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MFS Variable Insurance Trust

Filed: 23 Aug 19, 11:07am
Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORMN-CSR

CERTIFIED SHAREHOLDER REPORT OF

REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number811-8326

MFS VARIABLE INSURANCE TRUST

(Exact name of registrant as specified in charter)

111 Huntington Avenue, Boston, Massachusetts 02199

(Address of principal executive offices) (Zip code)

Christopher R. Bohane

Massachusetts Financial Services Company

111 Huntington Avenue

Boston, Massachusetts 02199

(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, 2019


Table of Contents
ITEM 1.

REPORTS TO STOCKHOLDERS.


Table of Contents

Semiannual Report

June 30, 2019

 

LOGO

 

MFS® Global Equity Series

 

LOGO

 

MFS® Variable Insurance Trust

 

Beginning on January 1, 2021, as permitted by regulations adopted by the U.S. Securities and Exchange Commission, the insurance company that offers your contract may determine that it will no longer send you paper copies of the fund’s annual and semiannual shareholder reports unless you specifically request paper copies from the insurance company or from your financial intermediary. Instead, the shareholder reports will be made available on a Web site (insurancefunds.mfs.com or other Web site of which you will be notified), and the insurance company will notify you by mail each time a report is posted and provide you with a Web site link to access the report. Instructions for requesting paper copies will be provided by your insurance company or financial intermediary.

If you already elected to receive shareholder reports by email, you will not be affected by this change and you need not take any action. If your insurance company or financial intermediary offers electronic delivery, you may elect to receive shareholder reports and other communications from the insurance company or financial intermediary by email by following the instructions provided by the insurance company or financial intermediary.

Beginning on January 1, 2019, you may elect to receive all future reports in paper free of charge from the insurance company or financial intermediary. You can inform the insurance company or financial intermediary that you wish to continue receiving paper copies of your shareholder reports by contacting your insurance company or financial intermediary. Your election to receive reports in paper will apply to all funds held in your account with your insurance company or financial intermediary.

 

VGE-SEM


Table of Contents

MFS® Global Equity Series

 

CONTENTS

 

Letter from the Executive Chairman   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 
Proxy voting policies and information   16 
Quarterly portfolio disclosure   16 
Further information   16 
Information about fund contracts and legal claims   16 

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



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MFS Global Equity Series

 

LETTER FROM THE EXECUTIVE CHAIRMAN

 

LOGO

Dear Contract Owners:

Slowing global growth, low inflation, and increasing trade friction between the United States and China have been hallmarks of the past 12 months. After experiencing an uptick in market volatility in late 2018, markets steadied during the first half of 2019, thanks in large measure to the adoption of a dovish policy stance on the part of global central banks, who have largely abandoned efforts to normalize interest rates and have instead focused on supporting economic growth. Trade tensions remain high as the U.S. has ratcheted up tariffs on Chinese imports and China has retaliated. A truce of sorts was reached midyear, but significant challenges continue to confront negotiators, and it is not known whether a comprehensive agreement can be reached.

With Boris Johnson replacing Theresa May as Britain’s prime minister, uncertainty over Brexit remains high. Johnson has adopted a more combative stance than his predecessor toward the European Union, increasing concerns that there will be a “hard” Brexit.

Markets expect that the longest economic expansion in U.S. history will continue for the time being, albeit at a slower pace. Nevertheless, slower growth and low inflation have spurred the U.S. Federal Reserve to take a more accommodative policy stance, prompting investors to anticipate several interest rate cuts in the coming year. The European Central Bank has adopted a similar position. The more accommodative environment has helped fuel a continued rise in global equities and has been broadly supportive of risk assets.

Since launching the first U.S.open-end mutual fund in 1924, MFS® has been committed to a single purpose: to create value by allocating capital responsibly for clients. Through our powerful global investment platform, we combine collective expertise, thoughtful risk management, and long-term discipline to uncover what we believe are the best investment opportunities in the market.

Respectfully,

 

LOGO

Robert J. Manning

Executive Chairman

MFS Investment Management

August 16, 2019

 

 

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

 

1


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MFS Global Equity Series

 

PORTFOLIO COMPOSITION

 

Portfolio structure

 

LOGO

 

Top ten holdings 
Thermo Fisher Scientific, Inc.  3.3% 
Visa, Inc., “A”  3.2% 
Medtronic PLC  3.0% 
Comcast Corp., “A”  2.9% 
Nestle S.A.  2.8% 
LVMH Moet Hennessy Louis Vuitton SE  2.7% 
Accenture PLC, “A”  2.6% 
Honeywell International, Inc.  2.5% 
Schneider Electric S.A.  2.3% 
Walt Disney Co.  2.3% 
GICS equity sectors (g) 
Health Care  19.9% 
Industrials  18.9% 
Consumer Staples  16.7% 
Information Technology  13.1% 
Consumer Discretionary  9.2% 
Financials  9.1% 
Communication Services  6.8% 
Materials  5.8% 
Energy  0.5% 
Issuer country weightings (x) 
United States  55.1% 
France  11.3% 
Switzerland  7.5% 
United Kingdom  7.4% 
Germany  4.1% 
Japan  2.9% 
Netherlands  2.3% 
Sweden  2.3% 
Canada  1.9% 
Other Countries  5.2% 
Currency exposure weightings (y) 
United States Dollar  56.5% 
Euro  21.0% 
Swiss Franc  7.5% 
British Pound Sterling  7.4% 
Japanese Yen  2.9% 
Swedish Krona  2.3% 
South Korean Won  0.8% 
Danish Krone  0.7% 
Brazilian Real  0.3% 
Other Currencies  0.6% 
 

 

(g)

The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and S&P Global Market Intelligence Inc. (“S&P Global Market Intelligence”). GICS is a service mark of MSCI and S&P Global Market Intelligence and has been licensed for use by MFS.

(o)

Less than 0.1%.

(x)

Represents the portfolio’s exposure to issuer countries as a percentage of a portfolio’s net assets. For purposes of this presentation, United States includes Cash & Cash Equivalents.

(y)

Represents the portfolio’s exposure to a particular currency as a percentage of a portfolio’s net assets. For purposes of this presentation, United States Dollar includes Cash & Cash Equivalents.

Cash & Cash Equivalents includes any cash, investments in money market funds, short-term securities, and other assets less liabilities. Please see the Statement of Assets and Liabilities for additional information related to the fund’s cash position and other assets and liabilities.

Percentages are based on net assets as of June 30, 2019.

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

 

2


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MFS Global Equity Series

 

EXPENSE TABLE

 

Fund Expenses Borne by the Contract Holders during the Period,

January 1, 2019 through June 30, 2019

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, 2019 through June 30, 2019.

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
1/01/19
   Ending
Account Value
6/30/19
   Expenses Paid
During Period (p)
1/01/19-6/30/19
 
Initial Class Actual   0.97%    $1,000.00    $1,210.95    $5.32 
 Hypothetical (h)   0.97%    $1,000.00    $1,019.98    $4.86 
Service Class Actual   1.22%    $1,000.00    $1,209.09    $6.68 
 Hypothetical (h)   1.22%    $1,000.00    $1,018.74    $6.11 

 

(h)

5% class return per year before expenses.

 

(p)

“Expenses Paid During Period” are equal to each class’s annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by 181/365 (to reflect theone-half year period).

Notes to Expense Table

Changes to the fund’s fee arrangements will occur during the fund’s current fiscal year. Had these fee changes been in effect during the six month period, the annualized expense ratios, the actual expenses paid during the period, and the hypothetical expenses paid during the period would have been approximately 0.92%, $5.04, and $4.61 for Initial Class and 1.17%, $6.41, and $5.86 for Service Class, 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 Global Equity Series

 

PORTFOLIO OF INVESTMENTS – 6/30/19 (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 – 100.0%

 

Aerospace – 4.3%   
Honeywell International, Inc.   8,469  $1,478,603 
MTU Aero Engines Holding AG   1,735   413,316 
United Technologies Corp.   4,479   583,166 
   

 

 

 
   $2,475,085 
   

 

 

 
Airlines – 1.3%   
Aena S.A.   3,772  $747,597 
   

 

 

 
Alcoholic Beverages – 6.0%   
Ambev S.A.   41,468  $193,196 
Carlsberg A.S., “B”   2,888   382,858 
Diageo PLC   30,125   1,294,624 
Heineken N.V.   5,067   565,452 
Pernod Ricard S.A.   5,704   1,051,060 
   

 

 

 
   $3,487,190 
   

 

 

 
Apparel Manufacturers – 4.2%   
Burberry Group PLC   11,970  $283,048 
Compagnie Financiere Richemont S.A.   7,077   600,552 
LVMH Moet Hennessy Louis Vuitton SE   3,665   1,559,885 
   

 

 

 
   $2,443,485 
   

 

 

 
Automotive – 0.8%   
Aptiv PLC   3,433  $277,489 
Harley-Davidson, Inc.   4,637   166,144 
   

 

 

 
   $443,633 
   

 

 

 
Broadcasting – 3.8%   
Omnicom Group, Inc.   3,534  $289,611 
Walt Disney Co.   9,495   1,325,882 
WPP PLC   48,745   612,970 
   

 

 

 
   $2,228,463 
   

 

 

 
Brokerage & Asset Managers – 0.9%

 

 
Deutsche Boerse AG   1,722  $243,586 
TD Ameritrade Holding Corp.   5,605   279,802 
   

 

 

 
   $523,388 
   

 

 

 
Business Services – 7.4%   
Accenture PLC, “A”   8,289  $1,531,559 
Adecco S.A.   4,920   295,643 
Brenntag AG   6,054   298,146 
Cognizant Technology Solutions Corp., “A”   9,403   596,056 
Compass Group PLC   26,236   628,718 
Equifax, Inc.   4,016   543,124 
PayPal Holdings, Inc. (a)   3,824   437,695 
   

 

 

 
   $4,330,941 
   

 

 

 
Cable TV – 2.9%   
Comcast Corp., “A”   40,482  $1,711,579 
   

 

 

 
Chemicals – 2.6%   
3M Co.   4,722  $818,511 
PPG Industries, Inc.   6,015   702,011 
   

 

 

 
   $1,520,522 
   

 

 

 
Issuer  Shares/Par  Value ($) 
COMMON STOCKS – continued

 

Computer Software – 2.8%   
Check Point Software Technologies Ltd. (a)   6,028  $696,897 
Oracle Corp.   15,966   909,583 
   

 

 

 
   $1,606,480 
   

 

 

 
Consumer Products – 5.4%   
Colgate-Palmolive Co.   9,199  $659,292 
Essity AB   42,807   1,315,628 
Reckitt Benckiser Group PLC   14,704   1,160,361 
   

 

 

 
   $3,135,281 
   

 

 

 
Electrical Equipment – 3.9%   
Amphenol Corp., “A”   3,284  $315,067 
Legrand S.A.   8,196   599,255 
Resideo Technologies, Inc. (a)   1,463   32,069 
Schneider Electric S.A.   14,848   1,346,641 
   

 

 

 
   $2,293,032 
   

 

 

 
Electronics – 1.9%   
Hoya Corp.   5,500  $421,064 
Microchip Technology, Inc.   2,686   232,876 
Samsung Electronics Co. Ltd.   11,031   449,017 
   

 

 

 
   $1,102,957 
   

 

 

 
Food & Beverages – 5.3%   
Danone S.A.   12,363  $1,047,319 
Kellogg Co.   7,724   413,774 
Nestle S.A.   15,647   1,619,838 
   

 

 

 
   $3,080,931 
   

 

 

 
Gaming & Lodging – 0.9%   
Marriott International, Inc., “A”   2,248  $315,372 
Sands China Ltd.   20,000   95,626 
Wynn Resorts Ltd.   861   106,755 
   

 

 

 
   $517,753 
   

 

 

 
Insurance – 1.2%   
Aon PLC   3,649  $704,184 
   

 

 

 
Internet – 0.9%   
eBay, Inc.   12,937  $511,011 
   

 

 

 
Machinery & Tools – 1.3%   
Kubota Corp.   46,000  $764,996 
   

 

 

 
Major Banks – 4.7%   
Bank of New York Mellon Corp.   16,902  $746,223 
Erste Group Bank AG   5,375   199,493 
Goldman Sachs Group, Inc.   2,962   606,025 
State Street Corp.   11,945   669,637 
UBS AG   41,544   493,660 
   

 

 

 
   $2,715,038 
   

 

 

 
Medical Equipment – 15.1%   
Abbott Laboratories   10,968  $922,409 
Cooper Cos., Inc.   2,217   746,885 
EssilorLuxottica   1,683   219,602 
 

 

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Portfolio of Investments (unaudited) – continued

 

Issuer  Shares/Par  Value ($) 
COMMON STOCKS – continued

 

Medical Equipment – continued   
Medtronic PLC   17,786  $1,732,178 
Olympus Corp.   46,700   518,047 
Sonova Holding AG   594   134,961 
Stryker Corp.   5,562   1,143,436 
Thermo Fisher Scientific, Inc.   6,536   1,919,492 
Waters Corp. (a)   2,463   530,136 
Zimmer Biomet Holdings, Inc.   7,962   937,446 
   

 

 

 
   $8,804,592 
   

 

 

 
Network & Telecom – 1.0%   
Cisco Systems, Inc.   10,176  $556,932 
   

 

 

 
Oil Services – 0.6%   
National Oilwell Varco, Inc.   4,027  $89,520 
NOW, Inc. (a)   2,392   35,306 
Schlumberger Ltd.   5,813   231,009 
   

 

 

 
   $355,835 
   

 

 

 
Other Banks & Diversified Financials – 5.5%

 

 
American Express Co.   6,606  $815,445 
Grupo Financiero Banorte S.A. de C.V.   27,671   160,544 
Julius Baer Group Ltd.   5,334   237,467 
Kasikornbank Co. Ltd.   18,900   116,786 
Visa, Inc., “A”   10,803   1,874,861 
   

 

 

 
   $3,205,103 
   

 

 

 
Pharmaceuticals – 4.5%

 

 
Bayer AG   14,330  $992,996 
Johnson & Johnson   1,605   223,544 
Merck KGaA   3,922   410,115 
Roche Holding AG   3,440   967,830 
   

 

 

 
   $2,594,485 
   

 

 

 
Railroad & Shipping – 3.8%   
Canadian National Railway Co.   11,933  $1,103,564 
Kansas City Southern Co.   9,168   1,116,846 
   

 

 

 
   $2,220,410 
   

 

 

 
Restaurants – 0.6%   
Whitbread PLC   5,700  $335,080 
   

 

 

 
Issuer  Shares/Par  Value ($) 
COMMON STOCKS – continued

 

Specialty Chemicals – 4.6%   
Akzo Nobel N.V.   8,312  $781,078 
L’Air Liquide S.A.   4,283   599,278 
Linde PLC   1,449   290,959 
Linde PLC   4,895   983,253 
   

 

 

 
   $2,654,568 
   

 

 

 
Specialty Stores – 0.4%   
Hermes International   188  $135,576 
Sally Beauty Holdings, Inc. (a)   7,303   97,422 
   

 

 

 
   $232,998 
   

 

 

 
Trucking – 1.4%   
United Parcel Service, Inc., “B”   8,129  $839,482 
   

 

 

 
Total Common Stocks
(Identified Cost, $31,386,857)
   $58,143,031 
   

 

 

 
INVESTMENT COMPANIES (h) – 0.8%

 

 
Money Market Funds – 0.8%   
MFS Institutional Money Market Portfolio, 2.42% (v) (Identified Cost, $456,714)   456,705  $456,751 
   

 

 

 
OTHER ASSETS, LESS
LIABILITIES – (0.8)%
    (440,841
   

 

 

 
NET ASSETS – 100.0%   $58,158,941 
   

 

 

 

 

(a) Non-income producing security.

 

(h) An affiliated issuer, which 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. At period end, the aggregate values of the fund’s investments in affiliated issuers and in unaffiliated issuers were $456,751 and $58,143,031, respectively.

 

(v) Affiliated issuer that is available only to investment companies managed by MFS. The rate quoted for the MFS Institutional Money Market Portfolio is the annualizedseven-day yield of the fund at period end.

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 6/30/19

  

Assets

     

Investments in unaffiliated issuers, at value (identified cost, $31,386,857)

   $58,143,031 

Investments in affiliated issuers, at value (identified cost, $456,714)

   456,751 

Cash

   4,163 

Receivables for

  

Investments sold

   56,641 

Fund shares sold

   15,023 

Dividends

   156,956 

Receivable from investment adviser

   3,638 

Other assets

   231 

Total assets

   $58,836,434 

Liabilities

     

Payables for

  

Investments purchased

   $90,683 

Fund shares reacquired

   528,788 

Payable to affiliates

  

Administrative services fee

   204 

Shareholder servicing costs

   159 

Distribution and/or service fees

   247 

Payable for independent Trustees’ compensation

   11 

Deferred country tax expense payable

   1,893 

Accrued expenses and other liabilities

   55,508 

Total liabilities

   $677,493 

Net assets

   $58,158,941 

Net assets consist of

     

Paid-in capital

   $26,304,416 

Total distributable earnings (loss)

   31,854,525 

Net assets

   $58,158,941 

Shares of beneficial interest outstanding

   2,555,335 

 

   Net assets   Shares
outstanding
   Net asset value
per share
 

Initial Class

   $49,371,342    2,166,593    $22.79 

Service Class

   8,787,599    388,742    22.61 

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 6/30/19

  

Net investment income (loss)

     

Income

  

Dividends

   $855,377 

Dividends from affiliated issuers

   4,658 

Other

   20 

Foreign taxes withheld

   (60,368

Total investment income

   $799,687 

Expenses

  

Management fee

   $247,011 

Distribution and/or service fees

   10,274 

Shareholder servicing costs

   3,452 

Administrative services fee

   9,039 

Independent Trustees’ compensation

   1,731 

Custodian fee

   11,341 

Shareholder communications

   5,232 

Audit and tax fees

   28,828 

Legal fees

   346 

Miscellaneous

   12,069 

Total expenses

   $329,323 

Reduction of expenses by investment adviser

   (52,232

Net expenses

   $277,091 

Net investment income (loss)

   $522,596 

Realized and unrealized gain (loss)

     

Realized gain (loss) (identified cost basis)

  

Unaffiliated issuers (net of $117 country tax)

   $907,171 

Affiliated issuers

   46 

Foreign currency

   (4,821

Net realized gain (loss)

   $902,396 

Change in unrealized appreciation or depreciation

  

Unaffiliated issuers (net of $410 increase in deferred country tax)

   $8,973,899 

Affiliated issuers

   37 

Translation of assets and liabilities in foreign currencies

   819 

Net unrealized gain (loss)

   $8,974,755 

Net realized and unrealized gain (loss)

   $9,877,151 

Change in net assets from operations

   $10,399,747 

See Notes to Financial Statements

 

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MFS Global Equity 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
6/30/19
   Year ended
12/31/18
 
   (unaudited)     

Change in net assets

    
From operations          

Net investment income (loss)

   $522,596    $613,901 

Net realized gain (loss)

   902,396    3,443,173 

Net unrealized gain (loss)

   8,974,755    (9,540,418

Change in net assets from operations

   $10,399,747    $(5,483,344

Total distributions to shareholders

   $—    $(3,119,040

Change in net assets from fund share transactions

   $(4,599,018   $(2,050,773

Total change in net assets

   $5,800,729    $(10,653,157

Net assets

          

At beginning of period

   52,358,212    63,011,369 

At end of period

   $58,158,941    $52,358,212 

See Notes to Financial Statements

 

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MFS Global Equity 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 that 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

6/30/19

   Year ended 
   12/31/18     12/31/17     12/31/16     12/31/15     12/31/14 
     (unaudited)                             

Net asset value, beginning of period

     $18.82    $22.00      $18.59      $18.39      $19.59      $19.18 
Income (loss) from investment operations                                        

Net investment income (loss) (d)

     $0.20    $0.23      $0.20      $0.17      $0.18      $0.20 

Net realized and unrealized gain (loss)

     3.77    (2.23     4.20      1.20      (0.49     0.54 

Total from investment operations

     $3.97    $(2.00     $4.40      $1.37      $(0.31     $0.74 
Less distributions declared to shareholders                                        

From net investment income

     $—    $(0.21     $(0.18     $(0.18     $(0.21     $(0.14

From net realized gain

         (0.97     (0.81     (0.99��    (0.68     (0.19

Total distributions declared to shareholders

     $—    $(1.18     $(0.99     $(1.17     $(0.89     $(0.33

Net asset value, end of period (x)

     $22.79    $18.82      $22.00      $18.59      $18.39      $19.59 

Total return (%) (k)(r)(s)(x)

     21.09(n)    (9.74     24.07      7.35      (1.41     3.87 
Ratios (%) (to average net assets)
and Supplemental data:
                                        

Expenses before expense reductions (f)

     1.16(a)    1.13      1.16      1.19      1.26      1.28 

Expenses after expense reductions (f)

     0.97(a)    0.97      0.97      0.99      1.00      1.09 

Net investment income (loss)

     1.94(a)    1.07      0.95      0.93      0.91      1.06 

Portfolio turnover

     5(n)    15      11      13      12      15 

Net assets at end of period (000 omitted)

     $49,371    $45,219      $52,850      $44,756      $45,946      $51,635 
Service Class    

Six months

ended
6/30/19

   Year ended 
   12/31/18     12/31/17     12/31/16     12/31/15     12/31/14 
     (unaudited)                             

Net asset value, beginning of period

     $18.70    $21.86      $18.49      $18.30      $19.50      $19.10 
Income (loss) from investment operations                                        

Net investment income (loss) (d)

     $0.18    $0.18      $0.14      $0.13      $0.13      $0.15 

Net realized and unrealized gain (loss)

     3.73    (2.21     4.18      1.18      (0.48     0.54 

Total from investment operations

     $3.91    $(2.03     $4.32      $1.31      $(0.35     $0.69 
Less distributions declared to shareholders                                        

From net investment income

     $—    $(0.16     $(0.14     $(0.13     $(0.17     $(0.10

From net realized gain

         (0.97     (0.81     (0.99     (0.68     (0.19

Total distributions declared to shareholders

     $—    $(1.13     $(0.95     $(1.12     $(0.85     $(0.29

Net asset value, end of period (x)

     $22.61    $18.70      $21.86      $18.49      $18.30      $19.50 

Total return (%) (k)(r)(s)(x)

     20.91(n)    (9.92     23.75      7.06      (1.67     3.63 
Ratios (%) (to average net assets)
and Supplemental data:
                                        

Expenses before expense reductions (f)

     1.41(a)    1.38      1.42      1.44      1.51      1.53 

Expenses after expense reductions (f)

     1.22(a)    1.22      1.22      1.24      1.25      1.34 

Net investment income (loss)

     1.71(a)    0.86      0.68      0.70      0.67      0.80 

Portfolio turnover

     5(n)    15      11      13      12      15 

Net assets at end of period (000 omitted)

     $8,788    $7,139      $10,162      $7,033      $6,893      $6,533 

See Notes to Financial Statements

 

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MFS Global Equity Series

 

Financial Highlights – continued

 

 

(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.

