N-CSRS 1 dncsrs.htm MFS VARIABLE INSURANCE TRUST N-CSRS MFS VARIABLE INSURANCE TRUST N-CSRS
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF

REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-8326

MFS VARIABLE INSURANCE TRUST

(Exact name of registrant as specified in charter)

500 Boylston Street, Boston, Massachusetts 02116

(Address of principal executive offices) (Zip code)

Susan S. Newton

Massachusetts Financial Services Company

500 Boylston Street

Boston, Massachusetts 02116

(Name and address of agents for service)

Registrant’s telephone number, including area code: (617) 954-5000

Date of fiscal year end: December 31

Date of reporting period: June 30, 2011

Table of Contents
ITEM 1. REPORTS TO STOCKHOLDERS.

Table of Contents

LOGO

 

MFS® Research Series

MFS® Variable Insurance Trust

 

LOGO

 

 

SEMIANNUAL REPORT

June 30, 2011

 

VFR-SEM

Table of Contents

MFS® RESEARCH SERIES

 

CONTENTS   
Letter from the CEO      1   
Portfolio composition      2   
Expense table      3   
Portfolio of investments      4   
Statement of assets and liabilities      7   
Statement of operations      8   
Statements of changes in net assets      9   
Financial highlights      10   
Notes to financial statements      12   
Board review of investment advisory agreement      19   
Proxy voting policies and information      19   
Quarterly portfolio disclosure      19   
Further information      19   
MFS® privacy notice      20   

 

 

 

 

The report is prepared for the general information of contract owners. It is authorized for distribution to prospective investors only when preceded or accompanied by a current prospectus.

 

NOT FDIC INSURED Ÿ MAY LOSE VALUE Ÿ NO BANK OR CREDIT UNION GUARANTEE Ÿ

NOT A DEPOSIT Ÿ NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY OR NCUA/NCUSIF

Table of Contents

MFS Research Series

 

LETTER FROM THE CEO

 

LOGO

 

Dear Contract Owners:

After about a year of almost uninterrupted macroeconomic and financial market improvement following the global credit crisis, investors grew more cautious in the middle of 2010 as fears grew that some European countries would default on their debt and as economic data showed a weakening

trend in the global economy. As a result asset prices fell significantly.

Last September the U.S. Federal Reserve Board’s promises to make lending conditions easier helped assuage market fears and drive asset prices off their recent lows. A combination of solid earnings and improving economic data gave an additional boost to investor sentiment.

In the following months, the renewed positive market mood, coupled with indications of better global macroeconomic activity, pushed many asset valuations to post-crisis highs. At the same time, global sovereign

bond yields initially rose as investors became concerned about inflationary pressures, driven by higher prices for oil as well as other commodities. However, by the end of the second quarter of 2011, a weakening macroeconomic backdrop and renewed concerns over debt problems in some eurozone countries pushed equities lower.

For the remainder of 2011, we are cautiously optimistic that economic growth will continue to improve and that the global economies will recover from the shocks of the past few years. We expect the pace of recovery worldwide to be uneven and volatile and acknowledge the elevated uncertainty created by events in Japan, Europe, the Middle East, as well as that created by the U.S. debate over raising the debt ceiling and the downgrade by Standard & Poor’s of the U.S. long-term credit rating.

As always, we continue to be mindful of the many economic challenges faced at the local, national, and international levels. It is in times such as these that we want to remind investors of the merits of maintaining a long-term view, adhering to basic investing principles such as asset allocation and diversification, and working closely with their advisors to research and identify appropriate investment opportunities.

Respectfully,

LOGO

Robert J. Manning

Chairman and Chief Executive Officer

MFS Investment Management®

August 16, 2011

 

The opinions expressed in this letter are subject to change, may not be relied upon for investment advice, and no forecasts can be guaranteed.

 

 

1

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MFS Research Series

 

PORTFOLIO COMPOSITION

 

Portfolio structure (i)

LOGO

 

Top ten holdings (i)  
Apple, Inc.     3.8%   
Exxon Mobil Corp.     2.5%   
Danaher Corp.     2.4%   
Oracle Corp.     1.9%   
Occidental Petroleum Corp.     1.8%   
Target Corp.     1.8%   
McDonald’s Corp.     1.7%   
JPMorgan Chase & Co.     1.7%   
EMC Corp.     1.6%   
Fluor Corp.     1.5%   
Global equity sectors (i)  
Technology     17.0%   
Capital Goods     16.7%   
Energy     15.9%   
Financial Services     15.1%   
Health Care     11.2%   
Consumer Cyclicals     11.2%   
Consumer Staples     8.3%   

Telecommunications/Cable Television

     4.2%   
 

 

(i) For purposes of this presentation, the components include the market value of securities, less any securities sold short, and reflect the impact of the equivalent exposure of derivative positions, if applicable. These amounts may be negative from time to time. Equivalent exposure is a calculated amount that translates the derivative position into a reasonable approximation of the amount of the underlying asset that the portfolio would have to hold at a given point in time to have the same price sensitivity that results from the portfolio’s ownership of the derivative contract. When dealing with derivatives, equivalent exposure is a more representative measure of the potential impact of a position on portfolio performance than market value.

Percentages are based on net assets as of 6/30/11.

The portfolio is actively managed and current holdings may be different.

 

2

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MFS Research Series

 

EXPENSE TABLE

 

Fund Expenses Borne by the Contract Holders During the Period,

January 1, 2011 through June 30, 2011

As a contract holder of the fund, you incur ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period January 1, 2011 through June 30, 2011.

Actual Expenses

The first line for each share class in the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The second line for each share class in the following table provides information about hypothetical account values and hypothetical expenses based on the fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight the fund’s ongoing costs only and do not take into account the fees and expenses imposed under the variable contracts through which your investment in the fund is made. Therefore, the second line for each share class in the table is useful in comparing ongoing costs associated with an investment in vehicles (such as the fund) which fund benefits under variable annuity and variable life insurance contracts and to qualified pension and retirement plans only, and will not help you determine the relative total costs of investing in the fund through variable annuity and variable life insurance contracts. If the fees and expenses imposed under the variable contracts were included, your costs would have been higher.

 

Share Class         Annualized
Expense Ratio		      Beginning
Account Value
1/01/11		     

Ending

Account Value
6/30/11

      Expenses Paid
During Period (p)
1/01/11-6/30/11		  
Initial Class   Actual      0.87%         $1,000.00         $1,049.37         $4.42   
  Hypothetical (h)      0.87%         $1,000.00         $1,020.48         $4.36   
Service Class   Actual      1.12%         $1,000.00         $1,047.54         $5.69   
  Hypothetical (h)      1.12%         $1,000.00         $1,019.24         $5.61   

 

(h) 5% class return per year before expenses.

 

(p) Expenses paid is equal to each class’ annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by the number of days in the period, divided by the number of days in the year.

Expenses Impacting Table

Expense ratios include 0.01% of investment related expenses from short sale dividend and interest expenses.

 

3

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MFS Research Series

 

PORTFOLIO OF INVESTMENTS – 6/30/11 (unaudited)

 

The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.

Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – 99.0%     
Aerospace – 2.4%     
Goodrich Corp.      7,160      $ 683,774   
Honeywell International, Inc.      28,960        1,725,726   
Precision Castparts Corp.      14,900        2,453,285   
          
     $ 4,862,785   
          
Apparel Manufacturers – 0.8%     
NIKE, Inc., “B”      10,080      $ 906,998   
Phillips-Van Heusen Corp.      9,840        644,225   
          
     $ 1,551,223   
          
Automotive – 1.1%     
General Motors Co. (a)      35,430      $ 1,075,655   
Johnson Controls, Inc.      26,690        1,111,905   
          
     $ 2,187,560   
          
Biotechnology – 1.3%     
Amgen, Inc. (a)      22,450      $ 1,309,958   
Gilead Sciences, Inc. (a)      33,720        1,396,345   
          
     $ 2,706,303   
          
Broadcasting – 2.0%     
Viacom, Inc., “B”      39,450      $ 2,011,950   
Walt Disney Co.      49,110        1,917,254   
          
     $ 3,929,204   
          
Brokerage & Asset Managers – 3.3%     
Affiliated Managers Group, Inc. (a)      14,020      $ 1,422,329   
Blackrock, Inc.      7,190        1,379,114   
CME Group, Inc.      2,870        836,863   
Franklin Resources, Inc.      16,560        2,174,162   
GFI Group, Inc.      162,070        743,901   
          
     $ 6,556,369   
          
Business Services – 1.2%     
Accenture PLC, “A”      27,100      $ 1,637,382   
FleetCor Technologies, Inc. (a)      24,300        720,252   
          
     $ 2,357,634   
          
Cable TV – 1.6%     
Comcast Corp., “Special A”      82,440      $ 1,997,521   
DIRECTV, “A” (a)      18,220        925,940   
Virgin Media, Inc.      10,780        322,645   
          
     $ 3,246,106   
          
Chemicals – 2.3%     
Celanese Corp.      41,670      $ 2,221,428   
Ecolab, Inc.      18,660        1,052,051   
Monsanto Co.      18,330        1,329,658   
          
     $ 4,603,137   
          
Computer Software – 4.3%     
Autodesk, Inc. (a)      33,870      $ 1,307,382   
Check Point Software Technologies Ltd. (a)      25,410        1,444,559   
Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – continued   
Computer Software – continued     
Oracle Corp.      118,300      $ 3,893,253   
Red Hat, Inc. (a)      26,990        1,238,841   
VeriSign, Inc.      21,260        711,360   
          
     $ 8,595,395   
          
Computer Software – Systems – 6.3%   
Apple, Inc. (a)      22,950      $ 7,703,627   
EMC Corp. (a)      115,690        3,187,260   
International Business Machines Corp.      9,710        1,665,751   
          
     $ 12,556,638   
          
Construction – 1.0%     
Owens Corning (a)      53,610      $ 2,002,334   
          
Consumer Products – 1.5%     
Avon Products, Inc.      84,980      $ 2,379,440   
Newell Rubbermaid, Inc.      35,550        560,979   
          
     $ 2,940,419   
          
Electrical Equipment – 2.4%     
Danaher Corp.      89,980      $ 4,768,040   
          
Electronics – 2.9%     
Advanced Micro Devices, Inc. (a)      135,489      $ 947,068   
ASML Holding N.V.      32,530        1,202,309   
First Solar, Inc. (a)(l)      7,580        1,002,607   
Hittite Microwave Corp. (a)      6,580        407,368   
JDS Uniphase Corp. (a)      25,670        427,662   
Microchip Technology, Inc.      27,340        1,036,459   
Samsung Electronics Co. Ltd., GDR      2,331        903,496   
          
     $ 5,926,969   
          
Energy – Independent – 4.5%     
Apache Corp.      19,160      $ 2,364,152   
Cabot Oil & Gas Corp.      15,160        1,005,260   
CONSOL Energy, Inc.      5,880        285,062   
EOG Resources, Inc.      17,370        1,816,034   
Occidental Petroleum Corp.      34,710        3,611,228   
          
     $ 9,081,736   
          
Energy – Integrated – 5.5%     
BP PLC, ADR      27,390      $ 1,213,103   
Chevron Corp.      23,500        2,416,740   
EQT Corp.      18,870        991,052   
Exxon Mobil Corp. (s)      61,490        5,004,056   
QEP Resources, Inc.      35,460        1,483,292   
          
     $ 11,108,243   
          
Engineering – Construction – 1.5%     
Fluor Corp.      47,910      $ 3,097,861   
          
Food & Beverages – 3.6%     
Bunge Ltd.      20,300      $ 1,399,685   
General Mills, Inc.      60,020        2,233,944   
 

 

4

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MFS Research Series

 

Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – continued   
Food & Beverages – continued     
Groupe Danone      16,297      $ 1,215,922   
PepsiCo, Inc. (s)      34,700        2,443,921   
          
     $ 7,293,472   
          
Food & Drug Stores – 0.9%     
CVS Caremark Corp.      26,170      $ 983,469   
METRO, Inc., “A”      15,900        791,167   
          
     $ 1,774,636   
          
General Merchandise – 2.8%     
Dollar General Corp. (a)      23,160      $ 784,892   
Kohl’s Corp.      25,470        1,273,755   
Target Corp.      76,290        3,578,764   
          
     $ 5,637,411   
          
Health Maintenance Organizations – 0.7%   
WellPoint, Inc.      17,990      $ 1,417,072   
          
Insurance – 4.2%     
ACE Ltd.      24,870      $ 1,636,943   
Aon Corp.      23,670        1,214,271   
Chubb Corp.      24,030        1,504,518   
MetLife, Inc.      58,070        2,547,531   
Prudential Financial, Inc.      24,190        1,538,242   
          
     $ 8,441,505   
          
Internet – 1.3%     
Google, Inc., “A” (a)      5,300      $ 2,683,814   
          
Machinery & Tools – 1.0%     
Cummins, Inc.      11,420      $ 1,181,856   
Regal Beloit Corp.      12,000        801,240   
          
     $ 1,983,096   
          
Major Banks – 4.6%     
Bank of America Corp.      176,480      $ 1,934,221   
Comerica, Inc.      24,860        859,410   
Goldman Sachs Group, Inc.      16,070        2,138,756   
JPMorgan Chase & Co. (s)      81,740        3,346,436   
SunTrust Banks, Inc.      39,440        1,017,552   
          
     $ 9,296,375   
          
Medical & Health Technology & Services – 1.3%   
AmerisourceBergen Corp.      18,510      $ 766,314   
Quest Diagnostics, Inc.      15,070        890,637   
VCA Antech, Inc. (a)      46,190        979,228   
          
     $ 2,636,179   
          
Medical Equipment – 3.7%     
Becton, Dickinson & Co.      13,390      $ 1,153,816   
Covidien PLC      32,950        1,753,929   
Medtronic, Inc.      47,950        1,847,514   
St. Jude Medical, Inc.      7,720        368,090   
Thermo Fisher Scientific, Inc. (a)      35,910        2,312,245   
          
     $ 7,435,594   
          
Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – continued   
Metals & Mining – 1.0%     
Teck Resources Ltd., “B”      39,029      $ 1,983,723   
          
Natural Gas – Distribution – 0.6%     
AGL Resources, Inc.      29,370      $ 1,195,653   
          
Natural Gas – Pipeline – 0.3%     
Kinder Morgan, Inc.      20,990      $ 603,043   
          
Network & Telecom – 1.0%     
Cisco Systems, Inc.      26,690      $ 416,631   
F5 Networks, Inc. (a)      10,680        1,177,470   
Finisar Corp. (a)      22,620        407,839   
          
     $ 2,001,940   
          
Oil Services – 3.0%     
Cameron International Corp. (a)      23,090      $ 1,161,196   
Halliburton Co.      36,850        1,879,350   
Schlumberger Ltd.      24,090        2,081,376   
Transocean, Inc.      12,630        815,393   
          
     $ 5,937,315   
          
Other Banks & Diversified Financials – 3.0%     
Citigroup, Inc.      62,605      $ 2,606,872   
Discover Financial Services      33,520        896,660   
Visa, Inc., “A”      30,400        2,561,504   
          
     $ 6,065,036   
          
Pharmaceuticals – 4.2%     
Abbott Laboratories      56,390      $ 2,967,242   
Hospira, Inc. (a)      12,630        715,616   
Johnson & Johnson      22,000        1,463,440   
Pfizer, Inc.      97,010        1,998,406   
Teva Pharmaceutical Industries Ltd., ADR      28,480        1,373,306   
          
     $ 8,518,010   
          
Pollution Control – 0.6%     
Republic Services, Inc.      39,210      $ 1,209,629   
          
Railroad & Shipping – 0.9%     
CSX Corp.      66,200      $ 1,735,764   
          
Restaurants – 1.7%     
McDonald’s Corp.      40,090      $ 3,380,389   
          
Specialty Chemicals – 1.3%     
Airgas, Inc.      36,150      $ 2,531,946   
          
Specialty Stores – 2.8%     
Abercrombie & Fitch Co., “A”      9,250      $ 619,010   
Amazon.com, Inc. (a)      2,430        496,911   
PetSmart, Inc.      30,680        1,391,952   
Ross Stores, Inc.      9,970        798,796   
Tiffany & Co.      18,980        1,490,310   
Urban Outfitters, Inc. (a)      30,820        867,583   
          
     $ 5,664,562   
          
Telecommunications – Wireless – 0.3%   
SBA Communications Corp. (a)      10,450      $ 399,086   
Sprint Nextel Corp. (a)      40,970        220,828   
          
     $ 619,914   
          
 

 

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MFS Research Series

 

Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – continued   
Telephone Services – 2.3%     
American Tower Corp., “A” (a)      18,430      $ 964,442   
AT&T, Inc.      79,270        2,489,871   
CenturyLink, Inc.      12,370        500,119   
Verizon Communications, Inc.      19,160        713,327   
    

 

 

  
     $ 4,667,759   
    

 

 

  
Tobacco – 3.2%     
Altria Group, Inc.      87,910      $ 2,321,703   
Philip Morris International, Inc.      39,690        2,650,101   
Reynolds American, Inc.      41,770        1,547,579   
    

 

 

  
     $ 6,519,383   
    

 

 

  
Trucking – 1.1%     
Expeditors International of Washington, Inc.      42,250      $ 2,162,778   
    

 

 

  
Utilities – Electric Power – 1.7%     
AES Corp. (a)      78,930      $ 1,005,568   
American Electric Power Co., Inc.      41,770        1,573,894   
CMS Energy Corp.      42,950        845,686   
    

 

 

  
     $ 3,425,148   
    

 

 

  
Total Common Stocks
(Identified Cost, $178,537,177)		      $ 198,899,102   
    

 

 

  
CONVERTIBLE PREFERRED STOCKS – 0.3%   
Utilities – Electric Power – 0.3%   
PPL Corp., 9.5%
(Identified Cost, $558,777)		      10,930      $ 610,987   
    

 

 

  
Issuer/Expiration Date/Strike Price    Number of
Contracts		        
CALL OPTIONS PURCHASED – 0.0%   
Specialty Stores – 0.0%     
Best Buy Co., Inc. – September 2011
@ $33		      339      $ 39,324   
    

 

 

  
Construction – 0.0%     
Lennar Corp., “A” – August 2011
@ $20		      190      $ 4,560   
    

 

 

  

Total Call Options Purchased

(Premiums Paid, $49,471)

      $ 43,884   
    

 

 

  
Issuer    Shares/Par     Value ($)  
    
MONEY MARKET FUNDS (v) – 0.7%   
MFS Institutional Money Market Portfolio, 0.1%, at Cost and Net Asset Value      1,288,227      $ 1,288,227   
    

 

 

  
COLLATERAL FOR SECURITIES LOANED – 0.3%   
Navigator Securities Lending Prime Portfolio, 0.23%, at Cost and Net Asset Value (j)      674,475      $ 674,475   
    

 

 

  
Total Investments
(Identified Cost, $181,108,127)		      $ 201,516,675   
    

 

 

  
Issuer/Expiration Date/Strike Price    Number of
Contracts		        
PUT OPTIONS WRITTEN – 0.0%   
Lennar Corp., “A” – August 2011 @ $16 (Premiums Received, $11,780)      (190 )    $ (4,180 ) 
    

 

 

  
OTHER ASSETS, LESS
LIABILITIES – (0.3)%		        (631,190 ) 
    

 

 

  
Net Assets – 100.0%      $ 200,881,305   
    

 

 

  

 

(a) Non-income producing security.

 

(j) The rate quoted is the annualized seven-day yield of the portfolio at period end.

 

(l) A portion of this security is on loan.

 

(s) Security or a portion of the security was pledged to cover collateral requirements for written options. At June 30, 2011, the value of securities pledged amounted to $498,575.

 

(v) Underlying affiliated fund that is available only to investment companies managed by MFS. The rate quoted is the annualized seven-day yield of the fund at period end.

The following abbreviations are used in this report and are defined:

 

ADR   American Depository Receipt

 

GDR   Global Depository Receipt

 

PLC   Public Limited Company

See Notes to Financial Statements

 

 

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MFS Research Series

 

FINANCIAL STATEMENTS  |  STATEMENT OF ASSETS AND LIABILITIES (unaudited)

 

This statement represents your fund’s balance sheet, which details the assets and liabilities comprising the total value of the fund.

 

At 6/30/11

      

Assets

                  

Investments –

      

Non-affiliated issuers, at value (identified cost, $179,819,900)

      $200,228,448      

Underlying affiliated funds, at cost and value

      1,288,227            

Total investments, at value, including $674,577 of securities on loan (identified cost, $181,108,127)

      $201,516,675            

Restricted cash

      2,866      

Receivables for

      

Investments sold

      1,063,523      

Fund shares sold

      144,034      

Interest and dividends

      208,956      

Other assets

      1,032            

Total assets

               $202,937,086   

Liabilities

                  

Payables for

      

Investments purchased

      $1,066,722      

Fund shares reacquired

      218,164      

Written options outstanding, at value (premiums received, $11,780)

      4,180      

Collateral for securities loaned, at value

      674,475      

Payable to affiliates

      

Investment adviser

      8,366      

Shareholder servicing costs

      300      

Distribution and/or service fees

      286      

Payable for independent Trustees’ compensation

      236      

Accrued expenses and other liabilities

      83,052            

Total liabilities

               $2,055,781   

Net assets

               $200,881,305   

Net assets consist of

                  

Paid-in capital

      $212,892,321      

Unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies

      20,416,277      

Accumulated net realized gain (loss) on investments and foreign currency transactions

      (34,747,777 )    

Undistributed net investment income

      2,320,484            

Net assets

               $200,881,305   

Shares of beneficial interest outstanding

               10,063,788   

 

     Net assets      Shares
outstanding		      Net asset value
per share		  

Initial Class

      $179,711,053         8,996,351         $19.98   

Service Class

      21,170,252         1,067,437         19.83   

See Notes to Financial Statements

 

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FINANCIAL STATEMENTS  |  STATEMENT OF OPERATIONS (unaudited)

 

This statement describes how much your fund earned in investment income and accrued in expenses. It also describes any gains and/or losses generated by fund operations.

 

Six months ended 6/30/11      
Net investment income                  

Income

      

Dividends

      $1,617,267      

Interest

      13,913      

Dividends from underlying affiliated funds

      855      

Foreign taxes withheld

      (12,453 )          

Total investment income

               $1,619,582   

Expenses

      

Management fee

      $754,194      

Distribution and/or service fees

      26,008      

Shareholder servicing costs

      11,794      

Administrative services fee

      19,589      

Independent Trustees’ compensation

      4,118      

Custodian fee

      15,520      

Shareholder communications

      30,249      

Auditing fees

      24,602      

Legal fees

      1,727      

Dividend and interest expense on securities sold short

      4,341      

Miscellaneous

      8,072            

Total expenses

               $900,214   

Fees paid indirectly

      (6 )    

Reduction of expenses by investment adviser

      (576 )          

Net expenses

               $899,632   

Net investment income

               $719,950   

Realized and unrealized gain (loss) on investments and foreign currency transactions

                  

Realized gain (loss) (identified cost basis)

      

Investment transactions

      $11,061,987      

Written option transactions

      10,304      

Securities sold short

      (74,563 )    

Foreign currency transactions

      (5,861 )          

Net realized gain (loss) on investments and foreign currency transactions

               $10,991,867   

Change in unrealized appreciation (depreciation)

      

Investments

      $(1,931,095 )    

Written options

      7,600      

Securities sold short

      57,701      

Translation of assets and liabilities in foreign currencies

      69            

Net unrealized gain (loss) on investments and foreign currency translation

               $(1,865,725 ) 

Net realized and unrealized gain (loss) on investments and foreign currency

               $9,126,142   

Change in net assets from operations

               $9,846,092   

See Notes to Financial Statements

 

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FINANCIAL STATEMENTS  |  STATEMENTS OF CHANGES IN NET ASSETS

 

These statements describe the increases and/or decreases in net assets resulting from operations, any distributions, and any shareholder transactions.

 

    
 
 		 Six months ended
6/30/11
(unaudited		   
  
) 		     
 		 Year ended
12/31/10		   
  

Change in net assets

      

From operations

                  

Net investment income

      $719,950         $1,602,546   

Net realized gain (loss) on investments and foreign currency transactions

      10,991,867         14,848,081   

Net unrealized gain (loss) on investments and foreign currency translation

      (1,865,725 )       11,656,177   

Change in net assets from operations

      $9,846,092         $28,106,804   

Distributions declared to shareholders

                  

From net investment income

      $—         $(1,762,583 ) 

Change in net assets from fund share transactions

      $(11,684,435 )       $(21,049,435 ) 

Total change in net assets

      $(1,838,343 )       $5,294,786   

Net assets

                  

At beginning of period

      202,719,648         197,424,862   

At end of period (including undistributed net investment income of $2,320,484 and
$1,600,534, respectively)

      $200,881,305         $202,719,648   

See Notes to Financial Statements

 

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FINANCIAL STATEMENTS  |  FINANCIAL HIGHLIGHTS

 

The financial highlights table is intended to help you understand the fund’s financial performance for the semiannual period and the past 5 fiscal years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period.

 

Initial Class     

Six months
ended
6/30/11

      Years ended 12/31  
          2010        2009        2008        2007        2006  
       (unaudited)                                             

Net asset value, beginning of period

        $19.04         $16.57           $12.90           $20.28           $18.04           $16.41   
Income (loss) from investment operations                                                                

Net investment income (d)

        $0.07         $0.15           $0.15           $0.18           $0.09           $0.12   

Net realized and unrealized gain (loss) on investments and foreign currency

        0.87         2.47           3.72           (7.47 )         2.28           1.59   

Total from investment operations

        $0.94         $2.62           $3.87           $(7.29 )         $2.37           $1.71   
Less distributions declared to shareholders                                                                

From net investment income

        $—         $(0.15 )         $(0.20 )         $(0.09 )         $(0.13 )         $(0.08 ) 

Net asset value, end of period

        $19.98         $19.04           $16.57           $12.90           $20.28           $18.04   

Total return (%) (k)(r)(s)

        4.94 (n)       15.90           30.54           (36.09 )         13.20           10.48   
Ratios (%) (to average net assets)
and Supplemental data:		                                                                

Expenses before expense reductions (f)

        0.87 (a)       0.89           0.90           0.88           0.88           0.90   

Expenses after expense reductions (f)

        0.87 (a)       0.89           0.90           0.88           0.88           0.89   

Net investment income

        0.74 (a)       0.86           1.05           1.04           0.46           0.71   

Portfolio turnover

        33         71           107           123           87           90   

Net assets at end of period (000 omitted)

        $179,711         $182,895           $180,229           $149,517           $281,339           $267,602   
Supplemental Ratios (%):                                                                

Ratio of expenses to average net assets after expense reductions excluding short sale dividend and interest expense (f)

        0.86 (a)       0.89           0.90           N/A           N/A           N/A   

See Notes to Financial Statements

 

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Financial Highlights – continued

 

Service Class      Six months
ended
6/30/11		      Years ended 12/31  
          2010        2009        2008        2007        2006  
       (unaudited)                                             

Net asset value, beginning of period

        $18.93         $16.48           $12.82           $20.16           $17.94           $16.33   
Income (loss) from investment operations                                                                

Net investment income (d)

        $0.05         $0.10           $0.11           $0.13           $0.05           $0.09   

Net realized and unrealized gain (loss) on
investments and foreign currency

        0.85         2.47           3.71           (7.42 )         2.26           1.57   

Total from investment operations

        $0.90         $2.57           $3.82           $(7.29 )         $2.31           $1.66   
Less distributions declared to shareholders                                                                

From net investment income

        $—         $(0.12 )         $(0.16 )         $(0.05 )         $(0.09 )         $(0.05 ) 

Net asset value, end of period

        $19.83         $18.93           $16.48           $12.82           $20.16           $17.94   

Total return (%) (k)(r)(s)

        4.75 (n)       15.64           30.20           (36.25 )         12.93           10.20   
Ratios (%) (to average net assets)
and Supplemental data:		                                                                

Expenses before expense reductions (f)

        1.12 (a)       1.14           1.15           1.14           1.13           1.14   

Expenses after expense reductions (f)

        1.12 (a)       1.14           1.15           1.13           1.13           1.14   

Net investment income

        0.50 (a)       0.61           0.80           0.78           0.23           0.51   

Portfolio turnover

        33         71           107           123           87           90   

Net assets at end of period (000 omitted)

        $21,170         $19,825           $17,196           $12,951           $21,116           $16,674   
Supplemental Ratios (%):                                                                

Ratio of expenses to average net assets after
expense reductions excluding short sale
dividend and interest expense (f)

        1.11 (a)       1.14           1.15           N/A           N/A           N/A   

 

(a) Annualized.

 

(d) Per share data is based on average shares outstanding.

 

(f) Ratios do not reflect reductions from fees paid indirectly, if applicable.

 

(k) The total return does not reflect expenses that apply to separate accounts. Inclusion of these charges would reduce the total return figures for all periods shown.

 

(n) Not annualized.

 

(r) Certain expenses have been reduced without which performance would have been lower.

 

(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. Excluding the effect of the proceeds received from a non-recurring litigation settlement against Enron Corp., the Initial Class and Service Class total returns for the year ended December 31, 2008 would have each been lower by approximately 0.82%. Excluding the effect of the proceeds received from a non-recurring litigation settlement against Tyco International Ltd., the Initial Class and Service Class total returns for the year ended December 31, 2010 would have each been lower by approximately 0.60%.

See Notes to Financial Statements

 

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NOTES TO FINANCIAL STATEMENTS (unaudited)

 

(1)   Business and Organization

MFS Research Series (the fund) is a 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, and qualified retirement and pension plans.

 

(2)   Significant Accounting Policies

General – The preparation of financial statements in conformity with U.S. 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. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the fund’s Statement of Assets and Liabilities through the date that the financial statements were issued.

Investment Valuations – Equity securities, including restricted equity securities, are generally valued at the last sale or official closing price as provided by a third-party pricing service on the market or exchange on which they are primarily traded. Equity securities, for which there were no sales reported that day, are generally valued at the last quoted daily bid quotation as provided by a third-party pricing service on the market or exchange on which such securities are primarily traded. Equity securities held short, for which there were no sales reported for that day, are generally valued at the last quoted daily ask quotation as provided by a third-party pricing service on the market or exchange on which such securities are primarily traded. Short-term instruments with a maturity at issuance of 60 days or less generally are valued at amortized cost, which approximates market value. Exchange-traded options are generally valued at the last sale or official closing price as provided by a third-party pricing service on the exchange on which such options are primarily traded. Exchange-traded options for which there were no sales reported that day are generally valued at the last daily bid quotation as provided by a third-party pricing service on the exchange on which such options are primarily traded. Options not traded on an exchange are generally valued at a broker/dealer bid quotation. Foreign currency options are generally valued at valuations provided by a third-party pricing service. Open-end investment companies are generally valued at net asset value per share. Securities and other assets generally valued on the basis of information from a third-party pricing service may also be valued at a broker/dealer bid quotation. Values obtained from third-party pricing services can utilize both transaction data and market information such as yield, quality, coupon rate, maturity, type of issue, trading characteristics, and other market data. The values of foreign securities and other assets and liabilities expressed in foreign currencies are converted to U.S. dollars using the mean of bid and asked prices for rates provided by a third-party pricing service.

The Board of Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments (including any fair valuation) to the adviser pursuant to valuation policies and procedures approved by the Board. If the adviser determines that reliable market quotations are not readily available, investments are valued at fair value as determined in good faith by the adviser in accordance with such procedures under the oversight of the Board of Trustees. Under the fund’s valuation policies and procedures, market quotations are not considered to be readily available for most types of debt instruments and floating rate loans and many types of derivatives. These investments are generally valued at fair value based on information from third-party pricing services. In addition, investments may be valued at fair value if the adviser determines that an investment’s value has been materially affected by events occurring after the close of the exchange or market on which the investment is principally traded (such as foreign exchange or market) and prior to the determination of the fund’s net asset value, or after the halting of trading of a specific security where trading does not resume prior to the close of the exchange or market on which the security is principally traded. Events that occur on a frequent basis after foreign markets close (such as developments in foreign markets and significant movements in the U.S. markets) and prior to the determination of the fund’s net asset value may be deemed to have a material effect on the value of securities traded in foreign markets. Accordingly, the fund’s foreign equity securities may often be valued at fair value. The adviser generally relies on third-party pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and financial condition of the issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment for purposes of calculating the fund’s net asset value can differ depending on the source and method used to determine value. When fair valuation is used, the value of an investment used to determine the fund’s net asset value may differ from quoted or published prices for the same investment. There can be no assurance that the fund could obtain the fair value assigned to an investment if it were to sell the investment at the same time at which the fund determines its net asset value per share.

 

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Notes to Financial Statements (unaudited) – continued

 

Various inputs are used in determining the value of the fund’s assets or liabilities. These inputs are categorized into three broad levels. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fund’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. Level 1 includes unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes other significant observable market-based inputs (including quoted prices for similar securities, interest rates, prepayment speed, and credit risk). Level 3 includes unobservable inputs, which may include the adviser’s own assumptions in determining the fair value of investments. Other financial instruments are derivative instruments not reflected in total investments, such as written options. The following is a summary of the levels used as of June 30, 2011 in valuing the fund’s assets or liabilities:

 

Investments at Value    Level 1      Level 2      Level 3      Total  
Equity Securities      $199,553,973         $—         $—         $199,553,973   
Mutual Funds      1,962,702         —         —         1,962,702   
Total Investments      $201,516,675         $—         $—         $201,516,675   
Written Options      $(4,180 )       $—         $—         $(4,180 ) 

For further information regarding security characteristics, see the Portfolio of Investments.

Foreign Currency Translation – 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 or on the reporting date for foreign denominated receivables and payables. 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 receivables, payables, 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.

Derivatives – The fund uses derivatives for different purposes, including to earn income and enhance returns, to increase or decrease exposure to a particular market, to manage or adjust the risk profile of the fund, or as alternatives to direct investments. Derivatives are used for hedging or non-hedging purposes. While hedging can reduce or eliminate losses, it can also reduce or eliminate gains. When the fund uses derivatives as an investment to increase market exposure, or for hedging purposes, gains and losses from derivative instruments may be substantially greater than the derivative’s original cost.

The derivative instruments used by the fund were written options and purchased options. The fund’s period end derivatives, as presented in the Portfolio of Investments, generally are indicative of the volume of its derivative activity during the period.

The following table presents, by major type of derivative contract, the fair value, on a gross basis, of the asset and liability components of derivatives held by the fund at June 30, 2011 as reported in the Statement of Assets and Liabilities:

 

          Fair Value (a)  
Risk    Derivative Contracts    Asset Derivatives      Liability Derivatives  
Equity    Purchased Equity Options      $43,884         $—   
Equity    Written Equity Options      —         (4,180 ) 
Total         $43,884         $(4,180 ) 

 

(a) The value of purchased options outstanding is included in total investments, at value, within the fund’s Statement of Assets and Liabilities.

The following table presents, by major type of derivative contract, the realized gain (loss) on derivatives held by the fund for the six months ended June 30, 2011 as reported in the Statement of Operations:

 

Risk    Investment
Transactions
(Purchased Options)		      Written Options  
Equity      $(11,408 )       $10,304   

The following table presents, by major type of derivative contract, the change in unrealized appreciation (depreciation) on derivatives held by the fund for the six months ended June 30, 2011 as reported in the Statement of Operations:

 

Risk    Investments
(Purchased Options)		      Written Options  
Equity      $(5,587 )       $7,600   

 

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Notes to Financial Statements (unaudited) – continued

 

Derivative counterparty credit risk is managed through formal evaluation of the creditworthiness of all potential counterparties. On certain over-the-counter derivatives, the fund attempts to reduce its exposure to counterparty credit risk whenever possible by entering into an International Swaps and Derivatives Association (ISDA) Master Agreement on a bilateral basis with each of the counterparties with whom it undertakes a significant volume of transactions. The ISDA Master Agreement gives each party to the agreement the right to terminate all transactions traded under such agreement if there is a certain deterioration in the credit quality of the other party. The ISDA Master Agreement gives the fund the right, upon an event of default by the applicable counterparty or a termination of the agreement, to close out all transactions traded under such agreement and to net amounts owed under each transaction to one net amount payable by one party to the other. This right to close out and net payments across all transactions traded under the ISDA Master Agreement could result in a reduction of the fund’s credit risk to such counterparty equal to any amounts payable by the fund under the applicable transactions, if any. However, absent an event of default by the counterparty or a termination of the agreement, the ISDA Master Agreement does not result in an offset of reported amounts of assets and liabilities in the Statement of Assets and Liabilities across transactions between the fund and the applicable counterparty.

Collateral requirements differ by type of derivative. Collateral or margin requirements are set by the broker or exchange clearing house for exchange traded derivatives (i.e., futures and exchange-traded options) while collateral terms are contract specific for over-the-counter traded derivatives (i.e., forward foreign currency exchange contracts, swaps and over-the-counter options). For derivatives traded under an ISDA Master Agreement, the collateral requirements are netted across all transactions traded under such agreement and one amount is posted from one party to the other to collateralize such obligations. Cash collateral that has been pledged to cover obligations of the fund under derivative contracts, if any, will be reported separately on the Statement of Assets and Liabilities as restricted cash. Securities collateral pledged for the same purpose, if any, is noted in the Portfolio of Investments.

Written Options – In exchange for a premium, the fund wrote put options and used the premium to purchase call options on securities that it anticipated the price would increase. At the time the option was written, the fund believed the premium received exceeded the potential loss that could result from adverse price changes in the options’ underlying securities. In a written option, the fund as the option writer grants the buyer the right to purchase from, or sell to, the fund a specified number of shares or units of a particular security, currency or index at a specified price within a specified period of time.

The premium received is initially recorded as a liability on the Statement of Assets and Liabilities. The option is subsequently marked-to-market daily with the difference between the premium received and the market value of the written option being recorded as unrealized appreciation or depreciation. When a written option expires, the fund realizes a gain equal to the amount of the premium received. The difference between the premium received and the amount paid on effecting a closing transaction is considered a realized gain or loss. When a written put option is exercised, the premium reduces the cost basis of the security purchased by the fund.

At the initiation of the written option contract, for exchange traded options, the fund is required to deposit securities or cash as collateral with the custodian for the benefit of the broker. For over-the-counter options, the fund may post collateral subject to the terms of an ISDA Master Agreement as generally described above if the market value of the options contract moves against it. The fund, as writer of an option, may have no control over whether the underlying securities may be sold (call) or purchased (put) and, as a result, bears the market risk of an unfavorable change in the price of the securities underlying the written option. Losses from writing options can exceed the premium received and can exceed the potential loss from an ordinary buy and sell transaction. Although the fund’s market risk may be significant, the maximum counterparty credit risk to the fund is equal to the market value of any collateral posted to the broker. For over-the-counter options, this risk is mitigated in cases where there is an ISDA Master Agreement between the fund and the counterparty providing for netting as described above.

Written Option Transactions

 

     Number of
contracts		      Premiums
received		  
Outstanding, beginning of period      —         $—   
Options written      969         24,583   
Options closed      —         —   
Options exercised      (43 )       (2,499 ) 
Options expired      (736}         (10,304 ) 
Outstanding, end of period      190         $11,780   

Purchased Options – The fund purchased call options for a premium. Purchased call options entitle the holder to buy a specified number of shares or units of a particular security, currency or index at a specified price at a specified date or within a

 

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Notes to Financial Statements (unaudited) – continued

 

specified period of time. Purchasing call options may be used to hedge against an anticipated increase in the dollar cost of securities or currency to be acquired or to increase the fund’s exposure to an underlying instrument.

The premium paid is initially recorded as an investment in the Statement of Assets and Liabilities. That investment is subsequently marked-to-market daily with the difference between the premium paid and the market value of the purchased option being recorded as unrealized appreciation or depreciation. Premiums paid for purchased call options which have expired are treated as realized losses on investments in the Statement of Operations. Upon the exercise or closing of a purchased call option, the premium paid is added to the cost of the security or financial instrument.

The risk in purchasing an option is that the fund pays a premium whether or not the option is exercised. The fund’s maximum risk of loss due to counterparty credit risk is limited to the market value of the option. For over-the-counter options, this risk is mitigated in cases where there is an ISDA Master Agreement between the fund and the counterparty providing for netting as described above and for posting of collateral by the counterparty to the fund to cover the fund’s exposure to the counterparty under such ISDA Master Agreement.

Short Sales – The fund entered into short sales whereby it sells a security it does not own in anticipation of a decline in the value of that security. The fund will realize a gain if the security price decreases and a loss if the security price increases between the date of the short sale and the date on which the fund replaces the borrowed security. Losses from short sales can exceed the proceeds of the security sold; and they can also exceed the potential loss from an ordinary buy and sell transaction. The amount of any premium, dividends, or interest the fund may be required to pay in connection with a short sale will be recognized as a fund expense. During the six months ended June 30, 2011, this expense amounted to $4,341. The fund segregates cash or marketable securities in an amount that, when combined with the amount of proceeds from the short sale deposited with the broker, at least equals the current market value of the security sold short. At June 30, 2011, the fund had no short sales outstanding.

Security Loans – State Street Bank and Trust Company (“State Street”), as lending agent, loans the securities of the fund to certain qualified institutions (the “Borrowers”) approved by the fund. The loans are collateralized by cash and/or U.S. Treasury and federal agency obligations in an amount typically at least equal to the market value of the securities loaned. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. State Street provides the fund with indemnification against Borrower default. The fund bears the risk of loss with respect to the investment of cash collateral. On loans collateralized by cash, the cash collateral is invested in a money market fund or 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 fund and the lending agent. On loans collateralized by U.S. Treasury and/or federal agency obligations, a fee is received from the Borrower, and is allocated between the fund 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.

Indemnifications – Under the fund’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the fund. Additionally, in the normal course of business, the fund enters into agreements with service providers that may contain indemnification clauses. The fund’s maximum exposure under these agreements is unknown as this would involve future claims that may be made against the fund that have not yet occurred.

Investment Transactions and Income – Investment transactions are recorded on the trade date. Interest income is recorded on the accrual basis. Dividends received in cash are recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded when the fund is informed of the dividend if such information is obtained subsequent to 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.

The fund may receive proceeds from litigation settlements. Any proceeds received from litigation involving portfolio holdings are reflected in the Statement of Operations in realized gain/loss if the security has been disposed of by the fund or in unrealized gain/loss if the security is still held by the fund. Any other proceeds from litigation not related to portfolio holdings are reflected as other income in the Statement of Operations.

Fees Paid Indirectly – The fund’s custody fee may be reduced according to an arrangement that measures the value of cash deposited with the custodian by the fund. This amount, for the six months ended June 30, 2011, is shown as a reduction of total expenses on the Statement of Operations.

 

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Notes to Financial Statements (unaudited) – continued

 

Tax Matters and Distributions – The fund intends to qualify as a regulated investment company, as defined under Subchapter M of the Internal Revenue Code, and to distribute all of its taxable income, including realized capital gains. As a result, no provision for federal income tax is required. The fund’s federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue Service. Foreign taxes, if any, have been accrued by the fund in the accompanying financial statements.

Distributions to shareholders are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income, expense, gain or loss in different periods for financial statement and tax purposes will reverse at some time in the future. Distributions in excess of net investment income or net realized gains are temporary overdistributions for financial statement purposes resulting from differences in the recognition or classification of income or distributions for financial statement and tax purposes.

Book/tax differences primarily relate to expiration of capital loss carryforwards and wash sale loss deferrals.

The tax character of distributions declared to shareholders for the last fiscal year is as follows:

 

     12/31/10  
Ordinary income (including any short-term capital gains)      $1,762,583   

The federal tax cost and the tax basis components of distributable earnings were as follows:

 

As of 6/30/11   
Cost of investments      $181,222,820   
Gross appreciation      26,342,739   
Gross depreciation      (6,048,884 ) 
Net unrealized appreciation (depreciation)      $20,293,855   
As of 12/31/10   
Undistributed ordinary income      1,600,534   
Capital loss carryforwards      (45,624,952 ) 
Other temporary differences      (57,641 ) 
Net unrealized appreciation (depreciation)      22,224,951   

The aggregate cost above includes prior fiscal year end tax adjustments, if applicable.

As of December 31, 2010, the fund had capital loss carryforwards available to offset future realized gains. Such losses expire as follows:

 

12/31/16      $ (20,169,637 ) 
12/31/17      (25,455,315 ) 
Total      $(45,624,952 ) 

Multiple Classes of Shares of Beneficial Interest – The fund offers multiple classes of shares, which differ in their respective distribution and/or service fees. The fund’s income, realized and unrealized gain (loss), and common expenses are allocated to shareholders based on the daily net assets of each class. Dividends are declared separately for each class. Differences in per share dividend rates are generally due to differences in separate class expenses. The fund’s distributions declared to shareholders as reported on the Statements of Changes in Net Assets are presented by class as follows:

 

 

     From net investment
income		  
     Six months ended
6/30/11		      Year ended
12/31/10		  
Initial Class      $—         $1,635,301   
Service Class      —         127,282   
Total      $—         $1,762,583   

 

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Notes to Financial Statements (unaudited) – continued

 

 

(3)   Transactions with Affiliates

Investment Adviser – The fund has an investment advisory agreement with MFS to provide overall investment management and related administrative services and facilities to the fund. The management fee is computed daily and paid monthly at the following annual rates:

 

First $1 billion of average daily net assets      0.75%   
Average daily net assets in excess of $1 billion      0.65%   

The management fee incurred for the six months ended June 30, 2011 was equivalent to an annual effective rate of 0.75% of the fund’s average daily net assets.

Distributor – MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, is the distributor of shares of the fund. The Trustees have adopted a distribution plan for the Service Class shares pursuant to Rule 12b-1 under the Investment Company Act of 1940.

The fund’s distribution plan provides that the fund will pay MFD distribution and/or service fees equal to 0.25% per annum of its average daily net assets attributable to Service Class shares as partial consideration for services performed and expenses incurred by MFD and financial intermediaries (including participating insurance companies that invest in the fund to fund variable annuity and variable life insurance contracts, sponsors of qualified retirement and pension plans that invest in the fund, and affiliates of these participating insurance companies and plan sponsors) in connection with the sale and distribution of the Service Class shares. MFD may subsequently pay all, or a portion, of the distribution and/or service fees to financial intermediaries.

Shareholder Servicing Agent – MFS Service Center, Inc. (MFSC), a wholly-owned subsidiary of MFS, receives a fee from the fund for its services as shareholder servicing agent. For the six months ended June 30, 2011, the fee was $11,221, which equated to 0.0112% annually of the fund’s average daily net assets. MFSC also receives payment from the fund for out-of-pocket expenses paid by MFSC on behalf of the fund. For the six months ended June 30, 2011, these costs amounted to $573.

Administrator – MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the fund partially reimburses MFS the costs incurred to provide these services. The fund is charged an annual fixed amount of $17,500 plus a fee based on average daily net assets. The administrative services fee incurred for the six months ended June 30, 2011 was equivalent to an annual effective rate of 0.0195% of the fund’s average daily net assets.

Trustees’ and Officers’ Compensation – The fund pays compensation to independent Trustees in the form of a retainer, attendance fees, and additional compensation to Board and Committee chairpersons. The fund does not pay compensation directly to Trustees or officers of the fund who are also officers of the investment adviser, all of whom receive remuneration for their services to the fund from MFS. Certain officers and Trustees of the fund are officers or directors of MFS, MFD, and MFSC.

Other – This fund and certain other funds managed by MFS (the funds) have entered into services agreements (the Agreements) which provide for payment of fees by the funds to Tarantino LLC and Griffin Compliance LLC in return for the provision of services of an Independent Chief Compliance Officer (ICCO) and Assistant ICCO, respectively, for the funds. The ICCO and Assistant ICCO are officers of the funds and the sole members of Tarantino LLC and Griffin Compliance LLC, respectively. The funds can terminate the Agreements with Tarantino LLC and Griffin Compliance LLC at any time under the terms of the Agreements. For the six months ended June 30, 2011, the aggregate fees paid by the fund to Tarantino LLC and Griffin Compliance LLC were $711 and are included in miscellaneous expense on the Statement of Operations. MFS has agreed to reimburse the fund for a portion of the payments made by the fund in the amount of $576, which is shown as a reduction of total expenses in the Statement of Operations. Additionally, MFS has agreed to bear all expenses associated with office space, other administrative support, and supplies provided to the ICCO and Assistant ICCO.

The fund invests in the MFS Institutional Money Market Portfolio which is managed by MFS and seeks a high level of current income consistent with preservation of capital and liquidity. Income earned on this investment is included in dividends from underlying affiliated funds on the Statement of Operations. This money market fund does not pay a management fee to MFS.

 

(4)   Portfolio Securities

Purchases and sales of investments, other than U.S. Government securities, purchased option transactions, short sales, and short-term obligations, aggregated $66,164,921 and $76,861,360, respectively.

 

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Notes to Financial Statements (unaudited) – continued

 

 

(5)   Shares of Beneficial Interest

The fund’s Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest. Transactions in fund shares were as follows:

 

     Six months ended 6/30/11      Year ended 12/31/10  
     Shares      Amount      Shares      Amount  
Shares sold            

Initial Class

      533,095         $10,404,395         973,297         $16,519,125   

Service Class

      92,520         1,812,264         169,991         2,837,140   
     625,615         $12,216,659         1,143,288         $19,356,265   
Shares issued to shareholders in reinvestment of distributions            

Initial Class

      —         $—         91,154         $1,635,301   

Service Class

      —         —         7,123         127,282   
     —         $—         98,277         $1,762,583   
Shares reacquired            

Initial Class

      (1,143,284 )       $(22,480,616 )       (2,337,513 )       $(39,290,944 ) 

Service Class

      (72,604 )       (1,420,478 )       (173,170 )       (2,877,339 ) 
     (1,215,888 )       $(23,901,094 )       (2,510,683 )       $(42,168,283 ) 
Net change            

Initial Class

      (610,189 )       $(12,076,221 )       (1,273,062 )       $(21,136,518 ) 

Service Class

      19,916         391,786         3,944         87,083   
     (590,273 )       $(11,684,435 )       (1,269,118 )       $(21,049,435 ) 

 

(6)   Line of Credit

The fund and certain other funds managed by MFS participate in a $1.1 billion unsecured committed line of credit, subject to a $1 billion sublimit, provided by a syndication of banks under a credit agreement. Borrowings may be made for temporary financing needs. Interest is charged to each fund, based on its borrowings, generally at a rate equal to the higher of the Federal Reserve funds rate or one month LIBOR plus an agreed upon spread. A commitment fee, based on the average daily, unused portion of the committed line of credit, is allocated among the participating funds at the end of each calendar quarter. In addition, the fund and other funds managed by MFS have established unsecured uncommitted borrowing arrangements with certain banks for temporary financing needs. Interest is charged to each fund, based on its borrowings, at a rate equal to the Federal Reserve funds rate plus an agreed upon spread. For the six months ended June 30, 2011, the fund’s commitment fee and interest expense were $958 and $0, respectively, and are included in miscellaneous expense on the Statement of Operations.

 

(7)   Transactions in Underlying Affiliated Funds – Affiliated Issuers

An affiliated issuer may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. For the purposes of this report, the fund assumes the following to be affiliated issuers:

 

Underlying Affiliated Funds    Beginning
Shares/Par
Amount		    Acquisitions
Shares/Par
Amount		      Dispositions
Shares/Par
Amount		      Ending
Shares/Par
Amount		  
MFS Institutional Money Market Portfolio    1,282,271      22,441,168         (22,435,212 )       1,288,227   
Underlying Affiliated Funds    Realized
Gain (Loss)		    Capital Gain
Distributions		      Dividend
Income		      Ending
Value		  
MFS Institutional Money Market Portfolio    $—      $—         $855         $1,288,227   

 

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BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT

 

A discussion regarding the Board’s most recent review and renewal of the fund’s Investment Advisory Agreement with MFS will be available on or about November 1, 2011 by clicking on the fund’s name under “Variable Insurance Portfolios — VIT” in the “Products and Performance” section of the MFS Web site (mfs.com).

PROXY VOTING POLICIES AND INFORMATION

A general description of the MFS funds’ proxy voting policies and procedures is available without charge, upon request, by calling
1-800-225-2606, by visiting the Proxy Voting section of mfs.com or by visiting the SEC’s Web site at http://www.sec.gov.

Information regarding how the fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available without charge by visiting the Proxy Voting section of mfs.com or by visiting the SEC’s Web site at http://www.sec.gov.

QUARTERLY PORTFOLIO DISCLOSURE

The fund will file a complete schedule of portfolio holdings with the Securities and Exchange Commission (the Commission) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q may be reviewed and copied at the:

Public Reference Room

Securities and Exchange Commission

100 F Street, NE, Room 1580

Washington, D.C. 20549

Information on the operation of the Public Reference Room may be obtained by calling the Commission at 1-800-SEC-0330. The fund’s Form N-Q is available on the EDGAR database on the Commission’s Internet Web site 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: publicinfo@sec.gov or by writing the Public Reference Section at the above address.

FURTHER INFORMATION

From time to time, MFS may post important information about the fund or the MFS funds on the MFS web site (mfs.com). This information is available by visiting the “News & Commentary” section of mfs.com or by clicking on the fund’s name under “Variable Insurance Portfolios — VIT” in the “Products and Performance” section of mfs.com.

 

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FACTS   WHAT DOES MFS DO WITH YOUR
PERSONAL INFORMATION?		   LOGO

 

Why?   Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?  

The types of personal information we collect and share depend on the product or service you have with us. This information can include:

 

• Social Security number and account balances

• Account transactions and transaction history

• Checking account information and wire transfer instructions

 

When you are no longer our customer, we continue to share your information as described in this notice.

 

How?   All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons MFS chooses to share; and whether you can limit this sharing.

 

Reasons we can share your personal information   Does MFS share?   Can you limit this
sharing?

For our everyday business purposes –

such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus

   Yes   No

For our marketing purposes –

to offer our products and services to you

   No   We don’t share
For joint marketing with other financial companies   No   We don’t share

For our affiliates’ everyday business purposes –

information about your transactions and experiences

   No   We don’t share

For our affiliates’ everyday business purposes –

information about your creditworthiness

   No   We don’t share
For nonaffiliates to market to you   No   We don’t share

 

Questions?   Call 800-225-2606 or go to mfs.com.

 

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Who we are
Who is providing this notice?   MFS Funds, MFS Investment Management, MFS Institutional Advisors, Inc., MFS Fund Distributors, Inc., MFS Heritage Trust Company, and MFS Service Center, Inc.

 

What we do
How does MFS protect my personal information?   To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include procedural, electronic, and physical safeguards for the protection of the personal information we collect about you.
How does MFS
collect my personal information?		  

We collect your personal information, for example, when you

 

• open an account or provide account information

• direct us to buy securities or direct us to sell your securities

• make a wire transfer

 

We also collect your personal information from others, such as credit bureaus, affiliates and other companies.

Why can’t I limit all sharing?  

Federal law gives you the right to limit only

 

• sharing for affiliates’ everyday business purposes – information about your creditworthiness

• affiliates from using your information to market to you

• sharing for nonaffiliates to market to you

 

State laws and individual companies may give you additional rights to limit sharing.

 

Definitions
Affiliates  

Companies related by common ownership or control. They can be financial and nonfinancial companies.

 

• MFS does not share personal information with affiliates, except for everyday business purposes as described on page one of this notice.

Nonaffiliates  

Companies not related by common ownership or control. They can be financial and nonfinancial companies.

 

• MFS does not share with nonaffiliates so they can market to you.

Joint Marketing  

A formal agreement between nonaffiliated financial companies that together market financial products or services to you.

 

• MFS doesn’t jointly market.

 

 

Other important information
If you own an MFS product or receive an MFS service in the name of a third party such as a bank or broker-dealer, their privacy policy may apply to you instead of ours.

 

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LOGO

Table of Contents

LOGO

 

MFS® Research International Series

MFS® Variable Insurance Trust

 

LOGO

 

 

SEMIANNUAL REPORT

June 30, 2011

 

VRI-SEM

Table of Contents

MFS® RESEARCH INTERNATIONAL SERIES

 

CONTENTS   
Letter from the CEO      1   
Portfolio composition      2   
Expense table      3   
Portfolio of investments      4   
Statement of assets and liabilities      7   
Statement of operations      8   
Statements of changes in net assets      9   
Financial highlights      10   
Notes to financial statements      12   
Board review of investment advisory agreement      17   
Proxy voting policies and information      17   
Quarterly portfolio disclosure      17   
Further information      17   
MFS® privacy notice      18   

 

The report is prepared for the general information of contract owners.

It is authorized for distribution to prospective investors only when preceded or accompanied by a current prospectus.

 

NOT FDIC INSURED Ÿ MAY LOSE VALUE Ÿ NO BANK OR CREDIT UNION GUARANTEE Ÿ NOT A DEPOSIT Ÿ NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY OR NCUA/NCUSIF

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MFS Research International Series

 

LETTER FROM THE CEO

 

LOGO

 

Dear Contract Owners:

After about a year of almost uninterrupted macroeconomic and financial market improvement following the global credit crisis, investors grew more cautious in the middle of 2010 as fears grew that some European countries would default on their debt and as economic data showed a weakening

trend in the global economy. As a result asset prices fell significantly.

Last September the U.S. Federal Reserve Board’s promises to make lending conditions easier helped assuage market fears and drive asset prices off their recent lows. A combination of solid earnings and improving economic data gave an additional boost to investor sentiment.

In the following months, the renewed positive market mood, coupled with indications of better global macroeconomic activity, pushed many asset valuations to post-crisis highs. At the same time, global sovereign

bond yields initially rose as investors became concerned about inflationary pressures, driven by higher prices for oil as well as other commodities. However, by the end of the second quarter of 2011, a weakening macroeconomic backdrop and renewed concerns over debt problems in some eurozone countries pushed equities lower.

For the remainder of 2011, we are cautiously optimistic that economic growth will continue to improve and that the global economies will recover from the shocks of the past few years. We expect the pace of recovery worldwide to be uneven and volatile and acknowledge the elevated uncertainty created by events in Japan, Europe, the Middle East, as well as that created by the U.S. debate over raising the debt ceiling and the downgrade by Standard & Poor’s of the U.S. long-term credit rating.

As always, we continue to be mindful of the many economic challenges faced at the local, national, and international levels. It is in times such as these that we want to remind investors of the merits of maintaining a long-term view, adhering to basic investing principles such as asset allocation and diversification, and working closely with their advisors to research and identify appropriate investment opportunities.

Respectfully,

LOGO

Robert J. Manning

Chairman and Chief Executive Officer

MFS Investment Management®

August 16, 2011

 

The opinions expressed in this letter are subject to change, may not be relied upon for investment advice, and no forecasts can be guaranteed.

 

 

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PORTFOLIO COMPOSITION

 

Portfolio structure

LOGO

 

Top ten holdings  
Nestle S.A.     2.8%   
Royal Dutch Shell PLC, “A”     2.5%   
Rio Tinto Ltd.     2.2%   
Roche Holding AG     2.2%   
BNP Paribas     2.1%   
Siemens AG     2.1%   
HSBC Holdings PLC     1.9%   
Linde AG     1.7%   
Groupe Danone     1.7%   
Vodafone Group PLC     1.7%   

 

Currency exposure weightings (y)  
Euro     31.1%   
Japan     19.4%   
United Kingdom     17.2%   
Switzerland     9.7%   
Hong Kong     5.0%   
Australia     3.1%   
United States     2.5%   
India     2.4%   
Sweden     1.9%   
Other Countries     7.7%   
Global equity sectors  
Capital Goods     25.7%   
Financial Services     23.7%   
Energy     12.6%   
Health Care     8.7%   
Consumer Staples     8.1%   
Consumer Cyclicals     7.7%   
Technology     7.7%   
Telecommunications/Cable Television     5.9%   

 

Issuer country weightings (x)  
Japan     19.4%   
United Kingdom     17.2%   
France     10.1%   
Switzerland     9.8%   
Germany     9.2%   
Netherlands     6.0%   
Australia     3.1%   
Hong Kong     2.7%   
India     2.4%   
Other Countries     20.1%   
 

 

(x) Represents the portfolio’s exposure to issuer countries as a percentage of a portfolio’s total net assets.
(y) Represents the portfolio’s exposure to a particular currency as a percentage of a portfolio’s total net assets.

From time to time “Cash & Other Net Assets” may be negative due to timing of cash receipts and/or equivalent exposure from any derivative holdings.

Percentages are based on net assets as of 6/30/11.

The portfolio is actively managed and current holdings may be different.

 

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EXPENSE TABLE

 

Fund Expenses Borne by the Contract Holders During the Period,

January 1, 2011 through June 30, 2011

As a contract holder of the fund, you incur ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period January 1, 2011 through June 30, 2011.

Actual Expenses

The first line for each share class in the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The second line for each share class in the following table provides information about hypothetical account values and hypothetical expenses based on the fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight the fund’s ongoing costs only and do not take into account the fees and expenses imposed under the variable contracts through which your investment in the fund is made. Therefore, the second line for each share class in the table is useful in comparing ongoing costs associated with an investment in vehicles (such as the fund) which fund benefits under variable annuity and variable life insurance contracts and to qualified pension and retirement plans only, and will not help you determine the relative total costs of investing in the fund through variable annuity and variable life insurance contracts. If the fees and expenses imposed under the variable contracts were included, your costs would have been higher.

 

Share Class         Annualized
Expense Ratio		      Beginning
Account Value
1/01/11		      Ending
Account Value
6/30/11		      Expenses Paid
During Period (p)
1/01/11-6/30/11		  
Initial Class   Actual      1.07%         $1,000.00         $1,065.11         $5.48   
  Hypothetical (h)      1.07%         $1,000.00         $1,019.49         $5.36   
Service Class   Actual      1.32%         $1,000.00         $1,064.78         $6.76   
  Hypothetical (h)      1.32%         $1,000.00         $1,018.25         $6.61   

 

(h) 5% class return per year before expenses.

 

(p) Expenses paid is equal to each class’ annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by the number of days in the period, divided by the number of days in the year.

 

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PORTFOLIO OF INVESTMENTS – 6/30/11 (unaudited)

 

The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.

Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – 100.1%     
Aerospace – 0.6%     
Rolls Royce Holdings PLC      94,092      $ 974,034   
          
Alcoholic Beverages – 1.5%     
Heineken N.V.      42,584      $ 2,560,904   
          
Apparel Manufacturers – 1.5%     
Li & Fung Ltd.      302,000      $ 607,390   
LVMH Moet Hennessy Louis Vuitton S.A.      10,436        1,878,100   
          
     $ 2,485,490   
          
Automotive – 3.7%     
Bayerische Motoren Werke AG      23,127      $ 2,307,723   
DENSO Corp.      41,200        1,529,701   
GKN PLC      138,079        513,692   
Honda Motor Co. Ltd.      44,700        1,722,898   
          
     $ 6,074,014   
          
Broadcasting – 1.6%     
Nippon Television Network Corp.      7,410      $ 1,054,444   
Publicis Groupe S.A. (l)      29,580        1,649,329   
          
     $ 2,703,773   
          
Brokerage & Asset Managers – 1.3%     
BM&F Bovespa S.A.      16,700      $ 110,538   
Deutsche Boerse AG      19,122        1,453,040   
Nomura Holdings, Inc.      132,500        655,559   
          
     $ 2,219,137   
          
Business Services – 2.0%     
Cognizant Technology Solutions Corp., “A” (a)      11,880      $ 871,279   
Compass Group PLC      35,260        340,109   
Mitsubishi Corp.      56,400        1,413,099   
Nomura Research, Inc.      34,900        763,884   
          
     $ 3,388,371   
          
Chemicals – 0.8%     
Monsanto Co.      7,380      $ 535,345   
Nufarm Ltd. (a)      162,731        786,820   
          
     $ 1,322,165   
          
Computer Software – 0.8%     
Dassault Systems S.A. (l)      14,989      $ 1,276,138   
          
Computer Software – Systems – 2.3%     
Acer, Inc.      694,978      $ 1,217,931   
Canon, Inc.      21,700        1,034,804   
Konica Minolta Holdings, Inc.      195,500        1,631,201   
          
     $ 3,883,936   
          
Conglomerates – 0.6%     
Hutchison Whampoa Ltd.      87,000      $ 943,253   
          
Consumer Products – 1.4%     
Kimberly-Clark de Mexico S.A. de C.V., “A”      110,340      $ 726,019   
Reckitt Benckiser Group PLC      29,531        1,630,416   
          
     $ 2,356,435   
          
Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – continued     
Electrical Equipment – 3.8%     
Legrand S.A.      13,456      $ 566,761   
Schneider Electric S.A.      13,928        2,326,773   
Siemens AG      25,126        3,450,533   
          
     $ 6,344,067   
          
Electronics – 1.5%     
Samsung Electronics Co. Ltd.      1,400      $ 1,088,135   
Taiwan Semiconductor Manufacturing Co. Ltd.      589,174        1,491,244   
          
     $ 2,579,379   
          
Energy – Independent – 2.5%     
Bankers Petroleum Ltd. (a)      71,736      $ 511,736   
Cairn Energy PLC (a)      72,007        479,375   
INPEX Corp.      325        2,399,387   
Reliance Industries Ltd.      40,188        810,219   
          
     $ 4,200,717   
          
Energy – Integrated – 5.0%     
BG Group PLC      65,050      $ 1,476,245   
BP PLC      358,280        2,637,338   
Royal Dutch Shell PLC, “A”      118,112        4,204,529   
          
     $ 8,318,112   
          
Engineering – Construction – 2.2%     
JGC Corp.      70,000      $ 1,917,055   
Keppel Corp. Ltd.      109,900        994,405   
Outotec Oyj      11,805        671,065   
          
     $ 3,582,525   
          
Food & Beverages – 4.4%     
Groupe Danone      37,046      $ 2,764,009   
Nestle S.A.      73,731        4,582,153   
          
     $ 7,346,162   
          
Food & Drug Stores – 2.1%     
Lawson, Inc.      31,500      $ 1,654,384   
Tesco PLC      273,305        1,763,337   
          
     $ 3,417,721   
          
Gaming & Lodging – 0.9%     
MGM China Holdings Ltd. (a)      76,800      $ 141,329   
Sands China Ltd. (a)      504,000        1,373,238   
          
     $ 1,514,567   
          
Insurance – 4.5%     
AIA Group Ltd. (a)      127,000      $ 442,009   
Amlin PLC      43,273        282,041   
China Pacific Insurance Co. Ltd.      138,200        575,271   
Hiscox Ltd.      100,270        674,129   
ING Groep N.V. (a)      209,377        2,577,498   
SNS REAAL Groep N.V. (a)      121,521        542,593   
Swiss Re Ltd.      41,025        2,303,646   
          
     $ 7,397,187   
          
 

 

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MFS Research International Series

 

Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – continued     
Machinery & Tools – 2.8%     
BEML Ltd.      16,545      $ 214,740   
Glory Ltd.      53,300        1,199,742   
Joy Global, Inc.      6,390        608,584   
MAN SE      6,083        811,203   
Schindler Holding AG      11,457        1,392,692   
Sinotruk Hong Kong Ltd.      496,500        348,014   
          
     $ 4,574,975   
          
Major Banks – 11.8%     
Barclays PLC      355,232      $ 1,462,098   
BNP Paribas      44,831        3,460,571   
Credit Suisse Group AG      47,499        1,847,419   
Erste Group Bank AG      29,652        1,554,444   
HSBC Holdings PLC      318,832        3,164,413   
Julius Baer Group Ltd.      25,649        1,059,518   
KBC Group N.V. (l)      24,875        977,564   
Mitsubishi UFJ Financial Group, Inc.      154,100        750,201   
Standard Chartered PLC      73,169        1,923,547   
Sumitomo Mitsui Financial Group, Inc.      53,700        1,652,668   
Westpac Banking Corp.      76,330        1,831,017   
          
     $ 19,683,460   
          
Medical & Health Technology & Services – 2.4%     
Diagnosticos da America S.A.      54,800      $ 737,385   
Miraca Holdings, Inc.      43,400        1,760,753   
Rhoen-Klinikum AG      59,794        1,442,859   
          
     $ 3,940,997   
          
Medical Equipment – 0.8%     
Sonova Holding AG      6,110      $ 570,485   
Synthes, Inc. (n)      4,750        835,593   
          
     $ 1,406,078   
          
Metals & Mining – 4.6%     
Iluka Resources Ltd.      78,818      $ 1,429,864   
Rio Tinto Ltd.      50,030        3,605,678   
Steel Authority of India Ltd.      112,583        346,846   
Sumitomo Metal Industries Ltd.      189,000        425,093   
Teck Resources Ltd., “B”      36,237        1,841,814   
          
     $ 7,649,295   
          
Natural Gas – Distribution – 0.8%     
Tokyo Gas Co. Ltd.      292,000      $ 1,320,907   
          
Network & Telecom – 1.1%     
Ericsson, Inc., “B”      125,861      $ 1,814,729   
          
Oil Services – 0.9%     
AMEC PLC      37,910      $ 661,979   
Technip      7,210        772,981   
          
     $ 1,434,960   
          
Other Banks & Diversified Financials – 5.3%     
Aeon Credit Service Co. Ltd.      72,500      $ 988,821   
Banco Santander Brasil S.A., ADR      93,730        1,097,578   
China Construction Bank      1,268,780        1,056,035   
HDFC Bank Ltd., ADR      5,530        975,437   
ICICI Bank Ltd.      68,680        1,683,411   
Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – continued     
Other Banks & Diversified Financials – continued     
Komercni Banka A.S.      4,422      $ 1,078,405   
Sberbank of Russia      365,470        1,344,930   
United Overseas Bank Ltd.      41,000        658,724   
          
     $ 8,883,341   
          
Pharmaceuticals – 5.5%     
Bayer AG      22,962      $ 1,846,060   
Roche Holding AG      21,516        3,600,715   
Sanofi-Aventis      25,830        2,076,636   
Santen, Inc.      40,600        1,650,411   
          
     $ 9,173,822   
          
Precious Metals & Minerals – 0.7%     
Newcrest Mining Ltd.      27,915      $ 1,133,085   
          
Railroad & Shipping – 0.5%     
East Japan Railway Co.      14,900      $ 856,215   
          
Real Estate – 0.8%     
GSW Immobilien AG (a)      13,817      $ 473,868   
Hang Lung Properties Ltd.      224,000        927,803   
          
     $ 1,401,671   
          
Specialty Chemicals – 4.3%     
Akzo Nobel N.V.      42,978      $ 2,711,116   
Chugoku Marine Paints Ltd.      58,000        453,164   
Linde AG      16,048        2,813,585   
Nippon Paint Co. Ltd.      63,000        504,838   
Symrise AG      19,688        627,541   
          
     $ 7,110,244   
          
Specialty Stores – 1.6%     
Hennes & Mauritz AB, “B”      40,440      $ 1,394,417   
Industria de Diseno Textil S.A.      13,570        1,236,599   
          
     $ 2,631,016   
          
Telecommunications – Wireless – 3.0%   
KDDI Corp.      257      $ 1,849,141   
Tim Participacoes S.A., ADR      6,670        328,231   
Vodafone Group PLC      1,038,572        2,755,315   
          
     $ 4,932,687   
          
Telephone Services – 2.9%     
China Unicom Ltd.      898,000      $ 1,818,412   
Royal KPN N.V.      111,535        1,622,277   
Telecom Italia S.p.A.      339,528        472,426   
Telecom Italia S.p.A.      746,696        868,964   
          
     $ 4,782,079   
          
Tobacco – 0.8%     
Japan Tobacco, Inc.      334      $ 1,288,983   
          
Trucking – 1.1%     
Yamato Holdings Co. Ltd.      116,500      $ 1,829,849   
          
Utilities – Electric Power – 3.4%     
CEZ AS      24,314      $ 1,251,143   
Energias de Portugal S.A.      509,127        1,808,122   
Fortum Corp.      49,147        1,423,272   
 

 

5

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Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – continued     
Utilities – Electric Power – continued     
Red Electrica de Espana      9,829      $ 593,303   
Tractebel Energia S.A.      32,820        578,317   
    

 

 

  
     $ 5,654,157   
    

 

 

  
Total Common Stocks
(Identified Cost, $158,464,130)		      $ 166,390,637   
    

 

 

  
MONEY MARKET FUNDS (v) – 0.0%     
MFS Institutional Money Market Portfolio, 0.1%, at Cost and Net Asset Value      5      $ 5   
    

 

 

  
COLLATERAL FOR SECURITIES LOANED – 1.8%   
Navigator Securities Lending Prime Portfolio, 0.23%, at Cost and Net Asset Value (j)      2,947,319      $ 2,947,319   
    

 

 

  
Total Investments
(Identified Cost, $161,411,454)		      $ 169,337,961   
    

 

 

  
OTHER ASSETS, LESS
LIABILITIES – (1.9)%		        (3,221,302 ) 
    

 

 

  
Net Assets – 100.0%      $ 166,116,659   
    

 

 

  
(a)   Non-income producing security.

 

(j)   The rate quoted is the annualized seven-day yield of the portfolio at period end.

 

(l)   A portion of this security is on loan.

 

(n)   Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be sold in the ordinary course of business in transactions exempt from registration, normally to qualified institutional buyers. At period end, the aggregate value of these securities was $835,593, representing 0.5% of net assets.

 

(v)   Underlying affiliated fund that is available only to investment companies managed by MFS. The rate quoted is the annualized seven-day yield of the fund at period end.

The following abbreviations are used in this report and are defined:

 

ADR   American Depository Receipt

 

PLC   Public Limited Company

See Notes to Financial Statements

 

 

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FINANCIAL STATEMENTS  |  STATEMENT OF ASSETS AND LIABILITIES (unaudited)

 

This statement represents your fund’s balance sheet, which details the assets and liabilities comprising the total value of the fund.

 

At 6/30/11

      

Assets

                  

Investments –

      

Non-affiliated issuers, at value (identified cost, $161,411,449)

      $169,337,956      

Underlying affiliated funds, at cost and value

      5            

Total investments, at value, including $2,852,838 of securities on loan (identified cost, $161,411,454)

      $169,337,961            

Foreign currency, at value (identified cost, $173,186)

      174,233      

Receivables for

      

Investments sold

      5,213,853      

Fund shares sold

      1,615      

Interest and dividends

      776,683      

Other assets

      981            

Total assets

               $175,505,326   

Liabilities

                  

Payable to custodian

      $1,760,193      

Payables for

      

Investments purchased

      3,888,099      

Fund shares reacquired

      669,933      

Collateral for securities loaned, at value

      2,947,319      

Payable to affiliates

      

Investment adviser

      8,238      

Shareholder servicing costs

      209      

Distribution and/or service fees

      484      

Payable for independent Trustees’ compensation

      806      

Accrued expenses and other liabilities

      113,386            

Total liabilities

               $9,388,667   

Net assets

               $166,116,659   

Net assets consist of

                  

Paid-in capital

      $177,377,748      

Unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies

      7,933,708      

Accumulated net realized gain (loss) on investments and foreign currency transactions

      (24,507,849 )    

Undistributed net investment income

      5,313,052            

Net assets

               $166,116,659   

Shares of beneficial interest outstanding

               12,554,822   

 

     Net assets      Shares
outstanding		      Net asset value
per share		  

Initial Class

      $130,088,477         9,814,986         $13.25   

Service Class

      36,028,182         2,739,836         13.15   

See Notes to Financial Statements

 

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FINANCIAL STATEMENTS  |  STATEMENT OF OPERATIONS (unaudited)

 

This statement describes how much your fund earned in investment income and accrued in expenses. It also describes any gains and/or losses generated by fund operations.

 

Six months ended 6/30/11      
Net investment income                  

Income

      

Dividends

      $4,101,770      

Interest

      102,156      

Dividends from underlying affiliated funds

      996      

Foreign taxes withheld

      (424,831 )          

Total investment income

               $3,780,091   

Expenses

      

Management fee

      $841,588      

Distribution and/or service fees

      49,348      

Shareholder servicing costs

      10,797      

Administrative services fee

      18,574      

Independent Trustees’ compensation

      2,908      

Custodian fee

      68,327      

Shareholder communications

      22,107      

Auditing fees

      27,213      

Legal fees

      1,579      

Miscellaneous

      12,268            

Total expenses

               $1,054,709   

Fees paid indirectly

      (2 )    

Reduction of expenses by investment adviser

      (541 )          

Net expenses

               $1,054,166   

Net investment income

               $2,725,925   

Realized and unrealized gain (loss) on investments and foreign currency transactions

                  

Realized gain (loss) (identified cost basis)

      

Investment transactions

      $13,210,119      

Foreign currency transactions

      (8,551 )          

Net realized gain (loss) on investments and foreign currency transactions

               $13,201,568   

Change in unrealized appreciation (depreciation)

      

Investments

      $(4,140,699 )    

Translation of assets and liabilities in foreign currencies

      (6,158 )          

Net unrealized gain (loss) on investments and foreign currency translation

               $(4,146,857 ) 

Net realized and unrealized gain (loss) on investments and foreign currency

               $9,054,711   

Change in net assets from operations

               $11,780,636   

See Notes to Financial Statements

 

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FINANCIAL STATEMENTS  |  STATEMENTS OF CHANGES IN NET ASSETS

 

These statements describe the increases and/or decreases in net assets resulting from operations, any distributions, and any shareholder transactions.

 

    
 
 		 Six months ended
6/30/11
(unaudited		   
  
) 		     
 		 Year ended
12/31/10		   
  

Change in net assets

      

From operations

                  

Net investment income

      $2,725,925         $2,675,705   

Net realized gain (loss) on investments and foreign currency transactions

      13,201,568         (817,258 ) 

Net unrealized gain (loss) on investments and foreign currency translation

      (4,146,857 )       15,512,104   

Change in net assets from operations

      $11,780,636         $17,370,551   

Distributions declared to shareholders

                  

From net investment income

      $—         $(2,782,073 ) 

Change in net assets from fund share transactions

      $(33,231,259 )       $(7,280,966 ) 

Total change in net assets

      $(21,450,623 )       $7,307,512   

Net assets

                  

At beginning of period

      187,567,282         180,259,770   

At end of period (including undistributed net investment income of $5,313,052 and
$2,587,127, respectively)

      $166,116,659         $187,567,282   

See Notes to Financial Statements

 

9

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FINANCIAL STATEMENTS  |  FINANCIAL HIGHLIGHTS

 

The financial highlights table is intended to help you understand the fund’s financial performance for the semiannual period and the past 5 fiscal years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period.

 

Initial Class      Six months
ended
6/30/11		      Years ended 12/31  
          2010        2009        2008        2007        2006  
       (unaudited)                                             

Net asset value, beginning of period

        $12.44         $11.40           $8.89           $16.12           $14.44           $11.84   
Income (loss) from investment operations                                                                

Net investment income (d)

        $0.19         $0.18           $0.17           $0.25           $0.17           $0.18   

Net realized and unrealized gain (loss) on investments and foreign currency

        0.62         1.03           2.51           (6.82 )         1.67           2.85   

Total from investment operations

        $0.81         $1.21           $2.68           $(6.57 )         $1.84           $3.03   
Less distributions declared to shareholders                                                                

From net investment income

        $—         $(0.17 )         $(0.17 )         $(0.10 )         $—           $(0.13 ) 

From net realized gain on investments

        —         —           —           (0.56 )         (0.16 )         (0.30 ) 

Total distributions declared to shareholders

        $—         $(0.17 )         $(0.17 )         $(0.66 )         $(0.16 )         $(0.43 ) 

Net asset value, end of period

        $13.25         $12.44           $11.40           $8.89           $16.12           $14.44   

Total return (%) (k)(r)(s)

        6.51 (n)       10.81           30.86           (42.39 )         12.82           25.67   
Ratios (%) (to average net assets)
and Supplemental data:		                                                                

Expenses before expense reductions (f)

        1.07 (a)       1.15           1.23           1.35           1.56           2.77   

Expenses after expense reductions (f)

        1.07 (a)       1.10           1.10           1.10           1.10           1.10   

Net investment income

        2.98 (a)(l)       1.60           1.78           2.06           1.14           1.36   

Portfolio turnover

        26         61           92           77           64           130   

Net assets at end of period (000 omitted)

        $130,088         $145,085           $146,044           $115,944           $81,987           $32,437   

See Notes to Financial Statements

 

10

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MFS Research International Series

 

Financial Highlights – continued

 

Service Class      Six months
ended
6/30/11		      Years ended 12/31  
          2010        2009        2008        2007        2006  
       (unaudited)                                             

Net asset value, beginning of period

        $12.35         $11.33           $8.83           $16.02           $14.39           $11.83   
Income (loss) from investment operations                                                                

Net investment income (d)

        $0.17         $0.14           $0.15           $0.25           $0.16           $0.06   

Net realized and unrealized gain (loss) on
investments and foreign currency

        0.63         1.03           2.49           (6.81 )         1.63           2.91   

Total from investment operations

        $0.80         $1.17           $2.64           $(6.56 )         $1.79           $2.97   
Less distributions declared to shareholders                                                                

From net investment income

        $—         $(0.15 )         $(0.14 )         $(0.07 )         $—           $(0.11 ) 

From net realized gain on investments

        —         —           —           (0.56 )         (0.16 )         (0.30 ) 

Total distributions declared to shareholders

        $—         $(0.15 )         $(0.14 )         $(0.63 )         $(0.16 )         $(0.41 ) 

Net asset value, end of period

        $13.15         $12.35           $11.33           $8.83           $16.02           $14.39   

Total return (%) (k)(r)(s)

        6.48 (n)       10.48           30.57           (42.52 )         12.52           25.21   
Ratios (%) (to average net assets)
and Supplemental data:		                                                                

Expenses before expense reductions (f)

        1.32 (a)       1.40           1.49           1.58           1.81           2.86   

Expenses after expense reductions (f)

        1.32 (a)       1.35           1.35           1.35           1.35           1.35   

Net investment income

        2.65 (a)(l)       1.27           1.56           2.01           1.03           0.41   

Portfolio turnover

        26         61           92           77           64           130   

Net assets at end of period (000 omitted)

        $36,028         $42,482           $34,215           $22,000           $29,238           $13,707   

 

(a) Annualized.

 

(d) Per share data is based on average shares outstanding.

 

(f) Ratios do not reflect reductions from fees paid indirectly, if applicable.

 

(k) The total return does not reflect expenses that apply to separate accounts. Inclusion of these charges would reduce the total return figures for all periods shown.

 

(l) Recognition of net investment income by the fund may be affected by the timing of the declaration of dividends by companies in which the fund invests and the actual annual net investment income ratio may differ.

 

(n) Not annualized.

 

(r) Certain expenses have been reduced without which performance would have been lower.

 

(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.

See Notes to Financial Statements

 

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NOTES TO FINANCIAL STATEMENTS (unaudited)

 

(1)   Business and Organization

MFS Research International Series (the fund) is a 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, and qualified retirement and pension plans.

 

(2)   Significant Accounting Policies

General – The preparation of financial statements in conformity with U.S. 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. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the fund’s Statement of Assets and Liabilities through the date that the financial statements were issued. The fund invests in foreign securities, including securities of emerging market issuers. 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. The markets of emerging markets countries are generally more volatile than the markets of developed countries with more mature economies. All of the risks of investing in foreign securities previously described are heightened when investing in emerging markets countries.

Investment Valuations – Equity securities, including restricted equity securities, are generally valued at the last sale or official closing price as provided by a third-party pricing service on the market or exchange on which they are primarily traded. Equity securities, for which there were no sales reported that day, are generally valued at the last quoted daily bid quotation as provided by a third-party pricing service on the market or exchange on which such securities are primarily traded. Equity securities held short, for which there were no sales reported for that day, are generally valued at the last quoted daily ask quotation as provided by a third-party pricing service on the market or exchange on which such securities are primarily traded. Short-term instruments with a maturity at issuance of 60 days or less generally are valued at amortized cost, which approximates market value. Open-end investment companies are generally valued at net asset value per share. Securities and other assets generally valued on the basis of information from a third-party pricing service may also be valued at a broker/dealer bid quotation. Values obtained from third-party pricing services can utilize both transaction data and market information such as yield, quality, coupon rate, maturity, type of issue, trading characteristics, and other market data. The values of foreign securities and other assets and liabilities expressed in foreign currencies are converted to U.S. dollars using the mean of bid and asked prices for rates provided by a third-party pricing service.

The Board of Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments (including any fair valuation) to the adviser pursuant to valuation policies and procedures approved by the Board. If the adviser determines that reliable market quotations are not readily available, investments are valued at fair value as determined in good faith by the adviser in accordance with such procedures under the oversight of the Board of Trustees. Under the fund’s valuation policies and procedures, market quotations are not considered to be readily available for most types of debt instruments and floating rate loans and many types of derivatives. These investments are generally valued at fair value based on information from third-party pricing services. In addition, investments may be valued at fair value if the adviser determines that an investment’s value has been materially affected by events occurring after the close of the exchange or market on which the investment is principally traded (such as foreign exchange or market) and prior to the determination of the fund’s net asset value, or after the halting of trading of a specific security where trading does not resume prior to the close of the exchange or market on which the security is principally traded. Events that occur on a frequent basis after foreign markets close (such as developments in foreign markets and significant movements in the U.S. markets) and prior to the determination of the fund’s net asset value may be deemed to have a material effect on the value of securities traded in foreign markets. Accordingly, the fund’s foreign equity securities may often be valued at fair value. The adviser generally relies on third-party pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and financial condition of the issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment for purposes of calculating the fund’s net asset value can differ depending on the source and method used to determine value. When fair valuation is used, the value of an investment used to determine the fund’s net asset value may differ from quoted or published prices for the same investment. There can be no assurance that the fund could obtain the fair value assigned to an investment if it were to sell the investment at the same time at which the fund determines its net asset value per share.

 

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Notes to Financial Statements (unaudited) – continued

 

Various inputs are used in determining the value of the fund’s assets or liabilities. These inputs are categorized into three broad levels. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fund’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. Level 1 includes unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes other significant observable market-based inputs (including quoted prices for similar securities, interest rates, prepayment speed, and credit risk). Level 3 includes unobservable inputs, which may include the adviser’s own assumptions in determining the fair value of investments. The following is a summary of the levels used as of June 30, 2011 in valuing the fund’s assets or liabilities:

 

Investments at Value    Level 1      Level 2      Level 3      Total  
Equity Securities:            

Japan

      $1,441,985         $30,865,220         $—         $32,307,205   

United Kingdom

      28,548,275         —         —         28,548,275   

France

      16,771,299         —         —         16,771,299   

Switzerland

      16,192,220         —         —         16,192,220   

Germany

      15,226,411         —         —         15,226,411   

Netherlands

      10,014,388         —         —         10,014,388   

Australia

      —         5,180,786         —         5,180,786   

Hong Kong

      141,328         4,293,692         —         4,435,020   

India

      1,190,177         2,840,477         —         4,030,654   

Other Countries

      24,436,207         9,248,172         —         33,684,379   
Mutual Funds      2,947,324         —         —         2,947,324   
Total Investments      $116,909,614         $52,428,347         $—         $169,337,961   

For further information regarding security characteristics, see the Portfolio of Investments.

Of the level 2 investments presented above, equity investments amounting to $41,610,052 would have been considered level 1 investments at the beginning of the period. The primary reason for changes in the classifications between levels 1 and 2 occurs when foreign equity securities are fair valued using other observable market-based inputs in place of the closing exchange price due to events occurring after the close of the exchange or market on which the investment is principally traded. The fund’s foreign equity securities may often be valued at fair value. The fund’s policy is to recognize transfers between the levels as of the end of the period.

Foreign Currency Translation – 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 or on the reporting date for foreign denominated receivables and payables. 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 receivables, payables, 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, loans the securities of the fund to certain qualified institutions (the “Borrowers”) approved by the fund. The loans are collateralized by cash and/or U.S. Treasury and federal agency obligations in an amount typically at least equal to the market value of the securities loaned. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. State Street provides the fund with indemnification against Borrower default. The fund bears the risk of loss with respect to the investment of cash collateral. On loans collateralized by cash, the cash collateral is invested in a money market fund or 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 fund and the lending agent. On loans collateralized by U.S. Treasury and/or federal agency obligations, a fee is received from the Borrower, and is allocated between the fund 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.

Indemnifications – Under the fund’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the fund. Additionally, in the normal course of business, the fund enters into agreements with service providers that may contain indemnification clauses. The fund’s maximum exposure under these agreements is unknown as this would involve future claims that may be made against the fund that have not yet occurred.

 

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Notes to Financial Statements (unaudited) – continued

 

Investment Transactions and Income – Investment transactions are recorded on the trade date. Interest income is recorded on the accrual basis. Dividends received in cash are recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded when the fund is informed of the dividend if such information is obtained subsequent to 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.

The fund may receive proceeds from litigation settlements. Any proceeds received from litigation involving portfolio holdings are reflected in the Statement of Operations in realized gain/loss if the security has been disposed of by the fund or in unrealized gain/loss if the security is still held by the fund. Any other proceeds from litigation not related to portfolio holdings are reflected as other income in the Statement of Operations.

Fees Paid Indirectly – The fund’s custody fee may be reduced according to an arrangement that measures the value of cash deposited with the custodian by the fund. This amount, for the six months ended June 30, 2011, is shown as a reduction of total expenses on the Statement of Operations.

Tax Matters and Distributions – The fund intends to qualify as a regulated investment company, as defined under Subchapter M of the Internal Revenue Code, and to distribute all of its taxable income, including realized capital gains. As a result, no provision for federal income tax is required. The fund’s federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue Service. Foreign taxes, if any, have been accrued by the fund in the accompanying financial statements.

Distributions to shareholders are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income, expense, gain or loss in different periods for financial statement and tax purposes will reverse at some time in the future. Distributions in excess of net investment income or net realized gains are temporary overdistributions for financial statement purposes resulting from differences in the recognition or classification of income or distributions for financial statement and tax purposes.

Book/tax differences primarily relate to wash sale loss deferrals.

The tax character of distributions declared to shareholders for the last fiscal year is as follows:

 

     12/31/10  
Ordinary income (including any short-term capital gains)      $2,782,073   

The federal tax cost and the tax basis components of distributable earnings were as follows:

 

As of 6/30/11   
Cost of investments      $162,558,469   
Gross appreciation      15,581,413   
Gross depreciation      (8,801,921 ) 
Net unrealized appreciation (depreciation)      $6,779,492   
As of 12/31/10   
Undistributed ordinary income      2,591,844   
Capital loss carryforwards      (36,562,402 ) 
Other temporary differences      8,642   
Net unrealized appreciation (depreciation)      10,920,191   

The aggregate cost above includes prior fiscal year end tax adjustments, if applicable.

As of December 31, 2010, the fund had capital loss carryforwards available to offset future realized gains. Such losses expire as follows:

 

12/31/16      $(31,373,068 ) 
12/31/17      (3,004,405 ) 
12/31/18      (2,184,929 ) 
Total      $(36,562,402 ) 

Multiple Classes of Shares of Beneficial Interest – The fund offers multiple classes of shares, which differ in their respective distribution and/or service fees. The fund’s income, realized and unrealized gain (loss), and common expenses are allocated to shareholders based on the daily net assets of each class. Dividends are declared separately for each class. Differences in per

 

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MFS Research International Series

 

Notes to Financial Statements (unaudited) – continued

 

share dividend rates are generally due to differences in separate class expenses. The fund’s distributions declared to shareholders as reported on the Statements of Changes in Net Assets are presented by class as follows:

 

     From net investment
income		  
     Six months ended
6/30/11		      Year ended
12/31/10		  
Initial Class      $—         $2,316,559   
Service Class      —         465,514   
Total      $—         $2,782,073   

 

(3)   Transactions with Affiliates

Investment Adviser – The fund has an investment advisory agreement with MFS to provide overall investment management and related administrative services and facilities to the fund. The management fee is computed daily and paid monthly at an annual rate of 0.90% of the fund’s average daily net assets.

The investment adviser has agreed in writing to pay a portion of the fund’s total annual operating expenses, exclusive of interest, taxes, extraordinary expenses, brokerage and transaction costs and investment-related expenses, such that total annual operating expenses do not exceed 1.10% of average daily net assets for the Initial Class shares and 1.35% of average daily net assets for the Service Class shares. This written agreement will continue until modified by the fund’s Board of Trustees, but such agreement will continue at least until April 30, 2013. For the six months ended June 30, 2011, the fund’s actual operating expenses did not exceed the limit and therefore, the investment adviser did not pay any portion of the fund’s expenses related to this agreement.

Distributor – MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, is the distributor of shares of the fund. The Trustees have adopted a distribution plan for the Service Class shares pursuant to Rule 12b-1 under the Investment Company Act of 1940.

The fund’s distribution plan provides that the fund will pay MFD distribution and/or service fees equal to 0.25% per annum of its average daily net assets attributable to Service Class shares as partial consideration for services performed and expenses incurred by MFD and financial intermediaries (including participating insurance companies that invest in the fund to fund variable annuity and variable life insurance contracts, sponsors of qualified retirement and pension plans that invest in the fund, and affiliates of these participating insurance companies and plan sponsors) in connection with the sale and distribution of the Service Class shares. MFD may subsequently pay all, or a portion, of the distribution and/or service fees to financial intermediaries.

Shareholder Servicing Agent – MFS Service Center, Inc. (MFSC), a wholly-owned subsidiary of MFS, receives a fee from the fund for its services as shareholder servicing agent. For the six months ended June 30, 2011, the fee was $10,445, which equated to 0.0112% annually of the fund’s average daily net assets. MFSC also receives payment from the fund for out-of-pocket expenses paid by MFSC on behalf of the fund. For the six months ended June 30, 2011, these costs amounted to $352.

Administrator – MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the fund partially reimburses MFS the costs incurred to provide these services. The fund is charged an annual fixed amount of $17,500 plus a fee based on average daily net assets. The administrative services fee incurred for the six months ended June 30, 2011 was equivalent to an annual effective rate of 0.0199% of the fund’s average daily net assets.

Trustees’ and Officers’ Compensation – The fund pays compensation to independent Trustees in the form of a retainer, attendance fees, and additional compensation to Board and Committee chairpersons. The fund does not pay compensation directly to Trustees or officers of the fund who are also officers of the investment adviser, all of whom receive remuneration for their services to the fund from MFS. Certain officers and Trustees of the fund are officers or directors of MFS, MFD, and MFSC.

Other – This fund and certain other funds managed by MFS (the funds) have entered into services agreements (the Agreements) which provide for payment of fees by the funds to Tarantino LLC and Griffin Compliance LLC in return for the provision of services of an Independent Chief Compliance Officer (ICCO) and Assistant ICCO, respectively, for the funds. The ICCO and Assistant ICCO are officers of the funds and the sole members of Tarantino LLC and Griffin Compliance LLC, respectively. The funds can terminate the Agreements with Tarantino LLC and Griffin Compliance LLC at any time under the terms of the Agreements. For the six months ended June 30, 2011, the aggregate fees paid by the fund to Tarantino LLC and Griffin Compliance LLC were $668 and are included in miscellaneous expense on the Statement of Operations. MFS has agreed

 

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MFS Research International Series

 

Notes to Financial Statements (unaudited) – continued

 

to reimburse the fund for a portion of the payments made by the fund in the amount of $541, which is shown as a reduction of total expenses in the Statement of Operations. Additionally, MFS has agreed to bear all expenses associated with office space, other administrative support, and supplies provided to the ICCO and Assistant ICCO.

The fund invests in the MFS Institutional Money Market Portfolio which is managed by MFS and seeks a high level of current income consistent with preservation of capital and liquidity. Income earned on this investment is included in dividends from underlying affiliated funds on the Statement of Operations. This money market fund does not pay a management fee to MFS.

 

(4)   Portfolio Securities

Purchases and sales of investments, other than U.S. Government securities, purchased option transactions, and short-term obligations, aggregated $48,590,006 and $77,834,189, respectively.

 

(5)   Shares of Beneficial Interest

The fund’s Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest. Transactions in fund shares were as follows:

 

     Six months ended 6/30/11      Year ended 12/31/10  
     Shares      Amount      Shares      Amount  
Shares sold            

Initial Class

      656,703         $8,426,083         1,581,983         $17,741,458   

Service Class

      217,293         2,795,474         2,142,666         23,508,973   
     873,996         $11,221,557         3,724,649         $41,250,431   
Shares issued to shareholders in reinvestment of distributions            

Initial Class

      —         $—         205,551         $2,316,559   

Service Class

      —         —         41,527         465,514   
     —         $—         247,078         $2,782,073   
Shares reacquired            

Initial Class

      (2,508,186 )       $(32,712,495 )       (2,935,655 )       $(31,859,343 ) 

Service Class

      (916,798 )       (11,740,321 )       (1,765,813 )       (19,454,127 ) 
     (3,424,984 )       $(44,452,816 )       (4,701,468 )       $(51,313,470 ) 
Net change            

Initial Class

      (1,851,483 )       $(24,286,412 )       (1,148,121 )       $(11,801,326 ) 

Service Class

      (699,505 )       (8,944,847 )       418,380         4,520,360   
     (2,550,988 )       $(33,231,259 )       (729,741 )       $(7,280,966 ) 

 

(6)   Line of Credit

The fund and certain other funds managed by MFS participate in a $1.1 billion unsecured committed line of credit, subject to a $1 billion sublimit, provided by a syndication of banks under a credit agreement. Borrowings may be made for temporary financing needs. Interest is charged to each fund, based on its borrowings, generally at a rate equal to the higher of the Federal Reserve funds rate or one month LIBOR plus an agreed upon spread. A commitment fee, based on the average daily, unused portion of the committed line of credit, is allocated among the participating funds at the end of each calendar quarter. In addition, the fund and other funds managed by MFS have established unsecured uncommitted borrowing arrangements with certain banks for temporary financing needs. Interest is charged to each fund, based on its borrowings, at a rate equal to the Federal Reserve funds rate plus an agreed upon spread. For the six months ended June 30, 2011, the fund’s commitment fee and interest expense were $888 and $0, respectively, and are included in miscellaneous expense on the Statement of Operations.

 

(7)   Transactions in Underlying Affiliated Funds – Affiliated Issuers

An affiliated issuer may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. For the purposes of this report, the fund assumes the following to be affiliated issuers:

 

Underlying Affiliated Funds   

Beginning
Shares/Par

Amount

     

Acquisitions

Shares/Par

Amount

     

Dispositions

Shares/Par

Amount

     

Ending

Shares/Par

Amount

  
MFS Institutional Money Market Portfolio      208,772         19,074,657         (19,283,424 )       5   
Underlying Affiliated Funds   

Realized

Gain (Loss)

     

Capital Gain

Distributions

     

Dividend

Income

     

Ending

Value

  
MFS Institutional Money Market Portfolio      $—         $—         $996         $5   

 

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BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT

 

A discussion regarding the Board’s most recent review and renewal of the fund’s Investment Advisory Agreement with MFS will be available on or about November 1, 2011 by clicking on the fund’s name under “Variable Insurance Portfolios — VIT” in the “Products and Performance” section of the MFS Web site (mfs.com).

PROXY VOTING POLICIES AND INFORMATION

A general description of the MFS funds’ proxy voting policies and procedures is available without charge, upon request, by calling
1-800-225-2606, by visiting the Proxy Voting section of mfs.com or by visiting the SEC’s Web site at http://www.sec.gov.

Information regarding how the fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available without charge by visiting the Proxy Voting section of mfs.com or by visiting the SEC’s Web site at http://www.sec.gov.

QUARTERLY PORTFOLIO DISCLOSURE

The fund will file a complete schedule of portfolio holdings with the Securities and Exchange Commission (the Commission) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q may be reviewed and copied at the:

Public Reference Room

Securities and Exchange Commission

100 F Street, NE, Room 1580

Washington, D.C. 20549

Information on the operation of the Public Reference Room may be obtained by calling the Commission at 1-800-SEC-0330. The fund’s Form N-Q is available on the EDGAR database on the Commission’s Internet Web site 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: publicinfo@sec.gov or by writing the Public Reference Section at the above address.

FURTHER INFORMATION

From time to time, MFS may post important information about the fund or the MFS funds on the MFS web site (mfs.com). This information is available by visiting the “News & Commentary” section of mfs.com or by clicking on the fund’s name under “Variable Insurance Portfolios — VIT” in the “Products and Performance” section of mfs.com.

 

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rev. 3/11

 

FACTS   WHAT DOES MFS DO WITH YOUR
PERSONAL INFORMATION?		   LOGO

 

Why?   Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?  

The types of personal information we collect and share depend on the product or service you have with us. This information can include:

 

• Social Security number and account balances

• Account transactions and transaction history

• Checking account information and wire transfer instructions

 

When you are no longer our customer, we continue to share your information as described in this notice.

 

How?   All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons MFS chooses to share; and whether you can limit this sharing.

 

Reasons we can share your personal information   Does MFS share?   Can you limit this
sharing?

For our everyday business purposes –

such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus

   Yes   No

For our marketing purposes –

to offer our products and services to you

   No   We don’t share
For joint marketing with other financial companies   No   We don’t share

For our affiliates’ everyday business purposes –

information about your transactions and experiences

   No   We don’t share

For our affiliates’ everyday business purposes –

information about your creditworthiness

   No   We don’t share
For nonaffiliates to market to you   No   We don’t share

 

Questions?   Call 800-225-2606 or go to mfs.com.

 

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Page 2  

 

Who we are
Who is providing this notice?   MFS Funds, MFS Investment Management, MFS Institutional Advisors, Inc., MFS Fund Distributors, Inc., MFS Heritage Trust Company, and MFS Service Center, Inc.

 

What we do
How does MFS protect my personal information?   To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include procedural, electronic, and physical safeguards for the protection of the personal information we collect about you.
How does MFS
collect my personal information?		  

We collect your personal information, for example, when you

 

• open an account or provide account information

• direct us to buy securities or direct us to sell your securities

• make a wire transfer

 

We also collect your personal information from others, such as credit bureaus, affiliates and other companies.

Why can’t I limit all sharing?  

Federal law gives you the right to limit only

 

• sharing for affiliates’ everyday business purposes – information about your creditworthiness

• affiliates from using your information to market to you

• sharing for nonaffiliates to market to you

 

State laws and individual companies may give you additional rights to limit sharing.

 

Definitions
Affiliates  

Companies related by common ownership or control. They can be financial and nonfinancial companies.

 

• MFS does not share personal information with affiliates, except for everyday business purposes as described on page one of this notice.

Nonaffiliates  

Companies not related by common ownership or control. They can be financial and nonfinancial companies.

 

• MFS does not share with nonaffiliates so they can market to you.

Joint Marketing  

A formal agreement between nonaffiliated financial companies that together market financial products or services to you.

 

• MFS doesn’t jointly market.

 

 

Other important information
If you own an MFS product or receive an MFS service in the name of a third party such as a bank or broker-dealer, their privacy policy may apply to you instead of ours.

 

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LOGO

Table of Contents

LOGO

 

MFS® Growth Series

MFS® Variable Insurance Trust

 

LOGO

 

 

SEMIANNUAL REPORT

June 30, 2011

 

VEG-SEM

Table of Contents

MFS® GROWTH SERIES

 

CONTENTS   
Letter from the CEO      1   
Portfolio composition      2   
Expense table      3   
Portfolio of investments      4   
Statement of assets and liabilities      7   
Statement of operations      8   
Statements of changes in net assets      9   
Financial highlights      10   
Notes to financial statements      12   
Board review of investment advisory agreement      17   
Proxy voting policies and information      17   
Quarterly portfolio disclosure      17   
Further information      17   
MFS® privacy notice      18   

 

The report is prepared for the general information of contract owners.

It is authorized for distribution to prospective investors only when preceded or accompanied by a current prospectus.

 

NOT FDIC INSURED Ÿ MAY LOSE VALUE Ÿ NO BANK OR CREDIT UNION GUARANTEE Ÿ NOT A DEPOSIT Ÿ NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY OR NCUA/NCUSIF

Table of Contents

MFS Growth Series

 

LETTER FROM THE CEO

 

LOGO

 

Dear Contract Owners:

After about a year of almost uninterrupted macroeconomic and financial market improvement following the global credit crisis, investors grew more cautious in the middle of 2010 as fears grew that some European countries would default on their debt and as economic data showed a weakening

trend in the global economy. As a result asset prices fell significantly.

Last September the U.S. Federal Reserve Board’s promises to make lending conditions easier helped assuage market fears and drive asset prices off their recent lows. A combination of solid earnings and improving economic data gave an additional boost to investor sentiment.

In the following months, the renewed positive market mood, coupled with indications of better global macroeconomic activity, pushed many asset valuations to post-crisis highs. At the same time, global sovereign

bond yields initially rose as investors became concerned about inflationary pressures, driven by higher prices for oil as well as other commodities. However, by the end of the second quarter of 2011, a weakening macroeconomic backdrop and renewed concerns over debt problems in some eurozone countries pushed equities lower.

For the remainder of 2011, we are cautiously optimistic that economic growth will continue to improve and that the global economies will recover from the shocks of the past few years. We expect the pace of recovery worldwide to be uneven and volatile and acknowledge the elevated uncertainty created by events in Japan, Europe, the Middle East, as well as that created by the U.S. debate over raising the debt ceiling and the downgrade by Standard & Poor’s of the U.S. long-term credit rating.

As always, we continue to be mindful of the many economic challenges faced at the local, national, and international levels. It is in times such as these that we want to remind investors of the merits of maintaining a long-term view, adhering to basic investing principles such as asset allocation and diversification, and working closely with their advisors to research and identify appropriate investment opportunities.

Respectfully,

LOGO

Robert J. Manning

Chairman and Chief Executive Officer

MFS Investment Management®

August 16, 2011

 

The opinions expressed in this letter are subject to change, may not be relied upon for investment advice, and no forecasts can be guaranteed.

 

 

1

Table of Contents

MFS Growth Series

 

PORTFOLIO COMPOSITION

 

Portfolio structure

LOGO

 

Top ten holdings  
Apple, Inc.     5.1%   
Danaher Corp.     3.2%   
EMC Corp.     3.0%   
Oracle Corp.     2.9%   
Google, Inc., “A”     2.4%   
Qualcomm, Inc.     2.1%   
American Tower Corp., “A”     2.0%   
Precision Castparts Corp.     1.8%   
Thermo Fisher Scientific, Inc.     1.8%   
Viacom, Inc., “B”     1.7%   
Equity sectors  
Technology     24.9%   
Health Care     11.5%   
Energy     9.4%   
Industrial Goods & Services     9.3%   
Retailing     8.5%   
Leisure     8.3%   
Consumer Staples     6.5%   
Special Products & Services     5.0%   
Financial Services     5.0%   
Basic Materials     4.2%   
Autos & Housing     2.3%   
Transportation     2.2%   
Utilities & Communications     2.0%   
 

 

Percentages are based on net assets as of 6/30/11.

The portfolio is actively managed and current holdings may be different.

 

2

Table of Contents

MFS Growth Series

 

EXPENSE TABLE

 

Fund Expenses Borne by the Contract Holders During the Period,

January 1, 2011 through June 30, 2011

As a contract holder of the fund, you incur ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period January 1, 2011 through June 30, 2011.

Actual Expenses

The first line for each share class in the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The second line for each share class in the following table provides information about hypothetical account values and hypothetical expenses based on the fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight the fund’s ongoing costs only and do not take into account the fees and expenses imposed under the variable contracts through which your investment in the fund is made. Therefore, the second line for each share class in the table is useful in comparing ongoing costs associated with an investment in vehicles (such as the fund) which fund benefits under variable annuity and variable life insurance contracts and to qualified pension and retirement plans only, and will not help you determine the relative total costs of investing in the fund through variable annuity and variable life insurance contracts. If the fees and expenses imposed under the variable contracts were included, your costs would have been higher.

 

Share Class         Annualized
Expense Ratio		      Beginning
Account Value
1/01/11		     

Ending

Account Value
6/30/11

      Expenses Paid
During Period (p)
1/01/11-6/30/11		  
Initial Class   Actual      0.83%         $1,000.00         $1,046.17         $4.21   
  Hypothetical (h)      0.83%         $1,000.00         $1,020.68         $4.16   
Service Class   Actual      1.08%         $1,000.00         $1,044.91         $5.48   
  Hypothetical (h)      1.08%         $1,000.00         $1,019.44         $5.41   

 

(h) 5% class return per year before expenses.

 

(p) Expenses paid is equal to each class’ annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by the number of days in the period, divided by the number of days in the year.

 

3

Table of Contents

MFS Growth Series

 

PORTFOLIO OF INVESTMENTS – 6/30/11 (unaudited)

 

The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.

Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – 99.1%     
Aerospace – 4.0%     
Goodrich Corp.      40,645      $ 3,881,594   
Honeywell International, Inc.      130,600        7,782,454   
Precision Castparts Corp.      61,525        10,130,091   
    

 

 

  
     $ 21,794,139   
    

 

 

  
Alcoholic Beverages – 1.0%     
Diageo PLC      271,850      $ 5,554,174   
    

 

 

  
Apparel Manufacturers – 1.0%     
LVMH Moet Hennessy Louis Vuitton S.A.      13,040      $ 2,346,725   
NIKE, Inc., “B”      19,996        1,799,240   
Phillips-Van Heusen Corp.      18,300        1,198,101   
    

 

 

  
     $ 5,344,066   
    

 

 

  
Automotive – 1.1%     
Johnson Controls, Inc.      141,960      $ 5,914,054   
    

 

 

  
Biotechnology – 1.4%     
Alexion Pharmaceuticals, Inc. (a)      83,340      $ 3,919,480   
Celgene Corp. (a)      63,380        3,823,082   
    

 

 

  
     $ 7,742,562   
    

 

 

  
Broadcasting – 4.1%     
Discovery Communications, Inc., “A” (a)      56,490      $ 2,313,830   
Interpublic Group of Cos., Inc.      306,460        3,830,750   
Viacom, Inc., “B”      185,660        9,468,660   
Walt Disney Co.      175,860        6,865,574   
    

 

 

  
     $ 22,478,814   
    

 

 

  
Brokerage & Asset Managers – 1.9%     
Affiliated Managers Group, Inc. (a)      71,420      $ 7,245,559   
Blackrock, Inc.      15,526        2,978,042   
    

 

 

  
     $ 10,223,601   
    

 

 

  
Business Services – 4.1%     
Accenture PLC, “A”      96,030      $ 5,802,133   
Cognizant Technology Solutions Corp., “A” (a)      78,390        5,749,123   
FleetCor Technologies, Inc. (a)      46,060        1,365,218   
Jones Lang LaSalle, Inc.      42,280        3,987,004   
MSCI, Inc., “A” (a)      38,380        1,446,158   
Verisk Analytics, Inc., “A”      128,370        4,444,169   
    

 

 

  
     $ 22,793,805   
    

 

 

  
Cable TV – 1.3%     
Comcast Corp., “Special A”      182,770      $ 4,428,517   
DIRECTV, “A” (a)      54,210        2,754,952   
    

 

 

  
     $ 7,183,469   
    

 

 

  
Chemicals – 2.5%     
Celanese Corp.      85,230      $ 4,543,611   
Ecolab, Inc.      61,700        3,478,646   
Monsanto Co.      77,120        5,594,285   
    

 

 

  
     $ 13,616,542   
    

 

 

  
Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – continued     
Computer Software – 7.7%     
Autodesk, Inc. (a)      139,810      $ 5,396,666   
Check Point Software Technologies Ltd. (a)      139,360        7,922,616   
Intuit, Inc. (a)      79,980        4,147,763   
Oracle Corp.      485,640        15,982,412   
Red Hat, Inc. (a)      72,160        3,312,144   
Salesforce.com, Inc. (a)      11,150        1,661,127   
VeriSign, Inc.      114,823        3,841,978   
    

 

 

  
     $ 42,264,706   
    

 

 

  
Computer Software – Systems – 9.8%   
Apple, Inc. (a)      83,908      $ 28,165,398   
EMC Corp. (a)      597,280        16,455,064   
International Business Machines Corp.      46,290        7,941,050   
Verifone Systems, Inc.      28,390        1,259,097   
    

 

 

  
     $ 53,820,609   
    

 

 

  
Construction – 1.2%     
Owens Corning (a)      90,550      $ 3,382,043   
Stanley Black & Decker, Inc.      44,090        3,176,685   
    

 

 

  
     $ 6,558,728   
    

 

 

  
Consumer Products – 1.3%     
Avon Products, Inc.      77,700      $ 2,175,600   
Colgate-Palmolive Co.      55,170        4,822,410   
    

 

 

  
     $ 6,998,010   
    

 

 

  
Consumer Services – 0.9%     
Priceline.com, Inc. (a)      6,510      $ 3,332,664   
Sotheby’s      41,960        1,825,260   
    

 

 

  
     $ 5,157,924   
    

 

 

  
Electrical Equipment – 3.2%     
Danaher Corp.      333,730      $ 17,684,353   
    

 

 

  
Electronics – 2.6%     
Advanced Micro Devices, Inc. (a)      256,804      $ 1,795,060   
Agilent Technologies, Inc. (a)      64,460        3,294,551   
ASML Holding N.V.      89,101        3,293,173   
Broadcom Corp., “A”      99,750        3,355,590   
First Solar, Inc. (a)(l)      12,230        1,617,662   
JDS Uniphase Corp. (a)      42,480        707,717   
    

 

 

  
     $ 14,063,753   
    

 

 

  
Energy – Independent – 4.2%     
Apache Corp.      20,326      $ 2,508,025   
EOG Resources, Inc.      47,760        4,993,308   
Newfield Exploration Co. (a)      33,250        2,261,665   
Noble Energy, Inc.      47,270        4,236,810   
Occidental Petroleum Corp.      88,310        9,187,772   
    

 

 

  
     $ 23,187,580   
    

 

 

  
Energy – Integrated – 0.2%     
EQT Corp.      25,980      $ 1,364,470   
    

 

 

  
 

 

4

Table of Contents

MFS Growth Series

 

Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – continued     
Engineering – Construction – 1.2%     
Fluor Corp.      98,120      $ 6,344,439   
          
Food & Beverages – 3.2%     
Coca-Cola Co.      90,470      $ 6,087,726   
Green Mountain Coffee Roasters, Inc. (a)      30,610        2,732,249   
Groupe Danone      39,819        2,970,904   
Mead Johnson Nutrition Co., “A”      85,630        5,784,307   
          
     $ 17,575,186   
          
Gaming & Lodging – 0.9%     
Carnival Corp.      44,940      $ 1,691,092   
Las Vegas Sands Corp. (a)      27,570        1,163,730   
Wynn Resorts Ltd.      14,020        2,012,431   
          
     $ 4,867,253   
          
General Merchandise – 3.4%     
Costco Wholesale Corp.      63,620      $ 5,168,489   
Dollar General Corp. (a)      65,720        2,227,251   
Kohl’s Corp.      80,840        4,042,808   
Target Corp.      159,300        7,472,763   
          
     $ 18,911,311   
          
Health Maintenance Organizations – 0.7%   
WellPoint, Inc.      52,020      $ 4,097,615   
          
Internet – 2.7%     
Google, Inc., “A” (a)      25,670      $ 12,998,775   
LinkedIn Corp., “A” (a)(l)      21,610        1,946,845   
          
     $ 14,945,620   
          
Machinery & Tools – 0.6%     
Joy Global, Inc.      15,080      $ 1,436,219   
Polypore International, Inc. (a)      25,390        1,722,458   
          
     $ 3,158,677   
          
Major Banks – 1.0%     
Goldman Sachs Group, Inc.      20,570      $ 2,737,661   
JPMorgan Chase & Co.      66,560        2,724,966   
          
     $ 5,462,627   
          
Medical & Health Technology & Services – 3.3%     
AmerisourceBergen Corp.      124,080      $ 5,136,912   
Cerner Corp. (a)      51,270        3,133,110   
Express Scripts, Inc. (a)      95,190        5,138,356   
IDEXX Laboratories, Inc. (a)      22,070        1,711,749   
Stericycle, Inc.      35,300        3,145,936   
          
     $ 18,266,063   
          
Medical Equipment – 3.8%     
Becton, Dickinson & Co.      46,597      $ 4,015,263   
Cooper Cos., Inc.      17,700        1,402,548   
Covidien PLC      101,680        5,412,426   
Thermo Fisher Scientific, Inc. (a)      156,630        10,085,406   
          
     $ 20,915,643   
          
Metals & Mining – 0.2%     
Teck Resources Ltd., “B”      23,000      $ 1,167,020   
          
Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – continued     
Network & Telecom – 2.1%     
Qualcomm, Inc.      202,480      $ 11,498,839   
          
Oil Services – 5.0%     
Cameron International Corp. (a)      137,510      $ 6,915,378   
Dresser-Rand Group, Inc. (a)      56,260        3,023,975   
FMC Technologies, Inc. (a)      30,830        1,380,876   
Halliburton Co.      88,280        4,502,280   
National Oilwell Varco, Inc.      46,150        3,609,392   
Schlumberger Ltd.      91,080        7,869,312   
          
     $ 27,301,213   
          
Other Banks & Diversified Financials – 2.1%     
MasterCard, Inc., “A”      22,700      $ 6,840,418   
Visa, Inc., “A”      53,367        4,496,703   
          
     $ 11,337,121   
          
Pharmaceuticals – 2.3%     
Abbott Laboratories      95,930      $ 5,047,837   
Allergan, Inc.      38,890        3,237,593   
Teva Pharmaceutical Industries Ltd., ADR      91,300        4,402,486   
          
     $ 12,687,916   
          
Pollution Control – 0.3%     
Republic Services, Inc.      56,020      $ 1,728,217   
          
Printing & Publishing – 0.6%     
Moody’s Corp.      85,310      $ 3,271,639   
          
Railroad & Shipping – 1.3%     
CSX Corp.      128,400      $ 3,366,648   
Kansas City Southern Co. (a)      66,330        3,935,359   
          
     $ 7,302,007   
          
Restaurants – 1.4%     
McDonald’s Corp.      48,940      $ 4,126,621   
Starbucks Corp.      91,910        3,629,526   
          
     $ 7,756,147   
          
Specialty Chemicals – 1.5%     
Airgas, Inc.      40,250      $ 2,819,110   
Praxair, Inc.      47,820        5,183,210   
          
     $ 8,002,320   
          
Specialty Stores – 4.1%     
Abercrombie & Fitch Co., “A”      37,060      $ 2,480,055   
Amazon.com, Inc. (a)      40,370        8,255,261   
Industria de Diseno Textil S.A.      19,519        1,778,716   
PetSmart, Inc.      41,920        1,901,910   
Ross Stores, Inc.      41,100        3,292,932   
Tiffany & Co.      42,880        3,366,938   
Urban Outfitters, Inc. (a)      43,240        1,217,206   
          
     $ 22,293,018   
          
Telephone Services – 2.0%     
American Tower Corp., “A” (a)      209,663      $ 10,971,665   
          
Tobacco – 1.0%     
Philip Morris International, Inc.      80,680      $ 5,387,004   
          
 

 

5

Table of Contents

MFS Growth Series

 

Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – continued     
Trucking – 0.9%     
Expeditors International of Washington, Inc.      92,150      $ 4,717,159   
    

 

 

  
Total Common Stocks
(Identified Cost, $452,386,821)		       $ 543,711,078   
    

 

 

  
MONEY MARKET FUNDS (v) – 1.0%   
MFS Institutional Money Market Portfolio, 0.1%, at Cost and Net Asset Value      5,458,161      $ 5,458,161   
    

 

 

  
    
COLLATERAL FOR SECURITIES LOANED – 0.5%   
Navigator Securities Lending Prime Portfolio, 0.23%, at Cost and Net Asset Value (j)      2,602,221      $ 2,602,221   
    

 

 

  
Total Investments
(Identified Cost, $460,447,203)		       $ 551,771,460   
    

 

 

  
OTHER ASSETS, LESS
LIABILITIES – (0.6)%		         (3,156,314 ) 
    

 

 

  
Net Assets – 100.0%      $ 548,615,146   
    

 

 

  
(a) Non-income producing security.

 

(j) The rate quoted is the annualized seven-day yield of the portfolio at period end.

 

(l) A portion of this security is on loan.

 

(v) Underlying affiliated fund that is available only to investment companies managed by MFS. The rate quoted is the annualized seven-day yield of the fund at period end.

The following abbreviations are used in this report and are defined:

 

ADR   American Depository Receipt

 

PLC   Public Limited Company

See Notes to Financial Statements

 

 

6

Table of Contents

MFS Growth Series

 

FINANCIAL STATEMENTS  |  STATEMENT OF ASSETS AND LIABILITIES (unaudited)

 

This statement represents your fund’s balance sheet, which details the assets and liabilities comprising the total value of the fund.

 

At 6/30/11

      

Assets

                  

Investments –

      

Non-affiliated issuers, at value (identified cost, $454,989,042)

      $546,313,299      

Underlying affiliated funds, at cost and value

      5,458,161            

Total investments, at value, including $2,607,764 of securities on loan (identified cost, $460,447,203)

      $551,771,460            

Receivables for

      

Investments sold

      6,864,703      

Fund shares sold

      835,800      

Interest and dividends

      349,900      

Other assets

      2,327            

Total assets

               $559,824,190   

Liabilities

                  

Payables for

      

Investments purchased

      $7,502,151      

Fund shares reacquired

      960,971      

Collateral for securities loaned, at value

      2,602,221      

Payable to affiliates

      

Investment adviser

      22,709      

Shareholder servicing costs

      635      

Distribution and/or service fees

      634      

Payable for independent Trustees’ compensation

      2,671      

Accrued expenses and other liabilities

      117,052            

Total liabilities

               $11,209,044   

Net assets

               $548,615,146   

Net assets consist of

                  

Paid-in capital

      $504,733,075      

Unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies

      91,324,584      

Accumulated net realized gain (loss) on investments and foreign currency transactions

      (48,635,101 )    

Undistributed net investment income

      1,192,588            

Net assets

               $548,615,146   

Shares of beneficial interest outstanding

               21,274,908   

 

     Net assets      Shares
outstanding		      Net asset value
per share		  

Initial Class

      $501,555,507         19,419,009         $25.83   

Service Class

      47,059,639         1,855,899         25.36   

See Notes to Financial Statements

 

7

Table of Contents

MFS Growth Series

 

FINANCIAL STATEMENTS  |  STATEMENT OF OPERATIONS (unaudited)

 

This statement describes how much your fund earned in investment income and accrued in expenses. It also describes any gains and/or losses generated by fund operations.

 

Six months ended 6/30/11      
Net investment income                  

Income

      

Dividends

      $2,621,251      

Interest

      23,635      

Dividends from underlying affiliated funds

      10,273      

Foreign taxes withheld

      (27,218 )          

Total investment income

               $2,627,941   

Expenses

      

Management fee

      $2,091,481      

Distribution and/or service fees

      58,139      

Shareholder servicing costs

      32,127      

Administrative services fee

      45,265      

Independent Trustees’ compensation

      9,598      

Custodian fee

      34,604      

Shareholder communications

      55,922      

Auditing fees

      24,602      

Legal fees

      4,570      

Miscellaneous

      14,346            

Total expenses

               $2,370,654   

Fees paid indirectly

      (13 )    

Reduction of expenses by investment adviser

      (1,590 )          

Net expenses

               $2,369,051   

Net investment income

               $258,890   

Realized and unrealized gain (loss) on investments and foreign currency transactions

                  

Realized gain (loss) (identified cost basis)

      

Investment transactions

      $33,246,549      

Foreign currency transactions

      (15,242 )          

Net realized gain (loss) on investments and foreign currency transactions

               $33,231,307   

Change in unrealized appreciation (depreciation)

      

Investments

      $(8,528,512 )    

Translation of assets and liabilities in foreign currencies

      (2,061 )          

Net unrealized gain (loss) on investments and foreign currency translation

               $(8,530,573 ) 

Net realized and unrealized gain (loss) on investments and foreign currency

               $24,700,734   

Change in net assets from operations

               $24,959,624   

See Notes to Financial Statements

 

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MFS Growth Series

 

FINANCIAL STATEMENTS  |  STATEMENTS OF CHANGES IN NET ASSETS

 

These statements describe the increases and/or decreases in net assets resulting from operations, any distributions, and any shareholder transactions.

 

    
 
 		 Six months ended
6/30/11
(unaudited		   
  
) 		     
 		 Year ended
12/31/10		   
  

Change in net assets

      

From operations

                  

Net investment income

      $258,890         $1,150,455   

Net realized gain (loss) on investments and foreign currency transactions

      33,231,307         41,498,031   

Net unrealized gain (loss) on investments and foreign currency translation

      (8,530,573 )       30,240,826   

Change in net assets from operations

      $24,959,624         $72,889,312   

Distributions declared to shareholders

                  

From net investment income

      $—         $(550,091 ) 

Change in net assets from fund share transactions

      $(23,002,999 )       $(55,829,691 ) 

Total change in net assets

      $1,956,625         $16,509,530   

Net assets

                  

At beginning of period

      546,658,521         530,148,991   

At end of period (including undistributed net investment income of $1,192,588 and
$933,698, respectively)

      $548,615,146         $546,658,521   

See Notes to Financial Statements

 

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MFS Growth Series

 

FINANCIAL STATEMENTS  |  FINANCIAL HIGHLIGHTS

 

The financial highlights table is intended to help you understand the fund’s financial performance for the semiannual period and the past 5 fiscal years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period.

 

Initial Class    Six months
ended
6/30/11		      Years ended 12/31  
        2010        2009        2008        2007        2006  
     (unaudited)                                             

Net asset value, beginning of period

      $24.69         $21.43           $15.62           $25.01           $20.64           $19.13   
Income (loss) from investment operations                                                              

Net investment income (loss) (d)

      $0.01         $0.05           $0.03           $0.05           $0.05           $(0.03 ) 

Net realized and unrealized gain (loss) on investments and foreign currency

      1.13         3.24           5.83           (9.39 )         4.32           1.54   

Total from investment operations

      $1.14         $3.29           $5.86           $(9.34 )         $4.37           $1.51   
Less distributions declared to shareholders                                                              

From net investment income

      $—         $(0.03 )         $(0.05 )         $(0.05 )         $—           $—   

Net asset value, end of period

      $25.83         $24.69           $21.43           $15.62           $25.01           $20.64   

Total return (%) (k)(r)(s)

      4.62 (n)       15.34           37.67           (37.42 )         21.17           7.89   

Ratios (%) (to average net assets)

and Supplemental data:

                                                              

Expenses before expense reductions (f)

      0.83 (a)       0.85           0.86           0.84           0.87           0.87   

Expenses after expense reductions (f)

      0.83 (a)       0.85           0.86           0.84           0.87           0.87   

Net investment income (loss)

      0.11 (a)       0.24           0.14           0.25           0.20           (0.14 ) 

Portfolio turnover

      41         100           100           129           84           127   

Net assets at end of period (000 omitted)

      $501,556         $503,497           $498,288           $389,813           $711,418           $667,776   

See Notes to Financial Statements

 

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Financial Highlights – continued

 

Service Class      Six months
ended
6/30/11		      Years ended 12/31  
          2010      2009        2008      2007        2006  
       (unaudited)                                         

Net asset value, beginning of period

        $24.27         $21.10         $15.37           $24.61         $20.36           $18.92   
Income (loss) from investment operations                                                            

Net investment income (loss) (d)

        $(0.02 )       $0.00 (w)       $(0.02 )         $0.00 (w)       $(0.01 )         $(0.07 ) 

Net realized and unrealized gain (loss) on investments and foreign currency

        1.11         3.17         5.76           (9.24 )       4.26           1.51   

Total from investment operations

        $1.09         $3.17         $5.74           $(9.24 )       $4.25           $1.44   
Less distributions declared to shareholders                                                            

From net investment income

        $—         $—         $(0.01 )         $—         $—           $—   

Net asset value, end of period

        $25.36         $24.27         $21.10           $15.37         $24.61           $20.36   

Total return (%) (k)(r)(s)

        4.49 (n)       15.02         37.33           (37.55 )       20.87           7.61   
Ratios (%) (to average net assets)
and Supplemental data:		                                                            

Expenses before expense reductions (f)

        1.08 (a)       1.10         1.10           1.09         1.12           1.12   

Expenses after expense reductions (f)

        1.08 (a)       1.10         1.10           1.08         1.12           1.12   

Net investment income (loss)

        (0.13 )(a)       0.02         (0.11 )         0.01         (0.05 )         (0.39 ) 

Portfolio turnover

        41         100         100           129         84           127   

Net assets at end of period (000 omitted)

        $47,060         $43,161         $31,861           $18,684         $30,698           $34,595   

 

(a) Annualized.

 

(d) Per share data is based on average shares outstanding.

 

(f) Ratios do not reflect reductions from fees paid indirectly, if applicable.

 

(k) The total return does not reflect expenses that apply to separate accounts. Inclusion of these charges would reduce the total return figures for all periods shown.

 

(n) Not annualized.

 

(r) Certain expenses have been reduced without which performance would have been lower.

 

(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.

 

(w) Per share amount was less than $0.01.

See Notes to Financial Statements

 

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NOTES TO FINANCIAL STATEMENTS (unaudited)

 

(1)   Business and Organization

MFS Growth Series (the fund) is a 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, and qualified retirement and pension plans.

 

(2)   Significant Accounting Policies

General – The preparation of financial statements in conformity with U.S. 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. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the fund’s Statement of Assets and Liabilities through the date that the financial statements were issued. The fund invests in foreign securities, including securities of emerging market issuers. 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. The markets of emerging markets countries are generally more volatile than the markets of developed countries with more mature economies. All of the risks of investing in foreign securities previously described are heightened when investing in emerging markets countries.

Investment Valuations – Equity securities, including restricted equity securities, are generally valued at the last sale or official closing price as provided by a third-party pricing service on the market or exchange on which they are primarily traded. Equity securities, for which there were no sales reported that day, are generally valued at the last quoted daily bid quotation as provided by a third-party pricing service on the market or exchange on which such securities are primarily traded. Equity securities held short, for which there were no sales reported for that day, are generally valued at the last quoted daily ask quotation as provided by a third-party pricing service on the market or exchange on which such securities are primarily traded. Short-term instruments with a maturity at issuance of 60 days or less generally are valued at amortized cost, which approximates market value. Open-end investment companies are generally valued at net asset value per share. Securities and other assets generally valued on the basis of information from a third-party pricing service may also be valued at a broker/dealer bid quotation. Values obtained from third-party pricing services can utilize both transaction data and market information such as yield, quality, coupon rate, maturity, type of issue, trading characteristics, and other market data. The values of foreign securities and other assets and liabilities expressed in foreign currencies are converted to U.S. dollars using the mean of bid and asked prices for rates provided by a third-party pricing service.

The Board of Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments (including any fair valuation) to the adviser pursuant to valuation policies and procedures approved by the Board. If the adviser determines that reliable market quotations are not readily available, investments are valued at fair value as determined in good faith by the adviser in accordance with such procedures under the oversight of the Board of Trustees. Under the fund’s valuation policies and procedures, market quotations are not considered to be readily available for most types of debt instruments and floating rate loans and many types of derivatives. These investments are generally valued at fair value based on information from third-party pricing services. In addition, investments may be valued at fair value if the adviser determines that an investment’s value has been materially affected by events occurring after the close of the exchange or market on which the investment is principally traded (such as foreign exchange or market) and prior to the determination of the fund’s net asset value, or after the halting of trading of a specific security where trading does not resume prior to the close of the exchange or market on which the security is principally traded. Events that occur on a frequent basis after foreign markets close (such as developments in foreign markets and significant movements in the U.S. markets) and prior to the determination of the fund’s net asset value may be deemed to have a material effect on the value of securities traded in foreign markets. Accordingly, the fund’s foreign equity securities may often be valued at fair value. The adviser generally relies on third-party pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and financial condition of the issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment for purposes of calculating the fund’s net asset value can differ depending on the source and method used to determine value. When fair valuation is used, the value of an investment used to determine the fund’s net asset value may differ from quoted or published prices for the same investment. There can be no assurance that the fund could obtain the fair value assigned to an investment if it were to sell the investment at the same time at which the fund determines its net asset value per share.

 

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Notes to Financial Statements (unaudited) – continued

 

Various inputs are used in determining the value of the fund’s assets or liabilities. These inputs are categorized into three broad levels. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fund’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. Level 1 includes unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes other significant observable market-based inputs (including quoted prices for similar securities, interest rates, prepayment speed, and credit risk). Level 3 includes unobservable inputs, which may include the adviser’s own assumptions in determining the fair value of investments. The following is a summary of the levels used as of June 30, 2011 in valuing the fund’s assets or liabilities:

 

Investments at Value    Level 1      Level 2      Level 3      Total  
Equity Securities      $543,711,078         $—         $—         $543,711,078   
Mutual Funds      8,060,382         —         —         8,060,382   
Total Investments      $551,771,460         $—         $—         $551,771,460   

For further information regarding security characteristics, see the Portfolio of Investments.

Foreign Currency Translation – 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 or on the reporting date for foreign denominated receivables and payables. 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 receivables, payables, 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, loans the securities of the fund to certain qualified institutions (the “Borrowers”) approved by the fund. The loans are collateralized by cash and/or U.S. Treasury and federal agency obligations in an amount typically at least equal to the market value of the securities loaned. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. State Street provides the fund with indemnification against Borrower default. The fund bears the risk of loss with respect to the investment of cash collateral. On loans collateralized by cash, the cash collateral is invested in a money market fund or 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 fund and the lending agent. On loans collateralized by U.S. Treasury and/or federal agency obligations, a fee is received from the Borrower, and is allocated between the fund 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.

Indemnifications – Under the fund’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the fund. Additionally, in the normal course of business, the fund enters into agreements with service providers that may contain indemnification clauses. The fund’s maximum exposure under these agreements is unknown as this would involve future claims that may be made against the fund that have not yet occurred.

Investment Transactions and Income – Investment transactions are recorded on the trade date. Interest income is recorded on the accrual basis. Dividends received in cash are recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded when the fund is informed of the dividend if such information is obtained subsequent to 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. The fund may receive proceeds from litigation settlements. Any proceeds received from litigation involving portfolio holdings are reflected in the Statement of Operations in realized gain/loss if the security has been disposed of by the fund or in unrealized gain/loss if the security is still held by the fund. Any other proceeds from litigation not related to portfolio holdings are reflected as other income in the Statement of Operations.

Fees Paid Indirectly – The fund’s custody fee may be reduced according to an arrangement that measures the value of cash deposited with the custodian by the fund. This amount, for the six months ended June 30, 2011, is shown as a reduction of total expenses on the Statement of Operations.

Tax Matters and Distributions – The fund intends to qualify as a regulated investment company, as defined under Subchapter M of the Internal Revenue Code, and to distribute all of its taxable income, including realized capital gains. As a result, no

 

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MFS Growth Series

 

Notes to Financial Statements (unaudited) – continued

 

provision for federal income tax is required. The fund’s federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue Service. Foreign taxes, if any, have been accrued by the fund in the accompanying financial statements.

Distributions to shareholders are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income, expense, gain or loss in different periods for financial statement and tax purposes will reverse at some time in the future. Distributions in excess of net investment income or net realized gains are temporary overdistributions for financial statement purposes resulting from differences in the recognition or classification of income or distributions for financial statement and tax purposes.

Book/tax differences primarily relate to expiration of capital loss carryforwards, wash sale loss deferrals and straddle loss deferrals.

The tax character of distributions declared to shareholders for the last fiscal year is as follows:

 

     12/31/10  
Ordinary income (including any short-term capital gains)      $550,091   

The federal tax cost and the tax basis components of distributable earnings were as follows:

 

As of 6/30/11   
Cost of investments      $461,677,909   
Gross appreciation      95,190,408   
Gross depreciation      (5,096,857 ) 
Net unrealized appreciation (depreciation)      $90,093,551   
As of 12/31/10   
Undistributed ordinary income      933,698   
Capital loss carryforwards      (80,449,076 ) 
Other temporary differences      (184,238 ) 
Net unrealized appreciation (depreciation)      98,622,063   

The aggregate cost above includes prior fiscal year end tax adjustments, if applicable.

As of December 31, 2010, the fund had capital loss carryforwards available to offset future realized gains. Such losses expire as follows:

 

12/31/16      $(52,541,803 ) 
12/31/17      (27,907,273 ) 
Total      $(80,449,076 ) 

Multiple Classes of Shares of Beneficial Interest – The fund offers multiple classes of shares, which differ in their respective distribution and/or service fees. The fund’s income, realized and unrealized gain (loss), and common expenses are allocated to shareholders based on the daily net assets of each class. Dividends are declared separately for each class. Differences in per share dividend rates are generally due to differences in separate class expenses. The fund’s distributions declared to shareholders as reported on the Statements of Changes in Net Assets are presented by class as follows:

 

     From net investment
income		  
     Six months ended
6/30/11		      Year ended
12/31/10		  
Initial Class      $—         $550,091   

(3) Transactions with Affiliates

Investment Adviser – The fund has an investment advisory agreement with MFS to provide overall investment management and related administrative services and facilities to the fund.

The management fee is computed daily and paid monthly at the following annual rates:

 

First $1 billion of average daily net assets      0.75%   
Average daily net assets in excess of $1 billion      0.65%   

 

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MFS Growth Series

 

Notes to Financial Statements (unaudited) – continued

 

The management fee incurred for the six months ended June 30, 2011 was equivalent to an annual effective rate of 0.75% of the fund’s average daily net assets.

Distributor – MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, is the distributor of shares of the fund. The Trustees have adopted a distribution plan for the Service Class shares pursuant to Rule 12b-1 under the Investment Company Act of 1940.

The fund’s distribution plan provides that the fund will pay MFD distribution and/or service fees equal to 0.25% per annum of its average daily net assets attributable to Service Class shares as partial consideration for services performed and expenses incurred by MFD and financial intermediaries (including participating insurance companies that invest in the fund to fund variable annuity and variable life insurance contracts, sponsors of qualified retirement and pension plans that invest in the fund, and affiliates of these participating insurance companies and plan sponsors) in connection with the sale and distribution of the Service Class shares. MFD may subsequently pay all, or a portion, of the distribution and/or service fees to financial intermediaries.

Shareholder Servicing Agent – MFS Service Center, Inc. (MFSC), a wholly-owned subsidiary of MFS, receives a fee from the fund for its services as shareholder servicing agent. For the six months ended June 30, 2011, the fee was $31,128, which equated to 0.0112% annually of the fund’s average daily net assets. MFSC also receives payment from the fund for out-of-pocket expenses paid by MFSC on behalf of the fund. For the six months ended June 30, 2011, these costs amounted to $999.

Administrator – MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the fund partially reimburses MFS the costs incurred to provide these services. The fund is charged an annual fixed amount of $17,500 plus a fee based on average daily net assets. The administrative services fee incurred for the six months ended June 30, 2011 was equivalent to an annual effective rate of 0.0162% of the fund’s average daily net assets.

Trustees’ and Officers’ Compensation – The fund pays compensation to independent Trustees in the form of a retainer, attendance fees, and additional compensation to Board and Committee chairpersons. The fund does not pay compensation directly to Trustees or officers of the fund who are also officers of the investment adviser, all of whom receive remuneration for their services to the fund from MFS. Certain officers and Trustees of the fund are officers or directors of MFS, MFD, and MFSC.

Other – This fund and certain other funds managed by MFS (the funds) have entered into services agreements (the Agreements) which provide for payment of fees by the funds to Tarantino LLC and Griffin Compliance LLC in return for the provision of services of an Independent Chief Compliance Officer (ICCO) and Assistant ICCO, respectively, for the funds. The ICCO and Assistant ICCO are officers of the funds and the sole members of Tarantino LLC and Griffin Compliance LLC, respectively. The funds can terminate the Agreements with Tarantino LLC and Griffin Compliance LLC at any time under the terms of the Agreements. For the six months ended June 30, 2011, the aggregate fees paid by the fund to Tarantino LLC and Griffin Compliance LLC were $1,963 and are included in miscellaneous expense on the Statement of Operations. MFS has agreed to reimburse the fund for a portion of the payments made by the fund in the amount of $1,590, which is shown as a reduction of total expenses in the Statement of Operations. Additionally, MFS has agreed to bear all expenses associated with office space, other administrative support, and supplies provided to the ICCO and Assistant ICCO.

The fund invests in the MFS Institutional Money Market Portfolio which is managed by MFS and seeks a high level of current income consistent with preservation of capital and liquidity. Income earned on this investment is included in dividends from underlying affiliated funds on the Statement of Operations. This money market fund does not pay a management fee to MFS.

(4) Portfolio Securities

Purchases and sales of investments, other than U.S. Government securities, purchased option transactions, and short-term obligations, aggregated $226,075,470 and $235,799,791, respectively.

 

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Notes to Financial Statements (unaudited) – continued

 

(5) Shares of Beneficial Interest

The fund’s Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest. Transactions in fund shares were as follows:

 

     Six months ended 6/30/11      Year ended 12/31/10  
     Shares      Amount      Shares      Amount  
Shares sold            

Initial Class

      1,343,178         $34,078,406         2,960,888         $65,574,689   

Service Class

      475,772         11,842,260         686,815         14,790,994   
     1,818,950         $45,920,666         3,647,703         $80,365,683   
Shares issued to shareholders in reinvestment of distributions            

Initial Class

      —         $—         23,650         $550,091   
Shares reacquired            

Initial Class

      (2,317,712 )       $(58,985,299 )       (5,842,314 )       $(127,766,833 ) 

Service Class

      (398,348 )       (9,938,366 )       (418,686 )       (8,978,632 ) 
     (2,716,060 )       $(68,923,665 )       (6,261,000 )       $(136,745,465 ) 
Net change            

Initial Class

      (974,534 )       $(24,906,893 )       (2,857,776 )       $(61,642,053 ) 

Service Class

      77,424         1,903,894         268,129         5,812,362   
     (897,110 )       $(23,002,999 )       (2,589,647 )       $(55,829,691 ) 

(6) Line of Credit

The fund and certain other funds managed by MFS participate in a $1.1 billion unsecured committed line of credit, subject to a $1 billion sublimit, provided by a syndication of banks under a credit agreement. Borrowings may be made for temporary financing needs. Interest is charged to each fund, based on its borrowings, generally at a rate equal to the higher of the Federal Reserve funds rate or one month LIBOR plus an agreed upon spread. A commitment fee, based on the average daily, unused portion of the committed line of credit, is allocated among the participating funds at the end of each calendar quarter. In addition, the fund and other funds managed by MFS have established unsecured uncommitted borrowing arrangements with certain banks for temporary financing needs. Interest is charged to each fund, based on its borrowings, at a rate equal to the Federal Reserve funds rate plus an agreed upon spread. For the six months ended June 30, 2011, the fund’s commitment fee and interest expense were $2,568 and $0, respectively, and are included in miscellaneous expense on the Statement of Operations.

(7) Transactions in Underlying Affiliated Funds – Affiliated Issuers

An affiliated issuer may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. For the purposes of this report, the fund assumes the following to be affiliated issuers:

 

Underlying Affiliated Funds    Beginning
Shares/Par
Amount		      Acquisitions
Shares/Par
Amount		      Dispositions
Shares/Par
Amount		      Ending
Shares/Par
Amount		  
MFS Institutional Money Market Portfolio      9,944,359         86,791,216         (91,277,414 )       5,458,161   
Underlying Affiliated Funds    Realized
Gain (Loss)		      Capital Gain
Distributions		      Dividend
Income		      Ending
Value		  
MFS Institutional Money Market Portfolio      $—         $—         $10,273         $5,458,161   

 

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MFS Growth Series

 

BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT

 

A discussion regarding the Board’s most recent review and renewal of the fund’s Investment Advisory Agreement with MFS will be available on or about November 1, 2011 by clicking on the fund’s name under “Variable Insurance Portfolios — VIT” in the “Products and Performance” section of the MFS Web site (mfs.com).

PROXY VOTING POLICIES AND INFORMATION

A general description of the MFS funds’ proxy voting policies and procedures is available without charge, upon request, by calling
1-800-225-2606, by visiting the Proxy Voting section of mfs.com or by visiting the SEC’s Web site at http://www.sec.gov.

Information regarding how the fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available without charge by visiting the Proxy Voting section of mfs.com or by visiting the SEC’s Web site at http://www.sec.gov.

QUARTERLY PORTFOLIO DISCLOSURE

The fund will file a complete schedule of portfolio holdings with the Securities and Exchange Commission (the Commission) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q may be reviewed and copied at the:

Public Reference Room

Securities and Exchange Commission

100 F Street, NE, Room 1580

Washington, D.C. 20549

Information on the operation of the Public Reference Room may be obtained by calling the Commission at 1-800-SEC-0330. The fund’s Form N-Q is available on the EDGAR database on the Commission’s Internet Web site 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: publicinfo@sec.gov or by writing the Public Reference Section at the above address.

FURTHER INFORMATION

From time to time, MFS may post important information about the fund or the MFS funds on the MFS web site (mfs.com). This information is available by visiting the “News & Commentary” section of mfs.com or by clicking on the fund’s name under “Variable Insurance Portfolios — VIT” in the “Products and Performance” section of mfs.com.

 

17

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rev. 3/11

 

FACTS   WHAT DOES MFS DO WITH YOUR
PERSONAL INFORMATION?		   LOGO

 

Why?   Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?  

The types of personal information we collect and share depend on the product or service you have with us. This information can include:

 

• Social Security number and account balances

• Account transactions and transaction history

• Checking account information and wire transfer instructions

 

When you are no longer our customer, we continue to share your information as described in this notice.

 

How?   All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons MFS chooses to share; and whether you can limit this sharing.

 

Reasons we can share your personal information   Does MFS share?   Can you limit this
sharing?

For our everyday business purposes –

such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus

   Yes   No

For our marketing purposes –

to offer our products and services to you

   No   We don’t share
For joint marketing with other financial companies   No   We don’t share

For our affiliates’ everyday business purposes –

information about your transactions and experiences

   No   We don’t share

For our affiliates’ everyday business purposes –

information about your creditworthiness

   No   We don’t share
For nonaffiliates to market to you   No   We don’t share

 

Questions?   Call 800-225-2606 or go to mfs.com.

 

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Page 2  

 

Who we are
Who is providing this notice?   MFS Funds, MFS Investment Management, MFS Institutional Advisors, Inc., MFS Fund Distributors, Inc., MFS Heritage Trust Company, and MFS Service Center, Inc.

 

What we do
How does MFS protect my personal information?   To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include procedural, electronic, and physical safeguards for the protection of the personal information we collect about you.
How does MFS
collect my personal information?		  

We collect your personal information, for example, when you

 

• open an account or provide account information

• direct us to buy securities or direct us to sell your securities

• make a wire transfer

 

We also collect your personal information from others, such as credit bureaus, affiliates and other companies.

Why can’t I limit all sharing?  

Federal law gives you the right to limit only

 

• sharing for affiliates’ everyday business purposes – information about your creditworthiness

• affiliates from using your information to market to you

• sharing for nonaffiliates to market to you

 

State laws and individual companies may give you additional rights to limit sharing.

 

Definitions
Affiliates  

Companies related by common ownership or control. They can be financial and nonfinancial companies.

 

• MFS does not share personal information with affiliates, except for everyday business purposes as described on page one of this notice.

Nonaffiliates  

Companies not related by common ownership or control. They can be financial and nonfinancial companies.

 

• MFS does not share with nonaffiliates so they can market to you.

Joint Marketing  

A formal agreement between nonaffiliated financial companies that together market financial products or services to you.

 

• MFS doesn’t jointly market.

 

 

Other important information
If you own an MFS product or receive an MFS service in the name of a third party such as a bank or broker-dealer, their privacy policy may apply to you instead of ours.

 

19

Table of Contents

LOGO

Table of Contents

LOGO

 

MFS® Investors Trust Series

MFS® Variable Insurance Trust

 

LOGO

 

 

SEMIANNUAL REPORT

June 30, 2011

 

VGI-SEM

Table of Contents

MFS® INVESTORS TRUST SERIES

 

CONTENTS   
Letter from the CEO      1   
Portfolio composition      2   
Expense table      3   
Portfolio of investments      4   
Statement of assets and liabilities      6   
Statement of operations      7   
Statements of changes in net assets      8   
Financial highlights      9   
Notes to financial statements      11   
Board review of investment advisory agreement      16   
Proxy voting policies and information      16   
Quarterly portfolio disclosure      16   
Further information      16   
MFS® privacy notice      17   

 

The report is prepared for the general information of contract owners. It is authorized for distribution to prospective investors only when preceded or accompanied by a current prospectus.

 

NOT FDIC INSURED Ÿ MAY LOSE VALUE Ÿ NO BANK OR CREDIT UNION GUARANTEE Ÿ NOT A DEPOSIT Ÿ NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY OR NCUA/NCUSIF

Table of Contents

MFS Investors Trust Series

 

LETTER FROM THE CEO

 

LOGO

 

Dear Contract Owners:

After about a year of almost uninterrupted macroeconomic and financial market improvement following the global credit crisis, investors grew more cautious in the middle of 2010 as fears grew that some European countries would default on their debt and as economic data showed a weakening

trend in the global economy. As a result asset prices fell significantly.

Last September the U.S. Federal Reserve Board’s promises to make lending conditions easier helped assuage market fears and drive asset prices off their recent lows. A combination of solid earnings and improving economic data gave an additional boost to investor sentiment.

In the following months, the renewed positive market mood, coupled with indications of better global macroeconomic activity, pushed many asset valuations to post-crisis highs. At the same time, global sovereign

bond yields initially rose as investors became concerned about inflationary pressures, driven by higher prices for oil as well as other commodities. However, by the end of the second quarter of 2011, a weakening macroeconomic backdrop and renewed concerns over debt problems in some eurozone countries pushed equities lower.

For the remainder of 2011, we are cautiously optimistic that economic growth will continue to improve and that the global economies will recover from the shocks of the past few years. We expect the pace of recovery worldwide to be uneven and volatile and acknowledge the elevated uncertainty created by events in Japan, Europe, the Middle East, as well as that created by the U.S. debate over raising the debt ceiling and the downgrade by Standard & Poor’s of the U.S. long-term credit rating.

As always, we continue to be mindful of the many economic challenges faced at the local, national, and international levels. It is in times such as these that we want to remind investors of the merits of maintaining a long-term view, adhering to basic investing principles such as asset allocation and diversification, and working closely with their advisors to research and identify appropriate investment opportunities.

Respectfully,

LOGO

Robert J. Manning

Chairman and Chief Executive Officer

MFS Investment Management®

August 16, 2011

 

The opinions expressed in this letter are subject to change, may not be relied upon for investment advice, and no forecasts can be guaranteed.

 

 

1

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MFS Investors Trust Series

 

PORTFOLIO COMPOSITION

 

Portfolio structure

LOGO

 

Top ten holdings  
Apple, Inc.     2.9%   
Oracle Corp.     2.8%   
JPMorgan Chase & Co.     2.5%   
Danaher Corp.     2.4%   
EMC Corp.     2.3%   
United Technologies Corp.     2.2%   
Walt Disney Co.     2.2%   
Procter & Gamble Co.     2.0%   
Abbott Laboratories     1.9%   
Chevron Corp.     1.8%   
Equity sectors  
Financial Services     18.7%   
Technology     15.2%   
Energy     12.1%   
Health Care     11.5%   
Consumer Staples     11.0%   
Industrial Goods & Services     5.7%   
Retailing     5.6%   
Basic Materials     5.0%   
Utilities & Communications     4.6%   
Autos & Housing     3.7%   
Leisure     3.4%   
Transportation     1.5%   
Special Products & Services     1.1%   
 

 

Percentages are based on net assets as of 6/30/11.

The portfolio is actively managed and current holdings may be different.

 

2

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MFS Investors Trust Series

 

EXPENSE TABLE

 

Fund Expenses Borne by the Contract Holders During the Period,

January 1, 2011 through June 30, 2011

As a contract holder of the fund, you incur ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period January 1, 2011 through June 30, 2011.

Actual Expenses

The first line for each share class in the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The second line for each share class in the following table provides information about hypothetical account values and hypothetical expenses based on the fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight the fund’s ongoing costs only and do not take into account the fees and expenses imposed under the variable contracts through which your investment in the fund is made. Therefore, the second line for each share class in the table is useful in comparing ongoing costs associated with an investment in vehicles (such as the fund) which fund benefits under variable annuity and variable life insurance contracts and to qualified pension and retirement plans only, and will not help you determine the relative total costs of investing in the fund through variable annuity and variable life insurance contracts. If the fees and expenses imposed under the variable contracts were included, your costs would have been higher.

 

Share Class         Annualized
Expense Ratio		      Beginning
Account Value
1/01/11		      Ending
Account Value
6/30/11		      Expenses Paid
During Period (p)
1/01/11-6/30/11		  
Initial Class   Actual      0.82%         $1,000.00         $1,052.40         $4.17   
  Hypothetical (h)      0.82%         $1,000.00         $1,020.73         $4.11   
Service Class   Actual      1.07%         $1,000.00         $1,050.63         $5.44   
  Hypothetical (h)      1.07%         $1,000.00         $1,019.49         $5.36   

 

(h) 5% class return per year before expenses.

 

(p) Expenses paid is equal to each class’ annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by the number of days in the period, divided by the number of days in the year.

 

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PORTFOLIO OF INVESTMENTS – 6/30/11 (unaudited)

 

The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.

Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – 99.1%     
Aerospace – 2.2%     
United Technologies Corp.      160,950      $ 14,245,685   
    

 

 

  
Alcoholic Beverages – 2.3%     
Diageo PLC      282,195      $ 5,765,533   
Heineken N.V.      150,728        9,064,436   
    

 

 

  
     $ 14,829,969   
    

 

 

  
Apparel Manufacturers – 2.2%     
LVMH Moet Hennessy Louis Vuitton S.A.      34,916      $ 6,283,608   
NIKE, Inc., “B”      84,630        7,615,007   
    

 

 

  
     $ 13,898,615   
    

 

 

  
Automotive – 1.0%     
Bayerische Motoren Werke AG      61,388      $ 6,125,589   
    

 

 

  
Biotechnology – 1.1%     
Gilead Sciences, Inc. (a)      163,230      $ 6,759,354   
    

 

 

  
Broadcasting – 3.2%     
Viacom, Inc., “B”      129,120      $ 6,585,120   
Walt Disney Co.      358,610        14,000,134   
    

 

 

  
     $ 20,585,254   
    

 

 

  
Brokerage & Asset Managers – 3.0%     
Blackrock, Inc.      32,995      $ 6,328,771   
Charles Schwab Corp.      261,530        4,302,169   
Franklin Resources, Inc.      63,180        8,294,902   
    

 

 

  
     $ 18,925,842   
    

 

 

  
Business Services – 1.1%     
Accenture PLC, “A”      121,650      $ 7,350,093   
    

 

 

  
Chemicals – 2.6%     
3M Co.      101,880      $ 9,663,318   
Celanese Corp.      76,260        4,065,421   
Monsanto Co.      36,100        2,618,694   
    

 

 

  
     $ 16,347,433   
    

 

 

  
Computer Software – 4.2%     
Check Point Software Technologies Ltd. (a)      101,270      $ 5,757,200   
Oracle Corp.      545,070        17,938,254   
VeriSign, Inc.      93,760        3,137,210   
    

 

 

  
     $ 26,832,664   
    

 

 

  
Computer Software – Systems – 6.0%     
Apple, Inc. (a)      54,770      $ 18,384,646   
EMC Corp. (a)      523,670        14,427,109   
International Business Machines Corp.      33,570        5,758,934   
    

 

 

  
     $ 38,570,689   
    

 

 

  
Construction – 2.7%     
Owens Corning (a)      158,470      $ 5,918,854   
Sherwin-Williams Co.      81,930        6,871,469   
Stanley Black & Decker, Inc.      61,990        4,466,379   
    

 

 

  
     $ 17,256,702   
    

 

 

  
Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – continued   
Consumer Products – 4.3%     
Colgate-Palmolive Co.      72,080      $ 6,300,513   
Procter & Gamble Co.      203,000        12,904,710   
Reckitt Benckiser Group PLC      149,682        8,263,990   
    

 

 

  
     $ 27,469,213   
    

 

 

  
Electrical Equipment – 2.4%     
Danaher Corp.      293,750      $ 15,565,813   
    

 

 

  
Electronics – 1.9%     
ASML Holding N.V.      61,223      $ 2,262,802   
Microchip Technology, Inc.      207,730        7,875,044   
Samsung Electronics Co. Ltd., GDR      5,992        2,322,499   
    

 

 

  
     $ 12,460,345   
    

 

 

  
Energy – Independent – 3.2%     
Apache Corp.      51,860      $ 6,399,005   
EOG Resources, Inc.      53,440        5,587,152   
Occidental Petroleum Corp.      80,090        8,332,564   
    

 

 

  
     $ 20,318,721   
    

 

 

  
Energy – Integrated – 5.0%     
Chevron Corp.      114,460      $ 11,771,066   
Exxon Mobil Corp.      99,810        8,122,538   
Hess Corp.      98,800        7,386,288   
QEP Resources, Inc.      117,650        4,921,299   
    

 

 

  
     $ 32,201,191   
    

 

 

  
Engineering – Construction – 1.1%     
Fluor Corp.      113,310      $ 7,326,625   
    

 

 

  
Food & Beverages – 2.7%     
General Mills, Inc.      103,330      $ 3,845,943   
Groupe Danone      71,219        5,313,664   
PepsiCo, Inc.      115,351        8,124,171   
    

 

 

  
     $ 17,283,778   
    

 

 

  
Gaming & Lodging – 0.2%     
Ladbrokes PLC      626,249      $ 1,531,771   
    

 

 

  
General Merchandise – 2.8%     
Kohl’s Corp.      133,350      $ 6,668,834   
Nordstrom, Inc.      40,110        1,882,763   
Target Corp.      204,720        9,603,415   
    

 

 

  
     $ 18,155,012   
    

 

 

  
Insurance – 2.3%     
ACE Ltd.      68,310      $ 4,496,164   
Aon Corp.      118,010        6,053,913   
MetLife, Inc.      102,690        4,505,010   
    

 

 

  
     $ 15,055,087   
    

 

 

  
Internet – 1.5%     
Google, Inc., “A” (a)      18,930      $ 9,585,773   
    

 

 

  
 

 

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MFS Investors Trust Series

 

Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – continued   
Major Banks – 9.4%     
Bank of America Corp.      909,850      $ 9,971,956   
Bank of New York Mellon Corp.      222,663        5,704,626   
Goldman Sachs Group, Inc.      73,390        9,767,475   
JPMorgan Chase & Co.      387,050        15,845,827   
State Street Corp.      112,390        5,067,665   
SunTrust Banks, Inc.      111,160        2,867,928   
Wells Fargo & Co.      396,370        11,122,142   
    

 

 

  
     $ 60,347,619   
    

 

 

  
Medical & Health Technology & Services – 0.2%   
VCA Antech, Inc. (a)      46,888      $ 994,026   
    

 

 

  
Medical Equipment – 5.7%   
Baxter International, Inc.      76,140      $ 4,544,797   
Becton, Dickinson & Co.      89,190        7,685,502   
Medtronic, Inc.      193,310        7,448,234   
St. Jude Medical, Inc.      190,450        9,080,656   
Thermo Fisher Scientific, Inc. (a)      119,840        7,716,498   
    

 

 

  
     $ 36,475,687   
    

 

 

  
Natural Gas – Pipeline – 0.3%   
Kinder Morgan, Inc.      66,670      $ 1,915,429   
    

 

 

  
Network & Telecom – 1.6%   
Cisco Systems, Inc.      639,172      $ 9,977,475   
    

 

 

  
Oil Services – 3.9%   
Cameron International Corp. (a)      110,780      $ 5,571,126   
Halliburton Co.      131,740        6,718,740   
National Oilwell Varco, Inc.      78,970        6,176,244   
Schlumberger Ltd.      76,830        6,638,112   
    

 

 

  
     $ 25,104,222   
    

 

 

  
Other Banks & Diversified Financials – 4.0%   
American Express Co.      152,130      $ 7,865,121   
MasterCard, Inc., “A”      24,260        7,310,508   
Visa, Inc., “A”      85,900        7,237,934   
Zions Bancorporation      138,390        3,322,744   
    

 

 

  
     $ 25,736,307   
    

 

 

  
Pharmaceuticals – 4.5%   
Abbott Laboratories      230,460      $ 12,126,805   
Johnson & Johnson      172,896        11,501,042   
Teva Pharmaceutical Industries Ltd., ADR      106,990        5,159,058   
    

 

 

  
     $ 28,786,905   
    

 

 

  
Railroad & Shipping – 1.1%   
Canadian National Railway Co.      90,530      $ 7,233,347   
    

 

 

  
Specialty Chemicals – 2.4%   
Linde AG      49,542      $ 8,685,857   
Praxair, Inc.      60,930        6,604,203   
    

 

 

  
     $ 15,290,060   
    

 

 

  
Specialty Stores – 0.6%   
Hennes & Mauritz AB, “B”      117,790      $ 4,061,531   
    

 

 

  
Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – continued   
Telephone Services – 2.1%     
American Tower Corp., “A” (a)      129,790      $ 6,791,911   
AT&T, Inc.      203,890        6,404,185   
    

 

 

  
     $ 13,196,096   
    

 

 

  
Tobacco – 1.7%   
Philip Morris International, Inc.      161,500      $ 10,783,355   
    

 

 

  
Trucking – 0.4%   
Expeditors International of Washington, Inc.      46,560      $ 2,383,406   
    

 

 

  
Utilities – Electric Power – 2.2%   
Alliant Energy Corp.      105,730      $ 4,298,982   
American Electric Power Co., Inc.      114,900        4,329,432   
Wisconsin Energy Corp.      172,410        5,405,053   
    

 

 

  
     $ 14,033,467   
    

 

 

  
Total Common Stocks
(Identified Cost, $541,070,484)		      $ 635,000,150   
    

 

 

  
MONEY MARKET FUNDS (v) – 0.8%   
MFS Institutional Money Market Portfolio, 0.1%, at Cost and Net Asset Value      5,393,174      $ 5,393,174   
    

 

 

  
Total Investments
(Identified Cost, $546,463,658)		       $ 640,393,324   
    

 

 

  
OTHER ASSETS, LESS
LIABILITIES – 0.1%		         669,166   
    

 

 

  
Net Assets – 100.0%      $ 641,062,490   
    

 

 

  

 

(a) Non-income producing security.

 

(v) Underlying affiliated fund that is available only to investment companies managed by MFS. The rate quoted is the annualized seven-day yield of the fund at period end.

The following abbreviations are used in this report and are defined:

 

ADR   American Depository Receipt

 

GDR   Global Depository Receipt

 

PLC   Public Limited Company

See Notes to Financial Statements

 

 

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MFS Investors Trust Series

 

FINANCIAL STATEMENTS  |  STATEMENT OF ASSETS AND LIABILITIES (unaudited)

 

This statement represents your fund’s balance sheet, which details the assets and liabilities comprising the total value of the fund.

 

At 6/30/11

      

Assets

                  

Investments –

      

Non-affiliated issuers, at value (identified cost, $541,070,484)

      $635,000,150      

Underlying affiliated funds, at cost and value

      5,393,174            

Total investments, at value (identified cost, $546,463,658)

      $640,393,324            

Cash

      26,351      

Receivables for

      

Investments sold

      3,136,663      

Fund shares sold

      168,913      

Interest and dividends

      460,719      

Other assets

      2,926            

Total assets

               $644,188,896   

Liabilities

                  

Payables for

      

Investments purchased

      $2,261,679      

Fund shares reacquired

      726,671      

Payable to affiliates

      

Investment adviser

      26,526      

Shareholder servicing costs

      515      

Distribution and/or service fees

      1,011      

Payable for independent Trustees’ compensation

      2,793      

Accrued expenses and other liabilities

      107,211            

Total liabilities

               $3,126,406   

Net assets

               $641,062,490   

Net assets consist of

                  

Paid-in capital

      $585,049,888      

Unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies

      93,933,393      

Accumulated net realized gain (loss) on investments and foreign currency transactions

      (46,420,918 )    

Undistributed net investment income

      8,500,127            

Net assets

               $641,062,490   

Shares of beneficial interest outstanding

               30,418,738   

 

     Net assets      Shares
outstanding		      Net asset value
per share		  

Initial Class

      $566,003,936         26,837,935         $21.09   

Service Class

      75,058,554         3,580,803         20.96   

See Notes to Financial Statements

 

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FINANCIAL STATEMENTS  |  STATEMENT OF OPERATIONS (unaudited)

 

This statement describes how much your fund earned in investment income and accrued in expenses. It also describes any gains and/or losses generated by fund operations.

 

Six months ended 6/30/11      
Net investment income                  

Income

      

Dividends

      $5,939,328      

Interest

      4,666      

Dividends from underlying affiliated funds

      3,470      

Foreign taxes withheld

      (136,945 )          

Total investment income

               $5,810,519   

Expenses

      

Management fee

      $2,455,584      

Distribution and/or service fees

      86,153      

Shareholder servicing costs

      36,984      

Administrative services fee

      52,256      

Independent Trustees’ compensation

      9,883      

Custodian fee

      36,234      

Shareholder communications

      54,470      

Auditing fees

      23,497      

Legal fees

      5,735      

Miscellaneous

      16,708            

Total expenses

               $2,777,504   

Reduction of expenses by investment adviser

      (1,882 )          

Net expenses

               $2,775,622   

Net investment income

               $3,034,897   

Realized and unrealized gain (loss) on investments and foreign currency transactions

                  

Realized gain (loss) (identified cost basis)

      

Investment transactions

      $23,146,876      

Foreign currency transactions

      4,515            

Net realized gain (loss) on investments and foreign currency transactions

               $23,151,391   

Change in unrealized appreciation (depreciation)

      

Investments

      $7,521,230      

Translation of assets and liabilities in foreign currencies

      (7,252 )          

Net unrealized gain (loss) on investments and foreign currency translation

               $7,513,978   

Net realized and unrealized gain (loss) on investments and foreign currency

               $30,665,369   

Change in net assets from operations

               $33,700,266   

See Notes to Financial Statements

 

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FINANCIAL STATEMENTS  |  STATEMENTS OF CHANGES IN NET ASSETS

 

These statements describe the increases and/or decreases in net assets resulting from operations, any distributions, and any shareholder transactions.

 

    
 
 		 Six months ended
6/30/11
(unaudited		   
  
) 		     
 		 Year ended
12/31/10		   
  

Change in net assets

      

From operations

                  

Net investment income

      $3,034,897         $5,467,583   

Net realized gain (loss) on investments and foreign currency transactions

      23,151,391         22,401,863   

Net unrealized gain (loss) on investments and foreign currency translation

      7,513,978         41,402,512   

Change in net assets from operations

      $33,700,266         $69,271,958   

Distributions declared to shareholders

                  

From net investment income

      $—         $(7,580,322 ) 

Change in net assets from fund share transactions

      $(58,225,815 )       $(79,178,737 ) 

Total change in net assets

      $(24,525,549 )       $(17,487,101 ) 

Net assets

                  

At beginning of period

      665,588,039         683,075,140   

At end of period (including undistributed net investment income of $8,500,127 and
$5,465,230, respectively)

      $641,062,490         $665,588,039   

See Notes to Financial Statements

 

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FINANCIAL STATEMENTS  |  FINANCIAL HIGHLIGHTS

 

The financial highlights table is intended to help you understand the fund’s financial performance for the semiannual period and the past 5 fiscal years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period.

 

Initial Class      Six months
ended
6/30/11		      Years ended 12/31  
          2010        2009        2008        2007        2006  
       (unaudited)                                             

Net asset value, beginning of period

        $20.04         $18.24           $14.64           $23.52           $21.69           $19.29   
Income (loss) from investment operations                                                                

Net investment income (d)

        $0.10         $0.16           $0.19           $0.24           $0.17           $0.19   

Net realized and unrealized gain (loss) on
investments and foreign currency

        0.95         1.86           3.67           (7.54 )         2.04           2.31   

Total from investment operations

        $1.05         $2.02           $3.86           $(7.30 )         $2.21           $2.50   
Less distributions declared to shareholders                                                                

From net investment income

        $—         $(0.22 )         $(0.26 )         $(0.17 )         $(0.19 )         $(0.10 ) 

From net realized gain on investments

        —         —           —           (1.41 )         (0.19 )         —   

Total distributions declared to shareholders

        $—         $(0.22 )         $(0.26 )         $(1.58 )         $(0.38 )         $(0.10 ) 

Net asset value, end of period

        $21.09         $20.04           $18.24           $14.64           $23.52           $21.69   

Total return (%) (k)(r)(s)

        5.24 (n)       11.10           26.90           (33.08 )         10.31           12.99   
Ratios (%) (to average net assets)
and Supplemental data:		                                                                

Expenses before expense reductions (f)

        0.82 (a)       0.83           0.86           0.84           0.85           0.86   

Expenses after expense reductions (f)

        0.82 (a)       0.83           0.86           0.84           0.85           0.86   

Net investment income

        0.95 (a)       0.87           1.25           1.25           0.74           0.93   

Portfolio turnover

        14         22           34           29           37           46   

Net assets at end of period (000 omitted)

        $566,004         $603,279           $636,809           $560,356           $917,158           $820,583   

See Notes to Financial Statements

 

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Financial Highlights – continued

 

Service Class      Six months
ended
6/30/11		      Years ended 12/31  
          2010        2009        2008        2007        2006  
       (unaudited)                                             

Net asset value, beginning of period

        $19.95         $18.16           $14.56           $23.39           $21.57           $19.19   
Income (loss) from investment operations                                                                

Net investment income (d)

        $0.07         $0.11           $0.15           $0.19           $0.11           $0.14   

Net realized and unrealized gain (loss) on
investments and foreign currency

        0.94         1.86           3.65           (7.51 )         2.03           2.29   

Total from investment operations

        $1.01         $1.97           $3.80           $(7.32 )         $2.14           $2.43   
Less distributions declared to shareholders                                                                

From net investment income

        $—         $(0.18 )         $(0.20 )         $(0.10 )         $(0.13 )         $(0.05 ) 

From net realized gain on investments

        —         —           —           (1.41 )         (0.19 )         —   

Total distributions declared to shareholders

        $—         $(0.18 )         $(0.20 )         $(1.51 )         $(0.32 )         $(0.05 ) 

Net asset value, end of period

        $20.96         $19.95           $18.16           $14.56           $23.39           $21.57   

Total return (%) (k)(r)(s)

        5.06 (n)       10.88           26.56           (33.25 )         10.03           12.69   
Ratios (%) (to average net assets)
and Supplemental data:		                                                                

Expenses before expense reductions (f)

        1.07 (a)       1.08           1.11           1.09           1.11           1.11   

Expenses after expense reductions (f)

        1.07 (a)       1.08           1.11           1.09           1.11           1.11   

Net investment income

        0.71 (a)       0.63           0.99           1.00           0.49           0.69   

Portfolio turnover

        14         22           34           29           37           46   

Net assets at end of period (000 omitted)

        $75,059         $62,309           $46,267           $38,259           $65,180           $79,976   

 

(a) Annualized.

 

(d) Per share data is based on average shares outstanding.

 

(f) Ratios do not reflect reductions from fees paid indirectly, if applicable.

 

(k) The total return does not reflect expenses that apply to separate accounts. Inclusion of these charges would reduce the total return figures for all periods shown.

 

(n) Not annualized.

 

(r) Certain expenses have been reduced without which performance would have been lower.

 

(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.

See Notes to Financial Statements

 

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NOTES TO FINANCIAL STATEMENTS (unaudited)

 

(1)   Business and Organization

MFS Investors Trust Series (the fund) is a 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, and qualified retirement and pension plans.

 

(2)   Significant Accounting Policies

General – The preparation of financial statements in conformity with U.S. 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. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the fund’s Statement of Assets and Liabilities through the date that the financial statements were issued. The fund invests 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, including restricted equity securities, are generally valued at the last sale or official closing price as provided by a third-party pricing service on the market or exchange on which they are primarily traded. Equity securities, for which there were no sales reported that day, are generally valued at the last quoted daily bid quotation as provided by a third-party pricing service on the market or exchange on which such securities are primarily traded. Equity securities held short, for which there were no sales reported for that day, are generally valued at the last quoted daily ask quotation as provided by a third-party pricing service on the market or exchange on which such securities are primarily traded. Short-term instruments with a maturity at issuance of 60 days or less generally are valued at amortized cost, which approximates market value. Open-end investment companies are generally valued at net asset value per share. Securities and other assets generally valued on the basis of information from a third-party pricing service may also be valued at a broker/dealer bid quotation. Values obtained from third-party pricing services can utilize both transaction data and market information such as yield, quality, coupon rate, maturity, type of issue, trading characteristics, and other market data. The values of foreign securities and other assets and liabilities expressed in foreign currencies are converted to U.S. dollars using the mean of bid and asked prices for rates provided by a third-party pricing service.

The Board of Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments (including any fair valuation) to the adviser pursuant to valuation policies and procedures approved by the Board. If the adviser determines that reliable market quotations are not readily available, investments are valued at fair value as determined in good faith by the adviser in accordance with such procedures under the oversight of the Board of Trustees. Under the fund’s valuation policies and procedures, market quotations are not considered to be readily available for most types of debt instruments and floating rate loans and many types of derivatives. These investments are generally valued at fair value based on information from third-party pricing services. In addition, investments may be valued at fair value if the adviser determines that an investment’s value has been materially affected by events occurring after the close of the exchange or market on which the investment is principally traded (such as foreign exchange or market) and prior to the determination of the fund’s net asset value, or after the halting of trading of a specific security where trading does not resume prior to the close of the exchange or market on which the security is principally traded. Events that occur on a frequent basis after foreign markets close (such as developments in foreign markets and significant movements in the U.S. markets) and prior to the determination of the fund’s net asset value may be deemed to have a material effect on the value of securities traded in foreign markets. Accordingly, the fund’s foreign equity securities may often be valued at fair value. The adviser generally relies on third-party pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and financial condition of the issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment for purposes of calculating the fund’s net asset value can differ depending on the source and method used to determine value. When fair valuation is used, the value of an investment used to determine the fund’s net asset value may differ from quoted or published prices for the same investment. There can be no assurance that the fund could obtain the fair value assigned to an investment if it were to sell the investment at the same time at which the fund determines its net asset value per share.

Various inputs are used in determining the value of the fund’s assets or liabilities. These inputs are categorized into three broad levels. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair

 

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Notes to Financial Statements (unaudited) – continued

 

value measurement. The fund’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. Level 1 includes unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes other significant observable market-based inputs (including quoted prices for similar securities, interest rates, prepayment speed, and credit risk). Level 3 includes unobservable inputs, which may include the adviser’s own assumptions in determining the fair value of investments. The following is a summary of the levels used as of June 30, 2011 in valuing the fund’s assets or liabilities:

 

Investments at Value    Level 1      Level 2      Level 3      Total  
Equity Securities      $635,000,150         $—         $—         $635,000,150   
Mutual Funds      5,393,174         —         —         5,393,174   
Total Investments      $640,393,324         $—         $—         $640,393,324   

For further information regarding security characteristics, see the Portfolio of Investments.

Foreign Currency Translation – 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 or on the reporting date for foreign denominated receivables and payables. 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 receivables, payables, 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, loans the securities of the fund to certain qualified institutions (the “Borrowers”) approved by the fund. The loans are collateralized by cash and/or U.S. Treasury and federal agency obligations in an amount typically at least equal to the market value of the securities loaned. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. State Street provides the fund with indemnification against Borrower default. The fund bears the risk of loss with respect to the investment of cash collateral. On loans collateralized by cash, the cash collateral is invested in a money market fund or 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 fund and the lending agent. On loans collateralized by U.S. Treasury and/or federal agency obligations, a fee is received from the Borrower, and is allocated between the fund 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.

Indemnifications – Under the fund’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the fund. Additionally, in the normal course of business, the fund enters into agreements with service providers that may contain indemnification clauses. The fund’s maximum exposure under these agreements is unknown as this would involve future claims that may be made against the fund that have not yet occurred.

Investment Transactions and Income – Investment transactions are recorded on the trade date. Interest income is recorded on the accrual basis. Dividends received in cash are recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded when the fund is informed of the dividend if such information is obtained subsequent to 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.

The fund may receive proceeds from litigation settlements. Any proceeds received from litigation involving portfolio holdings are reflected in the Statement of Operations in realized gain/loss if the security has been disposed of by the fund or in unrealized gain/loss if the security is still held by the fund. Any other proceeds from litigation not related to portfolio holdings are reflected as other income in the Statement of Operations.

Fees Paid Indirectly – The fund’s custody fee may be reduced according to an arrangement that measures the value of cash deposited with the custodian by the fund. For the six months ended June 30, 2011, custody fees were not reduced.

Tax Matters and Distributions – The fund intends to qualify as a regulated investment company, as defined under Subchapter M of the Internal Revenue Code, and to distribute all of its taxable income, including realized capital gains. As a result, no provision for federal income tax is required. The fund’s federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue Service. Foreign taxes, if any, have been accrued by the fund in the accompanying financial statements.

 

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Notes to Financial Statements (unaudited) – continued

 

Distributions to shareholders are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income, expense, gain or loss in different periods for financial statement and tax purposes will reverse at some time in the future. Distributions in excess of net investment income or net realized gains are temporary overdistributions for financial statement purposes resulting from differences in the recognition or classification of income or distributions for financial statement and tax purposes.

Book/tax differences primarily relate to wash sale loss deferrals.

The tax character of distributions declared to shareholders for the last fiscal year is as follows:

 

     12/31/10  
Ordinary income (including any short-term capital gains)      $7,580,322   

The federal tax cost and the tax basis components of distributable earnings were as follows:

 

As of 6/30/11   
Cost of investments      $548,333,016   
Gross appreciation      115,684,698   
Gross depreciation      (23,624,390 ) 
Net unrealized appreciation (depreciation)      $92,060,308   
As of 12/31/10   
Undistributed ordinary income      5,465,230   
Capital loss carryforwards      (67,702,951 ) 
Other temporary differences      10,979   
Net unrealized appreciation (depreciation)      84,539,078   

The aggregate cost above includes prior fiscal year end tax adjustments, if applicable.

As of December 31, 2010, the fund had capital loss carryforwards available to offset future realized gains. Such losses expire as follows:

 

12/31/16      $(14,214,265 ) 
12/31/17      (53,488,686 ) 
Total      $(67,702,951 ) 

Multiple Classes of Shares of Beneficial Interest – The fund offers multiple classes of shares, which differ in their respective distribution and/or service fees. The fund’s income, realized and unrealized gain (loss), and common expenses are allocated to shareholders based on the daily net assets of each class. Dividends are declared separately for each class. Differences in per share dividend rates are generally due to differences in separate class expenses. The fund’s distributions declared to shareholders as reported on the Statements of Changes in Net Assets are presented by class as follows:

 

     From net investment
income		  
     Six months ended
6/30/11		      Year ended
12/31/10		  
Initial Class      $—         $7,105,436   
Service Class      —         474,886   
Total      $—         $7,580,322   

 

(3)   Transactions with Affiliates

Investment Adviser – The fund has an investment advisory agreement with MFS to provide overall investment management and related administrative services and facilities to the fund. The management fee is computed daily and paid monthly at the following annual rates:

 

First $1 billion of average daily net assets      0.75%   
Average daily net assets in excess of $1 billion      0.65%   

Effective May 1, 2011, the investment adviser has agreed in writing to reduce its management fee to 0.60% of average daily net assets in excess of $2.5 billion. This written agreement will continue until modified by the fund’s Board of Trustees, but such agreement will continue at least until April 30, 2013. For the period May 1, 2011 through June 30, 2011, the fund’s average daily net assets did not exceed $2.5 billion and therefore, the management fee was not reduced.

 

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Notes to Financial Statements (unaudited) – continued

 

The management fee incurred for the six months ended June 30, 2011 was equivalent to an annual effective rate of 0.75% of the fund’s average daily net assets.

Distributor – MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, is the distributor of shares of the fund. The Trustees have adopted a distribution plan for the Service Class shares pursuant to Rule 12b-1 under the Investment Company Act of 1940.

The fund’s distribution plan provides that the fund will pay MFD distribution and/or service fees equal to 0.25% per annum of its average daily net assets attributable to Service Class shares as partial consideration for services performed and expenses incurred by MFD and financial intermediaries (including participating insurance companies that invest in the fund to fund variable annuity and variable life insurance contracts, sponsors of qualified retirement and pension plans that invest in the fund, and affiliates of these participating insurance companies and plan sponsors) in connection with the sale and distribution of the Service Class shares. MFD may subsequently pay all, or a portion, of the distribution and/or service fees to financial intermediaries.

Shareholder Servicing Agent – MFS Service Center, Inc. (MFSC), a wholly-owned subsidiary of MFS, receives a fee from the fund for its services as shareholder servicing agent. For the six months ended June 30, 2011, the fee was $36,537, which equated to 0.0112% annually of the fund’s average daily net assets. MFSC also receives payment from the fund for out-of-pocket expenses paid by MFSC on behalf of the fund. For the six months ended June 30, 2011, these costs amounted to $447.

Administrator – MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the fund partially reimburses MFS the costs incurred to provide these services. The fund is charged an annual fixed amount of $17,500 plus a fee based on average daily net assets. The administrative services fee incurred for the six months ended June 30, 2011 was equivalent to an annual effective rate of 0.0160% of the fund’s average daily net assets.

Trustees’ and Officers’ Compensation – The fund pays compensation to independent Trustees in the form of a retainer, attendance fees, and additional compensation to Board and Committee chairpersons. The fund does not pay compensation directly to Trustees or officers of the fund who are also officers of the investment adviser, all of whom receive remuneration for their services to the fund from MFS. Certain officers and Trustees of the fund are officers or directors of MFS, MFD, and MFSC.

Other – This fund and certain other funds managed by MFS (the funds) have entered into services agreements (the Agreements) which provide for payment of fees by the funds to Tarantino LLC and Griffin Compliance LLC in return for the provision of services of an Independent Chief Compliance Officer (ICCO) and Assistant ICCO, respectively, for the funds. The ICCO and Assistant ICCO are officers of the funds and the sole members of Tarantino LLC and Griffin Compliance LLC, respectively. The funds can terminate the Agreements with Tarantino LLC and Griffin Compliance LLC at any time under the terms of the Agreements. For the six months ended June 30, 2011, the aggregate fees paid by the fund to Tarantino LLC and Griffin Compliance LLC were $2,323 and are included in miscellaneous expense on the Statement of Operations. MFS has agreed to reimburse the fund for a portion of the payments made by the fund in the amount of $1,882, which is shown as a reduction of total expenses in the Statement of Operations. Additionally, MFS has agreed to bear all expenses associated with office space, other administrative support, and supplies provided to the ICCO and Assistant ICCO.

The fund invests in the MFS Institutional Money Market Portfolio which is managed by MFS and seeks a high level of current income consistent with preservation of capital and liquidity. Income earned on this investment is included in dividends from underlying affiliated funds on the Statement of Operations. This money market fund does not pay a management fee to MFS.

 

(4)   Portfolio Securities

Purchases and sales of investments, other than U.S. Government securities, purchased option transactions, and short-term obligations, aggregated $92,768,110 and $148,996,364, respectively.

 

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Notes to Financial Statements (unaudited) – continued

 

 

(5)   Shares of Beneficial Interest

The fund’s Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest. Transactions in fund shares were as follows:

 

     Six months ended 6/30/11      Year ended 12/31/10  
     Shares      Amount      Shares      Amount  
Shares sold            

Initial Class

      194,767         $4,056,612         1,482,988         $25,496,825   

Service Class

      802,841         16,642,682         1,096,120         20,064,145   
     997,608         $20,699,294         2,579,108         $45,560,970   
Shares issued to shareholders in reinvestment of distributions            

Initial Class

      —         $—         364,756         $7,105,436   

Service Class

      —         —         24,453         474,886   
     —         $—         389,209         $7,580,322   
Shares reacquired            

Initial Class

      (3,454,937 )       $(71,763,890 )       (6,663,657 )       $(122,417,272 ) 

Service Class

      (345,824 )       (7,161,219 )       (544,147 )       (9,902,757 ) 
     (3,800,761 )       $(78,925,109 )       (7,207,804 )       $(132,320,029 ) 
Net change            

Initial Class

      (3,260,170 )       $(67,707,278 )       (4,815,913 )       $(89,815,011 ) 

Service Class

      457,017         9,481,463         576,426         10,636,274   
     (2,803,153 )       $(58,225,815 )       (4,239,487 )       $(79,178,737 ) 

 

(6)   Line of Credit

The fund and certain other funds managed by MFS participate in a $1.1 billion unsecured committed line of credit, subject to a $1 billion sublimit, provided by a syndication of banks under a credit agreement. Borrowings may be made for temporary financing needs. Interest is charged to each fund, based on its borrowings, generally at a rate equal to the higher of the Federal Reserve funds rate or one month LIBOR plus an agreed upon spread. A commitment fee, based on the average daily, unused portion of the committed line of credit, is allocated among the participating funds at the end of each calendar quarter. In addition, the fund and other funds managed by MFS have established unsecured uncommitted borrowing arrangements with certain banks for temporary financing needs. Interest is charged to each fund, based on its borrowings, at a rate equal to the Federal Reserve funds rate plus an agreed upon spread. For the six months ended June 30, 2011, the fund’s commitment fee and interest expense were $3,182 and $0, respectively, and are included in miscellaneous expense on the Statement of Operations.

 

(7)   Transactions in Underlying Affiliated Funds – Affiliated Issuers

An affiliated issuer may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. For the purposes of this report, the fund assumes the following to be affiliated issuers:

 

Underlying Affiliated Funds    Beginning
Shares/Par
Amount		    Acquisitions
Shares/Par
Amount		      Dispositions
Shares/Par
Amount		      Ending
Shares/Par
Amount		  
MFS Institutional Money Market Portfolio    4,905,692      69,482,823         (68,995,341 )       5,393,174   
Underlying Affiliated Funds    Realized
Gain (Loss)		   

Capital Gain

Distributions

     

Dividend

Income

     

Ending

Value

  
MFS Institutional Money Market Portfolio    $—      $—         $3,470         $5,393,174   

 

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MFS Investors Trust Series

 

BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT

 

A discussion regarding the Board’s most recent review and renewal of the fund’s Investment Advisory Agreement with MFS will be available on or about November 1, 2011 by clicking on the fund’s name under “Variable Insurance Portfolios — VIT” in the “Products and Performance” section of the MFS Web site (mfs.com).

PROXY VOTING POLICIES AND INFORMATION

A general description of the MFS funds’ proxy voting policies and procedures is available without charge, upon request, by calling
1-800-225-2606, by visiting the Proxy Voting section of mfs.com or by visiting the SEC’s Web site at http://www.sec.gov.

Information regarding how the fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available without charge by visiting the Proxy Voting section of mfs.com or by visiting the SEC’s Web site at http://www.sec.gov.

QUARTERLY PORTFOLIO DISCLOSURE

The fund will file a complete schedule of portfolio holdings with the Securities and Exchange Commission (the Commission) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q may be reviewed and copied at the:

Public Reference Room

Securities and Exchange Commission

100 F Street, NE, Room 1580

Washington, D.C. 20549

Information on the operation of the Public Reference Room may be obtained by calling the Commission at 1-800-SEC-0330. The fund’s Form N-Q is available on the EDGAR database on the Commission’s Internet Web site 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: publicinfo@sec.gov or by writing the Public Reference Section at the above address.

FURTHER INFORMATION

From time to time, MFS may post important information about the fund or the MFS funds on the MFS web site (mfs.com). This information is available by visiting the “News & Commentary” section of mfs.com or by clicking on the fund’s name under “Variable Insurance Portfolios — VIT” in the “Products and Performance” section of mfs.com.

 

16

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rev. 3/11

 

FACTS   WHAT DOES MFS DO WITH YOUR
PERSONAL INFORMATION?		   LOGO

 

Why?   Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?  

The types of personal information we collect and share depend on the product or service you have with us. This information can include:

 

• Social Security number and account balances

• Account transactions and transaction history

• Checking account information and wire transfer instructions

 

When you are no longer our customer, we continue to share your information as described in this notice.

 

How?   All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons MFS chooses to share; and whether you can limit this sharing.

 

Reasons we can share your personal information   Does MFS share?   Can you limit this
sharing?

For our everyday business purposes –

such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus

   Yes   No

For our marketing purposes –

to offer our products and services to you

   No   We don’t share
For joint marketing with other financial companies   No   We don’t share

For our affiliates’ everyday business purposes –

information about your transactions and experiences

   No   We don’t share

For our affiliates’ everyday business purposes –

information about your creditworthiness

   No   We don’t share
For nonaffiliates to market to you   No   We don’t share

 

Questions?   Call 800-225-2606 or go to mfs.com.

 

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Page 2  

 

Who we are
Who is providing this notice?   MFS Funds, MFS Investment Management, MFS Institutional Advisors, Inc., MFS Fund Distributors, Inc., MFS Heritage Trust Company, and MFS Service Center, Inc.

 

What we do
How does MFS protect my personal information?   To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include procedural, electronic, and physical safeguards for the protection of the personal information we collect about you.
How does MFS
collect my personal information?		  

We collect your personal information, for example, when you

 

• open an account or provide account information

• direct us to buy securities or direct us to sell your securities

• make a wire transfer

 

We also collect your personal information from others, such as credit bureaus, affiliates and other companies.

Why can’t I limit all sharing?  

Federal law gives you the right to limit only

 

• sharing for affiliates’ everyday business purposes – information about your creditworthiness

• affiliates from using your information to market to you

• sharing for nonaffiliates to market to you

 

State laws and individual companies may give you additional rights to limit sharing.

 

Definitions
Affiliates  

Companies related by common ownership or control. They can be financial and nonfinancial companies.

 

• MFS does not share personal information with affiliates, except for everyday business purposes as described on page one of this notice.

Nonaffiliates  

Companies not related by common ownership or control. They can be financial and nonfinancial companies.

 

• MFS does not share with nonaffiliates so they can market to you.

Joint Marketing  

A formal agreement between nonaffiliated financial companies that together market financial products or services to you.

 

• MFS doesn’t jointly market.

 

 

Other important information
If you own an MFS product or receive an MFS service in the name of a third party such as a bank or broker-dealer, their privacy policy may apply to you instead of ours.

 

18

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LOGO

Table of Contents

LOGO

 

MFS® Value Series

MFS® Variable Insurance Trust

 

LOGO

 

 

SEMIANNUAL REPORT

June 30, 2011

 

VLU-SEM

Table of Contents

MFS® VALUE SERIES

 

CONTENTS   
Letter from the CEO      1   
Portfolio composition      2   
Expense table      3   
Portfolio of investments      4   
Statement of assets and liabilities      6   
Statement of operations      7   
Statements of changes in net assets      8   
Financial highlights      9   
Notes to financial statements      11   
Board review of investment advisory agreement      16   
Proxy voting policies and information      16   
Quarterly portfolio disclosure      16   
Further information      16   
MFS® privacy notice      17   

 

The report is prepared for the general information of contract owners.

It is authorized for distribution to prospective investors only when preceded or accompanied by a current prospectus.

 

NOT FDIC INSURED Ÿ MAY LOSE VALUE Ÿ NO BANK OR CREDIT UNION GUARANTEE Ÿ NOT A DEPOSIT Ÿ NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY OR NCUA/NCUSIF

Table of Contents

MFS Value Series

 

LETTER FROM THE CEO

 

LOGO

 

Dear Contract Owners:

After about a year of almost uninterrupted macroeconomic and financial market improvement following the global credit crisis, investors grew more cautious in the middle of 2010 as fears grew that some European countries would default on their debt and as economic data showed a weakening

trend in the global economy. As a result asset prices fell significantly.

Last September the U.S. Federal Reserve Board’s promises to make lending conditions easier helped assuage market fears and drive asset prices off their recent lows. A combination of solid earnings and improving economic data gave an additional boost to investor sentiment.

In the following months, the renewed positive market mood, coupled with indications of better global macroeconomic activity, pushed many asset valuations to post-crisis highs. At the same time, global sovereign

bond yields initially rose as investors became concerned about inflationary pressures, driven by higher prices for oil as well as other commodities. However, by the end of the second quarter of 2011, a weakening macroeconomic backdrop and renewed concerns over debt problems in some eurozone countries pushed equities lower.

For the remainder of 2011, we are cautiously optimistic that economic growth will continue to improve and that the global economies will recover from the shocks of the past few years. We expect the pace of recovery worldwide to be uneven and volatile and acknowledge the elevated uncertainty created by events in Japan, Europe, the Middle East, as well as that created by the U.S. debate over raising the debt ceiling and the downgrade by Standard & Poor’s of the U.S. long-term credit rating.

As always, we continue to be mindful of the many economic challenges faced at the local, national, and international levels. It is in times such as these that we want to remind investors of the merits of maintaining a long-term view, adhering to basic investing principles such as asset allocation and diversification, and working closely with their advisors to research and identify appropriate investment opportunities.

Respectfully,

LOGO

Robert J. Manning

Chairman and Chief Executive Officer

MFS Investment Management®

August 16, 2011

 

The opinions expressed in this letter are subject to change, may not be relied upon for investment advice, and no forecasts can be guaranteed.

 

 

1

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MFS Value Series

 

PORTFOLIO COMPOSITION

 

Portfolio structure

LOGO

 

Top ten holdings   
Lockheed Martin Corp.      3.6%   
Philip Morris International, Inc.      3.4%   
AT&T, Inc.      2.9%   
Goldman Sachs Group, Inc.      2.9%   
JPMorgan Chase & Co.      2.7%   
Johnson & Johnson      2.7%   
Pfizer, Inc.      2.5%   
MetLife, Inc.      2.4%   
International Business Machines Corp.      2.4%   
Chevron Corp.      2.3%   
Equity sectors   
Financial Services      21.9%   
Health Care      12.7%   
Consumer Staples      11.8%   
Industrial Goods & Services      11.3%   
Energy      8.9%   
Technology      6.5%   
Utilities & Communications      6.5%   
Leisure      5.4%   
Basic Materials      3.7%   
Special Products & Services      3.3%   
Autos & Housing      3.2%   
Retailing      3.0%   
Transportation      0.6%   
 

 

Percentages are based on net assets as of 6/30/11.

The portfolio is actively managed and current holdings may be different.

 

2

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MFS Value Series

 

EXPENSE TABLE

 

Fund Expenses Borne by the Contract Holders During the Period,

January 1, 2011 through June 30, 2011

As a contract holder of the fund, you incur ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period January 1, 2011 through June 30, 2011.

Actual Expenses

The first line for each share class in the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The second line for each share class in the following table provides information about hypothetical account values and hypothetical expenses based on the fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight the fund’s ongoing costs only and do not take into account the fees and expenses imposed under the variable contracts through which your investment in the fund is made. Therefore, the second line for each share class in the table is useful in comparing ongoing costs associated with an investment in vehicles (such as the fund) which fund benefits under variable annuity and variable life insurance contracts and to qualified pension and retirement plans only, and will not help you determine the relative total costs of investing in the fund through variable annuity and variable life insurance contracts. If the fees and expenses imposed under the variable contracts were included, your costs would have been higher.

 

Share Class         Annualized
Expense Ratio		      Beginning
Account Value
1/01/11		      Ending
Account Value
6/30/11		      Expenses Paid
During Period (p)
1/01/11-6/30/11		  
Initial Class   Actual      0.80%         $1,000.00         $1,056.24         $4.08   
  Hypothetical (h)      0.80%         $1,000.00         $1,020.83         $4.01   
Service Class   Actual      1.05%         $1,000.00         $1,055.34         $5.35   
  Hypothetical (h)      1.05%         $1,000.00         $1,019.59         $5.26   

 

(h) 5% class return per year before expenses.

 

(p) Expenses paid is equal to each class’ annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by the number of days in the period, divided by the number of days in the year.

 

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MFS Value Series

 

PORTFOLIO OF INVESTMENTS – 6/30/11 (unaudited)

 

The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.

Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – 98.6%   
Aerospace – 8.9%     
Honeywell International, Inc.      319,410      $ 19,033,636   
Huntington Ingalls Industries, Inc. (a)      37,403        1,290,404   
Lockheed Martin Corp.      534,710        43,295,469   
Northrop Grumman Corp.      224,700        15,582,945   
United Technologies Corp.      312,250        27,637,248   
    

 

 

  
     $ 106,839,702   
    

 

 

  
Alcoholic Beverages – 1.5%     
Diageo PLC      884,111      $ 18,063,295   
    

 

 

  
Automotive – 1.1%     
General Motors Co. (a)      100,680      $ 3,056,645   
Johnson Controls, Inc.      243,240        10,133,378   
    

 

 

  
     $ 13,190,023   
    

 

 

  
Broadcasting – 3.5%     
Omnicom Group, Inc.      269,780      $ 12,992,605   
Viacom, Inc., “B”      226,820        11,567,820   
Walt Disney Co.      431,030        16,827,411   
    

 

 

  
     $ 41,387,836   
    

 

 

  
Brokerage & Asset Managers – 0.5%   
Blackrock, Inc.      31,267      $ 5,997,323   
    

 

 

  
Business Services – 3.3%     
Accenture PLC, “A”      427,210      $ 25,812,028   
Dun & Bradstreet Corp.      83,420        6,301,547   
Western Union Co.      359,320        7,197,180   
    

 

 

  
     $ 39,310,755   
    

 

 

  
Cable TV – 0.4%     
Comcast Corp., “Special A”      202,460      $ 4,905,606   
    

 

 

  
Chemicals – 2.6%     
3M Co.      164,610      $ 15,613,259   
PPG Industries, Inc.      165,066        14,986,342   
    

 

 

  
     $ 30,599,601   
    

 

 

  
Computer Software – 2.0%     
Oracle Corp.      734,620      $ 24,176,344   
    

 

 

  
Computer Software – Systems – 2.9%   
Hewlett-Packard Co.      176,150      $ 6,411,860   
International Business Machines Corp.      165,780        28,439,559   
    

 

 

  
     $ 34,851,419   
    

 

 

  
Construction – 2.1%     
Pulte Homes, Inc. (a)      302,660      $ 2,318,376   
Sherwin-Williams Co.      132,010        11,071,679   
Stanley Black & Decker, Inc.      165,303        11,910,081   
    

 

 

  
     $ 25,300,136   
    

 

 

  
Consumer Products – 0.7%     
Avon Products, Inc.      94,500      $ 2,646,000   
Procter & Gamble Co.      89,274        5,675,148   
    

 

 

  
     $ 8,321,148   
    

 

 

  
Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – continued   
Electrical Equipment – 1.5%     
Danaher Corp.      238,570      $ 12,641,824   
Tyco International Ltd.      112,000        5,536,160   
    

 

 

  
     $ 18,177,984   
    

 

 

  
Electronics – 1.0%     
Intel Corp.      550,390      $ 12,196,642   
    

 

 

  
Energy – Independent – 3.6%     
Apache Corp.      145,210      $ 17,917,462   
EOG Resources, Inc.      88,490        9,251,630   
Occidental Petroleum Corp.      149,270        15,530,051   
    

 

 

  
     $ 42,699,143   
    

 

 

  
Energy – Integrated – 4.7%     
Chevron Corp.      269,730      $ 27,739,033   
Exxon Mobil Corp.      257,348        20,942,980   
Hess Corp.      104,120        7,784,011   
    

 

 

  
     $ 56,466,024   
    

 

 

  
Engineering – Construction – 0.2%     
Fluor Corp.      34,530      $ 2,232,710   
    

 

 

  
Food & Beverages – 5.0%     
General Mills, Inc.      464,460      $ 17,287,201   
J.M. Smucker Co.      67,979        5,196,315   
Kellogg Co.      165,530        9,157,120   
Nestle S.A.      249,261        15,490,797   
PepsiCo, Inc.      185,558        13,068,850   
    

 

 

  
     $ 60,200,283   
    

 

 

  
Food & Drug Stores – 0.6%     
CVS Caremark Corp.      202,801      $ 7,621,262   
    

 

 

  
General Merchandise – 1.6%     
Kohl’s Corp.      80,870      $ 4,044,309   
Target Corp.      318,590        14,945,057   
    

 

 

  
     $ 18,989,366   
    

 

 

  
Insurance – 7.7%     
ACE Ltd.      146,920      $ 9,670,274   
Aon Corp.      248,150        12,730,095   
Chubb Corp.      132,410        8,290,190   
MetLife, Inc.      655,253        28,745,949   
Prudential Financial, Inc.      288,355        18,336,494   
Travelers Cos., Inc.      245,670        14,342,215   
    

 

 

  
     $ 92,115,217   
    

 

 

  
Leisure & Toys – 0.7%     
Hasbro, Inc.      175,520      $ 7,710,594   
    

 

 

  
Machinery & Tools – 0.7%     
Eaton Corp.      157,570      $ 8,106,977   
    

 

 

  
Major Banks – 12.7%     
Bank of America Corp.      1,455,020      $ 15,947,019   
Bank of New York Mellon Corp.      915,150        23,446,143   
 

 

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MFS Value Series

 

Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – continued   
Major Banks – continued     
Goldman Sachs Group, Inc.      260,322      $ 34,646,255   
JPMorgan Chase & Co.      803,450        32,893,243   
PNC Financial Services Group, Inc.      154,780        9,226,436   
State Street Corp.      252,570        11,388,381   
SunTrust Banks, Inc.      78,500        2,025,300   
Wells Fargo & Co.      783,930        21,997,076   
          
     $ 151,569,853   
          
Medical & Health Technology & Services – 0.6%     
Quest Diagnostics, Inc.      114,750      $ 6,781,725   
          
Medical Equipment – 3.6%     
Becton, Dickinson & Co.      139,620      $ 12,031,055   
Medtronic, Inc.      414,260        15,961,438   
St. Jude Medical, Inc.      187,490        8,939,523   
Thermo Fisher Scientific, Inc. (a)      98,660        6,352,717   
          
     $ 43,284,733   
          
Network & Telecom – 0.6%     
Cisco Systems, Inc.      487,030      $ 7,602,538   
          
Oil Services – 0.6%     
Transocean, Inc.      115,560      $ 7,460,554   
          
Other Banks & Diversified Financials – 1.0%     
MasterCard, Inc., “A”      40,854      $ 12,310,944   
          
Pharmaceuticals – 8.5%     
Abbott Laboratories      451,950      $ 23,781,609   
GlaxoSmithKline PLC      236,837        5,070,691   
Johnson & Johnson      491,240        32,677,285   
Merck & Co., Inc.      130,830        4,616,991   
Pfizer, Inc.      1,447,146        29,811,208   
Roche Holding AG      36,732        6,147,122   
          
     $ 102,104,906   
          
Railroad & Shipping – 0.6%     
Canadian National Railway Co.      83,860      $ 6,700,414   
          
Restaurants – 0.8%     
McDonald’s Corp.      107,650      $ 9,077,048   
          
Specialty Chemicals – 1.1%     
Air Products & Chemicals, Inc.      137,126      $ 13,106,503   
          
Specialty Stores – 0.8%     
Advance Auto Parts, Inc.      109,000      $ 6,375,410   
Staples, Inc.      227,100        3,588,180   
          
     $ 9,963,590   
          
Telecommunications – Wireless – 1.3%     
Vodafone Group PLC      5,879,596      $ 15,598,474   
          
Telephone Services – 2.9%     
AT&T, Inc.      1,119,050      $ 35,149,361   
          
Tobacco – 4.6%     
Altria Group, Inc.      293,911      $ 7,762,190   
Philip Morris International, Inc.      607,311        40,550,155   
Reynolds American, Inc.      182,720        6,769,776   
          
     $ 55,082,121   
          
Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – continued   
Utilities – Electric Power – 2.1%     
Dominion Resources, Inc.      61,522      $ 2,969,667   
PG&E Corp.      276,200        11,608,686   
PPL Corp.      140,820        3,919,021   
Public Service Enterprise Group, Inc.      207,320        6,766,925   
          
     $ 25,264,299   
          
Total Common Stocks
(Identified Cost, $1,027,654,654)		      $ 1,180,516,453   
          
CONVERTIBLE PREFERRED STOCKS – 0.2%   
Utilities – Electric Power – 0.2%     
PPL Corp., 9.5%
(Identified Cost, $1,688,500)		      33,770      $ 1,887,743   
          
MONEY MARKET FUNDS (v) – 1.1%   
MFS Institutional Money Market Portfolio, 0.1%, at Cost and Net Asset Value      12,814,196      $ 12,814,196   
          
Total Investments
(Identified Cost, $1,042,157,350)		      $ 1,195,218,392   
          
OTHER ASSETS, LESS
LIABILITIES – 0.1%		        1,482,470   
          
Net Assets – 100.0%      $ 1,196,700,862   
          

 

(a) Non-income producing security.

 

(v) Underlying affiliated fund that is available only to investment companies managed by MFS. The rate quoted is the annualized seven-day yield of the fund at period end.

The following abbreviations are used in this report and are defined:

 

PLC   Public Limited Company

See Notes to Financial Statements

 

 

5

Table of Contents

MFS Value Series

 

FINANCIAL STATEMENTS | STATEMENT OF ASSETS AND LIABILITIES (unaudited)

 

This statement represents your fund’s balance sheet, which details the assets and liabilities comprising the total value of the fund.

 

At 6/30/11

      

Assets

                  

Investments –

      

Non-affiliated issuers, at value (identified cost, $1,029,343,154)

      $1,182,404,196      

Underlying affiliated funds, at cost and value

      12,814,196            

Total investments, at value (identified cost, $1,042,157,350)

      $1,195,218,392            

Cash

      24,078      

Receivables for

      

Investments sold

      3,879,609      

Fund shares sold

      412,255      

Interest and dividends

      2,232,119      

Other assets

      4,966            

Total assets

               $1,201,771,419   

Liabilities

                  

Payables for

      

Investments purchased

      $3,550,732      

Fund shares reacquired

      1,267,945      

Payable to affiliates

      

Investment adviser

      48,554      

Shareholder servicing costs

      812      

Distribution and/or service fees

      10,959      

Payable for independent Trustees’ compensation

      1,987      

Accrued expenses and other liabilities

      189,568            

Total liabilities

               $5,070,557   

Net assets

               $1,196,700,862   

Net assets consist of

                  

Paid-in capital

      $1,013,747,896      

Unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies

      153,059,122      

Accumulated net realized gain (loss) on investments and foreign currency transactions

      6,066,049      

Undistributed net investment income

      23,827,795            

Net assets

               $1,196,700,862   

Shares of beneficial interest outstanding

               88,057,459   

 

     Net assets      Shares
outstanding		      Net asset value
per share		  

Initial Class

      $386,903,130         28,229,129         $13.71   

Service Class

      809,797,732         59,828,330         13.54   

See Notes to Financial Statements

 

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MFS Value Series

 

FINANCIAL STATEMENTS  |  STATEMENT OF OPERATIONS (unaudited)

 

This statement describes how much your fund earned in investment income and accrued in expenses. It also describes any gains and/or losses generated by fund operations.

 

Six months ended 6/30/11

      
Net investment income                  

Income

      

Dividends

      $14,195,939      

Interest

      5,212      

Dividends from underlying affiliated funds

      11,780      

Foreign taxes withheld

      (124,522 )          

Total investment income

               $14,088,409   

Expenses

      

Management fee

      $4,324,563      

Distribution and/or service fees

      981,168      

Shareholder servicing costs

      66,146      

Administrative services fee

      89,928      

Independent Trustees’ compensation

      13,096      

Custodian fee

      56,432      

Shareholder communications

      96,980      

Auditing fees

      23,858      

Legal fees

      9,732      

Miscellaneous

      23,616            

Total expenses

               $5,685,519   

Fees paid indirectly

      (4 )    

Reduction of expenses by investment adviser

      (3,352 )          

Net expenses

               $5,682,163   

Net investment income

               $8,406,246   

Realized and unrealized gain (loss) on investments and foreign currency transactions

                  

Realized gain (loss) (identified cost basis)

      

Investment transactions

      $7,148,927      

Foreign currency transactions

      24,453            

Net realized gain (loss) on investments and foreign currency transactions

               $7,173,380   

Change in unrealized appreciation (depreciation)

      

Investments

      $46,837,479      

Translation of assets and liabilities in foreign currencies

      (10,992 )          

Net unrealized gain (loss) on investments and foreign currency translation

               $46,826,487   

Net realized and unrealized gain (loss) on investments and foreign currency

               $53,999,867   

Change in net assets from operations

               $62,406,113   

See Notes to Financial Statements

 

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FINANCIAL STATEMENTS  |  STATEMENTS OF CHANGES IN NET ASSETS

 

These statements describe the increases and/or decreases in net assets resulting from operations, any distributions, and any shareholder transactions.

 

    
 
 		 Six months ended
6/30/11
(unaudited		  
 
) 		     
 		 Year ended
12/31/10		  
  

Change in net assets

      

From operations

                  

Net investment income

      $8,406,246         $15,384,815   

Net realized gain (loss) on investments and foreign currency transactions

      7,173,380         57,234,860   

Net unrealized gain (loss) on investments and foreign currency translation

      46,826,487         45,163,437   

Change in net assets from operations

      $62,406,113         $117,783,112   

Distributions declared to shareholders

                  

From net investment income

      $—         $(14,600,065 ) 

Change in net assets from fund share transactions

      $(4,806,123 )       $50,503,547   

Total change in net assets

      $57,599,990         $153,686,594   

Net assets

                  

At beginning of period

      1,139,100,872         985,414,278   

At end of period (including undistributed net investment income of $23,827,795 and
$15,421,549, respectively)

      $1,196,700,862         $1,139,100,872   

See Notes to Financial Statements

 

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FINANCIAL STATEMENTS  |  FINANCIAL HIGHLIGHTS

 

The financial highlights table is intended to help you understand the fund’s financial performance for the semiannual period and the past 5 fiscal years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period.

 

Initial Class    Six months
ended
6/30/11		      Years ended 12/31  
        2010        2009        2008        2007        2006  
     (unaudited)                                             

Net asset value, beginning of period

      $12.98         $11.80           $9.76           $15.25           $14.52           $12.52   
Income (loss) from investment operations                                                              

Net investment income (d)

      $0.11         $0.19           $0.20           $0.22           $0.21           $0.22   

Net realized and unrealized gain (loss) on
investments and foreign currency

      0.62         1.16           1.98           (4.98 )         0.92           2.32   

Total from investment operations

      $0.73         $1.35           $2.18           $(4.76 )         $1.13           $2.54   
Less distributions declared to shareholders                                                              

From net investment income

      $—         $(0.17 )         $(0.14 )         $(0.17 )         $(0.15 )         $(0.14 ) 

From net realized gain on investments

      —         —           —           (0.56 )         (0.25 )         (0.40 ) 

Total distributions declared to shareholders

      $—         $(0.17 )         $(0.14 )         $(0.73 )         $(0.40 )         $(0.54 ) 

Net asset value, end of period

      $13.71         $12.98           $11.80           $9.76           $15.25           $14.52   

Total return (%) (k)(r)(s)

      5.62 (n)       11.53           22.71           (32.58 )         7.91           20.84   
Ratios (%) (to average net assets)
and Supplemental data:		                                                              

Expenses before expense reductions (f)

      0.80 (a)       0.83           0.84           0.84           0.86           0.88   

Expenses after expense reductions (f)

      0.80 (a)       0.83           0.84           0.84           0.86           0.88   

Net investment income

      1.59 (a)       1.60           1.99           1.77           1.41           1.65   

Portfolio turnover

      10         28           26           36           23           25   

Net assets at end of period (000 omitted)

      $386,903         $389,052           $367,676           $295,721           $390,346           $256,529   

See Notes to Financial Statements

 

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Financial Highlights – continued

 

Service Class      Six months
ended
6/30/11		      Years ended 12/31  
          2010        2009        2008        2007        2006  
       (unaudited)                                             

Net asset value, beginning of period

        $12.83         $11.68           $9.67           $15.12           $14.42           $12.44   
Income (loss) from investment operations                                                                

Net investment income (d)

        $0.09         $0.16           $0.18           $0.19           $0.17           $0.18   

Net realized and unrealized gain (loss) on investments and foreign currency

        0.62         1.15           1.95           (4.94 )         0.91           2.32   

Total from investment operations

        $0.71         $1.31           $2.13           $(4.75 )         $1.08           $2.50   
Less distributions declared to shareholders                                                                

From net investment income

        $—         $(0.16 )         $(0.12 )         $(0.14 )         $(0.13 )         $(0.12 ) 

From net realized gain on investments

        —         —           —           (0.56 )         (0.25 )         (0.40 ) 

Total distributions declared to shareholders

        $—         $(0.16 )         $(0.12 )         $(0.70 )         $(0.38 )         $(0.52 ) 

Net asset value, end of period

        $13.54         $12.83           $11.68           $9.67           $15.12           $14.42   

Total return (%) (k)(r)(s)

        5.53 (n)       11.22           22.45           (32.74 )         7.59           20.60   
Ratios (%) (to average net assets)
and Supplemental data:		                                                                

Expenses before expense reductions (f)

        1.05 (a)       1.08           1.09           1.09           1.11           1.13   

Expenses after expense reductions (f)

        1.05 (a)       1.08           1.09           1.09           1.11           1.13   

Net investment income

        1.34 (a)       1.35           1.75           1.57           1.16           1.40   

Portfolio turnover

        10         28           26           36           23           25   

Net assets at end of period (000 omitted)

        $809,798         $750,049           $617,739           $218,528           $197,844           $140,135   

 

(a) Annualized.

 

(d) Per share data is based on average shares outstanding.

 

(f) Ratios do not reflect reductions from fees paid indirectly, if applicable.

 

(k) The total return does not reflect expenses that apply to separate accounts. Inclusion of these charges would reduce the total return figures for all periods shown.

 

(n) Not annualized.

 

(r) Certain expenses have been reduced without which performance would have been lower.

 

(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.

See Notes to Financial Statements

 

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MFS Value Series

 

NOTES TO FINANCIAL STATEMENTS (unaudited)

 

(1)   Business and Organization

MFS Value Series (the fund) is a 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, and qualified retirement and pension plans.

 

(2)   Significant Accounting Policies

General – The preparation of financial statements in conformity with U.S. 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. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the fund’s Statement of Assets and Liabilities through the date that the financial statements were issued. The fund invests 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, including restricted equity securities, are generally valued at the last sale or official closing price as provided by a third-party pricing service on the market or exchange on which they are primarily traded. Equity securities, for which there were no sales reported that day, are generally valued at the last quoted daily bid quotation as provided by a third-party pricing service on the market or exchange on which such securities are primarily traded. Equity securities held short, for which there were no sales reported for that day, are generally valued at the last quoted daily ask quotation as provided by a third-party pricing service on the market or exchange on which such securities are primarily traded. Short-term instruments with a maturity at issuance of 60 days or less generally are valued at amortized cost, which approximates market value. Open-end investment companies are generally valued at net asset value per share. Securities and other assets generally valued on the basis of information from a third-party pricing service may also be valued at a broker/dealer bid quotation. Values obtained from third-party pricing services can utilize both transaction data and market information such as yield, quality, coupon rate, maturity, type of issue, trading characteristics, and other market data. The values of foreign securities and other assets and liabilities expressed in foreign currencies are converted to U.S. dollars using the mean of bid and asked prices for rates provided by a third-party pricing service.

The Board of Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments (including any fair valuation) to the adviser pursuant to valuation policies and procedures approved by the Board. If the adviser determines that reliable market quotations are not readily available, investments are valued at fair value as determined in good faith by the adviser in accordance with such procedures under the oversight of the Board of Trustees. Under the fund’s valuation policies and procedures, market quotations are not considered to be readily available for most types of debt instruments and floating rate loans and many types of derivatives. These investments are generally valued at fair value based on information from third-party pricing services. In addition, investments may be valued at fair value if the adviser determines that an investment’s value has been materially affected by events occurring after the close of the exchange or market on which the investment is principally traded (such as foreign exchange or market) and prior to the determination of the fund’s net asset value, or after the halting of trading of a specific security where trading does not resume prior to the close of the exchange or market on which the security is principally traded. Events that occur on a frequent basis after foreign markets close (such as developments in foreign markets and significant movements in the U.S. markets) and prior to the determination of the fund’s net asset value may be deemed to have a material effect on the value of securities traded in foreign markets. Accordingly, the fund’s foreign equity securities may often be valued at fair value. The adviser generally relies on third-party pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and financial condition of the issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment for purposes of calculating the fund’s net asset value can differ depending on the source and method used to determine value. When fair valuation is used, the value of an investment used to determine the fund’s net asset value may differ from quoted or published prices for the same investment. There can be no assurance that the fund could obtain the fair value assigned to an investment if it were to sell the investment at the same time at which the fund determines its net asset value per share.

Various inputs are used in determining the value of the fund’s assets or liabilities. These inputs are categorized into three broad levels. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair

 

11

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MFS Value Series

 

Notes to Financial Statements (unaudited) – continued

 

value measurement. The fund’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. Level 1 includes unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes other significant observable market-based inputs (including quoted prices for similar securities, interest rates, prepayment speed, and credit risk). Level 3 includes unobservable inputs, which may include the adviser’s own assumptions in determining the fair value of investments. The following is a summary of the levels used as of June 30, 2011 in valuing the fund’s assets or liabilities:

 

Investments at Value    Level 1      Level 2      Level 3      Total  
Equity Securities      $1,182,404,196         $—         $—         $1,182,404,196   
Mutual Funds      12,814,196         —         —         12,814,196   
Total Investments      $1,195,218,392         $—         $—         $1,195,218,392   

For further information regarding security characteristics, see the Portfolio of Investments.

Foreign Currency Translation – 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 or on the reporting date for foreign denominated receivables and payables. 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 receivables, payables, 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, loans the securities of the fund to certain qualified institutions (the “Borrowers”) approved by the fund. The loans are collateralized by cash and/or U.S. Treasury and federal agency obligations in an amount typically at least equal to the market value of the securities loaned. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. State Street provides the fund with indemnification against Borrower default. The fund bears the risk of loss with respect to the investment of cash collateral. On loans collateralized by cash, the cash collateral is invested in a money market fund or 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 fund and the lending agent. On loans collateralized by U.S. Treasury and/or federal agency obligations, a fee is received from the Borrower, and is allocated between the fund 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.

Indemnifications – Under the fund’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the fund. Additionally, in the normal course of business, the fund enters into agreements with service providers that may contain indemnification clauses. The fund’s maximum exposure under these agreements is unknown as this would involve future claims that may be made against the fund that have not yet occurred.

Investment Transactions and Income – Investment transactions are recorded on the trade date. Interest income is recorded on the accrual basis. Dividends received in cash are recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded when the fund is informed of the dividend if such information is obtained subsequent to 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.

The fund may receive proceeds from litigation settlements. Any proceeds received from litigation involving portfolio holdings are reflected in the Statement of Operations in realized gain/loss if the security has been disposed of by the fund or in unrealized gain/loss if the security is still held by the fund. Any other proceeds from litigation not related to portfolio holdings are reflected as other income in the Statement of Operations.

Fees Paid Indirectly – The fund’s custody fee may be reduced according to an arrangement that measures the value of cash deposited with the custodian by the fund. This amount, for the six months ended June 30, 2011, is shown as a reduction of total expenses on the Statement of Operations.

Tax Matters and Distributions – The fund intends to qualify as a regulated investment company, as defined under Subchapter M of the Internal Revenue Code, and to distribute all of its taxable income, including realized capital gains. As a result, no provision for federal income tax is required. The fund’s federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue Service. Foreign taxes, if any, have been accrued by the fund in the accompanying financial statements.

 

12

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MFS Value Series

 

Notes to Financial Statements (unaudited) – continued

 

Distributions to shareholders are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income, expense, gain or loss in different periods for financial statement and tax purposes will reverse at some time in the future. Distributions in excess of net investment income or net realized gains are temporary overdistributions for financial statement purposes resulting from differences in the recognition or classification of income or distributions for financial statement and tax purposes.

Book/tax differences primarily relate to wash sale loss deferrals.

The tax character of distributions declared to shareholders for the last fiscal year is as follows:

 

     12/31/10  
Ordinary income (including any short-term capital gains)      $14,600,065   

The federal tax cost and the tax basis components of distributable earnings were as follows:

 

As of 6/30/11   
Cost of investments      $1,047,911,460   
Gross appreciation      182,627,899   
Gross depreciation      (35,320,967 ) 
Net unrealized appreciation (depreciation)      $147,306,932   
As of 12/31/10   
Undistributed ordinary income      15,421,549   
Undistributed long-term capital gain      4,646,779   
Other temporary differences      9,072   
Net unrealized appreciation (depreciation)      100,469,453   

The aggregate cost above includes prior fiscal year end tax adjustments, if applicable.

Multiple Classes of Shares of Beneficial Interest – The fund offers multiple classes of shares, which differ in their respective distribution and/or service fees. The fund’s income, realized and unrealized gain (loss), and common expenses are allocated to shareholders based on the daily net assets of each class. Dividends are declared separately for each class. Differences in per share dividend rates are generally due to differences in separate class expenses. The fund’s distributions declared to shareholders as reported on the Statements of Changes in Net Assets are presented by class as follows:

 

     From net investment
income		  
     Six months ended
6/30/11		      Year ended
12/31/10		  
Initial Class      $—         $5,462,462   
Service Class      —         9,137,603   
Total      $—         $14,600,065   

 

(3)   Transactions with Affiliates

Investment Adviser – The fund has an investment advisory agreement with MFS to provide overall investment management and related administrative services and facilities to the fund.

The management fee is computed daily and paid monthly at the following annual rates:

 

First $1 billion of average daily net assets      0.75%   
Average daily net assets in excess of $1 billion      0.65%   

Effective May 1, 2011, the investment adviser has agreed in writing to reduce its management fee to 0.60% of average daily net assets in excess of $2.5 billion. This written agreement will continue until modified by the fund’s Board of Trustees, but such agreement will continue at least until April 30, 2013. For the period May 1, 2011 through June 30, 2011, the fund’s average daily net assets did not exceed $2.5 billion and therefore, the management fee was not reduced.

The management fee incurred for the six months ended June 30, 2011 was equivalent to an annual effective rate of 0.73% of the fund’s average daily net assets.

 

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MFS Value Series

 

Notes to Financial Statements (unaudited) – continued

 

The investment adviser has agreed in writing to pay a portion of the fund’s total annual operating expenses, exclusive of interest, taxes, extraordinary expenses, brokerage and transaction costs and investment-related expenses, such that total annual operating expenses do not exceed 0.90% of average daily net assets for the Initial Class shares and 1.15% of average daily net assets for the Service Class shares. This written agreement will continue until modified by the fund’s Board of Trustees, but such agreement will continue at least until April 30, 2013. For the six months ended June 30, 2011, the fund’s actual operating expenses did not exceed the limit and therefore, the investment adviser did not pay any portion of the fund’s expenses related to this agreement.

Distributor – MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, is the distributor of shares of the fund. The Trustees have adopted a distribution plan for the Service Class shares pursuant to Rule 12b-1 under the Investment Company Act of 1940.

The fund’s distribution plan provides that the fund will pay MFD distribution and/or service fees equal to 0.25% per annum of its average daily net assets attributable to Service Class shares as partial consideration for services performed and expenses incurred by MFD and financial intermediaries (including participating insurance companies that invest in the fund to fund variable annuity and variable life insurance contracts, sponsors of qualified retirement and pension plans that invest in the fund, and affiliates of these participating insurance companies and plan sponsors) in connection with the sale and distribution of the Service Class shares. MFD may subsequently pay all, or a portion, of the distribution and/or service fees to financial intermediaries.

