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INVESTMENT MANGEMENT
We invented the mutual fund(RegTM)]
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MFS[RegTM] VARIABLE INSURANCE TRUST(SM)
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Prospectus
Initial Class
MAY 1, 2000
MFS[RegTM] MID CAP GROWTH SERIES
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This Prospectus describes one series of the MFS Variable Insurance Trust
(referred to as the trust):
1. MFS Mid Cap Growth Series seeks long-term growth of capital (referred to as
the Mid Cap Growth Series).
The Securities and Exchange Commission has not approved the series' shares or
determined whether this prospectus is accurate or complete. Anyone who tells
you otherwise is committing a crime.
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TABLE OF CONTENTS
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I Expense Summary ............................................ 1
II Risk Return Summary ........................................ 2
1. Mid Cap Growth Series .................................. 2
III Certain Investment Strategies and Risks .................... 4
IV Management of the Series ................................... 4
V Description of Shares ...................................... 5
VI Other Information .......................................... 5
VII Financial Highlights ....................................... 6
Appendix A -- Investment Techniques and Practices .......... A-1
</TABLE>
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The trust offers shares of its 16 series to separate accounts established
by insurance companies in order to serve as investment vehicles for
variable annuity and variable life insurance contracts and to qualified
pension and retirement plans. Each of these series is managed by
Massachusetts Financial Services Company (referred to as MFS or the
adviser) one is described below.
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I EXPENSE SUMMARY
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> Expense Table
This table describes the expense that you may pay when you hold initial class
shares of the series. These fees and expenses do not take into account the
fees and expenses imposed by insurance companies through which your
investment in a series may be made.
Annual Series Operating Expenses (expenses that are deducted from a series'
assets):
<TABLE>
<CAPTION>
Mid Cap
Growth
Series
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<S> <C>
Management Fee ................................. 0.75%
Other Expenses ................................. 0.46%
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Total Annual Series Operating Expenses ......... 1.21%
Expense Reimbursement ......................... (0.31)%(2)
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Net Expenses .................................. 0.90%
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(2) MFS has contractually agreed, subject to reimbursement, to bear expenses
for this series such that the Mid Cap Growth series' "Other Expenses"
(after taking into account the expense offset arrangement described
above), does not exceed 0.15% of the average daily net assets of the
series during the current fiscal year. These contractual fee arrangements
will continue until at least May 1, 2001, unless changed with the consent
of the board of trustees which oversees the series.
> Example of Expenses--Initial Class
This example is intended to help you compare the cost of investing in the
series with the cost of investing in other mutual funds. This example does
not take into account the fees and expenses imposed by insurance companies
through which your investment in a series may be made.
The example assumes that:
o You invest $10,000 in the series for the time periods indicated and you
redeem your shares at the end of the time periods;
o Your investment has a 5% return each year and dividends and other
distributions are reinvested; and
o The series' operating expenses remain the same, except that the series'
total operating expenses are assumed to be the series' "Net Expenses" for
the first year, and the series' "Total Annual Series Operating Expenses"
for subsequent years (see the expense table on the previous page).
Although your actual costs may be higher or lower, under these assumptions
your costs would be:
<TABLE>
<CAPTION>
Period
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Series 1 Year 3 Years 5 Years 10 Years
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<S> <C> <C> <C> <C>
Mid Cap Growth Series 92 353 N/A N/A
</TABLE>
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II RISK RETURN SUMMARY
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1: Mid Cap Series
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> Investment Objective
The series' investment objective is long-term growth of capital. The series'
objective may be changed without shareholder approval.
> Principal Investment Policies
The series invests, under normal market conditions, at least 65% of its total
assets in common stocks and related securities, such as preferred stocks,
convertible securities and depositary receipts for those securities, of
companies with medium market capitalization which the series' investment
adviser believes have above-average growth potential.
Medium market capitalization companies are defined by the series as
companies with market capitalizations equaling or exceeding $250 million
but not exceeding the top of the Russell MidcapTM Growth Index range at the
time of the series' investment. This Index is a widely recognized,
unmanaged index of mid-cap common stock prices. Companies whose market
capitalizations fall below $250 million or exceed the top of the Russell
Midcap Growth Index range after purchase continue to be considered
medium-capitalization companies for purposes of the fund's 65% investment
policy. As of February 29, 2000, the top of the Russell Midcap Growth Index
range was $59.6 billion. The series' investments may include securities
listed on a securities exchange or traded in the over-the-counter markets.
