<PAGE>
[Logo] M F S(R)
INVESTMENT MANAGEMENT
WE INVENTED THE MUTUAL FUND(R)
[graphic omitted]
MFS(R) CASH
RESERVE FUND
SEMIANNUAL REPORT o FEBRUARY 29, 2000
<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
Management Review and Outlook ............................................. 4
Portfolio of Investments .................................................. 8
Financial Statements ...................................................... 10
Notes to Financial Statements ............................................. 16
Trustees and Officers ..................................................... 21
MFS(R) ORIGINAL RESEARCH(SM)
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,
One could easily argue that the Internet represents the greatest technological
development most of us may see in our lifetimes. There is no disputing that this
new communication medium is changing forever the way we work, play, and shop.
One might also argue that investing in this new technology represents the
investment opportunity of a lifetime. The question for any investor is whether
and how to take advantage of it.
The popular press, it seems, would have us believe that by surfing the Web, we
can learn everything we need to know about investing. Indeed, there is no doubt
that Internet-delivered information and brokerage services enable individual
investors to be well informed and to trade at bargain prices. But we believe the
numbers and facts argue that, for most of us, mutual funds purchased through an
investment professional will continue to be one of the best products for
long-term investing in this new millennium.
According to a survey by the Investment Company Institute, the national
association of American investment companies, 44% of American households own
stock or bond mutual funds, while only 25.5% own individual stocks.(1) Of course
that doesn't tell us how well they did owning those funds or stocks, but another
statistic gives us a clue. In the third quarter of 1999, during a period of
volatility in the greatest bull market in history, a quarter of the 7,500 stocks
tracked by Morningstar, a popular rating service, lost more than 20% of their
value. But during the same period, fewer than 1% of the mutual funds tracked by
Morningstar -- 6 out of 10,000 funds -- were down by a similar amount.(2) So an
investor's chance of picking one of those losing stocks was about 25 times
greater than his or her chance of picking an equally losing fund.
The numbers also show that a majority of Americans seek professional advice when
buying mutual funds. Outside of employer-sponsored retirement plans,
approximately 68% of fund shareholders state that their primary method of
purchasing shares is through an investment professional.(1)
Why do we at MFS(R) believe that mutual funds plus professional advice will
continue to define the best course of action for many investors? Let's look at
some of the characteristics of a successful long-term investment approach:
o HAVING A PLAN AND STICKING TO IT: Our experience is that successful investors
-- those whose lives are enriched by the fruits of their investing -- share
two characteristics. They have a plan for reaching their monetary goals, and
they stick with that plan through up as well as down markets. And for many
investors, working with an investment professional may be the best way to
develop a plan. Although the Internet abounds with calculators for developing
all sorts of investment plans, none has your investment professional's high
level of experience and an understanding of your unique situation. And no
calculator can counsel you during a down market, when you may be tempted to
abandon your goals and your plan.
o DIVERSIFICATION: Few investors can afford to own a large number of holdings,
so poor performance of one company can potentially drag down their entire
portfolio. This is especially true when investing in volatile new areas such
as the Internet. On the other hand, a diversified mutual fund that owns
dozens or even hundreds of holdings is better positioned to survive a
disappointment in one or several investments.
o GOOD IN A DOWN MARKET: As we enter the tenth year of the greatest bull market
in history, it's easy to forget that market downturns are an almost
inevitable part of investing. Few mutual funds, of course, are going to be up
when the overall market is down. But as the numbers above from the third
quarter of 1999 demonstrate, mutual funds may be less likely to suffer the
extreme downturns experienced by a large number of individual holdings when
the market heads south.
o MFS ORIGINAL RESEARCH(R): The Internet is one of the greatest research tools
ever invented, but it's still not the same as being eyeball to eyeball with
the management of a company and discussing their plans for their firm's
future.
o GOOD PERFORMANCE AT AN ACCEPTABLE LEVEL OF RISK: Investing in individual
stocks or bonds does indeed offer the potential of exhilarating performance
that few mutual funds even attempt. The downside is that the most exciting
investments are also likely to be the ones that give you sleepless nights.
