<PAGE>
[LOGO] M F S(SM) Annual Report
INVESTMENT MANAGEMENT for Year Ended
September 30, 1997
MFS(R) UNION STANDARD(R) EQUITY FUND
[GRAPHIC OMITTED]
LEARNING FINANCIAL BASICS THE EASY WAY (see page 28)
<PAGE>
TABLE OF CONTENTS
Letter from the Chairman .................................................. 1
A Discussion with the Portfolio Manager ................................... 2
Portfolio Manager's Profile ............................................... 5
Fund Facts ................................................................ 6
Performance Summary ....................................................... 6
Tax Form Summary .......................................................... 8
Portfolio Concentration ................................................... 9
Portfolio of Investments .................................................. 10
Financial Statements ...................................................... 13
Notes to Financial Statements ............................................. 20
Independent Auditors' Report .............................................. 25
MFS Investment Opportunities .............................................. 26
The MFS Family of Funds(R) ................................................ 27
The ABCs of Investing ..................................................... 28
Trustees and Officers ..................................................... 29
HIGHLIGHTS
o FOR THE 12 MONTHS ENDED SEPTEMBER 30, 1997, CLASS A SHARES OF THE FUND
PROVIDED A TOTAL RETURN AT NET ASSET VALUE OF 32.27%, WHILE CLASS B, CLASS
C, AND CLASS I SHARES EACH PROVIDED A TOTAL RETURN OF 32.51%. (SEE
PERFORMANCE SUMMARY FOR MORE INFORMATION.)
o THE FUND HAS BEEN OVERWEIGHTED IN THE HEALTH CARE AND CONSUMER STAPLES
SECTORS, WHILE BEING UNDERWEIGHTED IN PAPER, METAL, AND CHEMICAL COMPANIES,
BASED ON OUR EXPECTATION FOR A SLOWING ECONOMY.
o THE FUND'S STOCK SELECTIONS ARE BASED ON FUNDAMENTAL ANALYSIS, BY WHICH WE
LOOK FOR QUALITY COMPANIES THAT ARE WELL POSITIONED IN THEIR BUSINESSES,
PREFERABLY GROWTH BUSINESSES.
o THE EQUITY PERFORMANCES OF TWO OF THE FUND'S HOLDINGS, GENERAL ELECTRIC AND
COLGATE-PALMOLIVE, HAVE EXCEEDED EXPECTATIONS. GENERAL ELECTRIC HAS
BENEFITED FROM A FLIGHT TO QUALITY AND AN ACCELERATING GROWTH RATE, WHILE
COLGATE IS A LEADER IN GROWING INTERNATIONAL MARKETS, WITH OVER 75% OF ITS
PROFITS COMING FROM OUTSIDE THE UNITED STATES.
<PAGE>
LETTER FROM THE CHAIRMAN
[Photo of A. Keith Brodkin]
Dear Shareholders:
An unprecedented combination of generally positive factors has helped the U.S.
economy enjoy a sustained period of relative stability and moderate growth in
which thousands of new jobs have been created every month, inflation remains
under control, and the investment climate -- at least until now -- has been
favorable. For example, the increased use of technology and other productivity
enhancements, as well as corporate restructuring and global competition, is
improving companies' balance sheets and helping control inflation. Meanwhile,
borrowing by corporations and governments continues to decline, while consumer
confidence is increasing, although consumer debt levels are still uncomfortably
high. The rapid pace of growth seen in the first quarter slowed in the second
quarter, to an annual rate of 3.3%. While real (inflation-adjusted) growth could
moderate further in the third quarter, we believe economic momentum will carry
well into the first quarter of 1998. Although the economy appears to be in a
modest lull, the money supply is increasing at a rapid rate, and it appears that
Christmas sales could be quite good. Because economic growth continues to be
impressive, markets are likely to begin focusing on the Federal Reserve Board's
willingness to raise interest rates.
Although the U.S. equity market has seen increased price volatility of late, we
have been surprised by its overall strength thus far in 1997. Much of this is
the result of continuing gains in corporate earnings. Even as the current
recovery enters its seventh year, more and more U.S. companies have been
exceeding analysts' earnings estimates. In the first quarter of 1997, for
example, two-thirds of all companies met or exceeded analysts' expectations, a
trend that could be an important indicator of the U.S. equity market's future
direction. However, while the near-term outlook for profits is generally
favorable, we believe equity valuations have risen to a point where a cautious
investment approach seems warranted.
We appreciate your support and welcome any questions or comments you may have.
Respectfully,
/s/ A. Keith Brodkin
A. Keith Brodkin
Chairman and President
October 15, 1997
<PAGE>
A DISCUSSION WITH THE PORTFOLIO MANAGER
[Photo of Mitchell D. Dynan]
Mitchell D. Dynan
For the 12 months ended September 30, 1997, Class A shares of the Fund provided
a total return of 32.27%, while Class B, Class C, and Class I shares each
provided a total return of 32.51%. These returns assume the reinvestment of
distributions but exclude the effects of any sales charges and compare to a
34.60% return over the same period for the ACS Labor Sensitivity Index (the
LSI), an unmanaged index of companies selected on the basis of labor-sensitive
criteria. The Fund's returns also compare to a 40.45% return for the Standard &
Poor's 500 Composite Index (the S&P 500), a popular, unmanaged index of common
stock total return performance.
