<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) RESEARCH
SERIES
<PAGE>
<TABLE>
MFS(R) RESEARCH 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
Alec C. Murray* 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 shares
provided a total return of 6.31% and Service Class 6.27%, including the
reinvestment of any distributions. This compares to a -0.42% return for the
series' benchmark, the Standard & Poor's 500 Composite Index (the S&P 500), a
popular, unmanaged index of common stock total return performance, for the
same period.
Historically, investment trends and styles have gone in and out of favor with
investors. Consequently, we don't spend too much time trying to determine when
value or growth, small-cap or large-cap stocks will move in and out of the
spotlight. Instead, we focus on finding dominant business franchises with
outstanding management driving accelerating earnings growth. It's a bottom-up
approach that's based on intensive hands-on research and the best ideas of our
analysts. This approach has led us to some very rewarding growth
opportunities, and the series has held on to its favorable returns during the
six-month period despite the weakness we've seen in the market over the past
four months.
We're finding opportunities in a wide range of areas, but some industries that
have recently performed well for the portfolio are energy, insurance, and
pharmaceuticals. In the energy sector, exploration and production companies
such as Global Marine and Transocean have rallied significantly due to the
rebound in oil and natural gas prices. Higher prices have spurred demand for
drilling services, resulting in strong revenue and earnings growth at many
energy services companies. Despite a fairly long stretch of weak performance
from insurance stocks such as Hartford Financial, we held on to these
companies because we believed in their long-term prospects and the possibility
of consolidation in the industry. Recently, we've seen an increase in merger
and acquisition activity in this group, which has boosted the performance of
these holdings. In the first quarter of 2000, we took advantage of weakness in
pharmaceutical stocks to increase our holdings in what we believe are top-
notch companies with strong track records, such as Pharmacia, American Home
Products, and Bristol-Myers Squibb. Some of these stocks have come back strong
in the second quarter, and we believe they still offer attractive growth
prospects.
We've also increased the portfolio's exposure to wireless communications
stocks because we see tremendous growth opportunities for these companies. A
few years ago, roughly 3% of worldwide communications were handled over
wireless networks. Now that percentage has mushroomed to double-digits, and we
believe similar growth lies ahead. We expect revenue growth for many wireless
companies to rise 25% to 50% per year and international revenues could be even
higher. Given our outlook for dramatic growth in this industry, we like the
risk/reward profile of these stocks.
Despite what we think may be a somewhat less robust environment for consumer
spending, we also like companies such as CVS and Safeway because they're
noncyclical. People have to buy prescriptions, household products, and
groceries, regardless of the economic environment. We also happen to think
these are two of the best-run companies in their respective industries.
Additionally, we've increased our positions in Intel and EMC Corp. because we
see demand for their products and services accelerating, their fundamental
business prospects are strong, and we ultimately believe they can maintain
their leadership positions in their markets.
Respectfully,
/s/ Alec C. Murray
Alec C. Murray
Associate Director of Equity Research
The committee of MFS research analysts is responsible for the day-to-day
management of the series under the general supervision of Mr. Murray.
The opinions expressed in this report are those of the Associate Director of
Equity Research and are current only through the end of the period of the
report as stated on the cover. His views are subject to change at any time
based on market and other conditions, and no forecasts can be guaranteed.
The portfolio is actively managed, and current holdings may be different.
It is not possible to invest directly in an index.
<PAGE>
SERIES FACTS
Objective: Seeks long-term growth of capital and future income.
Commencement of investment operations: July 26, 1995
Class inception: Initial Class July 26, 1995
Service Class May 1, 2000
Size: $991.2 million 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.)
<TABLE>
TOTAL RATES OF RETURN THROUGH JUNE 30, 2000
INITIAL CLASS
<CAPTION>
6 Months 1 Year 3 Years Life*
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return +6.31% +21.16% +72.21% +164.82%
-----------------------------------------------------------------------------------------------------------------
Average Annual Total Return -- +21.16% +19.86% + 21.83%
-----------------------------------------------------------------------------------------------------------------
<CAPTION>
SERVICE CLASS
6 Months 1 Year 3 Years Life*
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return +6.27% +21.10% +72.13% +164.70%
-----------------------------------------------------------------------------------------------------------------
Average Annual Total Return -- +21.10% +19.84% + 21.82%
-----------------------------------------------------------------------------------------------------------------
* For the period from the commencement of the series' investment operations, July 26, 1995, through June 30, 2000.
