<PAGE>
[logo] M F S(SM) ANNUAL REPORT
INVESTMENT MANAGEMENT FOR YEAR ENDED
DECEMBER 31, 1996
MFS(R) LIMITED MATURITY SERIES
A SERIES OF MFS(R) VARIABLE INSURANCE TRUST
[Graphic Omitted]
<PAGE>
MFS(R) LIMITED MATURITY SERIES
A SERIES OF MFS(R) VARIABLE INSURANCE TRUST
<TABLE>
<C> <C>
TRUSTEES INVESTMENT ADVISER
A. Keith Brodkin* Massachusetts Financial Services Company
Chairman and President 500 Boylston Street
Boston, MA 02116-3741
Nelson J. Darling, Jr.
Trustee, Eastern Enterprises DISTRIBUTOR
(diversified holding company) MFS Fund Distributors, Inc.
500 Boylston Street
William R. Gutow Boston, MA 02116-3741
Vice Chairman,
Capitol Entertainment Management Company SHAREHOLDER SERVICE CENTER
(Blockbuster Video Franchise) MFS Service Center, Inc.
P.O. Box 1400
PORTFOLIO MANAGER Boston, MA 02107-9906
Geoffrey L. Kurinsky*
For additional information,
TREASURER contact your financial adviser.
W. Thomas London*
CUSTODIAN
ASSISTANT TREASURER Investors Bank & Trust Company
James O. Yost*
AUDITORS
SECRETARY Deloitte & Touche LLP
Stephen E. Cavan*
WORLD WIDE WEB
ASSISTANT SECRETARY www.mfs.com
James R. Bordewick, Jr.*
*Affiliated with the Investment Adviser
</TABLE>
<PAGE>
Dear Contract Owner:
The pattern of slow but sustainable growth seen in most of the world in 1996
seems likely to continue in 1997. While it looks like U.S. growth in 1997 will
slow modestly relative to 1996, there is evidence that Europe and, to a lesser
degree, Japan are continuing their recoveries from recession. At the same
time, companies in many emerging markets are reporting robust increases in
earnings as these markets benefit from higher-than-average economic growth and
market reforms. This should continue to provide more opportunities for
development and trade.
After more than six years of expansion, the U.S. economy appears headed
toward another year of moderate growth in 1997, although a few signs point to
the possibility of a modest rise in inflation during the year. On the positive
side, the pattern of moderate growth and inflation set over the past few years
now seems fairly well entrenched in the economy and, short of a major
international or domestic crisis, appears to have enough momentum to remain on
track for some time. Recent gains in such important sectors as housing,
automobiles, industrial production, and exports indicate a fair amount of
underlying strength in the economy. However, some reason for caution can be
seen in the continuing high level of consumer debt and the attendant rise in
personal bankruptcies, as well as in the modestly disappointing level of
holiday sales. Furthermore, the ongoing tightness in labor markets, and price
rises in such important sectors as energy, could add some inflationary
pressures to the economy. Given these somewhat conflicting indicators, we
expect real (inflation-adjusted) growth to revolve around 2% in 1997, which
would represent a modest decline from 1996.
We continue to urge U.S. equity investors to lower their expectations for
1997 and to point out that the impressive gains of the past two years are not
sustainable. Just as the slowdown in corporate earnings growth and increases
in interest rates in 1996 raised some near-term concerns, further interest
rate increases and an acceleration of inflation could negatively affect the
stock market in 1997. However, to the extent that some slowdown in earnings
means that the economy is not overheating, this may be beneficial for the
equity market in the long run. We believe many of the technology-driven
productivity gains that U.S. companies have made in recent years will continue
to enhance corporate America's competitiveness and profitability. Therefore,
while we have some near-term concerns, we remain reasonably positive about the
long-term viability of the equity market.