The diversification and professional management of mutual funds help make
them inherently less risky than individual stock picking, and funds are
available in a wide range of risk profiles.
We believe that now, more than ever, mutual funds sold by an investment
professional may offer many investors the best way to participate in whatever
investment opportunities the new millennium may bring. The combination of
professional portfolio management and professional advice recognizes the key
reason that investors give us their money: because they don't want to make a
hobby or a second profession out of investing; they simply want their money to
work for them so they have a better likelihood of realizing their dreams.
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)
March 15, 2000
- --------------
(1) Source: Investment Company Institute.
(2) Source: Morningstar CEO Don Phillips' keynote address at The Baltimore Sun's
Dollars and Sense Conference, 10/99. In the period 7/1/99 through 9/ 30/99,
of the 7,500 stocks tracked by Morningstar, 1,865 lost 20% or more; of the
10,000 mutual funds tracked by Morningstar, six lost 20% or more. Mutual
fund results are at net asset value; if sales charges had been reflected,
results would have been lower.
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. Allesandro]
Jean O. Alessandro
Dear Shareholders,
Short-term interest rates have been quite volatile over the past six months. As
a result, the seven-day annualized compounded yield on an investment in Class A
shares of the Fund increased from 4.62% at the beginning of the period to 5.22%
for the period ended February 29, 2000. During the same period, the seven-day
annualized compounded yield on an investment in Class B shares increased from
3.60% to 4.16%, while that on Class C shares increased from 3.64% to 4.12%.
The U.S. economy continues to grow rapidly, and we are seeing evidence of an
accelerating recovery overseas. Despite encouraging productivity growth in the
United States keeping consumer prices in check, persistently strong economic
growth has resulted in heightened concerns about inflation. In response, the
Federal Reserve Board (the Fed) has increased the overnight interbank lending
rate -- the federal funds rate -- two times since August 1999, resulting in an
overall increase from 5.25% to 5.75%. As a result, yields on 90-day commercial
paper and government agencies have increased approximately 60 basis points
(0.60%).
While the market has priced in some expectation of future rate hikes, we expect
short-term interest rates to move higher given the Fed's bias to continue to
raise rates over the next few months. In order to lower the Fund's sensitivity
toward interest-rate swings, we have reduced the average maturity for the Fund
to 26 days, versus 40 days at the beginning of the period. In light of our
belief that the strong global economic environment and inflation fears may
persist in the near term, we will target an average maturity near the low end of
the Fund's range of 30 to 35 days.
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. On February 29, 2000, approximately 87% of the Fund's net
assets were invested in top-tier 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. We believe our investment guidelines
are among the strictest in the industry and our 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
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 portfolio is actively managed, and current holdings may be different.
<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 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 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 the exchange privilege and all charges and expenses, for any other 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 FUND SEEKS AS HIGH A LEVEL OF CURRENT INCOME AS IS
CONSISTENT WITH THE PRESERVATION OF CAPITAL AND
LIQUIDITY.
COMMENCEMENT OF
INVESTMENT OPERATIONS: DECEMBER 29, 1986
CLASS INCEPTION: CLASS A SEPTEMBER 7, 1993
CLASS B DECEMBER 29, 1986
CLASS C APRIL 1, 1996
SIZE: $650.1 MILLION NET ASSETS AS OF FEBRUARY 29, 2000
INVESTMENTS IN THE FUND ARE NEITHER INSURED NOR GUARANTEED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. ALTHOUGH THE FUND
SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS
POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. SEE THE PROSPECTUS FOR DETAILS.
