<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) GROWTH SERIES
<PAGE>
<TABLE>
MFS(R) GROWTH SERIES
A SERIES OF MFS(R) VARIABLE INSURANCE TRUST(SM)
<S> <C>
TRUSTEES INVESTMENT ADVISER
Massachusetts Financial Services Company
Jeffrey L. Shames* - Chairman and Chief Executive 500 Boylston Street
Officer, MFS Investment Management(R) Boston, MA 02116-3741
Nelson J. Darling, Jr.+ - Private investor and DISTRIBUTOR
trustee MFS Fund Distributors, Inc.
500 Boylston Street
William R. Gutow+ - Private investor and real Boston, MA 02116-3741
estate consultant; Vice Chairman, Capitol
Entertainment Management Company (video franchise) INVESTOR SERVICE
MFS Service Center, Inc.
CHAIRMAN AND PRESIDENT P.O. Box 2281
Jeffrey L. Shames* Boston, MA 02107-9906
PORTFOLIO MANAGER For additional information,
Stephen Pesek* contact your investment professional.
TREASURER CUSTODIAN
James O. Yost* State Street Bank and Trust Company
ASSISTANT TREASURERS WORLD WIDE WEB
Mark E. Bradley* www.mfs.com
Ellen Moynihan*
SECRETARY
Stephen E. Cavan*
ASSISTANT SECRETARY
James R. Bordewick, Jr.*
* MFS Investment Management
+ Independent Trustee
</TABLE>
--------------------------------------------------------------------------------
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
--------------------------------------------------------------------------------
<PAGE>
LETTER FROM THE CHAIRMAN
Dear Shareholders,
I'm sure you've noticed that whenever financial markets suffer a large
decline, as they did this past spring, there's a flurry of information on "how
to deal with market volatility" -- both in the popular press and from those of
us in the investment business. Our own thinking on this is that, first, for
long-term investors volatility is not necessarily something to be feared;
occasional volatility may in fact be healthy for the markets.
Second, our experience has been that when markets begin to fall, it's often
too late to act. The best response may be to do nothing -- if you're properly
prepared with a long-term plan, created with the help of your investment
professional. To help you create or update that plan and take market
volatility in stride, here are some points you may want to consider the next
time you talk with your investment professional.
1. VOLATILITY CAN BE A GOOD THING
We would argue that the markets today are much healthier than they were before
the period of volatility this past spring, in the sense that stock prices have
returned to more reasonable levels and we have a stronger base for future
growth. Perhaps the worst of the market's wrath descended on companies with very
high stock prices, relative to their earnings, or with business concepts that
looked great in the euphoria of a booming market but in the end appeared to have
no fundamental backing. It has always been our view that one of the best
protections against market volatility is to invest in stocks and bonds of
fundamentally good companies selling at reasonable prices. When discussing
potential investments with your investment professional, you may want to ask how
they fared in previous periods of volatility, as well as in the good times.
2. INVEST FOR THE LONG TERM
You've heard that before, but we think it's still probably the most important
concept in investing. Time is one of an investor's greatest allies. Over
nearly all long-term periods -- 5, 10, 20 years, and more -- stock and bond
returns, as represented by most common indices, have been positive and have
considerably outpaced inflation. Investing is the best way we know of to make
your money work for you while you're doing something else.
Where investors can get into trouble is by confusing investing with trading.
In our view, traders who buy securities with the intention of selling them at
a profit in a matter of hours, days, or weeks are gambling. We believe this
seldom turns out to be a good strategy for increasing your wealth.
3. INVEST REGULARLY
Waiting for the "right time" to invest is almost always a poor strategy,
because only in retrospect do we know when that right time really was. Periods
of volatility are probably the worst times to make an investment decision.
Faced with turmoil in the markets, many investors have opted to simply stay on
the sidelines.
On the other hand, we think one of the best techniques for investing is
through automatic monthly or quarterly deductions from a checking or savings
account. This approach has at least three major benefits. First, you can
formulate a long-term plan -- how much to invest, how often, and into which
portfolios -- in a calm, rational manner, working with your investment
professional. Second, with this approach you invest regularly without
agonizing over the decision each time you buy shares. And, third, if you
invest equal amounts of money at regular intervals, you'll be taking advantage
of a strategy called dollar-cost averaging: by investing a fixed amount while
the share cost fluctuates, you end up with an average share cost to you that
is lower than the average share price over your investment period.(1) If all
this sounds familiar, it's probably because you're already taking advantage of
dollar-cost averaging by investing regularly for retirement through a 401(k)
or similar account at work.
4. DIVERSIFY
One of the dangers of not having an investment plan is that you may be tempted
to simply chase performance, by moving money into whatever asset class appears
to be outperforming at the moment -- small, mid, or large cap; growth or value;
United States or international; stocks or bonds. The problem with this approach
is that by the time a particular area is generally recognized as "hot," you may
have already missed some of the best performance.
International investing offers a case in point. In the 1980s, international
investments, as represented by the Morgan Stanley Capital International (MSCI)
Europe, Australia, Far East (EAFE) Index, outperformed U.S. investments, as
represented by the Standard & Poor's 500 Composite Index (S&P 500), in 7 out
of 10 years.(2) For the decade, the MSCI EAFE's average annual performance was
23%, compared to 18% for the S&P 500. Going into the 1990s, then, an investor
looking only at recent performance might have favored international
investments over U.S. investments.
But the 1990s turned out to be virtually a mirror image of the '80s. Domestic
investments outperformed international investments in 7 out of 10 years, with
the S&P 500 returning an average of 18% annually for the decade and the MSCI
EAFE returning a 7% annual average. Looking ahead, however, we are optimistic
about international markets because we feel that many of the same forces that
propelled the current U.S. economic boom -- deregulation, restructuring, and
increased adoption of technology -- have taken root overseas.