 

(x)

The net asset values and total returns have been calculated on net assets which include adjustments made in accordance with U.S. generally accepted accounting principles required at period end for financial reporting purposes.

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 diversified series of MFS Variable Insurance Trust (the trust). The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as anopen-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.

The fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services – Investment Companies.

 

(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 increases and decreases in net assets from operations 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 market, economic, industrial, political, regulatory, geopolitical, and other conditions.

Balance Sheet Offsetting– The fund’s accounting policy with respect to balance sheet offsetting is that, absent an event of default by the counterparty or a termination of the agreement, the International Swaps and Derivatives Association (ISDA) Master Agreement, or similar agreement, does not result in an offset of reported amounts of financial assets and financial liabilities in the Statement of Assets and Liabilities across transactions between the fund and the applicable counterparty. The fund’s right to setoff may be restricted or prohibited by the bankruptcy or insolvency laws of the particular jurisdiction to which a specific master netting agreement counterparty is subject. Balance sheet offsetting disclosures, to the extent applicable to the fund, have been included in the fund’s Significant Accounting Policies note under the captions for each of the fund’sin-scope financial instruments and transactions.

Investment Valuations– Equity securities, including restricted equity securities, are generally valued at the last sale or official closing price on their primary market or exchange as provided by a third-party pricing service. Equity securities, for which there were no sales reported that day, are generally valued at the last quoted daily bid quotation on their primary market or exchange as provided by a third-party pricing service. Short-term instruments with a maturity at issuance of 60 days or less may be 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. In determining values, 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 halt 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 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

 

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MFS Global Equity Series

 

Notes to Financial Statements (unaudited) – continued

 

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, 2019 in valuing the fund’s assets or liabilities:

 

Financial Instruments  Level 1   Level 2   Level 3   Total 
Equity Securities   $58,143,031    $—    $—    $58,143,031 
Mutual Funds   456,751            456,751 
Total   $58,599,782    $—    $—    $58,599,782 

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.

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. Dividends received in cash are recorded on theex-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 theex-dividend date. Dividend payments received in additional securities are recorded on theex-dividend 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.

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, when filed, will remain subject to examination by the Internal Revenue Service for a three year period. Management has analyzed the fund’s tax positions taken on federal and state tax returns for all open tax years and does not believe that there are any uncertain tax positions that require recognition of a tax liability. Foreign taxes, if any, have been accrued by the fund in the accompanying financial statements in accordance with the applicable foreign tax law. Foreign income taxes may be withheld by certain countries in which the fund invests. Additionally, capital gains realized by the fund on securities issued in or by certain foreign countries may be subject to capital gains tax imposed by those countries.

Distributions to shareholders are recorded on theex-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.

 

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MFS Global Equity Series

 

Notes to Financial Statements (unaudited) – continued

 

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

 

   Year ended
12/31/18
 
Ordinary income (including any short-term capital gains)   $692,013 
Long-term capital gains   2,427,027 
Total distributions   $3,119,040 

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

 

As of 6/30/19  
Cost of investments   $32,313,765 
Gross appreciation   26,912,919 
Gross depreciation   (626,902
Net unrealized appreciation (depreciation)   $26,286,017 
As of 12/31/18  
Undistributed ordinary income   710,888 
Undistributed long-term capital gain   3,433,744 
Other temporary differences   (42
Net unrealized appreciation (depreciation)   17,310,188 

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 in the Statements of Changes in Net Assets are presented by class as follows:

 

   From net investment
income
   From net realized
gain
 
   Six months ended
6/30/19
   Year ended
12/31/18
   Six months ended
6/30/19
   Year ended
12/31/18
 
Initial Class   $—    $467,135    $—    $2,182,087 
Service Class       64,876        404,942 
Total   $—    $532,011    $—    $2,587,029 

 

(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 based on the fund’s average daily net assets:

 

Up to $1 billion   0.90% 
In excess of $1 billion and up to $2.5 billion   0.75% 
In excess of $2.5 billion   0.65% 

MFS has agreed in writing to reduce its management fee by a specified amount if certain MFS mutual fund assets exceed thresholds agreed to by MFS and the fund’s Board of Trustees. For the six months ended June 30, 2019, this management fee reduction amounted to $2,647, which is included in the reduction of total expenses in the Statement of Operations. The management fee incurred for the six months ended June 30, 2019 was equivalent to an annual effective rate of 0.89% 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, excluding interest, taxes, extraordinary expenses, brokerage and transaction costs, and investment-related expenses, such that total annual operating expenses do not exceed 0.97% of average daily net assets for the Initial Class shares and 1.22% of average daily net assets for the Service Class shares. This written agreement will terminate on July 31, 2019. For the six months ended June 30, 2019, this reduction amounted to $49,585, which is included in the reduction of total expenses in the Statement of Operations. Effective August 1, 2019, the investment adviser has agreed in writing to pay a portion of the fund’s total annual operating expenses, excluding interest, taxes, extraordinary expenses, brokerage and transaction costs, and investment-related expenses, such that total annual operating expenses do not exceed 0.92% of average daily net assets for the Initial Class shares and 1.17% 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, 2021.

 

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MFS Global Equity 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 Rule12b-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, 2019, the fee was $3,277, which equated to 0.0119% annually of the fund’s average daily net assets. MFSC also receives payment from the fund forout-of-pocket expenses paid by MFSC on behalf of the fund. For the six months ended June 30, 2019, these costs amounted to $175.

Administrator– MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the fund 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, 2019 was equivalent to an annual effective rate of 0.0329% 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 from MFS for their services to the fund. 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) had entered into a service agreement (the ISO Agreement) which provided for payment of fees solely by the funds to Tarantino LLC in return for the provision of services of an Independent Senior Officer (ISO) for the funds. Frank L. Tarantino served as the ISO and was an officer of the funds and the sole member of Tarantino LLC. Effective June 30, 2019, Mr. Tarantino retired from his position as ISO for the funds, and the ISO Agreement was terminated. For the six months ended June 30, 2019, the fee paid by the fund under this agreement was $65 and is included in “Miscellaneous” expense in the Statement of Operations. MFS had agreed to bear all expenses associated with office space, other administrative support, and supplies provided to the ISO.

The fund invests in the MFS Institutional Money Market Portfolio which is managed by MFS and seeks current income consistent with preservation of capital and liquidity. This money market fund does not pay a management fee to MFS.

The fund is permitted to engage in purchase and sale transactions with funds and accounts for which MFS serves as investment adviser orsub-adviser (“cross-trades”) pursuant to a policy adopted by the Board of Trustees. This policy has been designed to ensure that cross-trades conducted by the fund comply with Rule17a-7 under the Investment Company Act of 1940. During the six months ended June 30, 2019, the fund engaged in purchase and sale transactions pursuant to this policy, which amounted to $1,342 and $4,146, respectively. The sales transactions resulted in net realized gains (losses) of $278.

 

(4) Portfolio Securities

For the six months ended June 30, 2019, purchases and sales of investments, other than short-term obligations, aggregated $2,493,717 and $6,218,873, 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 6/30/19   Year ended 12/31/18 
   Shares   Amount   Shares   Amount 
Shares sold        

Initial Class

   146,945    $3,127,436    317,099    $6,565,809 

Service Class

   74,801    1,584,895    91,085    1,943,172 
   221,746    $4,712,331    408,184    $8,508,981 
Shares issued to shareholders in reinvestment of distributions        

Initial Class

       $—    123,334    $2,649,222 

Service Class

           22,006    469,818 
       $—    145,340    $3,119,040 

 

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MFS Global Equity Series

 

Notes to Financial Statements (unaudited) – continued

 

   Six months ended 6/30/19   Year ended 12/31/18 
   Shares   Amount   Shares   Amount 
Shares reacquired        

Initial Class

   (382,499   $(7,857,125   (440,375   $(9,499,130

Service Class

   (67,901   (1,454,224   (196,025   (4,179,664
   (450,400   $(9,311,349   (636,400   $(13,678,794
Net change        

Initial Class

   (235,554   $(4,729,689   58    $(284,099

Service Class

   6,900    130,671    (82,934   (1,766,674
   (228,654   $(4,599,018   (82,876   $(2,050,773

 

(6) Line of Credit

The fund and certain other funds managed by MFS participate in a $1.25 billion unsecured committed line of credit, subject to a $1 billion sublimit, provided by a syndicate 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 highest of one month LIBOR, the Federal Funds Effective Rate and the Overnight Bank Funding Rate, 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. 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 rates equal to customary reference rates plus an agreed upon spread. For the six months ended June 30, 2019, the fund’s commitment fee and interest expense were $163 and $0, respectively, and are included in “Miscellaneous” expense in the Statement of Operations.

 

(7) Investments in 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 following were affiliated issuers:

 

Affiliated Issuers Beginning
Value
  Purchases  Sales
Proceeds
  Realized
Gain
(Loss)
  Change in
Unrealized
Appreciation or
Depreciation
  Ending
Value
 
MFS Institutional Money Market Portfolio  $373,176   $5,642,421   $5,558,929   $46   $37   $456,751 
Affiliated Issuers                 Dividend
Income
  Capital Gain
Distributions
 
MFS Institutional Money Market Portfolio

 

    $4,658   $— 

 

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MFS Global Equity Series

 

PROXY VOTING POLICIES AND INFORMATION

 

MFS votes proxies on behalf of the fund pursuant to proxy voting policies and procedures that are available without charge, upon request, by calling 1-800-225-2606, by visitingmfs.com/proxyvoting, or by visiting the SEC’s Web site athttp://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 by August 31 of each year without charge by visitingmfs.com/proxyvoting, or by visiting the SEC’s Web site athttp://www.sec.gov.

QUARTERLY PORTFOLIO DISCLOSURE

The fund files a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q or as an exhibit to its reports on Form N-PORT (for first and third fiscal quarters ending March 31, 2019 or after). The fund’sForm N-Q or Form N-PORT reports are available on the SEC’s website athttp://www.sec.gov.A shareholder can obtain the portfolio holdings report for the first and third quarters of the fund’s fiscal year atmfs.com/vit1 by choosing the fund’s name and then selecting the “Resources” tab and clicking on “Prospectus and Reports”.

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 at https://www.mfs.com/en-us/what-we-do/announcements.html or atmfs.com/vit1 by choosing the fund’s name.

INFORMATION ABOUT FUND CONTRACTS AND LEGAL CLAIMS

The fund has entered into contractual arrangements with an investment adviser, administrator, distributor, shareholder servicing agent, 529 program manager (if applicable), and custodian who each provide services to the fund. Unless expressly stated otherwise, shareholders are not parties to, or intended beneficiaries of these contractual arrangements, and these contractual arrangements are not intended to create any shareholder right to enforce them against the service providers or to seek any remedy under them against the service providers, either directly or on behalf of the fund.

Under the Trust’s By-Laws and Declaration of Trust, any claims asserted against or on behalf of the MFS Funds, including claims against Trustees and Officers, must be brought in state and federal courts located within the Commonwealth of Massachusetts.

 

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LOGO


Table of Contents

 

Semiannual Report

June 30, 2019

 

LOGO

 

MFS® Growth Series

 

LOGO

 

MFS® Variable Insurance Trust

 

Beginning on January 1, 2021, as permitted by regulations adopted by the U.S. Securities and Exchange Commission, the insurance company that offers your contract may determine that it will no longer send you paper copies of the fund’s annual and semiannual shareholder reports unless you specifically request paper copies from the insurance company or from your financial intermediary. Instead, the shareholder reports will be made available on a Web site (insurancefunds.mfs.com or other Web site of which you will be notified), and the insurance company will notify you by mail each time a report is posted and provide you with a Web site link to access the report. Instructions for requesting paper copies will be provided by your insurance company or financial intermediary.

If you already elected to receive shareholder reports by email, you will not be affected by this change and you need not take any action. If your insurance company or financial intermediary offers electronic delivery, you may elect to receive shareholder reports and other communications from the insurance company or financial intermediary by email by following the instructions provided by the insurance company or financial intermediary.

Beginning on January 1, 2019, you may elect to receive all future reports in paper free of charge from the insurance company or financial intermediary. You can inform the insurance company or financial intermediary that you wish to continue receiving paper copies of your shareholder reports by contacting your insurance company or financial intermediary. Your election to receive reports in paper will apply to all funds held in your account with your insurance company or financial intermediary.

 

VEG-SEM


Table of Contents

MFS® Growth Series

 

CONTENTS

 

Letter from the Executive Chairman   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 
Proxy voting policies and information   16 
Quarterly portfolio disclosure   16 
Further information   16 
Information about fund contracts and legal claims   16 

 

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



Table of Contents

MFS Growth Series

 

LETTER FROM THE EXECUTIVE CHAIRMAN

 

LOGO

Dear Contract Owners:

Slowing global growth, low inflation, and increasing trade friction between the United States and China have been hallmarks of the past 12 months. After experiencing an uptick in market volatility in late 2018, markets steadied during the first half of 2019, thanks in large measure to the adoption of a dovish policy stance on the part of global central banks, who have largely abandoned efforts to normalize interest rates and have instead focused on supporting economic growth. Trade tensions remain high as the U.S. has ratcheted up tariffs on Chinese imports and China has retaliated. A truce of sorts was reached midyear, but significant challenges continue to confront negotiators, and it is not known whether a comprehensive agreement can be reached.

With Boris Johnson replacing Theresa May as Britain’s prime minister, uncertainty over Brexit remains high. Johnson has adopted a more combative stance than his predecessor toward the European Union, increasing concerns that there will be a “hard” Brexit.

Markets expect that the longest economic expansion in U.S. history will continue for the time being, albeit at a slower pace. Nevertheless, slower growth and low inflation have spurred the U.S. Federal Reserve to take a more accommodative policy stance, prompting investors to anticipate several interest rate cuts in the coming year. The European Central Bank has adopted a similar position. The more accommodative environment has helped fuel a continued rise in global equities and has been broadly supportive of risk assets.

Since launching the first U.S.open-end mutual fund in 1924, MFS® has been committed to a single purpose: to create value by allocating capital responsibly for clients. Through our powerful global investment platform, we combine collective expertise, thoughtful risk management, and long-term discipline to uncover what we believe are the best investment opportunities in the market.

Respectfully,

 

LOGO

Robert J. Manning

Executive Chairman

MFS Investment Management

August 16, 2019

 

 

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

 

1


Table of Contents

MFS Growth Series

 

PORTFOLIO COMPOSITION

 

Portfolio structure

 

LOGO

 

Top ten holdings 
Microsoft Corp.  7.3% 
Amazon.com, Inc.  6.2% 
Visa, Inc., “A”  5.0% 
Adobe Systems, Inc.  4.4% 
MasterCard, Inc., “A”  4.2% 
Alphabet, Inc., “A”  3.5% 
Facebook, Inc., “A”  2.8% 
Thermo Fisher Scientific, Inc.  2.8% 
Danaher Corp.  2.2% 
Fiserv, Inc.  2.2% 
GICS equity sectors (g) 
Information Technology  37.2% 
Health Care  14.2% 
Communication Services  13.6% 
Consumer Discretionary  12.9% 
Industrials  7.7% 
Consumer Staples  4.2% 
Financials  3.9% 
Materials  2.9% 
Real Estate  1.8% 
Energy  0.4% 
 

 

(g)

The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and S&P Global Market Intelligence Inc. (“S&P Global Market Intelligence”). GICS is a service mark of MSCI and S&P Global Market Intelligence and has been licensed for use by MFS.

Cash & Cash Equivalents includes any cash, investments in money market funds, short-term securities, and other assets less liabilities. Please see the Statement of Assets and Liabilities for additional information related to the fund’s cash position and other assets and liabilities.

Percentages are based on net assets as of June 30, 2019.

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, 2019 through June 30, 2019

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, 2019 through June 30, 2019.

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
1/01/19
   

Ending

Account Value
6/30/19

   Expenses Paid
During Period (p)
1/01/19-6/30/19
 
Initial Class Actual   0.74%    $1,000.00    $1,258.03    $4.14 
 Hypothetical (h)   0.74%    $1,000.00    $1,021.12    $3.71 
Service Class Actual   0.99%    $1,000.00    $1,256.52    $5.54 
 Hypothetical (h)   0.99%    $1,000.00    $1,019.89    $4.96 

 

(h)

5% class return per year before expenses.

 

(p)

“Expenses Paid During Period” are equal to each class’s annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by 181/365 (to reflect theone-half year period).

 

3


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MFS Growth Series

 

PORTFOLIO OF INVESTMENTS – 6/30/19 (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 – 98.8%

 

Aerospace – 0.2%   
FLIR Systems, Inc.   66,848  $3,616,477 
   

 

 

 
Alcoholic Beverages – 1.0%   
Constellation Brands, Inc., “A”   71,406  $14,062,698 
Pernod Ricard S.A.   23,704   4,367,867 
   

 

 

 
   $18,430,565 
   

 

 

 
Apparel Manufacturers – 1.2%   
NIKE, Inc., “B”   258,024  $21,661,115 
   

 

 

 
Biotechnology – 1.6%   
Illumina, Inc. (a)   25,165  $9,264,495 
Vertex Pharmaceuticals, Inc. (a)   100,190   18,372,842 
   

 

 

 
   $27,637,337 
   

 

 

 
Broadcasting – 2.2%   
Netflix, Inc. (a)   105,494  $38,750,056 
   

 

 

 
Brokerage & Asset Managers – 1.0%

 

 
Charles Schwab Corp.   90,765  $3,647,845 
Intercontinental Exchange, Inc.   171,885   14,771,797 
   

 

 

 
   $18,419,642 
   

 

 

 
Business Services – 12.5%   
CoStar Group, Inc. (a)   5,638  $3,123,790 
Fidelity National Information Services, Inc.   155,930   19,129,492 
Fiserv, Inc. (a)   433,179   39,488,598 
FleetCor Technologies, Inc. (a)   70,355   19,759,202 
Global Payments, Inc.   170,580   27,314,975 
MSCI, Inc.   94,786   22,633,949 
PayPal Holdings, Inc. (a)   205,508   23,522,446 
Total System Services, Inc.   84,699   10,864,341 
TransUnion   140,073   10,296,766 
Verisk Analytics, Inc., “A”   207,689   30,418,131 
Worldpay, Inc. (a)   133,655   16,379,420 
   

 

 

 
   $222,931,110 
   

 

 

 
Cable TV – 1.6%   
Charter Communications, Inc., “A” (a)   39,915  $15,773,610 
Comcast Corp., “A”   299,216   12,650,852 
   

 

 

 
   $28,424,462 
   

 

 

 
Computer Software – 15.9%   
Adobe Systems, Inc. (a)   267,469  $78,809,741 
Intuit, Inc.   126,235   32,988,993 
Microsoft Corp.   968,218   129,702,483 
PTC, Inc. (a)   42,652   3,828,443 
Salesforce.com, Inc. (a)   249,293   37,825,227 
   

 

 

 
   $283,154,887 
   

 

 

 
Computer Software – Systems – 1.7%

 

 
Apple, Inc.   127,924  $25,318,718 
Square, Inc., “A” (a)   78,645   5,704,122 
   

 

 

 
   $31,022,840 
   

 

 

 
Issuer  Shares/Par  Value ($) 
COMMON STOCKS – continued

 

Construction – 2.9%

 

 
Sherwin-Williams Co.   58,226  $26,684,393 
Vulcan Materials Co.   176,503   24,235,627 
   

 

 

 
   $50,920,020 
   

 

 

 
Consumer Products – 1.9%   
Colgate-Palmolive Co.   284,673  $20,402,514 
Estee Lauder Cos., Inc., “A”   77,243   14,143,966 
   

 

 

 
   $34,546,480 
   

 

 

 
Consumer Services – 0.2%   
Booking Holdings, Inc. (a)   1,455  $2,727,703 
   

 

 

 
Electrical Equipment – 2.4%   
AMETEK, Inc.   174,790  $15,877,924 
Amphenol Corp., “A”   168,607   16,176,156 
Fortive Corp.   138,743   11,310,329 
   

 

 

 
   $43,364,409 
   

 

 

 
Electronics – 0.5%   
Analog Devices, Inc.   84,243  $9,508,507 
   

 

 

 
Energy – Independent – 0.4%   
Pioneer Natural Resources Co.   45,005  $6,924,469 
   

 

 

 
Food & Beverages – 0.2%   
Monster Worldwide, Inc. (a)   52,780  $3,368,947 
   

 

 

 
Gaming & Lodging – 1.5%   
Hilton Worldwide Holdings, Inc.   86,838  $8,487,546 
Marriott International, Inc., “A”   109,382   15,345,201 
Wynn Resorts Ltd.   25,966   3,219,524 
   

 

 

 
   $27,052,271 
   

 

 

 
General Merchandise – 1.1%   
Dollar General Corp.   69,890  $9,446,332 
Dollar Tree, Inc. (a)   100,558   10,798,924 
   

 

 

 
   $20,245,256 
   

 

 

 
Insurance – 1.6%   
Aon PLC   150,764  $29,094,437 
   

 

 

 
Internet – 8.4%   
Alibaba Group Holding Ltd., ADR (a)   36,559  $6,194,923 
Alphabet, Inc., “A” (a)   57,946   62,743,929 
Alphabet, Inc., “C” (a)   25,496   27,558,881 
Facebook, Inc., “A” (a)   260,406   50,258,358 
Spotify Technology S.A. (a)   23,407   3,422,571 
   

 

 

 
   $150,178,662 
   

 

 

 
Leisure & Toys – 1.8%   
Electronic Arts, Inc. (a)   209,787  $21,243,032 
Take-Two Interactive Software, Inc. (a)   96,995   11,011,842 
   

 

 

 
   $32,254,874 
   

 

 

 
Machinery & Tools – 1.4%   
Roper Technologies, Inc.   68,300  $25,015,558 
   

 

 

 
 

 

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MFS Growth Series

 

Portfolio of Investments (unaudited) – continued

 

Issuer  Shares/Par  Value ($) 
COMMON STOCKS – continued

 

Medical Equipment – 10.2%   
Abbott Laboratories   255,186  $21,461,143 
Boston Scientific Corp. (a)   458,583   19,709,897 
Danaher Corp.   278,822   39,849,240 
Edwards Lifesciences Corp. (a)   65,889   12,172,334 
Medtronic PLC   285,841   27,838,055 
Stryker Corp.   56,294   11,572,921 
Thermo Fisher Scientific, Inc.   169,034   49,641,905 
   

 

 

 
   $182,245,495 
   

 

 

 
Other Banks & Diversified Financials – 9.2%

 

 
Mastercard, Inc., “A”   280,196  $74,120,248 
Visa, Inc., “A”   512,668   88,973,531 
   

 

 

 
   $163,093,779 
   

 

 

 
Pharmaceuticals – 2.5%   
Elanco Animal Health, Inc. (a)   101,155  $3,419,039 
Eli Lilly & Co.   81,980   9,082,564 
Zoetis, Inc.   275,719   31,291,350 
   

 

 

 
   $43,792,953 
   

 

 

 
Printing & Publishing – 0.2%   
IHS Markit Ltd. (a)   60,459  $3,852,448 
   

 

 

 
Railroad & Shipping – 2.1%   
Canadian Pacific Railway Ltd.   71,883  $16,909,757 
Union Pacific Corp.   117,859   19,931,135 
   

 

 

 
   $36,840,892 
   

 

 

 
Restaurants – 1.0%   
Chipotle Mexican Grill, Inc., “A” (a)   11,226  $8,227,311 
Starbucks Corp.   113,081   9,479,580 
   

 

 

 
   $17,706,891 
   

 

 

 
Specialty Stores – 8.3%   
Amazon.com, Inc. (a)   58,175  $110,161,925 
Costco Wholesale Corp.   54,670   14,447,094 
Lululemon Athletica, Inc. (a)   33,375   6,014,509 
Ross Stores, Inc.   179,263   17,768,549 
   

 

 

 
   $148,392,077 
   

 

 

 
Issuer  Shares/Par  Value ($) 
COMMON STOCKS – continued

 

Telecommunications – Wireless – 1.8%

 

 
American Tower Corp., REIT   153,180  $31,317,651 
   

 

 

 
Tobacco – 0.3%   
Philip Morris International, Inc.   57,071  $4,481,786 
   

 

 

 
Total Common Stocks
(Identified Cost, $739,219,583)
   $1,760,974,056 
   

 

 

 
INVESTMENT COMPANIES (h) – 1.4%

 

 
Money Market Funds – 1.4%   
MFS Institutional Money Market Portfolio, 2.42% (v) (Identified Cost, $25,636,585)   25,637,090  $25,639,653 
   

 

 

 
OTHER ASSETS, LESS
LIABILITIES – (0.2)%
    (3,352,754
   

 

 

 
NET ASSETS – 100.0%   $1,783,260,955 
   

 

 

 

 

(a) Non-income producing security.

