<PAGE>
[Logo] MFS(SM) Annual Report
INVESTMENT MANAGEMENT for Year Ended
December 31, 1997
MFS(R) LIMITED MATURITY SERIES
A SERIES OF MFS(R) VARIABLE INSURANCE TRUST(SM)
[Graphic Omitted]
<PAGE>
MFS(R) LIMITED MATURITY SERIES
A SERIES OF MFS(R) VARIABLE INSURANCE TRUST(SM)
<TABLE>
<CAPTION>
<S> <C>
TRUSTEES INVESTMENT ADVISER
A. Keith Brodkin* Massachusetts Financial Services Company
Chairman and President; 500 Boylston Street
Chairman and Director, Boston, MA 02116-3741
Massachusetts Financial Services Company
DISTRIBUTOR
Nelson J. Darling, Jr. MFS Fund Distributors, Inc.
Trustee, Eastern Enterprises 500 Boylston Street
(diversified holding company) Boston, MA 02116-3741
William R. Gutow INVESTOR SERVICE
Vice Chairman, MFS Service Center, Inc.
Capitol Entertainment Management Company P.O. Box 2281
(Blockbuster Video franchise) Boston, MA 02107-9906
PORTFOLIO MANAGER For additional information,
Geoffrey L. Kurinsky* contact your financial adviser.
TREASURER CUSTODIAN
W. Thomas London* State Street Bank and Trust Company
ASSISTANT TREASURERS AUDITORS
Mark E. Bradley* Deloitte & Touche LLP
Ellen Moynihan*
James O. Yost* WORLD WIDE WEB
www.mfs.com
SECRETARY
Stephen E. Cavan*
ASSISTANT SECRETARY
James R. Bordewick, Jr.*
</TABLE>
[Graphic Omitted]
For the fourth year in a row, MFS earned a #1 ranking in the DALBAR, Inc.
Broker/Dealer Survey, Main Office Operations Service Quality Category. The firm
achieved a 3.42 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," and "ease of doing business" with the firm.
*Affiliated with the Investment Adviser
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
<PAGE>
MFS Mourns Chairman's Passing
It is with deep regret that we inform you of the death on February 2,
1998, of A. Keith Brodkin, Chairman and Chief Executive Officer of MFS
Investment Management(SM). Mr. Brodkin joined MFS in 1970 and made
enormous contributions to the organization, including helping to build the
firm's investment staff, which will continue to manage all of the MFS
investment portfolios. His leadership, friendship, and wise counsel will
be sorely missed.
Dear Contract Owners:
Thanks to a sustained period of relative stability and moderate growth, the
U.S. economy has produced thousands of new jobs, inflation has remained under
control, and the investment climate has -- for the most part -- been
favorable. 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. The rapid
pace of growth seen in the first quarter slowed to an annual rate of 3.3% in
the second quarter and 3.5% in the third. We believe this economic momentum
will carry well into the first quarter of 1998 as a result of lower interest
rates and continuing growth in the money supply. While economic growth in the
United States continues to be impressive, this is partially being offset by
events in the Pacific Rim. Thus, markets will most likely continue to focus on
activity by the Federal Reserve Board (the Fed) and its response to both U.S.
and world events.
The U.S. government bond market has benefited from the deflationary events in
Asia, while the high-yield and emerging-debt markets have come under severe
pressure. Inflation remains under control, and the Fed will most likely take a
wait-and-see attitude toward raising interest rates. As a result, our
near-term outlook for high-grade markets is neutral to moderately positive. At
the same time, high-yield markets, having gone through a substantial
correction, could offer reasonable value but require careful selection.
Overall, fixed-income markets appear to be reasonably valued.
We appreciate your support and welcome any questions or comments you may have.
Respectfully,
/s/Jeffrey L. Shames
Jeffrey L. Shames
President, MFS Investment Management
January 12, 1998
MFS LIMITED MATURITY SERIES
For the year ended December 31, 1997, the Series provided a total return of
6.08% (including the reinvestment of any distributions). This compares to a
7.16% return for the Merrill Lynch One- to Five-Year Government/Corporate Bond
Index, an unmanaged composite of coupon-bearing U.S. Treasury issues, debt of
the U.S. government and its agencies, and investment-grade corporate debt.