Q. WHAT IS THE FUND'S INVESTMENT OBJECTIVE AND PHILOSOPHY?
A. The Fund seeks long-term growth of capital, and generally invests not less
than 65% of its total assets in equity securities of companies contained in
the LSI. In order to achieve this objective, I manage the Fund conservatively
by investing in a number of industries and purchasing a variety of stocks
based on their risk-reward tradeoff, without putting too much money in any
one industry. The LSI investment universe is relatively conservative compared
to the overall market. Technology stocks account for a very small percentage
of the Fund because of their limited representation in the LSI. This
contributes to low fund volatility. The Fund's turnover is relatively low; I
like to hold stocks for the long term and remain fully invested, since it is
extremely difficult to time the market.
Q. NOW, COULD YOU EXPLAIN THE FUND'S CURRENT INVESTMENT STRATEGY AND TALK ABOUT
HOW THIS STRATEGY AFFECTED PERFORMANCE OVER THE PAST YEAR?
A. The strategy is predicated on the assumptions that U.S. economic growth will
slow in 1998 and that interest rates will remain stable. I've invested in
companies that I believe are capable of achieving their earnings targets in a
slower-growth environment. As a result, the Fund is overweighted in the
health care and consumer staples sectors. Conversely, the Fund does not own
any auto stocks, which account for about 5% of the LSI. Basic materials,
which include paper, metal, and chemical companies, have also been
de-emphasized. Unfortunately, this strategy has hurt the Fund's relative
performance over the near term. During the third calendar quarter, investors
rotated into the cyclical groups. Auto stocks reversed their prior
underperformance and handily beat the LSI. Similarly, some of the basic
material sectors, like paper companies, rallied sharply. While the Fund's
performance lagged the LSI, I've decided to stick to my strategy and not to
chase the cyclical stocks. If my economic scenario pans out, the earnings
growth of these companies will not be sustainable and investor perceptions
will change.
Q. ONCE YOU HAVE DEFINED YOUR STRATEGY, HOW DO YOU DECIDE WHICH STOCKS GO IN
THE PORTFOLIO?
A. Stock selection is based on fundamental analysis. I look for high-quality
companies that are well positioned in good businesses. The starting point for
my analysis is a company's products. I look at the markets in which these
products are sold and the company's positioning relative to the competition.
At this point in the economic cycle, I'm interested in companies that can
deliver consistent growth, so confidence in their earnings outlooks is
important. The quality of management is critical in this regard. Can
management deliver, and is it shareholder oriented? Once I have completed the
fundamental analysis, I assess the valuation of the stock relative to the
expected earnings growth rate. I try to establish a price target and
determine the upside potential as well as the downside risk. If I can achieve
a potential return of 15% to 20% under a reasonable set of assumptions, I
will buy the stock.
Q. IF A STOCK REACHES YOUR PRICE TARGET, DO YOU REEVALUATE IT?
A. Yes. This price target discipline forces me to revisit a company's earnings
estimates and its valuation relative to the market and its peer group. If the
fundamentals are intact, my inclination is to continue to hold it. However,
if the stock is excessively valued, I may pare the position. I will also sell
the stock if I'm uncomfortable with its fundamentals.
Q. LOOKING AT SPECIFIC STOCKS IN THE PORTFOLIO, COULD YOU TALK ABOUT SOME THAT
HAVE PERFORMED BETTER THAN YOU EXPECTED?
A. General Electric did a lot better than I initially thought it would. The
stock provided a total return of nearly 40% during the first nine months of
1997, benefiting from a flight to quality and a huge valuation expansion. The
earnings growth rate accelerated, which is pretty extraordinary for a company
of that size. In addition, 35% to 40% of GE's earnings came from financial
services. This area has grown very rapidly and has significantly added to the
company's growth.
Another stock that surprised me on the upside was Colgate-Palmolive. All of its
businesses seem to be clicking. The toothpaste business is doing very well and
experiencing good volume growth. While Colgate is number two in toothpaste sales
in the United States, it's number one in almost every other country, and the
majority of its operating profits, on the order of 75% to 80%, is made outside
the United States. It's very big in Latin America. While the company's U.S.
business had been underperforming, it has done a lot better of late under new
management, and its Hills pet food business has turned around this year after
distribution was realigned. Finally, later this year the company is coming out
with a new FDA-approved toothpaste called Total. It's the only toothpaste that
can claim to prevent gingivitis, a gum disease. Colgate has been selling Total
outside the United States for a number of years, where it has been very
successful and has picked up market share. I expect it to do well in this
country also.
Q. AND WHAT ABOUT SOME STOCKS THAT HAVE NOT PERFORMED AS WELL AS YOU HAD
HOPED?
A. Philip Morris was disappointing. The stock was under pressure because of
litigation and uncertainty about the settlement between the cigarette
industry and the federal government. The outlook is difficult to analyze
because it is determined by politics and negotiation. The fundamentals of the
business are very good; that's never been an issue. Even though the company
has a large food division and a beer division, its biggest business is
tobacco. That's its fastest growing and most profitable area.
Another stock that didn't do well was Johnson & Johnson. It didn't hurt the
Fund a lot, but it didn't keep up with the other pharmaceutical companies.
Investors are concerned about its growth rate and about competition for some
of its medical devices. The company has also had a few disappointments in the
new-drug area.
Q. LOOKING AHEAD, WHAT KIND OF MARKET OR ECONOMIC ENVIRONMENT DO YOU EXPECT, AND
HOW MIGHT THIS AFFECT SOME OF YOUR INVESTMENT DECISIONS FOR THE FUND?
A. My view of the economy is based on the current longevity of the recovery and
high consumer debt levels. The proliferation of credit cards and the
aggressiveness of credit card companies in granting credit to individuals
could have negative ramifications for the economy in the future. Global
economies are a mixed bag. Japan and a number of Asian economies are weak. In
Europe, the United Kingdom is fine, but France and Germany still have
double-digit unemployment and their economies are soft. Business conditions
in Latin America are mixed, with some companies complaining about weak demand
for their products in Brazil.
