<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) 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* - 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
David R. Mannheim* 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 1.43%, including the reinvestment
of any dividends. This compares to a -1.19% return over the same period for
the average global portfolio tracked by Lipper Inc., an independent firm that
reports performance, and to a -2.41% return for the series' benchmark, 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 those of the United States, Canada, Europe, Australia, New Zealand,
and the Far East.
We feel our strategy of relatively broad sector diversification was a major
factor in helping us offer competitive performance in a difficult environment.
In Asia and Europe, as well as in the United States, we witnessed the same
market phenomena: high volatility and rotation between new-economy stocks, or
companies seen as being technology rich, and old-economy stocks, that is,
companies viewed as being technology poor and as having done business the same
way for a long time. Through February 2000, we experienced a continuation of
the late-1999 rally in new-economy stocks, or what Europeans refer to as TMT:
technology, media, and telecommunications. The rally was followed by what we
view as a natural correction in high-valuation TMT issues, with money rotating
back toward old-economy stocks.
The big drivers of the portfolio's performance early in the period were our
TMT holdings. But when we gave back a portion of our TMT gains during the
market volatility in late winter and spring, the rotation into old-economy
stocks helped some of our other sectors, such as financial services. So we
feel conditions during the period supported our long-standing belief that
diversification may serve investors well by providing competitive returns over
a variety of market cycles. We also took advantage of market volatility to buy
shares in what we believed were fundamentally sound companies with depressed
stock prices.
A factor that hurt performance, however, was the decline of the euro over the
period as the dollar strengthened. Since our results must always be converted
back into dollars, any profits we make on European equities are decreased if
the euro declines versus the dollar. Conversely, a rising euro would give an
extra boost to profits on our European holdings.
Utilities and communications has remained the largest sector in the portfolio.
This is actually a byproduct of our style of individual bottom-up stock
picking, rather than a top-down decision to overweight a particular sector.
Utilities and communications, particularly telecommunications, is simply the
area in which we have found the most companies with strong earnings growth
prospects at reasonable valuations -- as opposed to some other areas of TMT
where we feel relative valuations are not as compelling.
Although, these holdings gave up some of their gains late in the period, we
still feel very positive about them as a group. Our focus has been largely on
wireless carriers and what are called alternative carriers. These are
companies that come into a market with new technology, such as all-fiber-optic
networks, and are able to undercut the incumbents' prices. Cable & Wireless in
the United Kingdom and Time Warner Telecom in the United States are examples
of alternative carriers. Major wireless carriers that we hold include NTT
Mobile Communications, the largest cellular company in Japan, Sprint in the
United States, and Vodafone AirTouch in the United Kingdom.
The portfolio continued to benefit from research conducted firsthand by MFS
analysts around the globe. Fast Retailing is a stock that we think exemplifies
how our bottom-up Original Research(SM) may uncover new opportunities in
difficult markets. With rising unemployment and a weak economy, we would not
generally consider Japan to be a great environment in which to invest in a
retail company. But Fast Retailing is a chain of unisex casual clothing stores
that has broken out of the traditional Japanese retail mold. By cutting out
layers of middlemen, it has been able to undercut department store prices by
as much as 50% to 60%. However, until recently, the market's perception seemed
to be that the company's stock was already fully valued.
Our retail analyst in Tokyo had been following the stock for some time when he
urged us last fall to increase our existing small position in the company. The
analyst had been visiting Fast Retailing stores and seeing lines of customers
stretching around the block. Conversations with store managers confirmed that
the company was experiencing phenomenal sales growth. Further research led us
to conclude that Fast Retailing's stock was actually underpriced relative to
future earnings, and we strongly increased our position. Subsequently, the
market appears to have arrived at a similar opinion, and our holding has
appreciated considerably.
On a cautionary note, looking to the period ahead we feel that valuations in
the markets are high, so investors should not expect overall returns to be
what they've been in the past. That said, we think the prospects for earnings
growth have actually improved over the past year for a majority of the
companies in which we're invested. Japan has moved from negative to positive
earnings growth. In much of the rest of Asia, we've seen continued and
accelerating recovery from the regional financial crisis of 1998. In Europe,
our projections of average annual earnings growth have increased from the
8%-10% range a year ago to 12%-15% for 2000, a rate we feel may be sustainable
into next year. And in the United States, although the market seems somewhat
concerned about rising interest rates, we foresee a continued period of high
earnings growth.