MFS uses a bottom-up, as opposed to a top-down, investment style in
managing the equity-oriented funds (such as the series) it advises. This
means that securities are selected based upon fundamental analysis (such as
an analysis of earnings, cash flows, competitive position and management's
abilities) performed by the series' portfolio manager and MFS' large group
of equity research analysts.
The series is a non-diversified mutual series. This means that the series
may invest a relatively high percentage of its assets in a small number of
issuers.
The series may invest in foreign securities (including emerging markets
securities) through which it may have exposure to foreign currencies.
The series is expected to engage in active and frequent trading to achieve
its principal investment strategies.
> Principal Risks of an Investment
The principal risks of investing in the series and the circumstances
reasonably likely to cause the value of your investment in the series to
decline are described below. The share price of the series generally changes
daily based on market conditions and other factors. Please note that there
are many circumstances which could cause the value of your investment in the
series to decline, and which could prevent the series from achieving its
objective, that are not described here.
The principal risks of investing in the series are:
o Mid-Cap Growth Company Risk: Prices of growth company securities held by
the series may decline due to changing economic, political or market
conditions, or due to the financial condition of the company which issued
the security, and may decline to a greater extent than the overall equity
markets (e.g., as represented by the Standard and Poor's Composite 500
Index). Investments in medium capitalization companies can be riskier and
more volatile than investments in companies with larger market
capitalizations.
o Over-the Counter Risk: Over-the-counter (OTC) transactions involve risks in
addition to those associated with transactions in securities traded on
exchanges. OTC-listed companies may have limited product lines, markets or
financial resources. Many OTC stocks trade less frequently and in smaller
volume than exchange-listed stocks. The values of these stocks may be more
volatile than exchange-listed stocks, and the fund may experience
difficulty in establishing or closing out positions in these stocks at
prevailing market prices.
o Foreign Securities Risk: Investing in foreign securities involves risks
relating to political, social and economic developments abroad, as well as
risks resulting from the differences between the regulations to which U.S.
and foreign issuers and markets are subject:
> These risks may include the seizure by the government of company
assets, excessive taxation, withholding taxes on dividends and interest,
limitations on the use or transfer of portfolio assets, and political or
social instability.
> Enforcing legal rights may be difficult, costly and slow in foreign
countries, and there may be special problems enforcing claims against
foreign governments.
> Foreign companies may not be subject to accounting standards or
governmental supervision comparable to U.S. companies, and there may be
less public information about their operations.
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> Foreign markets may be less liquid and more volatile than U.S. markets.
> Foreign securities often trade in currencies other than the U.S.
dollar, and the series may directly hold foreign currencies and purchase
and sell foreign currencies through forward exchange contracts. Changes
in currency exchange rates will affect the series' net asset value, the
value of dividends and interest earned, and gains and losses realized on
the sale of securities. An increase in the strength of the U.S. dollar
relative to these other currencies may cause the value of the series to
decline. Certain foreign currencies may be particularly volatile, and
foreign governments may intervene in the currency markets, causing a
decline in value or liquidity in the series' foreign currency holdings.
By entering into forward foreign currency exchange contracts, the series
may be required to forego the benefits of advantageous changes in
exchange rates and, in the case of forward contracts entered into for
the purpose of increasing return, the series may sustain losses which
will reduce its gross income. Forward foreign currency exchange
contracts involve the risk that the party with which the series enters
the contract may fail to perform its obligations to the series.
o Non-Diversified Status Risk: Because the series may invest its assets in a
small number of issuers, the series is more susceptible to any single
economic, political or regulatory event affecting those issuers than is a
diversified series.
o Emerging Markets Risk: Emerging markets are generally defined as countries
in the initial stages of their industrialization cycles with low per capita
income. Investments in emerging markets securities involve all of the risks
of investments in foreign securities, and also have additional risks:
> All of the risks of investing in foreign securities are heightened by
investing in emerging markets countries.
> The markets of emerging markets countries have been more volatile than
the markets of developed countries with more mature economies. These
markets often have provided significantly higher or lower rates of
return than developed markets, and significantly greater risks, to
investors.
o Active or Frequent Trading Risk: The series is expected to engage in active
and frequent trading to achieve its principal investment strategies. This
may result in the realization and distribution to shareholders of higher
capital gains as compared to a series with less active trading policies.