In U.S. bond markets, conflicting signals over the strength of the economy
have created near-term volatility. Even comments by Federal Reserve Chairman
Alan Greenspan in late 1996 created some uncertainty over the Federal Reserve
Board's next move. We expect the Fed to maintain its anti-inflationary stance
should signs of more rapid economic growth and, particularly, higher inflation
resurface. While inflationary forces largely remained in check in 1996, the
continued strength in the labor market and rising energy prices mean that a
pickup in inflation is still possible. At the same time, the U.S. budget
deficit continues to decline and, as a percentage of gross domestic product,
is now less than 2%, which we consider a positive development for the bond
markets. Although interest rates may move higher over the coming months, we
believe that, at current levels, fixed-income markets remain equitably valued.
Internationally, the environment of moderate growth, benign inflation, and
fairly steady interest rates is also providing support for investment markets
and should help support valuation levels in the coming year. Throughout the
world, the key to stock market performance in 1997 will be corporate earnings
growth. While U.S. earnings growth is slowing, but still expected to be fairly
healthy, we anticipate that a number of European countries will see an
acceleration in earnings growth and improved valuations in 1997. Despite this
environment, many European countries trade at discounts to the United States.
In particular, we see opportunities in some of the multinationals, and
businesses with the ability to generate steady earnings growth. In Japan, a
recovery appears to be taking place, but at a very modest rate, with
valuations still at high levels. In the emerging markets, the long-term
economic growth story remains intact and, although selectivity is even more
important in these markets, more companies are benefiting from this growth and
trading at below-average global valuations.
<PAGE>
Comments from the portfolio manager of the Series are presented below. We
appreciate your support and welcome any questions or comments you may have.
Respectfully,
/s/A. Keith Brodkin /s/Geoffrey L. Kurinsky
A. Keith Brodkin Geoffrey L. Kurinsky
Chairman and President Portfolio Manager
January 9, 1997
MFS LIMITED MATURITY SERIES
The Series commenced operations on August 14, 1996, and from that date through
December 31, 1996, provided a total return of 2.61%. This was a strong period
for shorter-maturity fixed-income securities as interest rates on two-year
Treasuries fell from 6.40% to 5.75%, while the market adopted the view that
the pace of economic growth was declining. There was no change in rates from
the Federal Reserve as the economy continued to grow, albeit at a slower pace,
and inflationary pressures remained absent. Despite market concerns over a
pickup in the pace of inflation, both labor costs and commodity prices
remained relatively restrained.
The Series' performance benefited from the decline in interest rates and
the Series' overweighting in investment-grade securities. As is typical in
periods of strong economic activity, the 3.83% return of short-term "BBB"
investment-grade corporate securities for the last half of 1996 outperformed
Treasury securities, which returned 3.57% according to Lehman Brothers.
(Principal value and interest on Treasury securities are guaranteed by the
U.S. government if held to maturity.) The Series' weightings in "BBB"
investment-grade securities stands at around 45% of the portfolio, which is a
higher exposure than competing funds of the competitive universe as defined by
Lipper Analytical Services, Inc., an independent firm which reports mutual
fund performance.
Looking forward, we will continue to increase the Series' exposure to
investment-grade corporate securities toward the 65% level. This is consistent
with our view that the corporate securities will continue outperforming
Treasuries as 1997 marks another year of steady economic growth.
PORTFOLIO MANAGER'S PROFILE
Geoffrey L. Kurinsky is Senior Vice President of Massachusetts Financial
Services (MFS) and manages MFS Limited Maturity Series. He joined MFS as
Portfolio Manager in the Fixed Income Department in 1987 and was named Vice
President in 1990 and Senior Vice President in 1993. Mr. Kurinsky is a
graduate of the University of Massachusetts and holds an M.B.A. in Finance
from Boston University.
PERFORMANCE SUMMARY
The information below illustrates the historical performance of MFS Limited
Maturity Series shares in comparison to various market indicators. Benchmark
comparisons are unmanaged and do not reflect any fees or expenses. You cannot
invest in an index.