Most investment professionals have been surprised by the strength of the U.S.
equity market during 1997. The favorable combination of moderate economic
growth and low inflation, along with the unrelenting flow of money into
mutual and pension funds, has propelled the market higher. I don't know what
will happen to the U.S. stock market over the next year, but it is probably a
good bet that the returns of the last three years won't be repeated in 1998.
During the next 12 months, I will continue to manage the Fund using the
strategy I have outlined and invest in high-quality companies that can, I
believe, generate consistent earnings growth.
/s/ Mitchell D. Dynan
Mitchell D. Dynan
Portfolio Manager
PORTFOLIO MANAGER'S PROFILE
MITCHELL D. DYNAN JOINED THE MFS RESEARCH DEPARTMENT IN 1986. A GRADUATE
OF TUFTS UNIVERSITY, HE WAS NAMED ASSISTANT VICE PRESIDENT - INVESTMENTS
IN 1987 AND VICE PRESIDENT - INVESTMENTS IN 1988. MR. DYNAN BECAME
PORTFOLIO MANAGER OF MFS(R) UNION STANDARD(R) EQUITY FUND IN 1997.
<PAGE>
FUND FACTS
OBJECTIVE: THE FUND'S INVESTMENT OBJECTIVE IS TO PROVIDE LONG-TERM
GROWTH OF CAPITAL.
COMMENCEMENT OF INVESTMENT OPERATIONS: JANUARY 14, 1994
CLASS INCEPTION: CLASS A AUGUST 8, 1997
CLASS B AUGUST 11, 1997
CLASS C AUGUST 11, 1997
CLASS I JANUARY 14, 1994
SIZE: $69.1 MILLION NET ASSETS AS OF SEPTEMBER 30, 1997
PERFORMANCE SUMMARY
The information below and on the following page illustrates the historical
performance of MFS Union Standard Equity Fund -- Class I shares in comparison to
various market indicators. Class I share performance results have no initial
sales charge; benchmark comparisons are unmanaged and do not reflect any fees or
expenses. The performance of other share classes will be greater than or less
than the line shown, based on differences in charges and fees paid by
shareholders investing in different classes. It is not possible to invest
directly in an index.
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the period from February 1, 1994, through September 30, 1997)
MFS Union
Period Standard Equity Consumer Price S&P 500 ASC Labor
End Fund - Class I Index - U.S. Composite Index Sensitivity Index
--- -------------- ------------ --------------- -----------------
2/01/94 $10,000 $10,000 $10,000 $ 9,689
9/30/94 9,442 10,219 9,800 9,676
9/29/95 11,727 10,479 12,716 12,340
9/30/96 14,185 10,793 15,301 14,784
9/30/97 18,797 11,019 21,490 19,889
<PAGE>
AVERAGE ANNUAL TOTAL RETURNS AS OF SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
1 Year 3 Years Life of Fund*
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MFS Union Standard Equity Fund (Class A)
including 5.75% sales charge (SEC results) +24.69% +23.27% +17.26%
- -----------------------------------------------------------------------------------------------------------------------------
MFS Union Standard Equity Fund (Class A)
at net asset value +32.27% +25.72% +19.14%
- -----------------------------------------------------------------------------------------------------------------------------
MFS Union Standard Equity Fund (Class B) with CDSC
(SEC results) +28.51% +25.17% +18.69%
- -----------------------------------------------------------------------------------------------------------------------------
MFS Union Standard Equity Fund (Class B)
at net asset value +32.51% +25.80% +19.20%
- -----------------------------------------------------------------------------------------------------------------------------
MFS Union Standard Equity Fund (Class C) with CDSC
(SEC results) +31.51% +25.80% +19.20%
- -----------------------------------------------------------------------------------------------------------------------------
MFS Union Standard Equity Fund (Class C)
at net asset value +32.51% +25.80% +19.20%
- -----------------------------------------------------------------------------------------------------------------------------
MFS Union Standard Equity Fund (Class I)
at net asset value +32.51% +25.80% +19.20%
- -----------------------------------------------------------------------------------------------------------------------------
ACS Labor Sensitivity Index(+) +34.60% +27.17% +20.64%
- -----------------------------------------------------------------------------------------------------------------------------
Standard & Poor's 500 Composite Index(++) +40.45% +29.92% +24.00%
- -----------------------------------------------------------------------------------------------------------------------------
Consumer Price Index(++)(**) + 2.10% + 2.55% + 2.73%
- -----------------------------------------------------------------------------------------------------------------------------
(*) For the period from the commencement of the Fund's investment operations, January 14, 1994, through September 30, 1997.
(+) Source: AIM.
(++) Source: CDA/Wiesenberger.
(**) The Consumer Price Index is published by the U.S. Bureau of Labor Statistics and measures the cost of living (inflation).
</TABLE>
All results are historical and assume the reinvestment of dividends and capital
gains. Investment return and principal value will fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Past performance
is no guarantee of future results.
Class A share SEC results include the maximum 5.75% sales charge. Class B share
SEC results reflect the applicable contingent deferred sales charge (CDSC),
which declines over six years as follows: 4%, 4%, 3%, 3%, 2%, 1%, 0%. Class C
shares have no initial sales charge but, along with Class B shares, have higher
annual fees and expenses than Class A shares. Class C share purchases are
subject to a 1% CDSC if redeemed within 12 months of purchase.
Class A, Class B, and Class C share results include the performance and the
operating expenses of the Fund's Class I shares for periods prior to the
inception of Class A, Class B, and Class C shares. Because operating expenses
attributable to Class I shares are lower than those of Class A, Class B, and
Class C shares, Class A, Class B, and Class C share performance generally would
have been lower than Class I share performance. The Class I share performance
included within the Class A share SEC performance has been adjusted to reflect
the initial sales charge generally applicable to Class A shares. The Class I
share performance included within the Class B and Class C share SEC performance
has been adjusted to reflect the CDSC generally applicable to Class B and Class
C shares.
Performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Current subsidies and
waivers may be discontinued at any time.
TAX FORM SUMMARY
IN JANUARY 1998, SHAREHOLDERS WILL BE MAILED A TAX FORM SUMMARY
REPORTING THE FEDERAL TAX STATUS OF ALL DISTRIBUTIONS PAID DURING THE
CALENDAR YEAR 1997.
FEDERAL INCOME TAX INFORMATION ON DISTRIBUTIONS
THE FUND HAS DESIGNATED $4,359,399 AS A LONG-TERM CAPITAL GAIN.
DIVIDENDS-RECEIVED DEDUCTION
FOR THE YEAR ENDED SEPTEMBER 30, 1997, THE AMOUNT OF DISTRIBUTIONS FROM
INCOME ELIGIBLE FOR THE 70% DIVIDENDS-RECEIVED DEDUCTION FOR
CORPORATIONS WAS 98.4%.
<PAGE>
PORTFOLIO CONCENTRATION AS OF SEPTEMBER 30, 1997
TOP 10 HOLDINGS
GENERAL ELECTRIC CO. PHILIP MORRIS COS., INC.
Diversified manufacturing and services Tobacco, food, and beverage
conglomerate conglomerate
EXXON CORP. LOCKHEED-MARTIN CORP.
International oil and gas company Aerospace/defense contractor
BRISTOL-MYERS SQUIBB CO. MOBIL CORP.
Pharmaceutical products company International oil and gas company
MERCK & CO., INC. JOHNSON & JOHNSON
Pharmaceutical products company Health care and pharmaceutical
products company
COCA-COLA CO.
International soft drink company TYCO INTERNATIONAL LTD.
Fire protection, packaging, and
electronic equipment manufacturing
company
LARGEST SECTORS
Other Sectors 22.2%
Consumer Staples 19.3%
Industrial Goods and Services 15.9%
Utilities and Communications 14.5%
Energy 11.9%
Health Care 11.3%
Miscellaneous 4.9%
(Conglomerates, special
products/services)
For a more complete breakdown, refer to the Portfolio of Investments.
<PAGE>
PORTFOLIO OF INVESTMENTS - September 30, 1997
Stocks - 96.7%
ISSUER SHARES VALUE
- ------------------------------------------------------------------------------
Aerospace - 6.2%
General Dynamics Corp. 13,200 $ 1,150,050
Goodrich (B.F.) Co. 15,400 696,850
Lockheed-Martin Corp. 16,661 1,776,479
United Technologies Corp. 8,400 680,400
-----------
$ 4,303,779
- ------------------------------------------------------------------------------
Banks and Credit Companies - 3.2%
BankAmerica Corp. 18,200 $ 1,334,288
Firstar Corp. 24,800 899,000
-----------
$ 2,233,288
- ------------------------------------------------------------------------------
Building - 0.9%
Sherwin Williams Co. 21,800 $ 641,738
- ------------------------------------------------------------------------------
Business Services - 1.3%
First Data Corp. 23,300 $ 875,206
- ------------------------------------------------------------------------------
Chemicals - 3.3%
Air Products & Chemicals, Inc. 10,100 $ 837,669
duPont (E.I.) de Nemours & Co., Inc. 23,500 1,446,718
-----------
$ 2,284,387
- ------------------------------------------------------------------------------
Conglomerates - 3.5%
Allied Signal, Inc. 18,200 $ 773,500
Tyco International Ltd.* 19,900 1,633,044
-----------
$ 2,406,544
- ------------------------------------------------------------------------------
Construction Services - 1.2%
Martin Marietta Materials, Inc. 22,599 $ 813,564
- ------------------------------------------------------------------------------
Consumer Goods and Services - 5.2%
Clorox Co. 9,200 $ 681,950
Colgate-Palmolive Co. 13,400 933,813
Philip Morris Cos., Inc. 46,950 1,951,359
-----------
$ 3,567,122
- ------------------------------------------------------------------------------
Electrical Equipment - 8.0%
Emerson Electric Co. 11,900 $ 685,737
General Electric Co. 62,900 4,281,131
Honeywell, Inc. 8,500 571,094
-----------
$ 5,537,962
- ------------------------------------------------------------------------------
Entertainment - 0.9%
Disney (Walt) Co. 7,800 $ 628,875
- ------------------------------------------------------------------------------
Food and Beverage Products - 13.0%
Anheuser Busch Cos, Inc. 18,000 $ 812,250
Campbell Soup Co. 13,600 666,400
Coca-Cola Co. 34,700 2,114,531
Heinz (H.J.) Co. 14,600 674,338
Hershey Foods Corp. 11,100 627,150
Interstate Bakeries Corp. 22,600 1,549,512
Nabisco Holdings Corp. 16,500 702,281
PepsiCo., Inc. 27,200 1,103,300
Ralston-Ralston Purina Co. 8,200 725,700
-----------
$ 8,975,462
- ------------------------------------------------------------------------------
Forest and Paper Products - 0.5%
Kimberly-Clark Corp. 7,300 $ 357,244
- ------------------------------------------------------------------------------
Medical and Health Products - 10.9%
American Home Products Corp. 9,200 $ 671,600
Bristol-Myers Squibb Co. 35,000 2,896,250
Johnson & Johnson 29,600 1,705,700
Merck & Co., Inc. 22,800 2,278,575
-----------
$ 7,552,125
- ------------------------------------------------------------------------------
Oils - 11.5%
Chevron Corp. 18,300 $ 1,522,331
Exxon Corp. 56,100 3,593,906
Mobil Corp. 23,100 1,709,400
Texaco, Inc. 18,200 1,118,163
-----------
$ 7,943,800
- ------------------------------------------------------------------------------
Printing and Publishing - 1.1%
Gannett Co., Inc. 7,100 $ 766,356
- ------------------------------------------------------------------------------
Railroads - 1.2%
Burlington Northern Santa Fe Railway Co. 8,400 $ 811,650
- ------------------------------------------------------------------------------
Restaurants and Lodging - 2.6%
HFS, Inc.* 13,200 $ 982,575
Promus Hotel Corp.* 18,800 842,475
-----------
$ 1,825,050
- ------------------------------------------------------------------------------