Frequent trading also increases transaction costs, which could detract from
the series' performance.
o As with any mutual fund, you could lose money on your investment in the
fund.
An investment in the series is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
> Bar Chart and Performance Table
The bar chart and performance table are not included because the series had
not commenced investment operations as of December 31, 1999.
> Portfolio Manager
Mark Regan, a Senior Vice President of the Adviser, has been employed in the
investment management area of the Adviser since 1989 and has been the series'
portfolio manager since its inception. David E. Sette-Ducati, a Vice
President of the Adviser, has been employed in the investment management area
of the Adviser since 1995 and has been a portfolio manager of the series
since May 1, 2000.
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III CERTAIN INVESTMENT STRATEGIES AND RISKS
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> Further Information on Investment Strategies and Risks
The series may invest in various types of securities and engage in various
investment techniques and practices which are not the principal focus of the
series and therefore are not described in this prospectus. The types of
securities and investment techniques and practices in which the series may
engage, including the principal investment techniques and practices described
above, are identified in Appendix A to this Prospectus, and are discussed,
together with their risks, in the trust's Statement of Additional Information
(referred to as the SAI), which you may obtain by contacting MFS Service
Center, Inc. (see back cover for address and phone number).
> Temporary Defensive Policies
The series may depart from its principal investment strategies by temporarily
investing for defensive purposes when adverse market, economic or political
conditions exist. While a series invests defensively, it may not be able to
pursue its investment objective. The series defensive investment position may
not be effective in protecting its value.
> Active or Frequent Trading
The series may engage in active and frequent trading to achieve its principal
investment strategies. This may result in the realization and distribution to
shareholders of higher capital gains as compared to a series with less active
trading policies. Frequent trading also increases transaction costs, which
could detract from the series' performance.
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IV MANAGEMENT OF THE SERIES
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Investment Adviser
Massachusetts Financial Services Company (referred to as MFS or the adviser)
is the investment adviser to each series. MFS is America's oldest mutual fund
organization. MFS and its predecessor organizations have a history of money
management dating from 1924 and the founding of the first mutual fund,
Massachusetts Investors Trust. Net assets under the management of the MFS
organization were approximately $136.7 billion as of December 31, 1999. MFS
is located at 500 Boylston Street, Boston, Massachusetts 02116.
MFS provides investment management and related administrative services and
facilities to each series, including portfolio management and trade
execution. For these services, each series pays MFS an annual management
fee as set forth in the Expense Summary.
MFS or its affiliates generally pay an administrative service fee to
insurance companies which use the series as underlying investment vehicles
for their variable annuity and variable life insurance contracts based upon
the aggregate net assets of the series attributable to these contracts.
These fees are not paid by the series, their shareholders, or by the
contract holders.
> Administrator
MFS provides each series with certain financial, legal, compliance,
shareholder communications and other administrative services. MFS is
reimbursed by each series for a portion of the costs it incurs in providing
these services.
> Distributor
MFS Fund Distributors, Inc. (referred to as MFD), a wholly owned subsidiary
of MFS, is the distributor of shares of the series.
> Shareholder Servicing Agent
MFS Service Center, Inc. (referred to as MFSC), a wholly owned subsidiary of
MFS, performs transfer agency and certain other services for the series, for
which it receives compensation from the series.
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V DESCRIPTION OF SHARES
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The trust offers two classes of shares--initial class shares and service
class shares. Initial class shares are offered through this prospectus.
Service class shares, which bear a Rule 12b-1 distribution fee, are
available through a separate prospectus supplement. These shares are
offered to separate accounts established by insurance companies in order to
serve as investment vehicles for variable annuity and variable life
insurance contracts. The trust also offers shares of each of its series to
qualified pension and retirement plans. All purchases, redemptions and
exchanges of shares are made through these insurance company separate
accounts and plans, which are the record owner of the shares. Contract
holders and plan beneficiaries seeking to purchase, redeem or exchange
interests in the trust's shares should consult with the insurance company
which issued their contracts or their plan sponsor.
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VI OTHER INFORMATION
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> Pricing of Series' Shares
The price of each series' shares is based on its net asset value. The net
asset value of the series' shares is determined at the close of regular
trading each day that the New York Stock Exchange is open for trading
(generally, 4:00 p.m., Eastern time) (referred to as the valuation time). The
New York Stock Exchange is closed on most national holidays and Good Friday.