<PAGE>
PORTFOLIO OF INVESTMENTS (Unaudited) -- February 29, 2000
<TABLE>
<CAPTION>
Commercial Paper - 86.5%
- --------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
ISSUER (000 OMITTED) VALUE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
American Express Credit Corp., due 3/22/00 $ 15,000 $ 14,949,512
American General Corp., due 5/02/00 10,000 9,898,733
Archer Daniels Midland Co., due 4/03/00 - 5/23/00 24,000 23,788,486
Associates Corp. of North America, due 3/01/00 25,000 25,000,000
Banc One Corp., due 3/01/00 10,000 10,000,000
BankAmerica Corp., due 3/08/00 - 5/22/00 16,900 16,757,843
Bellsouth Telecommunications, Inc., due 3/08/00 - 4/04/00 25,150 25,046,439
Credit Suisse First Boston Inc., due 5/10/00 - 5/15/00 20,000 19,762,153
Daimler Chrysler North America Holdings, due 3/13/00 7,000 6,985,860
Dow Chemical Co., due 3/01/00 15,000 15,000,000
Du Pont (E.I.) de Nemours & Co., due 3/08/00 - 6/02/00 25,000 24,836,897
Duke Energy Corp., due 4/26/00 10,600 10,504,200
Formosa Plastics (ABN Amro Bank), due 4/19/00 10,000 9,919,694
General Electric Capital Corp., due 6/06/00 7,000 6,887,776
General Motors Acceptance Corp., due 3/01/00 25,000 25,000,000
Goldman Sachs Group LP, due 4/04/00 16,650 16,558,009
GTE Funding, Inc., due 3/17/00 - 4/03/00 16,750 16,679,033
ING America Insurance Holdings, due 4/10/00 - 5/15/00 23,800 23,575,700
Kimberly Clark Corp., due 3/06/00 12,000 11,990,417
Merck & Co., Inc., due 3/09/00 10,000 9,987,222
Merrill Lynch & Co., Inc., due 4/23/00 - 5/24/00 20,000 19,724,914
Metropolitan Life Funding, Inc., due 3/03/00 - 3/27/00 19,000 18,955,515
Minnesota Mining & Manufacturing Co., due 3/20/00 7,000 6,978,757
Morgan (J.P.) & Co., Inc., due 3/02/00 15,000 14,997,571
Morgan Stanley Dean Witter, due 3/21/00 - 4/13/00 20,000 19,897,583
Motorola, Inc., due 4/06/00 - 4/28/00 20,000 19,848,111
National Rural Utilities Cooperative Finance Corp.,
due 3/17/00 10,000 9,973,867
Old Line Funding Corp. (Royal Bank Canada),
due 3/02/00 - 5/04/00 22,656 22,605,385
Pemex Capital, Series B (Barclays Bank), due 3/07/00 10,784 10,773,540
Salomon Smith Barney Holdings, Inc., due 5/01/00 - 5/16/00 23,000 22,732,420
SBC Communications, Inc., due 3/07/00 10,000 9,990,417
Sheffield Receivables Corp., due 3/20/00 10,000 9,969,336
Societe Generale, due 3/15/00 10,000 10,000,000
Southern California Edison Co., due 3/21/00 - 4/17/00 23,000 22,863,736
United Parcel Service America, Inc., due 4/05/00 10,000 9,943,903
Warner Lambert Co., due 3/20/00 10,000 9,969,600
- ------------------------------------------------------------------------------------------------------
Total Commercial Paper, at Amortized Cost $562,352,629
- ------------------------------------------------------------------------------------------------------
U.S. Government and Agency Obligation - 7.7%
- ------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., due 3/01/00,
at Amortized Cost $ 50,300 $ 50,300,000
- ------------------------------------------------------------------------------------------------------
Repurchase Agreement - 15.4%
- ------------------------------------------------------------------------------------------------------
Goldman Sachs, dated 2/29/00, due 3/01/00, total
to be received $100,015,972 (secured by various
U.S. Treasury and Federal Agency obligations in a
jointly traded account), at Cost $100,000 $ 100,000,000
- ------------------------------------------------------------------------------------------------------
Total Investments, at Amortized Cost and Value $ 712,652,629
Other Assets, Less Liabilities - (9.6)% (62,559,808)
- ------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $650,092,821
- ------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
- -------------------------------------------------------------------------------
FEBRUARY 29, 2000
- -------------------------------------------------------------------------------
Assets:
Investments, at amortized cost and value $ 612,652,629
Repurchase agreement, at cost and value 100,000,000
--------------
Total investments, at amortized cost and value $ 712,652,629
Cash 10,194
Receivable for Fund shares sold 3,508,786
Interest receivable 142,639
Other assets 14,070
--------------
Total assets $ 716,328,318
--------------
Liabilities:
Distributions payable $ 168,157
Payable for Fund shares reacquired 65,652,707
Payable to affiliates -
Management fee 9,118
Shareholder servicing agent fee 2,026