 

(h) An affiliated issuer, which 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. At period end, the aggregate values of the fund’s investments in affiliated issuers and in unaffiliated issuers were $25,639,653 and $1,760,974,056, respectively.

 

(v) Affiliated issuer that is available only to investment companies managed by MFS. The rate quoted for the MFS Institutional Money Market Portfolio is the annualizedseven-day yield of the fund at period end.

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

 

ADR American Depositary Receipt

 

REIT Real Estate Investment Trust

See Notes to Financial Statements

 

 

5


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 6/30/19

  

Assets

     

Investments in unaffiliated issuers, at value (identified cost, $739,219,583)

   $1,760,974,056 

Investments in affiliated issuers, at value (identified cost, $25,636,585)

   25,639,653 

Receivables for

  

Fund shares sold

   1,168,593 

Dividends

   492,246 

Other assets

   3,045 

Total assets

   $1,788,277,593 

Liabilities

     

Payables for

  

Fund shares reacquired

   $4,648,074 

Payable to affiliates

  

Investment adviser

   145,854 

Administrative services fee

   2,703 

Shareholder servicing costs

   1,324 

Distribution and/or service fees

   9,729 

Payable for independent Trustees’ compensation

   13 

Accrued expenses and other liabilities

   208,941 

Total liabilities

   $5,016,638 

Net assets

   $1,783,260,955 

Net assets consist of

     

Paid-in capital

   $547,227,772 

Total distributable earnings (loss)

   1,236,033,183 

Net assets

   $1,783,260,955 

Shares of beneficial interest outstanding

   30,394,015 

 

   Net assets   Shares
outstanding
   Net asset value
per share
 

Initial Class

   $1,425,161,843    24,097,070    $59.14 

Service Class

   358,099,112    6,296,945    56.87 

See Notes to Financial Statements

 

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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 6/30/19

  

Net investment income (loss)

     

Income

  

Dividends

   $5,587,014 

Dividends from affiliated issuers

   199,905 

Other

   13,531 

Income on securities loaned

   9,761 

Foreign taxes withheld

   (12,244

Total investment income

   $5,797,967 

Expenses

  

Management fee

   $5,979,882 

Distribution and/or service fees

   412,759 

Shareholder servicing costs

   20,165 

Administrative services fee

   123,153 

Independent Trustees’ compensation

   20,903 

Custodian fee

   41,314 

Shareholder communications

   50,053 

Audit and tax fees

   29,820 

Legal fees

   7,373 

Miscellaneous

   27,598 

Total expenses

   $6,713,020 

Reduction of expenses by investment adviser

   (81,320

Net expenses

   $6,631,700 

Net investment income (loss)

   $(833,733

Realized and unrealized gain (loss)

     

Realized gain (loss) (identified cost basis)

  

Unaffiliated issuers

   $64,224,336 

Affiliated issuers

   526 

Foreign currency

   763 

Net realized gain (loss)

   $64,225,625 

Change in unrealized appreciation or depreciation

  

Unaffiliated issuers

   $317,978,377 

Affiliated issuers

   3,068 

Translation of assets and liabilities in foreign currencies

   91 

Net unrealized gain (loss)

   $317,981,536 

Net realized and unrealized gain (loss)

   $382,207,161 

Change in net assets from operations

   $381,373,428 

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   Year ended 
   6/30/19   12/31/18 
   (unaudited)     

Change in net assets

    

From operations

          

Net investment income (loss)

   $(833,733   $(740,252

Net realized gain (loss)

   64,225,625    152,572,534 

Net unrealized gain (loss)

   317,981,536    (96,117,913

Change in net assets from operations

   $381,373,428    $55,714,369 

Total distributions to shareholders

   $—    $(114,147,480

Change in net assets from fund share transactions

   $(111,741,465   $(49,798,519

Total change in net assets

   $269,631,963    $(108,231,630

Net assets

          

At beginning of period

   1,513,628,992    1,621,860,622 

At end of period

   $1,783,260,955    $1,513,628,992 

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 that 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
6/30/19

  Year ended 
  12/31/18  12/31/17   12/31/16  12/31/15   12/31/14 
     (unaudited)                  

Net asset value, beginning of period

     $47.01   $48.90   $38.76    $40.17   $39.75    $39.07 
Income (loss) from investment operations                             

Net investment income (loss) (d)

     $(0.01  $0.00(w)   $0.06    $0.05(c)   $0.03    $0.07 

Net realized and unrealized gain (loss)

     12.14   1.81   11.95    1.01   2.73    3.33 

Total from investment operations

     $12.13   $1.81   $12.01    $1.06   $2.76    $3.40 
Less distributions declared to shareholders                             

From net investment income

     $—   $(0.05  $(0.05   $(0.02  $(0.07   $(0.04

From net realized gain

        (3.65  (1.82   (2.45  (2.27   (2.68

Total distributions declared to shareholders

     $—   $(3.70  $(1.87   $(2.47  $(2.34   $(2.72

Net asset value, end of period (x)

     $59.14   $47.01   $48.90    $38.76   $40.17    $39.75 

Total return (%) (k)(r)(s)(x)

     25.80(n)   2.67   31.40    2.44(c)   7.56    8.94 
Ratios (%) (to average net assets)
and Supplemental data:
                             

Expenses before expense reductions (f)

     0.75(a)   0.75   0.76    0.75(c)   0.76    0.76 

Expenses after expense reductions (f)

     0.74(a)   0.74   0.75    0.74(c)   0.75    0.76 

Net investment income (loss)

     (0.05)(a)(l)   0.00(w)   0.13    0.12(c)   0.08    0.18 

Portfolio turnover

     6(n)   15   14    24   31    36 

Net assets at end of period (000 omitted)

     $1,425,162   $1,226,217   $1,332,128    $1,179,822   $1,273,204    $1,263,935 
Service Class    

Six months

ended

6/30/19

  Year ended 
  12/31/18  12/31/17   12/31/16  12/31/15   12/31/14 
     (unaudited)                  

Net asset value, beginning of period

     $45.26   $47.27   $37.57    $39.09   $38.77    $38.22 
Income (loss) from investment operations                             

Net investment income (loss) (d)

     $(0.08  $(0.13  $(0.05   $(0.05)(c)   $(0.07   $(0.02

Net realized and unrealized gain (loss)

     11.69   1.77   11.57    0.98   2.66    3.25 

Total from investment operations

     $11.61   $1.64   $11.52    $0.93   $2.59    $3.23 
Less distributions declared to shareholders                             

From net investment income

     $—   $—   $—    $—   $—    $— 

From net realized gain

        (3.65  (1.82   (2.45  (2.27   (2.68

Total distributions declared to shareholders

     $—   $(3.65  $(1.82   $(2.45  $(2.27   $(2.68

Net asset value, end of period (x)

     $56.87   $45.26   $47.27    $37.57   $39.09    $38.77 

Total return (%) (k)(r)(s)(x)

     25.65(n)   2.41   31.08    2.18(c)   7.30    8.68 
Ratios (%) (to average net assets)
and Supplemental data:
                             

Expenses before expense reductions (f)

     1.00(a)   1.00   1.01    1.00(c)   1.01    1.01 

Expenses after expense reductions (f)

     0.99(a)   0.99   1.00    0.99(c)   1.00    1.01 

Net investment income (loss)

     (0.30)(a)(l)   (0.25  (0.12   (0.13)(c)   (0.16   (0.06

Portfolio turnover

     6(n)   15   14    24   31    36 

Net assets at end of period (000 omitted)

     $358,099   $287,412   $289,733    $235,869   $224,694    $279,063 

See Notes to Financial Statements

 

9


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MFS Growth Series

 

Financial Highlights – continued

 

 

(a) Annualized.

 

(c) Amount reflects aone-time reimbursement of expenses by the custodian (or former custodian) without which net investment income and performance would be lower and expenses would be higher.

 

(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.

 

(w) Per share amount was less than $0.01 and total return or ratio was less than 0.01%, as applicable.

 

(x) The net asset values and total returns have been calculated on net assets which include adjustments made in accordance with U.S. generally accepted accounting principles required at period end for financial reporting purposes.

See Notes to Financial Statements

 

10


Table of Contents

 

MFS Growth Series

 

NOTES TO FINANCIAL STATEMENTS (unaudited)

 

(1) Business and Organization

MFS Growth Series (the fund) is a diversified series of MFS Variable Insurance Trust (the trust). The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as anopen-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.

The fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services – Investment Companies.

 

(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 increases and decreases in net assets from operations 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.

Balance Sheet Offsetting– The fund’s accounting policy with respect to balance sheet offsetting is that, absent an event of default by the counterparty or a termination of the agreement, the International Swaps and Derivatives Association (ISDA) Master Agreement, or similar agreement, does not result in an offset of reported amounts of financial assets and financial liabilities in the Statement of Assets and Liabilities across transactions between the fund and the applicable counterparty. The fund’s right to setoff may be restricted or prohibited by the bankruptcy or insolvency laws of the particular jurisdiction to which a specific master netting agreement counterparty is subject. Balance sheet offsetting disclosures, to the extent applicable to the fund, have been included in the fund’s Significant Accounting Policies note under the captions for each of the fund’sin-scope financial instruments and transactions.

Investment Valuations– Equity securities, including restricted equity securities, are generally valued at the last sale or official closing price on their primary market or exchange as provided by a third-party pricing service. Equity securities, for which there were no sales reported that day, are generally valued at the last quoted daily bid quotation on their primary market or exchange as provided by a third-party pricing service. Short-term instruments with a maturity at issuance of 60 days or less may be 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. In determining values, 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 halt 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 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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Table of Contents

MFS Growth Series

 

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, 2019 in valuing the fund’s assets or liabilities:

 

Financial Instruments  Level 1   Level 2   Level 3   Total 
Equity Securities   $1,760,974,056    $—    $—    $1,760,974,056 
Mutual Funds   25,639,653            25,639,653 
Total   $1,786,613,709    $—    $—    $1,786,613,709 

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– Under its Securities Lending Agency Agreement with the fund, State Street Bank and Trust Company, as lending agent, loans the securities of the fund to certain qualified institutions (the “Borrowers”) approved by the fund. Security loans can be terminated at the discretion of either the lending agent or the fund and the related securities must be returned within the earlier of the standard trade settlement period for such securities or within three business days. 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. On loans collateralized by cash, the cash collateral is invested in a money market fund. 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. The lending agent provides the fund with indemnification against Borrower default. In the event of Borrower default, the lending agent will, for the benefit of the fund, either purchase securities identical to those loaned or, when such purchase is commercially impracticable, pay the fund the market value of the loaned securities. In return, the lending agent assumes the fund’s rights to the related collateral. If the collateral value is less than the cost to purchase identical securities, the lending agent is responsible for the shortfall, but only to the extent that such shortfall is not due to a decline in collateral value resulting from collateral reinvestment for which the fund bears the risk of loss. 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 separately reported in the Statement of Operations. The dividend and interest income earned on the securities loaned is accounted for in the same manner as other dividend and interest income. At June 30, 2019, there were no securities on loan or collateral outstanding.

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 theex-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 theex-dividend date. Dividend payments received in additional securities are recorded on theex-dividend 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.

 

12


Table of Contents

MFS Growth Series

 

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, when filed, will remain subject to examination by the Internal Revenue Service for a three year period. Management has analyzed the fund’s tax positions taken on federal and state tax returns for all open tax years and does not believe that there are any uncertain tax positions that require recognition of a tax liability. Foreign taxes, if any, have been accrued by the fund in the accompanying financial statements in accordance with the applicable foreign tax law. Foreign income taxes may be withheld by certain countries in which the fund invests. Additionally, capital gains realized by the fund on securities issued in or by certain foreign countries may be subject to capital gains tax imposed by those countries.

Distributions to shareholders are recorded on theex-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 net operating losses and wash sale loss deferrals.

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

 

   Year ended
12/31/18
 
Ordinary income (including any short-term capital gains)   $8,219,900 
Long-term capital gains   105,927,580 
Total distributions   $114,147,480 

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

 

As of 6/30/19  
Cost of investments   $766,180,716 
Gross appreciation   1,023,561,289 
Gross depreciation   (3,128,296
Net unrealized appreciation (depreciation)   $1,020,432,993 
As of 12/31/18  
Undistributed long-term capital gain   152,208,237 
Other temporary differences   (31
Net unrealized appreciation (depreciation)   702,451,549 

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 in the Statements of Changes in Net Assets are presented by class as follows:

 

   From net investment
income
   From net realized
gain
 
   Six months ended
6/30/19
   Year ended
12/31/18
   Six months ended
6/30/19
   Year ended
12/31/18
 
Initial Class   $—    $1,231,227    $—    $91,363,901 
Service Class               21,552,352 
Total   $—    $1,231,227    $—    $112,916,253 

 

(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 based on the fund’s average daily net assets:

 

Up to $1 billion   0.75% 
In excess of $1 billion   0.65% 

 

13


Table of Contents

MFS Growth Series

 

Notes to Financial Statements (unaudited) – continued

 

MFS has agreed in writing to reduce its management fee by a specified amount if certain MFS mutual fund assets exceed thresholds agreed to by MFS and the fund’s Board of Trustees. For the six months ended June 30, 2019, this management fee reduction amounted to $81,320, which is included in the reduction of total expenses in the Statement of Operations. The management fee incurred for the six months ended June 30, 2019 was equivalent to an annual effective rate of 0.70% 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 Rule12b-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, 2019, the fee was $18,591, which equated to 0.0022% annually of the fund’s average daily net assets. MFSC also receives payment from the fund forout-of-pocket expenses paid by MFSC on behalf of the fund. For the six months ended June 30, 2019, these costs amounted to $1,574.

Administrator– MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the fund 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, 2019 was equivalent to an annual effective rate of 0.0146% 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 from MFS for their services to the fund. 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) had entered into a service agreement (the ISO Agreement) which provided for payment of fees solely by the funds to Tarantino LLC in return for the provision of services of an Independent Senior Officer (ISO) for the funds. Frank L. Tarantino served as the ISO and was an officer of the funds and the sole member of Tarantino LLC. Effective June 30, 2019, Mr. Tarantino retired from his position as ISO for the funds, and the ISO Agreement was terminated. For the six months ended June 30, 2019, the fee paid by the fund under this agreement was $2,006 and is included in “Miscellaneous” expense in the Statement of Operations. MFS had agreed to bear all expenses associated with office space, other administrative support, and supplies provided to the ISO.

The fund invests in the MFS Institutional Money Market Portfolio which is managed by MFS and seeks current income consistent with preservation of capital and liquidity. This money market fund does not pay a management fee to MFS.

The adviser has voluntarily undertaken to reimburse the fund from its own resources on a quarterly basis for the cost of investment research embedded in the cost of the fund’s securities trades. This agreement may be rescinded at any time. For the six months ended June 30, 2019, this reimbursement amounted to $13,273, which is included in “Other” income in the Statement of Operations.

 

(4) Portfolio Securities

For the six months ended June 30, 2019, purchases and sales of investments, other than short-term obligations, aggregated $99,528,303 and $206,196,909, 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 6/30/19   Year ended 12/31/18 
   Shares   Amount   Shares   Amount 
Shares sold        

Initial Class

   642,597    $34,344,803    1,885,287    $98,349,828 

Service Class

   593,161    30,631,556    1,291,280    65,518,241 
   1,235,758    $64,976,359    3,176,567    $163,868,069 

 

14


Table of Contents

MFS Growth Series

 

Notes to Financial Statements (unaudited) – continued

 

   Six months ended 6/30/19   Year ended 12/31/18 
   Shares   Amount   Shares   Amount 
Shares issued to shareholders in reinvestment of distributions        

Initial Class

       $—    1,680,711    $91,548,350 

Service Class

           410,599    21,552,352 
       $—    2,091,310    $113,100,702 
Shares reacquired        

Initial Class

   (2,628,408   $(142,892,626   (4,724,710   $(251,082,206

Service Class

   (646,334   (33,825,198   (1,481,320   (75,685,084
   (3,274,742   $(176,717,824   (6,206,030   $(326,767,290
Net change        

Initial Class

   (1,985,811   $(108,547,823   (1,158,712   $(61,184,028

Service Class

   (53,173   (3,193,642   220,559    11,385,509 
   (2,038,984   $(111,741,465   (938,153   $(49,798,519

The fund is one of several mutual funds in which certain MFS funds may invest. The MFS funds do not invest in the underlying funds for the purpose of exercising management or control. At the end of the period, the MFS Moderate Allocation Portfolio, the MFS Growth Allocation Portfolio, and the MFS Conservative Allocation Portfolio were the owners of record of approximately 7%, 2%, and 2%, respectively, of the value of outstanding voting shares of the fund.

 

(6) Line of Credit

The fund and certain other funds managed by MFS participate in a $1.25 billion unsecured committed line of credit, subject to a $1 billion sublimit, provided by a syndicate 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 highest of one month LIBOR, the Federal Funds Effective Rate and the Overnight Bank Funding Rate, 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. 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 rates equal to customary reference rates plus an agreed upon spread. For the six months ended June 30, 2019, the fund’s commitment fee and interest expense were $4,888 and $0, respectively, and are included in “Miscellaneous” expense in the Statement of Operations.

 

(7) Investments in 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 following were affiliated issuers:

 

Affiliated Issuers Beginning
Value
  Purchases  Sales
Proceeds
  Realized
Gain
(Loss)
  Change in
Unrealized
Appreciation or
Depreciation
  Ending
Value
 
MFS Institutional Money Market Portfolio  $30,545,398   $107,601,275   $112,510,614   $526   $3,068   $25,639,653 
Affiliated Issuers                 Dividend
Income
  Capital Gain
Distributions
 
MFS Institutional Money Market Portfolio      $199,905   $— 

 

15


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MFS Growth Series

 

PROXY VOTING POLICIES AND INFORMATION

 

MFS votes proxies on behalf of the fund pursuant to proxy voting policies and procedures that are available without charge, upon request, by calling 1-800-225-2606, by visitingmfs.com/proxyvoting, or by visiting the SEC’s Web site athttp://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 by August 31 of each year without charge by visitingmfs.com/proxyvoting, or by visiting the SEC’s Web site athttp://www.sec.gov.

QUARTERLY PORTFOLIO DISCLOSURE

The fund files a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q or as an exhibit to its reports on Form N-PORT (for first and third fiscal quarters ending March 31, 2019 or after). The fund’sForm N-Q or Form N-PORT reports are available on the SEC’s website athttp://www.sec.gov.A shareholder can obtain the portfolio holdings report for the first and third quarters of the fund’s fiscal year atmfs.com/vit1 by choosing the fund’s name and then selecting the “Resources” tab and clicking on “Prospectus and Reports”.

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 at https://www.mfs.com/en-us/what-we-do/announcements.html or atmfs.com/vit1 by choosing the fund’s name.

INFORMATION ABOUT FUND CONTRACTS AND LEGAL CLAIMS

The fund has entered into contractual arrangements with an investment adviser, administrator, distributor, shareholder servicing agent, 529 program manager (if applicable), and custodian who each provide services to the fund. Unless expressly stated otherwise, shareholders are not parties to, or intended beneficiaries of these contractual arrangements, and these contractual arrangements are not intended to create any shareholder right to enforce them against the service providers or to seek any remedy under them against the service providers, either directly or on behalf of the fund.

Under the Trust’s By-Laws and Declaration of Trust, any claims asserted against or on behalf of the MFS Funds, including claims against Trustees and Officers, must be brought in state and federal courts located within the Commonwealth of Massachusetts.

 

16


Table of Contents

LOGO


Table of Contents

Semiannual Report

June 30, 2019

 

LOGO

 

MFS® Investors Trust Series

 

LOGO

 

MFS® Variable Insurance Trust

 

Beginning on January 1, 2021, as permitted by regulations adopted by the U.S. Securities and Exchange Commission, the insurance company that offers your contract may determine that it will no longer send you paper copies of the fund’s annual and semiannual shareholder reports unless you specifically request paper copies from the insurance company or from your financial intermediary. Instead, the shareholder reports will be made available on a Web site (insurancefunds.mfs.com or other Web site of which you will be notified), and the insurance company will notify you by mail each time a report is posted and provide you with a Web site link to access the report. Instructions for requesting paper copies will be provided by your insurance company or financial intermediary.

If you already elected to receive shareholder reports by email, you will not be affected by this change and you need not take any action. If your insurance company or financial intermediary offers electronic delivery, you may elect to receive shareholder reports and other communications from the insurance company or financial intermediary by email by following the instructions provided by the insurance company or financial intermediary.