To determine net asset value, the series values its assets at current market
values, or at fair value as determined by the Adviser under the direction of
the Board of Trustees that oversees the series if current market values are
unavailable. Fair value pricing may be used by a series when current market
values are unavailable or when an event occurs after the close of the
exchange on which the series' portfolio securities are principally traded
that is likely to have changed the value of the securities. The use of fair
value pricing by a series may cause the net asset value of its shares to
differ significantly from the net asset value that would be calculated using
current market values.
Insurance companies and plan sponsors are the designees of the trust for
receipt of purchase, exchange and redemption orders from contractholders
and plan beneficiaries. An order submitted to the trust's designee by the
valuation time will receive the net asset value next calculated; provided
that the trust receives notice of the order generally by 9:30 a.m. eastern
time on the next day on which the New York Stock Exchange is open for
trading.
Certain series invest in securities which are primarily listed on foreign
exchanges that trade on weekends and other days when the series does not
price its shares. Therefore, the value of these series' shares may change
on days when you will not be able to purchase or redeem their shares.
> Distributions
The series intends to pay substantially all of its net income (including any
realized net capital and net foreign currency gains) to shareholders as
dividends at least annually.
> Tax Considerations
The following discussion is very general. You are urged to consult your tax
adviser regarding the effect that an investment in a series may have on your
tax situation. The series of the Trust is treated as a separate corporation
for federal tax purposes. As long as a series qualifies for treatment as a
regulated investment company (which the series intends to do), it pays no
federal income tax on the earnings it distributes to shareholders. In
addition, the series also intends to continue to diversify its assets to
satisfy the federal diversification tax rules applicable to separate accounts
that fund variable insurance and annuity contracts.
Shares of the series are offered to insurance company separate accounts and
to qualified retirement and pension plans. You should consult with the
insurance company that issued your contract to understand the federal tax
treatment of your investment.
> Right to Reject or Restrict Purchase and Exchange Orders
Purchases and exchanges should be made for investment purposes only. The
series reserves the right to reject or restrict any specific purchase or
exchange request. Because an exchange request involves both a request to
redeem shares of one series and to purchase shares of another series, the
series consider the underlying redemption and purchase requests conditioned
upon the acceptance of each of these underlying requests. Therefore, in the
event that the series reject an exchange request, neither the redemption nor
the purchase side of the exchange will be processed. When a series determines
that the level of exchanges on any day may be harmful to its remaining
shareholders, the
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series may delay the payment of exchange proceeds for up to seven days to
permit cash to be raised through the orderly liquidation of its portfolio
securities to pay the redemption proceeds. In this case, the purchase side
of the exchange will be delayed until the exchange proceeds are paid by the
redeeming series.
> Excessive Trading Practices
The series do not permit market-timing or other excessive trading practices.
Excessive, short-term (market-timing) trading practices may disrupt portfolio
management strategies and harm series' performance. As noted above, each
series reserves the right to reject or restrict any purchase order (including
exchanges) from any investor. To minimize harm to the series and their
shareholders, the series will exercise these rights if an investor has a
history of excessive trading or if an investor's trading, in the judgment of
the series, has been or may be disruptive to a series. In making this
judgment, the series may consider trading done in multiple accounts under
common ownership or control.
> In-kind distributions
The series have reserved the right to pay redemption proceeds by a
distribution in-kind of portfolio securities (rather than cash). In the event
that the series makes an in-kind distribution, you could incur the brokerage
and transaction charges when converting the securities to cash. The series do
not expect to make in-kind distributions.
> Unique Nature of Series
MFS may serve as the investment adviser to other funds which have investment
goals and principal investment policies and risks similar to those of the
series, and which may be managed by the series' portfolio manager(s). While a
series may have many similarities to these other funds, its investment
performance will differ from their investment performance. This is due to a
number of differences between a series and these similar products, including
differences in sales charges, expense ratios and cash flows.
> Potential Conflicts
Shares of the series are offered to the separate accounts of insurance
companies that may be affiliated or unaffiliated with MFS and each other
("shared funding") and may serve as the underlying investments for both
variable annuity and variable life insurance contracts ("mixed funding"). Due
to differences in tax treatment or other considerations, the interests of
various contract owners might at some time be in conflict. The trust
currently does not foresee any such conflict. Nevertheless, the board of
trustees which oversees the series intends to monitor events in order to
identify any material irreconcilable conflicts which may possibly arise and
to determine what action, if any, should be taken in response. If such a
conflict were to occur, one or more separate accounts of the insurance
companies might be required to withdraw its investments in one or more
series. This might force a series to sell securities at disadvantageous
prices.