Shareholder Servicing Agent – MFS Service Center, Inc. (MFSC), a wholly-owned subsidiary of MFS, receives a fee from the fund for its services as shareholder servicing agent. For the six months ended June 30, 2011, the fee was $65,762, which equated to 0.0112% annually of the fund’s average daily net assets. MFSC also receives payment from the fund for out-of-pocket expenses paid by MFSC on behalf of the fund. For the six months ended June 30, 2011, these costs amounted to $384.

Administrator – MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the fund partially reimburses MFS the costs incurred to provide these services. The fund is charged an annual fixed amount of $17,500 plus a fee based on average daily net assets. The administrative services fee incurred for the six months ended June 30, 2011 was equivalent to an annual effective rate of 0.0153% of the fund’s average daily net assets.

Trustees’ and Officers’ Compensation – The fund pays compensation to independent Trustees in the form of a retainer, attendance fees, and additional compensation to Board and Committee chairpersons. The fund does not pay compensation directly to Trustees or officers of the fund who are also officers of the investment adviser, all of whom receive remuneration for their services to the fund from MFS. Certain officers and Trustees of the fund are officers or directors of MFS, MFD, and MFSC.

Other – This fund and certain other funds managed by MFS (the funds) have entered into services agreements (the Agreements) which provide for payment of fees by the funds to Tarantino LLC and Griffin Compliance LLC in return for the provision of services of an Independent Chief Compliance Officer (ICCO) and Assistant ICCO, respectively, for the funds. The ICCO and Assistant ICCO are officers of the funds and the sole members of Tarantino LLC and Griffin Compliance LLC, respectively. The funds can terminate the Agreements with Tarantino LLC and Griffin Compliance LLC at any time under the terms of the Agreements. For the six months ended June 30, 2011, the aggregate fees paid by the fund to Tarantino LLC and Griffin Compliance LLC were $4,138 and are included in miscellaneous expense on the Statement of Operations. MFS has agreed to reimburse the fund for a portion of the payments made by the fund in the amount of $3,352, which is shown as a reduction of total expenses in the Statement of Operations. Additionally, MFS has agreed to bear all expenses associated with office space, other administrative support, and supplies provided to the ICCO and Assistant ICCO.

The fund invests in the MFS Institutional Money Market Portfolio which is managed by MFS and seeks a high level of current income consistent with preservation of capital and liquidity. Income earned on this investment is included in dividends from underlying affiliated funds on the Statement of Operations. This money market fund does not pay a management fee to MFS.

 

(4)   Portfolio Securities

Purchases and sales of investments, other than U.S. Government securities, purchased option transactions, and short-term obligations, aggregated $116,739,193 and $117,291,339, respectively.

 

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MFS Value Series

 

Notes to Financial Statements (unaudited) – continued

 

 

(5)   Shares of Beneficial Interest

The fund’s Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest. Transactions in fund shares were as follows:

 

     Six months ended 6/30/11      Year ended 12/31/10  
     Shares      Amount      Shares      Amount  
Shares sold            

Initial Class

      931,203         $12,681,952         2,731,825         $32,016,435   

Service Class

      6,340,003         84,975,684         16,546,554         194,242,416   
     7,271,206         $97,657,636         19,278,379         $226,258,851   
Shares issued to shareholders in reinvestment of distributions            

Initial Class

      —         $—         435,603         $5,462,462   

Service Class

      —         —         735,717         9,137,603   
     —         $—         1,171,320         $14,600,065   
Shares reacquired            

Initial Class

      (2,677,302 )       $(36,340,368 )       (4,351,822 )       $(51,701,985 ) 

Service Class

      (4,956,030 )       (66,123,391 )       (11,728,496 )       (138,653,384 ) 
     (7,633,332 )       $(102,463,759 )       (16,080,318 )       $(190,355,369 ) 
Net change            

Initial Class

      (1,746,099 )       $(23,658,416 )       (1,184,394 )       $(14,223,088 ) 

Service Class

      1,383,973         18,852,293         5,553,775         64,726,635   
     (362,126 )       $(4,806,123 )       4,369,381         $50,503,547   

 

(6)   Line of Credit

The fund and certain other funds managed by MFS participate in a $1.1 billion unsecured committed line of credit, subject to a $1 billion sublimit, provided by a syndication of banks under a credit agreement. Borrowings may be made for temporary financing needs. Interest is charged to each fund, based on its borrowings, generally at a rate equal to the higher of the Federal Reserve funds rate or one month LIBOR plus an agreed upon spread. A commitment fee, based on the average daily, unused portion of the committed line of credit, is allocated among the participating funds at the end of each calendar quarter. In addition, the fund and other funds managed by MFS have established unsecured uncommitted borrowing arrangements with certain banks for temporary financing needs. Interest is charged to each fund, based on its borrowings, at a rate equal to the Federal Reserve funds rate plus an agreed upon spread. For the six months ended June 30, 2011, the fund’s commitment fee and interest expense were $5,444 and $0, respectively, and are included in miscellaneous expense on the Statement of Operations.

 

(7)   Transactions in Underlying Affiliated Funds – Affiliated Issuers

An affiliated issuer may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. For the purposes of this report, the fund assumes the following to be affiliated issuers:

 

Underlying Affiliated Funds    Beginning
Shares/Par
Amount		      Acquisitions
Shares/Par
Amount		      Dispositions
Shares/Par
Amount		      Ending
Shares/Par
Amount		  
MFS Institutional Money Market Portfolio      11,364,410         71,182,390         (69,732,604 )       12,814,196   
Underlying Affiliated Funds    Realized
Gain (Loss)		      Capital Gain
Distributions		      Dividend
Income		      Ending
Value		  
MFS Institutional Money Market Portfolio      $—         $—         $11,780         $12,814,196   

 

15

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MFS Value Series

 

BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT

 

A discussion regarding the Board’s most recent review and renewal of the fund’s Investment Advisory Agreement with MFS will be available on or about November 1, 2011 by clicking on the fund’s name under “Variable Insurance Portfolios — VIT” in the “Products and Performance” section of the MFS Web site (mfs.com).

PROXY VOTING POLICIES AND INFORMATION

A general description of the MFS funds’ proxy voting policies and procedures is available without charge, upon request, by calling
1-800-225-2606, by visiting the Proxy Voting section of mfs.com or by visiting the SEC’s Web site at http://www.sec.gov.

Information regarding how the fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available without charge by visiting the Proxy Voting section of mfs.com or by visiting the SEC’s Web site at http://www.sec.gov.

QUARTERLY PORTFOLIO DISCLOSURE

The fund will file a complete schedule of portfolio holdings with the Securities and Exchange Commission (the Commission) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q may be reviewed and copied at the:

Public Reference Room

Securities and Exchange Commission

100 F Street, NE, Room 1580

Washington, D.C. 20549

Information on the operation of the Public Reference Room may be obtained by calling the Commission at 1-800-SEC-0330. The fund’s Form N-Q is available on the EDGAR database on the Commission’s Internet Web site 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: publicinfo@sec.gov or by writing the Public Reference Section at the above address.

FURTHER INFORMATION

From time to time, MFS may post important information about the fund or the MFS funds on the MFS web site (mfs.com). This information is available by visiting the “News & Commentary” section of mfs.com or by clicking on the fund’s name under “Variable Insurance Portfolios — VIT” in the “Products and Performance” section of mfs.com.

 

16

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rev. 3/11

 

FACTS   WHAT DOES MFS DO WITH YOUR
PERSONAL INFORMATION?		   LOGO

 

Why?   Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?  

The types of personal information we collect and share depend on the product or service you have with us. This information can include:

 

•  Social Security number and account balances

•  Account transactions and transaction history

•  Checking account information and wire transfer instructions

 

When you are no longer our customer, we continue to share your information as described in this notice.

 

How?   All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons MFS chooses to share; and whether you can limit this sharing.

 

Reasons we can share your personal information   Does MFS share?   Can you limit this
sharing?

For our everyday business purposes –

such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus

   Yes   No

For our marketing purposes –

to offer our products and services to you

   No   We don’t share
For joint marketing with other financial companies   No   We don’t share

For our affiliates’ everyday business purposes –

information about your transactions and experiences

   No   We don’t share

For our affiliates’ everyday business purposes –

information about your creditworthiness

   No   We don’t share
For nonaffiliates to market to you   No   We don’t share

 

Questions?   Call 800-225-2606 or go to mfs.com.

 

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Page 2  

 

Who we are
Who is providing this notice?   MFS Funds, MFS Investment Management, MFS Institutional Advisors, Inc., MFS Fund Distributors, Inc., MFS Heritage Trust Company, and MFS Service Center, Inc.

 

What we do
How does MFS protect my personal information?   To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include procedural, electronic, and physical safeguards for the protection of the personal information we collect about you.
How does MFS
collect my personal information?		  

We collect your personal information, for example, when you

 

• open an account or provide account information

• direct us to buy securities or direct us to sell your securities

• make a wire transfer

 

We also collect your personal information from others, such as credit bureaus, affiliates and other companies.

Why can’t I limit all sharing?  

Federal law gives you the right to limit only

 

• sharing for affiliates’ everyday business purposes – information about your creditworthiness

• affiliates from using your information to market to you

• sharing for nonaffiliates to market to you

 

State laws and individual companies may give you additional rights to limit sharing.

 

Definitions
Affiliates  

Companies related by common ownership or control. They can be financial and nonfinancial companies.

 

• MFS does not share personal information with affiliates, except for everyday business purposes as described on page one of this notice.

Nonaffiliates  

Companies not related by common ownership or control. They can be financial and nonfinancial companies.

 

• MFS does not share with nonaffiliates so they can market to you.

Joint Marketing  

A formal agreement between nonaffiliated financial companies that together market financial products or services to you.

 

• MFS doesn’t jointly market.

 

 

Other important information
If you own an MFS product or receive an MFS service in the name of a third party such as a bank or broker-dealer, their privacy policy may apply to you instead of ours.

 

18

Table of Contents

LOGO

Table of Contents

LOGO

 

MFS® Mid Cap Growth Series

MFS® Variable Insurance Trust

 

LOGO

 

 

SEMIANNUAL REPORT

June 30, 2011

 

VMG-SEM

Table of Contents

MFS® MID CAP GROWTH SERIES

 

CONTENTS   
Letter from the CEO      1   
Portfolio composition      2   
Expense table      3   
Portfolio of investments      4   
Statement of assets and liabilities      7   
Statement of operations      8   
Statements of changes in net assets      9   
Financial highlights      10   
Notes to financial statements      12   
Board review of investment advisory agreement      17   
Proxy voting policies and information      17   
Quarterly portfolio disclosure      17   
Further information      17   
MFS® privacy notice      18   

 

The report is prepared for the general information of contract owners.

It is authorized for distribution to prospective investors only when preceded or accompanied by a current prospectus.

 

NOT FDIC INSURED Ÿ MAY LOSE VALUE Ÿ NO BANK OR CREDIT UNION GUARANTEE Ÿ NOT A DEPOSIT Ÿ NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY OR NCUA/NCUSIF

Table of Contents

MFS Mid Cap Growth Series

 

LETTER FROM THE CEO

 

LOGO

 

Dear Contract Owners:

After about a year of almost uninterrupted macroeconomic and financial market improvement following the global credit crisis, investors grew more cautious in the middle of 2010 as fears grew that some European countries would default on their debt and as economic data showed a weakening

trend in the global economy. As a result asset prices fell significantly.

Last September the U.S. Federal Reserve Board’s promises to make lending conditions easier helped assuage market fears and drive asset prices off their recent lows. A combination of solid earnings and improving economic data gave an additional boost to investor sentiment.

In the following months, the renewed positive market mood, coupled with indications of better global macroeconomic activity, pushed many asset valuations to post-crisis highs. At the same time, global sovereign

bond yields initially rose as investors became concerned about inflationary pressures, driven by higher prices for oil as well as other commodities. However, by the end of the second quarter of 2011, a weakening macroeconomic backdrop and renewed concerns over debt problems in some eurozone countries pushed equities lower.

For the remainder of 2011, we are cautiously optimistic that economic growth will continue to improve and that the global economies will recover from the shocks of the past few years. We expect the pace of recovery worldwide to be uneven and volatile and acknowledge the elevated uncertainty created by events in Japan, Europe, the Middle East, as well as that created by the U.S. debate over raising the debt ceiling and the downgrade by Standard & Poor’s of the U.S. long-term credit rating.

As always, we continue to be mindful of the many economic challenges faced at the local, national, and international levels. It is in times such as these that we want to remind investors of the merits of maintaining a long-term view, adhering to basic investing principles such as asset allocation and diversification, and working closely with their advisors to research and identify appropriate investment opportunities.

Respectfully,

LOGO

Robert J. Manning

Chairman and Chief Executive Officer

MFS Investment Management®

August 16, 2011

 

The opinions expressed in this letter are subject to change, may not be relied upon for investment advice, and no forecasts can be guaranteed.

 

 

1

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MFS Mid Cap Growth Series

 

PORTFOLIO COMPOSITION

 

Portfolio structure

LOGO

 

Top ten holdings  
AMETEK, Inc.     1.8%   
Dresser-Rand Group, Inc.     1.6%   
American Tower Corp., “A”     1.6%   
Check Point Software Technologies Ltd.     1.6%   
Affiliated Managers Group, Inc.     1.5%   
Newfield Exploration Co.     1.4%   
Mead Johnson Nutrition Co., “A”     1.3%   
Celanese Corp.     1.3%   
Alexion Pharmaceuticals, Inc.     1.3%   
Ross Stores, Inc.     1.3%   
Equity sectors  
Technology     19.8%   
Health Care     13.3%   
Industrial Goods & Services     12.9%   
Retailing     8.6%   
Energy     7.8%   
Special Products & Services     7.7%   
Leisure     6.0%   
Financial Services     5.8%   
Basic Materials     5.0%   
Autos & Housing     4.0%   
Consumer Staples     3.4%   
Transportation     3.1%   
Utilities & Communications     2.4%   
 

 

Percentages are based on net assets as of 6/30/11.

The portfolio is actively managed and current holdings may be different.

 

2

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MFS Mid Cap Growth Series

 

EXPENSE TABLE

 

Fund Expenses Borne by the Contract Holders During the Period,

January 1, 2011 through June 30, 2011

As a contract holder of the fund, you incur ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period January 1, 2011 through June 30, 2011.

Actual Expenses

The first line for each share class in the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The second line for each share class in the following table provides information about hypothetical account values and hypothetical expenses based on the fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight the fund’s ongoing costs only and do not take into account the fees and expenses imposed under the variable contracts through which your investment in the fund is made. Therefore, the second line for each share class in the table is useful in comparing ongoing costs associated with an investment in vehicles (such as the fund) which fund benefits under variable annuity and variable life insurance contracts and to qualified pension and retirement plans only, and will not help you determine the relative total costs of investing in the fund through variable annuity and variable life insurance contracts. If the fees and expenses imposed under the variable contracts were included, your costs would have been higher.

 

Share Class         Annualized
Expense Ratio		      Beginning
Account Value
1/01/11		      Ending
Account Value
6/30/11		      Expenses Paid
During Period (p)
1/01/11-6/30/11		  
Initial Class   Actual      0.87%         $1,000.00         $1,056.76         $4.44   
  Hypothetical (h)      0.87%         $1,000.00         $1,020.48         $4.36   
Service Class   Actual      1.12%         $1,000.00         $1,056.51         $5.71   
  Hypothetical (h)      1.12%         $1,000.00         $1,019.24         $5.61   

 

(h) 5% class return per year before expenses.

 

(p) Expenses paid is equal to each class’ annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by the number of days in the period, divided by the number of days in the year.

 

3

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MFS Mid Cap Growth Series

 

PORTFOLIO OF INVESTMENTS – 6/30/11 (unaudited)

 

The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.

Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – 99.8%     
Aerospace – 2.2%     
BE Aerospace, Inc. (a)      29,510      $ 1,204,303   
Goodrich Corp.      17,550        1,676,020   
Moog, Inc., “A” (a)      8,750        380,800   
    

 

 

  
     $ 3,261,123   
    

 

 

  
Alcoholic Beverages – 0.2%     
Tsingtao Brewery Co. Ltd., “H”      54,000      $ 313,308   
    

 

 

  
Apparel Manufacturers – 0.9%     
Li & Fung Ltd.      140,000      $ 281,572   
Phillips-Van Heusen Corp.      15,480        1,013,476   
    

 

 

  
     $ 1,295,048   
    

 

 

  
Automotive – 0.7%     
BorgWarner Transmission Systems, Inc. (a)      11,960      $ 966,248   
    

 

 

  
Biotechnology – 2.5%     
Alexion Pharmaceuticals, Inc. (a)      41,350      $ 1,944,691   
Dendreon Corp. (a)      23,870        941,433   
Gen-Probe, Inc. (a)      11,590        801,449   
    

 

 

  
     $ 3,687,573   
    

 

 

  
Broadcasting – 1.6%     
Discovery Communications, Inc., “A” (a)      30,530      $ 1,250,509   
Interpublic Group of Cos., Inc.      93,400        1,167,500   
    

 

 

  
     $ 2,418,009   
    

 

 

  
Brokerage & Asset Managers – 3.0%     
Affiliated Managers Group, Inc. (a)      21,960      $ 2,227,842   
Evercore Partners, Inc.      11,440        381,181   
GFI Group, Inc.      62,520        286,967   
IntercontinentalExchange, Inc. (a)      8,190        1,021,375   
Lazard Ltd.      16,220        601,762   
    

 

 

  
     $ 4,519,127   
    

 

 

  
Business Services – 6.0%     
Cognizant Technology Solutions Corp., “A” (a)      23,580      $ 1,729,357   
Concur Technologies, Inc. (a)      25,630        1,283,294   
FleetCor Technologies, Inc. (a)      21,550        638,742   
Gartner, Inc. (a)      32,120        1,294,115   
Jones Lang LaSalle, Inc.      14,450        1,362,635   
MSCI, Inc., “A” (a)      24,800        934,464   
Verisk Analytics, Inc., “A” (a)      49,990        1,730,654   
    

 

 

  
     $ 8,973,261   
    

 

 

  
Chemicals – 1.9%     
Celanese Corp.      36,990      $ 1,971,937   
Ecolab, Inc.      15,020        846,828   
    

 

 

  
     $ 2,818,765   
    

 

 

  
Computer Software – 8.4%     
Ariba, Inc. (a)      13,020      $ 448,799   
Autodesk, Inc. (a)      39,340        1,518,524   
Autonomy Corp. PLC (a)      47,507        1,301,526   
Check Point Software Technologies Ltd. (a)      41,600        2,364,960   
Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – continued     
Computer Software – continued     
Informatica Corp. (a)      4,540      $ 265,272   
Intuit, Inc. (a)      21,240        1,101,506   
Parametric Technology Corp. (a)      77,390        1,774,553   
Red Hat, Inc. (a)      32,790        1,505,061   
SuccessFactors, Inc. (a)      25,450        748,230   
Symantec Corp. (a)      22,760        448,827   
VeriSign, Inc.      30,900        1,033,914   
    

 

 

  
     $ 12,511,172   
    

 

 

  
Computer Software – Systems – 3.0%     
MICROS Systems, Inc. (a)      32,900      $ 1,635,459   
NICE Systems Ltd., ADR (a)      28,650        1,041,714   
Qlik Technologies, Inc. (a)      30,100        1,025,206   
Verifone Systems, Inc. (a)      18,720        830,232   
    

 

 

  
     $ 4,532,611   
    

 

 

  
Construction – 3.3%     
Beacon Roofing Supply, Inc. (a)      25,040      $ 571,413   
NVR, Inc. (a)      1,120        812,538   
Owens Corning (a)      32,250        1,204,538   
Sherwin-Williams Co.      11,320        949,408   
Stanley Black & Decker, Inc.      19,498        1,404,831   
    

 

 

  
     $ 4,942,728   
    

 

 

  
Consumer Products – 0.6%     
Avon Products, Inc.      33,450      $ 936,600   
    

 

 

  
Consumer Services – 1.7%     
Anhanguera Educacional Participacoes S.A.      36,300      $ 772,682   
HomeAway, Inc. (a)      3,100        119,970   
Priceline.com, Inc. (a)      1,750        895,878   
Sotheby’s      18,530        806,055   
    

 

 

  
     $ 2,594,585   
    

 

 

  
Containers – 1.0%     
Ball Corp.      40,300      $ 1,549,938   
    

 

 

  
Electrical Equipment – 3.6%     
AMETEK, Inc.      59,225      $ 2,659,203   
Danaher Corp.      19,390        1,027,476   
Mettler-Toledo International, Inc. (a)      6,060        1,022,140   
MSC Industrial Direct Co., Inc., “A”      10,880        721,453   
    

 

 

  
     $ 5,430,272   
    

 

 

  
Electronics – 3.6%     
Advanced Micro Devices, Inc. (a)      86,060      $ 601,559   
ARM Holdings PLC      75,626        713,691   
First Solar, Inc. (a)(l)      2,990        395,487   
Hittite Microwave Corp. (a)      15,000        928,650   
JDS Uniphase Corp. (a)      22,370        372,684   
Linear Technology Corp.      27,600        911,352   
Microchip Technology, Inc.      27,400        1,038,734   
NetLogic Microsystems, Inc. (a)      11,000        444,620   
    

 

 

  
     $ 5,406,777   
    

 

 

  
 

 

4

Table of Contents

MFS Mid Cap Growth Series

 

Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – continued     
Energy – Independent – 3.0%     
Concho Resources, Inc. (a)      15,150      $ 1,391,528   
Newfield Exploration Co. (a)      30,470        2,072,569   
Whiting Petroleum Corp. (a)      17,430        991,941   
          
     $ 4,456,038   
          
Energy – Integrated – 0.9%     
EQT Corp.      9,920      $ 520,998   
QEP Resources, Inc.      19,350        809,411   
          
     $ 1,330,409   
          
Engineering – Construction – 1.0%     
Fluor Corp.      22,920      $ 1,482,007   
          
Food & Beverages – 2.6%     
Green Mountain Coffee Roasters, Inc. (a)      17,900      $ 1,597,754   
Mead Johnson Nutrition Co., “A”      29,790        2,012,315   
Want Want China Holdings Ltd.      337,000        327,798   
          
     $ 3,937,867   
          
Food & Drug Stores – 0.5%     
Whole Foods Market, Inc.      11,260      $ 714,447   
          
Gaming & Lodging – 1.3%     
Pinnacle Entertainment, Inc. (a)      45,290      $ 674,821   
Royal Caribbean Cruises Ltd. (a)      34,730        1,307,237   
          
     $ 1,982,058   
          
General Merchandise – 0.7%     
Dollar General Corp. (a)      29,240      $ 990,944   
          
Insurance – 0.6%     
Allied World Assurance Co.      8,180      $ 471,004   
Willis Group Holdings PLC      11,310        464,954   
          
     $ 935,958   
          
Internet – 1.8%     
LinkedIn Corp., “A” (a)(l)      11,670      $ 1,051,350   
OpenTable, Inc. (a)      6,130        509,526   
Shutterfly, Inc. (a)      19,100        1,096,722   
          
     $ 2,657,598   
          
Leisure & Toys – 0.7%     
Hasbro, Inc.      24,370      $ 1,070,574   
          
Machinery & Tools – 5.3%     
Finning International, Inc.      36,960      $ 1,096,019   
Flowserve Corp.      13,780        1,514,284   
Joy Global, Inc.      7,400        704,776   
Kennametal, Inc.      15,400        650,034   
Polypore International, Inc. (a)      20,280        1,375,795   
Regal Beloit Corp.      7,590        506,784   
United Rentals, Inc. (a)      18,790        477,266   
WABCO Holdings, Inc. (a)      22,090        1,525,535   
          
     $ 7,850,493   
          
Medical & Health Technology & Services – 6.4%     
AmerisourceBergen Corp.      25,040      $ 1,036,656   
Cerner Corp. (a)      24,820        1,516,750   
DaVita, Inc. (a)      19,750        1,710,548   
Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – continued     
Medical & Health Technology & Services – continued   
Diagnosticos da America S.A.      67,800      $ 912,312   
Health Management Associates, Inc., “A” (a)      47,320        510,110   
IDEXX Laboratories, Inc. (a)      15,550        1,206,058   
LifePoint Hospitals, Inc. (a)      12,530        489,672   
Patterson Cos., Inc.      34,120        1,122,207   
Stericycle, Inc. (a)      11,740        1,046,269   
          
     $ 9,550,582   
          
Medical Equipment – 3.5%     
Cooper Cos., Inc.      16,410      $ 1,300,328   
Edwards Lifesciences Corp. (a)      11,360        990,365   
NxStage Medical, Inc. (a)      14,250        296,685   
Pall Corp.      21,830        1,227,501   
Sonova Holding AG      3,052        284,962   
Thermo Fisher Scientific, Inc. (a)      17,120        1,102,357   
          
     $ 5,202,198   
          
Metals & Mining – 0.4%     
Teck Resources Ltd., “B”      12,340      $ 626,132   
          
Network & Telecom – 3.0%     
Acme Packet, Inc. (a)      9,190      $ 644,495   
Ciena Corp. (a)      36,070        662,967   
F5 Networks, Inc. (a)      4,140        456,435   
Finisar Corp. (a)      20,980        378,269   
Fortinet, Inc. (a)      23,080        629,853   
Polycom, Inc. (a)      20,990        1,349,657   
Trimble Navigation Ltd. (a)      10,450        414,238   
          
     $ 4,535,914   
          
Oil Services – 3.9%     
Cameron International Corp. (a)      37,360      $ 1,878,834   
Dresser-Rand Group, Inc. (a)      45,390        2,439,713   
FMC Technologies, Inc. (a)      16,810        752,920   
Lufkin Industries, Inc.      9,110        783,916   
          
     $ 5,855,383   
          
Other Banks & Diversified Financials – 2.2%     
BankUnited, Inc.      14,540      $ 385,892   
MasterCard, Inc., “A”      5,930        1,786,946   
Wintrust Financial Corp.      12,360        397,745   
Zions Bancorporation      32,200        773,122   
          
     $ 3,343,705   
          
Pharmaceuticals – 0.9%     
Genomma Lab Internacional S.A., “B” (a)      348,900      $ 889,198   
Hospira, Inc. (a)      6,640        376,222   
          
     $ 1,265,420   
          
Pollution Control – 0.8%     
Waste Connections, Inc.      39,050      $ 1,239,057   
          
Printing & Publishing – 1.6%     
Lamar Advertising Co., “A” (a)      23,750      $ 650,038   
Moody’s Corp.      45,140        1,731,119   
          
     $ 2,381,157   
          
 

 

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MFS Mid Cap Growth Series

 

Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – continued     
Railroad & Shipping – 0.9%     
Kansas City Southern Co. (a)      21,760      $ 1,291,021   
    

 

 

  
Restaurants – 0.8%     
P.F. Chang’s China Bistro, Inc.      28,480      $ 1,146,035   
    

 

 

  
Specialty Chemicals – 1.7%     
Airgas, Inc.      23,800      $ 1,666,952   
Rockwood Holdings, Inc. (a)      14,500        801,705   
    

 

 

  
     $ 2,468,657   
    

 

 

  
Specialty Stores – 6.5%     
Abercrombie & Fitch Co., “A”      25,730      $ 1,721,852   
Dick’s Sporting Goods, Inc. (a)      46,570        1,790,617   
PetSmart, Inc.      16,120        731,364   
Ross Stores, Inc.      23,920        1,916,470   
Tiffany & Co.      20,080        1,576,682   
Tractor Supply Co.      13,370        894,186   
Urban Outfitters, Inc. (a)      34,660        975,679   
    

 

 

  
     $ 9,606,850   
    

 

 

  
Telecommunications – Wireless – 0.3%     
NII Holdings, Inc. (a)      9,190      $ 389,472   
    

 

 

  
Telephone Services – 1.6%     
American Tower Corp., “A” (a)      46,030      $ 2,408,750   
    

 

 

  
Trucking – 2.2%     
Atlas Air Worldwide Holdings, Inc. (a)      6,490      $ 386,220   
Expeditors International of Washington, Inc.      26,030        1,332,476   
Landstar System, Inc.      34,810        1,617,969   
    

 

 

  
     $ 3,336,665   
    

 

 

  
Utilities – Electric Power – 0.5%     
CMS Energy Corp.      34,300      $ 675,367   
    

 

 

  
Total Common Stocks
(Identified Cost, $119,860,191)		      $ 148,887,903   
    

 

 

  
Issuer    Shares/Par     Value ($)  
MONEY MARKET FUNDS (v) – 1.4%     
MFS Institutional Money Market Portfolio, 0.1%, at Cost and Net Asset Value      2,027,642      $ 2,027,642   
    

 

 

  
COLLATERAL FOR SECURITIES LOANED – 0.7%   
Navigator Securities Lending Prime Portfolio, 0.23%, at Cost and Net Asset Value (j)      1,053,150      $ 1,053,150   
    

 

 

  
Total Investments
(Identified Cost, $122,940,983)		      $ 151,968,695   
    

 

 

  
OTHER ASSETS, LESS
LIABILITIES – (1.9)%		        (2,844,503 ) 
    

 

 

  
Net Assets – 100.0%      $ 149,124,192   
    

 

 

  

 

(a)   Non-income producing security.

 

(j)   The rate quoted is the annualized seven-day yield of the portfolio at period end.

 

(l)   A portion of this security is on loan.

 

(v)   Underlying affiliated fund that is available only to investment companies managed by MFS. The rate quoted is the annualized seven-day yield of the fund at period end.

The following abbreviations are used in this report and are defined:

 

ADR   American Depository Receipt

 

PLC   Public Limited Company

See Notes to Financial Statements

 

 

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MFS Mid Cap Growth Series

 

FINANCIAL STATEMENTS  |  STATEMENT OF ASSETS AND LIABILITIES (unaudited)

 

This statement represents your fund’s balance sheet, which details the assets and liabilities comprising the total value of the fund.

 

At 6/30/11

      

Assets

                  

Investments –

      

Non-affiliated issuers, at value (identified cost, $120,913,341)

      $149,941,053      

Underlying affiliated funds, at cost and value

      2,027,642            

Total investments, at value, including $1,056,090 of securities on loan (identified cost, $122,940,983)

      $151,968,695            

Foreign currency, at value (identified cost, $4,364)

      4,356      

Receivables for

      

Investments sold

      1,752,727      

Fund shares sold

      4,149      

Interest and dividends

      46,631      

Other assets

      880            

Total assets

               $153,777,438   

Liabilities

                  

Payables for

      

Investments purchased

      $3,336,369      

Fund shares reacquired

      207,957      

Collateral for securities loaned, at value

      1,053,150      

Payable to affiliates

      

Investment adviser

      6,238      

Shareholder servicing costs

      177      

Distribution and/or service fees

      479      

Payable for independent Trustees’ compensation

      809      

Accrued expenses and other liabilities

      48,067            

Total liabilities

               $4,653,246   

Net assets

               $149,124,192   

Net assets consist of

                  

Paid-in capital

      $140,345,214      

Unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies

      29,027,772      

Accumulated net realized gain (loss) on investments and foreign currency transactions

      (20,002,378 )    

Accumulated net investment loss

      (246,416 )          

Net assets

               $149,124,192   

Shares of beneficial interest outstanding

               23,715,123   

 

     Net assets      Shares
outstanding		      Net asset value
per share		  

Initial Class

      $113,881,870         17,999,235         $6.33   

Service Class

      35,242,322         5,715,888         6.17   

See Notes to Financial Statements

 

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MFS Mid Cap Growth Series

 

FINANCIAL STATEMENTS  |  STATEMENT OF OPERATIONS (unaudited)

 

This statement describes how much your fund earned in investment income and accrued in expenses. It also describes any gains and/or losses generated by fund operations.

 

Six months ended 6/30/11

      

Net Investment loss

                  

Income

      

Dividends

      $480,619      

Interest

      5,017      

Dividends from underlying affiliated funds

      1,817      

Foreign taxes withheld

      (3,197 )          

Total investment income

               $484,256   

Expenses

      

Management fee

      $591,835      

Distribution and/or service fees

      45,052      

Shareholder servicing costs

      9,053      

Administrative services fee

      16,472      

Independent Trustees’ compensation

      2,849      

Custodian fee

      18,752      

Shareholder communications

      14,185      

Auditing fees

      23,747      

Legal fees

      1,378      

Miscellaneous

      7,819            

Total expenses

               $731,142   

Fees paid indirectly

      (12 )    

Reduction of expenses by investment adviser

      (458 )          

Net expenses

               $730,672   

Net investment loss

               $(246,416 ) 

Realized and unrealized gain (loss) on investments and foreign currency transactions

                  

Realized gain (loss) (identified cost basis)

      

Investment transactions

      $20,346,765      

Foreign currency transactions

      (6,610 )          

Net realized gain (loss) on investments and foreign currency transactions

               $20,340,155   

Change in unrealized appreciation (depreciation)

      

Investments

      $(11,156,487 )    

Translation of assets and liabilities in foreign currencies

      (187 )          

Net unrealized gain (loss) on investments and foreign currency translation

               $(11,156,674 ) 

Net realized and unrealized gain (loss) on investments and foreign currency

               $9,183,481   

Change in net assets from operations

               $8,937,065   

See Notes to Financial Statements

 

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MFS Mid Cap Growth Series

 

FINANCIAL STATEMENTS  |  STATEMENTS OF CHANGES IN NET ASSETS

 

These statements describe the increases and/or decreases in net assets resulting from operations, any distributions, and any shareholder transactions.

 

    
 
 		 Six months ended
6/30/11
(unaudited		  
 
) 		     
 		 Year ended
12/31/10		  
  

Change in net assets

      

From operations

                  

Net investment income (loss)

      $(246,416 )       $55,677   

Net realized gain (loss) on investments and foreign currency transactions

      20,340,155         23,011,639   

Net unrealized gain (loss) on investments and foreign currency translation

      (11,156,674 )       15,736,099   

Change in net assets from operations

      $8,937,065         $38,803,415   

Change in net assets from fund share transactions

      $(33,102,201 )       $(3,027,435 ) 

Total change in net assets

      $(24,165,136 )       $35,775,980   

Net assets

                  

At beginning of period

      173,289,328         137,513,348   

At end of period (including accumulated net investment loss of $246,416 and
$0, respectively)

      $149,124,192         $173,289,328   

See Notes to Financial Statements

 

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MFS Mid Cap Growth Series

 

FINANCIAL STATEMENTS  |  FINANCIAL HIGHLIGHTS

 

The financial highlights table is intended to help you understand the fund’s financial performance for the semiannual period and the past 5 fiscal years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period.

 

Initial Class     

Six months
ended

6/30/11

      Years ended 12/31  
          2010      2009      2008        2007        2006  
       (unaudited)                                         

Net asset value, beginning of period

        $5.99         $4.62         $3.27         $7.66           $7.25           $7.30   
Income (loss) from investment operations                                                    

Net investment income (loss) (d)

        $(0.01 )       $(0.00 )(w)       $(0.00 )(w)       $0.01           $(0.01 )         $0.01   

Net realized and unrealized gain (loss) on
investments and foreign currency

        0.35         1.37         1.36         (3.55 )         0.71           0.18   

Total from investment operations

        $0.34         $1.37         $1.36         $(3.54 )         $0.70           $0.19   
Less distributions declared to shareholders                                                    

From net investment income

        $—         $—         $(0.01 )       $—           $(0.01 )         $—   

From net realized gain on investments

        —         —         —         (0.85 )         (0.28 )         (0.24 ) 

From tax return of capital

        —         —         (0.00 )(w)       —           —           —   

Total distributions declared to shareholders

        $—         $—         $(0.01 )       $(0.85 )         $(0.29 )         $(0.24 ) 

Net asset value, end of period

        $6.33         $5.99         $4.62         $3.27           $7.66           $7.25   

Total return (%) (k)(r)(s)

        5.68 (n)       29.65         41.78         (51.56 )         9.82           2.55   
Ratios (%) (to average net assets)
and Supplemental data:		                                                            

Expenses before expense reductions (f)

        0.87 (a)       0.88         0.90         0.87           0.91           0.90   

Expenses after expense reductions (f)

        0.87 (a)       0.88         0.90         0.87           0.91           0.89   

Net investment income (loss)

        (0.26 )(a)       0.09         (0.09 )       0.21           (0.10 )         0.19   

Portfolio turnover

        34         91         114         104           91           141   

Net assets at end of period (000 omitted)

        $113,882         $137,567         $107,989         $73,066           $173,048           $190,684   

See Notes to Financial Statements

 

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MFS Mid Cap Growth Series

 

Financial Highlights – continued

 

Service Class      Six months
ended
6/30/11		      Years ended 12/31  
          2010        2009        2008      2007        2006  
       (unaudited)                                           

Net asset value, beginning of period

        $5.84         $4.52           $3.20           $7.52         $7.13           $7.20   
Income (loss) from investment operations                                                              

Net investment income (loss) (d)

        $(0.01 )       $(0.01 )         $(0.01 )         $(0.00 )(w)       $(0.03 )         $(0.00 )(w) 

Net realized and unrealized gain (loss) on
investments and foreign currency

        0.34         1.33           1.33           (3.47 )       0.70           0.17   

Total from investment operations

        $0.33         $1.32           $1.32           $(3.47 )       $0.67           $0.17   
Less distributions declared to shareholders                                                              

From net realized gain on investments

        $—         $—           $—           $(0.85 )       $(0.28 )         $(0.24 ) 

Net asset value, end of period

        $6.17         $5.84           $4.52           $3.20         $7.52           $7.13   

Total return (%) (k)(r)(s)

        5.65 (n)       29.20           41.25           (51.59 )       9.51           2.30   
Ratios (%) (to average net assets)
and Supplemental data:		                                                              

Expenses before expense reductions (f)

        1.12 (a)       1.13           1.16           1.12         1.16           1.15   

Expenses after expense reductions (f)

        1.12 (a)       1.13           1.15           1.12         1.16           1.15   

Net investment loss

        (0.49 )(a)       (0.16 )         (0.33 )         (0.05 )       (0.35 )         (0.02 ) 

Portfolio turnover

        34         91           114           104         91           141   

Net assets at end of period (000 omitted)

        $35,242         $35,722           $29,524           $22,511         $48,209           $41,929   

 

(a) Annualized.

 

(d) Per share data is based on average shares outstanding.

 

(f) Ratios do not reflect reductions from fees paid indirectly, if applicable.

 

(k) The total return does not reflect expenses that apply to separate accounts. Inclusion of these charges would reduce the total return figures for all periods shown.

 

(n) Not annualized.

 

(r) Certain expenses have been reduced without which performance would have been lower.

 

(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.

 

(w) Per share amount was less than $0.01.

See Notes to Financial Statements

 

11

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MFS Mid Cap Growth Series

 

NOTES TO FINANCIAL STATEMENTS (unaudited)

 

(1)   Business and Organization

MFS Mid Cap Growth Series (the fund) is a 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, and qualified retirement and pension plans.

 

(2)   Significant Accounting Policies

General – The preparation of financial statements in conformity with U.S. 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. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the fund’s Statement of Assets and Liabilities through the date that the financial statements were issued.

Investment Valuations – Equity securities, including restricted equity securities, are generally valued at the last sale or official closing price as provided by a third-party pricing service on the market or exchange on which they are primarily traded. Equity securities, for which there were no sales reported that day, are generally valued at the last quoted daily bid quotation as provided by a third-party pricing service on the market or exchange on which such securities are primarily traded. Equity securities held short, for which there were no sales reported for that day, are generally valued at the last quoted daily ask quotation as provided by a third-party pricing service on the market or exchange on which such securities are primarily traded. Short-term instruments with a maturity at issuance of 60 days or less generally are valued at amortized cost, which approximates market value. Open-end investment companies are generally valued at net asset value per share. Securities and other assets generally valued on the basis of information from a third-party pricing service may also be valued at a broker/dealer bid quotation. Values obtained from third-party pricing services can utilize both transaction data and market information such as yield, quality, coupon rate, maturity, type of issue, trading characteristics, and other market data. The values of foreign securities and other assets and liabilities expressed in foreign currencies are converted to U.S. dollars using the mean of bid and asked prices for rates provided by a third-party pricing service.

The Board of Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments (including any fair valuation) to the adviser pursuant to valuation policies and procedures approved by the Board. If the adviser determines that reliable market quotations are not readily available, investments are valued at fair value as determined in good faith by the adviser in accordance with such procedures under the oversight of the Board of Trustees. Under the fund’s valuation policies and procedures, market quotations are not considered to be readily available for most types of debt instruments and floating rate loans and many types of derivatives. These investments are generally valued at fair value based on information from third-party pricing services. In addition, investments may be valued at fair value if the adviser determines that an investment’s value has been materially affected by events occurring after the close of the exchange or market on which the investment is principally traded (such as foreign exchange or market) and prior to the determination of the fund’s net asset value, or after the halting of trading of a specific security where trading does not resume prior to the close of the exchange or market on which the security is principally traded. Events that occur on a frequent basis after foreign markets close (such as developments in foreign markets and significant movements in the U.S. markets) and prior to the determination of the fund’s net asset value may be deemed to have a material effect on the value of securities traded in foreign markets. Accordingly, the fund’s foreign equity securities may often be valued at fair value. The adviser generally relies on third-party pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and financial condition of the issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment for purposes of calculating the fund’s net asset value can differ depending on the source and method used to determine value. When fair valuation is used, the value of an investment used to determine the fund’s net asset value may differ from quoted or published prices for the same investment. There can be no assurance that the fund could obtain the fair value assigned to an investment if it were to sell the investment at the same time at which the fund determines its net asset value per share.

Various inputs are used in determining the value of the fund’s assets or liabilities. These inputs are categorized into three broad levels. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fund’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. Level 1 includes unadjusted quoted prices in active

 

12

Table of Contents

MFS Mid Cap Growth Series

 

Notes to Financial Statements (unaudited) – continued

 

markets for identical assets or liabilities. Level 2 includes other significant observable market-based inputs (including quoted prices for similar securities, interest rates, prepayment speed, and credit risk). Level 3 includes unobservable inputs, which may include the adviser’s own assumptions in determining the fair value of investments. The following is a summary of the levels used as of June 30, 2011 in valuing the fund’s assets or liabilities:

 

Investments at Value    Level 1      Level 2      Level 3      Total  
Equity Securities:            

United States

      $137,962,029         $—         $—         $137,962,029   

Israel

      3,406,674         —         —         3,406,674   

United Kingdom

      2,015,217         —         —         2,015,217   

Canada

      1,722,151         —         —         1,722,151   

Brazil

      1,684,994         —         —         1,684,994   

Mexico

      889,198         —         —         889,198   

China

      —         641,106         —         641,106   

Switzerland

      284,962         —         —         284,962   

Hong Kong

      —         281,572         —         281,572   
Mutual Funds      3,080,792         —         —         3,080,792   
Total Investments      $151,046,017         $922,678         $—         $151,968,695   

For further information regarding security characteristics, see the Portfolio of Investments.

Foreign Currency Translation – 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 or on the reporting date for foreign denominated receivables and payables. 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 receivables, payables, 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, loans the securities of the fund to certain qualified institutions (the “Borrowers”) approved by the fund. The loans are collateralized by cash and/or U.S. Treasury and federal agency obligations in an amount typically at least equal to the market value of the securities loaned. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. State Street provides the fund with indemnification against Borrower default. The fund bears the risk of loss with respect to the investment of cash collateral. On loans collateralized by cash, the cash collateral is invested in a money market fund or 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 fund and the lending agent. On loans collateralized by U.S. Treasury and/or federal agency obligations, a fee is received from the Borrower, and is allocated between the fund 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.

Indemnifications – Under the fund’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the fund. Additionally, in the normal course of business, the fund enters into agreements with service providers that may contain indemnification clauses. The fund’s maximum exposure under these agreements is unknown as this would involve future claims that may be made against the fund that have not yet occurred.

Investment Transactions and Income – Investment transactions are recorded on the trade date. Interest income is recorded on the accrual basis. Dividends received in cash are recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded when the fund is informed of the dividend if such information is obtained subsequent to 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.

The fund may receive proceeds from litigation settlements. Any proceeds received from litigation involving portfolio holdings are reflected in the Statement of Operations in realized gain/loss if the security has been disposed of by the fund or in unrealized gain/loss if the security is still held by the fund. Any other proceeds from litigation not related to portfolio holdings are reflected as other income in the Statement of Operations.

 

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Notes to Financial Statements (unaudited) – continued

 

Fees Paid Indirectly – The fund’s custody fee may be reduced according to an arrangement that measures the value of cash deposited with the custodian by the fund. This amount, for the six months ended June 30, 2011, is shown as a reduction of total expenses on the Statement of Operations.

Tax Matters and Distributions – The fund intends to qualify as a regulated investment company, as defined under Subchapter M of the Internal Revenue Code, and to distribute all of its taxable income, including realized capital gains. As a result, no provision for federal income tax is required. The fund’s federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue Service. Foreign taxes, if any, have been accrued by the fund in the accompanying financial statements.

Distributions to shareholders are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income, expense, gain or loss in different periods for financial statement and tax purposes will reverse at some time in the future. Distributions in excess of net investment income or net realized gains are temporary overdistributions for financial statement purposes resulting from differences in the recognition or classification of income or distributions for financial statement and tax purposes.

During the year ended December 31, 2010, there were no significant adjustments due to differences between book and tax accounting.

The fund declared no distributions for the current period or for the year ended December 31, 2010.

The federal tax cost and the tax basis components of distributable earnings were as follows:

 

As of 6/30/11   
Cost of investments      $122,991,596   
Gross appreciation      30,938,073   
Gross depreciation      (1,960,974 ) 
Net unrealized appreciation (depreciation)      $28,977,099   
As of 12/31/10   
Capital loss carryforwards      (40,292,029 ) 
Other temporary differences      356   
Net unrealized appreciation (depreciation)      40,133,586   

The aggregate cost above includes prior fiscal year end tax adjustments, if applicable.

As of December 31, 2010, the fund had capital loss carryforwards available to offset future realized gains. Such losses expire as follows:

 

12/31/16      $(30,850,869 ) 
12/31/17      (9,441,160 ) 
Total      $(40,292,029 ) 

Multiple Classes of Shares of Beneficial Interest – The fund offers multiple classes of shares, which differ in their respective distribution and/or service fees. The fund’s income, realized and unrealized gain (loss), and common expenses are allocated to shareholders based on the daily net assets of each class. 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 fund has an investment advisory agreement with MFS to provide overall investment management and related administrative services and facilities to the fund. The management fee is computed daily and paid monthly at the following annual rates:

 

First $1 billion of average daily net assets      0.75%   
Average daily net assets in excess of $1 billion      0.70%   

The management fee incurred for the six months ended June 30, 2011 was equivalent to an annual effective rate of 0.75% of the fund’s average daily net assets.

 

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MFS Mid Cap Growth Series

 

Notes to Financial Statements (unaudited) – continued

 

Distributor – MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, is the distributor of shares of the fund. The Trustees have adopted a distribution plan for the Service Class shares pursuant to Rule 12b-1 under the Investment Company Act of 1940.

The fund’s distribution plan provides that the fund will pay MFD distribution and/or service fees equal to 0.25% per annum of its average daily net assets attributable to Service Class shares as partial consideration for services performed and expenses incurred by MFD and financial intermediaries (including participating insurance companies that invest in the fund to fund variable annuity and variable life insurance contracts, sponsors of qualified retirement and pension plans that invest in the fund, and affiliates of these participating insurance companies and plan sponsors) in connection with the sale and distribution of the Service Class shares. MFD may subsequently pay all, or a portion, of the distribution and/or service fees to financial intermediaries.

Shareholder Servicing Agent – MFS Service Center, Inc. (MFSC), a wholly-owned subsidiary of MFS, receives a fee from the fund for its services as shareholder servicing agent. For the six months ended June 30, 2011, the fee was $8,804, which equated to 0.0112% annually of the fund’s average daily net assets. MFSC also receives payment from the fund for out-of-pocket expenses paid by MFSC on behalf of the fund. For the six months ended June 30, 2011, these costs amounted to $249.

Administrator – MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the fund partially reimburses MFS the costs incurred to provide these services. The fund is charged an annual fixed amount of $17,500 plus a fee based on average daily net assets. The administrative services fee incurred for the six months ended June 30, 2011 was equivalent to an annual effective rate of 0.0209% of the fund’s average daily net assets.

Trustees’ and Officers’ Compensation – The fund pays compensation to independent Trustees in the form of a retainer, attendance fees, and additional compensation to Board and Committee chairpersons. The fund does not pay compensation directly to Trustees or officers of the fund who are also officers of the investment adviser, all of whom receive remuneration for their services to the fund from MFS. Certain officers and Trustees of the fund are officers or directors of MFS, MFD, and MFSC.

Other – This fund and certain other funds managed by MFS (the funds) have entered into services agreements (the Agreements) which provide for payment of fees by the funds to Tarantino LLC and Griffin Compliance LLC in return for the provision of services of an Independent Chief Compliance Officer (ICCO) and Assistant ICCO, respectively, for the funds. The ICCO and Assistant ICCO are officers of the funds and the sole members of Tarantino LLC and Griffin Compliance LLC, respectively. The funds can terminate the Agreements with Tarantino LLC and Griffin Compliance LLC at any time under the terms of the Agreements. For the six months ended June 30, 2011, the aggregate fees paid by the fund to Tarantino LLC and Griffin Compliance LLC were $565 and are included in miscellaneous expense on the Statement of Operations. MFS has agreed to reimburse the fund for a portion of the payments made by the fund in the amount of $458, which is shown as a reduction of total expenses in the Statement of Operations. Additionally, MFS has agreed to bear all expenses associated with office space, other administrative support, and supplies provided to the ICCO and Assistant ICCO.

The fund invests in the MFS Institutional Money Market Portfolio which is managed by MFS and seeks a high level of current income consistent with preservation of capital and liquidity. Income earned on this investment is included in dividends from underlying affiliated funds on the Statement of Operations. This money market fund does not pay a management fee to MFS.

 

(4)   Portfolio Securities

Purchases and sales of investments, other than U.S. Government securities, purchased option transactions, and short-term obligations, aggregated $53,331,038 and $85,120,203, respectively.

 

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MFS Mid Cap Growth Series

 

Notes to Financial Statements (unaudited) – continued

 

 

(5)   Shares of Beneficial Interest

The fund’s Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest. Transactions in fund shares were as follows:

 

     Six months ended 6/30/11      Year ended 12/31/10  
     Shares      Amount      Shares      Amount  
Shares sold            

Initial Class

      514,515         $3,237,972         4,425,094         $22,756,008   

Service Class

      695,079         4,212,238         1,591,878         7,971,128   
     1,209,594         $7,450,210         6,016,972         $30,727,136   
Shares reacquired            

Initial Class

      (5,478,698 )       $(33,955,966 )       (4,818,822 )       $(23,803,385 ) 

Service Class

      (1,090,977 )       (6,596,445 )       (2,008,946 )       (9,951,186 ) 
     (6,569,675 )       $(40,552,411 )       (6,827,768 )       $(33,754,571 ) 
Net change            

Initial Class

      (4,964,183 )       $(30,717,994 )       (393,728 )       $(1,047,377 ) 

Service Class

      (395,898 )       (2,384,207 )       (417,068 )       (1,980,058 ) 
     (5,360,081 )       $(33,102,201 )       (810,796 )       $(3,027,435 ) 

 

(6)   Line of Credit

The fund and certain other funds managed by MFS participate in a $1.1 billion unsecured committed line of credit, subject to a $1 billion sublimit, provided by a syndication of banks under a credit agreement. Borrowings may be made for temporary financing needs. Interest is charged to each fund, based on its borrowings, generally at a rate equal to the higher of the Federal Reserve funds rate or one month LIBOR plus an agreed upon spread. A commitment fee, based on the average daily, unused portion of the committed line of credit, is allocated among the participating funds at the end of each calendar quarter. In addition, the fund and other funds managed by MFS have established unsecured uncommitted borrowing arrangements with certain banks for temporary financing needs. Interest is charged to each fund, based on its borrowings, at a rate equal to the Federal Reserve funds rate plus an agreed upon spread. For the six months ended June 30, 2011, the fund’s commitment fee and interest expense were $785 and $0, respectively, and are included in miscellaneous expense on the Statement of Operations.

 

(7)   Transactions in Underlying Affiliated Funds – Affiliated Issuers

An affiliated issuer may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. For the purposes of this report, the fund assumes the following to be affiliated issuers:

 

Underlying Affiliated Funds    Beginning
Shares/Par
Amount		      Acquisitions
Shares/Par
Amount		      Dispositions
Shares/Par
Amount		      Ending
Shares/Par
Amount		  
MFS Institutional Money Market Portfolio      2,545,260         28,105,281         (28,622,899 )       2,027,642   
Underlying Affiliated Funds    Realized
Gain (Loss)		      Capital Gain
Distributions		      Dividend
Income		      Ending
Value		  
MFS Institutional Money Market Portfolio      $—         $—         $1,817         $2,027,642   

 

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BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT

 

A discussion regarding the Board’s most recent review and renewal of the fund’s Investment Advisory Agreement with MFS will be available on or about November 1, 2011 by clicking on the fund’s name under “Variable Insurance Portfolios — VIT” in the “Products and Performance” section of the MFS Web site (mfs.com).

PROXY VOTING POLICIES AND INFORMATION

A general description of the MFS funds’ proxy voting policies and procedures is available without charge, upon request, by calling
1-800-225-2606, by visiting the Proxy Voting section of mfs.com or by visiting the SEC’s Web site at http://www.sec.gov.

Information regarding how the fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available without charge by visiting the Proxy Voting section of mfs.com or by visiting the SEC’s Web site at http://www.sec.gov.

QUARTERLY PORTFOLIO DISCLOSURE

The fund will file a complete schedule of portfolio holdings with the Securities and Exchange Commission (the Commission) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q may be reviewed and copied at the:

Public Reference Room

Securities and Exchange Commission

100 F Street, NE, Room 1580

Washington, D.C. 20549

Information on the operation of the Public Reference Room may be obtained by calling the Commission at 1-800-SEC-0330. The fund’s Form N-Q is available on the EDGAR database on the Commission’s Internet Web site 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: publicinfo@sec.gov or by writing the Public Reference Section at the above address.

FURTHER INFORMATION

From time to time, MFS may post important information about the fund or the MFS funds on the MFS web site (mfs.com). This information is available by visiting the “News & Commentary” section of mfs.com or by clicking on the fund’s name under “Variable Insurance Portfolios — VIT” in the “Products and Performance” section of mfs.com.

 

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rev. 3/11

 

FACTS   WHAT DOES MFS DO WITH YOUR
PERSONAL INFORMATION?		   LOGO

 

Why?   Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?  

The types of personal information we collect and share depend on the product or service you have with us. This information can include:

 

•  Social Security number and account balances

•  Account transactions and transaction history

•  Checking account information and wire transfer instructions

 

When you are no longer our customer, we continue to share your information as described in this notice.

 

How?   All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons MFS chooses to share; and whether you can limit this sharing.

 

Reasons we can share your personal information   Does MFS share?   Can you limit this
sharing?

For our everyday business purposes –

such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus

   Yes   No

For our marketing purposes –

to offer our products and services to you

   No   We don’t share
For joint marketing with other financial companies   No   We don’t share

For our affiliates’ everyday business purposes –

information about your transactions and experiences

   No   We don’t share

For our affiliates’ everyday business purposes –

information about your creditworthiness

   No   We don’t share
For nonaffiliates to market to you   No   We don’t share

 

Questions?   Call 800-225-2606 or go to mfs.com.

 

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Page 2  

 

Who we are
Who is providing this notice?   MFS Funds, MFS Investment Management, MFS Institutional Advisors, Inc., MFS Fund Distributors, Inc., MFS Heritage Trust Company, and MFS Service Center, Inc.

 

What we do
How does MFS protect my personal information?   To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include procedural, electronic, and physical safeguards for the protection of the personal information we collect about you.
How does MFS
collect my personal information?		  

We collect your personal information, for example, when you

 

• open an account or provide account information

• direct us to buy securities or direct us to sell your securities

• make a wire transfer

 

We also collect your personal information from others, such as credit bureaus, affiliates and other companies.

Why can’t I limit all sharing?  

Federal law gives you the right to limit only

 

• sharing for affiliates’ everyday business purposes – information about your creditworthiness

• affiliates from using your information to market to you

• sharing for nonaffiliates to market to you

 

State laws and individual companies may give you additional rights to limit sharing.

 

Definitions
Affiliates  

Companies related by common ownership or control. They can be financial and nonfinancial companies.

 

• MFS does not share personal information with affiliates, except for everyday business purposes as described on page one of this notice.

Nonaffiliates  

Companies not related by common ownership or control. They can be financial and nonfinancial companies.

 

• MFS does not share with nonaffiliates so they can market to you.

Joint Marketing  

A formal agreement between nonaffiliated financial companies that together market financial products or services to you.

 

• MFS doesn’t jointly market.

 

 

Other important information
If you own an MFS product or receive an MFS service in the name of a third party such as a bank or broker-dealer, their privacy policy may apply to you instead of ours.

 

19

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LOGO

Table of Contents

LOGO

 

MFS® New Discovery Series

MFS® Variable Insurance Trust

 

LOGO

 

 

SEMIANNUAL REPORT

June 30, 2011

 

VND-SEM

Table of Contents

MFS® NEW DISCOVERY SERIES

 

CONTENTS   
Letter from the CEO      1   
Portfolio composition      2   
Expense table      3   
Portfolio of investments      4   
Statement of assets and liabilities      7   
Statement of operations      8   
Statements of changes in net assets      9   
Financial highlights      10   
Notes to financial statements      12   
Board review of investment advisory agreement      17   
Proxy voting policies and information      17   
Quarterly portfolio disclosure      17   
Further information      17   
MFS® privacy notice      18   

 

The report is prepared for the general information of contract owners.

It is authorized for distribution to prospective investors only when preceded or accompanied by a current prospectus.

 

NOT FDIC INSURED Ÿ MAY LOSE VALUE Ÿ NO BANK OR CREDIT UNION GUARANTEE Ÿ NOT A DEPOSIT Ÿ NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY OR NCUA/NCUSIF

Table of Contents

MFS New Discovery Series

 

LETTER FROM THE CEO

 

LOGO

 

Dear Contract Owners:

After about a year of almost uninterrupted macroeconomic and financial market improvement following the global credit crisis, investors grew more cautious in the middle of 2010 as fears grew that some European countries would default on their debt and as economic data showed a weakening

trend in the global economy. As a result asset prices fell significantly.

Last September the U.S. Federal Reserve Board’s promises to make lending conditions easier helped assuage market fears and drive asset prices off their recent lows. A combination of solid earnings and improving economic data gave an additional boost to investor sentiment.

In the following months, the renewed positive market mood, coupled with indications of better global macroeconomic activity, pushed many asset valuations to post-crisis highs. At the same time, global sovereign

bond yields initially rose as investors became concerned about inflationary pressures, driven by higher prices for oil as well as other commodities. However, by the end of the second quarter of 2011, a weakening macroeconomic backdrop and renewed concerns over debt problems in some eurozone countries pushed equities lower.

For the remainder of 2011, we are cautiously optimistic that economic growth will continue to improve and that the global economies will recover from the shocks of the past few years. We expect the pace of recovery worldwide to be uneven and volatile and acknowledge the elevated uncertainty created by events in Japan, Europe, the Middle East, as well as that created by the U.S. debate over raising the debt ceiling and the downgrade by Standard & Poor’s of the U.S. long-term credit rating.

As always, we continue to be mindful of the many economic challenges faced at the local, national, and international levels. It is in times such as these that we want to remind investors of the merits of maintaining a long-term view, adhering to basic investing principles such as asset allocation and diversification, and working closely with their advisors to research and identify appropriate investment opportunities.

Respectfully,

LOGO

Robert J. Manning

Chairman and Chief Executive Officer

MFS Investment Management®

August 16, 2011

 

The opinions expressed in this letter are subject to change, may not be relied upon for investment advice, and no forecasts can be guaranteed.

 

 

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MFS New Discovery Series

 

PORTFOLIO COMPOSITION

 

Portfolio structure

LOGO

 

Top ten holdings  
QuinStreet, Inc.     1.9%   
LinkedIn Corp., “A”     1.8%   
P.F. Chang’s China Bistro, Inc.     1.8%   
Polypore International, Inc.     1.7%   
F5 Networks, Inc.     1.6%   
Brookdale Senior Living, Inc.     1.6%   
WebMD Health Corp.     1.6%   
Green Mountain Coffee Roasters, Inc.     1.5%   
Cabot Oil & Gas Corp.     1.5%   
SuccessFactors, Inc.     1.4%   
Equity sectors  
Technology     34.0%   
Health Care     12.3%   
Industrial Goods & Services     7.9%   
Energy     7.3%   
Special Products & Services     6.5%   
Financial Services     6.1%   
Retailing     5.8%   
Autos & Housing     5.4%   
Leisure     4.9%   
Transportation     4.9%   
Basic Materials     3.2%   
Consumer Staples     2.0%   
 

 

From time to time “Cash & Other Net Assets” may be negative due to timing of cash receipts and/or equivalent exposure from any derivative holdings.

Percentages are based on net assets as of 6/30/11.

The portfolio is actively managed and current holdings may be different.

 

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EXPENSE TABLE

 

Fund Expenses Borne by the Contract Holders During the Period,

January 1, 2011 through June 30, 2011

As a contract holder of the fund, you incur ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period January 1, 2011 through June 30, 2011.

Actual Expenses

The first line for each share class in the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The second line for each share class in the following table provides information about hypothetical account values and hypothetical expenses based on the fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight the fund’s ongoing costs only and do not take into account the fees and expenses imposed under the variable contracts through which your investment in the fund is made. Therefore, the second line for each share class in the table is useful in comparing ongoing costs associated with an investment in vehicles (such as the fund) which fund benefits under variable annuity and variable life insurance contracts and to qualified pension and retirement plans only, and will not help you determine the relative total costs of investing in the fund through variable annuity and variable life insurance contracts. If the fees and expenses imposed under the variable contracts were included, your costs would have been higher.

 

Share Class         Annualized
Expense Ratio		      Beginning
Account Value
1/01/11		      Ending
Account Value
6/30/11		      Expenses Paid
During Period (p)
1/01/11-6/30/11		  
Initial Class   Actual      0.97%         $1,000.00         $1,105.95         $5.06   
  Hypothetical (h)      0.97%         $1,000.00         $1,019.98         $4.86   
Service Class   Actual      1.22%         $1,000.00         $1,104.85         $6.37   
  Hypothetical (h)      1.22%         $1,000.00         $1,018.74         $6.11   

 

(h) 5% class return per year before expenses.

 

(p) Expenses paid is equal to each class’ annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by the number of days in the period, divided by the number of days in the year.

 

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MFS New Discovery Series

 

PORTFOLIO OF INVESTMENTS – 6/30/11 (unaudited)

 

The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.

Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – 100.3%     
Aerospace – 0.4%     
HEICO Corp.      62,995      $ 3,448,338   
          
Airlines – 2.6%     
Allegiant Travel Co. (a)      146,680      $ 7,260,660   
Spirit Airlines, Inc. (a)      788,910        9,459,031   
United Continental Holdings, Inc. (a)      281,960        6,380,755   
          
     $ 23,100,446   
          
Apparel Manufacturers – 1.1%     
Arezzo Industria e Comercio S.A. (a)      534,560      $ 7,484,148   
Phillips-Van Heusen Corp.      30,970        2,027,606   
          
     $ 9,511,754   
          
Biotechnology – 0.9%     
Alimera Sciences, Inc. (a)      91,460      $ 745,399   
Anacor Pharmaceuticals, Inc. (a)      433,060        2,797,568   
Pacific Biosciences of California, Inc. (a)      177,900        2,081,430   
SEQUENOM, Inc. (a)      350,320        2,644,916   
          
     $ 8,269,313   
          
Broadcasting – 1.9%     
QuinStreet, Inc. (a)      1,326,318      $ 17,215,608   
          
Business Services – 4.8%     
Calix, Inc. (a)      311,810      $ 6,491,884   
Concur Technologies, Inc. (a)      137,140        6,866,600   
Constant Contact, Inc. (a)      198,370        5,034,631   
FleetCor Technologies, Inc. (a)      361,320        10,709,525   
Jones Lang LaSalle, Inc.      70,840        6,680,212   
LPS Brasil – Consultoria de Imoveis S.A.      100,600        2,449,492   
Ultimate Software Group, Inc. (a)      84,610        4,605,322   
          
     $ 42,837,666   
          
Computer Software – 6.2%     
Ariba, Inc. (a)      206,650      $ 7,123,226   
Check Point Software Technologies Ltd. (a)      121,100        6,884,535   
CommVault Systems, Inc. (a)      112,660        5,007,737   
Nuance Communications, Inc. (a)      290,134        6,229,177   
Red Hat, Inc. (a)      172,550        7,920,045   
SolarWinds, Inc. (a)      327,890        8,571,045   
SuccessFactors, Inc. (a)      437,840        12,872,496   
          
     $ 54,608,261   
          
Computer Software – Systems – 10.0%     
Active Network, Inc. (a)      417,190      $ 7,342,544   
BroadSoft, Inc. (a)      142,090        5,417,892   
Cornerstone OnDemand, Inc. (a)      251,440        4,437,916   
DemandTec, Inc. (a)      413,530        3,763,123   
Fusion-io, Inc. (a)      193,773        5,830,630   
IntraLinks Holdings, Inc. (a)      409,600        7,077,888   
MICROS Systems, Inc. (a)      90,300        4,488,813   
National Instruments Corp.      334,980        9,945,556   
PROS Holdings, Inc. (a)      545,300        9,537,297   
Qlik Technologies, Inc. (a)      294,190        10,020,111   
Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – continued     
Computer Software – Systems – continued     
SciQuest, Inc. (a)      467,030      $ 7,981,543   
ServiceSource International, Inc. (a)      265,040        5,889,189   
Velti PLC (a)      269,140        4,551,157   
Verifone Systems, Inc. (a)      52,140        2,312,409   
          
     $ 88,596,068   
          
Construction – 4.6%     
Beacon Roofing Supply, Inc. (a)      472,020      $ 10,771,496   
Eagle Materials, Inc.      351,830        9,805,502   
NVR, Inc. (a)      14,850        10,773,378   
Owens Corning (a)      263,590        9,845,087   
          
     $ 41,195,463   
          
Consumer Products – 0.5%     
L’Occitane International S.A.      1,617,500      $ 4,323,477   
          
Consumer Services – 1.7%     
Anhanguera Educacional Participacoes S.A.      179,800      $ 3,827,223   
HomeAway, Inc. (a)      292,750        11,329,425   
          
     $ 15,156,648   
          
Electrical Equipment – 1.5%     
Acuity Brands, Inc.      113,950      $ 6,356,131   
MSC Industrial Direct Co., Inc., “A”      32,690        2,167,674   
Sensata Technologies Holding B.V. (a)      125,380        4,720,557   
          
     $ 13,244,362   
          
Electronics – 7.8%     
Aeroflex Holding Corp. (a)      321,110      $ 5,828,147   
DynaVox, Inc., “A” (a)      550,680        4,185,168   
Entegris, Inc. (a)      451,850        4,572,722   
Fabrinet (a)      457,730        11,113,684   
Hittite Microwave Corp. (a)      171,950        10,645,425   
Inphi Corp. (a)      256,560        4,464,144   
Monolithic Power Systems, Inc. (a)      461,880        7,122,190   
Semtech Corp. (a)      253,950        6,942,993   
Stratasys, Inc. (a)      142,680        4,808,316   
Veeco Instruments, Inc. (a)(l)      187,810        9,091,882   
          
     $ 68,774,671   
          
Energy – Independent – 6.1%     
Brigham Exploration Co. (a)      333,000      $ 9,966,690   
Cabot Oil & Gas Corp.      199,540        13,231,497   
Energy XXI (Bermuda) Ltd. (a)      258,100        8,574,082   
Oasis Petroleum LLC (a)      335,290        9,951,407   
Petrohawk Energy Corp. (a)      513,150        12,659,411   
          
     $ 54,383,087   
          
Food & Beverages – 1.5%     
Green Mountain Coffee Roasters, Inc. (a)      150,200      $ 13,406,852   
          
Forest & Paper Products – 0.8%     
Universal Forest Products, Inc.      281,050      $ 6,733,958   
          
 

 

4

Table of Contents

MFS New Discovery Series

 

Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – continued     
Furniture & Appliances – 0.8%     
SodaStream International Ltd. (a)      120,480      $ 7,326,389   
          
Gaming & Lodging – 0.7%     
Morgans Hotel Group Co. (a)      847,908      $ 6,096,459   
          
General Merchandise – 0.6%     
Lojas Renner S.A.      134,200      $ 5,116,394   
          
Health Maintenance Organizations – 0.2%     
OdontoPrev S.A.      127,500      $ 2,124,115   
          
Insurance – 1.3%     
Brazil Insurance Participacoes e Administracao S.A.      9,200      $ 11,495,210   
          
Internet – 6.4%     
Demand Media, Inc. (a)      242,950      $ 3,291,973   
LinkedIn Corp., “A” (a)(l)      176,430        15,894,579   
LogMeIn, Inc. (a)      106,510        4,108,091   
OpenTable, Inc. (a)      148,610        12,352,463   
Shutterfly, Inc. (a)      40,410        2,320,342   
TechTarget, Inc. (a)      646,816        4,896,397   
WebMD Health Corp. (a)      303,550        13,835,809   
          
     $ 56,699,654   
          
Machinery & Tools – 6.0%     
Douglas Dynamics, Inc.      184,870      $ 2,919,097   
Finning International, Inc.      290,820        8,624,037   
Herman Miller, Inc.      327,030        8,901,757   
Joy Global, Inc.      49,330        4,698,189   
Polypore International, Inc. (a)      218,312        14,810,286   
Thermon Group Holdings, Inc. (a)      439,070        5,268,840   
United Rentals, Inc. (a)      221,880        5,635,752   
WABCO Holdings, Inc. (a)      32,410        2,238,235   
          
     $ 53,096,193   
          
Medical & Health Technology & Services – 5.1%     
Allscripts Healthcare Solutions, Inc. (a)      309,910      $ 6,018,452   
Brookdale Senior Living, Inc. (a)      577,715        14,009,589   
Cerner Corp. (a)      147,570        9,018,003   
Health Management Associates, Inc., “A” (a)      632,120        6,814,254   
IPC The Hospitalist Co., Inc. (a)      69,660        3,228,741   
LifePoint Hospitals, Inc. (a)      153,220        5,987,838   
          
     $ 45,076,877   
          
Medical Equipment – 6.1%     
DexCom, Inc. (a)      322,900      $ 4,678,821   
Heartware International, Inc. (a)      61,550        4,559,624   
IMRIS, Inc. (a)      279,890        1,911,649   
Masimo Corp.      377,750        11,211,620   
NxStage Medical, Inc. (a)      498,407        10,376,834   
Thoratec Corp. (a)      279,630        9,177,457   
Uroplasty, Inc. (a)      611,910        4,589,325   
Volcano Corp. (a)      246,500        7,959,485   
          
     $ 54,464,815   
          
Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – continued     
Metals & Mining – 0.8%     
Globe Specialty Metals, Inc.      102,330      $ 2,294,239   
Molycorp, Inc. (a)      83,740        5,113,164   
          
     $ 7,407,403   
          
Network & Telecom – 3.6%     
Acme Packet, Inc. (a)      34,470      $ 2,417,381   
Ciena Corp. (a)      184,470        3,390,559   
F5 Networks, Inc. (a)      127,710        14,080,028   
Finisar Corp. (a)      287,410        5,182,002   
Polycom, Inc. (a)      110,800        7,124,440   
          
     $ 32,194,410   
          
Oil Services – 1.2%     
Dresser-Rand Group, Inc. (a)      203,240      $ 10,924,150   
          
Other Banks & Diversified Financials – 4.6%     
Air Lease Corp. (a)      234,620      $ 5,698,920   
BankUnited, Inc.      220,790        5,859,767   
First Interstate BancSystem, Inc.      418,740        6,172,228   
First Republic Bank (a)      66,600        2,149,848   
Metro Bancorp, Inc. (a)      401,570        4,585,929   
PacWest Bancorp      294,920        6,066,504   
Wintrust Financial Corp.      172,620        5,554,912   
Zipcar, Inc. (a)      225,080        4,593,883   
          
     $ 40,681,991   
          
Precious Metals & Minerals – 0.9%     
Stillwater Mining Co. (a)      344,970      $ 7,592,790   
          
Real Estate – 0.2%     
Chesapeake Lodging Trust, REIT      78,395      $ 1,337,419   
          
Restaurants – 2.3%     
Arcos Dorados Holdings, Inc.      219,430      $ 4,627,779   
P.F. Chang’s China Bistro, Inc.      393,070        15,817,137   
          
     $ 20,444,916   
          
Specialty Chemicals – 0.7%     
KiOR, Inc. “A” (a)      134,560      $ 2,038,584   
Rockwood Holdings, Inc. (a)      82,390        4,555,343   
          
     $ 6,593,927   
          
Specialty Stores – 4.1%     
Citi Trends, Inc. (a)      626,380      $ 9,445,810   
Ethan Allen Interiors, Inc.      292,860        6,234,989   
Monro Muffler Brake, Inc.      244,515        9,117,964   
Urban Outfitters, Inc. (a)      422,540        11,894,501   
          
     $ 36,693,264   
          
Trucking – 2.3%     
Atlas Air Worldwide Holdings, Inc. (a)      131,870      $ 7,847,584   
Landstar System, Inc.      97,440        4,529,011   
Swift Transportation Co. (a)      573,700        7,773,635   
          
     $ 20,150,230   
          
Total Common Stocks
(Identified Cost, $824,922,982)		      $ 890,322,578   
          
 

 

5

Table of Contents

MFS New Discovery Series

 

Portfolio of Investments (unaudited) – continued

 

 

    Strike
Price		     First
Exercise		     Shares/Par     Value ($)  
       
WARRANTS – 0.0%       
Alcoholic Beverages – 0.0%         
Castle Brands, Inc. (1 share for 1 warrant) (Identified Cost, $166,679) (a)(z)   $ 6.57        5/08/07        118,680      $ 0   
       

 

 

  
RIGHTS – 0.0%       
Business Services – 0.0%         
LPS Brasil Consultoria de Imoveis S.A.
(1 share for 1 right) (Identified Cost, $0) (a)		   BRL  39.43        6/30/11        1,216      $ 0   
       

 

 

  
Issuer    Shares/Par     Value ($)  
    
MONEY MARKET FUNDS (v) – 0.0%     
MFS Institutional Money Market Portfolio, 0.1%, at Cost and Net Asset Value      325      $ 325   
    

 

 

  
COLLATERAL FOR SECURITIES LOANED – 1.5%     
Navigator Securities Lending Prime Portfolio, 0.23%, at Cost and Net Asset Value (j)      13,199,332      $ 13,199,332   
    

 

 

  

Total Investments

(Identified Cost, $838,289,318)

      $ 903,522,235   
    

 

 

  
OTHER ASSETS, LESS
LIABILITIES – (1.8)%		        (15,625,405 ) 
    

 

 

  
Net Assets – 100.0%      $ 887,896,830   
    

 

 

  
 
(a)   Non-income producing security.

 

(j)   The rate quoted is the annualized seven-day yield of the portfolio at period end.

 

(l)   A portion of this security is on loan.

 

(v)   Underlying affiliated fund that is available only to investment companies managed by MFS. The rate quoted is the annualized seven-day yield of the fund at period end.

 

(z)   Restricted securities are not registered under the Securities Act of 1933 and are subject to legal restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are subsequently registered. Disposal of these securities may involve time-consuming negotiations and prompt sale at an acceptable price may be difficult. The fund holds the following restricted securities:

 

Restricted Securities    Acquisition
Date		    Cost      Value  
Castle Brands, Inc. (Warrants)    4/18/07      $166,679         $0   
% of Net Assets            0.0%   

The following abbreviations are used in this report and are defined:

 

PLC   Public Limited Company

 

REIT   Real Estate Investment Trust

Abbreviations indicate amounts shown in currencies other than the U.S. dollar. All amounts are stated in U.S. dollars unless otherwise indicated. A list of abbreviations is shown below:

 

BRL   Brazilian Real

See Notes to Financial Statements

 

6

Table of Contents

MFS New Discovery Series

 

FINANCIAL STATEMENTS  |  STATEMENT OF ASSETS AND LIABILITIES (unaudited)

 

This statement represents your fund’s balance sheet, which details the assets and liabilities comprising the total value of the fund.

 

At 6/30/11

      

Assets

                  

Investments –

      

Non-affiliated issuers, at value (identified cost, $838,288,993)

      $903,521,910      

Underlying affiliated funds, at cost and value

      325            

Total investments, at value, including $13,257,131 of securities on loan (identified cost, $838,289,318)

      $903,522,235            

Cash

      305,755      

Receivables for

      

Investments sold

      18,473,608      

Fund shares sold

      1,140,018      

Interest and dividends

      212,472      

Other assets

      3,296            

Total assets

               $923,657,384   

Liabilities

                  

Payable to custodian

      $1,720,067      

Payables for

      

Investments purchased

      20,122,580      

Fund shares reacquired

      490,652      

Collateral for securities loaned, at value

      13,199,332      

Payable to affiliates

      

Investment adviser

      44,035      

Shareholder servicing costs

      795      

Distribution and/or service fees

      5,290      

Payable for independent Trustees’ compensation

      2,640      

Accrued expenses and other liabilities

      175,163            

Total liabilities

               $35,760,554   

Net assets

               $887,896,830   

Net assets consist of

                  

Paid-in capital

      $627,593,643      

Unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies

      65,234,315      

Accumulated net realized gain (loss) on investments and foreign currency transactions

      198,233,542      

Accumulated net investment loss

      (3,164,670 )          

Net assets

               $887,896,830   

Shares of beneficial interest outstanding

               44,477,846   

 

     Net assets      Shares
outstanding		      Net asset value
per share		  

Initial Class

      $497,581,244         24,565,860         $20.25   

Service Class

      390,315,586         19,911,986         19.60   

See Notes to Financial Statements

 

7

Table of Contents

MFS New Discovery Series

 

FINANCIAL STATEMENTS  |  STATEMENT OF OPERATIONS (unaudited)

 

This statement describes how much your fund earned in investment income and accrued in expenses. It also describes any gains and/or losses generated by fund operations.

 

Six months ended 6/30/11

      

Net Investment loss

                  

Income

      

Dividends

      $1,610,213      

Interest

      12,623      

Dividends from underlying affiliated funds

      4,619      

Foreign taxes withheld

      (42,536 )          

Total investment income

               $1,584,919   

Expenses

      

Management fee

      $3,962,714      

Distribution and/or service fees

      456,696      

Shareholder servicing costs

      50,099      

Administrative services fee

      68,512      

Independent Trustees’ compensation

      10,196      

Custodian fee

      78,592      

Shareholder communications

      65,135      

Auditing fees

      32,230      

Legal fees

      6,423      

Miscellaneous

      21,639            

Total expenses

               $4,752,236   

Fees paid indirectly

      (133 )    

Reduction of expenses by investment adviser

      (2,514 )          

Net expenses

               $4,749,589   

Net investment loss

               $(3,164,670 ) 

Realized and unrealized gain (loss) on investments and foreign currency transactions

                  

Realized gain (loss) (identified cost basis)

      

Investment transactions (net of $65 country tax)

      $105,452,891      

Foreign currency transactions

      (498,831 )          

Net realized gain (loss) on investments and foreign currency transactions

               $104,954,060   

Change in unrealized appreciation (depreciation)

      

Investments

      $(15,813,879 )    

Translation of assets and liabilities in foreign currencies

      1,603            

Net unrealized gain (loss) on investments and foreign currency translation

               $(15,812,276 ) 

Net realized and unrealized gain (loss) on investments and foreign currency

               $89,141,784   

Change in net assets from operations

               $85,977,114   

See Notes to Financial Statements

 

8

Table of Contents

MFS New Discovery Series

 

FINANCIAL STATEMENTS  |  STATEMENTS OF CHANGES IN NET ASSETS

 

These statements describe the increases and/or decreases in net assets resulting from operations, any distributions, and any shareholder transactions.

 

    
 
 		 Six months ended
6/30/11
(unaudited		  
 
) 		     
 		 Year ended
12/31/10		  
  

Change in net assets

      

From operations

                  

Net investment loss

      $(3,164,670 )       $(4,219,907 ) 

Net realized gain (loss) on investments and foreign currency transactions

      104,954,060         199,637,306   

Net unrealized gain (loss) on investments and foreign currency translation

      (15,812,276 )       19,102,181   

Change in net assets from operations

      $85,977,114         $214,519,580   

Change in net assets from fund share transactions

      $(21,657,902 )       $(33,965,430 ) 

Total change in net assets

      $64,319,212         $180,554,150   

Net assets

                  

At beginning of period

      823,577,618         643,023,468   

At end of period (including accumulated net investment loss of $3,164,670 and
$0, respectively)

      $887,896,830         $823,577,618   

See Notes to Financial Statements

 

9

Table of Contents

MFS New Discovery Series

 

FINANCIAL STATEMENTS  |  FINANCIAL HIGHLIGHTS

 

The financial highlights table is intended to help you understand the fund’s financial performance for the semiannual period and the past 5 fiscal years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period.

 

Initial Class   

Six months
ended

6/30/11

      Years ended 12/31  
        2010        2009        2008        2007        2006  
     (unaudited)                                             

Net asset value, beginning of period

      $18.31         $13.43           $8.23           $16.63           $17.42           $15.65   
Income (loss) from investment operations                                                              

Net investment loss (d)

      $(0.06 )       $(0.08 )         $(0.06 )         $(0.04 )         $(0.09 )         $(0.10 ) 

Net realized and unrealized gain (loss) on investments and foreign currency

      2.00         4.96           5.26           (5.54 )         0.58           2.16   

Total from investment operations

      $1.94         $4.88           $5.20           $(5.58 )         $0.49           $2.06   
Less distributions declared to shareholders                                                              

From net realized gain on investments

      $—         $—           $—           $(2.82 )         $(1.28 )         $(0.29 ) 

Net asset value, end of period

      $20.25         $18.31           $13.43           $8.23           $16.63           $17.42   

Total return (%) (k)(r)(s)

      10.60 (n)       36.34           63.18           (39.33 )         2.52           13.22   
Ratios (%) (to average net assets)
and Supplemental data:		                                                              

Expenses before expense reductions (f)

      0.97 (a)       1.01           1.03           1.01           1.01           1.03   

Expenses after expense reductions (f)

      0.97 (a)       1.01           1.03           1.01           1.01           1.03   

Net investment loss

      (0.62 )(a)       (0.54 )         (0.57 )         (0.36 )         (0.50 )         (0.63 ) 

Portfolio turnover

      105         195           158           121           95           106   

Net assets at end of period (000 omitted)

      $497,581         $499,020           $423,042           $289,596           $520,726           $533,322   

See Notes to Financial Statements

 

10

Table of Contents

MFS New Discovery Series

 

Financial Highlights – continued

 

Service Class   

Six months
ended

6/30/11

      Years ended 12/31  
        2010        2009        2008        2007        2006  
     (unaudited)                                             

Net asset value, beginning of period

      $17.74         $13.05           $8.01           $16.31           $17.15           $15.45   
Income (loss) from investment operations                                                              

Net investment loss (d)

      $(0.08 )       $(0.11 )         $(0.08 )         $(0.07 )         $(0.13 )         $(0.14 ) 

Net realized and unrealized gain (loss) on investments and foreign currency

      1.94         4.80           5.12           (5.41 )         0.57           2.13   

Total from investment operations

      $1.86         $4.69           $5.04           $(5.48 )         $0.44           $1.99   
Less distributions declared to shareholders                                                              

From net realized gain on investments

      $—         $—           $—           $(2.82 )         $(1.28 )         $(0.29 ) 

Net asset value, end of period

      $19.60         $17.74           $13.05           $8.01           $16.31           $17.15   

Total return (%) (k)(r)(s)

      10.48 (n)       35.94           62.92           (39.52 )         2.25           12.93   
Ratios (%) (to average net assets)
and Supplemental data:		                                                              

Expenses before expense reductions (f)

      1.22 (a)       1.26           1.28           1.26           1.26           1.28   

Expenses after expense reductions (f)

      1.22 (a)       1.26           1.28           1.26           1.26           1.28   

Net investment loss

      (0.86 )(a)       (0.79 )         (0.82 )         (0.60 )         (0.75 )         (0.88 ) 

Portfolio turnover

      105         195           158           121           95           106   

Net assets at end of period (000 omitted)

      $390,316         $324,557           $219,982           $125,421           $242,510           $285,511   

 

(a) Annualized.

 

(d) Per share data is based on average shares outstanding.

 

(f) Ratios do not reflect reductions from fees paid indirectly, if applicable.

 

(k) The total return does not reflect expenses that apply to separate accounts. Inclusion of these charges would reduce the total return figures for all periods shown.

 

(n) Not annualized.

 

(r) Certain expenses have been reduced without which performance would have been lower.

 

(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.

See Notes to Financial Statements

 

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MFS New Discovery Series

 

NOTES TO FINANCIAL STATEMENTS (unaudited)

 

(1)   Business and Organization

MFS New Discovery Series (the fund) is a 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, and qualified retirement and pension plans.

 

(2)   Significant Accounting Policies

General – The preparation of financial statements in conformity with U.S. 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. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the fund’s Statement of Assets and Liabilities through the date that the financial statements were issued.

Investment Valuations – Equity securities, including restricted equity securities, are generally valued at the last sale or official closing price as provided by a third-party pricing service on the market or exchange on which they are primarily traded. Equity securities, for which there were no sales reported that day, are generally valued at the last quoted daily bid quotation as provided by a third-party pricing service on the market or exchange on which such securities are primarily traded. Equity securities held short, for which there were no sales reported for that day, are generally valued at the last quoted daily ask quotation as provided by a third-party pricing service on the market or exchange on which such securities are primarily traded. Short-term instruments with a maturity at issuance of 60 days or less generally are valued at amortized cost, which approximates market value. Open-end investment companies are generally valued at net asset value per share. Securities and other assets generally valued on the basis of information from a third-party pricing service may also be valued at a broker/dealer bid quotation. Values obtained from third-party pricing services can utilize both transaction data and market information such as yield, quality, coupon rate, maturity, type of issue, trading characteristics, and other market data. The values of foreign securities and other assets and liabilities expressed in foreign currencies are converted to U.S. dollars using the mean of bid and asked prices for rates provided by a third-party pricing service.

The Board of Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments (including any fair valuation) to the adviser pursuant to valuation policies and procedures approved by the Board. If the adviser determines that reliable market quotations are not readily available, investments are valued at fair value as determined in good faith by the adviser in accordance with such procedures under the oversight of the Board of Trustees. Under the fund’s valuation policies and procedures, market quotations are not considered to be readily available for most types of debt instruments and floating rate loans and many types of derivatives. These investments are generally valued at fair value based on information from third-party pricing services. In addition, investments may be valued at fair value if the adviser determines that an investment’s value has been materially affected by events occurring after the close of the exchange or market on which the investment is principally traded (such as foreign exchange or market) and prior to the determination of the fund’s net asset value, or after the halting of trading of a specific security where trading does not resume prior to the close of the exchange or market on which the security is principally traded. Events that occur on a frequent basis after foreign markets close (such as developments in foreign markets and significant movements in the U.S. markets) and prior to the determination of the fund’s net asset value may be deemed to have a material effect on the value of securities traded in foreign markets. Accordingly, the fund’s foreign equity securities may often be valued at fair value. The adviser generally relies on third-party pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and financial condition of the issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment for purposes of calculating the fund’s net asset value can differ depending on the source and method used to determine value. When fair valuation is used, the value of an investment used to determine the fund’s net asset value may differ from quoted or published prices for the same investment. There can be no assurance that the fund could obtain the fair value assigned to an investment if it were to sell the investment at the same time at which the fund determines its net asset value per share.

Various inputs are used in determining the value of the fund’s assets or liabilities. These inputs are categorized into three broad levels. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fund’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. Level 1 includes unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes other significant observable market-based inputs (including quoted

 

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MFS New Discovery Series

 

Notes to Financial Statements (unaudited) – continued

 

prices for similar securities, interest rates, prepayment speed, and credit risk). Level 3 includes unobservable inputs, which may include the adviser’s own assumptions in determining the fair value of investments. The following is a summary of the levels used as of June 30, 2011 in valuing the fund’s assets or liabilities:

 

Investments at Value    Level 1      Level 2      Level 3      Total  
Equity Securities      $890,322,578         $—         $—         $890,322,578   
Mutual Funds      13,199,657         —         —         13,199,657   
Total Investments      $903,522,235         $—         $—         $903,522,235   

For further information regarding security characteristics, see the Portfolio of Investments.

Foreign Currency Translation – 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 or on the reporting date for foreign denominated receivables and payables. 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 receivables, payables, 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, loans the securities of the fund to certain qualified institutions (the “Borrowers”) approved by the fund. The loans are collateralized by cash and/or U.S. Treasury and federal agency obligations in an amount typically at least equal to the market value of the securities loaned. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. State Street provides the fund with indemnification against Borrower default. The fund bears the risk of loss with respect to the investment of cash collateral. On loans collateralized by cash, the cash collateral is invested in a money market fund or 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 fund and the lending agent. On loans collateralized by U.S. Treasury and/or federal agency obligations, a fee is received from the Borrower, and is allocated between the fund 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.

Indemnifications – Under the fund’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the fund. Additionally, in the normal course of business, the fund enters into agreements with service providers that may contain indemnification clauses. The fund’s maximum exposure under these agreements is unknown as this would involve future claims that may be made against the fund that have not yet occurred.

Investment Transactions and Income – Investment transactions are recorded on the trade date. Interest income is recorded on the accrual basis. Dividends received in cash are recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded when the fund is informed of the dividend if such information is obtained subsequent to 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.

The fund may receive proceeds from litigation settlements. Any proceeds received from litigation involving portfolio holdings are reflected in the Statement of Operations in realized gain/loss if the security has been disposed of by the fund or in unrealized gain/loss if the security is still held by the fund. Any other proceeds from litigation not related to portfolio holdings are reflected as other income in the Statement of Operations.

Fees Paid Indirectly – The fund’s custody fee may be reduced according to an arrangement that measures the value of cash deposited with the custodian by the fund. This amount, for the six months ended June 30, 2011, is shown as a reduction of total expenses on the Statement of Operations.

Tax Matters and Distributions – The fund intends to qualify as a regulated investment company, as defined under Subchapter M of the Internal Revenue Code, and to distribute all of its taxable income, including realized capital gains. As a result, no provision for federal income tax is required. The fund’s federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue Service. Foreign taxes, if any, have been accrued by the fund in the accompanying financial statements.

Distributions to shareholders are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles. Certain capital

 

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MFS New Discovery Series

 

Notes to Financial Statements (unaudited) – continued

 

accounts in the financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income, expense, gain or loss in different periods for financial statement and tax purposes will reverse at some time in the future. Distributions in excess of net investment income or net realized gains are temporary overdistributions for financial statement purposes resulting from differences in the recognition or classification of income or distributions for financial statement and tax purposes.

Book/tax differences primarily relate to net operating losses and wash sale loss deferrals.

The fund declared no distributions for the current period or for the year ended December 31, 2010.

The federal tax cost and the tax basis components of distributable earnings were as follows:

 

As of 6/30/11   
Cost of investments      $839,305,580   
Gross appreciation      104,206,274   
Gross depreciation      (39,989,619 ) 
Net unrealized appreciation (depreciation)      $64,216,655   
As of 12/31/10   
Undistributed ordinary income      29,757,086   
Undistributed long-term capital gain      64,538,658   
Other temporary differences      (205 ) 
Net unrealized appreciation (depreciation)      80,030,534   

The aggregate cost above includes prior fiscal year end tax adjustments, if applicable.

Multiple Classes of Shares of Beneficial Interest – The fund offers multiple classes of shares, which differ in their respective distribution and/or service fees. The fund’s income, realized and unrealized gain (loss), and common expenses are allocated to shareholders based on the daily net assets of each class. 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 fund has an investment advisory agreement with MFS to provide overall investment management and related administrative services and facilities to the fund. The management fee is computed daily and paid monthly at the following annual rates:

 

First $1 billion of average daily net assets      0.90%   
Average daily net assets in excess of $1 billion      0.80%   

The management fee incurred for the six months ended June 30, 2011 was equivalent to an annual effective rate of 0.90% of the fund’s average daily net assets.

Distributor – MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, is the distributor of shares of the fund. The Trustees have adopted a distribution plan for the Service Class shares pursuant to Rule 12b-1 under the Investment Company Act of 1940.

The fund’s distribution plan provides that the fund will pay MFD distribution and/or service fees equal to 0.25% per annum of its average daily net assets attributable to Service Class shares as partial consideration for services performed and expenses incurred by MFD and financial intermediaries (including participating insurance companies that invest in the fund to fund variable annuity and variable life insurance contracts, sponsors of qualified retirement and pension plans that invest in the fund, and affiliates of these participating insurance companies and plan sponsors) in connection with the sale and distribution of the Service Class shares. MFD may subsequently pay all, or a portion, of the distribution and/or service fees to financial intermediaries.

Shareholder Servicing Agent – MFS Service Center, Inc. (MFSC), a wholly-owned subsidiary of MFS, receives a fee from the fund for its services as shareholder servicing agent. For the six months ended June 30, 2011, the fee was $49,171, which equated to 0.0112% annually of the fund’s average daily net assets. MFSC also receives payment from the fund for out-of-pocket expenses paid by MFSC on behalf of the fund. For the six months ended June 30, 2011, these costs amounted to $928.

Administrator – MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the fund partially reimburses MFS the costs incurred to provide these services. The fund is charged an annual fixed amount of $17,500 plus a fee based on average daily net assets. The administrative services fee incurred for the six months ended June 30, 2011 was equivalent to an annual effective rate of 0.0155% of the fund’s average daily net assets.

 

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MFS New Discovery Series

 

Notes to Financial Statements (unaudited) – continued

 

Trustees’ and Officers’ Compensation – The fund pays compensation to independent Trustees in the form of a retainer, attendance fees, and additional compensation to Board and Committee chairpersons. The fund does not pay compensation directly to Trustees or officers of the fund who are also officers of the investment adviser, all of whom receive remuneration for their services to the fund from MFS. Certain officers and Trustees of the fund are officers or directors of MFS, MFD, and MFSC.

Other – This fund and certain other funds managed by MFS (the funds) have entered into services agreements (the Agreements) which provide for payment of fees by the funds to Tarantino LLC and Griffin Compliance LLC in return for the provision of services of an Independent Chief Compliance Officer (ICCO) and Assistant ICCO, respectively, for the funds. The ICCO and Assistant ICCO are officers of the funds and the sole members of Tarantino LLC and Griffin Compliance LLC, respectively. The funds can terminate the Agreements with Tarantino LLC and Griffin Compliance LLC at any time under the terms of the Agreements. For the six months ended June 30, 2011, the aggregate fees paid by the fund to Tarantino LLC and Griffin Compliance LLC were $3,104 and are included in miscellaneous expense on the Statement of Operations. MFS has agreed to reimburse the fund for a portion of the payments made by the fund in the amount of $2,514, which is shown as a reduction of total expenses in the Statement of Operations. Additionally, MFS has agreed to bear all expenses associated with office space, other administrative support, and supplies provided to the ICCO and Assistant ICCO.

The fund invests in the MFS Institutional Money Market Portfolio which is managed by MFS and seeks a high level of current income consistent with preservation of capital and liquidity. Income earned on this investment is included in dividends from underlying affiliated funds on the Statement of Operations. This money market fund does not pay a management fee to MFS.

 

(4)   Portfolio Securities

Purchases and sales of investments, other than U.S. Government securities, purchased option transactions, and short-term obligations, aggregated $930,980,059 and $946,251,352, respectively.

 

(5)   Shares of Beneficial Interest

The fund’s Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest. Transactions in fund shares were as follows:

 

     Six months ended 6/30/11      Year ended 12/31/10  
     Shares      Amount      Shares      Amount  
Shares sold            

Initial Class

      3,341,683         $64,850,201         4,536,652         $68,573,896   

Service Class

      4,298,687         81,842,229         6,201,547         92,202,328   
     7,640,370         $146,692,430         10,738,199         $160,776,224   
Shares reacquired            

Initial Class

      (6,026,188 )       $(117,503,108 )       (8,777,202 )       $(127,128,602 ) 

Service Class

      (2,677,393 )       (50,847,224 )       (4,768,360 )       (67,613,052 ) 
     (8,703,581 )       $(168,350,332 )       (13,545,562 )       $(194,741,654 ) 
Net change            

Initial Class

      (2,684,505 )       $(52,652,907 )       (4,240,550 )       $(58,554,706 ) 

Service Class

      1,621,294         30,995,005         1,433,187         24,589,276   
     (1,063,211 )       $(21,657,902 )       (2,807,363 )       $(33,965,430 ) 

 

(6)   Line of Credit

The fund and certain other funds managed by MFS participate in a $1.1 billion unsecured committed line of credit, subject to a $1 billion sublimit, provided by a syndication of banks under a credit agreement. Borrowings may be made for temporary financing needs. Interest is charged to each fund, based on its borrowings, generally at a rate equal to the higher of the Federal Reserve funds rate or one month LIBOR plus an agreed upon spread. A commitment fee, based on the average daily, unused portion of the committed line of credit, is allocated among the participating funds at the end of each calendar quarter. In addition, the fund and other funds managed by MFS have established unsecured uncommitted borrowing arrangements with certain banks for temporary financing needs. Interest is charged to each fund, based on its borrowings, at a rate equal to the Federal Reserve funds rate plus an agreed upon spread. For the six months ended June 30, 2011, the fund’s commitment fee and interest expense were $3,769 and $0, respectively, and are included in miscellaneous expense on the Statement of Operations.

 

15

Table of Contents

MFS New Discovery Series

 

Notes to Financial Statements (unaudited) – continued

 

 

(7)   Transactions in Underlying Affiliated Funds – Affiliated Issuers

An affiliated issuer may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. For the purposes of this report, the fund assumes the following to be affiliated issuers:

 

Underlying Affiliated Funds    Beginning
Shares/Par
Amount		      Acquisitions
Shares/Par
Amount		      Dispositions
Shares/Par
Amount		      Ending
Shares/Par
Amount		  
MFS Institutional Money Market Portfolio      3,550,969         218,838,147         (222,388,791 )       325   
Underlying Affiliated Funds    Realized
Gain (Loss)		      Capital Gain
Distributions		      Dividend
Income		      Ending
Value		  
MFS Institutional Money Market Portfolio      $—         $—         $4,619         $325   

 

16

Table of Contents

MFS New Discovery Series

 

BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT

 

A discussion regarding the Board’s most recent review and renewal of the fund’s Investment Advisory Agreement with MFS will be available on or about November 1, 2011 by clicking on the fund’s name under “Variable Insurance Portfolios — VIT” in the “Products and Performance” section of the MFS Web site (mfs.com).

PROXY VOTING POLICIES AND INFORMATION

A general description of the MFS funds’ proxy voting policies and procedures is available without charge, upon request, by calling
1-800-225-2606, by visiting the Proxy Voting section of mfs.com or by visiting the SEC’s Web site at http://www.sec.gov.

Information regarding how the fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available without charge by visiting the Proxy Voting section of mfs.com or by visiting the SEC’s Web site at http://www.sec.gov.

QUARTERLY PORTFOLIO DISCLOSURE

The fund will file a complete schedule of portfolio holdings with the Securities and Exchange Commission (the Commission) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q may be reviewed and copied at the:

Public Reference Room

Securities and Exchange Commission

100 F Street, NE, Room 1580

Washington, D.C. 20549

Information on the operation of the Public Reference Room may be obtained by calling the Commission at 1-800-SEC-0330. The fund’s Form N-Q is available on the EDGAR database on the Commission’s Internet Web site 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: publicinfo@sec.gov or by writing the Public Reference Section at the above address.

FURTHER INFORMATION

From time to time, MFS may post important information about the fund or the MFS funds on the MFS web site (mfs.com). This information is available by visiting the “News & Commentary” section of mfs.com or by clicking on the fund’s name under “Variable Insurance Portfolios — VIT” in the “Products and Performance” section of mfs.com.

 

17

Table of Contents

rev. 3/11

 

FACTS   WHAT DOES MFS DO WITH YOUR
PERSONAL INFORMATION?		   LOGO

 

Why?   Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?  

The types of personal information we collect and share depend on the product or service you have with us. This information can include:

 

• Social Security number and account balances

• Account transactions and transaction history

• Checking account information and wire transfer instructions

 

When you are no longer our customer, we continue to share your information as described in this notice.

 

How?   All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons MFS chooses to share; and whether you can limit this sharing.

 

Reasons we can share your personal information   Does MFS share?   Can you limit this
sharing?

For our everyday business purposes –

such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus

   Yes   No

For our marketing purposes –

to offer our products and services to you

   No   We don’t share
For joint marketing with other financial companies   No   We don’t share

For our affiliates’ everyday business purposes –

information about your transactions and experiences

   No   We don’t share

For our affiliates’ everyday business purposes –

information about your creditworthiness

   No   We don’t share
For nonaffiliates to market to you   No   We don’t share

 

Questions?   Call 800-225-2606 or go to mfs.com.

 

18

Table of Contents
Page 2  

 

Who we are
Who is providing this notice?   MFS Funds, MFS Investment Management, MFS Institutional Advisors, Inc., MFS Fund Distributors, Inc., MFS Heritage Trust Company, and MFS Service Center, Inc.

 

What we do
How does MFS protect my personal information?   To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include procedural, electronic, and physical safeguards for the protection of the personal information we collect about you.
How does MFS
collect my personal information?		  

We collect your personal information, for example, when you

 

• open an account or provide account information

• direct us to buy securities or direct us to sell your securities

• make a wire transfer

 

We also collect your personal information from others, such as credit bureaus, affiliates and other companies.

Why can’t I limit all sharing?  

Federal law gives you the right to limit only

 

• sharing for affiliates’ everyday business purposes – information about your creditworthiness

• affiliates from using your information to market to you

• sharing for nonaffiliates to market to you

 

State laws and individual companies may give you additional rights to limit sharing.

 

Definitions
Affiliates  

Companies related by common ownership or control. They can be financial and nonfinancial companies.

 

• MFS does not share personal information with affiliates, except for everyday business purposes as described on page one of this notice.

Nonaffiliates  

Companies not related by common ownership or control. They can be financial and nonfinancial companies.

 

• MFS does not share with nonaffiliates so they can market to you.

Joint Marketing  

A formal agreement between nonaffiliated financial companies that together market financial products or services to you.

 

• MFS doesn’t jointly market.

 

 

Other important information
If you own an MFS product or receive an MFS service in the name of a third party such as a bank or broker-dealer, their privacy policy may apply to you instead of ours.

 

19

Table of Contents

LOGO

Table of Contents

LOGO

 

MFS® Core Equity Series

MFS® Variable Insurance Trust

 

LOGO

 

 

SEMIANNUAL REPORT

June 30, 2011

 

VVS-SEM

Table of Contents

MFS® CORE EQUITY SERIES

 

CONTENTS   
Letter from the CEO      1   
Portfolio composition      2   
Expense table      3   
Portfolio of investments      4   
Statement of assets and liabilities      8   
Statement of operations      9   
Statements of changes in net assets      10   
Financial highlights      11   
Notes to financial statements      13   
Board review of investment advisory agreement      21   
Proxy voting policies and information      21   
Quarterly portfolio disclosure      21   
Further information      21   
MFS® privacy notice      22   

 

 

 

 

The report is prepared for the general information of contract owners.

It is authorized for distribution to prospective investors only when preceded or accompanied by a current prospectus.

 

NOT FDIC INSURED Ÿ MAY LOSE VALUE Ÿ NO BANK OR CREDIT UNION GUARANTEE Ÿ NOT A DEPOSIT Ÿ NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY OR NCUA/NCUSIF

Table of Contents

MFS Core Equity Series

 

LETTER FROM THE CEO

 

LOGO

 

Dear Contract Owners:

After about a year of almost uninterrupted macroeconomic and financial market improvement following the global credit crisis, investors grew more cautious in the middle of 2010 as fears grew that some European countries would default on their debt and as economic data showed a weakening

trend in the global economy. As a result asset prices fell significantly.

Last September the U.S. Federal Reserve Board’s promises to make lending conditions easier helped assuage market fears and drive asset prices off their recent lows. A combination of solid earnings and improving economic data gave an additional boost to investor sentiment.

In the following months, the renewed positive market mood, coupled with indications of better global macroeconomic activity, pushed many asset valuations to post-crisis highs. At the same time, global sovereign

bond yields initially rose as investors became concerned about inflationary pressures, driven by higher prices for oil as well as other commodities. However, by the end of the second quarter of 2011, a weakening macroeconomic backdrop and renewed concerns over debt problems in some eurozone countries pushed equities lower.

For the remainder of 2011, we are cautiously optimistic that economic growth will continue to improve and that the global economies will recover from the shocks of the past few years. We expect the pace of recovery worldwide to be uneven and volatile and acknowledge the elevated uncertainty created by events in Japan, Europe, the Middle East, as well as that created by the U.S. debate over raising the debt ceiling and the downgrade by Standard & Poor’s of the U.S. long-term credit rating.

As always, we continue to be mindful of the many economic challenges faced at the local, national, and international levels. It is in times such as these that we want to remind investors of the merits of maintaining a long-term view, adhering to basic investing principles such as asset allocation and diversification, and working closely with their advisors to research and identify appropriate investment opportunities.

Respectfully,

LOGO

Robert J. Manning

Chairman and Chief Executive Officer

MFS Investment Management®

August 16, 2011

 

The opinions expressed in this letter are subject to change, may not be relied upon for investment advice, and no forecasts can be guaranteed.

 

 

1

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MFS Core Equity Series

 

PORTFOLIO COMPOSITION

 

Portfolio structure (i)

LOGO

 

Top ten holdings (i)  
Apple, Inc.     3.4%   
Exxon Mobil Corp.     3.0%   
Abbott Laboratories     1.9%   
Fluor Corp.     1.7%   
Chevron Corp.     1.7%   
Danaher Corp.     1.7%   
JPMorgan Chase & Co.     1.6%   
International Business Machines Corp.     1.5%   
Oracle Corp.     1.5%   
EMC Corp.     1.4%   
Equity sectors (i)  
Financial Services     15.9%   
Technology     15.4%   
Health Care     12.0%   
Energy     11.4%   
Industrial Goods & Services     8.3%   
Consumer Staples     7.4%   
Utilities & Communications     6.3%   
Retailing     6.1%   
Leisure     6.0%   
Basic Materials     4.8%   
Transportation     2.2%   
Special Products & Services     2.1%   
Autos & Housing     1.3%   
 

 

(i) For purposes of this presentation, the components include the market value of securities, less any securities sold short, and reflect the impact of the equivalent exposure of derivative positions, if applicable. These amounts may be negative from time to time. Equivalent exposure is a calculated amount that translates the derivative position into a reasonable approximation of the amount of the underlying asset that the portfolio would have to hold at a given point in time to have the same price sensitivity that results from the portfolio’s ownership of the derivative contract. When dealing with derivatives, equivalent exposure is a more representative measure of the potential impact of a position on portfolio performance than market value.

Percentages are based on net assets as of 6/30/11.

The portfolio is actively managed and current holdings may be different.

 

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EXPENSE TABLE

 

Fund Expenses Borne by the Contract Holders During the Period,

January 1, 2011 through June 30, 2011

As a contract holder of the fund, you incur ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period January 1, 2011 through June 30, 2011.

Actual Expenses

The first line for each share class in the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The second line for each share class in the following table provides information about hypothetical account values and hypothetical expenses based on the fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight the fund’s ongoing costs only and do not take into account the fees and expenses imposed under the variable contracts through which your investment in the fund is made. Therefore, the second line for each share class in the table is useful in comparing ongoing costs associated with an investment in vehicles (such as the fund) which fund benefits under variable annuity and variable life insurance contracts and to qualified pension and retirement plans only, and will not help you determine the relative total costs of investing in the fund through variable annuity and variable life insurance contracts. If the fees and expenses imposed under the variable contracts were included, your costs would have been higher.

 

Share Class         Annualized
Expense Ratio		      Beginning
Account Value
1/01/11		     

Ending

Account Value
6/30/11

      Expenses Paid
During Period (p)
1/01/11-6/30/11		  
Initial Class   Actual      0.91%         $1,000.00         $1,052.40         $4.63   
  Hypothetical (h)      0.91%         $1,000.00         $1,020.28         $4.56   
Service Class   Actual      1.16%         $1,000.00         $1,050.67         $5.90   
  Hypothetical (h)      1.16%         $1,000.00         $1,019.04         $5.81   

 

(h) 5% class return per year before expenses.

 

(p) Expenses paid is equal to each class’ annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by the number of days in the period, divided by the number of days in the year.

Expenses Impacting Table

Expense ratios include 0.01% of investment related expenses from short sales that are outside of the expense cap arrangement (See Note 3 of the Notes to Financial Statements).

 

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PORTFOLIO OF INVESTMENTS – 6/30/11 (unaudited)

 

The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.

Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – 98.5%     
Aerospace – 2.9%     
Boeing Co.      2,370      $ 175,203   
Goodrich Corp.      2,480        236,840   
Honeywell International, Inc.      7,900        470,761   
Precision Castparts Corp.      1,900        312,835   
Textron, Inc.      7,490        176,839   
United Technologies Corp.      6,760        598,328   
    

 

 

  
     $ 1,970,806   
    

 

 

  
Apparel Manufacturers – 0.6%     
NIKE, Inc., “B”      3,280      $ 295,134   
Phillips-Van Heusen Corp.      1,830        119,810   
    

 

 

  
     $ 414,944   
    

 

 

  
Automotive – 0.8%     
General Motors Co. (a)      13,130      $ 398,627   
Magna International, Inc.      2,670        144,287   
    

 

 

  
     $ 542,914   
    

 

 

  
Biotechnology – 1.8%     
Amgen, Inc. (a)      12,540      $ 731,709   
Anacor Pharmaceuticals, Inc. (a)      14,460        93,412   
Gilead Sciences, Inc. (a)      9,420        390,082   
    

 

 

  
     $ 1,215,203   
    

 

 

  
Broadcasting – 1.8%     
Viacom, Inc., “B”      9,750      $ 497,250   
Walt Disney Co.      17,680        690,227   
    

 

 

  
     $ 1,187,477   
    

 

 

  
Brokerage & Asset Managers – 1.3%     
Affiliated Managers Group, Inc. (a)      1,290      $ 130,871   
Blackrock, Inc.      412        79,026   
Charles Schwab Corp.      8,250        135,713   
CME Group, Inc.      530        154,543   
Cowen Group, Inc. “A” (a)      8,612        32,381   
Franklin Resources, Inc.      1,650        216,629   
GFI Group, Inc.      21,380        98,134   
    

 

 

  
     $ 847,297   
    

 

 

  
Business Services – 1.6%     
Accenture PLC, “A”      4,480      $ 270,682   
FleetCor Technologies, Inc. (a)      11,630        344,713   
Jones Lang LaSalle, Inc.      1,650        155,595   
Paychex, Inc.      10,740        329,933   
    

 

 

  
     $ 1,100,923   
    

 

 

  
Cable TV – 1.3%     
Comcast Corp., “Special A”      18,590      $ 450,436   
DIRECTV, “A” (a)      7,760        394,363   
    

 

 

  
     $ 844,799   
    

 

 

  
Chemicals – 2.0%     
Celanese Corp.      15,270      $ 814,044   
Ecolab, Inc.      3,480        196,202   
Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – continued   
Chemicals – continued     
Monsanto Co.      4,800      $ 348,192   
    

 

 

  
     $ 1,358,438   
    

 

 

  
Computer Software – 4.3%     
Autodesk, Inc. (a)      11,720      $ 452,392   
Check Point Software Technologies Ltd. (a)      7,170        407,615   
Nuance Communications, Inc. (a)      4,710        101,124   
Oracle Corp.      30,180        993,224   
Red Hat, Inc. (a)      8,970        411,723   
Symantec Corp. (a)      10,950        215,934   
VeriSign, Inc.      8,260        276,380   
    

 

 

  
     $ 2,858,392   
    

 

 

  
Computer Software – Systems – 6.7%   
Apple, Inc. (a)      6,700      $ 2,248,989   
EMC Corp. (a)      34,950        962,873   
International Business Machines Corp.      5,990        1,027,585   
NICE Systems Ltd., ADR (a)      6,420        233,431   
    

 

 

  
     $ 4,472,878   
    

 

 

  
Construction – 0.5%     
Lennox International, Inc.      3,460      $ 149,022   
Owens Corning (a)      5,720        213,642   
    

 

 

  
     $ 362,664   
    

 

 

  
Consumer Products – 1.3%     
Avon Products, Inc.      24,370      $ 682,360   
Newell Rubbermaid, Inc.      11,940        188,413   
    

 

 

  
     $ 870,773   
    

 

 

  
Consumer Services – 0.5%     
DeVry, Inc.      1,990      $ 117,669   
Priceline.com, Inc. (a)      420        215,011   
    

 

 

  
     $ 332,680   
    

 

 

  
Electrical Equipment – 2.2%     
Danaher Corp.      20,930      $ 1,109,081   
Sensata Technologies Holding B.V. (a)      9,540        359,181   
    

 

 

  
     $ 1,468,262   
    

 

 

  
Electronics – 2.4%     
Advanced Micro Devices, Inc. (a)      70,491      $ 492,732   
First Solar, Inc. (a)(l)      3,170        419,296   
Hittite Microwave Corp. (a)      1,200        74,292   
Linear Technology Corp.      4,220        139,344   
Microchip Technology, Inc.      11,090        420,422   
Oclaro, Inc. (a)      4,960        33,331   
    

 

 

  
     $ 1,579,417   
    

 

 

  
Energy – Independent – 3.3%     
Apache Corp.      3,560      $ 439,268   
Arch Coal, Inc.      3,480        92,777   
Canadian Natural Resources Ltd.      2,340        98,093   
CONSOL Energy, Inc.      1,390        67,387   
 

 

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MFS Core Equity Series

 

Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – continued   
Energy – Integrated – continued     
EOG Resources, Inc.      3,740      $ 391,017   
Newfield Exploration Co. (a)      3,100        210,862   
Occidental Petroleum Corp.      7,390        768,856   
Peabody Energy Corp.      1,590        93,667   
Walter Energy, Inc.      660        76,428   
          
     $ 2,238,355   
          
Energy – Integrated – 5.6%     
Chevron Corp.      10,920      $ 1,123,013   
EQT Corp.      2,550        133,926   
Exxon Mobil Corp. (s)      25,040        2,037,755   
Marathon Oil Corp.      5,370        282,892   
QEP Resources, Inc.      4,740        198,274   
          
     $ 3,775,860   
          
Engineering – Construction – 1.7%     
Fluor Corp.      17,870      $ 1,155,474   
          
Food & Beverages – 3.4%     
Bunge Ltd.      1,950      $ 134,453   
Coca-Cola Co.      6,410        431,329   
General Mills, Inc.      16,730        622,691   
Mead Johnson Nutrition Co., “A”      5,200        351,260   
PepsiCo, Inc. (s)      10,880        766,278   
          
     $ 2,306,011   
          
Food & Drug Stores – 0.9%     
CVS Caremark Corp.      11,500      $ 432,170   
Whole Foods Market, Inc.      2,900        184,005   
          
     $ 616,175   
          
Gaming & Lodging – 0.9%     
Carnival Corp.      5,460      $ 205,460   
Las Vegas Sands Corp. (a)      5,120        216,115   
Marriott International, Inc., “A”      5,480        194,485   
          
     $ 616,060   
          
General Merchandise – 2.3%     
Kohl’s Corp.      11,250      $ 562,613   
Target Corp.      20,230        948,989   
          
     $ 1,511,602   
          
Health Maintenance Organizations – 1.1%   
Aetna, Inc.      3,430      $ 151,229   
WellPoint, Inc.      7,080        557,692   
          
     $ 708,921   
          
Insurance – 4.0%     
ACE Ltd.      13,770      $ 906,341   
Aflac, Inc.      1,290        60,217   
Allied World Assurance Co.      1,720        99,038   
Aon Corp.      10,400        533,520   
Chubb Corp.      4,580        286,754   
MetLife, Inc.      8,520        373,772   
Prudential Financial, Inc.      3,770        239,734   
Willis Group Holdings PLC      4,090        168,140   
          
     $ 2,667,516   
          
Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – continued   
Internet – 1.0%     
Google, Inc., “A” (a)      1,330      $ 673,485   
          
Leisure & Toys – 0.1%     
Mattel, Inc.      2,620      $ 72,024   
          
Machinery & Tools – 1.1%     
Finning International, Inc.      8,110      $ 240,496   
Regal Beloit Corp.      2,680        178,944   
Thermon Group Holdings, Inc. (a)      8,570        102,840   
WABCO Holdings, Inc. (a)      2,710        187,153   
          
     $ 709,433   
          
Major Banks – 4.8%     
Bank of America Corp.      53,140      $ 582,414   
Bank of New York Mellon Corp.      9,148        234,372   
Comerica, Inc.      3,920        135,514   
Goldman Sachs Group, Inc.      4,680        622,861   
JPMorgan Chase & Co. (s)      26,770        1,095,964   
KeyCorp      28,810        239,987   
SunTrust Banks, Inc.      11,450        295,410   
          
     $ 3,206,522   
          
Medical & Health Technology & Services – 1.5%     
AmerisourceBergen Corp.      5,500      $ 227,700   
Cross Country Healthcare, Inc. (a)      39,470        299,972   
Henry Schein, Inc. (a)      1,470        105,237   
Medco Health Solutions, Inc. (a)      5,150        291,078   
Quest Diagnostics, Inc.      1,810        106,971   
          
     $ 1,030,958   
          
Medical Equipment – 2.8%     
Becton, Dickinson & Co.      3,150      $ 271,436   
Covidien PLC      4,320        229,954   
Medtronic, Inc.      10,700        412,271   
NxStage Medical, Inc. (a)      17,678        368,056   
NxStage Medical, Inc. (a)      4,850        100,977   
St. Jude Medical, Inc.      4,040        192,627   
Thermo Fisher Scientific, Inc. (a)      4,710        303,277   
          
     $ 1,878,598   
          
Metals & Mining – 1.0%     
Cliffs Natural Resources, Inc.      3,600      $ 332,820   
Teck Resources Ltd., “B”      6,604        335,661   
          
     $ 668,481   
          
Natural Gas – Distribution – 0.4%     
AGL Resources, Inc.      6,120      $ 249,145   
          
Natural Gas – Pipeline – 0.4%     
Kinder Morgan, Inc.      9,740      $ 279,830   
          
Network & Telecom – 0.9%     
Cisco Systems, Inc.      8,440      $ 131,748   
F5 Networks, Inc. (a)      2,860        315,315   
Finisar Corp. (a)      10,030        180,841   
          
     $ 627,904   
          
 

 

5

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MFS Core Equity Series

 

Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – continued   
Oil Services – 2.5%     
Cameron International Corp. (a)      9,040      $ 454,622   
Dresser-Rand Group, Inc. (a)      2,530        135,988   
Halliburton Co.      11,050        563,550   
Schlumberger Ltd.      6,090        526,176   
    

 

 

  
     $ 1,680,336   
    

 

 

  
Other Banks & Diversified Financials – 3.2%     
American Express Co.      2,540      $ 131,318   
Citigroup, Inc.      12,434        517,752   
Discover Financial Services      3,670        98,173   
EuroDekania Ltd. (a)(z)      50,820        130,586   
TCF Financial Corp.      20,750        286,350   
Visa, Inc., “A”      6,120        515,671   
Wintrust Financial Corp.      4,810        154,786   
Zions Bancorporation      13,600        326,536   
    

 

 

  
     $ 2,161,172   
    

 

 

  
Pharmaceuticals – 4.8%     
Abbott Laboratories      23,990      $ 1,262,354   
Hospira, Inc. (a)      4,570        258,936   
Johnson & Johnson      9,940        661,209   
Pfizer, Inc.      32,039        660,003   
Teva Pharmaceutical Industries Ltd., ADR      8,230        396,851   
    

 

 

  
     $ 3,239,353   
    

 

 

  
Pollution Control – 0.4%     
Republic Services, Inc.      9,700      $ 299,245   
    

 

 

  
Precious Metals & Minerals – 0.2%     
Goldcorp, Inc.      2,490      $ 120,192   
    

 

 

  
Printing & Publishing – 0.6%     
Moody’s Corp.      9,810      $ 376,214   
    

 

 

  
Railroad & Shipping – 1.2%     
CSX Corp.      15,480      $ 405,886   
Kansas City Southern Co. (a)      6,430        381,492   
    

 

 

  
     $ 787,378   
    

 

 

  
Real Estate – 2.6%     
Annaly Mortgage Management, Inc., REIT      18,290      $ 329,952   
Cogdell Spencer, Inc., REIT      22,650        135,674   
Entertainment Properties Trust, REIT      14,740        688,358   
Kilroy Realty Corp., REIT      7,430        293,411   
Mack-Cali Realty Corp., REIT      8,430        277,684   
    

 

 

  
     $ 1,725,079   
    

 

 

  
Restaurants – 1.3%     
McDonald’s Corp.      10,240      $ 863,437   
    

 

 

  
Specialty Chemicals – 1.6%     
Airgas, Inc.      9,450      $ 661,878   
Valspar Corp.      4,280        154,337   
W. R. Grace & Co. (a)      5,630        256,897   
    

 

 

  
     $ 1,073,112   
    

 

 

  
Specialty Stores – 2.3%     
Abercrombie & Fitch Co., “A”      2,780      $ 186,038   
Amazon.com, Inc. (a)      2,650        541,899   
Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – continued   
Specialty Stores – continued     
Dick’s Sporting Goods, Inc. (a)      3,180      $ 122,271   
PetSmart, Inc.      4,710        213,693   
Tiffany & Co.      4,360        342,347   
Urban Outfitters, Inc. (a)      6,040        170,026   
    

 

 

  
     $ 1,576,274   
    

 

 

  
Telecommunications – Wireless – 0.3%   
SBA Communications Corp. (a)      4,900      $ 187,131   
    

 

 

  
Telephone Services – 2.5%     
American Tower Corp., “A” (a)      6,640      $ 347,471   
AT&T, Inc.      24,140        758,237   
CenturyLink, Inc.      4,982        201,422   
Verizon Communications, Inc.      9,700        361,131   
    

 

 

  
     $ 1,668,261   
    

 

 

  
Tobacco – 2.7%     
Altria Group, Inc.      28,590      $ 755,062   
Philip Morris International, Inc.      10,930        729,796   
Reynolds American, Inc.      8,490        314,555   
    

 

 

  
     $ 1,799,413   
    

 

 

  
Trucking – 1.0%     
Atlas Air Worldwide Holdings, Inc. (a)      2,860      $ 170,199   
Expeditors International of Washington, Inc.      6,080        311,235   
Swift Transportation Co. (a)      14,480        196,204   
    

 

 

  
     $ 677,638   
    

 

 

  
Utilities – Electric Power – 2.1%     
American Electric Power Co., Inc.      8,640      $ 325,555   
Calpine Corp. (a)      7,230        116,620   
CMS Energy Corp.      13,350        262,862   
PG&E Corp.      5,130        215,614   
Public Service Enterprise Group, Inc.      8,200        267,648   
Wisconsin Energy Corp.      7,690        241,082   
    

 

 

  
     $ 1,429,381   
    

 

 

  
Total Common Stocks
(Identified Cost, $59,463,204)		      $ 66,083,837   
    

 

 

  
CONVERTIBLE PREFERRED STOCKS – 0.6%   
Utilities – Electric Power – 0.6%     
PPL Corp., 8.75%      3,270      $ 179,556   
PPL Corp., 9.5%      3,660        204,594   
    

 

 

  
Total Convertible Preferred Stocks
(Identified Cost, $352,234)		      $ 384,150   
    

 

 

  
Issuer/Expiration Date/ Strike Price    Number of
Contracts		        
CALL OPTIONS PURCHASED – 0.0%     
Construction – 0.0%     
Lennar Corp., “A” – August 2011 @ $20      42      $ 1,008   
    

 

 

  
Network & Telecom – 0.0%     
Finisar Corp. – July 2011 @ $26      48      $ 240   
    

 

 

  
Total Call Options Purchased
(Premium Paid, $4,422)		      $ 1,248   
    

 

 

  
 

 

6

Table of Contents

MFS Core Equity Series

 

Portfolio of Investments (unaudited) – continued

 

Issuer        
Shares/Par		     Value ($)  
    
MONEY MARKET FUNDS (v) – 0.8%   
MFS Institutional Money Market Portfolio, 0.1%, at Cost and Net Asset Value      523,893      $ 523,893   
    

 

 

  
COLLATERAL FOR SECURITIES LOANED – 0.5%   
Navigator Securities Lending Prime Portfolio, 0.23%, at Cost and Net Asset Value (j)      306,027      $ 306,027   
    

 

 

  
Total Investments
(Identified Cost, $60,649,780)		      $ 67,299,155   
    

 

 

  
Issuer/Expiration Date/ Strike Price    Number of
Contracts		     Value ($)  
    
PUT OPTIONS WRITTEN – 0.0%   
Construction – 0.0%     
Lennar Corp., “A” – August 2011 @ $16      (42 )    $ (924 ) 
    

 

 

  
Network & Telecom – 0.0%     
Finisar Corp. – July 2011 @ $18      (48 )    $ (3,360 ) 
    

 

 

  
Total Put Options Written
(Premium Received, $4,956)		      $ (4,284 ) 
    

 

 

  
OTHER ASSETS, LESS
LIABILITIES – (0.4)%		        (239,344 ) 
    

 

 

  
Net Assets – 100.0%      $ 67,055,527   
    

 

 

  
 
(a)   Non-income producing security.

 

(j)   The rate quoted is the annualized seven-day yield of the portfolio at period end.

 

(l)   A portion of this security is on loan.

 

(s)   Security or a portion of the security was pledged to cover collateral requirements for written options. At June 30, 2011, the value of securities pledged amounted to $555,751.

 

(v)   Underlying affiliated fund that is available only to investment companies managed by MFS. The rate quoted is the annualized seven-day yield of the fund at period end.

 

(z)   Restricted securities are not registered under the Securities Act of 1933 and are subject to legal restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are subsequently registered. Disposal of these securities may involve time-consuming negotiations and prompt sale at an acceptable price may be difficult. The fund holds the following restricted securities:

 

Restricted Securities    Acquisition
Date		    Cost      Value  
EuroDekania Ltd.    6/25/07      $737,167         $130,586   
% of Net Assets            0.2%   

The following abbreviations are used in this report and are defined:

 

ADR   American Depository Receipt

 

PLC   Public Limited Company

 

REIT   Real Estate Investment Trust

See Notes to Financial Statements

 

7

Table of Contents

MFS Core Equity Series

 

FINANCIAL STATEMENTS  |  STATEMENT OF ASSETS AND LIABILITIES (unaudited)

 

This statement represents your fund’s balance sheet, which details the assets and liabilities comprising the total value of the fund.

 

At 6/30/11

      

Assets

                  

Investments –

      

Non-affiliated issuers, at value (identified cost, $60,125,887)

      $66,775,262      

Underlying affiliated funds, at cost and value

      523,893            

Total investments, at value, including $306,073 of securities on loan (identified cost, $60,649,780)

      $67,299,155            

Cash

      5,476      

Restricted cash

      381      

Receivables for

      

Investments sold

      265,501      

Fund shares sold

      117,032      

Interest and dividends

      94,283      

Receivable from investment adviser

      3,099      

Other assets

      443            

Total assets

               $67,785,370   

Liabilities

                  

Payables for

      

Investments purchased

      $262,933      

Fund shares reacquired

      99,099      

Written options outstanding, at value (premiums received, $4,956)

      4,284      

Collateral for securities loaned, at value

      306,027      

Payable to affiliates

      

Shareholder servicing costs

      133      

Distribution and/or service fees

      56      

Payable for independent Trustees’ compensation

      465      

Accrued expenses and other liabilities

      56,846            

Total liabilities

               $729,843   

Net assets

               $67,055,527   

Net assets consist of

                  

Paid-in capital

      $81,625,335      

Unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies

      6,650,072      

Accumulated net realized gain (loss) on investments and foreign currency transactions

      (22,080,558 )    

Undistributed net investment income

      860,678            

Net assets

               $67,055,527   

Shares of beneficial interest outstanding

               4,073,091   

 

     Net assets      Shares
outstanding		      Net asset value
per share		  

Initial Class

      $62,932,065         3,821,397         $16.47   

Service Class

      4,123,462         251,694         16.38   

See Notes to Financial Statements

 

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FINANCIAL STATEMENTS  |  STATEMENT OF OPERATIONS (unaudited)

 

This statement describes how much your fund earned in investment income and accrued in expenses. It also describes any gains and/or losses generated by fund operations.

 

Six months ended 6/30/11

      

Net investment income

                  

Income

      

Dividends

      $588,123      

Interest

      4,827      

Dividends from underlying affiliated funds

      420      

Foreign taxes withheld

      (2,273 )          

Total investment income

               $591,097   

Expenses

      

Management fee

      $253,659      

Distribution and/or service fees

      5,341      

Shareholder servicing costs

      4,048      

Administrative services fee

      9,979      

Independent Trustees’ compensation

      1,652      

Custodian fee

      10,375      

Shareholder communications

      19,658      

Auditing fees

      24,594      

Legal fees

      577      

Dividend and interest expense on securities sold short

      2,755      

Miscellaneous

      6,009            

Total expenses

               $338,647   

Reduction of expenses by investment adviser

      (25,679 )          

Net expenses

               $312,968   

Net investment income

               $278,129   

Realized and unrealized gain (loss) on investments and foreign currency transactions

                  

Realized gain (loss) (identified cost basis)

      

Investment transactions

      $3,385,822      

Securities sold short

      (253,835 )    

Foreign currency transactions

      (154 )          

Net realized gain (loss) on investments and foreign currency transactions

               $3,131,833   

Change in unrealized appreciation (depreciation)

      

Investments

      $(78,919 )    

Written options

      672      

Securities sold short

      172,898      

Translation of assets and liabilities in foreign currencies

      8            

Net unrealized gain (loss) on investments and foreign currency translation

               $94,659   

Net realized and unrealized gain (loss) on investments and foreign currency

               $3,226,492   

Change in net assets from operations

               $3,504,621   

See Notes to Financial Statements

 

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FINANCIAL STATEMENTS  |  STATEMENTS OF CHANGES IN NET ASSETS

 

These statements describe the increases and/or decreases in net assets resulting from operations, any distributions, and any shareholder transactions.

 

    
 
 		 Six months ended
6/30/11
(unaudited		   
  
) 		     
 		 Year ended
12/31/10		   
  

Change in net assets

      

From operations

                  

Net investment income

      $278,129         $583,252   

Net realized gain (loss) on investments and foreign currency transactions

      3,131,833         4,789,711   

Net unrealized gain (loss) on investments and foreign currency translation

      94,659         4,765,002   

Change in net assets from operations

      $3,504,621         $10,137,965   

Distributions declared to shareholders

                  

From net investment income

      $—         $(705,029 ) 

Change in net assets from fund share transactions

      $(3,673,912 )       $(8,847,188 ) 

Total change in net assets

      $(169,291 )       $585,748   

Net assets

                  

At beginning of period

      67,224,818         66,639,070   

At end of period (including undistributed net investment income of $860,678 and
$582,549, respectively)

      $67,055,527         $67,224,818   

See Notes to Financial Statements

 

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FINANCIAL STATEMENTS  |  FINANCIAL HIGHLIGHTS

 

The financial highlights table is intended to help you understand the fund’s financial performance for the semiannual period and the past 5 fiscal years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period.

 

Initial Class      Six months
ended
6/30/11		      Years ended 12/31  
          2010        2009        2008        2007        2006  
       (unaudited)                                             

Net asset value, beginning of period

        $15.65         $13.49           $10.38           $17.18           $15.51           $13.69   
Income (loss) from investment operations                                                                

Net investment income (d)

        $0.07         $0.13           $0.14           $0.16           $0.09           $0.05   

Net realized and unrealized gain (loss) on investments and foreign currency

        0.75         2.18           3.16           (6.85 )         1.64           1.83   

Total from investment operations

        $0.82         $2.31           $3.30           $(6.69 )         $1.73           $1.88   
Less distributions declared to shareholders                                                                

From net investment income

        $—         $(0.15 )         $(0.19 )         $(0.11 )         $(0.06 )         $(0.06 ) 

Net asset value, end of period

        $16.47         $15.65           $13.49           $10.38           $17.18           $15.51   

Total return (%) (k)(r)(s)

        5.24 (n)       17.21           32.43           (39.15 )         11.15           13.80   

Ratios (%) (to average net assets)

and Supplemental data:

                                                                

Expenses before expense reductions (f)

        0.99 (a)       1.01           1.01           0.95           1.03           0.92   

Expenses after expense reductions (f)

        0.91 (a)       0.91           0.90           0.90           0.90           0.90   

Net investment income

        0.84 (a)       0.93           1.20           1.13           0.53           0.35   

Portfolio turnover

        31         69           90           109           151           89   

Net assets at end of period (000 omitted)

        $62,932         $62,602           $61,856           $54,049           $115,251           $131,259   
Supplemental Ratios (%):                                                                

Ratio of expenses to average net assets after expense
reductions excluding short sale dividend and
interest expense (f)

        0.90 (a)       0.90           0.90           N/A           N/A           N/A   

See Notes to Financial Statements

 

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Financial Highlights – continued

 

Service Class      Six months
ended
6/30/11		      Years ended 12/31  
          2010        2009        2008        2007        2006  
       (unaudited)                                             

Net asset value, beginning of period

        $15.59         $13.45           $10.32           $17.07           $15.41           $13.60   
Income (loss) from investment operations                                                                

Net investment income (d)

        $0.05         $0.09           $0.11           $0.12           $0.04           $0.01   

Net realized and unrealized gain (loss) on investments
and foreign currency

        0.74         2.17           3.17           (6.81 )         1.63           1.82   

Total from investment operations

        $0.79         $2.26           $3.28           $(6.69 )         $1.67           $1.83   
Less distributions declared to shareholders                                                                

From net investment income

        $—         $(0.12 )         $(0.15 )         $(0.06 )         $(0.01 )         $(0.02 ) 

Net asset value, end of period

        $16.38         $15.59           $13.45           $10.32           $17.07           $15.41   

Total return (%) (k)(r)(s)

        5.07 (n)       16.86           32.24           (39.32 )         10.87           13.50   

Ratios (%) (to average net assets)

and Supplemental data:

                                                                

Expenses before expense reductions (f)

        1.23 (a)       1.26           1.26           1.20           1.27           1.17   

Expenses after expense reductions (f)

        1.16 (a)       1.16           1.15           1.15           1.15           1.15   

Net investment income

        0.59 (a)       0.67           0.95           0.87           0.25           0.10   

Portfolio turnover

        31         69           90           109           151           89   

Net assets at end of period (000 omitted)

        $4,123         $4,623           $4,783           $4,571           $9,288           $14,740   
Supplemental Ratios (%):                                                                

Ratio of expenses to average net assets after expense
reductions excluding short sale dividend and
interest expense (f)

        1.15 (a)       1.15           1.15           N/A           N/A           N/A   

 

(a) Annualized.

 

(d) Per share data is based on average shares outstanding.

 

(f) Ratios do not reflect reductions from fees paid indirectly, if applicable.

 

(k) The total return does not reflect expenses that apply to separate accounts. Inclusion of these charges would reduce the total return figures for all periods shown.

 

(n) Not annualized.

 

(r) Certain expenses have been reduced without which performance would have been lower.

 

(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower. Excluding the effect of the proceeds received from a non-recurring litigation settlement against Enron Corp., the Initial Class and Service Class total returns for the year ended December 31, 2008 would have each been lower by approximately 0.87%.

See Notes to Financial Statements

 

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MFS Core Equity Series

 

NOTES TO FINANCIAL STATEMENTS (unaudited)

 

(1)   Business and Organization

MFS Core Equity Series (the fund) is a 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, and qualified retirement and pension plans.

 

(2)   Significant Accounting Policies

General – The preparation of financial statements in conformity with U.S. 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. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the fund’s Statement of Assets and Liabilities through the date that the financial statements were issued. The fund invests 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, including restricted equity securities, are generally valued at the last sale or official closing price as provided by a third-party pricing service on the market or exchange on which they are primarily traded. Equity securities, for which there were no sales reported that day, are generally valued at the last quoted daily bid quotation as provided by a third-party pricing service on the market or exchange on which such securities are primarily traded. Equity securities held short, for which there were no sales reported for that day, are generally valued at the last quoted daily ask quotation as provided by a third-party pricing service on the market or exchange on which such securities are primarily traded. Short-term instruments with a maturity at issuance of 60 days or less generally are valued at amortized cost, which approximates market value. Exchange-traded options are generally valued at the last sale or official closing price as provided by a third-party pricing service on the exchange on which such options are primarily traded. Exchange-traded options for which there were no sales reported that day are generally valued at the last daily bid quotation as provided by a third-party pricing service on the exchange on which such options are primarily traded. Options not traded on an exchange are generally valued at a broker/dealer bid quotation. Foreign currency options are generally valued at valuations provided by a third-party pricing service. Open-end investment companies are generally valued at net asset value per share. Securities and other assets generally valued on the basis of information from a third-party pricing service may also be valued at a broker/dealer bid quotation. Values obtained from third-party pricing services can utilize both transaction data and market information such as yield, quality, coupon rate, maturity, type of issue, trading characteristics, and other market data. The values of foreign securities and other assets and liabilities expressed in foreign currencies are converted to U.S. dollars using the mean of bid and asked prices for rates provided by a third-party pricing service.

The Board of Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments (including any fair valuation) to the adviser pursuant to valuation policies and procedures approved by the Board. If the adviser determines that reliable market quotations are not readily available, investments are valued at fair value as determined in good faith by the adviser in accordance with such procedures under the oversight of the Board of Trustees. Under the fund’s valuation policies and procedures, market quotations are not considered to be readily available for most types of debt instruments and floating rate loans and many types of derivatives. These investments are generally valued at fair value based on information from third-party pricing services. In addition, investments may be valued at fair value if the adviser determines that an investment’s value has been materially affected by events occurring after the close of the exchange or market on which the investment is principally traded (such as foreign exchange or market) and prior to the determination of the fund’s net asset value, or after the halting of trading of a specific security where trading does not resume prior to the close of the exchange or market on which the security is principally traded. Events that occur on a frequent basis after foreign markets close (such as developments in foreign markets and significant movements in the U.S. markets) and prior to the determination of the fund’s net asset value may be deemed to have a material effect on the value of securities traded in foreign markets. Accordingly, the fund’s foreign equity securities may often be valued at fair value. The adviser generally relies on third-party pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and financial condition of the issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment for purposes of calculating the fund’s net asset value can differ depending on the source and method used to determine value. When fair valuation is used, the value of an investment used to determine the fund’s net asset value may differ from quoted or published prices for the same investment. There can be no assurance that the

 

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MFS Core Equity Series

 

Notes to Financial Statements (unaudited) – continued

 

fund could obtain the fair value assigned to an investment if it were to sell the investment at the same time at which the fund determines its net asset value per share.

Various inputs are used in determining the value of the fund’s assets or liabilities. These inputs are categorized into three broad levels. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fund’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. Level 1 includes unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes other significant observable market-based inputs (including quoted prices for similar securities, interest rates, prepayment speed, and credit risk). Level 3 includes unobservable inputs, which may include the adviser’s own assumptions in determining the fair value of investments. Other financial instruments are derivative instruments not reflected in total investments, such as written options. The following is a summary of the levels used as of June 30, 2011 in valuing the fund’s assets or liabilities:

 

Investments at Value    Level 1      Level 2      Level 3      Total  
Equity Securities:            

United States

      $64,260,807         $101,217         $—         $64,362,024   

Israel

      1,037,896         —         —         1,037,896   

Canada

      938,729         —         —         938,729   

United Kingdom

      —         —         130,586         130,586   
Mutual Funds      829,920         —         —         829,920   
Total Investments      $67,067,352         $101,217         $130,586         $67,299,155   
Other Financial Instruments                            
Written Options      $(4,284 )       $—         $—         $(4,284 ) 

For further information regarding security characteristics, see the Portfolio of Investments.

The following is a reconciliation of level 3 assets for which significant unobservable inputs were used to determine fair value. The fund’s policy is to recognize transfers between the levels as of the end of the period. The table presents the activity of level 3 securities held at the beginning and the end of the period.

 

     Equity
Securities		  
Balance as of 12/31/10      $78,293   

Change in unrealized appreciation (depreciation)

      52,293   
Balance as of 6/30/11      $130,586   

The net change in unrealized appreciation (depreciation) from investments still held as level 3 at June 30, 2011 is $52,293.

Foreign Currency Translation – 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 or on the reporting date for foreign denominated receivables and payables. 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 receivables, payables, 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.

Derivatives – The fund uses derivatives for different purposes, including to earn income and enhance returns, to increase or decrease exposure to a particular market, to manage or adjust the risk profile of the fund, or as alternatives to direct investments. Derivatives are used for hedging or non-hedging purposes. While hedging can reduce or eliminate losses, it can also reduce or eliminate gains. When the fund uses derivatives as an investment to increase market exposure, or for hedging purposes, gains and losses from derivative instruments may be substantially greater than the derivative’s original cost.

The derivative instruments used by the fund were written options and purchased options. The fund’s period end derivatives, as presented in the Portfolio of Investments generally are indicative of the volume of its derivative activity during the period.

 

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MFS Core Equity Series

 

Notes to Financial Statements (unaudited) – continued

 

The following table presents, by major type of derivative contract, the fair value, on a gross basis, of the asset and liability components of derivatives held by the fund at June 30, 2011 as reported in the Statement of Assets and Liabilities:

 

          Fair Value (a)  
Risk    Derivative Contracts    Asset Derivatives      Liability Derivatives  
Equity    Purchased Equity Options      $1,248         $—   
Equity    Written Equity Options      —         (4,284 ) 
Total         $1,248         $(4,284 ) 

 

(a) The value of purchased options outstanding is included in total investments, at value, within the fund’s Statement of Assets and Liabilities.

The following table presents, by major type of derivative contract, the realized gain (loss) on derivatives held by the fund for the six months ended June 30, 2011 as reported in the Statement of Operations:

 

Risk   

Investment Transactions

(Purchased Options)

  
Equity      $(10,337 ) 

The following table presents, by major type of derivative contract, the change in unrealized appreciation (depreciation) on derivatives held by the fund for the six months ended June 30, 2011 as reported in the Statement of Operations:

 

Risk    Investments
(Purchased Options)		      Written Options  
Equity      $(3,174 )       $672   

Derivative counterparty credit risk is managed through formal evaluation of the creditworthiness of all potential counterparties. On certain over-the-counter derivatives, the fund attempts to reduce its exposure to counterparty credit risk whenever possible by entering into an International Swaps and Derivatives Association (ISDA) Master Agreement on a bilateral basis with each of the counterparties with whom it undertakes a significant volume of transactions. The ISDA Master Agreement gives each party to the agreement the right to terminate all transactions traded under such agreement if there is a certain deterioration in the credit quality of the other party. The ISDA Master Agreement gives the fund the right, upon an event of default by the applicable counterparty or a termination of the agreement, to close out all transactions traded under such agreement and to net amounts owed under each transaction to one net amount payable by one party to the other. This right to close out and net payments across all transactions traded under the ISDA Master Agreement could result in a reduction of the fund’s credit risk to such counterparty equal to any amounts payable by the fund under the applicable transactions, if any. However, absent an event of default by the counterparty or a termination of the agreement, the ISDA Master Agreement does not result in an offset of reported amounts of assets and liabilities in the Statement of Assets and Liabilities across transactions between the fund and the applicable counterparty.

Collateral requirements differ by type of derivative. Collateral or margin requirements are set by the broker or exchange clearing house for exchange traded derivatives (i.e., futures and exchange-traded options) while collateral terms are contract specific for over-the-counter traded derivatives (i.e., forward foreign currency exchange contracts, swaps and over-the-counter options). For derivatives traded under an ISDA Master Agreement, the collateral requirements are netted across all transactions traded under such agreement and one amount is posted from one party to the other to collateralize such obligations. Cash collateral that has been pledged to cover obligations of the fund under derivative contracts, if any, will be reported separately on the Statement of Assets and Liabilities as restricted cash. Securities collateral pledged for the same purpose, if any, is noted in the Portfolio of Investments.

Written Options – In exchange for a premium, the fund wrote put options on securities that it anticipated the price would increase. At the time the option was written, the fund believed the premium received exceeded the potential loss that could result from adverse price changes in the options’ underlying securities. In a written option, the fund as the option writer grants the buyer the right to purchase from, or sell to, the fund a specified number of shares or units of a particular security, currency or index at a specified price within a specified period of time.

The premium received is initially recorded as a liability on the Statement of Assets and Liabilities. The option is subsequently marked-to-market daily with the difference between the premium received and the market value of the written option being recorded as unrealized appreciation or depreciation. When a written option expires, the fund realizes a gain equal to the amount of the premium received. The difference between the premium received and the amount paid on effecting a closing transaction is considered a realized gain or loss. When a written put option is exercised, the premium reduces the cost basis of the security purchased by the fund.

 

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MFS Core Equity Series

 

Notes to Financial Statements (unaudited) – continued

 

At the initiation of the written option contract, for exchange traded options, the fund is required to deposit securities or cash as collateral with the custodian for the benefit of the broker. For over-the-counter options, the fund may post collateral subject to the terms of an ISDA Master Agreement as generally described above if the market value of the options contract moves against it. The fund, as writer of an option, may have no control over whether the underlying securities may be sold (call) or purchased (put) and, as a result, bears the market risk of an unfavorable change in the price of the securities underlying the written option. Losses from writing options can exceed the premium received and can exceed the potential loss from an ordinary buy and sell transaction. Although the fund’s market risk may be significant, the maximum counterparty credit risk to the fund is equal to the market value of any collateral posted to the broker. For over-the-counter options, this risk is mitigated in cases where there is an ISDA Master Agreement between the fund and the counterparty providing for netting as described above.

 

     Number of
Contracts		      Premiums
Received		  
Outstanding, beginning of period      —         $—   
Options written      90         4,956   
Options closed      —         —   
Options exercised      —         —   
Options expired      —         —   
Outstanding, end of period      90         $4,956   

Purchased Options – The fund purchased call and put options for a premium. Purchased call and put options entitle the holder to buy and sell a specified number of shares or units of a particular security, currency or index at a specified price at a specified date or within a specified period of time. Purchasing call options may be used to hedge against an anticipated increase in the dollar cost of securities or currency to be acquired or to increase the fund’s exposure to an underlying instrument. Purchasing put options may hedge against a decline in the value of portfolio securities or currency.

The premium paid is initially recorded as an investment in the Statement of Assets and Liabilities. That investment is subsequently marked-to-market daily with the difference between the premium paid and the market value of the purchased option being recorded as unrealized appreciation or depreciation. Premiums paid for purchased call and put options which have expired are treated as realized losses on investments in the Statement of Operations. Upon the exercise or closing of a purchased call option, the premium paid is added to the cost of the security or financial instrument. Upon the exercise or closing of a purchased put option, the premium paid is offset against the proceeds on the sale of the underlying security or financial instrument in order to determine the realized gain or loss on investments.

The risk in purchasing an option is that the fund pays a premium whether or not the option is exercised. The fund’s maximum risk of loss due to counterparty credit risk is limited to the market value of the option. For over-the-counter options, this risk is mitigated in cases where there is an ISDA Master Agreement between the fund and the counterparty providing for netting as described above and for posting of collateral by the counterparty to the fund to cover the fund’s exposure to the counterparty under such ISDA Master Agreement.

Short Sales – The fund entered into short sales whereby it sells a security it does not own in anticipation of a decline in the value of that security. The fund will realize a gain if the security price decreases and a loss if the security price increases between the date of the short sale and the date on which the fund replaces the borrowed security. Losses from short sales can exceed the proceeds of the security sold; and they can also exceed the potential loss from an ordinary buy and sell transaction. The amount of any premium, dividends, or interest the fund may be required to pay in connection with a short sale will be recognized as a fund expense. During the six months ended June 30, 2011, this expense amounted to $2,755. The fund segregates cash or marketable securities in an amount that, when combined with the amount of proceeds from the short sale deposited with the broker, at least equals the current market value of the security sold short. At June 30, 2011, the fund had no short sales outstanding.

Security Loans – State Street Bank and Trust Company (“State Street”), as lending agent, loans the securities of the fund to certain qualified institutions (the “Borrowers”) approved by the fund. The loans are collateralized by cash and/or U.S. Treasury and federal agency obligations in an amount typically at least equal to the market value of the securities loaned. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. State Street provides the fund with indemnification against Borrower default. The fund bears the risk of loss with respect to the investment of cash collateral. On loans collateralized by cash, the cash collateral is invested in a money market fund or 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 fund and the lending agent. On loans collateralized by U.S. Treasury and/or federal agency obligations, a fee is received from the Borrower, and is allocated between

 

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MFS Core Equity Series

 

Notes to Financial Statements (unaudited) – continued

 

the fund 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.

Indemnifications – Under the fund’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the fund. Additionally, in the normal course of business, the fund enters into agreements with service providers that may contain indemnification clauses. The fund’s maximum exposure under these agreements is unknown as this would involve future claims that may be made against the fund that have not yet occurred.

Investment Transactions and Income – Investment transactions are recorded on the trade date. Interest income is recorded on the accrual basis. Dividends received in cash are recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded when the fund is informed of the dividend if such information is obtained subsequent to 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.

The fund may receive proceeds from litigation settlements. Any proceeds received from litigation involving portfolio holdings are reflected in the Statement of Operations in realized gain/loss if the security has been disposed of by the fund or in unrealized gain/loss if the security is still held by the fund. Any other proceeds from litigation not related to portfolio holdings are reflected as other income in the Statement of Operations.

Fees Paid Indirectly – The fund’s custody fee may be reduced according to an arrangement that measures the value of cash deposited with the custodian by the fund. For the six months ended June 30, 2011, custody fees were not reduced.

Tax Matters and Distributions – The fund intends to qualify as a regulated investment company, as defined under Subchapter M of the Internal Revenue Code, and to distribute all of its taxable income, including realized capital gains. As a result, no provision for federal income tax is required. The fund’s federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue Service. Foreign taxes, if any, have been accrued by the fund in the accompanying financial statements.

Distributions to shareholders are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income, expense, gain or loss in different periods for financial statement and tax purposes will reverse at some time in the future. Distributions in excess of net investment income or net realized gains are temporary overdistributions for financial statement purposes resulting from differences in the recognition or classification of income or distributions for financial statement and tax purposes.

Book/tax differences primarily relate to expiration of capital loss carryforwards and wash sale loss deferrals.

The tax character of distributions declared to shareholders for the last fiscal year is as follows:

 

     12/31/10  
Ordinary income (including any short-term capital gains)      $705,029   

The federal tax cost and the tax basis components of distributable earnings were as follows:

 

As of 6/30/11   
Cost of investments      $60,751,616   
Gross appreciation      9,364,068   
Gross depreciation      (2,816,529 ) 
Net unrealized appreciation (depreciation)      $6,547,539   
As of 12/31/10   
Undistributed ordinary income      582,549   
Capital loss carryforwards      (25,154,103 ) 
Other temporary differences      (172,881 ) 
Net unrealized appreciation (depreciation)      6,670,006   

The aggregate cost above includes prior fiscal year end tax adjustments, if applicable.

 

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MFS Core Equity Series

 

Notes to Financial Statements (unaudited) – continued

 

As of December 31, 2010, the fund had capital loss carryforwards available to offset future realized gains. Such losses expire as follows:

 

12/31/16      $(16,149,798 ) 
12/31/17      (9,004,305 ) 
Total      $(25,154,103 ) 

Multiple Classes of Shares of Beneficial Interest – The fund offers multiple classes of shares, which differ in their respective distribution and/or service fees. The fund’s income, realized and unrealized gain (loss), and common expenses are allocated to shareholders based on the daily net assets of each class. Dividends are declared separately for each class. Differences in per share dividend rates are generally due to differences in separate class expenses. The fund’s distributions declared to shareholders as reported on the Statements of Changes in Net Assets are presented by class as follows:

 

     From net investment
income		  
     Six months ended
6/30/11		      Year ended
12/31/10		  
Initial Class      $—         $663,488   
Service Class      —         41,541   
Total      $—         $705,029   

 

(3)   Transactions with Affiliates

Investment Adviser – The fund has an investment advisory agreement with MFS to provide overall investment management and related administrative services and facilities to the fund.

The management fee is computed daily and paid monthly at the following annual rates:

 

First $1 billion of average daily net assets      0.75%   
Average daily net assets in excess of $1 billion      0.65%   

The management fee incurred for the six months ended June 30, 2011 was equivalent to an annual effective rate of 0.75% of the fund’s average daily net assets.

The investment adviser has agreed in writing to pay a portion of the fund’s total annual operating expenses, exclusive of interest, taxes, extraordinary expenses, brokerage and transaction costs and investment-related expenses, such that total annual operating expenses do not exceed 0.90% of average daily net assets for the Initial Class shares and 1.15% of average daily net assets for the Service Class shares. This written agreement will continue until modified by the fund’s Board of Trustees, but such agreement will continue at least until April 30, 2013. For the six months ended June 30, 2011, this reduction amounted to $25,485 and is reflected as a reduction of total expenses in the Statement of Operations.

Distributor – MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, is the distributor of shares of the fund. The Trustees have adopted a distribution plan for the Service Class shares pursuant to Rule 12b-1 under the Investment Company Act of 1940.

The fund’s distribution plan provides that the fund will pay MFD distribution and/or service fees equal to 0.25% per annum of its average daily net assets attributable to Service Class shares as partial consideration for services performed and expenses incurred by MFD and financial intermediaries (including participating insurance companies that invest in the fund to fund variable annuity and variable life insurance contracts, sponsors of qualified retirement and pension plans that invest in the fund, and affiliates of these participating insurance companies and plan sponsors) in connection with the sale and distribution of the Service Class shares. MFD may subsequently pay all, or a portion, of the distribution and/or service fees to financial intermediaries.

Shareholder Servicing Agent – MFS Service Center, Inc. (MFSC), a wholly-owned subsidiary of MFS, receives a fee from the fund for its services as shareholder servicing agent. For the six months ended June 30, 2011, the fee was $3,774, which equated to 0.0112% annually of the fund’s average daily net assets. MFSC also receives payment from the fund for out-of-pocket expenses paid by MFSC on behalf of the fund. For the six months ended June 30, 2011, these costs amounted to $274.

Administrator – MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the fund partially reimburses MFS the costs incurred to provide these services. The fund is charged an annual fixed amount of $17,500 plus a fee based on average daily net assets. The administrative services fee incurred for the six months ended June 30, 2011 was equivalent to an annual effective rate of 0.0295% of the fund’s average daily net assets.

 

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MFS Core Equity Series

 

Notes to Financial Statements (unaudited) – continued

 

Trustees’ and Officers’ Compensation – The fund pays compensation to independent Trustees in the form of a retainer, attendance fees, and additional compensation to Board and Committee chairpersons. The fund does not pay compensation directly to Trustees or officers of the fund who are also officers of the investment adviser, all of whom receive remuneration for their services to the fund from MFS. Certain officers and Trustees of the fund are officers or directors of MFS, MFD, and MFSC.

Other – This fund and certain other funds managed by MFS (the funds) have entered into services agreements (the Agreements) which provide for payment of fees by the funds to Tarantino LLC and Griffin Compliance LLC in return for the provision of services of an Independent Chief Compliance Officer (ICCO) and Assistant ICCO, respectively, for the funds. The ICCO and Assistant ICCO are officers of the funds and the sole members of Tarantino LLC and Griffin Compliance LLC, respectively. The funds can terminate the Agreements with Tarantino LLC and Griffin Compliance LLC at any time under the terms of the Agreements. For the six months ended June 30, 2011, the aggregate fees paid by the fund to Tarantino LLC and Griffin Compliance LLC were $239 and are included in miscellaneous expense on the Statement of Operations. MFS has agreed to reimburse the fund for a portion of the payments made by the fund in the amount of $194, which is shown as a reduction of total expenses in the Statement of Operations. Additionally, MFS has agreed to bear all expenses associated with office space, other administrative support, and supplies provided to the ICCO and Assistant ICCO.

The fund invests in the MFS Institutional Money Market Portfolio which is managed by MFS and seeks a high level of current income consistent with preservation of capital and liquidity. Income earned on this investment is included in dividends from underlying affiliated funds on the Statement of Operations. This money market fund does not pay a management fee to MFS.

 

(4)   Portfolio Securities

Purchases and sales of investments, other than U.S. Government securities, purchased option transactions, and short-term obligations, aggregated $20,884,133 and $24,888,968, respectively.

 

(5)   Shares of Beneficial Interest

The fund’s Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest. Transactions in fund shares were as follows:

 

     Six months ended 6/30/11      Year ended 12/31/10  
     Shares      Amount      Shares      Amount  
Shares sold            

Initial Class

      286,684         $4,638,558         251,174         $3,529,038   

Service Class

      13,383         220,743         19,762         274,095   
     300,067         $4,859,301         270,936         $3,803,133   
Shares issued to shareholders in reinvestment of distributions            

Initial Class

      —         $—         45,507         $663,488   

Service Class

      —         —         2,855         41,541   
     —         $—         48,362         $705,029   
Shares reacquired            

Initial Class

      (465,864 )       $(7,590,857 )       (880,123 )       $(12,221,995 ) 

Service Class

      (58,291 )       (942,356 )       (81,719 )       (1,133,355 ) 
     (524,155 )       $(8,533,213 )       (961,842 )       $(13,355,350 ) 
Net change            

Initial Class

      (179,180 )       $(2,952,299 )       (583,442 )       $(8,029,469 ) 

Service Class

      (44,908 )       (721,613 )       (59,102 )       (817,719 ) 
     (224,088 )       $(3,673,912 )       (642,544 )       $(8,847,188 ) 

 

(6)   Line of Credit

The fund and certain other funds managed by MFS participate in a $1.1 billion unsecured committed line of credit, subject to a $1 billion sublimit, provided by a syndication of banks under a credit agreement. Borrowings may be made for temporary financing needs. Interest is charged to each fund, based on its borrowings, generally at a rate equal to the higher of the Federal Reserve funds rate or one month LIBOR plus an agreed upon spread. A commitment fee, based on the average daily, unused portion of the committed line of credit, is allocated among the participating funds at the end of each calendar quarter. In addition, the fund and other funds managed by MFS have established unsecured uncommitted borrowing arrangements with certain banks for temporary financing needs. Interest is charged to each fund, based on its borrowings, at a rate equal to the Federal Reserve funds rate plus an agreed upon spread. For the six months ended June 30, 2011, the fund’s commitment fee and interest expense were $322 and $0, respectively, and are included in miscellaneous expense on the Statement of Operations.

 

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MFS Core Equity Series

 

Notes to Financial Statements (unaudited) – continued

 

 

(7)   Transactions in Underlying Affiliated Funds – Affiliated Issuers

An affiliated issuer may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. For the purposes of this report, the fund assumes the following to be affiliated issuers:

 

Underlying Affiliated Funds    Beginning
Shares/Par
Amount		      Acquisitions
Shares/Par
Amount		      Dispositions
Shares/Par
Amount		      Ending
Shares/Par
Amount		  
MFS Institutional Money Market Portfolio      104,440         7,879,950         (7,460,497 )       523,893   
Underlying Affiliated Funds    Realized
Gain (Loss)		      Capital Gain
Distributions		      Dividend
Income		      Ending
Value		  
MFS Institutional Money Market Portfolio      $—         $—         $420         $523,893   

 

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MFS Core Equity Series

 

BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT

 

A discussion regarding the Board’s most recent review and renewal of the fund’s Investment Advisory Agreement with MFS will be available on or about November 1, 2011 by clicking on the fund’s name under “Variable Insurance Portfolios — VIT” in the “Products and Performance” section of the MFS Web site (mfs.com).

PROXY VOTING POLICIES AND INFORMATION

A general description of the MFS funds’ proxy voting policies and procedures is available without charge, upon request, by calling
1-800-225-2606, by visiting the Proxy Voting section of mfs.com or by visiting the SEC’s Web site at http://www.sec.gov.

Information regarding how the fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available without charge by visiting the Proxy Voting section of mfs.com or by visiting the SEC’s Web site at http://www.sec.gov.

QUARTERLY PORTFOLIO DISCLOSURE

The fund will file a complete schedule of portfolio holdings with the Securities and Exchange Commission (the Commission) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q may be reviewed and copied at the:

Public Reference Room

Securities and Exchange Commission

100 F Street, NE, Room 1580

Washington, D.C. 20549

Information on the operation of the Public Reference Room may be obtained by calling the Commission at 1-800-SEC-0330. The fund’s Form N-Q is available on the EDGAR database on the Commission’s Internet Web site 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: publicinfo@sec.gov or by writing the Public Reference Section at the above address.

FURTHER INFORMATION

From time to time, MFS may post important information about the fund or the MFS funds on the MFS web site (mfs.com). This information is available by visiting the “News & Commentary” section of mfs.com or by clicking on the fund’s name under “Variable Insurance Portfolios — VIT” in the “Products and Performance” section of mfs.com.

 

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rev. 3/11

 

FACTS   WHAT DOES MFS DO WITH YOUR
PERSONAL INFORMATION?		   LOGO

 

Why?   Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?  

The types of personal information we collect and share depend on the product or service you have with us. This information can include:

 

•  Social Security number and account balances

•  Account transactions and transaction history

•  Checking account information and wire transfer instructions

 

When you are no longer our customer, we continue to share your information as described in this notice.

 

How?   All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons MFS chooses to share; and whether you can limit this sharing.

 

Reasons we can share your personal information   Does MFS share?   Can you limit this
sharing?

For our everyday business purposes –

such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus

   Yes   No

For our marketing purposes –

to offer our products and services to you

   No   We don’t share
For joint marketing with other financial companies   No   We don’t share

For our affiliates’ everyday business purposes –

information about your transactions and experiences

   No   We don’t share

For our affiliates’ everyday business purposes –

information about your creditworthiness

   No   We don’t share
For nonaffiliates to market to you   No   We don’t share

 

Questions?   Call 800-225-2606 or go to mfs.com.

 

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Page 2  

 

Who we are
Who is providing this notice?   MFS Funds, MFS Investment Management, MFS Institutional Advisors, Inc., MFS Fund Distributors, Inc., MFS Heritage Trust Company, and MFS Service Center, Inc.

 

What we do
How does MFS protect my personal information?   To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include procedural, electronic, and physical safeguards for the protection of the personal information we collect about you.
How does MFS
collect my personal information?		  

We collect your personal information, for example, when you

 

• open an account or provide account information

• direct us to buy securities or direct us to sell your securities

• make a wire transfer

 

We also collect your personal information from others, such as credit bureaus, affiliates and other companies.

Why can’t I limit all sharing?  

Federal law gives you the right to limit only

 

• sharing for affiliates’ everyday business purposes – information about your creditworthiness

• affiliates from using your information to market to you

• sharing for nonaffiliates to market to you

 

State laws and individual companies may give you additional rights to limit sharing.

 

Definitions
Affiliates  

Companies related by common ownership or control. They can be financial and nonfinancial companies.

 

• MFS does not share personal information with affiliates, except for everyday business purposes as described on page one of this notice.

Nonaffiliates  

Companies not related by common ownership or control. They can be financial and nonfinancial companies.

 

• MFS does not share with nonaffiliates so they can market to you.

Joint Marketing  

A formal agreement between nonaffiliated financial companies that together market financial products or services to you.

 

• MFS doesn’t jointly market.

 

 

Other important information
If you own an MFS product or receive an MFS service in the name of a third party such as a bank or broker-dealer, their privacy policy may apply to you instead of ours.

 

23

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LOGO

Table of Contents

LOGO

 

MFS® Utilities Series

MFS® Variable Insurance Trust

 

LOGO

 

 

SEMIANNUAL REPORT

June 30, 2011

 

VUF-SEM

Table of Contents

MFS® UTILITIES SERIES

 

CONTENTS   
Letter from the CEO      1   
Portfolio composition      2   
Expense table      3   
Portfolio of investments      4   
Statement of assets and liabilities      7   
Statement of operations      8   
Statements of changes in net assets      9   
Financial highlights      10   
Notes to financial statements      12   
Board review of investment advisory agreement      19   
Proxy voting policies and information      19   
Quarterly portfolio disclosure      19   
Further information      19   
MFS® privacy notice      20   

 

The report is prepared for the general information of contract owners. It is authorized for distribution to prospective investors only when preceded or accompanied by a current prospectus.

 

NOT FDIC INSURED Ÿ MAY LOSE VALUE Ÿ NO BANK OR CREDIT UNION GUARANTEE Ÿ

NOT A DEPOSIT Ÿ NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY OR NCUA/NCUSIF

Table of Contents

MFS Utilities Series

 

LETTER FROM THE CEO

 

LOGO

 

Dear Contract Owners:

After about a year of almost uninterrupted macroeconomic and financial market improvement following the global credit crisis, investors grew more cautious in the middle of 2010 as fears grew that some European countries would default on their debt and as economic data showed a weakening

trend in the global economy. As a result asset prices fell significantly.

Last September the U.S. Federal Reserve Board’s promises to make lending conditions easier helped assuage market fears and drive asset prices off their recent lows. A combination of solid earnings and improving economic data gave an additional boost to investor sentiment.

In the following months, the renewed positive market mood, coupled with indications of better global macroeconomic activity, pushed many asset valuations to post-crisis highs. At the same time, global sovereign

bond yields initially rose as investors became concerned about inflationary pressures, driven by higher prices for oil as well as other commodities. However, by the end of the second quarter of 2011, a weakening macroeconomic backdrop and renewed concerns over debt problems in some eurozone countries pushed equities lower.

For the remainder of 2011, we are cautiously optimistic that economic growth will continue to improve and that the global economies will recover from the shocks of the past few years. We expect the pace of recovery worldwide to be uneven and volatile and acknowledge the elevated uncertainty created by events in Japan, Europe, the Middle East, as well as that created by the U.S. debate over raising the debt ceiling and the downgrade by Standard & Poor’s of the U.S. long-term credit rating.

As always, we continue to be mindful of the many economic challenges faced at the local, national, and international levels. It is in times such as these that we want to remind investors of the merits of maintaining a long-term view, adhering to basic investing principles such as asset allocation and diversification, and working closely with their advisors to research and identify appropriate investment opportunities.

Respectfully,

LOGO

Robert J. Manning

Chairman and Chief Executive Officer

MFS Investment Management®

August 16, 2011

 

The opinions expressed in this letter are subject to change, may not be relied upon for investment advice, and no forecasts can be guaranteed.

 

 

1

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MFS Utilities Series

 

PORTFOLIO COMPOSITION

 

Portfolio structure (i)

LOGO

 

Top ten holdings (i)  
El Paso Corp.     3.3%   
Williams Cos, Inc.     3.0%   
Comcast Corp.     2.9%   
CMS Energy Corp.     2.8%   
Virgin Media, Inc.     2.8%   
Nextera Energy, Inc.     2.6%   
Public Service Enterprise Group, Inc.     2.4%   
AES Corp.     2.4%   
QEP Resources, Inc.     2.4%   
EQT Corp.     2.2%   
Top five industries (i)  
Utilities – Electric Power     49.1%   

Telephone Services

     10.7%   
Cable TV     9.5%   
Telecommunications – Wireless     8.8%   
Natural Gas – Pipeline     8.4%   

 

Issuer country weightings (i)(x)   
United States      62.8%   
Brazil      8.9%   
United Kingdom      4.9%   
Portugal      3.1%   
Spain      3.0%   
Israel      2.7%   
Czech Republic      2.1%   
Chile      2.0%   
Russia      1.5%   
Other Countries      9.0%   
 

 

(i) For purposes of this presentation, the components include the market value of securities, and reflect the impact of the equivalent exposure of derivative positions, if applicable. These amounts may be negative from time to time. The bond component will include any accrued interest amounts. Equivalent exposure is a calculated amount that translates the derivative position into a reasonable approximation of the amount of the underlying asset that the portfolio would have to hold at a given point in time to have the same price sensitivity that results from the portfolio’s ownership of the derivative contract. When dealing with derivatives, equivalent exposure is a more representative measure of the potential impact of a position on portfolio performance than market value. Where the fund holds convertible bonds, these are treated as part of the equity portion of the portfolio.
(x) Represents the portfolio’s exposure to issuer countries as a percentage of a portfolio’s total net assets.

Percentages are based on net assets as of 6/30/11.

The portfolio is actively managed and current holdings may be different.

 

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MFS Utilities Series

 

EXPENSE TABLE

 

Fund Expenses Borne by the Contract Holders During the Period,

January 1, 2011 through June 30, 2011

As a contract holder of the fund, you incur ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period January 1, 2011 through June 30, 2011.

Actual Expenses

The first line for each share class in the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The second line for each share class in the following table provides information about hypothetical account values and hypothetical expenses based on the fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight the fund’s ongoing costs only and do not take into account the fees and expenses imposed under the variable contracts through which your investment in the fund is made. Therefore, the second line for each share class in the table is useful in comparing ongoing costs associated with an investment in vehicles (such as the fund) which fund benefits under variable annuity and variable life insurance contracts and to qualified pension and retirement plans only, and will not help you determine the relative total costs of investing in the fund through variable annuity and variable life insurance contracts. If the fees and expenses imposed under the variable contracts were included, your costs would have been higher.

 

Share Class        

Annualized

Expense Ratio

     

Beginning

Account Value

1/01/11

     

Ending

Account Value

6/30/11

     

Expenses Paid

During Period (p)

1/01/11-6/30/11

  
Initial Class   Actual      0.79%         $1,000.00         $1,107.24         $4.13   
  Hypothetical (h)      0.79%         $1,000.00         $1,020.88         $3.96   
Service Class   Actual      1.04%         $1,000.00         $1,105.81         $5.43   
  Hypothetical (h)      1.04%         $1,000.00         $1,019.64         $5.21   

 

(h) 5% class return per year before expenses.

 

(p) Expenses paid is equal to each class’ annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by the number of days in the period, divided by the number of days in the year.

 

3

Table of Contents

MFS Utilities Series

 

PORTFOLIO OF INVESTMENTS – 6/30/11 (unaudited)

 

The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.

Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – 94.9%     
Broadcasting – 0.4%     
Viacom, Inc., “B”      168,600      $ 8,598,600   
    

 

 

  
Cable TV – 8.8%     
Comcast Corp., “Special A”      2,498,170      $ 60,530,659   
DIRECTV, “A” (a)      124,930        6,348,943   
Telenet Group Holding N.V.      588,061        27,979,596   
Time Warner Cable, Inc.      369,820        28,860,753   
Virgin Media, Inc.      1,955,280        58,521,530   
    

 

 

  
     $ 182,241,481   
    

 

 

  
Energy – Independent – 2.3%     
Arch Coal, Inc.      325,450      $ 8,676,497   
EOG Resources, Inc.      59,850        6,257,318   
Occidental Petroleum Corp.      122,350        12,729,294   
Williams Partners LP      373,560        20,239,481   
    

 

 

  
     $ 47,902,590   
    

 

 

  
Energy – Integrated – 4.6%     
EQT Corp.      862,590      $ 45,303,227   
QEP Resources, Inc.      1,166,520        48,795,532   
    

 

 

  
     $ 94,098,759   
    

 

 

  
Natural Gas – Distribution – 4.3%     
AGL Resources, Inc.      303,760      $ 12,366,070   
Centrica PLC      1,362,856        7,071,596   
NiSource, Inc.      605,020        12,251,655   
Questar Corp.      566,300        10,029,173   
Sempra Energy      272,210        14,394,465   
Spectra Energy Corp.      881,730        24,168,219   
UGI Corp.      257,000        8,195,730   
    

 

 

  
     $ 88,476,908   
    

 

 

  
Natural Gas – Pipeline – 8.4%     
El Paso Corp.      3,392,657      $ 68,531,671   
Enagas S.A.      1,181,848        28,638,542   
Kinder Morgan, Inc.      545,590        15,674,801   
Williams Cos., Inc.      2,018,205        61,050,701   
    

 

 

  
     $ 173,895,715   
    

 

 

  
Special Products & Services – 0.4%     
Hutchison Port Holdings Trust, IEU (a)      9,912,000      $ 8,375,640   
    

 

 

  
Telecommunications – Wireless – 8.4%     
America Movil S.A.B. de C.V., “L”, ADR      211,310      $ 11,385,383   
Cellcom Israel Ltd.      1,158,313        32,108,436   
Millicom International Cellular S.A.      19,540        2,038,892   
Mobile TeleSystems OJSC, ADR      1,110,610        21,123,802   
MTN Group Ltd.      674,368        14,351,438   
NII Holdings, Inc. (a)      804,500        34,094,710   
Partner Communication Co. Ltd., ADR      643,300        9,598,036   
SBA Communications Corp. (a)      301,120        11,499,773   
Tim Participacoes S.A., ADR      414,300        20,387,703   
Vodafone Group PLC      6,552,450        17,383,545   
    

 

 

  
     $ 173,971,718   
    

 

 

  
Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – continued     
Telephone Services – 10.7%     
American Tower Corp., “A” (a)      494,810      $ 25,893,407   
AT&T, Inc.      65,560        2,059,240   
Bezeq – The Israel Telecommunication Corp. Ltd.      5,965,360        15,097,099   
CenturyLink, Inc.      544,371        22,008,920   
Crown Castle International Corp. (a)      244,380        9,968,260   
Deutsche Telekom AG      1,074,060        16,844,879   
Frontier Communications Corp.      639,620        5,161,733   
Kabel Deutschland Holding AG (a)      85,390        5,250,319   
Portugal Telecom, SGPS, S.A.      1,298,975        12,878,913   
PT XL Axiata Tbk      17,961,000        12,880,899   
Royal KPN N.V.      1,273,647        18,525,197   
TDC A/S (a)      2,289,245        20,892,243   
Telecom Italia S.p.A.      10,067,193        11,715,647   
Telecomunicacoes de Sao Paulo S.A., ADR      1,451,058        43,096,423   
    

 

 

  
     $ 222,273,179   
    

 

 

  
Utilities – Electric Power – 46.6%     
AES Corp. (a)      3,872,380      $ 49,334,121   
AES Tiete S.A., IPS      1,058,359        17,143,700   
Aguas Andinas S.A.      28,990,356        15,700,137   
Alliant Energy Corp.      174,780        7,106,555   
American Electric Power Co., Inc.      1,063,890        40,087,375   
American Water Works Co., Inc.      412,210        12,139,584   
Calpine Corp. (a)      1,695,150        27,342,769   
CenterPoint Energy, Inc.      1,589,790        30,762,436   
CEZ AS      844,530        43,457,589   
China Hydroelectric Corp., ADR (a)      482,890        1,970,191   
CMS Energy Corp.      2,985,160        58,777,800   
Companhia de Saneamento de Minas Gerais – Copasa MG      863,800        17,324,153   
Companhia Paranaense de Energia, ADR      371,670        10,094,557   
Companhia Paranaense de Energia, IPS      320,700        8,527,889   
Constellation Energy Group, Inc.      820,650        31,151,874   
E-CL S.A.      3,500,510        9,842,024   
E.ON AG      260,594        7,401,177   
Edison International      960,640        37,224,800   
EDP Renovaveis S.A. (a)      2,194,276        14,475,048   
Eletropaulo Metropolitana S.A., IPS      840,800        18,242,071   
ENEL OGK-5 OAO (a)      22,959,317        1,836,745   
Energias de Portugal S.A.      10,104,628        35,885,743   
Enersis S.A., ADR      721,380        16,663,878   
EVN AG      138,248        2,397,744   
Federal Grid Co. of Unified Energy
System JSC		      301,177,510        3,343,070   
Fortum Corp.      952,021        27,570,041   
GenOn Energy, Inc. (a)      1,084,110        4,184,665   
Hawaiian Electric Industries, Inc.      6,500        156,390   
International Power PLC      4,863,108        25,108,845   
Light S.A.      1,306,340        24,575,749   
National Grid PLC      2,938,619        28,887,579   
NextEra Energy, Inc.      919,080        52,810,337   
 

 

4

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MFS Utilities Series

 

Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – continued     
Utilities – Electric Power – continued   
Northeast Utilities      458,793      $ 16,135,750   
NRG Energy, Inc. (a)      953,914        23,447,206   
NV Energy, Inc.      663,140        10,179,199   
OGE Energy Corp.      492,020        24,758,446   
OGK-4 OAO (a)      20,994,883        1,763,570   
PG&E Corp.      861,010        36,188,250   
PPL Corp.      809,120        22,517,810   
Public Service Enterprise Group, Inc.      1,550,460        50,607,014   
Red Electrica de Espana      536,996        32,414,410   
Scottish & Southern Energy PLC      996,089        22,269,529   
TGK International GmbH      5,520,996,663        2,815,708   
Tractebel Energia S.A.      1,460,100        25,728,222   
Wisconsin Energy Corp.      129,200        4,050,420   
Xcel Energy, Inc.      380,440        9,244,692   
    

 

 

  
     $ 963,646,862   
    

 

 

  

Total Common Stocks

(Identified Cost, $1,759,734,923)

  

  

   $ 1,963,481,452   
    

 

 

  
BONDS – 0.3%     
Asset-Backed & Securitized – 0.0%   
Falcon Franchise Loan LLC, FRN, 3.305%, 2023 (i)(z)    $ 245,437      $ 14,726   
    

 

 

  
Utilities – Electric Power – 0.3%   
GenOn Energy, Inc., 9.875%, 2020    $ 5,795,000      $ 6,055,775   
    

 

 

  

Total Bonds

(Identified Cost, $5,840,820)

      $ 6,070,501   
    

 

 

  
Issuer    Shares/Par     Value ($)  
CONVERTIBLE PREFERRED STOCKS – 2.2%   
Utilities – Electric Power – 2.2%     
Great Plains Energy, Inc., 12%      141,030      $ 9,200,797   
NextEra Energy, Inc., 7%      235,780        12,201,615   
PPL Corp., 9.5%      262,860        14,693,874   
PPL Corp., 8.75%      195,820        10,752,476   
    

 

 

  

Total Convertible Preferred Stocks

(Identified Cost, $44,181,874)

      $ 46,848,762   
    

 

 

  
CONVERTIBLE BONDS – 1.0%     
Cable TV – 0.7%     
Virgin Media, Inc., 6.5%, 2016    $ 7,481,000      $ 13,381,639   
    

 

 

  
Telecommunications – Wireless – 0.3%     
SBA Communications Corp., 4%, 2014    $ 5,093,000      $ 7,142,933   
    

 

 

  

Total Convertible Bonds

(Identified Cost, $15,005,471)

      $ 20,524,572   
    

 

 

  
MONEY MARKET FUNDS (v) – 1.4%     
MFS Institutional Money Market Portfolio, 0.1%, at Cost and Net Asset Value      28,424,317      $ 28,424,317   
    

 

 

  

Total Investments

(Identified Cost, $1,853,187,405)

      $ 2,065,349,604   
    

 

 

  
OTHER ASSETS, LESS
LIABILITIES – 0.2%		        3,473,594   
    

 

 

  
Net Assets – 100.0%      $ 2,068,823,198   
    

 

 

  
 
(a)   Non-income producing security.

 

(i)   Interest only security for which the series receives interest on notional principal (Par amount). Par amount shown is the notional principal and does not reflect the cost of the security.

 

(v)   Underlying affiliated fund that is available only to investment companies managed by MFS. The rate quoted is the annualized seven-day yield of the fund at period end.

 

(z)   Restricted securities are not registered under the Securities Act of 1933 and are subject to legal restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are subsequently registered. Disposal of these securities may involve time-consuming negotiations and prompt sale at an acceptable price may be difficult. The fund holds the following restricted securities:

 

Restricted Securities    Acquisition
Date		    Cost      Value  
Falcon Franchise Loan LLC, FRN, 3.305%, 2023    1/18/02      $10,766         $14,726   
% of Net Assets            0.00%   

The following abbreviations are used in this report and are defined:

 

ADR   American Depository Receipt

 

FRN   Floating Rate Note. Interest rate resets periodically and may not be the rate reported at period end.

 

IEU   International Equity Unit

 

IPS   International Preference Stock

 

PLC   Public Limited Company

Abbreviations indicate amounts shown in currencies other than the U.S. dollar. All amounts are stated in U.S. dollars unless otherwise indicated. A list of abbreviations is shown below:

 

BRL   Brazilian Real

 

EUR   Euro

 

GBP   British Pound

 

5

Table of Contents

MFS Utilities Series

 

Portfolio of Investments (unaudited) – continued

 

Derivative Contracts at 6/30/11

Forward Foreign Currency Exchange Contracts at 6/30/11

 

Type    Currency     Counterparty   Contracts to
Deliver/Receive		   Settlement Date
Range		   In Exchange For     Contracts
at Value		     Net Unrealized
Appreciation
(Depreciation)		  
Asset Derivatives               
  BUY      EUR      Citibank N.A.   313,599   7/12/11   $ 448,807      $ 454,676      $ 5,869   
  BUY      EUR      Credit Suisse Group   6,262,274   7/12/11     8,999,788        9,079,465        79,677   
  BUY      EUR      Deutsche Bank AG   1,373,821   7/12/11     1,972,120        1,991,858        19,738   
  BUY      EUR      HSBC Bank   1,250,226   7/12/11     1,780,750        1,812,662        31,912   
  BUY      EUR      Merrill Lynch International Bank   1,649,464   7/12/11     2,347,358        2,391,503        44,145   
  BUY      EUR      Morgan Stanley Capital Services, Inc.   91,557   7/12/11     132,360        132,745        385   
  SELL      EUR      Citibank N.A.   511,037   7/12/11     743,560        740,936        2,624   
  SELL      EUR      Credit Suisse Group   4,591,972   7/12/11     6,704,243        6,657,750        46,493   
  SELL      EUR      HSBC Bank   667,002   7/12/11     978,685        967,064        11,621   
  SELL      GBP      Barclays Bank PLC   30,119,070   7/12/11     49,089,218        48,335,480        753,738   
  SELL      GBP      Credit Suisse Group   1,127,803   7/12/11     1,845,259        1,809,913        35,346   
  SELL      GBP      Deutsche Bank AG   30,617,047   7/12/11     49,912,038        49,134,640        777,398   
  SELL      GBP      HSBC Bank   579,829   7/12/11     941,584        930,517        11,067   
  SELL      GBP      JPMorgan Chase Bank N.A.   246,767   7/12/11     397,097        396,014        1,083   
  SELL      GBP      Merrill Lynch International Bank   745,215   7/12/11     1,219,567        1,195,931        23,636   
  SELL      GBP      UBS AG   422,496   7/12/11     693,437        678,027        15,410   
              

 

 

  
                 $ 1,860,142   
                

 

 

  
Liability Derivatives               
  SELL      BRL      Barclays Bank PLC   5,384,000   8/02/11   $ 3,355,772      $ 3,427,134      $ (71,362 ) 
  SELL      BRL      Credit Suisse Group   21,984,672   8/02/11-11/04/11     13,639,481        13,857,388        (217,907 ) 
  SELL      BRL      Deutsche Bank AG   34,857,000   9/02/11-11/04/11     21,568,575        21,923,439        (354,864 ) 
  SELL      BRL      Goldman Sachs International   4,915,000   8/02/11     3,070,915        3,128,596        (57,681 ) 
  SELL      BRL      HSBC Bank   30,743,288   8/02/11-11/07/11     18,746,444        19,388,175        (641,731 ) 
  SELL      BRL      JPMorgan Chase Bank N.A.   66,849,077   8/02/11-11/04/11     41,250,739        42,371,433        (1,120,694 ) 
  SELL      BRL      Morgan Stanley Capital Services, Inc.   15,890,000   8/02/11     9,899,400        10,114,629        (215,229 ) 
  SELL      BRL      UBS AG   16,940,000   8/02/11     10,620,932        10,782,996        (162,064 ) 
  BUY      EUR      Citibank N.A.   596,249   7/12/11     865,581        864,482        (1,099 ) 
  BUY      EUR      Credit Suisse Group   2,873,976   7/12/11     4,200,603        4,166,883        (33,720 ) 
  BUY      EUR      Merrill Lynch International Bank   507,561   7/12/11     740,075        735,896        (4,179 ) 
  SELL      EUR      Barclays Bank PLC   233,858   7/12/11     331,559        339,063        (7,504 ) 
  SELL      EUR      Credit Suisse Group   6,055,102   7/12/11     8,686,855        8,779,094        (92,239 ) 
  SELL      EUR      Deutsche Bank AG   12,666,688   7/12/11     18,074,818        18,365,015        (290,197 ) 
  SELL      EUR      Goldman Sachs International   389,104   7/12/11     557,746        564,150        (6,404 ) 
  SELL      EUR      HSBC Bank   582,753   7/12/11     833,716        844,915        (11,199 ) 
  SELL      EUR      Merrill Lynch International Bank   926,131   7/12/11     1,318,582        1,342,767        (24,185 ) 
  SELL      EUR      UBS AG   95,227,551   7/12/11-9/15/11     137,155,502        137,819,892        (664,390 ) 
  BUY      GBP      Barclays Bank PLC   464,284   7/12/11     746,225        745,089        (1,136 ) 
  BUY      GBP      HSBC Bank   1,233,671   7/12/11     2,003,451        1,979,812        (23,639 ) 
  SELL      GBP      Barclays Bank PLC   273,473   7/12/11     436,617        438,873        (2,256 ) 
              

 

 

  
                 $ (4,003,679 ) 
                

 

 

  

At June 30, 2011, the fund had sufficient cash and/or securities to cover any commitments under these derivative contracts.

See Notes to Financial Statements

 

6

Table of Contents

MFS Utilities Series

 

FINANCIAL STATEMENTS  |  STATEMENT OF ASSETS AND LIABILITIES (unaudited)

 

This statement represents your fund’s balance sheet, which details the assets and liabilities comprising the total value of the fund.

 

At 6/30/11

      

Assets

                  

Investments –

      

Non-affiliated issuers, at value (identified cost, $1,824,763,088)

      $2,036,925,287      

Underlying affiliated funds, at cost and value

      28,424,317            

Total investments, at value (identified cost, $1,853,187,405)

      $2,065,349,604            

Cash

      1,684,097      

Restricted cash

      480,000      

Receivables for

      

Forward foreign currency exchange contracts

      1,860,142      

Investments sold

      9,146,617      

Fund shares sold

      654,181      

Interest and dividends

      10,099,729      

Other assets

      8,016            

Total assets

               $2,089,282,386   

Liabilities

                  

Payables for

      

Forward foreign currency exchange contracts

      $4,003,679      

Investments purchased

      14,819,099      

Fund shares reacquired

      1,256,599      

Payable to affiliates

      

Investment adviser

      82,980      

Shareholder servicing costs

      1,448      

Distribution and/or service fees

      20,223      

Payable for independent Trustees’ compensation

      5,887      

Accrued expenses and other liabilities

      269,273            

Total liabilities

               $20,459,188   

Net assets

               $2,068,823,198   

Net assets consist of

                  

Paid-in capital

      $1,920,324,990      

Unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies

      209,988,853      

Accumulated net realized gain (loss) on investments and foreign currency transactions

      (164,799,524 )    

Undistributed net investment income

      103,308,879            

Net assets

               $2,068,823,198   

Shares of beneficial interest outstanding

               74,686,422   

 

     Net assets      Shares
outstanding		      Net asset value
per share		  

Initial Class

      $577,404,677         20,635,389         $27.98   

Service Class

      1,491,418,521         54,051,033         27.59   

See Notes to Financial Statements

 

7

Table of Contents

MFS Utilities Series

 

FINANCIAL STATEMENTS  |  STATEMENT OF OPERATIONS (unaudited)

 

This statement describes how much your fund earned in investment income and accrued in expenses. It also describes any gains and/or losses generated by fund operations.

 

Six months ended 6/30/11      
Net investment income                  

Income

      

Dividends

      $56,065,364      

Interest

      424,881      

Dividends from underlying affiliated funds

      20,554      

Foreign taxes withheld

      (3,835,710 )          

Total investment income

               $52,675,089   

Expenses

      

Management fee

      $7,120,971      

Distribution and/or service fees

      1,759,600      

Shareholder servicing costs

      110,535      

Administrative services fee

      146,496      

Independent Trustees’ compensation

      21,508      

Custodian fee

      188,223      

Shareholder communications

      92,599      

Auditing fees

      24,296      

Legal fees

      16,002      

Miscellaneous

      45,817            

Total expenses

               $9,526,047   

Fees paid indirectly

      (690 )    

Reduction of expenses by investment adviser

      (5,567 )          

Net expenses

               $9,519,790   

Net investment income

               $43,155,299   

Realized and unrealized gain (loss) on investments and foreign currency transactions

                  
Realized gain (loss) (identified cost basis)      

Investment transactions

      $86,238,145      

Foreign currency transactions

      (16,473,204 )          

Net realized gain (loss) on investments and foreign currency transactions

               $69,764,941   
Change in unrealized appreciation (depreciation)      

Investments

      $87,097,415      

Translation of assets and liabilities in foreign currencies

      (2,089,193 )          

Net unrealized gain (loss) on investments and foreign currency translation

               $85,008,222   

Net realized and unrealized gain (loss) on investments and foreign currency

               $154,773,163   

Change in net assets from operations

               $197,928,462   

See Notes to Financial Statements

 

8

Table of Contents

MFS Utilities Series

 

FINANCIAL STATEMENTS  |  STATEMENTS OF CHANGES IN NET ASSETS

 

These statements describe the increases and/or decreases in net assets resulting from operations, any distributions, and any shareholder transactions.

 

    
 
 		 Six months ended
6/30/11
(unaudited		   
  
) 		     
 		 Year ended
12/31/10		   
  

Change in net assets

      

From operations

                  

Net investment income

      $43,155,299         $57,761,335   

Net realized gain (loss) on investments and foreign currency transactions

      69,764,941         74,636,945   

Net unrealized gain (loss) on investments and foreign currency translation

      85,008,222         92,299,866   

Change in net assets from operations

      $197,928,462         $224,698,146   

Distributions declared to shareholders

                  

From net investment income

      $—         $(53,910,218 ) 

Change in net assets from fund share transactions

      $(6,063,304 )       $(68,416,700 ) 

Total change in net assets

      $191,865,158         $102,371,228   

Net assets

                  

At beginning of period

      1,876,958,040         1,774,586,812   

At end of period (including undistributed net investment income of $103,308,879 and
$60,153,580, respectively)

      $2,068,823,198         $1,876,958,040   

See Notes to Financial Statements

 

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FINANCIAL STATEMENTS  |  FINANCIAL HIGHLIGHTS

 

The financial highlights table is intended to help you understand the fund’s financial performance for the semiannual period and the past 5 fiscal years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period.

 

Initial Class      Six months
ended
6/30/11		      Years ended 12/31  
          2010        2009        2008        2007        2006  
       (unaudited)                                             

Net asset value, beginning of period

        $25.27         $22.92           $18.21           $34.48           $29.27           $23.74   
Income (loss) from investment operations                                                                

Net investment income (d)

        $0.61         $0.79           $0.80           $0.73           $0.71           $0.59   

Net realized and unrealized gain (loss) on
investments and foreign currency

        2.10         2.29           4.90           (11.97 )         7.10           6.47   

Total from investment operations

        $2.71         $3.08           $5.70           $(11.24 )         $7.81           $7.06   
Less distributions declared to shareholders                                                                

From net investment income

        $—         $(0.73 )         $(0.99 )         $(0.44 )         $(0.32 )         $(0.53 ) 

From net realized gain on investments

        —         —           —           (4.59 )         (2.28 )         (1.00 ) 

Total distributions declared to shareholders

        $—         $(0.73 )         $(0.99 )         $(5.03 )         $(2.60 )         $(1.53 ) 

Net asset value, end of period

        $27.98         $25.27           $22.92           $18.21           $34.48           $29.27   

Total return (%) (k)(r)(s)

        10.72 (n)       13.81           33.44           (37.77 )         27.90           31.26   
Ratios (%) (to average net assets)
and Supplemental data:		                                                                

Expenses before expense reductions (f)

        0.79 (a)       0.81           0.83           0.84           0.85           0.87   

Expenses after expense reductions (f)

        0.79 (a)       0.81           0.83           0.81           0.82           0.86   

Net investment income

        4.56 (a)(l)       3.47           4.11           2.76           2.22           2.32   

Portfolio turnover

        26         56           70           68           84           94   

Net assets at end of period (000 omitted)

        $577,405         $541,653           $564,822           $495,297           $969,404           $710,341   

See Notes to Financial Statements

 

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Financial Highlights – continued

 

Service Class      Six months
ended
6/30/11		      Years ended 12/31  
          2010        2009        2008        2007        2006  
       (unaudited)                                             

Net asset value, beginning of period

        $24.95         $22.65           $17.98           $34.11           $29.01           $23.56   
Income (loss) from investment operations                                                                

Net investment income (d)

        $0.57         $0.73           $0.73           $0.66           $0.62           $0.53   

Net realized and unrealized gain (loss) on
investments and foreign currency

        2.07         2.25           4.86           (11.82 )         7.03           6.42   

Total from investment operations

        $2.64         $2.98           $5.59           $(11.16 )         $7.65           $6.95   
Less distributions declared to shareholders                                                                

From net investment income

        $—         $(0.68 )         $(0.92 )         $(0.38 )         $(0.27 )         $(0.50 ) 

From net realized gain on investments

        —         —           —           (4.59 )         (2.28 )         (1.00 ) 

Total distributions declared to shareholders

        $—         $(0.68 )         $(0.92 )         $(4.97 )         $(2.55 )         $(1.50 ) 

Net asset value, end of period

        $27.59         $24.95           $22.65           $17.98           $34.11           $29.01   

Total return (%) (k)(r)(s)

        10.58 (n)       13.51           33.09           (37.91 )         27.56           30.96   
Ratios (%) (to average net assets)
and Supplemental data:		                                                                

Expenses before expense reductions (f)

        1.04 (a)       1.06           1.08           1.09           1.10           1.12   

Expenses after expense reductions (f)

        1.04 (a)       1.06           1.07           1.06           1.07           1.11   

Net investment income

        4.33 (a)(l)       3.23           3.83           2.54           1.96           2.11   

Portfolio turnover

        26         56           70           68           84           94   

Net assets at end of period (000 omitted)

        $1,491,419         $1,335,305           $1,209,765           $992,502           $1,715,446           $993,085   

 

(a) Annualized.

 

(d) Per share data is based on average shares outstanding.

 

(f) Ratios do not reflect reductions from fees paid indirectly, if applicable.

 

(k) The total return does not reflect expenses that apply to separate accounts. Inclusion of these charges would reduce the total return figures for all periods shown.

 

(l) Recognition of net investment income by the fund may be affected by the timing of the declaration of dividends by companies in which the fund invests and the actual annual net investment income ratio may differ.

 

(n) Not annualized.

 

(r) Certain expenses have been reduced without which performance would have been lower.

 

(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.

See Notes to Financial Statements

 

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NOTES TO FINANCIAL STATEMENTS (unaudited)

 

(1)   Business and Organization

MFS Utilities Series (the fund) is a 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, and qualified retirement and pension plans.

 

(2)   Significant Accounting Policies

General – The preparation of financial statements in conformity with U.S. 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. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the fund’s Statement of Assets and Liabilities through the date that the financial statements were issued. The fund invests primarily in securities of issuers in the utility industry. Issuers in a single industry can react similarly to market, economic, political and regulatory conditions and developments. The fund invests in foreign securities, including securities of emerging market issuers. 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. The markets of emerging markets countries are generally more volatile than the markets of developed countries with more mature economies. All of the risks of investing in foreign securities previously described are heightened when investing in emerging markets countries.

Investment Valuations – Equity securities, including restricted equity securities, are generally valued at the last sale or official closing price as provided by a third-party pricing service on the market or exchange on which they are primarily traded. Equity securities, for which there were no sales reported that day, are generally valued at the last quoted daily bid quotation as provided by a third-party pricing service on the market or exchange on which such securities are primarily traded. Equity securities held short, for which there were no sales reported for that day, are generally valued at the last quoted daily ask quotation as provided by a third-party pricing service on the market or exchange on which such securities are primarily traded. Debt instruments and floating rate loans (other than short-term instruments), including restricted debt instruments, are generally valued at an evaluated or composite bid as provided by a third-party pricing service. Short-term instruments with a maturity at issuance of 60 days or less generally are valued at amortized cost, which approximates market value. Forward foreign currency exchange contracts are generally valued at the mean of bid and asked prices for the time period interpolated from rates provided by a third-party pricing service for proximate time periods. Open-end investment companies are generally valued at net asset value per share. Securities and other assets generally valued on the basis of information from a third-party pricing service may also be valued at a broker/dealer bid quotation. Values obtained from third-party pricing services can utilize both transaction data and market information such as yield, quality, coupon rate, maturity, type of issue, trading characteristics, and other market data. The values of foreign securities and other assets and liabilities expressed in foreign currencies are converted to U.S. dollars using the mean of bid and asked prices for rates provided by a third-party pricing service.

The Board of Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments (including any fair valuation) to the adviser pursuant to valuation policies and procedures approved by the Board. If the adviser determines that reliable market quotations are not readily available, investments are valued at fair value as determined in good faith by the adviser in accordance with such procedures under the oversight of the Board of Trustees. Under the fund’s valuation policies and procedures, market quotations are not considered to be readily available for most types of debt instruments and floating rate loans and many types of derivatives. These investments are generally valued at fair value based on information from third-party pricing services. In addition, investments may be valued at fair value if the adviser determines that an investment’s value has been materially affected by events occurring after the close of the exchange or market on which the investment is principally traded (such as foreign exchange or market) and prior to the determination of the fund’s net asset value, or after the halting of trading of a specific security where trading does not resume prior to the close of the exchange or market on which the security is principally traded. Events that occur on a frequent basis after foreign markets close (such as developments in foreign markets and significant movements in the U.S. markets) and prior to the determination of the fund’s net asset value may be deemed to have a material effect on the value of securities traded in foreign markets. Accordingly, the fund’s foreign equity securities may often be valued at fair value. The adviser generally relies on third-party pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and financial condition of the issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment for purposes of calculating the fund’s net asset value can differ depending on the

 

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Notes to Financial Statements (unaudited) – continued

 

source and method used to determine value. When fair valuation is used, the value of an investment used to determine the fund’s net asset value may differ from quoted or published prices for the same investment. There can be no assurance that the fund could obtain the fair value assigned to an investment if it were to sell the investment at the same time at which the fund determines its net asset value per share.

Various inputs are used in determining the value of the fund’s assets or liabilities. These inputs are categorized into three broad levels. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fund’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. Level 1 includes unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes other significant observable market-based inputs (including quoted prices for similar securities, interest rates, prepayment speed, and credit risk). Level 3 includes unobservable inputs, which may include the adviser’s own assumptions in determining the fair value of investments. Other financial instruments are derivative instruments not reflected in total investments, such as forward foreign currency exchange contracts. The following is a summary of the levels used as of June 30, 2011 in valuing the fund’s assets or liabilities:

 

Investments at Value    Level 1      Level 2      Level 3      Total  
Equity Securities:            

United States

      $1,237,266,617         $—         $—         $1,237,266,617   

Brazil

      185,120,467         —         —         185,120,467   

United Kingdom

      100,721,093         —         —         100,721,093   

Portugal

      63,239,703         —         —         63,239,703   

Spain

      61,052,952         —         —         61,052,952   

Israel

      41,706,472         15,097,099         —         56,803,571   

Czech Republic

      43,457,589         —         —         43,457,589   

Chile

      42,206,040         —         —         42,206,040   

Russia

      30,882,896         —         —         30,882,896   

Other Countries

      189,579,286         —         —         189,579,286   
Corporate Bonds      —         26,580,347         —         26,580,347   
Commercial Mortgage-Backed Securities      —         14,726         —         14,726   
Mutual Funds      28,424,317         —         —         28,424,317   
Total Investments      $2,023,657,432         $41,692,172         $—         $2,065,349,604   
Other Financial Instruments                            
Forward Currency Contracts      $—         $(2,143,537 )       $—         $(2,143,537 ) 

For further information regarding security characteristics, see the Portfolio of Investments.

Foreign Currency Translation – 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 or on the reporting date for foreign denominated receivables and payables. 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 receivables, payables, 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.

Derivatives – The fund uses derivatives for different purposes, including to earn income and enhance returns, to increase or decrease exposure to a particular market, to manage or adjust the risk profile of the fund, or as alternatives to direct investments. Derivatives are used for hedging or non-hedging purposes. While hedging can reduce or eliminate losses, it can also reduce or eliminate gains. When the fund uses derivatives as an investment to increase market exposure, or for hedging purposes, gains and losses from derivative instruments may be substantially greater than the derivative’s original cost.

The derivative instruments used by the fund were forward foreign currency exchange contracts. The fund’s period end derivatives, as presented in the Portfolio of Investments and the associated Derivative Contract Tables, generally are indicative of the volume of its derivative activity during the period.

The following table presents, by major type of derivative contract, the fair value, on a gross basis, of the asset and liability components of derivatives held by the fund at June 30, 2011 as reported in the Statement of Assets and Liabilities:

 

          Fair Value  
Risk    Derivative Contracts    Asset Derivatives      Liability Derivatives  
Foreign Exchange    Forward Foreign Currency Exchange      $1,860,142         $(4,003,679 ) 

 

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Notes to Financial Statements (unaudited) – continued

 

The following table presents, by major type of derivative contract, the realized gain (loss) on derivatives held by the fund for the six months ended June 30, 2011 as reported in the Statement of Operations:

 

Risk    Foreign Currency
Transactions		  
Foreign Exchange      $(15,538,673 ) 

The following table presents, by major type of derivative contract, the change in unrealized appreciation (depreciation) on derivatives held by the fund for the six months ended June 30, 2011 as reported in the Statement of Operations:

 

Risk   

Translation of

Assets and

Liabilities in

Foreign Currencies

  
Foreign Exchange      $(2,048,795 ) 

Derivative counterparty credit risk is managed through formal evaluation of the creditworthiness of all potential counterparties. On certain over-the-counter derivatives, the fund attempts to reduce its exposure to counterparty credit risk whenever possible by entering into an International Swaps and Derivatives Association (ISDA) Master Agreement on a bilateral basis with each of the counterparties with whom it undertakes a significant volume of transactions. The ISDA Master Agreement gives each party to the agreement the right to terminate all transactions traded under such agreement if there is a certain deterioration in the credit quality of the other party. The ISDA Master Agreement gives the fund the right, upon an event of default by the applicable counterparty or a termination of the agreement, to close out all transactions traded under such agreement and to net amounts owed under each transaction to one net amount payable by one party to the other. This right to close out and net payments across all transactions traded under the ISDA Master Agreement could result in a reduction of the fund’s credit risk to such counterparty equal to any amounts payable by the fund under the applicable transactions, if any. However, absent an event of default by the counterparty or a termination of the agreement, the ISDA Master Agreement does not result in an offset of reported amounts of assets and liabilities in the Statement of Assets and Liabilities across transactions between the fund and the applicable counterparty.

Collateral requirements differ by type of derivative. Collateral or margin requirements are set by the broker or exchange clearing house for exchange traded derivatives (i.e., futures and exchange-traded options) while collateral terms are contract specific for over-the-counter traded derivatives (i.e., forward foreign currency exchange contracts, swaps and over-the-counter options). For derivatives traded under an ISDA Master Agreement, the collateral requirements are netted across all transactions traded under such agreement and one amount is posted from one party to the other to collateralize such obligations. Cash collateral that has been pledged to cover obligations of the fund under derivative contracts, if any, will be reported separately on the Statement of Assets and Liabilities as restricted cash. Securities collateral pledged for the same purpose, if any, is noted in the Portfolio of Investments.

Forward Foreign Currency Exchange Contracts – The fund entered into forward foreign currency exchange contracts for the purchase or sale of a specific foreign currency at a fixed price on a future date. These contracts may be used to hedge the fund’s currency risk or for non-hedging purposes. For hedging purposes, the fund may enter into contracts to deliver or receive foreign currency that the fund will receive from or use in its normal investment activities. The fund may also use contracts to hedge against declines in the value of foreign currency denominated securities due to unfavorable exchange rate movements. For non-hedging purposes, the fund may enter into contracts with the intent of changing the relative exposure of the fund’s portfolio of securities to different currencies to take advantage of anticipated exchange rate changes.

Forward foreign currency exchange contracts are adjusted by the daily exchange rate of the underlying currency and any unrealized gains or losses are recorded as a receivable or payable for forward foreign currency exchange contracts until the contract settlement date. On contract settlement date, any gain or loss on the contract is recorded as realized gains or losses on foreign currency transactions.

Risks may arise upon entering into these contracts from unanticipated movements in the value of the contract and from the potential inability of counterparties to meet the terms of their contracts. Generally, the fund’s maximum risk due to counterparty credit risk is the unrealized gain on the contract due to the use of Continuous Linked Settlement, an industry accepted settlement system. This risk is mitigated in cases where there is an ISDA Master Agreement between the fund and the counterparty providing for netting as described above and for posting of collateral by the counterparty to the fund to cover the fund’s exposure to the counterparty under such ISDA Master Agreement.

Security Loans – State Street Bank and Trust Company (“State Street”), as lending agent, loans the securities of the fund to certain qualified institutions (the “Borrowers”) approved by the fund. The loans are collateralized by cash and/or U.S. Treasury

 

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Notes to Financial Statements (unaudited) – continued

 

and federal agency obligations in an amount typically at least equal to the market value of the securities loaned. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. State Street provides the fund with indemnification against Borrower default. The fund bears the risk of loss with respect to the investment of cash collateral. On loans collateralized by cash, the cash collateral is invested in a money market fund or 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 fund and the lending agent. On loans collateralized by U.S. Treasury and/or federal agency obligations, a fee is received from the Borrower, and is allocated between the fund 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.

Indemnifications – Under the fund’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the fund. Additionally, in the normal course of business, the fund enters into agreements with service providers that may contain indemnification clauses. The fund’s maximum exposure under these agreements is unknown as this would involve future claims that may be made against the fund that have not yet occurred.

Investment Transactions and Income – Investment transactions are recorded on the trade date. Interest income is recorded on the accrual basis. All premium and discount is amortized or accreted for financial statement purposes in accordance with U.S. generally accepted accounting principles. Dividends received in cash are recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded when the fund is informed of the dividend if such information is obtained subsequent to 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.

The fund may receive proceeds from litigation settlements. Any proceeds received from litigation involving portfolio holdings are reflected in the Statement of Operations in realized gain/loss if the security has been disposed of by the fund or in unrealized gain/loss if the security is still held by the fund. Any other proceeds from litigation not related to portfolio holdings are reflected as other income in the Statement of Operations.

Fees Paid Indirectly – The fund’s custody fee may be reduced according to an arrangement that measures the value of cash deposited with the custodian by the fund. This amount, for the six months ended June 30, 2011, is shown as a reduction of total expenses on the Statement of Operations.

Tax Matters and Distributions – The fund intends to qualify as a regulated investment company, as defined under Subchapter M of the Internal Revenue Code, and to distribute all of its taxable income, including realized capital gains. As a result, no provision for federal income tax is required. The fund’s federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue Service. Foreign taxes, if any, have been accrued by the fund in the accompanying financial statements.

Distributions to shareholders are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income, expense, gain or loss in different periods for financial statement and tax purposes will reverse at some time in the future. Distributions in excess of net investment income or net realized gains are temporary overdistributions for financial statement purposes resulting from differences in the recognition or classification of income or distributions for financial statement and tax purposes.

Book/tax differences primarily relate to wash sale loss deferrals.

The tax character of distributions declared to shareholders for the last fiscal year is as follows:

 

     12/31/10  
Ordinary income (including any short-term capital gains)      $53,910,218   

 

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Notes to Financial Statements (unaudited) – continued

 

The federal tax cost and the tax basis components of distributable earnings were as follows:

 

As of 6/30/11   
Cost of investments      $1,872,712,881   
Gross appreciation      282,347,763   
Gross depreciation      (89,711,040 ) 
Net unrealized appreciation (depreciation)      $192,636,723   
As of 12/31/10   
Undistributed ordinary income      60,058,838   
Capital loss carryforwards      (215,150,574 ) 
Other temporary differences      10,589   
Net unrealized appreciation (depreciation)      105,650,893   

The aggregate cost above includes prior fiscal year end tax adjustments, if applicable.

As of December 31, 2010, the fund had capital loss carryforwards available to offset future realized gains. Such losses expire as follows:

 

12/31/16      $(95,096,618 ) 
12/31/17      (120,053,956 ) 
Total      $(215,150,574 ) 

Multiple Classes of Shares of Beneficial Interest – The fund offers multiple classes of shares, which differ in their respective distribution and/or service fees. The fund’s income, realized and unrealized gain (loss), and common expenses are allocated to shareholders based on the daily net assets of each class. Dividends are declared separately for each class. Differences in per share dividend rates are generally due to differences in separate class expenses. The fund’s distributions declared to shareholders as reported on the Statements of Changes in Net Assets are presented by class as follows:

 

     From net investment
income		  
     Six months ended
6/30/11		      Year ended
12/31/10		  
Initial Class      $—         $17,038,959   
Service Class      —         36,871,259   
Total      $—         $53,910,218   

 

(3)   Transactions with Affiliates

Investment Adviser – The fund has an investment advisory agreement with MFS to provide overall investment management and related administrative services and facilities to the fund. The management fee is computed daily and paid monthly at the following annual rates:

 

First $1 billion of average daily net assets      0.75%   
Average daily net assets in excess of $1 billion      0.70%   

The management fee incurred for the six months ended June 30, 2011 was equivalent to an annual effective rate of 0.72% of the fund’s average daily net assets.

Distributor – MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, is the distributor of shares of the fund. The Trustees have adopted a distribution plan for the Service Class shares pursuant to Rule 12b-1 under the Investment Company Act of 1940.

The fund’s distribution plan provides that the fund will pay MFD distribution and/or service fees equal to 0.25% per annum of its average daily net assets attributable to Service Class shares as partial consideration for services performed and expenses incurred by MFD and financial intermediaries (including participating insurance companies that invest in the fund to fund variable annuity and variable life insurance contracts, sponsors of qualified retirement and pension plans that invest in the fund, and affiliates of these participating insurance companies and plan sponsors) in connection with the sale and distribution of the Service Class shares. MFD may subsequently pay all, or a portion, of the distribution and/or service fees to financial intermediaries.

Shareholder Servicing Agent – MFS Service Center, Inc. (MFSC), a wholly-owned subsidiary of MFS, receives a fee from the fund for its services as shareholder servicing agent. For the six months ended June 30, 2011, the fee was $109,627, which equated to 0.0112% annually of the fund’s average daily net assets. MFSC also receives payment from the fund for out-of-pocket expenses paid by MFSC on behalf of the fund. For the six months ended June 30, 2011, these costs amounted to $908.

 

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MFS Utilities Series

 

Notes to Financial Statements (unaudited) – continued

 

Administrator – MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the fund partially reimburses MFS the costs incurred to provide these services. The fund is charged an annual fixed amount of $17,500 plus a fee based on average daily net assets. The administrative services fee incurred for the six months ended June 30, 2011 was equivalent to an annual effective rate of 0.0149% of the fund’s average daily net assets.

Trustees’ and Officers’ Compensation – The fund pays compensation to independent Trustees in the form of a retainer, attendance fees, and additional compensation to Board and Committee chairpersons. The fund does not pay compensation directly to Trustees or officers of the fund who are also officers of the investment adviser, all of whom receive remuneration for their services to the fund from MFS. Certain officers and Trustees of the fund are officers or directors of MFS, MFD, and MFSC.

Other – This fund and certain other funds managed by MFS (the funds) have entered into services agreements (the Agreements) which provide for payment of fees by the funds to Tarantino LLC and Griffin Compliance LLC in return for the provision of services of an Independent Chief Compliance Officer (ICCO) and Assistant ICCO, respectively, for the funds. The ICCO and Assistant ICCO are officers of the funds and the sole members of Tarantino LLC and Griffin Compliance LLC, respectively. The funds can terminate the Agreements with Tarantino LLC and Griffin Compliance LLC at any time under the terms of the Agreements. For the six months ended June 30, 2011, the aggregate fees paid by the fund to Tarantino LLC and Griffin Compliance LLC were $6,873 and are included in miscellaneous expense on the Statement of Operations. MFS has agreed to reimburse the fund for a portion of the payments made by the fund in the amount of $5,567, which is shown as a reduction of total expenses in the Statement of Operations. Additionally, MFS has agreed to bear all expenses associated with office space, other administrative support, and supplies provided to the ICCO and Assistant ICCO.

The fund invests in the MFS Institutional Money Market Portfolio which is managed by MFS and seeks a high level of current income consistent with preservation of capital and liquidity. Income earned on this investment is included in dividends from underlying affiliated funds on the Statement of Operations. This money market fund does not pay a management fee to MFS.

 

(4)   Portfolio Securities

Purchases and sales of investments, other than U.S. Government securities, purchased option transactions, and short-term obligations, aggregated $548,912,564 and $516,874,540, respectively.

 

(5)   Shares of Beneficial Interest

The fund’s Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest. Transactions in fund shares were as follows:

 

     Six months ended 6/30/11      Year ended 12/31/10  
     Shares      Amount      Shares      Amount  
Shares sold            

Initial Class

      1,005,658         $27,257,796         1,843,606         $42,047,040   

Service Class

      3,200,281         85,108,413         5,744,719         129,754,840   
     4,205,939         $112,366,209         7,588,325         $171,801,880   
Shares issued to shareholders in reinvestment of distributions            

Initial Class

      —         $—         752,272         $17,038,959   

Service Class

      —         —         1,646,038         36,871,259   
     —         $—         2,398,310         $53,910,218   
Shares reacquired            

Initial Class

      (1,803,940 )       $(48,147,965 )       (5,803,553 )       $(131,670,247 ) 

Service Class

      (2,665,991 )       (70,281,548 )       (7,287,517 )       (162,458,551 ) 
     (4,469,931 )       $(118,429,513 )       (13,091,070 )       $(294,128,798 ) 
Net change            

Initial Class

      (798,282 )       $(20,890,169 )       (3,207,675 )       $(72,584,248 ) 

Service Class

      534,290         14,826,865         103,240         4,167,548   
     (263,992 )       $(6,063,304 )       (3,104,435 )       $(68,416,700 ) 

 

(6)   Line of Credit

The fund and certain other funds managed by MFS participate in a $1.1 billion unsecured committed line of credit, subject to a $1 billion sublimit, provided by a syndication of banks under a credit agreement. Borrowings may be made for temporary financing needs. Interest is charged to each fund, based on its borrowings, generally at a rate equal to the higher of the Federal Reserve funds rate or one month LIBOR plus an agreed upon spread. A commitment fee, based on the average daily, unused

 

17

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MFS Utilities Series

 

Notes to Financial Statements (unaudited) – continued

 

portion of the committed line of credit, is allocated among the participating funds at the end of each calendar quarter. In addition, the fund and other funds managed by MFS have established unsecured uncommitted borrowing arrangements with certain banks for temporary financing needs. Interest is charged to each fund, based on its borrowings, at a rate equal to the Federal Reserve funds rate plus an agreed upon spread. For the six months ended June 30, 2011, the fund’s commitment fee and interest expense were $8,982 and $0, respectively, and are included in miscellaneous expense on the Statement of Operations.

 

(7)   Transactions in Underlying Affiliated Funds – Affiliated Issuers

An affiliated issuer may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. For the purposes of this report, the fund assumes the following to be affiliated issuers:

 

Underlying Affiliated Funds   

Beginning

Shares/Par

Amount

     

Acquisitions

Shares/Par

Amount

     

Dispositions

Shares/Par

Amount

     

Ending

Shares/Par
Amount

  
MFS Institutional Money Market Portfolio      28,020,520         247,164,854         (246,761,057 )       28,424,317   
Underlying Affiliated Funds   

Realized

Gain (Loss)

     

Capital Gain

Distributions

     

Dividend

Income

     

Ending

Value

  
MFS Institutional Money Market Portfolio      $—         $—         $20,554         $28,424,317   

 

18

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MFS Utilities Series

 

BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT

 

A discussion regarding the Board’s most recent review and renewal of the fund’s Investment Advisory Agreement with MFS will be available on or about November 1, 2011 by clicking on the fund’s name under “Variable Insurance Portfolios — VIT” in the “Products and Performance” section of the MFS Web site (mfs.com).

PROXY VOTING POLICIES AND INFORMATION

A general description of the MFS funds’ proxy voting policies and procedures is available without charge, upon request, by calling
1-800-225-2606, by visiting the Proxy Voting section of mfs.com or by visiting the SEC’s Web site at http://www.sec.gov.

Information regarding how the fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available without charge by visiting the Proxy Voting section of mfs.com or by visiting the SEC’s Web site at http://www.sec.gov.

QUARTERLY PORTFOLIO DISCLOSURE

The fund will file a complete schedule of portfolio holdings with the Securities and Exchange Commission (the Commission) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q may be reviewed and copied at the:

Public Reference Room

Securities and Exchange Commission

100 F Street, NE, Room 1580

Washington, D.C. 20549

Information on the operation of the Public Reference Room may be obtained by calling the Commission at 1-800-SEC-0330. The fund’s Form N-Q is available on the EDGAR database on the Commission’s Internet Web site 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: publicinfo@sec.gov or by writing the Public Reference Section at the above address.

FURTHER INFORMATION

From time to time, MFS may post important information about the fund or the MFS funds on the MFS web site (mfs.com). This information is available by visiting the “News & Commentary” section of mfs.com or by clicking on the fund’s name under “Variable Insurance Portfolios — VIT” in the “Products and Performance” section of mfs.com.

 

19

Table of Contents

rev. 3/11

 

FACTS   WHAT DOES MFS DO WITH YOUR
PERSONAL INFORMATION?		   LOGO

 

Why?   Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?  

The types of personal information we collect and share depend on the product or service you have with us. This information can include:

 

• Social Security number and account balances

• Account transactions and transaction history

• Checking account information and wire transfer instructions

 

When you are no longer our customer, we continue to share your information as described in this notice.

 

How?   All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons MFS chooses to share; and whether you can limit this sharing.

 

Reasons we can share your personal information   Does MFS share?   Can you limit this
sharing?

For our everyday business purposes –

such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus

   Yes   No

For our marketing purposes –

to offer our products and services to you

   No   We don’t share
For joint marketing with other financial companies   No   We don’t share

For our affiliates’ everyday business purposes –

information about your transactions and experiences

   No   We don’t share

For our affiliates’ everyday business purposes –

information about your creditworthiness

   No   We don’t share
For nonaffiliates to market to you   No   We don’t share

 

Questions?   Call 800-225-2606 or go to mfs.com.

 

20

Table of Contents
Page 2  

 

Who we are
Who is providing this notice?   MFS Funds, MFS Investment Management, MFS Institutional Advisors, Inc., MFS Fund Distributors, Inc., MFS Heritage Trust Company, and MFS Service Center, Inc.

 

What we do
How does MFS protect my personal information?   To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include procedural, electronic, and physical safeguards for the protection of the personal information we collect about you.
How does MFS
collect my personal information?		  

We collect your personal information, for example, when you

 

• open an account or provide account information

• direct us to buy securities or direct us to sell your securities

• make a wire transfer

 

We also collect your personal information from others, such as credit bureaus, affiliates and other companies.

Why can’t I limit all sharing?  

Federal law gives you the right to limit only

 

• sharing for affiliates’ everyday business purposes – information about your creditworthiness

• affiliates from using your information to market to you

• sharing for nonaffiliates to market to you

 

State laws and individual companies may give you additional rights to limit sharing.

 

Definitions
Affiliates  

Companies related by common ownership or control. They can be financial and nonfinancial companies.

 

• MFS does not share personal information with affiliates, except for everyday business purposes as described on page one of this notice.

Nonaffiliates  

Companies not related by common ownership or control. They can be financial and nonfinancial companies.

 

• MFS does not share with nonaffiliates so they can market to you.

Joint Marketing  

A formal agreement between nonaffiliated financial companies that together market financial products or services to you.

 

• MFS doesn’t jointly market.

 

 

Other important information
If you own an MFS product or receive an MFS service in the name of a third party such as a bank or broker-dealer, their privacy policy may apply to you instead of ours.

 

21

Table of Contents

LOGO

Table of Contents

LOGO

 

MFS® Investors Growth

Stock Series

MFS® Variable Insurance Trust

 

LOGO

 

 

SEMIANNUAL REPORT

June 30, 2011

 

VGS-SEM

Table of Contents

MFS® INVESTORS GROWTH STOCK SERIES

 

CONTENTS   
Letter from the CEO      1   
Portfolio composition      2   
Expense table      3   
Portfolio of investments      4   
Statement of assets and liabilities      6   
Statement of operations      7   
Statements of changes in net assets      8   
Financial highlights      9   
Notes to financial statements      11   
Board review of investment advisory agreement      16   
Proxy voting policies and information      16   
Quarterly portfolio disclosure      16   
Further information      16   
MFS® privacy notice      17   

 

The report is prepared for the general information of contract owners.

It is authorized for distribution to prospective investors only when preceded or accompanied by a current prospectus.

 

NOT FDIC INSURED Ÿ MAY LOSE VALUE Ÿ NO BANK OR CREDIT UNION GUARANTEE Ÿ NOT A DEPOSIT Ÿ NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY OR NCUA/NCUSIF

Table of Contents

MFS Investors Growth Stock Series

 

LETTER FROM THE CEO

 

LOGO

 

Dear Contract Owners:

After about a year of almost uninterrupted macroeconomic and financial market improvement following the global credit crisis, investors grew more cautious in the middle of 2010 as fears grew that some European countries would default on their debt and as economic data showed a weakening

trend in the global economy. As a result asset prices fell significantly.

Last September the U.S. Federal Reserve Board’s promises to make lending conditions easier helped assuage market fears and drive asset prices off their recent lows. A combination of solid earnings and improving economic data gave an additional boost to investor sentiment.

In the following months, the renewed positive market mood, coupled with indications of better global macroeconomic activity, pushed many asset valuations to post-crisis highs. At the same time, global sovereign

bond yields initially rose as investors became concerned about inflationary pressures, driven by higher prices for oil as well as other commodities. However, by the end of the second quarter of 2011, a weakening macroeconomic backdrop and renewed concerns over debt problems in some eurozone countries pushed equities lower.

For the remainder of 2011, we are cautiously optimistic that economic growth will continue to improve and that the global economies will recover from the shocks of the past few years. We expect the pace of recovery worldwide to be uneven and volatile and acknowledge the elevated uncertainty created by events in Japan, Europe, the Middle East, as well as that created by the U.S. debate over raising the debt ceiling and the downgrade by Standard & Poor’s of the U.S. long-term credit rating.