The lesson to be learned is that nobody really knows what asset class will be
the next to outperform or how long that performance will be sustained. We would
suggest that one way to potentially profit from swings in the market -- to
potentially be invested in various asset classes before the market shifts in
their favor -- is with a diversified portfolio covering several asset classes.
If you haven't already done so, we encourage you to discuss these thoughts
with your investment professional and factor them into your long-range
financial planning. Hopefully, the next time the markets appear to be going
wild, you'll feel confident enough in your plan to view periods of volatility
as a time of potential opportunity -- or perhaps just a time to sit back and
do nothing.
As always, we appreciate your confidence and welcome any questions or comments
you may have.
Respectfully,
/s/ Jeffrey L. Shames
Jeffrey L. Shames
Chairman and Chief Executive Officer
MFS Investment Management(R)
July 17, 2000
(1) The use of a systematic investing program does not guarantee a profit or
protect against a loss in declining markets. You should consider your
financial ability to continue to invest through periods of low prices.
(2) Source: Lipper Inc. Decade performance: '80s -- 12/31/79-12/31/89,
'90s -- 12/31/89-12/31/99. The MSCI EAFE Index is an unmanaged,
market-capitalization-weighted total return index that measures the
performance of the same developed-country global stock markets included in
the MSCI World Index but excludes the United States, Canada, and the South
African mining component. The S&P 500 is a popular, unmanaged index of
common stock total return performance. It is not possible to invest directly
in an index. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
Investments in variable products will fluctuate and may be worth more or less
upon redemption. Please see your investment professional for more information.
The opinions expressed in this letter are those of Jeffrey L. Shames, and no
forecasts can be guaranteed.
<PAGE>
MANAGEMENT REVIEW AND OUTLOOK
Dear Shareholders,
For the six months ended June 30, 2000, the series' Initial Class and Service
Class shares each provided a total return of 3.51%, including the reinvestment
of any dividends. This compares to a -0.42% return over the same period for
the series' benchmark, the Standard & Poor's 500 Composite Index (the S&P
500). The S&P 500 is a popular, unmanaged index of common stock performance.
The series' return also compares to a 2.36% return for the average growth fund
tracked by Lipper Inc., an independent firm that reports performance.
During a period that included dramatic market volatility, the series
outperformed both its benchmark and a majority of its peers. We attribute that
to several factors. First, we tend to be well diversified across both
companies and sectors; we avoid taking very big positions in any individual
holding. In our experience, that mitigates some of the volatility in a down
market. Second, we cut back our technology holdings early in the first quarter
of 2000 because some of these stocks reached the price targets we had set for
them and others, we felt, had risen to overly high valuations. That helped us
weather a correction that largely affected technology stocks. Third, we used
the correction as an opportunity to add to our positions in what we view as
some very good companies at bargain prices. Cisco Systems is one example.
Over the past six months, we think the likelihood of a slowdown in corporate
earnings has risen with the Federal Reserve Board's (the Fed's) increases in
interest rates. This has led us to increase the portfolio's diversification
into sectors we believe may be less exposed to the economic cycle. Two
examples are health care and business services.
We increased our weighting in health care stocks mainly by adding
pharmaceutical holdings such as Pharmacia and Warner-Lambert. The portfolio
profited handsomely when Warner-Lambert's stock rose on the news of its
pending acquisition by Pfizer, which was completed in June, and Pfizer
continues to be a significant holding. Short term, we expect there will
continue to be a lot of rhetoric out of Washington regarding health care
regulation, but in the long term we don't think that will seriously impact
what our research indicates are strong earnings outlooks for our
pharmaceutical holdings.
Business services companies provide services that enable larger companies to
become more efficient by downsizing and outsourcing. Two examples are Computer
Sciences, an information technology consulting firm, and Automatic Data
Processing, which we feel is the market leader in payroll processing. In
addition to their strong growth prospects, we think many business services
companies offer relatively predictable, consistent revenues because much of
their work tends to come from long-term contracts.
We continue to have a bullish long-term outlook for the portfolio's technology
and telecommunications holdings, although in the short term we feel some of
these companies could be sensitive to an economic slowdown. A look at current
spending patterns around the world offers a reason for optimism. According to
our research, spending on information technology is increasing in every area of
the world, and in the United States spending this year is estimated to reach
nearly 5% of gross domestic product. By comparison, however, Europe will spend
about half of that figure, while Japan and other Asian countries will spend even
less. We believe that in the long term these foreign economies will need to
dramatically increase their technology spending in order to remain competitive
with the United States -- and that a significant portion of that spending may go
to companies in our portfolio that are already leaders of the communications and
technology revolution, such as Cisco, Nortel, Corning, and Intel.
In describing our overall investment style and strategy, two phrases we often
use are "sustainable competitive advantage" and "flexible and opportunistic."
What we try to find for the portfolio are good businesses selling at reasonable
valuations, and one of our definitions of a good business is one that exhibits a
sustainable competitive advantage. Often that's a large market share; we tend to
invest in businesses with very few competitors. A patented product is another
form of competitive advantage; an example would be a pharmaceutical company with
the most effective drug for a certain disease or condition. Lowest cost may be
another form of sustainable competitive advantage.