One factor in our positive outlook is the strong dollar. We talked about this
earlier as being, in one respect, a negative for the portfolio. But it is a
positive factor for overseas firms competing against dollar-based companies.
In the United States, for example, a strong dollar makes imported goods
cheaper and therefore more competitive. We also see the establishment of the
euro zone as a positive development. We believe it is propelling European
companies into a wider marketplace, forcing them to act more competitively and
focus more on delivering stock performance for shareholders. Other factors
contributing to our outlook for strong global earnings growth include
continued deregulation in many foreign marketplaces and industries, as well as
ongoing restructuring in Europe and Asia -- trends that echo earlier
developments in the United States that contributed strongly to our current
economic boom.
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.
<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) Global Equity Series (part of MFS(R)
Variable Insurance Trust(SM)), MFS(R) International Growth Fund, MFS(R)
Institutional International Equity Fund, and the International Growth Series
offered through MFS(R)/Sun Life annuity products.
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 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: May 3, 1999
Class inception: Initial Class May 3, 1999
Service Class May 1, 2000
Size: $3.2 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 Life*
------------------------------------------------------------------------------
Cumulative Total Return +1.43% +19.16% +25.59%
------------------------------------------------------------------------------
Average Annual Total Return -- +19.16% +21.73%
------------------------------------------------------------------------------
SERVICE CLASS
6 Months 1 Year Life*
------------------------------------------------------------------------------
Cumulative Total Return +1.43% +19.16% +25.59%
------------------------------------------------------------------------------
Average Annual Total Return -- +19.16% +21.73%
------------------------------------------------------------------------------
* For the period from the commencement of the series' investment operations,
May 3, 1999, 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 UNITS, 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.
Investments in foreign and emerging market 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 share price volatility. See the
prospectus for details.
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS (Unaudited) - June 30, 2000
<CAPTION>
Stocks - 97.8%
-------------------------------------------------------------------------------------------------------
ISSUER SHARES VALUE
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
Foreign Stocks - 58.1%
Australia - 1.9%
Publishing & Broadcasting Ltd. (Broadcasting) 2,120 $ 16,285
QBE Insurance Group Ltd. (Insurance)* 9,100 44,456
----------
$ 60,741
-------------------------------------------------------------------------------------------------------
Bermuda - 0.3%
FLAG Telecom Holdings Ltd. (Telecommunications)* 540 $ 8,032
-------------------------------------------------------------------------------------------------------
Canada - 3.1%
Anderson Exploration Ltd. (Oils)* 890 $ 16,182
AT&T Canada Inc (Telecommunications)* 340 11,376
BCE, Inc. (Telecommunications) 695 16,488
Canadian National Railway Co. (Railroads) 1,248 36,426
Nortel Networks Corp. (Telecommunications) 227 15,757
----------
$ 96,229
-------------------------------------------------------------------------------------------------------
Finland - 1.7%
Helsingin Puhelin Oyj (Telecommunications) 550 $ 53,868
-------------------------------------------------------------------------------------------------------
France - 6.9%
Aventis S.A. (Pharmaceuticals) 260 $ 18,974
Banque Nationale de Paris (Banks and Credit Cos.) 290 27,905
Bouygues S.A. (Telecommunications) 55 36,752
Sanofi-Synthelabo S.A. (Medical and Health Products)* 830 39,537
Technip S.A. (Construction) 222 26,850
Television Francaise (Telecommunications)* 150 10,453
Total S.A., "B" (Oils) 210 32,195
Vivendi S.A. (Business Services) 300 26,476
----------
$ 219,142
-------------------------------------------------------------------------------------------------------
Germany - 1.9%
ProSieben Media AG, Preferred (Entertainment) 480 $ 59,682
-------------------------------------------------------------------------------------------------------