As always, we continue to be mindful of the many economic challenges faced at the local, national, and international levels. It is in times such as these that we want to remind investors of the merits of maintaining a long-term view, adhering to basic investing principles such as asset allocation and diversification, and working closely with their advisors to research and identify appropriate investment opportunities.

Respectfully,

LOGO

Robert J. Manning

Chairman and Chief Executive Officer

MFS Investment Management®

August 16, 2011

 

The opinions expressed in this letter are subject to change, may not be relied upon for investment advice, and no forecasts can be guaranteed.

 

 

1

Table of Contents

MFS Investors Growth Stock Series

 

PORTFOLIO COMPOSITION

 

Portfolio structure

LOGO

 

Top ten holdings  
Oracle Corp.     4.5%   
Danaher Corp.     4.0%   
Apple, Inc.     3.9%   
International Business Machines Corp.     3.6%   
Accenture Ltd., “A”     3.3%   
United Technologies Corp.     3.0%   
Colgate-Palmolive Co.     2.9%   
Schlumberger Ltd.     2.9%   
Google, Inc., “A”     2.5%   
PepsiCo, Inc.     2.3%   
Equity sectors  
Technology     26.0%   
Industrial Goods & Services     11.6%   
Health Care     11.2%   
Consumer Staples     11.1%   
Special Products & Services     8.8%   
Financial Services     8.2%   
Retailing     7.9%   
Energy     7.2%   
Basic Materials     3.4%   
Autos & Housing     1.6%   
Leisure     1.6%   
Transportation     0.7%   
 

 

Percentages are based on net assets as of 6/30/11.

The portfolio is actively managed and current holdings may be different.

 

2

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MFS Investors Growth Stock Series

 

EXPENSE TABLE

 

Fund Expenses Borne by the Contract Holders During the Period,

January 1, 2011 through June 30, 2011

As a contract holder of the fund, you incur ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period January 1, 2011 through June 30, 2011.

Actual Expenses

The first line for each share class in the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The second line for each share class in the following table provides information about hypothetical account values and hypothetical expenses based on the fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight the fund’s ongoing costs only and do not take into account the fees and expenses imposed under the variable contracts through which your investment in the fund is made. Therefore, the second line for each share class in the table is useful in comparing ongoing costs associated with an investment in vehicles (such as the fund) which fund benefits under variable annuity and variable life insurance contracts and to qualified pension and retirement plans only, and will not help you determine the relative total costs of investing in the fund through variable annuity and variable life insurance contracts. If the fees and expenses imposed under the variable contracts were included, your costs would have been higher.

 

Share Class        

Annualized

Expense Ratio

     

Beginning

Account Value

1/01/11

     

Ending

Account Value

6/30/11

     

Expenses Paid

During Period (p)

1/01/11-6/30/11

  
Initial Class   Actual      0.84%         $1,000.00         $1,063.58         $4.30   
  Hypothetical (h)      0.84%         $1,000.00         $1,020.63         $4.21   
Service Class   Actual      1.09%         $1,000.00         $1,063.20         $5.58   
  Hypothetical (h)      1.09%         $1,000.00         $1,019.39         $5.46   

 

(h) 5% class return per year before expenses.

 

(p) Expenses paid is equal to each class’ annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by the number of days in the period, divided by the number of days in the year.

 

3

Table of Contents

MFS Investors Growth Stock Series

 

PORTFOLIO OF INVESTMENTS – 6/30/11 (unaudited)

 

The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.

Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – 99.3%     
Aerospace – 3.6%     
Precision Castparts Corp.      14,560      $ 2,397,298   
United Technologies Corp.      119,080        10,539,771   
    

 

 

  
     $ 12,937,069   
    

 

 

  
Alcoholic Beverages – 1.1%     
Diageo PLC      186,597      $ 3,812,368   
    

 

 

  
Apparel Manufacturers – 3.2%     
LVMH Moet Hennessy Louis Vuitton S.A.      22,682      $ 4,081,934   
NIKE, Inc., “B”      83,340        7,498,933   
    

 

 

  
     $ 11,580,867   
    

 

 

  
Automotive – 1.6%     
Johnson Controls, Inc.      140,570      $ 5,856,146   
    

 

 

  
Broadcasting – 0.4%     
Omnicom Group, Inc.      27,550      $ 1,326,808   
    

 

 

  
Brokerage & Asset Managers – 4.3%     
Charles Schwab Corp.      222,360      $ 3,657,822   
CME Group, Inc.      19,990        5,828,884   
Franklin Resources, Inc.      43,530        5,715,054   
    

 

 

  
     $ 15,201,760   
    

 

 

  
Business Services – 8.8%     
Accenture PLC, “A”      193,250      $ 11,676,165   
Dun & Bradstreet Corp.      87,990        6,646,765   
MSCI, Inc., “A” (a)      188,760        7,112,477   
Verisk Analytics, Inc., “A” (a)      175,830        6,087,235   
    

 

 

  
     $ 31,522,642   
    

 

 

  
Cable TV – 1.2%     
DIRECTV, “A” (a)      82,580      $ 4,196,716   
    

 

 

  
Chemicals – 0.8%     
Monsanto Co.      39,210      $ 2,844,293   
    

 

 

  
Computer Software – 6.3%     
Autodesk, Inc. (a)      59,970      $ 2,314,842   
Check Point Software Technologies Ltd. (a)      73,050        4,152,893   
Oracle Corp.      489,560        16,111,420   
    

 

 

  
     $ 22,579,155   
    

 

 

  
Computer Software – Systems – 10.6%     
Apple, Inc. (a)      41,250      $ 13,846,388   
EMC Corp. (a)      231,320        6,372,866   
Hewlett-Packard Co.      134,770        4,905,628   
International Business Machines Corp.      74,680        12,811,354   
    

 

 

  
     $ 37,936,236   
    

 

 

  
Consumer Products – 5.6%     
Church & Dwight Co., Inc.      64,850      $ 2,629,019   
Colgate-Palmolive Co.      119,250        10,423,643   
Procter & Gamble Co.      107,993        6,865,115   
    

 

 

  
     $ 19,917,777   
    

 

 

  
Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – continued   
Electrical Equipment – 8.0%     
Amphenol Corp., “A”      65,060      $ 3,512,589   
Danaher Corp.      271,450        14,384,136   
Sensata Technologies Holding B.V. (a)      160,090        6,027,389   
W.W. Grainger, Inc.      30,450        4,678,643   
    

 

 

  
     $ 28,602,757   
    

 

 

  
Electronics – 4.6%     
ASML Holding N.V.      51,750      $ 1,912,680   
Microchip Technology, Inc.      198,090        7,509,592   
Taiwan Semiconductor Manufacturing Co. Ltd., ADR      545,716        6,881,479   
    

 

 

  
     $ 16,303,751   
    

 

 

  
Energy – Integrated – 2.4%     
Chevron Corp.      22,100      $ 2,272,764   
Exxon Mobil Corp.      50,780        4,132,476   
Hess Corp.      27,210        2,034,220   
    

 

 

  
     $ 8,439,460   
    

 

 

  
Food & Beverages – 4.4%     
Groupe Danone      73,040      $ 5,449,529   
Mead Johnson Nutrition Co., “A”      29,670        2,004,209   
PepsiCo, Inc.      118,670        8,357,928   
    

 

 

  
     $ 15,811,666   
    

 

 

  
Food & Drug Stores – 0.6%     
CVS Caremark Corp.      54,353      $ 2,042,586   
    

 

 

  
General Merchandise – 2.9%     
Kohl’s Corp.      93,320      $ 4,666,933   
Target Corp.      120,210        5,639,051   
    

 

 

  
     $ 10,305,984   
    

 

 

  
Internet – 3.2%     
eBay, Inc. (a)      68,870      $ 2,222,435   
Google, Inc., “A” (a)      17,890        9,059,138   
    

 

 

  
     $ 11,281,573   
    

 

 

  
Major Banks – 0.6%     
Bank of New York Mellon Corp.      78,048      $ 1,999,590   
    

 

 

  
Medical & Health Technology & Services – 1.9%     
Medco Health Solutions, Inc. (a)      39,580      $ 2,237,062   
Patterson Cos., Inc.      138,490        4,554,936   
    

 

 

  
     $ 6,791,998   
    

 

 

  
Medical Equipment – 6.5%     
Becton, Dickinson & Co.      70,720      $ 6,093,942   
DENTSPLY International, Inc.      114,450        4,358,256   
Medtronic, Inc.      46,640        1,797,039   
St. Jude Medical, Inc.      42,070        2,005,898   
Thermo Fisher Scientific, Inc. (a)      101,230        6,518,200   
Waters Corp. (a)      24,890        2,382,969   
    

 

 

  
     $ 23,156,304   
    

 

 

  
 

 

4

Table of Contents

MFS Investors Growth Stock Series

 

Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – continued   
Metals & Mining – 0.9%     
BHP Billiton Ltd., ADR      32,900      $ 3,113,327   
    

 

 

  
Network & Telecom – 1.3%     
Cisco Systems, Inc.      291,320      $ 4,547,505   
    

 

 

  
Oil Services – 4.8%     
National Oilwell Varco, Inc.      88,570      $ 6,927,060   
Schlumberger Ltd.      118,350        10,225,440   
    

 

 

  
     $ 17,152,500   
    

 

 

  
Other Banks & Diversified Financials – 3.3%     
MasterCard, Inc., “A”      13,610      $ 4,101,237   
Visa, Inc., “A”      90,390        7,616,261   
    

 

 

  
     $ 11,717,498   
    

 

 

  
Pharmaceuticals – 2.8%     
Abbott Laboratories      62,180      $ 3,271,912   
Allergan, Inc.      30,400        2,530,800   
Johnson & Johnson      63,840        4,246,637   
    

 

 

  
     $ 10,049,349   
    

 

 

  
Railroad & Shipping – 0.7%     
Kuehne & Nagel, Inc. AG      15,280      $ 2,319,034   
    

 

 

  
Specialty Chemicals – 1.7%     
Praxair, Inc.      56,980      $ 6,176,062   
    

 

 

  
Specialty Stores – 1.2%     
Industria de Diseno Textil S.A.      26,664      $ 2,429,821   
Staples, Inc.      122,195        1,930,681   
    

 

 

  
     $ 4,360,502   
    

 

 

  
Total Common Stocks
(Identified Cost, $299,155,721)		      $ 353,883,283   
    

 

 

  
Issuer    Shares/Par     Value ($)  
    
MONEY MARKET FUNDS (v) – 0.5%   
MFS Institutional Money Market Portfolio, 0.1%, at Cost and Net Asset Value      1,733,210      $ 1,733,210   
    

 

 

  
Total Investments
(Identified Cost, $300,888,931)		      $ 355,616,493   
    

 

 

  
OTHER ASSETS, LESS
LIABILITIES – 0.2%		        645,946   
    

 

 

  
Net Assets – 100.0%      $ 356,262,439   
    

 

 

  

 

(a) Non-income producing security.

 

(v) Underlying affiliated fund that is available only to investment companies managed by MFS. The rate quoted is the annualized seven-day yield of the fund at period end.

The following abbreviations are used in this report and are defined:

 

ADR   American Depository Receipt

 

PLC   Public Limited Company

See Notes to Financial Statements

 

 

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FINANCIAL STATEMENTS  |  STATEMENT OF ASSETS AND LIABILITIES (unaudited)

 

This statement represents your fund’s balance sheet, which details the assets and liabilities comprising the total value of the fund.

 

At 6/30/11

      
Assets                  

Investments –

      

Non-affiliated issuers, at value (identified cost, $299,155,721)

      $353,883,283      

Underlying affiliated funds, at cost and value

      1,733,210            

Total investments, at value (identified cost, $300,888,931)

      $355,616,493            

Receivables for

      

Fund shares sold

      1,024,505      

Dividends

      387,738      

Other assets

      1,558            

Total assets

               $357,030,294   

Liabilities

                  

Payable for fund shares reacquired

      $624,602      

Payable to affiliates

      

Investment adviser

      14,736      

Shareholder servicing costs

      327      

Distribution and/or service fees

      3,745      

Payable for independent Trustees’ compensation

      1,640      

Accrued expenses and other liabilities

      122,805            

Total liabilities

               $767,855   

Net assets

               $356,262,439   

Net assets consist of

                  

Paid-in capital

      $293,435,427      

Unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies

      54,728,074      

Accumulated net realized gain (loss) on investments and foreign currency transactions

      6,227,546      

Undistributed net investment income

      1,871,392            

Net assets

               $356,262,439   

Shares of beneficial interest outstanding

               30,993,728   

 

     Net assets      Shares
outstanding		      Net asset value
per share		  

Initial Class

      $79,202,233         6,765,035         $11.71   

Service Class

      277,060,206         24,228,693         11.44   

See Notes to Financial Statements

 

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FINANCIAL STATEMENTS  |  STATEMENT OF OPERATIONS (unaudited)

 

This statement describes how much your fund earned in investment income and accrued in expenses. It also describes any gains and/or losses generated by fund operations.

 

Six months ended 6/30/11      
Net investment income                  

Income

      

Dividends

      $2,698,662      

Interest

      13,302      

Dividends from underlying affiliated funds

      3,186      

Foreign taxes withheld

      (99,949 )          

Total investment income

               $2,615,201   

Expenses

      

Management fee

      $1,338,530      

Distribution and/or service fees

      345,221      

Shareholder servicing costs

      20,295      

Administrative services fee

      30,808      

Independent Trustees’ compensation

      5,798      

Custodian fee

      21,886      

Shareholder communications

      45,890      

Auditing fees

      24,251      

Legal fees

      3,272      

Miscellaneous

      11,105            

Total expenses

               $1,847,056   

Reduction of expenses by investment adviser

      (1,022 )          

Net expenses

               $1,846,034   

Net investment income

               $769,167   

Realized and unrealized gain (loss) on investments and foreign currency transactions

                  

Realized gain (loss) (identified cost basis)

      

Investment transactions

      $10,121,434      

Foreign currency transactions

      6,554            

Net realized gain (loss) on investments and foreign currency transactions

               $10,127,988   

Change in unrealized appreciation (depreciation)

      

Investments

      $11,007,094      

Translation of assets and liabilities in foreign currencies

      (2,539 )          

Net unrealized gain (loss) on investments and foreign currency translation

               $11,004,555   

Net realized and unrealized gain (loss) on investments and foreign currency

               $21,132,543   

Change in net assets from operations

               $21,901,710   

See Notes to Financial Statements

 

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FINANCIAL STATEMENTS  |  STATEMENTS OF CHANGES IN NET ASSETS

 

These statements describe the increases and/or decreases in net assets resulting from operations, any distributions, and any shareholder transactions.

 

    

 

 

 Six months ended

6/30/11

(unaudited

   

  

) 

     
 		 Year ended
12/31/10		   
  

Change in net assets

      

From operations

                  

Net investment income

      $769,167         $1,123,346   

Net realized gain (loss) on investments and foreign currency transactions

      10,127,988         56,122,396   

Net unrealized gain (loss) on investments and foreign currency translation

      11,004,555         (20,715,958 ) 

Change in net assets from operations

      $21,901,710         $36,529,784   

Distributions declared to shareholders

                  

From net investment income

      $—         $(1,540,410 ) 

Change in net assets from fund share transactions

      $(25,771,113 )       $(173,907,368 ) 

Total change in net assets

      $(3,869,403 )       $(138,917,994 ) 

Net assets

                  

At beginning of period

      360,131,842         499,049,836   

At end of period (including undistributed net investment income of $1,871,392 and
$1,102,225, respectively)

      $356,262,439         $360,131,842   

See Notes to Financial Statements

 

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FINANCIAL STATEMENTS  |  FINANCIAL HIGHLIGHTS

 

The financial highlights table is intended to help you understand the fund’s financial performance for the semiannual period and the past 5 fiscal years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period.

 

Initial Class      Six months
ended
6/30/11		      Years ended 12/31  
          2010        2009        2008        2007        2006  
       (unaudited)                                             

Net asset value, beginning of period

        $11.01         $9.83           $7.10           $11.82           $10.65           $9.90   
Income (loss) from investment operations                                                                

Net investment income (d)

        $0.03         $0.05           $0.05           $0.06           $0.05           $0.03   

Net realized and unrealized gain (loss) on
investments and foreign currency

        0.67         1.17           2.74           (4.24 )         1.16           0.72   

Total from investment operations

        $0.70         $1.22           $2.79           $(4.18 )         $1.21           $0.75   
Less distributions declared to shareholders                                                                

From net investment income

        $—         $(0.04 )         $(0.06 )         $(0.06 )         $(0.04 )         $—   

From net realized gain on investments

        —         —           —           (0.48 )         —           —   

Total distributions declared to shareholders

        $—         $(0.04 )         $(0.06 )         $(0.54 )         $(0.04 )         $—   

Net asset value, end of period

        $11.71         $11.01           $9.83           $7.10           $11.82           $10.65   

Total return (%) (k)(r)(s)

        6.36 (n)       12.47           39.55           (36.87 )         11.36           7.58   
Ratios (%) (to average net assets)
and Supplemental data:		                                                                

Expenses before expense reductions (f)

        0.84 (a)       0.88           0.86           0.85           0.86           0.87   

Expenses after expense reductions (f)

        0.84 (a)       0.88           0.86           0.85           0.86           0.87   

Net investment income

        0.62 (a)(l)       0.49           0.63           0.60           0.47           0.33   

Portfolio turnover

        15         44           50           50           63           80   

Net assets at end of period (000 omitted)

        $79,202         $83,355           $93,011           $75,444           $148,096           $161,081   

See Notes to Financial Statements

 

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Financial Highlights – continued

 

Service Class      Six months
ended
6/30/11		      Years ended 12/31  
          2010        2009        2008        2007        2006  
       (unaudited)                                             

Net asset value, beginning of period

        $10.76         $9.62           $6.95           $11.57           $10.43           $9.72   
Income (loss) from investment operations                                                                

Net investment income (d)

        $0.02         $0.02           $0.03           $0.03           $0.02           $0.01   

Net realized and unrealized gain (loss) on investments and foreign currency

        0.66         1.15           2.68           (4.14 )         1.13           0.70   

Total from investment operations

        $0.68         $1.17           $2.71           $(4.11 )         $1.15           $0.71   
Less distributions declared to shareholders                                                                

From net investment income

        $—         $(0.03 )         $(0.04 )         $(0.03 )         $(0.01 )         $—   

From net realized gain on investments

        —         —           —           (0.48 )         —           —   

Total distributions declared to shareholders

        $—         $(0.03 )         $(0.04 )         $(0.51 )         $(0.01 )         $—   

Net asset value, end of period

        $11.44         $10.76           $9.62           $6.95           $11.57           $10.43   

Total return (%) (k)(r)(s)

        6.32 (n)       12.15           39.10           (36.98 )         11.02           7.30   
Ratios (%) (to average net assets)
and Supplemental data:		                                                                

Expenses before expense reductions (f)

        1.09 (a)       1.12           1.11           1.10           1.11           1.12   

Expenses after expense reductions (f)

        1.09 (a)       1.12           1.11           1.10           1.11           1.12   

Net investment income

        0.38 (a)(l)       0.23           0.38           0.35           0.22           0.08   

Portfolio turnover

        15         44           50           50           63           80   

Net assets at end of period (000 omitted)

        $277,060         $276,777           $406,039           $178,256           $297,186           $300,026   

 

(a) Annualized.

 

(d) Per share data is based on average shares outstanding.

 

(f) Ratios do not reflect reductions from fees paid indirectly, if applicable.

 

(k) The total return does not reflect expenses that apply to separate accounts. Inclusion of these charges would reduce the total return figures for all periods shown.

 

(l) Recognition of net investment income by the fund may be affected by the timing of the declaration of dividends by companies in which the fund invests and the actual annual net investment income ratio may differ.

 

(n) Not annualized.

 

(r) Certain expenses have been reduced without which performance would have been lower.

 

(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.

See Notes to Financial Statements

 

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MFS Investors Growth Stock Series

 

NOTES TO FINANCIAL STATEMENTS (unaudited)

 

(1)   Business and Organization

MFS Investors Growth Stock Series (the fund) is a 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, and qualified retirement and pension plans.

 

(2)   Significant Accounting Policies

General – The preparation of financial statements in conformity with U.S. 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. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the fund’s Statement of Assets and Liabilities through the date that the financial statements were issued. The fund invests 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, including restricted equity securities, are generally valued at the last sale or official closing price as provided by a third-party pricing service on the market or exchange on which they are primarily traded. Equity securities, for which there were no sales reported that day, are generally valued at the last quoted daily bid quotation as provided by a third-party pricing service on the market or exchange on which such securities are primarily traded. Equity securities held short, for which there were no sales reported for that day, are generally valued at the last quoted daily ask quotation as provided by a third-party pricing service on the market or exchange on which such securities are primarily traded. Short-term instruments with a maturity at issuance of 60 days or less generally are valued at amortized cost, which approximates market value. Open-end investment companies are generally valued at net asset value per share. Securities and other assets generally valued on the basis of information from a third-party pricing service may also be valued at a broker/dealer bid quotation. Values obtained from third-party pricing services can utilize both transaction data and market information such as yield, quality, coupon rate, maturity, type of issue, trading characteristics, and other market data. The values of foreign securities and other assets and liabilities expressed in foreign currencies are converted to U.S. dollars using the mean of bid and asked prices for rates provided by a third-party pricing service.

The Board of Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments (including any fair valuation) to the adviser pursuant to valuation policies and procedures approved by the Board. If the adviser determines that reliable market quotations are not readily available, investments are valued at fair value as determined in good faith by the adviser in accordance with such procedures under the oversight of the Board of Trustees. Under the fund’s valuation policies and procedures, market quotations are not considered to be readily available for most types of debt instruments and floating rate loans and many types of derivatives. These investments are generally valued at fair value based on information from third-party pricing services. In addition, investments may be valued at fair value if the adviser determines that an investment’s value has been materially affected by events occurring after the close of the exchange or market on which the investment is principally traded (such as foreign exchange or market) and prior to the determination of the fund’s net asset value, or after the halting of trading of a specific security where trading does not resume prior to the close of the exchange or market on which the security is principally traded. Events that occur on a frequent basis after foreign markets close (such as developments in foreign markets and significant movements in the U.S. markets) and prior to the determination of the fund’s net asset value may be deemed to have a material effect on the value of securities traded in foreign markets. Accordingly, the fund’s foreign equity securities may often be valued at fair value. The adviser generally relies on third-party pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and financial condition of the issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment for purposes of calculating the fund’s net asset value can differ depending on the source and method used to determine value. When fair valuation is used, the value of an investment used to determine the fund’s net asset value may differ from quoted or published prices for the same investment. There can be no assurance that the fund could obtain the fair value assigned to an investment if it were to sell the investment at the same time at which the fund determines its net asset value per share.

Various inputs are used in determining the value of the fund’s assets or liabilities. These inputs are categorized into three broad levels. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair

 

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Notes to Financial Statements (unaudited) – continued

 

value measurement. The fund’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. Level 1 includes unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes other significant observable market-based inputs (including quoted prices for similar securities, interest rates, prepayment speed, and credit risk). Level 3 includes unobservable inputs, which may include the adviser’s own assumptions in determining the fair value of investments. The following is a summary of the levels used as of June 30, 2011 in valuing the fund’s assets or liabilities:

 

Investments at Value    Level 1      Level 2      Level 3      Total  
Equity Securities      $353,883,283         $—         $—         $353,883,283   
Mutual Funds      1,733,210         —         —         1,733,210   
Total Investments      $355,616,493         $—         $—         $355,616,493   

For further information regarding security characteristics, see the Portfolio of Investments.

Foreign Currency Translation – 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 or on the reporting date for foreign denominated receivables and payables. 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 receivables, payables, 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, loans the securities of the fund to certain qualified institutions (the “Borrowers”) approved by the fund. The loans are collateralized by cash and/or U.S. Treasury and federal agency obligations in an amount typically at least equal to the market value of the securities loaned. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. State Street provides the fund with indemnification against Borrower default. The fund bears the risk of loss with respect to the investment of cash collateral. On loans collateralized by cash, the cash collateral is invested in a money market fund or 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 fund and the lending agent. On loans collateralized by U.S. Treasury and/or federal agency obligations, a fee is received from the Borrower, and is allocated between the fund 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.

Indemnifications – Under the fund’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the fund. Additionally, in the normal course of business, the fund enters into agreements with service providers that may contain indemnification clauses. The fund’s maximum exposure under these agreements is unknown as this would involve future claims that may be made against the fund that have not yet occurred.

Investment Transactions and Income – Investment transactions are recorded on the trade date. Interest income is recorded on the accrual basis. All premium and discount is amortized or accreted for financial statement purposes in accordance with U.S. generally accepted accounting principles. Dividends received in cash are recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded when the fund is informed of the dividend if such information is obtained subsequent to 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.

The fund may receive proceeds from litigation settlements. Any proceeds received from litigation involving portfolio holdings are reflected in the Statement of Operations in realized gain/loss if the security has been disposed of by the fund or in unrealized gain/loss if the security is still held by the fund. Any other proceeds from litigation not related to portfolio holdings are reflected as other income in the Statement of Operations.

Fees Paid Indirectly – The fund’s custody fee may be reduced according to an arrangement that measures the value of cash deposited with the custodian by the fund. For the six months ended June 30, 2011, custody fees were not reduced.

Tax Matters and Distributions – The fund intends to qualify as a regulated investment company, as defined under Subchapter M of the Internal Revenue Code, and to distribute all of its taxable income, including realized capital gains. As a result, no provision for federal income tax is required. The fund’s federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue Service. Foreign taxes, if any, have been accrued by the fund in the accompanying financial statements.

 

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MFS Investors Growth Stock Series

 

Notes to Financial Statements (unaudited) – continued

 

Distributions to shareholders are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income, expense, gain or loss in different periods for financial statement and tax purposes will reverse at some time in the future. Distributions in excess of net investment income or net realized gains are temporary overdistributions for financial statement purposes resulting from differences in the recognition or classification of income or distributions for financial statement and tax purposes.

Book/tax differences primarily relate to wash sale loss deferrals.

The tax character of distributions declared to shareholders for the last fiscal year is as follows:

 

     12/31/10  
Ordinary income (including any short-term capital gains)      $1,540,410   

The federal tax cost and the tax basis components of distributable earnings were as follows:

 

As of 6/30/11   
Cost of investments      $303,502,273   
Gross appreciation      62,323,673   
Gross depreciation      (10,209,453 ) 
Net unrealized appreciation (depreciation)      $52,114,220   
As of 12/31/10   
Undistributed ordinary income      1,102,225   
Capital loss carryforwards      (1,287,100 ) 
Other temporary differences      3,051   
Net unrealized appreciation (depreciation)      41,107,126   

The aggregate cost above includes prior fiscal year end tax adjustments, if applicable.

As of December 31, 2010, the fund had capital loss carryforwards available to offset future realized gains. Such losses expire as follows:

 

12/31/17      $(1,287,100 ) 

Multiple Classes of Shares of Beneficial Interest – The fund offers multiple classes of shares, which differ in their respective distribution and/or service fees. The fund’s income, realized and unrealized gain (loss), and common expenses are allocated to shareholders based on the daily net assets of each class. Dividends are declared separately for each class. Differences in per share dividend rates are generally due to differences in separate class expenses. The fund’s distributions declared to shareholders as reported on the Statements of Changes in Net Assets are presented by class as follows:

 

     From net investment
income		  
     Six months ended
6/30/11		      Year ended
12/31/10		  
Initial Class      $—         $384,738   
Service Class      —         1,155,672   
Total      $—         $1,540,410   

 

(3)   Transactions with Affiliates

Investment Adviser – The fund has an investment advisory agreement with MFS to provide overall investment management and related administrative services and facilities to the fund. The management fee is computed daily and paid monthly at the following annual rates:

 

First $1 billion of average daily net assets      0.75%   
Average daily net assets in excess of $1 billion      0.65%   

The management fee incurred for the six months ended June 30, 2011 was equivalent to an annual effective rate of 0.75% of the fund’s average daily net assets.

Distributor – MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, is the distributor of shares of the fund. The Trustees have adopted a distribution plan for the Service Class shares pursuant to Rule 12b-1 under the Investment Company Act of 1940.

 

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MFS Investors Growth Stock Series

 

Notes to Financial Statements (unaudited) – continued

 

The fund’s distribution plan provides that the fund will pay MFD distribution and/or service fees equal to 0.25% per annum of its average daily net assets attributable to Service Class shares as partial consideration for services performed and expenses incurred by MFD and financial intermediaries (including participating insurance companies that invest in the fund to fund variable annuity and variable life insurance contracts, sponsors of qualified retirement and pension plans that invest in the fund, and affiliates of these participating insurance companies and plan sponsors) in connection with the sale and distribution of the Service Class shares. MFD may subsequently pay all, or a portion, of the distribution and/or service fees to financial intermediaries.

Shareholder Servicing Agent – MFS Service Center, Inc. (MFSC), a wholly-owned subsidiary of MFS, receives a fee from the fund for its services as shareholder servicing agent. For the six months ended June 30, 2011, the fee was $19,917, which equated to 0.0112% annually of the fund’s average daily net assets. MFSC also receives payment from the fund for out-of-pocket expenses paid by MFSC on behalf of the fund. For the six months ended June 30, 2011, these costs amounted to $378.

Administrator – MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the fund partially reimburses MFS the costs incurred to provide these services. The fund is charged an annual fixed amount of $17,500 plus a fee based on average daily net assets. The administrative services fee incurred for the six months ended June 30, 2011 was equivalent to an annual effective rate of 0.0173% of the fund’s average daily net assets.

Trustees’ and Officers’ Compensation – The fund pays compensation to independent Trustees in the form of a retainer, attendance fees, and additional compensation to Board and Committee chairpersons. The fund does not pay compensation directly to Trustees or officers of the fund who are also officers of the investment adviser, all of whom receive remuneration for their services to the fund from MFS. Certain officers and Trustees of the fund are officers or directors of MFS, MFD, and MFSC.

Other – This fund and certain other funds managed by MFS (the funds) have entered into services agreements (the Agreements) which provide for payment of fees by the funds to Tarantino LLC and Griffin Compliance LLC in return for the provision of services of an Independent Chief Compliance Officer (ICCO) and Assistant ICCO, respectively, for the funds. The ICCO and Assistant ICCO are officers of the funds and the sole members of Tarantino LLC and Griffin Compliance LLC, respectively. The funds can terminate the Agreements with Tarantino LLC and Griffin Compliance LLC at any time under the terms of the Agreements. For the six months ended June 30, 2011, the aggregate fees paid by the fund to Tarantino LLC and Griffin Compliance LLC were $1,261 and are included in miscellaneous expense on the Statement of Operations. MFS has agreed to reimburse the fund for a portion of the payments made by the fund in the amount of $1,022, which is shown as a reduction of total expenses in the Statement of Operations. Additionally, MFS has agreed to bear all expenses associated with office space, other administrative support, and supplies provided to the ICCO and Assistant ICCO.

The fund invests in the MFS Institutional Money Market Portfolio which is managed by MFS and seeks a high level of current income consistent with preservation of capital and liquidity. Income earned on this investment is included in dividends from underlying affiliated funds on the Statement of Operations. This money market fund does not pay a management fee to MFS.

 

(4)   Portfolio Securities

Purchases and sales of investments, other than U.S. Government securities, purchased option transactions, and short-term obligations, aggregated $53,914,652 and $77,182,246, respectively.

 

(5)   Shares of Beneficial Interest

The fund’s Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest. Transactions in fund shares were as follows:

 

     Six months ended 6/30/11      Year ended 12/31/10  
     Shares      Amount      Shares      Amount  
Shares sold            

Initial Class

      150,092         $1,738,116         269,399         $2,657,412   

Service Class

      898,449         10,001,713         2,893,154         27,830,907   
     1,048,541         $11,739,829         3,162,553         $30,488,319   
Shares issued to shareholders in reinvestment of distributions            

Initial Class

      —         $—         37,066         $384,738   

Service Class

      —         —         113,635         1,155,672   
     —         $—         150,701         $1,540,410   

 

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MFS Investors Growth Stock Series

 

Notes to Financial Statements (unaudited) – continued

 

     Six months ended 6/30/11      Year ended 12/31/10  
     Shares      Amount      Shares      Amount  
Shares reacquired            

Initial Class

      (959,104 )       $(10,942,966 )       (2,191,471 )       $(21,583,137 ) 

Service Class

      (2,385,973 )       (26,567,976 )       (19,478,141 )       (184,352,960 ) 
     (3,345,077 )       $(37,510,942 )       (21,669,612 )       $(205,936,097 ) 
Net change            

Initial Class

      (809,012 )       $(9,204,850 )       (1,885,006 )       $(18,540,987 ) 

Service Class

      (1,487,524 )       (16,566,263 )       (16,471,352 )       (155,366,381 ) 
     (2,296,536 )       $(25,771,113 )       (18,356,358 )       $(173,907,368 ) 

 

(6)   Line of Credit

The fund and certain other funds managed by MFS participate in a $1.1 billion unsecured committed line of credit, subject to a $1 billion sublimit, provided by a syndication of banks under a credit agreement. Borrowings may be made for temporary financing needs. Interest is charged to each fund, based on its borrowings, generally at a rate equal to the higher of the Federal Reserve funds rate or one month LIBOR plus an agreed upon spread. A commitment fee, based on the average daily, unused portion of the committed line of credit, is allocated among the participating funds at the end of each calendar quarter. In addition, the fund and other funds managed by MFS have established unsecured uncommitted borrowing arrangements with certain banks for temporary financing needs. Interest is charged to each fund, based on its borrowings, at a rate equal to the Federal Reserve funds rate plus an agreed upon spread. For the six months ended June 30, 2011, the fund’s commitment fee and interest expense were $1,770 and $0, respectively, and are included in miscellaneous expense on the Statement of Operations.

 

(7)   Transactions in Underlying Affiliated Funds – Affiliated Issuers

An affiliated issuer may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. For the purposes of this report, the fund assumes the following to be affiliated issuers:

 

Underlying Affiliated Funds    Beginning
Shares/Par
Amount		      Acquisitions
Shares/Par
Amount		      Dispositions
Shares/Par
Amount		      Ending
Shares/Par
Amount		  
MFS Institutional Money Market Portfolio      4,378,230         24,340,367         (26,985,387 )       1,733,210   
Underlying Affiliated Funds    Realized
Gain (Loss)		      Capital Gain
Distributions		      Dividend
Income		      Ending
Value		  
MFS Institutional Money Market Portfolio      $—         $—         $3,186         $1,733,210   

 

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MFS Investors Growth Stock Series

 

BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT

 

A discussion regarding the Board’s most recent review and renewal of the fund’s Investment Advisory Agreement with MFS will be available on or about November 1, 2011 by clicking on the fund’s name under “Variable Insurance Portfolios — VIT” in the “Products and Performance” section of the MFS Web site (mfs.com).

PROXY VOTING POLICIES AND INFORMATION

A general description of the MFS funds’ proxy voting policies and procedures is available without charge, upon request, by calling
1-800-225-2606, by visiting the Proxy Voting section of mfs.com or by visiting the SEC’s Web site at http://www.sec.gov.

Information regarding how the fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available without charge by visiting the Proxy Voting section of mfs.com or by visiting the SEC’s Web site at http://www.sec.gov.

QUARTERLY PORTFOLIO DISCLOSURE

The fund will file a complete schedule of portfolio holdings with the Securities and Exchange Commission (the Commission) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q may be reviewed and copied at the:

Public Reference Room

Securities and Exchange Commission

100 F Street, NE, Room 1580

Washington, D.C. 20549

Information on the operation of the Public Reference Room may be obtained by calling the Commission at 1-800-SEC-0330. The fund’s Form N-Q is available on the EDGAR database on the Commission’s Internet Web site 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: publicinfo@sec.gov or by writing the Public Reference Section at the above address.

FURTHER INFORMATION

From time to time, MFS may post important information about the fund or the MFS funds on the MFS web site (mfs.com). This information is available by visiting the “News & Commentary” section of mfs.com or by clicking on the fund’s name under “Variable Insurance Portfolios — VIT” in the “Products and Performance” section of mfs.com.

 

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rev. 3/11

 

FACTS   WHAT DOES MFS DO WITH YOUR
PERSONAL INFORMATION?		   LOGO

 

Why?   Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?  

The types of personal information we collect and share depend on the product or service you have with us. This information can include:

 

• Social Security number and account balances

• Account transactions and transaction history

• Checking account information and wire transfer instructions

 

When you are no longer our customer, we continue to share your information as described in this notice.

 

How?   All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons MFS chooses to share; and whether you can limit this sharing.

 

Reasons we can share your personal information   Does MFS share?   Can you limit this
sharing?

For our everyday business purposes –

such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus

   Yes   No

For our marketing purposes –

to offer our products and services to you

   No   We don’t share
For joint marketing with other financial companies   No   We don’t share

For our affiliates’ everyday business purposes –

information about your transactions and experiences

   No   We don’t share

For our affiliates’ everyday business purposes –

information about your creditworthiness

   No   We don’t share
For nonaffiliates to market to you   No   We don’t share

 

Questions?   Call 800-225-2606 or go to mfs.com.

 

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Page 2  

 

Who we are
Who is providing this notice?   MFS Funds, MFS Investment Management, MFS Institutional Advisors, Inc., MFS Fund Distributors, Inc., MFS Heritage Trust Company, and MFS Service Center, Inc.

 

What we do
How does MFS protect my personal information?   To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include procedural, electronic, and physical safeguards for the protection of the personal information we collect about you.
How does MFS
collect my personal information?		  

We collect your personal information, for example, when you

 

• open an account or provide account information

• direct us to buy securities or direct us to sell your securities

• make a wire transfer

 

We also collect your personal information from others, such as credit bureaus, affiliates and other companies.

Why can’t I limit all sharing?  

Federal law gives you the right to limit only

 

• sharing for affiliates’ everyday business purposes – information about your creditworthiness

• affiliates from using your information to market to you

• sharing for nonaffiliates to market to you

 

State laws and individual companies may give you additional rights to limit sharing.

 

Definitions
Affiliates  

Companies related by common ownership or control. They can be financial and nonfinancial companies.

 

• MFS does not share personal information with affiliates, except for everyday business purposes as described on page one of this notice.

Nonaffiliates  

Companies not related by common ownership or control. They can be financial and nonfinancial companies.

 

• MFS does not share with nonaffiliates so they can market to you.

Joint Marketing  

A formal agreement between nonaffiliated financial companies that together market financial products or services to you.

 

• MFS doesn’t jointly market.

 

 

Other important information
If you own an MFS product or receive an MFS service in the name of a third party such as a bank or broker-dealer, their privacy policy may apply to you instead of ours.

 

18

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LOGO

Table of Contents

LOGO

 

MFS® Global Equity Series

MFS® Variable Insurance Trust

 

LOGO

 

 

SEMIANNUAL REPORT

June 30, 2011

 

VGE-SEM

Table of Contents

MFS® GLOBAL EQUITY SERIES

 

CONTENTS   
Letter from the CEO      1   
Portfolio composition      2   
Expense table      3   
Portfolio of investments      4   
Statement of assets and liabilities      6   
Statement of operations      7   
Statements of changes in net assets      8   
Financial highlights      9   
Notes to financial statements      11   
Board review of investment advisory agreement      16   
Proxy voting policies and information      16   
Quarterly portfolio disclosure      16   
Further information      16   
MFS® privacy notice      17   

The report is prepared for the general information of contract owners.

It is authorized for distribution to prospective investors only when preceded or accompanied by a current prospectus.

 

NOT FDIC INSURED Ÿ MAY LOSE VALUE Ÿ NO BANK OR CREDIT UNION GUARANTEE Ÿ

NOT A DEPOSIT Ÿ NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY OR NCUA/NCUSIF

Table of Contents

MFS Global Equity Series

 

LETTER FROM THE CEO

 

LOGO

 

Dear Contract Owners:

After about a year of almost uninterrupted macroeconomic and financial market improvement following the global credit crisis, investors grew more cautious in the middle of 2010 as fears grew that some European countries would default on their debt and as economic data showed a weakening

trend in the global economy. As a result asset prices fell significantly.

Last September the U.S. Federal Reserve Board’s promises to make lending conditions easier helped assuage market fears and drive asset prices off their recent lows. A combination of solid earnings and improving economic data gave an additional boost to investor sentiment.

In the following months, the renewed positive market mood, coupled with indications of better global macroeconomic activity, pushed many asset valuations to post-crisis highs. At the same time, global sovereign

bond yields initially rose as investors became concerned about inflationary pressures, driven by higher prices for oil as well as other commodities. However, by the end of the second quarter of 2011, a weakening macroeconomic backdrop and renewed concerns over debt problems in some eurozone countries pushed equities lower.

For the remainder of 2011, we are cautiously optimistic that economic growth will continue to improve and that the global economies will recover from the shocks of the past few years. We expect the pace of recovery worldwide to be uneven and volatile and acknowledge the elevated uncertainty created by events in Japan, Europe, the Middle East, as well as that created by the U.S. debate over raising the debt ceiling and the downgrade by Standard & Poor’s of the U.S. long-term credit rating.

As always, we continue to be mindful of the many economic challenges faced at the local, national, and international levels. It is in times such as these that we want to remind investors of the merits of maintaining a long-term view, adhering to basic investing principles such as asset allocation and diversification, and working closely with their advisors to research and identify appropriate investment opportunities.

Respectfully,

LOGO

Robert J. Manning

Chairman and Chief Executive Officer

MFS Investment Management®

August 16, 2011

 

The opinions expressed in this letter are subject to change, may not be relied upon for investment advice, and no forecasts can be guaranteed.

 

 

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MFS Global Equity Series

 

PORTFOLIO COMPOSITION

 

Portfolio structure

LOGO

 

Top ten holdings  
Linde AG     3.3%   
Nestle S.A.     3.2%   
Heineken N.V.     2.8%   
Reckitt Benckiser Group PLC     2.4%   
Walt Disney Co.     2.2%   
Diageo PLC     2.0%   
Oracle Corp.     1.9%   
3M Co.     1.9%   
Accenture PLC, “A”     1.9%   
State Street Corp.     1.9%   

 

Currency exposure weightings (t)  
United States     47.4%   
Euro     24.2%   
United Kingdom     10.3%   
Switzerland     10.0%   
Japan     4.7%   
Sweden     1.6%   
South Korea     1.0%   
India     0.4%   
Czech Republic     0.4%   
Other Countries (o)     0.0%   
Equity sectors  
Consumer Staples     20.0%   
Financial Services     15.3%   
Health Care     12.2%   
Basic Materials     10.9%   
Retailing     9.8%   
Technology     7.6%   
Industrial Goods & Services     6.5%   
Leisure     5.6%   
Transportation     3.8%   
Special Products & Services     3.2%   
Energy     2.7%   
Autos & Housing     1.2%   
Utilities & Communications     0.3%   

 

Issuer country weightings (e)  
United States     45.0%   
United Kingdom     10.3%   
France     10.2%   
Switzerland     10.0%   
Germany     7.4%   
Netherlands     5.2%   
Japan     4.7%   
Canada     1.8%   
Sweden     1.6%   
Other Countries     3.8%   
 

 

(e) Represents the portfolio’s exposure to issuer countries as a percentage of a portfolio’s total net assets.
(o) Less than 0.1%.
(t) Represents the portfolio’s exposure to a particular currency as a percentage of a portfolio’s total net assets.

Percentages are based on net assets as of 6/30/11.

The portfolio is actively managed and current holdings may be different.

 

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MFS Global Equity Series

 

EXPENSE TABLE

 

Fund Expenses Borne by the Contract Holders During the Period,

January 1, 2011 through June 30, 2011

As a contract holder of the fund, you incur ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period January 1, 2011 through June 30, 2011.

Actual Expenses

The first line for each share class in the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The second line for each share class in the following table provides information about hypothetical account values and hypothetical expenses based on the fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight the fund’s ongoing costs only and do not take into account the fees and expenses imposed under the variable contracts through which your investment in the fund is made. Therefore, the second line for each share class in the table is useful in comparing ongoing costs associated with an investment in vehicles (such as the fund) which fund benefits under variable annuity and variable life insurance contracts and to qualified pension and retirement plans only, and will not help you determine the relative total costs of investing in the fund through variable annuity and variable life insurance contracts. If the fees and expenses imposed under the variable contracts were included, your costs would have been higher.

 

Share Class         Annualized
Expense Ratio		      Beginning
Account Value
1/01/11		      Ending
Account Value
6/30/11		      Expenses Paid
During Period (p)
1/01/11-6/30/11		  
Initial Class   Actual      1.15%         $1,000.00         $1,078.36         $5.93   
  Hypothetical (h)      1.15%         $1,000.00         $1,019.09         $5.76   
Service Class   Actual      1.40%         $1,000.00         $1,077.04         $7.21   
  Hypothetical (h)      1.40%         $1,000.00         $1,017.85         $7.00   

 

(h) 5% class return per year before expenses.

 

(p) Expenses paid is equal to each class’ annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by the number of days in the period, divided by the number of days in the year.

 

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MFS Global Equity Series

 

PORTFOLIO OF INVESTMENTS – 6/30/11 (unaudited)

 

The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.

Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – 99.1%     
Aerospace – 2.8%     
Honeywell International, Inc.      13,230      $ 788,376   
United Technologies Corp.      5,560        492,116   
          
     $ 1,280,492   
          
Alcoholic Beverages – 5.9%     
Diageo PLC      44,715      $ 913,573   
Heineken N.V.      20,888        1,256,156   
Pernod Ricard S.A. (l)      4,918        484,751   
          
     $ 2,654,480   
          
Apparel Manufacturers – 4.9%     
Burberry Group PLC      8,696      $ 202,371   
Compagnie Financiere Richemont S.A.      8,607        563,563   
LVMH Moet Hennessy Louis Vuitton S.A.      4,628        832,871   
NIKE, Inc., “B”      6,700        602,866   
          
     $ 2,201,671   
          
Automotive – 0.4%     
Harley-Davidson, Inc.      4,100      $ 167,977   
          
Broadcasting – 4.7%     
Omnicom Group, Inc.      12,470      $ 600,555   
Walt Disney Co.      25,380        990,835   
WPP Group PLC      44,169        552,935   
          
     $ 2,144,325   
          
Brokerage & Asset Managers – 0.8%     
Deutsche Boerse AG      4,919      $ 373,784   
          
Business Services – 2.9%     
Accenture PLC, “A”      13,950      $ 842,859   
Compass Group PLC      47,330        456,534   
          
     $ 1,299,393   
          
Chemicals – 3.0%     
3M Co.      8,900      $ 844,165   
Givaudan S.A.      294        311,047   
Monsanto Co.      3,090        224,149   
          
     $ 1,379,361   
          
Computer Software – 2.9%     
Autodesk, Inc. (a)      2,840      $ 109,624   
Dassault Systems S.A. (l)      3,914        333,231   
Oracle Corp.      25,840        850,394   
          
     $ 1,293,249   
          
Computer Software – Systems – 1.0%     
Canon, Inc.      9,900      $ 472,100   
          
Conglomerates – 0.3%     
Smiths Group PLC      8,142      $ 156,941   
          
Construction – 0.8%     
Sherwin-Williams Co.      4,250      $ 356,448   
          
Consumer Products – 6.6%     
Beiersdorf AG      3,476      $ 225,572   
Colgate-Palmolive Co.      7,030        614,492   
Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – continued     
Consumer Products – continued     
Kao Corp.      5,100      $ 134,032   
Procter & Gamble Co.      6,663        423,567   
Reckitt Benckiser Group PLC      19,704        1,087,864   
Svenska Cellulosa Aktiebolaget      35,080        493,878   
          
     $ 2,979,405   
          
Electrical Equipment – 3.7%     
Amphenol Corp., “A”      3,410      $ 184,106   
Legrand S.A.      13,742        578,808   
Rockwell Automation, Inc.      1,440        124,934   
Schneider Electric S.A.      4,849        810,061   
          
     $ 1,697,909   
          
Electronics – 2.4%     
Hoya Corp.      17,100      $ 379,022   
Intel Corp.      10,210        226,254   
Samsung Electronics Co. Ltd.      598        464,789   
          
     $ 1,070,065   
          
Energy – Independent – 0.9%     
INPEX Corp.      56      $ 413,433   
          
Energy – Integrated – 0.4%     
Royal Dutch Shell PLC, “A” (a)      5,084      $ 180,480   
          
Food & Beverages – 7.5%     
Dr Pepper Snapple Group, Inc.      7,800      $ 327,054   
General Mills, Inc.      3,950        147,019   
Groupe Danone      10,268        766,098   
J.M. Smucker Co.      5,155        394,048   
Nestle S.A.      23,656        1,470,147   
PepsiCo, Inc.      3,870        272,564   
          
     $ 3,376,930   
          
Food & Drug Stores – 2.6%     
Lawson, Inc.      2,400      $ 126,048   
Tesco PLC      45,682        294,736   
Walgreen Co.      17,300        734,558   
          
     $ 1,155,342   
          
Gaming & Lodging – 0.9%     
Ladbrokes PLC      57,155      $ 139,798   
William Hill PLC      70,325        257,791   
          
     $ 397,589   
          
General Merchandise – 1.0%     
Target Corp.      10,120      $ 474,729   
          
Insurance – 1.5%     
AXA      15,974      $ 362,991   
Swiss Re Ltd.      5,431        304,963   
          
     $ 667,954   
          
Major Banks – 7.9%     
Bank of New York Mellon Corp.      26,990      $ 691,484   
Erste Group Bank AG      8,981        470,810   
 

 

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MFS Global Equity Series

 

Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – continued     
Major Banks – continued     
Goldman Sachs Group, Inc.      3,980      $ 529,698   
Julius Baer Group Ltd.      10,888        449,765   
Standard Chartered PLC      22,898        601,968   
State Street Corp.      18,690        842,732   
    

 

 

  
     $ 3,586,457   
    

 

 

  
Medical Equipment – 7.5%     
DENTSPLY International, Inc.      10,190      $ 388,035   
Medtronic, Inc.      17,630        679,284   
Sonova Holding AG      2,149        200,650   
St. Jude Medical, Inc.      13,840        659,891   
Synthes, Inc. (n)      801        140,907   
Thermo Fisher Scientific, Inc. (a)      9,530        613,637   
Waters Corp. (a)      5,830        558,164   
Zimmer Holdings, Inc. (a)      2,620        165,584   
    

 

 

  
     $ 3,406,152   
    

 

 

  
Network & Telecom – 1.3%     
Cisco Systems, Inc.      37,630      $ 587,404   
    

 

 

  
Oil Services – 1.4%     
National Oilwell Varco, Inc.      5,150      $ 402,782   
Schlumberger Ltd.      2,860        247,104   
    

 

 

  
     $ 649,886   
    

 

 

  
Other Banks & Diversified Financials – 5.1%     
Aeon Credit Service Co. Ltd.      9,100      $ 124,114   
American Express Co.      8,310        429,627   
Banco Santander Brasil S.A., ADR      22,930        268,510   
ICICI Bank Ltd.      8,168        200,205   
Komercni Banka A.S.      749        182,661   
UBS AG (a)      29,105        530,692   
Visa, Inc., “A”      6,790        572,125   
    

 

 

  
     $ 2,307,934   
    

 

 

  
Pharmaceuticals – 4.7%     
Bayer AG      9,152      $ 735,787   
Johnson & Johnson      6,200        412,424   
Merck KGaA      4,998        543,154   
Roche Holding AG      2,673        447,328   
    

 

 

  
     $ 2,138,693   
    

 

 

  
Railroad & Shipping – 2.1%     
Canadian National Railway Co.      10,414      $ 832,079   
Kuehne & Nagel, Inc. AG      800        121,415   
    

 

 

  
     $ 953,494   
    

 

 

  
Specialty Chemicals – 7.9%     
Akzo Nobel N.V.      11,817      $ 745,434   
L’Air Liquide S.A.      3,212        460,385   
Linde AG      8,483        1,487,266   
Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – continued     
Specialty Chemicals – continued     
Praxair, Inc.      4,070      $ 441,147   
Shin-Etsu Chemical Co. Ltd.      8,600        461,298   
    

 

 

  
     $ 3,595,530   
    

 

 

  
Specialty Stores – 1.3%     
Abercrombie & Fitch Co., “A”      1,070      $ 71,604   
Hennes & Mauritz AB, “B”      6,750        232,748   
Sally Beauty Holdings, Inc. (a)      8,590        146,889   
Urban Outfitters, Inc. (a)      4,640        130,616   
    

 

 

  
     $ 581,857   
    

 

 

  
Trucking – 1.7%     
TNT N.V. (a)      15,315      $ 158,839   
United Parcel Service, Inc., “B”      8,360        609,695   
    

 

 

  
     $ 768,534   
    

 

 

  
Utilities – Electric Power – 0.3%     
Red Electrica de Espana      2,401      $ 144,930   
    

 

 

  
Total Common Stocks
(Identified Cost, $38,066,490)		      $ 44,914,928   
    

 

 

  
MONEY MARKET FUNDS (v) – 0.5%     
MFS Institutional Money Market Portfolio, 0.1%, at Cost and Net Asset Value      246,256      $ 246,256   
    

 

 

  
COLLATERAL FOR SECURITIES LOANED – 1.4%   
Navigator Securities Lending Prime Portfolio, 0.23%, at Cost and Net Asset Value (j)      633,386      $ 633,386   
    

 

 

  
Total Investments
(Identified Cost, $38,946,132)		      $ 45,794,570   
    

 

 

  
OTHER ASSETS, LESS
LIABILITIES – (1.0)%		        (456,914 ) 
    

 

 

  
Net Assets – 100.0%      $ 45,337,656   
    

 

 

  

 

(a)   Non-income producing security.

 

(j)   The rate quoted is the annualized seven-day yield of the portfolio at period end.

 

(l)   A portion of this security is on loan.

 

(n)   Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be sold in the ordinary course of business in transactions exempt from registration, normally to qualified institutional buyers. At period end, the aggregate value of these securities was $140,907, representing 0.3% of net assets.

 

(v)   Underlying affiliated fund that is available only to investment companies managed by MFS. The rate quoted is the annualized seven-day yield of the fund at period end.

The following abbreviations are used in this report and are defined:

 

ADR   American Depository Receipt

 

PLC   Public Limited Company

See Notes to Financial Statements

 

 

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MFS Global Equity Series

 

FINANCIAL STATEMENTS  |  STATEMENT OF ASSETS AND LIABILITIES (unaudited)

 

This statement represents your fund’s balance sheet, which details the assets and liabilities comprising the total value of the fund.

 

At 6/30/11

      

Assets

                  

Investments –

      

Non-affiliated issuers, at value (identified cost, $38,699,876)

      $45,548,314      

Underlying affiliated funds, at cost and value

      246,256            

Total investments, at value, including $607,528 of securities on loan (identified cost, $38,946,132)

      $45,794,570            

Cash

      2,974      

Foreign currency, at value (identified cost, $14,486)

      14,544      

Receivables for

      

Investments sold

      16,707      

Fund shares sold

      135,150      

Interest and dividends

      76,212      

Receivable from investment adviser

      1,142      

Other assets

      329            

Total assets

               $46,041,628   

Liabilities

                  

Payable for fund shares reacquired

      $27,942      

Collateral for securities loaned, at value

      633,386      

Payable to affiliates

      

Shareholder servicing costs

      61      

Distribution and/or service fees

      42      

Payable for independent Trustees’ compensation

      220      

Accrued expenses and other liabilities

      42,321            

Total liabilities

               $703,972   

Net assets

               $45,337,656   

Net assets consist of

                  

Paid-in capital

      $37,616,510      

Unrealized appreciation (depreciation) on investments and translation of assets
and liabilities in foreign currencies (net of $153 deferred country tax)

      6,849,982      

Accumulated net realized gain (loss) on investments and foreign currency transactions

      162,603      

Undistributed net investment income

      708,561            

Net assets

               $45,337,656   

Shares of beneficial interest outstanding

               3,137,977   

 

     Net assets      Shares
outstanding		     

Net asset value

per share

  

Initial Class

      $42,263,872         2,924,559         $14.45   

Service Class

      3,073,784         213,418         14.40   

See Notes to Financial Statements

 

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FINANCIAL STATEMENTS  |  STATEMENT OF OPERATIONS (unaudited)

 

This statement describes how much your fund earned in investment income and accrued in expenses. It also describes any gains and/or losses generated by fund operations.

 

Six months ended 6/30/11

      

Net investment income

                  

Income

      

Dividends

      $666,862      

Interest

      10,990      

Dividends from underlying affiliated funds

      320      

Foreign taxes withheld

      (54,356 )          

Total investment income

               $623,816   

Expenses

      

Management fee

      $217,697      

Distribution and/or service fees

      3,331      

Shareholder servicing costs

      2,540      

Administrative services fee

      8,679      

Independent Trustees’ compensation

      759      

Custodian fee

      21,087      

Shareholder communications

      10,458      

Auditing fees

      24,645      

Legal fees

      357      

Miscellaneous

      5,799            

Total expenses

               $295,352   

Fees paid indirectly

      (1 )    

Reduction of expenses by investment adviser

      (41,290 )          

Net expenses

               $254,061   

Net investment income

               $369,755   

Realized and unrealized gain (loss) on investments and foreign currency transactions

                  

Realized gain (loss) (identified cost basis)

      

Investment transactions (net of $79 country tax)

      $840,741      

Foreign currency transactions

      3,096            

Net realized gain (loss) on investments and foreign currency transactions

               $843,837   

Change in unrealized appreciation (depreciation)

      

Investments (net of $7,143 decrease in deferred country tax)

      $2,094,975      

Translation of assets and liabilities in foreign currencies

      (1,700 )          

Net unrealized gain (loss) on investments and foreign currency translation

               $2,093,275   

Net realized and unrealized gain (loss) on investments and foreign currency

               $2,937,112   

Change in net assets from operations

               $3,306,867   

See Notes to Financial Statements

 

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FINANCIAL STATEMENTS  |  STATEMENTS OF CHANGES IN NET ASSETS

 

These statements describe the increases and/or decreases in net assets resulting from operations, any distributions, and any shareholder transactions.

 

    
 
 		 Six months ended
6/30/11
(unaudited		   
  
) 		     
 		 Year ended
12/31/10		   
  

Change in net assets

      

From operations

                  

Net investment income

      $369,755         $347,329   

Net realized gain (loss) on investments and foreign currency transactions

      843,837         1,783,785   

Net unrealized gain (loss) on investments and foreign currency translation

      2,093,275         2,560,351   

Change in net assets from operations

      $3,306,867         $4,691,465   
Distributions declared to shareholders                  

From net investment income

      $—         $(401,053 ) 

Change in net assets from fund share transactions

      $(408,961 )       $(3,517,283 ) 

Total change in net assets

      $2,897,906         $773,129   

Net assets

                  

At beginning of period

      42,439,750         41,666,621   

At end of period (including undistributed net investment income of $708,561 and
$338,806, respectively)

      $45,337,656         $42,439,750   

See Notes to Financial Statements

 

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FINANCIAL STATEMENTS  |  FINANCIAL HIGHLIGHTS

 

The financial highlights table is intended to help you understand the fund’s financial performance for the semiannual period and the past 5 fiscal years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period.

 

Initial Class      Six months
ended
6/30/11		      Years ended 12/31  
          2010        2009        2008        2007        2006  
       (unaudited)                                             

Net asset value, beginning of period

        $13.40         $12.04           $9.36           $15.47           $15.45           $13.49   
Income (loss) from investment operations                                                                

Net investment income (d)

        $0.12         $0.11           $0.12           $0.20           $0.13           $0.37   

Net realized and unrealized gain (loss) on investments
and foreign currency

        0.93         1.37           2.78           (5.01 )         1.22           2.76   

Total from investment operations

        $1.05         $1.48           $2.90           $(4.81 )         $1.35           $3.13   
Less distributions declared to shareholders                                                                

From net investment income

        $—         $(0.12 )         $(0.22 )         $(0.14 )         $(0.32 )         $(0.07 ) 

From net realized gain on investments

        —         —           —           (1.16 )         (1.01 )         (1.10 ) 

Total distributions declared to shareholders

        $—         $(0.12 )         $(0.22 )         $(1.30 )         $(1.33 )         $(1.17 ) 

Net asset value, end of period

        $14.45         $13.40           $12.04           $9.36           $15.47           $15.45   

Total return (%) (k)(r)(s)

        7.84 (n)       12.36           31.98           (33.77 )         9.19           24.41   

Ratios (%) (to average net assets)

and Supplemental data:

                                                                

Expenses before expense reductions (f)

        1.34 (a)       1.38           1.52           1.36           1.41           1.49   

Expenses after expense reductions (f)

        1.15 (a)       1.15           1.15           1.15           1.15           1.15   

Net investment income

        1.71 (a)(l)       0.88           1.18           1.61           0.88           2.60   

Portfolio turnover

        8         18           23           28           38           37   

Net assets at end of period (000 omitted)

        $42,264         $39,966           $39,418           $33,523           $56,246           $53,388   

See Notes to Financial Statements

 

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Financial Highlights – continued

 

Service Class     

Six months
ended
6/30/11

      Years ended 12/31  
          2010        2009        2008        2007        2006  
       (unaudited)                                             

Net asset value, beginning of period

        $13.37         $12.03           $9.35           $15.47           $15.47           $13.53   
Income (loss) from investment operations                                                                

Net investment income (d)

        $0.11         $0.08           $0.08           $0.16           $0.09           $0.31   

Net realized and unrealized gain (loss) on investments
and foreign currency

        0.92         1.36           2.81           (5.01 )         1.23           2.79   

Total from investment operations

        $1.03         $1.44           $2.89           $(4.85 )         $1.32           $3.10   
Less distributions declared to shareholders                                                                

From net investment income

        $—         $(0.10 )         $(0.21 )         $(0.11 )         $(0.31 )         $(0.06 ) 

From net realized gain on investments

        —         —           —           (1.16 )         (1.01 )         (1.10 ) 

Total distributions declared to shareholders

        $—         $(0.10 )         $(0.21 )         $(1.27 )         $(1.32 )         $(1.16 ) 

Net asset value, end of period

        $14.40         $13.37           $12.03           $9.35           $15.47           $15.47   

Total return (%) (k)(r)(s)

        7.70 (n)       12.05           31.80           (33.97 )         8.97           24.02   
Ratios (%) (to average net assets)
and Supplemental data:		                                                                

Expenses before expense reductions (f)

        1.59 (a)       1.63           1.75           1.60           1.65           1.76   

Expenses after expense reductions (f)

        1.40 (a)       1.40           1.40           1.40           1.40           1.40   

Net investment income

        1.56 (a)(l)       0.64           0.82           1.32           0.60           2.29   

Portfolio turnover

        8         18           23           28           38           37   

Net assets at end of period (000 omitted)

        $3,074         $2,474           $2,248           $695           $628           $271   

 

(a) Annualized.

 

(d) Per share data is based on average shares outstanding.

 

(f) Ratios do not reflect reductions from fees paid indirectly, if applicable.

 

(k) The total return does not reflect expenses that apply to separate accounts. Inclusion of these charges would reduce the total return figures for all periods shown.

 

(l) Recognition of net investment income by the fund may be affected by the timing of the declaration of dividends by companies in which the fund invests and the actual annual net investment income ratio may differ.

 

(n) Not annualized.

 

(r) Certain expenses have been reduced without which performance would have been lower.

 

(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.

See Notes to Financial Statements

 

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MFS Global Equity Series

 

NOTES TO FINANCIAL STATEMENTS (unaudited)

 

(1)   Business and Organization

MFS Global Equity Series (the fund) is a 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, and qualified retirement and pension plans.

 

(2)   Significant Accounting Policies

General – The preparation of financial statements in conformity with U.S. 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. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the fund’s Statement of Assets and Liabilities through the date that the financial statements were issued. The fund invests 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, including restricted equity securities, are generally valued at the last sale or official closing price as provided by a third-party pricing service on the market or exchange on which they are primarily traded. Equity securities, for which there were no sales reported that day, are generally valued at the last quoted daily bid quotation as provided by a third-party pricing service on the market or exchange on which such securities are primarily traded. Equity securities held short, for which there were no sales reported for that day, are generally valued at the last quoted daily ask quotation as provided by a third-party pricing service on the market or exchange on which such securities are primarily traded. Short-term instruments with a maturity at issuance of 60 days or less generally are valued at amortized cost, which approximates market value. Open-end investment companies are generally valued at net asset value per share. Securities and other assets generally valued on the basis of information from a third-party pricing service may also be valued at a broker/dealer bid quotation. Values obtained from third-party pricing services can utilize both transaction data and market information such as yield, quality, coupon rate, maturity, type of issue, trading characteristics, and other market data. The values of foreign securities and other assets and liabilities expressed in foreign currencies are converted to U.S. dollars using the mean of bid and asked prices for rates provided by a third-party pricing service.

The Board of Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments (including any fair valuation) to the adviser pursuant to valuation policies and procedures approved by the Board. If the adviser determines that reliable market quotations are not readily available, investments are valued at fair value as determined in good faith by the adviser in accordance with such procedures under the oversight of the Board of Trustees. Under the fund’s valuation policies and procedures, market quotations are not considered to be readily available for most types of debt instruments and floating rate loans and many types of derivatives. These investments are generally valued at fair value based on information from third-party pricing services. In addition, investments may be valued at fair value if the adviser determines that an investment’s value has been materially affected by events occurring after the close of the exchange or market on which the investment is principally traded (such as foreign exchange or market) and prior to the determination of the fund’s net asset value, or after the halting of trading of a specific security where trading does not resume prior to the close of the exchange or market on which the security is principally traded. Events that occur on a frequent basis after foreign markets close (such as developments in foreign markets and significant movements in the U.S. markets) and prior to the determination of the fund’s net asset value may be deemed to have a material effect on the value of securities traded in foreign markets. Accordingly, the fund’s foreign equity securities may often be valued at fair value. The adviser generally relies on third-party pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and financial condition of the issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment for purposes of calculating the fund’s net asset value can differ depending on the source and method used to determine value. When fair valuation is used, the value of an investment used to determine the fund’s net asset value may differ from quoted or published prices for the same investment. There can be no assurance that the fund could obtain the fair value assigned to an investment if it were to sell the investment at the same time at which the fund determines its net asset value per share.

Various inputs are used in determining the value of the fund’s assets or liabilities. These inputs are categorized into three broad levels. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair

 

11

Table of Contents

MFS Global Equity Series

 

Notes to Financial Statements (unaudited) – continued

 

value measurement. The fund’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. Level 1 includes unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes other significant observable market-based inputs (including quoted prices for similar securities, interest rates, prepayment speed, and credit risk). Level 3 includes unobservable inputs, which may include the adviser’s own assumptions in determining the fair value of investments. The following is a summary of the levels used as of June 30, 2011 in valuing the fund’s assets or liabilities:

 

Investments at Value    Level 1      Level 2      Level 3      Total  
Equity Securities:            

United States

      $19,973,616         $—         $—         $19,973,616   

United Kingdom

      4,664,510         —         —         4,664,510   

France

      4,629,195         —         —         4,629,195   

Switzerland

      4,540,478         —         —         4,540,478   

Germany

      3,365,563         —         —         3,365,563   

Netherlands

      2,340,910         —         —         2,340,910   

Japan

      124,114         1,985,933         —         2,110,047   

Canada

      832,079         —         —         832,079   

Sweden

      726,625         —         —         726,625   

Other Countries

      1,066,911         664,994         —         1,731,905   
Mutual Funds      879,642         —         —         879,642   
Total Investments      $43,143,643         $2,650,927         $—         $45,794,570   

For further information regarding security characteristics, see the Portfolio of Investments.

Foreign Currency Translation – 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 or on the reporting date for foreign denominated receivables and payables. 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 receivables, payables, 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, loans the securities of the fund to certain qualified institutions (the “Borrowers”) approved by the fund. The loans are collateralized by cash and/or U.S. Treasury and federal agency obligations in an amount typically at least equal to the market value of the securities loaned. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. State Street provides the fund with indemnification against Borrower default. The fund bears the risk of loss with respect to the investment of cash collateral. On loans collateralized by cash, the cash collateral is invested in a money market fund or 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 fund and the lending agent. On loans collateralized by U.S. Treasury and/or federal agency obligations, a fee is received from the Borrower, and is allocated between the fund 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.

Indemnifications – Under the fund’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the fund. Additionally, in the normal course of business, the fund enters into agreements with service providers that may contain indemnification clauses. The fund’s maximum exposure under these agreements is unknown as this would involve future claims that may be made against the fund that have not yet occurred.

Investment Transactions and Income – Investment transactions are recorded on the trade date. Interest income is recorded on the accrual basis. Dividends received in cash are recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded when the fund is informed of the dividend if such information is obtained subsequent to 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.

The fund may receive proceeds from litigation settlements. Any proceeds received from litigation involving portfolio holdings are reflected in the Statement of Operations in realized gain/loss if the security has been disposed of by the fund or in

 

12

Table of Contents

MFS Global Equity Series

 

Notes to Financial Statements (unaudited) – continued

 

unrealized gain/loss if the security is still held by the fund. Any other proceeds from litigation not related to portfolio holdings are reflected as other income in the Statement of Operations.

Fees Paid Indirectly – The fund’s custody fee may be reduced according to an arrangement that measures the value of cash deposited with the custodian by the fund. This amount, for the six months ended June 30, 2011, is shown as a reduction of total expenses on the Statement of Operations.

Tax Matters and Distributions – The fund intends to qualify as a regulated investment company, as defined under Subchapter M of the Internal Revenue Code, and to distribute all of its taxable income, including realized capital gains. As a result, no provision for federal income tax is required. The fund’s federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue Service. Foreign taxes, if any, have been accrued by the fund in the accompanying financial statements.

Distributions to shareholders are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income, expense, gain or loss in different periods for financial statement and tax purposes will reverse at some time in the future. Distributions in excess of net investment income or net realized gains are temporary overdistributions for financial statement purposes resulting from differences in the recognition or classification of income or distributions for financial statement and tax purposes.

Book/tax differences primarily relate to wash sale loss deferrals.

The tax character of distributions declared to shareholders for the last fiscal year is as follows:

 

     12/31/10  
Ordinary income (including any short-term capital gains)      $401,053   

The federal tax cost and the tax basis components of distributable earnings were as follows:

 

As of 6/30/11   
Cost of investments      $39,083,312   
Gross appreciation      9,286,014   
Gross depreciation      (2,574,756 ) 
Net unrealized appreciation (depreciation)      $6,711,258   
As of 12/31/10   
Undistributed ordinary income      339,310   
Capital loss carryforwards      (544,054 ) 
Other temporary differences      (4,403 ) 
Net unrealized appreciation (depreciation)      4,623,426   

The aggregate cost above includes prior fiscal year end tax adjustments, if applicable.

As of December 31, 2010, the fund had capital loss carryforwards available to offset future realized gains. Such losses expire as follows:

 

12/31/17      $(544,054 ) 

Multiple Classes of Shares of Beneficial Interest – The fund offers multiple classes of shares, which differ in their respective distribution and/or service fees. The fund’s income, realized and unrealized gain (loss), and common expenses are allocated to shareholders based on the daily net assets of each class. Dividends are declared separately for each class. Differences in per share dividend rates are generally due to differences in separate class expenses. The fund’s distributions declared to shareholders as reported on the Statements of Changes in Net Assets are presented by class as follows:

 

     From net investment
income		  
     Six months ended
6/30/11		      Year ended
12/31/10		  
Initial Class      $—         $380,540   
Service Class      —         20,513   
Total      $—         $401,053   

 

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MFS Global Equity Series

 

Notes to Financial Statements (unaudited) – continued

 

 

(3)   Transactions with Affiliates

Investment Adviser – The fund has an investment advisory agreement with MFS to provide overall investment management and related administrative services and facilities to the fund. The management fee is computed daily and paid monthly at the following annual rates:

 

First $1 billion of average daily net assets      1.00%   
Average daily net assets in excess of $1 billion      0.90%   

Effective May 1, 2011, the investment adviser has agreed in writing to reduce its management fee to 0.90% of average daily net assets. This written agreement will continue until modified by the fund’s Board of Trustees, but such agreement will continue at least until April 30, 2013. This management fee reduction amounted to $7,498, which is shown as a reduction of total expenses in the Statement of Operations. The management fee incurred for the six months ended June 30, 2011 was equivalent to an annual effective rate of 0.96% of the fund’s average daily net assets.

The investment adviser has agreed in writing to pay a portion of the fund’s total annual operating expenses, exclusive of interest, taxes, extraordinary expenses, brokerage and transaction costs, and investment-related expenses, such that total annual operating expenses do not exceed 1.15% of average daily net assets for the Initial Class shares and 1.40% of average daily net assets for the Service Class shares. This written agreement will continue until modified by the fund’s Board of Trustees, but such agreement will continue at least until April 30, 2013. For the six months ended June 30, 2011, this reduction amounted to $33,668 and is reflected as a reduction of total expenses in the Statement of Operations.

Distributor – MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, is the distributor of shares of the fund. The Trustees have adopted a distribution plan for the Service Class shares pursuant to Rule 12b-1 under the Investment Company Act of 1940.

The fund’s distribution plan provides that the fund will pay MFD distribution and/or service fees equal to 0.25% per annum of its average daily net assets attributable to Service Class shares as partial consideration for services performed and expenses incurred by MFD and financial intermediaries (including participating insurance companies that invest in the fund to fund variable annuity and variable life insurance contracts, sponsors of qualified retirement and pension plans that invest in the fund, and affiliates of these participating insurance companies and plan sponsors) in connection with the sale and distribution of the Service Class shares. MFD may subsequently pay all, or a portion, of the distribution and/or service fees to financial intermediaries.

Shareholder Servicing Agent – MFS Service Center, Inc. (MFSC), a wholly-owned subsidiary of MFS, receives a fee from the fund for its services as shareholder servicing agent. For the six months ended June 30, 2011, the fee was $2,430, which equated to 0.0112% annually of the fund’s average daily net assets. MFSC also receives payment from the fund for out-of-pocket expenses paid by MFSC on behalf of the fund. For the six months ended June 30, 2011, these costs amounted to $110.

Administrator – MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the fund partially reimburses MFS the costs incurred to provide these services. The fund is charged an annual fixed amount of $17,500 plus a fee based on average daily net assets. The administrative services fee incurred for the six months ended June 30, 2011 was equivalent to an annual effective rate of 0.0398% of the fund’s average daily net assets.

Trustees’ and Officers’ Compensation – The fund pays compensation to independent Trustees in the form of a retainer, attendance fees, and additional compensation to Board and Committee chairpersons. The fund does not pay compensation directly to Trustees or officers of the fund who are also officers of the investment adviser, all of whom receive remuneration for their services to the fund from MFS. Certain officers and Trustees of the fund are officers or directors of MFS, MFD, and MFSC.

Other – This fund and certain other funds managed by MFS (the funds) have entered into services agreements (the Agreements) which provide for payment of fees by the funds to Tarantino LLC and Griffin Compliance LLC in return for the provision of services of an Independent Chief Compliance Officer (ICCO) and Assistant ICCO, respectively, for the funds. The ICCO and Assistant ICCO are officers of the funds and the sole members of Tarantino LLC and Griffin Compliance LLC, respectively. The funds can terminate the Agreements with Tarantino LLC and Griffin Compliance LLC at any time under the terms of the Agreements. For the six months ended June 30, 2011, the aggregate fees paid by the fund to Tarantino LLC and Griffin Compliance LLC were $153 and are included in miscellaneous expense on the Statement of Operations. MFS has agreed to reimburse the fund for a portion of the payments made by the fund in the amount of $124, which is shown as a reduction of total expenses in the Statement of Operations. Additionally, MFS has agreed to bear all expenses associated with office space, other administrative support, and supplies provided to the ICCO and Assistant ICCO.

 

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MFS Global Equity Series

 

Notes to Financial Statements (unaudited) – continued

 

The fund invests in the MFS Institutional Money Market Portfolio which is managed by MFS and seeks a high level of current income consistent with preservation of capital and liquidity. Income earned on this investment is included in dividends from underlying affiliated funds on the Statement of Operations. This money market fund does not pay a management fee to MFS.

 

(4)   Portfolio Securities

Purchases and sales of investments, other than U.S. Government securities, purchased option transactions, and short-term obligations, aggregated $3,455,138 and $3,589,381, respectively.

 

(5)   Shares of Beneficial Interest

The fund’s Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest. Transactions in fund shares were as follows:

 

     Six months ended 6/30/11      Year ended 12/31/10  
     Shares      Amount      Shares      Amount  
Shares sold            

Initial Class

      268,153         $3,737,933         304,450         $3,649,601   

Service Class

      73,814         1,018,228         66,276         803,097   
     341,967         $4,756,161         370,726         $4,452,698   
Shares issued to shareholders in reinvestment of distributions            

Initial Class

      —         $—         30,516         $380,540   

Service Class

      —         —         1,646         20,513   
     —         $—         32,162         $401,053   
Shares reacquired            

Initial Class

      (326,399 )       $(4,543,829 )       (625,414 )       $(7,517,887 ) 

Service Class

      (45,488 )       (621,293 )       (69,781 )       (853,147 ) 
     (371,887 )       $(5,165,122 )       (695,195 )       $(8,371,034 ) 
Net change            

Initial Class

      (58,246 )       $(805,896 )       (290,448 )       $(3,487,746 ) 

Service Class

      28,326         396,935         (1,859 )       (29,537 ) 
     (29,920 )       $(408,961 )       (292,307 )       $(3,517,283 ) 

 

(6)   Line of Credit

The fund and certain other funds managed by MFS participate in a $1.1 billion unsecured committed line of credit, subject to a $1 billion sublimit, provided by a syndication of banks under a credit agreement. Borrowings may be made for temporary financing needs. Interest is charged to each fund, based on its borrowings, generally at a rate equal to the higher of the Federal Reserve funds rate or one month LIBOR plus an agreed upon spread. A commitment fee, based on the average daily, unused portion of the committed line of credit, is allocated among the participating funds at the end of each calendar quarter. In addition, the fund and other funds managed by MFS have established unsecured uncommitted borrowing arrangements with certain banks for temporary financing needs. Interest is charged to each fund, based on its borrowings, at a rate equal to the Federal Reserve funds rate plus an agreed upon spread. For the six months ended June 30, 2011, the fund’s commitment fee and interest expense were $206 and $0, respectively, and are included in miscellaneous expense on the Statement of Operations.

 

(7)   Transactions in Underlying Affiliated Funds – Affiliated Issuers

An affiliated issuer may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. For the purposes of this report, the fund assumes the following to be affiliated issuers:

 

Underlying Affiliated Funds    Beginning
Shares/Par
Amount		      Acquisitions
Shares/Par
Amount		      Dispositions
Shares/Par
Amount		      Ending
Shares/Par
Amount		  
MFS Institutional Money Market Portfolio      71,174         4,606,554         (4,431,472 )       246,256   
Underlying Affiliated Funds    Realized
Gain (Loss)		      Capital Gain
Distributions		      Dividend
Income		      Ending
Value		  
MFS Institutional Money Market Portfolio      $—         $—         $320         $246,256   

 

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MFS Global Equity Series

 

BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT

 

A discussion regarding the Board’s most recent review and renewal of the fund’s Investment Advisory Agreement with MFS will be available on or about November 1, 2011 by clicking on the fund’s name under “Variable Insurance Portfolios — VIT” in the “Products and Performance” section of the MFS Web site (mfs.com).

PROXY VOTING POLICIES AND INFORMATION

A general description of the MFS funds’ proxy voting policies and procedures is available without charge, upon request, by calling
1-800-225-2606, by visiting the Proxy Voting section of mfs.com or by visiting the SEC’s Web site at http://www.sec.gov.

Information regarding how the fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available without charge by visiting the Proxy Voting section of mfs.com or by visiting the SEC’s Web site at http://www.sec.gov.

QUARTERLY PORTFOLIO DISCLOSURE

The fund will file a complete schedule of portfolio holdings with the Securities and Exchange Commission (the Commission) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q may be reviewed and copied at the:

Public Reference Room

Securities and Exchange Commission

100 F Street, NE, Room 1580

Washington, D.C. 20549

Information on the operation of the Public Reference Room may be obtained by calling the Commission at 1-800-SEC-0330. The fund’s Form N-Q is available on the EDGAR database on the Commission’s Internet Web site 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: publicinfo@sec.gov or by writing the Public Reference Section at the above address.

FURTHER INFORMATION

From time to time, MFS may post important information about the fund or the MFS funds on the MFS web site (mfs.com). This information is available by visiting the “News & Commentary” section of mfs.com or by clicking on the fund’s name under “Variable Insurance Portfolios — VIT” in the “Products and Performance” section of mfs.com.

 

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rev. 3/11

 

FACTS   WHAT DOES MFS DO WITH YOUR
PERSONAL INFORMATION?		   LOGO

 

Why?   Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?  

The types of personal information we collect and share depend on the product or service you have with us. This information can include:

 

• Social Security number and account balances

• Account transactions and transaction history

• Checking account information and wire transfer instructions

 

When you are no longer our customer, we continue to share your information as described in this notice.

 

How?   All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons MFS chooses to share; and whether you can limit this sharing.

 

Reasons we can share your personal information   Does MFS share?   Can you limit this
sharing?

For our everyday business purposes –

such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus

   Yes   No

For our marketing purposes –

to offer our products and services to you

   No   We don’t share
For joint marketing with other financial companies   No   We don’t share

For our affiliates’ everyday business purposes –

information about your transactions and experiences

   No   We don’t share

For our affiliates’ everyday business purposes –

information about your creditworthiness

   No   We don’t share
For nonaffiliates to market to you   No   We don’t share

 

Questions?   Call 800-225-2606 or go to mfs.com.

 

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Page 2  

 

Who we are
Who is providing this notice?   MFS Funds, MFS Investment Management, MFS Institutional Advisors, Inc., MFS Fund Distributors, Inc., MFS Heritage Trust Company, and MFS Service Center, Inc.

 

What we do
How does MFS protect my personal information?   To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include procedural, electronic, and physical safeguards for the protection of the personal information we collect about you.
How does MFS
collect my personal information?		  

We collect your personal information, for example, when you

 

• open an account or provide account information

• direct us to buy securities or direct us to sell your securities

• make a wire transfer

 

We also collect your personal information from others, such as credit bureaus, affiliates and other companies.

Why can’t I limit all sharing?  

Federal law gives you the right to limit only

 

• sharing for affiliates’ everyday business purposes – information about your creditworthiness

• affiliates from using your information to market to you

• sharing for nonaffiliates to market to you

 

State laws and individual companies may give you additional rights to limit sharing.

 

Definitions
Affiliates  

Companies related by common ownership or control. They can be financial and nonfinancial companies.

 

• MFS does not share personal information with affiliates, except for everyday business purposes as described on page one of this notice.

Nonaffiliates  

Companies not related by common ownership or control. They can be financial and nonfinancial companies.

 

• MFS does not share with nonaffiliates so they can market to you.

Joint Marketing  

A formal agreement between nonaffiliated financial companies that together market financial products or services to you.

 

• MFS doesn’t jointly market.

 

 

Other important information
If you own an MFS product or receive an MFS service in the name of a third party such as a bank or broker-dealer, their privacy policy may apply to you instead of ours.

 

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LOGO

Table of Contents

LOGO

 

MFS® Total Return Series

MFS® Variable Insurance Trust

 

LOGO

 

 

SEMIANNUAL REPORT

June 30, 2011

 

VTR-SEM

Table of Contents

MFS® TOTAL RETURN SERIES

 

CONTENTS   
Letter from the CEO      1   
Portfolio composition      2   
Expense table      4   
Portfolio of investments      5   
Statement of assets and liabilities      12   
Statement of operations      13   
Statements of changes in net assets      14   
Financial highlights      15   
Notes to financial statements      17   
Board review of investment advisory agreement      23   
Proxy voting policies and information      23   
Quarterly portfolio disclosure      23   
Further information      23   
MFS® privacy notice      24   

 

 

The report is prepared for the general information of contract owners. It is authorized for distribution to prospective investors only when preceded or accompanied by a current prospectus.

 

NOT FDIC INSURED Ÿ MAY LOSE VALUE Ÿ NO BANK OR CREDIT UNION GUARANTEE Ÿ

NOT A DEPOSIT Ÿ NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY OR NCUA/NCUSIF

Table of Contents

MFS Total Return Series

 

LETTER FROM THE CEO

 

LOGO

 

Dear Contract Owners:

After about a year of almost uninterrupted macroeconomic and financial market improvement following the global credit crisis, investors grew more cautious in the middle of 2010 as fears grew that some European countries would default on their debt and as economic data showed a weakening

trend in the global economy. As a result asset prices fell significantly.

Last September the U.S. Federal Reserve Board’s promises to make lending conditions easier helped assuage market fears and drive asset prices off their recent lows. A combination of solid earnings and improving economic data gave an additional boost to investor sentiment.

In the following months, the renewed positive market mood, coupled with indications of better global macroeconomic activity, pushed many asset valuations to post-crisis highs. At the same time, global sovereign

bond yields initially rose as investors became concerned about inflationary pressures, driven by higher prices for oil as well as other commodities. However, by the end of the second quarter of 2011, a weakening macroeconomic backdrop and renewed concerns over debt problems in some eurozone countries pushed equities lower.

For the remainder of 2011, we are cautiously optimistic that economic growth will continue to improve and that the global economies will recover from the shocks of the past few years. We expect the pace of recovery worldwide to be uneven and volatile and acknowledge the elevated uncertainty created by events in Japan, Europe, the Middle East, as well as that created by the U.S. debate over raising the debt ceiling and the downgrade by Standard & Poor’s of the U.S. long-term credit rating.

As always, we continue to be mindful of the many economic challenges faced at the local, national, and international levels. It is in times such as these that we want to remind investors of the merits of maintaining a long-term view, adhering to basic investing principles such as asset allocation and diversification, and working closely with their advisors to research and identify appropriate investment opportunities.

Respectfully,

LOGO

Robert J. Manning

Chairman and Chief Executive Officer

MFS Investment Management®

August 16, 2011

 

The opinions expressed in this letter are subject to change, may not be relied upon for investment advice, and no forecasts can be guaranteed.

 

 

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MFS Total Return Series

 

PORTFOLIO COMPOSITION

 

Portfolio structure (i)

LOGO

 

Top ten holdings (i)  
Fannie Mae, 5.5%, 30 Years     2.3%   
U.S. Treasury Notes, 3.75%, 2018     2.2%   
JP Morgan Chase & Co.     2.1%   
Exxon Mobil Corp.     1.8%   
Philip Morris International Inc.     1.7%   
Lockhead Martin Corp.     1.6%   
United Technologies     1.5%   
U.S. Treasury Notes, 2.75%, 2013     1.4%   
Johnson & Johnson     1.4%   
Goldman Sachs     1.3%   

 

Composition including fixed income credit quality (a)(i)  
AAA     2.2%   
AA     1.8%   
A     3.7%   
BBB     4.9%   
BB     0.2%   
B     0.1%   
CCC (o)     0.0%   
CC (o)     0.0%   
D (o)     0.0%   
U.S. Government     12.3%   
Federal Agencies     13.4%   
Not Rated (o)     0.0%   
Non-Fixed Income     60.2%   
Cash & Other     1.2%   
Equity sectors  
Financial Services     12.9%   
Energy     7.1%   
Consumer Staples     6.9%   
Health Care     6.8%   
Industrial Goods & Services     6.3%   
Utilities & Communications     4.7%   
Technology     3.8%   
Leisure     3.5%   
Basic Materials     2.8%   
Retailing     2.5%   
Autos & Housing     1.4%   
Special Products & Services     1.0%   
Transportation     0.5%   

 

Fixed income sectors (i)  
Mortgage-Backed Securities     12.5%   
U.S. Treasury Securities     12.3%   
High Grade Corporates     9.1%   
Commercial Mortgage-Backed Securities     2.0%   
U.S. Government Agencies     0.8%   
Non-U.S. Government Bonds     0.8%   
Emerging Markets Bonds     0.5%   
High Yield Corporates     0.2%   
Collateralized Debt Obligations     0.2%   
Asset-Backed Securities     0.2%   
 

 

(a) For all securities other than those specifically described below, ratings are assigned to underlying securities utilizing ratings from Moody’s, Fitch, and Standard & Poor’s rating agencies and applying the following hierarchy: If all three agencies provide a rating, the middle rating (after dropping the highest and lowest ratings) is assigned; if two of the three agencies rate a security, the lower of the two is assigned. Ratings are shown in the S&P and Fitch scale (e.g., AAA). All ratings are subject to change. U.S. Government includes securities issued by the U.S. Department of the Treasury. Federal Agencies includes rated and unrated U.S. Agency fixed-income securities, U.S. Agency mortgage-backed securities, and collateralized mortgage obligations of U.S. Agency mortgage-backed securities. Not Rated includes fixed income securities, including fixed income futures, which have not been rated by any rating agency. Non-Fixed Income includes equity securities (including convertible bonds and equity derivatives) and commodities. Cash & Other includes cash, other assets less liabilities, offsets to derivative positions, and short-term securities. The fund may not hold all of these instruments. The fund itself has not been rated.

 

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MFS Total Return Series

 

Portfolio Composition – continued

 

 

(i) For purposes of this presentation, the components include the market value of securities, and reflect the impact of the equivalent exposure of derivative positions, if applicable. These amounts may be negative from time to time. The bond component will include any accrued interest amounts. Equivalent exposure is a calculated amount that translates the derivative position into a reasonable approximation of the amount of the underlying asset that the portfolio would have to hold at a given point in time to have the same price sensitivity that results from the portfolio’s ownership of the derivative contract. When dealing with derivatives, equivalent exposure is a more representative measure of the potential impact of a position on portfolio performance than market value. Where the fund holds convertible bonds, these are treated as part of the equity portion of the portfolio.

 

(o) Less than 0.1%.

Percentages are based on net assets as of 6/30/11.

The portfolio is actively managed and current holdings may be different.

 

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MFS Total Return Series

 

EXPENSE TABLE

 

Fund Expenses Borne by the Contract Holders During the Period,

January 1, 2011 through June 30, 2011

As a contract holder of the fund, you incur ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period January 1, 2011 through June 30, 2011.

Actual Expenses

The first line for each share class in the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The second line for each share class in the following table provides information about hypothetical account values and hypothetical expenses based on the fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight the fund’s ongoing costs only and do not take into account the fees and expenses imposed under the variable contracts through which your investment in the fund is made. Therefore, the second line for each share class in the table is useful in comparing ongoing costs associated with an investment in vehicles (such as the fund) which fund benefits under variable annuity and variable life insurance contracts and to qualified pension and retirement plans only, and will not help you determine the relative total costs of investing in the fund through variable annuity and variable life insurance contracts. If the fees and expenses imposed under the variable contracts were included, your costs would have been higher.

 

Share Class         Annualized
Expense Ratio		      Beginning
Account Value
1/01/11		      Ending
Account Value
6/30/11		      Expenses Paid
During Period (p)
1/01/11-6/30/11		  
Initial Class   Actual      0.79%         $1,000.00         $1,041.69         $4.00   
  Hypothetical (h)      0.79%         $1,000.00         $1,020.88         $3.96   
Service Class   Actual      1.04%         $1,000.00         $1,040.58         $5.26   
  Hypothetical (h)      1.04%         $1,000.00         $1,019.64         $5.21   

 

(h) 5% class return per year before expenses.

 

(p) Expenses paid is equal to each class’ annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by the number of days in the period, divided by the number of days in the year.

Expense Changes Impacting the Table

Changes to the fund’s fee arrangements occurred during the six month period. Had these fee changes been in effect throughout the entire six month period, the annualized expense ratios would have been 0.76% and 1.01% for Initial Class and Service Class shares, respectively; the actual expenses paid during the period would have been approximately $3.85 and $5.11 for Initial Class and Service Class shares, respectively; and the hypothetical expenses paid during the period would have been approximately $3.81 and $5.06 for Initial Class and Service Class shares, respectively. For further information about the fund’s fee arrangements and changes to those fee arrangements, please see Note 3 in the Notes to Financial Statements.

 

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MFS Total Return Series

 

PORTFOLIO OF INVESTMENTS 6/30/11 (unaudited)

 

The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.

Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – 60.0%   
Aerospace – 4.5%     
Honeywell International, Inc.      332,560      $ 19,817,242   
Huntington Ingalls Industries, Inc. (a)      25,889        893,171   
Lockheed Martin Corp.      550,163        44,546,698   
Northrop Grumman Corp.      155,657        10,794,813   
Precision Castparts Corp.      31,660        5,212,819   
United Technologies Corp.      444,210        39,317,027   
    

 

 

  
     $ 120,581,770   
    

 

 

  
Alcoholic Beverages – 0.9%     
Diageo PLC      944,006      $ 19,287,011   
Heineken N.V.      78,292        4,708,301   
    

 

 

  
     $ 23,995,312   
    

 

 

  
Apparel Manufacturers – 0.2%     
NIKE, Inc., “B”      46,396      $ 4,174,712   
    

 

 

  
Automotive – 0.7%     
General Motors Co. (a)      133,620      $ 4,056,703   
Johnson Controls, Inc.      330,240        13,757,798   
    

 

 

  
     $ 17,814,501   
    

 

 

  
Broadcasting – 2.1%     
Omnicom Group, Inc.      319,160      $ 15,370,746   
Viacom, Inc., “B”      385,780        19,674,780   
Walt Disney Co.      535,720        20,914,509   
    

 

 

  
     $ 55,960,035   
    

 

 

  
Brokerage & Asset Managers – 0.6%     
Blackrock, Inc.      32,163      $ 6,169,185   
Charles Schwab Corp.      257,030        4,228,144   
Franklin Resources, Inc.      54,125        7,106,071   
    

 

 

  
     $ 17,503,400   
    

 

 

  
Business Services – 1.0%     
Accenture PLC, “A”      295,770      $ 17,870,423   
Dun & Bradstreet Corp.      57,960        4,378,298   
Western Union Co.      245,540        4,918,166   
    

 

 

  
     $ 27,166,887   
    

 

 

  
Cable TV – 0.5%     
Comcast Corp., “Special A”      512,640      $ 12,421,267   
    

 

 

  
Chemicals – 2.0%     
3M Co.      235,870      $ 22,372,270   
Celanese Corp.      127,570        6,800,757   
E.I. du Pont de Nemours & Co.      103,810        5,610,931   
PPG Industries, Inc.      208,030        18,887,044   
    

 

 

  
     $ 53,671,002   
    

 

 

  
Computer Software – 1.3%     
Check Point Software Technologies Ltd. (a)      85,920      $ 4,884,552   
Microsoft Corp.      145,730        3,788,980   
Oracle Corp.      814,622        26,809,210   
    

 

 

  
     $ 35,482,742   
    

 

 

  
Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – continued   
Computer Software – Systems – 1.6%     
Hewlett-Packard Co.      373,111      $ 13,581,240   
International Business Machines Corp.      165,520        28,394,956   
    

 

 

  
     $ 41,976,196   
    

 

 

  
Construction – 0.6%     
Pulte Homes, Inc. (a)      208,630      $ 1,598,106   
Sherwin-Williams Co.      91,000        7,632,170   
Stanley Black & Decker, Inc.      113,379        8,168,957   
    

 

 

  
     $ 17,399,233   
    

 

 

  
Consumer Products – 1.0%     
Avon Products, Inc.      214,090      $ 5,994,520   
Procter & Gamble Co.      248,001        15,765,424   
Reckitt Benckiser Group PLC      73,937        4,082,085   
    

 

 

  
     $ 25,842,029   
    

 

 

  
Electrical Equipment – 1.1%     
Danaher Corp.      510,680      $ 27,060,933   
Tyco International Ltd.      77,220        3,816,985   
    

 

 

  
     $ 30,877,918   
    

 

 

  
Electronics – 0.5%     
ASML Holding N.V.      41,160      $ 1,521,274   
Intel Corp.      378,508        8,387,737   
Microchip Technology, Inc.      114,090        4,325,152   
    

 

 

  
     $ 14,234,163   
    

 

 

  
Energy – Independent – 3.0%     
Anadarko Petroleum Corp.      76,170      $ 5,846,809   
Apache Corp.      283,180        34,941,580   
EOG Resources, Inc.      109,950        11,495,273   
Noble Energy, Inc.      93,310        8,363,375   
Occidental Petroleum Corp.      192,310        20,007,932   
    

 

 

  
     $ 80,654,969   
    

 

 

  
Energy – Integrated – 3.8%     
Chevron Corp.      305,342      $ 31,401,371   
EQT Corp.      101,720        5,342,334   
Exxon Mobil Corp.      594,952        48,417,194   
Hess Corp.      179,280        13,402,973   
QEP Resources, Inc.      74,630        3,121,773   
    

 

 

  
     $ 101,685,645   
    

 

 

  
Engineering – Construction – 0.3%     
Fluor Corp.      117,390      $ 7,590,437   
    

 

 

  
Food & Beverages – 2.7%     
General Mills, Inc.      319,080      $ 11,876,158   
Groupe Danone      88,296        6,587,782   
J.M. Smucker Co.      47,065        3,597,649   
Kellogg Co.      115,077        6,366,060   
Nestle S.A.      388,622        24,151,650   
PepsiCo, Inc.      304,310        21,432,553   
    

 

 

  
     $ 74,011,852   
    

 

 

  
 

 

5

Table of Contents

MFS Total Return Series

 

Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – continued   
Food & Drug Stores – 0.8%     
CVS Caremark Corp.      344,730      $ 12,954,953   
Kroger Co.      172,320        4,273,536   
Walgreen Co.      94,540        4,014,168   
          
     $ 21,242,657   
          
General Merchandise – 1.1%     
Kohl’s Corp.      206,310      $ 10,317,563   
Target Corp.      399,560        18,743,360   
          
     $ 29,060,923   
          
Health Maintenance Organizations – 0.1%     
WellPoint, Inc.      29,980      $ 2,361,525   
          
Insurance – 4.2%     
ACE Ltd.      283,900      $ 18,686,298   
Aon Corp.      268,020        13,749,426   
Chubb Corp.      89,790        5,621,752   
MetLife, Inc.      737,550        32,356,319   
Prudential Financial, Inc.      394,930        25,113,599   
Travelers Cos., Inc.      300,230        17,527,427   
          
     $ 113,054,821   
          
Leisure & Toys – 0.4%     
Hasbro, Inc.      199,070      $ 8,745,145   
Mattel, Inc.      123,630        3,398,589   
          
     $ 12,143,734   
          
Machinery & Tools – 0.4%     
Eaton Corp.      225,630      $ 11,608,664   
          
Major Banks – 7.3%     
Bank of America Corp.      1,959,030      $ 21,470,969   
Bank of New York Mellon Corp.      1,139,522        29,194,554   
Goldman Sachs Group, Inc.      272,100        36,213,789   
JPMorgan Chase & Co.      1,357,074        55,558,610   
PNC Financial Services Group, Inc.      175,830        10,481,226   
State Street Corp.      352,630        15,900,087   
SunTrust Banks, Inc.      91,690        2,365,602   
Wells Fargo & Co.      940,820        26,399,409   
          
     $ 197,584,246   
          
Medical & Health Technology & Services – 0.3%     
AmerisourceBergen Corp.      112,970      $ 4,676,958   
Quest Diagnostics, Inc.      79,070        4,673,037   
          
     $ 9,349,995   
          
Medical Equipment – 2.3%     
Becton, Dickinson & Co.      168,510      $ 14,520,507   
Covidien PLC      138,770        7,386,727   
Medtronic, Inc.      424,400        16,352,132   
St. Jude Medical, Inc.      251,330        11,983,414   
Thermo Fisher Scientific, Inc. (a)      188,610        12,144,598   
          
     $ 62,387,378   
          
Metals & Mining – 0.1%     
Cliffs Natural Resources, Inc.      39,870      $ 3,685,982   
          
Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – continued   
Natural Gas – Pipeline – 0.4%     
Kinder Morgan, Inc.      77,400      $ 2,223,702   
Williams Cos., Inc.      259,898        7,861,915   
          
     $ 10,085,617   
          
Network & Telecom – 0.4%     
Cisco Systems, Inc.      644,950      $ 10,067,670   
          
Oil Services – 0.3%     
Schlumberger Ltd.      48,190      $ 4,163,616   
Transocean, Inc.      79,970        5,162,863   
          
     $ 9,326,479   
          
Other Banks & Diversified Financials – 0.8%     
MasterCard, Inc., “A”      28,010      $ 8,440,533   
TCF Financial Corp.      202,840        2,799,192   
Visa, Inc., “A”      81,520        6,868,875   
Zions Bancorporation      180,710        4,338,847   
          
     $ 22,447,447   
          
Pharmaceuticals – 4.1%     
Abbott Laboratories      524,420      $ 27,594,980   
Bayer AG      50,625        4,070,063   
GlaxoSmithKline PLC      160,927        3,445,454   
Johnson & Johnson      555,620        36,959,842   
Merck & Co., Inc.      95,000        3,352,550   
Pfizer, Inc.      1,512,356        31,154,534   
Roche Holding AG      25,088        4,198,491   
          
     $ 110,775,914   
          
Railroad & Shipping – 0.3%     
Canadian National Railway Co.      57,790      $ 4,617,421   
CSX Corp.      132,380        3,471,004   
          
     $ 8,088,425   
          
Restaurants – 0.5%     
McDonald’s Corp.      144,280      $ 12,165,690   
          
Specialty Chemicals – 0.7%     
Air Products & Chemicals, Inc.      185,110      $ 17,692,814   
Airgas, Inc.      25,380        1,777,615   
          
     $ 19,470,429   
          
Specialty Stores – 0.4%     
Advance Auto Parts, Inc.      74,660      $ 4,366,863   
Staples, Inc.      388,970        6,145,726   
          
     $ 10,512,589   
          
Telecommunications – Wireless – 0.7%     
Vodafone Group PLC      7,295,687      $ 19,355,340   
          
Telephone Services – 1.5%     
AT&T, Inc.      1,149,204      $ 36,096,498   
CenturyLink, Inc.      111,831        4,521,327   
          
     $ 40,617,825   
          
Tobacco – 2.3%     
Altria Group, Inc.      203,323      $ 5,369,760   
Philip Morris International, Inc.      695,110        46,412,495   
Reynolds American, Inc.      243,780        9,032,049   
          
     $ 60,814,304   
          
 

 

6

Table of Contents

MFS Total Return Series

 

Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
    
COMMON STOCKS – continued   
Trucking – 0.2%     
United Parcel Service, Inc., “B”      80,710      $ 5,886,180   
          
Utilities – Electric Power – 2.0%     
American Electric Power Co., Inc.      152,510      $ 5,746,577   
Dominion Resources, Inc.      42,600        2,056,302   
Entergy Corp.      88,130        6,017,516   
NextEra Energy, Inc.      76,714        4,407,986   
NRG Energy, Inc. (a)      187,320        4,604,326   
PG&E Corp.      243,750        10,244,813   
PPL Corp.      341,270        9,497,544   
Public Service Enterprise Group, Inc.      380,030        12,404,179   
          
     $ 54,979,243   
          
Total Common Stocks
(Identified Cost, $1,456,922,403)		      $ 1,620,117,147   
          
BONDS – 38.3%     
Agency – Other – 0.0%     
Financing Corp., 9.65%, 2018    $ 740,000      $ 1,063,128   
          
Asset-Backed & Securitized – 2.3%     
Anthracite Ltd., “A”, CDO, FRN,
0.635%, 2017 (z)		    $ 3,052,679      $ 2,961,099   
Bayview Financial Revolving Mortgage Loan Trust, FRN, 1.785%, 2040 (z)      2,171,604        1,214,605   
Capital Trust Realty Ltd., CDO,
5.16%, 2035 (z)		      2,292,200        2,304,807   
Citigroup Commercial Mortgage Trust, FRN, 5.886%, 2049      5,000,000        5,459,031   
Citigroup/Deutsche Bank Commercial Mortgage Trust, 5.322%, 2049      6,624,280        7,028,644   
Credit Suisse Mortgage Capital Certificate, FRN, 5.695%, 2040      3,818,128        4,047,401   
GMAC Mortgage Corp. Loan Trust, FRN, 5.805%, 2036      1,535,446        1,009,745   
Greenwich Capital Commercial Funding Corp., 5.475%, 2039      5,978,000        5,789,737   
JPMorgan Chase Commercial Mortgage Securities Corp., 4.78%, 2042      2,485,000        2,558,590   
JPMorgan Chase Commercial Mortgage Securities Corp., 5.552%, 2045      1,551,006        1,689,072   
JPMorgan Chase Commercial Mortgage Securities Corp., FRN, 4.948%, 2037      2,548,000        2,568,149   
JPMorgan Chase Commercial Mortgage Securities Corp., FRN, 5.388%, 2041      2,550,000        2,738,030   
JPMorgan Chase Commercial Mortgage Securities Corp., FRN, 5.475%, 2043      4,339,145        4,726,710   
JPMorgan Chase Commercial Mortgage Securities Corp., FRN, 6.067%, 2045      4,332,626        4,808,573   
JPMorgan Chase Commercial Mortgage Securities Corp., FRN, 6.186%, 2051      5,259,422        5,595,247   
Merrill Lynch Mortgage Trust, FRN, “A3”, 6.019%, 2050      808,563        865,584   
Merrill Lynch/Countrywide Commercial Mortgage Trust, FRN, 5.81%, 2050      3,818,128        4,086,309   
Morgan Stanley Capital I, Inc., FRN, 1.185%, 2030 (i)(z)      3,377,188        85,105   
Issuer    Shares/Par     Value ($)  
    
BONDS – continued   
Asset-Backed & Securitized – continued     
Residential Asset Mortgage Products, Inc., FRN, 4.97%, 2034    $ 655,557      $ 661,187   
Residential Funding Mortgage Securities, Inc., FRN, 5.32%, 2035      2,164,000        921,901   
Spirit Master Funding LLC,
5.05%, 2023 (z)		      1,932,451        1,716,519   
Structured Asset Securities Corp., FRN,
4.67%, 2035		      79,237        79,087   
          
     $ 62,915,132   
          
Automotive – 0.1%     
Toyota Motor Credit Corp., 3.2%, 2015    $ 1,430,000      $ 1,486,215   
          
Broadcasting – 0.1%     
Hearst-Argyle Television, Inc., 7.5%, 2027    $ 1,871,000      $ 1,423,754   
News America, Inc., 8.5%, 2025      1,586,000        2,006,412   
          
     $ 3,430,166   
          
Cable TV – 0.4%     
Cox Communications, Inc., 4.625%, 2013    $ 2,949,000      $ 3,131,360   
DIRECTV Holdings LLC, 4.6%, 2021      2,930,000        2,943,891   
Time Warner Entertainment Co. LP, 8.375%, 2033      3,421,000        4,372,411   
          
     $ 10,447,662   
          
Conglomerates – 0.1%     
Kennametal, Inc., 7.2%, 2012    $ 2,140,000      $ 2,257,015   
          
Consumer Services – 0.1%     
Western Union Co., 5.4%, 2011    $ 3,514,000      $ 3,577,350   
          
Defense Electronics – 0.1%     
BAE Systems Holdings, Inc.,
5.2%, 2015 (n)		    $ 2,440,000      $ 2,649,113   
          
Electronics – 0.1%     
Tyco Electronics Group S.A., 6.55%, 2017    $ 2,931,000      $ 3,453,445   
          
Emerging Market Quasi-Sovereign – 0.2%     
Corporacion Nacional del Cobre de Chile, 3.75%, 2020 (n)    $ 746,000      $ 708,754   
Petrobras International Finance Co., 6.75%, 2041      637,000        679,752   
Petroleos Mexicanos, 8%, 2019      1,753,000        2,161,449   
Ras Laffan Liquefied Natural Gas Co. Ltd., 5.832%, 2016 (n)      2,281,958        2,487,334   
          
     $ 6,037,289   
          
Emerging Market Sovereign – 0.2%     
Republic of Peru, 7.35%, 2025    $ 184,000      $ 224,756   
Russian Federation, 3.625%, 2015 (z)      5,000,000        5,137,500   
          
     $ 5,362,256   
          
Energy – Independent – 0.1%     
Anadarko Petroleum Corp., 6.45%, 2036    $ 3,000,000      $ 3,130,338   
          
Energy – Integrated – 0.5%     
BP Capital Markets PLC, 4.5%, 2020    $ 683,000      $ 696,519   
BP Capital Markets PLC, 4.742%, 2021      2,950,000        3,043,226   
Hess Corp., 8.125%, 2019      700,000        885,707   
 

 

7

Table of Contents

MFS Total Return Series

 

Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
    
BONDS – continued     
Energy – Integrated – continued     
Husky Energy, Inc., 5.9%, 2014    $ 1,758,000      $ 1,956,631   
Husky Energy, Inc., 7.25%, 2019      1,793,000        2,148,898   
Petro-Canada, 6.05%, 2018      3,647,000        4,129,199   
    

 

 

  
     $ 12,860,180   
    

 

 

  
Financial Institutions – 0.1%     
General Electric Capital Corp.,
5.45%, 2013		    $ 1,963,000      $ 2,089,152   
General Electric Capital Corp.,
4.625%, 2021		      1,520,000        1,528,947   
    

 

 

  
     $ 3,618,099   
    

 

 

  
Food & Beverages – 0.4%     
Anheuser-Busch InBev Worldwide, Inc., 8%, 2039    $ 2,880,000      $ 3,892,694   
Miller Brewing Co., 5.5%, 2013 (n)      5,763,000        6,242,332   
    

 

 

  
     $ 10,135,026   
    

 

 

  
Food & Drug Stores – 0.1%     
CVS Caremark Corp., 6.125%, 2016    $ 2,078,000      $ 2,382,219   
    

 

 

  
Gaming & Lodging – 0.1%     
Wyndham Worldwide Corp., 6%, 2016    $ 1,997,000      $ 2,120,772   
    

 

 

  
Insurance – 0.2%     
ING Groep N.V., 5.775% to 2015,
FRN to 2049		    $ 2,021,000      $ 1,859,320   
MetLife, Inc., 4.75%, 2021      740,000        754,367   
Metropolitan Life Global Funding,
5.125%, 2013 (n)		      1,200,000        1,276,834   
Metropolitan Life Global Funding,
5.125%, 2014 (n)		      1,060,000        1,158,114   
Prudential Financial, Inc., 6.625%, 2040      980,000        1,058,080   
    

 

 

  
     $ 6,106,715   
    

 

 

  
Insurance – Property & Casualty – 0.2%     
Chubb Corp., 6.375% to 2017,
FRN to 2067		    $ 5,036,000      $ 5,212,260   
ZFS Finance USA Trust IV,
5.875% to 2012, FRN to 2062 (n)		      243,000        245,299   
ZFS Finance USA Trust V, 6.5% to 2017, FRN to 2067 (n)      990,000        985,050   
    

 

 

  
     $ 6,442,609   
    

 

 

  
International Market Quasi-Sovereign – 0.7%     
Achmea Hypotheekbank N.V.,
3.2%, 2014 (n)		    $ 2,020,000      $ 2,120,196   
ING Bank N.V., 3.9%, 2014 (n)      2,900,000        3,102,785   
Irish Life & Permanent PLC,
3.6%, 2013 (e)(n)		      3,600,000        3,026,552   
KFW International Finance, Inc.,
4.875%, 2019		      2,980,000        3,370,395   
Royal Bank of Scotland Group PLC, 2.625%, 2012 (n)      5,190,000        5,288,008   
Societe Financement de l’ Economie Francaise, 3.375%, 2014 (n)      1,664,000        1,764,887   
    

 

 

  
     $ 18,672,823   
    

 

 

  
Issuer    Shares/Par     Value ($)  
    
BONDS – continued     
Local Authorities – 0.1%     
New Jersey Turnpike Authority Rev. (Build America Bonds), “F”, 7.414%, 2040    $ 2,405,000      $ 2,902,931   
    

 

 

  
Machinery & Tools – 0.1%     
Atlas Copco AB, 5.6%, 2017 (n)    $ 3,117,000      $ 3,467,669   
    

 

 

  
Major Banks – 1.9%     
ABN Amro Bank N.V., FRN,
2.042%, 2014 (n)		    $ 4,710,000      $ 4,807,780   
Bank of America Corp., 7.375%, 2014      1,160,000        1,304,067   
Bank of America Corp., 5.49%, 2019      2,160,000        2,164,106   
Bank of America Corp., 7.625%, 2019      1,640,000        1,899,763   
BNP Paribas, 7.195% to 2037,
FRN to 2049 (n)		      1,042,000        1,005,530   
Commonwealth Bank of Australia,
5%, 2019 (n)		      1,620,000        1,685,788   
Credit Suisse New York, 5.5%, 2014      3,360,000        3,690,439   
Goldman Sachs Group, Inc., 5.625%, 2017      2,680,000        2,837,150   
HSBC USA, Inc., 4.875%, 2020      1,700,000        1,673,708   
JPMorgan Chase & Co., 6.3%, 2019      2,760,000        3,110,895   
JPMorgan Chase Capital XXII,
6.45%, 2087		      1,295,000        1,304,811   
JPMorgan Chase Capital XXVII, 7%, 2039      339,000        338,580   
Merrill Lynch & Co., Inc., 6.15%, 2013      2,480,000        2,662,860   
Morgan Stanley, 5.75%, 2016      2,536,000        2,693,557   
Morgan Stanley, 6.625%, 2018      1,980,000        2,181,154   
PNC Funding Corp., 5.625%, 2017      2,078,000        2,288,102   
Royal Bank of Scotland PLC, 6.125%, 2021      2,780,000        2,849,817   
UniCredito Luxembourg Finance S.A.,
6%, 2017 (n)		      3,820,000        3,670,959   
Wachovia Corp., 5.25%, 2014      7,433,000        7,967,173   
    

 

 

  
     $ 50,136,239   
    

 

 

  
Medical & Health Technology & Services – 0.2%     
CareFusion Corp., 6.375%, 2019    $ 2,550,000      $ 2,878,170   
Hospira, Inc., 6.05%, 2017      1,927,000        2,187,141   
    

 

 

  
     $ 5,065,311   
    

 

 

  
Metals & Mining – 0.2%     
ArcelorMittal, 9.85%, 2019    $ 1,278,000      $ 1,620,160   
ArcelorMittal, 5.25%, 2020      2,440,000        2,412,509   
Vale Overseas Ltd., 4.625%, 2020      669,000        665,346   
Vale Overseas Ltd., 6.875%, 2039      525,000        570,560   
    

 

 

  
     $ 5,268,575   
    

 

 

  
Mortgage-Backed – 12.5%     
Fannie Mae, 6.33%, 2011    $ 54,656      $ 54,629   
Fannie Mae, 4.775%, 2012      1,462,002        1,502,821   
Fannie Mae, 4.01%, 2013      228,134        237,817   
Fannie Mae, 4.02%, 2013      1,020,817        1,066,964   
Fannie Mae, 4.767%, 2013      122,782        127,942   
Fannie Mae, 4.845%, 2013      404,677        426,195   
Fannie Mae, 5.37%, 2013 - 2018      2,512,241        2,704,762   
Fannie Mae, 4.562%, 2014      1,003,817        1,069,765   
Fannie Mae, 4.841%, 2014      1,716,074        1,836,681   
Fannie Mae, 4.872%, 2014      890,934        940,778   
Fannie Mae, 4.94%, 2015      379,000        413,111   
 

 

8

Table of Contents

MFS Total Return Series

 

Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
    
BONDS – continued     
Mortgage-Backed – continued     
Fannie Mae, 5.19%, 2015    $ 414,031      $ 454,541   
Fannie Mae, 5.27%, 2016      1,118,046        1,218,957   
Fannie Mae, 5.662%, 2016      315,371        354,018   
Fannie Mae, 5.724%, 2016      705,420        782,968   
Fannie Mae, 5.45%, 2017      787,685        860,729   
Fannie Mae, 5.5%, 2017 - 2038      62,233,153        67,694,664   
Fannie Mae, 6%, 2017 - 2037      31,992,005        35,390,108   
Fannie Mae, 3.8%, 2018      334,464        346,481   
Fannie Mae, 3.91%, 2018      488,455        508,732   
Fannie Mae, 4.5%, 2018 - 2041      13,201,902        13,841,904   
Fannie Mae, 5%, 2018 - 2041      32,915,364        35,206,519   
Fannie Mae, 4.88%, 2020      974,508        1,038,177   
Fannie Mae, 7.5%, 2030 - 2032      246,170        289,117   
Fannie Mae, 6.5%, 2031 - 2037      8,756,042        9,943,219   
Freddie Mac, 6%, 2016 - 2037      16,506,204        18,239,217   
Freddie Mac, 5%, 2017 - 2039      23,996,339        25,673,861   
Freddie Mac, 3.154%, 2018      274,000        273,164   
Freddie Mac, 4.5%, 2018 - 2039      18,785,346        19,714,766   
Freddie Mac, 5.085%, 2019      2,793,000        2,984,513   
Freddie Mac, 5.5%, 2019 - 2037      10,830,185        11,777,776   
Freddie Mac, 3.808%, 2020      2,402,000        2,412,539   
Freddie Mac, 4%, 2024      4,992,528        5,212,015   
Freddie Mac, 6.5%, 2034 - 2038      5,481,800        6,198,318   
Freddie Mac, 4%, 2040 - 2041      15,495,700        15,505,229   
Freddie Mac, FRN, 3.882%, 2017      839,798        877,994   
Ginnie Mae, 6%, 2032 - 2038      6,155,019        6,879,471   
Ginnie Mae, 4.5%, 2033 - 2040      11,903,217        12,628,671   
Ginnie Mae, 5.5%, 2033 - 2035      7,176,649        7,943,236   
Ginnie Mae, 5%, 2034 - 2039      13,305,170        14,447,530   
Ginnie Mae, 4%, 2041      7,903,799        8,042,527   
          
     $ 337,122,426   
          
Natural Gas – Pipeline – 0.2%     
Enterprise Products Operating LLC,
6.5%, 2019		    $ 1,953,000      $ 2,237,140   
Kinder Morgan Energy Partners LP,
7.4%, 2031		      219,000        249,462   
Kinder Morgan Energy Partners LP, 7.75%, 2032      1,000,000        1,187,184   
Spectra Energy Capital LLC, 8%, 2019      1,694,000        2,072,208   
          
     $ 5,745,994   
          
Network & Telecom – 0.5%     
AT&T, Inc., 6.55%, 2039    $ 2,940,000      $ 3,224,680   
BellSouth Corp., 6.55%, 2034      2,642,000        2,842,694   
Telecom Italia Capital, 5.25%, 2013      2,176,000        2,284,306   
Verizon New York, Inc., 6.875%, 2012      5,030,000        5,253,941   
          
     $ 13,605,621   
          
Other Banks & Diversified Financials – 1.1%     
American Express Co., 5.5%, 2016    $ 2,287,000      $ 2,549,358   
Banco Bradesco S.A., 6.75%, 2019 (n)      1,391,000        1,495,325   
Banco Santander U.S. Debt S.A.U., 3.781%, 2015 (n)      1,100,000        1,060,682   
Capital One Financial Corp., 6.15%, 2016      2,872,000        3,168,448   
Citigroup, Inc., 5%, 2014      2,679,000        2,807,479   
Issuer    Shares/Par     Value ($)  
    
BONDS – continued     
Other Banks & Diversified Financials – continued   
Groupe BPCE S.A., 12.5% to 2019,
FRN to 2049 (n)		    $ 3,021,000      $ 3,457,112   
HSBC Holdings PLC, 5.1%, 2021      1,568,000        1,606,861   
Lloyds TSB Bank PLC, 4.875%, 2016      2,560,000        2,618,294   
Nordea Bank AB, 4.875%, 2021 (z)      1,880,000        1,900,971   
Nordea Bank AB, 5.424% to 2015,
FRN to 2049 (n)		      862,000        818,900   
Svenska Handelsbanken AB,
4.875%, 2014 (n)		      3,040,000        3,283,689   
UBS Preferred Funding Trust V,
6.243% to 2016, FRN to 2049		      4,738,000        4,643,240   
          
     $ 29,410,359   
          
Pharmaceuticals – 0.2%     
Pfizer, Inc., 7.2%, 2039    $ 1,240,000      $ 1,556,785   
Roche Holdings, Inc., 6%, 2019 (n)      4,080,000        4,700,817   
          
     $ 6,257,602   
          
Real Estate – 0.6%     
Boston Properties, Inc., REIT, 5%, 2015    $ 1,871,000      $ 2,028,113   
HCP, Inc., REIT, 5.375%, 2021      1,703,000        1,756,520   
HRPT Properties Trust, REIT, 6.25%, 2016      3,320,000        3,635,164   
HRPT Properties Trust, REIT, 6.65%, 2018      1,620,000        1,800,844   
Kimco Realty Corp., REIT, 6%, 2012      936,000        990,381   
Simon Property Group, Inc., REIT,
5.875%, 2017		      1,880,000        2,129,034   
WEA Finance LLC, REIT, 6.75%, 2019 (n)      837,000        949,152   
WEA Finance LLC, REIT, 4.625%, 2021 (z)      2,300,000        2,232,051   
          
     $ 15,521,259   
          
Retailers – 0.3%     
Home Depot, Inc., 5.95%, 2041    $ 2,623,000      $ 2,701,234   
Limited Brands, Inc., 5.25%, 2014      779,000        814,055   
Wal-Mart Stores, Inc., 5.25%, 2035      5,106,000        5,106,327   
          
     $ 8,621,616   
          
Supermarkets – 0.0%     
Kroger Co., 5%, 2013    $ 1,045,000      $ 1,113,812   
          
Supranational – 0.1%     
Asian Development Bank, 2.75%, 2014    $ 2,220,000      $ 2,324,011   
          
Telecommunications – Wireless – 0.3%   
Crown Castle Towers LLC,
6.113%, 2020 (n)		    $ 1,605,000      $ 1,751,246   
Crown Castle Towers LLC,
4.883%, 2020 (n)		      830,000        834,586   
Rogers Communications, Inc., 6.8%, 2018      3,340,000        3,941,100   
          
     $ 6,526,932   
          
Transportation – Services – 0.1%     
Erac USA Finance Co., 7%, 2037 (n)    $ 2,572,000      $ 2,830,041   
          
U.S. Government Agencies and Equivalents – 0.8%   
Freddie Mac, 4.625%, 2012    $ 13,500,000      $ 14,258,309   
Small Business Administration,
4.77%, 2024		      619,671        660,336   
 

 

9

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MFS Total Return Series

 

Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
    
BONDS – continued     
U.S. Government Agencies and Equivalents – continued   
Small Business Administration,
5.18%, 2024		    $ 1,042,812      $ 1,117,607   
Small Business Administration,
4.99%, 2024		      1,023,078        1,096,826   
Small Business Administration,
5.11%, 2025		      4,106,891        4,423,762   
    

 

 

  
     $ 21,556,840   
    

 

 

  
U.S. Treasury Obligations – 12.2%     
U.S. Treasury Bonds, 2%, 2013    $ 4,762,000      $ 4,920,484   
U.S. Treasury Bonds, 8.5%, 2020      4,816,000        6,919,990   
U.S. Treasury Bonds, 8%, 2021      2,560,000        3,645,199   
U.S. Treasury Bonds, 6%, 2026      278,000        346,023   
U.S. Treasury Bonds, 6.75%, 2026      2,129,000        2,841,217   
U.S. Treasury Bonds, 5.25%, 2029      7,300,000        8,423,514   
U.S. Treasury Bonds, 5.375%, 2031      8,423,000        9,872,017   
U.S. Treasury Bonds, 4.5%, 2036      3,417,000        3,531,258   
U.S. Treasury Bonds, 5%, 2037      6,508,000        7,228,963   
U.S. Treasury Bonds, 4.5%, 2039      33,619,400        34,375,837   
U.S. Treasury Notes, 1.375%, 2012      14,232,400        14,341,918   
U.S. Treasury Notes, 1.375%, 2012      13,751,000        13,940,076   
U.S. Treasury Notes, 1.375%, 2013      15,539,000        15,779,373   
U.S. Treasury Notes, 1.375%, 2013      23,897,000        24,289,150   
U.S. Treasury Notes, 3.5%, 2013      8,400,000        8,886,612   
U.S. Treasury Notes, 3.125%, 2013      16,178,000        17,113,283   
U.S. Treasury Notes, 2.75%, 2013      36,007,000        37,807,350   
U.S. Treasury Notes, 1.5%, 2013      6,564,000        6,705,021   
U.S. Treasury Notes, 1.875%, 2014      1,365,000        1,407,656   
U.S. Treasury Notes, 4.125%, 2015      6,910,000        7,667,398   
U.S. Treasury Notes, 9.875%, 2015      2,793,000        3,793,243   
U.S. Treasury Notes, 2.625%, 2016      1,737,000        1,817,878   
U.S. Treasury Notes, 4.875%, 2016      6,300,000        7,262,716   
U.S. Treasury Notes, 3.75%, 2018      53,528,000        57,985,865   
U.S. Treasury Notes, 2.75%, 2019      6,001,500        6,059,168   
U.S. Treasury Notes, TIPS, 1.25%, 2020      21,295,932        22,527,092   
    

 

 

  
     $ 329,488,301   
    

 

 

  
Issuer    Shares/Par     Value ($)  
    
BONDS – continued     
Utilities – Electric Power – 0.8%     
Bruce Mansfield Unit, 6.85%, 2034    $ 4,837,832      $ 5,186,480   
EDP Finance B.V., 6%, 2018 (n)      2,259,000        2,090,153   
Enel Finance International S.A.,
6.25%, 2017 (n)		      2,306,000        2,545,753   
MidAmerican Funding LLC, 6.927%, 2029      387,000        446,442   
Oncor Electric Delivery Co., 7%, 2022      3,162,000        3,769,781   
PSEG Power LLC, 6.95%, 2012      3,745,000        3,948,391   
PSEG Power LLC, 5.32%, 2016      1,603,000        1,766,952   
System Energy Resources, Inc.,
5.129%, 2014 (z)		      423,882        435,081   
Waterford 3 Funding Corp., 8.09%, 2017      142,689        143,680   
    

 

 

  
     $ 20,332,713   
    

 

 

  
Total Bonds
(Identified Cost, $986,502,502)		      $ 1,035,445,804   
    

 

 

  
CONVERTIBLE PREFERRED STOCKS – 0.2%   
Automotive – 0.1%     
General Motors Co., 4.75%      86,200      $ 4,201,388   
    

 

 

  
Utilities – Electric Power – 0.1%     
PPL Corp., 9.5%      25,670      $ 1,434,953   
    

 

 

  
Total Convertible Preferred Stocks
(Identified Cost, $5,593,500)		      $ 5,636,341   
    

 

 

  
MONEY MARKET FUNDS (v) – 1.2%   
MFS Institutional Money Market Portfolio, 0.1%, at Cost and Net Asset Value      31,946,919      $ 31,946,919   
    

 

 

  
Total Investments
(Identified Cost, $2,480,965,324)		      $ 2,693,146,211   
    

 

 

  
OTHER ASSETS, LESS
LIABILITIES – 0.3%		        8,384,025   
    

 

 

  
Net Assets – 100.0%      $ 2,701,530,236   
    

 

 

  
 
(a)   Non-income producing security.

