<PAGE>
[Logo] M F S(R) SEMIANNUAL REPORT
INVESTMENT MANAGEMENT JUNE 30, 1999
75 YEARS
WE INVENTED THE MUTUAL FUND(R)
[graphic omitted]
A SERIES OF MFS(R) VARIABLE INSURANCE TRUST(SM)
MFS(R) GLOBAL EQUITY
SERIES
<PAGE>
<TABLE>
MFS(R) GLOBAL EQUITY SERIES
A SERIES OF MFS(R) VARIABLE INSURANCE TRUST(SM)
<S> <C>
TRUSTEES INVESTMENT ADVISER
Jeffrey L. Shames* Massachusetts Financial Services Company
Chairman, Chief Executive Officer, and 500 Boylston Street
Director, MFS Investment Management(R) Boston, MA 02116-3741
Nelson J. Darling, Jr. DISTRIBUTOR
Professional trustee MFS Fund Distributors, Inc.
500 Boylston Street
William R. Gutow Boston, MA 02116-3741
Vice Chairman,
Capitol Entertainment Management Company; SHAREHOLDER SERVICE CENTER
Private investor and real estate consultant MFS Service Center, Inc.
P.O. Box 2281
CHAIRMAN AND PRESIDENT Boston, MA 02107-9906
Jeffrey L. Shames*
For additional information,
PORTFOLIO MANAGER contact your financial adviser.
David R. Mannheim*
CUSTODIAN
TREASURER State Street Bank and Trust Company
W. Thomas London*
WORLD WIDE WEB
ASSISTANT TREASURERS www.mfs.com
Mark E. Bradley*
Ellen Moynihan*
James O. Yost*
SECRETARY
Stephen E. Cavan*
ASSISTANT SECRETARY
James R. Bordewick, Jr.*
*Affiliated with the Investment Adviser
- -------------------------------------------------------------------------------------------
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
- -------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LETTER FROM THE CHAIRMAN
Dear Contract Owners,
It has been almost two years since financial turmoil began to rock markets in
Asia, Russia, and Latin America. Even developed markets such as Europe and the
United States were not immune. In the U.S. equity market, for example,
investors focused on a narrow group of 50 of the largest-company growth stocks
because they seemed to offer less volatility in uncertain times. Fixed-income
investors also became more concerned about risk, moving money into U.S.
Treasury securities and out of corporate and municipal bonds and mortgage-
backed securities.
The narrowness of the market was just one of three broad issues that dominated
the U.S. equity market until recently. The other two were a slowdown in
corporate earnings growth and high valuations, with stocks of many companies
selling at extremely high prices relative to their earnings.
Although these have been challenging issues, we now see signs that we feel
demonstrate each one is changing for the better. Today, we believe the markets
are presenting more opportunities for investors to diversify, for our
portfolio managers to find good values, and for us to show the benefits of
staying with our long-term objectives and strategies. Investors seem to be
regaining confidence in a wider range of companies. Stocks of some small and
mid-sized companies, as well as some large industrial companies, have begun to
perform better in the past few months than they had for the previous year or
so. These companies appear to have benefited from early signs of stability in
emerging markets and a continuation of economic growth in the United States.
U.S. companies also have produced better earnings. Corporate earnings were, on
average, relatively flat in 1998. However, we expect earnings to grow 12% to
14% this year because more companies have benefited from the strong economy
and from aggressive consolidation and cost-cutting measures they have taken
over the past several years.
Based on their earnings projections, our analysts estimate that the U.S. stock
market is still about 30% overvalued. While there has been some shift to a
wider group of stocks, many investors are still focusing on the large-company
stocks. As a result, most of the overvaluation is in the 50 largest stocks in
the Standard & Poor's 500 Composite Index (the S&P 500), a popular, unmanaged
index of common stock total return performance. That means about 450 stocks
are selling at more attractive prices, particularly given what we see as the
improved earnings outlooks for these and many small and mid-sized companies
not in the S&P 500. These companies also benefit from consolidation, cost
cutting, and global growth. Because they are smaller, they may be able to
respond to these changes more quickly, and thus they have the potential to
grow faster than the big companies.