Greece - 0.2%
Antenna TV S.A., ADR (Broadcasting)* 500 $ 7,750
-------------------------------------------------------------------------------------------------------
Ireland - 0.1%
Anglo Irish Bank Corp. PLC (Banks and Credit Cos.) 1,600 $ 3,461
-------------------------------------------------------------------------------------------------------
Israel - 0.2%
Partner Communications Co. Ltd., ADR (Cellular Telephones)* 640 $ 6,080
-------------------------------------------------------------------------------------------------------
Italy - 0.9%
Telecom Italia Mobile S.p.A., Saving Shares (Telecommunications)* 5,700 $ 28,675
-------------------------------------------------------------------------------------------------------
Japan - 14.8%
Canon, Inc. (Special Products and Services) 1,000 $ 49,774
Chugai Pharmaceutical Co. Ltd. (Pharmaceuticals) 3,000 56,702
Fast Retailing Co. (Retail) 100 41,855
Fuji Heavy Industries Ltd. (Automotive) 3,000 21,776
Fujitsu Ltd. (Computer Hardware - Systems) 1,000 34,597
Hitachi Ltd. (Electronics) 4,000 57,692
Mitsubishi Electric Corp. (Electronics) 2,000 21,644
Mitsubishi Motors Corp. (Automotive) 3,000 12,811
Nippon Telegraph & Telephone Co. (Utilities - Telephone) 2 26,584
NTT Mobile Communications Network, Inc. (Telecommunications) 3 81,165
Sony Corp. (Electronics) 100 9,333
Tokyo Broadcasting System, Inc. (Entertainment) 1,000 43,175
Toshiba Corp. (Electronics) 1,000 11,284
----------
$ 468,392
-------------------------------------------------------------------------------------------------------
Mexico - 0.6%
Grupo Television S.A. de C.V., GDR (Entertainment)* 260 $ 17,924
-------------------------------------------------------------------------------------------------------
Netherlands - 6.0%
Akzo Nobel N.V. (Chemicals) 1,000 $ 42,480
Completel Europe N.V. (Telecommunications)* 20 248
ING Groep N.V. (Financial Services)* 500 33,793
Philips Electronics N.V. (Electronics) 780 36,783
KPN N.V. (Telecommunications)* 786 35,152
Libertel N.V. (Cellular Telecommunications)* 640 9,744
Royal Dutch Petroleum Co. (Oils) 500 31,072
----------
$ 189,272
-------------------------------------------------------------------------------------------------------
Norway - 0.5%
Schibsted ASA (Publishing) 635 $ 11,770
Sparebanken NOR (Banks and Credit Cos.) 130 2,918
----------
$ 14,688
-------------------------------------------------------------------------------------------------------
Portugal - 0.5%
Telecel - Comunicacoes Pessoais, S.A. (Cellular Telecommunications)* 950 $ 14,419
-------------------------------------------------------------------------------------------------------
Singapore - 2.0%
Overseas Union Bank Ltd. (Banks and Credit Cos.) 7,142 $ 27,716
Overseas-Chinese Banking Corp. Ltd. (Banks and Credit Cos.) 3,000 20,678
Singapore Press Holdings Ltd. (Printing and Publishing) 1,000 15,638
----------
$ 64,032
-------------------------------------------------------------------------------------------------------
Spain - 0.5%
Repsol S.A. (Oils) 830 $ 16,520
-------------------------------------------------------------------------------------------------------
Sweden - 2.2%
NetCom AB (Telecommunications)* 225 $ 16,616
Saab AB, "B" (Aerospace) 6,150 51,628
Tele1 Europe Holdings AB (Telecommunications)* 20 245
----------
$ 68,489
-------------------------------------------------------------------------------------------------------
Switzerland - 1.5%
Novartis AG (Medical and Health Products) 28 $ 44,366
Synthes-Stratec, Inc. (Medical and Health Products)* 9 4,095
----------
$ 48,461
-------------------------------------------------------------------------------------------------------
United Kingdom - 12.3%
AstraZeneca Group PLC (Medical and Health Products) 690 $ 32,093
BAE Systems PLC (Aerospace)* 3,770 23,494
BP Amoco PLC (Oils) 3,200 30,688
Cable & Wireless PLC, ADR (Telecommunications)* 1,633 27,640
Capital Radio PLC (Broadcasting) 500 11,685
Carlton Communicatons PLC (Broadcasting) 2,520 32,400
CGU PLC (Insurance)* 2,130 35,440
Diageo PLC (Food and Beverage Products)* 2,869 25,734
NDS Group PLC, ADR (Internet)* 20 1,220
Next PLC (Retail) 2,410 21,070
Reckitt Benckiser PLC (Consumer Goods and Services)* 1,810 20,260
Royal Bank of Scotland PLC (Banks and Credit Cos.)* 1,590 26,600
United News & Media PLC (Broadcasting) 2,820 40,523
Vodafone AirTouch PLC (Telecommunications)* 14,581 58,887
----------
$ 387,734
-------------------------------------------------------------------------------------------------------
Total Foreign Stocks $1,833,591