Distribution and service fee 16,819
Administrative fee 304
Accrued expenses and other liabilities 386,366
--------------
Total liabilities $ 66,235,497
--------------
Net assets (represented by paid-in capital) $ 650,092,821
==============
Shares of beneficial interest outstanding 650,092,821
===========
Class A shares:
Net asset value and offering price per share
(net assets of $84,406,722 / 84,406,722 shares of
beneficial interest outstanding) $1.00
=====
Class B shares:
Net asset value and offering price per share
(net assets of $469,479,104 / 469,479,104 shares
of beneficial interest outstanding) $1.00
=====
Class C shares:
Net asset value and offering price per share
(net assets of $96,206,995 / 96,206,995 shares
of beneficial interest outstanding) $1.00
=====
A contingent deferred sales charge may be imposed on redemptions of Class A,
Class B, and Class C shares.
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
Statement of Operations (Unaudited)
- -------------------------------------------------------------------------------
SIX MONTHS ENDED FEBRUARY 29, 2000
- -------------------------------------------------------------------------------
Net investment income:
Interest income $ 20,407,122
------------
Expenses -
Management fee $ 1,983,747
Trustees' compensation 19,925
Shareholder servicing agent fee 359,797
Distribution and service fee (Class B) 2,556,518
Distribution and service fee (Class C) 543,118
Administrative fee 40,092
Custodian fee 129,956
Printing 42,175
Postage 121,378
Auditing fees 10,694
Legal fees 634
Miscellaneous 519,448
------------
Total expenses $ 6,327,482
Fees paid indirectly (58,827)
Reduction of expenses by investment adviser (364,660)
------------
Net expenses $ 5,903,995
------------
Net investment income $ 14,503,127
============
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
- -------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 29, 2000 AUGUST 31, 1999
(UNAUDITED)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 14,503,127 $ 19,228,912
---------------- ----------------
Distributions declared to shareholders -
From net investment income (Class A) $ (2,412,261) $ (3,392,925)
From net investment income (Class B) (9,983,616) (13,457,718)
From net investment income (Class C) (2,107,250) (2,378,269)
---------------- ----------------
Total distributions declared to shareholders $ (14,503,127) $ (19,228,912)
---------------- ----------------
Fund share (principal) transactions at net asset
value of $1.00 per share -
Net proceeds from sale of shares $ 4,179,947,261 $ 7,092,954,026
Shares issued in reinvestment of distributions 11,742,715 14,927,681
Shares reacquired (4,287,001,920) (6,952,174,564)
---------------- ----------------
Total increase (decrease) in net assets $ (95,311,944) $ 155,707,143
Net assets:
At beginning of period 745,404,765 589,697,622
---------------- ----------------
At end of period $ 650,092,821 $ 745,404,765
================ ================
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights
- -------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED AUGUST 31,
SIX MONTHS ENDED ----------------------------------------------------------------------
FEBRUARY 29, 2000 1999 1998 1997 1996 1995
(UNAUDITED)
- -------------------------------------------------------------------------------------------------------------------------------
CLASS A
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------ ------
Net investment income(S) $ 0.02 $ 0.04 $ 0.05 $ 0.05 $ 0.04 $ 0.05
Less distributions declared to
shareholders from net investment
income (0.02) (0.04) (0.05) (0.05) (0.04) (0.05)
------ ------ ------ ------ ------ ------
Net asset value - end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ====== ======
Total return 4.95%+ 4.33% 4.87% 4.64% 4.75% 4.91%
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 0.77%+ 0.82% 0.82% 0.93% 0.84% 0.90%
Net investment income 4.78%+ 4.22% 4.72% 4.54% 4.62% 4.94%
Net assets at end of period (000
omitted) $84,407 $98,719 $80,374 $45,007 $37,872 $10,852
(S) The investment adviser voluntarily waived a portion of its fee for the periods indicated. If this fee had been incurred by
the Fund, the net investment income per share and the ratios would have been:
Net investment income $ 0.02 $ 0.04 $ 0.05 $ 0.04 $ 0.04 $ 0.05
Ratios (to average net assets):
Expenses## 0.87%+ 0.92% 0.92% 1.03% 0.94% 1.00%
Net investment income 4.68%+ 4.12% 4.62% 4.44% 4.52% 4.84%
+ Annualized.