The fixed-income markets, meanwhile, seem to be approaching the level of
relative stability they enjoyed before the Asian turmoil. Some credit for this
stability goes to the Federal Reserve Board (the Fed), which has reassured
investors that it will act to prevent rapid economic growth from causing
higher inflation and reduced purchasing power. Also, once investors saw that
the overseas turmoil had little, if any, effect on the financial strength of
most domestic bond issuers, the major non-Treasury markets -- corporate,
municipal, and mortgage -- began to rebound. Our portfolio managers are now
finding more opportunities to buy bonds with relatively stable prices and
attractive yields.
The past two years have challenged investors. However, we believe we are well
positioned for the current environment because our analysts and portfolio
managers continue to rely on MFS(R) Original Research(SM) to help evaluate the
long-term investment potential of each holding being considered for our
portfolios. Also, we believe our discipline of staying with our clearly
defined investment strategies can help us offer investment products with the
potential to sustain returns over a variety of market cycles.
We appreciate your confidence and welcome any questions or comments you may
have.
Respectfully,
/s/ Jeffrey L. Shames
Jeffrey L. Shames
Chairman and Chief Executive Officer
MFS Investment Management(R)
July 15, 1999
MANAGEMENT REVIEW AND OUTLOOK
Dear Contract Owners,
The Series, which commenced investment operations on May 3, 1999, seeks
capital appreciation by investing in companies around the world that we
believe will generate above-average growth in earnings and/or cash flow and
are trading at attractive valuations. Focusing mainly on large capitalization
stocks, we conduct bottom-up company research, rather than country or region
analysis, to identify stocks to add to the portfolio.
We believe that the global equity markets were affected positively by
deregulation, restructuring within companies and industries, globalization due
to fewer economic barriers, and greater emphasis on companies' responsibility
to produce value for their shareholders. Many of these factors, in turn, were
a result of European monetary union, the North American Free Trade Agreement,
a worldwide move by governments to shift responsibility for pensions to
individual citizens, and the use of technology to expand markets and increase
productivity.
Currently, technology represents the top sector in the portfolio at 18.7%. Two
of our largest positions were in BMC Software and Computer Associates, two
U.S. stocks whose prices were pushed down by investors' worries about the Year
2000 (Y2K) issue. This gave us the opportunity to buy these stocks at what we
felt were reasonable prices. By next spring, we believe the Y2K issue will be
behind us, and we feel we'll be well positioned in this industry. Other large
technology holdings include Cable & Wireless Communications, a U.K.
telecommunications and cable provider, and Ericsson, the Swedish
telecommunications equipment manufacturer.
The financial services sector, at 17.9% of equities, represents the second-
largest sector in the Series, but it is underweighted relative to the 19.1%
weighting in this sector of the Morgan Stanley Capital International (MSCI)
World Index. (The MSCI World Index is an unmanaged, market-capitalization-
weighted total return index that measures the performance of 23 developed-
country global stock markets, including the United States, Canada, Europe,
Australia, New Zealand, and the Far East.) Our holdings differ dramatically
from the index in that we have no holdings in U.S. bank stocks. In general, we
were overweighted in European financials and insurance companies compared with
banking. Our largest positions include ReliaStar Financial, a U.S. life
insurance company; UBS, a leading global bank based in Switzerland; and QBE
Insurance, a multiline insurer in Australia.
Because the Series is managed from the bottom up, we buy stocks regardless of
where a company is located. Therefore, our large relative weighting in
continental Europe (36.2% vs. 21.8% in the MSCI World Index) and large
underweighting in the United States (41.5% vs. 51.7% in the MSCI World Index)
are merely the byproducts of where MFS(R) Original Research(SM) found the most
companies that are offering above-average growth and trading at attractive
valuations. The Series' largest country allocation is the United States,
followed by the United Kingdom at 9% and Japan at 8%.
While the rally in global equity markets from the October 1998 lows has pushed
valuations to higher levels, we believe we will continue to see few signs of
inflationary pressure at the company level. We believe that this combined with
an improving corporate earnings outlook in many markets gives us reason to
feel optimistic about the remainder of 1999. Regardless of economic tremors
that may develop around the world, we believe that there will be no lack of
opportunistic and established companies in which to invest. Our mission is to
use MFS(R) Original Research(SM) to uncover these opportunities.