Micron Technology, which became one of our top holdings during the period,
offers an example. We believe the company has become a dominant global
manufacturer of dynamic random access memory (DRAM) computer chips, which are
essential components of computer hard drives, wireless phones, and other
devices. According to our research, Micron's market share was about 8% in 1997
and is expected to reach nearly 20% this year; globally, it is one of the two
lowest-cost producers. It is also the only DRAM manufacturer that has added
significant production capacity since 1996, by acquiring a chip factory from
Texas Instruments. Currently, demand for DRAM chips is outstripping supply; we
feel this situation could continue for some time and lead to dramatic price
increases. So we believe Micron has a sustainable competitive advantage as a
result of being one of the lowest-cost producers and having a dominant market
share of a product experiencing high demand.
Flexible and opportunistic are really two aspects of the same strategy. As
long-term investors, we try to buy stocks we believe we can hold for three
years or more. But we also recognize that the investing landscape changes
daily and has become increasingly volatile in recent years, due largely to the
instantaneous flow of large amounts of information. We try to be flexible and
take advantage of the opportunities that the market presents, in part by
purchasing stocks we believe have strong growth prospects over the long term
but are undervalued over the short term -- perhaps because of some negative
announcement or what we believe is a false rumor. Everything continues to be
driven by our Original Research(SM); in many cases our analysts have
identified companies we would like to invest in when a drop in their stock
prices presents us with an opportunity.
Respectfully,
/s/ Stephen Pesek
Stephen Pesek
Portfolio Manager
The opinions expressed in this report are those of the portfolio manager and
are current only through the end of the period of the report as stated on the
cover. The manager's views are subject to change at any time based on market
and other conditions, and no forecasts can be guaranteed.
It is not possible to invest directly in an index.
The portfolio is actively managed, and current holdings may be different.
<PAGE>
PORTFOLIO MANAGER'S PROFILE
Stephen Pesek is Senior Vice President of MFS Investment Management(R) and
portfolio manager of Massachusetts Investors Growth Stock Fund, MFS(R) Core
Growth Fund, and the Massachusetts Investors Growth Stock Series offered
through MFS(R)/Sun Life annuity products. He is also a portfolio manager of
MFS(R) Institutional Large Cap Growth Fund and MFS(R) Growth Series (part of
MFS(R) Variable Insurance Trust(SM)).
Mr. Pesek joined MFS in 1994 as a research analyst following the
pharmaceutical, biotechnology, and electronics industries. He became a
portfolio manager in 1996 and Senior Vice President in 1999. Prior to joining
MFS, he worked for seven years at a major investment management firm as an
equity analyst. He is a graduate of the University of Pennsylvania and has an
M.B.A. degree from Columbia University. He is a Chartered Financial Analyst.
All equity portfolio managers began their careers at MFS Investment
Management(R) as research analysts. Our portfolio managers are supported by an
investment staff of over 100 professionals utilizing MFS Original Research(R),
a global, company-oriented, bottom-up process of selecting securities.
This report is prepared for the general information of shareholders. It is
authorized for distribution to prospective investors only when preceded or
accompanied by a current prospectus. A prospectus containing more information,
including all charges and expenses, for any MFS product is available from your
investment professional, or by calling MFS at 1-800-225-2606. Please read it
carefully before investing or sending money.
<PAGE>
SERIES FACTS
Objective: Seeks to provide long-term growth of capital and future income
rather than current income.
Commencement of investment operations: May 3, 1999
Class inception: Initial Class May 3, 1999
Service Class May 1, 2000
Size: $61.9 million net assets as of June 30, 2000
PERFORMANCE SUMMARY
Because the series is designed for investors with long-term goals, we have
provided the cumulative as well as the average annual total returns for the
applicable time periods. Investment results reflect the percentage change in
net asset value, including the reinvestment of dividends. (See Notes to
Performance Summary.)
TOTAL RATES OF RETURN THROUGH JUNE 30, 2000
INITIAL CLASS
6 Months 1 Year Life*
----------------------------------------------------------------------------
Cumulative Total Return +3.51% +26.34% +44.92%
----------------------------------------------------------------------------
Average Annual Total Return -- +26.34% +37.73%
----------------------------------------------------------------------------
SERVICE CLASS
6 Months 1 Year Life*
----------------------------------------------------------------------------
Cumulative Total Return +3.51% +26.34% +44.92%
----------------------------------------------------------------------------
Average Annual Total Return -- +26.34% +37.73%
----------------------------------------------------------------------------
* For the period from the commencement of the series' investment operations,
May 3, 1999, through June 30, 2000.
NOTES TO PERFORMANCE SUMMARY
Initial Class and Service Class shares have no sales charge; however, Service
Class shares carry a 0.20% annual Rule 12b-1 fee. Service Class share
performance includes the performance of the series' Initial Class shares for
periods prior to the inception of Service Class shares (blended performance).
These blended performance figures have not been adjusted to take into account
differences in the class-specific operating expenses (such as Rule 12b-1
fees). Because operating expenses of Service Class shares are higher than
those of Initial Class shares, the blended Service Class share performance is
higher than it would have been had Service Class shares been offered for the
entire period.
Performance results reflect any applicable expense subsidies and waivers,
without which the results would have been less favorable. Subsidies and
waivers may be rescinded at any time. See the prospectus for details. All
results are historical and assume the reinvestment of dividends and capital
gains. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MORE RECENT
RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. PAST PERFORMANCE IS NO GUARANTEE
OF FUTURE RESULTS.
Returns shown do not reflect the deduction of the mortality and expense risk
charges and administration fees. Please refer to the variable product's annual
report for performance that reflects the deduction of the fees and charges
imposed by insurance company separate accounts.
