<PAGE>
[Logo] M F S (R)
INVESTMENT MANAGEMENT SEMIANNUAL REPORT
We invented the mutual fund(R) JUNE 30, 2000
[Graphic Omitted]
A SERIES OF MFS(R) VARIABLE INSURANCE TRUST(SM)
MFS(R) CAPITAL
OPPORTUNITIES SERIES
<PAGE>
<TABLE>
MFS(R) CAPITAL OPPORTUNITIES SERIES
A SERIES OF MFS(R) VARIABLE INSURANCE TRUST(SM)
<S> <C>
TRUSTEES INVESTMENT ADVISER
Jeffrey L. Shames* - Chairman and Chief Executive Massachusetts Financial Services Company
Officer, MFS Investment Management(R) 500 Boylston Street
Boston, MA 02116-3741
Nelson J. Darling, Jr.+ - Private investor and
trustee DISTRIBUTOR
MFS Fund Distributors, Inc.
William R. Gutow+ - Private investor and real 500 Boylston Street
estate consultant; Vice Chairman, Capitol Boston, MA 02116-3741
Entertainment Management Company (video franchise)
INVESTOR SERVICE
CHAIRMAN AND PRESIDENT MFS Service Center, Inc.
Jeffrey L. Shames* P.O. Box 2281
Boston, MA 02107-9906
PORTFOLIO MANAGER
Maura A. Shaughnessy* For additional information,
contact your investment professional.
TREASURER
James O. Yost* CUSTODIAN
State Street Bank and Trust Company
ASSISTANT TREASURERS
Mark E. Bradley* WORLD WIDE WEB
Ellen Moynihan* www.mfs.com
SECRETARY
Stephen E. Cavan*
ASSISTANT SECRETARY
James R. Bordewick, Jr.*
* MFS Investment Management
+ Independent Trustee
</TABLE>
--------------------------------------------------------------------------------
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
--------------------------------------------------------------------------------
<PAGE>
LETTER FROM THE CHAIRMAN
Dear Shareholders,
I'm sure you've noticed that whenever financial markets suffer a large
decline, as they did this past spring, there's a flurry of information on "how
to deal with market volatility" -- both in the popular press and from those of
us in the investment business. Our own thinking on this is that, first, for
long-term investors volatility is not necessarily something to be feared;
occasional volatility may in fact be healthy for the markets.
Second, our experience has been that when markets begin to fall, it's often
too late to act. The best response may be to do nothing -- if you're properly
prepared with a long-term plan, created with the help of your investment
professional. To help you create or update that plan and take market
volatility in stride, here are some points you may want to consider the next
time you talk with your investment professional.
1. VOLATILITY CAN BE A GOOD THING
We would argue that the markets today are much healthier than they were before
the period of volatility this past spring, in the sense that stock prices have
returned to more reasonable levels and we have a stronger base for future
growth. Perhaps the worst of the market's wrath descended on companies with very
high stock prices, relative to their earnings, or with business concepts that
looked great in the euphoria of a booming market but in the end appeared to have
no fundamental backing. It has always been our view that one of the best
protections against market volatility is to invest in stocks and bonds of
fundamentally good companies selling at reasonable prices. When discussing
potential investments with your investment professional, you may want to ask how
they fared in previous periods of volatility, as well as in the good times.
2. INVEST FOR THE LONG TERM
You've heard that before, but we think it's still probably the most important
concept in investing. Time is one of an investor's greatest allies. Over
nearly all long-term periods -- 5, 10, 20 years, and more -- stock and bond
returns, as represented by most common indices, have been positive and have
considerably outpaced inflation. Investing is the best way we know of to make
your money work for you while you're doing something else.
Where investors can get into trouble is by confusing investing with trading.
In our view, traders who buy securities with the intention of selling them at
a profit in a matter of hours, days, or weeks are gambling. We believe this
seldom turns out to be a good strategy for increasing your wealth.
3. INVEST REGULARLY
Waiting for the "right time" to invest is almost always a poor strategy,
because only in retrospect do we know when that right time really was. Periods
of volatility are probably the worst times to make an investment decision.
Faced with turmoil in the markets, many investors have opted to simply stay on
the sidelines.
On the other hand, we think one of the best techniques for investing is
through automatic monthly or quarterly deductions from a checking or savings
account. This approach has at least three major benefits. First, you can
formulate a long-term plan -- how much to invest, how often, and into which
portfolios -- in a calm, rational manner, working with your investment
professional. Second, with this approach you invest regularly without
agonizing over the decision each time you buy shares. And, third, if you
invest equal amounts of money at regular intervals, you'll be taking advantage
of a strategy called dollar-cost averaging: by investing a fixed amount while
the share cost fluctuates, you end up with an average share cost to you that
is lower than the average share price over your investment period.(1) If all
this sounds familiar, it's probably because you're already taking advantage of
dollar-cost averaging by investing regularly for retirement through a 401(k)
or similar account at work.
4. DIVERSIFY
One of the dangers of not having an investment plan is that you may be tempted
to simply chase performance, by moving money into whatever asset class appears
to be outperforming at the moment -- small, mid, or large cap; growth or value;
United States or international; stocks or bonds. The problem with this approach
is that by the time a particular area is generally recognized as "hot," you may
have already missed some of the best performance.