We have seen strong returns for U.S. fixed-income markets, as prospects for
continued steady economic growth and low inflation have sparked a rally in
this arena. Rates on 10-year U.S. Treasuries fell almost a full percentage
point, from 6.50% to 5.75%, during 1997. We believe interest rates could
continue moving gradually lower as the inflation figures continue to decline.
The main reason for this favorable environment has been positive inflation
data, which changed the markets' previous perception that the Fed would have
to raise interest rates. The U.S. bond market is also receiving flight capital
from Asian markets. We believe the Fed will most likely take a wait-and-see
attitude toward raising rates, especially given the market sell-off in the
Pacific Rim, which could slow the pace of economic growth globally.
Major commitments for the Series include the bank and finance sectors, as well
as media and entertainment. The steady-growth, low-inflation environment has
been beneficial to both banking and brokerage companies, while we believe the
continued focus on debt reduction and increasing cash flows in the media and
entertainment industries should result in further credit upgrades in coming
months.
At two years, the Series' duration, or interest-rate sensitivity, reflects
what we see as a period of stability for short-term interest rates. This is
also the average duration for the average short-term, investment-
grade fund as tracked by Lipper Analytical Services, Inc., an independent firm
that reports mutual fund performance.
Looking ahead, we believe the forces of economic growth and low inflation will
keep interest rates moving lower from current levels. The recent collapse of
markets in Southeast Asia suggests a moderation of both global growth and
inflation expectations, but just how much of an impact these events will have
on U.S. growth and earnings remains debatable. They do, though, suggest that
the Fed will keep rates stable or move them lower as we move into 1998 as
officials evaluate the impact on the U.S. economy.
Respectfully,
/s/ Geoffrey L. Kurinsky
Geoffrey L. Kurinsky
Portfolio Manager
PORTFOLIO MANAGER'S PROFILE
Geoffrey L. Kurinsky began his career at MFS in 1987 in the Fixed Income
Department and was named Assistant Vice President in 1988, Vice President in
1989, and Senior Vice President in 1993. A graduate of the University of
Massachusetts and the Boston University Graduate School of Management, he has
managed MFS Limited Maturity Series since 1996.
OBJECTIVES AND POLICIES
The Series' primary investment objective is to provide as high a level of
current income as is believed to be consistent with prudent investment risk.
The Series' secondary objective is to protect shareholders' capital.
Commencement of investment operations: August 14, 1996
TAX FORM SUMMARY
FEDERAL INCOME TAX INFORMATION ON DISTRIBUTIONS.
The Series designated $614 as a long-term capital gain.
PERFORMANCE SUMMARY
The information below illustrates the historical performance of MFS Limited
Maturity Series - VIT shares in comparison to various market indicators.
Benchmark comparisons are unmanaged and do not reflect any fees or expenses.
It is not possible to invest directly in an index.
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
(For the period from September 1, 1996, through December 31, 1997)
[Graphic Omitted]
MFS Limited Merrill Lynch 1-5 Yr. Consumer Price
Maturity Series Govt/Corp Index - U.S.
9/96 $10,000 $10,000 $10,000
12/96 10,322 10,323 10,090
12/97 10,950 11,062 10,301
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 1997
1 Year Life of Series*
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
MFS Limited Maturity Series + 6.08% + 6.33%
- --------------------------------------------------------------------------------------------------------
Average short-term investment-grade debt fund** + 6.19% + 6.34%
- --------------------------------------------------------------------------------------------------------
Merrill Lynch One- to Five-Year Government/Corporate Bond Index# + 7.16% + 7.77%
- --------------------------------------------------------------------------------------------------------
Consumer Price Index#+ + 2.15% + 2.32%
- --------------------------------------------------------------------------------------------------------
</TABLE>
*For the period from the commencement of the Series' investment operations,
August 14, 1996, through December 31, 1997.
**Source: Lipper Analytical Services, Inc.
#Source: CDA/Wiesenberger.
