[MFS Logo[RegTM]]
INVESTMENT MANAGEMENT
We invented the mutual fund[RegTM]
-------------------------------------------
MFS[RegTM] VARIABLE INSURANCE TRUST(SM)
-------------------------------------------
Prospectus
M A Y 1 , 2 0 0 0 Initial Class
MFS[RegTM] TOTAL RETURN SERIES
--------------------------------------------------------------------------------
This Prospectus describes one series of the MFS Variable Insurance Trust
(referred to as the trust):
1. MFS Total Return Series seeks mainly to provide above-average income
(compared to a portfolio invested entirely in equity securities)
consistent with the prudent employment of capital, and secondarily to
provide a reasonable opportunity for growth of capital and income
(referred to as the Total Return 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.
<PAGE>
<TABLE>
<CAPTION>
---------------------
TABLE OF CONTENTS Page
---------------------
<S> <C> <C>
I Expense Summary ............................................ 1
II Risk Return Summary ........................................ 2
1. Total Return Series .................................... 2
III Certain Investment Strategies and Risks .................... 7
IV Management of the Series ................................... 7
V Description of Shares ...................................... 8
VI Other Information .......................................... 8
VII Financial Highlights ....................................... 9
Appendix A -- Investment Techniques and Practices .......... A-1
</TABLE>
<PAGE>
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.
----------------------
I EXPENSE SUMMARY
----------------------
> 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>
Total
Return
Series
------
<S> <C>
Management Fee ................................................... 0.75%
Other Expenses(1) ................................................ 0.15%
----
Total Annual Series Operating Expenses ........................... 0.90%
Expense Reimbursement ........................................... N/A
----
Net Expenses(1) ................................................. 0.90%
</TABLE>
---------
(1) Each series has an expense offset arrangement which reduces the series'
custodian fee based upon the amount of cash maintained by the series with
its custodian and dividend disbursing agent. Each series may enter into
other such arrangements and directed brokerage arrangements, which would
also have the effect of reducing the series' expenses. "Other Expenses"
do not take into account these expense reductions, and are therefore
higher than the actual expenses of the series. Had these fee reductions
been taken into account, "Net Expenses" would be lower for certain series
and would equal 0.89% for the Total Return 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 the 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
-------------------------------------------------------
Series 1 Year 3 Years 5 Years 10 Years
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total Return Series $92 $287 $498 $1,108
</TABLE>
1
<PAGE>
---------------------------
II RISK RETURN SUMMARY
---------------------------
1: Total Return Series
-----------------------------------------------------------------------------
> Investment Objective
The series' main investment objective is to provide above-average income
(compared to a portfolio invested entirely in equity securities) consistent
with the prudent employment of capital. Its secondary objective is to provide
reasonable opportunity for growth of capital and income. The series'
objectives may be changed without shareholder approval.
> Principal Investment Policies
The series is a "balanced fund," and invests in a combination of equity and
fixed income securities. Under normal market conditions, the series invests:
o at least 40%, but not more than 75%, of its net assets in common stocks and
related securities (referred to as equity securities), such as preferred
stock; bonds, warrants or rights convertible into stock; and depositary
receipts for those securities, and
o at least 25% of its net assets in non-convertible fixed income securities.
The series may vary the percentage of its assets invested in any one type of
security (within the limits described above) in accordance with MFS's
interpretation of economic and money market conditions, fiscal and monetary
policy and underlying security values.
Consistent with the series' principal investment policies the series may
invest in foreign securities, and may have exposure to foreign currencies
through its investment in these securities.
The series has engaged and may engage in active and frequent trading to
achieve its principal investment strategies.
Equity Investments. While the series may invest in all types of equity
securities, MFS generally seeks to purchase for the series equity securities,
such as common stocks, preferred stocks, convertible securities and
depositary receipts, of companies that MFS believes are undervalued in the
market relative to their long-term potential. The equity securities of these
companies may be undervalued because:
o they are viewed by MFS as being temporarily out of favor in the market due
to
> a decline in the market,
> poor economic conditions,
> developments that have affected or may affect the issuer of the
securities or the issuer's industry, or
o the market has overlooked them.