International investing offers a case in point. In the 1980s, international
investments, as represented by the Morgan Stanley Capital International (MSCI)
Europe, Australia, Far East (EAFE) Index, outperformed U.S. investments, as
represented by the Standard & Poor's 500 Composite Index (S&P 500), in 7 out
of 10 years.(2) For the decade, the MSCI EAFE's average annual performance was
23%, compared to 18% for the S&P 500. Going into the 1990s, then, an investor
looking only at recent performance might have favored international
investments over U.S. investments.
But the 1990s turned out to be virtually a mirror image of the '80s. Domestic
investments outperformed international investments in 7 out of 10 years, with
the S&P 500 returning an average of 18% annually for the decade and the MSCI
EAFE returning a 7% annual average. Looking ahead, however, we are optimistic
about international markets because we feel that many of the same forces that
propelled the current U.S. economic boom -- deregulation, restructuring, and
increased adoption of technology -- have taken root overseas.
The lesson to be learned is that nobody really knows what asset class will be
the next to outperform or how long that performance will be sustained. We would
suggest that one way to potentially profit from swings in the market -- to
potentially be invested in various asset classes before the market shifts in
their favor -- is with a diversified portfolio covering several asset classes.
If you haven't already done so, we encourage you to discuss these thoughts
with your investment professional and factor them into your long-range
financial planning. Hopefully, the next time the markets appear to be going
wild, you'll feel confident enough in your plan to view periods of volatility
as a time of potential opportunity -- or perhaps just a time to sit back and
do nothing.
As always, 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 17, 2000
(1) The use of a systematic investing program does not guarantee a profit or
protect against a loss in declining markets. You should consider your
financial ability to continue to invest through periods of low prices.
(2) Source: Lipper Inc. Decade performance: '80s -- 12/31/79-12/31/89,
'90s -- 12/31/89-12/31/99. The MSCI EAFE Index is an unmanaged,
market-capitalization-weighted total return index that measures the
performance of the same developed-country global stock markets included in
the MSCI World Index but excludes the United States, Canada, and the South
African mining component. The S&P 500 is a popular, unmanaged index of
common stock total return performance. It is not possible to invest directly
in an index. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
Investments in variable products will fluctuate and may be worth more or less
upon redemption. Please see your investment professional for more information.
The opinions expressed in this letter are those of Jeffrey L. Shames, and no
forecasts can be guaranteed.
<PAGE>
MANAGEMENT REVIEW AND OUTLOOK
Dear Shareholders,
For the six months ended June 30, 2000, the series' Initial Class and Service
Class shares each provided a total return of 8.05%, including the reinvestment
of any distributions. This compares to a 2.53% return for the average multi-
cap core fund tracked by Lipper Inc., an independent firm that reports
performance and to a -0.42% return for the series' benchmark, the Standard &
Poor's 500 Composite Index. The S&P 500 is a popular, unmanaged index of
common stock total return performance.
The market has been extremely volatile over the period, driven mainly by
interest-rate concerns. Technology and telecommunications stocks led the
market between November and March, as interest rates climbed and investors
abandoned stocks in more economically sensitive sectors. Valuations in the
technology and telecommunications sectors reached what seemed like
ridiculously high levels, especially given that many companies showed no sign
of being profitable anytime soon. Investors finally got nervous and started
selling tech and telecom names, leading to volatility in the S&P 500 through
much of the spring. This shift caused some liquidity problems in the market --
especially among small- and mid-cap names. As technology stocks slid, safe-
haven sectors like drugs, utilities, and food benefited. In May, we finally
started seeing data that suggested the economy was slowing. This led to
speculation that the Federal Reserve Board (the Fed) might be nearing the end
of its interest rate hikes, and investors began moving back into technology
stocks.
We stuck to our disciplined investment strategy, buying stocks with strong
earnings growth that were selling at reasonable prices and selling them when
we felt they were fully valued. We tried not to get caught up in the herd
instinct known as momentum buying. Instead, we took advantage of stock price
weakness to buy names that we liked. A good example is Corning, a position we
started adding to back in January. In our view, this company was mostly known
for its plasticware. Instead, it's the leading manufacturer worldwide of fiber
used in the networks being built for high-speed data and Internet
transmission. Its stock price bounced around a lot during the tech debacle.
But earnings accelerated during the spring and more investors began to
understand the importance of Corning's fiber business. Several other large
investments also did quite well, including Mannesmann, a German wireless and
wireline company that was bought out at a nice premium by Vodafone AirTouch
PLC, a leading international mobile telecom provider.
During the recent volatility, we maintained a sizable stake in the telecom and
tech sectors but used the volatility to change our holdings. We sold positions
whose quality we were concerned about and trimmed stocks that had held up
well, including well-known names such as Oracle and Cisco. We used the
proceeds to buy stocks like Vodafone, which we liked but hadn't had a big
position in because it had been too expensive. We also bought some lesser-
known names at what we thought were attractive prices. Among them were ADC
Telecommunications, a networking stock; Telesystem International Wireless, a
Canadian cellular company with investments in Eastern Europe, Brazil, and
Asia; and Cabletron Systems, a mid-size company involved in both networking
and high-end consulting. We kept stocks like Nortel Networks -- a Canadian
leader in the optical business -- that we thought had strong earnings growth
prospects not fully reflected in their stock prices.
Our energy investments contributed to our strong performance during the
period. We had more than doubled our energy stake late last year on the
expectation that oil prices were bottoming. Our biggest increase was in oil
services companies that supply services and equipment for drilling rigs and
oil wells. One of our largest investments was Baker-Hughes, which was the
cheapest stock in its group last fall due mainly to management problems. The
stock has since rebounded nicely, thanks to both restructuring and the rally
in oil prices this past winter. We also added to exploration and production
stocks like Noble Drilling, as well as to natural gas pipeline stocks like
Enron, Coastal, and Dynegy -- all of which did quite well during the period.