Beginning on January 1, 2019, you may elect to receive all future reports in paper free of charge from the insurance company or financial intermediary. You can inform the insurance company or financial intermediary that you wish to continue receiving paper copies of your shareholder reports by contacting your insurance company or financial intermediary. Your election to receive reports in paper will apply to all funds held in your account with your insurance company or financial intermediary.

 

VGI-SEM


Table of Contents

MFS® Investors Trust Series

 

CONTENTS

 

Letter from the Executive Chairman   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 
Proxy voting policies and information   16 
Quarterly portfolio disclosure   16 
Further information   16 
Information about fund contracts and legal claims   16 

 

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



Table of Contents

MFS Investors Trust Series

 

LETTER FROM THE EXECUTIVE CHAIRMAN

 

LOGO

Dear Contract Owners:

Slowing global growth, low inflation, and increasing trade friction between the United States and China have been hallmarks of the past 12 months. After experiencing an uptick in market volatility in late 2018, markets steadied during the first half of 2019, thanks in large measure to the adoption of a dovish policy stance on the part of global central banks, who have largely abandoned efforts to normalize interest rates and have instead focused on supporting economic growth. Trade tensions remain high as the U.S. has ratcheted up tariffs on Chinese imports and China has retaliated. A truce of sorts was reached midyear, but significant challenges continue to confront negotiators, and it is not known whether a comprehensive agreement can be reached.

With Boris Johnson replacing Theresa May as Britain’s prime minister, uncertainty over Brexit remains high. Johnson has adopted a more combative stance than his predecessor toward the European Union, increasing concerns that there will be a “hard” Brexit.

Markets expect that the longest economic expansion in U.S. history will continue for the time being, albeit at a slower pace. Nevertheless, slower growth and low inflation have spurred the U.S. Federal Reserve to take a more accommodative policy stance, prompting investors to anticipate several interest rate cuts in the coming year. The European Central Bank has adopted a similar position. The more accommodative environment has helped fuel a continued rise in global equities and has been broadly supportive of risk assets.

Since launching the first U.S.open-end mutual fund in 1924, MFS® has been committed to a single purpose: to create value by allocating capital responsibly for clients. Through our powerful global investment platform, we combine collective expertise, thoughtful risk management, and long-term discipline to uncover what we believe are the best investment opportunities in the market.

Respectfully,

 

LOGO

Robert J. Manning

Executive Chairman

MFS Investment Management

August 16, 2019

 

 

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

 

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Table of Contents

MFS Investors Trust Series

 

PORTFOLIO COMPOSITION

 

Portfolio structure

 

LOGO

 

Top ten holdings 
Alphabet, Inc., “A”  3.3% 
Visa, Inc., “A”  3.0% 
American Tower Corp., REIT  2.8% 
JPMorgan Chase & Co.  2.7% 
Mastercard, Inc., “A”  2.5% 
Johnson & Johnson  2.5% 
Danaher Corp.  2.5% 
Medtronic PLC  2.5% 
Thermo Fisher Scientific, Inc.  2.5% 
Fidelity National Information Services, Inc.  2.2% 
GICS equity sectors (g) 
Information Technology  23.4% 
Health Care  16.6% 
Financials  12.7% 
Communication Services  9.6% 
Consumer Staples  9.5% 
Consumer Discretionary  8.5% 
Industrials  7.4% 
Energy  4.5% 
Materials  4.0% 
Real Estate  2.8% 
Utilities  0.5% 
 
(g)

The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and S&P Global Market Intelligence Inc. (“S&P Global Market Intelligence”). GICS is a service mark of MSCI and S&P Global Market Intelligence and has been licensed for use by MFS.

Cash & Cash Equivalents includes any cash, investments in money market funds, short-term securities, and other assets less liabilities. Please see the Statement of Assets and Liabilities for additional information related to the fund’s cash position and other assets and liabilities.

Percentages are based on net assets as of June 30, 2019.

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

 

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MFS Investors Trust Series

 

EXPENSE TABLE

 

Fund Expenses Borne by the Contract Holders during the Period,

January 1, 2019 through June 30, 2019

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, 2019 through June 30, 2019.

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
1/01/19
   Ending
Account Value
6/30/19
   Expenses Paid
During Period  (p)
1/01/19-6/30/19
 
Initial Class Actual   0.79%    $1,000.00    $1,206.29    $4.32 
 Hypothetical (h)   0.79%    $1,000.00    $1,020.88    $3.96 
Service Class Actual   1.04%    $1,000.00    $1,205.02    $5.69 
 Hypothetical (h)   1.04%    $1,000.00    $1,019.64    $5.21 

 

(h)

5% class return per year before expenses.

 

(p)

“Expenses Paid During Period” are equal to each class’s annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by 181/365 (to reflect theone-half year period).

 

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PORTFOLIO OF INVESTMENTS – 6/30/19 (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 – 99.5%   
Aerospace – 3.4%

 

 
Honeywell International, Inc.   76,807  $13,409,734 
United Technologies Corp.   70,730   9,209,046 
   

 

 

 
   $22,618,780 
   

 

 

 
Alcoholic Beverages – 2.5%

 

 
Diageo PLC   169,776  $7,296,138 
Pernod Ricard S.A.   50,195   9,249,286 
   

 

 

 
   $16,545,424 
   

 

 

 
Apparel Manufacturers – 2.3%

 

 
LVMH Moet Hennessy Louis Vuitton SE   20,765  $8,837,928 
NIKE, Inc., “B”   78,008   6,548,772 
   

 

 

 
   $15,386,700 
   

 

 

 
Biotechnology – 0.7%

 

 
Biogen, Inc. (a)   20,405  $4,772,117 
   

 

 

 
Broadcasting – 0.7%

 

 
Walt Disney Co.   32,105  $4,483,142 
   

 

 

 
Brokerage & Asset Managers – 3.8%

 

 
Blackstone Group LP   195,540  $8,685,887 
NASDAQ, Inc.   104,907   10,088,906 
TD Ameritrade Holding Corp.   129,317   6,455,505 
   

 

 

 
   $25,230,298 
   

 

 

 
Business Services – 7.8%

 

 
Accenture PLC, “A”   70,039  $12,941,106 
Amdocs Ltd.   128,211   7,960,621 
Cognizant Technology Solutions Corp., “A”   158,315   10,035,588 
DXC Technology Co.   110,423   6,089,828 
Fidelity National Information Services, Inc.   119,285   14,633,884 
   

 

 

 
   $51,661,027 
   

 

 

 
Cable TV – 2.0%

 

 
Comcast Corp., “A”   320,231  $13,539,367 
   

 

 

 
Chemicals – 1.0%

 

 
PPG Industries, Inc.   56,178  $6,556,534 
   

 

 

 
Computer Software – 4.0%

 

 
Adobe Systems, Inc. (a)   31,833  $9,379,594 
Microsoft Corp.   88,202   11,815,540 
Salesforce.com, Inc. (a)   34,525   5,238,478 
   

 

 

 
   $26,433,612 
   

 

 

 
Computer Software – Systems – 1.1%

 

 
Apple, Inc.   37,880  $7,497,210 
   

 

 

 
Construction – 1.4%

 

 
Sherwin-Williams Co.   20,583  $9,432,983 
   

 

 

 
Consumer Products – 2.8%

 

 
Colgate-Palmolive Co.   117,775  $8,440,934 
Estee Lauder Cos., Inc., “A”   22,530   4,125,469 
Kimberly-Clark Corp.   42,868   5,713,447 
   

 

 

 
   $18,279,850 
   

 

 

 
Issuer  Shares/Par  Value ($) 
COMMON STOCKS – continued   
Containers – 1.1%

 

 
Crown Holdings, Inc. (a)   119,557  $7,304,933 
   

 

 

 
Electrical Equipment – 3.0%

 

 
AMETEK, Inc.   86,840  $7,888,545 
Fortive Corp.   68,411   5,576,865 
TE Connectivity Ltd.   66,251   6,345,521 
   

 

 

 
   $19,810,931 
   

 

 

 
Electronics – 2.5%

 

 
Analog Devices, Inc.   57,685  $6,510,906 
Texas Instruments, Inc.   85,336   9,793,159 
   

 

 

 
   $16,304,065 
   

 

 

 
Energy – Independent – 1.5%

 

 
EOG Resources, Inc.   109,074  $10,161,334 
   

 

 

 
Food & Beverages – 3.1%

 

 
Danone S.A.   110,806  $9,386,815 
Mondelez International, Inc.   208,089   11,215,997 
   

 

 

 
   $20,602,812 
   

 

 

 
General Merchandise – 1.6%

 

 
Dollar General Corp.   46,651  $6,305,349 
Dollar Tree, Inc. (a)   41,716   4,479,881 
   

 

 

 
   $10,785,230 
   

 

 

 
Insurance – 1.1%

 

 
Chubb Ltd.   51,487  $7,583,520 
   

 

 

 
Internet – 5.8%

 

 
Alphabet, Inc., “A” (a)   18,242  $19,752,438 
Alphabet, Inc., “C” (a)   7,267   7,854,973 
Facebook, Inc., “A” (a)   57,194   11,038,442 
   

 

 

 
   $38,645,853 
   

 

 

 
Leisure & Toys – 1.1%

 

 
Electronic Arts, Inc. (a)   70,008  $7,089,010 
   

 

 

 
Machinery & Tools – 0.3%

 

 
Flowserve Corp.   40,607  $2,139,583 
   

 

 

 
Major Banks – 6.6%

 

 
Bank of America Corp.   493,239  $14,303,931 
Goldman Sachs Group, Inc.   41,373   8,464,916 
JPMorgan Chase & Co.   159,488   17,830,758 
Morgan Stanley   70,818   3,102,537 
   

 

 

 
   $43,702,142 
   

 

 

 
Medical & Health Technology & Services – 0.9%

 

 
McKesson Corp.   43,814  $5,888,164 
   

 

 

 
Medical Equipment – 9.5%

 

 
Abbott Laboratories   85,580  $7,197,278 
Becton, Dickinson and Co.   25,901   6,527,311 
Danaher Corp.   114,444   16,356,336 
Medtronic PLC   167,784   16,340,484 
 

 

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Portfolio of Investments (unaudited) – continued

 

Issuer  Shares/Par  Value ($) 
COMMON STOCKS – continued

 

 
Medical Equipment – continued

 

 
Thermo Fisher Scientific, Inc.   55,391  $16,267,229 
   

 

 

 
   $62,688,638 
   

 

 

 
Natural Gas – Pipeline – 1.5%

 

 
Enterprise Products Partners LP   347,486  $10,031,921 
   

 

 

 
Network & Telecom – 1.2%

 

 
Cisco Systems, Inc.   150,155  $8,217,983 
   

 

 

 
Oil Services – 1.5%

 

 
Core Laboratories N.V.   57,185  $2,989,632 
Schlumberger Ltd.   172,016   6,835,916 
   

 

 

 
   $9,825,548 
   

 

 

 
Other Banks & Diversified Financials – 7.0%

 

 
BB&T Corp.   156,004  $7,664,476 
Mastercard, Inc., “A”   63,258   16,733,639 
Visa, Inc., “A”   126,403   21,937,241 
   

 

 

 
   $46,335,356 
   

 

 

 
Pharmaceuticals – 5.5%

 

 
Elanco Animal Health, Inc. (a)   175,762  $5,940,756 
Eli Lilly & Co.   64,396   7,134,433 
Johnson & Johnson   118,590   16,517,215 
Zoetis, Inc.   61,458   6,974,868 
   

 

 

 
   $36,567,272 
   

 

 

 
Railroad & Shipping – 1.7%

 

 
Canadian National Railway Co.   118,752  $10,982,185 
   

 

 

 
Restaurants – 1.7%

 

 
Starbucks Corp.   131,417  $11,016,687 
   

 

 

 
Specialty Chemicals – 0.5%

 

 
DuPont de Nemours, Inc.   43,087  $3,234,541 
   

 

 

 
Specialty Stores – 4.0%

 

 
Costco Wholesale Corp.   27,769  $7,338,236 
Ross Stores, Inc.   90,379   8,958,366 
Tractor Supply Co.   90,797   9,878,714 
   

 

 

 
   $26,175,316 
   

 

 

 
Issuer  Shares/Par  Value ($) 
COMMON STOCKS – continued

 

 
Telecommunications – Wireless – 2.8%

 

 
American Tower Corp., REIT   91,664  $18,740,705 
   

 

 

 
Utilities – Electric Power – 0.5%

 

 
American Electric Power Co., Inc.   40,134  $3,532,193 
   

 

 

 
Total Common Stocks
(Identified Cost, $373,041,774)
   $659,802,966 
   

 

 

 
INVESTMENT COMPANIES (h) – 0.5%

 

Money Market Funds – 0.5%   
MFS Institutional Money Market Portfolio, 2.42% (v) (Identified Cost, $3,328,296)   3,328,695  $3,329,028 
   

 

 

 
OTHER ASSETS, LESS
LIABILITIES – 0.0%
    53,094 
   

 

 

 
NET ASSETS – 100.0%   $663,185,088 
   

 

 

 

 

(a) Non-income producing security.

 

(h) An affiliated issuer, which 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. At period end, the aggregate values of the fund’s investments in affiliated issuers and in unaffiliated issuers were $3,329,028 and $659,802,966, respectively.

 

(v) Affiliated issuer that is available only to investment companies managed by MFS. The rate quoted for the MFS Institutional Money Market Portfolio is the annualizedseven-day yield of the fund at period end.

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

 

REIT Real Estate Investment Trust

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 6/30/19

  

Assets

     

Investments in unaffiliated issuers, at value (identified cost, $373,041,774)

   $659,802,966 

Investments in affiliated issuers, at value (identified cost, $3,328,296)

   3,329,028 

Cash

   41,561 

Receivables for

  

Fund shares sold

   224,197 

Dividends

   438,885 

Other assets

   1,242 

Total assets

   $663,837,879 

Liabilities

     

Payables for

  

Fund shares reacquired

   $461,770 

Payable to affiliates

  

Investment adviser

   51,481 

Administrative services fee

   1,080 

Shareholder servicing costs

   728 

Distribution and/or service fees

   10,929 

Payable for independent Trustees’ compensation

   11 

Accrued expenses and other liabilities

   126,792 

Total liabilities

   $652,791 

Net assets

   $663,185,088 

Net assets consist of

     

Paid-in capital

   $329,300,145 

Total distributable earnings (loss)

   333,884,943 

Net assets

   $663,185,088 

Shares of beneficial interest outstanding

   20,508,251 

 

   Net assets   Shares
outstanding
   Net asset value
per share
 

Initial Class

   $261,826,001    8,023,577    $32.63 

Service Class

   401,359,087    12,484,674    32.15 

See Notes to Financial Statements

 

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MFS Investors Trust 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 6/30/19

  

Net investment income (loss)

     

Income

  

Dividends

   $4,949,418 

Dividends from affiliated issuers

   84,769 

Income on securities loaned

   33,115 

Other

   7,845 

Foreign taxes withheld

   (69,917

Total investment income

   $5,005,230 

Expenses

  

Management fee

   $2,342,510 

Distribution and/or service fees

   463,894 

Shareholder servicing costs

   13,728 

Administrative services fee

   48,913 

Independent Trustees’ compensation

   9,945 

Custodian fee

   16,314 

Shareholder communications

   27,934 

Audit and tax fees

   28,156 

Legal fees

   2,712 

Miscellaneous

   16,460 

Total expenses

   $2,970,566 

Reduction of expenses by investment adviser

   (34,685

Net expenses

   $2,935,881 

Net investment income (loss)

   $2,069,349 

Realized and unrealized gain (loss)

     

Realized gain (loss) (identified cost basis)

  

Unaffiliated issuers

   $2,386,150 

Affiliated issuers

   (78

Foreign currency

   714 

Net realized gain (loss)

   $2,386,786 

Change in unrealized appreciation or depreciation

  

Unaffiliated issuers

   $110,248,391 

Affiliated issuers

   554 

Net unrealized gain (loss)

   $110,248,945 

Net realized and unrealized gain (loss)

   $112,635,731 

Change in net assets from operations

   $114,705,080 

See Notes to Financial Statements

 

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MFS Investors Trust 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
6/30/19
   Year ended
12/31/18
 
   (unaudited)     

Change in net assets

    

From operations

          

Net investment income (loss)

   $2,069,349    $4,410,167 

Net realized gain (loss)

   2,386,786    38,546,790 

Net unrealized gain (loss)

   110,248,945    (75,138,678

Change in net assets from operations

   $114,705,080    $(32,181,721

Total distributions to shareholders

   $—    $(30,377,311

Change in net assets from fund share transactions

   $(8,578,763   $17,770,363 

Total change in net assets

   $106,126,317    $(44,788,669

Net assets

          

At beginning of period

   557,058,771    601,847,440 

At end of period

   $663,185,088    $557,058,771 

See Notes to Financial Statements

 

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MFS Investors Trust 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 that 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

6/30/19

   Year ended 
   12/31/18   12/31/17   12/31/16   12/31/15   12/31/14 
     (unaudited)                     

Net asset value, beginning of period

     $27.05    $30.07    $25.57    $26.58    $30.41    $29.95 
Income (loss) from investment operations                                

Net investment income (loss) (d)

     $0.12    $0.26    $0.22    $0.23(c)    $0.21    $0.26 

Net realized and unrealized gain (loss)

     5.46    (1.71   5.62    2.01    (0.42   2.92 

Total from investment operations

     $5.58    $(1.45   $5.84    $2.24    $(0.21   $3.18 
Less distributions declared to shareholders                                

From net investment income

     $—    $(0.20   $(0.21   $(0.24   $(0.28   $(0.30

From net realized gain

         (1.37   (1.13   (3.01   (3.34   (2.42

Total distributions declared to shareholders

     $—    $(1.57   $(1.34   $(3.25   $(3.62   $(2.72

Net asset value, end of period (x)

     $32.63    $27.05    $30.07    $25.57    $26.58    $30.41 

Total return (%) (k)(r)(s)(x)

     20.63(n)    (5.49   23.35    8.59(c)    0.22    11.01 
Ratios (%) (to average net assets)
and Supplemental data:
                                

Expenses before expense reductions (f)

     0.80(a)    0.80    0.82    0.80(c)    0.82    0.81 

Expenses after expense reductions (f)

     0.79(a)    0.79    0.79    0.79(c)    0.81    0.81 

Net investment income (loss)

     0.81(a)    0.86    0.79    0.89(c)    0.73    0.87 

Portfolio turnover

     9(n)    16    18    20    17    25 

Net assets at end of period (000 omitted)

     $261,826    $231,900    $283,237    $270,796    $293,203    $356,389 
Service Class    

Six months

ended

6/30/19

   Year ended 
   12/31/18   12/31/17   12/31/16   12/31/15   12/31/14 
     (unaudited)                     

Net asset value, beginning of period

     $26.68    $29.69    $25.28    $26.30    $30.13    $29.72 
Income (loss) from investment operations                                

Net investment income (loss) (d)

     $0.08    $0.18    $0.15    $0.16(c)    $0.14    $0.19 

Net realized and unrealized gain (loss)

     5.39    (1.68   5.55    1.98    (0.42   2.88 

Total from investment operations

     $5.47    $(1.50   $5.70    $2.14    $(0.28   $3.07 
Less distributions declared to shareholders                                

From net investment income

     $—    $(0.14   $(0.16   $(0.15   $(0.21   $(0.24

From net realized gain

         (1.37   (1.13   (3.01   (3.34   (2.42

Total distributions declared to shareholders

     $—    $(1.51   $(1.29   $(3.16   $(3.55   $(2.66

Net asset value, end of period (x)

     $32.15    $26.68    $29.69    $25.28    $26.30    $30.13 

Total return (%) (k)(r)(s)(x)

     20.50(n)    (5.71   23.03    8.32(c)    (0.05   10.71 
Ratios (%) (to average net assets)
and Supplemental data:
                                

Expenses before expense reductions (f)

     1.05(a)    1.05    1.07    1.04(c)    1.07    1.06 

Expenses after expense reductions (f)

     1.04(a)    1.04    1.04    1.04(c)    1.06    1.06 

Net investment income (loss)

     0.56(a)    0.62    0.55    0.64(c)    0.47    0.63 

Portfolio turnover

     9(n)    16    18    20    17    25 

Net assets at end of period (000 omitted)

     $401,359    $325,159    $318,611    $228,741    $193,116    $283,328 

See Notes to Financial Statements

 

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Financial Highlights – continued

 

 

(a)

Annualized.

 

(c)

Amount reflects aone-time reimbursement of expenses by the custodian (or former custodian) without which net investment income and performance would be lower and expenses would be higher.

 

(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.

 

(x)

The net asset values and total returns have been calculated on net assets which include adjustments made in accordance with U.S. generally accepted accounting principles required at period end for financial reporting purposes.

See Notes to Financial Statements

 

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MFS Investors Trust Series

 

NOTES TO FINANCIAL STATEMENTS (unaudited)

 

(1) Business and Organization

MFS Investors Trust Series (the fund) is a diversified series of MFS Variable Insurance Trust (the trust). The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as anopen-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.

The fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services – Investment Companies.

 

(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 increases and decreases in net assets from operations 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.

Balance Sheet Offsetting– The fund’s accounting policy with respect to balance sheet offsetting is that, absent an event of default by the counterparty or a termination of the agreement, the International Swaps and Derivatives Association (ISDA) Master Agreement, or similar agreement, does not result in an offset of reported amounts of financial assets and financial liabilities in the Statement of Assets and Liabilities across transactions between the fund and the applicable counterparty. The fund’s right to setoff may be restricted or prohibited by the bankruptcy or insolvency laws of the particular jurisdiction to which a specific master netting agreement counterparty is subject. Balance sheet offsetting disclosures, to the extent applicable to the fund, have been included in the fund’s Significant Accounting Policies note under the captions for each of the fund’sin-scope financial instruments and transactions.