## Ratios do not reflect expense reductions from certain expense offset arrangements.
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- -------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED AUGUST 31,
SIX MONTHS ENDED --------------------------------------------------------------------------
FEBRUARY 29, 2000 1999 1998 1997 1996 1995
(UNAUDITED)
- -------------------------------------------------------------------------------------------------------------------------------
CLASS B
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------ ------
Net investment income(S) $ 0.02 $ 0.03 $ 0.04 $ 0.03 $ 0.04 $ 0.04
Less distributions declared to
shareholders from net
investment income (0.02) (0.03) (0.04) (0.03) (0.04) (0.04)
------ ------ ------ ------ ------ ------
Net asset value - end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ====== ======
Total return 3.93%+ 3.29% 3.83% 3.58% 3.64% 3.81%
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 1.77%+ 1.82% 1.82% 1.95% 1.92% 1.93%
Net investment income 3.87%+ 3.22% 3.78% 3.53% 3.58% 3.69%
Net assets at end of period
(000 omitted) $469,479 $541,126 $438,577 $244,416 $251,192 $166,519
(S) The investment adviser voluntarily waived a portion of its fee for the periods indicated. If this fee had been incurred by
the Fund, the net investment income per share and the ratios would have been:
Net investment income $ 0.02 $ 0.03 $ 0.04 $ 0.03 $ 0.04 $ 0.04
Ratios (to average net assets):
Expenses## 1.87%+ 1.92% 1.92% 2.05% 2.02% 2.03%
Net investment income 3.77%+ 3.12% 3.68% 3.43% 3.48% 3.59%
+ Annualized.
## Ratios do not reflect expense reductions from certain expense offset arrangements.
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
Financial Highlights - continued
- ----------------------------------------------------------------------------------------------------------------------------
PERIOD ENDED
YEAR ENDED AUGUST 31, AUGUST 31,
SIX MONTHS ENDED --------------------------------------------------------------
FEBRUARY 29, 2000 1999 1998 1997 1996*
(UNAUDITED)
- ----------------------------------------------------------------------------------------------------------------------------
CLASS C
- ----------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C> <C> <C> <C>
Net asset value - beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------
Net investment income(S) $ 0.02 $ 0.03 $ 0.04 $ 0.03 $ 0.01
Less distributions declared to
shareholders from net investment
income (0.02) (0.03) (0.04) (0.03) (0.01)
------ ------ ------ ------ ------
Net asset value - end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ======
Total return 3.91%+ 3.25% 3.76% 3.60% 3.67%+
Ratios (to average net assets)/
Supplemental data(S):
Expenses## 1.77%+ 1.82% 1.82% 1.95% 1.79%+
Net investment income 3.83%+ 3.22% 3.80% 3.57% 3.60%+
Net assets at end of period (000
omitted) $96,207 $105,559 $70,746 $16,373 $6,642
(S) The investment adviser voluntarily waived a portion of its fee for the periods indicated. If this fee had been incurred by the
Fund, the net investment income per share and the ratios would have been:
Net investment income $ 0.02 $ 0.03 $ 0.04 $ 0.03 $ 0.01
Ratios (to average net assets):
Expenses## 1.87%+ 1.92% 1.92% 2.05% 1.89%+
Net investment income 3.73%+ 3.12% 3.70% 3.47% 3.50%+
* For the period from the inception of Class C, April 1, 1996, through August 31, 1996.
+ Annualized.
