MFS(R) Variable Insurance Trust(SM)
MFS(R) Total Return Series
Semiannual Report
June 30, 1995
<PAGE>
Dear Contract Owner:
A general slowdown in most major economies has resulted in favorable performance
for both stock and bond markets around the world during the past six months.
Yields on many fixed-income securities declined over the period, resulting in
favorable price performance for these investments. At the same time, the decline
in interest rates and strong corporate earnings reports caused many stock prices
to rise over the period, producing strong returns. For the six months ended June
30, 1995, the market, as measured by the Standard & Poor's 500 Composite Index
(the S&P 500), a popular, unmanaged index of common stock performance, returned
+20.19%.
U.S. Outlook
In response to increasing evidence of economic weakness during the second
quarter, the Federal Reserve Board has reversed policy by lowering the federal
funds rate 0.25%. This marks the first time in three years that this rate has
been lowered, and brings the Federal Reserve's 18-month monetary-tightening
initiative to at least a temporary conclusion. Although inflation at the
consumer level has been trending higher this year at a 3 1/2% annualized rate,
recent evidence suggests that these pressures are beginning to moderate,
allowing the Federal Reserve to shift its policy focus toward sustaining
economic growth. Despite the economy's apparent lackluster performance in the
second quarter, we do not anticipate that the economy will lapse into recession.
Rather, we believe it will continue to expand at a more moderate, sustainable
pace, supported by lower prevailing interest rates and a healthy export sector.
Global Outlook
Economic recoveries in both Europe and Japan have been inhibited by the strength
of the yen and deutsche mark against the U.S. dollar. These export-led
expansions are struggling to compete in a global marketplace in which their
products are less competitively priced. Consumer sectors in these economies have
been impaired by relatively high unemployment rates and continued low growth in
domestic money supplies. Recently, the Bank of Japan lowered interest rates in
an effort to stimulate domestic demand as well as to arrest the strength of the
yen against the dollar. Germany's Bundesbank lowered rates in March, yet it
appears that controlled inflation and sluggish domestic demand should leave it
with further room to ease. Our view is that the global expansion remains intact,
yet at a sluggish pace, particularly in Japan. Inflation in overseas economies
remains in a downward trend, providing fixed-income investors with opportunities
for relatively attractive real (adjusted for inflation) rates of interest,
possibly accompanied by moderate price appreciation. While we view emerging
markets with caution, selected opportunities exist in both fixed-income and
equity markets, particularly at the more attractive levels resulting from
selloffs in many of those markets last year. Recently, the U.S. dollar has
stabilized in world currency markets. Although we believe that the dollar
continues to represent a sound store of value over the long term, in the near
term its relative strength will be restrained by the persistently large U.S.
current-account deficit.
Bond Markets
As the economy's ability to create jobs has diminished along with its use of
available productive capacity, fixed-income markets have become increasingly
convinced that inflationary pressures will remain subdued. As a result,
long-term U.S. Treasury bond yields have declined to 6.50% from their 7.85%
level at the beginning of the year. As bond yields continued to decline, it
became apparent that the markets had been anticipating an easing of the Federal
Reserve's policy. Now that the easing has begun, we believe that prevailing
rates may consolidate near present levels in the near term. Longer term, we feel
that continuing moderate growth should result in interest rates maintaining
their present levels or perhaps declining moderately over the balance of this
year.
<PAGE>
The general slowdown of world economies has resulted in solid performance in
world bond markets during the past six months. European markets continue to be
buoyed by slow growth, low and controlled inflation and recent interest rate
cuts from key central banks. The Japanese market also has been strong as anemic
economic growth and consumer price deflation have helped interest rates stage a
major decline. We remain positive on overseas markets because we anticipate
continued slow growth and minimal inflationary pressures.