In addition, we increased our stake in AES, a leading worldwide independent
power producer that's benefiting from the deregulation of electric power
generation.
We continued to find some good buying opportunities overseas, including
Samsung Electronics, a South Korean supplier of cellular handsets and memory
chips, and NTL, which is involved in acquiring cable firms. We also bought
some telecommunications stocks -- including Nextlink and Allegiance Telecom --
when their stock prices nosedived this spring. In the winter, when drug stocks
tumbled on worries about changes in Medicare reimbursement policies, we added
shares of Pharmacia and Bristol-Myers Squibb. Another area in which we did
some selective buying was financial services; We added to existing holdings
like AXA Financial. Many of these stocks have appreciated significantly since
we purchased them.
It's impossible to forecast the direction of interest rates or the market. We
could well be near the end of the Fed's increases -- which would bode well for
the market -- or we could continue to see volatility. Under either scenario,
we'll maintain our disciplined investment strategy, looking for earnings
growth at a reasonable price wherever we can find it. Our approach is to be
patient and not panic even when the market seems like a roller coaster.
Respectfully,
/s/ Maura A. Shaughnessy
Maura A. Shaughnessy
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.
PORTFOLIO MANAGER'S PROFILE
Maura A. Shaughnessy is Senior Vice President of MFS Investment Management(R)
and portfolio manager of MFS(R) Capital Opportunities Fund, MFS(R) Utilities
Fund, MFS(R) Utilities Series and MFS(R) Capital Opportunities Series (both
part of MFS(R) Variable Insurance Trust(SM)), and the Utilities Series and the
Capital Opportunities Series offered through MFS(R)/Sun Life annuity products.
Ms. Shaughnessy joined MFS in 1991 as a research analyst and became Vice
President and portfolio manager in 1992 and Senior Vice President in 1998. A
graduate of Colby College and the Amos Tuck School of Business Administration
of Dartmouth College, she is a Chartered Financial Analyst.
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 Original Research(R),
a global company-oriented, bottom-up process of selecting securities.
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. A prospectus containing more information,
including all charges and expenses, for any MFS product is available from your
investment professional, or by calling MFS at 1-800-225-2606. Please read it
carefully before investing or sending money.
<PAGE>
SERIES FACTS
Objective: Seeks capital appreciation.
Commencement of investment operations: August 14, 1996
Class Inception: Initial Class August 14, 1996
Service Class May 1, 2000
Size: $108.7 million net assets as of June 30, 2000
PERFORMANCE SUMMARY
Because the series is designed for investors with long-term goals, we have
provided the cumulative as well as the average annual total returns for the
applicable time periods. Investment results reflect the percentage change in
net asset value, including the reinvestment of dividends. (See Notes to
Performance Summary.)
TOTAL RATES OF RETURN THROUGH JUNE 30, 2000
INITIAL CLASS
6 Months 1 Year 3 Years Life*
-------------------------------------------------------------------------------
Cumulative Total Return +8.05% +34.63% +129.60% +177.87%
-------------------------------------------------------------------------------
Average Annual Total Return -- +34.63% + 31.92% + 30.16%
-------------------------------------------------------------------------------
SERVICE CLASS
6 Months 1 Year 3 Years Life*
-------------------------------------------------------------------------------
Cumulative Total Return +8.05% +34.63% +129.60% +177.87%
-------------------------------------------------------------------------------
Average Annual Total Return -- +34.63% + 31.92% + 30.16%
-------------------------------------------------------------------------------
* For the period from the commencement of the series' investment operations,
August 14, 1996, through June 30, 2000.
NOTES TO PERFORMANCE SUMMARY
Initial Class and Service Class shares have no sales charge; however, Service
Class shares carry a 0.20% annual Rule 12b-1 fee. Service Class share
performance includes the performance of the series' Initial Class shares for
periods prior to the inception of Service Class shares (blended performance).
These blended performance figures have not been adjusted to take into account
differences in the class-specific operating expenses (such as Rule 12b-1
fees). Because operating expenses of Service Class shares are higher than
those of Initial Class shares, the blended Service Class share performance is
higher than it would have been had Service Class shares been offered for the
entire period.
Performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Subsidies and
waivers may be rescinded at any time. See the prospectus for details. All
results are historical and assume the reinvestment of dividends and capital
gains. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MORE RECENT
RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. PAST PERFORMANCE IS NO GUARANTEE
OF FUTURE RESULTS.
Returns shown do not reflect the deduction of the mortality and expense risk
charges and administration fees. Please refer to the variable product's annual
report for performance that reflects the deduction of the fees and charges
imposed by insurance company separate accounts.
