MFS Variable Insurance Trust Iii NCSR Certified annual shareholder report (management investment company)

MFS Variable Insurance Trust Iii N-CSRCertified annual shareholder report (management investment company)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORMN-CSR

CERTIFIED SHAREHOLDER REPORT OF

REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number811-08879

MFS VARIABLE INSURANCE TRUST III

(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: December 31, 2018

ITEM 1.

REPORTS TO STOCKHOLDERS.

Annual Report

December 31, 2018

LOGO

MFS^® Blended Research^® Small Cap Equity Portfolio

LOGO

MFS^® Variable Insurance Trust III

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.

VSC-ANN

MFS® Blended Research® Small Cap Equity Portfolio

CONTENTS

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

MFS Blended Research Small Cap Equity Portfolio

LETTER FROM THE EXECUTIVE CHAIRMAN

LOGO

Dear Contract Owners:

Higher interest rates, international trade friction, and geopolitical uncertainty surrounding issues such as Brexit have contributed to an uptick in market volatility in recent quarters — a departure from thelow-volatility environment that prevailed for much of the past several years. Against this more challenging backdrop, equity markets in the United States outperformed most international markets on a relative basis in 2018, though broad market returns were modestly negative on an absolute basis. Global economic growth has become less synchronized over the past few quarters, with Europe, China, and some emerging markets having shown signs of significantly slowing growth. While U.S. growth has remained above average, the pace of that growth slowed in the second half of 2018.

Slowing global growth and tighter financial conditions have clouded the outlook for U.S. monetary policy, with the chairman of the U.S. Federal Reserve acknowledging that policy rates are close to levels that the Fed deems neutral for the U.S. economy. This suggests that the predictable pattern of quarterly rate increases is behind us. At the same time, markets must contend with a shift from years of quantitative easing toward a cycle of quantitative tightening now that the European Central Bank has halted asset purchases. U.S. tax reforms adopted in late 2017 have been welcomed by equity markets while emerging market economies have recently had to contend with tighter financial conditions as a result of firmer U.S. interest rates and a stronger dollar. With the Republicans losing control of the U.S. House of Representatives, further meaningful U.S. fiscal stimulus appears less likely over the remainder of this presidential term. A partial U.S. government shutdown, beginning in late 2018, also added to political uncertainty. Globally, inflation remains largely subdued thanks in part to falling oil prices, but tight labor markets and moderate global demand have investors on the lookout for its potential reappearance. Increased U.S. protectionism is also a growing concern, as investors fear trade disputes could dampen business sentiment, leading to even slower global growth. While there has been progress on this front — a NAFTA replacement has been agreed upon between the U.S., Mexico, and Canada; the free trade pact with Korea has been updated; and a negotiating framework with the European Union has been agreed upon — tensions over trade with China remain quite high, though the two sides have recently returned to the negotiating table.

As a global investment manager with nearly a century of expertise, MFS® firmly believes active risk management offers downside mitigation and may help improve investment outcomes. We built our active investment platform with this belief in mind. Ourlong-term perspective influences nearly every aspect of our business, ensuring our investment decisions align with the investing time horizons of our clients.

Respectfully,

LOGO

Robert J. Manning

Executive Chairman

MFS Investment Management

February 15, 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.

MFS Blended Research Small Cap Equity Portfolio

PORTFOLIO COMPOSITION

Portfolio structure

LOGO


Top ten holdings
Store Capital Corp., REIT			1.6%
Paylocity Holding Corp.			1.4%
Tech Data Corp.			1.4%
Medical Properties Trust, Inc., REIT			1.4%
LogMeIn, Inc.			1.4%
Stoneridge, Inc.			1.4%
TriMas Corp.			1.4%
Cathay General Bancorp, Inc.			1.4%
Five9, Inc.			1.3%
Rapid7, Inc.			1.3%


Equity sectors (k)
Financial Services			26.2%
Technology			16.5%
Health Care			15.0%
Industrial Goods & Services			11.2%
Utilities & Communications			5.7%
Basic Materials			5.5%
Leisure			3.9%
Energy			3.8%
Autos & Housing			3.3%
Retailing			2.5%
Special Products & Services			2.4%
Consumer Staples			2.0%
Transportation			0.8%

(k)	The sectors set forth above and the associated portfolio composition are based on MFS’ own custom sector classification methodology.

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 December 31, 2018.

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

MFS Blended Research Small Cap Equity Portfolio

MANAGEMENT REVIEW

Summary of Results

For the twelve months ended December 31, 2018, Initial Class shares of the MFS Blended Research Small Cap Equity Portfolio (“fund”) provided a total return of –5.11%, while Service Class shares of the fund provided a total return of –5.35%. These compare with a return of –11.01% over the same period for the fund’s benchmark, the Russell 2000® Index.

Market Environment

During the reporting period, the US Federal Reserve raised interest rates by 100 basis points, bringing the total number of rate hikes to nine since the central bank began to normalize monetary policy in late 2015. Economic growth rates in the US, Eurozone and Japan remained above trend, despite a slowing in global growth, particularly toward the end of the period. Inflation remained contained, particularly outside the US. Late in the period, the European Central Bank halted its asset purchase program but issued forward guidance that it does not expect to raise interest rates at least until after the summer of 2019. The Bank of England (once) and the Bank of Canada (three times) each raised rates during the period. The European political backdrop became a bit more volatile, late in the period, spurred by concerns over cohesion in the eurozone after the election of an anti-establishment, Eurosceptic coalition government in Italy and widespread protests over stagnant wage growth in France.