Stock Market
The U.S. stock market has maintained its upward momentum as stock prices have
responded to the cessation of the Federal Reserve's monetary-tightening
initiative and to the belief that gains in corporate earnings may remain
substantial. Although we expect growth to remain moderate, our outlook for
corporate earnings growth remains favorable. We have been de-emphasizing many
cyclical areas such as autos and basic materials because of their less
attractive earnings outlook and have been emphasizing growth areas such as
technology, health care, consumer and household products, and financial
services.
Comments from the head of the portfolio management team of this Series are
presented below. We appreciate your support and welcome any questions or
comments you may have.
Respectfully,
/s/ A. Keith Brodkin /s/ David Calabro
A. Keith Brodkin David Calabro
Chairman and President Head of Portfolio Management Team
July 18, 1995
MFS(R) Total Return Series
As a result of the slowing U.S. economy and decelerating earnings, the equity
market has continued to produce strong returns. The 20% rise in the S&P 500
since December 31, 1994 has pushed its yield to an historical low of 2.5%. The
slowing economy has also served to keep inflation in check. The lack of
inflationary pressure has benefited the bond market, which also has produced
strong year-to-date results.
While we continue to see excellent opportunities in both the equity and bond
markets, our near-term enthusiasm is tempered by relatively high valuations. As
a result, our common stock weighting has recently been in the 45% to 50% range.
Within this portion of the portfolio, we are finding values in both the energy
and financial services sectors. We believe the retail sector and telephone
utilities are also more attractively priced. This below-normal weighting in
stocks is supported by a 7% weighting in convertibles. Government and corporate
bonds have been making up 32% of the portfolio, while cash has ranged from 10%
to 13% of total assets.
Looking forward, we believe that the Series is conservatively positioned for the
balance of the year. Should the markets correct, we would use that opportunity
to purchase stocks in order to increase the equity weighting to the more normal
60% range.
<PAGE>
Portfolio Manager Profile
David Calabro, Vice President; Geoffrey L. Kurinsky, Senior Vice President;
Judith N. Lamb, Vice President; Lisa B. Nurme, Vice President; and Maura A.
Shaughnessy, Vice President, are the Series portfolio managers. Mr. Calabro is
the head of this portfolio management team and a manager of the common stock
portion of the Series portfolio. Mr. Calabro has been employed by MFS since
1992. Mr. Kurinsky, the manager of the Series fixed-income securities, has been
employed by MFS since 1987. Ms. Lamb, the manager of the Series convertible
securities, has been employed by MFS since 1992. Ms. Nurme, a manager of the
common stock portion of the Series portfolio, has been employed by MFS since
1987. Ms. Shaughnessy, also a manager of the common stock portion of the Series
portfolio, has been employed by MFS since 1991.
Objective and Policies
MFS Total Return Series seeks to provide above-average current income (compared
to a portfolio entirely invested in equity securities) consistent with prudent
employment of capital. As a secondary objective, the Series seeks opportunities
for growth of capital and income because many securities that offer a
better-than-average yield may possess growth potential.
MFS Series' investment policies are to vary its investments in debt and equity
securities in accordance with its interpretation of economic and money market
conditions, fiscal and monetary policies and underlying security values.
Generally, at least 40% of the Series' assets is invested in equity securities.
The Series' debt securities may include non-investment-grade bonds. The Series
may also invest in foreign securities.
Performance Summary
The aggregate total return from January 3, 1995+ to June 30, 1995 was +13.30%.
All Series results represent past performance and are not necessarily an
indication of future results. Investment return and principal value will
fluctuate, and units, when redeemed, may be worth more or less than their
original cost. All Series results reflect the applicable expense subsidy which
is explained in the Notes to Financial Statements. Had the subsidy not been in
effect, the results would have been less favorable. The subsidy may be rescinded
by MFS at any time. All Series results do not reflect expenses that would be
imposed by insurance company separate accounts.
+ Commencement of offering of shares.