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS (Unaudited) - June 30, 2000
<CAPTION>
Stocks - 92.1%
-------------------------------------------------------------------------------------------------------
ISSUER SHARES VALUE
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Stocks - 83.9%
Banks and Credit Companies - 0.5%
Providian Financial Corp. 3,535 $ 318,150
-------------------------------------------------------------------------------------------------------
Biotechnology - 1.7%
Abbott Laboratories, Inc. 15,700 $ 699,631
Waters Corp.* 3,090 385,671
------------
$ 1,085,302
-------------------------------------------------------------------------------------------------------
Business Machines - 2.1%
Seagate Technology, Inc.* 10,300 $ 566,500
Sun Microsystems, Inc.* 8,300 754,781
------------
$ 1,321,281
-------------------------------------------------------------------------------------------------------
Business Services - 3.8%
Automatic Data Processing, Inc. 14,000 $ 749,875
Bea Systems, Inc.* 1,840 90,965
BISYS Group, Inc.* 3,000 184,500
Computer Sciences Corp.* 10,020 748,369
First Data Corp. 9,810 486,821
Fiserv, Inc.* 2,580 111,585
Predictive Systems, Inc.* 35 1,258
------------
$ 2,373,373
-------------------------------------------------------------------------------------------------------
Cellular Telephones - 2.2%
AirGate PCS, Inc.* 25 $ 1,314
Motorola, Inc. 10,106 293,706
Sprint Corp. (PCS Group)* 15,260 907,970
Voicestream Wireless Corp.* 1,200 139,556
------------
$ 1,342,546
-------------------------------------------------------------------------------------------------------
Computer Hardware - Systems - 1.7%
Compaq Computer Corp. 6,800 $ 173,825
Dell Computer Corp.* 17,300 853,106
------------
$ 1,026,931
-------------------------------------------------------------------------------------------------------
Computer Software - Personal Computers - 3.3%
Mercury Interactive Corp.* 1,500 $ 145,125
Microsoft Corp.* 23,990 1,919,200
------------
$ 2,064,325
-------------------------------------------------------------------------------------------------------
Computer Software - Services - 1.4%
EMC Corp.* 11,080 $ 852,468
Metasolv Software, Inc.* 10 440
------------
$ 852,908
-------------------------------------------------------------------------------------------------------
Computer Software - Systems - 5.8%
BMC Software, Inc.* 9,150 $ 333,832
Cadence Design Systems, Inc.* 19,630 399,961
Commerce One, Inc.* 1,300 58,988
Computer Associates International, Inc. 9,910 507,268
Comverse Technology, Inc.* 4,100 381,300
E.piphany, Inc.* 1,200 128,625
Foundry Networks, Inc.* 800 88,000
I2 Technologies, Inc.* 300 31,280
Oracle Corp.* 9,430 792,709
Rational Software Corp.* 6,400 594,800
Siebel Systems, Inc.* 1,320 215,902
StorageNetworks, Inc.* 80 80
VERITAS Software Corp.* 300 33,905
------------
$ 3,573,790
-------------------------------------------------------------------------------------------------------
Conglomerates - 2.5%
Tyco International Ltd. 32,700 $ 1,549,162
-------------------------------------------------------------------------------------------------------
Consumer Goods and Services - 0.6%
Philip Morris Cos., Inc. 7,700 $ 204,531
Clorox Co. 3,700 165,806
Gillette Co. 10 350
------------
$ 370,687
-------------------------------------------------------------------------------------------------------
Electrical Equipment - 1.9%
Capstone Turbine Corp.* 70 $ 3,154
Emerson Electric Co. 2,600 156,975
General Electric Co. 18,990 1,006,470
Jabil Circuit, Inc.* 100 4,963
------------
$ 1,171,562
-------------------------------------------------------------------------------------------------------
Electronics - 9.9%
Altera Corp.* 3,140 $ 320,084
Analog Devices, Inc.* 3,660 278,160
Applied Materials, Inc.* 1,500 135,938
Atmel Corp.* 3,960 146,025
Flextronics International Ltd.* 9,662 663,659
Intel Corp. 11,480 1,534,732
Lam Research Corp.* 10,660 399,750
LSI Logic Corp.* 10,460 566,147
Marvell Technology Group Ltd.* 100 5,700
Micron Technology, Inc.* 17,700 1,558,706
National Semiconductor Corp.* 8,850 502,238
------------
$ 6,111,139
-------------------------------------------------------------------------------------------------------
Energy - 0.3%
Dynegy, Inc. 2,600 $ 177,613
-------------------------------------------------------------------------------------------------------
Entertainment - 3.3%
Gemstar International Group Ltd.* 160 $ 9,832
Harrah's Entertainment, Inc.* 210 4,397
Infinity Broadcasting Corp., "A"* 7,210 262,714
Radio Unica Communications Co.* 25 175
Time Warner, Inc. 6,270 476,520
Univision Communications, Inc., "A"* 1,790 185,265
USA Networks, Inc.* 15,600 337,350
Viacom, Inc., "B"* 11,635 793,362
------------
$ 2,069,615
-------------------------------------------------------------------------------------------------------
Financial Institutions - 3.2%
American Express Co. 3,140 $ 163,672
Associates First Capital Corp., "A" 12,300 274,444
Citigroup, Inc. 9,980 601,295
Freddie Mac Corp. 12,900 522,450
Morgan Stanley Dean Witter & Co. 400 33,300
State Street Corp. 3,740 396,674
------------
$ 1,991,835
-------------------------------------------------------------------------------------------------------
