<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) MID CAP
GROWTH SERIES
<PAGE>
<TABLE>
MFS(R) MID CAP GROWTH SERIES
A SERIES OF MFS(R) VARIABLE INSURANCE TRUST(SM)
<S>
TRUSTEES <C>
Jeffrey L. Shames* - Chairman and Chief Executive INVESTMENT ADVISER
Officer, MFS Investment Management(R) Massachusetts Financial Services
Company
Nelson J. Darling, Jr.+ - Private investor and 500 Boylston Street
trustee Boston, MA 02116-3741
William R. Gutow+ - Private investor and real DISTRIBUTOR
estate consultant; Vice Chairman, Capitol MFS Fund Distributors, Inc.
Entertainment Management Company (video franchise) 500 Boylston Street
Boston, MA 02116-3741
CHAIRMAN AND PRESIDENT
Jeffrey L. Shames* INVESTOR SERVICE
MFS Service Center, Inc.
PORTFOLIO MANAGER P.O. Box 2281
Mark Regan* Boston, MA 02107-9906
TREASURER For additional information,
James O. Yost* contact your investment professional.
ASSISTANT TREASURERS CUSTODIAN
Mark E. Bradley* State Street Bank and Trust Company
Ellen Moynihan*
WORLD WIDE WEB
SECRETARY www.mfs.com
Stephen E. Cavan*
ASSISTANT SECRETARY
James R. Bordewick, Jr.*
* MFS Investment Management
+ Independent Trustee
-----------------------------------------------------------------------------------------------------------
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
-----------------------------------------------------------------------------------------------------------
</TABLE>
<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,
The series commenced investment operations on April 28, 2000. As a mid-cap
portfolio, the series looks for growing businesses that have made the
transition from small cap to mid cap. Often that means the portfolio's assets
are invested in industries in which the competitive field has narrowed to just
a few companies. Our goal is to use our research to pick the companies that
will wind up dominating their fields and to invest in them early, before the
market recognizes their true worth.
An example in the telecommunications area is American Tower Corp., our top
holding. The company builds antenna towers and rents space on them to wireless
and broadcast companies. What our research uncovered is that wireless voice
and data carriers appear to be moving toward offering nationwide service, and
there are only two tower operators that can rent them the necessary antennas
on a national basis. American Tower is one of them. In addition, we think
highly of American Tower's business model. Its operating expenses on a tower
are fixed. As soon as it has two or more tenants on a tower, the company is
making a healthy profit -- and each tower is designed to handle multiple
tenants. Nationwide, various operators have about 65,000 towers in operation,
and we believe that number will more than double within four years. So this
appears to us to be a high-growth industry in which American Tower may be
positioned to gain a dominant market share.
Our research also tries to uncover "second chance" opportunities in the mid-
cap area. These are companies whose stock prices have stumbled but that we
believe still have the potential to be leaders in their businesses. A stumble
can result from events such as a quarterly earnings shortfall of a few cents
per share or a change in pricing of a major product -- events that may cause
the market to temporarily lose confidence in a company whose fundamentals we
believe remain strong, and offer us a buying opportunity.
A second-chance holding in the portfolio is VISX, a company that makes equipment
for performing laser eye surgery. VISX also receives a per-eye royalty for each
patient. In late 1999, VISX dropped its royalty by over 50%, a move that it felt
would open the market to millions of customers who could not have afforded
surgery at the old price. In the short term, however, that devastated the
company's earnings and caused the stock price to drop sharply. But what we
believe the company did was assure its future; in our view, the steep drop in
VISX's stock price made it a classic second-chance opportunity that could
potentially be one of our better-performing stocks over the next year.
Looking to the period ahead, areas in which we see opportunity include
technology, telecommunications, business services, and energy. Data storage
companies such as Emulex and Seagate Technology are examples of companies that
we feel remain at reasonable valuations and offer the prospect of strong
performance. We will, however, continue to avoid those areas of technology
where we feel that high valuations cannot be justified by our projections of
future earnings.