Respectfully,
/s/ David R. Mannheim
David R. Mannheim
Portfolio Manager
The opinions expressed in this report are those of the portfolio manager and
are current only through the end of the period of the report as stated on the
cover. The manager's views are subject to change at any time based on market
and other conditions, and no forecasts can be guaranteed.
It is not possible to invest directly in an index.
The portfolio is actively managed, and current holdings may be different.
Investments in foreign securities may provide superior returns but also
involve greater risk than U.S. investments. Investments in foreign and
emerging market securities may be favorably or unfavorably affected by changes
in interest rates and currency exchange rates, market conditions, and the
economic and political conditions of the countries where investments are made.
These risks may increase unit price volatility. See the prospectus for
details.
<PAGE>
PORTFOLIO MANAGER'S PROFILE
David R. Mannheim is Senior Vice President of MFS Investment Management(R) and
Director of International Portfolio Management. He is portfolio manager of
MFS(R) Global Equity Fund, MFS(R) International Growth Fund, MFS(R)
Institutional International Equity Fund, the International Growth Series
offered through MFS(R)/Sun Life annuity products, and MFS(R) Global Equity
Series (part of MFS(R) Variable Insurance Trust(SM)).
Mr. Mannheim joined MFS in 1988 and was named Investment Officer in 1990,
Assistant Vice President in 1991, Vice President and portfolio manager in
1992, Senior Vice President in 1997, and Director of International Portfolio
Management in 1999. He is a graduate of Amherst College and the Massachusetts
Institute of Technology Sloan School of Management.
All equity portfolio managers began their careers at MFS Investment
Management(R) as research analysts. Our portfolio managers are supported by an
investment staff of over 100 professionals utilizing MFS(R) Original Research
(SM), a company-oriented, bottom-up process of selecting securities.
SERIES FACTS
Objective: Seeks capital appreciation.
Commencement of investment operations: May 3, 1999
Size: $1.1 million net assets as of June 30, 1999
This report is prepared for the general information of contract owners. It is
authorized for distribution to prospective investors only when preceded or
accompanied by a current prospectus. A prospectus containing more information,
including the exchange privilege and all charges and expenses, for any other
MFS product is available from your financial adviser, or by calling MFS at
1-800-225-2606. Please read it carefully before investing or sending money.
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS (Unaudited) - June 30, 1999
Stocks - 93.3%
- -----------------------------------------------------------------------------------------------------
<CAPTION>
ISSUER SHARES VALUE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Foreign Stocks - 54.2%
Argentina - 0.3%
Quilmes Industrial S.A., ADR (Beverages) 230 $ 2,846
- -----------------------------------------------------------------------------------------------------
Australia - 1.3%
QBE Insurance Group Ltd. (Insurance)* 3,500 $ 13,299
- -----------------------------------------------------------------------------------------------------
Canada - 1.3%
Canadian National Railway Co. (Railroads) 200 $ 13,400
- -----------------------------------------------------------------------------------------------------
Finland - 2.7%
Helsingin Puhelin Oyj (Telecommunications) 300 $ 14,221
Perlos Corp. (Electronics)* 120 1,756
Pohjola Group Insurance Corp. (Insurance) 140 7,177
Tieto Corp. (Computer Software - Systems) 120 4,996
----------
$ 28,150
- -----------------------------------------------------------------------------------------------------
France - 5.6%
Bouygues S.A. (Construction)* 11 $ 2,905
Castorama Dubois Investisse ( Building Products) 40 9,480
Pernod Ricard Co. (Beverages) 135 9,043
Renault Regie Nationale (Automobiles) 10 435
Television Francaise (Entertainment) 40 9,316
TOTAL S.A., "B" (Oils)* 130 16,759
Union des Assurances Federales S.A. (Insurance) 95 11,258
----------
$ 59,196
- -----------------------------------------------------------------------------------------------------
Germany - 4.9%
Henkel KGaA, Preferred (Chemicals) 150 $ 10,233
HypoVereinsbank (Banks and Credit Cos.) 120 7,791
Mannesmann AG (Conglomerate) 140 20,919
VEBA AG (Oil and Gas) 100 5,874