+The Consumer Price Index is published by the U.S. Bureau of Labor Statistics
and measures the cost of living (inflation).
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.
<PAGE>
PORTFOLIO OF INVESTMENTS - December 31, 1997
Bonds - 76.2%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Principal Amount
Issuer (000 Omitted) Value
- --------------------------------------------------------------------------------------------------------
U.S. Bonds - 44.6%
Airlines - 4.6%
<S> <C> <C>
Delta Air Lines, Inc., 8.5s, 2002 $30 $ 32,012
- --------------------------------------------------------------------------------------------------------
Banks and Credit Companies - 6.9%
Advanta Corp., 6.574s, 2000 $10 $ 9,616
Advanta Corp., 6.925s, 2002 20 18,809
Capital One Financial Corp., 7.25s, 2003 20 20,177
---------
$ 48,602
- --------------------------------------------------------------------------------------------------------
Entertainment - 2.8%
Time Warner Pass-Through Asset Trust, 6.1s, 2001## $20 $ 19,596
- --------------------------------------------------------------------------------------------------------
Financial Services - 12.7%
Bear Stearns, Inc., 6.75s, 2007 $30 $ 30,236
Contifinancial Corp., 7.5s, 2002 24 23,490
Salomon, Inc., 7.3s, 2002 10 10,320
United Cos. Financial Corp., 7s, 1998 20 20,066
United Cos. Financial Corp., 9.35s, 1999 5 5,182
---------
$ 89,294
- --------------------------------------------------------------------------------------------------------
Forest and Paper Products - 4.8%
Boise Cascade Corp., 9.9s, 2001 $30 $ 33,559
- --------------------------------------------------------------------------------------------------------
Telecommunications - 11.0%
Continental Cablevision, Inc., 11s, 2007 $20 $ 22,207
Tele-Communications, Inc., 10.125s, 2001 30 33,139
WorldCom, Inc., 8.875s, 2006 20 21,519
---------
$ 76,865
- --------------------------------------------------------------------------------------------------------
Utilities - Electric - 1.8%
Salton Sea Funding Corp., 6.69s, 2000 $13 $ 12,598
- --------------------------------------------------------------------------------------------------------
Total U.S. Bonds $ 312,526
- --------------------------------------------------------------------------------------------------------
Foreign Bonds - 5.4%
Chile - 2.9%
Empresa Electric Guacolda S.A., 7.6s, 2001 (Utilities -
Electric)## $20 $ 20,076
- --------------------------------------------------------------------------------------------------------
United Kingdom - 2.5%
Bell Cablemedia PLC, 0s to 2000, 11.875s to 2005
(Telecommunications) $20 $ 17,722
- --------------------------------------------------------------------------------------------------------
Total Foreign Bonds $ 37,798
- --------------------------------------------------------------------------------------------------------
U.S. Federal Agencies - 15.6%
Federal Home Loan Mortgage Corp., 6.725s, 2027 $19 $ 18,893
Federal National Mortgage Assn., 7.5s, 2011 88 90,741
- --------------------------------------------------------------------------------------------------------
Total U.S. Federal Agencies $ 109,634
- --------------------------------------------------------------------------------------------------------
U.S. Government Guaranteed - 10.6%
U.S. Treasury Notes, 5.5s, 2000 $30 $ 29,831
U.S. Treasury Notes, 6.25s, 2002 23 23,471
U.S. Treasury Notes, 8.875s, 1999 20 20,691
- --------------------------------------------------------------------------------------------------------
Total U.S. Government Guaranteed $ 73,993
- --------------------------------------------------------------------------------------------------------
Total Bonds (Identified Cost, $533,278) $ 533,951
- --------------------------------------------------------------------------------------------------------
Short-Term Obligations - 10.0%
- ------------------------------------------------------------------------------------------------------
Federal Home Loan Bank Corp., due 1/02/98, at Amortized
Cost $70 $ 69,991
- --------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $603,269) $ 603,942
Other Assets, Less Liabilities - 13.8% 97,118
- ------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $ 701,060
- --------------------------------------------------------------------------------------------------------
</TABLE>
##SEC Rule 144A restriction.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
- ------------------------------------------------------------------------------