Bond yields rose in the US during most of the period, but remained low by historical standards and slipped from their highs, late in the period, as market volatility increased. Yields in many developed markets fell. Outside of emerging markets, where spreads and currencies came under pressure, credit spreads remained quite tight until the end of the period, when thinner liquidity, lower oil prices and concerns over high degrees of corporate leverage emerged. Growing concern over increasing global trade friction appeared to have weighed on business sentiment during the period’s second half, especially outside the US. Tighter financial conditions from rising US rates and a strong dollar, combined with trade uncertainty, helped expose structural weaknesses in several emerging markets in the second half of the period.

Volatility increased, at the end of the period, amid signs of slowing global economic growth and increasing trade tensions, which prompted a market setback shortly after US markets set record highs in September. It was the second such equity market decline during the reporting period. The correction came despite a third consecutive quarter of strong growth in US earnings per share. Strong earnings growth, combined with the market decline, brought US equity valuations down from elevated levels, earlier in the period, to multiples more in line with long-term averages. While the US economy held up better than most, global economic growth became less synchronized during the period, with Europe and China showing signs of a slowdown and some emerging markets coming under stress.

Contributors to Performance

Security selection and, to a lesser extent, an overweight position in thetechnology sector contributed to performance relative to the Russell 2000® Index. Within this sector, the fund’s overweight positions in security risk intelligence solutions provider Rapid7,cloud-based software solutions providers Five9 and Paylocity and digital intelligence software manufacturer New Relic (h) aided relative returns. Shares of Rapid7 appreciated, outpacing the benchmark, as the company’s transition to a subscription-based platform continued to accelerate and strong results from its vulnerability management and application security divisions led to solid earnings results throughout the year.

Stock selection in both thehealth care andenergy sectors further strengthened relative results. Within thehealth care sector, overweight positions in medical device and component manufacturer Integer and medical technology company CONMED benefited relative performance. Shares of CONMED rose as better-than-expected growth helped drive solid earnings results and appeared to have lifted investor sentiment. Although security selection in theenergy sector supported relative returns, there were no individual stocks within this sector that were among the fund’s top relative contributors during the reporting period.

Elsewhere, the fund’s holdings of power generation company NRG Energy (b) and real estate investment trusts Medical Properties Trust (b) and Store Capital (b), as well as an overweight position in biofuel and renewable chemicals producer Renewable Energy Group, helped relative performance

Detractors from Performance

Security selection in theretailing,consumer staples andindustrials goods & services sectors weighed on relative performance during the reporting period. Within theretailing sector, holding shares of arts and crafts specialty retailer Michaels Companies (b)(h) hurt relative returns as high freight costs, lower-than-expected gross margins and weak same-store sales weighed on its earnings results and appeared to have soured investor sentiment. Although stock selection in theconsumer staples sector held back relative returns, there were no individual stocks within this sector that were among the fund’s top relative detractors during the reporting period. Within theindustrial goods & services sector, an overweight position in industrial components manufacturer SPX Flow and holding shares of electrical products manufacturer Wesco International (b) dampened relative performance. The stock price of SPX Flow, depreciated, notably late in the period, as unfavorable pricing trends, weak order growth and company-specific execution issues negatively impacted corporate earnings.

MFS Blended Research Small Cap Equity Portfolio

Management Review – continued

Stocks in other sectors that further hindered relative results included the fund’s holdings of industrial and specialty chemicals distributor Univar (b), banking services provider Bank OZK (b), high-performance laser manufacturer IPG Photonics (b) and omni-channel technology solutions provider NCR (b). The timing of the fund’s ownership in shares of hospital operator Tenet Healthcare, and overweight positions in equipment rental supplier Herc Holdings and specialty pharmaceuticals company Mallinckrodt (United Kingdom) also weakened relative returns.

Respectfully,

Portfolio Manager(s)

Jim Fallon, Matt Krummell, Jonathan Sage, and Jed Stocks

(b)	Security is not a benchmark constituent.

(h)	Security was not held in the portfolio at period end.

The views expressed in this report are those of the portfolio manager(s) only through the end of the period of the report as stated on the cover and do not necessarily reflect the views of MFS or any other person in the MFS organization. These views are subject to change at any time based on market or other conditions, and MFS disclaims any responsibility to update such views. These views may not be relied upon as investment advice or an indication of trading intent on behalf of any MFS portfolio. References to specific securities are not recommendations of such securities, and may not be representative of any MFS portfolio’s current or future investments.

MFS Blended Research Small Cap Equity Portfolio

PERFORMANCE SUMMARY THROUGH 12/31/18

The following chart illustrates the historical performance of the fund in comparison to its benchmark(s). Benchmarks are unmanaged and may not be invested in directly. Benchmark returns do not reflect any fees or expenses. The performance of other share classes will be greater than or less than that of the class depicted below. (See Notes to Performance Summary.)

Performance data shown represents past performance and is no guarantee of future results. Investment return and principal value fluctuate so your units, when sold, may be worth more or less than the original cost; current performance may be lower or higher than quoted. The performance shown does not reflect the deduction of taxes, if any, that a contract holder would pay on fund distributions or the redemption of contract units. The returns for the fund shown also do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges imposed by the insurance company separate accounts. Such expenses would reduce the overall returns shown.

Growth of a Hypothetical $10,000 Investment

LOGO

Total Returns through 12/31/18

Average annual total returns


	Share Class	Class Inception Date	1-yr	5-yr	10-yr
	Initial Class	7/17/00	(5.11)%	6.29%	13.89%
	Service Class	5/01/06	(5.35)%	6.02%	13.60%

Comparative benchmark(s)
	Russell 2000® Index (f)		(11.01)%	4.41%	11.97%

(f)	Source: FactSet Research Systems Inc.