</TABLE>
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 - 94.1%
-------------------------------------------------------------------------------------------------------
ISSUER SHARES VALUE
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Stocks - 84.8%
Aerospace - 1.6%
Boeing Co. 194,100 $ 8,115,806
General Dynamics Corp. 44,500 2,325,125
United Technologies Corp. 96,300 5,669,663
------------
$ 16,110,594
-------------------------------------------------------------------------------------------------------
Banks and Credit Companies - 2.1%
Capital One Financial Corp. 88,100 $ 3,931,463
Chase Manhattan Corp. 131,496 6,057,034
PNC Bank Corp. 77,600 3,637,500
Providian Financial Corp. 54,900 4,941,000
U.S. Bancorp 129,500 2,492,875
------------
$ 21,059,872
-------------------------------------------------------------------------------------------------------
Biotechnology - 2.1%
Pharmacia Corp. 400,626 $ 20,707,356
-------------------------------------------------------------------------------------------------------
Business Machines - 5.0%
Hewlett-Packard Co. 82,900 $ 10,352,138
International Business Machines Corp. 72,300 7,921,369
Seagate Technology, Inc.* 99,700 5,483,500
Sun Microsystems, Inc.* 281,000 25,553,437
------------
$ 49,310,444
-------------------------------------------------------------------------------------------------------
Business Services - 2.5%
Automatic Data Processing, Inc. 172,000 $ 9,212,750
Bea Systems, Inc.* 28,200 1,394,137
Computer Sciences Corp.* 144,900 10,822,219
Digimarc Corp.* 4,970 191,345
Fiserv, Inc.* 64,177 2,775,655
------------
$ 24,396,106
-------------------------------------------------------------------------------------------------------
Cellular Telephones - 2.2%
Motorola, Inc. 296,860 $ 8,627,494
Sprint Corp. (PCS Group)* 227,700 13,548,150
------------
$ 22,175,644
-------------------------------------------------------------------------------------------------------
Chemicals - 0.3%
Rohm & Haas Co. 92,600 $ 3,194,700
-------------------------------------------------------------------------------------------------------
Computer Hardware - Systems - 0.7%
Compaq Computer Corp. 130,700 $ 3,341,019
Dell Computer Corp.* 72,800 3,589,950
------------
$ 6,930,969
-------------------------------------------------------------------------------------------------------
Computer Software - Personal Computers - 3.2%
America Online, Inc.* 149,600 $ 7,891,400
Microsoft Corp.* 295,200 23,616,000
------------
$ 31,507,400
-------------------------------------------------------------------------------------------------------
Computer Software - Services - 2.4%
EMC Corp.* 312,000 $ 24,004,500
-------------------------------------------------------------------------------------------------------
Computer Software - Systems - 4.5%
BMC Software, Inc.* 94,900 $ 3,462,367
Computer Associates International, Inc. 66,225 3,389,892
Comverse Technology, Inc.* 85,200 7,923,600
E.piphany, Inc.* 13,800 1,479,187
I2 Technologies, Inc.* 26,100 2,721,333
Liberate Technologies* 32,850 962,916
Oracle Corp.* 172,100 14,467,156
Rational Software Corp.* 21,500 1,998,156
Siebel Systems, Inc.* 12,300 2,011,819
VERITAS Software Corp.* 55,100 6,227,161
------------
$ 44,643,587
-------------------------------------------------------------------------------------------------------
Conglomerates - 2.5%
Tyco International Ltd. 520,048 $ 24,637,274
-------------------------------------------------------------------------------------------------------
Consumer Products
Energizer Holdings, Inc. 16,666 $ 304,155
-------------------------------------------------------------------------------------------------------
Consumer Goods and Services - 1.3%
Clorox Co. 122,600 $ 5,494,013
Colgate-Palmolive Co. 120,500 7,214,937
------------
$ 12,708,950
-------------------------------------------------------------------------------------------------------
Containers - 0.1%
Owens Illinois, Inc.* 114,300 $ 1,335,881
-------------------------------------------------------------------------------------------------------
Electrical Equipment - 2.6%
General Electric Co. 479,400 $ 25,408,200
-------------------------------------------------------------------------------------------------------