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS (Unaudited) - June 30, 2000
<CAPTION>
Stocks - 91.0%
-------------------------------------------------------------------------------------------------------
ISSUER SHARES VALUE
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Stocks - 75.5%
Aerospace - 1.2%
Boeing Co. 17,200 $ 719,175
Honeywell International, Inc. 10,075 339,402
United Technologies Corp. 4,600 270,825
------------
$ 1,329,402
-------------------------------------------------------------------------------------------------------
Banks and Credit Companies - 1.1%
Chase Manhattan Corp. 20,550 $ 946,584
Providian Financial Corp. 3,100 279,000
------------
$ 1,225,584
-------------------------------------------------------------------------------------------------------
Biotechnology - 1.2%
Pharmacia Corp. 26,150 $ 1,351,628
-------------------------------------------------------------------------------------------------------
Business Machines - 1.3%
Hewlett-Packard Co. 3,600 $ 449,550
International Business Machines Corp. 1,900 208,169
Seagate Technology, Inc.* 12,700 698,500
------------
$ 1,356,219
-------------------------------------------------------------------------------------------------------
Business Services - 1.4%
Adelphia Business Solutions* 8,600 $ 199,413
Bea Systems, Inc.* 3,800 187,863
Computer Sciences Corp.* 10,700 799,156
Finisar Corp.* 14,700 384,956
------------
$ 1,571,388
-------------------------------------------------------------------------------------------------------
Cellular Telephones - 2.5%
Motorola, Inc. 39,436 $ 1,146,108
Sprint Corp. (PCS Group)* 12,500 743,750
Voicestream Wireless Corp.* 6,800 790,819
------------
$ 2,680,677
-------------------------------------------------------------------------------------------------------
Computer Hardware - Systems - 1.0%
Compaq Computer Corp. 9,400 $ 240,288
Dell Computer Corp.* 16,600 818,587
------------
$ 1,058,875
-------------------------------------------------------------------------------------------------------
Computer Software - Personal Computers - 0.9%
Mercury Interactive Corp.* 1,100 $ 106,425
Microsoft Corp.* 10,300 824,000
------------
$ 930,425
-------------------------------------------------------------------------------------------------------
Computer Software - Services - 0.5%
EMC Corp.* 7,600 $ 584,725
-------------------------------------------------------------------------------------------------------
Computer Software - Systems - 5.0%
BMC Software, Inc.* 11,800 $ 430,516
Brocade Communications Systems, Inc.* 900 165,136
Commerce One, Inc.* 1,600 72,600
Computer Associates International, Inc. 8,700 445,331
Digex, Inc.* 7,600 516,325
Extreme Networks, Inc.* 19,800 2,088,900
I2 Technologies, Inc.* 2,035 212,180
Oracle Corp.* 3,600 302,625
Redback Networks, Inc.* 1,100 195,800
Siebel Systems, Inc.* 2,100 343,481
StorageNetworks, Inc.* 180 16,245
Unisys Corp.* 14,000 203,875
VERITAS Software Corp.* 3,750 423,809
------------
$ 5,416,823
-------------------------------------------------------------------------------------------------------
Conglomerates - 2.7%
Tyco International Ltd. 60,720 $ 2,876,610
-------------------------------------------------------------------------------------------------------
Electrical Equipment
Capstone Turbine Corp.* 60 $ 2,704
-------------------------------------------------------------------------------------------------------
Electronics - 6.9%
Analog Devices, Inc.* 9,806 $ 745,256
Applied Materials, Inc.* 4,958 449,319
Atmel Corp.* 9,800 361,375
Fairchild Semiconductor International Co.* 18,400 745,200
Flextronics International Ltd.* 3,400 233,538
Intel Corp. 5,100 681,806
Lam Research Corp.* 8,300 311,250
LSI Logic Corp.* 13,500 730,688
Micron Technology, Inc.* 12,200 1,074,362
Novellus Systems, Inc.* 8,000 452,500
Sanmina Corp.* 4,940 422,370
Solectron Corp.* 20,700 866,812
Teradyne, Inc.* 5,900 433,650
------------
$ 7,508,126
-------------------------------------------------------------------------------------------------------
Energy - 0.9%
Dynegy, Inc. 5,500 $ 375,719
NRG Energy, Inc.* 30,460 555,895
------------
$ 931,614
-------------------------------------------------------------------------------------------------------
Entertainment - 2.0%
Harrah's Entertainment, Inc.* 17,106 $ 358,157
Hearst-Argyle Television, Inc.* 7,600 148,200
Infinity Broadcasting Corp., "A"* 38,650 1,408,309
Viacom, Inc., "B"* 3,900 265,931
------------
$ 2,180,597
-------------------------------------------------------------------------------------------------------
Financial Institutions - 2.2%
Associates First Capital Corp., "A" 27,010 $ 602,661
Citigroup, Inc. 9,400 566,350
Federal National Mortgage Assn 6,200 323,562
Freddie Mac Corp. 23,100 935,550
------------
$ 2,428,123
-------------------------------------------------------------------------------------------------------
Financial Services - 1.1%
AXA Financial, Inc. 34,040 $ 1,157,360
-------------------------------------------------------------------------------------------------------
Insurance - 2.2%
American International Group, Inc. 3,900 $ 458,250
Hartford Financial Services Group, Inc. 20,929 1,170,716
Lincoln National Corp. 20,000 722,500
------------
$ 2,351,466
-------------------------------------------------------------------------------------------------------
Internet - 1.4%
VeriSign, Inc.* 8,080 $ 1,426,120