Benchmark Definition(s)

Russell 2000® Index – constructed to provide a comprehensive barometer for securities in the small-cap segment of the U.S. equity universe. The index includes 2,000 of the smallest U.S. companies based on total market capitalization, representing approximately 10% of the investable U.S. equity market. The Russell 2000® Index is a trademark/service mark of the Frank Russell Company. Russell® is a trademark of the Frank Russell Company.

It is not possible to invest directly in an index.

Notes to Performance Summary

Average annual total return represents the average annual change in value for each share class for the periods presented.

Performance results reflect any applicable expense subsidies and waivers in effect during the periods shown. Without such subsidies and waivers the fund’s performance results would be less favorable. Please see the prospectus and financial statements for complete details. All results are historical and assume the reinvestment of any dividends and capital gains distributions.

Performance prior to close of business December 7, 2012, reflects time periods when another adviser or subadviser was responsible for selecting investments for the fund under a different investment objective and different investment strategies.

Performance results do not include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles and may differ from amounts reported in the financial highlights.

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

MFS Blended Research Small Cap Equity Portfolio

EXPENSE TABLE

Fund Expenses Borne by the Contract Holders during the Period,

July 1, 2018 through December 31, 2018

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 July 1, 2018 through December 31, 2018.

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 7/01/18		Ending Account Value 12/31/18		Expenses Paid During Period (p) 7/01/18-12/31/18
Initial Class	Actual		0.54%		$1,000.00		$873.69		$2.55
Initial Class	Hypothetical (h)		0.54%		$1,000.00		$1,022.48		$2.75
Service Class	Actual		0.79%		$1,000.00		$872.64		$3.73
Service Class	Hypothetical (h)		0.79%		$1,000.00		$1,021.22		$4.02

(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 184/365 (to reflect theone-half year period).

MFS Blended Research Small Cap Equity Portfolio

PORTFOLIO OF INVESTMENTS – 12/31/18

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 – 1.4%
American Outdoor Brands Corp. (a)		42,088	$	541,252
CACI International, Inc., “A” (a)		4,581		659,801

			$	1,201,053

Apparel Manufacturers – 0.6%
Skechers USA, Inc., “A” (a)		21,587	$	494,126

Automotive – 1.4%
Stoneridge, Inc. (a)		47,873	$	1,180,070

Biotechnology – 4.5%
Acorda Therapeutics, Inc. (a)		32,742	$	510,120
AMAG Pharmaceuticals, Inc. (a)		35,975		546,460
Bio-Techne Corp.		7,862		1,137,789
Bruker BioSciences Corp.		6,221		185,199
Genomic Health, Inc. (a)		3,087		198,834
Macrogenics, Inc. (a)		33,716		428,193
Pieris Pharmaceuticals, Inc. (a)		24,814		66,005
Vanda Pharmaceuticals, Inc. (a)		20,627		538,984
Varex Imaging Corp. (a)		9,463		224,084

			$	3,835,668

Broadcasting – 0.1%
MDC Partners, Inc. (a)		21,815	$	56,937

Brokerage & Asset Managers – 0.1%
LPL Financial Holdings, Inc.		1,533	$	93,636

Business Services – 2.5%
Forrester Research, Inc.		23,590	$	1,054,473
Grand Canyon Education, Inc. (a)		10,845		1,042,638

			$	2,097,111

Chemicals – 1.1%
Ingevity Corp. (a)		11,019	$	922,180

Computer Software – 3.6%
Cornerstone OnDemand, Inc. (a)		19,982	$	1,007,692
Eventbrite, Inc. (a)(l)		6,748		187,662
Paylocity Holding Corp. (a)		20,045		1,206,910
RingCentral, Inc. (a)		3,860		318,218
SecureWorks Corp. (a)		20,244		341,921

			$	3,062,403

Computer Software – Systems – 9.1%
EPAM Systems, Inc. (a)		9,311	$	1,080,169
Five9, Inc. (a)		26,341		1,151,628
ForeScout Tech, Inc. (a)		8,920		231,831
Insight Enterprises, Inc. (a)		4,177		170,213
NCR Corp. (a)		41,017		946,672
Presidio, Inc.		67,119		875,903
Rapid7, Inc. (a)		36,718		1,144,133
Tech Data Corp. (a)		14,636		1,197,371
Verint Systems, Inc. (a)		12,173		515,040
Wageworks, Inc. (a)		17,536		476,278

			$	7,789,238



Issuer	Shares/Par		Value ($)
COMMON STOCKS – continued
Construction – 1.9%
Armstrong World Industries, Inc.		17,943	$	1,044,462
Eagle Materials, Inc.		6,454		393,888
Foundation Building Materials, Inc. (a)		15,107		125,539
GMS, Inc. (a)		4,578		68,029

			$	1,631,918

Consumer Products – 0.6%
e.l.f. Beauty, Inc. (a)		15,060	$	130,420
Herbalife Ltd. (a)		5,797		341,733

			$	472,153

Electrical Equipment – 2.7%
Atkore International Group, Inc. (a)		3,307	$	65,611
TriMas Corp. (a)		42,698		1,165,228
WESCO International, Inc. (a)		22,987		1,103,376

			$	2,334,215

Electronics – 2.3%
Amkor Technology, Inc. (a)		38,259	$	250,979
IPG Photonics Corp. (a)		4,495		509,239
Jabil Circuit, Inc.		22,377		554,726
OSI Systems, Inc. (a)		4,114		301,556
Sanmina Corp. (a)		15,282		367,685