<PAGE>
MFS Variable Insurance Trust --
MFS Total Return Series
Portfolio of Investments -- June 30, 1995
Non-Convertible Bonds -- 31.8%
================================================================================
Principal Amount
Issuer (000 Omitted) Value
- --------------------------------------------------------------------------------
U.S. Treasury Obligations -- 31.8%
U.S. Treasury Notes, 6.375s, 1999 $ 50 $ 50,649
U.S. Treasury Notes, 7.125s, 1999 300 312,375
- --------------------------------------------------------------------------------
Total Non-Convertible Bonds (Identified Cost, $343,757) $ 363,024
- --------------------------------------------------------------------------------
Convertible Bonds -- 3.7%
- --------------------------------------------------------------------------------
Time Warner, Inc., 8.75s, 2015 (Entertainment) $ 20 $ 20,700
Valhi, Inc., 0s, 2007 (Chemicals) 63 21,892
- --------------------------------------------------------------------------------
Total Convertible Bonds (Identified Cost, $40,414) $ 42,592
- --------------------------------------------------------------------------------
Common Stocks -- 49.8%
- --------------------------------------------------------------------------------
Shares
- --------------------------------------------------------------------------------
Automotive -- 2.0%
General Motors Corp. 500 $ 23,437
- --------------------------------------------------------------------------------
Banks and Credit Companies -- 4.4%
BankAmerica Corp. 400 $ 21,050
Citicorp 500 28,938
-----------
$ 49,988
- --------------------------------------------------------------------------------
Chemicals -- 2.7%
Grace (W.R.) & Co. 500 $ 30,687
- --------------------------------------------------------------------------------
Consumer Goods and Services -- 2.6%
Philip Morris Cos., Inc. 400 $ 29,750
- --------------------------------------------------------------------------------
Electrical Equipment -- 4.2%
General Electric Co. 400 $ 22,550
Honeywell, Inc. 600 25,875
-----------
$ 48,425
- --------------------------------------------------------------------------------
Food and Beverage Products -- 3.5%
Anheuser-Busch Cos. 200 $ 11,375
General Mills, Inc. 300 15,412
PepsiCo, Inc. 300 13,688
-----------
$ 40,475
- --------------------------------------------------------------------------------
Forest and Paper Products -- 2.1%
Weyerhaeuser Co. 500 $ 23,563
- --------------------------------------------------------------------------------
Insurance -- 2.2%
Aetna Life & Casualty Co. 400 $ 25,150
- --------------------------------------------------------------------------------
Medical and Health Products -- 2.0%
American Home Products Corp. 300 $ 23,212
- --------------------------------------------------------------------------------
Oils -- 5.7%
Amoco Corp. 400 $ 26,650
Exxon Corp. 400 28,250
USX-Marathon Group 500 9,875
-----------
$ 64,775
- --------------------------------------------------------------------------------
Photographic Products -- 2.7%
Eastman Kodak Co. 500 $ 30,313
- --------------------------------------------------------------------------------
Real Estate Investment Trusts -- 1.7%
Kimco Realty Corp. 500 $ 19,000
- --------------------------------------------------------------------------------
<PAGE>
Common Stocks - continued
- --------------------------------------------------------------------------------
Issuer Shares Value
- --------------------------------------------------------------------------------
Restaurants -- 0.3%
Darden Restaurants, Inc.* 300 $ 3,262
- --------------------------------------------------------------------------------
Special Products and Services -- 1.0%
Minnesota Mining & Manufacturing Co. 200 $ 11,450
- --------------------------------------------------------------------------------
Stores -- 2.1%
Sears, Roebuck & Co. 400 $ 23,950
- --------------------------------------------------------------------------------
Utilities -- Electric -- 1.7%
FPL Group, Inc. 500 $ 19,313
- --------------------------------------------------------------------------------
Utilities -- Gas -- 4.6%
Pacific Enterprises 1,000 $ 24,500
Williams Cos., Inc. 800 27,900
-----------
$ 52,400
- --------------------------------------------------------------------------------
Utilities -- Telephone -- 4.1%
American Telephone & Telegraph Co. 500 $ 26,562
GTE Corp. 600 20,475
-----------
$ 47,037
- --------------------------------------------------------------------------------
Foreign -- 0.2%
United Kingdom
National Power PLC (Utilities -- Electric) 400 $ 1,099
PowerGen PLC (Utilities -- Electric) 400 1,220
-----------
$ 2,319
- --------------------------------------------------------------------------------
Total Common Stocks (Identified Cost, $482,985) $ 568,506
- --------------------------------------------------------------------------------
Convertible Preferred Stock -- 2.1%
- --------------------------------------------------------------------------------
Allstate Corp., 6.7647% (Insurance)
(Identified Cost, $20,400) 600 $ 24,451
- --------------------------------------------------------------------------------
Total Investments (Identified Cost, $887,556) $ 998,573
Other Assets, Less Liabilities -- 12.6% 144,182
- --------------------------------------------------------------------------------
Net Assets -- 100.0% $ 1,142,755
- --------------------------------------------------------------------------------
* Non-income producing security.