We are also invested in several firms that are enabling business transactions
on the Internet. Companies such as VeriSign, RSA Security, and CheckFree are
providing services such as security, authentication, authorization, and
transaction processing that we believe will be essential to making the
Internet a reliable and low-cost medium for conducting business. We believe
their customer bases could eventually number in the tens of millions, and that
long term, these companies have the potential to become tremendously
profitable businesses.
Finally, we see opportunity in two areas of the energy sector: deep-water oil
drillers and natural gas exploration and production. Oil companies have found
that the most productive wells are located in deep water over about 5,000
feet. The rigs to drill these wells take three years to build and are owned
primarily by four companies: Transocean, Noble Drilling, Diamond Offshore, and
Falcon. According to our research, when the price of oil is above $18 per
barrel -- and it's currently in the mid- to high-20s -- the leases for these
rigs are usually bid up in price every time they're renewed. So we think this
is a good business to be in, and we own positions in most of the dominant rig
companies.
Natural gas is an area dominated by a supply/demand imbalance. According to
our research, demand for gas has been growing faster than that for any other
form of energy, in part because electric utilities around the country have
been adding gas-fired turbines to provide extra capacity at times of peak
demand. Gas-drilling activity, however, declined around 1998 along with oil
exploration, due to low energy prices. Late last year, we concluded that
valuations of many gas exploration and production companies were at very
attractive levels; concurrently, our analysis led us to believe the decline in
supply could soon lead to rising gas prices. This combination of factors led
us to increase our natural gas holdings at a time when most Wall Street
analysts did not share our positive outlook for these stocks. In fact, price
increases this year have exceeded even our expectations, benefiting our gas
exploration and production holdings, including Newfield Exploration and EOG
Resources.
Respectfully,
/s/ Mark Regan
Mark Regan
Portfolio Manager
The opinions expressed in this report are those of the portfolio manager and
are current only through the end of the period of the report as stated on the
cover. The manager's views are subject to change at any time based on market
and other conditions, and no forecasts can be guaranteed.
The portfolio is actively managed, and current holdings may be different.
<PAGE>
PORTFOLIO MANAGER'S PROFILE
Mark Regan is Senior Vice President of MFS Investment Management(R) and a
portfolio manager of MFS(R) Mid Cap Growth Fund, MFS(R) Institutional Mid Cap
Growth Fund, and MFS(R) Mid Cap Growth Series (part of MFS(R) Variable
Insurance Trust(SM)).
He joined MFS in 1989 as a research analyst. He was named Investment Officer
in 1990, Assistant Vice President in 1991, Vice President in 1992, portfolio
manager in 1993, and Senior Vice President in 1999. Mr. Regan is a graduate of
Cornell Univerity and the Sloan School of Management of the Massachusetts
Institute of Technology.
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.
SERIES FACTS
Objective: Seeks long-term growth of capital
Commencement of investment operations: April 28, 2000
Class inception: Initial Class April 28, 2000
Service Class May 1, 2000
Size: $1.8 million net assets as of June 30, 2000
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>
<TABLE>
PORTFOLIO OF INVESTMENTS (Unaudited) - June 30, 2000
Stocks - 74.4%
<CAPTION>
-----------------------------------------------------------------------------------------------------
ISSUER SHARES VALUE
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Stocks - 72.0%
Agricultural Products - 1.0%
AGCO Corp. 1,479 $ 18,118
-----------------------------------------------------------------------------------------------------
Business Machines - 1.4%
Seagate Technology, Inc.* 468 $ 25,740
-----------------------------------------------------------------------------------------------------
Business Services - 5.3%
Adelphia Business Solutions, "A"* 550 $ 12,753
National Data Corp. 86 1,978
NOVA Corp.* 1,699 47,466
Peregrine Systems, Inc.* 394 13,667
Radiant Systems, Inc.* 25 600
S1 Corp.* 745 17,368
----------
$ 93,832
-----------------------------------------------------------------------------------------------------
Chemicals - 0.4%
Rohm & Haas Co. 220 $ 7,590
-----------------------------------------------------------------------------------------------------
Computer Software - Services - 2.0%
Entrust Technologies, Inc.* 350 $ 28,962