VIA NET.WORKS, Inc.* 5,620 86,759
------------
$ 1,512,879
-------------------------------------------------------------------------------------------------------
Machinery - 1.0%
Deere & Co., Inc. 11,900 $ 440,300
Ingersoll Rand Co. 17,000 684,250
------------
$ 1,124,550
-------------------------------------------------------------------------------------------------------
Medical and Health Products - 2.8%
American Home Products Corp. 7,470 $ 438,862
Bausch & Lomb, Inc. 8,400 649,950
Bristol-Myers Squibb Co. 18,600 1,083,450
Pfizer, Inc. 17,325 831,600
------------
$ 3,003,862
-------------------------------------------------------------------------------------------------------
Medical and Health Technology and Services - 0.5%
PE Corp. - PE Biosystems Group 8,800 $ 579,700
-------------------------------------------------------------------------------------------------------
Metals and Minerals - 0.3%
Phelps Dodge Corp. 9,300 $ 345,844
-------------------------------------------------------------------------------------------------------
Oil Services - 5.4%
Baker Hughes, Inc. 62,700 $ 2,006,400
BJ Services Co.* 5,300 331,250
Cooper Cameron Corp.* 8,400 554,400
Global Marine, Inc.* 8,800 248,050
Halliburton Co. 17,100 806,906
Noble Drilling Corp.* 19,000 782,563
Valero Energy Corp. 7,600 241,300
Weatherford International, Inc.* 22,600 899,762
------------
$ 5,870,631
-------------------------------------------------------------------------------------------------------
Oils - 4.9%
Coastal Corp. 17,200 $ 1,047,050
Conoco, Inc. 34,800 854,775
Conoco, Inc., "A" 19,700 433,400
EOG Resources, Inc. 22,500 753,750
Grant Pride Co., Inc.* 20,400 510,000
Transocean Sedco Forex, Inc. 15,806 844,633
Ultramar Diamond Shamrock 16,100 399,481
Unocal Corp. 13,100 433,938
------------
$ 5,277,027
-------------------------------------------------------------------------------------------------------
Printing and Publishing - 0.5%
Tribune Co. 15,200 $ 532,000
-------------------------------------------------------------------------------------------------------
Retail - 1.7%
CVS Corp. 11,700 $ 468,000
RadioShack Corp. 29,700 1,407,038
------------
$ 1,875,038
-------------------------------------------------------------------------------------------------------
Supermarkets - 1.2%
Kroger Co.* 39,378 $ 868,777
Safeway, Inc.* 10,200 460,275
------------
$ 1,329,052
-------------------------------------------------------------------------------------------------------
Telecommunications - 17.6%
ADC Telecommunications, Inc.* 14,100 $ 1,182,637
Allegiance Telecom, Inc.* 18,500 1,184,000
Alltel Corp. 9,800 606,988
Amdocs Ltd.* 7,100 544,925
AT&T Corp. 23,390 651,996
BroadWing, Inc.* 14,024 363,748
Cabletron Systems, Inc.* 28,000 707,000
Cablevision Systems Corp., "A"* 6,200 420,825
CIENA Corp.* 1,600 266,700
Cisco Systems, Inc.* 18,500 1,175,906
Corning, Inc. 12,100 3,265,486
Crown Castle International Corp.* 2,200 80,300
Focal Communications Corp.* 2,400 85,800
GTE Corp. 6,800 423,300
Intermedia Communications, Inc.* 100 2,975
Lucent Technologies, Inc. 10,900 645,825
Metromedia Fiber Network, Inc., "A"* 18,420 731,044
MGC Communications, Inc.* 10,400 623,350
Nextlink Communications, Inc., "A"* 14,400 546,300
NTL, Inc.* 20,851 1,248,454
ONI Systems Corp.* 150 17,580
Pegasus Communications Corp.* 2,200 107,938
Qwest Communications International, Inc.* 1,500 74,531
Sprint Corp. 1,700 86,700
Tekelec Co.* 17,500 843,281
Tellabs, Inc.* 4,300 294,281
Time Warner Telecom, Inc.* 7,200 463,500
UnitedGlobalCom, Inc.* 21,300 995,775
Vignette Corp.* 1,200 62,419
Williams Communications Group, Inc.* 24,600 816,413
Winstar Communications, Inc.* 18,600 630,075
------------
$ 19,150,052
-------------------------------------------------------------------------------------------------------
Telecommunications and Cable - 0.8%
Comcast Corp., "A"* 22,200 $ 899,100
-------------------------------------------------------------------------------------------------------
Utilities - Electric - 2.3%
AES Corp.* 43,200 $ 1,971,000
Calpine Corp.* 5,000 328,750
CMS Energy Corp. 7,300 161,512
------------
$ 2,461,262
-------------------------------------------------------------------------------------------------------
Utilities - Gas - 1.0%
Enron Corp. 7,200 $ 464,400
Williams Cos., Inc. 14,900 621,144
------------
$ 1,085,544
-------------------------------------------------------------------------------------------------------
Total U.S. Stocks $ 81,988,887
-------------------------------------------------------------------------------------------------------
Foreign Stocks - 15.5%
Argentina - 0.1%
IMPSAT Fiber Networks, Inc. (Telecommunications)* 6,380 $ 106,865
-------------------------------------------------------------------------------------------------------
Australia - 0.5%
Cable & Wireless Optus Ltd. (Telecommunications) 183,100 $ 545,097
-------------------------------------------------------------------------------------------------------
Bermuda - 1.6%
FLAG Telecom Holdings Ltd. (Telecommunications)* 5,650 $ 84,044
Global Crossing Ltd. (Telecommunications)* 63,500 1,670,843
------------
$ 1,754,887
-------------------------------------------------------------------------------------------------------
Canada - 2.9%
AT&T Canada, Inc. (Telecommunications)* 8,100 $ 268,819
Nortel Networks Corp. (Telecommunications) 33,600 2,293,200
Telesystem International Wireless, Inc.