Undervalued equity securities generally have low price-to-book,
price-to-sales and/or price-to-earnings ratios. The series focuses on
undervalued equity securities issued by companies with relatively large
market capitalizations (i.e., market capitalizations of $5 billion or more).
As noted above, the series' investments in equity securities include
convertible securities. A convertible security is a security that may be
converted within a specified period of time into a certain amount of common
stock of the same or a different issuer. A convertible security generally
provides:
o a fixed income stream, and
o the opportunity, through its conversion feature, to participate in an
increase in the market price of the underlying common stock.
MFS uses a bottom-up, as opposed to a top-down, investment style in managing
the equity-oriented funds (including the equity portion of 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.
Fixed Income Investments. The series invests in securities which pay a fixed
interest rate, which include:
o U.S. government securities, which are bonds or other debt obligations
issued by, or whose principal and interest payments are guaranteed or
supported by, the U.S. government or one of its agencies or
instrumentalities,
2
<PAGE>
o mortgage-backed and asset-backed securities, which represent interests in a
pool of assets such as mortgage loans, car loan receivables, or credit card
receivables. These investments entitle the series to a share of the
principal and interest payments made on the underlying mortgage, car loan,
or credit card. For example, if the series invests in a pool that includes
your mortgage loan, a share of the principal and interest payments on your
mortgage would pass to the series, and
o corporate bonds, which are bonds or other debt obligations issued by
corporations or other similar entities.
In selecting fixed income investments for the series, MFS considers the views
of its large group of fixed income portfolio managers and research analysts.
This group periodically assesses the three-month total return outlook for
various segments of the fixed income markets. This three-month "horizon"
outlook is used by the portfolio manager(s) of MFS' fixed-income oriented
series (including the fixed-income portion of the series) as a tool in making
or adjusting a series' asset allocations to various segments of the fixed
income markets. In assessing the credit quality of fixed-income securities,
MFS does not rely solely on the credit ratings assigned by credit rating
agencies, but rather performs its own independent credit analysis.
> 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 Allocation Risk: The series will allocate its investments between equity
and fixed income securities, and among various segments of the fixed income
markets, based upon judgments made by MFS. The series could miss attractive
investment opportunities by underweighting markets where there are
significant returns, and could lose value by overweighting markets where
there are significant declines.
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.
> 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 Market Risk: This is the risk that the price of a security held by the
series will fall due to changing economic, political or market conditions
or disappointing earnings results.
o Undervalued Securities Risk: Prices of securities react to the economic
condition of the company that issued the security. The series' equity
investments in an issuer may rise and fall based on the issuer's actual and
anticipated earnings, changes in management and the potential for takeovers
and acquisitions. MFS will invest in securities that are undervalued based
on its belief that the market value of these securities will rise due to
anticipated events and investor perceptions. If these events do not occur
or are delayed, or if investor perceptions about the securities do not
improve, the market price of these securities may not rise or may fall.
3
<PAGE>
o Interest Rate Risk: When interest rates rise, the prices of fixed income
securities in the series' portfolio will generally fall. Conversely, when
interest rates fall, the prices of fixed income securities in the series'
portfolio will generally rise.
o Convertible Securities Risk: Convertible securities, like fixed income
securities, tend to increase in value when interest rates decline and
decrease in value when interest rates rise. The market value of a
convertible security also tends to increase as the market value of the
underlying stock rises and decrease as the market value of the underlying
stock declines.
o Maturity Risk: Interest rate risk will generally affect the price of a
fixed income security more if the security has a longer maturity. Fixed
income securities with longer maturities will therefore be more volatile
than other fixed income securities with shorter maturities. Conversely,
fixed income securities with shorter maturities will be less volatile but
generally provide lower returns than fixed income securities with longer
maturities. The average maturity of the series' fixed income investments
will affect the volatility of the series' share price.