ePresence, Inc.* 34 247
RSA Security, Inc.* 96 6,648
----------
$ 35,857
-----------------------------------------------------------------------------------------------------
Computer Software - Systems - 7.9%
Aspen Technology, Inc.* 149 $ 5,736
Cerner Corp.* 120 3,270
CheckFree Holdings Corp.* 1,391 71,723
Computer Network Technology Corp.* 156 2,711
CSG Systems International, Inc.* 946 53,035
MMC Networks, Inc.* 44 2,351
StorageNetworks, Inc.* 10 903
----------
$ 139,729
-----------------------------------------------------------------------------------------------------
Consumer Goods and Services - 0.1%
Sportsline USA, Inc.* 106 $ 1,809
-----------------------------------------------------------------------------------------------------
Containers - 1.4%
Smurfit-Stone Container Corp.* 1,934 $ 24,900
-----------------------------------------------------------------------------------------------------
Electronics - 2.4%
Cable Design Technologies Corp.* 211 $ 7,068
DuPont Photomasks, Inc.* 93 6,371
MKS Instruments, Inc.* 87 3,404
Sawtek, Inc.* 20 1,151
SIPEX Corp.* 576 15,948
The InterCept Group, Inc.* 158 2,686
Veeco Instruments, Inc.* 86 6,300
----------
$ 42,928
-----------------------------------------------------------------------------------------------------
Entertainment
Hearst-Argyle Television, Inc.* 25 $ 488
-----------------------------------------------------------------------------------------------------
Financial Institutions - 0.9%
Edwards (A.G.), Inc. 392 $ 15,288
-----------------------------------------------------------------------------------------------------
Food and Beverage Products - 0.9%
Del Monte Foods Co.* 350 $ 2,384
Keebler Foods Co. 357 13,254
----------
$ 15,638
-----------------------------------------------------------------------------------------------------
Internet - 4.0%
Netzee, Inc.* 62 $ 355
Switchboard, Inc.* 2,008 20,080
VeriSign, Inc.* 289 51,008
----------
$ 71,443
-----------------------------------------------------------------------------------------------------
Machinery - 0.9%
Applied Science and Technology, Inc.* 92 $ 2,380
W.W. Grainger, Inc. 460 14,174
----------
$ 16,554
-----------------------------------------------------------------------------------------------------
Medical and Health Technology and Services - 1.9%
Cytyc Corp.* 414 $ 22,098
IDEXX Laboratories, Inc.* 7 160
Martek Biosciences Corp.* 283 5,306
Total Renal Care Holdings, Inc.* 149 894
VISX, Inc.* 196 5,500
----------
$ 33,958
-----------------------------------------------------------------------------------------------------
Oil Services - 7.0%
Diamond Offshore Drilling, Inc. 709 $ 24,904
Global Industries, Inc.* 638 12,042
Global Marine, Inc.* 530 14,939
Noble Affiliates, Inc. 108 4,023
Noble Drilling Corp.* 1,648 67,877
----------
$ 123,785
-----------------------------------------------------------------------------------------------------
Oils - 11.7%
Apache Corp. 731 $ 42,992
EOG Resources, Inc. 1,748 58,558
Houston Exploration Co.* 158 3,970
Newfield Exploration Co.* 1,482 57,983
Transocean Sedco Forex, Inc. 817 43,658
----------
$ 207,161
-----------------------------------------------------------------------------------------------------
Pharmaceuticals - 3.2%
IntraBiotics Pharmaceuticals, Inc.* 727 $ 19,402
United Therapeutics Corp.* 339 36,739
----------
$ 56,141
-----------------------------------------------------------------------------------------------------
Printing and Publishing - 0.2%
Scholastic Corp.* 47 $ 2,873
-----------------------------------------------------------------------------------------------------
Retail - 2.1%
BJ's Wholesale Club, Inc.* 1,103 $ 36,399
Gymboree Corp.* 183 549
----------
$ 36,948
-----------------------------------------------------------------------------------------------------
Supermarkets - 3.2%
Kroger Co.* 2,596 $ 57,274
-----------------------------------------------------------------------------------------------------
Telecommunications - 14.1%
American Tower Corp., "A"* 1,861 $ 77,580
Ancor Communications, Inc.* 1,901 67,990
Aware, Inc.* 110 5,624
Cabletron Systems, Inc.* 573 14,468
Covad Communications Group, Inc.* 110 1,774
Emulex Corp.* 953 62,600
i3 Mobile, Inc.* 160 2,940
Intermedia Communications, Inc.* 91 2,707
MGC Communications, Inc.* 40 2,398
Pinnacle Holdings, Inc.* 22 1,188
Spectrasite Holdings, Inc.* 21 596
Time Warner Telecom, Inc., "A"* 170 10,944
----------
$ 250,809
-----------------------------------------------------------------------------------------------------
Total U.S. Stocks $1,278,863
-----------------------------------------------------------------------------------------------------
Foreign Stocks - 2.4%
Canada - 0.5%
Diversinet Corp. (Computer Software - Services)* 640 $ 7,600