(Telecommunications)* 28,800 532,800
------------
$ 3,094,819
-------------------------------------------------------------------------------------------------------
Finland - 1.2%
Nokia Corp., ADR (Telecommunications) 17,440 $ 870,910
Sonera Oyj (Telecommunications) 9,900 451,263
------------
$ 1,322,173
-------------------------------------------------------------------------------------------------------
France - 0.5%
Integra S.A. (Computer Software - Services)* 12,200 $ 110,173
Vivendi S.A. (Business Services) 5,100 450,089
------------
$ 560,262
-------------------------------------------------------------------------------------------------------
Hong Kong - 0.3%
China Telecom Ltd. (Telecommunications) 40,000 $ 352,790
-------------------------------------------------------------------------------------------------------
Israel - 0.5%
Partner Communications Co. Ltd., ADR (Cellular Telephones)* 57,000 $ 541,500
-------------------------------------------------------------------------------------------------------
Japan - 0.5%
NTT Mobile Communications Network, Inc. (Telecommunications) 20 $ 541,101
-------------------------------------------------------------------------------------------------------
Mexico - 0.2%
Grupo Iusacell S. A. de C. V., ADR (Telecommunications)* 10,140 $ 158,437
-------------------------------------------------------------------------------------------------------
Netherlands - 2.1%
Completel Europe N.V. (Telecommunications)* 27,790 $ 344,868
KPNQwest N.V. (Internet)* 5,400 212,379
Libertel N.V. (Cellular Telecommunications)* 25,300 385,215
United Pan-Europe Communications N.V. (Telecommunications
and Cable)* 33,700 881,137
Versatel Telecommunications N.V. (Telecommunications)* 10,690 449,006
------------
$ 2,272,605
-------------------------------------------------------------------------------------------------------
South Korea - 1.8%
Samsung Electronics (Electronics) 5,900 $ 1,952,731
-------------------------------------------------------------------------------------------------------
Sweden - 0.9%
Tele1 Europe Holdings AB (Telecommunications)* 27,790 $ 340,479
Tele1 Europe Holdings AB, ADR (Telecommunications)* 1,400 16,888
Telefonaktiebolaget LM Ericsson AB (Telecommunications) 32,800 649,302
------------
$ 1,006,669
-------------------------------------------------------------------------------------------------------
United Kingdom - 2.4%
Cable & Wireless Communications PLC, ADR (Telecommunications)* 29,366 $ 497,049
Energis PLC (Telecommunications)* 16,690 625,579
NDS Group PLC, ADR (Internet)* 2,000 122,000
Vodafone AirTouch PLC (Telecommunications)* 339,055 1,369,322
------------
$ 2,613,950
-------------------------------------------------------------------------------------------------------
Total Foreign Stocks $ 16,823,886
-------------------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $89,075,298) $ 98,812,773
-------------------------------------------------------------------------------------------------------
Short-Term Obligation - 7.7%
-------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
-------------------------------------------------------------------------------------------------------
Federal Home Loan Bank, due 7/03/00, at Amortized Cost $ 8,398 $ 8,394,935
-------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $97,470,233) $107,207,708
Other Assets, Less Liabilities - 1.3% 1,456,370
-------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $108,664,078
-------------------------------------------------------------------------------------------------------
* Non-income producing security.
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
-------------------------------------------------------------------------------
JUNE 30, 2000
-------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $97,470,233) $107,207,708
Investments of cash collateral for securities loaned, at
identified cost and value 16,206,408
Cash 727
Receivable for investments sold 1,346,382
Receivable for series shares sold 955,451
Dividends receivable 45,055
Deferred organization expenses 2,073
------------
Total assets $125,763,804
------------
Liabilities:
Payable for investments purchased $ 876,440
Payable for series shares reacquired 5,448
Collateral for securities loaned, at value 16,206,408
Payable to affiliates -
Management fee 2,196
Reimbursement fee 2,839
Distribution fee 5
Accrued expenses and other liabilities 6,390
------------
Total liabilities $ 17,099,726
------------
Net assets $108,664,078
============
Net assets consist of:
Paid-in capital $ 90,100,878
Unrealized appreciation on investments and translation of
assets and liabilities in foreign currencies 9,737,804
Accumulated undistributed net realized gain on investments
and foreign currency transactions 8,855,891
Accumulated net investment loss (30,495)
------------
Total $108,664,078
============
Shares of beneficial interest outstanding 5,029,306
=========
Initial Class shares:
Net asset value per share
(net assets of $106,308,312 / 4,920,249 shares of beneficial
interest outstanding) $21.61
======
Service Class shares:
Net asset value per share
(net assets of $2,355,766 / 109,057 shares of beneficial
interest outstanding) $21.60
======
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Operations (Unaudited)
-------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, 2000
-------------------------------------------------------------------------------
Net investment income (loss):
Income -
Dividends $ 219,085
Interest 149,726
Securities lending income 21,553
Foreign taxes withheld (6,655)
------------
Total investment income $ 383,709
------------
Expenses -
Management fee $ 322,866
Trustees' compensation 1,700
Shareholder servicing agent fee 15,005
Distribution fee (Service Class) 194
Administrative fee 7,049
Custodian fee 26,813
Printing 12,009
Auditing fees 17,650
Legal fees 333
Amortization of organization expenses 916
Miscellaneous 922
------------
Total expenses $ 405,457
Fees paid indirectly (2,341)
Reimbursement of expenses to investment adviser 11,088
------------
Net expenses $ 414,204
------------
Net investment loss $ (30,495)
------------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ 8,919,695
Foreign currency transactions (16,166)
------------
Net realized gain on investments and foreign currency
transactions $ 8,903,529
------------
Change in unrealized depreciation -
Investments $ (3,388,125)
Translation of assets and liabilities in foreign currencies (145)
------------
Net unrealized loss on investments and foreign currency
translation $ (3,388,270)
------------
Net realized and unrealized gain on investments and
foreign currency $ 5,515,259
------------
Increase in net assets from operations $ 5,484,764
============
See notes to financial statements.