-------------------------------------------------------------------------------------------------------
U.S. Stocks - 39.7%
Aerospace - 1.2%
Boeing Co. 650 $ 27,178
TRW, Inc. 215 9,326
----------
$ 36,504
-------------------------------------------------------------------------------------------------------
Biotechnology - 1.0%
Pharmacia Corp. 620 $ 32,046
-------------------------------------------------------------------------------------------------------
Business Machines - 1.5%
Hewlett-Packard Co. 200 $ 24,975
International Business Machines Corp. 210 23,008
----------
$ 47,983
-------------------------------------------------------------------------------------------------------
Business Services - 1.3%
Adelphia Business Solutions* 500 $ 11,594
Computer Sciences Corp.* 340 25,393
United Parcel Service, Inc. 60 3,540
----------
$ 40,527
-------------------------------------------------------------------------------------------------------
Cellular Telephones - 2.1%
Motorola, Inc. 870 $ 25,284
Sprint Corp. (PCS Group)* 700 41,650
----------
$ 66,934
-------------------------------------------------------------------------------------------------------
Computer Software - Systems - 3.3%
BMC Software, Inc.* 550 $ 20,066
Computer Associates International, Inc. 1,420 72,686
Compuware Corp.* 920 9,545
Electronic Data Systems Corp. 50 2,063
----------
$ 104,360
-------------------------------------------------------------------------------------------------------
Energy - 0.4%
NRG Energy, Inc.* 710 $ 12,958
-------------------------------------------------------------------------------------------------------
Entertainment - 2.6%
Disney (Walt) Co. 940 $ 36,484
Hearst-Argyle Television, Inc.* 500 9,750
Time Warner, Inc. 460 34,960
----------
$ 81,194
-------------------------------------------------------------------------------------------------------
Food and Beverage Products - 1.0%
Keebler Foods Co. 890 $ 33,041
-------------------------------------------------------------------------------------------------------
Insurance - 4.7%
CIGNA Corp. 310 $ 28,985
Hartford Financial Services Group, Inc. 790 44,191
Marsh & McLennan Cos., Inc. 240 25,065
MetLife, Inc.* 260 5,476
ReliaStar Financial Corp. 850 44,572
----------
$ 148,289
-------------------------------------------------------------------------------------------------------
Machinery - 1.8%
Deere & Co., Inc. 960 $ 35,520
Ingersoll Rand Co. 560 22,540
----------
$ 58,060
-------------------------------------------------------------------------------------------------------
Medical and Health Products - 3.4%
Bausch & Lomb, Inc. 800 $ 61,900
Bristol-Myers Squibb Co. 230 13,397
Pfizer, Inc. 687 32,976
----------
$ 108,273
-------------------------------------------------------------------------------------------------------
Oil Services - 0.7%
Halliburton Co. 460 $ 21,706
-------------------------------------------------------------------------------------------------------
Oils - 5.0%
Apache Corp. 360 $ 21,173
Coastal Corp. 630 38,351
Conoco, Inc., "A" 1,460 32,120
EOG Resources, Inc. 1,540 51,590
Santa Fe International Corp. 400 13,975
----------
$ 157,209
-------------------------------------------------------------------------------------------------------
Photographic Products - 0.7%
Polaroid Corp. 1,180 $ 21,314
-------------------------------------------------------------------------------------------------------
Retail - 1.9%
BJ's Wholesale Club, Inc.* 790 $ 26,070
CVS Corp. 830 33,200
----------
$ 59,270
-------------------------------------------------------------------------------------------------------
Supermarkets - 1.0%
Safeway, Inc.* 710 $ 32,039
-------------------------------------------------------------------------------------------------------
Telecommunications - 6.1%
AT&T Wireless* 480 $ 13,380
Bell Atlantic Corp. 270 13,719
BroadWing, Inc.* 360 9,338
Corning, Inc. 55 14,843
GTE Corp. 340 21,165
Lucent Technologies, Inc. 315 18,664
NTL, Inc.* 612 36,643
Sprint Corp. 300 15,300
Tellabs, Inc.* 520 35,588
Time Warner Telecom, Inc.* 200 12,875
----------
$ 191,515
-------------------------------------------------------------------------------------------------------
Total U.S. Stocks $1,253,222
-------------------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $2,920,157) $3,086,813
-------------------------------------------------------------------------------------------------------
Short-Term Obligations - 1.7%
-------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