Electronics - 9.0%
Analog Devices, Inc.* 67,532 $ 5,132,432
Atmel Corp.* 101,300 3,735,437
Fairchild Semiconductor International Co.* 48,800 1,976,400
Flextronics International Ltd.* 91,364 6,275,565
Intel Corp. 291,700 38,996,644
Lam Research Corp.* 125,800 4,717,500
LSI Logic Corp.* 72,600 3,929,475
Micron Technology, Inc.* 155,500 13,693,719
SCI Systems, Inc. 31,100 1,218,731
Solectron Corp.* 113,600 4,757,000
Teradyne, Inc.* 66,600 4,895,100
------------
$ 89,328,003
-------------------------------------------------------------------------------------------------------
Energy - 0.2%
Devon Energy Corp. 35,200 $ 1,977,800
-------------------------------------------------------------------------------------------------------
Entertainment - 2.8%
Infinity Broadcasting Corp., "A"* 190,225 $ 6,931,324
Macromedia, Inc.* 35,200 3,403,400
Time Warner, Inc. 104,800 7,964,800
Viacom, Inc., "B"* 138,486 9,443,014
------------
$ 27,742,538
-------------------------------------------------------------------------------------------------------
Financial Institutions - 3.6%
Associates First Capital Corp., "A" 296,892 $ 6,624,403
Citigroup, Inc. 208,650 12,571,163
Federal Home Loan Mortgage Corp. 131,200 5,313,600
Lehman Brothers Holdings, Inc. 24,500 2,316,781
Merrill Lynch & Co., Inc. 52,700 6,060,500
Morgan Stanley Dean Witter & Co. 29,600 2,464,200
State Street Corp. 3,300 350,006
------------
$ 35,700,653
-------------------------------------------------------------------------------------------------------
Financial Services - 0.5%
AXA Financial, Inc. 147,000 $ 4,998,000
-------------------------------------------------------------------------------------------------------
Food and Beverage Products - 1.0%
Anheuser-Busch Cos., Inc. 103,800 $ 7,752,562
Quaker Oats Co. 14,400 1,081,800
Ralston-Ralston Purina Co. 50,000 996,875
------------
$ 9,831,237
-------------------------------------------------------------------------------------------------------
Forest and Paper Products - 0.2%
Bowater, Inc. 41,500 $ 1,831,188
-------------------------------------------------------------------------------------------------------
Insurance - 2.3%
American International Group, Inc. 80,375 $ 9,444,063
Hartford Financial Services Group, Inc. 85,500 4,782,656
Marsh & McLennan Cos., Inc. 34,900 3,644,869
MetLife, Inc.* 162,450 3,421,603
St. Paul Cos., Inc. 44,600 1,521,975
------------
$ 22,815,166
-------------------------------------------------------------------------------------------------------
Internet - 0.9%
InterWorld Corp.* 8,700 $ 178,350
Selectica, Inc.* 8,080 566,105
VeriSign, Inc.* 46,400 8,189,600
------------
$ 8,934,055
-------------------------------------------------------------------------------------------------------
Machinery - 0.9%
Deere & Co., Inc. 139,600 $ 5,165,200
Ingersoll Rand Co. 104,600 4,210,150
------------
$ 9,375,350
-------------------------------------------------------------------------------------------------------
Medical and Health Products - 4.1%
American Home Products Corp. 133,200 $ 7,825,500
Bausch & Lomb, Inc. 65,000 5,029,375
Bristol-Myers Squibb Co. 289,800 16,880,850
Pfizer, Inc. 232,650 11,167,200
------------
$ 40,902,925
-------------------------------------------------------------------------------------------------------
Medical and Health Technology and Services - 0.8%
Medtronic, Inc. 148,600 $ 7,402,137
-------------------------------------------------------------------------------------------------------
Metals and Minerals - 0.2%
Alcoa, Inc. 70,800 $ 2,053,200
-------------------------------------------------------------------------------------------------------
Oil Services - 2.2%
Baker Hughes, Inc. 104,400 $ 3,340,800
Cooper Cameron Corp.* 14,000 924,000
Global Marine, Inc.* 293,600 8,275,850
Noble Drilling Corp.* 117,000 4,818,938
Weatherford International, Inc.* 103,300 4,112,631
------------
$ 21,472,219
-------------------------------------------------------------------------------------------------------
Oils - 4.2%
Conoco, Inc. 424,700 $ 10,431,693
EOG Resources, Inc. 124,300 4,164,050
Exxon Mobil Corp. 199,000 15,621,500
Santa Fe International Corp. 100,800 3,521,700
Transocean Sedco Forex, Inc. 150,500 8,042,344