Stores - 2.4%
American Stores Co. 26,400 $ 643,500
Rite Aid Corp. 17,600 975,700
-----------
$ 1,619,200
- ------------------------------------------------------------------------------
Supermarkets - 3.9%
Kroger Co.* 43,400 $ 1,310,138
Safeway, Inc.* 25,300 1,375,687
-----------
$ 2,685,825
- ------------------------------------------------------------------------------
Telecommunications - 1.9%
Corning, Inc. 13,800 $ 652,050
Lucent Technologies, Inc. 8,100 659,138
-----------
$ 1,311,188
- ------------------------------------------------------------------------------
Utilities - Electric - 4.9%
Cinergy Corp. 19,800 $ 662,063
CMS Energy Corp. 24,200 895,400
FPL Group, Inc. 13,600 697,000
Nipsco Industries, Inc. 14,400 606,600
Pinnacle West Capital Corp. 16,200 544,725
-----------
$ 3,405,788
- ------------------------------------------------------------------------------
Utilities - Gas - 2.3%
Columbia Gas System, Inc. 12,300 $ 861,000
Consolidated Natural Gas Co. 12,600 733,163
-----------
$ 1,594,163
- ------------------------------------------------------------------------------
Utilities - Telephone - 6.8%
AT&T Corp. 31,200 $ 1,382,550
BellSouth Corp. 27,600 1,276,500
SBC Communications, Inc. 22,214 1,363,384
Sprint Corp. 13,300 665,000
-----------
$ 4,687,434
- ------------------------------------------------------------------------------
Total Stocks (Identified Cost, $47,917,525) $66,827,750
- ------------------------------------------------------------------------------
Short-Term Obligation - 3.1%
- ------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
- ------------------------------------------------------------------------------
Student Loan Marketing Assn., due 10/01/97,
at Amortized Cost $ 2,100 $ 2,100,000
- ------------------------------------------------------------------------------
Total Investments (Identified Cost, $50,017,525) $68,927,750
Other Assets, Less Liabilities - 0.2% 155,793
- ------------------------------------------------------------------------------
Net Assets - 100.0% $69,083,543
- ------------------------------------------------------------------------------
*Non-income producing security.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1997
- --------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $50,017,525) $68,927,750
Cash 59,498
Receivable for Fund shares sold 3,847
Dividend receivable 97,000
Deferred organization expenses 6,568
Other assets 5,297
-----------
Total assets $69,099,960
-----------
Liabilities:
Payable to affiliates -
Management fee $ 3,664
Distribution and service fee 106
Administrative fee 84
Accrued expenses and other liabilities 12,563
-----------
Total liabilities $ 16,417
-----------
Net assets $69,083,543
===========
Net assets consist of:
Paid-in capital $44,185,517
Unrealized appreciation on investments 18,910,225
Accumulated undistributed net realized gain on investments 5,491,563
Accumulated undistributed net investment income 496,238
-----------
Total $69,083,543
===========
Shares of beneficial interest outstanding 4,205,566
=========
Class I shares:
Net asset value, offering price, and redemption price per share
(net assets of $68,527,006 / 4,171,627 shares of beneficial
interest outstanding) $16.43
======
Class A shares:
Net asset value per share
(net assets of $536,016 / 32,690 shares of beneficial
interest outstanding) $16.40
======
Offering price per share (100/94.25) $17.40
======
Class B shares:
Net asset value and offering price per share
(net assets of $16,676 / 1,015 shares of beneficial interest
outstanding) $16.43
======
Class C shares:
Net asset value and offering price per share
(net assets of $3,845 / 234 shares of beneficial interest
outstanding) $16.43
======
On sales of $50,000 or more, the offering price of Class A shares is reduced. A
contingent deferred sales charge may be imposed on redemptions of Class A, Class
B, and Class C shares. See notes to financial statements
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Operations
- -------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30, 1997
- -------------------------------------------------------------------------------
Net investment income:
Income -
Dividends $ 1,162,826
Interest 79,074
-----------
Total investment income $ 1,241,900
-----------
Expenses -
Management fee $ 385,300
Trustees' compensation 5,000
Shareholder servicing agent fee 3,428
Shareholder servicing agent fee (Class I) 1,006
Distribution and service fee (Class A) 137
Distribution and service fee (Class B) 5
Distribution and service fee (Class C) 1
Distribution and service fee (Class I) 72,264
Administrative fee 5,527
Registration fee 77,342
Auditing fees 29,985
Printing 29,461
Custodian fee 27,787
Legal fees 9,813
Amortization of organizational expenses 4,949
Miscellaneous 4,223
-----------
Total expenses $ 656,228
Reduction of expenses by investment adviser (75,246)
Fees paid indirectly (4,716)
-----------
Net expenses $ 576,266
-----------
Net investment income $ 665,634
-----------
Realized and unrealized gain on investments:
Realized gain (identified cost basis) on investment transactions $ 5,385,099
Change in unrealized appreciation on investments 10,238,878
-----------
Net realized and unrealized gain on investments $15,623,977
-----------