Wella AG (Consumer Goods and Services) 10 7,265
----------
$ 52,082
- -----------------------------------------------------------------------------------------------------
Greece - 1.3%
Antenna TV S.A., ADR (Broadcasting)* 400 $ 5,500
Hellenic Telecommunication Organization S.A., GDR (Telecommunications) 370 7,923
STET Hellas Telecommunications S.A., ADR (Telecommunications)* 20 447
----------
$ 13,870
- -----------------------------------------------------------------------------------------------------
Ireland - 2.1%
Allied Irish Bank PLC (Banks and Credit Cos.) 550 $ 7,281
Anglo Irish Bank PLC (Banks and Credit Cos.)* 6,000 14,941
----------
$ 22,222
- -----------------------------------------------------------------------------------------------------
Israel - 1.1%
Oshap Technologies Ltd. (Computer Software - Systems) 900 $ 11,475
- -----------------------------------------------------------------------------------------------------
Italy - 3.1%
Banca Carige S.p.A. (Banks and Credit Cos.) 800 $ 7,007
ERG S.p.A. (Oils) 1,500 4,483
Mediaset S.p.A. (Entertainment) 870 7,728
Telecom Italia Mobile S.p.A., (Telecommunications)* 3,700 13,612
----------
$ 32,830
- -----------------------------------------------------------------------------------------------------
Japan - 7.6%
Canon, Inc., ADR (Special Products and Services) 400 $ 11,650
Chugai Pharmaceutical Co., Ltd. (Pharmaceuticals) 1,000 10,784
Chukyo Coca-Cola Bottling Co., Ltd. (Food and Beverage
Products) 1,000 14,042
Fuji Heavy Industries, Ltd. (Automotive) 1,000 7,724
Hitachi (Electronics) 1,000 9,386
Mitsubishi Motor (Automotive) 1,000 5,185
Olympus Optical Co. (Conglomerate) 1,000 14,795
Sanyo Coca-Cola Bottling Co., Ltd. (Food and Beverage
Products) 200 6,191
----------
$ 79,757
- -----------------------------------------------------------------------------------------------------
Netherlands - 4.8%
Akzo Nobel N.V. (Chemicals) 200 $ 8,409
Benckiser N.V., "B" (Consumer Goods and Services) 422 22,505
Equant N.V. (Computer Software - Services)* 40 3,765
IHC Caland N.V. (Marine Equipment)* 60 2,349
ING Groep N.V. (Financial Services)* 245 13,255
----------
$ 50,283
- -----------------------------------------------------------------------------------------------------
Norway - 1.4%
Sparebanken NOR (Banks and Credit Cos.) 420 $ 7,837
Storebrand ASA (Insurance) 1,100 7,400
----------
$ 15,237
- -----------------------------------------------------------------------------------------------------
Portugal - 1.2%
Banco Pinto & Sotto Mayor S.A. (Banks and Credit Cos.) 500 $ 8,873
Telecel - Comunicacoes Pessoais S.A (Telecommunications) 30 3,864
----------
$ 12,737
- -----------------------------------------------------------------------------------------------------
Sweden - 3.4%
Ericsson LM, "B" (Telecommunications) 570 $ 18,308
Saab AB, "B" (Aerospace) 2,300 17,893
----------
$ 36,201
- -----------------------------------------------------------------------------------------------------
Switzerland - 2.8%
Barry Callebaut AG (Food and Beverage Products) 46 $ 7,042
Novartis AG (Medical and Health Products) 3 4,381
UBS AG (Banks and Credit Cos.)* 60 17,908
----------
$ 29,331
- -----------------------------------------------------------------------------------------------------
United Kingdom - 9.3%
AstraZeneca Group PLC (Medical and Health Products) 335 $ 13,070
BP Amoco PLC (Oils)* 700 12,532
British Aerospace PLC (Aerospace and Defense)* 2,400 15,621
Cable & Wireless Communications PLC (Telecommunications) 2,330 22,400
Next PLC (Stores) 1,200 14,562
Orange PLC (Telecommunications) 300 4,402
TeleWest Communications PLC (Entertainment)* 1,700 7,616
Tomkins PLC (Conglomerate) 1,800 7,801
----------
$ 98,004
- -----------------------------------------------------------------------------------------------------
Total Foreign Stocks $ 570,920
- -----------------------------------------------------------------------------------------------------
U.S. Stocks - 39.1%
Aerospace - 1.0%
Raytheon Co., "A" 160 $ 11,020
- -----------------------------------------------------------------------------------------------------
Automotive - 1.4%
Delphi Automotive Systems Corp. 500 $ 9,281
TRW, Inc. 100 5,488
----------
$ 14,769
- -----------------------------------------------------------------------------------------------------
Business Machines - 1.1%
International Business Machines Corp. 92 $ 11,891
- -----------------------------------------------------------------------------------------------------