 

(e)   Guaranteed by Minister for Finance of Ireland.

 

(i)   Interest only security for which the fund receives interest on notional principal (Par amount). Par amount shown is the notional principal and does not reflect the cost of the security.

 

(n)   Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be sold in the ordinary course of business in transactions exempt from registration, normally to qualified institutional buyers. At period end, the aggregate value of these securities was $71,510,440, representing 2.7% of net assets.

 

(v)   Underlying affiliated fund that is available only to investment companies managed by MFS. The rate quoted is the annualized seven-day yield of the fund at period end.

 

(z)   Restricted securities are not registered under the Securities Act of 1933 and are subject to legal restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are subsequently registered. Disposal of these securities may involve time-consuming negotiations and prompt sale at an acceptable price may be difficult. The fund holds the following restricted securities:

 

Restricted Securities    Acquisition
Date		    Cost      Value  
Anthracite Ltd., “A”, CDO, FRN, 0.635%, 2017    3/19/10      $2,861,836         $2,961,099   
Bayview Financial Revolving Mortgage Loan Trust, FRN, 1.785%, 2040    3/01/06      2,171,604         1,214,605   
Capital Trust Realty Ltd., CDO, 5.16%, 2035    9/14/10      2,293,598         2,304,807   

 

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MFS Total Return Series

 

Portfolio of Investments (unaudited) – continued

 

Restricted Securities - continued    Acquisition
Date		    Cost      Value  
Morgan Stanley Capital I, Inc., FRN, 1.185%, 2030    4/04/02      $116,350         $85,105   
Nordea Bank AB, 4.875%, 2021    1/11/11      1,871,359         1,900,971   
Russian Federation, 3.625%, 2015    4/22/10      4,979,480         5,137,500   
Spirit Master Funding LLC, 5.05%, 2023    10/04/05      1,914,579         1,716,519   
System Energy Resources, Inc., 5.129%, 2014    4/16/04-11/22/04      424,324         435,081   
WEA Finance LLC, REIT, 4.625%, 2021    10/23/09-5/03/11      2,282,034         2,232,051   
Total Restricted Securities            $17,987,738   
% of Net Assets            0.7%   

The following abbreviations are used in this report and are defined:

 

CDO   Collateralized Debt Obligation

 

FRN   Floating Rate Note. Interest rate resets periodically and may not be the rate reported at period end.

 

PLC   Public Limited Company

 

REIT   Real Estate Investment Trust

 

TIPS   Treasury Inflation Protected Security

See Notes to Financial Statements

 

11

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MFS Total Return Series

 

FINANCIAL STATEMENTS  |  STATEMENT OF ASSETS AND LIABILITIES (unaudited)

 

This statement represents your fund’s balance sheet, which details the assets and liabilities comprising the total value of the fund.

 

At 6/30/11

      
Assets                  

Investments –

      

Non-affiliated issuers, at value (identified cost, $2,449,018,405)

      $2,661,199,292      

Underlying affiliated funds, at cost and value

      31,946,919            

Total investments, at value (identified cost, $2,480,965,324)

      $2,693,146,211            

Cash

      16,592      

Receivables for

      

Investments sold

      2,621,389      

Fund shares sold

      167,320      

Interest and dividends

      11,282,983      

Other assets

      11,651            

Total assets

               $2,707,246,146   

Liabilities

                  

Payables for

      

Investments purchased

      $2,324,872      

Fund shares reacquired

      3,006,649      

Payable to affiliates

      

Investment adviser

      107,302      

Shareholder servicing costs

      1,890      

Distribution and/or service fees

      12,622      

Payable for independent Trustees’ compensation

      8,054      

Accrued expenses and other liabilities

      254,521            

Total liabilities

               $5,715,910   

Net assets

               $2,701,530,236   

Net assets consist of

                  

Paid-in capital

      $2,735,452,099      

Unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies

      212,230,366      

Accumulated net realized gain (loss) on investments and foreign currency transactions

      (341,604,667 )    

Undistributed net investment income

      95,452,438            

Net assets

               $2,701,530,236   

Shares of beneficial interest outstanding

               139,247,988   

 

     Net assets      Shares
outstanding		      Net asset value
per share		  

Initial Class

      $1,773,198,158         90,981,769         $19.49   

Service Class

      928,332,078         48,266,219         19.23   

See Notes to Financial Statements

 

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MFS Total Return Series

 

FINANCIAL STATEMENTS  |  STATEMENT OF OPERATIONS (unaudited)

 

This statement describes how much your fund earned in investment income and accrued in expenses. It also describes any gains and/or losses generated by fund operations.

 

Six months ended 6/30/11      
Net investment income                  

Income

      

Interest

      $22,943,116      

Dividends

      19,507,985      

Dividends from underlying affiliated funds

      16,866      

Foreign taxes withheld

      (228,160 )          

Total investment income

               $42,239,807   

Expenses

      

Management fee

      $10,322,373      

Distribution and/or service fees

      1,162,282      

Shareholder servicing costs

      154,631      

Administrative services fee

      203,298      

Independent Trustees’ compensation

      27,940      

Custodian fee

      93,566      

Shareholder communications

      144,746      

Auditing fees

      30,328      

Legal fees

      24,897      

Miscellaneous

      51,597            

Total expenses

               $12,215,658   

Fees paid indirectly

      (191 )    

Reduction of expenses by investment adviser

      (172,611 )          

Net expenses

               $12,042,856   

Net investment income

               $30,196,951   

Realized and unrealized gain (loss) on investments and foreign currency transactions

                  

Realized gain (loss) (identified cost basis)

      

Investment transactions

      $53,794,054      

Foreign currency transactions

      2,181            

Net realized gain (loss) on investments and foreign currency transactions

               $53,796,235   

Change in unrealized appreciation (depreciation)

      

Investments

      $29,672,342      

Translation of assets and liabilities in foreign currencies

      31,943            

Net unrealized gain (loss) on investments and foreign currency translation

               $29,704,285   

Net realized and unrealized gain (loss) on investments and foreign currency

               $83,500,520   

Change in net assets from operations

               $113,697,471   

See Notes to Financial Statements

 

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MFS Total Return Series

 

FINANCIAL STATEMENTS  |  STATEMENTS OF CHANGES IN NET ASSETS

 

These statements describe the increases and/or decreases in net assets resulting from operations, any distributions, and any shareholder transactions.

 

    
 
 		 Six months ended
6/30/11
(unaudited		   
  
) 		     
 		 Year ended
12/31/10		   
  

Change in net assets

      

From operations

                  

Net investment income

      $30,196,951         $61,744,159   

Net realized gain (loss) on investments and foreign currency transactions

      53,796,235         95,935,731   

Net unrealized gain (loss) on investments and foreign currency translation

      29,704,285         100,356,225   

Change in net assets from operations

      $113,697,471         $258,036,115   

Distributions declared to shareholders

                  

From net investment income

      $—         $(75,285,859 ) 

Change in net assets from fund share transactions

      $(197,427,205 )       $(237,181,394 ) 

Total change in net assets

      $(83,729,734 )       $(54,431,138 ) 

Net assets

                  

At beginning of period

      2,785,259,970         2,839,691,108   

At end of period (including undistributed net investment income of $95,452,438 and
$65,255,487, respectively)

      $2,701,530,236         $2,785,259,970   

See Notes to Financial Statements

 

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FINANCIAL STATEMENTS  |  FINANCIAL HIGHLIGHTS

 

The financial highlights table is intended to help you understand the fund’s financial performance for the semiannual period and the past 5 fiscal years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period.

 

Initial Class      Six months
ended
6/30/11		     Years ended 12/31  
         2010      2009      2008      2007      2006  
       (unaudited)                                    

Net asset value, beginning of period

        $18.71        $17.48         $15.42         $21.68         $21.90         $20.69   
Income (loss) from investment operations                                                       

Net investment income (d)

        $0.22        $0.41         $0.44         $0.52         $0.56         $0.56   

Net realized and unrealized gain (loss) on investments
and foreign currency

        0.56        1.31         2.20         (4.97 )       0.34         1.81   

Total from investment operations

        $0.78        $1.72         $2.64         $(4.45 )       $0.90         $2.37   
Less distributions declared to shareholders                                                       

From net investment income

        $—        $(0.49 )       $(0.58 )       $(0.61 )       $(0.57 )       $(0.50 ) 

From net realized gain on investments

        —        —         —         (1.20 )       (0.55 )       (0.66 ) 

Total distributions declared to shareholders

        $—        $(0.49 )       $(0.58 )       $(1.81 )       $(1.12 )       $(1.16 ) 

Net asset value, end of period

        $19.49        $18.71         $17.48         $15.42         $21.68         $21.90   

Total return (%) (k)(r)(s)

        4.17 (n)      9.93         18.03         (22.13 )       4.17         11.95   
Ratios (%) (to average net assets)
and Supplemental data:		                                                       

Expenses before expense reductions (f)

        0.80 (a)      0.81         0.82         0.82         0.83         0.85   

Expenses after expense reductions (f)

        0.79 (a)      0.81         0.82         0.80         0.80         0.83   

Net investment income

        2.28 (a)      2.30         2.80         2.80         2.55         2.68   

Portfolio turnover

        9        30         43         55         60         51   

Net assets at end of period (000 omitted)

        $1,773,198        $1,860,233         $1,967,226         $1,901,307         $2,887,256         $2,859,830   

See Notes to Financial Statements

 

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Financial Highlights – continued

 

Service Class      Six months
ended
6/30/11		      Years ended 12/31  
          2010        2009        2008        2007        2006  
       (unaudited)                                             

Net asset value, beginning of period

        $18.48         $17.28           $15.24           $21.44           $21.67           $20.50   
Income (loss) from investment operations                                                                

Net investment income (d)

        $0.19         $0.36           $0.39           $0.46           $0.50           $0.50   

Net realized and unrealized gain (loss) on investments
and foreign currency

        0.56         1.29           2.18           (4.91 )         0.34           1.78   

Total from investment operations

        $0.75         $1.65           $2.57           $(4.45 )         $0.84           $2.28   
Less distributions declared to shareholders                                                                

From net investment income

        $—         $(0.45 )         $(0.53 )         $(0.55 )         $(0.52 )         $(0.45 ) 

From net realized gain on investments

        —         —           —           (1.20 )         (0.55 )         (0.66 ) 

Total distributions declared to shareholders

        $—         $(0.45 )         $(0.53 )         $(1.75 )         $(1.07 )         $(1.11 ) 

Net asset value, end of period

        $19.23         $18.48           $17.28           $15.24           $21.44           $21.67   

Total return (%) (k)(r)(s)

        4.06 (n)       9.63           17.72           (22.32 )         3.94           11.62   
Ratios (%) (to average net assets)
and Supplemental data:		                                                                

Expenses before expense reductions (f)

        1.05 (a)       1.06           1.07           1.07           1.08           1.10   

Expenses after expense reductions (f)

        1.04 (a)       1.06           1.07           1.05           1.05           1.09   

Net investment income

        2.03 (a)       2.05           2.54           2.55           2.30           2.44   

Portfolio turnover

        9         30           43           55           60           51   

Net assets at end of period (000 omitted)

        $928,332         $925,027           $872,466           $804,493           $1,113,209           $1,070,518   

 

(a) Annualized.

 

(d) Per share data is based on average shares outstanding.

 

(f) Ratios do not reflect reductions from fees paid indirectly, if applicable.

 

(k) The total return does not reflect expenses that apply to separate accounts. Inclusion of these charges would reduce the total return figures for all periods shown.

 

(n) Not annualized.

 

(r) Certain expenses have been reduced without which performance would have been lower.

 

(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.

See Notes to Financial Statements

 

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NOTES TO FINANCIAL STATEMENTS (unaudited)

 

(1)   Business and Organization

MFS Total Return Series (the fund) is a 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, and qualified retirement and pension plans.

 

(2)   Significant Accounting Policies

General – The preparation of financial statements in conformity with U.S. 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. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the fund’s Statement of Assets and Liabilities through the date that the financial statements were issued. The fund invests a significant portion of its assets in asset-backed and/or mortgage-backed securities. The value of these securities may depend, in part, on the issuer’s or borrower’s credit quality or ability to pay principal and interest when due and may fall if an issuer or borrower defaults on its obligation to pay principal or interest or if the instrument’s credit rating is downgraded by a credit rating agency. U.S. Government securities not supported as to the payment of principal or interest by the U.S. Treasury, such as those issued by Fannie Mae, Freddie Mac, and the Federal Home Loan Banks, are subject to greater credit risk than are U.S. Government securities supported by the U.S. Treasury, such as those issued by Ginnie Mae.

Investment Valuations – Equity securities, including restricted equity securities, are generally valued at the last sale or official closing price as provided by a third-party pricing service on the market or exchange on which they are primarily traded. Equity securities, for which there were no sales reported that day, are generally valued at the last quoted daily bid quotation as provided by a third-party pricing service on the market or exchange on which such securities are primarily traded. Equity securities held short, for which there were no sales reported for that day, are generally valued at the last quoted daily ask quotation as provided by a third-party pricing service on the market or exchange on which such securities are primarily traded. Debt instruments and floating rate loans (other than short-term instruments), including restricted debt instruments, are generally valued at an evaluated or composite bid as provided by a third-party pricing service. Short-term instruments with a maturity at issuance of 60 days or less generally are valued at amortized cost, which approximates market value. Open-end investment companies are generally valued at net asset value per share. Securities and other assets generally valued on the basis of information from a third-party pricing service may also be valued at a broker/dealer bid quotation. Values obtained from third-party pricing services can utilize both transaction data and market information such as yield, quality, coupon rate, maturity, type of issue, trading characteristics, and other market data. The values of foreign securities and other assets and liabilities expressed in foreign currencies are converted to U.S. dollars using the mean of bid and asked prices for rates provided by a third-party pricing service.

The Board of Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments (including any fair valuation) to the adviser pursuant to valuation policies and procedures approved by the Board. If the adviser determines that reliable market quotations are not readily available, investments are valued at fair value as determined in good faith by the adviser in accordance with such procedures under the oversight of the Board of Trustees. Under the fund’s valuation policies and procedures, market quotations are not considered to be readily available for most types of debt instruments and floating rate loans and many types of derivatives. These investments are generally valued at fair value based on information from third-party pricing services. In addition, investments may be valued at fair value if the adviser determines that an investment’s value has been materially affected by events occurring after the close of the exchange or market on which the investment is principally traded (such as foreign exchange or market) and prior to the determination of the fund’s net asset value, or after the halting of trading of a specific security where trading does not resume prior to the close of the exchange or market on which the security is principally traded. Events that occur on a frequent basis after foreign markets close (such as developments in foreign markets and significant movements in the U.S. markets) and prior to the determination of the fund’s net asset value may be deemed to have a material effect on the value of securities traded in foreign markets. Accordingly, the fund’s foreign equity securities may often be valued at fair value. The adviser generally relies on third-party pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and financial condition of the issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment for purposes of calculating the fund’s net asset value can differ depending on the source and method used to determine value. When fair valuation is used, the value of an investment used to determine the

 

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Notes to Financial Statements (unaudited) – continued

 

fund’s net asset value may differ from quoted or published prices for the same investment. There can be no assurance that the fund could obtain the fair value assigned to an investment if it were to sell the investment at the same time at which the fund determines its net asset value per share.

Various inputs are used in determining the value of the fund’s assets or liabilities. These inputs are categorized into three broad levels. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fund’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. Level 1 includes unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes other significant observable market-based inputs (including quoted prices for similar securities, interest rates, prepayment speed, and credit risk). Level 3 includes unobservable inputs, which may include the adviser’s own assumptions in determining the fair value of investments. The following is a summary of the levels used as of June 30, 2011 in valuing the fund’s assets or liabilities:

 

Investments at Value    Level 1      Level 2      Level 3      Total  
Equity Securities      $1,625,753,488         $—         $—         $1,625,753,488   
U.S. Treasury Bonds & U.S. Government Agency & Equivalents      —         352,108,269         —         352,108,269   
Non-U.S. Sovereign Debt      —         32,396,379         —         32,396,379   
Corporate Bonds      —         171,380,005         —         171,380,005   
Residential Mortgage-Backed Securities      —         339,794,346         —         339,794,346   
Commercial Mortgage-Backed Securities      —         53,762,701         —         53,762,701   
Asset-Backed Securities (including CDOs)      —         6,480,511         —         6,480,511   
Foreign Bonds      —         79,523,593         —         79,523,593   
Mutual Funds      31,946,919         —         —         31,946,919   
Total Investments      $1,657,700,407         $1,035,445,804         $—         $2,693,146,211   

For further information regarding security characteristics, see the Portfolio of Investments.

Inflation-Adjusted Debt Securities – The fund invests in inflation-adjusted debt securities issued by the U.S. Treasury. The fund may also invest in inflation-adjusted debt securities issued by U.S. Government agencies and instrumentalities other than the U.S. Treasury and by other entities such as U.S. and foreign corporations and foreign governments. The principal value of these debt securities is adjusted through income according to changes in the Consumer Price Index or another general price or wage index. These debt securities typically pay a fixed rate of interest, but this fixed rate is applied to the inflation-adjusted principal amount. The principal paid at maturity of the debt security is typically equal to the inflation-adjusted principal amount, or the security’s original par value, whichever is greater. Other types of inflation-adjusted securities may use other methods to adjust for other measures of inflation.

Foreign Currency Translation – 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 or on the reporting date for foreign denominated receivables and payables. 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 receivables, payables, 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, loans the securities of the fund to certain qualified institutions (the “Borrowers”) approved by the fund. The loans are collateralized by cash and/or U.S. Treasury and federal agency obligations in an amount typically at least equal to the market value of the securities loaned. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. State Street provides the fund with indemnification against Borrower default. The fund bears the risk of loss with respect to the investment of cash collateral. On loans collateralized by cash, the cash collateral is invested in a money market fund or 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 fund and the lending agent. On loans collateralized by U.S. Treasury and/or federal agency obligations, a fee is received from the Borrower, and is allocated between the fund 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.

 

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Notes to Financial Statements (unaudited) – continued

 

Indemnifications – Under the fund’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the fund. Additionally, in the normal course of business, the fund enters into agreements with service providers that may contain indemnification clauses. The fund’s maximum exposure under these agreements is unknown as this would involve future claims that may be made against the fund that have not yet occurred.

Investment Transactions and Income – Investment transactions are recorded on the trade date. Interest income is recorded on the accrual basis. All premium and discount is amortized or accreted for financial statement purposes in accordance with U.S. generally accepted accounting principles. Inflation-indexed bonds are fixed-income securities whose principal value is periodically adjusted upward or downward to the rate of inflation. Interest is accrued based on the principal value, which is adjusted for inflation. Any increase or decrease in the principal amount of an inflation-indexed bond is generally recorded as an increase or decrease in interest income, respectively, even though the adjusted principal is not received until maturity. Dividends received in cash are recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded when the fund is informed of the dividend if such information is obtained subsequent to 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.

The fund may receive proceeds from litigation settlements. Any proceeds received from litigation involving portfolio holdings are reflected in the Statement of Operations in realized gain/loss if the security has been disposed of by the fund or in unrealized gain/loss if the security is still held by the fund. Any other proceeds from litigation not related to portfolio holdings are reflected as other income in the Statement of Operations.

Fees Paid Indirectly – The fund’s custody fee may be reduced according to an arrangement that measures the value of cash deposited with the custodian by the fund. This amount, for the six months ended June 30, 2011, is shown as a reduction of total expenses on the Statement of Operations.

Tax Matters and Distributions – The fund intends to qualify as a regulated investment company, as defined under Subchapter M of the Internal Revenue Code, and to distribute all of its taxable income, including realized capital gains. As a result, no provision for federal income tax is required. The fund’s federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue Service. Foreign taxes, if any, have been accrued by the fund in the accompanying financial statements.

Distributions to shareholders are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income, expense, gain or loss in different periods for financial statement and tax purposes will reverse at some time in the future. Distributions in excess of net investment income or net realized gains are temporary overdistributions for financial statement purposes resulting from differences in the recognition or classification of income or distributions for financial statement and tax purposes.

Book/tax differences primarily relate to amortization and accretion of debt securities and wash sale loss deferrals.

The tax character of distributions declared to shareholders for the last fiscal year is as follows:

 

     12/31/10  
Ordinary income (including any short-term capital gains)      $75,285,859   

The federal tax cost and the tax basis components of distributable earnings were as follows:

 

As of 6/30/11   
Cost of investments      $2,511,020,734   
Gross appreciation      254,861,476   
Gross depreciation      (72,735,999 ) 
Net unrealized appreciation (depreciation)      $182,125,477   
As of 12/31/10   
Undistributed ordinary income      65,255,487   
Capital loss carryforwards      (364,175,353 ) 
Other temporary differences      17,536   
Net unrealized appreciation (depreciation)      151,282,996   

 

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Notes to Financial Statements (unaudited) – continued

 

The aggregate cost above includes prior fiscal year end tax adjustments, if applicable.

As of December 31, 2010, the fund had capital loss carryforwards available to offset future realized gains. Such losses expire as follows:

 

12/31/16      $(303,515,965 ) 
12/31/17      (60,659,388 ) 
Total      $(364,175,353 ) 

Multiple Classes of Shares of Beneficial Interest – The fund offers multiple classes of shares, which differ in their respective distribution and/or service fees. The fund’s income, realized and unrealized gain (loss), and common expenses are allocated to shareholders based on the daily net assets of each class. Dividends are declared separately for each class. Differences in per share dividend rates are generally due to differences in separate class expenses. The fund’s distributions declared to shareholders as reported on the Statements of Changes in Net Assets are presented by class as follows:

 

     From net investment
income		  
     Six months ended
6/30/11		      Year ended
12/31/10		  
Initial Class      $—         $52,744,422   
Service Class      —         22,541,437   
Total      $—         $75,285,859   

 

(3)   Transactions with Affiliates

Investment Adviser – The fund has an investment advisory agreement with MFS to provide overall investment management and related administrative services and facilities to the fund. The management fee is computed daily and paid monthly at the following annual rates:

 

First $3 billion of average daily net assets      0.75%   
Next $2 billion of average daily net assets      0.65%   
Average daily net assets in excess of $5 billion      0.50%   

Effective May 1, 2011, the investment adviser has agreed in writing to reduce its management fee to 0.70% of average daily net assets in excess of $1 billion up to $2.5 billion, and 0.65% of average daily net assets in excess of $2.5 billion up to $3 billion. This written agreement will continue until modified by the fund’s Board of Trustees, but such agreement will continue at least until April 30, 2013. For the six months ended June 30, 2011, this reduction amounted to $164,748 and is reflected as a reduction of total expenses in the Statement of Operations.

The management fee incurred for the six months ended June 30, 2011 was equivalent to an annual effective rate of 0.74% of the fund’s average daily net assets.

Distributor – MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, is the distributor of shares of the fund. The Trustees have adopted a distribution plan for the Service Class shares pursuant to Rule 12b-1 under the Investment Company Act of 1940.

The fund’s distribution plan provides that the fund will pay MFD distribution and/or service fees equal to 0.25% per annum of its average daily net assets attributable to Service Class shares as partial consideration for services performed and expenses incurred by MFD and financial intermediaries (including participating insurance companies that invest in the fund to fund variable annuity and variable life insurance contracts, sponsors of qualified retirement and pension plans that invest in the fund, and affiliates of these participating insurance companies and plan sponsors) in connection with the sale and distribution of the Service Class shares. MFD may subsequently pay all, or a portion, of the distribution and/or service fees to financial intermediaries.

Shareholder Servicing Agent – MFS Service Center, Inc. (MFSC), a wholly-owned subsidiary of MFS, receives a fee from the fund for its services as shareholder servicing agent. For the six months ended June 30, 2011, the fee was $153,563, which equated to 0.0112% annually of the fund’s average daily net assets. MFSC also receives payment from the fund for out-of-pocket expenses paid by MFSC on behalf of the fund. For the six months ended June 30, 2011, these costs amounted to $1,068.

Administrator – MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the fund partially reimburses MFS the costs incurred to provide these services. The fund is charged an annual fixed amount of $17,500 plus a fee based on average daily net assets. The administrative services fee incurred for the six months ended June 30, 2011 was equivalent to an annual effective rate of 0.0148% of the fund’s average daily net assets.

Trustees’ and Officers’ Compensation – The fund pays compensation to independent Trustees in the form of a retainer, attendance fees, and additional compensation to Board and Committee chairpersons. The fund does not pay compensation directly to Trustees or

 

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Notes to Financial Statements (unaudited) – continued

 

officers of the fund who are also officers of the investment adviser, all of whom receive remuneration for their services to the fund from MFS. Certain officers and Trustees of the fund are officers or directors of MFS, MFD, and MFSC.

Other – This fund and certain other funds managed by MFS (the funds) have entered into services agreements (the Agreements) which provide for payment of fees by the funds to Tarantino LLC and Griffin Compliance LLC in return for the provision of services of an Independent Chief Compliance Officer (ICCO) and Assistant ICCO, respectively, for the funds. The ICCO and Assistant ICCO are officers of the funds and the sole members of Tarantino LLC and Griffin Compliance LLC, respectively. The funds can terminate the Agreements with Tarantino LLC and Griffin Compliance LLC at any time under the terms of the Agreements. For the six months ended June 30, 2011, the aggregate fees paid by the fund to Tarantino LLC and Griffin Compliance LLC were $9,704 and are included in miscellaneous expense on the Statement of Operations. MFS has agreed to reimburse the fund for a portion of the payments made by the fund in the amount of $7,863, which is shown as a reduction of total expenses in the Statement of Operations. Additionally, MFS has agreed to bear all expenses associated with office space, other administrative support, and supplies provided to the ICCO and Assistant ICCO.

The fund invests in the MFS Institutional Money Market Portfolio which is managed by MFS and seeks a high level of current income consistent with preservation of capital and liquidity. Income earned on this investment is included in dividends from underlying affiliated funds on the Statement of Operations. This money market fund does not pay a management fee to MFS.

 

(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      $39,999,262         $104,618,612   
Investments (non-U.S. Government securities)      $204,585,752         $318,369,076   

 

(5)   Shares of Beneficial Interest

The fund’s Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest. Transactions in fund shares were as follows:

 

     Six months ended 6/30/11      Year ended 12/31/10  
     Shares      Amount      Shares      Amount  
Shares sold            

Initial Class

      1,477,139         $28,416,001         2,578,398         $45,549,752   

Service Class

      3,279,888         62,345,936         7,547,496         132,017,347   
     4,757,027         $90,761,937         10,125,894         $177,567,099   
Shares issued to shareholders in reinvestment of distributions            

Initial Class

      —         $—         2,935,137         $52,744,422   

Service Class

      —         —         1,267,085         22,541,437   
     —         $—         4,202,222         $75,285,859   
Shares reacquired            

Initial Class

      (9,937,322 )       $(191,837,174 )       (18,606,613 )       $(328,691,104 ) 

Service Class

      (5,058,761 )       (96,351,968 )       (9,247,365 )       (161,343,248 ) 
     (14,996,083 )       $(288,189,142 )       (27,853,978 )       $(490,034,352 ) 
Net change            

Initial Class

      (8,460,183 )       $(163,421,173 )       (13,093,078 )       $(230,396,930 ) 

Service Class

      (1,778,873 )       (34,006,032 )       (432,784 )       (6,784,464 ) 
     (10,239,056 )       $(197,427,205 )       (13,525,862 )       $(237,181,394 ) 

 

(6)   Line of Credit

The fund and certain other funds managed by MFS participate in a $1.1 billion unsecured committed line of credit, subject to a $1 billion sublimit, provided by a syndication of banks under a credit agreement. Borrowings may be made for temporary financing needs. Interest is charged to each fund, based on its borrowings, generally at a rate equal to the higher of the Federal Reserve funds rate or one month LIBOR plus an agreed upon spread. A commitment fee, based on the average daily, unused portion of the committed line of credit, is allocated among the participating funds at the end of each calendar quarter. In addition, the fund and other funds managed by MFS have established unsecured uncommitted borrowing arrangements with certain banks for temporary financing needs. Interest is charged to each fund, based on its borrowings, at a rate equal to the Federal Reserve funds rate plus an agreed upon spread. For the six months ended June 30, 2011, the fund’s commitment fee and interest expense were $13,473 and $0, respectively, and are included in miscellaneous expense on the Statement of Operations.

 

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Notes to Financial Statements (unaudited) – continued

 

 

(7)   Transactions in Underlying Affiliated Funds – Affiliated Issuers

An affiliated issuer may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. For the purposes of this report, the fund assumes the following to be affiliated issuers:

 

Underlying Affiliated Funds    Beginning
Shares/Par
Amount		      Acquisitions
Shares/Par
Amount		      Dispositions
Shares/Par
Amount		      Ending
Shares/Par
Amount		  
MFS Institutional Money Market Portfolio      41,354,810         205,387,448         (214,795,339 )       31,946,919   
Underlying Affiliated Funds   

Realized

Gain (Loss)

     

Capital Gain

Distributions

      Dividend
Income		     

Ending

Value

  
MFS Institutional Money Market Portfolio      $—         $—         $16,866         $31,946,919   

 

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BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT

 

A discussion regarding the Board’s most recent review and renewal of the fund’s Investment Advisory Agreement with MFS will be available on or about November 1, 2011 by clicking on the fund’s name under “Variable Insurance Portfolios — VIT” in the “Products and Performance” section of the MFS Web site (mfs.com).

PROXY VOTING POLICIES AND INFORMATION

A general description of the MFS funds’ proxy voting policies and procedures is available without charge, upon request, by calling
1-800-225-2606, by visiting the Proxy Voting section of mfs.com or by visiting the SEC’s Web site at http://www.sec.gov.

Information regarding how the fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available without charge by visiting the Proxy Voting section of mfs.com or by visiting the SEC’s Web site at http://www.sec.gov.

QUARTERLY PORTFOLIO DISCLOSURE

The fund will file a complete schedule of portfolio holdings with the Securities and Exchange Commission (the Commission) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q may be reviewed and copied at the:

Public Reference Room

Securities and Exchange Commission

100 F Street, NE, Room 1580

Washington, D.C. 20549

Information on the operation of the Public Reference Room may be obtained by calling the Commission at 1-800-SEC-0330. The fund’s Form N-Q is available on the EDGAR database on the Commission’s Internet Web site 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: publicinfo@sec.gov or by writing the Public Reference Section at the above address.

FURTHER INFORMATION

From time to time, MFS may post important information about the fund or the MFS funds on the MFS web site (mfs.com). This information is available by visiting the “News & Commentary” section of mfs.com or by clicking on the fund’s name under “Variable Insurance Portfolios — VIT” in the “Products and Performance” section of mfs.com.

 

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FACTS   WHAT DOES MFS DO WITH YOUR
PERSONAL INFORMATION?		   LOGO

 

Why?   Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?  

The types of personal information we collect and share depend on the product or service you have with us. This information can include:

 

• Social Security number and account balances

• Account transactions and transaction history

• Checking account information and wire transfer instructions

 

When you are no longer our customer, we continue to share your information as described in this notice.

 

How?   All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons MFS chooses to share; and whether you can limit this sharing.

 

Reasons we can share your personal information   Does MFS share?   Can you limit this
sharing?

For our everyday business purposes –

such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus

   Yes   No

For our marketing purposes –

to offer our products and services to you

   No   We don’t share
For joint marketing with other financial companies   No   We don’t share

For our affiliates’ everyday business purposes –

information about your transactions and experiences

   No   We don’t share

For our affiliates’ everyday business purposes –

information about your creditworthiness

   No   We don’t share
For nonaffiliates to market to you   No   We don’t share

 

Questions?   Call 800-225-2606 or go to mfs.com.

 

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Page 2  

 

Who we are
Who is providing this notice?   MFS Funds, MFS Investment Management, MFS Institutional Advisors, Inc., MFS Fund Distributors, Inc., MFS Heritage Trust Company, and MFS Service Center, Inc.

 

What we do
How does MFS protect my personal information?   To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include procedural, electronic, and physical safeguards for the protection of the personal information we collect about you.
How does MFS
collect my personal information?		  

We collect your personal information, for example, when you

 

• open an account or provide account information

• direct us to buy securities or direct us to sell your securities

• make a wire transfer

 

We also collect your personal information from others, such as credit bureaus, affiliates and other companies.

Why can’t I limit all sharing?  

Federal law gives you the right to limit only

 

• sharing for affiliates’ everyday business purposes – information about your creditworthiness

• affiliates from using your information to market to you

• sharing for nonaffiliates to market to you

 

State laws and individual companies may give you additional rights to limit sharing.

 

Definitions
Affiliates  

Companies related by common ownership or control. They can be financial and nonfinancial companies.

 

• MFS does not share personal information with affiliates, except for everyday business purposes as described on page one of this notice.

Nonaffiliates  

Companies not related by common ownership or control. They can be financial and nonfinancial companies.

 

• MFS does not share with nonaffiliates so they can market to you.

Joint Marketing  

A formal agreement between nonaffiliated financial companies that together market financial products or services to you.

 

• MFS doesn’t jointly market.

 

 

Other important information
If you own an MFS product or receive an MFS service in the name of a third party such as a bank or broker-dealer, their privacy policy may apply to you instead of ours.

 

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LOGO

Table of Contents

LOGO

 

MFS® Research Bond Series

MFS® Variable Insurance Trust

 

LOGO

 

 

SEMIANNUAL REPORT

June 30, 2011

 

VFB-SEM

Table of Contents

MFS® RESEARCH BOND SERIES

 

CONTENTS   
Letter from the CEO      1   
Portfolio composition      2   
Expense table      3   
Portfolio of investments      4   
Statement of assets and liabilities      11   
Statement of operations      12   
Statements of changes in net assets      13   
Financial highlights      14   
Notes to financial statements      16   
Board review of investment advisory agreement      22   
Proxy voting policies and information      22   
Quarterly portfolio disclosure      22   
Further information      22   
MFS® privacy notice      23   

 

The report is prepared for the general information of contract owners. It is authorized for distribution to prospective investors only when preceded or accompanied by a current prospectus.

 

NOT FDIC INSURED Ÿ MAY LOSE VALUE Ÿ NO BANK OR CREDIT UNION GUARANTEE Ÿ NOT A DEPOSIT Ÿ NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY OR NCUA/NCUSIF

Table of Contents

MFS Research Bond Series

 

LETTER FROM THE CEO

 

LOGO

 

Dear Contract Owners:

After about a year of almost uninterrupted macroeconomic and financial market improvement following the global credit crisis, investors grew more cautious in the middle of 2010 as fears grew that some European countries would default on their debt and as economic data showed a weakening

trend in the global economy. As a result asset prices fell significantly.

Last September the U.S. Federal Reserve Board’s promises to make lending conditions easier helped assuage market fears and drive asset prices off their recent lows. A combination of solid earnings and improving economic data gave an additional boost to investor sentiment.

In the following months, the renewed positive market mood, coupled with indications of better global macroeconomic activity, pushed many asset valuations to post-crisis highs. At the same time, global sovereign

bond yields initially rose as investors became concerned about inflationary pressures, driven by higher prices for oil as well as other commodities. However, by the end of the second quarter of 2011, a weakening macroeconomic backdrop and renewed concerns over debt problems in some eurozone countries pushed equities lower.

For the remainder of 2011, we are cautiously optimistic that economic growth will continue to improve and that the global economies will recover from the shocks of the past few years. We expect the pace of recovery worldwide to be uneven and volatile and acknowledge the elevated uncertainty created by events in Japan, Europe, the Middle East, as well as that created by the U.S. debate over raising the debt ceiling and the downgrade by Standard & Poor’s of the U.S. long-term credit rating.

As always, we continue to be mindful of the many economic challenges faced at the local, national, and international levels. It is in times such as these that we want to remind investors of the merits of maintaining a long-term view, adhering to basic investing principles such as asset allocation and diversification, and working closely with their advisors to research and identify appropriate investment opportunities.

Respectfully,

LOGO

Robert J. Manning

Chairman and Chief Executive Officer

MFS Investment Management®

August 16, 2011

 

The opinions expressed in this letter are subject to change, may not be relied upon for investment advice, and no forecasts can be guaranteed.

 

 

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PORTFOLIO COMPOSITION

 

Portfolio structure (i)

LOGO

 

Fixed income sectors (i)  
High Grade Corporates     29.5%   
U.S. Treasury Securities     24.2%   
Mortgage-Backed Securities     21.1%   
High Yield Corporates     6.6%   
Commercial Mortgage-Backed Securities     6.1%   
U.S. Government Agencies     4.6%   
Emerging Markets Bonds     2.8%   
Collateralized Debt Obligations     1.7%   
Non-U.S. Government Bonds     1.1%   
Asset-Backed Securities     0.8%   
Floating Rate Loans (o)     0.0%   
Composition including fixed income credit quality (a)(i)  
AAA     5.6%   
AA     3.1%   
A     11.6%   
BBB     20.7%   
BB     6.5%   
B     1.1%   
CCC (o)     0.0%   
CC (o)     0.0%   
C (o)     0.0%   
D (o)     0.0%   
U.S. Government     24.2%   
Federal Agencies     25.7%   
Not Rated (o)     0.0%   
Cash & Other     1.5%   

 

Portfolio facts (i)  
Average Duration (d)     4.8   
Average Effective Maturity (m)     6.9 yrs.   
 

 

(a) For all securities other than those specifically described below, ratings are assigned to underlying securities utilizing ratings from Moody’s, Fitch, and Standard & Poor’s rating agencies and applying the following hierarchy: If all three agencies provide a rating, the middle rating (after dropping the highest and lowest ratings) is assigned; if two of the three agencies rate a security, the lower of the two is assigned. Ratings are shown in the S&P and Fitch scale (e.g., AAA). All ratings are subject to change. U.S. Government includes securities issued by the U.S. Department of the Treasury. Federal Agencies includes rated and unrated U.S. Agency fixed-income securities, U.S. Agency mortgage-backed securities, and collateralized mortgage obligations of U.S. Agency mortgage-backed securities. Not Rated includes fixed income securities, including fixed income futures, which have not been rated by any rating agency. Cash & Other includes cash, other assets less liabilities, offsets to derivative positions, and short-term securities. The fund may not hold all of these instruments. The fund itself has not been rated.

 

 

(d) Duration is a measure of how much a bond’s price is likely to fluctuate with general changes in interest rates, e.g., if rates rise 1.00%, a bond with a 5-year duration is likely to lose about 5.00% of its value due to the interest rate move.

 

(i) For purposes of this presentation, the components include the market value of securities, and reflect the impact of the equivalent exposure of derivative positions, if applicable. These amounts may be negative from time to time. The bond component will include any accrued interest amounts. Equivalent exposure is a calculated amount that translates the derivative position into a reasonable approximation of the amount of the underlying asset that the portfolio would have to hold at a given point in time to have the same price sensitivity that results from the portfolio’s ownership of the derivative contract. When dealing with derivatives, equivalent exposure is a more representative measure of the potential impact of a position on portfolio performance than market value. Where the fund holds convertible bonds, these are treated as part of the equity portion of the portfolio.

 

(m) In determining an instrument’s effective maturity for purposes of calculating the fund’s dollar-weighted average effective maturity, MFS uses the instrument’s stated maturity or, if applicable, an earlier date on which MFS believes it is probable that a maturity-shortening device (such as a put, pre-refunding or prepayment) will cause the instrument to be repaid. Such an earlier date can be substantially shorter than the instrument’s stated maturity.

 

(o) Less than 0.1%.

Percentages are based on net assets as of 6/30/11.

The portfolio is actively managed and current holdings may be different.

 

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EXPENSE TABLE

 

Fund Expenses Borne by the Contract Holders During the Period,

January 1, 2011 through June 30, 2011

As a contract holder of the fund, you incur ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period January 1, 2011 through June 30, 2011.

Actual Expenses

The first line for each share class in the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The second line for each share class in the following table provides information about hypothetical account values and hypothetical expenses based on the fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight the fund’s ongoing costs only and do not take into account the fees and expenses imposed under the variable contracts through which your investment in the fund is made. Therefore, the second line for each share class in the table is useful in comparing ongoing costs associated with an investment in vehicles (such as the fund) which fund benefits under variable annuity and variable life insurance contracts and to qualified pension and retirement plans only, and will not help you determine the relative total costs of investing in the fund through variable annuity and variable life insurance contracts. If the fees and expenses imposed under the variable contracts were included, your costs would have been higher.

 

Share Class         Annualized
Expense Ratio		      Beginning
Account Value
1/01/11		     

Ending

Account Value
6/30/11

      Expenses Paid
During Period (p)
1/01/11-6/30/11		  
Initial Class   Actual      0.57%         $1,000.00         $1,030.81         $2.87   
  Hypothetical (h)      0.57%         $1,000.00         $1,021.97         $2.86   
Service Class   Actual      0.82%         $1,000.00         $1,029.53         $4.13   
  Hypothetical (h)      0.82%         $1,000.00         $1,020.73         $4.11   

 

(h) 5% class return per year before expenses.

 

(p) Expenses paid is equal to each class’ annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by the number of days in the period, divided by the number of days in the year.

 

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PORTFOLIO OF INVESTMENTS – 6/30/11 (unaudited)

 

The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.

Issuer    Shares/Par     Value ($)  
    
BONDS – 97.6%     
Aerospace – 0.2%     
Bombardier, Inc., 7.75%, 2020 (n)    $ 1,020,000      $ 1,147,500   
          
Apparel Manufacturers – 0.2%     
Phillips-Van Heusen Corp., 7.375%, 2020    $ 1,455,000      $ 1,556,850   
          
Asset-Backed & Securitized – 8.6%     
Anthracite Ltd., “A”, CDO, FRN, 0.545%, 2019 (z)    $ 1,270,277      $ 1,105,141   
Anthracite Ltd., “B”, CDO, 5.488%, 2037 (z)      700,000        694,260   
Anthracite Ltd., “BFL”, CDO, FRN, 1.185%, 2037 (z)      1,160,000        1,048,756   
Anthracite Ltd., “CFL”, CDO, FRN, 1.435%, 2037 (z)      263,618        243,873   
Anthracite Ltd., CDO, FRN, 1.035%, 2037 (z)      1,977,382        1,879,304   
ARCap REIT, Inc., CDO, “F”, FRN,
6.054%, 2045 (q)(z)		      325,000        39,813   
Bayview Commercial Asset Trust, FRN, 3.117%, 2036 (i)(z)      1,070,724        70,614   
Bayview Commercial Asset Trust, FRN, 3.086%, 2036 (i)(z)      408,368        20,183   
Bayview Commercial Asset Trust, FRN, 2.834%, 2036 (i)(z)      517,129        20,955   
Bayview Commercial Asset Trust, FRN, 2.93%, 2036 (i)(z)      343,828        14,453   
Bayview Commercial Asset Trust, FRN, 2.87%, 2035 (i)(z)      559,387        17,381   
Bayview Commercial Asset Trust, FRN, 3.231%, 2037 (i)(z)      1,175,296        88,865   
Bayview Commercial Asset Trust, FRN, 3.037%, 2036 (i)(z)      546,243        37,831   
Bayview Financial Acquisition Trust, FRN, 5.483%, 2041      45,726        45,896   
Bayview Financial Acquisition Trust, FRN, 5.402%, 2035      2,524        2,524   
Bayview Financial Revolving Mortgage Loan Trust, FRN, 1.785%, 2040 (z)      180,426        100,914   
Capital Trust Realty Ltd., CDO, 5.16%, 2035 (z)      795,312        799,686   
Capital Trust Realty Ltd., CDO,
5.267%, 2035 (z)		      1,677,300        1,643,754   
Carey Commercial Mortgage Trust,
2002-1, “A”, 5.97%, 2019 (z)		      128,042        129,058   
Citigroup/Deutsche Bank Commercial Mortgage Trust, 5.322%, 2049      4,500,342        4,775,055   
Citigroup/Deutsche Bank Commercial Mortgage Trust, FRN, 5.393%, 2044      500,000        506,589   
Commercial Mortgage Acceptance Corp., FRN, 2.046%, 2030 (i)      174,425        7,915   
Commercial Mortgage Pass-Through Certificates, “A4”, 5.306%, 2046      1,361,478        1,457,940   
Credit Suisse Mortgage Capital Certificate, 5.311%, 2039      2,250,000        2,409,806   
Issuer    Shares/Par     Value ($)  
    
BONDS – continued     
Asset-Backed & Securitized – continued   
Credit Suisse Mortgage Capital Certificate, FRN, 5.694%, 2040    $ 375,725      $ 391,110   
Credit-Based Asset Servicing & Securitization LLC, FRN, 5.303%, 2035      40,504        39,541   
Crest Ltd., “A1” CDO, FRN, 0.726%, 2018 (z)      1,045,910        962,237   
Crest Ltd., “A2”, CDO, 4.669%, 2018 (z)      358,861        336,432   
Crest Ltd., “B”, CDO, FRN, 1.622%, 2035 (z)      897,000        892,515   
CWCapital LLC, 5.223%, 2048      600,000        635,692   
Falcon Franchise Loan LLC, FRN, 3.948%, 2025 (i)(z)      187,464        25,458   
First Union-Lehman Brothers Commercial Mortgage Trust, 7%, 2029 (n)      32,704        33,675   
Ford Credit Auto Lease Trust, 1.04%, 2013 (n)      81,778        81,802   
FUEL Trust, 3.984%, 2016 (z)      1,773,000        1,758,594   
GE Equipment Transportation LLC, “A2”, 0.77%, 2013      1,175,000        1,175,000   
GMAC LLC, FRN, 7.95%, 2034 (n)      110,000        95,700   
GMAC LLC, FRN, 6.02%, 2033 (z)      27,894        28,920   
Hertz Vehicle Financing LLC, 2010-1A, “A1”, 2.6%, 2015 (n)      1,205,000        1,229,185   
JPMorgan Chase Commercial Mortgage Securities Corp., 5.552%, 2045      725,000        789,537   
JPMorgan Chase Commercial Mortgage Securities Corp., 5.42%, 2049      4,865,701        5,217,003   
JPMorgan Chase Commercial Mortgage Securities Corp., FRN, 5.572%, 2042 (n)      130,000        44,442   
JPMorgan Chase Commercial Mortgage Securities Corp., FRN, 6.004%, 2049      3,564,937        3,786,059   
JPMorgan Chase Commercial Mortgage Securities Corp., FRN, 6.004%, 2049      3,630,395        3,915,375   
JPMorgan Chase Commercial Mortgage Securities Corp., FRN, 6.186%, 2051      4,621,335        4,916,417   
KKR Financial CLO Ltd., “A1”, FRN, 0.543%, 2017 (z)      1,000,000        972,470   
Lehman Brothers Commercial Conduit Mortgage Trust, FRN, 1.072%, 2030 (i)      180,724        3,651   
Mach One Trust Commercial Mortgage, “B”, 5.43%, 2040 (z)      851,000        868,020   
Merrill Lynch Mortgage Trust, FRN, “A3”, 6.019%, 2050      3,575,513        3,827,665   
Merrill Lynch/Countrywide Commercial Mortgage Trust, FRN, 5.81%, 2050      540,000        577,929   
Morgan Stanley Capital I, Inc., FRN, 1.185%, 2030 (i)(z)      269,761        6,798   
Preferred Term Securities XIX Ltd., CDO, FRN, 0.597%, 2035 (z)      464,966        310,365   
Prudential Securities Secured Financing Corp., FRN, 7.325%, 2013 (z)      125,000        125,524   
Residential Funding Mortgage Securities, Inc., FRN, 5.32%, 2035      174,000        74,127   
Smart Trust, “A2B”, FRN, 0.948%, 2013 (z)      713,000        713,001   
 

 

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Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
    
BONDS – continued     
Asset-Backed & Securitized – continued     
Structured Asset Securities Corp., FRN, 0.425%, 2035    $ 315      $ 313   
Wachovia Bank Commercial Mortgage Trust, “A3”, FRN, 6.096%, 2051      3,431,440        3,647,885   
Wachovia Bank Commercial Mortgage Trust, “A4”, FRN, 6.096%, 2051      4,231,834        4,603,989   
          
     $ 59,246,997   
          
Automotive – 1.1%     
Ford Motor Credit Co. LLC, 8%, 2014    $ 1,350,000      $ 1,481,008   
Harley-Davidson Financial Services, 3.875%, 2016 (n)      3,270,000        3,325,740   
Lear Corp., 8.125%, 2020      1,495,000        1,610,863   
RCI Banque S.A., 4.6%, 2016 (n)      1,426,000        1,456,692   
          
     $ 7,874,303   
          
Banks & Diversified Financials (Covered Bonds) – 0.1%   
Compagnie de Financement Foncier, 2.125%, 2013 (n)    $ 900,000      $ 913,423   
          
Biotechnology – 0.2%     
Life Technologies Corp., 5%, 2021    $ 1,542,000      $ 1,564,384   
          
Broadcasting – 0.9%     
Discovery Communications, Inc., 4.375%, 2021    $ 1,666,000      $ 1,649,697   
Inmarsat Finance PLC, 7.375%, 2017 (n)      1,525,000        1,616,500   
NBC Universal, Inc., 5.95%, 2041 (n)      1,594,000        1,620,926   
News America, Inc., 8.5%, 2025      152,000        192,292   
SIRIUS XM Radio, Inc., 13%, 2013 (n)      1,215,000        1,424,588   
          
     $ 6,504,003   
          
Brokerage & Asset Managers – 0.2%     
INVESCO PLC, 5.625%, 2012    $ 191,000      $ 198,476   
TD AMERITRADE Holding Corp., 5.6%, 2019      859,000        920,864   
          
     $ 1,119,340   
          
Building – 0.4%     
Owens Corning, Inc., 6.5%, 2016    $ 2,292,000      $ 2,493,884   
          
Cable TV – 2.4%     
CCO Holdings LLC, 7.875%, 2018    $ 1,630,000      $ 1,717,613   
Cox Communications, Inc., 9.375%, 2019 (n)      2,492,000        3,312,105   
CSC Holdings LLC, 8.5%, 2014      1,600,000        1,772,000   
DIRECTV Holdings LLC, 5.2%, 2020      1,050,000        1,110,992   
DIRECTV Holdings LLC, 7.625%, 2016      2,517,000        2,743,530   
Myriad International Holdings B.V., 6.375%, 2017 (n)      1,470,000        1,587,600   
TCI Communications, Inc., 9.8%, 2012      72,000        75,715   
Time Warner Cable, Inc., 5%, 2020      2,000,000        2,077,888   
Time Warner Entertainment Co. LP, 8.375%, 2033      290,000        370,652   
Virgin Media Finance PLC, 9.5%, 2016      1,350,000        1,525,500   
Virgin Media Secured Finance PLC, 5.25%, 2021 (z)      480,000        511,158   
          
     $ 16,804,753   
          
Issuer    Shares/Par     Value ($)  
    
BONDS – continued     
Chemicals – 1.3%     
Ashland, Inc., 9.125%, 2017    $ 2,120,000      $ 2,385,000   
Dow Chemical Co., 8.55%, 2019      2,300,000        2,965,721   
Lyondell Chemical Co., 11%, 2018      1,275,000        1,428,000   
Nalco Co., 8.25%, 2017      1,700,000        1,857,250   
          
     $ 8,635,971   
          
Consumer Products – 0.5%     
Hasbro, Inc., 6.35%, 2040    $ 1,500,000      $ 1,550,550   
Newell Rubbermaid, Inc., 5.5%, 2013      1,971,000        2,109,717   
          
     $ 3,660,267   
          
Consumer Services – 0.2%     
Western Union Co., 5.4%, 2011    $ 1,147,000      $ 1,167,678   
          
Containers – 0.2%     
Greif, Inc., 7.75%, 2019    $ 1,575,000      $ 1,701,000   
          
Defense Electronics – 0.1%     
BAE Systems Holdings, Inc.,
6.375%, 2019 (n)		    $ 500,000      $ 568,221   
BAE Systems Holdings, Inc., 6.4%, 2011 (n)      354,000        363,305   
          
     $ 931,526   
          
Electronics – 0.2%     
Tyco Electronics Group S.A., 6.55%, 2017    $ 1,180,000      $ 1,390,333   
          
Emerging Market Quasi-Sovereign – 0.8%     
Banco do Brasil S.A., 5.875%, 2022 (z)    $ 1,702,000      $ 1,683,278   
CNPC (HK) Overseas Capital Ltd., 4.5%, 2021 (z)      1,659,000        1,616,282   
OJSC Russian Agricultural Bank, FRN, 6%, 2021 (z)      2,026,000        2,034,921   
Petroleos Mexicanos, 6.5%, 2041 (z)      51,000        51,747   
          
     $ 5,386,228   
          
Emerging Market Sovereign – 0.2%     
Republic of Hungary, 6.375%, 2021    $ 1,592,000      $ 1,679,560   
          
Energy – Independent – 1.6%     
Anadarko Petroleum Corp., 6.45%, 2036    $ 1,280,000      $ 1,335,611   
Anadarko Petroleum Corp., 6.95%, 2019      1,460,000        1,705,296   
Anadarko Petroleum Corp., 6.375%, 2017      653,000        748,556   
Newfield Exploration Co., 6.625%, 2016      1,160,000        1,197,700   
Newfield Exploration Co., 7.125%, 2018      740,000        784,400   
Pioneer Natural Resources Co., 6.65%, 2017      1,760,000        1,916,950   
Southwestern Energy Co., 7.5%, 2018      2,521,000        2,867,638   
Talisman Energy, Inc., 7.75%, 2019      200,000        243,736   
          
     $ 10,799,887   
          
Energy – Integrated – 0.2%     
BP Capital Markets PLC, 4.5%, 2020    $ 623,000      $ 635,332   
ConocoPhillips, 6%, 2020      740,000        865,349   
          
     $ 1,500,681   
          
Financial Institutions – 1.5%     
CIT Group, Inc., 6.625%, 2018 (n)    $ 1,641,000      $ 1,710,743   
General Electric Capital Corp.,
6.375% to 2017, FRN to 2067		      2,005,000        2,055,125   
General Electric Capital Corp., 4.625%, 2021      1,830,000        1,840,771   
 

 

5

Table of Contents

MFS Research Bond Series

 

Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
    
BONDS – continued     
Financial Institutions – continued     
International Lease Finance Corp., 5.75%, 2016    $ 1,205,000      $ 1,186,584   
International Lease Finance Corp., 7.125%, 2018 (n)      1,190,000        1,273,300   
SLM Corp., 6.25%, 2016      2,039,000        2,115,463   
          
     $ 10,181,986   
          
Food & Beverages – 1.3%     
Anheuser-Busch InBev S.A., 7.75%, 2019    $ 2,667,000      $ 3,355,203   
Kraft Foods, Inc., 6.5%, 2040      1,351,000        1,500,656   
Kraft Foods, Inc., 6.125%, 2018      550,000        632,739   
Miller Brewing Co., 5.5%, 2013 (n)      1,310,000        1,418,958   
Tyson Foods, Inc., 6.85%, 2016      1,760,000        1,944,800   
          
     $ 8,852,356   
          
Food & Drug Stores – 0.2%     
CVS Caremark Corp., 5.75%, 2041    $ 1,600,000      $ 1,573,176   
          
Forest & Paper Products – 0.4%     
Fibria Overseas Finance, 6.75%, 2021 (n)    $ 1,549,000      $ 1,622,578   
Georgia-Pacific Corp., 5.4%, 2020 (n)      175,000        178,348   
Inversiones CMPC S.A., 4.75%, 2018 (n)      830,000        829,200   
          
     $ 2,630,126   
          
Gaming & Lodging – 0.5%     
Wyndham Worldwide Corp., 7.375%, 2020    $ 600,000      $ 665,327   
Wyndham Worldwide Corp., 6%, 2016      2,905,000        3,085,049   
          
     $ 3,750,376   
          
Insurance – 1.1%     
Aflac, Inc., 6.45%, 2040    $ 1,654,000      $ 1,641,185   
ING Groep N.V., 5.775% to 2015, FRN to 2049      2,198,000        2,022,160   
Metropolitan Life Global Funding, 5.125%, 2013 (n)      420,000        446,892   
Metropolitan Life Global Funding, 5.125%, 2014 (n)      290,000        316,842   
Unum Group, 7.125%, 2016      290,000        332,872   
UnumProvident Corp., 6.85%, 2015 (n)      2,243,000        2,510,774   
          
     $ 7,270,725   
          
Insurance – Health – 0.7%     
Humana, Inc., 7.2%, 2018    $ 2,482,000      $ 2,881,190   
Unitedhealth Group, Inc., 4.875%, 2013      2,000,000        2,114,898   
          
     $ 4,996,088   
          
Insurance – Property & Casualty – 1.3%     
Allied World Assurance, 5.5%, 2020    $ 740,000      $ 748,686   
AXIS Capital Holdings Ltd., 5.75%, 2014      555,000        599,709   
CNA Financial Corp., 5.875%, 2020      1,580,000        1,642,783   
PartnerRe Ltd., 5.5%, 2020      1,083,000        1,093,715   
QBE Capital Funding III Ltd., FRN, 7.25%, 2041 (n)      1,670,000        1,675,635   
XL Group PLC, 6.5% to 2017, FRN to 2049      1,504,000        1,379,920   
Issuer    Shares/Par     Value ($)  
    
BONDS – continued     
Insurance – Property & Casualty – continued     
ZFS Finance USA Trust II, 6.45% to 2016, FRN to 2065 (n)    $ 542,000      $ 550,130   
ZFS Finance USA Trust V, 6.5% to 2017, FRN to 2067 (n)      1,452,000        1,444,740   
          
     $ 9,135,318   
          
International Market Quasi-Sovereign – 1.0%     
Achmea Hypotheekbank N.V., 3.2%, 2014 (n)    $ 1,150,000      $ 1,207,042   
FIH Erhvervsbank A.S., 1.75%, 2012 (z)      766,000        778,570   
ING Bank N.V., 3.9%, 2014 (n)      1,500,000        1,604,889   
NIBC Bank N.V., 2.8%, 2014 (z)      1,500,000        1,561,541   
Royal Bank of Scotland Group PLC, 2.625%, 2012 (n)      1,080,000        1,100,395   
Societe Financement de l’ Economie Francaise, 3.375%, 2014 (n)      842,000        893,050   
          
     $ 7,145,487   
          
Machinery & Tools – 0.2%     
Case New Holland, Inc., 7.875%, 2017 (n)    $ 1,225,000      $ 1,347,500   
          
Major Banks – 6.0%     
ABN AMRO Bank N.V., 3%, 2014 (n)    $ 850,000      $ 868,308   
BAC Capital Trust XIV, 5.63% to 2012, FRN to 2049      120,000        89,250   
Bank of America Corp., 5.65%, 2018      4,300,000        4,533,623   
Bank of America Corp., 8% to 2018, FRN to 2049      1,884,000        1,967,480   
Bank of America Corp., 5.625%, 2020      555,000        573,044   
Bank of America Corp., 5.875%, 2021      1,670,000        1,752,623   
BNP Paribas, 5%, 2021      1,120,000        1,126,056   
Credit Suisse (USA), Inc., 6%, 2018      2,160,000        2,330,776   
Goldman Sachs Group, Inc., 7.5%, 2019      1,438,000        1,673,175   
Goldman Sachs Group, Inc., 5.625%, 2017      336,000        355,702   
HSBC USA, Inc., 4.875%, 2020      1,090,000        1,073,142   
JPMorgan Chase & Co., 4.25%, 2020      2,800,000        2,739,338   
JPMorgan Chase & Co., 4.625%, 2021      2,630,000        2,608,721   
JPMorgan Chase Bank N.A., 5.875%, 2016      250,000        276,731   
JPMorgan Chase Capital XXII, 6.45%, 2087      845,000        851,402   
JPMorgan Chase Capital XXVII, 7%, 2039      221,000        220,726   
Macquarie Group Ltd., 6%, 2020 (n)      1,073,000        1,075,957   
Macquarie Group Ltd., 6.25%, 2021 (n)      1,400,000        1,399,177   
Merrill Lynch & Co., Inc., 6.15%, 2013      1,170,000        1,256,269   
Merrill Lynch & Co., Inc., 6.05%, 2016      1,569,000        1,644,924   
Morgan Stanley, 6.625%, 2018      2,260,000        2,489,600   
Morgan Stanley, 5.5%, 2020      1,600,000        1,619,506   
Morgan Stanley, 5.75%, 2021      1,680,000        1,699,873   
Morgan Stanley, 5.75%, 2016      944,000        1,002,649   
PNC Funding Corp., 5.625%, 2017      1,673,000        1,842,154   
Royal Bank of Scotland PLC, 6.125%, 2021      1,660,000        1,701,689   
Wachovia Corp., 6.605%, 2025      164,000        181,574   
Wells Fargo & Co., 7.98% to 2018, FRN to 2049      2,012,000        2,172,960   
          
     $ 41,126,429   
          
 

 

6

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MFS Research Bond Series

 

Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
    
BONDS – continued     
Medical & Health Technology & Services – 0.3%     
HCA, Inc., 7.875%, 2020    $ 1,505,000      $ 1,632,925   
McKesson Corp., 5.7%, 2017      510,000        578,081   
          
     $ 2,211,006   
          
Metals & Mining – 1.6%     
ArcelorMittal, 6.5%, 2014    $ 496,000      $ 550,027   
ArcelorMittal, 9.85%, 2019      1,410,000        1,787,501   
Freeport-McMoRan Copper & Gold, Inc., 8.375%, 2017      1,542,000        1,684,635   
Southern Copper Corp., 6.75%, 2040      2,040,000        1,984,530   
Teck Resources Ltd., 10.25%, 2016      1,284,000        1,534,380   
Teck Resources Ltd., 10.75%, 2019      1,167,000        1,474,796   
Vale Overseas Ltd., 5.625%, 2019      1,210,000        1,291,383   
Vedanta Resources PLC, 6.75%, 2016 (z)      1,068,000        1,063,942   
          
     $ 11,371,194   
          
Mortgage-Backed – 21.0%     
Fannie Mae, 4.55%, 2011    $ 111,390      $ 110,473   
Fannie Mae, 4.86%, 2012 - 2015      194,861        203,447   
Fannie Mae, 5.12%, 2012      54,639        55,396   
Fannie Mae, 3.81%, 2013      17,721        18,415   
Fannie Mae, 4.517%, 2013      280,923        294,093   
Fannie Mae, 4.845%, 2013      47,660        50,194   
Fannie Mae, 5.159%, 2013      1,353,814        1,441,137   
Fannie Mae, 4.562%, 2014      104,553        111,422   
Fannie Mae, 4.6%, 2014 - 2015      102,723        110,085   
Fannie Mae, 4.61%, 2014      66,538        71,434   
Fannie Mae, 4.77%, 2014 - 2019      489,506        525,502   
Fannie Mae, 4.88%, 2014 - 2020      204,596        220,091   
Fannie Mae, 4.53%, 2015      99,936        107,570   
Fannie Mae, 4.56%, 2015      52,120        55,991   
Fannie Mae, 4.665%, 2015      35,703        38,466   
Fannie Mae, 4.69%, 2015      155,101        167,080   
Fannie Mae, 4.7%, 2015      327,550        353,940   
Fannie Mae, 4.74%, 2015      46,717        50,501   
Fannie Mae, 4.78%, 2015      99,883        108,333   
Fannie Mae, 4.815%, 2015      52,268        56,675   
Fannie Mae, 4.85%, 2015      165,816        179,373   
Fannie Mae, 4.87%, 2015      32,327        35,079   
Fannie Mae, 4.89%, 2015      91,549        99,553   
Fannie Mae, 4.922%, 2015      68,150        74,095   
Fannie Mae, 4.94%, 2015      120,000        130,800   
Fannie Mae, 5.1%, 2015      275,000        293,070   
Fannie Mae, 5.466%, 2015      787,747        870,295   
Fannie Mae, 5.08%, 2016      354,729        388,532   
Fannie Mae, 5.09%, 2016      115,646        126,641   
Fannie Mae, 5.157%, 2016      3,395,734        3,732,549   
Fannie Mae, 5.35%, 2016 - 2023      860,107        940,264   
Fannie Mae, 5.395%, 2016      129,410        141,445   
Fannie Mae, 5.424%, 2016      1,143,686        1,263,220   
Fannie Mae, 5.724%, 2016      1,613,314        1,790,667   
Fannie Mae, 3.308%, 2017      1,392,778        1,416,333   
Fannie Mae, 4.99%, 2017      150,413        162,874   
Fannie Mae, 5.05%, 2017      255,176        278,458   
Fannie Mae, 5.28%, 2017      137,885        151,155   
Fannie Mae, 5.488%, 2017      951,296        1,061,681   
Issuer    Shares/Par     Value ($)  
    
BONDS – continued     
Mortgage-Backed – continued     
Fannie Mae, 5.5%, 2017 - 2040    $ 19,765,265      $ 21,433,477   
Fannie Mae, 5.54%, 2017      105,226        114,900   
Fannie Mae, 5.65%, 2017      157,439        171,409   
Fannie Mae, 3.84%, 2018      697,786        723,859   
Fannie Mae, 3.99%, 2018      600,000        624,738   
Fannie Mae, 5.341%, 2018      501,875        557,396   
Fannie Mae, 5.18%, 2019      130,569        142,396   
Fannie Mae, 5.51%, 2019      195,223        212,126   
Fannie Mae, 5%, 2020 - 2040      13,524,733        14,426,905   
Fannie Mae, 5.19%, 2020      192,601        206,886   
Fannie Mae, 6%, 2022 - 2038      18,148,300        19,969,626   
Fannie Mae, 4%, 2024 - 2025      2,376,572        2,482,251   
Fannie Mae, 4.5%, 2024 - 2040      9,572,959        10,134,124   
Fannie Mae, 4.5%, 2025      771,452        819,229   
Fannie Mae, 6.5%, 2032 - 2033      30,661        34,893   
Freddie Mac, 5%, 2017 - 2040      5,251,879        5,599,647   
Freddie Mac, 3.154%, 2018      935,000        932,147   
Freddie Mac, 5.5%, 2019 - 2038      4,544,259        4,939,274   
Freddie Mac, 2.757%, 2020      1,427,549        1,437,742   
Freddie Mac, 3.32%, 2020      2,922,614        3,006,913   
Freddie Mac, 4.251%, 2020      807,000        841,491   
Freddie Mac, 4%, 2025 - 2040      8,372,912        8,567,907   
Freddie Mac, 4.5%, 2025 - 2028      2,338,069        2,447,092   
Freddie Mac, 6%, 2034 - 2038      1,426,582        1,576,048   
Freddie Mac, FRN, 3.882%, 2017      1,836,000        1,919,505   
Ginnie Mae, 4%, 2032 - 2040      4,482,407        4,560,743   
Ginnie Mae, 6%, 2036 - 2039      2,247,942        2,508,450   
Ginnie Mae, 5.5%, 2038 - 2040      4,193,549        4,617,570   
Ginnie Mae, 4.5%, 2039 - 2040      11,846,116        12,557,177   
          
     $ 144,852,250   
          
Natural Gas – Pipeline – 0.4%     
Enterprise Products Operating LP, 5.65%, 2013    $ 227,000      $ 243,488   
Kinder Morgan Energy Partners LP, 7.4%, 2031      103,000        117,327   
Kinder Morgan Energy Partners LP, 6.375%, 2041      1,740,000        1,781,148   
Spectra Energy Capital LLC, 8%, 2019      613,000        749,860   
          
     $ 2,891,823   
          
Network & Telecom – 1.2%     
AT&T, Inc., 5.35%, 2040    $ 1,770,000      $ 1,677,723   
Centurylink, Inc., 6.45%, 2021      1,860,000        1,838,738   
Frontier Communications Corp., 8.5%, 2020      861,000        938,490   
Telefonica Emisiones S.A.U., 5.134%, 2020      1,471,000        1,458,155   
Telefonica Emisiones S.A.U., 5.462%, 2021      760,000        771,534   
Verizon New York, Inc., 6.875%, 2012      1,317,000        1,375,634   
          
     $ 8,060,274   
          
Oil Services – 0.6%     
Nabors Industries, Inc., 5%, 2020    $ 2,230,000      $ 2,256,394   
Transocean, Inc., 6%, 2018      610,000        675,381   
Transocean, Inc., 6.5%, 2020      760,000        849,862   
          
     $ 3,781,637   
          
 

 

7

Table of Contents

MFS Research Bond Series

 

Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
    
BONDS – continued     
Oils – 0.3%     
LUKOIL International Finance B.V., 6.125%, 2020 (n)    $ 1,980,000      $ 2,041,875   
          
Other Banks & Diversified Financials – 3.2%     
Banco Santander U.S. Debt S.A.U., 3.781%, 2015 (n)    $ 1,500,000      $ 1,446,384   
Capital One Financial Corp., 6.15%, 2016      1,970,000        2,173,343   
Citigroup, Inc., 8.5%, 2019      2,400,000        2,975,172   
Citigroup, Inc., 6.125%, 2018      1,810,000        1,993,226   
Citigroup, Inc., 5.375%, 2020      1,700,000        1,774,057   
Discover Bank, 7%, 2020      1,720,000        1,910,389   
Groupe BPCE S.A., 12.5% to 2019, FRN to 2049 (n)      472,000        540,138   
HSBC Holdings PLC, 5.1%, 2021      2,481,000        2,542,489   
Lloyds TSB Bank PLC, 4.875%, 2016      1,890,000        1,933,037   
Santander Holdings USA, Inc., 4.625%, 2016      480,000        482,384   
Santander UK PLC, 8.963% to 2030, FRN to 2049      1,070,000        1,182,350   
Turkiye Garanti Bankasi A.S., 6.25%, 2021 (z)      1,632,000        1,583,040   
UBS Preferred Funding Trust V,
6.243% to 2016, FRN to 2049		      1,249,000        1,224,020   
          
     $ 21,760,029   
          
Pharmaceuticals – 0.1%     
Celgene Corp., 2.45%, 2015    $ 743,000      $ 738,563   
          
Pollution Control – 0.2%     
Allied Waste North America, Inc.,
6.875%, 2017		    $ 1,250,000      $ 1,354,688   
          
Printing & Publishing – 0.0%     
Pearson PLC, 5.5%, 2013 (n)    $ 200,000      $ 214,051   
          
Real Estate – 1.4%     
HCP, Inc., REIT, 5.375%, 2021    $ 1,134,000      $ 1,169,638   
HRPT Properties Trust, REIT, 6.25%, 2016      1,689,000        1,849,335   
Kimco Realty Corp., REIT, 5.783%, 2016      1,794,000        1,981,430   
Liberty Property LP, REIT, 5.5%, 2016      1,013,000        1,103,823   
Simon Property Group, Inc., REIT, 10.35%, 2019      1,313,000        1,817,469   
WEA Finance LLC, REIT, 6.75%, 2019 (n)      1,510,000        1,712,329   
          
     $ 9,634,024   
          
Retailers – 0.4%     
Home Depot, Inc., 5.95%, 2041    $ 1,524,000      $ 1,569,455   
Wesfarmers Ltd., 6.998%, 2013 (n)      1,000,000        1,094,901   
          
     $ 2,664,356   
          
Specialty Stores – 0.5%     
Advance Auto Parts, Inc., 5.75%, 2020    $ 1,512,000      $ 1,599,915   
Best Buy Co., Inc., 6.75%, 2013      1,660,000        1,813,482   
          
     $ 3,413,397   
          
Supranational – 0.0%     
Corporacion Andina de Fomento, 6.875%, 2012    $ 61,000      $ 63,387   
          
Issuer    Shares/Par     Value ($)  
    
BONDS – continued     
Telecommunications – Wireless – 0.8%     
American Tower Corp., 4.5%, 2018    $ 2,620,000      $ 2,618,782   
Crown Castle Towers LLC, 6.113%, 2020 (n)      1,096,000        1,195,866   
Crown Castle Towers LLC, 4.883%, 2020 (n)      900,000        904,973   
Rogers Cable, Inc., 5.5%, 2014      734,000        808,286   
          
     $ 5,527,907   
          
Tobacco – 1.5%     
Altria Group, Inc., 9.95%, 2038    $ 1,650,000      $ 2,318,326   
Lorillard Tobacco Co., 8.125%, 2019      3,555,000        4,140,693   
Reynolds American, Inc., 7.25%, 2012      800,000        845,036   
Reynolds American, Inc., 6.75%, 2017      2,900,000        3,348,273   
          
     $ 10,652,328   
          
Transportation – Services – 0.5%     
Erac USA Finance Co., 7%, 2037 (n)    $ 1,851,000      $ 2,036,705   
Hertz Corp., 7.5%, 2018 (n)      1,036,000        1,067,080   
          
     $ 3,103,785   
          
U.S. Government Agencies and Equivalents – 4.6%     
Bank of America Corp., FRN, 0.626%, 2012 (m)    $ 2,353,000      $ 2,363,417   
Citigroup, Inc., FRN, 0.602%, 2012 (m)      5,650,000        5,669,453   
FDIC Structured Sale Guarantee Note, 0%, 2012 (n)      396,000        390,064   
General Electric Capital Corp., FRN, 0.218%, 2012 (m)      3,034,000        3,034,601   
Goldman Sachs Group, Inc., FRN, 0.447%, 2012 (m)      1,157,000        1,159,521   
JPMorgan Chase & Co., FRN, 0.496%, 2012 (m)      5,650,000        5,675,431   
Morgan Stanley, FRN, 0.596%, 2012 (m)      5,173,000        5,195,415   
National Credit Union Administration Guaranteed Note, 2.9%, 2020      980,000        978,169   
PNC Funding Corp., FRN, 0.504%, 2012 (m)      2,960,000        2,966,556   
Small Business Administration, 4.34%, 2024      110,751        116,796   
Small Business Administration, 4.43%, 2029      1,073,137        1,141,779   
Small Business Administration, 4.99%, 2024      92,120        98,761   
Small Business Administration, 4.86%, 2025      196,132        209,775   
Small Business Administration, 4.625%, 2025      192,518        204,640   
Small Business Administration, 5.11%, 2025      146,659        156,838   
Small Business Administration, 4.93%, 2024      83,628        89,459   
Small Business Administration, 3.25%, 2030      917,757        910,019   
Wells Fargo & Co., FRN, 0.467%, 2012 (m)      1,289,000        1,293,018   
          
     $ 31,653,712   
          
U.S. Treasury Obligations – 24.0%     
U.S. Treasury Bonds, 6.25%, 2023    $ 177,000      $ 224,541   
U.S. Treasury Bonds, 6%, 2026      373,000        464,269   
U.S. Treasury Bonds, 6.75%, 2026      19,000        25,356   
U.S. Treasury Bonds, 5.25%, 2029      14,492,000        16,722,406   
U.S. Treasury Bonds, 4.5%, 2036      116,000        119,879   
U.S. Treasury Bonds, 5%, 2037      5,246,000        5,827,157   
U.S. Treasury Bonds, 4.5%, 2039      20,040,600        20,491,514   
U.S. Treasury Notes, 1.375%, 2012      42,733,800        43,062,637   
 

 

8

Table of Contents

MFS Research Bond Series

 

Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
    
BONDS – continued     
U.S. Treasury Obligations – continued     
U.S. Treasury Notes, 1.375%, 2012    $ 18,164,000      $ 18,347,057   
U.S. Treasury Notes, 3.125%, 2013      201,000        212,620   
U.S. Treasury Notes, 1.875%, 2014      24,639,000        25,407,047   
U.S. Treasury Notes, 1.875%, 2014      14,184,000        14,627,250   
U.S. Treasury Notes, 2.125%, 2015      975,000        1,007,906   
U.S. Treasury Notes, 5.125%, 2016      167,000        194,085   
U.S. Treasury Notes, 3.5%, 2020      14,945,000        15,602,281   
U.S. Treasury Notes, TIPS, 2%, 2014      764,395        823,517   
U.S. Treasury Notes, TIPS, 1.625%, 2015      812,723        881,551   
U.S. Treasury Notes, TIPS, 2%, 2016      1,393,787        1,549,063   
          
     $ 165,590,136   
          
Utilities – Electric Power – 1.2%     
CenterPoint Energy, Inc., 5.95%, 2017    $ 540,000      $ 604,464   
EDP Finance B.V., 6%, 2018 (n)      2,600,000        2,405,666   
PPL WEM Holdings PLC, 5.375%, 2021 (n)      2,909,000        3,013,567   
TECO Energy, Inc., 5.15%, 2020      1,810,000        1,919,400   
Waterford 3 Funding Corp., 8.09%, 2017      60,492        60,912   
          
     $ 8,004,009   
          
Total Bonds
(Identified Cost, $651,686,500)		       $ 673,672,566   
          
Issuer    Shares/Par     Value ($)  
FLOATING RATE LOANS (g)(r) – 0.0%   
Automotive – 0.0%     
Ford Motor Co., Term Loan B-1,
2.94%, 2013 (Identified Cost, $229,675)		    $ 242,665      $ 242,346   
          
MONEY MARKET FUNDS (v) – 1.5%   
MFS Institutional Money Market Portfolio, 0.1%, at Cost and Net Asset Value      10,146,942      $ 10,146,942   
          
Total Investments
(Identified Cost, $662,063,117)		       $ 684,061,854   
          
OTHER ASSETS, LESS
LIABILITIES – 0.9%		        6,116,772   
          
Net Assets – 100.0%      $ 690,178,626   
          
 
(g)   The rate shown represents a weighted average coupon rate on settled positions at period end, unless otherwise indicated.

 

(i)   Interest only security for which the fund receives interest on notional principal (Par amount). Par amount shown is the notional principal and does not reflect the cost of the security.

 

(m)   The debt is guaranteed under the Federal Deposit Insurance Corporation’s (FDIC) Temporary Liquidity Guarantee Program and is backed by the full faith and credit of the United States. The expiration date of the FDIC’s guarantee is the earlier of the maturity date of the debt or June 30, 2012.

 

(n)   Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be sold in the ordinary course of business in transactions exempt from registration, normally to qualified institutional buyers. At period end, the aggregate value of these securities was $60,359,461 representing 8.7% of net assets.
(q)   Interest received was less than stated coupon rate.

 

(r)   Remaining maturities of floating rate loans may be less than stated maturities shown as a result of contractual or optional prepayments by the borrower. Such prepayments cannot be predicted with certainty. These loans may be subject to restrictions on resale. Floating rate loans generally have rates of interest which are determined periodically by reference to a base lending rate plus a premium.

 

(v)   Underlying affiliated fund that is available only to investment companies managed by MFS. The rate quoted is the annualized seven-day yield of the fund at period end.

 

(z)   Restricted securities are not registered under the Securities Act of 1933 and are subject to legal restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are subsequently registered. Disposal of these securities may involve time-consuming negotiations and prompt sale at an acceptable price may be difficult. The fund holds the following restricted securities:

 

Restricted Securities    Acquisition
Date		    Cost      Value  
ARCap REIT, Inc., CDO, “F”, FRN, 6.054%, 2045    12/07/06      $332,002         $39,813   
Anthracite Ltd., “A”, CDO, FRN, 0.545%, 2019    1/15/10-1/28/10      929,818         1,105,141   
Anthracite Ltd., “B”, CDO, 5.488%, 2037    12/09/10      689,650         694,260   
Anthracite Ltd., “BFL”, CDO, FRN, 1.185%, 2037    12/09/10      1,055,600         1,048,756   
Anthracite Ltd., “CFL”, CDO, FRN, 1.435%, 2037    3/03/11      248,457         243,873   
Anthracite Ltd., CDO, FRN, 1.035%, 2037    2/24/10-3/03/11      1,797,834         1,879,304   
Banco do Brasil S.A., 5.875%, 2022    5/19/11      1,679,939         1,683,278   
Bayview Commercial Asset Trust, FRN, 2.87%, 2035    10/06/05      43,458         17,381   
Bayview Commercial Asset Trust, FRN, 2.93%, 2036    3/29/06      33,963         14,453   
Bayview Commercial Asset Trust, FRN, 2.834%, 2036    2/28/06      45,005         20,955   
Bayview Commercial Asset Trust, FRN, 3.086%, 2036    5/16/06      30,772         20,183   
Bayview Commercial Asset Trust, FRN, 3.117%, 2036    9/11/06      140,104         70,614   

 

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Portfolio of Investments (unaudited) – continued

 

Restricted Securities - continued    Acquisition
Date		    Cost      Value  
Bayview Commercial Asset Trust, FRN, 3.037%, 2036    10/25/06      $76,758         $37,831   
Bayview Commercial Asset Trust, FRN, 3.231%, 2037    1/26/07      110,291         88,865   
Bayview Financial Revolving Mortgage Loan Trust, FRN, 1.785%, 2040    3/01/06      180,426         100,914   
CNPC (HK) Overseas Capital Ltd., 4.5%, 2021    4/20/11-4/21/11      1,628,033         1,616,282   
Capital Trust Realty Ltd., CDO, 5.16%, 2035    4/07/06-3/04/10      768,711         799,686   
Capital Trust Realty Ltd., CDO, 5.267%, 2035    9/14/10-3/25/11      1,542,826         1,643,754   
Carey Commercial Mortgage Trust, 2002-1, “A”, 5.97%, 2019    7/22/10      129,204         129,058   
Crest Ltd., “A1” CDO, FRN, 0.726%, 2018    1/21/10-3/04/10      809,270         962,237   
Crest Ltd., “A2”, CDO, 4.669%, 2018    3/02/10      295,834         336,432   
Crest Ltd., “B”, CDO, FRN, 1.622%, 2035    1/12/10      753,722         892,515   
FIH Erhvervsbank A.S., 1.75%, 2012    12/02/09      765,019         778,570   
FUEL Trust, 3.984%, 2016    6/14/11-6/29/11      1,767,842         1,758,594   
Falcon Franchise Loan LLC, FRN, 3.948%, 2025    1/29/03      16,370         25,458   
GMAC LLC, FRN, 6.02%, 2033    3/20/02      18,203         28,920   
KKR Financial CLO Ltd., “A1”, FRN, 0.543%, 2017    4/11/11      955,000         972,470   
Mach One Trust Commercial Mortgage, “B”, 5.43%, 2040    3/10/10      801,363         868,020   
Morgan Stanley Capital I, Inc., FRN, 1.185%, 2030    4/04/02      9,581         6,798   
NIBC Bank N.V., 2.8%, 2014    11/24/09      1,497,714         1,561,541   
OJSC Russian Agricultural Bank, FRN, 6%, 2021    5/26/11-5/31/11      2,030,294         2,034,921   
Petroleos Mexicanos, 6.5%, 2041    5/25/11      50,634         51,747   
Preferred Term Securities XIX Ltd., CDO, FRN, 0.597%, 2035    9/08/05-3/28/11      329,874         310,365   
Prudential Securities Secured Financing Corp., FRN, 7.325%, 2013    12/06/04      128,208         125,524   
Smart Trust, “A2B”, FRN, 0.948%, 2013    3/10/11      713,000         713,001   
Turkiye Garanti Bankasi A.S., 6.25%, 2021    4/14/11-4/20/11      1,618,211         1,583,040   
Vedanta Resources PLC, 6.75%, 2016    5/26/11      1,068,000         1,063,942   
Virgin Media Secured Finance PLC, 5.25%, 2021    2/24/11      477,578         511,158   
Total Restricted Securities            $25,839,654   
% of Net Assets            3.7%   

The following abbreviations are used in this report and are defined:

 

CDO   Collateralized Debt Obligation

 

CLO   Collateralized Loan Obligation

 

FRN   Floating Rate Note. Interest rate resets periodically and may not be the rate reported at period end.

 

PLC   Public Limited Company

 

REIT   Real Estate Investment Trust

 

TIPS   Treasury Inflation Protected Security

See Notes to Financial Statements

 

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FINANCIAL STATEMENTS  |  STATEMENT OF ASSETS AND LIABILITIES (unaudited)

 

This statement represents your fund’s balance sheet, which details the assets and liabilities comprising the total value of the fund.

 

At 6/30/11

      

Assets

                  

Investments –

      

Non-affiliated issuers, at value (identified cost, $651,916,175)

      $673,914,912      

Underlying affiliated funds, at cost and value

      10,146,942            

Total investments, at value (identified cost, $662,063,117)

      $684,061,854            

Cash

      699,170      

Receivables for

      

Fund shares sold

      1,688,683      

Interest

      5,992,506      

Other assets

      2,887            

Total assets

               $692,445,100   

Liabilities

                  

Payables for

      

Investments purchased

      $1,635,051      

Fund shares reacquired

      513,010      

Payable to affiliates

      

Investment adviser

      19,478      

Shareholder servicing costs

      466      

Distribution and/or service fees

      4,435      

Payable for independent Trustees’ compensation

      890      

Accrued expenses and other liabilities

      93,144            

Total liabilities

               $2,266,474   

Net assets

               $690,178,626   

Net assets consist of

                  

Paid-in capital

      $631,308,690      

Unrealized appreciation (depreciation) on investments

      21,998,737      

Accumulated net realized gain (loss) on investments

      7,302,697      

Undistributed net investment income

      29,568,502            

Net assets

               $690,178,626   

Shares of beneficial interest outstanding

               53,172,609   

 

     Net assets      Shares
outstanding		      Net asset value
per share		  

Initial Class

      $365,047,800         27,973,260         $13.05   

Service Class

      325,130,826         25,199,349         12.90   

See Notes to Financial Statements

 

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FINANCIAL STATEMENTS  |  STATEMENT OF OPERATIONS (unaudited)

 

This statement describes how much your fund earned in investment income and accrued in expenses. It also describes any gains and/or losses generated by fund operations.

 

Six months ended 6/30/11      
Net investment income                  

Income

      

Interest

      $13,167,390      

Dividends from underlying affiliated funds

      11,332            

Total investment income

               $13,178,722   

Expenses

      

Management fee

      $1,578,169      

Distribution and/or service fees

      332,897      

Shareholder servicing costs

      35,436      

Administrative services fee

      50,560      

Independent Trustees’ compensation

      7,920      

Custodian fee

      38,725      

Shareholder communications

      42,323      

Auditing fees

      30,568      

Legal fees

      4,681      

Miscellaneous

      15,317            

Total expenses

               $2,136,596   

Fees paid indirectly

      (444 )    

Reduction of expenses by investment adviser

      (1,759 )          

Net expenses

               $2,134,393   

Net investment income

               $11,044,329   

Realized and unrealized gain (loss) on investments

                  

Realized gain (loss) on investment transactions (identified cost basis)

               $956,346   

Change in unrealized appreciation (depreciation) on investments

               $6,705,180   

Net realized and unrealized gain (loss) on investments

               $7,661,526   

Change in net assets from operations

               $18,705,855   

See Notes to Financial Statements

 

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FINANCIAL STATEMENTS  |  STATEMENTS OF CHANGES IN NET ASSETS

 

These statements describe the increases and/or decreases in net assets resulting from operations, any distributions, and any shareholder transactions.

 

    

 

 

 Six months ended

6/30/11

(unaudited

   

  

) 

     

 

 Year ended

12/31/10

   

  

Change in net assets

      

From operations

                  

Net investment income

      $11,044,329         $16,535,232   

Net realized gain (loss) on investments

      956,346         10,684,917   

Net unrealized gain (loss) on investments

      6,705,180         4,393,825   

Change in net assets from operations

      $18,705,855         $31,613,974   

Distributions declared to shareholders

                  

From net investment income

      $—         $(13,266,265 ) 

From net realized gain on investments

      —         (1,375,381 ) 

Total distributions declared to shareholders

      $—         $(14,641,646 ) 

Change in net assets from fund share transactions

      $88,530,765         $203,342,287   

Total change in net assets

      $107,236,620         $220,314,615   

Net assets

                  

At beginning of period

      582,942,006         362,627,391   

At end of period (including undistributed net investment income of $29,568,502 and
$18,524,173, respectively)

      $690,178,626         $582,942,006   

See Notes to Financial Statements

 

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FINANCIAL STATEMENTS  |  FINANCIAL HIGHLIGHTS

 

The financial highlights table is intended to help you understand the fund’s financial performance for the semiannual period and the past 5 fiscal years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period.

 

Initial Class      Six months
ended
6/30/11		      Years ended 12/31  
          2010        2009        2008        2007        2006  
       (unaudited)                                             

Net asset value, beginning of period

        $12.66         $12.20           $11.00           $11.60           $11.51           $11.61   
Income (loss) from investment operations                                                                

Net investment income (d)

        $0.23         $0.44           $0.51           $0.52           $0.55           $0.53   

Net realized and unrealized gain (loss) on investments

        0.16         0.45           1.20           (0.78 )         (0.08 )         (0.08 ) 

Total from investment operations

        $0.39         $0.89           $1.71           $(0.26 )         $0.47           $0.45   
Less distributions declared to shareholders                                                                

From net investment income

        $—         $(0.39 )         $(0.51 )         $(0.34 )         $(0.38 )         $(0.49 ) 

From net realized gain on investments

        —         (0.04 )         —           —           —           (0.06 ) 

Total distributions declared to shareholders

        $—         $(0.43 )         $(0.51 )         $(0.34 )         $(0.38 )         $(0.55 ) 

Net asset value, end of period

        $13.05         $12.66           $12.20           $11.00           $11.60           $11.51   

Total return (%) (k)(r)(s)

        3.08 (n)       7.47           16.16           (2.37 )         4.21           4.05   
Ratios (%) (to average net assets)
and Supplemental data:		                                                                

Expenses before expense reductions (f)

        0.57 (a)       0.59           0.62           0.74           0.77           0.94   

Expenses after expense reductions (f)

        0.57 (a)       0.59           0.62           0.64           0.67           0.70   

Net investment income

        3.61 (a)       3.51           4.38           4.63           4.80           4.69   

Portfolio turnover

        30         66           113           115           74           51   

Net assets at end of period (000 omitted)

        $365,048         $371,865           $317,851           $184,984           $139,275           $66,875   

See Notes to Financial Statements

 

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Financial Highlights – continued

 

Service Class      Six months
ended
6/30/11		      Years ended 12/31  
          2010        2009        2008        2007        2006  
       (unaudited)                                             

Net asset value, beginning of period

        $12.53         $12.10           $10.91           $11.51           $11.43           $11.54   
Income (loss) from investment operations                                                                

Net investment income (d)

        $0.21         $0.40           $0.47           $0.49           $0.52           $0.50   

Net realized and unrealized gain (loss) on investments

        0.16         0.45           1.20           (0.78 )         (0.08 )         (0.08 ) 

Total from investment operations

        $0.37         $0.85           $1.67           $(0.29 )         $0.44           $0.42   
Less distributions declared to shareholders                                                                

From net investment income

        $—         $(0.38 )         $(0.48 )         $(0.31 )         $(0.36 )         $(0.47 ) 

From net realized gain on investments

        —         (0.04 )         —           —           —           (0.06 ) 

Total distributions declared to shareholders

        $—         $(0.42 )         $(0.48 )         $(0.31 )         $(0.36 )         $(0.53 ) 

Net asset value, end of period

        $12.90         $12.53           $12.10           $10.91           $11.51           $11.43   

Total return (%) (k)(r)(s)

        2.95 (n)       7.20           15.91           (2.64 )         3.92           3.79   
Ratios (%) (to average net assets)
and Supplemental data:		                                                                

Expenses before expense reductions (f)

        0.82 (a)       0.84           0.87           0.99           1.03           1.20   

Expenses after expense reductions (f)

        0.82 (a)       0.84           0.87           0.89           0.93           0.95   

Net investment income

        3.35 (a)       3.20           4.07           4.37           4.55           4.44   

Portfolio turnover

        30         66           113           115           74           51   

Net assets at end of period (000 omitted)

        $325,131         $211,077           $44,776           $14,518           $18,347           $16,822   

 

(a) Annualized.

 

(d) Per share data is based on average shares outstanding.

 

(f) Ratios do not reflect reductions from fees paid indirectly, if applicable.

 

(k) The total return does not reflect expenses that apply to separate accounts. Inclusion of these charges would reduce the total return figures for all periods shown.

 

(n) Not annualized.

 

(r) Certain expenses have been reduced without which performance would have been lower.

 

(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.

See Notes to Financial Statements

 

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NOTES TO FINANCIAL STATEMENTS (unaudited)

 

(1)   Business and Organization

MFS Research Bond Series (the fund) is a 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, and qualified retirement and pension plans.

 

(2)   Significant Accounting Policies

General – The preparation of financial statements in conformity with U.S. 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. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the fund’s Statement of Assets and Liabilities through the date that the financial statements were issued. The fund invests a significant portion of its assets in asset-backed and/or mortgage-backed securities. The value of these securities may depend, in part, on the issuer’s or borrower’s credit quality or ability to pay principal and interest when due and may fall if an issuer or borrower defaults on its obligation to pay principal or interest or if the instrument’s credit rating is downgraded by a credit rating agency. U.S. Government securities not supported as to the payment of principal or interest by the U.S. Treasury, such as those issued by Fannie Mae, Freddie Mac, and the Federal Home Loan Banks, are subject to greater credit risk than are U.S. Government securities supported by the U.S. Treasury, such as those issued by Ginnie Mae. The fund invests 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 – Debt instruments and floating rate loans (other than short-term instruments), including restricted debt instruments, are generally valued at an evaluated or composite bid as provided by a third-party pricing service. Short-term instruments with a maturity at issuance of 60 days or less generally are valued at amortized cost, which approximates market value. Open-end investment companies are generally valued at net asset value per share. Securities and other assets generally valued on the basis of information from a third-party pricing service may also be valued at a broker/dealer bid quotation. Values obtained from third-party pricing services can utilize both transaction data and market information such as yield, quality, coupon rate, maturity, type of issue, trading characteristics, and other market data. The values of foreign securities and other assets and liabilities expressed in foreign currencies are converted to U.S. dollars using the mean of bid and asked prices for rates provided by a third-party pricing service.

The Board of Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments (including any fair valuation) to the adviser pursuant to valuation policies and procedures approved by the Board. If the adviser determines that reliable market quotations are not readily available, investments are valued at fair value as determined in good faith by the adviser in accordance with such procedures under the oversight of the Board of Trustees. Under the fund’s valuation policies and procedures, market quotations are not considered to be readily available for most types of debt instruments and floating rate loans and many types of derivatives. These investments are generally valued at fair value based on information from third-party pricing services. In addition, investments may be valued at fair value if the adviser determines that an investment’s value has been materially affected by events occurring after the close of the exchange or market on which the investment is principally traded (such as foreign exchange or market) and prior to the determination of the fund’s net asset value, or after the halting of trading of a specific security where trading does not resume prior to the close of the exchange or market on which the security is principally traded. The adviser generally relies on third-party pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and financial condition of the issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment for purposes of calculating the fund’s net asset value can differ depending on the source and method used to determine value. When fair valuation is used, the value of an investment used to determine the fund’s net asset value may differ from quoted or published prices for the same investment. There can be no assurance that the fund could obtain the fair value assigned to an investment if it were to sell the investment at the same time at which the fund determines its net asset value per share.

Various inputs are used in determining the value of the fund’s assets or liabilities. These inputs are categorized into three broad levels. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair

 

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MFS Research Bond Series

 

Notes to Financial Statements (unaudited) – continued

 

value measurement. The fund’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. Level 1 includes unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes other significant observable market-based inputs (including quoted prices for similar securities, interest rates, prepayment speed, and credit risk). Level 3 includes unobservable inputs, which may include the adviser’s own assumptions in determining the fair value of investments. The following is a summary of the levels used as of June 30, 2011 in valuing the fund’s assets or liabilities:

 

Investments at Value    Level 1      Level 2      Level 3      Total  
U.S. Treasury Bonds & U.S. Government Agency & Equivalents      $ —         $197,243,848         $—         $197,243,848   
Non-U.S. Sovereign Debt      —         12,239,741         —         12,239,741   
Corporate Bonds      —         200,534,075         —         200,534,075   
Residential Mortgage-Backed Securities      —         145,014,651         —         145,014,651   
Commercial Mortgage-Backed Securities      —         42,229,474         —         42,229,474   
Asset-Backed Securities (including CDOs)      —         16,855,122         —         16,855,122   
Foreign Bonds      —         59,555,655         —         59,555,655   
Floating Rate Loans      —         242,346         —         242,346   
Mutual Funds      10,146,942         —         —         10,146,942   
Total Investments      $10,146,942         $673,914,912         $—         $684,061,854   

For further information regarding security characteristics, see the Portfolio of Investments.