-----------------------------------------------------------------------------------------------------
Israel - 1.9%
Check Point Software Technologies Ltd. (Computer
Software - Services)* 40 $ 8,470
Fundtech Ltd. (Computer Software - Systems)* 990 25,740
----------
$ 34,210
-----------------------------------------------------------------------------------------------------
Total Foreign Stocks $ 41,810
-----------------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $1,275,416) $1,320,673
-----------------------------------------------------------------------------------------------------
Short-Term Obligations - 50.9%
-----------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
-----------------------------------------------------------------------------------------------------
American Express Credit Corp., due 7/03/00 $ 65 $ 64,975
Associates First Capital Corp., due 7/03/00 70 69,973
Federal Home Loan Bank, due 7/03/00 700 699,744
Morgan Stanley Dean Witter & Co., due 7/05/00 70 69,947
-----------------------------------------------------------------------------------------------------
Total Short-Term Obligations, at Amortized Cost $ 904,639
-----------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $2,180,055) $2,225,312
Other Assets, Less Liabilities - (25.3)% (449,331)
-----------------------------------------------------------------------------------------------------
Net Assets - 100.0% $1,775,981
-----------------------------------------------------------------------------------------------------
* Non-income producing security.
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
-------------------------------------------------------------------------------
JUNE 30, 2000
-------------------------------------------------------------------------------
<S> <C>
Assets:
Investments, at value (identified cost, $2,180,055) $2,225,312
Investments of cash collateral for securities loaned, at
identified cost and value 243,218
Cash 1,635
Receivable for series shares sold 106,748
Receivable for investments sold 2,188
Dividends and interest receivable 51
----------
Total assets $2,579,152
----------
Liabilities:
Payable for series shares reacquired $ 33
Payable for investments purchased 559,873
Collateral for securities loaned, at value 243,218
Payable to affiliates -
Management fee 34
Reimbursement fee 5
Distribution fee 8
----------
Total liabilities $ 803,171
----------
Net assets $1,775,981
==========
Net assets consist of:
Paid-in capital $1,709,019
Unrealized appreciation on investments and translation of
assets and liabilities in
foreign currencies 45,257
Accumulated undistributed net realized gain on investments
and foreign currency transactions 21,191
Accumulated undistributed net investment income 514
----------
Total $1,775,981
==========
Shares of beneficial interest outstanding 164,998
=======
Initial Class shares:
Net asset value, offering price, and redemption price per
share (net assets of $242,793 / 22,520 shares of
beneficial interest outstanding) $10.78
======
Service Class shares:
Net asset value, offering price, and redemption price per
share (net assets of $1,533,188 / 142,478 shares of
beneficial interest outstanding) $10.76
======
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Operations (Unaudited)
-------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, 2000
-------------------------------------------------------------------------------
Net investment income:
Income -
Interest $ 1,456
Dividends 62
-------
Total investment income $ 1,518
-------
Expenses -
Management fee $ 736
Shareholder servicing agent fee 38
Distribution fee (Service Class) 121
Administrative fee 17
Registration fees 875
Miscellaneous 131
-------
Total expenses $ 1,918
Reduction of expenses by investment adviser (914)
-------
Net expenses $ 1,004
-------
Net investment income $ 514
-------
Realized and unrealized gain on investments:
Realized gain from investment transactions (identified
cost basis) $21,191
-------
Change in unrealized appreciation from investments 45,257
-------
Net realized and unrealized gain on investments and
foreign currency $66,448
-------
Increase in net assets from operations $66,962
=======
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Changes in Net Assets (Unaudited)
-------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, 2000
-------------------------------------------------------------------------------
Increase in net assets:
From operations -
Net investment income $ 514
Net realized gain on investments and foreign currency
transactions 21,191
Net unrealized gain on investments and foreign currency
translation 45,257
----------
Increase in net assets from operations $ 66,962
----------
Net increase in net assets from series share transactions $1,709,019