			$	1,984,185

Energy – Independent – 1.9%
Bonanza Creek Energy, Inc. (a)		14,521	$	300,149
Delek U.S. Holdings, Inc.		11,582		376,531
PBF Energy, Inc., “A”		11,349		370,772
W&T Offshore, Inc. (a)		29,888		123,139
Warrior Met Coal, Inc.		20,196		486,925

			$	1,657,516

Engineering – Construction – 1.9%
KBR, Inc.		74,901	$	1,136,997
Quanta Services, Inc.		15,331		461,463

			$	1,598,460

Entertainment – 0.9%
AMC Entertainment Holdings, Inc., “A”		14,724	$	180,811
Six Flags Entertainment Corp.		10,913		607,090

			$	787,901

Food & Beverages – 1.5%
Dean Foods Co.		23,901	$	91,063
Hostess Brands, Inc. (a)		21,385		233,952
Pilgrim’s Pride Corp. (a)		30,364		470,945
SpartanNash Co.		27,122		465,956

			$	1,261,916

Forest & Paper Products – 2.3%
Boise Cascade Corp.		12,743	$	303,920
Trex Co., Inc. (a)		15,320		909,395
Verso Corp., “A” (a)		34,664		776,474

			$	1,989,789

MFS Blended Research Small Cap Equity Portfolio

Portfolio of Investments – continued



Issuer	Shares/Par		Value ($)
COMMON STOCKS – continued
Health Maintenance Organizations – 1.0%
Molina Healthcare, Inc. (a)		7,220	$	839,108

Insurance – 3.9%
American Equity Investment Life Holding Co.		30,313	$	846,945
Essent Group Ltd. (a)		17,311		591,690
MGIC Investment Corp. (a)		59,703		624,494
Radian Group, Inc.		37,386		611,635
Universal Insurance Holdings, Inc.		17,786		674,445

			$	3,349,209

Internet – 1.5%
Blucora, Inc. (a)		2,822	$	75,178
LogMeIn, Inc.		14,538		1,185,865

			$	1,261,043

Leisure & Toys – 1.0%
Brunswick Corp.		14,474	$	672,317
Funko, Inc., “A” (a)		12,090		158,984

			$	831,301

Machinery & Tools – 4.9%
ACCO Brands Corp.		26,682	$	180,904
AGCO Corp.		4,070		226,577
Allison Transmission Holdings, Inc.		7,451		327,173
Herman Miller, Inc.		4,903		148,316
ITT, Inc.		1,876		90,555
Knoll, Inc.		18,073		297,843
Park-Ohio Holdings Corp.		14,070		431,808
Regal Beloit Corp.		13,727		961,576
SPX FLOW, Inc. (a)		29,238		889,420
Steelcase, Inc., “A”		10,668		158,206
Titan Machinery, Inc. (a)		34,012		447,258

			$	4,159,636

Medical & Health Technology & Services – 0.9%
Premier, Inc., “A” (a)		7,041	$	262,981
Tenet Healthcare Corp. (a)		31,743		544,075

			$	807,056

Medical Equipment – 4.9%
AngioDynamics, Inc. (a)		27,400	$	551,562
Avanos Medical, Inc. (a)		16,756		750,501
CONMED Corp.		12,123		778,297
CUTERA, Inc. (a)		2,539		43,214
Integer Holdings Corp. (a)		11,071		844,275
IntriCon Corp. (a)		15,301		403,640
Lantheus Holdings, Inc. (a)		25,338		396,540
LivaNova PLC (a)		3,005		274,867
NuVasive, Inc. (a)		3,770		186,841

			$	4,229,737

Metals & Mining – 0.4%
Olympic Steel, Inc.		11,418	$	162,935
Ryerson Holding Corp. (a)		19,087		121,012
Schnitzer Steel Industries, Inc., “A”		2,459		52,991

			$	336,938



Issuer	Shares/Par		Value ($)
COMMON STOCKS – continued
Natural Gas – Distribution – 0.5%
MDU Resources Group, Inc.		16,371	$	390,285
South Jersey Industries, Inc.		1,422		39,531

			$	429,816

Oil Services – 1.8%
Liberty Oilfield Services, Inc. (l)		34,611	$	448,212
MRC Global, Inc. (a)		21,965		268,632
ProPetro Holding Corp. (a)		70,250		865,480

			$	1,582,324

Other Banks & Diversified Financials – 12.6%
Assured Guaranty Ltd.		11,263	$	431,148
BancFirst Corp.		5,517		275,298
Bank of N.T. Butterfield & Son Ltd.		14,237		446,330
Bank OZK		35,470		809,780
CAI International, Inc. (a)		19,643		456,307
Cathay General Bancorp, Inc.		34,626		1,161,010
East West Bancorp, Inc.		15,514		675,325
Enova International, Inc. (a)		23,806		463,265
First Hawaiian, Inc.		47,457		1,068,257
First Interstate BancSystem, Inc.		25,844		944,857
Hanmi Financial Corp.		8,290		163,313
Herc Holdings, Inc. (a)		16,863		438,269
Legacytextas Financial Group, Inc.		6,580		211,152
OFG Bancorp		7,233		119,055
On Deck Capital, Inc. (a)		8,650		51,035
Popular, Inc.		11,973		565,365
Prosperity Bancshares, Inc.		4,904		305,519
Regional Management Corp. (a)		22,668		545,165
Triton International Ltd. of Bermuda		18,486		574,360
Wintrust Financial Corp.		16,493		1,096,620