------------
$ 41,781,287
-------------------------------------------------------------------------------------------------------
Printing and Publishing - 0.4%
Tribune Co. 104,800 $ 3,668,000
-------------------------------------------------------------------------------------------------------
Retail - 3.4%
CVS Corp. 405,200 $ 16,208,000
Office Depot, Inc.* 428,650 2,679,063
Radioshack Corp.* 171,600 8,129,550
Wal-Mart Stores, Inc. 121,500 7,001,437
------------
$ 34,018,050
-------------------------------------------------------------------------------------------------------
Special Products and Services - 0.3%
SPX Corp.* 26,400 $ 3,192,750
-------------------------------------------------------------------------------------------------------
Supermarkets - 1.6%
Albertsons, Inc. 693 $ 23,042
Safeway, Inc.* 343,900 15,518,488
------------
$ 15,541,530
-------------------------------------------------------------------------------------------------------
Telecommunications - 11.5%
Allegiance Telecom, Inc.* 11,500 $ 736,000
Ancor Communications, Inc.* 24,950 892,352
Bell Atlantic Corp. 79,300 4,029,431
Cabletron Systems, Inc.* 113,100 2,855,775
CIENA Corp.* 70,400 11,734,800
Cisco Systems, Inc.* 483,700 30,745,181
Corning, Inc. 61,555 16,612,156
Intermedia Communications, Inc.* 17,800 529,550
Level 3 Communications, Inc.* 28,200 2,481,600
Metromedia Fiber Network, Inc., "A"* 278,400 11,049,000
Qwest Communications International, Inc.* 135,900 6,752,531
Sprint Corp.* 206,700 10,541,700
Tellabs, Inc.* 43,800 2,997,563
Time Warner Telecom, Inc.* 17,100 1,100,813
Winstar Communications, Inc.* 15,750 533,531
WorldCom, Inc.* 235,161 10,788,011
------------
$114,379,994
-------------------------------------------------------------------------------------------------------
Telecommunications and Cable - 0.5%
Comcast Corp., "A"* 123,000 $ 4,981,500
-------------------------------------------------------------------------------------------------------
Utilities - Electric - 0.7%
AES Corp.* 152,800 $ 6,971,500
-------------------------------------------------------------------------------------------------------
Utilities - Gas - 0.4%
Williams Cos., Inc. 83,100 $ 3,464,231
-------------------------------------------------------------------------------------------------------
Total U.S. Stocks $840,798,945
-------------------------------------------------------------------------------------------------------
Foreign Stocks - 9.3%
Bermuda - 1.1%
FLAG Telecom Holdings Ltd. (Telecommunications)* 142,540 $ 2,120,283
Global Crossing Ltd. (Telecommunications)* 345,800 9,098,862
------------
$ 11,219,145
-------------------------------------------------------------------------------------------------------
Canada - 2.0%
Nortel Networks Corp. (Telecommunications) 286,400 $ 19,546,800
-------------------------------------------------------------------------------------------------------
France - 0.3%
Business Objects S.A., ADR (Computer Software - Systems)* 7,400 $ 652,125
Total S.A., "B" (Oils) 12,500 1,916,360
------------
$ 2,568,485
-------------------------------------------------------------------------------------------------------
Ireland - 0.1%
Trintech Group PLC, ADR (Computer Software - Products)* 54,350 $ 1,070,865
-------------------------------------------------------------------------------------------------------
Japan - 1.3%
AFLAC, Inc. (Insurance) 40,400 $ 1,855,875
Fast Retailing Co. (Retail) 7,000 2,929,864
Hitachi Ltd. (Electronics) 172,000 2,480,769
Nippon Telegraph & Telephone Co. (Utilities - Telephone) 414 5,502,828
------------
$ 12,769,336
-------------------------------------------------------------------------------------------------------
Netherlands - 1.5%
KPN N.V. (Telecommunications)* 123,162 $ 5,508,176
Royal Dutch Petroleum Co. (Oils) 149,200 9,271,955
------------
$ 14,780,131
-------------------------------------------------------------------------------------------------------
United Kingdom - 3.0%
BAE Systems PLC (Aerospace)* 921,100 $ 5,740,217
BP Amoco PLC, ADR (Oils) 239,254 13,532,804
HSBC Holdings PLC (Banks and Credit Cos.)* 248,700 2,842,069
Lloyds TSB Group PLC (Banks and Credit Cos.)* 1,180 11,138
Vodafone AirTouch PLC (Telecommunications)* 926,165 3,740,451