See notes to financial statements
<PAGE>
MFS Variable Insurance Trust --
MFS Total Return Series
Statement of Assets and Liabilities
================================================================================
June 30, 1995
- --------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $887,556) $ 998,573
Cash 117,446
Receivable for investments sold 11,609
Interest and dividends receivable 9,375
Receivable from investment adviser 7,561
Deferred organization expenses 5,260
----------
Total assets $1,149,824
----------
Liabilities:
Payable to affiliates for management fee $ 23
Accrued expenses and other liabilities 7,046
----------
Total liabilities $ 7,069
----------
Net assets $1,142,755
==========
Net assets consist of:
Paid-in capital $1,008,600
Unrealized appreciation on investments and translation of assets
and liabilities in foreign currencies 111,017
Accumulated undistributed net realized gain on investments and
foreign currency transactions 938
Accumulated undistributed net investment income 22,200
----------
Total $1,142,755
==========
Shares of beneficial interest outstanding 100,860
==========
Net asset value, offering price and redemption price per share
(net assets/shares of beneficial interest outstanding) $ 11.33
==========
See notes to financial statements
<PAGE>
MFS Variable Insurance Trust --
MFS Total Return Series
<TABLE>
<CAPTION>
Statement of Operations
=============================================================================================
Period Ended June 30, 1995*
- ---------------------------------------------------------------------------------------------
<S> <C>
Net investment income:
Income --
Interest $ 17,666
Dividends 9,656
Foreign taxes withheld (30)
---------
Total investment income $ 27,292
---------
Expenses --
Management fee $ 3,819
Trustees' compensation` 1,016
Shareholder servicing agent fee 177
Auditing fees 5,982
Legal fees 819
Amortization of organization expenses 725
Printing 532
Custodian fee 324
Miscellaneous 524
---------
Total expenses $ 13,918
Preliminary reduction of expenses by investment adviser (8,826)
---------
Net expenses $ 5,092
---------
Net investment income $ 22,200
---------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) --
Investment transactions $ 953
Foreign currency transactions (15)
---------
Net realized gain on investments and foreign currency transactions $ 938
---------
Change in unrealized appreciation on investments $ 111,017
---------
Net unrealized gain on investments $ 111,017
---------
Net realized and unrealized gain on investments and foreign currency $ 111,955
---------
Increase in net assets from operations $ 134,155
=========
* For the period from the commencement of investment operations, January 3, 1995
to June 30, 1995.
See notes to financial statements
</TABLE>
<PAGE>
MFS Variable Insurance Trust --
MFS Total Return Series
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
============================================================================================
Period Ended June 30, 1995 *
- --------------------------------------------------------------------------------------------
<S> <C>
Increase in net assets:
From operations --
Net investment income $ 22,200
Net realized gain on investments and foreign currency transactions 938
Net unrealized gain on investments 111,017
----------
Increase in net assets from operations $ 134,155
----------
Series share (principal) transactions --
Net proceeds from sale of shares $1,000,000
----------
Increase in net assets from Series share transactions $1,000,000
----------
Total increase in net assets $1,134,155
Net assets:
At beginning of period 8,600
----------
At end of period (including accumulated undistributed
net investment income of $22,200) $1,142,755
==========
* For the period from the commencement of investment operations, January 3, 1995
to June 30, 1995.