Investment Valuations– Equity securities, including restricted equity securities, are generally valued at the last sale or official closing price on their primary market or exchange as provided by a third-party pricing service. Equity securities, for which there were no sales reported that day, are generally valued at the last quoted daily bid quotation on their primary market or exchange as provided by a third-party pricing service. Short-term instruments with a maturity at issuance of 60 days or less may be 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. In determining values, 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 halt 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 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, 2019 in valuing the fund’s assets or liabilities:

 

Financial Instruments  Level 1   Level 2   Level 3   Total 
Equity Securities   $659,802,966    $—    $—    $659,802,966 
Mutual Funds   3,329,028            3,329,028 
Total   $663,131,994    $—    $—    $663,131,994 

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– Under its Securities Lending Agency Agreement with the fund, State Street Bank and Trust Company, as lending agent, loans the securities of the fund to certain qualified institutions (the “Borrowers”) approved by the fund. Security loans can be terminated at the discretion of either the lending agent or the fund and the related securities must be returned within the earlier of the standard trade settlement period for such securities or within three business days. 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. On loans collateralized by cash, the cash collateral is invested in a money market fund. 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. The lending agent provides the fund with indemnification against Borrower default. In the event of Borrower default, the lending agent will, for the benefit of the fund, either purchase securities identical to those loaned or, when such purchase is commercially impracticable, pay the fund the market value of the loaned securities. In return, the lending agent assumes the fund’s rights to the related collateral. If the collateral value is less than the cost to purchase identical securities, the lending agent is responsible for the shortfall, but only to the extent that such shortfall is not due to a decline in collateral value resulting from collateral reinvestment for which the fund bears the risk of loss. 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 separately reported in the Statement of Operations. The dividend and interest income earned on the securities loaned is accounted for in the same manner as other dividend and interest income. At June 30, 2019, there were no securities on loan or collateral outstanding.

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 theex-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 theex-dividend date. Dividend payments received in additional securities are recorded on theex-dividend 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.

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

 

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Notes to Financial Statements (unaudited) – continued

 

federal income tax is required. The fund’s federal tax returns, when filed, will remain subject to examination by the Internal Revenue Service for a three year period. Management has analyzed the fund’s tax positions taken on federal and state tax returns for all open tax years and does not believe that there are any uncertain tax positions that require recognition of a tax liability. Foreign taxes, if any, have been accrued by the fund in the accompanying financial statements in accordance with the applicable foreign tax law. Foreign income taxes may be withheld by certain countries in which the fund invests. Additionally, capital gains realized by the fund on securities issued in or by certain foreign countries may be subject to capital gains tax imposed by those countries.

Distributions to shareholders are recorded on theex-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 and partnership adjustments.

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

 

   Year ended
12/31/18
 
Ordinary income (including any short-term capital gains)   $5,939,205 
Long-term capital gains   24,438,106 
Total distributions   $30,377,311 

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

 

As of 6/30/19  
Cost of investments   $377,296,742 
Gross appreciation   297,183,004 
Gross depreciation   (11,347,752
Net unrealized appreciation (depreciation)   $285,835,252 
As of 12/31/18  
Undistributed ordinary income   6,071,486 
Undistributed long-term capital gain   36,774,987 
Other temporary differences   747,083 
Net unrealized appreciation (depreciation)   175,586,307 

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 in the Statements of Changes in Net Assets are presented by class as follows:

 

   From net investment
income
   From net realized
gain
 
   Six months ended
6/30/19
   Year ended
12/31/18
   Six months ended
6/30/19
   Year ended
12/31/18
 
Initial Class   $—    $1,693,155    $—    $11,766,710 
Service Class       1,528,034        15,389,412 
Total   $—    $3,221,189    $—    $27,156,122 

 

(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 based on the fund’s average daily net assets:

 

Up to $1 billion   0.75% 
In excess of $1 billion and up to $2.5 billion   0.65% 
In excess of $2.5 billion   0.60% 

 

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Notes to Financial Statements (unaudited) – continued

 

MFS has agreed in writing to reduce its management fee by a specified amount if certain MFS mutual fund assets exceed thresholds agreed to by MFS and the fund’s Board of Trustees. For the six months ended June 30, 2019, this management fee reduction amounted to $30,138, which is included in the reduction of total expenses in the Statement of Operations. The management fee incurred for the six months ended June 30, 2019 was equivalent to an annual effective rate of 0.74% 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, excluding interest, taxes, extraordinary expenses, brokerage and transaction costs, and investment-related expenses, such that total annual operating expenses do not exceed 0.79% of average daily net assets for the Initial Class shares and 1.04% 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, 2021. For the six months ended June 30, 2019, this reduction amounted to $4,547, which is included in the 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 Rule12b-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, 2019, the fee was $12,896, which equated to 0.0041% annually of the fund’s average daily net assets. MFSC also receives payment from the fund forout-of-pocket expenses paid by MFSC on behalf of the fund. For the six months ended June 30, 2019, these costs amounted to $832.

Administrator– MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the fund 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, 2019 was equivalent to an annual effective rate of 0.0156% 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 from MFS for their services to the fund. 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) had entered into a service agreement (the ISO Agreement) which provided for payment of fees solely by the funds to Tarantino LLC in return for the provision of services of an Independent Senior Officer (ISO) for the funds. Frank L. Tarantino served as the ISO and was an officer of the funds and the sole member of Tarantino LLC. Effective June 30, 2019, Mr. Tarantino retired from his position as ISO for the funds, and the ISO Agreement was terminated. For the six months ended June 30, 2019, the fee paid by the fund under this agreement was $752 and is included in “Miscellaneous” expense in the Statement of Operations. MFS had agreed to bear all expenses associated with office space, other administrative support, and supplies provided to the ISO.

The fund invests in the MFS Institutional Money Market Portfolio which is managed by MFS and seeks current income consistent with preservation of capital and liquidity. This money market fund does not pay a management fee to MFS.

The fund is permitted to engage in purchase and sale transactions with funds and accounts for which MFS serves as investment adviser orsub-adviser (“cross-trades”) pursuant to a policy adopted by the Board of Trustees. This policy has been designed to ensure that cross-trades conducted by the fund comply with Rule17a-7 under the Investment Company Act of 1940. During the six months ended June 30, 2019, the fund engaged in purchase and sale transactions pursuant to this policy, which amounted to $88,947 and $1,593,337, respectively. The sales transactions resulted in net realized gains (losses) of $(187,500).

The adviser has voluntarily undertaken to reimburse the fund from its own resources on a quarterly basis for the cost of investment research embedded in the cost of the fund’s securities trades. This agreement may be rescinded at any time. For the six months ended June 30, 2019, this reimbursement amounted to $7,739, which is included in “Other” income in the Statement of Operations.

 

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Notes to Financial Statements (unaudited) – continued

 

 

(4) Portfolio Securities

For the six months ended June 30, 2019, purchases and sales of investments, other than short-term obligations, aggregated $54,454,981 and $54,767,942, 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 6/30/19   Year ended 12/31/18 
   Shares   Amount   Shares   Amount 
Shares sold        

Initial Class

   161,756    $4,717,668    460,046    $13,933,540 

Service Class

   923,261    27,633,074    2,206,956    65,663,348 
   1,085,017    $32,350,742    2,667,002    $79,596,888 
Shares issued to shareholders in reinvestment of distributions        

Initial Class

       $—    435,876    $13,459,865 

Service Class

           555,034    16,917,446 
       $—    990,910    $30,377,311 
Shares reacquired        

Initial Class

   (712,069   $(21,938,032   (1,742,162   $(53,053,828

Service Class

   (626,371   (18,991,473   (1,303,877   (39,150,008
   (1,338,440   $(40,929,505   (3,046,039   $(92,203,836
Net change        

Initial Class

   (550,313   $(17,220,364   (846,240   $(25,660,423

Service Class

   296,890    8,641,601    1,458,113    43,430,786 
   (253,423   $(8,578,763   611,873    $17,770,363 

 

(6) Line of Credit

The fund and certain other funds managed by MFS participate in a $1.25 billion unsecured committed line of credit, subject to a $1 billion sublimit, provided by a syndicate 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 highest of one month LIBOR, the Federal Funds Effective Rate and the Overnight Bank Funding Rate, 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. 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 rates equal to customary reference rates plus an agreed upon spread. For the six months ended June 30, 2019, the fund’s commitment fee and interest expense were $1,877 and $0, respectively, and are included in “Miscellaneous” expense in the Statement of Operations.

 

(7) Investments in 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 following were affiliated issuers:

 

Affiliated Issuers Beginning
Value
  Purchases  Sales
Proceeds
  Realized
Gain
(Loss)
  Change in
Unrealized
Appreciation or
Depreciation
  Ending
Value
 
MFS Institutional Money Market Portfolio  $8,297,586   $28,458,203   $33,427,237   $(78  $554   $3,329,028 
Affiliated Issuers                 Dividend
Income
  Capital Gain
Distributions
 
MFS Institutional Money Market Portfolio      $84,769   $— 

 

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PROXY VOTING POLICIES AND INFORMATION

 

MFS votes proxies on behalf of the fund pursuant to proxy voting policies and procedures that are available without charge, upon request, by calling 1-800-225-2606, by visitingmfs.com/proxyvoting, or by visiting the SEC’s Web site athttp://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 by August 31 of each year without charge by visitingmfs.com/proxyvoting, or by visiting the SEC’s Web site athttp://www.sec.gov.

QUARTERLY PORTFOLIO DISCLOSURE

The fund files a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q or as an exhibit to its reports on Form N-PORT (for first and third fiscal quarters ending March 31, 2019 or after). The fund’sForm N-Q or Form N-PORT reports are available on the SEC’s website athttp://www.sec.gov.A shareholder can obtain the portfolio holdings report for the first and third quarters of the fund’s fiscal year atmfs.com/vit1 by choosing the fund’s name and then selecting the “Resources” tab and clicking on “Prospectus and Reports”.

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 at https://www.mfs.com/en-us/what-we-do/announcements.html or atmfs.com/vit1 by choosing the fund’s name.

INFORMATION ABOUT FUND CONTRACTS AND LEGAL CLAIMS

The fund has entered into contractual arrangements with an investment adviser, administrator, distributor, shareholder servicing agent, 529 program manager (if applicable), and custodian who each provide services to the fund. Unless expressly stated otherwise, shareholders are not parties to, or intended beneficiaries of these contractual arrangements, and these contractual arrangements are not intended to create any shareholder right to enforce them against the service providers or to seek any remedy under them against the service providers, either directly or on behalf of the fund.

Under the Trust’s By-Laws and Declaration of Trust, any claims asserted against or on behalf of the MFS Funds, including claims against Trustees and Officers, must be brought in state and federal courts located within the Commonwealth of Massachusetts.

 

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LOGO


Table of Contents

Semiannual Report

June 30, 2019

 

LOGO

 

MFS® Mid Cap Growth Series

 

LOGO

 

MFS® Variable Insurance Trust

 

Beginning on January 1, 2021, as permitted by regulations adopted by the U.S. Securities and Exchange Commission, the insurance company that offers your contract may determine that it will no longer send you paper copies of the fund’s annual and semiannual shareholder reports unless you specifically request paper copies from the insurance company or from your financial intermediary. Instead, the shareholder reports will be made available on a Web site (insurancefunds.mfs.com or other Web site of which you will be notified), and the insurance company will notify you by mail each time a report is posted and provide you with a Web site link to access the report. Instructions for requesting paper copies will be provided by your insurance company or financial intermediary.

If you already elected to receive shareholder reports by email, you will not be affected by this change and you need not take any action. If your insurance company or financial intermediary offers electronic delivery, you may elect to receive shareholder reports and other communications from the insurance company or financial intermediary by email by following the instructions provided by the insurance company or financial intermediary.

Beginning on January 1, 2019, you may elect to receive all future reports in paper free of charge from the insurance company or financial intermediary. You can inform the insurance company or financial intermediary that you wish to continue receiving paper copies of your shareholder reports by contacting your insurance company or financial intermediary. Your election to receive reports in paper will apply to all funds held in your account with your insurance company or financial intermediary.

 

VMG-SEM


Table of Contents

MFS® Mid Cap Growth Series

 

CONTENTS

 

Letter from the Executive Chairman   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 
Proxy voting policies and information   16 
Quarterly portfolio disclosure   16 
Further information   16 
Information about fund contracts and legal claims   16 

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



Table of Contents

MFS Mid Cap Growth Series

 

LETTER FROM THE EXECUTIVE CHAIRMAN

 

LOGO

Dear Contract Owners:

Slowing global growth, low inflation, and increasing trade friction between the United States and China have been hallmarks of the past 12 months. After experiencing an uptick in market volatility in late 2018, markets steadied during the first half of 2019, thanks in large measure to the adoption of a dovish policy stance on the part of global central banks, who have largely abandoned efforts to normalize interest rates and have instead focused on supporting economic growth. Trade tensions remain high as the U.S. has ratcheted up tariffs on Chinese imports and China has retaliated. A truce of sorts was reached midyear, but significant challenges continue to confront negotiators, and it is not known whether a comprehensive agreement can be reached.

With Boris Johnson replacing Theresa May as Britain’s prime minister, uncertainty over Brexit remains high. Johnson has adopted a more combative stance than his predecessor toward the European Union, increasing concerns that there will be a “hard” Brexit.

Markets expect that the longest economic expansion in U.S. history will continue for the time being, albeit at a slower pace. Nevertheless, slower growth and low inflation have spurred the U.S. Federal Reserve to take a more accommodative policy stance, prompting investors to anticipate several interest rate cuts in the coming year. The European Central Bank has adopted a similar position. The more accommodative environment has helped fuel a continued rise in global equities and has been broadly supportive of risk assets.

Since launching the first U.S.open-end mutual fund in 1924, MFS® has been committed to a single purpose: to create value by allocating capital responsibly for clients. Through our powerful global investment platform, we combine collective expertise, thoughtful risk management, and long-term discipline to uncover what we believe are the best investment opportunities in the market.

Respectfully,

 

LOGO

Robert J. Manning

Executive Chairman

MFS Investment Management

August 16, 2019

 

 

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

 

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MFS Mid Cap Growth Series

 

PORTFOLIO COMPOSITION

 

Portfolio structure

 

LOGO

 

Top ten holdings 
Bright Horizons Family Solutions, Inc.  3.8% 
PerkinElmer, Inc.  2.6% 
Global Payments, Inc.  2.6% 
AMETEK, Inc.  2.2% 
Cadence Design Systems, Inc.  2.2% 
Verisk Analytics, Inc., “A”  2.2% 
STERIS PLC  2.1% 
Copart, Inc.  2.1% 
Roper Technologies, Inc.  2.1% 
Fiserv, Inc.  1.8% 
GICS equity sectors (g) 
Information Technology  29.6% 
Industrials  19.3% 
Health Care  15.9% 
Consumer Discretionary  14.6% 
Financials  6.6% 
Communication Services  5.1% 
Materials  3.5% 
Real Estate  3.1% 
Consumer Staples  0.7% 
Energy  0.6% 
 
(g)

The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and S&P Global Market Intelligence Inc. (“S&P Global Market Intelligence”). GICS is a service mark of MSCI and S&P Global Market Intelligence and has been licensed for use by MFS.

Cash & Cash Equivalents includes any cash, investments in money market funds, short-term securities, and other assets less liabilities. Please see the Statement of Assets and Liabilities for additional information related to the fund’s cash position and other assets and liabilities.

Percentages are based on net assets as of June 30, 2019.

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

 

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MFS Mid Cap Growth Series

 

EXPENSE TABLE

 

Fund Expenses Borne by the Contract Holders during the Period,

January 1, 2019 through June 30, 2019

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, 2019 through June 30, 2019.

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
1/01/19
   Ending
Account Value
6/30/19
   Expenses Paid
During Period (p)
1/01/19-6/30/19
 
Initial Class Actual   0.80%    $1,000.00    $1,302.55    $4.57 
 Hypothetical (h)   0.80%    $1,000.00    $1,020.83    $4.01 
Service Class Actual   1.05%    $1,000.00    $1,300.78    $5.99 
 Hypothetical (h)   1.05%    $1,000.00    $1,019.59    $5.26 

 

(h)

5% class return per year before expenses.

 

(p)

“Expenses Paid During Period” are equal to each class’s annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by 181/365 (to reflect theone-half year period).

 

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MFS Mid Cap Growth Series

 

PORTFOLIO OF INVESTMENTS – 6/30/19 (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 – 3.8%

 

 
FLIR Systems, Inc.   73,395  $3,970,670 
L3 Harris Technologies, Inc.   34,573   6,538,791 
TransDigm Group, Inc. (a)   8,811   4,262,762 
   

 

 

 
   $14,772,223 
   

 

 

 
Alcoholic Beverages – 0.4%

 

 
Constellation Brands, Inc., “A”   8,149  $1,604,864 
   

 

 

 
Automotive – 2.1%

 

 
Copart, Inc. (a)   108,573  $8,114,746 
   

 

 

 
Biotechnology – 1.8%

 

 
Biomarin Pharmaceutical, Inc. (a)   16,817  $1,440,376 
Bio-Techne Corp.   26,310   5,485,372 
   

 

 

 
   $6,925,748 
   

 

 

 
Broadcasting – 0.7%

 

 
Netflix, Inc. (a)   7,775  $2,855,913 
   

 

 

 
Brokerage & Asset Managers – 2.6%

 

 
Apollo Global Management LLC, “A”   77,020  $2,641,786 
NASDAQ, Inc.   71,021   6,830,090 
Tradeweb Markets, Inc.   16,521   723,785 
   

 

 

 
   $10,195,661 
   

 

 

 
Business Services – 17.7%

 

 
CoStar Group, Inc. (a)   8,471  $4,693,442 
Fidelity National Information Services, Inc.   29,412   3,608,264 
Fiserv, Inc. (a)   78,867   7,189,516 
FleetCor Technologies, Inc. (a)   19,762   5,550,158 
Global Payments, Inc.   63,082   10,101,321 
MSCI, Inc.   28,198   6,733,400 
Total System Services, Inc.   54,846   7,035,096 
TransUnion   80,769   5,937,329 
Tyler Technologies, Inc. (a)   12,930   2,793,139 
Verisk Analytics, Inc., “A”   57,383   8,404,314 
Worldpay, Inc. (a)   55,638   6,818,437 
   

 

 

 
   $68,864,416 
   

 

 

 
Cable TV – 0.9%

 

 
Altice USA, Inc. (a)   141,166  $3,437,392 
   

 

 

 
Chemicals – 0.9%

 

 
Ingevity Corp. (a)   31,679  $3,331,680 
   

 

 

 
Computer Software – 6.0%

 

 
Autodesk, Inc. (a)   40,565  $6,608,039 
Black Knight, Inc. (a)   35,342   2,125,821 
Cadence Design Systems, Inc. (a)   123,319   8,732,218 
DocuSign, Inc. (a)   16,948   842,485 
PTC, Inc. (a)   58,440   5,245,575 
   

 

 

 
   $23,554,138 
   

 

 

 
Computer Software – Systems – 6.5%

 

 
Constellation Software, Inc.   3,531  $3,327,965 
Guidewire Software, Inc. (a)   32,975   3,343,006 
Issuer  Shares/Par  Value ($) 
COMMON STOCKS – continued

 

 
Computer Software – Systems – continued

 

 
NICE Systems Ltd., ADR (a)   35,649  $4,883,913 
Pluralsight, Inc., “A” (a)   18,063   547,670 
ServiceNow, Inc. (a)   24,233   6,653,655 
Square, Inc., “A” (a)   32,969   2,391,242 
SS&C Technologies Holdings, Inc.   74,163   4,272,530 
   

 

 

 
   $25,419,981 
   

 

 

 
Construction – 3.4%

 

 
Lennox International, Inc.   17,832  $4,903,800 
Pool Corp.   12,881   2,460,271 
Vulcan Materials Co.   41,929   5,757,271 
   

 

 

 
   $13,121,342 
   

 

 

 
Consumer Products – 0.3%

 

 
ScottsMiracle-Gro Co.   12,182  $1,199,927 
   

 

 

 
Consumer Services – 3.8%

 

 
Bright Horizons Family Solutions, Inc. (a)   98,189  $14,813,774 
   

 

 

 
Containers – 0.2%

 

 
CCL Industries, Inc.   16,469  $807,636 
   

 

 

 
Electrical Equipment – 5.6%

 

 
AMETEK, Inc.   96,218  $8,740,443 
Amphenol Corp., “A”   55,445   5,319,393 
Littlefuse, Inc.   15,060   2,664,265 
Mettler-Toledo International, Inc. (a)   6,317   5,306,280 
   

 

 

 
   $22,030,381 
   

 

 

 
Electronics – 2.1%

 

 
Monolithic Power Systems, Inc.   39,689  $5,388,972 
Silicon Laboratories, Inc. (a)   27,955   2,890,547 
   

 

 

 
   $8,279,519 
   

 

 

 
Energy – Independent – 0.6%

 

 
Diamondback Energy, Inc.   15,365  $1,674,324 
Parsley Energy, Inc., “A” (a)   43,338   823,855 
   

 

 

 
   $2,498,179 
   

 

 

 
Entertainment – 0.3%

 

 
World Wrestling Entertainment, Inc., “A”   13,913  $1,004,658 
   

 

 

 
Food & Beverages – 0.7%   
Chr. Hansen Holding A.S.   28,597  $2,685,373 
   

 

 

 
Gaming & Lodging – 0.9%   
Flutter Entertainment PLC   11,966  $900,832 
Vail Resorts, Inc.   6,479   1,445,983 
Wynn Resorts Ltd.   8,322   1,031,845 
   

 

 

 
   $3,378,660 
   

 

 

 
General Merchandise – 2.5%

 

 
Dollar Tree, Inc. (a)   42,725  $4,588,238 
Five Below, Inc. (a)   43,323   5,199,626 
   

 

 

 
   $9,787,864 
   

 

 

 
 

 

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MFS Mid Cap Growth Series

 

Portfolio of Investments (unaudited) – continued

 

Issuer  Shares/Par  Value ($) 
COMMON STOCKS – continued

 

 
Insurance – 1.6%

 

 
Aon PLC   31,579  $6,094,115 
   

 

 

 
Internet – 1.9%

 

 
IAC/InterActiveCorp (a)   17,500  $3,806,775 
Match Group, Inc. (l)   19,416   1,306,114 
Pinterest, Inc. (a)   27,755   755,491 
Wix.com Ltd. (a)   12,015   1,707,332 
   

 

 

 
   $7,575,712 
   

 

 

 
Leisure & Toys – 2.1%

 

 
Electronic Arts, Inc. (a)   31,203  $3,159,616 
Take-Two Interactive Software, Inc. (a)   43,110   4,894,278 
   

 

 

 
   $8,053,894 
   

 

 

 
Machinery & Tools – 2.9%

 

 
IDEX Corp.   14,335  $2,467,627 
Roper Technologies, Inc.   21,914   8,026,222 
Xylem, Inc.   9,514   795,751 
   

 

 

 
   $11,289,600 
   

 

 

 
Medical & Health Technology & Services – 2.1%

 

 
Guardant Health, Inc. (a)   2,327  $200,890 
Henry Schein, Inc. (a)   19,892   1,390,451 
ICON PLC (a)   30,636   4,717,025 
IDEXX Laboratories, Inc. (a)   7,072   1,947,133 
   

 

 

 
   $8,255,499 
   

 

 

 
Medical Equipment – 9.5%

 

 
Align Technology, Inc. (a)   3,145  $860,787 
Cooper Cos., Inc.   13,927   4,691,867 
DexCom, Inc. (a)   9,346   1,400,405 
Edwards Lifesciences Corp. (a)   15,803   2,919,446 
Masimo Corp. (a)   22,626   3,367,201 
PerkinElmer, Inc.   105,133   10,128,513 
QIAGEN N.V. (a)   79,264   3,214,155 
STERIS PLC   55,562   8,272,071 
West Pharmaceutical Services, Inc.   17,596   2,202,139 
   

 

 

 
   $37,056,584 
   

 

 

 
Other Banks & Diversified Financials – 0.7%

 

 
First Republic Bank   27,764  $2,711,155 
   

 

 

 
Pharmaceuticals – 1.1%

 

 
Elanco Animal Health, Inc. (a)   129,369  $4,372,672 
   

 

 

 
Printing & Publishing – 1.8%

 

 
IHS Markit Ltd. (a)   110,219  $7,023,155 
   

 

 

 
Railroad & Shipping – 1.4%

 

 
Kansas City Southern Co.   43,497  $5,298,805 
   

 

 

 
Real Estate – 1.3%

 

 
Extra Space Storage, Inc., REIT   47,993  $5,092,057 
   

 

 

 
Issuer  Shares/Par  Value ($) 
COMMON STOCKS – continued

 

 
Restaurants – 2.6%

 

 
Chipotle Mexican Grill, Inc., “A” (a)   6,586  $4,826,747 
Domino’s Pizza, Inc.   7,628   2,122,720 
Dunkin Brands Group, Inc.   41,515   3,307,085 
   

 

 

 
 $10,256,552 
   

 

 

 
Specialty Stores – 4.4%

 

 
BJ’s Wholesale Club Holdings, Inc. (a)   34,633  $914,311 
Chewy, Inc., “A” (a)   49,678   1,738,730 
Lululemon Athletica, Inc. (a)   20,404   3,677,005 
O’Reilly Automotive, Inc. (a)   10,355   3,824,308 
Ross Stores, Inc.   27,483   2,724,115 
Tractor Supply Co.   38,721   4,212,845 
   

 

 

 
 $17,091,314 
   

 

 

 
Telecommunications – Wireless – 1.8%

 

 
SBA Communications Corp., REIT (a)   30,501  $6,857,845 
   

 

 

 
Total Common Stocks
(Identified Cost, $202,811,377)
   $385,713,034 
   

 

 

 
INVESTMENT COMPANIES (h) – 1.2%

 

Money Market Funds – 1.2%   
MFS Institutional Money Market Portfolio, 2.42% (v) (Identified Cost, $4,749,781)   4,749,819  $4,750,294 
   

 

 

 
OTHER ASSETS, LESS
LIABILITIES – (0.2)%
    (744,269
   

 

 

 
NET ASSETS – 100.0%   $389,719,059 
   

 

 

 

 

(a) Non-income producing security.