Business Services - 1.5%
Computer Sciences Corp.* 100 $ 6,919
H & R Block, Inc. 180 9,000
----------
$ 15,919
- -----------------------------------------------------------------------------------------------------
Computer Software - Services - 0.5%
Sun Microsystems, Inc.* 80 $ 5,510
- -----------------------------------------------------------------------------------------------------
Computer Software - Systems - 8.5%
BMC Software, Inc.* 770 $ 41,580
Computer Associates International, Inc. 500 27,500
Compuware Corp.* 230 7,317
SunGard Data Systems, Inc.* 70 2,415
Synopsys, Inc.* 200 11,037
----------
$ 89,849
- -----------------------------------------------------------------------------------------------------
Conglomerates - 0.8%
Sodexho Marriott Services, Inc.* 420 $ 8,059
- -----------------------------------------------------------------------------------------------------
Consumer Goods and Services - 3.4%
Galileo International, Inc. 570 $ 30,459
Kimberly-Clark Corp. 100 5,700
----------
$ 36,159
- -----------------------------------------------------------------------------------------------------
Electronics - 0.4%
Wavecom S.A.* 300 $ 3,938
- -----------------------------------------------------------------------------------------------------
Entertainment - 6.0%
Disney (Walt) Co. 550 $ 16,947
Hearst-Argyle Television, Inc.* 330 7,920
MediaOne Group, Inc.* 170 12,644
Mirage Resorts, Inc.* 560 9,380
Time Warner, Inc. 220 16,170
----------
$ 63,061
- -----------------------------------------------------------------------------------------------------
Insurance - 4.9%
CIGNA Corp. 130 $ 11,570
Hartford Financial Services Group, Inc. 280 16,327
ReliaStar Financial Corp. 540 23,625
----------
$ 51,522
- -----------------------------------------------------------------------------------------------------
Internet - 0.1%
Ask Jeeves, Inc. 50 $ 700
- -----------------------------------------------------------------------------------------------------
Medical and Health Products - 0.8%
Becton, Dickinson & Co. 270 $ 8,100
- -----------------------------------------------------------------------------------------------------
Medical and Health Technology and Services - 0.6%
McKesson HBOC, Inc. 200 $ 6,425
- -----------------------------------------------------------------------------------------------------
Oils - 0.7%
Conoco, Inc., "A" 250 $ 6,969
- -----------------------------------------------------------------------------------------------------
Stores - 3.9%
AutoZone, Inc.* 450 $ 13,556
CVS Corp. 210 10,657
Federated Department Stores, Inc.* 150 7,941
Rite Aid Corp. 350 8,619
----------
$ 40,773
- -----------------------------------------------------------------------------------------------------
Supermarkets - 2.5%
Albertsons, Inc. 264 $ 13,612
Kroger Co.* 470 13,131
----------
$ 26,743
- -----------------------------------------------------------------------------------------------------
Telecommunications - 0.2%
Global TeleSystems Group, Inc.* 30 $ 2,430
- -----------------------------------------------------------------------------------------------------
Utilities - Telephone - 0.8%
Frontier Corp. 145 $ 8,555
- -----------------------------------------------------------------------------------------------------
Total U.S. Stocks $ 412,392
- -----------------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $966,362) $ 983,312
- -----------------------------------------------------------------------------------------------------
Rights
- -----------------------------------------------------------------------------------------------------
France
Bouygues S.A. (Construction) (Identified Cost, $35) 11 $ 29
- -----------------------------------------------------------------------------------------------------
Short-Term Obligations - 9.0%
- -----------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
- -----------------------------------------------------------------------------------------------------
Federal Farm Credit Bank, due 7/01/99 at Amortized Cost $ 95 $ 95,000
- -----------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $1,061,397) 1,078,341
Other Assets, Less Liabilities - (2.3)% (24,360)
- -----------------------------------------------------------------------------------------------------
Net Assets - 100.0% $1,053,981
- -----------------------------------------------------------------------------------------------------
* Non-income producing security.
