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[LOGO] M F S(SM) Semiannual Report
INVESTMENT MANAGEMENT June 30, 1997
MFS(R) MONEY MARKET SERIES
A Series of MFS(R) Variable Insurance Trust(SM)
[Graphic omitted]
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MFS(R) MONEY MARKET SERIES
A SERIES OF MFS(R) VARIABLE INSURANCE TRUST(SM)
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 INVESTOR SERVICE
Company MFS Service Center, Inc.
(Blockbuster Video franchise) P.O. Box 2281
Boston, MA 02107-9906
PORTFOLIO MANAGER
Geoffrey L. Kurinsky* For additional information,
contact your financial adviser.
TREASURER
W. Thomas London* CUSTODIAN
Investors Bank & Trust Company
ASSISTANT TREASURERS
Mark E. Bradley* AUDITORS
Ellen Moynihan* Deloitte & Touche LLP
James O. Yost*
WORLD WIDE WEB
SECRETARY www.mfs.com
Stephen E. Cavan*
[DALBAR For the third year in a row,
ASSISTANT SECRETARY LOGO] MFS earned a #1 ranking in the
James R. Bordewick, Jr.* DALBAR, Inc. Broker/Dealer Survey,
Main Office Operations Service Quality
Category. The firm achieved a 3.48
overall score on a scale of 1 to 4 in
the 1996 survey. A total of 110 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 15 categories,
including "knowledge of phone service
contacts," "accuracy of transaction
processing," and "overall ease of
doing business with the firm."
*Affiliated with the Investment Adviser
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Dear Contract Owner:
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. While some lenders are beginning to tighten standards to address this
problem, consumer debt and personal bankruptcies continue to rise. Because of
this, plus slight declines in other indicators such as average hourly wages and
the corporate purchasing-managers index, we do not expect the rapid pace of
growth seen in the first quarter of 1997 to continue. While second-quarter
growth has slowed dramatically, we do expect the second half of the year to pick
up once again with real (inflation-adjusted) growth centering around 2 1/2%.
In the fixed-income markets, we have been encouraged by the Federal Reserve
Board's decision to not raise short-term interest rates at its July meeting. But
we cannot rule out the possibility of future monetary tightening in the second
half of the year if, as we now expect, the economy strengthens in the second
half of 1997. Therefore, our risk/reward outlook for the fixed-income markets is
neutral, and we believe that fixed-income investors should think in terms of
earning the coupon income from their investments rather than seeking possible
gains from price appreciation.
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
A. Keith Brodkin
Chairman and President
July 14, 1997
MFS MONEY MARKET SERIES
The Series seeks as high a level of current income as is considered consistent
with the preservation of capital and liquidity by investing in short-term money
market securities issued or guaranteed by the U.S. Treasury, its agencies, or
instrumentalities of the U.S. government, as well as the highest- quality
corporate issues, in order to minimize credit risk. As of June 30, 1997, the
portfolio had assets of approximately $6.8 million, which were invested in six
different government issues with an average maturity of 46 days.
Our market outlook over the next few months is neutral, and we expect to
maintain the average maturity in the 45-day range.
Respectfully,
/s/ Geoffrey L. Kurinsky
Geoffrey L. Kurinsky
Portfolio Manager
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PORTFOLIO MANAGER'S PROFILE
Geoffrey L. Kurinsky began his career at MFS in 1987 in the Fixed Income
Department. A graduate of the University of Massachusetts and Boston
University's Graduate School of Management, he was named Assistant Vice
President in 1988, Vice President in 1989, and Senior Vice President in 1993.
He has managed MFS Money Market Series since 1995.
OBJECTIVE AND POLICIES
The Series' investment objective is to seek as high a level of current income as
is considered consistent with the preservation of capital and liquidity.
Investments in the Series are neither insured nor guaranteed by the U.S.
government, and there is no assurance that the Series will be able to maintain a
stable net asset value.
Commencement of investment operations: January 3, 1995.
PERFORMANCE SUMMARY
The information below illustrates the historical performance of MFS Money Market
Series.