			$	10,801,430

Pharmaceuticals – 3.6%
Assertio Therapeutics, Inc. (a)		93,456	$	337,376
Catalent, Inc. (a)		5,768		179,846
Endo International PLC (a)		52,927		386,367
Horizon Pharma PLC (a)		41,961		819,918
Mallinckrodt PLC (a)		25,512		403,090
Phibro Animal Health Corp., “A”		14,779		475,293
United Therapeutics Corp. (a)		4,605		501,484

			$	3,103,374

Pollution Control – 0.3%
Advanced Disposal Services, Inc. (a)		11,705	$	280,218

Printing & Publishing – 0.1%
Gannett Co., Inc.		6,320	$	53,910

Real Estate – 9.5%
Ashford Hospitality Trust, REIT		76,046	$	304,184
Brixmor Property Group Inc., REIT		54,449		799,856
CoreCivic, Inc., REIT		26,524		472,923
EPR Properties, REIT		16,063		1,028,514
GEO Group, Inc., REIT		26,996		531,821
Life Storage, Inc., REIT		11,155		1,037,303
Medical Properties Trust, Inc., REIT		74,222		1,193,490

MFS Blended Research Small Cap Equity Portfolio

Portfolio of Investments – continued



Issuer	Shares/Par		Value ($)
COMMON STOCKS – continued
Real Estate – continued
Preferred Apartment Communities, Inc., “A”, REIT		23,278	$	327,289
RE/MAX Holdings, Inc., “A”		20,219		621,734
Store Capital Corp., REIT		47,719		1,350,925
Uniti Group, Inc., REIT		24,336		378,911
Xenia Hotels & Resorts Inc., REIT		6,434		110,665

			$	8,157,615

Restaurants – 1.9%
BJ’s Restaurants, Inc.		4,177	$	211,231
Bloomin Brands, Inc.		28,995		518,721
Brinker International, Inc.		12,047		529,827
Carrols Restaurant Group, Inc. (a)		38,831		382,097

			$	1,641,876

Specialty Chemicals – 1.7%
PolyOne Corp.		4,731	$	135,307
Renewable Energy Group, Inc. (a)		23,299		598,784
Univar, Inc. (a)		38,671		686,023

			$	1,420,114

Specialty Stores – 1.9%
Express, Inc. (a)		33,846	$	172,953
Party City Holdco, Inc. (a)		16,143		161,107
Signet Jewelers Ltd.		4,641		147,445
Urban Outfitters, Inc. (a)		28,271		938,597
Zumiez, Inc. (a)		11,540		221,222

			$	1,641,324

Telecommunications – Wireless – 1.3%
Intelsat S.A. (a)		26,840	$	574,108
Telephone and Data Systems, Inc.		17,074		555,588

			$	1,129,696

Telephone Services – 0.9%
ATN International, Inc.		587	$	41,988
Shenandoah Telecommunications Co.		15,823		700,168

			$	742,156

Trucking – 0.8%
ArcBest Corp.		10,126	$	346,917
Forward Air Corp.		6,330		347,200

			$	694,117

Utilities – Electric Power – 3.0%
Clearway Energy, Inc.		39,906	$	675,209
NRG Energy, Inc.		20,846		825,502
Portland General Electric Co.		21,113		968,031
Spark Energy, Inc., “A” (l)		18,554		137,856

			$	2,606,598

Total Common Stocks (Identified Cost, $84,181,354)			$	84,549,071



Issuer	Strike Price		First Exercise		Shares/Par	Value ($)
WARRANTS – 0.0%
Other Banks & Diversified Financials – 0.0%
Emergent Capital, Inc. (1 share for 1 warrant) (a)(u) (Identified Cost, $0)	$	10.75		11/06/14	318	$	0


INVESTMENT COMPANIES (h) – 1.2%
Money Market Funds – 1.2%
MFS Institutional Money Market Portfolio, 2.4% (v) (Identified Cost, $1,018,574)					1,018,676	$	1,018,574


COLLATERAL FOR SECURITIES LOANED – 0.2%
State Street Navigator Securities Lending Government Money Market Portfolio, 2.29% (j) (Identified Cost, $216,533)					216,533	$	216,533

OTHER ASSETS, LESS LIABILITIES – (0.2)%							(200,095	)

NET ASSETS – 100.0%						$	85,584,083

(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 $1,018,574 and $84,765,604, 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.

(u)

The security was valued using significant unobservable inputs and is considered level 3 under the fair value hierarchy. For further information about the fund’s level 3 holdings, please see Note 2 in the Notes to Financial Statements.

(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:

PLC

Public Limited Company

REIT

Real Estate Investment Trust

See Notes to Financial Statements

MFS Blended Research Small Cap Equity Portfolio

FINANCIAL STATEMENTS ^| STATEMENT OF ASSETS AND LIABILITIES

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


At 12/31/18

Assets
Investments in unaffiliated issuers, at value, including $301,781 of securities on loan (identified cost, $84,397,887)			$84,765,604
Investments in affiliated issuers, at value (identified cost, $1,018,574)			1,018,574
Cash			9,527
Receivables for
Fund shares sold			24,375
Interest and dividends			121,278
Other assets			988
Total assets			$85,940,346

Liabilities
Payables for
Fund shares reacquired			$82,135
Collateral for securities loaned, at value (c)			216,533
Payable to affiliates
Investment adviser			3,847
Shareholder servicing costs			68
Distribution and/or service fees			1,506
Payable for independent Trustees’ compensation			5
Accrued expenses and other liabilities			52,169
Total liabilities			$356,263
Net assets			$85,584,083

Net assets consist of
Paid-in capital			$69,877,315
Total distributable earnings (loss)			15,706,768
Net assets			$85,584,083
Shares of beneficial interest outstanding			7,759,409



	Net assets		Shares outstanding		Net asset value per share
Initial Class		$29,935,942		2,661,812		$11.25
Service Class		55,648,141		5,097,597		10.92

(c)	Non-cash collateral is not included.