Financial Services - 0.7%
AXA Financial, Inc. 13,300 $ 452,200
-------------------------------------------------------------------------------------------------------
Food and Beverage Products - 1.9%
Anheuser-Busch Cos., Inc. 7,600 $ 567,625
Coca-Cola Co. 10,900 626,069
------------
$ 1,193,694
-------------------------------------------------------------------------------------------------------
Healthcare - 0.5%
HCA Healthcare Co.* 11,200 $ 340,200
-------------------------------------------------------------------------------------------------------
Insurance - 3.0%
American International Group, Inc. 7,377 $ 866,797
Hartford Financial Services Group, Inc. 9,900 553,781
Lincoln National Corp. 3,760 135,830
Marsh & McLennan Cos., Inc. 2,900 302,869
------------
$ 1,859,277
-------------------------------------------------------------------------------------------------------
Internet - 2.4%
Art Technology Group, Inc.* 1,000 $ 100,937
Cobalt Networks, Inc.* 10 579
Data Return Corp.* 25 725
Juniper Networks, Inc.* 700 101,894
Lifeminders, Inc.* 10 296
Retek, Inc.* 10 320
VeriSign, Inc.* 7,340 1,295,510
------------
$ 1,500,261
-------------------------------------------------------------------------------------------------------
Machinery - 0.4%
Deere & Co., Inc. 6,090 $ 225,330
-------------------------------------------------------------------------------------------------------
Medical and Health Products - 3.5%
Alza Corp.* 2,600 $ 153,725
American Home Products Corp. 18,095 1,063,081
Bausch & Lomb, Inc. 4,450 344,319
Baxter International, Inc. 85 5,977
Bristol-Myers Squibb Co. 10,380 604,635
------------
$ 2,171,737
-------------------------------------------------------------------------------------------------------
Medical and Health Technology and Services - 0.8%
Cardinal Health, Inc. 270 $ 19,980
Edwards Lifesciences Corp.* 17 315
Genzyme Corp.* 1,000 59,438
PE Corp. - PE Biosystems Group 5,900 388,662
------------
$ 468,395
-------------------------------------------------------------------------------------------------------
Oil Services - 2.5%
Baker Hughes, Inc. 17,100 $ 547,200
Global Marine, Inc.* 9,900 279,056
Halliburton Co. 9,330 440,259
Noble Drilling Corp.* 6,430 264,836
------------
$ 1,531,351
-------------------------------------------------------------------------------------------------------
Oils - 1.5%
Apache Corp. 1,320 $ 77,633
Coastal Corp. 6,300 383,512
Transocean Sedco Forex, Inc. 8,290 442,997
------------
$ 904,142
-------------------------------------------------------------------------------------------------------
Pharmaceuticals - 4.0%
Pfizer, Inc. 25,390 $ 1,218,720
Pharmacia Corp. 20,379 1,053,339
Sepracor, Inc.* 1,600 193,000
------------
$ 2,465,059
-------------------------------------------------------------------------------------------------------
Retail - 2.2%
CVS Corp. 19,955 $ 798,200
Office Depot, Inc.* 4,620 28,875
RadioShack Corp. 8,540 404,582
Wal-Mart Stores, Inc. 2,600 149,825
------------
$ 1,381,482
-------------------------------------------------------------------------------------------------------
Supermarkets - 2.2%
Kroger Co.* 12,200 $ 269,163
Safeway, Inc.* 24,060 1,085,707
------------
$ 1,354,870
-------------------------------------------------------------------------------------------------------
Telecommunications - 11.4%
Alltel Corp. 2,300 $ 142,456
Amdocs Ltd.* 2,550 195,713
American Tower Corp., "A"* 13,390 558,196
AT&T Corp., "A"* 12,120 293,910
Cabletron Systems, Inc.* 4,360 110,090
Cisco Systems, Inc.* 27,180 1,727,629
Corning, Inc. 4,575 1,234,678
Metromedia Fiber Network, Inc., "A"* 17,440 692,150
NEXTEL Communications, Inc.* 6,100 373,244
Nextlink Communications, Inc., "A"* 8,700 330,056
NTL, Inc.* 6,500 389,187
Tellabs, Inc.* 4,500 307,969
UnitedGlobalCom, Inc.* 2,840 132,770
Vignette Corp.* 600 31,209
WorldCom, Inc.* 11,100 509,212
------------
$ 7,028,469
-------------------------------------------------------------------------------------------------------
Telecommunications and Cable - 0.9%
Comcast Corp., "A"* 13,890 $ 562,545
-------------------------------------------------------------------------------------------------------
Utilities - Electric - 1.7%
AES Corp.* 22,600 $ 1,031,125
-------------------------------------------------------------------------------------------------------
Utilities - Gas - 0.1%
Enron Corp. 660 $ 42,570
-------------------------------------------------------------------------------------------------------
Total U.S. Stocks $ 51,912,926
-------------------------------------------------------------------------------------------------------
Foreign Stocks - 8.2%
Bermuda - 0.9%
Global Crossing Ltd. (Telecommunications)* 21,850 $ 574,928
-------------------------------------------------------------------------------------------------------
Canada - 2.8%
Nortel Networks Corp. (Telecommunications) 25,160 $ 1,717,170
-------------------------------------------------------------------------------------------------------
Germany
SAP AG, ADR (Computer Software - Systems) 30 $ 1,408
-------------------------------------------------------------------------------------------------------
Israel - 0.9%
Check Point Software Technologies Ltd.