## Ratios do not reflect expense reductions from certain expense offset arrangements.
</TABLE>
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(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
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 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 collateral 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 collateral to ensure that its value, including
accrued interest, is greater than amounts owed to the Fund under each such
repurchase agreement. The Fund, 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 Fund's custody fee is calculated as a percentage of
the Fund's month end net assets. The fee is reduced according to an arrangement
that measures the value of cash deposited with the custodian by the Fund. This
amount is shown as a reduction of expenses on the Statement of Operations.
Tax Matters and Distributions - The 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 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 Fund
distinguishes between distributions on a tax basis and a financial reporting
basis and requires that only distributions in excess of tax basis earnings and
profits be 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.
At August 31, 1999, the Fund, for federal income tax purposes, had a capital
loss carryforward of $1,426 which may be applied against any net taxable
realized gains of each succeeding year until the earlier of its utilization or
expiration on August 31, 2003, ($908), August 31, 2004, ($480), August 31,
2006, ($2), and August 31, 2007, ($36).
Multiple Classes of Shares of Beneficial Interest - The Fund offers multiple
classes of shares, which differ in their respective distribution and service
fees. All shareholders bear the common expenses of the Fund based on the value
of settled shares outstanding of each class, without distinction between share
classes. Dividends are declared separately for each class. Differences in per
share dividend rates are generally due to differences in separate class
expenses. Class B shares will convert to Class A shares approximately eight
years after purchase.
(3) Transactions with Affiliates
Investment Adviser - The Fund has an investment advisory agreement with MFS to
provide overall investment advisory and administrative services, and general
office facilities. The management fee is computed daily and paid monthly at an
annual rate of 0.55% of the Fund's average daily net assets. The investment
adviser has voluntarily agreed to waive a portion of its fee, which is shown 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 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 its independent Trustees and Mr. Bailey. Included in Trustees'
compensation is a net periodic pension expense of $6,226 for the six months
ended February 29, 2000.
Administrator - The Fund has 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 Fund pays MFS an administrative fee at
the following annual percentages of the Fund's 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%
Distributor - The Trustees have adopted a distribution plan for Class A, Class
B, and Class C shares pursuant to Rule 12b-1 of the Investment Company Act of
1940 as follows:
The Fund's 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 paid 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 securties dealer and 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. Payment of 0.10% per annum Class A distribution fee and payment
of 0.25% per annum service fee will commence on such date as the Trustees of the
Fund may determine.
The Fund's distribution plan provides that the Fund will pay MFD a 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 and Class C 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 and Class C shares, and
will pay to such securities dealers all of the distribution fee attributable to
Class C shares. The service fee is intended to be consideration for services
rendered by the dealer with respect to Class B and Class C shares. MFD retains
the service fee for accounts not attributable to a securities dealer, which
amounted to $25,576 and $2,547 for Class B and Class C shares, respectively, for
the six months ended February 29, 2000. Fees incurred under the distribution
plan during the six months ended February 29, 2000, were 1.00% of average daily
net assets attributable to both Class B and Class C shares on an annualized
basis.
Certain Class A and Class C shares are subject to a contingent deferred sales
charge in the event of a shareholder redemption within 12 months following
purchase. 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 six months ended February
29, 2000, were $18,535, $1,082,760, and $76,373 for Class A, Class B, and Class
C shares, respectively.