See Notes to Financial Statements

MFS Blended Research Small Cap Equity Portfolio

FINANCIAL STATEMENTS ^| STATEMENT OF OPERATIONS

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.


Year ended 12/31/18

Net investment income (loss)
Income
Dividends	$1,172,554
Income on securities loaned	26,304
Other	18,101
Dividends from affiliated issuers	18,056
Foreign taxes withheld	(1,338	)
Total investment income	$1,233,677
Expenses
Management fee	$407,533
Distribution and/or service fees	165,405
Shareholder servicing costs	8,798
Administrative services fee	24,865
Independent Trustees’ compensation	3,540
Custodian fee	5,640
Shareholder communications	23,096
Audit and tax fees	53,663
Legal fees	931
Miscellaneous	18,165
Total expenses	$711,636
Reduction of expenses by investment adviser	(9,699	)
Net expenses	$701,937
Net investment income (loss)	$531,740

Realized and unrealized gain (loss)
Realized gain (loss) (identified cost basis)
Unaffiliated issuers	$15,298,968
Affiliated issuers	511
Net realized gain (loss)	$15,299,479
Change in unrealized appreciation or depreciation
Unaffiliated issuers	$(18,798,977	)
Net realized and unrealized gain (loss)	$(3,499,498	)
Change in net assets from operations	$(2,967,758	)

See Notes to Financial Statements

MFS Blended Research Small Cap Equity Portfolio

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.


	Year ended
	12/31/18			12/31/17
Change in net assets

From operations
Net investment income (loss)		$531,740			$680,254
Net realized gain (loss)		15,299,479			12,101,069
Net unrealized gain (loss)		(18,798,977	)		2,075,039
Change in net assets from operations		$(2,967,758	)		$14,856,362
Total distributions to shareholders (a)		$(12,885,061	)		$(12,174,151	)
Change in net assets from fund share transactions		$(6,124,153	)		$1,710,788
Total change in net assets		$(21,976,972	)		$4,392,999

Net assets
At beginning of period		107,561,055			103,168,056
At end of period (b)		$85,584,083			$107,561,055

(a)	Distributions from net investment income and from net realized gain are no longer required to be separately disclosed. See Note 2. For the year ended December 31, 2017, distributions from net investment income and from net realized gain were $764,011 and $11,410,140, respectively.

(b)	Parenthetical disclosure of undistributed net investment income is no longer required. See Note 2. For the year ended December 31, 2017, end of period net assets included undistributed net investment income of $680,118.

See Notes to Financial Statements

MFS Blended Research Small Cap Equity Portfolio

FINANCIAL STATEMENTS ^| FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand the fund’s financial performance for the past 5 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	Year ended

	12/31/18			12/31/17			12/31/16				12/31/15			12/31/14

Net asset value, beginning of period		$13.47			$13.23			$12.29				$16.04			$18.24

Income (loss) from investment operations
Net investment income (loss) (d)		$0.09			$0.11			$0.11	(c)			$0.15			$0.10
Net realized and unrealized gain (loss)		(0.40	)		1.70			2.35				(0.94	)		1.16
Total from investment operations		$(0.31	)		$1.81			$2.46				$(0.79	)		$1.26

Less distributions declared to shareholders
From net investment income		$(0.13	)		$(0.12	)		$(0.16	)			$(0.10	)		$(0.18	)
From net realized gain		(1.78	)		(1.45	)		(1.36	)			(2.86	)		(3.28	)
Total distributions declared to shareholders		$(1.91	)		$(1.57	)		$(1.52	)			$(2.96	)		$(3.46	)
Net asset value, end of period (x)		$11.25			$13.47			$13.23				$12.29			$16.04
Total return (%) (k)(r)(s)(x)		(5.11	)		14.97			20.90	(c)			(4.15	)		7.29

Ratios (%) (to average net assets) and Supplemental data:
Expenses before expense reductions (f)		0.54			0.53			0.42	(c)			0.54			0.51
Expenses after expense reductions (f)		0.53			0.52			0.41	(c)			0.53			0.50
Net investment income (loss)		0.69			0.82			0.92	(c)			1.03			0.56
Portfolio turnover		72			81			72				78			67
Net assets at end of period (000 omitted)		$29,936			$36,195			$28,715		��		$27,795			$31,323

Service Class	Year ended

	12/31/18			12/31/17			12/31/16				12/31/15			12/31/14

Net asset value, beginning of period		$13.12			$12.92			$12.03				$15.75			$17.96

Income (loss) from investment operations
Net investment income (loss) (d)		$0.06			$0.07			$0.08	(c)			$0.12			$0.05
Net realized and unrealized gain (loss)		(0.39	)		1.67			2.29				(0.93	)		1.15
Total from investment operations		$(0.33	)		$1.74			$2.37				$(0.81	)		$1.20

Less distributions declared to shareholders
From net investment income		$(0.09	)		$(0.09	)		$(0.12	)			$(0.05	)		$(0.13	)
From net realized gain		(1.78	)		(1.45	)		(1.36	)			(2.86	)		(3.28	)
Total distributions declared to shareholders		$(1.87	)		$(1.54	)		$(1.48	)			$(2.91	)		$(3.41	)
Net asset value, end of period (x)		$10.92			$13.12			$12.92				$12.03			$15.75
Total return (%) (k)(r)(s)(x)		(5.35	)		14.70			20.58	(c)			(4.38	)		7.04

Ratios (%) (to average net assets) and Supplemental data:
Expenses before expense reductions (f)		0.79			0.78			0.67	(c)			0.79			0.76
Expenses after expense reductions (f)		0.78			0.77			0.66	(c)			0.78			0.75
Net investment income (loss)		0.43			0.55			0.66	(c)			0.79			0.30
Portfolio turnover		72			81			72				78			67
Net assets at end of period (000 omitted)		$55,648			$71,366			$74,453				$82,794			$104,221

See Notes to Financial Statements

MFS Blended Research Small Cap Equity Portfolio

Financial Highlights – continued

(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.