December 31, 1997
- ------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $603,269) $603,942
Cash 4,302
Receivable for Series shares sold 77,865
Interest receivable 8,786
Receivable from investment adviser 3,411
Deferred organization expenses 6,662
Other assets 5
--------
Total assets $704,973
--------
Liabilities:
Payable to affiliates -
Management fee $ 9
Shareholder servicing agent fee 5
Accrued expenses and other liabilities 3,899
--------
Total liabilities $ 3,913
--------
Net assets $701,060
========
Net assets consist of:
Paid-in capital $701,043
Unrealized appreciation on investments 673
Accumulated net realized loss on investments (647)
Accumulated distributions in excess of net investment income (9)
--------
Total $701,060
========
Shares of beneficial interest outstanding 70,001
======
Net asset value per share
(net assets of $701,060 / 70,001 shares of beneficial interest
outstanding) $ 10.01
========
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Operations
- -------------------------------------------------------------------------------
Year Ended December 31, 1997
- -------------------------------------------------------------------------------
Net investment income:
Interest income $ 40,767
---------
Expenses -
Management fee $ 3,129
Trustees' compensation 2,033
Shareholder servicing agent fee 200
Administrative fee 67
Auditing fee 17,901
Printing 7,826
Amortization of organization expenses 1,837
Legal fee 1,357
Custodian fee 442
Miscellaneous 700
---------
Total expenses $ 35,492
Fees paid indirectly (89)
Reduction of expenses by investment advisor (29,715)
---------
Net expenses $ 5,688
---------
Net investment income $ 35,079
---------
Realized and unrealized gain (loss) on investments:
Realized gain on investment transactions (identified cost basis) $ 653
Change in unrealized appreciation on investments (1,204)
--------
Net realized and unrealized loss on investments $ (551)
---------
Increase in net assets from operations $ 34,528
=========
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Year Ended Period Ended
December 31, 1997 December 31, 1996*
- -------------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
From operations -
<S> <C> <C>
Net investment income $ 35,079 $ 12,877
Net realized gain (loss) on investments 653 (1,440)
Net unrealized gain (loss) on investments (1,204) 1,877
---------- --------
Increase in net assets from operations $ 34,528 13,314
---------- --------
Distributions declared to shareholders -
From net investment income (34,958) (12,819)
In excess of net investment income (77) --
In excess of net realized gain on investments (613) --
---------- -------
Total distributions declared to shareholders $ (35,648) $(12,819)
---------- --------
Net increase in net assets from Series share
transactions $ 179,248 $513,837
---------- --------
Total increase in net assets $ 178,128 $514,332
---------- --------
Net assets:
At beginning of period 522,932 8,600
---------- --------
At end of period (including accumulated distributions
in excess of net investment income of $(9) and
accumulated undistributed net investment income of
$49, respectively) $ 701,060 $522,932
========== ========
</TABLE>
*For the period from the commencement of the Series' investment operations,
August 14, 1996, through December 31, 1996.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Financial Highlights
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Year Ended December 31, 1997 1996*
- ------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout each period):
<S> <C> <C>
Net asset value - beginning of period $10.01 $10.00
------ ------
Income from investment operations# -
Net investment income(S) $ 0.62 $ 0.25
Net realized and unrealized gain (loss) on investments (0.01) 0.01
------ ------
Total from investment operations $ 0.61 $ 0.26
------ ------
Less distributions declared to shareholders -
From net investment income $(0.60) $(0.25)
From net realized gain on investments (0.01) --
------ ------
Total distributions declared to shareholders $(0.61) $(0.25)
------ ------
Net asset value - end of period $10.01 $10.01
====== ======
Total return 6.08% 2.61%++
Ratios (to average net assets)/Supplemental data(S):
Expenses## 1.00% 1.00%+
Net investment income 6.13% 6.61%+
Portfolio turnover 167% 109%
Net assets at end of period (000 omitted) $ 701 $ 523
*For the period from the commencement of the Series' investment operations, August 14, 1996,
through December 31, 1996.