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 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, aggregated $21,989,271,902 and $22,162,595,500,
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,
$1.00 per share). Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
Class A Shares
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 29, 2000 AUGUST 31, 1999
- ------------------------------------------------------------------------------------
<S> <C> <C>
Shares sold 1,352,001,182 1,911,002,475
Shares issued to shareholders in reinvestment of
distributions 1,735,396 2,554,337
Shares reacquired (1,368,049,307) (1,895,211,541)
-------------- --------------
Net increase (decrease) (14,312,729) 18,345,271
============== ==============
<CAPTION>
Class B Shares
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 29, 2000 AUGUST 31, 1999
- ------------------------------------------------------------------------------------
<S> <C> <C>
Shares sold 1,768,348,907 3,254,509,295
Shares issued to shareholders in reinvestment of
distributions 8,398,793 10,788,781
Shares reacquired (1,848,394,999) (3,162,749,084)
-------------- --------------
Net increase (decrease) (71,647,299) 102,548,992
============== ==============
<CAPTION>
Class C Shares
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 29, 2000 AUGUST 31, 1999
- ------------------------------------------------------------------------------------
<S> <C> <C>
Shares sold 1,059,597,172 1,927,442,256
Shares issued to shareholders in reinvestment of
distributions 1,608,526 1,584,563
Shares reacquired (1,070,557,614) (1,894,213,939)
-------------- --------------
Net increase (decrease) (9,351,916) 34,812,880
============== ==============
</TABLE>
(6) Line of Credit
The Fund and other affiliated funds participate in an $820 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 fee allocated to
the Fund for the six months ended February 29, 2000, was $2,605. The Fund had no
significant borrowings during the period.
<PAGE>
MFS(R) CASH RESERVE FUND
TRUSTEES ASSISTANT TREASURERS
Richard B. Bailey+ - Private Investor; Mark E. Bradley*
Former Chairman and Director (until Ellen Moynihan*
1991), MFS Investment Management(R) James O. Yost*
Marshall N. Cohan+ - Private Investor SECRETARY
Lawrence H. Cohn, M.D.+ - Chief of Stephen E. Cavan*
Cardiac Surgery, Brigham and Women's
Hospital; Professor of Surgery, ASSISTANT SECRETARY
Harvard Medical School James R. Bordewick, Jr.*
The Hon. Sir J. David Gibbons, KBE+ - CUSTODIAN
Chief Executive Officer, Edmund State Street Bank and Trust Company
Gibbons Ltd.; Chairman, Colonial
Insurance Company, Ltd. INVESTOR INFORMATION
For information on MFS mutual funds,
Abby M. O'Neill+ - Private Investor call your investment professional or,
for an information kit, call toll
Walter E. Robb, III+ - President and free: 1-800-637-2929 any business day
Treasurer, Benchmark Advisors, Inc. from 9 a.m. to 5 p.m. Eastern time (or
(corporate financial consultants); leave a message anytime).
President, Benchmark Consulting Group,
Inc. (office services) INVESTOR SERVICE
MFS Service Center, Inc.
Arnold D. Scott* - Senior P.O. Box 2281
Executive Vice President, Director, Boston, MA 02107-9906
and Secretary, MFS Investment
Management For general information, call toll
free: 1-800-225-2606 any business day
Jeffrey L. Shames* - Chairman and from 8 a.m. to 8 p.m. Eastern time.
Chief Executive Officer, MFS
Investment Management For service to speech- or
hearing-impaired, call toll free:
J. Dale Sherratt+ - President, Insight 1-800-637-6576 any business day from 9
Resources, Inc. (acquisition planning a.m. to 5 p.m. Eastern time. (To use
specialists) this service, your phone must be
equipped with a Telecommunications
Ward Smith+ - Former Chairman (until Device for the Deaf.)
1994), NACCO Industries (holding
company) For share prices, account balances,
exchanges, or stock and bond outlooks,
INVESTMENT ADVISER call toll free: 1-800-MFS-TALK
Massachusetts Financial Services Company (1-800-637-8255) anytime from a
500 Boylston Street touch-tone telephone.
Boston, MA 02116-3741
WORLD WIDE WEB
DISTRIBUTOR www.mfs.com
MFS Fund Distributors, Inc.
500 Boylston Street
Boston, MA 02116-3741
CHAIRMAN AND PRESIDENT
Jeffrey L. Shames*
PORTFOLIO MANAGER
Jean O. Alessandro*
TREASURER
W. Thomas London*
+ Independent Trustee
* MFS Investment Management
<PAGE>
MFS(R) CASH RESERVE FUND ------------
BULK RATE
[Logo] M F S(R) U.S. POSTAGE
INVESTMENT MANAGEMENT PAID
We invented the mutual fund(R) MFS
------------
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
MCR-3 4/00 59.1M 01/201/301