See notes to financial statements
</TABLE>
<PAGE>
MFS Variable Insurance Trust --
MFS Total Return Series
Financial Highlights
================================================================================
Period Ended June 30, 1995*
- --------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
Net asset value -- beginning of period $ 10.00
---------
Income from investment operations# --
Net investment income## $ 0.22
Net realized and unrealized gain on investments 1.11
---------
Total from investment operations $ 1.33
---------
Net asset value-- end of period $ 11.33
=========
Total return 13.30%++
Ratios (to average net assets) / Supplemental datass.:
Expenses 1.00%+
Net investment income 4.32%+
Portfolio turnover 1%
Net assets at end of period (000 omitted) $ 1,143
*For the period from the commencement of investment operations,
January 3, 1995 to June 30, 1995.
+Annualized.
++Not annualized.
#Per share data is based on average shares outstanding.
##The adviser voluntarily agreed to maintain the expenses of the Series at
not more than 1.00% of average daily net assets. To the actual expenses were
over these limitations, the net investment income per share and the ratios
would extent have been:
Net investment income $ 0.13
Ratios (to average net assets):
Expenses 2.71%+
Net investment income 2.60%+
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(1) Business and Organization
MFS Total Return Series (the Series) is a non-diversified series of MFS Variable
Insurance Trust (the Trust) which is comprised of the following twelve series:
Bond Series, Emerging Growth Series, Growth Series, Growth With Income Series,
High Income Series, Limited Maturity Series, Money Market Series, Research
Series, Strategic Fixed Income Series, Total Return Series, Utilities Series,
and World Governments Series. 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 shareholders of each Series of the Trust are separate accounts of insurance
companies which offer variable annuity and/or life insurance products. The
Series was seeded on or about February 1, 1994, but remained inactive until the
current period. The commencement of investment operations took place on January
3, 1995. As of June 30, 1995, there were four shareholders, who own all of the
outstanding shares of the Series.
(2) Significant Accounting Policies
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. Debt securities (other than
short-term obligations which mature in 60 days or less), including listed
issues, are valued on the basis of valuations furnished by dealers or by a
pricing service with consideration to factors such as institutional-size trading
in similar groups of securities, yield, quality, coupon rate, maturity, type of
issue, trading characteristics and other market data, without exclusive reliance
upon exchange or over-the-counter 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.
Repurchase Agreements -- The Series may enter into repurchase agreements with
institutions that the Series' investment adviser has determined are
creditworthy. Each repurchase agreement is recorded at cost. The Series requires
that the securities purchased in a repurchase transaction be transferred to the
custodian in a manner sufficient to enable the Series to obtain those securities
in the event of a default under the repurchase agreement. The Series monitors,
on a daily basis, the value of the securities transferred to ensure that the
value, including accrued interest, of the securities under each repurchase
agreement is greater than amounts owed to the Series under each such repurchase
agreement.
Foreign Currency Translation -- Investment valuations, other assets, and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. Purchases and
sales of foreign investments, income and expenses are converted into U.S.
dollars based upon currency exchange rates prevailing on the respective dates of
such transactions. Gains and losses attributable to foreign currency exchange
rates on sales of securities are recorded for financial statement purposes as
net realized gains and losses on investments. Gains and losses attributable to
foreign exchange rate movements on income and expenses are recorded for
financial statement purposes as foreign currency transaction gains and losses.
That portion of both realized and unrealized gains and losses on investments
that results from fluctuations in foreign currency exchange rates is not
separately disclosed.
Deferred Organization Expenses -- Costs incurred by the Series 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 operations of the Series.