<PAGE>
<TABLE>
FINANCIAL STATEMENTS - continued
<CAPTION>
Statement of Changes in Net Assets
------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2000 DECEMBER 31, 1999
(UNAUDITED)
----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment loss $ (30,495) $ (47,266)
Net realized gain on investments and foreign currency
transactions 8,903,529 7,237,544
Net unrealized gain (loss) on investments and foreign
currency translation (3,388,270) 9,712,329
------------ ------------
Increase in net assets from operations $ 5,484,764 $ 16,902,607
------------ ------------
Distributions declared to shareholders from net realized
gain on investments and foreign currency transactions
(Initial Class) $ (7,295,294) $ (100,358)
------------ ------------
Net increase in net assets from series shares transactions $ 47,302,888 $ 22,461,142
------------ ------------
Total increase in net assets $ 45,492,358 $ 39,263,391
Net assets:
At beginning of period 63,171,720 23,908,329
------------ ------------
At end of period (including accumulated net investment
loss of $30,495 and $0, respectively) $108,664,078 $ 63,171,720
============ ============
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS - continued
<CAPTION>
Financial Highlights
--------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, PERIOD ENDED
SIX MONTHS ENDED ------------------------------------------- DECEMBER 31,
JUNE 30, 2000 1999 1998 1997 1996*
(UNAUDITED)
--------------------------------------------------------------------------------------------------------------------------
INITIAL CLASS SHARES
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $21.74 $14.79 $11.68 $10.66 $10.00
------ ------ ------ ------ ------
Income from investment operations# -
Net investment income (loss)(S) $(0.01) $(0.02) $ 0.03 $ 0.12 $ 0.07
Net realized and unrealized gain on
investments and foreign currency 1.71 7.02 3.11 2.66 0.88
------ ------ ------ ------ ------
Total from investment operations $ 1.70 $ 7.00 $ 3.14 $ 2.78 $ 0.95
------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $ -- $ -- $(0.02) $(0.09) $(0.03)
From net realized gain on investments
and foreign currency transactions (1.83) (0.05) (0.01) (1.54) (0.21)
In excess of net realized gain on
investments and foreign currency
transactions -- -- -- -- (0.01)
From capital -- -- -- (0.13) (0.04)
------ ------ ------ ------ ------
Total distributions declared to
shareholders $(1.83) $(0.05) $(0.03) $(1.76) $(0.29)
------ ------ ------ ------ ------
Net asset value - end of period $21.61 $21.74 $14.79 $11.68 $10.66
====== ====== ====== ====== ======
Total return 8.05%++ 47.42% 26.80% 26.47% 8.78%++
Ratios (to average net assets)/Supplemental data(S):
Expenses## 0.98%+ 1.02% 1.02% 1.02% 1.02%+
Net investment income (loss) (1.57)%+ (0.13)% 0.21% 0.91% 1.72%+
Portfolio turnover 61% 152% 144% 270% 44%
Net assets at end of period (000 Omitted) $106,308 $63,172 $23,908 $5,660 $1,351
(S) Subject to reimbursement by the series, the investment adviser agreed under a temporary expense reimbursement agreement
to pay all of the series' operating expenses, exclusive of management fees. In consideration, the series pays the
investment adviser a reimbursement fee not greater than 0.15% of average daily net assets. Prior to May 1, 2000, this
fee was not greater than 0.25% 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) $(0.01) $(0.02) $ 0.02 $(0.02) $(0.04)
Ratios (to average net assets):
Expenses## 0.95%+ 1.03% 1.11% 2.08% 3.83%+
Net investment income (loss) (1.54)% (0.14)% 0.12% (0.18)% (1.11)%+
* 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.
## Ratios do not reflect expense reductions from directed brokerage and certain expense offset arrangements.
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL STATEMENTS - continued
Financial Highlights - continued
----------------------------------------------------------------------------
PERIOD ENDED
JUNE 30, 2000*
(UNAUDITED)
----------------------------------------------------------------------------
SERVICE CLASS SHARES
----------------------------------------------------------------------------
Per share data (for a share outstanding throughout the period):
Net asset value - beginning of period $21.48
------
Income from investment operations# -
Net investment loss(S) $ -- +++
Net realized and unrealized gain on investments and
foreign currency 0.12
------
Net asset value - end of period $21.60
======
Total return 8.05%++
Ratios (to average net assets)/Supplemental data(S):
Expenses## 1.16%+
Net investment loss (2.20)%+
Portfolio turnover 61%
Net assets at end of period (000 omitted) $2,356
(S) Subject to reimbursement by the series, the investment adviser has
voluntarily agreed under a temporary expense reimbursement agreement to
pay all the series' operating expenses, exclusive of management fees and
distribution fees. In consideration, the series pays the investment
adviser a reimbursement fee not greater than 0.15% of average daily net
assets. To the extent actual expenses were under this limitation, the net
investment loss per share and the ratios would have been:
Net investment loss $ -- +++
Ratios (to average net assets):
Expenses## 1.13%+
Net investment loss (2.17)%+
* For the period from the inception of Service Class shares, May 1, 2000,
through June 30, 2000.
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $(0.01).