o Credit Risk: Credit risk is the risk that the issuer of a fixed income
security will not be able to pay principal and interest when due. Rating
agencies assign credit ratings to certain fixed income securities to
indicate their credit risk. The price of a fixed income security will
generally fall if the issuer defaults on its obligation to pay principal or
interest, the rating agencies downgrade the issuer's credit rating or other
news affects the market's perception of the issuer's credit risk.
o Liquidity Risk: The fixed income securities purchased by the series may be
traded in the over-the-counter market rather than on an organized exchange
and are subject to liquidity risk. This means that they may be harder to
purchase or sell at a fair price. The inability to purchase or sell these
fixed income securities at a fair price could have a negative impact on the
series' performance.
o Mortgage and Asset-Backed Securities:
> Maturity Risk:
+ Mortgage-Backed Securities: A mortgage-backed security will mature
when all the mortgages in the pool mature or are prepaid. Therefore,
mortgage-backed securities do not have a fixed maturity, and their
expected maturities may vary when interest rates rise or fall.
@ When interest rates fall, homeowners are more likely to prepay
their mortgage loans. An increased rate of prepayments on the
series' mortgage-backed securities will result in an unforeseen
loss of interest income to the series as the series may be
required to reinvest assets at a lower interest rate. Because
prepayments increase when interest rates fall, the prices of
mortgage-backed securities does not increase as much as other
fixed income securities when interest rates fall.
@ When interest rates rise, homeowners are less likely to prepay
their mortgage loans. A decreased rate of prepayments lengthens
the expected maturity of a mortgage-backed security. Therefore,
the prices of mortgage-backed securities may decrease more than
prices of other fixed income securities when interest rates rise.
+ Collateralized Mortgage Obligations: The series may invest in
mortgage-backed securities called collateralized mortgage obligations
(CMOs). CMOs are issued in separate classes with different stated
maturities. As the mortgage pool experiences prepayments, the pool
pays off investors in classes with shorter maturities first. By
investing in CMOs, the series may manage the prepayment risk of
mortgage-backed securities. However, prepayments may cause the actual
maturity of a CMO to be substantially shorter than its stated
maturity.
+ Asset-Backed Securities: Asset-backed securities have prepayment
risks similar to mortgage-backed securities.
> Credit Risk: As with any fixed income security, mortgage-backed and
asset-backed securities are subject to the risk that the issuer will
default on principal and interest payments. It may be difficult to
enforce rights against the assets underlying mortgage-backed and
asset-backed securities in the case of default. The U.S. government or
its agencies may guarantee the payment of principal and interest on
some mortgage-backed securities. Mortgage-backed securities and
asset-backed securities issued by private lending institutions or other
financial intermediaries may be supported by insurance or other forms
of guarantees.
o Active or Frequent Trading Risk: The fund has engaged and 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 fund with less active trading
policies. Frequent trading also increases transaction costs, which could
detract from the fund's performance.
o As with any mutual fund, you could lose money on your investment in the
series.
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.
4
<PAGE>
> Bar Chart and Performance Table
The bar chart and performance table below are intended to indicate some of
the risks of investing in the series by showing changes in the series'
performance over time. The performance table also shows how the series
performance over time compares with that of one or more broad measures of
market performance. The chart and table provide past performance information
based on calendar year periods. The series' past performance does not
necessarily indicate how the series will perform in the future. The returns
shown do not reflect fees and charges imposed under the variable annuity and
life insurance contracts through which an investment may be made. If these
fees and charges were included, they would reduce these returns.
Bar Chart
The bar chart shows changes in the annual total returns of the series'
initial class, assuming the reinvestment of distributions.
[Begin Bar Chart]
<TABLE>
<S> <C>
1996 14.37%
1997 21.30%
1998 12.33%
1999 3.08%
</TABLE>
[End Bar Chart]
During the period shown in the bar chart, the highest quarterly return was
9.86% (for the calendar quarter ended June 30, 1997) and the lowest quarterly
return was (4.64)% (for the calendar quarter ended September 30, 1999).