Inflation-Adjusted Debt Securities – The fund invests in inflation-adjusted debt securities issued by the U.S. Treasury. The fund may also invest in inflation-adjusted debt securities issued by U.S. Government agencies and instrumentalities other than the U.S. Treasury and by other entities such as U.S. and foreign corporations and foreign governments. The principal value of these debt securities is adjusted through income according to changes in the Consumer Price Index or another general price or wage index. These debt securities typically pay a fixed rate of interest, but this fixed rate is applied to the inflation-adjusted principal amount. The principal paid at maturity of the debt security is typically equal to the inflation-adjusted principal amount, or the security’s original par value, whichever is greater. Other types of inflation-adjusted securities may use other methods to adjust for other measures of inflation.

Loans and Other Direct Debt Instruments – The fund invests in loans and loan participations or other receivables. These investments may include standby financing commitments, including revolving credit facilities, which obligate the fund to supply additional cash to the borrower on demand. Loan participations involve a risk of insolvency of the lending bank or other financial intermediary.

Indemnifications – Under the fund’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the fund. Additionally, in the normal course of business, the fund enters into agreements with service providers that may contain indemnification clauses. The fund’s maximum exposure under these agreements is unknown as this would involve future claims that may be made against the fund that have not yet occurred.

Investment Transactions and Income – Investment transactions are recorded on the trade date. Interest income is recorded on the accrual basis. All premium and discount is amortized or accreted for financial statement purposes in accordance with U.S. generally accepted accounting principles. The fund earns certain fees in connection with its floating rate loan purchasing activities. These fees are in addition to interest payments earned and may include amendment fees, commitment fees, facility fees, consent fees, and prepayment fees. Commitment fees are recorded on an accrual basis as income in the accompanying financial statements. Inflation-indexed bonds are fixed-income securities whose principal value is periodically adjusted upward or downward to the rate of inflation. Interest is accrued based on the principal value, which is adjusted for inflation. Any increase or decrease in the principal amount of an inflation-indexed bond is generally recorded as an increase or decrease in interest income, respectively, even though the adjusted principal is not received until maturity. 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.

The fund may receive proceeds from litigation settlements. Any proceeds received from litigation involving portfolio holdings are reflected in the Statement of Operations in realized gain/loss if the security has been disposed of by the fund or in unrealized gain/loss if the security is still held by the fund. Any other proceeds from litigation not related to portfolio holdings are reflected as other income in the Statement of Operations.

 

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Notes to Financial Statements (unaudited) – continued

 

The fund entered into “TBA” (to be announced) purchase commitments to purchase securities for a fixed unit price at a future date. Although the unit price has been established, the principal value has not been finalized. However, the principal amount of the commitments will not fluctuate more than 0.01%. The fund holds, and maintains until settlement date, cash or high-grade debt obligations in an amount sufficient to meet the purchase price, or the fund may enter into offsetting contracts for the forward sale of other securities it owns. Income on the securities will not be earned until settlement date. TBA purchase commitments may be considered securities in themselves, and involve a risk of loss if the value of the security to be purchased declines prior to settlement date, which is in addition to the risk of decline in the value of the fund’s other assets. Unsettled TBA purchase commitments are valued at the current market value of the underlying securities.

Fees Paid Indirectly – The fund’s custody fee may be reduced according to an arrangement that measures the value of cash deposited with the custodian by the fund. This amount, for the six months ended June 30, 2011, is shown as a reduction of total expenses on the Statement of Operations.

Tax Matters and Distributions – The fund intends to qualify as a regulated investment company, as defined under Subchapter M of the Internal Revenue Code, and to distribute all of its taxable income, including realized capital gains. As a result, no provision for federal income tax is required. The fund’s federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue Service. Foreign taxes, if any, have been accrued by the fund in the accompanying financial statements.

Distributions to shareholders are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income, expense, gain or loss in different periods for financial statement and tax purposes will reverse at some time in the future. Distributions in excess of net investment income or net realized gains are temporary overdistributions for financial statement purposes resulting from differences in the recognition or classification of income or distributions for financial statement and tax purposes.

Book/tax differences primarily relate to amortization and accretion of debt securities.

The tax character of distributions declared to shareholders for the last fiscal year is as follows:

 

     12/31/10  
Ordinary income (including any short-term capital gains)      $14,641,646   

The federal tax cost and the tax basis components of distributable earnings were as follows:

 

As of 6/30/11   
Cost of investments      $664,061,050   
Gross appreciation      22,378,504   
Gross depreciation      (2,377,700 ) 
Net unrealized appreciation (depreciation)      $20,000,804   
As of 12/31/10   
Undistributed ordinary income      24,584,956   
Undistributed long-term capital gain      2,046,568   
Other temporary differences      (105,920 ) 
Net unrealized appreciation (depreciation)      13,638,477   

The aggregate cost above includes prior fiscal year end tax adjustments, if applicable.

 

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Notes to Financial Statements (unaudited) – continued

 

Multiple Classes of Shares of Beneficial Interest – The fund offers multiple classes of shares, which differ in their respective distribution and/or service fees. The fund’s income, realized and unrealized gain (loss), and common expenses are allocated to shareholders based on the daily net assets of each class. Dividends are declared separately for each class. Differences in per share dividend rates are generally due to differences in separate class expenses. The fund’s distributions declared to shareholders as reported on the Statements of Changes in Net Assets are presented by class as follows:

 

     From net investment
income		      From net realized gain on
investments		  
     Six months ended
6/30/11		      Year ended
12/31/10		      Six months ended
6/30/11		      Year ended
12/31/10		  
Initial Class      $—         $10,520,871         $—         $1,086,136   
Service Class      —         2,745,394         —         289,245   
Total      $—         $13,266,265         $—         $1,375,381   

 

(3)   Transactions with Affiliates

Investment Adviser – The fund has an investment advisory agreement with MFS to provide overall investment management and related administrative services and facilities to the fund. The management fee is computed daily and paid monthly at an annual rate of 0.50% of the fund’s average daily net assets.

The investment adviser has agreed in writing to pay a portion of the fund’s total annual operating expenses, exclusive of interest, taxes, extraordinary expenses, brokerage and transaction costs and investment-related expenses, such that total annual operating expenses do not exceed 0.70% of average daily net assets for the Initial Class shares and 0.95% of average daily net assets for the Service Class shares. This written agreement will continue until modified by the fund’s Board of Trustees, but such agreement will continue at least until April 30, 2013. For the six months ended June 30, 2011, the fund’s actual operating expenses did not exceed the limit and therefore, the investment adviser did not pay any portion of the fund’s expenses related to this agreement.

Distributor – MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, is the distributor of shares of the fund. The Trustees have adopted a distribution plan for the Service Class shares pursuant to Rule 12b-1 under the Investment Company Act of 1940.

The fund’s distribution plan provides that the fund will pay MFD distribution and/or service fees equal to 0.25% per annum of its average daily net assets attributable to Service Class shares as partial consideration for services performed and expenses incurred by MFD and financial intermediaries (including participating insurance companies that invest in the fund to fund variable annuity and variable life insurance contracts, sponsors of qualified retirement and pension plans that invest in the fund, and affiliates of these participating insurance companies and plan sponsors) in connection with the sale and distribution of the Service Class shares. MFD may subsequently pay all, or a portion, of the distribution and/or service fees to financial intermediaries.

Shareholder Servicing Agent – MFS Service Center, Inc. (MFSC), a wholly-owned subsidiary of MFS, receives a fee from the fund for its services as shareholder servicing agent. For the six months ended June 30, 2011, the fee was $35,233, which equated to 0.0112% annually of the fund’s average daily net assets. MFSC also receives payment from the fund for out-of-pocket expenses paid by MFSC on behalf of the fund. For the six months ended June 30, 2011, these costs amounted to $203.

Administrator – MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the fund partially reimburses MFS the costs incurred to provide these services. The fund is charged an annual fixed amount of $17,500 plus a fee based on average daily net assets. The administrative services fee incurred for the six months ended June 30, 2011 was equivalent to an annual effective rate of 0.0160% of the fund’s average daily net assets.

Trustees’ and Officers’ Compensation – The fund pays compensation to independent Trustees in the form of a retainer, attendance fees, and additional compensation to Board and Committee chairpersons. The fund does not pay compensation directly to Trustees or officers of the fund who are also officers of the investment adviser, all of whom receive remuneration for their services to the fund from MFS. Certain officers and Trustees of the fund are officers or directors of MFS, MFD, and MFSC.

Other – This fund and certain other funds managed by MFS (the funds) have entered into services agreements (the Agreements) which provide for payment of fees by the funds to Tarantino LLC and Griffin Compliance LLC in return for the provision of services of an Independent Chief Compliance Officer (ICCO) and Assistant ICCO, respectively, for the funds. The

 

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MFS Research Bond Series

 

Notes to Financial Statements (unaudited) – continued

 

ICCO and Assistant ICCO are officers of the funds and the sole members of Tarantino LLC and Griffin Compliance LLC, respectively. The funds can terminate the Agreements with Tarantino LLC and Griffin Compliance LLC at any time under the terms of the Agreements. For the six months ended June 30, 2011, the aggregate fees paid by the fund to Tarantino LLC and Griffin Compliance LLC were $2,171 and are included in miscellaneous expense on the Statement of Operations. MFS has agreed to reimburse the fund for a portion of the payments made by the fund in the amount of $1,759, which is shown as a reduction of total expenses in the Statement of Operations. Additionally, MFS has agreed to bear all expenses associated with office space, other administrative support, and supplies provided to the ICCO and Assistant ICCO.

The fund invests in the MFS Institutional Money Market Portfolio which is managed by MFS and seeks a high level of current income consistent with preservation of capital and liquidity. Income earned on this investment is included in dividends from underlying affiliated funds on the Statement of Operations. This money market fund does not pay a management fee to MFS.

 

(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      $147,618,668         $96,262,573   
Investments (non-U.S. Government securities)      $134,383,297         $88,532,107   

 

(5)   Shares of Beneficial Interest

The fund’s Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest. Transactions in fund shares were as follows:

 

     Six months ended 6/30/11      Year ended 12/31/10  
     Shares      Amount      Shares      Amount  
Shares sold            

Initial Class

      2,404,292         $30,800,014         7,336,270         $91,347,137   

Service Class

      9,144,051         116,397,921         13,907,465         172,402,689   
     11,548,343         $147,197,935         21,243,735         $263,749,826   
Shares issued to shareholders in reinvestment of distributions            

Initial Class

      —         $—         955,309         $11,607,007   

Service Class

      —         —         251,837         3,034,639   
     —         $—         1,207,146         $14,641,646   
Shares reacquired            

Initial Class

      (3,798,992 )       $(48,673,400 )       (4,980,013 )       $(62,421,426 ) 

Service Class

      (784,256 )       (9,993,770 )       (1,019,752 )       (12,627,759 ) 
     (4,583,248 )       $(58,667,170 )       (5,999,765 )       $(75,049,185 ) 
Net change            

Initial Class

      (1,394,700 )       $(17,873,386 )       3,311,566         $40,532,718   

Service Class

      8,359,795         106,404,151         13,139,550         162,809,569   
     6,965,095         $88,530,765         16,451,116         $203,342,287   

 

(6)   Line of Credit

The fund and certain other funds managed by MFS participate in a $1.1 billion unsecured committed line of credit, subject to a $1 billion sublimit, provided by a syndication of banks under a credit agreement. Borrowings may be made for temporary financing needs. Interest is charged to each fund, based on its borrowings, generally at a rate equal to the higher of the Federal Reserve funds rate or one month LIBOR plus an agreed upon spread. A commitment fee, based on the average daily, unused portion of the committed line of credit, is allocated among the participating funds at the end of each calendar quarter. In addition, the fund and other funds managed by MFS have established unsecured uncommitted borrowing arrangements with certain banks for temporary financing needs. Interest is charged to each fund, based on its borrowings, at a rate equal to the Federal Reserve funds rate plus an agreed upon spread. For the six months ended June 30, 2011, the fund’s commitment fee and interest expense were $2,769 and $0, respectively, and are included in miscellaneous expense on the Statement of Operations.

 

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Notes to Financial Statements (unaudited) – continued

 

 

(7)   Transactions in Underlying Affiliated Funds – Affiliated Issuers

An affiliated issuer may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. For the purposes of this report, the fund assumes the following to be affiliated issuers:

 

Underlying Affiliated Funds    Beginning
Shares/Par
Amount		      Acquisitions
Shares/Par
Amount		      Dispositions
Shares/Par
Amount		      Ending
Shares/Par
Amount		  
MFS Institutional Money Market Portfolio      8,107,357         167,990,205         (165,950,620 )       10,146,942   
Underlying Affiliated Funds    Realized
Gain (Loss)		      Capital Gain
Distributions		      Dividend
Income		      Ending
Value		  
MFS Institutional Money Market Portfolio      $—         $—         $11,332         $10,146,942   

 

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MFS Research Bond Series

 

BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT

 

A discussion regarding the Board’s most recent review and renewal of the fund’s Investment Advisory Agreement with MFS will be available on or about November 1, 2011 by clicking on the fund’s name under “Variable Insurance Portfolios — VIT” in the “Products and Performance” section of the MFS Web site (mfs.com).

PROXY VOTING POLICIES AND INFORMATION

A general description of the MFS funds’ proxy voting policies and procedures is available without charge, upon request, by calling
1-800-225-2606, by visiting the Proxy Voting section of mfs.com or by visiting the SEC’s Web site at http://www.sec.gov.

Information regarding how the fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available without charge by visiting the Proxy Voting section of mfs.com or by visiting the SEC’s Web site at http://www.sec.gov.

QUARTERLY PORTFOLIO DISCLOSURE

The fund will file a complete schedule of portfolio holdings with the Securities and Exchange Commission (the Commission) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q may be reviewed and copied at the:

Public Reference Room

Securities and Exchange Commission

100 F Street, NE, Room 1580

Washington, D.C. 20549

Information on the operation of the Public Reference Room may be obtained by calling the Commission at 1-800-SEC-0330. The fund’s Form N-Q is available on the EDGAR database on the Commission’s Internet Web site 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: publicinfo@sec.gov or by writing the Public Reference Section at the above address.

FURTHER INFORMATION

From time to time, MFS may post important information about the fund or the MFS funds on the MFS web site (mfs.com). This information is available by visiting the “News & Commentary” section of mfs.com or by clicking on the fund’s name under “Variable Insurance Portfolios — VIT” in the “Products and Performance” section of mfs.com.

 

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rev. 3/11

 

FACTS   WHAT DOES MFS DO WITH YOUR
PERSONAL INFORMATION?		   LOGO

 

Why?   Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?  

The types of personal information we collect and share depend on the product or service you have with us. This information can include:

 

• Social Security number and account balances

• Account transactions and transaction history

• Checking account information and wire transfer instructions

 

When you are no longer our customer, we continue to share your information as described in this notice.

 

How?   All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons MFS chooses to share; and whether you can limit this sharing.

 

Reasons we can share your personal information   Does MFS share?   Can you limit this
sharing?

For our everyday business purposes –

such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus

   Yes   No

For our marketing purposes –

to offer our products and services to you

   No   We don’t share
For joint marketing with other financial companies   No   We don’t share

For our affiliates’ everyday business purposes –

information about your transactions and experiences

   No   We don’t share

For our affiliates’ everyday business purposes –

information about your creditworthiness

   No   We don’t share
For nonaffiliates to market to you   No   We don’t share

 

Questions?   Call 800-225-2606 or go to mfs.com.

 

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Page 2  

 

Who we are
Who is providing this notice?   MFS Funds, MFS Investment Management, MFS Institutional Advisors, Inc., MFS Fund Distributors, Inc., MFS Heritage Trust Company, and MFS Service Center, Inc.

 

What we do
How does MFS protect my personal information?   To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include procedural, electronic, and physical safeguards for the protection of the personal information we collect about you.
How does MFS
collect my personal information?		  

We collect your personal information, for example, when you

 

• open an account or provide account information

• direct us to buy securities or direct us to sell your securities

• make a wire transfer

 

We also collect your personal information from others, such as credit bureaus, affiliates and other companies.

Why can’t I limit all sharing?  

Federal law gives you the right to limit only

 

• sharing for affiliates’ everyday business purposes – information about your creditworthiness

• affiliates from using your information to market to you

• sharing for nonaffiliates to market to you

 

State laws and individual companies may give you additional rights to limit sharing.

 

Definitions
Affiliates  

Companies related by common ownership or control. They can be financial and nonfinancial companies.

 

• MFS does not share personal information with affiliates, except for everyday business purposes as described on page one of this notice.

Nonaffiliates  

Companies not related by common ownership or control. They can be financial and nonfinancial companies.

 

• MFS does not share with nonaffiliates so they can market to you.

Joint Marketing  

A formal agreement between nonaffiliated financial companies that together market financial products or services to you.

 

• MFS doesn’t jointly market.

 

 

Other important information
If you own an MFS product or receive an MFS service in the name of a third party such as a bank or broker-dealer, their privacy policy may apply to you instead of ours.

 

24

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LOGO

Table of Contents

LOGO

 

MFS® High Income Series

MFS® Variable Insurance Trust

 

LOGO

 

 

SEMIANNUAL REPORT

June 30, 2011

 

VHI-SEM

Table of Contents

MFS® HIGH INCOME SERIES

 

CONTENTS   
Letter from the CEO      1   
Portfolio composition      2   
Expense table      3   
Portfolio of investments      4   
Statement of assets and liabilities      13   
Statement of operations      14   
Statements of changes in net assets      15   
Financial highlights      16   
Notes to financial statements      18   
Board review of investment advisory agreement      26   
Proxy voting policies and information      26   
Quarterly portfolio disclosure      26   
Further information      26   
MFS® privacy notice      27   

 

 

 

 

The report is prepared for the general information of contract owners. It is authorized for distribution to prospective investors only when preceded or accompanied by a current prospectus.

 

NOT FDIC INSURED Ÿ MAY LOSE VALUE Ÿ NO BANK OR CREDIT UNION GUARANTEE Ÿ NOT A DEPOSIT Ÿ NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY OR NCUA/NCUSIF

Table of Contents

MFS High Income Series

 

LETTER FROM THE CEO

 

LOGO

 

Dear Contract Owners:

After about a year of almost uninterrupted macroeconomic and financial market improvement following the global credit crisis, investors grew more cautious in the middle of 2010 as fears grew that some European countries would default on their debt and as economic data showed a weakening

trend in the global economy. As a result asset prices fell significantly.

Last September the U.S. Federal Reserve Board’s promises to make lending conditions easier helped assuage market fears and drive asset prices off their recent lows. A combination of solid earnings and improving economic data gave an additional boost to investor sentiment.

In the following months, the renewed positive market mood, coupled with indications of better global macroeconomic activity, pushed many asset valuations to post-crisis highs. At the same time, global sovereign

bond yields initially rose as investors became concerned about inflationary pressures, driven by higher prices for oil as well as other commodities. However, by the end of the second quarter of 2011, a weakening macroeconomic backdrop and renewed concerns over debt problems in some eurozone countries pushed equities lower.

For the remainder of 2011, we are cautiously optimistic that economic growth will continue to improve and that the global economies will recover from the shocks of the past few years. We expect the pace of recovery worldwide to be uneven and volatile and acknowledge the elevated uncertainty created by events in Japan, Europe, the Middle East, as well as that created by the U.S. debate over raising the debt ceiling and the downgrade by Standard & Poor’s of the U.S. long-term credit rating.

As always, we continue to be mindful of the many economic challenges faced at the local, national, and international levels. It is in times such as these that we want to remind investors of the merits of maintaining a long-term view, adhering to basic investing principles such as asset allocation and diversification, and working closely with their advisors to research and identify appropriate investment opportunities.

Respectfully,

LOGO

Robert J. Manning

Chairman and Chief Executive Officer

MFS Investment Management®

August 16, 2011

 

The opinions expressed in this letter are subject to change, may not be relied upon for investment advice, and no forecasts can be guaranteed.

 

 

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MFS High Income Series

 

PORTFOLIO COMPOSITION

 

Portfolio structure (i)

LOGO

 

Top five industries (i)  
Energy Independent     8.3%   
Broadcasting     5.5%   
Medical & Health Technology & Services     5.4%   

Utilities – Electric Power

     4.8%   

Telecommunications – Wireless

     4.7%   
Composition including fixed income credit quality (a)(i)   
A      1.1%   
BBB      4.3%   
BB      30.3%   
B      42.2%   
CCC      15.4%   
CC      1.1%   
C      0.3%   
D      0.2%   
Not Rated      (0.4)%   
Non-Fixed Income      2.2%   
Cash & Other      3.3%   
Portfolio facts (i)   
Average Duration (d)      4.6   
Average Effective Maturity (m)      7.3 yrs.   
 

 

(a) For all securities other than those specifically described below, ratings are assigned to underlying securities utilizing ratings from Moody’s, Fitch, and Standard & Poor’s rating agencies and applying the following hierarchy: If all three agencies provide a rating, the middle rating (after dropping the highest and lowest ratings) is assigned; if two of the three agencies rate a security, the lower of the two is assigned. Ratings are shown in the S&P and Fitch scale (e.g., AAA). All ratings are subject to change. Not Rated includes fixed income securities, including fixed income futures, which have not been rated by any rating agency. Non-Fixed Income includes equity securities (including convertible bonds and equity derivatives) and commodities. Cash & Other includes cash, other assets less liabilities, offsets to derivative positions, and short-term securities. The fund may not hold all of these instruments. The fund itself has not been rated.

 

(d) Duration is a measure of how much a bond’s price is likely to fluctuate with general changes in interest rates, e.g., if rates rise 1.00%, a bond with a 5-year duration is likely to lose about 5.00% of its value due to the interest rate move.

 

(i) For purposes of this presentation, the components include the market value of securities, and reflect the impact of the equivalent exposure of derivative positions, if applicable. These amounts may be negative from time to time. The bond component will include any accrued interest amounts. Equivalent exposure is a calculated amount that translates the derivative position into a reasonable approximation of the amount of the underlying asset that the portfolio would have to hold at a given point in time to have the same price sensitivity that results from the portfolio’s ownership of the derivative contract. When dealing with derivatives, equivalent exposure is a more representative measure of the potential impact of a position on portfolio performance than market value. Where the fund holds convertible bonds, these are treated as part of the equity portion of the portfolio.

 

(m) In determining an instrument’s effective maturity for purposes of calculating the fund’s dollar-weighted average effective maturity, MFS uses the instrument’s stated maturity or, if applicable, an earlier date on which MFS believes it is probable that a maturity-shortening device (such as a put, pre-refunding or prepayment) will cause the instrument to be repaid. Such an earlier date can be substantially shorter than the instrument’s stated maturity.

Percentages are based on net assets as of 6/30/11.

The portfolio is actively managed and current holdings may be different.

 

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MFS High Income Series

 

EXPENSE TABLE

 

Fund Expenses Borne by the Contract Holders During the Period,

January 1, 2011 through June 30, 2011

As a contract holder of the fund, you incur ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period January 1, 2011 through June 30, 2011.

Actual Expenses

The first line for each share class in the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The second line for each share class in the following table provides information about hypothetical account values and hypothetical expenses based on the fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight the fund’s ongoing costs only and do not take into account the fees and expenses imposed under the variable contracts through which your investment in the fund is made. Therefore, the second line for each share class in the table is useful in comparing ongoing costs associated with an investment in vehicles (such as the fund) which fund benefits under variable annuity and variable life insurance contracts and to qualified pension and retirement plans only, and will not help you determine the relative total costs of investing in the fund through variable annuity and variable life insurance contracts. If the fees and expenses imposed under the variable contracts were included, your costs would have been higher.

 

Share Class         Annualized
Expense Ratio		      Beginning
Account Value
1/01/11		     

Ending

Account Value
6/30/11

      Expenses Paid
During Period (p)
1/01/11-6/30/11		  
Initial Class   Actual      0.79%         $1,000.00         $1,043.28         $4.00   
  Hypothetical (h)      0.79%         $1,000.00         $1,020.88         $3.96   
Service Class   Actual      1.04%         $1,000.00         $1,041.19         $5.26   
  Hypothetical (h)      1.04%         $1,000.00         $1,019.64         $5.21   

 

(h) 5% class return per year before expenses.

 

(p) Expenses paid is equal to each class’ annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by the number of days in the period, divided by the number of days in the year.

 

3

Table of Contents

MFS High Income Series

 

PORTFOLIO OF INVESTMENTS – 6/30/11 (unaudited)

 

The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.

Issuer    Shares/Par     Value ($)  
    
BONDS – 93.3%     
Aerospace – 2.1%     
BE Aerospace, Inc., 8.5%, 2018    $ 1,010,000      $ 1,102,163   
Bombardier, Inc., 7.5%, 2018 (n)      1,370,000        1,534,400   
Bombardier, Inc., 7.75%, 2020 (n)      550,000        618,750   
CPI International Acquisition, Inc., 8%, 2018 (n)      1,040,000        982,800   
Hawker Beechcraft Acquisition Co. LLC, 8.5%, 2015      1,220,000        954,650   
Heckler & Koch GmbH, 9.5%, 2018 (z)    EUR 655,000        902,356   
Huntington Ingalls Industries, Inc., 7.125%, 2021 (n)    $ 915,000        947,025   
    

 

 

  
     $ 7,042,144   
    

 

 

  
Airlines – 0.0%     
Continental Airlines, Inc., 6.748%, 2018    $ 60,788      $ 60,253   
    

 

 

  
Apparel Manufacturers – 0.7%     
Hanesbrands, Inc., 8%, 2016    $ 990,000      $ 1,056,825   
Phillips-Van Heusen Corp., 7.375%, 2020      1,350,000        1,444,500   
    

 

 

  
     $ 2,501,325   
    

 

 

  
Asset-Backed & Securitized – 1.2%     
Airlie LCDO Ltd., CDO, FRN,
2.146%, 2011 (a)(p)(z)		    $ 738,379      $ 317,503   
Anthracite Ltd., CDO, 6%, 2037 (z)      290,000        217,500   
Arbor Realty Mortgage Securities, CDO, FRN, 2.573%, 2038 (z)      568,229        73,870   
ARCap REIT, Inc., CDO, “H”, FRN,
6.1%, 2045 (d)(z)		      670,155        25,130   
Babson Ltd., CLO, “D”, FRN,
1.778%, 2018 (n)		      655,000        487,975   
Citigroup Commercial Mortgage Trust, FRN, 5.886%, 2049      985,952        566,796   
Crest Ltd., CDO, 7%, 2040 (a)      907,061        45,353   
CWCapital Cobalt Ltd., CDO,
6.23%, 2045 (a)(p)(z)		      1,060,218        21,895   
CWCapital Cobalt Ltd., CDO, “F”, FRN, 1.573%, 2050 (z)      512,458        10,249   
First Union National Bank Commercial Mortgage Trust, 6.75%, 2032      750,000        511,932   
G-Force LLC, CDO, “A2”, 4.83%, 2036 (z)      670,601        663,895   
JPMorgan Chase Commercial Mortgage Securities Corp., “C”, FRN, 6.258%, 2051      750,000        517,413   
Wachovia Bank Commercial Mortgage Trust, FRN, 5.943%, 2047      579,683        228,730   
Wachovia Credit, CDO, FRN,
1.596%, 2026 (z)		      372,000        260,400   
    

 

 

  
     $ 3,948,641   
    

 

 

  
Automotive – 2.7%     
Accuride Corp., 9.5%, 2018    $ 1,215,000      $ 1,300,050   
Allison Transmission, Inc.,
7.125%, 2019 (n)		      705,000        685,613   
Ford Motor Credit Co. LLC, 8%, 2014      710,000        778,901   
Ford Motor Credit Co. LLC, 12%, 2015      3,008,000        3,730,275   
Issuer    Shares/Par     Value ($)  
    
BONDS – continued     
Automotive – continued     
General Motors Financial Co., Inc., 6.75%, 2018 (z)    $ 725,000      $ 726,813   
Goodyear Tire & Rubber Co., 10.5%, 2016      478,000        537,750   
Jaguar Land Rover PLC, 7.75%, 2018 (z)      200,000        201,000   
Jaguar Land Rover PLC, 8.125%, 2021 (z)      1,085,000        1,093,138   
UCI International, Inc., 8.625%, 2019      140,000        144,200   
    

 

 

  
     $ 9,197,740   
    

 

 

  
Basic Industry – 0.3%     
Trimas Corp., 9.75%, 2017    $ 1,050,000      $ 1,149,750   
    

 

 

  
Broadcasting – 4.8%     
Allbritton Communications Co., 8%, 2018    $ 955,000      $ 971,713   
Citadel Broadcasting Corp., 7.75%, 2018 (n)      190,000        201,875   
Clear Channel Communications, Inc.,
9%, 2021 (z)		      405,000        387,788   
EH Holding Corp., 7.625%, 2021 (z)      265,000        270,300   
Gray Television, Inc., 10.5%, 2015      300,000        312,000   
Inmarsat Finance PLC, 7.375%, 2017 (n)      1,410,000        1,494,600   
Intelsat Bermuda Ltd., 11.25%, 2017      935,000        1,003,956   
Intelsat Jackson Holdings Ltd., 9.5%, 2016      2,725,000        2,857,844   
Intelsat Jackson Holdings Ltd., 11.25%, 2016      405,000        429,300   
Lamar Media Corp., 6.625%, 2015      460,000        466,900   
LBI Media, Inc., 8.5%, 2017 (z)      645,000        506,325   
Liberty Media Corp., 8.5%, 2029      915,000        882,975   
Local TV Finance LLC, 9.25%, 2015 (p)(z)      1,542,946        1,544,875   
Newport Television LLC, 13%, 2017 (n)(p)      475,186        471,672   
Salem Communications Corp., 9.625%, 2016      163,000        171,761   
Sinclair Broadcast Group, Inc., 9.25%, 2017 (n)      585,000        642,038   
Sinclair Broadcast Group, Inc., 8.375%, 2018      195,000        204,750   
SIRIUS XM Radio, Inc., 13%, 2013 (n)      300,000        351,750   
SIRIUS XM Radio, Inc., 8.75%, 2015 (n)      1,095,000        1,207,238   
SIRIUS XM Radio, Inc., 7.625%, 2018 (n)      760,000        794,200   
Univision Communications, Inc.,
6.875%, 2019 (n)		      630,000        623,700   
Univision Communications, Inc.,
7.875%, 2020 (n)		      505,000        517,625   
    

 

 

  
     $ 16,315,185   
    

 

 

  
Brokerage & Asset Managers – 0.4%     
E*TRADE Financial Corp., 12.5%, 2017    $ 1,095,000      $ 1,281,150   
    

 

 

  
Building – 2.2%     
Associated Materials LLC, 9.125%, 2017 (z)    $ 275,000      $ 274,313   
Building Materials Holding Corp.,
6.875%, 2018 (n)		      815,000        831,300   
Building Materials Holding Corp.,
7%, 2020 (n)		      480,000        502,800   
Building Materials Holding Corp.,
6.75%, 2021 (n)		      445,000        447,225   
CEMEX S.A., 9.25%, 2020      2,130,000        2,108,700   
Masonite International Corp.,
8.25%, 2021 (n)		      440,000        437,250   
 

 

4

Table of Contents

MFS High Income Series

 

Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
    
BONDS – continued     
Building – continued     
Nortek, Inc., 10%, 2018 (n)    $ 335,000      $ 335,000   
Nortek, Inc., 8.5%, 2021 (n)      1,075,000        994,375   
Owens Corning, 9%, 2019      1,275,000        1,522,854   
          
     $ 7,453,817   
          
Business Services – 1.4%     
First Data Corp., 12.625%, 2021 (n)    $ 465,000      $ 497,550   
Interactive Data Corp., 10.25%, 2018 (n)      975,000        1,060,313   
Iron Mountain, Inc., 6.625%, 2016      1,020,000        1,020,000   
SunGard Data Systems, Inc.,
10.25%, 2015		      1,210,000        1,252,350   
SunGard Data Systems, Inc.,
7.375%, 2018		      480,000        480,000   
SunGard Data Systems, Inc.,
7.625%, 2020		      575,000        580,750   
          
     $ 4,890,963   
          
Cable TV – 4.0%     
AMC Networks, Inc., 7.75%, 2021 (z)    $ 208,000      $ 217,360   
Bresnan Broadband Holdings LLC, 8%, 2018 (n)      290,000        299,063   
Cablevision Systems Corp., 8.625%, 2017      750,000        812,813   
CCH II LLC, 13.5%, 2016      1,120,000        1,318,800   
CCO Holdings LLC, 7.875%, 2018      1,135,000        1,196,006   
CCO Holdings LLC, 8.125%, 2020      580,000        626,400   
Cequel Communications Holdings, 8.625%, 2017 (n)      370,000        384,800   
Charter Communications Operating LLC, 10.875%, 2014 (n)      705,000        775,500   
CSC Holdings LLC, 8.5%, 2014      1,575,000        1,744,313   
CSC Holdings LLC, 8.5%, 2015      120,000        129,600   
Insight Communications Co., Inc., 9.375%, 2018 (n)      905,000        993,238   
Mediacom LLC, 9.125%, 2019      845,000        891,475   
Telenet Finance Luxembourg, 6.375%, 2020 (n)    EUR 270,000        375,879   
UPCB Finance III Ltd., 6.625%, 2020 (n)    $ 1,472,000        1,453,600   
Videotron LTEE, 6.875%, 2014      374,000        378,208   
Virgin Media Finance PLC, 9.125%, 2016      1,270,000        1,336,675   
Virgin Media Finance PLC, 9.5%, 2016      410,000        463,300   
          
     $ 13,397,030   
          
Chemicals – 3.8%     
Ashland, Inc., 9.125%, 2017    $ 680,000      $ 765,000   
Celanese U.S. Holdings LLC, 6.625%, 2018      1,045,000        1,102,475   
Hexion U.S. Finance Corp/Hexion Nova Scotia Finance, 8.875%, 2018      1,100,000        1,144,000   
Hexion U.S. Finance Corp/Hexion Nova Scotia Finance, 9%, 2020      290,000        297,250   
Huntsman International LLC, 8.625%, 2021      1,170,000        1,272,375   
Lyondell Chemical Co., 8%, 2017 (n)      472,000        525,100   
Lyondell Chemical Co., 11%, 2018      2,754,755        3,085,326   
Momentive Performance Materials, Inc., 12.5%, 2014      1,240,000        1,348,500   
Momentive Performance Materials, Inc., 11.5%, 2016      1,300,000        1,384,500   
Issuer    Shares/Par     Value ($)  
    
BONDS – continued     
Chemicals – continued     
Polypore International, Inc., 7.5%, 2017    $ 975,000      $ 1,031,063   
Solutia, Inc., 7.875%, 2020      805,000        861,350   
          
     $ 12,816,939   
          
Computer Software – 0.2%     
Syniverse Holdings, Inc., 9.125%, 2019 (n)    $ 750,000      $ 780,000   
          
Computer Software – Systems – 0.8%     
Audatex North America, Inc., 6.75%, 2018 (z)    $ 615,000      $ 618,075   
DuPont Fabros Technology, Inc., REIT, 8.5%, 2017      1,545,000        1,687,913   
Eagle Parent, Inc., 8.625%, 2019 (z)      550,000        530,063   
          
     $ 2,836,051   
          
Conglomerates – 1.2%     
Amsted Industries, Inc., 8.125%, 2018 (n)    $ 1,055,000      $ 1,107,750   
Griffon Corp., 7.125%, 2018 (n)      1,055,000        1,058,956   
Pinafore LLC, 9%, 2018 (n)      1,770,000        1,907,175   
          
     $ 4,073,881   
          
Consumer Products – 1.4%     
ACCO Brands Corp., 10.625%, 2015    $ 150,000      $ 167,438   
Easton – Bell Sports, Inc., 9.75%, 2016      890,000        981,225   
Elizabeth Arden, Inc., 7.375%, 2021      670,000        697,638   
Jarden Corp., 7.5%, 2020      1,095,000        1,138,800   
Libbey Glass, Inc., 10%, 2015      805,000        873,425   
Visant Corp., 10%, 2017      965,000        998,775   
          
     $ 4,857,301   
          
Consumer Services – 1.0%     
Realogy Corp., 10.5%, 2014    $ 288,000      $ 285,120   
Realogy Corp., 11.5%, 2017      820,000        832,300   
Service Corp. International, 6.75%, 2015      790,000        847,275   
Service Corp. International, 7%, 2017      1,015,000        1,093,663   
Service Corp. International, 7%, 2019      445,000        468,363   
          
     $ 3,526,721   
          
Containers – 2.2%     
Exopack Holding Corp., 10%, 2018 (z)    $ 545,000      $ 540,913   
Graham Packaging Co. LP/GPC Capital Corp., 9.875%, 2014      630,000        646,538   
Graham Packaging Co. LP/GPC Capital Corp., 8.25%, 2018      400,000        445,000   
Greif, Inc., 6.75%, 2017      1,070,000        1,112,800   
Greif, Inc., 7.75%, 2019      310,000        334,800   
Owens-Illinois, Inc., 7.375%, 2016      650,000        706,875   
Packaging Dynamics Corp., 8.75%, 2016 (z)      375,000        380,625   
Reynolds Group, 8.5%, 2016 (n)      470,000        489,975   
Reynolds Group, 7.125%, 2019 (n)      575,000        570,688   
Reynolds Group, 9%, 2019 (n)      1,135,000        1,120,813   
Reynolds Group, 8.25%, 2021 (n)      1,045,000        977,075   
          
     $ 7,326,102   
          
Defense Electronics – 0.6%     
Ducommun, Inc., 9.75%, 2018 (z)    $ 455,000      $ 467,513   
ManTech International Corp., 7.25%, 2018      1,275,000        1,332,375   
 

 

5

Table of Contents

MFS High Income Series

 

Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
    
BONDS – continued     
Defense Electronics – continued     
MOOG, Inc., 7.25%, 2018    $ 300,000      $ 318,375   
          
     $ 2,118,263   
          
Electronics – 0.7%     
Freescale Semiconductor, Inc., 10.125%, 2018 (n)    $ 473,000      $ 525,030   
Freescale Semiconductor, Inc., 9.25%, 2018 (n)      720,000        775,800   
Jabil Circuit, Inc., 7.75%, 2016      545,000        603,588   
NXP B.V., 9.75%, 2018 (n)      108,000        120,960   
Sensata Technologies B.V., 6.5%, 2019 (z)      445,000        443,888   
          
     $ 2,469,266   
          
Energy – Independent – 8.2%     
ATP Oil & Gas Corp., 11.875%, 2015    $ 560,000      $ 568,400   
Bill Barrett Corp., 9.875%, 2016      915,000        1,024,800   
Carrizo Oil & Gas, Inc., 8.625%, 2018      825,000        849,750   
Chaparral Energy, Inc., 8.875%, 2017      1,255,000        1,298,925   
Concho Resources, Inc., 8.625%, 2017      625,000        681,250   
Concho Resources, Inc., 6.5%, 2022      1,270,000        1,273,175   
Connacher Oil & Gas Ltd., 8.5%, 2019 (z)      635,000        603,250   
Continental Resources, Inc., 8.25%, 2019      925,000        1,010,563   
Denbury Resources, Inc., 8.25%, 2020      1,040,000        1,133,600   
Energy XXI Gulf Coast, Inc., 9.25%, 2017 (n)      730,000        777,450   
EXCO Resources, Inc., 7.5%, 2018      370,000        359,825   
Harvest Operations Corp., 6.875%, 2017 (n)      1,600,000        1,652,000   
LINN Energy LLC, 6.5%, 2019 (z)      445,000        440,550   
LINN Energy LLC, 8.625%, 2020      355,000        385,175   
LINN Energy LLC, 7.75%, 2021 (n)      791,000        822,640   
Newfield Exploration Co., 6.625%, 2014      445,000        451,675   
Newfield Exploration Co., 6.625%, 2016      855,000        882,788   
Newfield Exploration Co., 6.875%, 2020      375,000        398,438   
OGX Petroleo e Gas Participacoes S.A., 8.5%, 2018 (z)      1,074,000        1,104,609   
OPTI Canada, Inc., 9.75%, 2013 (n)      830,000        823,775   
OPTI Canada, Inc., 8.25%, 2014 (d)      1,890,000        784,350   
Petrohawk Energy Corp., 7.25%, 2018      370,000        379,713   
Pioneer Natural Resources Co., 6.875%, 2018      1,080,000        1,166,060   
Pioneer Natural Resources Co., 7.5%, 2020      1,195,000        1,346,534   
Plains Exploration & Production Co., 7%, 2017      1,425,000        1,467,750   
QEP Resources, Inc., 6.875%, 2021      1,265,000        1,334,575   
Quicksilver Resources, Inc., 9.125%, 2019      1,005,000        1,095,450   
Range Resources Corp., 8%, 2019      685,000        743,225   
SandRidge Energy, Inc., 8%, 2018 (n)      1,675,000        1,708,500   
W&T Offshore, Inc., 8.5%, 2019 (z)      550,000        556,875   
Whiting Petroleum Corp., 6.5%, 2018      560,000        582,400   
          
     $ 27,708,070   
          
Engineering – Construction – 0.2%     
B – Corp. Merger Sub, Inc., 8.25%, 2019 (z)    $ 800,000      $ 792,000   
          
Entertainment – 0.9%     
AMC Entertainment, Inc., 8.75%, 2019    $ 1,010,000      $ 1,065,550   
AMC Entertainment, Inc., 9.75%, 2020 (n)      585,000        598,163   
Cinemark USA, Inc., 8.625%, 2019      790,000        865,050   
Issuer    Shares/Par     Value ($)  
    
BONDS – continued     
Entertainment – continued     
NAI Entertainment Holdings LLC, 8.25%, 2017 (n)    $ 450,000      $ 482,625   
          
     $ 3,011,388   
          
Financial Institutions – 5.6%     
CIT Group, Inc., 5.25%, 2014 (n)    $ 1,415,000      $ 1,407,925   
CIT Group, Inc., 7%, 2016      2,420,000        2,410,925   
CIT Group, Inc., 7%, 2017      4,215,000        4,204,463   
CIT Group, Inc., 6.625%, 2018 (n)      1,189,000        1,239,533   
General Electric Capital Corp., 6.375% to 2017, FRN to 2067      1,180,000        1,209,500   
International Lease Finance Corp., 8.75%, 2017      1,085,000        1,186,719   
International Lease Finance Corp., 7.125%, 2018 (n)      1,428,000        1,527,960   
International Lease Finance Corp., 8.25%, 2020      290,000        313,200   
Nationstar Mortgage LLC, 10.875%, 2015 (n)      1,610,000        1,674,400   
SLM Corp., 8.45%, 2018      465,000        510,390   
SLM Corp., 8%, 2020      1,420,000        1,524,802   
Springleaf Finance Corp., 6.9%, 2017      1,950,000        1,789,125   
          
     $ 18,998,942   
          
Food & Beverages – 1.3%     
ARAMARK Corp., 8.5%, 2015    $ 355,000      $ 368,756   
B&G Foods, Inc., 7.625%, 2018      750,000        789,375   
Constellation Brands, Inc., 7.25%, 2016      240,000        262,200   
Pinnacle Foods Finance LLC, 9.25%, 2015      1,335,000        1,385,063   
Pinnacle Foods Finance LLC, 10.625%, 2017      375,000        399,844   
Pinnacle Foods Finance LLC, 8.25%, 2017      275,000        285,313   
TreeHouse Foods, Inc., 7.75%, 2018      850,000        903,125   
          
     $ 4,393,676   
          
Forest & Paper Products – 1.7%     
Boise, Inc., 8%, 2020    $ 1,065,000      $ 1,118,250   
Cascades, Inc., 7.75%, 2017      695,000        724,538   
Georgia-Pacific Corp., 8%, 2024      870,000        1,033,162   
Georgia-Pacific Corp., 7.25%, 2028      320,000        355,566   
Graphic Packaging Holding Co., 7.875%, 2018      710,000        752,600   
JSG Funding PLC, 7.75%, 2015      215,000        217,150   
Smurfit Kappa Group PLC, 7.75%, 2019 (n)    EUR 715,000        1,070,555   
Xerium Technologies, Inc., 8.875%, 2018 (z)    $ 415,000        415,000   
          
     $ 5,686,821   
          
Gaming & Lodging – 4.4%     
American Casinos, Inc., 7.5%, 2021 (n)    $ 870,000      $ 897,188   
Boyd Gaming Corp., 7.125%, 2016      720,000        664,200   
Firekeepers Development Authority, 13.875%, 2015 (n)      925,000        1,068,375   
Fontainebleau Las Vegas Holdings LLC, 10.25%, 2015 (d)(n)      1,190,000        595   
 

 

6

Table of Contents

MFS High Income Series

 

Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
    
BONDS – continued     
Gaming & Lodging – continued     
GWR Operating Partnership LLP, 10.875%, 2017    $ 470,000      $ 508,775   
Harrah’s Operating Co., Inc., 11.25%, 2017      1,325,000        1,462,469   
Harrah’s Operating Co., Inc., 10%, 2018      792,000        714,780   
Harrah’s Operating Co., Inc., 10%, 2018      461,000        397,613   
Host Hotels & Resorts, Inc., 6.75%, 2016      920,000        949,900   
Host Hotels & Resorts, Inc., 9%, 2017      1,065,000        1,198,125   
MGM Mirage, 10.375%, 2014      195,000        221,325   
MGM Mirage, 11.125%, 2017      485,000        554,113   
MGM Resorts International, 11.375%, 2018      625,000        701,563   
MGM Resorts International, 9%, 2020      1,020,000        1,116,900   
Penn National Gaming, Inc., 8.75%, 2019      1,195,000        1,299,563   
Seven Seas Cruises S. de R.L., 9.125%, 2019 (z)      400,000        412,000   
Starwood Hotels & Resorts Worldwide, Inc., 6.75%, 2018      580,000        642,350   
Station Casinos, Inc., 6.5%, 2014 (d)      2,175,000        218   
Station Casinos, Inc., 6.875%, 2016 (d)      2,540,000        254   
Station Casinos, Inc., 7.75%, 2016 (d)      472,000        47   
Wyndham Worldwide Corp., 6%, 2016      365,000        387,622   
Wyndham Worldwide Corp., 7.375%, 2020      645,000        715,226   
Wynn Las Vegas LLC, 7.75%, 2020      960,000        1,042,800   
          
     $ 14,956,001   
          
Industrial – 1.2%     
Altra Holdings, Inc., 8.125%, 2016    $ 710,000      $ 766,800   
Dematic S.A., 8.75%, 2016 (z)      895,000        888,288   
Hillman Group, Inc., 10.875%, 2018 (z)      565,000        609,494   
Hyva Global B.V., 8.625%, 2016 (n)      442,000        444,210   
Mueller Water Products, Inc., 7.375%, 2017      289,000        271,660   
Mueller Water Products, Inc., 8.75%, 2020      866,000        937,445   
          
     $ 3,917,897   
          
Insurance – 1.2%     
ING Capital Funding Trust III, FRN, 3.845%, 2061    $ 970,000      $ 916,046   
ING Groep N.V.,
5.775% to 2015, FRN to 2049		      2,250,000        2,070,000   
MetLife, Inc.,
9.25% to 2038, FRN to 2068 (n)		      900,000        1,098,000   
          
     $ 4,084,046   
          
Insurance – Property & Casualty – 1.4%     
Liberty Mutual Group, Inc., 10.75% to 2038, FRN to 2088 (n)    $ 1,625,000      $ 2,157,188   
USI Holdings Corp., 9.75%, 2015 (z)      780,000        781,950   
XL Group PLC, 6.5% to 2017, FRN to 2049      1,780,000        1,633,150   
          
     $ 4,572,288   
          
International Market Sovereign – 0.3%     
Republic of Ireland, 4.5%, 2020    EUR 500,000      $ 454,984   
Republic of Ireland, 5.4%, 2025      540,000        477,484   
          
     $ 932,468   
          
Issuer    Shares/Par     Value ($)  
    
BONDS – continued     
Machinery & Tools – 1.2%     
Case Corp., 7.25%, 2016    $ 545,000      $ 593,369   
Case New Holland, Inc., 7.875%, 2017 (n)      2,140,000        2,354,000   
Rental Service Corp., 9.5%, 2014      523,000        536,075   
RSC Equipment Rental, Inc., 8.25%, 2021      470,000        467,650   
          
     $ 3,951,094   
          
Major Banks – 1.7%     
Bank of America Corp.,
8% to 2018, FRN to 2049		    $ 2,205,000      $ 2,302,704   
JPMorgan Chase & Co.,
7.9% to 2018, FRN to 2049		      1,590,000        1,707,803   
Royal Bank of Scotland Group PLC,
7.648% to 2031, FRN to 2049		      1,580,000        1,422,000   
Royal Bank of Scotland Group PLC,
6.99% to 2017, FRN to 2049 (d)(n)		      530,000        477,000   
          
     $ 5,909,507   
          
Medical & Health Technology & Services – 5.3%   
Biomet, Inc., 10%, 2017    $ 835,000      $ 910,150   
Biomet, Inc., 10.375%, 2017 (p)      500,000        551,250   
Biomet, Inc., 11.625%, 2017      840,000        930,300   
CDRT Merger Sub, Inc., 8.125%, 2019 (z)      355,000        355,000   
Davita, Inc., 6.375%, 2018      1,000,000        1,012,500   
Davita, Inc., 6.625%, 2020      485,000        493,488   
Fresenius Medical Care AG & Co. KGaA,
9%, 2015 (n)		      865,000        978,531   
HCA, Inc., 9.25%, 2016      640,000        679,200   
HCA, Inc., 8.5%, 2019      2,715,000        3,000,075   
HealthSouth Corp., 8.125%, 2020      1,825,000        1,959,594   
Teleflex, Inc., 6.875%, 2019      545,000        551,813   
United Surgical Partners International, Inc., 8.875%, 2017      815,000        851,675   
United Surgical Partners International, Inc., 9.25%, 2017 (p)      495,000        517,275   
Universal Health Services, Inc., 7%, 2018      455,000        468,650   
Universal Hospital Services, Inc.,
8.5%, 2015 (p)		      1,630,000        1,678,900   
Universal Hospital Services, Inc., FRN, 3.777%, 2015      310,000        297,600   
Vanguard Health Systems, Inc., 0%, 2016      21,000        13,834   
Vanguard Health Systems, Inc., 8%, 2018      1,310,000        1,352,575   
VWR Funding, Inc., 10.25%, 2015 (p)      1,277,937        1,335,444   
          
     $ 17,937,854   
          
Metals & Mining – 1.8%     
Arch Coal, Inc., 7%, 2019 (z)    $ 925,000      $ 922,688   
Arch Coal, Inc., 7.25%, 2020      385,000        391,738   
Arch Western Finance LLC, 6.75%, 2013      512,000        512,640   
Cloud Peak Energy, Inc., 8.25%, 2017      390,000        417,300   
Cloud Peak Energy, Inc., 8.5%, 2019      1,340,000        1,448,875   
Consol Energy, Inc., 8%, 2017      765,000        833,850   
Consol Energy, Inc., 8.25%, 2020      510,000        555,900   
Novelis, Inc., 8.375%, 2017      585,000        624,488   
Novelis, Inc., 8.75%, 2020      285,000        307,800   
          
     $ 6,015,279   
          
 

 

7

Table of Contents

MFS High Income Series

 

Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
    
BONDS – continued     
Natural Gas – Distribution – 0.4%     
AmeriGas Partners LP, 7.125%, 2016    $ 1,380,000      $ 1,421,400   
          
Natural Gas – Pipeline – 2.2%     
Atlas Pipeline Partners LP, 8.75%, 2018    $ 825,000      $ 872,438   
Crosstex Energy, Inc., 8.875%, 2018      1,145,000        1,219,425   
El Paso Corp., 7%, 2017      1,270,000        1,436,846   
El Paso Corp., 7.75%, 2032      1,145,000        1,331,946   
Energy Transfer Equity LP, 7.5%, 2020      1,240,000        1,314,400   
Enterprise Products Partners LP,
8.375% to 2016, FRN to 2066		      750,000        811,875   
Enterprise Products Partners LP,
7.034% to 2018, FRN to 2068		      391,000        411,039   
          
     $ 7,397,969   
          
Network & Telecom – 2.4%     
CenturyLink, Inc., 7.6%, 2039    $ 360,000      $ 346,277   
Cincinnati Bell, Inc., 8.25%, 2017      315,000        316,575   
Cincinnati Bell, Inc., 8.75%, 2018      1,160,000        1,102,000   
Citizens Communications Co., 9%, 2031      440,000        451,000   
Frontier Communications Corp.,
8.25%, 2017		      295,000        320,813   
Frontier Communications Corp., 8.125%, 2018      1,205,000        1,308,931   
Qwest Communications International, Inc., 8%, 2015      505,000        549,188   
Qwest Communications International, Inc., 7.125%, 2018 (n)      1,720,000        1,846,850   
Windstream Corp., 8.125%, 2018      215,000        227,900   
Windstream Corp., 7.75%, 2020      995,000        1,042,263   
Windstream Corp., 7.75%, 2021      440,000        459,800   
          
     $ 7,971,597   
          
Oil Services – 1.2%     
Edgen Murray Corp., 12.25%, 2015    $ 645,000      $ 649,838   
Expro Finance Luxembourg, 8.5%, 2016 (n)      1,070,000        1,032,550   
McJunkin Red Man Holding Corp., 9.5%, 2016 (n)      760,000        773,300   
Pioneer Drilling Co., 9.875%, 2018      1,375,000        1,471,250   
Unit Corp., 6.625%, 2021      225,000        225,000   
          
     $ 4,151,938   
          
Oils – 0.2%     
Petroplus Holdings AG, 9.375%, 2019 (n)    $ 785,000      $ 788,925   
          
Other Banks & Diversified Financials – 1.6%     
Capital One Financial Corp.,
10.25%, 2039		    $ 1,345,000      $ 1,425,700   
Groupe BPCE S.A.,
12.5% to 2019, FRN to 2049 (n)		      710,000        812,496   
LBG Capital No.1 PLC, 7.875%, 2020 (n)      900,000        841,500   
Santander UK PLC,
8.963% to 2030, FRN to 2049		      2,155,000        2,381,275   
          
     $ 5,460,971   
          
Pollution Control – 0.1%     
WCA Waste Corp., 7.5%, 2019 (z)    $ 385,000      $ 384,519   
          
Issuer    Shares/Par     Value ($)  
    
BONDS – continued     
Printing & Publishing – 0.5%     
American Media, Inc., 13.5%, 2018 (z)    $ 94,618      $ 101,951   
McClatchy Co., 11.5%, 2017      590,000        626,875   
Nielsen Finance LLC, 11.5%, 2016      501,000        586,170   
Nielsen Finance LLC, 7.75%, 2018 (n)      480,000        504,000   
          
     $ 1,818,996   
          
Railroad & Shipping – 0.7%     
Kansas City Southern Railway, 8%, 2015    $ 1,825,000      $ 1,957,313   
Kansas City Southern Railway,
6.125%, 2021 (z)		      455,000        455,000   
          
     $ 2,412,313   
          
Real Estate – 1.1%     
CB Richard Ellis Group, Inc., 11.625%, 2017    $ 620,000      $ 718,425   
CNL Lifestyle Properties, Inc., REIT, 7.25%, 2019 (n)      465,000        420,825   
Entertainment Properties Trust, REIT, 7.75%, 2020      1,145,000        1,290,988   
Kennedy Wilson, Inc., 8.75%, 2019 (n)      765,000        769,781   
MPT Operating Partnership,
6.875%, 2021 (n)		      635,000        623,888   
          
     $ 3,823,907   
          
Retailers – 2.3%     
Burlington Coat Factory Warehouse Corp., 10%, 2019 (n)    $ 680,000      $ 673,200   
J. Crew Group, Inc., 8.125%, 2019 (n)      380,000        365,750   
Limited Brands, Inc., 6.9%, 2017      760,000        814,150   
Limited Brands, Inc., 6.95%, 2033      430,000        395,600   
Neiman Marcus Group, Inc., 10.375%, 2015      1,365,000        1,433,250   
QVC, Inc., 7.375%, 2020 (n)      705,000        742,013   
Sally Beauty Holdings, Inc., 10.5%, 2016      810,000        864,675   
Toys “R” Us Property Co. II LLC, 8.5%, 2017      790,000        825,550   
Toys “R” Us, Inc., 10.75%, 2017      1,260,000        1,401,750   
Yankee Holdings Corp., 10.25%, 2016 (n)(p)      280,000        280,700   
          
     $ 7,796,638   
          
Specialty Stores – 0.5%     
Michaels Stores, Inc., 11.375%, 2016    $ 735,000      $ 782,775   
Michaels Stores, Inc., 7.75%, 2018 (n)      785,000        786,963   
          
     $ 1,569,738   
          
Telecommunications – Wireless – 4.6%     
Clearwire Corp., 12%, 2015 (n)    $ 1,680,000      $ 1,799,700   
Cricket Communications, Inc., 7.75%, 2016      275,000        291,500   
Cricket Communications, Inc., 7.75%, 2020      270,000        264,600   
Crown Castle International Corp., 9%, 2015      1,120,000        1,215,200   
Crown Castle International Corp.,
7.125%, 2019		      1,190,000        1,252,475   
Digicel Group Ltd., 12%, 2014 (n)      200,000        231,500   
Digicel Group Ltd., 8.25%, 2017 (n)      1,155,000        1,198,313   
Digicel Group Ltd., 10.5%, 2018 (n)      930,000        1,041,600   
MetroPCS Wireless, Inc., 7.875%, 2018      880,000        931,700   
Nextel Communications, Inc., 7.375%, 2015      1,025,000        1,025,000   
NII Holdings, Inc., 10%, 2016      975,000        1,131,000   
NII Holdings, Inc., 7.625%, 2021      720,000        752,400   
 

 

8

Table of Contents

MFS High Income Series

 

Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
    
BONDS – continued     
Telecommunications – Wireless – continued     
SBA Communications Corp., 8%, 2016    $ 390,000      $ 414,863   
SBA Communications Corp.,
8.25%, 2019		      330,000        353,100   
Sprint Capital Corp., 6.875%, 2028      545,000        516,388   
Sprint Nextel Corp., 8.375%, 2017      825,000        906,469   
Wind Acquisition Finance S.A.,
11.75%, 2017 (n)		      1,095,000        1,240,088   
Wind Acquisition Finance S.A., 7.25%, 2018 (n)      960,000        998,400   
          
     $ 15,564,296   
          
Telephone Services – 0.1%     
Cogent Communications Group, Inc., 8.375%, 2018 (n)    $ 470,000      $ 482,925   
          
Transportation – 0.1%     
Navios South American Logistics, Inc., 9.25%, 2019 (n)    $ 459,000      $ 462,443   
          
Transportation – Services – 2.5%     
ACL I Corp., 10.625%, 2016 (p)(z)    $ 850,000      $ 756,881   
Aguila American Resources Ltd., 7.875%, 2018 (n)      655,000        659,094   
American Petroleum Tankers LLC, 10.25%, 2015      521,000        544,445   
Atlas Airlines, Inc. Pass-Through Certificates, “A-1”, 7.2%, 2019      598,877        568,933   
Commercial Barge Line Co., 12.5%, 2017      1,795,000        2,014,888   
Hertz Corp., 8.875%, 2014      50,000        51,250   
Hertz Corp., 7.5%, 2018 (n)      740,000        762,200   
Hertz Corp., 7.375%, 2021 (n)      555,000        564,713   
Navios Maritime Acquisition Corp., 8.625%, 2017 (z)      470,000        462,950   
Navios Maritime Acquisition Corp., 8.625%, 2017      485,000        477,725   
Navios Maritime Holdings, Inc., 8.875%, 2017      545,000        561,350   
Swift Services Holdings, Inc., 10%, 2018      975,000        1,031,063   
          
     $ 8,455,492   
          
Utilities – Electric Power – 4.7%     
AES Corp., 8%, 2017    $ 1,215,000      $ 1,287,900   
Calpine Corp., 8%, 2016 (n)      1,080,000        1,166,400   
Calpine Corp., 7.875%, 2020 (n)      1,415,000        1,478,675   
Covanta Holding Corp., 7.25%, 2020      760,000        794,914   
Dynegy Holdings, Inc., 7.5%, 2015      375,000        305,625   
Dynegy Holdings, Inc., 7.75%, 2019      1,430,000        1,040,325   
Edison Mission Energy, 7%, 2017      1,700,000        1,377,000   
EDP Finance B.V., 6%, 2018 (n)      760,000        703,195   
Energy Future Holdings Corp., 10%, 2020      1,315,000        1,395,820   
Energy Future Holdings Corp., 10%, 2020      2,045,000        2,180,911   
GenOn Energy, Inc., 9.875%, 2020      1,605,000        1,677,225   
NRG Energy, Inc., 7.375%, 2017      925,000        968,938   
NRG Energy, Inc., 8.25%, 2020      985,000        1,004,700   
Issuer    Shares/Par     Value ($)  
    
BONDS – continued     
Utilities – Electric Power – continued     
Texas Competitive Electric Holdings Co. LLC, 11.5%, 2020 (n)    $ 590,000      $ 579,636   
          
     $ 15,961,264   
          
Total Bonds
(Identified Cost, $316,254,126)		      $ 316,835,184   
          
FLOATING RATE LOANS (g)(r) – 0.7%     
Aerospace – 0.2%     
Hawker Beechcraft Acquisition Co. LLC, Term Loan, 10.5%, 2014    $ 564,811      $ 570,106   
          
Broadcasting – 0.2%     
Gray Television, Inc., Term Loan B, 3.7%, 2014    $ 328,882      $ 322,469   
Local TV Finance LLC, Term Loan B, 2.19%, 2013      96,829        94,530   
New Young Broadcasting Holding Co., Inc., Term Loan, 8%, 2015      363,559        365,149   
          
     $ 782,148   
          
Building – 0.0%     
Goodman Global Holdings, Inc., 2nd Lien Term Loan, 9%, 2017    $ 56,680      $ 58,121   
          
Financial Institutions – 0.1%     
Springleaf Finance Corp., Term Loan, 5.5%, 2017    $ 452,233      $ 442,717   
          
Gaming & Lodging – 0.2%     
MGM Mirage, Term Loan, 7%, 2014    $ 684,052      $ 667,901   
          
Total Floating Rate Loans
(Identified Cost, $2,307,822)		      $ 2,520,993   
          
COMMON STOCKS – 0.4%     
Automotive – 0.1%     
Accuride Corp. (a)      24,851      $ 313,868   
Oxford Automotive, Inc. (a)      82        0   
          
     $ 313,868   
          
Broadcasting – 0.2%     
New Young Broadcasting Holding Co., Inc. (a)      163      $ 440,100   
          
Printing & Publishing – 0.1%     
American Media Operations, Inc. (a)      24,246      $ 382,359   
Golden Books Family Entertainment, Inc. (a)      2,125        0   
          
     $ 382,359   
          
Special Products & Services – 0.0%     
Mark IV Industries LLC, Common Units, “A” (a)      676      $ 38,363   
          
Total Common Stocks
(Identified Cost, $2,056,558)		      $ 1,174,690   
          
CONVERTIBLE PREFERRED STOCKS – 0.7%   
Automotive – 0.4%     
General Motors Co., 4.75%    $ 24,710      $ 1,204,365   
          
 

 

9

Table of Contents

MFS High Income Series

 

Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
    
CONVERTIBLE PREFERRED
STOCKS – continued		     
Insurance – 0.3%     
MetLife, Inc., 5%    $ 13,130      $ 1,082,306   
          
Total Convertible Preferred Stocks
(Identified Cost, $2,321,813)		      $ 2,286,671   
          
PREFERRED STOCKS – 0.9%   
Other Banks & Diversified Financials – 0.9%   
Ally Financial, Inc., 7% (n)      550      $ 516,897   
Ally Financial, Inc., “A”, 8.5%      69,992        1,751,900   
GMAC Capital Trust I, 8.125% (a)      32,300        826,880   
          
Total Preferred Stocks
(Identified Cost, $3,104,955)		      $ 3,095,677   
          
                         
       
    Strike
Price		     First
Exercise		              
WARRANTS – 0.2%        
Broadcasting – 0.2%        
New Young Broadcasting Holding Co., Inc.
(1 share for 1 warrant) (Identified Cost, $562,667) (a)		   $ 0.01        7/14/10        295      $ 796,500   
Issuer    Shares/Par     Value ($)  
    
MONEY MARKET FUNDS (v) – 1.8%     
MFS Institutional Money Market Portfolio, 0.1%, at Cost and Net Asset Value      6,236,618      $ 6,236,618   
          
Total Investments
(Identified Cost, $332,844,559)		      $ 332,946,333   
          
OTHER ASSETS, LESS
LIABILITIES – 2.0%		        6,762,069   
          
Net Assets – 100.0%      $ 339,708,402   
          
 
(a)   Non-income producing security.

 

(d)   Non-income producing security – in default.

 

(g)   The rate shown represents a weighted average coupon rate on settled positions at period end, unless otherwise indicated.

 

(n)   Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be sold in the ordinary course of business in transactions exempt from registration, normally to qualified institutional buyers. At period end, the aggregate value of these securities was $79,317,609, representing 23.3% of net assets.
(p)   Payment-in-kind security.

 

(r)   Remaining maturities of floating rate loans may be less than stated maturities shown as a result of contractual or optional prepayments by the borrower. Such prepayments cannot be predicted with certainty. These loans may be subject to restrictions on resale. Floating rate loans generally have rates of interest which are determined periodically by reference to a base lending rate plus a premium.

 

(v)   Underlying affiliated fund that is available only to investment companies managed by MFS. The rate quoted is the annualized seven-day yield of the fund at period end.

 

(z)   Restricted securities are not registered under the Securities Act of 1933 and are subject to legal restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are subsequently registered. Disposal of these securities may involve time-consuming negotiations and prompt sale at an acceptable price may be difficult. The fund holds the following restricted securities:

 

Restricted Securities   

Acquisition

Date

    Cost      Value  
ACL I Corp., 10.625%, 2016    2/10/11      $835,991         $756,881   
AMC Networks, Inc., 7.75%, 2021    6/22/11      208,000         217,360   
Airlie LCDO Ltd., CDO, FRN, 2.146%, 2011    10/13/06      713,874         317,503   
American Media, Inc., 13.5%, 2018    12/22/10      96,067         101,951   
Anthracite Ltd., CDO, 6%, 2037    5/14/02-5/09/07      263,713         217,500   
Arbor Realty Mortgage Securities, CDO, FRN, 2.573%, 2038    12/20/05      568,229         73,870   
ARCap REIT, Inc., CDO, “H”, FRN, 6.1%, 2045    9/21/04      25,130         25,130   
Arch Coal, Inc., 7%, 2019    6/08/11-6/14/11      929,121         922,688   
Associated Materials LLC, 9.125%, 2017    6/09/11      268,846         274,313   
Audatex North America, Inc., 6.75%, 2018    6/10/11      615,000         618,075   
B-Corp. Merger Sub, Inc., 8.25%, 2019    5/17/11-6/06/11      802,785         792,000   
CDRT Merger Sub, Inc., 8.125%, 2019    5/13/11      355,000         355,000   
CWCapital Cobalt Ltd., CDO, 6.23%, 2045    5/20/06      1,072,867         21,895   

 

10

Table of Contents

MFS High Income Series

 

Portfolio of Investments (unaudited) – continued

 

Restricted Securities - continued   

Acquisition

Date

    Cost      Value  
CWCapital Cobalt Ltd., CDO, “F”, FRN, 1.573%, 2050    4/12/06      $512,680         $10,249   
Clear Channel Communications, Inc., 9%, 2021    6/08/11-6/09/11      388,066         387,788   
Connacher Oil & Gas Ltd., 8.5%, 2019    5/20/11      635,000         603,250   
Dematic S.A., 8.75%, 2016    4/19/11-4/20/11      905,636         888,288   
Ducommun, Inc., 9.75%, 2018    6/23/11      459,863         467,513   
EH Holding Corp., 7.625%, 2021    5/17/11      265,000         270,300   
Eagle Parent, Inc., 8.625%, 2019    5/11/11-5/24/11      555,361         530,063   
Exopack Holding Corp., 10%, 2018    5/25/11      547,026         540,913   
G-Force LLC, CDO, “A2”, 4.83%, 2036    2/14/11      652,361         663,895   
General Motors Financial Co., Inc., 6.75%, 2018    5/26/11-6/06/11      728,724         726,813   
Heckler & Koch GmbH, 9.5%, 2018    5/06/11-5/10/11      926,987         902,356   
Hillman Group, Inc., 10.875%, 2018    3/11/11      615,704         609,494   
Jaguar Land Rover PLC, 7.75%, 2018    5/12/11      200,000         201,000   
Jaguar Land Rover PLC, 8.125%, 2021    5/12/11-5/24/11      1,112,551         1,093,138   
Kansas City Southern Railway, 6.125%, 2021    5/06/11-5/09/11      458,867         455,000   
LBI Media, Inc., 8.5%, 2017    7/18/07      637,500         506,325   
LINN Energy LLC, 6.5%, 2019    5/10/11      441,626         440,550   
Local TV Finance LLC, 9.25%, 2015    11/13/07-2/16/11      1,514,027         1,544,875   
Navios Maritime Acquisition Corp., 8.625%, 2017    5/12/11      480,450         462,950   
OGX Petroleo e Gas Participacoes S.A., 8.5%, 2018    5/26/11      1,074,000         1,104,609   
Packaging Dynamics Corp., 8.75%, 2016    1/25/11-2/01/11      380,315         380,625   
Sensata Technologies B.V., 6.5%, 2019    5/06/11-5/09/11      447,220         443,888   
Seven Seas Cruises S. de R.L., 9.125%, 2019    5/13/11      400,000         412,000   
USI Holdings Corp., 9.75%, 2015    5/07/07-6/08/07      786,820         781,950   
W&T Offshore, Inc., 8.5%, 2019    6/03/11-6/09/11      550,000         556,875   
WCA Waste Corp., 7.5%, 2019    5/26/11      385,000         384,519   
Wachovia Credit, CDO, FRN, 1.596%, 2026    6/08/06      372,000         260,400   
Xerium Technologies, Inc., 8.875%, 2018    5/20/11      415,000         415,000   
Total Restricted Securities            $20,738,792   
% of Net Assets            6.1%   

The following abbreviations are used in this report and are defined:

 

CDO   Collateralized Debt Obligation

 

CLO   Collateralized Loan Obligation

 

FRN   Floating Rate Note. Interest rate resets periodically and may not be the rate reported at period end.

 

PLC   Public Limited Company

 

REIT   Real Estate Investment Trust

Abbreviations indicate amounts shown in currencies other than the U.S. dollar. All amounts are stated in U.S. dollars unless otherwise indicated. A list of abbreviations is shown below:

 

EUR   Euro

 

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MFS High Income Series

 

Portfolio of Investments (unaudited) – continued

 

Derivative Contracts at 6/30/11

Forward Foreign Currency Exchange Contracts at 6/30/11

 

Type

    Currency      Counterparty    Contracts to
Deliver/Receive		    Settlement Date
Range		    In Exchange For      Contracts
at Value		      Net Unrealized
Appreciation
(Depreciation)		  
Asset Derivatives                     
  BUY      EUR       Citibank N.A.    19,750    7/12/11    $ 28,310       $ 28,635       $ 325   
  SELL      EUR       HSBC Bank    402,645    7/12/11      587,143         583,782         3,361   
                          
                       $ 3,686   
                            
Liability Derivatives                     
  SELL      EUR       Citibank N.A.    363,160    7/12/11    $ 521,760       $ 526,534       $ (4,774 ) 
  SELL      EUR       Deutsche Bank AG    225,155    7/12/11      319,469         326,445         (6,976 ) 
  SELL      EUR       Goldman Sacs International    301,188    7/12/11      432,969         436,682         (3,713 ) 
  SELL      EUR       UBS AG    1,124,183    7/12/11      1,606,319         1,629,917         (23,598 ) 
                          
                       $ (39,061 ) 
                            

Futures Contracts Outstanding at 6/30/11

Liability Derivatives

 

Description    Currency      Contracts      Value   

Expiration

Date

     

Unrealized

Appreciation

(Depreciation)

  
Interest Rate Futures               
U.S. Treasury Note 10 yr (Short)      USD         25       $3,058,203      September - 2011         $9,678   
U.S. Treasury Bond 30 yr (Short)      USD         9       1,107,281      September - 2011         12,695   
                    
                 $22,373   
                    

At June 30, 2011, the fund had sufficient cash and/or other liquid securities to cover any commitments under these derivative contracts.

See Notes to Financial Statements

 

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MFS High Income Series

 

FINANCIAL STATEMENTS  |  STATEMENT OF ASSETS AND LIABILITIES (unaudited)

 

This statement represents your fund’s balance sheet, which details the assets and liabilities comprising the total value of the fund.

 

At 6/30/11

      

Assets

                  

Investments –

      

Non-affiliated issuers, at value (identified cost, $326,607,941)

      $326,709,715      

Underlying affiliated funds, at cost and value

      6,236,618            

Total investments, at value (identified cost, $332,844,559)

      $332,946,333            

Cash

      16,555      

Restricted cash

      45,500      

Receivables for

      

Forward foreign currency exchange contracts

      3,686      

Daily variation margin on open futures contracts

      17,672      

Investments sold

      2,812,145      

Fund shares sold

      364,033      

Interest

      5,942,900      

Other assets

      1,887            

Total assets

               $342,150,711   

Liabilities

                  

Payables for

      

Forward foreign currency exchange contracts

      $39,061      

Investments purchased

      1,390,928      

Fund shares reacquired

      919,053      

Payable to affiliates

      

Investment adviser

      13,310      

Shareholder servicing costs

      273      

Distribution and/or service fees

      105      

Payable for independent Trustees’ compensation

      1,691      

Accrued expenses and other liabilities

      77,888            

Total liabilities

               $2,442,309   

Net assets

               $339,708,402   

Net assets consist of

                  

Paid-in capital

      $322,091,258      

Unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies

      89,280      

Accumulated net realized gain (loss) on investments and foreign currency transactions

      (23,680,716 )    

Undistributed net investment income

      41,208,580            

Net assets

               $339,708,402   

Shares of beneficial interest outstanding

               37,105,378   

 

     Net assets      Shares
outstanding		      Net asset value
per share		  

Initial Class

      $332,001,654         36,258,939         $9.16   

Service Class

      7,706,748         846,439         9.10   

See Notes to Financial Statements

 

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MFS High Income Series

 

FINANCIAL STATEMENTS  |  STATEMENT OF OPERATIONS (unaudited)

 

This statement describes how much your fund earned in investment income and accrued in expenses. It also describes any gains and/or losses generated by fund operations.

 

Six months ended 6/30/11

      
Net investment income                  

Income

      

Interest

      $14,176,123      

Dividends

      61,476      

Dividends from underlying affiliated funds

      6,487      

Foreign taxes withheld

      (1,547 )          

Total investment income

               $14,242,539   

Expenses

      

Management fee

      $1,275,604      

Distribution and/or service fees

      9,479      

Shareholder servicing costs

      20,544      

Administrative services fee

      31,350      

Independent Trustees’ compensation

      5,850      

Custodian fee

      25,080      

Shareholder communications

      30,629      

Auditing fees

      32,556      

Legal fees

      3,276      

Miscellaneous

      12,131            

Total expenses

               $1,446,499   

Fees paid indirectly

      (292 )    

Reduction of expenses by investment adviser

      (1,044 )          

Net expenses

               $1,445,163   

Net investment income

               $12,797,376   

Realized and unrealized gain (loss) on investments and foreign currency transactions

                  

Realized gain (loss) (identified cost basis)

      

Investment transactions

      $9,238,437      

Futures contracts

      (191,969 )    

Foreign currency transactions

      (141,418 )          

Net realized gain (loss) on investments and foreign currency transactions

               $8,905,050   

Change in unrealized appreciation (depreciation)

      

Investments

      $(5,853,875 )    

Futures contracts

      (77,344 )    

Translation of assets and liabilities in foreign currencies

      (13,380 )          

Net unrealized gain (loss) on investments and foreign currency translation

               $(5,944,599 ) 

Net realized and unrealized gain (loss) on investments and foreign currency

               $2,960,451   

Change in net assets from operations

               $15,757,827   

See Notes to Financial Statements

 

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MFS High Income Series

 

FINANCIAL STATEMENTS  |  STATEMENTS OF CHANGES IN NET ASSETS

 

These statements describe the increases and/or decreases in net assets resulting from operations, any distributions, and any shareholder transactions.

 

    

 

 

 Six months ended

6/30/11

(unaudited

   

  

) 

     

 

 Year ended

12/31/10

   

  

Change in net assets

      

From operations

                  

Net investment income

      $12,797,376         $27,654,465   

Net realized gain (loss) on investments and foreign currency transactions

      8,905,050         11,817,825   

Net unrealized gain (loss) on investments and foreign currency translation

      (5,944,599 )       10,091,693   

Change in net assets from operations

      $15,757,827         $49,563,983   

Distributions declared to shareholders

                  

From net investment income

      $—         $(27,232,133 ) 

Change in net assets from fund share transactions

      $(55,893,735 )       $6,115,633   

Total change in net assets

      $(40,135,908 )       $28,447,483   

Net assets

                  

At beginning of period

      379,844,310         351,396,827   

At end of period (including undistributed net investment income of $41,208,580 and
$28,411,204, respectively)

      $339,708,402         $379,844,310   

See Notes to Financial Statements

 

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MFS High Income Series

 

FINANCIAL STATEMENTS  |  FINANCIAL HIGHLIGHTS

 

The financial highlights table is intended to help you understand the fund’s financial performance for the semiannual period and the past 5 fiscal years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period.

 

Initial Class     

Six months

ended

6/30/11

      Years ended 12/31  
          2010        2009        2008        2007        2006  
       (unaudited)                                             

Net asset value, beginning of period

        $8.78         $8.25           $6.25           $9.52           $10.04           $9.87   
Income (loss) from investment operations                                                                

Net investment income (d)

        $0.32         $0.63           $0.63           $0.71           $0.71           $0.68   

Net realized and unrealized gain (loss) on
investments and foreign currency

        0.06         0.53           1.98           (3.18 )         (0.52 )         0.29   

Total from investment operations

        $0.38         $1.16           $2.61           $(2.47 )         $0.19           $0.97   
Less distributions declared to shareholders                                                                

From net investment income

        $—         $(0.63 )         $(0.61 )         $(0.80 )         $(0.71 )         $(0.80 ) 

Net asset value, end of period

        $9.16         $8.78           $8.25           $6.25           $9.52           $10.04   

Total return (%) (k)(r)(s)

        4.33 (n)       14.73           45.08           (28.26 )         1.77           10.37   
Ratios (%) (to average net assets)
and Supplemental data:		                                                                

Expenses before expense reductions (f)

        0.79 (a)       0.80           0.81           0.87           0.88           0.91   

Expenses after expense reductions (f)

        0.79 (a)       0.80           0.81           0.82           0.83           0.88   

Net investment income

        7.02 (a)       7.55           8.89           8.66           7.21           7.06   

Portfolio turnover

        32         70           52           60           73           92   

Net assets at end of period (000 omitted)

        $332,002         $372,412           $344,186           $203,800           $324,081           $355,113   

See Notes to Financial Statements

 

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MFS High Income Series

 

Financial Highlights – continued

 

Service Class

      Six months
ended
6/30/11		      Years ended 12/31  
          2010        2009        2008        2007        2006  
       (unaudited)                                             

Net asset value, beginning of period

        $8.74         $8.22           $6.22           $9.47           $9.99           $9.80   
Income (loss) from investment operations                                                                

Net investment income (d)

        $0.30         $0.61           $0.62           $0.69           $0.68           $0.66   

Net realized and unrealized gain (loss) on
investments and foreign currency

        0.06         0.53           1.96           (3.17 )         (0.52 )         0.27   

Total from investment operations

        $0.36         $1.14           $2.58           $(2.48 )         $0.16           $0.93   
Less distributions declared to shareholders                                                                

From net investment income

        $—         $(0.62 )         $(0.58 )         $(0.77 )         $(0.68 )         $(0.74 ) 

Net asset value, end of period

        $9.10         $8.74           $8.22           $6.22           $9.47           $9.99   

Total return (%) (k)(r)(s)

        4.12 (n)       14.40           44.75           (28.43 )         1.54           9.99   
Ratios (%) (to average net assets)
and Supplemental data:		                                                                

Expenses before expense reductions (f)

        1.04 (a)       1.05           1.07           1.12           1.13           1.16   

Expenses after expense reductions (f)

        1.04 (a)       1.05           1.06           1.07           1.08           1.13   

Net investment income

        6.77 (a)       7.31           8.78           8.40           6.96           6.81   

Portfolio turnover

        32         70           52           60           73           92   

Net assets at end of period (000 omitted)

        $7,707         $7,432           $7,210           $6,442           $11,086           $11,896   

 

(a) Annualized.

 

(d) Per share data is based on average shares outstanding.

 

(f) Ratios do not reflect reductions from fees paid indirectly, if applicable.

 

(k) The total return does not reflect expenses that apply to separate accounts. Inclusion of these charges would reduce the total return figures for all periods shown.

 

(n) Not annualized.

 

(r) Certain expenses have been reduced without which performance would have been lower.

 

(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.

See Notes to Financial Statements

 

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MFS High Income Series

 

NOTES TO FINANCIAL STATEMENTS (unaudited)

 

(1)   Business and Organization

MFS High Income Series (the fund) is a 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, and qualified retirement and pension plans.

 

(2)   Significant Accounting Policies

General – The preparation of financial statements in conformity with U.S. 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. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the fund’s Statement of Assets and Liabilities through the date that the financial statements were issued. The fund invests in high-yield securities rated below investment grade. Investments in high-yield securities involve greater degrees of credit and market risk than investments in higher-rated securities and tend to be more sensitive to economic conditions. The fund invests 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 – Debt instruments and floating rate loans (other than short-term instruments), including restricted debt instruments, are generally valued at an evaluated or composite bid as provided by a third-party pricing service. Equity securities, including restricted equity securities, are generally valued at the last sale or official closing price as provided by a third-party pricing service on the market or exchange on which they are primarily traded. Equity securities, for which there were no sales reported that day, are generally valued at the last quoted daily bid quotation as provided by a third-party pricing service on the market or exchange on which such securities are primarily traded. Equity securities held short, for which there were no sales reported for that day, are generally valued at the last quoted daily ask quotation as provided by a third-party pricing service on the market or exchange on which such securities are primarily traded. Short-term instruments with a maturity at issuance of 60 days or less generally are valued at amortized cost, which approximates market value. Exchange-traded options are generally valued at the last sale or official closing price as provided by a third-party pricing service on the exchange on which such options are primarily traded. Exchange-traded options for which there were no sales reported that day are generally valued at the last daily bid quotation as provided by a third-party pricing service on the exchange on which such options are primarily traded. Options not traded on an exchange are generally valued at a broker/dealer bid quotation. Foreign currency options are generally valued at valuations provided by a third-party pricing service. Futures contracts are generally valued at last posted settlement price as provided by a third-party pricing service on the market on which they are primarily traded. Futures contracts for which there were no trades that day for a particular position are generally valued at the closing bid quotation as provided by a third-party pricing service on the market on which such futures contracts are primarily traded. Forward foreign currency exchange contracts are generally valued at the mean of bid and asked prices for the time period interpolated from rates provided by a third-party pricing service for proximate time periods. Open-end investment companies are generally valued at net asset value per share. Securities and other assets generally valued on the basis of information from a third-party pricing service may also be valued at a broker/dealer bid quotation. Values obtained from third-party pricing services can utilize both transaction data and market information such as yield, quality, coupon rate, maturity, type of issue, trading characteristics, and other market data. The values of foreign securities and other assets and liabilities expressed in foreign currencies are converted to U.S. dollars using the mean of bid and asked prices for rates provided by a third-party pricing service.

The Board of Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments (including any fair valuation) to the adviser pursuant to valuation policies and procedures approved by the Board. If the adviser determines that reliable market quotations are not readily available, investments are valued at fair value as determined in good faith by the adviser in accordance with such procedures under the oversight of the Board of Trustees. Under the fund’s valuation policies and procedures, market quotations are not considered to be readily available for most types of debt instruments and floating rate loans and many types of derivatives. These investments are generally valued at fair value based on information from third-party pricing services. In addition, investments may be valued at fair value if the adviser determines that an investment’s value has been materially affected by events occurring after the close of the exchange or market on which the investment is principally traded (such as foreign exchange or market) and prior to the determination of the fund’s net asset value, or after the halting of trading of a specific security where trading does not resume prior to the close of the exchange or market on which the security is principally traded. The adviser generally relies on third-party pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets;

 

18

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MFS High Income Series

 

Notes to Financial Statements (unaudited) – continued

 

the type, cost and investment characteristics of the security; the business and financial condition of the issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment for purposes of calculating the fund’s net asset value can differ depending on the source and method used to determine value. When fair valuation is used, the value of an investment used to determine the fund’s net asset value may differ from quoted or published prices for the same investment. There can be no assurance that the fund could obtain the fair value assigned to an investment if it were to sell the investment at the same time at which the fund determines its net asset value per share.

Various inputs are used in determining the value of the fund’s assets or liabilities. These inputs are categorized into three broad levels. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fund’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. Level 1 includes unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes other significant observable market-based inputs (including quoted prices for similar securities, interest rates, prepayment speed, and credit risk). Level 3 includes unobservable inputs, which may include the adviser’s own assumptions in determining the fair value of investments. Other financial instruments are derivative instruments not reflected in total investments, such as futures and forward foreign currency exchange contracts. The following is a summary of the levels used as of June 30, 2011 in valuing the fund’s assets or liabilities:

 

Investments at Value    Level 1      Level 2      Level 3      Total  
Equity Securities:            

United States

      $5,179,319         $1,791,860         $382,359         $7,353,538   
Non-U.S. Sovereign Debt      —         932,468         —         932,468   
Corporate Bonds      —         265,361,288         —         265,361,288   
Commercial Mortgage-Backed Securities      —         1,824,871         —         1,824,871   
Asset-Backed Securities (including CDOs)      —         1,806,266         317,503         2,123,769   
Foreign Bonds      —         46,592,787         —         46,592,787   
Floating Rate Loans      —         2,520,993         —         2,520,993   
Mutual Funds      6,236,618         —         —         6,236,618   
Total Investments      $11,415,937         $320,830,534         $699,862         $332,946,333   
Other Financial Instruments                            
Futures      $22,373         $—         $—         $22,373   
Forward Foreign Currency Exchange Contracts      —         (35,375 )       —         (35,375 ) 

For further information regarding security characteristics, see the Portfolio of Investments.

The following is a reconciliation of level 3 assets for which significant unobservable inputs were used to determine fair value. The fund’s policy is to recognize transfers between the levels as of the end of the period. The table presents the activity of level 3 securities held at the beginning and the end of the period.

 

    

Equity

Securities

     

Asset-Backed

Securities

     

Corporate

Bonds

      Total  
Balance as of 12/31/10      $—         $321,294         $96,132         $417,426   

Realized gain (loss)

      —         —         (333,216 )       (333,216 ) 

Change in unrealized appreciation (depreciation)

      —         (3,791 )       339,035         335,244   

Sales

      —         —         0         0   

Transfers into level 3

      382,359         —         —         382,359   

Transfers out of level 3

      —         —         (101,951 )       (101,951 ) 
Balance as of 6/30/11      $382,359         $317,503         $—         $699,862   

The net change in unrealized appreciation (depreciation) from investments still held as level 3 at June 30, 2011 is $(3,791).

Foreign Currency Translation – 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 or on the reporting date for foreign denominated receivables and payables. 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 receivables, payables, 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.

Derivatives – The fund uses derivatives for different purposes, including to earn income and enhance returns, to increase or decrease exposure to a particular market, to manage or adjust the risk profile of the fund, or as alternatives to direct

 

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Notes to Financial Statements (unaudited) – continued

 

investments. Derivatives are used for hedging or non-hedging purposes. While hedging can reduce or eliminate losses, it can also reduce or eliminate gains. When the fund uses derivatives as an investment to increase market exposure, or for hedging purposes, gains and losses from derivative instruments may be substantially greater than the derivative’s original cost.

The derivative instruments used by the fund were purchased options, futures contracts, and forward foreign currency exchange contracts. The fund’s period end derivatives, as presented in the Portfolio of Investments and the associated Derivative Contract Tables, generally are indicative of the volume of its derivative activity during the period.

The following table presents, by major type of derivative contract, the fair value, on a gross basis, of the asset and liability components of derivatives held by the fund at June 30, 2011 as reported in the Statement of Assets and Liabilities:

 

          Fair Value (a)  
Risk    Derivative Contracts    Asset Derivatives      Liability Derivatives  
Interest Rate    Interest Rate Futures      $22,373         $—   
Foreign Exchange    Forward Foreign Currency Exchange      3,686         (39,061 ) 
Total         $26,059         $(39,061 ) 

 

(a) The value of futures contracts outstanding includes cumulative appreciation (depreciation) as reported in the fund’s Portfolio of Investments. Only the current day variation margin for futures contracts is separately reported within the fund’s Statement of Assets and Liabilities.

The following table presents, by major type of derivative contract, the realized gain (loss) on derivatives held by the fund for the six months ended June 30, 2011 as reported in the Statement of Operations:

 

Risk    Futures Contracts     

Foreign Currency

Transactions

     

Investment

Transactions

(Purchased Options)

  
Interest Rate      $(191,969 )       $—         $—   
Foreign Exchange      —         (143,555 )       —   
Equity      —         —         346,534   
Total      $(191,969 )       $(143,555 )       $346,534   

The following table presents, by major type of derivative contract, the change in unrealized appreciation (depreciation) on derivatives held by the fund for the six months ended June 30, 2011 as reported in the Statement of Operations:

 

Risk    Futures Contracts     

Translation of
Assets and

Liabilities in

Foreign Currencies

     

Investments

(Purchased Options)

  
Interest Rate      $(77,344 )       $—         $—   
Foreign Exchange      —         (13,789 )       —   
Equity      —         —         (206,773 ) 
Total      $(77,344 )       $(13,789 )       $(206,773 ) 

Derivative counterparty credit risk is managed through formal evaluation of the creditworthiness of all potential counterparties. On certain over-the-counter derivatives, the fund attempts to reduce its exposure to counterparty credit risk whenever possible by entering into an International Swaps and Derivatives Association (ISDA) Master Agreement on a bilateral basis with each of the counterparties with whom it undertakes a significant volume of transactions. The ISDA Master Agreement gives each party to the agreement the right to terminate all transactions traded under such agreement if there is a certain deterioration in the credit quality of the other party. The ISDA Master Agreement gives the fund the right, upon an event of default by the applicable counterparty or a termination of the agreement, to close out all transactions traded under such agreement and to net amounts owed under each transaction to one net amount payable by one party to the other. This right to close out and net payments across all transactions traded under the ISDA Master Agreement could result in a reduction of the fund’s credit risk to such counterparty equal to any amounts payable by the fund under the applicable transactions, if any. However, absent an event of default by the counterparty or a termination of the agreement, the ISDA Master Agreement does not result in an offset of reported amounts of assets and liabilities in the Statement of Assets and Liabilities across transactions between the fund and the applicable counterparty.

Collateral requirements differ by type of derivative. Collateral or margin requirements are set by the broker or exchange clearing house for exchange traded derivatives (i.e., futures and exchange-traded options) while collateral terms are contract specific for over-the-counter traded derivatives (i.e., forward foreign currency exchange contracts, swaps and over-the-counter options). For derivatives traded under an ISDA Master Agreement, the collateral requirements are netted across all transactions traded under such agreement and one amount is posted from one party to the other to collateralize such obligations. Cash

 

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Notes to Financial Statements (unaudited) – continued

 

collateral that has been pledged to cover obligations of the fund under derivative contracts, if any, will be reported separately on the Statement of Assets and Liabilities as restricted cash. Securities collateral pledged for the same purpose, if any, is noted in the Portfolio of Investments.

Purchased Options – The fund purchased call options for a premium. Purchased call options entitle the holder to sell a specified number of shares or units of a particular security, currency or index at a specified price at a specified date or within a specified period of time. Purchasing call options may be used to hedge against an anticipated increase in the dollar cost of securities or currency to be acquired or to increase the fund’s exposure to an underlying instrument.

The premium paid is initially recorded as an investment in the Statement of Assets and Liabilities. That investment is subsequently marked-to-market daily with the difference between the premium paid and the market value of the purchased option being recorded as unrealized appreciation or depreciation. Premiums paid for purchased call options which have expired are treated as realized losses on investments in the Statement of Operations. Upon the exercise or closing of a purchased call option, the premium paid is added to the cost of the security or financial instrument.

The risk in purchasing an option is that the fund pays a premium whether or not the option is exercised. The fund’s maximum risk of loss due to counterparty credit risk is limited to the market value of the option. For over-the-counter options, this risk is mitigated in cases where there is an ISDA Master Agreement between the fund and the counterparty providing for netting as described above and for posting of collateral by the counterparty to the fund to cover the fund’s exposure to the counterparty under such ISDA Master Agreement.

Futures Contracts – The fund entered into futures contracts which may be used to hedge against or obtain broad market, interest rate or currency exposure. A futures contract represents a commitment for the future purchase or sale of an asset at a specified price on a specified date.

Upon entering into a futures contract, the fund is required to deposit with the broker, either in cash or securities, an initial margin in an amount equal to a certain percentage of the notional amount of the contract. Subsequent payments (variation margin) are made or received by the fund each day, depending on the daily fluctuations in the value of the contract, and are recorded for financial statement purposes as unrealized gain or loss by the fund until the contract is closed or expires at which point the gain or loss on futures is realized.

The fund bears the risk of interest rates, exchange rates or securities prices moving unexpectedly, in which case, the fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. While futures may present less counterparty risk to the fund since the contracts are exchange traded and the exchange’s clearinghouse guarantees payments to the broker, there is still counterparty credit risk due to the insolvency of the broker. The fund’s maximum risk of loss due to counterparty credit risk is equal to the margin posted by the fund to the broker plus any gains or minus any losses on the outstanding futures contracts.

Forward Foreign Currency Exchange Contracts – The fund entered into forward foreign currency exchange contracts for the purchase or sale of a specific foreign currency at a fixed price on a future date. These contracts may be used to hedge the fund’s currency risk or for non-hedging purposes. For hedging purposes, the fund may enter into contracts to deliver or receive foreign currency that the fund will receive from or use in its normal investment activities. The fund may also use contracts to hedge against declines in the value of foreign currency denominated securities due to unfavorable exchange rate movements. For non-hedging purposes, the fund may enter into contracts with the intent of changing the relative exposure of the fund’s portfolio of securities to different currencies to take advantage of anticipated exchange rate changes.

Forward foreign currency exchange contracts are adjusted by the daily exchange rate of the underlying currency and any unrealized gains or losses are recorded as a receivable or payable for forward foreign currency exchange contracts until the contract settlement date. On contract settlement date, any gain or loss on the contract is recorded as realized gains or losses on foreign currency transactions.

Risks may arise upon entering into these contracts from unanticipated movements in the value of the contract and from the potential inability of counterparties to meet the terms of their contracts. Generally, the fund’s maximum risk due to counterparty credit risk is the unrealized gain on the contract due to the use of Continuous Linked Settlement, an industry accepted settlement system. This risk is mitigated in cases where there is an ISDA Master Agreement between the fund and the counterparty providing for netting as described above and for posting of collateral by the counterparty to the fund to cover the fund’s exposure to the counterparty under such ISDA Master Agreement.

Hybrid Instruments – The fund invests in indexed or hybrid securities on which any combination of interest payments, the principal or stated amount payable at maturity is determined by reference to prices of other securities, currencies, indices, economic factors or other measures, including interest rates, currency exchange rates, or securities indices. The risks of

 

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Notes to Financial Statements (unaudited) – continued

 

investing in hybrid instruments reflect a combination of the risks of investing in securities, swaps, options, futures and currencies. Hybrid instruments are potentially more volatile and carry greater market risks than traditional debt instruments. Depending on the structure of the particular hybrid instrument, changes in a benchmark, underlying assets or economic indicator may be magnified by the terms of the hybrid instrument and have an even more dramatic and substantial effect upon the value of the hybrid instrument. Also, the prices of the hybrid instrument and the benchmark, underlying asset or economic indicator may not move in the same direction or at the same time.

Loans and Other Direct Debt Instruments – The fund invests in loans and loan participations or other receivables. These investments may include standby financing commitments, including revolving credit facilities, which obligate the fund to supply additional cash to the borrower on demand. Loan participations involve a risk of insolvency of the lending bank or other financial intermediary.

Indemnifications – Under the fund’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the fund. Additionally, in the normal course of business, the fund enters into agreements with service providers that may contain indemnification clauses. The fund’s maximum exposure under these agreements is unknown as this would involve future claims that may be made against the fund that have not yet occurred.

Investment Transactions and Income – Investment transactions are recorded on the trade date. Interest income is recorded on the accrual basis. All premium and discount is amortized or accreted for financial statement purposes in accordance with U.S. generally accepted accounting principles. The fund earns certain fees in connection with its floating rate loan purchasing activities. These fees are in addition to interest payments earned and may include amendment fees, commitment fees, facility fees, consent fees, and prepayment fees. Commitment fees are recorded on an accrual basis as income in the accompanying financial statements. Dividends received in cash are recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded when the fund is informed of the dividend if such information is obtained subsequent to 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. Debt obligations may be placed on non-accrual status or set to accrue at a rate of interest less than the contractual coupon when the collection of all or a portion of interest has become doubtful. Interest income for those debt obligations may be further reduced by the write-off of the related interest receivables when deemed uncollectible.

The fund may receive proceeds from litigation settlements. Any proceeds received from litigation involving portfolio holdings are reflected in the Statement of Operations in realized gain/loss if the security has been disposed of by the fund or in unrealized gain/loss if the security is still held by the fund. Any other proceeds from litigation not related to portfolio holdings are reflected as other income in the Statement of Operations.

Fees Paid Indirectly – The fund’s custody fee may be reduced according to an arrangement that measures the value of cash deposited with the custodian by the fund. This amount, for the six months ended June 30, 2011, is shown as a reduction of total expenses on the Statement of Operations.

Tax Matters and Distributions – The fund intends to qualify as a regulated investment company, as defined under Subchapter M of the Internal Revenue Code, and to distribute all of its taxable income, including realized capital gains. As a result, no provision for federal income tax is required. The fund’s federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue Service. Foreign taxes, if any, have been accrued by the fund in the accompanying financial statements.

Distributions to shareholders are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income, expense, gain or loss in different periods for financial statement and tax purposes will reverse at some time in the future. Distributions in excess of net investment income or net realized gains are temporary overdistributions for financial statement purposes resulting from differences in the recognition or classification of income or distributions for financial statement and tax purposes.

Book/tax differences primarily relate to amortization and accretion of debt securities, defaulted bonds, wash sale loss deferrals, and derivative transactions.

 

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Notes to Financial Statements (unaudited) – continued

 

The tax character of distributions declared to shareholders for the last fiscal year is as follows:

 

     12/31/10  
Ordinary income (including any short-term capital gains)      $27,232,133   

The federal tax cost and the tax basis components of distributable earnings were as follows:

 

As of 6/30/11   
Cost of investments      $333,970,335   
Gross appreciation      13,144,077   
Gross depreciation      (14,168,079 ) 
Net unrealized appreciation (depreciation)      $(1,024,002 ) 
As of 12/31/10   
Undistributed ordinary income      28,855,759   
Capital loss carryforwards      (31,157,949 ) 
Other temporary differences      (672,815 ) 
Net unrealized appreciation (depreciation)      4,834,322   

The aggregate cost above includes prior fiscal year end tax adjustments, if applicable.

As of December 31, 2010, the fund had capital loss carryforwards available to offset future realized gains. Such losses expire as follows:

 

12/31/14      $(693,182 ) 
12/31/16      (22,939,919 ) 
12/31/17      (7,524,848 ) 
Total      $(31,157,949 ) 

Multiple Classes of Shares of Beneficial Interest – The fund offers multiple classes of shares, which differ in their respective distribution and/or service fees. The fund’s income, realized and unrealized gain (loss), and common expenses are allocated to shareholders based on the daily net assets of each class. Dividends are declared separately for each class. Differences in per share dividend rates are generally due to differences in separate class expenses. The fund’s distributions declared to shareholders as reported on the Statements of Changes in Net Assets are presented by class as follows:

 

     From net investment
income		  
     Six months ended
6/30/11		      Year ended
12/31/10		  
Initial Class      $—         $26,701,187   
Service Class      —         530,946   
Total      $—         $27,232,133   

 

(3)   Transactions with Affiliates

Investment Adviser – The fund has an investment advisory agreement with MFS to provide overall investment management and related administrative services and facilities to the fund. The management fee is computed daily and paid monthly at the following annual rates:

 

First $1 billion of average daily net assets      0.70%   
Average daily net assets in excess of $1 billion      0.65%   

The management fee incurred for the six months ended June 30, 2011 was equivalent to an annual effective rate of 0.70% of the fund’s average daily net assets.

The investment adviser has agreed in writing to pay a portion of the fund’s total annual operating expenses, exclusive of interest, taxes, extraordinary expenses, brokerage and transaction costs and investment-related expenses, such that total annual operating expenses do not exceed 0.85% of average daily net assets for the Initial Class shares and 1.10% of average daily net assets for Service shares. This written agreement will continue until modified by the fund’s Board of Trustees, but such agreement will continue at least until April 30, 2013. For the six months ended June 30, 2011, the fund’s actual operating expenses did not exceed the limit and therefore, the investment adviser did not pay any portion of the fund’s expenses related to this agreement.

 

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Notes to Financial Statements (unaudited) – continued

 

Distributor – MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, is the distributor of shares of the fund. The Trustees have adopted a distribution plan for the Service Class shares pursuant to Rule 12b-1 under the Investment Company Act of 1940.

The fund’s distribution plan provides that the fund will pay MFD distribution and/or service fees equal to 0.25% per annum of its average daily net assets attributable to Service Class shares as partial consideration for services performed and expenses incurred by MFD and financial intermediaries (including participating insurance companies that invest in the fund to fund variable annuity and variable life insurance contracts, sponsors of qualified retirement and pension plans that invest in the fund, and affiliates of these participating insurance companies and plan sponsors) in connection with the sale and distribution of the Service Class shares. MFD may subsequently pay all, or a portion, of the distribution and/or service fees to financial intermediaries.

Shareholder Servicing Agent – MFS Service Center, Inc. (MFSC), a wholly-owned subsidiary of MFS, receives a fee from the fund for its services as shareholder servicing agent. For the six months ended June 30, 2011, the fee was $20,336, which equated to 0.0112% annually of the fund’s average daily net assets. MFSC also receives payment from the fund for out-of-pocket expenses paid by MFSC on behalf of the fund. For the six months ended June 30, 2011, these costs amounted to $208.

Administrator – MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the fund partially reimburses MFS the costs incurred to provide these services. The fund is charged an annual fixed amount of $17,500 plus a fee based on average daily net assets. The administrative services fee incurred for the six months ended June 30, 2011 was equivalent to an annual effective rate of 0.0172% of the fund’s average daily net assets.

Trustees’ and Officers’ Compensation – The fund pays compensation to independent Trustees in the form of a retainer, attendance fees, and additional compensation to Board and Committee chairpersons. The fund does not pay compensation directly to Trustees or officers of the fund who are also officers of the investment adviser, all of whom receive remuneration for their services to the fund from MFS. Certain officers and Trustees of the fund are officers or directors of MFS, MFD, and MFSC.

Other – This fund and certain other funds managed by MFS (the funds) have entered into services agreements (the Agreements) which provide for payment of fees by the funds to Tarantino LLC and Griffin Compliance LLC in return for the provision of services of an Independent Chief Compliance Officer (ICCO) and Assistant ICCO, respectively, for the funds. The ICCO and Assistant ICCO are officers of the funds and the sole members of Tarantino LLC and Griffin Compliance LLC, respectively. The funds can terminate the Agreements with Tarantino LLC and Griffin Compliance LLC at any time under the terms of the Agreements. For the six months ended June 30, 2011, the aggregate fees paid by the fund to Tarantino LLC and Griffin Compliance LLC were $1,288 and are included in miscellaneous expense on the Statement of Operations. MFS has agreed to reimburse the fund for a portion of the payments made by the fund in the amount of $1,044, which is shown as a reduction of total expenses in the Statement of Operations. Additionally, MFS has agreed to bear all expenses associated with office space, other administrative support, and supplies provided to the ICCO and Assistant ICCO.

The fund invests in the MFS Institutional Money Market Portfolio which is managed by MFS and seeks a high level of current income consistent with preservation of capital and liquidity. Income earned on this investment is included in dividends from underlying affiliated funds on the Statement of Operations. This money market fund does not pay a management fee to MFS.

 

(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      $1,039,776         $—   
Investments (non-U.S. Government securities)      $111,341,161         $155,031,066   

 

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Notes to Financial Statements (unaudited) – continued

 

 

(5)   Shares of Beneficial Interest

The fund’s Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest. Transactions in fund shares were as follows:

 

     Six months ended 6/30/11      Year ended 12/31/10  
     Shares      Amount      Shares      Amount  
Shares sold            

Initial Class

      2,548,819         $23,140,623         10,058,256         $84,434,070   

Service Class

      81,393         739,112         115,409         973,135   
     2,630,212         $23,879,735         10,173,665         $85,407,205   
Shares issued to shareholders in reinvestment of distributions            

Initial Class

      —         $—         3,284,279         $26,701,187   

Service Class

      —         —         65,468         530,946   
     —         $—         3,349,747         $27,232,133   
Shares reacquired            

Initial Class

      (8,723,989 )       $(78,998,039 )       (12,619,148 )       $(104,808,671 ) 

Service Class

      (85,511 )       (775,431 )       (207,525 )       (1,715,034 ) 
     (8,809,500 )       $(79,773,470 )       (12,826,673 )       $(106,523,705 ) 
Net change            

Initial Class

      (6,175,170 )       $(55,857,416 )       723,387         $6,326,586   

Service Class

      (4,118 )       (36,319 )       (26,648 )       (210,953 ) 
     (6,179,288 )       $(55,893,735 )       696,739         $6,115,633   

 

(6)   Line of Credit

The fund and certain other funds managed by MFS participate in a $1.1 billion unsecured committed line of credit, subject to a $1 billion sublimit, provided by a syndication of banks under a credit agreement. Borrowings may be made for temporary financing needs. Interest is charged to each fund, based on its borrowings, generally at a rate equal to the higher of the Federal Reserve funds rate or one month LIBOR plus an agreed upon spread. A commitment fee, based on the average daily, unused portion of the committed line of credit, is allocated among the participating funds at the end of each calendar quarter. In addition, the fund and other funds managed by MFS have established unsecured uncommitted borrowing arrangements with certain banks for temporary financing needs. Interest is charged to each fund, based on its borrowings, at a rate equal to the Federal Reserve funds rate plus an agreed upon spread. For the six months ended June 30, 2011, the fund’s commitment fee and interest expense were $1,837 and $0, respectively, and are included in miscellaneous expense on the Statement of Operations.

 

(7)   Transactions in Underlying Affiliated Funds – Affiliated Issuers

An affiliated issuer may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. For the purposes of this report, the fund assumes the following to be affiliated issuers:

 

Underlying Affiliated Funds   

Beginning

Shares/Par

Amount

     

Acquisitions

Shares/Par

Amount

     

Dispositions

Shares/Par

Amount

     

Ending

Shares/Par

Amount

  
MFS Institutional Money Market Portfolio      5,221,763         69,917,473         (68,902,618 )       6,236,618   
Underlying Affiliated Funds   

Realized

Gain (Loss)

     

Capital Gain

Distributions

     

Dividend

Income

     

Ending

Value

  
MFS Institutional Money Market Portfolio      $—         $—         $6,487         $6,236,618   

 

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BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT

 

A discussion regarding the Board’s most recent review and renewal of the fund’s Investment Advisory Agreement with MFS will be available on or about November 1, 2011 by clicking on the fund’s name under “Variable Insurance Portfolios — VIT” in the “Products and Performance” section of the MFS Web site (mfs.com).

PROXY VOTING POLICIES AND INFORMATION

A general description of the MFS funds’ proxy voting policies and procedures is available without charge, upon request, by calling
1-800-225-2606, by visiting the Proxy Voting section of mfs.com or by visiting the SEC’s Web site at http://www.sec.gov.

Information regarding how the fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available without charge by visiting the Proxy Voting section of mfs.com or by visiting the SEC’s Web site at http://www.sec.gov.

QUARTERLY PORTFOLIO DISCLOSURE

The fund will file a complete schedule of portfolio holdings with the Securities and Exchange Commission (the Commission) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q may be reviewed and copied at the:

Public Reference Room

Securities and Exchange Commission

100 F Street, NE, Room 1580

Washington, D.C. 20549

Information on the operation of the Public Reference Room may be obtained by calling the Commission at 1-800-SEC-0330. The fund’s Form N-Q is available on the EDGAR database on the Commission’s Internet Web site 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: publicinfo@sec.gov or by writing the Public Reference Section at the above address.

FURTHER INFORMATION

From time to time, MFS may post important information about the fund or the MFS funds on the MFS web site (mfs.com). This information is available by visiting the “News & Commentary” section of mfs.com or by clicking on the fund’s name under “Variable Insurance Portfolios — VIT” in the “Products and Performance” section of mfs.com.

 

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rev. 3/11

 

FACTS   WHAT DOES MFS DO WITH YOUR
PERSONAL INFORMATION?		   LOGO

 

Why?   Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?  

The types of personal information we collect and share depend on the product or service you have with us. This information can include:

 

• Social Security number and account balances

• Account transactions and transaction history

• Checking account information and wire transfer instructions

 

When you are no longer our customer, we continue to share your information as described in this notice.

 

How?   All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons MFS chooses to share; and whether you can limit this sharing.

 

Reasons we can share your personal information   Does MFS share?   Can you limit this
sharing?

For our everyday business purposes –

such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus

   Yes   No

For our marketing purposes –

to offer our products and services to you

   No   We don’t share
For joint marketing with other financial companies   No   We don’t share

For our affiliates’ everyday business purposes –

information about your transactions and experiences

   No   We don’t share

For our affiliates’ everyday business purposes –

information about your creditworthiness

   No   We don’t share
For nonaffiliates to market to you   No   We don’t share

 

Questions?   Call 800-225-2606 or go to mfs.com.

 

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Page 2  

 

Who we are
Who is providing this notice?   MFS Funds, MFS Investment Management, MFS Institutional Advisors, Inc., MFS Fund Distributors, Inc., MFS Heritage Trust Company, and MFS Service Center, Inc.

 

What we do
How does MFS protect my personal information?   To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include procedural, electronic, and physical safeguards for the protection of the personal information we collect about you.
How does MFS
collect my personal information?		  

We collect your personal information, for example, when you

 

• open an account or provide account information

• direct us to buy securities or direct us to sell your securities

• make a wire transfer

 

We also collect your personal information from others, such as credit bureaus, affiliates and other companies.

Why can’t I limit all sharing?  

Federal law gives you the right to limit only

 

• sharing for affiliates’ everyday business purposes – information about your creditworthiness

• affiliates from using your information to market to you

• sharing for nonaffiliates to market to you

 

State laws and individual companies may give you additional rights to limit sharing.

 

Definitions
Affiliates  

Companies related by common ownership or control. They can be financial and nonfinancial companies.

 

• MFS does not share personal information with affiliates, except for everyday business purposes as described on page one of this notice.

Nonaffiliates  

Companies not related by common ownership or control. They can be financial and nonfinancial companies.

 

• MFS does not share with nonaffiliates so they can market to you.

Joint Marketing  

A formal agreement between nonaffiliated financial companies that together market financial products or services to you.

 

• MFS doesn’t jointly market.