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from directed brokerage and
certain expense offset arrangements.
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(1) Business and Organization
MFS Capital Opportunities Series (the series) is a diversified series of MFS
Variable Insurance Trust (the trust). 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, 2000, there were
26 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. The series
can invest in foreign securities. 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 in good faith, at
fair value, 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.
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.
Security Loans - State Street Bank and Trust Company ("State Street"), as
lending agent, may loan the securities of the series to certain qualified
institutions (the "Borrowers") approved by the series. The loans are
collateralized at all times by cash and/or U.S. Treasury securities in an
amount at least equal to the market value of the securities loaned. State
Street provides the series with indemnification against Borrower default. The
series bears the risk of loss with respect to the investment of cash
collateral.
Cash collateral is invested in short-term securities. A portion of the income
generated upon investment of the collateral is remitted to the Borrowers, and
the remainder is allocated between the series and the lending agents. On loans
collateralized by U.S. Treasury securities, a fee is received from the
Borrower, and is allocated between the series and the lending agents. The
dividend and interest income earned on the securities loaned is accounted for
in the same manner as other dividend and interest income.
At June 30, 2000, the value of securities loaned was $15,944,517. These loans
were collateralized by U.S. Treasury securities of $247,874 and cash of
$16,206,408, which was invested in the following short-term obligations:
AMORTIZED COST
SHARES AND VALUE
------------------------------------------------------------------------------
Navigator Securities Lending Prime Portfolio 16,206,408 $16,206,408
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 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 total expenses on the
Statement of Operations. During the period, the series' custodian fees were
reduced by $749 under this arrangement. The series has entered into a directed
brokerage agreement, under which the broker will credit the series a portion
of the commissions generated, to offset certain expenses of the series. For
the period, the series' custodian fees were reduced by $1,592 under this
agreement. These amounts are 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.
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 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.
Multiple Classes of Shares of Beneficial Interest - The series offers multiple
classes of shares that differ in their respective distribution fees. All
shareholders bear the common expenses of the series based on daily net assets
of each class, without distinction between share classes. Dividends are
declared separately for each class. Differences in per share dividend rates
are generally due to differences in separate class expenses.
(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 0.75%
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, distribution, and service
fees. The series in turn will pay MFS an expense reimbursement fee not greater
than 0.15% of average daily net assets. Prior to May 1, 2000, this fee was 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, 2000, aggregate
unreimbursed expenses amounted to $59,913.
Each 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 incurs an administrative fee
at the following annual percentages of the series' average daily net assets:
First $2 billion 0.0175%
Next $2.5 billion 0.0130%
Next $2.5 billion 0.0005%
In excess of $7 billion 0.0000%
Distributor - The Trustees have adopted a distribution plan for the Service
Class shares pursuant to Rule 12b-1 of the Investment Company Act of 1940 as
follows:
The series' distribution plan provides that the series will pay MFD up to
0.25% per annum of its average daily net assets attributable to Service Class
shares in order that MFD may pay expenses on behalf of the series related to
the distribution of its shares. A portion of this distribution fee is
currently being paid by the series; payment of the remaining 0.05% per annum
Service Class distribution fee will become payable on such date as the
Trustees of the trust may determine. Fees incurred under the distribution plan
during the period ended June 30, 2000, were 0.20% of average daily net assets
attributable to Service Class shares on an annualized basis.
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 annual rate of
0.035%.
(4) Portfolio Securities
Purchases and sales of investments, other than purchased option transactions
and short-term obligations, were as follows:
PURCHASES SALES
-------------------------------------------------------------------------------
U.S. government securities $ 1,139,152 $ --
----------- -----------
Investments (non-U.S. government securities) $81,130,017 $49,373,359
----------- -----------
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 $97,470,233
-----------
Gross unrealized appreciation $16,298,389
Gross unrealized depreciation (6,560,914)
-----------
Net unrealized appreciation $ 9,737,475
===========
(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:
<TABLE>
<CAPTION>
Initial Class shares
SIX MONTHS ENDED JUNE 30, 2000 YEAR ENDED DECEMBER 31, 2000
------------------------------ ----------------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 1,792,084 $40,460,276 1,585,132 $27,479,475
Shares issued to shareholders in
reinvestment of distributions 346,569 7,295,285 5,754 100,358
Shares reacquired (124,831) (2,808,996) (301,261) (5,118,691)
--------- ----------- --------- -----------
Net increase 2,013,822 $44,946,565 1,289,625 $22,461,142
========= =========== ========= ===========
<CAPTION>
Service Class shares
PERIOD ENDED JUNE 30, 2000*
----------------------------
SHARES AMOUNT
----------------------------------------------------------------------
<S> <C> <C>
Shares sold 109,197 $ 2,359,310
Shares reacquired (140) (2,987)
--------- -----------
Net increase 109,057 $ 2,356,323
========= ===========
* For the period from the inception of the Service Class shares, May 1, 2000, through June 30, 2000.
</TABLE>
(6) Line of Credit
The series and other affiliated series' participate in a $1.1 billion
unsecured line of credit provided by a syndication of banks under a line of
credit agreement. Borrowings may be made for temporary financing needs.
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 funds at the end of each quarter. The commitment fee allocated
to the series for the six months ended June 30, 2000, was $337. The series had
no significant borrowings during the period.
<PAGE>
(c)2000 MFS Investment Management(R).
MFS(R) investment products are offered through MFS Fund Distributors, Inc.,
500 Boylston Street, Boston, MA 02116.
VCO-3 8/00 15M