Increase in net assets from operations $16,289,611
===========
See notes to financial statements
<PAGE>
<TABLE>
FINANCIAL STATEMENTS - continued
Statement of Changes in Net Assets
<CAPTION>
- ------------------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30, 1997 1996
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 665,634 $ 650,753
Net realized gain on investments 5,385,099 5,562,093
Net unrealized gain on investments 10,238,878 2,783,940
----------- -----------
Increase in net assets from operations $16,289,611 $ 8,996,786
----------- -----------
Distributions declared to shareholders -
From net investment income (Class I) $ (679,585) $ (535,470)
From net realized gain on investments (Class I) (5,134,200) (957,583)
----------- -----------
Total distributions declared to shareholders $(5,813,785) $(1,493,053)
----------- -----------
Net increase in net assets from Fund share transactions $ 9,289,953 $ 5,972,119
----------- -----------
Total increase in net assets $19,765,779 $13,475,852
Net assets:
At beginning of period 49,317,764 35,841,912
----------- -----------
At end of period (including accumulated undistributed net
investment income of $496,238 and $510,189, respectively) $69,083,543 $49,317,764
=========== ===========
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS - continued
Financial Highlights
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED SEPTEMBER 30, PERIOD ENDED
---------------------------------------- SEPTEMBER 30,
1997 1996 1995 1994*
- ------------------------------------------------------------------------------------------------------------------------
CLASS I
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $13.85 $11.85 $ 9.64 $10.00
------ ------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.17 $ 0.18 $ 0.17 $ 0.12
Net realized and unrealized gain (loss) on
investments 4.01 2.25 2.14 (0.48)
------ ------ ------ ------
Total from investment operations $ 4.18 $ 2.43 $ 2.31 $(0.36)
------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income
$(0.19) $(0.15) $(0.10) $ --
From net realized gain on investments (1.41) (0.28) -- --
------ ------ ------ ------
Total distributions declared to shareholders $(1.60) $(0.43) $(0.10) $ --
------ ------ ------ ------
Net asset value - end of period $16.43 $13.85 $11.85 $ 9.64
====== ====== ====== ======
Total return 32.51% 20.96% 24.21% (3.60)%++
Ratios (to average net assets)/Supplemental data(S):
Expenses 0.97% 1.00% 1.00% 1.00%+
Net investment income 1.12% 1.36% 1.58% 1.55%+
Portfolio turnover 49% 81% 125% 48%
Average commission rate###
$0.0589 $0.0562 $ -- $ --
Net assets at end of period (000 omitted) $68,527 $49,318 $35,842 $22,184
*For the period from the commencement of the Fund's investment operations, January 14, 1994, through September 30, 1994.
+Annualized.
++Not annualized.
#Per share data are based on average shares outstanding.
##For fiscal years ending after September 1, 1995, the Fund's expenses are calculated without reduction for fees paid indirectly.
###Average commission rate is calculated for funds with fiscal years beginning on or after September 1, 1995.
(S)Effective February 1, 1997, the investment adviser voluntarily agreed to maintain the other expenses of the Fund,
which include all Fund expenses except for the management fee and distribution and service fees, at not more than
0.20% of the Fund's average daily net assets. Prior to February 1, 1997, the investment adviser voluntarily agreed to
maintain the expenses of the Fund at not more than 1.00% of the Fund's average daily net assets. To the extent actual
expenses were over this limitation, the net investment income per share and the ratios would have been:
Net investment income $ 0.15 $ 0.18 $ 0.16 $ 0.07
Ratios (to average net assets):
Expenses## 1.11% 1.03% 1.12% 1.64%+
Net investment income 0.98% 1.33% 1.49% 0.91%+
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS - continued
Financial Highlights - continued
- -------------------------------------------------------------------------------------------
<CAPTION>
PERIOD ENDED
SEPTEMBER 30, 1997*
- -------------------------------------------------------------------------------------------
CLASS A
- -------------------------------------------------------------------------------------------
<S> <C>
Per share data (for a share outstanding throughout the period):
Net asset value - beginning of period $16.13
------
Income from investment operations# -
Net investment income(S) $ 0.03
Net realized and unrealized gain on investments 0.24
------
Total from investment operations $ 0.27
------
Net asset value - end of period $16.40
======
Total return(+) 1.67%++ Ratios (to average net assets)/Supplemental data(S):
Expenses 1.20%+
Net investment income 0.86%+
Portfolio turnover 49%
Average commission rate $0.0589
Net assets at end of period (000 omitted) $ 536
*For the period from the commencement of the Fund's offering of Class
A shares, August 8, 1997, through September 30, 1997.
+Annualized.
++Not annualized.
(+)Total return for Class A shares does not include the applicable
sales charge. If the charge had been included, the result would have
been lower.
#Per share data are based on average shares outstanding.
##The Fund's expenses are calculated without reduction for fees paid indirectly.