+Annualized.
++Not annualized.
#Per share data are based on average shares outstanding.
##The Series' expenses are calculated without reduction for fees paid indirectly.
(S)Subject to reimbursement by the Series, the investment adviser voluntarily agreed to maintain the
expenses of the Series, exclusive of management fee at not more than 1.00% of 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 $ 0.10 $ 0.01
Ratios (to average net assets):
Expenses## 6.20% 7.55%+
Net investment income 0.93% 0.06%+
</TABLE>
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(R) Bond Series, MFS(R) Emerging Growth Series, MFS(R)/Foreign & Colonial
Emerging Market Equity Series, MFS(R) Growth with Income Series, MFS(R) High
Income Series, MFS Limited Maturity Series, MFS(R) Money Market Series, MFS(R)
Research Series, MFS(R) Total Return Series, MFS(R) Utilities Series, MFS(R)
Value Series, and MFS(R) World Government Series. The Trust is organized as a
Massachusetts business trust and is registered under the Investment Company Act
of 1940 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, 1997, there were 8 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.
Investments in foreign securities are vulnerable to the effects of changes in
the relative values of the local currency and the U.S. dollar and to the
effects of changes in each country's legal, political, and economic
environment.
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
is 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' custody fee is calculated as a percentage
of the Series' average daily net assets. The fee is reduced according to an
arrangement that measures the value of cash deposited with the custodian by
the Series. 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.
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 net realized gains. During
the year ended December 31, 1997, $102 was reclassified from accumulated
undistributed net investment income and $642 from paid in capital to
accumulated net realized gain on investments due to differences between book
and tax accounting. These changes had no effect on the net assets or net asset
value per share. At December 31, 1997, 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 capital loss carryforwards.
At December 31, 1997, 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 in 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.
The Series has a temporary expense reimbursement agreement whereby MFS has
voluntarily agreed to pay all of the Series' operating expenses, exclusive of
management fee. 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,
1997, the aggregate unreimbursed expenses owed to MFS by the Series amounted
to $42,419.
Administrator - Effective March 1, 1997, the Series has an administrative
services agreement with MFS to provide the Series with certain financial,
legal, shareholder servicing, compliance, and other administrative services.
As a partial reimbursement for the cost of providing these services, the
Series pays MFS an administrative fee at the following annual percentages of
the Series average daily net assets, provided that the administrative fee is
not assessed on Series 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 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, MFS Fund
Distributors, Inc. (MFD), 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, other than short-term obligations, were as
follows:
<TABLE>
<CAPTION>
Purchases Sales
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. government securities $285,882 $404,650
-------- --------
Investments (non-U.S. government securities) $565,172 $411,008
-------- --------
</TABLE>
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 $603,269
--------
Gross unrealized appreciation $ 3,473
Gross unrealized depreciation (2,800)
--------
Net unrealized appreciation $ 673
========
(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 the Series were as follows:
Year Ended Period Ended
December 31, 1997 December 31, 1996
----------------- ----------------
Shares Amount Shares Amount
- ------------------------------------------------------------------------------
Shares sold 21,169 $216,032 50,102 $501,018
Shares issued to shareholders in
reinvestment of distributions 3,554 35,646 1,277 12,819
Shares reacquired (6,961) (72,430) -- --
------ -------- ------ --------
Net increase 17,762 $179,248 51,379 $513,837
====== ======== ====== ========
(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. Borrowing may be made to temporarily finance the repurchase of
Series shares. Interest is charged to each fund, based on its borrowing, 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 year ended December 31, 1997, 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, 1997, the related statement of operations for the year then
ended, the statements of changes in net assets for the year then ended and the
year ended December 31, 1996 and financial highlights for the period from
August 14, 1996 (the commencement of investment operations) through December
31, 1997. 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, 1997 by correspondence with the 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 Limited
Maturity Series at December 31, 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
February 6, 1998
--------------------------------------------
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>
(C)1998 MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116-3741
VLM-2 2/98 1.6M