 

(h) An affiliated issuer, which 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. At period end, the aggregate values of the fund’s investments in affiliated issuers and in unaffiliated issuers were $4,750,294 and $385,713,034, respectively.

 

(l) A portion of this security is on loan. See Note 2 for additional information.

 

(v) Affiliated issuer that is available only to investment companies managed by MFS. The rate quoted for the MFS Institutional Money Market Portfolio is the annualizedseven-day yield of the fund at period end.

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

 

ADR American Depositary Receipt

 

REIT Real Estate Investment Trust

See Notes to Financial Statements

 

 

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Table of Contents

 

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 6/30/19

  

Assets

     

Investments in unaffiliated issuers, at value, including $1,149,375 of securities on loan (identified cost, $202,811,377)

   $385,713,034 

Investments in affiliated issuers, at value (identified cost, $4,749,781)

   4,750,294 

Cash

   19,136 

Foreign currency, at value (identified cost, $1,808)

   1,841 

Receivables for

  

Fund shares sold

   20,385 

Interest and dividends

   140,944 

Other assets

   826 

Total assets

   $390,646,460 

Liabilities

     

Payables for

  

Fund shares reacquired

   $811,965 

Payable to affiliates

  

Investment adviser

   33,862 

Administrative services fee

   682 

Shareholder servicing costs

   382 

Distribution and/or service fees

   2,786 

Payable for independent Trustees’ compensation

   13 

Accrued expenses and other liabilities

   77,711 

Total liabilities

   $927,401 

Net assets

   $389,719,059 

Net assets consist of

     

Paid-in capital

   $143,718,959 

Total distributable earnings (loss)

   246,000,100 

Net assets

   $389,719,059 

Shares of beneficial interest outstanding

   37,058,446 

 

   Net assets   Shares
outstanding
   Net asset value
per share
 

Initial Class

   $287,021,252    26,779,584    $10.72 

Service Class

   102,697,807    10,278,862    9.99 

See Notes to Financial Statements

 

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Table of Contents

 

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 6/30/19

  

Net investment income (loss)

     

Income

  

Dividends

   $1,055,045 

Income on securities loaned

   48,763 

Dividends from affiliated issuers

   40,120 

Other

   6,346 

Foreign taxes withheld

   (7,593

Total investment income

   $1,142,681 

Expenses

  

Management fee

   $1,389,459 

Distribution and/or service fees

   119,892 

Shareholder servicing costs

   6,222 

Administrative services fee

   31,105 

Independent Trustees’ compensation

   5,921 

Custodian fee

   11,332 

Shareholder communications

   12,401 

Audit and tax fees

   28,871 

Legal fees

   1,730 

Miscellaneous

   14,453 

Total expenses

   $1,621,386 

Reduction of expenses by investment adviser

   (17,857

Net expenses

   $1,603,529 

Net investment income (loss)

   $(460,848

Realized and unrealized gain (loss)

     

Realized gain (loss) (identified cost basis)

  

Unaffiliated issuers

   $14,345,904 

Affiliated issuers

   (343

Foreign currency

   (136

Net realized gain (loss)

   $14,345,425 

Change in unrealized appreciation or depreciation

  

Unaffiliated issuers

   $83,088,985 

Affiliated issuers

   513 

Translation of assets and liabilities in foreign currencies

   (293

Net unrealized gain (loss)

   $83,089,205 

Net realized and unrealized gain (loss)

   $97,434,630 

Change in net assets from operations

   $96,973,782 

See Notes to Financial Statements

 

7


Table of Contents

 

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
6/30/19
   Year ended
12/31/18
 
   (unaudited)     

Change in net assets

    

From operations

          

Net investment income (loss)

   $(460,848   $(953,143

Net realized gain (loss)

   14,345,425    50,450,329 

Net unrealized gain (loss)

   83,089,205    (38,596,950

Change in net assets from operations

   $96,973,782    $10,900,236 

Total distributions to shareholders

   $—    $(60,563,444

Change in net assets from fund share transactions

   $(41,428,012   $(13,678,326

Total change in net assets

   $55,545,770    $(63,341,534

Net assets

          

At beginning of period

   334,173,289    397,514,823 

At end of period

   $389,719,059    $334,173,289 

See Notes to Financial Statements

 

8


Table of Contents

 

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 that 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
6/30/19
  Year ended 
  12/31/18   12/31/17   12/31/16  12/31/15   12/31/14 
     (unaudited)                   

Net asset value, beginning of period

     $8.23   $9.51    $7.96    $8.21   $8.76    $9.00 
Income (loss) from investment operations                              

Net investment income (loss) (d)

     $(0.01  $(0.02   $(0.01   $0.01(c)   $(0.03   $(0.03

Net realized and unrealized gain (loss)

     2.50   0.39    2.11    0.41   0.39    0.80 

Total from investment operations

     $2.49   $0.37    $2.10    $0.42   $0.36    $0.77 
Less distributions declared to shareholders                              

From net investment income

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

From net realized gain

        (1.65   (0.54   (0.67  (0.91   (1.01

Total distributions declared to shareholders

     $—   $(1.65   $(0.55   $(0.67  $(0.91   $(1.01

Net asset value, end of period (x)

     $10.72   $8.23    $9.51    $7.96   $8.21    $8.76 

Total return (%) (k)(r)(s)(x)

     30.26(n)   1.24    27.00    4.91(c)   4.61    8.86 
Ratios (%) (to average net assets)
and Supplemental data:
                              

Expenses before expense reductions (f)

     0.81(a)   0.81    0.81    0.75(c)   0.81    0.81 

Expenses after expense reductions (f)

     0.80(a)   0.80    0.80    0.74(c)   0.80    0.80 

Net investment income (loss)

     (0.18)(a)   (0.18   (0.15   0.15(c)   (0.33   (0.34

Portfolio turnover

     9(n)   21    32    37   37    49 

Net assets at end of period (000 omitted)

     $287,021   $247,614    $297,463    $294,226   $324,754    $363,788 
Service Class    

Six months

ended

6/30/19

  Year ended 
  12/31/18   12/31/17   12/31/16  12/31/15   12/31/14 
     (unaudited)                   

Net asset value, beginning of period

     $7.68   $8.99    $7.56    $7.85   $8.43    $8.72 
Income (loss) from investment operations                              

Net investment income (loss) (d)

     $(0.02  $(0.04   $(0.03   $(0.01)(c)   $(0.05   $(0.05

Net realized and unrealized gain (loss)

     2.33   0.38    2.00    0.39   0.38    0.77 

Total from investment operations

     $2.31   $0.34    $1.97    $0.38   $0.33    $0.72 
Less distributions declared to shareholders                              

From net investment income

     $—   $—    $—    $—   $—    $— 

From net realized gain

        (1.65   (0.54   (0.67  (0.91   (1.01

Total distributions declared to shareholders

     $—   $(1.65   $(0.54   $(0.67  $(0.91   $(1.01

Net asset value, end of period (x)

     $9.99   $7.68    $8.99    $7.56   $7.85    $8.43 

Total return (%) (k)(r)(s)(x)

     30.08(n)   0.95    26.68    4.62(c)   4.43    8.56 
Ratios (%) (to average net assets)
and Supplemental data:
                              

Expenses before expense reductions (f)

     1.06(a)   1.06    1.06    0.99(c)   1.06    1.06 

Expenses after expense reductions (f)

     1.05(a)   1.05    1.05    0.99(c)   1.05    1.05 

Net investment income (loss)

     (0.43)(a)   (0.43   (0.40   (0.08)(c)   (0.57   (0.59

Portfolio turnover

     9(n)   21    32    37   37    49 

Net assets at end of period (000 omitted)

     $102,698   $86,560    $100,052    $87,529   $87,008    $88,899 

See Notes to Financial Statements

 

9


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MFS Mid Cap Growth Series

 

Financial Highlights – continued

 

 

(a)

Annualized.

 

(c)

Amount reflects aone-time reimbursement of expenses by the custodian (or former custodian) without which net investment income and performance would be lower and expenses would be higher.

 

(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.

 

(x)

The net asset values and total returns have been calculated on net assets which include adjustments made in accordance with U.S. generally accepted accounting principles required at period end for financial reporting purposes.

See Notes to Financial Statements

 

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Table of Contents

 

MFS Mid Cap Growth Series

 

NOTES TO FINANCIAL STATEMENTS (unaudited)

 

(1) Business and Organization

MFS Mid Cap Growth Series (the fund) is a diversified series of MFS Variable Insurance Trust (the trust). The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as anopen-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.

The fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services – Investment Companies.

 

(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 increases and decreases in net assets from operations 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.

Balance Sheet Offsetting– The fund’s accounting policy with respect to balance sheet offsetting is that, absent an event of default by the counterparty or a termination of the agreement, the International Swaps and Derivatives Association (ISDA) Master Agreement, or similar agreement, does not result in an offset of reported amounts of financial assets and financial liabilities in the Statement of Assets and Liabilities across transactions between the fund and the applicable counterparty. The fund’s right to setoff may be restricted or prohibited by the bankruptcy or insolvency laws of the particular jurisdiction to which a specific master netting agreement counterparty is subject. Balance sheet offsetting disclosures, to the extent applicable to the fund, have been included in the fund’s Significant Accounting Policies note under the captions for each of the fund’sin-scope financial instruments and transactions.

Investment Valuations– Equity securities, including restricted equity securities, are generally valued at the last sale or official closing price on their primary market or exchange as provided by a third-party pricing service. Equity securities, for which there were no sales reported that day, are generally valued at the last quoted daily bid quotation on their primary market or exchange as provided by a third-party pricing service. Short-term instruments with a maturity at issuance of 60 days or less may be 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. In determining values, 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 halt 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 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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MFS Mid Cap Growth Series

 

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, 2019 in valuing the fund’s assets or liabilities:

 

Financial Instruments  Level 1   Level 2   Level 3   Total 
Equity Securities   $385,713,034    $—    $—    $385,713,034 
Mutual Funds   4,750,294            4,750,294 
Total   $390,463,328    $—    $—    $390,463,328 

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– Under its Securities Lending Agency Agreement with the fund, State Street Bank and Trust Company, as lending agent, loans the securities of the fund to certain qualified institutions (the “Borrowers”) approved by the fund. Security loans can be terminated at the discretion of either the lending agent or the fund and the related securities must be returned within the earlier of the standard trade settlement period for such securities or within three business days. 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. On loans collateralized by cash, the cash collateral is invested in a money market fund. 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. The lending agent provides the fund with indemnification against Borrower default. In the event of Borrower default, the lending agent will, for the benefit of the fund, either purchase securities identical to those loaned or, when such purchase is commercially impracticable, pay the fund the market value of the loaned securities. In return, the lending agent assumes the fund’s rights to the related collateral. If the collateral value is less than the cost to purchase identical securities, the lending agent is responsible for the shortfall, but only to the extent that such shortfall is not due to a decline in collateral value resulting from collateral reinvestment for which the fund bears the risk of loss. At period end, the fund had investment securities on loan, all of which were classified as equity securities in the fund’s Portfolio of Investments, with a fair value of $1,149,375. The fair value of the fund’s investment securities on loan is presented gross in the Statement of Assets and Liabilities. These loans were collateralized by U.S. Treasury Obligations of $1,189,339 held by the lending agent. The collateral on securities loaned exceeded the value of securities on loan at period end. 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 separately reported in 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 theex-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 theex-dividend date. Dividend payments received in additional securities are recorded on theex-dividend date in an amount equal to the value of the security on such date.

 

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MFS Mid Cap Growth Series

 

Notes to Financial Statements (unaudited) – continued

 

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.

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, when filed, will remain subject to examination by the Internal Revenue Service for a three year period. Management has analyzed the fund’s tax positions taken on federal and state tax returns for all open tax years and does not believe that there are any uncertain tax positions that require recognition of a tax liability. Foreign taxes, if any, have been accrued by the fund in the accompanying financial statements in accordance with the applicable foreign tax law. Foreign income taxes may be withheld by certain countries in which the fund invests. Additionally, capital gains realized by the fund on securities issued in or by certain foreign countries may be subject to capital gains tax imposed by those countries.

Distributions to shareholders are recorded on theex-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:

 

   Year ended
12/31/18
 
Ordinary income (including any short-term capital gains)   $2,076,310 
Long-term capital gains   58,487,134 
Total distributions   $60,563,444 

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

 

As of 6/30/19  
Cost of investments   $207,864,598 
Gross appreciation   184,140,294 
Gross depreciation   (1,541,564
Net unrealized appreciation (depreciation)   $182,598,730 
As of 12/31/18  
Undistributed ordinary income   3,472,522 
Undistributed long-term capital gain   46,043,087 
Other temporary differences   1,477 
Net unrealized appreciation (depreciation)   99,509,232 

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 in the Statements of Changes in Net Assets are presented by class as follows:

 

   From net investment
income
   From net realized
gain
 
   Six months ended
6/30/19
   Year ended
12/31/18
   Six months ended
6/30/19
   Year ended
12/31/18
 
Initial Class   $—    $—    $—    $43,616,306 
Service Class               16,947,138 
Total   $—    $—    $—    $60,563,444 

 

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MFS Mid Cap Growth 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 based on the fund’s average daily net assets:

 

Up to $1 billion   0.75% 
In excess of $1 billion   0.70% 

MFS has agreed in writing to reduce its management fee by a specified amount if certain MFS mutual fund assets exceed thresholds agreed to by MFS and the fund’s Board of Trustees. For the six months ended June 30, 2019, this management fee reduction amounted to $17,857, which is included in the reduction of total expenses in the Statement of Operations. The management fee incurred for the six months ended June 30, 2019 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 Rule12b-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, 2019, the fee was $5,779, which equated to 0.0031% annually of the fund’s average daily net assets. MFSC also receives payment from the fund forout-of-pocket expenses paid by MFSC on behalf of the fund. For the six months ended June 30, 2019, these costs amounted to $443.

Administrator– MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the fund 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, 2019 was equivalent to an annual effective rate of 0.0168% 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 from MFS for their services to the fund. 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) had entered into a service agreement (the ISO Agreement) which provided for payment of fees solely by the funds to Tarantino LLC in return for the provision of services of an Independent Senior Officer (ISO) for the funds. Frank L. Tarantino served as the ISO and was an officer of the funds and the sole member of Tarantino LLC. Effective June 30, 2019, Mr. Tarantino retired from his position as ISO for the funds, and the ISO Agreement was terminated. For the six months ended June 30, 2019, the fee paid by the fund under this agreement was $440 and is included in “Miscellaneous” expense in the Statement of Operations. MFS had agreed to bear all expenses associated with office space, other administrative support, and supplies provided to the ISO.

The fund invests in the MFS Institutional Money Market Portfolio which is managed by MFS and seeks current income consistent with preservation of capital and liquidity. This money market fund does not pay a management fee to MFS.

The fund is permitted to engage in purchase and sale transactions with funds and accounts for which MFS serves as investment adviser orsub-adviser (“cross-trades”) pursuant to a policy adopted by the Board of Trustees. This policy has been designed to ensure that cross-trades conducted by the fund comply with Rule17a-7 under the Investment Company Act of 1940. During the six months ended June 30, 2019, the fund engaged in purchase transactions pursuant to this policy, which amounted to $390,299.

The adviser has voluntarily undertaken to reimburse the fund from its own resources on a quarterly basis for the cost of investment research embedded in the cost of the fund’s securities trades. This agreement may be rescinded at any time. For the six months ended June 30, 2019, this reimbursement amounted to $6,275, which is included in “Other” income in the Statement of Operations.

 

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MFS Mid Cap Growth Series

 

Notes to Financial Statements (unaudited) – continued

 

 

(4) Portfolio Securities

For the six months ended June 30, 2019, purchases and sales of investments, other than short-term obligations, aggregated $33,677,623 and $74,740,112, 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 6/30/19   Year ended 12/31/18 
   Shares   Amount   Shares   Amount 
Shares sold        

Initial Class

   1,156,158    $11,028,795    1,454,735    $13,996,626 

Service Class

   1,006,397    9,157,097    2,340,234    21,633,301 
   2,162,555    $20,185,892    3,794,969    $35,629,927 
Shares issued to shareholders in reinvestment of distributions        

Initial Class

       $—    4,425,624    $43,105,580 

Service Class

           1,862,323    16,947,138 
       $—    6,287,947    $60,052,718 
Shares reacquired        

Initial Class

   (4,465,790   $(43,629,767   (7,082,285   $(72,234,596

Service Class

   (1,997,047   (17,984,137   (4,067,618   (37,126,375
   (6,462,837   $(61,613,904   (11,149,903   $(109,360,971
Net change        

Initial Class

   (3,309,632   $(32,600,972   (1,201,926   $(15,132,390

Service Class

   (990,650   (8,827,040   134,939    1,454,064 
   (4,300,282   $(41,428,012   (1,066,987   $(13,678,326

The fund is one of several mutual funds in which certain MFS funds may invest. The MFS funds do not invest in the underlying funds for the purpose of exercising management or control. At the end of the period, the MFS Moderate Allocation Portfolio, the MFS Growth Allocation Portfolio, and the MFS Conservative Allocation Portfolio were the owners of record of approximately 26%, 8%, and 5%, respectively, of the value of outstanding voting shares of the fund.

 

(6) Line of Credit

The fund and certain other funds managed by MFS participate in a $1.25 billion unsecured committed line of credit, subject to a $1 billion sublimit, provided by a syndicate 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 highest of one month LIBOR, the Federal Funds Effective Rate and the Overnight Bank Funding Rate, 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. 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 rates equal to customary reference rates plus an agreed upon spread. For the six months ended June 30, 2019, the fund’s commitment fee and interest expense were $1,116 and $0, respectively, and are included in “Miscellaneous” expense in the Statement of Operations.

 

(7) Investments in 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 following were affiliated issuers:

 

Affiliated Issuers Beginning
Value
  Purchases  Sales
Proceeds
  Realized
Gain
(Loss)
  Change in
Unrealized
Appreciation or
Depreciation
  Ending
Value
 
MFS Institutional Money Market Portfolio  $4,413,261   $47,025,822   $46,688,959   $(343  $513   $4,750,294 
Affiliated Issuers                 Dividend
Income
  Capital Gain
Distributions
 
MFS Institutional Money Market Portfolio

 

    $40,120   $— 

 

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MFS Mid Cap Growth Series

 

PROXY VOTING POLICIES AND INFORMATION

 

MFS votes proxies on behalf of the fund pursuant to proxy voting policies and procedures that are available without charge, upon request, by calling 1-800-225-2606, by visitingmfs.com/proxyvoting, or by visiting the SEC’s Web site athttp://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 by August 31 of each year without charge by visitingmfs.com/proxyvoting, or by visiting the SEC’s Web site athttp://www.sec.gov.

QUARTERLY PORTFOLIO DISCLOSURE

The fund files a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q or as an exhibit to its reports on Form N-PORT (for first and third fiscal quarters ending March 31, 2019 or after). The fund’sForm N-Q or Form N-PORT reports are available on the SEC’s website athttp://www.sec.gov.A shareholder can obtain the portfolio holdings report for the first and third quarters of the fund’s fiscal year atmfs.com/vit1 by choosing the fund’s name and then selecting the “Resources” tab and clicking on “Prospectus and Reports”.

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 at https://www.mfs.com/en-us/what-we-do/announcements.html or atmfs.com/vit1 by choosing the fund’s name.

INFORMATION ABOUT FUND CONTRACTS AND LEGAL CLAIMS

The fund has entered into contractual arrangements with an investment adviser, administrator, distributor, shareholder servicing agent, 529 program manager (if applicable), and custodian who each provide services to the fund. Unless expressly stated otherwise, shareholders are not parties to, or intended beneficiaries of these contractual arrangements, and these contractual arrangements are not intended to create any shareholder right to enforce them against the service providers or to seek any remedy under them against the service providers, either directly or on behalf of the fund.

Under the Trust’s By-Laws and Declaration of Trust, any claims asserted against or on behalf of the MFS Funds, including claims against Trustees and Officers, must be brought in state and federal courts located within the Commonwealth of Massachusetts.