<PAGE>
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the Period from August 1, 1996 to December 31, 1996)
MFS Consumer Merrill Lynch
Limited Price 1-5 Year
Maturity Index - Government/Corporate
Date Series U.S. Bond Index
- ---- -------- -------- --------------------
8/96 10000.0 10000.0 10000.0
8/96 9940.0 10020.0 10024.0
9/96 10060.0 10054.0 10134.0
10/96 10200.0 10086.0 10274.0
11/96 10300.0 10105.0 10375.0
12/96 10260.0 10124.0 10348.0
AGGREGATE TOTAL RETURNS AS OF DECEMBER 31, 1996
Life+
- ------------------------------------------------------------------------------
MFS Limited Maturity Series + 2.61%
- ------------------------------------------------------------------------------
Average short-term investment-grade debt fund + 2.48%
- ------------------------------------------------------------------------------
Merrill Lynch One- to Five-year Government/Corporate Bond Index++** + 3.48%
- ------------------------------------------------------------------------------
Consumer Price Index*++ + 1.24%
- ------------------------------------------------------------------------------
*The Consumer Price Index is a popular measure of change in prices.
**The Merrill Lynch one- to five-year Government/Corporate Bond Index is an
unmanaged composite of coupon-bearing Treasury issues, debt of the U.S.
government and its agencies, and corporate debt rated BB/Baa or better.
+For the period from the commencement of investment operations, August 14,
1996 to December 31, 1996.
++Source: CDA/Wiesenberger.
Returns shown do not reflect the deduction of the mortality and expense risk
charges and administrative fees. Please refer to the product's annual report
for performance that reflects the fees and charges imposed by insurance
company separate accounts.
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.
Series results reflect any applicable expense subsidies and waivers, without
which the performance results would have been less favorable. Subsidies and
waivers may be rescinded at any time. See the prospectus for details.
<PAGE>
PORTFOLIO OF INVESTMENTS - December 31, 1996
Bonds - 95.2%
- -----------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- -----------------------------------------------------------------------------
U.S. Bonds - 91.3%
Banks and Credit Companies - 7.7%
Advanta Corp., 7.47s, 2001 $ 20 $ 20,345
Capital One Financial Corp., 7.25s, 2003 20 19,675
--------
$ 40,020
- -----------------------------------------------------------------------------
Entertainment - 3.9%
Time Warner, Inc., 7.45s, 1998 $ 20 $ 20,220
- -----------------------------------------------------------------------------
Financial Services - 1.0%
United Cos. Financial Corp., 9.35s, 1999 $ 5 $ 5,318
- -----------------------------------------------------------------------------
Food and Beverage Products - 11.7%
Great Atlantic & Pacific Tea Co., Inc.,
9.125s, 1998 $ 20 $ 20,514
Nabisco, Inc., 8s, 2000 20 20,775
RJR Nabisco, Inc., 8s, 2001 20 20,064
--------
$ 61,353
- -----------------------------------------------------------------------------
Forest and Paper Products - 2.1%
Boise Cascade Corp., 9.9s, 2001 $ 10 $ 11,199
- -----------------------------------------------------------------------------
Real Estate Investment Trusts - 3.9%
Taubman Realty Group, 8s, 2001 $ 20 $ 20,643
- -----------------------------------------------------------------------------
Telecommunications - 3.8%
Tele-Communications, Inc., 6.275s, 2003 $ 20 $ 19,900
- -----------------------------------------------------------------------------
U.S. Government and Agency Obligations - 55.3%
Federal National Mortgage Assn., 7.5s, 2011 $ 97 $ 99,205
U.S. Treasury Notes, 9.125s, 1999 135 144,260
U.S. Treasury Notes, 6.875s, 2000 20 20,450
U.S. Treasury Notes, 6.25s, 2001 25 25,023
--------
$288,938
- -----------------------------------------------------------------------------
Utilities - Electric - 1.9%
System Energy Resources, 7.8s, 2000 $ 10 $ 10,121
- -----------------------------------------------------------------------------
Total U.S. Bonds $477,712
- -----------------------------------------------------------------------------
Foreign Bonds - 3.9%
Chile
Empresa Electrica Guacolda S.A., 7.6s, 2001
(Utilities - Electric)## $ 20 $ 20,275
- -----------------------------------------------------------------------------
Total Bonds (Identified Cost, $496,110) $497,987
- -----------------------------------------------------------------------------
Short-Term Obligations - 1.9%
- -----------------------------------------------------------------------------
Federal Home Loan Bank, due 1/02/97,