(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

MFS Blended Research Small Cap Equity Portfolio

NOTES TO FINANCIAL STATEMENTS

(1)

Business and Organization

MFS Blended Research Small Cap Equity Portfolio (the fund) is a diversified series of MFS Variable Insurance Trust III (the trust). The trust is organized as a Delaware statutory 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

In August 2018, the FASB issued Accounting Standards Update2018-13, Fair Value Measurement (Topic 820) – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement (“ASU2018-13”) which introduces new fair value disclosure requirements as well as eliminates and modifies certain existing fair value disclosure requirements. ASU2018-13 would be effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years; however, management has elected to early adopt ASU2018-13 effective with the current reporting period. The impact of the fund’s adoption was limited to changes in the fund’s financial statement disclosures regarding fair value, primarily those disclosures related to transfers between levels of the fair value hierarchy.

In August 2018, the Securities and Exchange Commission (SEC) released its Final Rule on Disclosure Update and Simplification (the “Final Rule”) which is intended to simplify an issuer’s disclosure compliance efforts by removing redundant or outdated disclosure requirements without significantly altering the mix of information provided to investors. Effective with the current reporting period, the fund adopted the Final Rule with the impacts being that the fund is no longer required to present the components of distributable earnings on the Statement of Assets and Liabilities or the sources of distributions to shareholders and the amount of undistributed net investment income on the Statements of Changes in Net Assets. 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.

MFS Blended Research Small Cap Equity Portfolio

Notes to Financial Statements – continued

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

Various inputs are used in determining the value of the fund’s assets or liabilities. These inputs are categorized into three broad levels. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fund’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. Level 1 includes unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes other significant observable market-based inputs (including quoted 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 December 31, 2018 in valuing the fund’s assets or liabilities:


Financial Instruments	Level 1		Level 2		Level 3		Total
Equity Securities:
United States		$84,102,741		$—		$0		$84,102,741
Bermuda		446,330		—		—		446,330
Mutual Funds		1,235,107		—		—		1,235,107
Total		$85,784,178		$—		$0		$85,784,178

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

The following is a reconciliation of level 3 assets for which significant unobservable inputs were used to determine fair value. The table presents the activity of level 3 securities held at the beginning and the end of the period.



	Equity Securities
Balance as of 12/31/17		$3
Change in unrealized appreciation or depreciation		(3	)
Balance as of 12/31/18		$0

The net change in unrealized appreciation or depreciation from investments held as level 3 at December 31, 2018 is $(3). At December 31, 2018, the fund held one level 3 security.

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

MFS Blended Research Small Cap Equity Portfolio

Notes to Financial Statements – continued

securities in the fund’s Portfolio of Investments, with a fair value of $301,781. The fair value of the fund’s investment securities on loan and a related liability of $216,533 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 $91,270 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 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 two fiscal years is as follows:


	Year ended 12/31/18		Year ended 12/31/17
Ordinary income (including any short-term capital gains)		$2,614,042		$2,113,078
Long-term capital gains		10,271,019		10,061,073
Total distributions		$12,885,061		$12,174,151

MFS Blended Research Small Cap Equity Portfolio

Notes to Financial Statements – continued

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


As of 12/31/18

Cost of investments	$86,079,186
Gross appreciation	10,547,921
Gross depreciation	(10,842,929	)
Net unrealized appreciation (depreciation)	$(295,008	)

Undistributed ordinary income	4,405,639
Undistributed long-term capital gain	11,591,790
Other temporary differences	4,347

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

	Year ended 12/31/18		Year ended 12/31/17		Year ended 12/31/18		Year ended 12/31/17
Initial Class		$298,909		$312,130		$4,211,769		$3,720,235
Service Class		382,104		451,881		7,992,279		7,689,905
Total		$681,013		$764,011		$12,204,048		$11,410,140

(3)

Transactions with Affiliates

Investment Adviser – The fund has an investment advisory agreement with MFS to provide overall investment management and related administrative services and facilities to the fund. The management fee is computed daily and paid monthly at an annual rate of 0.40% of the fund’s average daily net assets.

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 year ended December 31, 2018, this management fee reduction amounted to $9,699, which is included in the reduction of total expenses in the Statement of Operations. The management fee incurred for the year ended December 31, 2018 was equivalent to an annual effective rate of 0.39% 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 0.60% of average daily net assets for the Initial Class shares and 0.85% 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, 2020. For the year ended December 31, 2018, the fund’s actual operating expenses did not exceed the limit and therefore, the investment adviser did not pay any portion of the fund’s expenses related to this agreement.

Distributor – MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, is the distributor of shares of the fund. The Trustees have adopted a distribution plan for the Service Class shares pursuant to 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 year ended December 31, 2018, the fee was $8,305, which equated to 0.0082% 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 year ended December 31, 2018, these costs amounted to $493.

MFS Blended Research Small Cap Equity Portfolio

Notes to Financial Statements – continued

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 year ended December 31, 2018 was equivalent to an annual effective rate of 0.0244% of the fund’s average daily net assets.