AVERAGE ANNUAL AND CUMULATIVE TOTAL RATES OF RETURN AS OF JUNE 30, 1997
6 Months 1 Year Life of Series*
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Cumulative Total Return +2.38% +4.74% +11.72%
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Average Annual Total Return -- +4.74% + 4.55%
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*For the period from the commencement of the Series' investment operations,
January 3, 1995, through June 30, 1997.
All results are historical and, therefore, are not an indication of future
results. The investment return and principal value of an investment in the
product will vary with changes in market conditions, and shares, when redeemed,
may be worth more or less than their original cost.
Returns shown do not reflect the deduction of the mortality and expense risk
charges and administration fees. Please refer to the annuity product's annual
report for performance that reflects the deduction of the fees and charges
imposed by insurance company separate accounts.
All 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.
PORTFOLIO OF INVESTMENTS - June 30, 1997
U.S. Government and Agency Obligations - 96.0%
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Principal Amount
Issuer (000 Omitted) Value
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Federal Farm Credit Bank, due 7/11/97 - 11/17/97 $1,715 $1,695,403
Federal Home Loan Bank, due 7/24/97 - 9/22/97 1,400 1,385,483
Federal Home Loan Mortgage Corp., due 7/17/97 - 8/15/97 1,375 1,365,587
Federal National Mortgage Assn., due 7/18/97 - 9/5/97 910 902,425
Student Loan Marketing Assn., due 8/29/97 - 9/23/97 770 761,365
Tennessee Valley Authority, due 7/28/97 - 8/22/97 460 455,527
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Total Investments, at Amortized Cost $6,565,790
Other Assets, Less Liabilities - 4.0% 271,914
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Net Assets - 100.0% $6,837,704
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See notes to financial statements
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FINANCIAL STATEMENTS
Statement of Assets and Liabilities
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June 30, 1997
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Assets:
Investments, at amortized cost and value $6,565,790
Cash 40,793
Receivable for Series shares sold 214,441
Interest receivable 19,514
Receivable from investment adviser 1,518
Deferred organization expenses 4,624
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Total assets $6,846,680
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Liabilities:
Payable for Series shares reacquired $ 3,701
Payable to affiliates for management fee 328
Accrued expenses and other liabilities 4,947
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Total liabilities $ 8,976
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Net assets (represented by paid-in capital) $6,837,704
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Shares of beneficial interest outstanding 6,837,704
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Net asset value per share
(net assets of $6,837,704 / 6,837,704 shares of beneficial
interest outstanding) $1.00
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See notes to financial statements
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FINANCIAL STATEMENTS - continued
Statement of Operations
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Six Months Ended June 30, 1997
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Net investment income:
Interest income $ 80,075
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Expenses -
Management fee $ 7,324
Trustees' compensation 1,017
Shareholder servicing agent fee 495
Administrative fee 184
Auditing fee 11,047
Amortization of organization expenses 911
Custodian fee 424
Legal fee 134
Miscellaneous 23
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Total expenses $ 21,559
Fees paid indirectly (194)
Preliminary reduction of expenses by investment adviser (12,576)
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Net expenses $ 8,789
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Net investment income $ 71,286
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See notes to financial statements
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FINANCIAL STATEMENTS - continued
<TABLE>
Statements of Changes in Net Assets
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<CAPTION>
Six Months Ended Year Ended
June 30, 1997 December 31, 1996
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<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income, declared as distributions
to shareholders $ 71,286 $ 7,822
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Series share (principal) transactions at net asset
value of $1.00 per share -
Net proceeds from sale of shares $8,538,530 $ 643,286
Net asset value of shares issued to shareholders
in reinvestment of distributions 71,286 5,947
Cost of shares reacquired (2,404,730) (196,749)
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Total increase in net assets $6,205,086 $ 452,484
Net assets:
At beginning of period 632,618 180,134
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At end of period $6,837,704 $ 632,618
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</TABLE>
See notes to financial statements
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FINANCIAL STATEMENTS - continued
<TABLE>
Financial Highlights
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<CAPTION>