at Amortized Cost $ 10 $ 9,997
- -----------------------------------------------------------------------------
Total Investments (Identified Cost, $506,107) $507,984
Other Assets, Less Liabilities - 2.9% 14,948
- -----------------------------------------------------------------------------
Net Assets - 100.0% $522,932
- -----------------------------------------------------------------------------
## SEC Rule 144A restriction.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
- ----------------------------------------------------------------------------
December 31, 1996
- ----------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $506,107) $507,984
Cash 1,378
Interest receivable 7,464
Receivable from investment adviser 2,771
Deferred organization expenses 8,499
--------
Total assets $528,096
--------
Liabilities:
Payable to affiliate for management fee $ 23
Accrued expenses and other liabilities 5,141
--------
Total liabilities $ 5,164
--------
Net assets $522,932
========
Net assets consist of:
Paid-in capital $522,437
Unrealized appreciation on investments 1,877
Accumulated net realized loss on investments (1,431)
Accumulated undistributed net investment income 49
--------
Total $522,932
========
Shares of beneficial interest outstanding 52,239
======
Net asset value per share
(net assets of $522,932 / 52,239 shares of beneficial
interest outstanding) $10.01
======
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Operations
- -----------------------------------------------------------------------------
Period Ended December 31, 1996*
- -----------------------------------------------------------------------------
Net investment income:
Interest income $14,813
-------
Expenses -
Management fee $ 1,064
Trustees' compensation 508
Shareholder servicing agent fee 66
Custodian fee 82
Printing 8,401
Auditing fees 2,356
Legal fees 994
Amortization of organization expenses 689
Miscellaneous 540
-------
Total expenses $14,700
Fees paid indirectly (59)
Reduction of expenses by investment adviser (12,705)
-------
Net expenses $ 1,936
-------
Net investment income $12,877
-------
Realized and unrealized gain (loss) on investments:
Realized loss (identified cost basis) on investment
transactions $(1,440)
-------
Change in unrealized appreciation on investments $ 1,877
-------
Net realized and unrealized gain on investments $ 437
-------
Increase in net assets from operations $13,314
=======
*For the period from the commencement of investment operations, August 14,
1996 to December 31, 1996.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Changes in Net Assets
- ----------------------------------------------------------------------------
Period Ended December 31, 1996*
- ----------------------------------------------------------------------------
Increase (decrease) in net assets:
From operations -
Net investment income $ 12,877
Net realized loss on investments (1,440)
Net unrealized gain on investments 1,877
--------
Increase in net assets from operations $ 13,314
--------
Distributions declared to shareholders from net investment
income $(12,819)
--------
Series share (principal) transactions -
Net proceeds from sale of shares $501,018
Net asset value of shares issued to shareholders in
reinvestment of distributions 12,819
--------
Increase in net assets from Series share transactions $513,837
--------
Total increase in net assets $514,332
Net assets:
At beginning of period 8,600
--------
At end of period (including accumulated undistributed net
investment income of $49) $522,932
========
*For the period from the commencement of investment operations, August 14,
1996 to December 31, 1996.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Financial Highlights
- ---------------------------------------------------------------------------
Period Ended December 31, 1996*
- ---------------------------------------------------------------------------
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(S) $ 0.25
Net realized and unrealized gain on investments and foreign
currency transactions 0.01
------
Total from investment operations $ 0.26
------
Less distributions declared to shareholders -
From net investment income $(0.25)
------
Net asset value - end of period $10.01
======
Total return 2.61%++
Ratios (to average net assets)/Supplemental data(S):
Expenses 1.00%+
Net investment income 6.61%+
Portfolio turnover 109%
Average commission rate
Net assets at end of period (000 omitted) $ 523
* For the period from the commencement of investment operations, August 14,
1996 to December 31, 1996.
+ Annualized.
++ Not annualized.
