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[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) MONEY
MARKET SERIES
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<TABLE>
MFS(R) MONEY MARKET 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.
Jean O. Alessandro*
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
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NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
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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 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 in the
highest-quality corporate and bank issues, in order to minimize credit risk.
As of June 30, 1999, the portfolio had assets of approximately $12.7 million,
58% of which was invested in commercial paper and the balance in government-
agency securities. The average maturity of the Series was 31 days.
We expect flat to slightly higher short-term interest rates over the next
several months.
Investments in the Series are not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the Series
seeks to preserve the value of your investment at $1.00 per share, it is
possible to lose money by investing in the Series.
Respectfully,
/s/ Jean O. Alessandro
Jean O. Alessandro
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.
The portfolio is actively managed, and current holdings may be different.
<PAGE>
PORTFOLIO MANAGER'S PROFILE
Jean O. Alessandro is Assistant Vice President of MFS Investment Management(R)
and portfolio manager of MFS(R) Cash Reserve Fund, MFS(R) Government Money
Market Fund, MFS(R) Money Market Fund, the Money Market Series offered through
MFS(R)/Sun Life annuity products, and the MFS(R) Money Market Series (part of
MFS(R) Variable Insurance Trust(SM)).
Ms. Alessandro joined MFS in 1986 as a fixed-income trading assistant. From
1986 to 1990, she was a money market trader and, from 1990 to 1993, a senior
money market specialist. She was named Investment Officer in 1993, portfolio
manager in 1998, and Assistant Vice President in 1999. Ms. Alessandro earned a
bachelor's degree from the University of Connecticut.
All portfolio managers at MFS Investment Management(R) 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 as high a level of current income as is considered consistent
with the preservation of capital and liquidity.
Commencement of investment operations: January 3, 1995
Size: $12.7 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
Commercial Paper - 58.5%
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<CAPTION>
PRINCIPAL AMOUNT
ISSUER (000 OMITTED) VALUE
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<S> <C> <C>
American Express Credit Corp., due 8/11/99 $ 300 $ 298,360
American General Finance Corp., due 7/13/99 300 299,520
Ameritech Corp., due 7/26/99 250 249,170
Archer-Daniels-Midland Co., due 8/27/99 400 396,770
AT&T Corp., due 7/27/99 500 498,176
Banc One Corp., due 9/13/99 300 296,923
BankAmerica Corp., due 8/05/99 400 398,130
Campbell Soup Co., due 7/12/99 300 299,562
Carolina Power & Light Co., due 9/10/99 300 297,077
Caterpillar Financial Services, due 7/06/99 - 7/22/99 300 299,586
Coca-Cola Co., due 8/03/99 400 398,174
Deutsche Bank, due 8/23/99 200 198,569
Disney (Walt) Co., due 11/04/99 250 245,826
Ford Motor Credit Corp., due 8/13/99 257 255,450
General Electric Capital Corp., due 8/02/99 500 497,871
GTE Funding, Inc., due 7/19/99 325 324,163
Heinz (H.J.) Co., due 7/14/99 300 299,482
IBM Credit Corp., due 8/09/99 300 298,401
Kellogg Co., due 7/16/99 500 498,969
Lucent Technologies, Inc., due 7/08/99 300 299,720
National Rural Utilities Cooperative Finance Corp.,
due 8/20/99 200 198,653
Procter & Gamble Co., due 7/12/99 300 299,548
Sara Lee Corp., due 7/01/99 250 250,000
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Total Commercial Paper, at Amortized Cost and Value $ 7,398,100
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U.S. Government and Agency Obligations - 41.7%
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Federal Agricultural Mortgage Corp., due 7/02/99 - 8/12/99 $1,100 $ 1,096,692
Federal Farm Credit Bank, due 7/29/99 - 8/16/99 900 895,686
Federal Home Loan Bank, due 7/01/99 - 9/15/99 1,450 1,445,712
Federal Home Loan Mortgage Corp., due 7/15/99 - 7/19/99 745 743,489
Federal National Mortgage Assn., due 7/09/99 - 8/13/99 1,100 1,095,275
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Total U.S. Government and Agency Obligations, at
Amortized Cost and Value $ 5,276,854
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Total Investments, at Amortized Cost and Value $12,674,954
Other Assets, Less Liabilities - (0.2)% (20,568)
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Net Assets - 100.0% $12,654,386
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See notes to financial statements
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FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
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JUNE 30, 1999
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Assets:
Investments, at amortized cost and value $12,674,954
Cash 3,191
Receivable for Series shares sold 27,598
Deferred organization expenses 951
Other assets 103
-----------
Total assets $12,706,797
-----------
Liabilities:
Payable for Series shares reacquired $ 51,611
Payable to affiliate for management fee 173
Accrued expenses and other liabilities 627
-----------
Total liabilities $ 52,411
-----------
Net assets (represented by paid-in capital) $12,654,386
===========
Shares of beneficial interest outstanding 12,654,386
==========
Net asset value per share
(net assets / shares of beneficial interest outstanding) $1.00
=====
See notes to financial statements
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FINANCIAL STATEMENTS - continued