Six Months Ended Year Ended Period Ended
June 30, 1997 December 31, 1996 December 31, 1995*
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<S> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value - beginning of
period $ 1.00 $ 1.00 $ 1.00
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Income from investment operations# -
Net investment income(S) $ 0.02 $ 0.04 $ 0.04
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Less distributions declared to
shareholders from net investment income $(0.02) $(0.04) $(0.04)
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Net asset value - end of period $ 1.00 $ 1.00 $ 1.00
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Total return 2.38%++ 4.55% 4.37%++
Ratios (to average net assets)/
Supplemental data(S):
Expenses 0.60%+ 0.60% 0.60%+
Net investment income 4.84%+ 4.53% 4.54%+
Net assets at end of period (000 omitted) $6,838 $633 $180
* For the period from the commencement of the Series' investment operations, January 3, 1995, through
December 31, 1995.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
(S) The Adviser voluntarily agreed to maintain the expenses of the Series' at not more than 0.60% of average
daily net assets. To the extent actual expenses were over these limitations, the net investment income
(loss) per share and the ratios would have been:
Net investment income (loss) $ 0.02 $(0.21) $(0.14)
Ratios (to average net assets):
Expenses 1.46%+ 27.74% 21.54%+
Net investment income (loss) 3.99%+ (22.61)% (16.37)%+
See notes to financial statements
</TABLE>
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NOTES TO FINANCIAL STATEMENTS
(1) Business and Organization
MFS Money Market Series (the Series) is a diversified series of MFS(R) Variable
Insurance Trust (the Trust) which is comprised of the following 12 series:
MFS(R) Bond Series, MFS(R) Emerging Growth Series, MFS(R) Growth with Income
Series, MFS(R) High Income Series, MFS(R) Limited Maturity Series, MFS Money
Market Series, MFS(R) Research Series, MFS(R) Strategic Fixed Income Series,
MFS(R) Total Return Series, MFS(R) Utilities Series, MFS(R) Value Series, and
MFS(R) 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
June 30, 1997, 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 Valuation - Money market instruments are valued at amortized cost,
which the Trustees have determined in good faith constitutes fair value. The
Trust's use of amortized cost is subject to the Trust's compliance with certain
conditions as specified under Rule 2a-7 of the Investment Company Act of 1940.
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.
Fees Paid Indirectly - The Series' custody fee is calculated as a percentage of
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.
(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
0.50% of average daily net assets. The Series has a temporary expense
reimbursement agreement whereby MFS has voluntarily agreed to pay all of the
Series' operating expenses, exclusive of management fees. The Series in turn
will pay MFS an expense reimbursement fee not greater than 0.10% 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 June 30, 1997, the aggregate unreimbursed expenses
owed to MFS by the Series amounted to $84,383.
Administrator - Effective March 1, 1997, the Series has an administrative
service agreement with MFS to provide the Series with certain financial, legal,
and other administrative services. As a partial reimbursement for the cost of
providing these services, the Series pays MFS an administrative fee up to 0.015%
per annum of the Series' average daily net assets, provided that the
administrative fee is not assessed on Series assets that exceed $3 billion.
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 Series' average daily net assets at an effective annual rate
of 0.035%.
(4) Portfolio Securities
Purchases and sales of investments of money market investments, exclusive of
securities subject to repurchase agreements, consisted solely of U.S. government
securities and aggregated $25,345,205 and $19,472,954, respectively.
(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).
(6) Line of Credit
The Series 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
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 June 30, 1997, was $7.
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INDEPENDENT AUDITORS' REPORT
To the Trustees of MFS Variable Insurance Trust and Shareholders of MFS Money
Market Series:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of MFS Money Market Series (the Series) (one of
the series constituting the MFS Variable Insurance Trust) as of June 30, 1997,
the related statement of operations for the six months then ended, the
statements of changes in net assets for the six months then ended and the year
ended December 31, 1996, and financial highlights for the six months then ended,
the year ended December 31, 1996, and the period from January 3, 1995 (the
commencement of investment operations) to December 31, 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 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 June
30, 1997 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 Money Market
Series at June 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
August 1, 1997
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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.
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(C)1997 MFS Fund Distributors, Inc., 500 Boylston Street,
Boston, MA 02116-3741 VMM-3 8/97 200