Performance Table
This table shows how the average annual total returns of the series' shares
compares to broad measures of market performance and various other market
indicators and assumes the reinvestment of distributions.
Average Annual Total Returns as of December 31, 1999
.............................................................................
<TABLE>
<CAPTION>
1 Year Life*
<S> <C> <C>
Total Return Series--Initial Class 3.08% 15.42%
Standard & Poor's 500 Composite Index**+ 21.04% 28.56%
Lipper Balanced Index#++ 9.00% 16.33%
Lehman Brothers Government/Corporate Bond Index**+++ (2.15)% 7.61%
Lipper average balanced fund# 8.72% 16.24%
</TABLE>
---------
* Series performance figures are for the period from the commencement of
the series' investment operations, January 3, 1995, through December 31,
1999. Index and Lipper average returns are from January 1, 1995.
** Source: Standard & Poor's Micropal, Inc.
# Source: Lipper Inc.
+ The Standard & Poor's 500 Composite Index is a broad-based, unmanaged but
commonly used measure of common stock total return performance. It is
composed of 500 widely held common stocks listed on the NYSE, AMEX and
OTC market.
++ The Lipper Balanced Index is a broad based, unmanaged,
net-asset-value-weighted index of the largest qualifying mutual funds in
this Lipper category adjusted for the reinvestment of capital gain
distributions and income.
+++ The Lehman Brothers Government/Corporate Bond Index is a broad-based,
unmanaged, market-value-weighted index of all debt obligations of the
U.S. Treasury and government-agency securities (excluding mortgage-backed
securities) and of all publicly issued fixed-rate, nonconvertible,
investment-grade domestic corporate debt.
5
<PAGE>
> Portfolio Manager
David M. Calabro, a Senior Vice President of MFS, has been employed in the
investment management area of the Adviser since 1992. Mr. Calabro is the head
of the series' portfolio management team and a manager of the common stock
portion of the series' portfolio. Geoffrey L. Kurinsky, a Senior Vice
President of MFS, has been employed in the investment management area of the
Adviser since 1987. Mr. Kurinsky is the manager of the series' fixed income
securities. Constantinos G. Mokas, a Vice President of MFS, has been a
portfolio manager of the series since April 1, 1998, and has been employed in
the investment management area of the Adviser since 1990. Mr. Mokas is the
manager of the series' convertible securities. Lisa B. Nurme, a Senior Vice
President of MFS, has been a portfolio manager of the series since July 19,
1995, and has been employed in the investment management area of the Adviser
since 1987. Ms. Nurme is a manager of the common stock portion of the series'
portfolio. Kenneth J. Enright, a Senior Vice President of MFS, has been
employed in the investment management area of the Adviser since 1986 and has
been a portfolio manager of the series since January 15, 1999. Mr. Enright is
a manager of the common stock portion of the series' portfolio.
6
<PAGE>
------------------------------------------------
III CERTAIN INVESTMENT STRATEGIES AND RISKS
------------------------------------------------
> 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 a 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.
--------------------------------
IV MANAGEMENT OF THE SERIES
--------------------------------
> 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 the series with certain financial, legal, compliance,
shareholder communications and other administrative services. MFS is
reimbursed by the 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.
7
<PAGE>
-----------------------------
V DESCRIPTION OF SHARES
-----------------------------
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.
-------------------------
VI OTHER INFORMATION
-------------------------
> Pricing of Series' Shares
The price of the 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 the series' shares may change on
days when you will not be able to purchase or redeem the 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 the series qualifies for treatment as a
regulated investment company (which the series has done in the past and which
the series intends to do in the future), 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
8
<PAGE>
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 does 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, the 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 has 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.
-----------------------------
VII FINANCIAL HIGHLIGHTS
-----------------------------
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.
9
<PAGE>
1. Total Return Series--Initial Class
.............................................................................