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
<PAGE>
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.
Tax Matters and Distributions -- The Series' 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 Series 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. Foreign taxes have been
provided for on interest and dividend income earned on foreign investments in
accordance with the applicable country's tax rates and to the extent
unrecoverable are recorded as a reduction of investment income. Distributions to
shareholders are recorded on the ex-dividend date.
The Series 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 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 Series 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 effective annual rate of
0.75% of average daily net assets. Under a temporary expense reimbursement
agreement with MFS, MFS has voluntarily agreed to limit the operating expenses
of the Series at levels which increase over time. Currently MFS has agreed to
limit the Series' expenses at an effective annual rate of 1.00% of average daily
net assets. MFS will pay all Series expenses in excess of the current limit
subject to reimbursement by the Series at a later date. To the extent that
actual Series expenses do not reach the limit, the Series will reimburse MFS for
prior expenses paid by MFS on behalf of the Series such that the Series' expense
ratio does not exceed 1.00% of average daily net assets. At June 30, 1995, the
aggregate unreimbursed expenses owed to MFS by the Series amounted to $8,826.
The Series pays no compensation directly to its Trustees who are officers of the
investment adviser, or to officers of the Series, all of whom receive
remuneration for their services to the Series from MFS. Certain of the officers
and Trustees of the Series are officers or directors of MFS and MFS Service
Center, Inc. (MFSC).
Shareholder Servicing Agent -- MFSC, a wholly owned subsidiary of MFS, earns a
fee for its services as shareholder servicing agent. The fee is calculated as a
percentage of the average daily net assets at an effective annual rate of up to
0.10%.
(4) Portfolio Securities
Purchases and sales of investments, other than purchased option transactions and
short-term obligations, were as follows:
Purchases Sales
- --------------------------------------------------------------------------------
U.S. government securities $ 343,195 $ -
=========== =========
Investments (non-U.S. government securities) $ 556,854 $ 10,656
=========== =========
<PAGE>
The cost and unrealized appreciation or depreciation in value of the investments
owned by the Series, as computed on a federal income tax basis, are as follows:
Aggregate cost $ 887,556
===========
Gross unrealized appreciation $ 111,119
Gross unrealized depreciation (102)
-----------
Net unrealized appreciation $ 111,017
===========
(5) Shares of Beneficial Interest
The Series' Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without par value).
Transactions in Series shares were as follows:
Period ended June 30, 1995* Shares
- --------------------------------------------------------------------------------
Shares sold 100,000
--------
Net increase 100,000
========
* For the period from the commencement of investment operations, January 3, 1995
to June 30, 1995.
(6) Line of Credit
The Series entered into an agreement which enables it to participate with other
funds managed by MFS in an unsecured line of credit with a bank which permits
borrowings up to $350 million, collectively. Borrowings may be made to
temporarily finance the repurchase of Series shares. Interest is charged to each
funds, 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.
<PAGE>
Independent Auditors' Report
To the Trustees of MFS Variable Insurance Trust and Shareholders of MFS Total
Return Series:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of MFS Total Return Series (the Series) (one of
the Series constituting MFS Variable Insurance Trust) as of June 30, 1995, the
related statements of operations, changes in net assets, and financial
highlights for the period from January 3, 1995 (the commencement of investment
operations) to June 30, 1995. These financial statements and financial
highlights are the responsibility of the Series' management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audit.
We conducted our audit 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 June 30, 1995 by
correspondence with the custodian and brokers; where replies were not received
from brokers, we performed other auditing procedures. 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 audit provides 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 Total Return
Series at June 30, 1995, the results of its operations, the changes in its net
assets, and its financial highlights for the period from January 3, 1995 (the
commencement of investment operations) to June 30, 1995 in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
August 4, 1995
--------------------------------------------------
This report is prepared for the general information of shareholders. It is
authorized for distribution to prospective investors only when preceded or
accompanied by a current prospectus.