(S)The investment adviser voluntarily agreed to maintain the other expenses of the Fund,
which include all Fund expenses except for the management fee and distribution and service
fees, at not more than 0.20% of the Fund's average daily net assets. To the extent actual
expenses were over the limitation, the net investment income per share and the ratios
would have been:
Net investment income $ 0.03
Ratios (to average net assets):
Expenses## 1.34%+
Net investment income 0.72%+
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS - continued
Financial Highlights - continued
- -------------------------------------------------------------------------------------------
<CAPTION>
PERIOD ENDED
SEPTEMBER 30, 1997*
- -------------------------------------------------------------------------------------------
CLASS B
- -------------------------------------------------------------------------------------------
<S> <C>
Per share data (for a share outstanding throughout the period):
Net asset value - beginning of period $16.24
------
Income from investment operations# -
Net investment loss(S) $(0.01)
Net realized and unrealized gain on investments 0.20
------
Total from investment operations $ 0.19
------
Net asset value - end of period $16.43
======
Total return 1.17%++
Ratios (to average net assets)/Supplemental data(S):
Expenses 1.85%+
Net investment loss (0.37)%+
Portfolio turnover 49%
Average commission rate $0.0589
Net assets at end of period (000 omitted) $ 17
*For the period from the commencement of the Fund's offering of Class
B shares, August 11, 1997, through September 30, 1997.
+Annualized.
++Not annualized.
#Per share data are based on average shares outstanding.
##The Fund's expenses are calculated without reduction for fees paid indirectly.
(S)The investment adviser voluntarily agreed to maintain the other expenses of the Fund,
which include all Fund expenses except for the management fee and
distribution and service fees, at not more than 0.20% of the Fund's
average daily net assets. To the extent actual expenses were over
this limitation, the net investment loss per share and the ratios
would have been:
Net investment loss $(0.01) Ratios (to average net assets):
Expenses## 1.99%+
Net investment loss (0.52)%+
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS - continued
Financial Highlights - continued
- -------------------------------------------------------------------------------------------
<CAPTION>
PERIOD ENDED
SEPTEMBER 30, 1997*
- -------------------------------------------------------------------------------------------
CLASS C
- -------------------------------------------------------------------------------------------
<S> <C>
Per share data (for a share outstanding throughout the period):
Net asset value - beginning of period $16.24
------
Income from investment operations# -
Net investment income(S) $ 0.01
Net realized and unrealized gain on investments 0.18
------
Total from investment operations $ 0.19
------
Net asset value - end of period $16.43
======
Total return 1.17%++
Ratios (to average net assets)/Supplemental data(S):
Expenses 1.85%+
Net investment income 0.63%+
Portfolio turnover 49%
Average commission rate $0.0589
Net assets at end of period (000 omitted) $ 4
*For the period from the commencement of the Fund's offering of Class
C shares, August 11, 1997, through September 30, 1997.
+Annualized.
++Not annualized.
#Per share data are based on average shares outstanding.
##The Fund's expenses are calculated without reduction for fees paid indirectly.
(S)The investment adviser voluntarily agreed to maintain the other expenses of the Fund,
which include all Fund expenses except for the management fee and
distribution and service fees, at not more than 0.20% of the Fund's
average daily net assets. To the extent actual expenses were over
this limitation, the net investment income per share and the ratios
would have been:
Net investment income $ 0.01
Ratios (to average net assets):
Expenses## 1.99%+
Net investment income 0.49%+
See notes to financial statements
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(1) Business and Organization
MFS Union Standard Equity Fund (the Fund) is a diversified series of MFS Union
Standard 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.
(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 reported at market value using last sale
prices. Unlisted equity securities or listed equity securities for which last
sale prices are not available are reported at market value using 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 and are being amortized on a straight-line
basis over a five-year period beginning on the date of commencement of Fund
operations.
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 is amortized or accreted for financial statement and tax
reporting purposes as required by federal income tax regulations. Dividends
received in cash are recorded on the ex-dividend date. Dividend payments
received in additional securities are recorded on the ex-dividend date in an
amount equal to the value of the security on such date.
Fees Paid Indirectly - The Fund's custody fee is calculated as a percentage of
the Fund's average daily net assets. The fee is reduced according to an
arrangement which 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 net 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. During the year ended September 30, 1997, there were no differences
between book and tax accounting.
Multiple Classes of Shares of Beneficial Interest - The Fund offers multiple
classes of shares. The classes of shares differ in their respective distribution
and service fees. All shareholders bear the common expenses of the Fund pro rata
based on 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 daily and paid monthly at an annual rate of 0.65% of
average daily net assets. The Fund has a temporary expense reimbursement
agreement whereby MFS has voluntarily agreed to pay all of the Fund's operating
expenses, exclusive of management, distribution, and service fees. The Fund in
turn will pay MFS an expense reimbursement fee not greater than 0.20% 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. At September 30, 1997, the aggregate unreimbursed expenses owed to
MFS by the Fund amounted to $172,601.
Administrator - Effective March 1, 1997, 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, provided that the administrative fee is not assessed
on Fund assets that exceed $3 billion:
First $1 billion 0.0150%
Next $1 billion 0.0125%
Next $1 billion 0.0100%
In excess of $3 billion 0.0000%
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).
Distributor - MFD, a wholly owned subsidiary of MFS, as distributor, received $0
for the year ended September 30, 1997, as its portion of the sales charge on
sales of Class A shares of the Fund.
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 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. MFD retains the service fee for accounts not attributable
to a securities dealer which amounted to $87 for the year ended September 30,
1997. Fees incurred under the distribution plan during the year ended September
30, 1997, were 0.35% of average daily net assets attributable to Class A shares
on an annualized basis.
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 additional 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 $5 and $1 for Class B and Class C shares, respectively, for
the year ended September 30, 1997. Fees incurred under the distribution plan
during the year ended September 30, 1997, were 1.00% and 1.00% of average daily
net assets attributable to Class B and Class C shares on an annualized basis,
respectively.
Prior to August 1, 1997, the Fund's distribution plan provided that the Fund
would 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 Class I shares. Prior to August 1, 1997, the fee was 0.15%.
Effective August 1, 1997, Class I shares do not pay a distribution and service
fee.
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
0.13%. Prior to August 1, 1997, the fee was calculated based on the number of
shareholder accounts in the Fund.