(Computer Software - Services)* 2,500 $ 529,375
-------------------------------------------------------------------------------------------------------
Japan - 0.6%
Fast Retailing Co. (Retail) 800 $ 334,842
-------------------------------------------------------------------------------------------------------
Netherlands - 1.4%
Royal Dutch Petroleum Co. (Oils) 13,700 $ 851,379
-------------------------------------------------------------------------------------------------------
Sweden - 0.1%
Telefonaktiebolaget LM Ericsson AB (Telecommunications) 4,220 $ 83,539
-------------------------------------------------------------------------------------------------------
United Kingdom - 1.5%
HSBC Holdings PLC (Banks and Credit Cos.)* 12,300 $ 140,561
Vodafone AirTouch PLC (Telecommunications)* 198,825 802,983
------------
$ 943,544
-------------------------------------------------------------------------------------------------------
Total Foreign Stocks $ 5,036,185
-------------------------------------------------------------------------------------------------------
Total Stocks (Identified Cost, $53,887,709) $ 56,949,111
-------------------------------------------------------------------------------------------------------
Short-Term Obligations - 8.2%
-------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000 OMITTED)
-------------------------------------------------------------------------------------------------------
Federal Home Loan Bank, due 7/03/00, at Amortized
Cost $ 5,071 $ 5,069,149
-------------------------------------------------------------------------------------------------------
Total Investments (Identified Cost, $58,956,858) $ 62,018,260
Other Assets, Less Liabilities - (0.3)% (156,123)
-------------------------------------------------------------------------------------------------------
Net Assets - 100.0% $61,862,137
-------------------------------------------------------------------------------------------------------
* Non-income producing security.
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (Unaudited)
-------------------------------------------------------------------------------
JUNE 30, 2000
-------------------------------------------------------------------------------
Assets:
Investments, at value (identified cost, $58,956,858) $ 62,018,260
Investments of cash collateral for securities loaned, at
identified cost and value 9,055,374
Cash 545
Foreign currency, at value (identified cost, $86) 80
Receivable for series shares sold 695,346
Receivable for investments sold 712,030
Dividends receivable 18,505
------------
Total assets $ 72,500,140
------------
Liabilities:
Payable for series shares reacquired $ 1,376
Payable for investments purchased 1,579,726
Collateral for securities loaned, at value 9,055,374
Payable to affiliates -
Management fee 1,247
Reimbursement fee 249
Distribution fee 31
------------
Total liabilities $ 10,638,003
------------
Net assets $ 61,862,137
============
Net assets consist of:
Paid-in capital $ 58,314,685
Unrealized appreciation on investments and translation of
assets and liabilities in
foreign currencies 3,060,848
Accumulated undistributed net realized gain on investments and
foreign currency transactions 448,223
Accumulated undistributed net investment income 38,381
------------
Total $ 61,862,137
============
Shares of beneficial interest outstanding 4,314,996
=========
Initial Class:
Net asset value per share
(net assets of $55,891,107 / 3,898,303 shares of beneficial
interest outstanding) $14.34
======
Service Class:
Net asset value per share
(net asset of $5,971,030 / 416,693 shares of beneficial
interest outstanding) $14.33
======
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS - continued
Statement of Operations (Unaudited)
-------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, 2000
-------------------------------------------------------------------------------
Net investment income:
Income -
Interest $ 142,003
Dividends 72,759
Foreign taxes withheld (972)
------------
Total investment income $ 213,790
------------
Expenses -
Management fee $ 138,255
Trustees' compensation 1,090
Shareholder servicing agent fee 6,452
Distribution fee (Service Class) 772
Administrative fee 3,054
Custodian fee 12,139
Printing 4,237
Auditing fees 15,400
Legal fees 967
Miscellaneous 869
------------
Total expenses $ 183,235
Fees paid indirectly (698)
Reduction of expenses by investment adviser (5,725)
------------
Net expenses $ 176,812
------------
Net investment income $ 36,978
------------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) (identified cost basis) -
Investment transactions $ 575,996
Foreign currency transactions (7,907)
------------
Net realized gain on investments and foreign currency
transactions $ 568,089
------------
Change in unrealized appreciation (depreciation) -
Investments $ 650,304
Translation of assets and liabilities in foreign currencies (553)
------------
Net unrealized gain on investments and foreign currency
translation $ 649,751
------------
Net realized and unrealized gain on investments and
foreign currency $ 1,217,840
------------
Increase in net assets from operations $ 1,254,818
============
See notes to financial statements.
<PAGE>
<TABLE>
FINANCIAL STATEMENTS - continued
<CAPTION>
Statement of Changes in Net Assets
---------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED PERIOD ENDED*
JUNE 30, 2000 DECEMBER 31, 1999
(UNAUDITED)
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
From operations -
Net investment income $ 36,978 $ 25,464
Net realized gain on investments and foreign currency
transactions 568,089 203,087
Net unrealized gain on investments and foreign
currency translation 649,751 2,411,097
------------ ------------
Increase in net assets from operations $ 1,254,818 $ 2,639,648
------------ ------------
Distributions declared to shareholders -
From net investment income (Initial Class) -- (25,464)
Net realized gain on investments and foreign currency
transactions (Initial Class) (282,095) (36,772)
In excess of net investment income (Initial Class) -- (2,683)
------------ ------------
Total distributions declared to shareholders $ (282,095) $ (64,919)
------------ ------------
Net increase in net assets from series share
transactions $ 42,000,186 $ 16,314,499
------------ ------------
Total increase in net assets $ 42,972,909 $ 18,889,228
Net assets:
At beginning of period 18,889,228 --
------------ ------------
At end of period (including accumulated undistributed
net investment income of $38,381 and $1,403,
respectively) $ 61,862,137 $ 18,889,228
============ ============
* For the period from the commencement of the series' investment operations, May 3, 1999, through
December 31, 1999.