 

16


Table of Contents

LOGO


Table of Contents

Semiannual Report

June 30, 2019

 

LOGO

 

MFS® New Discovery Series

 

LOGO

 

MFS® Variable Insurance Trust

 

Beginning on January 1, 2021, as permitted by regulations adopted by the U.S. Securities and Exchange Commission, the insurance company that offers your contract may determine that it will no longer send you paper copies of the fund’s annual and semiannual shareholder reports unless you specifically request paper copies from the insurance company or from your financial intermediary. Instead, the shareholder reports will be made available on a Web site (insurancefunds.mfs.com or other Web site of which you will be notified), and the insurance company will notify you by mail each time a report is posted and provide you with a Web site link to access the report. Instructions for requesting paper copies will be provided by your insurance company or financial intermediary.

If you already elected to receive shareholder reports by email, you will not be affected by this change and you need not take any action. If your insurance company or financial intermediary offers electronic delivery, you may elect to receive shareholder reports and other communications from the insurance company or financial intermediary by email by following the instructions provided by the insurance company or financial intermediary.

Beginning on January 1, 2019, you may elect to receive all future reports in paper free of charge from the insurance company or financial intermediary. You can inform the insurance company or financial intermediary that you wish to continue receiving paper copies of your shareholder reports by contacting your insurance company or financial intermediary. Your election to receive reports in paper will apply to all funds held in your account with your insurance company or financial intermediary.

 

VND-SEM


Table of Contents

MFS® New Discovery Series

 

CONTENTS

 

Letter from the Executive Chairman   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 
Proxy voting policies and information   18 
Quarterly portfolio disclosure   18 
Further information   18 
Information about fund contracts and legal claims   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 MAY LOSE VALUE NO BANK OR CREDIT UNION GUARANTEE NOT A DEPOSIT NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY OR NCUA/NCUSIF



Table of Contents

MFS New Discovery Series

 

LETTER FROM THE EXECUTIVE CHAIRMAN

 

LOGO

Dear Contract Owners:

Slowing global growth, low inflation, and increasing trade friction between the United States and China have been hallmarks of the past 12 months. After experiencing an uptick in market volatility in late 2018, markets steadied during the first half of 2019, thanks in large measure to the adoption of a dovish policy stance on the part of global central banks, who have largely abandoned efforts to normalize interest rates and have instead focused on supporting economic growth. Trade tensions remain high as the U.S. has ratcheted up tariffs on Chinese imports and China has retaliated. A truce of sorts was reached midyear, but significant challenges continue to confront negotiators, and it is not known whether a comprehensive agreement can be reached.

With Boris Johnson replacing Theresa May as Britain’s prime minister, uncertainty over Brexit remains high. Johnson has adopted a more combative stance than his predecessor toward the European Union, increasing concerns that there will be a “hard” Brexit.

Markets expect that the longest economic expansion in U.S. history will continue for the time being, albeit at a slower pace. Nevertheless, slower growth and low inflation have spurred the U.S. Federal Reserve to take a more accommodative policy stance, prompting investors to anticipate several interest rate cuts in the coming year. The European Central Bank has adopted a similar position. The more accommodative environment has helped fuel a continued rise in global equities and has been broadly supportive of risk assets.

Since launching the first U.S.open-end mutual fund in 1924, MFS® has been committed to a single purpose: to create value by allocating capital responsibly for clients. Through our powerful global investment platform, we combine collective expertise, thoughtful risk management, and long-term discipline to uncover what we believe are the best investment opportunities in the market.

Respectfully,

 

LOGO

Robert J. Manning

Executive Chairman

MFS Investment Management

August 16, 2019

 

 

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

 

1


Table of Contents

MFS New Discovery Series

 

PORTFOLIO COMPOSITION

 

Portfolio structure

 

LOGO

 

Top ten holdings 
Bright Horizons Family Solutions, Inc.  1.8% 
Performance Food Group Co.  1.5% 
ICON PLC  1.5% 
CACI International, Inc., “A”  1.5% 
Masimo Corp.  1.5% 
Endava PLC, ADR  1.4% 
STAG Industrial, Inc., REIT  1.4% 
WNS (Holdings) Ltd., ADR  1.4% 
Everbridge, Inc.  1.4% 
Axalta Coating Systems Ltd.  1.4% 
GICS equity sectors (g) 
Information Technology  26.6% 
Health Care  25.3% 
Consumer Discretionary  13.2% 
Industrials  11.0% 
Financials  7.3% 
Materials  5.3% 
Real Estate  3.2% 
Communication Services  3.1% 
Consumer Staples  2.5% 
Energy  1.7% 
 
(g)

The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and S&P Global Market Intelligence Inc. (“S&P Global Market Intelligence”). GICS is a service mark of MSCI and S&P Global Market Intelligence and has been licensed for use by MFS.

Cash & Cash Equivalents includes any cash, investments in money market funds, short-term securities, and other assets less liabilities. Please see the Statement of Assets and Liabilities for additional information related to the fund’s cash position and other assets and liabilities.

Percentages are based on net assets as of June 30, 2019.

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

 

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MFS New Discovery Series

 

EXPENSE TABLE

 

Fund Expenses Borne by the Contract Holders during the Period,

January 1, 2019 through June 30, 2019

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, 2019 through June 30, 2019.

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
1/01/19
   Ending
Account Value
6/30/19
   Expenses Paid
During Period (p)
1/01/19-6/30/19
 
Initial Class Actual   0.94%    $1,000.00    $1,313.86    $5.39 
 Hypothetical (h)   0.94%    $1,000.00    $1,020.13    $4.71 
Service Class Actual   1.19%    $1,000.00    $1,311.75    $6.82 
 Hypothetical (h)   1.19%    $1,000.00    $1,018.89    $5.96 

 

(h)

5% class return per year before expenses.

 

(p)

“Expenses Paid During Period” are equal to each class’s annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by 181/365 (to reflect theone-half year period).

 

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PORTFOLIO OF INVESTMENTS – 6/30/19 (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 – 99.2%   
Aerospace – 4.5%

 

 
CACI International, Inc., “A” (a)   55,913  $11,439,241 
Cubic Corp.   140,169   9,038,097 
Curtiss-Wright Corp.   31,601   4,017,435 
FLIR Systems, Inc.   197,579   10,689,024 
   

 

 

 
   $35,183,797 
   

 

 

 
Apparel Manufacturers – 2.3%

 

 
Levi Strauss & Co., “A” (a)   433,455  $9,050,540 
Skechers USA, Inc., “A” (a)   288,959   9,099,319 
   

 

 

 
   $18,149,859 
   

 

 

 
Automotive – 4.2%

 

 
Hella KGaA Hueck & Co.   102,292  $5,057,431 
IAA, Inc. (a)   159,640   6,190,839 
KAR Auction Services, Inc.   159,640   3,991,000 
Stoneridge, Inc. (a)   320,186   10,101,868 
Visteon Corp. (a)   128,990   7,556,234 
   

 

 

 
   $32,897,372 
   

 

 

 
Biotechnology – 5.4%

 

 
Aimmune Therapeutics, Inc. (a)   148,223  $3,086,003 
Alder Biopharmaceuticals, Inc. (a)   331,604   3,902,979 
Amicus Therapeutics, Inc. (a)   404,040   5,042,419 
Bio-Techne Corp.   39,658   8,268,296 
Immunomedics, Inc. (a)(l)   168,002   2,330,188 
Morphosys AG, ADR (a)(l)   164,685   3,975,496 
Neurocrine Biosciences, Inc. (a)   46,172   3,898,302 
Sarepta Therapeutics, Inc. (a)   21,400   3,251,730 
Tricida, Inc. (a)   108,768   4,291,985 
Twist Bioscience Corp. (a)   129,299   3,750,964 
   

 

 

 
   $41,798,362 
   

 

 

 
Brokerage & Asset Managers – 3.9%

 

 
Hamilton Lane, Inc., “A”   166,085  $9,476,810 
HealthEquity, Inc. (a)   75,399   4,931,094 
TMX Group Ltd.   133,777   9,306,315 
Tradeweb Markets, Inc.   47,933   2,099,945 
WisdomTree Investments, Inc.   742,312   4,580,065 
   

 

 

 
   $30,394,229 
   

 

 

 
Business Services – 5.2%

 

 
CarGurus, Inc. (a)   191,740  $6,923,731 
Endava PLC, ADR (a)   278,912   11,223,419 
EVO Payments, Inc., “A” (a)   168,087   5,299,783 
TriNet Group, Inc. (a)   82,026   5,561,363 
WNS (Holdings) Ltd., ADR (a)   186,541   11,043,227 
   

 

 

 
   $40,051,523 
   

 

 

 
Chemicals – 1.1%

 

 
Ingevity Corp. (a)   80,069  $8,420,857 
   

 

 

 
Computer Software – 8.1%

 

 
8x8, Inc. (a)   159,119  $3,834,768 
Avalara, Inc. (a)   133,646   9,649,241 
Issuer  Shares/Par  Value ($) 
COMMON STOCKS – continued

 

 
Computer Software – continued

 

 
DocuSign, Inc. (a)   154,338  $7,672,142 
Everbridge, Inc. (a)   123,424   11,036,574 
Okta, Inc. (a)   14,452   1,784,967 
Pagerduty, Inc. (a)   115,003   5,410,891 
Paylocity Holding Corp. (a)   89,106   8,359,925 
RingCentral, Inc. (a)   47,047   5,406,641 
Zendesk, Inc. (a)   108,358   9,647,113 
   

 

 

 
   $62,802,262 
   

 

 

 
Computer Software – Systems – 6.4%

 

 
Box, Inc. (a)   376,277  $6,626,238 
Five9, Inc. (a)   80,545   4,131,153 
Pluralsight, Inc., “A” (a)   187,145   5,674,237 
Proofpoint, Inc. (a)   51,625   6,207,906 
Q2 Holdings, Inc. (a)   139,835   10,677,801 
Rapid7, Inc. (a)   169,699   9,815,390 
RealPage, Inc. (a)   112,932   6,646,048 
   

 

 

 
   $49,778,773 
   

 

 

 
Construction – 1.8%

 

 
Foundation Building Materials, Inc. (a)   333,361  $5,927,158 
Summit Materials, Inc., “A” (a)   410,599   7,904,031 
   

 

 

 
   $13,831,189 
   

 

 

 
Consumer Services – 5.3%

 

 
Bright Horizons Family Solutions, Inc. (a)   93,008  $14,032,117 
MakeMyTrip Ltd. (a)   329,551   8,172,865 
OneSpaWorld Holdings Ltd. (a)   554,026   8,587,403 
Planet Fitness, Inc. (a)   143,477   10,393,474 
   

 

 

 
   $41,185,859 
   

 

 

 
Electrical Equipment – 2.5%

 

 
CTS Corp.   171,575  $4,732,038 
Generac Holdings, Inc. (a)   104,637   7,262,854 
Littlefuse, Inc.   43,494   7,694,524 
   

 

 

 
   $19,689,416 
   

 

 

 
Electronics – 2.8%

 

 
Brooks Automation, Inc.   180,304  $6,986,780 
Monolithic Power Systems, Inc.   31,340   4,255,345 
nLIGHT, Inc. (a)   187,588   3,601,690 
Silicon Laboratories, Inc. (a)   66,235   6,848,699 
   

 

 

 
   $21,692,514 
   

 

 

 
Entertainment – 2.2%

 

 
CTS Eventim AG   135,969  $6,326,656 
Live Nation, Inc. (a)   57,772   3,827,395 
Manchester United PLC, “A”   402,799   7,282,606 
   

 

 

 
   $17,436,657 
   

 

 

 
Food & Drug Stores – 1.0%

 

 
Grocery Outlet Holding Corp. (a)   227,888  $7,492,957 
   

 

 

 
Forest & Paper Products – 1.0%

 

 
Trex Co., Inc. (a)   106,721  $7,651,896 
   

 

 

 
 

 

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Portfolio of Investments (unaudited) – continued

 

Issuer  Shares/Par  Value ($) 
COMMON STOCKS – continued

 

 
General Merchandise – 0.5%

 

 
Ollie’s Bargain Outlet Holdings, Inc. (a)   43,270  $3,769,250 
   

 

 

 
Machinery & Tools – 0.7%

 

 
Ritchie Bros. Auctioneers, Inc.   163,891  $5,444,459 
   

 

 

 
Medical & Health Technology & Services – 5.7%

 

 
Charles River Laboratories International, Inc. (a)   59,286  $8,412,683 
Guardant Health, Inc. (a)   57,827   4,992,205 
ICON PLC (a)   76,362   11,757,457 
Medidata Solutions, Inc. (a)   49,289   4,461,147 
Syneos Health, Inc. (a)   105,274   5,378,449 
Teladoc Health, Inc. (a)   144,624   9,604,480 
   

 

 

 
   $44,606,421 
   

 

 

 
Medical Equipment – 12.0%   
Adaptive Biotechnologies Corp. (a)   202,169  $9,764,763 
Inspire Medical Systems, Inc. (a)   60,160   3,648,704 
iRhythm Technologies, Inc. (a)   64,529   5,102,953 
Masimo Corp. (a)   76,429   11,374,164 
Merit Medical Systems, Inc. (a)   121,604   7,242,734 
Mesa Laboratories, Inc.   18,660   4,559,384 
Nevro Corp. (a)   73,544   4,767,857 
OptiNose, Inc. (a)(l)   310,032   2,195,027 
OrthoPediatrics Corp. (a)   142,342   5,551,338 
PerkinElmer, Inc.   80,417   7,747,374 
Quidel Corp. (a)   112,200   6,655,704 
Silk Road Medical, Inc. (a)   97,080   4,704,497 
STERIS PLC   47,620   7,089,666 
TransMedics Group, Inc. (a)   128,128   3,714,431 
West Pharmaceutical Services, Inc.   71,769   8,981,890 
   

 

 

 
   $93,100,486 
   

 

 

 
Network & Telecom – 1.3%   
Interxion Holding N.V. (a)   131,309  $9,991,302 
   

 

 

 
Oil Services – 1.4%   
Core Laboratories N.V.   127,696  $6,675,947 
Patterson-UTI Energy, Inc.   392,225   4,514,510 
   

 

 

 
   $11,190,457 
   

 

 

 
Other Banks & Diversified Financials – 4.1%

 

 
Bank OZK   146,213  $4,399,549 
Legacytextas Financial Group, Inc.   190,891   7,771,173 
Signature Bank   43,711   5,282,037 
Texas Capital Bancshares, Inc. (a)   99,780   6,123,499 
Wintrust Financial Corp.   108,264   7,920,594 
   

 

 

 
   $31,496,852 
   

 

 

 
Pharmaceuticals – 2.9%   
Aquestive Therapeutics, Inc. (a)   166,061  $697,456 
BridgeBio Pharma, Inc. (a)   119,884   3,233,272 
Collegium Pharmaceutical, Inc. (a)   208,886   2,746,851 
Issuer  Shares/Par  Value ($) 
COMMON STOCKS – continued

 

 
Pharmaceuticals – continued   
Forty Seven, Inc. (a)   116,199  $1,231,709 
GW Pharmaceuticals PLC, ADR (a)(l)   27,392   4,722,107 
Orchard RX Ltd., ADR (a)(l)   183,052   2,560,897 
PetIQ, Inc. (a)   120,222   3,962,517 
Principia Biopharma, Inc. (a)   94,248   3,128,091 
   

 

 

 
   $22,282,900 
   

 

 

 
Pollution Control – 0.6%   
Evoqua Water Technologies LLC (a)   354,786  $5,052,153 
   

 

 

 
Railroad & Shipping – 0.3%   
StealthGas, Inc. (a)   624,779  $2,149,240 
   

 

 

 
Real Estate – 3.2%   
Big Yellow Group PLC, REIT   345,531  $4,341,994 
Industrial Logistics Properties Trust, REIT   454,425   9,461,129 
STAG Industrial, Inc., REIT   368,689   11,149,155 
   

 

 

 
   $24,952,278 
   

 

 

 
Restaurants – 1.5%   
Performance Food Group Co. (a)   296,037  $11,850,361 
   

 

 

 
Special Products & Services – 1.1%   
Boyd Group Income Fund, IEU   69,576  $8,791,372 
   

 

 

 
Specialty Chemicals – 4.1%   
Axalta Coating Systems Ltd. (a)   361,781  $10,770,220 
Ferro Corp. (a)   593,341   9,374,788 
Ferroglobe PLC   564,766   960,102 
RPM International, Inc.   63,752   3,895,885 
Univar, Inc. (a)   303,828   6,696,369 
   

 

 

 
   $31,697,364 
   

 

 

 
Specialty Stores – 2.1%   
Chewy, Inc., “A” (a)   103,469  $3,621,415 
Floor & Decor Holdings, Inc. (a)   110,045   4,610,885 
Hudson Ltd., “A” (a)   597,159   8,234,823 
   

 

 

 
   $16,467,123 
   

 

 

 
Total Common Stocks
(Identified Cost, $593,788,627)
   $771,299,540 
   

 

 

 
INVESTMENT COMPANIES (h) – 1.7%

 

 
Money Market Funds – 1.7%   
MFS Institutional Money Market Portfolio, 2.42% (v) (Identified Cost, $12,700,923)   12,700,986  $12,702,256 
   

 

 

 
COLLATERAL FOR SECURITIES LOANED – 0.1%

 

State Street Navigator Securities Lending Government Money Market Portfolio, 2.36% (j) (Identified Cost, $817,037)   817,037  $817,037 
   

 

 

 
OTHER ASSETS, LESS
LIABILITIES – (1.0)%
    (7,561,570
   

 

 

 
NET ASSETS – 100.0%   $777,257,263 
   

 

 

 
 

 

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Portfolio of Investments (unaudited) – continued

 

 

(a) Non-income producing security.

 

(h) An affiliated issuer, which 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. At period end, the aggregate values of the fund’s investments in affiliated issuers and in unaffiliated issuers were $12,702,256 and $772,116,577, respectively.

 

(j) The rate quoted is the annualizedseven-day yield of the fund at period end.

 

(l) A portion of this security is on loan. See Note 2 for additional information.

 

(v) Affiliated issuer that is available only to investment companies managed by MFS. The rate quoted for the MFS Institutional Money Market Portfolio is the annualizedseven-day yield of the fund at period end.

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

 

ADR American Depositary Receipt

 

IEU International Equity Unit

 

REIT Real Estate Investment Trust

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 6/30/19

  

Assets

     

Investments in unaffiliated issuers, at value, including $3,704,206 of securities on loan (identified cost, $594,605,664)

   $772,116,577 

Investments in affiliated issuers, at value (identified cost, $12,700,923)

   12,702,256 

Cash

   18,126 

Receivables for

  

Investments sold

   1,362,709 

Fund shares sold

   198,678 

Interest and dividends

   213,314 

Other assets

   1,451 

Total assets

   $786,613,111 

Liabilities

     

Payables for

  

Investments purchased

   $6,455,196 

Fund shares reacquired

   1,815,715 

Collateral for securities loaned, at value (c)

   817,037 

Payable to affiliates

  

Investment adviser

   67,886 

Administrative services fee

   1,225 

Shareholder servicing costs

   1,267 

Distribution and/or service fees

   11,834 

Payable for independent Trustees’ compensation

   12 

Accrued expenses and other liabilities

   185,676 

Total liabilities

   $9,355,848 

Net assets

   $777,257,263 

Net assets consist of

     

Paid-in capital

   $426,513,605 

Total distributable earnings (loss)

   350,743,658 

Net assets

   $777,257,263 

Shares of beneficial interest outstanding

   35,797,536 

 

   Net assets   Shares
outstanding
   Net asset value
per share
 

Initial Class

   $334,257,490    14,573,714    $22.94 

Service Class

   442,999,773    21,223,822    20.87 

 

(c)

Non-cash collateral is not included.

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 6/30/19

  

Net investment income (loss)

     

Income

  

Dividends

   $1,981,729 

Dividends from affiliated issuers

   171,993 

Income on securities loaned

   60,015 

Other

   32,601 

Foreign taxes withheld

   (62,602

Total investment income

   $2,183,736 

Expenses

  

Management fee

   $3,270,565 

Distribution and/or service fees

   514,268 

Shareholder servicing costs

   14,796 

Administrative services fee

   56,000 

Independent Trustees’ compensation

   10,063 

Custodian fee

   25,520 

Shareholder communications

   50,721 

Audit and tax fees

   29,277 

Legal fees

   3,357 

Miscellaneous

   17,298 

Total expenses

   $3,991,865 

Reduction of expenses by investment adviser

   (58,423

Net expenses

   $3,933,442 

Net investment income (loss)

   $(1,749,706

Realized and unrealized gain (loss)

     

Realized gain (loss) (identified cost basis)

  

Unaffiliated issuers

   $37,030,299 

Affiliated issuers

   1,801 

Foreign currency

   1,213 

Net realized gain (loss)

   $37,033,313 

Change in unrealized appreciation or depreciation

  

Unaffiliated issuers

   $158,604,429 

Affiliated issuers

   1,153 

Translation of assets and liabilities in foreign currencies

   90 

Net unrealized gain (loss)

   $158,605,672 

Net realized and unrealized gain (loss)

   $195,638,985 

Change in net assets from operations

   $193,889,279 

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
6/30/19
   Year ended
12/31/18
 
   (unaudited)     

Change in net assets

    

From operations

          

Net investment income (loss)

   $(1,749,706   $(4,370,199

Net realized gain (loss)

   37,033,313    145,027,607 

Net unrealized gain (loss)

   158,605,672    (144,035,189

Change in net assets from operations

   $193,889,279    $(3,377,781

Total distributions to shareholders

   $—    $(102,401,393

Change in net assets from fund share transactions

   $(47,582,773   $(13,116,105

Total change in net assets

   $146,306,506    $(118,895,279

Net assets

          

At beginning of period

   630,950,757    749,846,036 

At end of period

   $777,257,263    $630,950,757 

See Notes to Financial Statements

 

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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 that 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

6/30/19

  Year ended 
  12/31/18   12/31/17   12/31/16  12/31/15   12/31/14 
     (unaudited)                   

Net asset value, beginning of period

     $17.46   $20.10    $16.18    $15.49   $16.32    $22.07 
Income (loss) from investment operations                              

Net investment income (loss) (d)

     $(0.04  $(0.09   $(0.07   $0.00(c)(w)   $(0.08   $(0.09

Net realized and unrealized gain (loss)

     5.52   0.35    4.34    1.40   (0.22   (1.42

Total from investment operations

     $5.48   $0.26    $4.27    $1.40   $(0.30   $(1.51
Less distributions declared to shareholders                              

From net realized gain

     $—   $(2.90   $(0.35   $(0.71  $(0.53   $(4.24

Net asset value, end of period (x)

     $22.94   $17.46    $20.10    $16.18   $15.49    $16.32 

Total return (%) (k)(r)(s)(x)

     31.39(n)   (1.48   26.65    9.05(c)   (1.89   (7.26
Ratios (%) (to average net assets)
and Supplemental data:
                              

Expenses before expense reductions (f)

     0.96(a)   0.96    0.97    0.94(c)   0.96    0.96 

Expenses after expense reductions (f)

     0.94(a)   0.94    0.94    0.92(c)   0.94    0.95 

Net investment income (loss)

     (0.34)(a)   (0.43   (0.37   0.02(c)   (0.48   (0.46

Portfolio turnover

     30(n)   71    58    63   60    96 

Net assets at end of period (000 omitted)

     $334,257   $272,039    $316,949    $292,368   $312,151    $391,474 
Service Class    

Six months

ended

6/30/19

  Year ended 
  12/31/18   12/31/17   12/31/16  12/31/15   12/31/14 
     (unaudited)                   

Net asset value, beginning of period

     $15.91   $18.57    $15.01    $14.45   $15.30    $21.02 
Income (loss) from investment operations                              

Net investment income (loss) (d)

     $(0.06  $(0.13   $(0.10   $(0.03)(c)   $(0.11   $(0.13

Net realized and unrealized gain (loss)

     5.02   0.37    4.01    1.30   (0.21   (1.35

Total from investment operations

     $4.96   $0.24    $3.91    $1.27   $(0.32   $(1.48
Less distributions declared to shareholders                              

From net realized gain

     $—   $(2.90   $(0.35   $(0.71  $(0.53   $(4.24

Net asset value, end of period (x)

     $20.87   $15.91    $18.57    $15.01   $14.45    $15.30 

Total return (%) (k)(r)(s)(x)

     31.18(n)   (1.72   26.33    8.80(c)   (2.15   (7.49
Ratios (%) (to average net assets)
and Supplemental data:
                              

Expenses before expense reductions (f)

     1.21(a)   1.21    1.22    1.19(c)   1.21    1.21 

Expenses after expense reductions (f)

     1.19(a)   1.19    1.19    1.17(c)   1.19    1.20 

Net investment income (loss)

     (0.59)(a)   (0.68   (0.62   (0.23)(c)   (0.73   (0.72

Portfolio turnover

     30(n)   71    58    63   60    96 

Net assets at end of period (000 omitted)

     $443,000   $358,912    $432,897    $380,884   $388,966    $469,245 

See Notes to Financial Statements

 

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MFS New Discovery Series

 

Financial Highlights – continued

 

 

(a) Annualized.