Statement of Operations (Unaudited)
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SIX MONTHS ENDED JUNE 30, 1999
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Net investment income (loss):
Interest income $291,794
--------
Expenses -
Management fee $ 29,938
Trustees' compensation 1,123
Shareholder servicing agent fee 2,094
Administrative fee 893
Custodian fee 3,069
Printing 3,757
Auditing fees 9,879
Legal fees 1,698
Amortization of organization expenses 911
Miscellaneous 284
--------
Total expenses $ 53,646
Fees paid indirectly (986)
Reduction of expenses by investment adviser (16,734)
--------
Net expenses $ 35,926
--------
Net investment income $255,868
========
See notes to financial statements
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<TABLE>
FINANCIAL STATEMENTS - continued
Statement of Changes in Net Assets
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<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, 1998
(UNAUDITED)
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<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income, declared as distributions to
shareholders $ 255,868 $ 430,322
----------- -----------
Series share (principal) transactions at net assets value
of $1.00 per share -
Net proceeds from sale of shares $ 5,670,189 $13,129,805
Net asset value of shares issued to shareholders in
reinvestment of distributions 255,748 430,497
Cost of shares reacquired (4,840,183) (10,747,102)
----------- -----------
Total increase in net assets $ 1,085,754 $ 2,813,200
Net assets:
At beginning of period 11,568,632 8,755,432
----------- -----------
At end of period $12,654,386 $11,568,632
=========== ===========
See notes to financial statements
</TABLE>
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<TABLE>
FINANCIAL STATEMENTS - continued
Financial Highlights
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<CAPTION>
YEAR ENDED DECEMBER 31,
SIX MONTHS ENDED -----------------------------------------------------------
JUNE 30, 1999 1998 199 7 1996 1995*
(UNAUDITED)
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<S> <C> <C> <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 $ 1.00 $ 1.00
------ ------ ------ ------ ------
Income from investment operations# -
Net investment income(S) $ 0.02 $ 0.05 $ 0.05 $ 0.04 $ 0.04
------ ------ ------ ------ ------
Less distributions declared to shareholders
from net investment income $(0.02) $(0.05) $(0.05) $(0.04) $(0.04)
------ ------ ------ ------ ------
Net asset value - end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ======
Total return 4.25%+ 4.91% 4.91% 4.55% 4.37%++
Ratios (to average net assets)/Supplemental data(S):
Expenses## 0.62%+ 0.62% 0.61% 0.63% 0.63%+
Net investment income 4.27%+ 4.76% 4.91% 4.53% 4.54%+
Net assets at end of period (000 omitted) $12,654 $11,569 $8,755 $633 $180
(S) Subject to reimbursement by the Series, the investment adviser agreed to maintain the expenses of the Series, exclusive of
management fees, at not more than 0.10% of average daily net assets. To the extent actual expenses were over/under this
limitation, the net investment income (loss) per share and the ratios would have been:
Net investment income (loss) $ 0.02 $ 0.05 $ 0.04 $(0.21) $(0.14)
Ratios (to average net assets):
Expenses## 0.90%+ 0.96% 1.36% 27.74% 21.54%+
Net investment income (loss) 3.99%+ 4.42% 4.16% (22.58)% (16.37)%+
* 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.
## 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 and dividend disbursing agent. The Series' expenses are calculated without
reduction for this expense offset arrangement.
See notes to financial statements
</TABLE>
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NOTES TO FINANCIAL STATEMENTS (Unaudited)
(1) Business and Organization
MFS Money Market Series (the Series) is a diversified series of MFS(R)
Variable Insurance Trust(SM) (the Trust) which is composed 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(R) 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 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 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.
Investment Valuations - Money market instruments are valued at amortized cost,
which the Trustees have determined in good faith approximates market 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 discount
is 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' 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 taxable
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.
At December 31, 1998, the Series, for federal income tax purposes, had a
capital loss carryforward of $45 which may be applied against any net taxable
realized gains of each succeeding year until the earlier of its utilization or
expiration on December 31, 2005, ($24) and December 31, 2006, ($21).
(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 0.50%
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 0.10% 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 $159,411.
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' average daily net assets at an effective annual
rate of 0.035%.
(4) Portfolio Securities
Purchases and sales of money market investments, exclusive of securities
subject to repurchase agreements, consisted solely of U.S. government
securities and aggregated $116,939,733 and $115,919,682, 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, $1.00 per share).
(6) Line of Credit
The Series and other affiliated funds 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 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 six months ended June 30, 1999, was $50. The Series had
no borrowings during the period.
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(C)1999 MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116-3741
VMM-3 8/99 256