# Per share data is based on average shares outstanding.
(S) The Adviser voluntarily agreed to maintain the expenses of the Series at
not more than 1.00% of average daily net assets. To the extent actual
expenses were over these limitations, the net investment income per share
and the ratios would have been:
Net investment income $ 0.01
Ratios (to average net assets):
Expenses 7.55%+
Net investment income 0.06%+
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(1) Business and Organization
MFS Limited Maturity Series (the Series) is a diversified series of MFS
Variable Insurance Trust (the Trust) which is comprised of the following 12
series: MFS Bond Series, MFS Emerging Growth Series, MFS Growth with Income
Series, MFS High Income Series, MFS Limited Maturity Series, MFS Money Market
Series, MFS Research Series, MFS Strategic Fixed Income Series, MFS Total
Return Series, MFS Utilities Series, MFS Value Series and MFS 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. As of December 31, 1996 there were eight shareholders in the Series.
(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 - 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.
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 Series 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 are amortized or accreted for financial statement
and tax reporting purposes as required by federal income tax regulations.
Interest payments received in additional securities are recorded on the ex-
interest date in an amount equal to the value of the security on such date.
Fees Paid Indirectly - The Series' custodian bank calculates its fee based on
the Series' average daily net assets. This fee is reduced according to an
expense offset arrangement with State Street Bank, the dividend disbursing
agent, which provides for partial reimbursement of custody fees based on a
formula developed to measure the value of cash deposited by the Series with
the custodian and with the dividend disbursing agent. This amount is shown as
a reduction of expenses on the Statement of Operations.
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. Accordingly, the amount of
net investment income and net realized gain reported on these financial
statements may differ from that reported on the Series' 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 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 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 period ended December 31, 1996, $9 was reclassified
from accumulated undistributed net investment income to accumulated net
realized loss on investments due to differences between book and tax
accounting for asset-backed securities. This change had no effect on the net
assets or net asset value per share. At December 31, 1996, accumulated
undistributed net investment income and net realized loss on investments under
book accounting were different from tax accounting due to temporary
differences in accounting for wash sales and capital loss carryforwards.
At December 31, 1996, the Series, for federal income tax purposes, had a
capital loss carryforward of $1,267 which may be applied against any net
taxable realized gains of each succeeding year until the earlier of its
utilization or expiration on December 31, 2004.
(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 annual rate of 0.55%
of average daily net assets. Under a temporary expense limitation agreement
with MFS, MFS has voluntarily agreed to pay all of the Series' operating
expenses, exclusive of management fees, which exceed 0.45% of the Series'
average daily net assets. The Series in turn will pay MFS an expense
reimbursement fee not greater than 0.45% of the Series' average daily net
assets. To the extent that the expense reimbursement fee exceeds the Series'
actual expenses, the excess will be applied to amounts paid by MFS in prior
years. At December 31, 1996, the aggregate unreimbursed expenses owed to MFS
by the Series amounted to $12,705.
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 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 0.035%.
(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 $580,641 $387,764
======== ========
Investments (non-U.S. government securities) $456,493 $150,622
======== ========
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 $506,107
========
Gross unrealized appreciation $ 3,067
Gross unrealized depreciation (1,190)
--------
Net unrealized appreciation $ 1,877
========
(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
December 31, 1996*
-------------------------
Shares Amount
- ------------------------------------------------------------------------
Shares sold 50,102 $501,018
Shares issued to shareholders in
reinvestment of distributions 1,277 12,819
------ --------
Net increase 51,379 $513,837
====== ========
*For the period from the commencement of investment operations, August 14,
1996 to December 31, 1996.
(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 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 Series for the period ended
December 31, 1996 was $4.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Trustees of MFS Variable Insurance Trust and Shareholders of MFS
Limited Maturity Series:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of MFS Limited Maturity Series (the
Series) (one of the series constituting the MFS Variable Insurance Trust) as
of December 31, 1996, the related statement of operations and the statements
of changes in net assets and financial highlights for the period from August
14, 1996 (the commencement of investment operations) to December 31, 1996.
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 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 December 31, 1996 by correspondence with the custodian and
brokers. 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 Limited
Maturity Series at December 31, 1996, 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
February 7, 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>
VLM-2/97 230