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL STATEMENTS - continued
Financial Highlights
-----------------------------------------------------------------------------
SIX MONTHS ENDED PERIOD ENDED
JUNE 30, 2000 DECEMBER 31,
(UNAUDITED) 1999*
-----------------------------------------------------------------------------
INITIAL CLASS
-----------------------------------------------------------------------------
Per share data (for a share outstanding throughout the period):
Net asset value - beginning of period $13.95 $10.00
------ ------
Income from investment operations# -
Net investment income(S) $ 0.01 $ 0.06
Net realized and unrealized gain on investments
and foreign currency 0.48 3.94
------ ------
Total from investment operations $ 0.49 $ 4.00
------ ------
Less distributions declared to shareholders -
From net investment income $ -- $(0.02)
From net realized gain on investments and foreign
currency transactions (0.10) (0.03)
In excess of net investment income -- -- +++
------ ------
Total distributions declared to shareholders $(0.10) $(0.05)
------ ------
Net asset value - end of period $14.34 $13.95
====== ======
Total return 3.51%++ 40.01%++
Ratios (to average net assets)/Supplemental data(S):
Expenses## 0.95%+ 1.01%+
Net investment income 0.20%+ 0.71%+
Portfolio turnover 103% 73%
Net assets at end of period (000 omitted) 55,891 $18,889
(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 the average daily net assets. Prior to May 1,
2000, this fee was not greater than 0.25% of the average net assets. To
the extent actual expenses were over this limitation, the net investment
income per share and the ratios would have been:
Net investment income $ 0.01 $ 0.02
Ratios (to average net assets):
Expenses## 0.98%+ 1.47%+
Net investment income 0.17%+ 0.25%+
* For the period from the commencement of the series' investment operations,
May 3, 1999, through December 31, 1999.
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01.
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from directed brokerage and
certain expense offset arrangements.
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS - continued
Financial Highlights
-------------------------------------------------------------------------------
PERIOD ENDED
JUNE 30, 2000*
(UNAUDITED)
-------------------------------------------------------------------------------
SERVICE CLASS
-------------------------------------------------------------------------------
Per share data (for a share outstanding throughout the period):
Net asset value - beginning of period $14.27
------
Income from investment operations# -
Net investment income $ -- +++
Net realized and unrealized gain on investments and foreign
currency 0.06
------
Total from investment operations $ 0.06
------
Net asset value - end of period $14.33
======
Total return 3.51%++
Ratios (to average net assets)/Supplemental data(S):
Expenses## 1.15%+
Net investment income 0.01%+
Portfolio turnover 103%
Net assets at end of period (000 omitted) $5,971
(S) Subject to reimbursement by the series, the investment adviser voluntarily
agreed under a temporary expense reimbursement agreement to pay all of the
series' operating expenses, exclusive of management and distribution fees.
In consideration, the series pays the investment adviser a reimbursement
fee not greater than 0.15% of the 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## 1.18%+
Net investment loss (0.02)%+
* For the period from the inception of Service Class shares, May 1, 2000,
through June 30, 2000.
+ Annualized.
++ Not annualized.
+++ Per share amount was less than $0.01.
# Per share data are based on average shares outstanding.
## Ratios do not reflect expense reductions from directed brokerage and
certain expense offset
arrangements.
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(1) Business and Organization
MFS 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
each series of the trust are separate accounts of insurance companies which
offer variable annuity and/or life insurance products. As of June 30, 2000,
there were 24 shareholders in the series.
(2) Significant Accounting Policies
General - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The series
can invest in foreign securities. Investments in foreign securities are
vulnerable to the effects of changes in the relative values of the local
currency and the U.S. dollar and to the effects of changes in each country's
legal, political, and economic environment.
Investment Valuations - Equity securities listed on securities exchanges or
reported through the NASDAQ system are reported at market value using last
sale prices. Unlisted equity securities or listed equity securities for which
last sale prices are not available are reported at market value using last
quoted bid prices. Short-term obligations, which mature in 60 days or less,
are valued at amortized cost, which approximates market value. Securities for
which there are no such quotations or valuations are valued in good faith, at
fair value, by the Trustees.
Foreign Currency Translation - Investment valuations, other assets, and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. Purchases
and sales of foreign investments, income, and expenses are converted into U.S.
dollars based upon currency exchange rates prevailing on the respective dates
of such transactions. Gains and losses attributable to foreign currency
exchange rates on sales of securities are recorded for financial statement
purposes as net realized gains and losses on investments. Gains and losses
attributable to foreign exchange rate movements on income and expenses are
recorded for financial statement purposes as foreign currency transaction
gains and losses. That portion of both realized and unrealized gains and
losses on investments that results from fluctuations in foreign currency
exchange rates is not separately disclosed.
Security Loans - State Street Bank and Trust Company ("State Street"), as
lending agent, may loan the securities of the series to certain qualified
institutions (the "Borrowers") approved by the series. The loans are
collateralized at all times by cash and/or U.S. Treasury securities in an
amount at least equal to the market value of the securities loaned. State
Street provides the series with indemnification against Borrower default. The
series bears the risk of loss with respect to the investment of cash
collateral.
Cash collateral is invested in short-term securities. A portion of the income
generated upon investment of the collateral is remitted to the Borrowers, and
the remainder is allocated between the series and the lending agent. On loans
collateralized by U.S. Treasury securities, a fee is received from the
Borrower, and is allocated between the series and the lending agent. Income
from securities lending is included in interest income on the Statement of
Operations. The dividend and interest income earned on the securities loaned
is accounted for in the same manner as other dividend and interest income.
At June 30, 2000, the value of securities loaned was $8,810,447. These loans
were collateralized by U.S. Treasury securities of $18,308 and cash of
$9,055,374 which was invested in the following short-term obligation:
IDENTIFIED COST
SHARES AND VALUE
-------------------------------------------------------------------------------
Navigator Securities Lending Prime Portfolio 9,055,374 $9,055,374
Investment Transactions and Income - Investment transactions are recorded on
the trade date. Interest income is recorded on the accrual basis. All discount
is accreted for financial statement and tax reporting purposes as required by
federal income tax regulations. Dividends received in cash are recorded on the
ex-dividend date. Dividend and interest payments received in additional
securities are recorded on the ex-dividend or ex-interest date in an amount
equal to the value of the security on such date.