-------------------------------------------------------------------------------------------------------
Federal Home Loan Bank, due 7/03/00, at Amortized Cost $ 53 $ 52,981
-------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $2,973,138) $3,139,794
Other Assets, Less Liabilities - 0.5% 14,985
-------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $3,154,779
-------------------------------------------------------------------------------------------------------
* 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, $2,973,138) $3,139,794
Investment of cash collateral for securities loaned, at
value and identified cost 492,127
Cash 566
Foreign currency, at value (identified cost, $4,058) 3,933
Receivable for investments sold 35,136
Receivable for series shares sold 38,538
Interest and dividends receivable 3,741
Other assets 9,901
----------
Total assets $3,723,736
----------
Liabilities:
Payable for investments purchased $ 76,602
Payable for series shares reacquired 130
Collateral for securities loaned, at value 492,127
Payable to affiliates -
Management fee 85
Reimbursement fee 13
----------
Total liabilities $ 568,957
----------
Net assets $3,154,779
==========
Net assets consist of:
Paid-in capital $2,875,494
Unrealized appreciation on investments and translation of
assets and liabilities in foreign currencies 166,624
Accumulated undistributed net realized gain on investments
and foreign currency transactions 91,692
Accumulated undistributed net investment income 20,969
----------
Total $3,154,779
==========
Shares of beneficial interest outstanding 262,489
=======
Initial Class shares:
Net asset value per share
(net assets of 3,154,571 / 262,472 shares of beneficial
interest outstanding) $12.02
======
Service Class shares:
Net asset value per share
(net assets 208 / 17 shares of beneficial interest
outstanding) $12.01
======
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Operations (Unaudited)
-------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, 2000
-------------------------------------------------------------------------------
Net investment income:
Income -
Dividends $ 31,221
Interest 5,576
Foreign taxes withheld (2,061)
--------
Total investment income $ 34,736
--------
Expenses -
Management fee $ 11,349
Trustees' compensation 1,090
Shareholder servicing agent fee 397
Administrative fee 187
Custodian fee 7,213
Printing 6,328
Postage 2
Auditing fees 15,700
Legal fees 959
Miscellaneous 1,319
--------
Total expenses $ 44,544
Fees paid indirectly (88)
Reduction of expenses by investment adviser (30,757)
--------
Net expenses $ 13,699
--------
Net investment income $ 21,037
--------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ 94,002
Foreign currency transactions (185)
--------
Net realized gain on investments and foreign currency
transactions $ 93,817
--------
Change in unrealized depreciation -
Investments $(29,475)
Translation of assets and liabilities in foreign currencies (28)
--------
Net unrealized loss on investments and foreign currency
translation $(29,503)
--------
Net realized and unrealized gain on investments and
foreign currency $ 64,314
--------
Increase in net assets from operations $ 85,351
========
See notes to financial statements.
<PAGE>
<TABLE>
FINANCIAL STATEMENTS - continued
<CAPTION>
Statement of Changes in Net Assets
------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED PERIOD ENDED
JUNE 30, 2000 DECEMBER 31, 1999*
(UNAUDITED)
------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 21,037 $ 2,827
Net realized gain on investments and foreign currency
transactions 93,817 76,027
Net unrealized gain (loss) on investments and foreign
currency translation (29,503) 196,127
---------- ----------
Increase in net assets from operations $ 85,351 $ 274,981
---------- ----------
Distributions declared to shareholders -
From net investment income $ -- $ (2,044)
From net realized gain on investments and foreign currency
transactions (39,078) (39,925)
---------- ----------
Total distributions declared to shareholders $ (39,078) $ (41,969)
---------- ----------
Net increase in net assets from series share transactions $1,457,704 $1,417,790
---------- ----------
Total increase in net assets $1,503,977 $1,650,802
Net assets:
At beginning of period 1,650,802 --
---------- ----------
At end of period (including accumulated undistributed net
investment income (loss) of $20,969 and $(68),
respectively) $3,154,779 $1,650,802
========== ==========
* For the period from the commencement of the series' investment operations, May 3, 1999, through
December 31, 1999.