Zeneca Group PLC (Medical and Health Products) 89,600 4,181,070
------------
$ 30,047,749
-------------------------------------------------------------------------------------------------------
Total Foreign Stocks $ 92,002,511
-------------------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $783,247,215) $932,801,456
-------------------------------------------------------------------------------------------------------
Short-Term Obligations - 5.1%
-------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
-------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., due 7/03/00 $ 42,735 $ 42,719,402
Federal Home Loan Mortgage Corp., due 7/05/00 8,000 7,994,355
-------------------------------------------------------------------------------------------------------
Total Short-Term Obligations, at Amortized Cost $ 50,713,757
-------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $833,960,972) $983,515,213
Other Assets, Less Liabilities - 0.8% 7,671,215
-------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $991,186,428
-------------------------------------------------------------------------------------------------------
* 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, $833,960,972) $ 983,515,213
Investments of cash collateral for securities loaned, at
identified cost and value 39,959,666
Cash 5,630
Receivable for series shares sold 1,015,645
Receivable for investments sold 12,079,683
Interest and dividends receivable 300,541
Deferred organization expenses 130
Other assets 4,619
--------------
Total assets $1,036,881,127
--------------
Liabilities:
Payable for series shares reacquired $ 467,569
Payable for investments purchased 5,130,061
Collateral for securities loaned, at value 39,959,666
Payable to affiliates -
Management fee 20,175
Shareholder servicing agent fee 941
Administrative fee 471
Accrued expenses and other liabilities 115,816
--------------
Total liabilities $ 45,694,699
--------------
Net assets $ 991,186,428
==============
Net assets consist of:
Paid-in capital $ 732,594,333
Unrealized appreciation on investments and translation of
assets and liabilities in foreign currencies 149,556,966
Accumulated undistributed net realized gain on investments
and foreign currency transactions 108,854,802
Accumulated undistributed net investment income 180,327
--------------
Total $ 991,186,428
==============
Shares of beneficial interest outstanding 42,652,040
==========
Initial Class shares:
Net asset value, offering price, and redemption price
per share (net assets of $991,155,001 / 42,650,688
shares of beneficial interest outstanding) $23.24
======
Service Class shares:
Net asset value, offering price, and redemption price
per share (net assets of $31,427 / 1,352 shares of
beneficial interest outstanding) $23.24
======
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Operations (Unaudited)
-------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, 2000
-------------------------------------------------------------------------------
Net investment income:
Income -
Dividends $ 3,026,571
Interest 1,074,345
Foreign taxes withheld (56,924)
------------
Total investment income $ 4,043,992
------------
Expenses -
Management fee $ 3,443,512
Trustees' compensation 6,940
Shareholder servicing agent fee 160,697
Distribution fee (Service Class) 9
Administrative fee 74,821
Custodian fee 162,765
Auditing fees 19,150
Legal fees 770
Amortization of organization expenses 916
Miscellaneous 56,274
------------
Total expenses $ 3,925,854
Fees paid indirectly (54,346)
------------
Net expenses $ 3,871,508
------------
Net investment income $ 172,484
------------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $109,875,025
Foreign currency transactions (42,879)
------------
Net realized gain on investments and foreign currency
transactions $109,832,146
------------
Change in unrealized appreciation (depreciation) -
Investments $(52,761,853)
Translation of assets and liabilities in foreign currency 5,349
------------
Net unrealized loss on investments and foreign currency
translation $(52,756,504)
------------
Net realized and unrealized gain on investments and
foreign currency $ 57,075,642
------------