<TABLE>
<CAPTION>
Year Ended December 31, Period Ended
------------------------------------------------ December 31,
1999 1998 1997 1996 1995*
<S> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------------------
Per share data (for a share outstanding throughout
each period):
Net asset value -- beginning of period ................... $ 18.12 $ 16.63 $ 13.71 $ 12.25 $10.00
-------- ------- ------- ------- ------
Income from investment operations# --
Net investment income[sec] .............................. $ 0.53 $ 0.53 $ 0.52 $ 0.46 $ 0.41
Net realized and unrealized gain on investments and
foreign currency ....................................... 0.05 1.49 2.40 1.30 2.32
-------- ------- ------- ------- ------
Total from investment operations ...................... $ 0.58 $ 2.02 $ 2.92 $ 1.76 $ 2.73
-------- ------- ------- ------- ------
Less distributions declared to shareholders --
From net investment income .............................. $ (0.33) $ (0.24) $ -- $ (0.21) $(0.25)
From net realized gain on investments and foreign
currency transactions .................................. ( 0.62) ( 0.29) -- (0.09) (0.23)
-------- -------- ------- ------- ------
Total distributions declared to shareholders .......... $ (0.95) $ (0.53) $ -- $ (0.30) $(0.48)
-------- -------- ------- ------- ------
Net asset value -- end of period ......................... $ 17.75 $ 18.12 $ 16.63 $ 13.71 $12.25
-------- -------- ------- ------- ------
Total return ............................................. 3.08% 12.33% 21.30% 14.37% 27.34%++
Ratios (to average net assets)/Supplemental data[sec]:
Expenses## .............................................. 0.90% 1.00% 1.00% 1.00% 1.00%+
Net investment income ................................... 2.97% 3.05% 3.25% 3.59% 3.83%+
Portfolio turnover ....................................... 112% 100% 93% 76% 16%
Net assets at end of period (000 omitted) ................ $256,128 $171,182 $75,612 $19,250 $2,797
[sec] Subject to reimbursement by the Series, the investment adviser voluntarily agreed under a temporary expense
reimbursement agreement to maintain the expenses of the Series, exclusive of management fees, at not more than
0.25% of average daily net assets for certain of the periods indicated. To the extent actual expenses were
over/under this limitation, the net investment income per share and the ratios would have been:
Net investment income .............................. -- $0.54 $0.52 $0.32 $0.22
Ratios (to average net assets):
Expenses## ....................................... -- 0.91% 1.02% 2.10% 2.49%+
Net investment income ............................ -- 3.14% 3.23% 2.49% 2.09%+
</TABLE>
---------
* For the period from the commencement of the Series' investment operations,
January 3, 1995, through December 31, 1995.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from certain expense offset
arrangements.
10
<PAGE>
---------------------- ---------------------------------------
A p p e n d i x A T o t a l R e t u r n S e r i e s
---------------------- ---------------------------------------
> Investment Techniques and Practices
In pursuing its investment objective and investment policies, the Total
Return 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.
<TABLE>
<S> <C>
Symbols X permitted -- not permitted
--------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
-------------------------------------------------------------------
Debt Securities
Asset-Backed Securities
Collateralized Mortgage Obligations and Multiclass
Pass-Through Securities X
Corporate Asset-Backed Securities X
Mortgage Pass-Through Securities X
Stripped Mortgage-Backed Securities X
Corporate Securities X
Loans and Other Direct Indebtedness X
Lower Rated Bonds X
Municipal Bonds X
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 X
Depositary Receipts X
Dollar-Denominated Foreign Debt Securities X
Emerging Markets X
Foreign Securities X
Forward Contracts X
Futures Contracts X
Indexed Securities/Structured Products X
Inverse Floating Rate Obligations X
-------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
-------------------------------------------------------------------
Investment in Other Investment Companies
Open-End Funds X
Closed-End Funds 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 X
"Yield Curve" Options X
Repurchase Agreements X
Restricted Securities X
Short Sales --
Short Sales Against the Box --
Short Term Instruments X
Swaps and Related Derivative Instruments X
Temporary Borrowings X
Temporary Defensive Positions X
Warrants X
"When-Issued" Securities X
-------------------------------------------------------------------
</TABLE>
*May be changed only with shareholder approval.
A-1
<PAGE>
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
