<PAGE>
UNION STANDARD RESEARCH FUND
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1996
- --------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- ------ ---------------- -----
SHORT-TERM OBLIGATION - 98.1%
Short-Term Obligation at Amortized Cost 50 $50,000
- --------------------------------------------------------------------------------
Total Investments $50,000
OTHER ASSETS, LESS LIABILITIES - 1.9% 984
- --------------------------------------------------------------------------------
Net Assets - 100.00% $50,984
================================================================================
See notes to financial statements
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1996
Assets:
Investments, at value (identified cost, $50,000) $50,000
Cash 984
Deferred organization expenses 14,381
-------
Total assets $65,365
Liabilities:
Accrued expenses and other liabilities $14,381
-------
Total liabilities $14,381
-------
Net assets $50,984
=======
Net assets consists of:
Paid-in capital $50,051
Accumulated undistributed net investment income 933
-------
Total $50,984
=======
Shares of beneficial interest outstanding 5,005
=======
Net asset value and redemption price per share (net assets of
$50,984/5005 shares of beneficial interest outstanding) $ 10.19
=======
See notes to financial statements
<PAGE>
STATEMENT OF OPERATIONS
Period Ended September 30, 1996*
Net investment income:
Interest Income $933
----
Expenses - --
----
Net investment income and increase in net assets
from operations $933
====
* For the period from the commencement of investment operations, November 17,
1995 to September 30, 1996
See notes to financial statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
Period Ended September 30, 1996*
Increase in net assets:
From Operations -
Net investment income $ 933
-------
Increase in net assets from operations $ 933
-------
Fund share (principal) transactions -
Net proceeds from sale of shares $50,051
-------
Increase in net assets from Fund share transactions $50,051
-------
Total increase in net assets $50,984
-------
Net assets:
At beginning of period $ --
-------
At end of period (including accumulated undistributed net
investment income of $933) $50,984
=======
* For the period from the commencement of investment operations, November 17,
1995 to September 30, 1996.
See notes to financial statements
<PAGE>
FINANCIAL HIGHLIGHTS
Period Ended
September 30, 1996*
Per share data (for a share outstanding throughout
the period):
Net asset value - beginning of period $10.00
------
Income from investment operations # -
Net investment income $ 0.19
------
Net asset value - end of period $10.19
======
Total return 1.90%++
Ratios (to average net assets) / Supplemental data:
Expenses --
Net investment income 2.12%+
Portfolio turnover --
Net assets at end of period (000 Omitted) $ 51
* For the period from the commencement of investment operations, November 17,
1995 to September 30, 1996.
+ Annualized.
++ Not annualized.
# Per share data is based on average shares outstanding.
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(1) Business and Organization
MFS Union Standard Research Fund (the Fund) is a diversified series of MFS Union
Standard Series Trust (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. The Fund commenced
investment operation on November 17, 1995.
(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 - Equity securities listed on securities exchanges or
reported through the NASDAQ system are valued at last sale prices. Unlisted
equity securities or listed equity securities for which last sale prices are not
available are valued at last quoted bid prices. Short-term obligations, which
mature in 60 days or less, are valued at amortized cost, which approximates
market value. Securities for which there are no such quotations or valuations
are valued at fair value as determined in good faith by or at the direction of
the Trustees.
Deferred Organization Expenses - Costs incurred by the Fund in connection with
its organization have been deferred. The organization expenses will be amortized
on a straight-line basis over a five-year period beginning on the date of the
initial shareholder investment into the Fund.
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. Dividend
income is recorded on the ex-dividend date for dividends received in cash.
Dividend and interest payments received in additional securities are recorded on
the ex-dividend or ex-interest date in an amount equal to the value of the
security on such date.
Fees Paid Indirectly - The Fund's custodian bank calculates its fee based on the
Fund's average daily net assets. The fee is reduced according to a fee
arrangement, which provides for custody fees to be reduced based on a formula
developed to measure 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. 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.
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 are reported in the financial statements as a tax return of
capital. Differences in the recognition or classification of income between the
financial statements and tax earnings and profits which result in temporary
over-distributions for financial statement purposes, are classified as
distributions in excess of net investment income or accumulated net realized
gains.
(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 daily and paid monthly at an annual rate of 0.60% of
average daily net assets. Under a temporary expense reimbursement agreement with
MFS, MFS has voluntarily agreed to pay all of the Fund's operating expenses
exclusive of management, distribution and service fees until December 31, 1998.
The Fund in turn will pay MFS an expense reimbursement fee not greater than
1.00% of average daily net assets. To the extent that the expense reimbursement
fee exceeds the Fund's actual expenses, the excess will be applied to amounts
paid by MFS in prior years. The management fee has not been imposed during the
period from November 17, 1995 to September 30, 1996.
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).
Distributor - MFD, a wholly owned subsidiary of MFS, is distributor of the Fund.
The Trustees have adopted a distribution plan pursuant to Rule 12b-1 of the
Investment Company Act of 1940 as follows:
The distribution plan provides that the Fund will pay MFD up to 0.25% per annum
of the Fund's average daily net assets in order that MFD may pay expenses on
behalf of the Fund related to the distribution of shares. This rate has been set
at 0.15% for an indefinite period. The distribution fee has not been imposed
during the period from November 17, 1995 to September 30, 1996. Shareholder
Servicing Agent - MFSC, a wholly owned subsidiary of MFS, earns a fee for its
services as shareholder serving agent. The fee is calculated based on the number
of shareholder accounts in the Fund.
(4) 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 were as follows:
Period Ended September 30, 1996*
---------------------
Shares Amount
- --------------------------------------------------------
Shares sold 5,005 $50,051
===== =======
* For the period from the commencement of investment operations, November 17,
1995 to September 30, 1996.