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS - continued
<CAPTION>
Financial Highlights
------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED PERIOD ENDED
JUNE 30, 2000 DECEMBER 31, 1999*
(UNAUDITED)
------------------------------------------------------------------------------------------------------
INITIAL CLASS SHARES
------------------------------------------------------------------------------------------------------
<S> <C> <C>
Per share data (for a share outstanding throughout the period):
Net asset value - beginning of period $12.04 $10.00
------ ------
Income from investment operations# -
Net investment income(S) $ 0.11 $ 0.03
Net realized and unrealized gain on investments and
foreign currency 0.06 2.34
------ ------
Total from investment operations $ 0.17 $ 2.37
------ ------
Less distributions declared to shareholders -
From net investment income $ -- $(0.02)
From realized gain on investments
and foreign currency transactions (0.19) (0.31)
------ ------
Total distributions declared to shareholders $(0.19) $(0.33)
------ ------
Net asset value - end of period $12.02 $12.04
====== ======
Total return 1.43%++ 23.83%++
Ratios (to average net assets)/Supplemental data(S):
Expenses## 1.22%+ 1.31%+
Net investment income 1.86%+ 0.37%+
Portfolio turnover 64% 68%
Net assets at end of period (000 omitted) $3,155 $1,651
(S) Subject to reimbursement by the series, the investment adviser voluntarily 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, the reimbursement fee
was not greater 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 $(0.05) $(0.18)
Ratios (to average net assets):
Expenses## 3.94%+ 4.39%+
Net investment loss (0.86)%+ (2.71)%+
* For the period from the commencement of the series' investment operations, May 3, 1999, through
December 31, 1999.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from 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 $11.69
------
Income from investment operations# -
Net investment income(S) $ 0.07
Net realized and unrealized gain on investments and foreign
currency 0.25
------
Total from investment operations $ 0.32
------
Net asset value - end of period $12.01
======
Total return 1.43%++
Ratios (to average net assets)/Supplemental data(S):
Expenses## 1.42%+
Net investment income 2.85%+
Portfolio turnover 64%
Net assets at end of period (000 omitted) $ -- +++
(S) Subject to reimbursement by the series, the investment adviser voluntarily
agreed under a temporary expense reimbursement agreement to pay all of the
series' operating expenses, exclusive of management 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 over this limitation, the net investment loss per
share and ratios would have been:
Net investment loss $(0.10)
Ratios (to average net assets):
Expenses## 4.14%+
Net investment income 0.13%+
* For the period from the inception of Service Class shares, May 1, 2000,
through June 30, 2000.
+ Annualized.
++ Not annualized.
+++ Service Class net assets were less than $500.
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from certain expense offset
arrangements.
See notes to financial statements.
<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 (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 10 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.
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 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 agent. On loans
collateralized by U.S. Treasury securities, a fee is received from the
Borrower, and is allocated between the series and the lending agent. Income
from securities lending is included in interest income on the Statement of
Operations. 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 $476,122. These loans were
collateralized by U.S. Treasury securities of $646 and cash of $492,127 which
was invested in the following short-term obligation:
IDENTIFIED COST
SHARES AND VALUE
------------------------------------------------------------------------------
Navigator Securities Lending Prime Portfolio 492,127 $492,127
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.
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 requires that only distributions in excess of tax basis earnings and
profits be 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 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 and distribution 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, the reimbursement 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 $54,070.
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 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 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
of the Service Class distribution fee will become payable on such a 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 U.S. government securities,
purchased option transactions, and short-term obligations, aggregated
$3,027,139 and $1,423,638, 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 $2,973,138
----------
Gross unrealized appreciation $ 305,843
Gross unrealized depreciation (139,187)
----------
Net unrealized appreciation $ 166,656
==========
(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
SIX MONTHS ENDED JUNE 30, 2000 PERIOD ENDED DECEMBER 31, 1999*
------------------------------ -------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 649,114 $ 7,527,371 133,529 $1,375,827
Shares issued to shareholders
in reinvestment of distributions 3,383 39,074 3,526 41,963
Shares reacquired (527,080) (6,108,941) -- --
-------- ----------- -------- ----------
Net increase 125,417 $ 1,457,504 137,055 $1,417,790
======= =========== ======= ==========
<CAPTION>
Service Class
PERIOD ENDED JUNE 30, 2000**
------------------------------
SHARES AMOUNT
------------------------------------------------------------------
<S> <C> <C>
Shares sold 17 $200
-------- -----------
* For the period from the commencement of the series' investment operations, May 3, 1999, through
December 31, 1999.
** For the period from the inception of 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 series at
the end of each quarter. The commitment fee allocated to the series for the
six months ended June 30, 2000, was $1. 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.
VGE-3 8/00 235