Increase in net assets from operations $ 57,248,126
============
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 income $ 172,484 $ 533,376
Net realized gain on investments and foreign currency
transactions 109,832,146 66,796,406
Net unrealized gain (loss) on investments and foreign
currency translation (52,756,504) 98,811,362
------------ ------------
Increase in net assets from operations $ 57,248,126 $166,141,144
------------ ------------
Distributions declared to shareholders -
From net investment income (Initial Class) $ (346,734) $ (1,317,597)
From net realized gain on investments and foreign
currency transactions (Initial Class) (59,516,402) (6,962,893)
------------ ------------
Total distributions declared to shareholders $(59,863,136) $ (8,280,490)
------------ ------------
Net increase in net assets from series share transactions $110,223,766 $157,939,466
------------ ------------
Total increase in net assets $107,608,756 $315,800,120
Net assets:
At beginning of period 883,577,672 567,777,552
------------ ------------
At end of period (including accumulated
undistributed net investment income of
$180,327 and $354,577, respectively) $991,186,428 $883,577,672
============ ============
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 1995*
(UNAUDITED)
-----------------------------------------------------------------------------------------------------------------------------
INITIAL CLASS SHARES
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning
of period $23.34 $19.05 $15.80 $13.13 $10.89 $10.00
------ ------ ------ ------ ------ ------
Income from investment operations# -
Net investment income(S) $ -- $ 0.02 $ 0.06 $ 0.05 $ 0.06 $ 0.05
Net realized and unrealized
gain on investments and
foreign currency 1.45 4.52 3.59 2.62 2.37 1.01
------ ------ ------ ------ ------ ------
Total from investment operations $ 1.45 $ 4.54 $ 3.65 $ 2.67 $ 2.43 $ 1.06
------ ------ ------ ------ ------ ------
Less distributions declared to shareholders -
From net investment income $(0.01) $(0.04) $(0.03) $ -- $(0.02) $(0.03)
From net realized gain on
investments and foreign
currency transactions (1.54) (0.21) (0.37) -- (0.16) (0.14)
In excess of net realized
gain on investments and
foreign currency
transactions -- -- -- -- (0.01) --
------ ------ ------ ------ ------ ------
Total distributions
declared to shareholders $(1.55) $(0.25) $(0.40) $ -- $(0.19) $(0.17)
------ ------ ------ ------ ------ ------
Net asset value - end of period $23.24 $23.34 $19.05 $15.80 $13.13 $10.89
====== ====== ====== ====== ====== ======
Total return 6.31%++ 24.05% 23.39% 20.26% 22.33% 10.62%++
Ratios (to average net assets)/Supplemental data(S):
Expenses## 0.86%+ 0.86% 0.86% 0.92% 1.01% 1.02%+
Net investment income 0.04%+ 0.08% 0.33% 0.34% 0.47% 1.15%+
Portfolio turnover 58% 91% 83% 99% 56% 28%
Net assets at end of period
(000 Omitted) $991,155 $883,578 $567,778 $285,845 $35,710 $2,530
(S) Prior to January 1, 1998, subject to reimbursement by the series, the investment adviser agreed to maintain the expenses of
the series, exclusive of management fees, at not more than 0.25% of average daily net assets. To the extent actual expenses
were over or under this limitation, the net investment income (loss) per share and the ratios would have been:
Net investment income (loss) $ 0.06 $ -- $(0.08)
Ratios (to average net assets):
Expenses## 0.88% 1.48% 3.90%+
Net investment income (loss) 0.38% -- (1.73)%+
* For the period from the commencement of the series' investment operations, July 26, 1995, through December 31, 1995.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect 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 each period):
Net asset value - beginning of period $23.13
------
Income from investment operations# -
Net investment loss $ 0.00**
Net realized and unrealized gain on investments and foreign
currency 0.11
------
Total from investment operations $ 0.11
------
Net asset value - end of period $23.24
======
Total return 0.48%++
Ratios (to average net assets)/Supplemental data:
Expenses## 1.10%+
Net investment loss (0.08)%+
Portfolio turnover 58%
Net assets at end of period (000 Omitted) $31
* For the period from the inception of Service Class shares, May 1, 2000,
through June 30, 2000.