Fees Paid Indirectly - The series' custody fee is reduced according to an
arrangement that measures the value of cash deposited with the custodian by
the series. During the period, the series' custodian fees were reduced by $328
under this arrangement. This series has entered into a directed brokerage
agreement, under which the broker will credit the series a portion of the
commissions generated, to offset certain expenses of this series. For the
period, the series custodian fees were reduced by $370 under this agreement.
These amounts are shown as a reduction of total expenses on the Statement of
Operations.
Tax Matters and Distributions - The series' policy is to comply with the
provisions of the Internal Revenue Code (the Code) applicable to regulated
investment companies and to distribute to shareholders all of its net taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is provided.
Distributions to shareholders are recorded on the ex-dividend date. The series
distinguishes between distributions on a tax basis and a financial reporting
basis and requires that only distributions in excess of tax basis earnings and
profits be reported in the financial statements as distributions from paid-in
capital. Differences in the recognition or classification of income between
the financial statements and tax earnings and profits, which result in
temporary over-distributions for financial statement purposes, are classified
as distributions in excess of net investment income or net realized gains.
Multiple Classes of Shares of Beneficial Interest - The series offers multiple
classes of shares that differ in their respective distribution fees. All
shareholders bear the common expenses of the series based on daily net assets
of each class, without distinction between share classes. Dividends are
declared separately for each class. Differences in per share dividend rates
are generally due to differences in separate class expenses.
(3) Transactions with Affiliates
Investment Adviser - The series has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities. The
management fee is computed daily and paid monthly at an annual rate of 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. Prior to May 1, 2000, the series paid MFS
an expense reimbursement fee was not greater than 0.25% of the 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 owed to MFS by the
series amounted to $22,093.
The series pays no compensation directly to its Trustees who are officers of
the investment adviser, or to officers of the series, all of whom receive
remuneration for their services to the series from MFS. Certain officers and
Trustees of the series are officers or directors of MFS and MFS Service
Center, Inc. (MFSC).
Administrator - The series has an administrative services agreement with MFS
to provide the series with certain financial, legal, shareholder servicing,
compliance, and other administrative services. As a partial reimbursement for
the cost of providing these services, the series incurs an administrative fee
at the following annual percentages of the series' average daily net assets:
First $2 billion 0.0175%
Next $2.5 billion 0.0130%
Next $2.5 billion 0.0005%
In excess of $7 billion 0.0000%
Distributor - The Trustees have adopted a distribution plan relating to
Service Class shares pursuant to Rule 12b-1 of the Investment Company Act of
1940 as follows:
The series' distribution plan provides that the series will pay MFD a
distribution fee of 0.25% per annum of the its average daily net assets
attributable to the Service Class shares in order that MFD may pay expenses on
behalf of the series related to the distribution of its shares. A portion of
this distribution fee is currently being paid by the series; payment of the
remaining 0.05% per annum of the Service Class distribution fee will become
payable on such a date as the Trustees of the trust may determine. Fees
incurred under the distribution plan during the period ended June 30, 2000,
were 0.20% of average daily 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 purchased option transactions
and short-term obligations, were as follows:
PURCHASES SALES
-----------------------------------------------------------------------------
U.S. government securities $ 761,010 $ 165,679
----------- -----------
Investments (non-U.S. government securities) $75,190,237 $33,964,472
----------- -----------
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 $58,956,858
-----------
Gross unrealized appreciation $ 4,515,116
Gross unrealized depreciation (1,453,714)
-----------
Net unrealized appreciation $ 3,061,402
===========
(5) Shares of Beneficial Interest
The series' Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest. Transactions in
series shares were as follows:
<TABLE>
<CAPTION>
Initial Class
SIX MONTHS ENDED JUNE 30, 2000 PERIOD ENDED DECEMBER 31, 1999*
------------------------------ -------------------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 2,740,769 $38,963,381 1,306,924 $17,118,606
Shares issued to shareholders in
reinvestment of distributions 19,838 282,092 18,737 311,327
Shares reacquired (216,086) (3,111,682) (387,890) (5,004,681)
--------- ----------- --------- -----------
Net increase 2,544,521 $36,133,791 937,771 $12,425,252
========= =========== ========= ===========
<CAPTION>
Service Class
PERIOD ENDED JUNE 30, 2000**
----------------------------
SHARES AMOUNT
---------------------------------------------------------------------
<S> <C> <C>
Shares sold 417,948 $ 5,884,745
Shares reacquired (1,255) (18,350)
--------- -----------
Net increase 416,693 $ 5,866,395
========= ===========
* For the period from the commencement of the series' investment operations, May 3, 1999, through
December 31, 1999.
** For the period from the inception of Service Class shares, May 1, 2000, through June 30, 2000.
</TABLE>
(6) Line of Credit
The series and other affiliated 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 series, based on its borrowings, at a rate equal to the bank's
base rate. In addition, a commitment fee, based on the average daily unused
portion of the line of credit, is allocated among the participating funds at
the end of each quarter. The commitment fee allocated to the series for the
six months ended June 30, 2000, was $10. The series had no significant
borrowings during the period.
<PAGE>
(c)2000 MFS Investment Management(R).
MFS(R) investment products are offered through MFS Fund Distributors, Inc.,
500 Boylston Street, Boston, MA 02116.
VGS-3 8/00 19.5M