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VII FINANCIAL HIGHLIGHTS
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The financial highlights table is intended to help you understand the
series' financial performance for the past five years, or, if a series has
not been in operation that long, since the time it commenced investment
operations. Certain information reflects financial results for a single
series' share. The total returns in the table represent the rate by which
an investor would have earned (or lost) on an investment in a series
(assuming reinvestment of all distributions). This information has been
audited by the trust's independent auditors, whose report, together with
the trust's financial statements, are included in the trust's Annual Report
to shareholders. The series' Annual Report is available upon request by
contacting MFSC (see back cover for address and telephone number). These
financial statements are incorporated by reference into the SAI. The
trust's independent auditors are Deloitte & Touche LLP.
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Appendix A Mid Cap Growth Series
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> Investment Techniques and Practices
In pursuing its investment objective and investment policies, the Mid Cap
Growth Series may engage in the following principal and non- principal
investment techniques and practices. Investment techniques and practices
which are the principal focus of the series are also described, together with
their risks, in the Risk Return Summary of the Prospectus. Both principal and
non-principal investment techniques and practices are described, together
with their risks, in the SAI.
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Symbols X permitted -- not permitted
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</TABLE>
<TABLE>
<S> <C>
Debt Securities
Asset-Backed Securities
Collateralized Mortgage Obligations and Multiclass
Pass-Through Securities --
Corporate Asset-Backed Securities --
Mortgage Pass-Through Securities --
Stripped Mortgage-Backed Securities --
Corporate Securities X
Loans and Other Direct Indebtedness --
Lower Rated Bonds X
Municipal Bonds --
Speculative Bonds X
U.S. Government Securities X
Variable and Floating Rate Obligations X
Zero Coupon Bonds, Deferred Interest Bonds and PIK
Bonds X
Equity Securities X
Foreign Securities Exposure
Brady Bonds --
Depositary Receipts X
Dollar-Denominated Foreign Debt Securities --
Emerging Markets X
Foreign Securities X
Forward Contracts X
Futures Contracts X
Indexed Securities/Structured Products --
Inverse Floating Rate Obligations --
</TABLE>
<TABLE>
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Investment in Other Investment Companies
Open-End X
Closed-End X
Lending of Portfolio Securities X
Leveraging Transactions
Bank Borrowings --
Mortgage "Dollar-Roll" Transactions --
Reverse Repurchase Agreements --
Options
Options on Foreign Currencies X
Options on Futures Contracts X
Options on Securities X
Options on Stock Indices X
Reset Options --
"Yield Curve" Options --
Repurchase Agreements X
Restricted Securities X
Short Sales X
Short Sales Against the Box X
Short Term Instruments X
Swaps and Related Derivative Instruments --
Temporary Borrowings X
Temporary Defensive Positions X
Warrants X
"When-Issued" Securities X
</TABLE>
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MFS[RegTM] VARIABLE INSURANCE TRUST(SM)
If you want more information about the trust and its series, the following
documents are available free upon request:
Annual/Semiannual Reports. These reports contain information about the
series' actual investments. Annual reports discuss the effect of recent
market conditions and the series' investment strategy on the series'
performance during its last fiscal year.
Statement of Additional Information (SAI). The SAI, dated May 1, 2000,
provides more detailed information about the trust and its series and is
incorporated into this prospectus by reference.
You can get free copies of the annual/semiannual reports, the SAI and other
information about the trust and its series, and make inquiries about the
trust and its series, by contacting:
MFS Service Center, Inc.
2 Avenue de Lafayette
Boston, MA 02111-1738
Telephone: 1-800-343-2829, ext. 3500
Internet: http://www.mfs.com
Information about the trust and its series (including its prospectus, SAI and
shareholder reports) can be reviewed and copied at the:
Public Reference Room
Securities and Exchange Commission
Washington, D.C., 20549-0102
Information on the operation of the Public Reference Room may be obtained
by calling the Commission at 202-942-8090. Reports and other information
about the trust and its series are available on the EDGAR Databases on the
Commission's Internet website at http://www.sec.gov, and copies of this
information may be obtained, upon payment of a duplicating fee, by
electronic request at the following E-mail address: [email protected], or
by writing the Public Reference Section at the above address.
The trust's Investment Company Act file number is 811-8326
MSG 11/98 224M 90/290/390/890