 

 

Other important information
If you own an MFS product or receive an MFS service in the name of a third party such as a bank or broker-dealer, their privacy policy may apply to you instead of ours.

 

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LOGO

Table of Contents

LOGO

 

MFS® Strategic Income Series

MFS® Variable Insurance Trust

 

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SEMIANNUAL REPORT

June 30, 2011

 

VWG-SEM

Table of Contents

MFS® STRATEGIC INCOME SERIES

 

CONTENTS   
Letter from the CEO      1   
Portfolio composition      2   
Expense table      3   
Portfolio of investments      4   
Statement of assets and liabilities      14   
Statement of operations      15   
Statements of changes in net assets      16   
Financial highlights      17   
Notes to financial statements      19   
Board review of investment advisory agreement      27   
Proxy voting policies and information      27   
Quarterly portfolio disclosure      27   
Further information      27   
MFS® privacy notice      28   

 

The report is prepared for the general information of contract owners.

It is authorized for distribution to prospective investors only when preceded or accompanied by a current prospectus.

 

NOT FDIC INSURED Ÿ MAY LOSE VALUE Ÿ NO BANK OR CREDIT UNION GUARANTEE Ÿ NOT A DEPOSIT Ÿ NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY OR NCUA/NCUSIF

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MFS Strategic Income Series

 

LETTER FROM THE CEO

 

LOGO

 

Dear Contract Owners:

After about a year of almost uninterrupted macroeconomic and financial market improvement following the global credit crisis, investors grew more cautious in the middle of 2010 as fears grew that some European countries would default on their debt and as economic data showed a weakening

trend in the global economy. As a result asset prices fell significantly.

Last September the U.S. Federal Reserve Board’s promises to make lending conditions easier helped assuage market fears and drive asset prices off their recent lows. A combination of solid earnings and improving economic data gave an additional boost to investor sentiment.

In the following months, the renewed positive market mood, coupled with indications of better global macroeconomic activity, pushed many asset valuations to post-crisis highs. At the same time, global sovereign

bond yields initially rose as investors became concerned about inflationary pressures, driven by higher prices for oil as well as other commodities. However, by the end of the second quarter of 2011, a weakening macroeconomic backdrop and renewed concerns over debt problems in some eurozone countries pushed equities lower.

For the remainder of 2011, we are cautiously optimistic that economic growth will continue to improve and that the global economies will recover from the shocks of the past few years. We expect the pace of recovery worldwide to be uneven and volatile and acknowledge the elevated uncertainty created by events in Japan, Europe, the Middle East, as well as that created by the U.S. debate over raising the debt ceiling and the downgrade by Standard & Poor’s of the U.S. long-term credit rating.

As always, we continue to be mindful of the many economic challenges faced at the local, national, and international levels. It is in times such as these that we want to remind investors of the merits of maintaining a long-term view, adhering to basic investing principles such as asset allocation and diversification, and working closely with their advisors to research and identify appropriate investment opportunities.

Respectfully,

LOGO

Robert J. Manning

Chairman and Chief Executive Officer

MFS Investment Management®

August 16, 2011

 

The opinions expressed in this letter are subject to change, may not be relied upon for investment advice, and no forecasts can be guaranteed.

 

 

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MFS Strategic Income Series

 

PORTFOLIO COMPOSITION

 

Portfolio structure (i)

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Fixed income sectors (i)  
High Grade Corporates     38.2%   
High Yield Corporates     30.8%   
Non-U.S. Government Bonds     15.6%   
Emerging Markets Bonds     4.7%   
U.S. Government Agencies     1.8%   
Commercial Mortgage-Backed Securities     1.7%   
Mortgage-Backed Securities     1.5%   
Collateralized Debt Obligations     0.6%   
Asset-Backed Securities     0.6%   
Floating Rate Loans     0.2%   
Composition including fixed income credit quality (a)(i)  
AAA     7.9%   
AA     12.9%   
A     14.1%   
BBB     25.1%   
BB     13.2%   
B     13.2%   
CCC     5.2%   
CC     0.3%   
C     0.1%   
D     0.1%   
Federal Agencies     3.3%   
Not Rated     0.3%   
Non-Fixed Income     0.7%   
Cash & Other     3.6%   

 

Portfolio facts (i)  
Average Duration (d)     4.8   
Average Effective Maturity (m)     7.3 yrs.   

 

Issuer country weightings (i)(x)  
United States     66.4%   
Japan     4.5%   
United Kingdom     3.3%   
France     3.2%   
Canada     3.0%   
Italy     2.8%   
Netherlands     2.3%   
Germany     2.2%   
Brazil     1.5%   
Other Countries     10.8%   
 

 

 

(a) For all securities other than those specifically described below, ratings are assigned to underlying securities utilizing ratings from Moody’s, Fitch, and Standard & Poor’s rating agencies and applying the following hierarchy: If all three agencies provide a rating, the middle rating (after dropping the highest and lowest ratings) is assigned; if two of the three agencies rate a security, the lower of the two is assigned. Ratings are shown in the S&P and Fitch scale (e.g., AAA). All ratings are subject to change. Federal Agencies includes rated and unrated U.S. Agency fixed-income securities, U.S. Agency mortgage-backed securities, and collateralized mortgage obligations of U.S. Agency mortgage-backed securities. Not Rated includes fixed income securities, including fixed income futures, which have not been rated by any rating agency. Non-Fixed Income includes equity securities (including convertible bonds and equity derivatives) and commodities. Cash & Other includes cash, other assets less liabilities, offsets to derivative positions, and short-term securities. The fund may not hold all of these instruments. The fund itself has not been rated.
(d) Duration is a measure of how much a bond’s price is likely to fluctuate with general changes in interest rates, e.g., if rates rise 1.00%, a bond with a 5-year duration is likely to lose about 5.00% of its value due to the interest rate move.
(i) For purposes of this presentation, the components include the market value of securities, and reflect the impact of the equivalent exposure of derivative positions, if applicable. These amounts may be negative from time to time. The bond component will include any accrued interest amounts. Equivalent exposure is a calculated amount that translates the derivative position into a reasonable approximation of the amount of the underlying asset that the portfolio would have to hold at a given point in time to have the same price sensitivity that results from the portfolio’s ownership of the derivative contract. When dealing with derivatives, equivalent exposure is a more representative measure of the potential impact of a position on portfolio performance than market value. Where the fund holds convertible bonds, these are treated as part of the equity portion of the portfolio.
(m) In determining an instrument’s effective maturity for purposes of calculating the fund’s dollar-weighted average effective maturity, MFS uses the instrument’s stated maturity or, if applicable, an earlier date on which MFS believes it is probable that a maturity-shortening device (such as a put, pre-refunding or prepayment) will cause the instrument to be repaid. Such an earlier date can be substantially shorter than the instrument’s stated maturity.
(x) Represents the portfolio’s exposure to issuer countries as a percentage of a portfolio’s total net assets.

Percentages are based on net assets as of 6/30/11.

The portfolio is actively managed and current holdings may be different.

 

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EXPENSE TABLE

 

Fund Expenses Borne by the Contract Holders During the Period,

January 1, 2011 through June 30, 2011

As a contract holder of the fund, you incur ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period January 1, 2011 through June 30, 2011.

Actual Expenses

The first line for each share class in the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The second line for each share class in the following table provides information about hypothetical account values and hypothetical expenses based on the fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight the fund’s ongoing costs only and do not take into account the fees and expenses imposed under the variable contracts through which your investment in the fund is made. Therefore, the second line for each share class in the table is useful in comparing ongoing costs associated with an investment in vehicles (such as the fund) which fund benefits under variable annuity and variable life insurance contracts and to qualified pension and retirement plans only, and will not help you determine the relative total costs of investing in the fund through variable annuity and variable life insurance contracts. If the fees and expenses imposed under the variable contracts were included, your costs would have been higher.

 

Share Class         Annualized
Expense Ratio		      Beginning
Account Value
1/01/11		     

Ending

Account Value
6/30/11

      Expenses Paid
During Period (p)
1/01/11-6/30/11		  
Initial Class   Actual      0.80%         $1,000.00         $1,033.53         $4.03   
  Hypothetical (h)      0.80%         $1,000.00         $1,020.83         $4.01   
Service Class   Actual      1.05%         $1,000.00         $1,033.10         $5.29   
  Hypothetical (h)      1.05%         $1,000.00         $1,019.59         $5.26   

 

(h) 5% class return per year before expenses.

 

(p) Expenses paid is equal to each class’ annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by the number of days in the period, divided by the number of days in the year.

 

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PORTFOLIO OF INVESTMENTS – 6/30/11 (unaudited)

 

The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.

Issuer    Shares/Par     Value ($)  
    
BONDS – 93.5%   
Aerospace – 0.7%   
BE Aerospace, Inc., 8.5%, 2018    $ 30,000      $ 32,738   
Bombardier, Inc., 7.5%, 2018 (n)      55,000        61,600   
Bombardier, Inc., 7.75%, 2020 (n)      20,000        22,500   
CPI International Acquisition, Inc.,
8%, 2018 (n)		      35,000        33,075   
Hawker Beechcraft Acquisition Co. LLC, 8.5%, 2015      40,000        31,300   
Huntington Ingalls Industries, Inc.,
7.125%, 2021 (n)		      55,000        56,925   
    

 

 

  
  $ 238,138   
    

 

 

  
Airlines – 0.3%     
Continental Airlines, Inc., FRN, 0.602%, 2013    $ 94,866      $ 89,648   
    

 

 

  
Apparel Manufacturers – 0.2%     
Hanesbrands, Inc., 8%, 2016    $ 30,000      $ 32,025   
Phillips-Van Heusen Corp., 7.375%, 2020      35,000        37,450   
    

 

 

  
  $ 69,475   
    

 

 

  
Asset-Backed & Securitized – 2.9%     
ARCap REIT, Inc., CDO, “H”, FRN,
6.1%, 2045 (d)(z)		    $ 73,928      $ 2,772   
Bayview Financial Revolving Mortgage Loan Trust, FRN, 1.785%, 2040 (z)      180,426        100,914   
Capital Trust Realty Ltd., CDO,
5.16%, 2035 (z)		      110,000        110,605   
Crest Ltd., “A1” CDO, FRN, 0.726%, 2018 (z)      92,016        84,654   
Crest Ltd., CDO, 7%, 2040 (a)      146,845        7,342   
Deutsche Mortgage & Asset Receiving Corp., FRN, 7.5%, 2031      71,289        71,412   
Falcon Franchise Loan LLC, FRN,
3.948%, 2025 (i)(z)		      305,298        41,460   
First Union National Bank Commercial Mortgage Trust, FRN, 1.636%, 2043 (i)(z)      87,672        3   
First Union-Lehman Brothers Bank of America, FRN, 0.561%, 2035 (i)      1,111,986        18,681   
First Union-Lehman Brothers Commercial Mortgage Trust, 7%, 2029 (n)      76,980        79,267   
Hertz Global Holdings, Inc., 4.26%, 2014 (n)      100,000        104,494   
Lehman Brothers Commercial Conduit Mortgage Trust, FRN, 1.072%, 2030 (i)      295,392        5,967   
Morgan Stanley Capital I, Inc., FRN,
1.387%, 2039 (i)(z)		      748,778        20,591   
Prudential Securities Secured Financing Corp., FRN, 7.325%, 2013 (z)      171,000        171,717   
Salomon Brothers Mortgage Securities, Inc., FRN, 7.285%, 2032 (z)      134,179        143,112   
    

 

 

  
  $ 962,991   
    

 

 

  
Automotive – 1.4%     
Accuride Corp., 9.5%, 2018    $ 50,000      $ 53,500   
Allison Transmission, Inc., 7.125%, 2019 (n)      45,000        43,761   
Ford Motor Credit Co. LLC, 12%, 2015      100,000        124,012   
Issuer    Shares/Par     Value ($)  
    
BONDS – continued     
Automotive – continued     
General Motors Financial Co., Inc.,
6.75%, 2018 (z)		    $ 25,000      $ 25,063   
Harley-Davidson Financial Services,
3.875%, 2016 (n)		      130,000        132,216   
RCI Banque S.A., 4.6%, 2016 (n)      90,000        91,937   
    

 

 

  
  $ 470,489   
    

 

 

  
Banks & Diversified Financials (Covered Bonds) – 0.5%   
Bank of Nova Scotia, 1.45%, 2013 (n)    $ 150,000      $ 151,722   
    

 

 

  
Basic Industry – 0.1%     
Trimas Corp., 9.75%, 2017    $ 35,000      $ 38,325   
    

 

 

  
Broadcasting – 2.6%     
Allbritton Communications Co., 8%, 2018    $ 30,000      $ 30,525   
CBS Corp., 5.75%, 2020      20,000        21,677   
Citadel Broadcasting Corp., 7.75%, 2018 (n)      5,000        5,313   
Clear Channel Communications, Inc.,
9%, 2021 (z)		      15,000        14,361   
EH Holding Corp., 7.625%, 2021 (z)      5,000        5,100   
Gray Television, Inc., 10.5%, 2015      10,000        10,400   
Intelsat Bermuda Ltd., 11.25%, 2017      40,000        42,950   
Intelsat Jackson Holdings Ltd., 9.5%, 2016      115,000        120,606   
Lamar Media Corp., 6.625%, 2015      40,000        40,600   
LBI Media, Inc., 8.5%, 2017 (z)      30,000        23,550   
Liberty Media Corp., 8.5%, 2029      30,000        28,950   
Local TV Finance LLC, 9.25%, 2015 (p)(z)      51,074        51,138   
NBC Universal, Inc., 5.95%, 2041 (n)      113,000        114,909   
Newport Television LLC, 13%, 2017 (n)(p)      16,265        16,145   
News America, Inc., 6.4%, 2035      100,000        104,577   
News America, Inc., 6.9%, 2039      29,000        31,935   
Salem Communications Corp., 9.625%, 2016      5,000        5,269   
Sinclair Broadcast Group, Inc., 9.25%, 2017 (n)      15,000        16,463   
Sinclair Broadcast Group, Inc., 8.375%, 2018      5,000        5,250   
SIRIUS XM Radio, Inc., 13%, 2013 (n)      20,000        23,450   
SIRIUS XM Radio, Inc., 8.75%, 2015 (n)      20,000        22,050   
SIRIUS XM Radio, Inc., 7.625%, 2018 (n)      50,000        52,250   
Univision Communications, Inc.,
6.875%, 2019 (n)		      45,000        44,550   
Univision Communications, Inc.,
7.875%, 2020 (n)		      15,000        15,375   
    

 

 

  
  $ 847,393   
    

 

 

  
Brokerage & Asset Managers – 0.8%     
E*TRADE Financial Corp., 7.875%, 2015    $ 30,000      $ 30,150   
E*TRADE Financial Corp., 12.5%, 2017      10,000        11,700   
TD AMERITRADE Holding Corp., 5.6%, 2019      200,000        214,404   
    

 

 

  
     $ 256,254   
    

 

 

  
Building – 1.2%     
Associated Materials LLC, 9.125%, 2017 (z)    $ 10,000      $ 9,975   
Building Materials Holding Corp.,
6.875%, 2018 (n)		      15,000        15,300   
 

 

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Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
    
BONDS – continued     
Building – continued     
Building Materials Holding Corp., 7%, 2020 (n)    $ 15,000      $ 15,713   
Building Materials Holding Corp.,
6.75%, 2021 (n)		      10,000        10,050   
CRH PLC, 8.125%, 2018      80,000        94,874   
Lafarge S.A., 6.15%, 2011      160,000        160,216   
Nortek, Inc., 10%, 2018 (n)      5,000        5,000   
Nortek, Inc., 8.5%, 2021 (n)      55,000        50,875   
Owens Corning, 9%, 2019      40,000        47,776   
    

 

 

  
     $ 409,779   
    

 

 

  
Business Services – 0.5%     
First Data Corp., 12.625%, 2021 (n)    $ 15,000      $ 16,050   
Interactive Data Corp., 10.25%, 2018 (n)      35,000        38,063   
Iron Mountain, Inc., 6.625%, 2016      40,000        40,000   
SunGard Data Systems, Inc., 10.25%, 2015      61,000        63,135   
SunGard Data Systems, Inc., 7.375%, 2018      10,000        10,000   
SunGard Data Systems, Inc., 7.625%, 2020      5,000        5,050   
    

 

 

  
     $ 172,298   
    

 

 

  
Cable TV – 2.5%     
AMC Networks, Inc., 7.75%, 2021 (z)    $ 6,000      $ 6,270   
Bresnan Broadband Holdings LLC,
8%, 2018 (n)		      5,000        5,156   
Cablevision Systems Corp., 8.625%, 2017      25,000        27,094   
CCH II LLC, 13.5%, 2016      35,000        41,211   
CCO Holdings LLC, 7.875%, 2018      55,000        57,956   
CCO Holdings LLC, 8.125%, 2020      15,000        16,200   
Cequel Communications Holdings,
8.625%, 2017 (n)		      10,000        10,400   
Charter Communications Operating LLC, 10.875%, 2014 (n)      25,000        27,500   
CSC Holdings LLC, 8.5%, 2014      50,000        55,375   
CSC Holdings LLC, 8.5%, 2015      15,000        16,200   
DIRECTV Holdings LLC, 5.875%, 2019      40,000        44,363   
Insight Communications Co., Inc.,
9.375%, 2018 (n)		      30,000        32,925   
Mediacom LLC, 9.125%, 2019      30,000        31,650   
Myriad International Holdings B.V.,
6.375%, 2017 (n)		      100,000        108,000   
TCI Communications, Inc., 9.8%, 2012      81,000        85,180   
Time Warner Cable, Inc., 8.25%, 2019      120,000        149,664   
Videotron LTEE, 6.875%, 2014      15,000        15,169   
Virgin Media Finance PLC, 9.125%, 2016      100,000        105,250   
    

 

 

  
     $ 835,563   
    

 

 

  
Chemicals – 2.0%     
Celanese U.S. Holdings LLC, 6.625%, 2018    $ 55,000      $ 58,025   
Dow Chemical Co., 8.55%, 2019      170,000        219,205   
Hexion U.S. Finance Corp/Hexion Nova Scotia Finance, 8.875%, 2018      55,000        57,200   
Hexion U.S. Finance Corp/Hexion Nova Scotia Finance, 9%, 2020      5,000        5,125   
Huntsman International LLC, 8.625%, 2021      50,000        54,375   
Lyondell Chemical Co., 11%, 2018      124,207        139,112   
Momentive Performance Materials, Inc., 12.5%, 2014      44,000        47,850   
Issuer    Shares/Par     Value ($)  
    
BONDS – continued     
Chemicals – continued     
Momentive Performance Materials, Inc., 11.5%, 2016    $ 44,000      $ 46,860   
Polypore International, Inc., 7.5%, 2017      30,000        31,725   
    

 

 

  
     $ 659,477   
    

 

 

  
Computer Software – 0.3%     
Oracle Corp., 5.375%, 2040 (n)    $ 66,000      $ 66,738   
Syniverse Holdings, Inc., 9.125%, 2019 (n)      20,000        20,800   
    

 

 

  
     $ 87,538   
    

 

 

  
Computer Software – Systems – 0.1%     
DuPont Fabros Technology, Inc., REIT,
8.5%, 2017		    $ 30,000      $ 32,775   
Eagle Parent, Inc., 8.625%, 2019 (z)      15,000        14,456   
    

 

 

  
     $ 47,231   
    

 

 

  
Conglomerates – 0.4%     
Amsted Industries, Inc., 8.125%, 2018 (n)    $ 30,000      $ 31,500   
Griffon Corp., 7.125%, 2018 (n)      30,000        30,113   
Pinafore LLC, 9%, 2018 (n)      60,000        64,650   
    

 

 

  
     $ 126,263   
    

 

 

  
Consumer Products – 0.7%     
ACCO Brands Corp., 10.625%, 2015    $ 5,000      $ 5,581   
Easton-Bell Sports, Inc., 9.75%, 2016      30,000        33,075   
Elizabeth Arden, Inc., 7.375%, 2021      25,000        26,031   
Libbey Glass, Inc., 10%, 2015      27,000        29,295   
Visant Corp., 10%, 2017      25,000        25,875   
Whirlpool Corp., 8%, 2012      98,000        103,545   
    

 

 

  
     $ 223,402   
    

 

 

  
Consumer Services – 1.1%     
Realogy Corp., 10.5%, 2014    $ 9,000      $ 8,910   
Realogy Corp., 11.5%, 2017      25,000        25,375   
Service Corp. International, 7%, 2017      80,000        86,200   
Service Corp. International, 7.625%, 2018      39,000        42,803   
Western Union Co., 5.4%, 2011      210,000        213,786   
    

 

 

  
     $ 377,074   
    

 

 

  
Containers – 1.0%     
Graham Packaging Co. LP/GPC Capital Corp., 9.875%, 2014    $ 20,000      $ 20,525   
Graham Packaging Co. LP/GPC Capital Corp., 8.25%, 2018      10,000        11,125   
Greif, Inc., 6.75%, 2017      145,000        150,800   
Owens-Illinois, Inc., 7.375%, 2016      20,000        21,750   
Packaging Dynamics Corp., 8.75%, 2016 (z)      15,000        15,225   
Reynolds Group, 9%, 2019 (n)      110,000        108,625   
    

 

 

  
     $ 328,050   
    

 

 

  
Defense Electronics – 0.8%     
BAE Systems Holdings, Inc., 5.2%, 2015 (n)    $ 169,000      $ 183,484   
BAE Systems Holdings, Inc., 6.375%, 2019 (n)      40,000        45,458   
ManTech International Corp., 7.25%, 2018      40,000        41,800   
    

 

 

  
     $ 270,742   
    

 

 

  
 

 

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Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
    
BONDS – continued     
Electronics – 0.3%     
Freescale Semiconductor, Inc.,
10.125%, 2018 (n)		    $ 13,000      $ 14,430   
Freescale Semiconductor, Inc., 9.25%, 2018 (n)      20,000        21,550   
Jabil Circuit, Inc., 7.75%, 2016      25,000        27,688   
Sensata Technologies B.V., 6.5%, 2019 (z)      30,000        29,925   
    

 

 

  
     $ 93,593   
    

 

 

  
Emerging Market Quasi-Sovereign – 1.7%     
Banco do Brasil S.A., 5.875%, 2022 (z)    $ 200,000      $ 197,800   
IIRSA Norte Finance Ltd., 8.75%, 2024      107,692        121,315   
Petrobras International Finance Co.,
7.875%, 2019		      66,000        79,920   
Petrobras International Finance Co.,
6.75%, 2041		      48,000        51,221   
Petroleos Mexicanos, 5.5%, 2021      100,000        104,850   
    

 

 

  
     $ 555,106   
    

 

 

  
Emerging Market Sovereign – 0.7%     
Republic of Hungary, 6.375%, 2021    $ 114,000      $ 120,270   
Republic of Poland, 5.125%, 2021      6,000        6,203   
Republic of South Africa, 5.5%, 2020      100,000        109,250   
United Mexican States, 5.75%, 2110      4,000        3,730   
    

 

 

  
     $ 239,453   
    

 

 

  
Energy – Independent – 3.3%     
Anadarko Petroleum Corp., 5.95%, 2016    $ 120,000      $ 135,070   
ATP Oil & Gas Corp., 11.875%, 2015      15,000        15,225   
Bill Barrett Corp., 9.875%, 2016      30,000        33,600   
Carrizo Oil & Gas, Inc., 8.625%, 2018      30,000        30,900   
Chaparral Energy, Inc., 8.875%, 2017      45,000        46,575   
Concho Resources, Inc., 8.625%, 2017      20,000        21,800   
Concho Resources, Inc., 6.5%, 2022      40,000        40,100   
Connacher Oil & Gas Ltd., 8.5%, 2019 (z)      15,000        14,250   
Continental Resources, Inc., 8.25%, 2019      30,000        32,775   
Denbury Resources, Inc., 8.25%, 2020      35,000        38,150   
Energy XXI Gulf Coast, Inc., 9.25%, 2017 (n)      35,000        37,275   
Harvest Operations Corp., 6.875%, 2017 (n)      50,000        51,625   
Hilcorp Energy I LP, 9%, 2016 (n)      40,000        41,850   
LINN Energy LLC, 6.5%, 2019 (z)      10,000        9,900   
LINN Energy LLC, 8.625%, 2020      15,000        16,275   
LINN Energy LLC, 7.75%, 2021 (n)      23,000        23,920   
Newfield Exploration Co., 6.625%, 2014      40,000        40,600   
Newfield Exploration Co., 6.625%, 2016      30,000        30,975   
Newfield Exploration Co., 6.875%, 2020      10,000        10,625   
OPTI Canada, Inc., 9.75%, 2013 (n)      30,000        29,775   
OPTI Canada, Inc., 8.25%, 2014 (d)      65,000        26,975   
Petrohawk Energy Corp., 7.25%, 2018      10,000        10,263   
Pioneer Natural Resources Co., 6.875%, 2018      35,000        37,789   
Pioneer Natural Resources Co., 7.5%, 2020      90,000        101,413   
QEP Resources, Inc., 6.875%, 2021      60,000        63,300   
Quicksilver Resources, Inc., 9.125%, 2019      30,000        32,700   
Range Resources Corp., 8%, 2019      25,000        27,125   
SandRidge Energy, Inc., 8%, 2018 (n)      55,000        56,100   
Talisman Energy, Inc., 7.75%, 2019      10,000        12,187   
Whiting Petroleum Corp., 6.5%, 2018      15,000        15,600   
    

 

 

  
     $ 1,084,717   
    

 

 

  
Issuer    Shares/Par     Value ($)  
    
BONDS – continued     
Energy – Integrated – 1.0%     
BP Capital Markets PLC, 4.5%, 2020    $ 29,000      $ 29,574   
BP Capital Markets PLC, 4.742%, 2021      90,000        92,844   
Cenovus Energy, Inc., 4.5%, 2014      30,000        32,559   
Hess Corp., 8.125%, 2019      30,000        37,959   
Petro-Canada Financial Partnership, 5%, 2014      110,000        120,702   
    

 

 

  
     $ 313,638   
    

 

 

  
Engineering – Construction – 0.1%     
B-Corp. Merger Sub, Inc., 8.25%, 2019 (z)    $ 25,000      $ 24,750   
    

 

 

  
Entertainment – 0.4%     
AMC Entertainment, Inc., 8.75%, 2019    $ 60,000      $ 63,300   
AMC Entertainment, Inc., 9.75%, 2020 (n)      15,000        15,338   
Cinemark USA, Inc., 8.625%, 2019      45,000        49,275   
    

 

 

  
     $ 127,913   
    

 

 

  
Financial Institutions – 2.8%     
CIT Group, Inc., 5.25%, 2014 (n)    $ 45,000      $ 44,775   
CIT Group, Inc., 7%, 2016      60,000        59,775   
CIT Group, Inc., 7%, 2017      150,000        149,625   
CIT Group, Inc., 6.625%, 2018 (n)      35,000        36,486   
General Electric Capital Corp., 6%, 2019      30,000        33,218   
General Electric Capital Corp., 5.5%, 2020      95,000        101,735   
General Electric Capital Corp., 6.375% to 2017, FRN to 2067      50,000        51,250   
International Lease Finance Corp.,
8.75%, 2017		      40,000        43,750   
International Lease Finance Corp.,
7.125%, 2018 (n)		      47,000        50,290   
International Lease Finance Corp.,
8.25%, 2020		      5,000        5,400   
Nationstar Mortgage LLC, 10.875%, 2015 (n)      50,000        52,000   
ORIX Corp., 5.48%, 2011      130,000        131,987   
SLM Corp., 8.45%, 2018      15,000        16,464   
SLM Corp., 8%, 2020      60,000        64,428   
Springleaf Finance Corp., 6.9%, 2017      100,000        91,750   
    

 

 

  
     $ 932,933   
    

 

 

  
Food & Beverages – 2.1%     
Anheuser-Busch InBev S.A., 7.75%, 2019    $ 140,000      $ 176,126   
ARAMARK Corp., 8.5%, 2015      30,000        31,161   
B&G Foods, Inc., 7.625%, 2018      55,000        57,886   
Conagra Foods, Inc., 5.875%, 2014      150,000        164,745   
Kraft Foods, Inc., 6.125%, 2018      80,000        91,744   
Pinnacle Foods Finance LLC, 9.25%, 2015      45,000        46,688   
Pinnacle Foods Finance LLC, 10.625%, 2017      10,000        10,663   
Pinnacle Foods Finance LLC, 8.25%, 2017      10,000        10,375   
TreeHouse Foods, Inc., 7.75%, 2018      30,000        31,875   
Tyson Foods, Inc., 6.85%, 2016      70,000        77,350   
    

 

 

  
     $ 698,613   
    

 

 

  
Food & Drug Stores – 0.3%     
CVS Caremark Corp., 5.75%, 2041    $ 110,000      $ 108,156   
    

 

 

  
Forest & Paper Products – 1.0%     
Boise, Inc., 8%, 2020    $ 30,000      $ 31,500   
Cascades, Inc., 7.75%, 2017      25,000        26,063   
 

 

6

Table of Contents

MFS Strategic Income Series

 

Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
    
BONDS – continued     
Forest & Paper Products – continued   
Georgia-Pacific Corp., 8%, 2024    $ 30,000      $ 35,626   
Georgia-Pacific Corp., 7.25%, 2028      10,000        11,111   
Graphic Packaging Holding Co.,
7.875%, 2018		      20,000        21,200   
Inversiones CMPC S.A., 4.75%, 2018 (n)      103,000        102,901   
Votorantim Participacoes S.A.,
6.75%, 2021 (n)		      100,000        106,000   
    

 

 

  
     $ 334,401   
    

 

 

  
Gaming & Lodging – 2.1%     
American Casinos, Inc., 7.5%, 2021 (n)    $ 25,000      $ 25,781   
Boyd Gaming Corp., 7.125%, 2016      25,000        23,063   
Firekeepers Development Authority, 13.875%, 2015 (n)      30,000        34,650   
Fontainebleau Las Vegas Holdings LLC, 10.25%, 2015 (d)(n)      65,000        33   
GWR Operating Partnership LLP,
10.875%, 2017		      20,000        21,650   
Harrah’s Operating Co., Inc., 11.25%, 2017      75,000        82,781   
Harrah’s Operating Co., Inc., 10%, 2018      2,000        1,725   
Harrah’s Operating Co., Inc., 10%, 2018      29,000        26,173   
Host Hotels & Resorts, Inc., 6.75%, 2016      30,000        30,975   
Host Hotels & Resorts, Inc., 9%, 2017      30,000        33,750   
Marriott International, Inc., 5.625%, 2013      80,000        85,323   
MGM Mirage, 10.375%, 2014      5,000        5,675   
MGM Mirage, 11.125%, 2017      10,000        11,425   
MGM Resorts International, 11.375%, 2018      25,000        28,063   
MGM Resorts International, 9%, 2020      30,000        32,850   
Penn National Gaming, Inc., 8.75%, 2019      35,000        38,063   
Seven Seas Cruises S. de R.L.,
9.125%, 2019 (z)		      10,000        10,300   
Station Casinos, Inc., 6.5%, 2014 (d)      85,000        9   
Station Casinos, Inc., 6.875%, 2016 (d)      180,000        18   
Wyndham Worldwide Corp., 6%, 2016      50,000        53,099   
Wyndham Worldwide Corp., 5.75%, 2018      90,000        92,933   
Wyndham Worldwide Corp., 7.375%, 2020      30,000        33,266   
Wynn Las Vegas LLC, 7.75%, 2020      30,000        32,588   
    

 

 

  
     $ 704,193   
    

 

 

  
Industrial – 0.4%     
Altra Holdings, Inc., 8.125%, 2016    $ 25,000      $ 27,000   
Mueller Water Products, Inc., 7.375%, 2017      11,000        10,340   
Mueller Water Products, Inc., 8.75%, 2020      26,000        28,145   
Steelcase, Inc., 6.5%, 2011      61,000        61,340   
    

 

 

  
     $ 126,825   
    

 

 

  
Insurance – 2.7%     
Aflac, Inc., 6.45%, 2040    $ 60,000      $ 59,535   
Allianz AG, 5.5% to 2014, FRN to 2049    EUR 105,000        151,124   
ING Groep N.V., 5.775% to 2015,
FRN to 2049		    $ 210,000        193,200   
Metropolitan Life Global Funding,
2.875%, 2012 (n)		      140,000        143,074   
Metropolitan Life Global Funding,
5.125%, 2014 (n)		      40,000        43,702   
Issuer    Shares/Par     Value ($)  
    
BONDS – continued     
Insurance – continued     
Principal Financial Group, Inc.,
8.875%, 2019		    $ 80,000      $ 101,762   
Prudential Financial, Inc., 6.2%, 2015      80,000        89,563   
Unum Group, 7.125%, 2016      90,000        103,305   
    

 

 

  
     $ 885,265   
    

 

 

  
Insurance – Property & Casualty – 2.7%     
ACE INA Holdings, Inc., 2.6%, 2015    $ 150,000      $ 150,635   
Aon Corp., 3.5%, 2015      130,000        133,621   
AXIS Capital Holdings Ltd., 5.75%, 2014      130,000        140,472   
AXIS Capital Holdings Ltd., 5.875%, 2020      40,000        41,020   
CNA Financial Corp., 5.875%, 2020      100,000        103,974   
Liberty Mutual Group, Inc.,
10.75% to 2038, FRN to 2088 (n)		      50,000        66,375   
PartnerRe Ltd., 5.5%, 2020      66,000        66,653   
Travelers Cos., Inc., 3.9%, 2020      150,000        145,000   
USI Holdings Corp., 9.75%, 2015 (z)      30,000        30,075   
    

 

 

  
     $ 877,825   
    

 

 

  
International Market Quasi-Sovereign – 2.5%     
Canada Housing Trust, 4.6%, 2011 (n)    CAD 63,000      $ 65,769   
EDF Energies Nouvelles S.A.,
6.5%, 2019 (n)		    $ 120,000        140,262   
ING Bank N.V., 3.9%, 2014 (n)      150,000        160,489   
Irish Life & Permanent PLC,
3.6%, 2013 (e)(n)		      400,000        336,284   
Westpac Banking Corp., 3.45%, 2014 (n)      100,000        106,400   
    

 

 

  
     $ 809,204   
    

 

 

  
International Market Sovereign – 12.6%     
Federal Republic of Germany,
3.75%, 2015		    EUR 179,000      $ 275,099   
Federal Republic of Germany,
4.25%, 2018		    EUR 73,000        116,443   
Federal Republic of Germany,
6.25%, 2030		    EUR 89,000        173,668   
Government of Canada, 4.5%, 2015    CAD 60,000        67,796   
Government of Canada, 4.25%, 2018    CAD 31,000        35,269   
Government of Canada, 5.75%, 2033    CAD 11,000        15,231   
Government of Japan, 1.3%, 2014    JPY 28,850,000        370,459   
Government of Japan, 1.7%, 2017    JPY 41,100,000        544,134   
Government of Japan, 2.2%, 2027    JPY 13,200,000        175,255   
Government of Japan, 2.4%, 2037    JPY 13,900,000        186,297   
Kingdom of Belgium, 5.5%, 2017    EUR 79,000        125,934   
Kingdom of Spain, 4.6%, 2019    EUR 118,000        164,388   
Kingdom of the Netherlands, 3.75%, 2014    EUR 198,000        301,888   
Kingdom of the Netherlands, 5.5%, 2028    EUR 25,000        43,997   
Republic of Austria, 4.65%, 2018    EUR 96,000        152,245   
Republic of France, 6%, 2025    EUR 77,000        138,773   
Republic of France, 4.75%, 2035    EUR 103,000        162,480   
Republic of Ireland, 4.5%, 2020    EUR 35,000        31,849   
Republic of Italy, 4.75%, 2013    EUR 197,000        293,878   
Republic of Italy, 5.25%, 2017    EUR 262,000        400,494   
United Kingdom Treasury, 8%, 2015    GBP 94,000        190,024   
United Kingdom Treasury, 8%, 2021    GBP 36,000        80,576   
United Kingdom Treasury, 4.25%, 2036    GBP 50,000        79,917   
    

 

 

  
     $ 4,126,094   
    

 

 

  
 

 

7

Table of Contents

MFS Strategic Income Series

 

Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
    
BONDS – continued     
Local Authorities – 0.6%     
Louisiana Gas & Fuels Tax Rev.
(Build America Bonds), FRN, 3%, 2043		    $ 100,000      $ 101,445   
Province of Ontario, 5.45%, 2016      95,000        108,857   
    

 

 

  
     $ 210,302   
    

 

 

  
Machinery & Tools – 0.8%     
Atlas Copco AB, 5.6%, 2017 (n)    $ 135,000      $ 150,188   
Case Corp., 7.25%, 2016      15,000        16,331   
Case New Holland, Inc., 7.875%, 2017 (n)      65,000        71,500   
Rental Service Corp., 9.5%, 2014      20,000        20,500   
RSC Equipment Rental, Inc., 8.25%, 2021      10,000        9,950   
    

 

 

  
     $ 268,469   
    

 

 

  
Major Banks – 4.9%     
BAC Capital Trust XIV, 5.63% to 2012,
FRN to 2049		    $ 240,000      $ 178,500   
Bank of America Corp., 7.375%, 2014      50,000        56,210   
Bank of America Corp., 8% to 2018,
FRN to 2049		      90,000        93,988   
Barclays Bank PLC, 5.125%, 2020      100,000        101,494   
BNP Paribas, 5.186% to 2015, FRN to 2049 (n)      26,000        23,933   
BNP Paribas, 7.195% to 2037, FRN to 2049 (n)      100,000        96,500   
Commonwealth Bank of Australia,
5%, 2019 (n)		      80,000        83,249   
Goldman Sachs Group, Inc., 6%, 2014      50,000        54,848   
Intesa Sanpaolo S.p.A., FRN, 2.657%, 2014 (n)      100,000        99,755   
JPMorgan Chase & Co., 4.625%, 2021      90,000        89,272   
JPMorgan Chase Capital XXII, 6.45%, 2087      71,000        71,538   
JPMorgan Chase Capital XXVII, 7%, 2039      20,000        19,975   
Macquarie Group Ltd., 6%, 2020 (n)      108,000        108,298   
Merrill Lynch & Co., Inc., 6.4%, 2017      30,000        32,747   
Morgan Stanley, 6%, 2014      100,000        108,912   
Morgan Stanley, 5.625%, 2019      100,000        102,615   
Royal Bank of Scotland Group PLC,
7.648% to 2031, FRN to 2049		      55,000        49,500   
Standard Chartered PLC, 3.85%, 2015 (n)      100,000        103,519   
UFJ Finance Aruba AEC, 6.75%, 2013      70,000        76,916   
Wells Fargo & Co., 7.98% to 2018,
FRN to 2049		      49,000        52,920   
    

 

 

  
     $ 1,604,689   
    

 

 

  
Medical & Health Technology & Services – 2.8%     
Biomet, Inc., 10%, 2017    $ 5,000      $ 5,450   
Biomet, Inc., 10.375%, 2017 (p)      15,000        16,536   
Biomet, Inc., 11.625%, 2017      55,000        60,911   
Cardinal Health, Inc., 5.8%, 2016      94,000        106,419   
CDRT Merger Sub, Inc., 8.125%, 2019 (z)      10,000        10,000   
Davita, Inc., 6.375%, 2018      45,000        45,563   
Davita, Inc., 6.625%, 2020      10,000        10,175   
Fresenius Medical Care AG & Co. KGaA,
9%, 2015 (n)		      20,000        22,625   
HCA, Inc., 9.25%, 2016      55,000        58,369   
HCA, Inc., 8.5%, 2019      85,000        93,925   
HealthSouth Corp., 8.125%, 2020      75,000        80,531   
Hospira, Inc., 6.05%, 2017      60,000        68,100   
McKesson Corp., 5.7%, 2017      40,000        45,340   
Issuer    Shares/Par     Value ($)  
    
BONDS – continued     
Medical & Health Technology & Services – continued     
Owens & Minor, Inc., 6.35%, 2016    $ 70,000      $ 73,485   
United Surgical Partners International, Inc., 8.875%, 2017      15,000        15,675   
United Surgical Partners International, Inc., 9.25%, 2017 (p)      15,000        15,675   
Universal Health Services, Inc., 7%, 2018      15,000        15,450   
Universal Hospital Services, Inc.,
8.5%, 2015 (p)		      55,000        56,650   
Universal Hospital Services, Inc., FRN,
3.777%, 2015		      10,000        9,600   
Vanguard Health Systems, Inc., 8%, 2018      55,000        56,788   
VWR Funding, Inc., 10.25%, 2015 (p)      47,531        49,670   
    

 

 

  
     $ 916,937   
    

 

 

  
Metals & Mining – 1.7%     
ArcelorMittal, 5.5%, 2021    $ 210,000      $ 210,328   
Arch Coal, Inc., 7%, 2019 (z)      35,000        34,913   
Arch Western Finance LLC, 6.75%, 2013      17,000        17,021   
Cloud Peak Energy, Inc., 8.25%, 2017      35,000        37,450   
Cloud Peak Energy, Inc., 8.5%, 2019      50,000        54,061   
Consol Energy, Inc., 8%, 2017      20,000        21,800   
Consol Energy, Inc., 8.25%, 2020      15,000        16,350   
Novelis, Inc., 8.375%, 2017      15,000        16,013   
Novelis, Inc., 8.75%, 2020      5,000        5,400   
Southern Copper Corp., 6.75%, 2040      100,000        97,281   
Vale Overseas Ltd., 6.875%, 2039      33,000        35,864   
    

 

 

  
     $ 546,481   
    

 

 

  
Mortgage-Backed – 1.5%     
Fannie Mae, 6%, 2017    $ 49,277      $ 53,940   
Fannie Mae, 5.5%, 2020 - 2034      319,226        347,393   
Freddie Mac, 4.224%, 2020      94,792        98,619   
    

 

 

  
     $ 499,952   
    

 

 

  
Natural Gas – Distribution – 0.2%     
AmeriGas Partners LP, 7.125%, 2016    $ 55,000      $ 56,650   
    

 

 

  
Natural Gas – Pipeline – 1.7%     
Crosstex Energy, Inc., 8.875%, 2018    $ 45,000      $ 47,925   
El Paso Corp., 7%, 2017      45,000        50,912   
El Paso Corp., 7.75%, 2032      35,000        40,715   
Energy Transfer Equity LP, 7.5%, 2020      55,000        58,300   
Enterprise Products Partners LP,
8.375% to 2016, FRN to 2066		      20,000        21,650   
Enterprise Products Partners LP,
7.034% to 2018, FRN to 2068		      12,000        12,615   
Kinder Morgan Energy Partners LP,
5.85%, 2012		      97,000        102,210   
Kinder Morgan Energy Partners LP,
6.375%, 2041		      130,000        133,074   
Spectra Energy Capital LLC, 8%, 2019      66,000        80,735   
    

 

 

  
     $ 548,136   
    

 

 

  
Network & Telecom – 2.0%     
AT&T, Inc., 5.5%, 2018    $ 70,000      $ 78,073   
CenturyLink, Inc., 7.6%, 2039      10,000        9,619   
Cincinnati Bell, Inc., 8.25%, 2017      10,000        10,050   
 

 

8

Table of Contents

MFS Strategic Income Series

 

Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
    
BONDS – continued     
Network & Telecom – continued     
Cincinnati Bell, Inc., 8.75%, 2018    $ 30,000      $ 28,500   
Citizens Communications Co., 9%, 2031      15,000        15,375   
France Telecom, 4.375%, 2014      80,000        86,636   
Frontier Communications Corp., 8.125%, 2018      40,000        43,450   
Qwest Communications International, Inc.,
8%, 2015		      10,000        10,875   
Qwest Communications International, Inc., 7.125%, 2018 (n)      35,000        37,581   
Qwest Corp., 7.5%, 2014      65,000        72,881   
Telefonica S.A., 5.877%, 2019      80,000        84,008   
Verizon Communications, Inc., 8.75%, 2018      80,000        104,088   
Windstream Corp., 8.125%, 2018      5,000        5,300   
Windstream Corp., 7.75%, 2020      45,000        47,138   
Windstream Corp., 7.75%, 2021      10,000        10,450   
    

 

 

  
     $ 644,024   
    

 

 

  
Oil Services – 0.3%     
McJunkin Red Man Holding Corp.,
9.5%, 2016 (n)		    $ 45,000      $ 45,788   
Pioneer Drilling Co., 9.875%, 2018      45,000        48,150   
Unit Corp., 6.625%, 2021      5,000        5,000   
    

 

 

  
     $ 98,938   
    

 

 

  
Other Banks & Diversified Financials – 3.0%     
Banco Santander U.S. Debt S.A.U.,
2.991%, 2013 (n)		    $ 200,000      $ 199,545   
Bosphorus Financial Services Ltd., FRN,
2.06%, 2012 (z)		      18,750        18,601   
Citigroup, Inc., 6.375%, 2014      80,000        88,458   
Citigroup, Inc., 6.01%, 2015      60,000        66,026   
Citigroup, Inc., 8.5%, 2019      52,000        64,462   
Groupe BPCE S.A., 12.5% to 2019,
FRN to 2049 (n)		      102,000        116,725   
Lloyds TSB Bank PLC, 5.8%, 2020 (n)      110,000        110,159   
Santander Holdings USA, Inc., 4.625%, 2016      10,000        10,050   
Santander UK PLC, 8.963% to 2030,
FRN to 2049		      68,000        75,140   
Svenska Handelsbanken AB, 4.875%, 2014 (n)      110,000        118,818   
UBS Preferred Funding Trust V,
6.243% to 2016, FRN to 2049		      120,000        117,600   
    

 

 

  
     $ 985,584   
    

 

 

  
Pharmaceuticals – 1.6%     
Celgene Corp., 3.95%, 2020    $ 130,000      $ 125,491   
Pfizer, Inc., 6.2%, 2019      160,000        187,160   
Roche Holdings, Inc., 6%, 2019 (n)      140,000        161,303   
Teva Pharmaceutical Finance LLC, 5.55%, 2016      39,000        43,895   
    

 

 

  
     $ 517,849   
    

 

 

  
Pollution Control – 0.3%     
Republic Services, Inc., 5.25%, 2021    $ 80,000      $ 84,526   
    

 

 

  
Printing & Publishing – 0.2%     
American Media, Inc., 13.5%, 2018 (z)    $ 3,347      $ 3,606   
McClatchy Co., 11.5%, 2017      20,000        21,250   
Issuer    Shares/Par     Value ($)  
    
BONDS – continued     
Printing & Publishing – continued     
Nielsen Finance LLC, 11.5%, 2016    $ 13,000      $ 15,210   
Nielsen Finance LLC, 7.75%, 2018 (n)      10,000        10,500   
    

 

 

  
     $ 50,566   
    

 

 

  
Railroad & Shipping – 0.5%     
Kansas City Southern Railway, 8%, 2015    $ 45,000      $ 48,263   
Kansas City Southern Railway,
6.125%, 2021 (z)		      15,000        15,000   
Panama Canal Railway Co., 7%, 2026 (n)      92,600        85,118   
    

 

 

  
     $ 148,381   
    

 

 

  
Real Estate – 1.7%     
CNL Lifestyle Properties, Inc., REIT,
7.25%, 2019 (n)		    $ 15,000      $ 13,575   
Entertainment Properties Trust, REIT,
7.75%, 2020		      30,000        33,825   
HCP, Inc., REIT, 5.375%, 2021      95,000        97,986   
Kennedy Wilson, Inc., 8.75%, 2019 (n)      20,000        20,125   
Kimco Realty Corp., REIT, 6.875%, 2019      22,000        25,563   
MPT Operating Partnership, 6.875%, 2021 (n)      20,000        19,650   
Simon Property Group, Inc., REIT, 6.1%, 2016      190,000        218,223   
WEA Finance LLC, REIT, 5.4%, 2012 (n)      50,000        52,540   
WEA Finance LLC, REIT, 6.75%, 2019 (n)      60,000        68,040   
    

 

 

  
     $ 549,527   
    

 

 

  
Retailers – 2.0%     
AutoZone, Inc., 6.5%, 2014    $ 150,000      $ 168,046   
Burlington Coat Factory Warehouse Corp., 10%, 2019 (n)      25,000        24,750   
Limited Brands, Inc., 5.25%, 2014      25,000        26,125   
Limited Brands, Inc., 6.9%, 2017      25,000        26,781   
Limited Brands, Inc., 6.95%, 2033      15,000        13,800   
Macy’s, Inc., 8.125%, 2015      120,000        142,350   
Neiman Marcus Group, Inc., 10.375%, 2015      35,000        36,750   
QVC, Inc., 7.375%, 2020 (n)      25,000        26,313   
Sally Beauty Holdings, Inc., 10.5%, 2016      45,000        48,038   
Staples, Inc., 9.75%, 2014      80,000        95,239   
Toys “R” Us Property Co. II LLC, 8.5%, 2017      15,000        15,675   
Toys “R” Us, Inc., 10.75%, 2017      30,000        33,375   
Yankee Holdings Corp., 10.25%, 2016 (n)(p)      10,000        10,025   
    

 

 

  
     $ 667,267   
    

 

 

  
Specialty Stores – 0.1%     
Michaels Stores, Inc., 11.375%, 2016    $ 25,000      $ 26,625   
Michaels Stores, Inc., 7.75%, 2018 (n)      20,000        20,050   
    

 

 

  
     $ 46,675   
    

 

 

  
Supermarkets – 0.3%     
Delhaize Group, 5.875%, 2014    $ 90,000      $ 98,729   
    

 

 

  
Supranational – 0.4%     
Central American Bank, 4.875%, 2012 (n)    $ 140,000      $ 142,115   
    

 

 

  
Telecommunications – Wireless – 2.2%   
American Tower Corp., 4.625%, 2015    $ 40,000      $ 42,110   
Clearwire Corp., 12%, 2015 (n)      60,000        64,275   
Cricket Communications, Inc., 7.75%, 2020      15,000        14,700   
 

 

9

Table of Contents

MFS Strategic Income Series

 

Portfolio of Investments (unaudited) – continued

 

Issuer    Shares/Par     Value ($)  
    
BONDS – continued     
Telecommunications – Wireless – continued   
Crown Castle International Corp., 9%, 2015    $ 20,000      $ 21,700   
Crown Castle International Corp.,
7.125%, 2019		      85,000        89,461   
Crown Castle Towers LLC, 6.113%, 2020 (n)      104,000        113,476   
MetroPCS Wireless, Inc., 7.875%, 2018      30,000        31,763   
Nextel Communications, Inc., 7.375%, 2015      35,000        35,000   
NII Holdings, Inc., 10%, 2016      30,000        34,800   
NII Holdings, Inc., 8.875%, 2019      20,000        22,075   
NII Holdings, Inc., 7.625%, 2021      10,000        10,450   
Rogers Cable, Inc., 5.5%, 2014      79,000        86,995   
Sprint Capital Corp., 6.875%, 2028      15,000        14,213   
Sprint Nextel Corp., 8.375%, 2017      35,000        38,456   
Wind Acquisition Finance S.A.,
11.75%, 2017 (n)		      100,000        113,250   
    

 

 

  
     $ 732,724   
    

 

 

  
Telephone Services – 0.0%     
Cogent Communications Group, Inc.,
8.375%, 2018 (n)		    $ 10,000      $ 10,275   
    

 

 

  
Tobacco – 1.3%     
Altria Group, Inc., 9.25%, 2019    $ 130,000      $ 169,513   
Lorillard Tobacco Co., 8.125%, 2019      37,000        43,096   
Lorillard Tobacco Co., 6.875%, 2020      50,000        54,247   
Reynolds American, Inc., 6.75%, 2017      135,000        155,868   
    

 

 

  
     $ 422,724   
    

 

 

  
Transportation – 0.1%     
Navios South American Logistics, Inc.,
9.25%, 2019 (n)		    $ 16,000      $ 16,120   
    

 

 

  
Transportation – Services – 1.0%     
ACL I Corp., 10.625%, 2016 (p)(z)    $ 30,000      $ 26,713   
American Petroleum Tankers LLC,
10.25%, 2015		      14,000        14,630   
Commercial Barge Line Co., 12.5%, 2017      40,000        44,900   
Erac USA Finance Co., 6.375%, 2017 (n)      110,000        126,505   
Hertz Corp., 8.875%, 2014      5,000        5,125   
Hertz Corp., 7.5%, 2018 (n)      20,000        20,600   
Hertz Corp., 7.375%, 2021 (n)      25,000        25,438   
Navios Maritime Acquisition Corp.,
8.625%, 2017		      15,000        14,775   
Navios Maritime Acquisition Corp.,
8.625%, 2017 (z)		      10,000        9,850   
Navios Maritime Holdings, Inc., 8.875%, 2017      20,000        20,600   
Swift Services Holdings, Inc., 10%, 2018      20,000        21,150   
    

 

 

  
     $ 330,286   
    

 

 

  
U.S. Government Agencies and Equivalents – 1.7%     
National Credit Union Administration Guaranteed Note, 2.9%, 2020    $ 20,000      $ 19,963   
Small Business Administration, 6.35%, 2021      43,796        48,254   
Small Business Administration, 4.34%, 2024      98,010        103,359   
Small Business Administration, 4.99%, 2024      121,924        130,713   
Small Business Administration, 4.86%, 2025      140,094        149,839   
Issuer    Shares/Par     Value ($)  
    
BONDS – continued     
U.S. Government Agencies and Equivalents – continued   
Small Business Administration, 4.625%, 2025    $ 55,005      $ 58,469   
Small Business Administration, 5.11%, 2025      50,327        54,210   
    

 

 

  
     $ 564,807   
    

 

 

  
Utilities – Electric Power – 3.8%     
AES Corp., 8%, 2017    $ 55,000      $ 58,300   
Allegheny Energy, Inc., 5.75%, 2019 (n)      90,000        94,160   
Calpine Corp., 8%, 2016 (n)      35,000        37,800   
Calpine Corp., 7.875%, 2020 (n)      45,000        47,025   
CMS Energy Corp., 4.25%, 2015      90,000        92,570   
Covanta Holding Corp., 7.25%, 2020      20,000        20,919   
Duke Energy Corp., 3.35%, 2015      140,000        145,399   
Dynegy Holdings, Inc., 7.5%, 2015      10,000        8,150   
Dynegy Holdings, Inc., 7.75%, 2019      50,000        36,375   
Edison Mission Energy, 7%, 2017      60,000        48,600   
EDP Finance B.V., 6%, 2018 (n)      130,000        120,283   
Energy Future Holdings Corp., 10%, 2020      45,000        47,766   
Energy Future Holdings Corp., 10%, 2020      90,000        95,981   
Exelon Generation Co. LLC, 5.35%, 2014      40,000        43,294   
Exelon Generation Co. LLC, 5.2%, 2019      65,000        67,834   
FirstEnergy Corp., 6.45%, 2011      4,000        4,075   
GenOn Energy, Inc., 9.875%, 2020      55,000        57,475   
NRG Energy, Inc., 7.375%, 2017      30,000        31,425   
NRG Energy, Inc., 8.25%, 2020      60,000        61,200   
PPL WEM Holdings PLC, 3.9%, 2016 (n)      110,000        112,880   
Texas Competitive Electric Holdings Co. LLC, 11.5%, 2020 (n)      20,000        19,650   
    

 

 

  
     $ 1,251,161   
    

 

 

  
Total Bonds
(Identified Cost, $29,609,298)		      $ 30,718,425   
    

 

 

  
PREFERRED STOCKS – 0.3%     
Other Banks & Diversified Financials – 0.3%     
Ally Financial, Inc., 7% (n)      20      $ 18,796   
Ally Financial, Inc., “A”, 8.5%      2,110        52,813   
GMAC Capital Trust I, 8.125% (a)      1,075        27,520   
    

 

 

  
Total Preferred Stocks
(Identified Cost, $101,194)		      $ 99,129   
    

 

 

  
FLOATING RATE LOANS (g)(r) – 0.2%     
Broadcasting – 0.1%     
Gray Television, Inc., Term Loan B, 3.7%, 2014    $ 12,881      $ 12,630   
New Young Broadcasting Holding Co., Inc., Term Loan, 8%, 2015      12,688        12,743   
    

 

 

  
     $ 25,373   
    

 

 

  
Building – 0.0%     
Goodman Global Holdings, Inc., 2nd Lien Term Loan, 9%, 2017    $ 1,683      $ 1,726   
    

 

 

  
Financial Institutions – 0.0%     
Springleaf Finance Corp., Term Loan,
5.5%, 2017		    $ 14,622      $ 14,314   
    

 

 

  
 

 

10

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MFS Strategic Income Series

 

Portfolio of Investments (unaudited) – continued

 

Issuer            Shares/Par     Value ($)  
        
FLOATING RATE LOANS (g)(r) – continued   
Gaming & Lodging – 0.1%     
MGM Mirage, Term Loan, 7%, 2014    $ 23,116      $ 22,571   
        

 

 

  
Total Floating Rate Loans
(Identified Cost, $57,538)		      $ 63,984   
        

 

 

  
CONVERTIBLE PREFERRED STOCKS – 0.2%   
Automotive – 0.1%     
General Motors Co., 4.75%      810      $ 39,479   
        

 

 

  
Insurance – 0.1%     
MetLife, Inc., 5%      430      $ 35,445   
        

 

 

  

Total Convertible Preferred Stocks

(Identified Cost, $76,043)

      $ 74,924   
        

 

 

  
COMMON STOCKS – 0.1%     
Automotive – 0.0%     
Accuride Corp. (a)      791      $ 9,990   
        

 

 

  
Broadcasting – 0.1%       
New Young Broadcasting Holding Co., Inc. (a)      6      $ 16,200   
        

 

 

  
Printing & Publishing – 0.0%     
American Media Operations, Inc. (a)      858      $ 13,531   
        

 

 

  
Total Common Stocks
(Identified Cost, $34,490)		      $ 39,721   
        

 

 

  
Issuer   Strike
Price		     First
Exercise		      Shares/Par     Value ($)  
WARRANTS – 0.1%        
Broadcasting – 0.1%        
New Young Broadcasting Holding Co., Inc. (1 share for 1 warrant) (Identified Cost, $18,500 )(a)   $ 0.01        7/14/10         9      $ 24,300   
        

 

 

  
MONEY MARKET FUNDS (v) – 2.3%     
MFS Institutional Money Market Portfolio, 0.1%, at Cost and Net Asset Value          749,443      $ 749,443   
        

 

 

  
Total Investments
(Identified Cost, $30,646,506)		          $ 31,769,926   
        

 

 

  
OTHER ASSETS, LESS
LIABILITIES – 3.3%		            1,085,763   
        

 

 

  
Net Assets – 100.0%         $ 32,855,689   
        

 

 

  
 
(a)   Non-income producing security.

 

(d)   Non-income producing security – in default.

 

(e)   Guaranteed by Minister for Finance of Ireland.

 

(g)   The rate shown represents a weighted average coupon rate on settled positions at period end, unless otherwise indicated.

 

(i)   Interest only security for which the fund receives interest on notional principal (Par amount). Par amount shown is the notional principal and does not reflect the cost of the security.

 

(n)   Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be sold in the ordinary course of business in transactions exempt from registration, normally to qualified institutional buyers. At period end, the aggregate value of these securities was $6,764,356 representing 20.6% of net assets.
(p)   Payment-in-kind security.

 

(r)   Remaining maturities of floating rate loans may be less than stated maturities shown as a result of contractual or optional prepayments by the borrower. Such prepayments cannot be predicted with certainty. These loans may be subject to restrictions on resale. Floating rate loans generally have rates of interest which are determined periodically by reference to a base lending rate plus a premium.

 

(v)   Underlying affiliated fund that is available only to investment companies managed by MFS. The rate quoted is the annualized seven-day yield of the fund at period end.

 

(z)   Restricted securities are not registered under the Securities Act of 1933 and are subject to legal restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are subsequently registered. Disposal of these securities may involve time-consuming negotiations and prompt sale at an acceptable price may be difficult. The fund holds the following restricted securities:

 

Restricted Securities    Acquisition
Date		    Cost      Value  
ACL I Corp., 10.625%, 2016    2/10/11      $29,508         $26,713   
AMC Networks, Inc., 7.75%, 2021    6/22/11      6,000         6,270   
American Media, Inc., 13.5%, 2018    12/22/10      3,399         3,606   
ARCap REIT, Inc., CDO, “H”, FRN, 6.1%, 2045    9/21/04      2,772         2,772   
Arch Coal, Inc., 7%, 2019    6/08/11-6/10/11      35,149         34,913   
Associated Materials LLC, 9.125%, 2017    6/09/11      9,776         9,975   
B-Corp. Merger Sub, Inc., 8.25%, 2019    5/17/11-6/06/11      25,131         24,750   
Banco do Brasil S.A., 5.875%, 2022    5/19/11      197,408         197,800   
Bayview Financial Revolving Mortgage Loan Trust, FRN, 1.785%, 2040    3/01/06      180,427         100,914   
Bosphorus Financial Services Ltd., FRN, 2.06%, 2012    3/08/05      18,750         18,601   

 

11

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MFS Strategic Income Series

 

Portfolio of Investments (unaudited) – continued

 

Restricted Securities (continued)    Acquisition
Date		    Cost      Value  
CDRT Merger Sub, Inc., 8.125%, 2019    5/13/11      $10,000         $10,000   
Capital Trust Realty Ltd., CDO, 5.16%, 2035    9/16/10      110,134         110,605   
Clear Channel Communications, Inc., 9%, 2021    6/08/11      14,402         14,361   
Connacher Oil & Gas Ltd., 8.5%, 2019    5/20/11      15,000         14,250   
Crest Ltd., “A1” CDO, FRN, 0.726%, 2018    1/21/10      70,826         84,654   
EH Holding Corp., 7.625%, 2021    5/17/11      5,000         5,100   
Eagle Parent, Inc., 8.625%, 2019    5/11/11-5/24/11      15,186         14,456   
Falcon Franchise Loan LLC, FRN, 3.948%, 2025    1/29/03      25,970         41,460   
First Union National Bank Commercial Mortgage Trust, FRN, 1.636%, 2043    12/11/03      208         3   
General Motors Financial Co., Inc., 6.75%, 2018    5/26/11-6/06/11      25,149         25,063   
Kansas City Southern Railway, 6.125%, 2021    5/06/11-5/09/11      15,136         15,000   
LBI Media, Inc., 8.5%, 2017    7/18/07      29,651         23,550   
LINN Energy LLC, 6.5%, 2019    5/10/11      9,924         9,900   
Local TV Finance LLC, 9.25%, 2015    11/13/07-2/16/11      50,184         51,138   
Morgan Stanley Capital I, Inc., FRN, 1.387%, 2039    7/20/04      19,342         20,591   
Navios Maritime Acquisition Corp., 8.625%, 2017    5/12/11      10,222         9,850   
Packaging Dynamics Corp., 8.75%, 2016    1/25/11-2/01/11      15,221         15,225   
Prudential Securities Secured Financing Corp., FRN, 7.325%, 2013    12/06/04      175,388         171,717   
Salomon Brothers Mortgage Securities, Inc., FRN, 7.285%, 2032    1/07/05      137,702         143,112   
Sensata Technologies B.V., 6.5%, 2019    5/06/11-5/18/11      30,297         29,925   
Seven Seas Cruises S. de R.L., 9.125%, 2019    5/13/11      10,000         10,300   
USI Holdings Corp., 9.75%, 2015    5/07/07      30,408         30,075   
Total Restricted Securities            $1,276,649   
% of Net Assets            3.9%   

The following abbreviations are used in this report and are defined:

 

CDO   Collateralized Debt Obligation

 

FRN   Floating Rate Note. Interest rate resets periodically and may not be the rate reported at period end.

 

PLC   Public Limited Company

 

REIT   Real Estate Investment Trust

Abbreviations indicate amounts shown in currencies other than the U.S. dollar. All amounts are stated in U.S. dollars unless otherwise indicated. A list of abbreviations is shown below:

 

CAD   Canadian Dollar

 

CNY   Chinese Yuan Renminbi

 

EUR   Euro

 

GBP   British Pound

 

IDR   Indonesian Rupiah

 

JPY   Japanese Yen

 

SEK   Swedish Krona

 

12

Table of Contents

MFS Strategic Income Series

 

Portfolio of Investments (unaudited) – continued

 

Derivative Contracts at 6/30/11

Forward Foreign Currency Exchange Contracts at 6/30/11

 

Type    Currency      Counterparty    Contracts to
Deliver/Receive		    Settlement Date
Range		    In Exchange For      Contracts
at Value		      Net Unrealized
Appreciation
(Depreciation)		  
Asset Derivatives                     
BUY      CAD       Barclays Bank PLC    8,857    7/12/11    $ 9,008       $ 9,182       $ 174   
BUY      EUR       Citibank N.A.    4,938    7/12/11      7,078         7,159         81   
BUY      EUR       Credit Suisse Group    223,055    7/12/11      320,229         323,400         3,171   
BUY      EUR       JPMorgan Chase Bank N.A.    90,527    7/12/11      129,178         131,253         2,075   
SELL      EUR       HSBC Bank    3,476    7/12/11      5,048         5,040         8   
BUY      GBP       Credit Suisse Group    21,032    7/12/11      33,679         33,753         74   
SELL      GBP       Barclays Bank PLC    118,084    7/12/11      192,407         189,503         2,904   
SELL      GBP       Deutsche Bank AG    118,084    7/12/11      192,479         189,503         2,976   
BUY      IDR       JPMorgan Chase Bank N.A.    488,308,000    7/26/11      56,648         56,763         115   
BUY      JPY       Barclays Bank PLC    27,120,034    7/12/11      335,326         336,885         1,559   
                    

 

 

  
                       $ 13,137   
                      

 

 

  
Liability Derivatives                     
SELL      CAD       Goldman Sachs International    186,880    7/12/11    $ 193,232       $ 193,735       $ (503 ) 
BUY      CNY       Deutsche Bank AG    1,149,000    11/16/11      178,874         178,390         (484 ) 
SELL      EUR       Barclays Bank PLC    31,000    7/12/11      44,602         44,946         (344 ) 
SELL      EUR       Deutsche Bank AG    21,443    7/12/11      30,426         31,090         (664 ) 
SELL      EUR       Goldman Sachs International    4,938    7/12/11      7,098         7,159         (61 ) 
SELL      EUR       UBS AG    984,241    9/15/11      1,418,074         1,424,407         (6,333 ) 
SELL      GBP       Deutsche Bank AG    5,000    7/12/11      8,009         8,024         (15 ) 
SELL      JPY       Credit Suisse Group    37,227,390    7/12/11      442,899         462,439         (19,540 ) 
BUY      SEK       Credit Suisse Group    36,840    7/12/11      5,885         5,822         (63 ) 
                    

 

 

  
                       $ (28,007 ) 
                      

 

 

  

Swap Agreements at 6/30/11

 

Expiration      Notional
Amount		        Counterparty    Cash Flows to
Receive		    Cash Flows
to Pay		    Fair Value  
Asset Derivatives                    
Credit Default Swaps         
9/20/14        USD         160,000         Goldman Sachs International (a)    1.00% (fixed rate)    (1)      $3,517   
                     

 

 

  

 

(1)   Fund, as protection seller, to pay notional amount upon a defined credit event by Cargill, Inc., 7.375%, 10/01/25, an A2 rated bond. The fund entered into the contract to gain issuer exposure.

 

(a)   Net unamortized premiums received by the fund amounted to $237.

The credit ratings presented here are an indicator of the current payment/performance risk of the related swap, the reference obligation for which may be either a single security or, in the case of a credit default index, a basket of securities issued by corporate or sovereign issuers. Ratings are assigned to each reference security, including each individual security within a reference basket of securities utilizing ratings from Moody’s, Fitch, and Standard & Poor’s rating agencies and applying the following hierarchy. If all three agencies provide a rating, the middle rating (after dropping the highest and lowest ratings) is assigned; if two of the three agencies rate a security, the lower of the two is assigned. Ratings are shown in the S&P and Fitch scale (e.g., AAA). The ratings for a credit default index are calculated by MFS as a weighted average of the external credit ratings of the individual securities that compose the index’s reference basket of securities.

At June 30, 2011, the fund had sufficient cash and/or other liquid securities to cover any commitments under these derivative contracts.

See Notes to Financial Statements

 

13

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MFS Strategic Income Series

 

FINANCIAL STATEMENTS  |  STATEMENT OF ASSETS AND LIABILITIES (unaudited)

 

This statement represents your fund’s balance sheet, which details the assets and liabilities comprising the total value of the fund.

 

At 6/30/11

      

Assets

                  

Investments –

      

Non-affiliated issuers, at value (identified cost, $29,897,063)

      $31,020,483      

Underlying affiliated funds, at cost and value

      749,443            

Total investments, at value (identified cost, $30,646,506)

      $31,769,926            

Cash

      16,510      

Receivables for

      

Forward foreign currency exchange contracts

      13,137      

Investments sold

      772,607      

Fund shares sold

      13      

Interest

      493,237      

Swaps, at value (net unamortized premiums received, $237)

      3,517      

Receivable from investment adviser

      10,376      

Other assets

      314            

Total assets

               $33,079,637   

Liabilities

                  

Payables for

      

Forward foreign currency exchange contracts

      $28,007      

Investments purchased

      70,145      

Fund shares reacquired

      66,889      

Payable to affiliates

      

Shareholder servicing costs

      102      

Distribution and/or service fees

      89      

Payable for independent Trustees’ compensation

      215      

Accrued expenses and other liabilities

      58,501            

Total liabilities

               $223,948   

Net assets

               $32,855,689   

Net assets consist of

                  

Paid-in capital

      $31,036,062      

Unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies

      1,114,220      

Accumulated net realized gain (loss) on investments and foreign currency transactions

      (1,611,731 )    

Undistributed net investment income

      2,317,138            

Net assets

               $32,855,689   

Shares of beneficial interest outstanding

               3,145,696   

 

     Net assets      Shares
outstanding		      Net asset value
per share		  

Initial Class

      $26,375,586         2,516,472         $10.48   

Service Class

      6,480,103         629,224         10.30   

See Notes to Financial Statements

 

14

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MFS Strategic Income Series

 

FINANCIAL STATEMENTS  |  STATEMENT OF OPERATIONS (unaudited)

 

This statement describes how much your fund earned in investment income and accrued in expenses. It also describes any gains and/or losses generated by fund operations.

 

Six months ended 6/30/11      
Net investment income                  

Income

      

Interest

      $936,248      

Dividends

      2,008      

Dividends from underlying affiliated funds

      541            

Total investment income

               $938,797   

Expenses

      

Management fee

      $118,419      

Distribution and/or service fees

      8,195      

Shareholder servicing costs

      2,121      

Administrative services fee

      8,679      

Independent Trustees’ compensation

      744      

Custodian fee

      14,648      

Shareholder communications

      9,950      

Auditing fees

      30,798      

Legal fees

      313      

Miscellaneous

      5,024            

Total expenses

               $198,891   

Fees paid indirectly

      (18 )    

Reduction of expenses by investment adviser

      (55,097 )          

Net expenses

               $143,776   

Net investment income

               $795,021   

Realized and unrealized gain (loss) on investments and foreign currency transactions

                  

Realized gain (loss) (identified cost basis)

      

Investment transactions

      $414,813      

Futures contracts

      6,024      

Swap transactions

      844      

Foreign currency transactions

      (120,850 )          

Net realized gain (loss) on investments and foreign currency transactions

               $300,831   

Change in unrealized appreciation (depreciation)

      

Investments

      $42,411      

Futures contracts

      (4,965 )    

Swap transactions

      235      

Translation of assets and liabilities in foreign currencies

      4,087            

Net unrealized gain (loss) on investments and foreign currency translation

               $41,768   

Net realized and unrealized gain (loss) on investments and foreign currency

               $342,599   

Change in net assets from operations

               $1,137,620   

See Notes to Financial Statements

 

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FINANCIAL STATEMENTS  |  STATEMENTS OF CHANGES IN NET ASSETS

 

These statements describe the increases and/or decreases in net assets resulting from operations, any distributions, and any shareholder transactions.

 

    
 
 		 Six months ended
6/30/11
(unaudited		   
  
) 		     
 		 Year ended
12/31/10		   
  

Change in net assets

      

From operations

                  

Net investment income

      $795,021         $1,742,659   

Net realized gain (loss) on investments and foreign currency transactions

      300,831         618,592   

Net unrealized gain (loss) on investments and foreign currency translation

      41,768         929,304   

Change in net assets from operations

      $1,137,620         $3,290,555   

Distributions declared to shareholders

                  

From net investment income

      $—         $(1,656,044 ) 

Change in net assets from fund share transactions

      $(3,142,963 )       $(1,174,505 ) 

Total change in net assets

      $(2,005,343 )       $460,006   

Net assets

                  

At beginning of period

      34,861,032         34,401,026   

At end of period (including undistributed net investment income of $2,317,138 and
$1,522,117, respectively)

      $32,855,689         $34,861,032   

See Notes to Financial Statements

 

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FINANCIAL STATEMENTS  |  FINANCIAL HIGHLIGHTS

 

The financial highlights table is intended to help you understand the fund’s financial performance for the semiannual period and the past 5 fiscal years. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate by which an investor would have earned (or lost) on an investment in the fund share class (assuming reinvestment of all distributions) held for the entire period.

 

Initial Class     

Six months
ended

6/30/11

      Years ended 12/31  
          2010        2009        2008        2007        2006  
       (unaudited)                                             

Net asset value, beginning of period

        $10.14         $9.68           $8.72           $10.55           $10.67           $10.64   
Income (loss) from investment operations                                                                

Net investment income (d)

        $0.24         $0.50           $0.51           $0.56           $0.59           $0.57   

Net realized and unrealized gain (loss) on investments
and foreign currency

        0.10         0.45           1.41           (1.76 )         (0.20 )         0.11   

Total from investment operations

        $0.34         $0.95           $1.92           $(1.20 )         $0.39           $0.68   
Less distributions declared to shareholders                                                                

From net investment income

        $—         $(0.49 )         $(0.96 )         $(0.63 )         $(0.51 )         $(0.57 ) 

From net realized gain on investments

        —         —           —           —           —           (0.08 ) 

Total distributions declared to shareholders

        $—         $(0.49 )         $(0.96 )         $(0.63 )         $(0.51 )         $(0.65 ) 

Net asset value, end of period

        $10.48         $10.14           $9.68           $8.72           $10.55           $10.67   

Total return (%) (k)(r)(s)

        3.35 (n)       10.11           24.25           (12.12 )         3.79           6.67   
Ratios (%) (to average net assets)
and Supplemental data:		                                                                

Expenses before expense reductions (f)

        1.13 (a)       1.14           1.18           1.21           1.16           1.36   

Expenses after expense reductions (f)

        0.80 (a)       0.82           0.85           0.85           0.85           0.88   

Net investment income

        4.75 (a)       5.07           5.63           5.66           5.63           5.43   

Portfolio turnover

        19         46           52           41           49           66   

Net assets at end of period (000 omitted)

        $26,376         $28,120           $27,652           $20,331           $32,507           $30,008   

See Notes to Financial Statements

 

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Financial Highlights – continued

 

Service Class     

Six months
ended

6/30/11

      Years ended 12/31  
          2010        2009        2008        2007        2006  
       (unaudited)                                             

Net asset value, beginning of period

        $9.97         $9.53           $8.60           $10.40           $10.54           $10.52   
Income (loss) from investment operations                                                                

Net investment income (d)

        $0.23         $0.47           $0.48           $0.53           $0.56           $0.53   

Net realized and unrealized gain (loss) on investments
and foreign currency

        0.10         0.44           1.39           (1.73 )         (0.21 )         0.11   

Total from investment operations

        $0.33         $0.91           $1.87           $(1.20 )         $0.35           $0.64   
Less distributions declared to shareholders                                                                

From net investment income

        $—         $(0.47 )         $(0.94 )         $(0.60 )         $(0.49 )         $(0.54 ) 

From net realized gain on investments

        —         —           —           —           —           (0.08 ) 

Total distributions declared to shareholders

        $—         $(0.47 )         $(0.94 )         $(0.60 )         $(0.49 )         $(0.62 ) 

Net asset value, end of period

        $10.30         $9.97           $9.53           $8.60           $10.40           $10.54   

Total return (%) (k)(r)(s)

        3.31 (n)       9.79           23.88           (12.26 )         3.42           6.39   
Ratios (%) (to average net assets)
and Supplemental data:		                                                                

Expenses before expense reductions (f)

        1.38 (a)       1.39           1.43           1.47           1.41           1.62   

Expenses after expense reductions (f)

        1.05 (a)       1.07           1.10           1.10           1.10           1.13   

Net investment income

        4.49 (a)       4.83           5.40           5.46           5.39           5.18   

Portfolio turnover

        19         46           52           41           49           66   

Net assets at end of period (000 omitted)

        $6,480         $6,741           $6,749           $5,834           $8,192           $6,684   

 

(a) Annualized.

 

(d) Per share data is based on average shares outstanding.

 

(f) Ratios do not reflect reductions from fees paid indirectly, if applicable.

 

(k) The total return does not reflect expenses that apply to separate accounts. Inclusion of these charges would reduce the total return figures for all periods shown.

 

(n) Not annualized.

 

(r) Certain expenses have been reduced without which performance would have been lower.

 

(s) From time to time the fund may receive proceeds from litigation settlements, without which performance would be lower.

See Notes to Financial Statements

 

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NOTES TO FINANCIAL STATEMENTS (unaudited)

 

(1)   Business and Organization

MFS Strategic Income Series (the fund) is a 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, and qualified retirement and pension plans.

 

(2)   Significant Accounting Policies

General – The preparation of financial statements in conformity with U.S. 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. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the fund’s Statement of Assets and Liabilities through the date that the financial statements were issued. The fund invests in high-yield securities rated below investment grade. Investments in high-yield securities involve greater degrees of credit and market risk than investments in higher-rated securities and tend to be more sensitive to economic conditions. The fund invests 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 – Debt instruments and floating rate loans (other than short-term instruments), including restricted debt instruments, are generally valued at an evaluated or composite bid as provided by a third-party pricing service. Equity securities, including restricted equity securities, are generally valued at the last sale or official closing price as provided by a third-party pricing service on the market or exchange on which they are primarily traded. Equity securities, for which there were no sales reported that day, are generally valued at the last quoted daily bid quotation as provided by a third-party pricing service on the market or exchange on which such securities are primarily traded. Equity securities held short, for which there were no sales reported for that day, are generally valued at the last quoted daily ask quotation as provided by a third-party pricing service on the market or exchange on which such securities are primarily traded. Short-term instruments with a maturity at issuance of 60 days or less generally are valued at amortized cost, which approximates market value. Futures contracts are generally valued at last posted settlement price as provided by a third-party pricing service on the market on which they are primarily traded. Futures contracts for which there were no trades that day for a particular position are generally valued at the closing bid quotation as provided by a third-party pricing service on the market on which such futures contracts are primarily traded. Forward foreign currency exchange contracts are generally valued at the mean of bid and asked prices for the time period interpolated from rates provided by a third-party pricing service for proximate time periods. Swaps are generally valued at valuations provided by a third-party pricing service. Open-end investment companies are generally valued at net asset value per share. Securities and other assets generally valued on the basis of information from a third-party pricing service may also be valued at a broker/dealer bid quotation. Values obtained from third-party pricing services can utilize both transaction data and market information such as yield, quality, coupon rate, maturity, type of issue, trading characteristics, and other market data. The values of foreign securities and other assets and liabilities expressed in foreign currencies are converted to U.S. dollars using the mean of bid and asked prices for rates provided by a third-party pricing service.

The Board of Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments (including any fair valuation) to the adviser pursuant to valuation policies and procedures approved by the Board. If the adviser determines that reliable market quotations are not readily available, investments are valued at fair value as determined in good faith by the adviser in accordance with such procedures under the oversight of the Board of Trustees. Under the fund’s valuation policies and procedures, market quotations are not considered to be readily available for most types of debt instruments and floating rate loans and many types of derivatives. These investments are generally valued at fair value based on information from third-party pricing services. In addition, investments may be valued at fair value if the adviser determines that an investment’s value has been materially affected by events occurring after the close of the exchange or market on which the investment is principally traded (such as foreign exchange or market) and prior to the determination of the fund’s net asset value, or after the halting of trading of a specific security where trading does not resume prior to the close of the exchange or market on which the security is principally traded. The adviser generally relies on third-party pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and financial condition of the issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment for purposes of calculating the fund’s net asset value can differ depending on the source and method used to determine value. When fair valuation is used, the value of an investment used to determine the fund’s net asset value may differ from quoted or published prices for the same investment. There can be no assurance that the fund could obtain the fair

 

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Notes to Financial Statements (unaudited) – continued

 

value assigned to an investment if it were to sell the investment at the same time at which the fund determines its net asset value per share.

Various inputs are used in determining the value of the fund’s assets or liabilities. These inputs are categorized into three broad levels. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fund’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. Level 1 includes unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes other significant observable market-based inputs (including quoted prices for similar securities, interest rates, prepayment speed, and credit risk). Level 3 includes unobservable inputs, which may include the adviser’s own assumptions in determining the fair value of investments. Other financial instruments are derivative instruments not reflected in total investments, such as forward foreign currency exchange contracts and swap contracts . The following is a summary of the levels used as of June 30, 2011 in valuing the fund’s assets or liabilities:

 

Investments at Value    Level 1      Level 2     Level 3      Total  
Equity Securities      $165,247         $59,296        $13,531         $ 238,074   
U.S. Treasury Bonds & U.S. Government Agency & Equivalents      —         564,807        —         564,807   
Non-U.S. Sovereign Debt      —         5,871,972        —         5,871,972   
Corporate Bonds      —         17,830,283        —         17,830,283   
Residential Mortgage-Backed Securities      —         499,952        —         499,952   
Commercial Mortgage-Backed Securities      —         552,210        —         552,210   
Asset-Backed Securities (including CDOs)      —         410,781        —         410,781   
Foreign Bonds      —         4,988,420        —         4,988,420   
Floating Rate Loans      —         63,984        —         63,984   
Mutual Funds      749,443         —        —         749,443   
Total Investments      $914,690         $30,841,705        $13,531         $31,769,926   
Other Financial Instruments                           
Swaps      $—         $3,517        $—         $3,517   
Forward Currency Contracts      —         (14,870 )      —         (14,870 ) 

For further information regarding security characteristics, see the Portfolio of Investments.

The following is a reconciliation of level 3 assets for which significant unobservable inputs were used to determine fair value. The fund’s policy is to recognize transfers between the levels as of the end of the period. The table presents the activity of level 3 securities held at the beginning and the end of the period.

 

     Equity
Securities		      Corporate
Bond		      Total  
Balance as of 12/31/10      $—         $3,401         $3,401   

Change in unrealized appreciation

      —         205         205   

Transfers into level 3

      13,531         —         13,531   

Transfers out of level 3

      —         (3,606 )       (3,606 ) 
Balance as of 6/30/11      $13,531         $—         $13,531   

The net change in unrealized appreciation (depreciation) from investments still held as level 3 at June 30, 2011 is $0.

Foreign Currency Translation – 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 or on the reporting date for foreign denominated receivables and payables. 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 receivables, payables, 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.

Derivatives – The fund uses derivatives for different purposes, including to earn income and enhance returns, to increase or decrease exposure to a particular market, to manage or adjust the risk profile of the fund, or as alternatives to direct investments. Derivatives are used for hedging or non-hedging purposes. While hedging can reduce or eliminate losses, it can also reduce or eliminate gains. When the fund uses derivatives as an investment to increase market exposure, or for hedging purposes, gains and losses from derivative instruments may be substantially greater than the derivative’s original cost.

The derivative instruments used by the fund were futures contracts, forward foreign currency exchange contracts, and swap agreements. The fund’s period end derivatives, as presented in the Portfolio of Investments and the associated Derivative Contract Tables, generally are indicative of the volume of its derivative activity during the period.

 

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Notes to Financial Statements (unaudited) – continued

 

The following table presents, by major type of derivative contract, the fair value, on a gross basis, of the asset and liability components of derivatives held by the fund at June 30, 2011 as reported in the Statement of Assets and Liabilities:

 

          Fair Value  
Risk    Derivative Contracts    Asset Derivatives      Liability Derivatives  
Foreign Exchange    Forward Foreign Currency Exchange      $13,137         $(28,007 ) 
Credit    Credit Default Swaps      3,517         —   
Total         $16,654         $(28,007 ) 

The following table presents, by major type of derivative contract, the realized gain (loss) on derivatives held by the fund for the six months ended June 30, 2011 as reported in the Statement of Operations:

 

Risk    Futures Contracts      Swap Transactions      Foreign Currency
Transactions		  
Interest Rate      $6,024         $—         $—   
Foreign Exchange      —         —         (134,957 ) 
Credit      —         844         —   
Total      $6,024         $844         $(134,957 ) 

The following table presents, by major type of derivative contract, the change in unrealized appreciation (depreciation) on derivatives held by the fund for the six months ended June 30, 2011 as reported in the Statement of Operations:

 

Risk    Futures Contracts      Swap Transactions      Translation of
Assets and
Liabilities in
Foreign Currencies		  
Interest Rate      $(4,965 )       $—         $—   
Foreign Exchange      —         —         2,747   
Credit      —         235         —   
Total      $(4,965 )       $235         $2,747   

Derivative counterparty credit risk is managed through formal evaluation of the creditworthiness of all potential counterparties. On certain over-the-counter derivatives, the fund attempts to reduce its exposure to counterparty credit risk whenever possible by entering into an International Swaps and Derivatives Association (ISDA) Master Agreement on a bilateral basis with each of the counterparties with whom it undertakes a significant volume of transactions. The ISDA Master Agreement gives each party to the agreement the right to terminate all transactions traded under such agreement if there is a certain deterioration in the credit quality of the other party. The ISDA Master Agreement gives the fund the right, upon an event of default by the applicable counterparty or a termination of the agreement, to close out all transactions traded under such agreement and to net amounts owed under each transaction to one net amount payable by one party to the other. This right to close out and net payments across all transactions traded under the ISDA Master Agreement could result in a reduction of the fund’s credit risk to such counterparty equal to any amounts payable by the fund under the applicable transactions, if any. However, absent an event of default by the counterparty or a termination of the agreement, the ISDA Master Agreement does not result in an offset of reported amounts of assets and liabilities in the Statement of Assets and Liabilities across transactions between the fund and the applicable counterparty.

Collateral requirements differ by type of derivative. Collateral or margin requirements are set by the broker or exchange clearing house for exchange traded derivatives (i.e., futures and exchange-traded options) while collateral terms are contract specific for over-the-counter traded derivatives (i.e., forward foreign currency exchange contracts, swaps and over-the-counter options). For derivatives traded under an ISDA Master Agreement, the collateral requirements are netted across all transactions traded under such agreement and one amount is posted from one party to the other to collateralize such obligations. Cash collateral that has been pledged to cover obligations of the fund under derivative contracts, if any, will be reported separately on the Statement of Assets and Liabilities as restricted cash. Securities collateral pledged for the same purpose, if any, is noted in the Portfolio of Investments.

Futures Contracts – The fund entered into futures contracts which may be used to hedge against or obtain broad market, interest rate or currency exposure. A futures contract represents a commitment for the future purchase or sale of an asset at a specified price on a specified date.

Upon entering into a futures contract, the fund is required to deposit with the broker, either in cash or securities, an initial margin in an amount equal to a certain percentage of the notional amount of the contract. Subsequent payments (variation

 

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Notes to Financial Statements (unaudited) – continued

 

margin) are made or received by the fund each day, depending on the daily fluctuations in the value of the contract, and are recorded for financial statement purposes as unrealized gain or loss by the fund until the contract is closed or expires at which point the gain or loss on futures is realized.

The fund bears the risk of interest rates, exchange rates or securities prices moving unexpectedly, in which case, the fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. While futures may present less counterparty risk to the fund since the contracts are exchange traded and the exchange’s clearinghouse guarantees payments to the broker, there is still counterparty credit risk due to the insolvency of the broker. The fund’s maximum risk of loss due to counterparty credit risk is equal to the margin posted by the fund to the broker plus any gains or minus any losses on the outstanding futures contracts.

Forward Foreign Currency Exchange Contracts – The fund entered into forward foreign currency exchange contracts for the purchase or sale of a specific foreign currency at a fixed price on a future date. These contracts may be used to hedge the fund’s currency risk or for non-hedging purposes. For hedging purposes, the fund may enter into contracts to deliver or receive foreign currency that the fund will receive from or use in its normal investment activities. The fund may also use contracts to hedge against declines in the value of foreign currency denominated securities due to unfavorable exchange rate movements. For non-hedging purposes, the fund may enter into contracts with the intent of changing the relative exposure of the fund’s portfolio of securities to different currencies to take advantage of anticipated exchange rate changes.

Forward foreign currency exchange contracts are adjusted by the daily exchange rate of the underlying currency and any unrealized gains or losses are recorded as a receivable or payable for forward foreign currency exchange contracts until the contract settlement date. On contract settlement date, any gain or loss on the contract is recorded as realized gains or losses on foreign currency transactions.

Risks may arise upon entering into these contracts from unanticipated movements in the value of the contract and from the potential inability of counterparties to meet the terms of their contracts. Generally, the fund’s maximum risk due to counterparty credit risk is the unrealized gain on the contract due to the use of Continuous Linked Settlement, an industry accepted settlement system. This risk is mitigated in cases where there is an ISDA Master Agreement between the fund and the counterparty providing for netting as described above and for posting of collateral by the counterparty to the fund to cover the fund’s exposure to the counterparty under such ISDA Master Agreement.

Swap Agreements – The fund entered into swap agreements. A swap is generally an exchange of cash payments, at specified intervals or upon the occurrence of specified events, between the fund and a counterparty. The net cash payments exchanged are recorded as a realized gain or loss on swap transactions in the Statement of Operations. The value of the swap, which is adjusted daily and includes any related interest accruals to be paid or received by the fund, is recorded on the Statement of Assets and Liabilities. The daily change in value, including any related interest accruals to be paid or received, is recorded as unrealized appreciation or depreciation on swap transactions in the Statement of Operations. Amounts paid or received at the inception of the swap are reflected as premiums paid or received on the Statement of Assets and Liabilities and are amortized using the effective interest method over the term of the agreement. A liquidation payment received or made upon early termination is recorded as a realized gain or loss on swap transactions in the Statement of Operations.

Risks related to swap agreements include the possible lack of a liquid market, unfavorable market and interest rate movements of the underlying instrument and the failure of the counterparty to perform under the terms of the agreements. To address counterparty risk, swap transactions are limited to only highly-rated counterparties. The risk is further mitigated by having an ISDA Master Agreement between the fund and the counterparty providing for netting as described above and by the posting of collateral by the counterparty to the fund to cover the fund’s exposure to the counterparty under such ISDA Master Agreement.

The fund entered into credit default swaps in order to manage its exposure to the market or certain sectors of the market, to reduce its credit risk exposure to defaults of corporate and sovereign issuers or to create exposure to corporate or sovereign issuers to which it is not otherwise exposed. In a credit default swap, the protection buyer can make an upfront payment and will make a stream of payments based on a fixed percentage applied to the contract notional amount to the protection seller in exchange for the right to receive a specified return upon the occurrence of a defined credit event on the reference obligation (which may be either a single security or a basket of securities issued by corporate or sovereign issuers) and, with respect to the rare cases where physical settlement applies, the delivery by the buyer to the seller of a defined deliverable obligation. Although contract-specific, credit events generally consist of a combination of the following: bankruptcy, failure to pay, restructuring, obligation acceleration, obligation default, or repudiation/moratorium, each as defined in the 2003 ISDA Credit Derivatives Definitions as amended by the relevant contract. Restructuring is generally not applicable when the reference obligation is issued by a North American corporation and obligation acceleration, obligation default, or repudiation/moratorium are generally only applicable when the reference obligation is issued by a sovereign entity or an entity in an

 

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emerging country. Upon determination of the final price for the deliverable obligation (or upon delivery of the deliverable obligation in the case of physical settlement), the difference between the value of the deliverable obligation and the swap’s notional amount is recorded as realized gain or loss on swap transactions in the Statement of Operations.

Credit default swaps are considered to have credit-risk-related contingent features since they trigger payment by the protection seller to the protection buyer upon the occurrence of a defined credit event. As discussed earlier in this note, any collateral requirements for these swaps are based generally on the market value of the swap netted against collateral requirements for other types of over-the-counter derivatives traded under each counterparty’s ISDA Master Agreement. The maximum amount of future, undiscounted payments that the fund, as protection seller, could be required to make is equal to the swap’s notional amount. The protection seller’s payment obligation would be offset to the extent of the value of the contract’s deliverable obligation. At June 30, 2011, the fund did not hold any credit default swaps at an unrealized loss where it is the protection seller.

The fund’s maximum risk of loss from counterparty risk, either as the protection seller or as the protection buyer, is the fair value of the contract. This risk is mitigated by having an ISDA Master Agreement between the fund and the counterparty providing for netting as described above and by the posting of collateral by the counterparty to the fund to cover the fund’s exposure to the counterparty under such ISDA Master Agreement.

Loans and Other Direct Debt Instruments – The fund invests in loans and loan participations or other receivables. These investments may include standby financing commitments, including revolving credit facilities, which obligate the fund to supply additional cash to the borrower on demand. Loan participations involve a risk of insolvency of the lending bank or other financial intermediary.

Indemnifications – Under the fund’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the fund. Additionally, in the normal course of business, the fund enters into agreements with service providers that may contain indemnification clauses. The fund’s maximum exposure under these agreements is unknown as this would involve future claims that may be made against the fund that have not yet occurred.

Investment Transactions and Income – Investment transactions are recorded on the trade date. Interest income is recorded on the accrual basis. All premium and discount is amortized or accreted for financial statement purposes in accordance with U.S. generally accepted accounting principles. The fund earns certain fees in connection with its floating rate loan purchasing activities. These fees are in addition to interest payments earned and may include amendment fees, commitment fees, facility fees, consent fees, and prepayment fees. Commitment fees are recorded on an accrual basis as income in the accompanying financial statements. Dividends received in cash are recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded when the fund is informed of the dividend if such information is obtained subsequent to 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. Debt obligations may be placed on non-accrual status or set to accrue at a rate of interest less than the contractual coupon when the collection of all or a portion of interest has become doubtful. Interest income for those debt obligations may be further reduced by the write-off of the related interest receivables when deemed uncollectible.

The fund may receive proceeds from litigation settlements. Any proceeds received from litigation involving portfolio holdings are reflected in the Statement of Operations in realized gain/loss if the security has been disposed of by the fund or in unrealized gain/loss if the security is still held by the fund. Any other proceeds from litigation not related to portfolio holdings are reflected as other income in the Statement of Operations.

Fees Paid Indirectly – The fund’s custody fee may be reduced according to an arrangement that measures the value of cash deposited with the custodian by the fund. This amount, for the six months ended June 30, 2011, is shown as a reduction of total expenses on the Statement of Operations.

Tax Matters and Distributions – The fund intends to qualify as a regulated investment company, as defined under Subchapter M of the Internal Revenue Code, and to distribute all of its taxable income, including realized capital gains. As a result, no provision for federal income tax is required. The fund’s federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue Service. Foreign taxes, if any, have been accrued by the fund in the accompanying financial statements.

Distributions to shareholders are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from

 

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MFS Strategic Income Series

 

Notes to Financial Statements (unaudited) – continued

 

recognizing certain items of income, expense, gain or loss in different periods for financial statement and tax purposes will reverse at some time in the future. Distributions in excess of net investment income or net realized gains are temporary overdistributions for financial statement purposes resulting from differences in the recognition or classification of income or distributions for financial statement and tax purposes.

Book/tax differences primarily relate to amortization and accretion of debt securities, defaulted bonds, and straddle loss deferrals.

The tax character of distributions declared to shareholders for the last fiscal year is as follows:

 

     12/31/10  
Ordinary income (including any short-term capital gains)      $1,656,044   

The federal tax cost and the tax basis components of distributable earnings were as follows:

 

As of 6/30/11   
Cost of investments      $30,830,573   
Gross appreciation      1,836,994   
Gross depreciation      (897,641 ) 
Net unrealized appreciation (depreciation)      $939,353   
As of 12/31/10   
Undistributed ordinary income      1,780,663   
Capital loss carryforwards      (1,684,312 ) 
Other temporary differences      (295,194 ) 
Net unrealized appreciation (depreciation)      880,850   

As of December 31, 2010, the fund had capital loss carryforwards available to offset future realized gains. Such losses expire as follows:

 

12/31/16      $(734,062 ) 
12/31/17      (950,250 ) 
Total      $(1,684,312 ) 

Multiple Classes of Shares of Beneficial Interest – The fund offers multiple classes of shares, which differ in their respective distribution and/or service fees. The fund’s income, realized and unrealized gain (loss), and common expenses are allocated to shareholders based on the daily net assets of each class. Dividends are declared separately for each class. Differences in per share dividend rates are generally due to differences in separate class expenses. The fund’s distributions declared to shareholders as reported on the Statements of Changes in Net Assets are presented by class as follows:

 

     From net investment
income		  
     Six months ended
6/30/11		      Year ended
12/31/10		  
Initial Class      $—         $1,336,828   
Service Class      —         319,216   
Total      $—         $1,656,044   

 

(3)   Transactions with Affiliates

Investment Adviser – The fund has an investment advisory agreement with MFS to provide overall investment management and related administrative services and facilities to the fund. The management fee is computed daily and paid monthly at the following annual rates:

 

First $1 billion of average daily net assets      0.70 % 
Average daily net assets in excess of $1 billion      0.65 % 

The management fee incurred for the six months ended June 30, 2011 was equivalent to an annual effective rate of 0.70% of the fund’s average daily net assets.

The investment adviser has agreed in writing to pay a portion of the fund’s total annual operating expenses, exclusive of interest, taxes, extraordinary expenses, brokerage and transaction costs and investment-related expenses, such that total annual operating expenses do not exceed 0.80% of average daily net assets for the Initial Class shares and 1.05% of average daily net assets for the Service Class shares. This written agreement will continue until modified by the fund’s Board of Trustees, but such agreement will continue at least until April 30, 2013. For the six months ended June 30, 2011, this reduction amounted to $55,001 and is reflected as a reduction of total expenses in the Statements of Operations.

 

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MFS Strategic Income Series

 

Notes to Financial Statements (unaudited) – continued

 

Distributor – MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, is the distributor of shares of the fund. The Trustees have adopted a distribution plan for the Service Class shares pursuant to Rule 12b-1 under the Investment Company Act of 1940.

The fund’s distribution plan provides that the fund will pay MFD distribution and/or service fees equal to 0.25% per annum of its average daily net assets attributable to Service Class shares as partial consideration for services performed and expenses incurred by MFD and financial intermediaries (including participating insurance companies that invest in the fund to fund variable annuity and variable life insurance contracts, sponsors of qualified retirement and pension plans that invest in the fund, and affiliates of these participating insurance companies and plan sponsors) in connection with the sale and distribution of the Service Class shares. MFD may subsequently pay all, or a portion, of the distribution and/or service fees to financial intermediaries.

Shareholder Servicing Agent – MFS Service Center, Inc. (MFSC), a wholly-owned subsidiary of MFS, receives a fee from the fund for its services as shareholder servicing agent. For the six months ended June 30, 2011, the fee was $1,886, which equated to 0.0111% annually of the fund’s average daily net assets. MFSC also receives payment from the fund for out-of-pocket expenses paid by MFSC on behalf of the fund. For the six months ended June 30, 2011, these costs amounted to $235.

Administrator – MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the fund partially reimburses MFS the costs incurred to provide these services. The fund is charged an annual fixed amount of $17,500 plus a fee based on average daily net assets. The administrative services fee incurred for the six months ended June 30, 2011 was equivalent to an annual effective rate of 0.0513% of the fund’s average daily net assets.

Trustees’ and Officers’ Compensation – The fund pays compensation to independent Trustees in the form of a retainer, attendance fees, and additional compensation to Board and Committee chairpersons. The fund does not pay compensation directly to Trustees or officers of the fund who are also officers of the investment adviser, all of whom receive remuneration for their services to the fund from MFS. Certain officers and Trustees of the fund are officers or directors of MFS, MFD, and MFSC.

Other – This fund and certain other funds managed by MFS (the funds) have entered into services agreements (the Agreements) which provide for payment of fees by the funds to Tarantino LLC and Griffin Compliance LLC in return for the provision of services of an Independent Chief Compliance Officer (ICCO) and Assistant ICCO, respectively, for the funds. The ICCO and Assistant ICCO are officers of the funds and the sole members of Tarantino LLC and Griffin Compliance LLC, respectively. The funds can terminate the Agreements with Tarantino LLC and Griffin Compliance LLC at any time under the terms of the Agreements. For the six months ended June 30, 2011, the aggregate fees paid by the fund to Tarantino LLC and Griffin Compliance LLC were $118 and are included in miscellaneous expense on the Statement of Operations. MFS has agreed to reimburse the fund for a portion of the payments made by the fund in the amount of $96, which is shown as a reduction of total expenses in the Statement of Operations. Additionally, MFS has agreed to bear all expenses associated with office space, other administrative support, and supplies provided to the ICCO and Assistant ICCO.

The fund invests in the MFS Institutional Money Market Portfolio which is managed by MFS and seeks a high level of current income consistent with preservation of capital and liquidity. Income earned on this investment is included in dividends from underlying affiliated funds on the Statement of Operations. This money market fund does not pay a management fee to MFS.

 

(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      $423,606         $639,277   
Investments (non-U.S. Government securities)      $5,986,599         $9,135,834   

 

(5)   Shares of Beneficial Interest

The fund’s Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest. Transactions in fund shares were as follows:

 

     Six months ended 6/30/11      Year ended 12/31/10  
     Shares      Amount      Shares      Amount  
Shares sold            

Initial Class

      190,711         $1,961,864         557,643         $5,530,413   

Service Class

      67,897         689,538         267,644         2,579,652   
     258,608         $2,651,402         825,287         $8,110,065   

 

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MFS Strategic Income Series

 

Notes to Financial Statements (unaudited) – continued

 

     Six months ended 6/30/11      Year ended 12/31/10  
     Shares      Amount      Shares      Amount  
Shares issued to shareholders in reinvestment of distributions            

Initial Class

      —         $—         139,689         $1,336,828   

Service Class

      —         —         33,851         319,216   
     —         $—         173,540         $1,656,044   
Shares reacquired            

Initial Class

      (447,896 )       $(4,632,777 )       (779,888 )       $(7,716,586 ) 

Service Class

      (114,511 )       (1,161,588 )       (333,588 )       (3,224,028 ) 
     (562,407 )       $(5,794,365 )       (1,113,476 )       $(10,940,614 ) 
Net change            

Initial Class

      (257,185 )       $(2,670,913 )       (82,556 )       $(849,345 ) 

Service Class

      (46,614 )       (472,050 )       (32,093 )       (325,160 ) 
     (303,799 )       $(3,142,963 )       (114,649 )       $(1,174,505 ) 

 

(6)   Line of Credit

The fund and certain other funds managed by MFS participate in a $1.1 billion unsecured committed line of credit, subject to a $1 billion sublimit, provided by a syndication of banks under a credit agreement. Borrowings may be made for temporary financing needs. Interest is charged to each fund, based on its borrowings, generally at a rate equal to the higher of the Federal Reserve funds rate or one month LIBOR plus an agreed upon spread. A commitment fee, based on the average daily, unused portion of the committed line of credit, is allocated among the participating funds at the end of each calendar quarter. In addition, the fund and other funds managed by MFS have established unsecured uncommitted borrowing arrangements with certain banks for temporary financing needs. Interest is charged to each fund, based on its borrowings, at a rate equal to the Federal Reserve funds rate plus an agreed upon spread. For the six months ended June 30, 2011, the fund’s commitment fee and interest expense were $171 and $0, respectively, and are included in miscellaneous expense on the Statement of Operations.

 

(7)   Transactions in Underlying Affiliated Funds – Affiliated Issuers

An affiliated issuer may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. For the purposes of this report, the fund assumes the following to be affiliated issuers:

 

Underlying Affiliated Funds    Beginning
Shares/Par
Amount		      Acquisitions
Shares/Par
Amount		      Dispositions
Shares/Par
Amount		      Ending
Shares/Par
Amount		  
MFS Institutional Money Market Portfolio      2,205,257         5,061,776         (6,517,590 )       749,443   
Underlying Affiliated Funds    Realized
Gain (Loss)		      Capital Gain
Distributions		      Dividend
Income		      Ending
Value		  
MFS Institutional Money Market Portfolio      $—         $—         $541         $749,443   

 

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MFS Strategic Income Series

 

BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT

 

A discussion regarding the Board’s most recent review and renewal of the fund’s Investment Advisory Agreement with MFS will be available on or about November 1, 2011 by clicking on the fund’s name under “Variable Insurance Portfolios — VIT” in the “Products and Performance” section of the MFS Web site (mfs.com).

PROXY VOTING POLICIES AND INFORMATION

A general description of the MFS funds’ proxy voting policies and procedures is available without charge, upon request, by calling
1-800-225-2606, by visiting the Proxy Voting section of mfs.com or by visiting the SEC’s Web site at http://www.sec.gov.

Information regarding how the fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available without charge by visiting the Proxy Voting section of mfs.com or by visiting the SEC’s Web site at http://www.sec.gov.

QUARTERLY PORTFOLIO DISCLOSURE

The fund will file a complete schedule of portfolio holdings with the Securities and Exchange Commission (the Commission) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q may be reviewed and copied at the:

Public Reference Room

Securities and Exchange Commission

100 F Street, NE, Room 1580

Washington, D.C. 20549

Information on the operation of the Public Reference Room may be obtained by calling the Commission at 1-800-SEC-0330. The fund’s Form N-Q is available on the EDGAR database on the Commission’s Internet Web site 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: publicinfo@sec.gov or by writing the Public Reference Section at the above address.

FURTHER INFORMATION

From time to time, MFS may post important information about the fund or the MFS funds on the MFS web site (mfs.com). This information is available by visiting the “News & Commentary” section of mfs.com or by clicking on the fund’s name under “Variable Insurance Portfolios — VIT” in the “Products and Performance” section of mfs.com.

 

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rev. 3/11

 

FACTS   WHAT DOES MFS DO WITH YOUR
PERSONAL INFORMATION?		   LOGO

 

Why?   Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?  

The types of personal information we collect and share depend on the product or service you have with us. This information can include:

 

• Social Security number and account balances

• Account transactions and transaction history

• Checking account information and wire transfer instructions

 

When you are no longer our customer, we continue to share your information as described in this notice.

 

How?   All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons MFS chooses to share; and whether you can limit this sharing.

 

Reasons we can share your personal information   Does MFS share?   Can you limit this
sharing?

For our everyday business purposes –

such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus

   Yes   No

For our marketing purposes –

to offer our products and services to you

   No   We don’t share
For joint marketing with other financial companies   No   We don’t share

For our affiliates’ everyday business purposes –

information about your transactions and experiences

   No   We don’t share

For our affiliates’ everyday business purposes –

information about your creditworthiness

   No   We don’t share
For nonaffiliates to market to you   No   We don’t share

 

Questions?   Call 800-225-2606 or go to mfs.com.

 

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Page 2  

 

Who we are
Who is providing this notice?   MFS Funds, MFS Investment Management, MFS Institutional Advisors, Inc., MFS Fund Distributors, Inc., MFS Heritage Trust Company, and MFS Service Center, Inc.

 

What we do
How does MFS protect my personal information?   To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include procedural, electronic, and physical safeguards for the protection of the personal information we collect about you.
How does MFS
collect my personal information?		  

We collect your personal information, for example, when you

 

• open an account or provide account information

• direct us to buy securities or direct us to sell your securities

• make a wire transfer

 

We also collect your personal information from others, such as credit bureaus, affiliates and other companies.

Why can’t I limit all sharing?  

Federal law gives you the right to limit only

 

• sharing for affiliates’ everyday business purposes – information about your creditworthiness

• affiliates from using your information to market to you

• sharing for nonaffiliates to market to you

 

State laws and individual companies may give you additional rights to limit sharing.

 

Definitions
Affiliates  

Companies related by common ownership or control. They can be financial and nonfinancial companies.

 

• MFS does not share personal information with affiliates, except for everyday business purposes as described on page one of this notice.

Nonaffiliates  

Companies not related by common ownership or control. They can be financial and nonfinancial companies.

 

• MFS does not share with nonaffiliates so they can market to you.

Joint Marketing  

A formal agreement between nonaffiliated financial companies that together market financial products or services to you.

 

• MFS doesn’t jointly market.

 

 

Other important information
If you own an MFS product or receive an MFS service in the name of a third party such as a bank or broker-dealer, their privacy policy may apply to you instead of ours.

 

29

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LOGO

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ITEM 2. CODE OF ETHICS.

During the period covered by this report, the Registrant has not amended any provision in its Code of Ethics (the “Code”) that relates to an element of the Code’s definitions enumerated in paragraph (b) of Item 2 of this Form N-CSR. During the period covered by this report, the Registrant did not grant a waiver, including an implicit waiver, from any provision of the Code.

 

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.

Not applicable for semi-annual reports.

 

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Not applicable for semi-annual reports.

 

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.

Not applicable to the Registrant.

 

ITEM 6. INVESTMENTS

A schedule of investments for each series of the Registrant is included as part of the report to shareholders of such series under Item 1 of this Form N-CSR.

 

ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

Not applicable to the Registrant.

 

ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

Not applicable to the Registrant.

 

ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.

Not applicable to the Registrant.

 

ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

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There were no material changes to the procedures by which shareholders may send recommendations to the Board for nominees to the Registrant’s Board since the Registrant last provided disclosure as to such procedures in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K or this Item.

 

ITEM 11. CONTROLS AND PROCEDURES.

 

(a) Based upon their evaluation of the effectiveness of the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”)) as conducted within 90 days of the filing date of this report on Form N-CSR, the registrant’s principal financial officer and principal executive officer have concluded that those disclosure controls and procedures provide reasonable assurance that the material information required to be disclosed by the registrant on this report is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

 

(b) There were no changes in the registrant’s internal controls over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the second fiscal quarter of the period covered by the report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

 

ITEM 12. EXHIBITS.

 

(a) File the exhibits listed below as part of this form. Letter or number the exhibits in the sequence indicated.

 

  (1) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit.

 

  (2) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Act (17 CFR 270.30a-2): Attached hereto.

 

(b) If the report is filed under Section 13(a) or 15(d) of the Exchange Act, provide the certifications required by Rule 30a-2(b) under the Act (17 CFR 270.30a-2(b)), Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR 240.13a-14(b) or 240.15d-14(b)) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350) as an exhibit. A certification furnished pursuant to this paragraph will not be deemed “filed” for the purposes of Section 18 of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference: Attached hereto.

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Notice

A copy of the Amended and Restated Declaration of Trust, as amended, of the Registrant is on file with the Secretary of State of The Commonwealth of Massachusetts and notice is hereby given that this instrument is executed on behalf of the Registrant by an officer of the Registrant as an officer and not individually and the obligations of or arising out of this instrument are not binding upon any of the Trustees or shareholders individually, but are binding only upon the assets and property of the respective constituent series of the Registrant.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

(Registrant) MFS VARIABLE INSURANCE TRUST

 

By (Signature and Title)*    MARIA F. DIORIODWYER
  Maria F. DiOrioDwyer, President

Date: August 16, 2011

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By (Signature and Title)*    MARIA F. DIORIODWYER
 

Maria F. DiOrioDwyer, President

(Principal Executive Officer)

Date: August 16, 2011

 

By (Signature and Title)*    JOHN M. CORCORAN
  John M. Corcoran, Treasurer (Principal Financial Officer and Accounting Officer)

Date: August 16, 2011

 

* Print name and title of each signing officer under his or her signature.