See notes to financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
- --------------------------------------------------------------------------------
JUNE 30, 1999
- --------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $1,061,397) $1,078,341
Cash 3,019
Foreign currency, at value (identified cost, $704) 696
Receivable for investments sold 8,396
Dividends receivable 1,593
----------
Total assets $1,092,045
----------
Liabilities:
Payable for investments purchased $ 38,027
Accrued expenses and other liabilities 37
----------
Total liabilities $ 38,064
----------
Net assets $1,053,981
==========
Net assets consist of:
Paid-in capital $1,000,200
Unrealized appreciation on investments and translation of assets
and liabilities in foreign currencies 16,938
Accumulated undistributed net realized gain on investments
and foreign currency transactions 34,976
Accumulated undistributed net investment income 1,867
----------
Total $1,053,981
==========
Shares of beneficial interest outstanding 100,020
=======
Net asset value, offering price, and redemption price per share
(net assets / shares of beneficial interest outstanding) $10.54
======
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Operations (Unaudited)
- --------------------------------------------------------------------------------
PERIOD ENDED JUNE 30, 1999
- --------------------------------------------------------------------------------
Net investment income (loss):
Income -
Dividends $ 3,072
Interest 1,215
Foreign taxes withheld (392)
-------
Total investment income $ 3,895
-------
Expenses -
Management fee $ 1,622
Shareholder servicing agent fee 57
Administrative fee 24
Custodian fee 49
Printing 13,000
Auditing fees 7,500
Legal fees 78
Miscellaneous 1,983
-------
Total expenses $24,313
Fees paid indirectly (49)
Reduction of expenses by investment adviser (22,236)
-------
Net expenses $ 2,028
-------
Net investment income $ 1,867
-------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $35,620
Foreign currency transactions (644)
-------
Net realized gain on investments and foreign
currency transactions $34,976
-------
Change in unrealized appreciation (depreciation) -
Investments $16,944
Translation of assets and liabilities in foreign
currencies (6)
-------
Net unrealized gain on investments and foreign
currency translation $16,938
-------
Net realized and unrealized gain on investments
and foreign currency $51,914
-------
Increase in net assets from operations $53,781
=======
See notes to financial statements
<PAGE>
<TABLE>
FINANCIAL STATEMENTS - continued
Statement of Changes in Net Assets
- -----------------------------------------------------------------------------------------
<CAPTION>
PERIOD ENDED
JUNE 30, 1999*
(UNAUDITED)
- -----------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 1,867
Net realized gain on investments and foreign currency transactions 34,976
Net unrealized gain on investments and foreign currency translation 16,938
----------
Increase in net assets from operations $ 53,781
----------
Net increase in net assets from Series share transactions $1,000,200
----------
Total increase in net assets $1,053,981
Net assets:
At beginning of period --
----------
At end of period (including accumulated undistributed net investment
income of $1,867) $1,053,981
==========
* For the period from the commencement of the Series' investment operations, May 3, 1999,
through June 30, 1999.