----------
Total increase in net assets $1,775,981
Net assets:
At beginning of period --
----------
At end of period (including accumulated undistributed net
investment income of $514) $1,775,981
==========
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS - continued
Financial Highlights
-------------------------------------------------------------------------------
PERIOD ENDED
JUNE 30, 2000*
(UNAUDITED)
-------------------------------------------------------------------------------
INITIAL CLASS SHARES
-------------------------------------------------------------------------------
Per share data (for a share outstanding throughout the period):
Net asset value - beginning of period $10.00
------
Income from investment operations# -
Net investment income $ 0.01
Net realized and unrealized gain on investments and foreign
currency 0.77
------
Total from investment operations $ 0.78
------
Net asset value - end of period $10.78
======
Total return 7.80%++
Ratios (to average net assets)/Supplemental data(S):
Expenses## 0.91%+
Net investment income 0.40%+
Portfolio turnover 109%
Net assets at end of period (000 Omitted) $ 243
(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. To the extent actual
expenses were over this limitation, the net investment loss per share and
the ratios would have been:
Net investment loss $(0.01)
Ratios (to average net assets):
Expenses## 1.84%+
Net investment loss (0.53)%+
* For the period from the commencement of the series' investment operations,
April 28, 2000, through June 30, 2000.
+ 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>
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 $10.00
------
Income from investment operations# -
Net investment income $ 0.01
Net realized and unrealized gain on investments and foreign
currency 0.75
------
Total from investment operations $ 0.76
------
Net asset value - end of period $10.76
======
Total return 7.60%++
Ratios (to average net assets)/Supplemental data(S):
Expenses## 1.10%+
Net investment income 0.60%+
Portfolio turnover 109%
Net assets at end of period (000 Omitted) $1,533
(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 and
service 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 the ratios would have been:
Net investment loss $ --
Ratios (to average net assets):
Expenses## 2.03%+
Net investment loss (0.33)%+
* For the period from the inception of Service Class shares, May 1, 2000,
through June 30, 2000.
+ 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 Mid Cap Growth 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 5
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") 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 provide the series with indemnification against
Borrower default.
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 $238,159. These loans
were collateralized by U.S. Treasury securities of $3,377 and cash of
$243,218, which was invested in the following short-term obligation:
AMORTIZED COST
SHARES AND VALUE
------------------------------------------------------------------------------
Navigator Securities Lending Prime Portfolio 243,218 $243,218
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.
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 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. 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 $914.
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, 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 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,
purchased option transactions, and short-term obligations, aggregated
$1,864,458 and $610,233, 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 $2,180,055
----------
Gross unrealized appreciation $ 73,737
Gross unrealized depreciation (28,480)
----------
Net unrealized appreciation $ 45,257
==========
(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:
Initial Class shares
PERIOD ENDED JUNE 30, 2000*
---------------------------
SHARES AMOUNT
------------------------------------------------------------------------------
Shares sold 22,520 $ 225,200
------- ----------
Service Class shares
PERIOD ENDED JUNE 30, 2000*
---------------------------
SHARES AMOUNT
------------------------------------------------------------------------------
Shares sold 229,824 $2,383,747
Shares reacquired (87,346) (899,928)
------- ----------
Net increase 142,478 $1,483,819
======= ==========
* For the period from the series' commencement of investment operations, April
28, 2000, through June 30, 2000.
** For the period from the inception of Service Class shares, May 1, 2000,
through June 30, 2000.
(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 series had no 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.
VMC-3 8/00 600