** Per share amount was less than $0.01.
+ 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.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(1) Business and Organization
MFS Research 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 the
series are separate accounts of insurance companies which offer variable
annuity and/or life insurance products. As of June 30, 2000, there were 85
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") and
Chase Manhattan Bank ("Chase"), as lending agents, 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 and Chase 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. 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 $38,819,229. These loans
were collateralized by cash of $39,959,666 which was invested in the following
short-term obligations:
SHARES/ AMORTIZED COST
PRINCIPAL AMOUNT AND VALUE
-------------------------------------------------------------------------------
Navigator Securities Lending Prime Portfolio 39,959,576 $39,959,576
Salomon Smith Barney, Inc., 6.85%, 7/3/00 $ 90 90
----------- -----------
Total investments of cash collateral for
securities loaned $39,959,666
===========
Forward Foreign Currency Exchange Contracts - The series may enter into
forward foreign currency exchange contracts for the purchase or sale of a
specific foreign currency at a fixed price on a future date. Risks may arise
upon entering into these contracts from the potential inability of
counterparties to meet the terms of their contracts and from unanticipated
movements in the value of a foreign currency relative to the U.S. dollar. The
series may enter into forward contracts for hedging purposes as well as for
non-hedging purposes. For hedging purposes, the series may enter into
contracts to deliver or receive foreign currency it will receive from or
require for its normal investment activities. The series may also use
contracts in a manner intended to protect foreign currency-denominated
securities from declines in value due to unfavorable exchange rate movements.
For non-hedging purposes, the series may enter into contracts with the intent
of changing the relative exposure of the series' portfolio of securities to
different currencies to take advantage of anticipated changes. The forward
foreign currency exchange contracts are adjusted by the daily exchange rate of
the underlying currency and any gains or losses are recorded as unrealized
until the contract settlement date. On contract settlement date, the gains or
losses are recorded as realized gains or losses on foreign currency
transactions.
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 payments received in additional securities are
recorded on the ex-dividend 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. During the period, the series' custodian fees were reduced by
$39,787 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 $14,559 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 and service 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 trust pays no compensation directly to its Trustees who are officers of
the investment adviser, or to officers of the series, all of whom receive
remuneration for their services to the series from MFS. Certain officers and
Trustees of the series are officers or directors of MFS, MFS Fund
Distributors, Inc. (MFD), and MFS Service Center, Inc. (MFSC).
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 a
distribution fee 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 date as the Trustees of the trust may determine. Fees incurred
under the distribution plan during the six months 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 and
short-term obligations, aggregated $534,469,760 and $512,475,993,
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 $833,960,972
------------
Gross unrealized appreciation $189,069,988
Gross unrealized depreciation (39,515,747)
------------
Net unrealized appreciation $149,554,241
============
(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, 1999
------------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 5,215,811 $121,959,593 12,734,866 $251,415,629
Shares issued to shareholders in
reinvestment of distributions 2,616,395 59,863,128 422,259 8,280,488
Shares reacquired (3,039,348) (71,630,276) (5,105,366) (101,756,651)
---------- ------------ ---------- ------------
Net increase 4,792,858 $110,192,445 8,051,759 $157,939,466
========== ============ ========== ============
<CAPTION>
Service Class shares PERIOD ENDED JUNE 30, 2000*
----------------------------------
SHARES AMOUNT
-------------------------------------------------------------------
<S> <C> <C>
Shares sold 1,352 $31,321
========== ============
* 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 funds 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 fund, based on its borrowings, at a rate equal to the bank's
base rate. In addition, a commitment fee, based on the average daily unused
portion of the line of credit, is allocated among the participating funds at
the end of each quarter. The commitment fee allocated to the series for the
six months ended June 30, 2000, was $3,371. The series had no significant
borrowings during the period.
--------------------------------------------
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>
(c)2000 MFS Investment Management(R).
MFS(R) investment products are offered through MFS Fund Distributors, Inc.,
500 Boylston Street, Boston, MA 02116.
VFR-3 8/00 84M