 

(c) Amount reflects aone-time reimbursement of expenses by the custodian (or former custodian) without which net investment income and performance would be lower and expenses would be higher.

 

(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.

 

(x) The net asset values and total returns have been calculated on net assets which include adjustments made in accordance with U.S. generally accepted accounting principles required at period end for financial reporting purposes.

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 diversified series of MFS Variable Insurance Trust (the trust). The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as anopen-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.

The fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services – Investment Companies.

 

(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 increases and decreases in net assets from operations 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 will generally focus on securities of small size companies which may be more volatile than those of larger companies.

Balance Sheet Offsetting– The fund’s accounting policy with respect to balance sheet offsetting is that, absent an event of default by the counterparty or a termination of the agreement, the International Swaps and Derivatives Association (ISDA) Master Agreement, or similar agreement, does not result in an offset of reported amounts of financial assets and financial liabilities in the Statement of Assets and Liabilities across transactions between the fund and the applicable counterparty. The fund’s right to setoff may be restricted or prohibited by the bankruptcy or insolvency laws of the particular jurisdiction to which a specific master netting agreement counterparty is subject. Balance sheet offsetting disclosures, to the extent applicable to the fund, have been included in the fund’s Significant Accounting Policies note under the captions for each of the fund’sin-scope financial instruments and transactions.

Investment Valuations– Equity securities, including restricted equity securities, are generally valued at the last sale or official closing price on their primary market or exchange as provided by a third-party pricing service. Equity securities, for which there were no sales reported that day, are generally valued at the last quoted daily bid quotation on their primary market or exchange as provided by a third-party pricing service. Short-term instruments with a maturity at issuance of 60 days or less may be 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. In determining values, 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 halt 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 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

 

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Notes to Financial Statements (unaudited) – continued

 

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, 2019 in valuing the fund’s assets or liabilities:

 

Financial Instruments  Level 1   Level 2   Level 3   Total 
Equity Securities   $771,299,540    $—    $—    $771,299,540 
Mutual Funds   13,519,293            13,519,293 
Total   $784,818,833    $—    $—    $784,818,833 

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– Under its Securities Lending Agency Agreement with the fund, State Street Bank and Trust Company, as lending agent, loans the securities of the fund to certain qualified institutions (the “Borrowers”) approved by the fund. Security loans can be terminated at the discretion of either the lending agent or the fund and the related securities must be returned within the earlier of the standard trade settlement period for such securities or within three business days. 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. On loans collateralized by cash, the cash collateral is invested in a money market fund. 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. The lending agent provides the fund with indemnification against Borrower default. In the event of Borrower default, the lending agent will, for the benefit of the fund, either purchase securities identical to those loaned or, when such purchase is commercially impracticable, pay the fund the market value of the loaned securities. In return, the lending agent assumes the fund’s rights to the related collateral. If the collateral value is less than the cost to purchase identical securities, the lending agent is responsible for the shortfall, but only to the extent that such shortfall is not due to a decline in collateral value resulting from collateral reinvestment for which the fund bears the risk of loss. At period end, the fund had investment securities on loan, all of which were classified as equity securities in the fund’s Portfolio of Investments, with a fair value of $3,704,206. The fair value of the fund’s investment securities on loan and a related liability of $817,037 for cash collateral received on securities loaned are both presented gross in the Statement of Assets and Liabilities. Additionally, these loans were collateralized by U.S. Treasury Obligations of $2,935,294 held by the lending agent. The collateral on securities loaned exceeded the value of securities on loan at period end. The liability for cash collateral for securities loaned is carried at fair value, which is categorized as level 2 within the fair value hierarchy. 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 separately reported in 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 theex-dividend date. Certain dividends from foreign securities will be

 

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Notes to Financial Statements (unaudited) – continued

 

recorded when the fund is informed of the dividend if such information is obtained subsequent to theex-dividend date. Dividend payments received in additional securities are recorded on theex-dividend 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.

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, when filed, will remain subject to examination by the Internal Revenue Service for a three year period. Management has analyzed the fund’s tax positions taken on federal and state tax returns for all open tax years and does not believe that there are any uncertain tax positions that require recognition of a tax liability. Foreign taxes, if any, have been accrued by the fund in the accompanying financial statements in accordance with the applicable foreign tax law. Foreign income taxes may be withheld by certain countries in which the fund invests. Additionally, capital gains realized by the fund on securities issued in or by certain foreign countries may be subject to capital gains tax imposed by those countries.

Distributions to shareholders are recorded on theex-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:

 

   Year ended
12/31/18
 
Ordinary income (including any short-term capital gains)   $25,836,100 
Long-term capital gains   76,565,293 
Total distributions   $102,401,393 

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

 

As of 6/30/19  
Cost of investments   $609,492,717 
Gross appreciation   213,144,939 
Gross depreciation   (37,818,823
Net unrealized appreciation (depreciation)   $175,326,116 
As of 12/31/18  
Undistributed ordinary income   47,069,448 
Undistributed long-term capital gain   92,954,744 
Other temporary differences   (518
Net unrealized appreciation (depreciation)   16,830,705 

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

 

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Notes to Financial Statements (unaudited) – continued

 

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

 

   From net realized
gain
 
   Six months ended
6/30/19
   Year ended
12/31/18
 
Initial Class   $—    $41,425,844 
Service Class       60,975,549 
Total   $—    $102,401,393 

 

(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 based on the fund’s average daily net assets:

 

Up to $1 billion   0.90% 
In excess of $1 billion   0.80% 

MFS has agreed in writing to reduce its management fee by a specified amount if certain MFS mutual fund assets exceed thresholds agreed to by MFS and the fund’s Board of Trustees. For the six months ended June 30, 2019, this management fee reduction amounted to $35,023, which is included in the reduction of total expenses in the Statement of Operations. The management fee incurred for the six months ended June 30, 2019 was equivalent to an annual effective rate of 0.89% 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, excluding interest, taxes, extraordinary expenses, brokerage and transaction costs, and investment-related expenses, such that total annual operating expenses do not exceed 0.94% of average daily net assets for the Initial Class shares and 1.19% 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, 2021. For the six months ended June 30, 2019, this reduction amounted to $23,400, which is included in the 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 Rule12b-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, 2019, the fee was $13,145, which equated to 0.0036% annually of the fund’s average daily net assets. MFSC also receives payment from the fund forout-of-pocket expenses paid by MFSC on behalf of the fund. For the six months ended June 30, 2019, these costs amounted to $1,651.

Administrator– MFS provides certain financial, legal, shareholder communications, compliance, and other administrative services to the fund. Under an administrative services agreement, the fund 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, 2019 was equivalent to an annual effective rate of 0.0154% 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 from MFS for their services to the fund. 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) had entered into a service agreement (the ISO Agreement) which provided for payment of fees solely by the funds to Tarantino LLC in return for the provision of services of an Independent Senior Officer (ISO) for the funds. Frank L. Tarantino served as the ISO and was an officer of the funds and the sole member of Tarantino LLC. Effective June 30, 2019, Mr. Tarantino retired from his position as ISO for the funds, and the ISO Agreement was

 

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Notes to Financial Statements (unaudited) – continued

 

terminated. For the six months ended June 30, 2019, the fee paid by the fund under this agreement was $854 and is included in “Miscellaneous” expense in the Statement of Operations. MFS had agreed to bear all expenses associated with office space, other administrative support, and supplies provided to the ISO.

The fund invests in the MFS Institutional Money Market Portfolio which is managed by MFS and seeks current income consistent with preservation of capital and liquidity. This money market fund does not pay a management fee to MFS.

The fund is permitted to engage in purchase and sale transactions with funds and accounts for which MFS serves as investment adviser orsub-adviser (“cross-trades”) pursuant to a policy adopted by the Board of Trustees. This policy has been designed to ensure that cross-trades conducted by the fund comply with Rule17a-7 under the Investment Company Act of 1940. During the six months ended June 30, 2019, the fund engaged in sale transactions pursuant to this policy, which amounted to $430,148. The sales transactions resulted in net realized gains (losses) of $83,664.

The adviser has voluntarily undertaken to reimburse the fund from its own resources on a quarterly basis for the cost of investment research embedded in the cost of the fund’s securities trades. This agreement may be rescinded at any time. For the six months ended June 30, 2019, this reimbursement amounted to $32,477, which is included in “Other” income in the Statement of Operations.

 

(4) Portfolio Securities

For the six months ended June 30, 2019, purchases and sales of investments, other than short-term obligations, aggregated $216,895,017 and $264,298,906, 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 6/30/19   Year ended 12/31/18 
   Shares   Amount   Shares   Amount 
Shares sold        

Initial Class

   736,793    $14,663,921    1,335,731    $28,577,256 

Service Class

   1,325,999    25,209,324    2,940,782    57,380,560 
   2,062,792    $39,873,245    4,276,513    $85,957,816 
Shares issued to shareholders in reinvestment of distributions        

Initial Class

       $—    1,916,976    $41,425,844 

Service Class

           3,093,635    60,975,549 
       $—    5,010,611    $102,401,393 
Shares reacquired        

Initial Class

   (1,742,477   $(36,643,362   (3,444,747   $(72,836,695

Service Class

   (2,660,170   (50,812,656   (6,791,905   (128,638,619
   (4,402,647   $(87,456,018   (10,236,652   $(201,475,314
Net change        

Initial Class

   (1,005,684   $(21,979,441   (192,040   $(2,833,595

Service Class

   (1,334,171   (25,603,332   (757,488   (10,282,510
   (2,339,855   $(47,582,773   (949,528   $(13,116,105

The fund is one of several mutual funds in which certain MFS funds may invest. The MFS funds do not invest in the underlying funds for the purpose of exercising management or control. At the end of the period, the MFS Moderate Allocation Portfolio was the owner of record of approximately 3% of the value of outstanding voting shares of the fund. In addition, the MFS Growth Allocation Portfolio and the MFS Conservative Allocation Portfolio was the owner of record of less than 1% of the value of outstanding voting shares of the fund.

 

(6) Line of Credit

The fund and certain other funds managed by MFS participate in a $1.25 billion unsecured committed line of credit, subject to a $1 billion sublimit, provided by a syndicate 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 highest of one month LIBOR, the Federal Funds Effective Rate and the Overnight Bank Funding Rate, 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. 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 rates equal to customary reference rates plus an agreed upon spread. For the six months ended June 30, 2019, the fund’s commitment fee and interest expense were $2,132 and $0, respectively, and are included in “Miscellaneous” expense in the Statement of Operations.

 

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Notes to Financial Statements (unaudited) – continued

 

 

(7) Investments in 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 following were affiliated issuers:

 

Affiliated Issuers Beginning
Value
  Purchases  Sales
Proceeds
  Realized
Gain
(Loss)
  Change in
Unrealized
Appreciation or
Depreciation
  Ending
Value
 
MFS Institutional Money Market Portfolio  $7,829,160   $112,863,654   $107,993,512   $1,801   $1,153   $12,702,256 
Affiliated Issuers                 Dividend
Income
  Capital Gain
Distributions
 
MFS Institutional Money Market Portfolio

 

    $171,993   $— 

 

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MFS New Discovery Series

 

PROXY VOTING POLICIES AND INFORMATION

 

MFS votes proxies on behalf of the fund pursuant to proxy voting policies and procedures that are available without charge, upon request, by calling 1-800-225-2606, by visitingmfs.com/proxyvoting, or by visiting the SEC’s Web site athttp://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 by August 31 of each year without charge by visitingmfs.com/proxyvoting, or by visiting the SEC’s Web site athttp://www.sec.gov.

QUARTERLY PORTFOLIO DISCLOSURE

The fund files a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q or as an exhibit to its reports on Form N-PORT (for first and third fiscal quarters ending March 31, 2019 or after). The fund’sForm N-Q or Form N-PORT reports are available on the SEC’s website athttp://www.sec.gov. A shareholder can obtain the portfolio holdings report for the first and third quarters of the fund’s fiscal year atmfs.com/vit1 by choosing the fund’s name and then selecting the “Resources” tab and clicking on “Prospectus and Reports”.

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 at https://www.mfs.com/en-us/what-we-do/announcements.html or atmfs.com/vit1 by choosing the fund’s name.

INFORMATION ABOUT FUND CONTRACTS AND LEGAL CLAIMS

The fund has entered into contractual arrangements with an investment adviser, administrator, distributor, shareholder servicing agent, 529 program manager (if applicable), and custodian who each provide services to the fund. Unless expressly stated otherwise, shareholders are not parties to, or intended beneficiaries of these contractual arrangements, and these contractual arrangements are not intended to create any shareholder right to enforce them against the service providers or to seek any remedy under them against the service providers, either directly or on behalf of the fund.

Under the Trust’s By-Laws and Declaration of Trust, any claims asserted against or on behalf of the MFS Funds, including claims against Trustees and Officers, must be brought in state and federal courts located within the Commonwealth of Massachusetts.

 

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Semiannual Report

June 30, 2019

 

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MFS® Total Return Bond Series

 

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MFS® Variable Insurance Trust

 

Beginning on January 1, 2021, as permitted by regulations adopted by the U.S. Securities and Exchange Commission, the insurance company that offers your contract may determine that it will no longer send you paper copies of the fund’s annual and semiannual shareholder reports unless you specifically request paper copies from the insurance company or from your financial intermediary. Instead, the shareholder reports will be made available on a Web site (insurancefunds.mfs.com or other Web site of which you will be notified), and the insurance company will notify you by mail each time a report is posted and provide you with a Web site link to access the report. Instructions for requesting paper copies will be provided by your insurance company or financial intermediary.

If you already elected to receive shareholder reports by email, you will not be affected by this change and you need not take any action. If your insurance company or financial intermediary offers electronic delivery, you may elect to receive shareholder reports and other communications from the insurance company or financial intermediary by email by following the instructions provided by the insurance company or financial intermediary.

Beginning on January 1, 2019, you may elect to receive all future reports in paper free of charge from the insurance company or financial intermediary. You can inform the insurance company or financial intermediary that you wish to continue receiving paper copies of your shareholder reports by contacting your insurance company or financial intermediary. Your election to receive reports in paper will apply to all funds held in your account with your insurance company or financial intermediary.

 

VFB-SEM


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MFS® Total Return Bond Series

 

CONTENTS

 

Letter from the Executive Chairman   1 
Portfolio composition   2 
Expense table   4 
Portfolio of investments   5 
Statement of assets and liabilities   15 
Statement of operations   16 
Statements of changes in net assets   17 
Financial highlights   18 
Notes to financial statements   20 
Proxy voting policies and information   29 
Quarterly portfolio disclosure   29 
Further information   29 
Information about fund contracts and legal claims   29 

 

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



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MFS Total Return Bond Series

 

LETTER FROM THE EXECUTIVE CHAIRMAN

 

LOGO

Dear Contract Owners:

Slowing global growth, low inflation, and increasing trade friction between the United States and China have been hallmarks of the past 12 months. After experiencing an uptick in market volatility in late 2018, markets steadied during the first half of 2019, thanks in large measure to the adoption of a dovish policy stance on the part of global central banks, who have largely abandoned efforts to normalize interest rates and have instead focused on supporting economic growth. Trade tensions remain high as the U.S. has ratcheted up tariffs on Chinese imports and China has retaliated. A truce of sorts was reached midyear, but significant challenges continue to confront negotiators, and it is not known whether a comprehensive agreement can be reached.

With Boris Johnson replacing Theresa May as Britain’s prime minister, uncertainty over Brexit remains high. Johnson has adopted a more combative stance than his predecessor toward the European Union, increasing concerns that there will be a “hard” Brexit.

Markets expect that the longest economic expansion in U.S. history will continue for the time being, albeit at a slower pace. Nevertheless, slower growth and low inflation have spurred the U.S. Federal Reserve to take a more accommodative policy stance, prompting investors to anticipate several interest rate cuts in the coming year. The European Central Bank has adopted a similar position. The more accommodative environment has helped fuel a continued rise in global equities and has been broadly supportive of risk assets.

Since launching the first U.S.open-end mutual fund in 1924, MFS® has been committed to a single purpose: to create value by allocating capital responsibly for clients. Through our powerful global investment platform, we combine collective expertise, thoughtful risk management, and long-term discipline to uncover what we believe are the best investment opportunities in the market.

Respectfully,

 

LOGO

Robert J. Manning

Executive Chairman

MFS Investment Management

August 16, 2019

 

 

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

 

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PORTFOLIO COMPOSITION

 

Portfolio structure (i)

 

LOGO

 

Fixed income sectors (i) 
Investment Grade Corporates  36.4% 
Mortgage-Backed Securities  24.4% 
U.S. Treasury Securities  12.7% 
Commercial Mortgage-Backed Securities  9.9% 
Collateralized Debt Obligations  5.7% 
High Yield Corporates  4.0% 
Asset-Backed Securities  3.4% 
Municipal Bonds  2.2% 
U.S. Government Agencies  1.8% 
Emerging Markets Bonds  1.7% 
Residential Mortgage-Backed Securities  0.5% 
Non-U.S. Government Bonds  0.2% 
Composition including fixed income credit quality (a)(i)

 

AAA  11.2% 
AA  5.4% 
A  13.2% 
BBB  25.6% 
BB  6.1% 
B  1.2% 
CCC  0.3% 
D (o)  0.0% 
U.S. Government  6.6% 
Federal Agencies  26.2% 
Not Rated  7.1% 
Cash & Cash Equivalents  0.8% 
Other  (3.7)% 
Portfolio facts (i) 
Average Duration (d)  5.6 
Average Effective Maturity (m)  8.4 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). Securities rated BBB or higher are considered investment grade. 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 and fixed income derivatives, which have not been rated by any rating agency. The fund may or may not have held all of these instruments on this date. The fund is not rated by these agencies.
(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 a5-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 value of securities, and reflect the impact of the equivalent exposure of derivative positions, if any. 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 value. The bond component will include any accrued interest amounts.
(m) In determining each 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%.

 

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Portfolio Composition – continued

 

Where the fund holds convertible bonds, they are treated as part of the equity portion of the portfolio.

Cash & Cash Equivalents includes any cash, investments in money market funds, short-term securities, and other assets less liabilities. Please see the Statement of Assets and Liabilities for additional information related to the fund’s cash position and other assets and liabilities.

Other includes equivalent exposure from currency derivatives and/or any offsets to derivative positions and may be negative.

Percentages are based on net assets as of June 30, 2019.

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

 

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MFS Total Return Bond Series

 

EXPENSE TABLE

 

Fund Expenses Borne by the Contract Holders during the Period,

January 1, 2019 through June 30, 2019

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, 2019 through June 30, 2019.

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
1/01/19
   Ending
Account Value
6/30/19
   Expenses Paid
During Period  (p)
1/01/19-6/30/19
 
Initial Class Actual   0.53%    $1,000.00    $1,072.73    $2.72 
 Hypothetical (h)   0.53%    $1,000.00    $1,022.17    $2.66 
Service Class Actual   0.78%    $1,000.00    $1,070.80    $4.00 
 Hypothetical (h)   0.78%    $1,000.00    $1,020.93    $3.91 

 

(h)

5% class return per year before expenses.

 

(p)

“Expenses Paid During Period” are equal to each class’s annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by 181/365 (to reflect theone-half year period).

 

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PORTFOLIO OF INVESTMENTS – 6/30/19 (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 – 98.4%

 

Aerospace – 0.3%   
TransDigm, Inc., 6.5%, 7/15/2024  $5,985,000  $6,052,331 
   

 

 

 
Asset-Backed & Securitized – 19.4%

 

Allegro CLO Ltd.,2014-1RA, “A2”, FLR, 4.191% (LIBOR - 3mo. + 1.6%), 10/21/2028 (n)  $5,554,267  $5,497,069 
ALM Loan Funding, CLO,2015-12A, “A1R2”, FLR, 3.491% (LIBOR - 3mo. + 0.89%), 4/16/2027 (n)   6,793,000   6,788,442 
ALM V Ltd.,2012-5A, “A2R3”, FLR, 3.851% (LIBOR - 3mo. + 1.25%), 10/18/2027 (z)   4,010,000   3,973,132 
ALM V Ltd.,2012-5A, “BR3”, FLR, 4.25% (LIBOR - 3mo. + 1.7%), 10/18/2027 (z)   1,750,000   1,727,378 
Arbor Realty CLO Ltd.,2017-FL2, “C”, FLR, 4.744% (LIBOR - 1mo. + 2.35%), 8/15/2027 (n)   1,494,500   1,499,614