(4) Portfolio Securities
Purchases and sales of investments, other than U.S. government securities,
purchased option transactions, and short-term obligations, aggregated
$31,264,771 and $28,163,636 respectively.
The cost and unrealized appreciation or depreciation in value of the investments
owned by the Fund, as computed on a federal income tax basis, are as follows:
Aggregate cost $50,022,393
===========
Gross unrealized appreciation $18,976,595
Gross unrealized depreciation (71,238)
-----------
Net unrealized appreciation $18,905,357
===========
(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 were as follows:
<TABLE>
Class I Shares
<CAPTION>
YEAR ENDED SEPTEMBER 30, 1997 YEAR ENDED SEPTEMBER 30, 1996
----------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 271,272 $4,159,884 1,592,667 $20,580,394
Shares issued to shareholders in
reinvestment of distributions 420,378 5,717,146 116,989 1,449,495
Shares reacquired (79,961) (1,132,439) (1,173,568) (16,057,770)
------- ---------- ---------- -----------
Net increase 611,689 $8,744,591 536,088 $ 5,972,119
======= ========== ========== ===========
Class A Shares
PERIOD ENDED SEPTEMBER 30, 1997*
--------------------------------
SHARES AMOUNT
- --------------------------------------------------------------------
Shares sold 32,873 $527,833
Shares reacquired (183) (2,893)
------ --------
Net increase 32,690 $524,940
====== ========
Class B Shares
PERIOD ENDED SEPTEMBER 30, 1997**
---------------------------------
SHARES AMOUNT
- --------------------------------------------------------------------
Shares sold 1,015 $16,553
Class C Shares
PERIOD ENDED SEPTEMBER 30, 1997**
---------------------------------
SHARES AMOUNT
- --------------------------------------------------------------------
Shares sold 234 $3,869
*For the period from the commencement of the Fund's offering of Class A shares,
August 8, 1997, through September 30, 1997.
**For the period from the commencement of the Fund's offering of Class B and
Class C shares, August 11, 1997, through September 30, 1997.
</TABLE>
(6) Line of Credit
The Fund and other affiliated funds participate in a $400 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
year ended September 30, 1997, was $587.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Trustees of MFS Union Standard Trust and Shareholders of MFS Union
Standard Equity Fund:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of MFS Union Standard Equity Fund (one of the
series constituting MFS Union Standard Trust) as of September 30, 1997, the
related statement of operations for the year the then ended, the statement of
changes in net assets for the years ended September 30, 1997 and 1996, and the
financial highlights for each of the years in the four-year period ended
September 30, 1997. 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
September 30, 1997 by correspondence with 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 Union Standard
Equity Fund at September 30, 1997, 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 31, 1997
--------------------------------------------
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>
MFS(R) UNION STANDARD(R) EQUITY FUND
TRUSTEES INVESTOR INFORMATION
A. Keith Brodkin* For MFS stock and bond market
Chairman and President outlooks, call toll free:
1-800-637-4458 anytime from a
Nelson J. Darling, Jr. touch-tone telephone.
Trustee, Eastern Enterprises
For information on MFS mutual funds,
William R. Gutow call your financial adviser or, for an
Private Investor; information kit, call toll free:
Senior Vice President, Capitol 1-800-637-2929 any business day from 9
Entertainment a.m. to 5 p.m. Eastern time (or leave
a message anytime).
INVESTMENT ADVISER
Massachusetts Financial Services INVESTOR SERVICE
Company MFS Service Center, Inc.
500 Boylston Street P.O. Box 2281
Boston, MA 02116-3741 Boston, MA 02107-9906
DISTRIBUTOR For general information, call toll free
MFS Fund Distributors, Inc. 1-800-225-2606 any business day from
500 Boylston Street 8 a.m. to 8 p.m. Eastern time.
Boston, MA 02116-3741
For service to speech- or
PORTFOLIO MANAGER hearing-impaired, call toll free:
Mitchell D. Dynan* 1-800-637-6576 any business day from 9
a.m. to 5 p.m. Eastern time. (To use
TREASURER this service, your phone must be
W. Thomas London* equipped with a Telecommunications
Device for the Deaf.)
ASSISTANT TREASURERS
Mark E. Bradley* For share prices, account balances,
Ellen Moynihan* and exchanges, call toll free:
James O. Yost* 1-800-MFS-TALK (1-800-637-8255)
anytime from a touch-tone telephone.
SECRETARY
Stephen E. Cavan* WORLD WIDE WEB
www.mfs.com
ASSISTANT SECRETARY
James R. Bordewick, Jr.*
[DALBAR For the fourth year in a row,
CUSTODIAN LOGO] MFS earned a #1 ranking in the
State Street Bank and Trust Company DALBAR, Inc. Broker/Dealer Survey,
Main Office Operations Service Quality
AUDITORS Category. The firm achieved a 3.42
Deloitte & Touche LLP overall score on a scale of 1 to 4 in
the 1997 survey. A total of 111 firms
responded, offering input on the
quality of service they received from
29 mutual fund companies nationwide.
The survey contained questions about
service quality in 11 categories,
including "knowledge of operations
contact," "keeping you informed,"
"ease of doing business" with the firm.
*Affiliated with the Investment Adviser
<PAGE>
MFS(R) UNION STANDARD(R) --------------
EQUITY FUND Bulk Rate
U.S. Postage
500 Boylston Street Paid
Boston, MA 02116-3741 MFS
--------------
[LOGO] M F S(SM)
INVESTMENT MANAGEMENT
We invented the mutual fund(SM)
[DALBAR LOGO]
TOP-RATED SERVICE
(C)1997 MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116-3741
UNE-2 11/97 5M 84/284/384/884