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS - continued
Financial Highlights
- ---------------------------------------------------------------------------------------------
<CAPTION>
PERIOD ENDED
JUNE 30, 1999*
(UNAUDITED)
- ---------------------------------------------------------------------------------------------
<S> <C>
Per share data (for a share outstanding throughout the period):
Net asset value - beginning of period $10.00
------
Income from investment operations# -
Net investment income(S) $ 0.02
Net realized and unrealized gain on investments and foreign currency 0.52
------
Total from investment operations $ 0.54
------
Net asset value - end of period $10.54
======
Total return 5.40%++
Ratios (to average net assets)/Supplemental data(S):
Expenses## 1.28%+
Net investment income 1.15%+
Portfolio turnover 18%
Net assets at end of period (000 omitted) $1,054
(S) Subject to reimbursement by the Series, the investment adviser voluntarily agreed to
maintain expenses of the Series, exclusive of management fees, at not more than 0.25% of
average daily net assets. To the extent actual expenses were over this limitation, the net
investment loss per share and ratios would have been:
Net investment loss $(0.20)
Ratios (to average net assets):
Expenses## 14.99%+
Net investment loss (12.56)%+
* For the period from the commencement of the Series' investment operations, May 3, 1999,
through June 30, 1999.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## The Series has an expense offset arrangement which reduces the Series' custodian fee based
upon the amount of cash maintained by the Series with its custodian. The Series' expenses
are calculated without reduction for this expense offset arrangement.
See notes to financial statements
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(1) Business and Organization
MFS Global Equity Series (the Series) is a diversified series of MFS(R) Variable
Insurance Trust(SM) (the Trust) which is comprised of the following 15 series:
MFS(R) Bond Series, MFS(R) Capital Opportunities Series (formerly MFS(R) Value
Series), MFS(R) Emerging Growth Series, MFS(R)/Foreign & Colonial Emerging
Markets Equity Series, MFS Global Equity Series, MFS(R) Global Government Series
(formerly MFS(R) World Governments Series), MFS(R) Growth Series, MFS(R) Growth
with Income Series, MFS(R) High Income Series, MFS(R) Limited Maturity Series,
MFS(R) Money Market Series, MFS(R) New Discovery Series, MFS(R) Research Series,
MFS(R) Total Return Series, and MFS(R) Utilities 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, 1999, there were 4 shareholders of 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 - Equity securities listed on securities exchanges or
reported through the NASDAQ system are reported at market value using last
sale prices. Unlisted equity securities or listed equity securities for which
last sale prices are not available are reported at market value using last
quoted bid prices. Short-term obligations, which mature in 60 days or less,
are valued at amortized cost, which approximates market value. Securities for
which there are no such quotations or valuations are valued at fair value as
determined in good faith by the Trustees.
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.
Investment Transactions and Income - Investment transactions are recorded on
the trade date. Interest income is recorded on the accrual basis. All discount
is accreted for financial statement and tax reporting purposes as required by
federal income tax regulations. Dividends received in cash are recorded on the
ex-dividend date. Dividend 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.
Fees Paid Indirectly - The Series' custody fee is calculated as a percentage
of the Series' month end 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 income,
including any net realized gain on investments. Accordingly, no provision for
federal income or excise tax is provided.
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 distributions from paid-in
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.
(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 1.00% of
the Series' 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 0.25% of 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, 1999, the aggregate unreimbursed expenses owed to MFS
by the Series amounted to $22,236.
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).
Administrator - 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:
First $1 billion 0.0150%
Next $1 billion 0.0125%
Next $1 billion 0.0100%
In excess of $3 billion 0.0000%
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's average daily net assets at an effective annual
rate of 0.035%.
(4) Portfolio Securities
Purchases and sales of investments, other than U.S. government securities,
purchased option transactions, and short-term obligations, aggregated
$1,097,556 and $166,779, respectively.
The cost and unrealized appreciation and depreciation in the value of the
investments owned by the Series, as computed on a federal income tax basis,
are as follows:
Aggregate cost $1,061,397
----------
Gross unrealized appreciation $ 57,591
Gross unrealized depreciation (40,647)
----------
Net unrealized appreciation $ 16,944
==========
(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. Transactions in
Series shares were as follows:
PERIOD ENDED JUNE 30, 1999*
-----------------------------
SHARES AMOUNT
- --------------------------------------------------------------------------------
Shares sold 100,020 $1,000,200
------- ----------
*For the period from the commencement of the Series' investment operations,
May 3, 1999, through June 30, 1999.
(6) Line of Credit
The Series and other affiliated Series participate in a $820 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 Series, 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 Series at the end of each quarter. The commitment fee allocated
to the Series for the period ended June 30, 1999, was $0. The Series had no
borrowings during the period.
<PAGE>
(C)1999 MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116-3741
VGE-3 8/99 260