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

Other – This fund and certain other funds managed by MFS (the funds) have entered into a service agreement (the ISO Agreement) which provides 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 serves as the ISO and is an officer of the funds and the sole member of Tarantino LLC. The funds can terminate the ISO Agreement with Tarantino LLC at any time under the terms of the ISO Agreement. For the year ended December 31, 2018, the fee paid by the fund under this agreement was $173 and is included in “Miscellaneous” expense in the Statement of Operations. MFS has 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.

Effective on or about January 3, 2018, 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 period on or about January 3, 2018 to December 31, 2018, this reimbursement amounted to $18,071, which is included in “Other” income in the Statement of Operations.

(4)

Portfolio Securities

For the year ended December 31, 2018, purchases and sales of investments, other than short-term obligations, aggregated $71,869,579 and $89,932,669, 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:


	Year ended 12/31/18						Year ended 12/31/17

	Shares			Amount			Shares			Amount
Shares sold
Initial Class		261,230			$3,403,663			656,127			$8,983,200
Service Class		558,043			6,746,807			366,000			4,715,043
		819,273			$10,150,470			1,022,127			$13,698,243

Shares issued to shareholders in reinvestment of distributions
Initial Class		321,961			$4,510,678			330,522			$4,032,365
Service Class		615,311			8,374,383			684,759			8,141,786
		937,272			$12,885,061			1,015,281			$12,174,151

Shares reacquired
Initial Class		(608,313	)		$(8,423,623	)		(470,190	)		$(6,195,645	)
Service Class		(1,515,630	)		(20,736,061	)		(1,373,684	)		(17,965,961	)
		(2,123,943	)		$(29,159,684	)		(1,843,874	)		$(24,161,606	)

Net change
Initial Class		(25,122	)		$(509,282	)		516,459			$6,819,920
Service Class		(342,276	)		(5,614,871	)		(322,925	)		(5,109,132	)
		(367,398	)		$(6,124,153	)		193,534			$1,710,788

(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 syndication of banks under a credit agreement. Borrowings may be made for temporary financing needs. Interest is charged to each fund, based on its borrowings, generally at a rate equal to the higher of the Overnight Bank Funding rate or daily one month LIBOR plus an agreed upon spread. A commitment fee, based on the average daily, unused portion of the committed line of credit, is allocated among the participating funds. 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

MFS Blended Research Small Cap Equity Portfolio

Notes to Financial Statements – continued

charged to each fund, based on its borrowings, at a rate equal to the Overnight Bank Funding rate plus an agreed upon spread. For the year ended December 31, 2018, the fund’s commitment fee and interest expense were $595 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 fund assumes the following to be affiliated issuers:


Affiliated Issuers		Beginning Shares/Par Amount		Acquisitions Shares/Par Amount		Dispositions Shares/Par Amount			Ending Shares/Par Amount

MFS Institutional Money Market Portfolio			844,615		25,572,946		(25,398,885	)		1,018,676

Affiliated Issuers	Realized Gain (Loss)	Change in Unrealized Appreciation/ Depreciation		Capital Gain Distributions		Dividend Income			Ending Value

MFS Institutional Money Market Portfolio	$511		$—		$—		$18,056			$1,018,574

MFS Blended Research Small Cap Equity Portfolio

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Trustees of MFS Variable Insurance Trust III and the Shareholders of MFS Blended Research Small Cap Equity Portfolio:

Opinion on the Financial Statements and Financial Highlights

We have audited the accompanying statement of assets and liabilities of MFS Blended Research Small Cap Equity Portfolio (the “Fund”), including the portfolio of investments, as of December 31, 2018, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of December 31, 2018, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of December 31, 2018, by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion.

DELOITTE & TOUCHE LLP

Boston, Massachusetts

February 15, 2019

We have served as the auditor of one or more of the MFS investment companies since 1924.

MFS Blended Research Small Cap Equity Portfolio

TRUSTEES AND OFFICERS – IDENTIFICATION AND BACKGROUND

The Trustees and Officers of the Trust, as of February 1, 2019, are listed below, together with their principal occupations during the past five years. (Their titles may have varied during that period.) The address of each Trustee and Officer is 111 Huntington Avenue, Boston, Massachusetts 02199-7618.


Name, Age	Position(s) Held with Fund	Trustee/Officer Since (h)	Number of MFS Funds overseen by the Trustee	Principal Occupations During the Past Five Years	Other Directorships During the Past Five Years (j)
INTERESTED TRUSTEES
Robert J. Manning (k) (age 55)	Trustee	February 2004	135	Massachusetts Financial Services Company, Executive Chairman (since January 2017); Director; Chairman of the Board; Chief Executive Officer (until 2015);Co-Chief Executive Officer(2015-2016)	N/A

Robin A. Stelmach (k) (age 57)	Trustee	January 2014	135	Massachusetts Financial Services Company, Vice Chair (since January 2017); Chief Operating Officer and Executive Vice President (until January 2017)	N/A

INDEPENDENT TRUSTEES
John P. Kavanaugh (age 64)	Trustee and Chair of Trustees	January 2009	135	Private investor	N/A

Steven E. Buller (age 67)	Trustee	February 2014	135	Financial Accounting Standards Advisory Council, Chairman(2014-2015); Public Company Accounting Oversight Board, Standing Advisory Group, Member (until 2014); BlackRock, Inc. (investment management), Managing Director (until 2014), BlackRock Finco UK (investment management), Director (until 2014)	N/A

John A. Caroselli (age 64)	Trustee	March 2017	135	JC Global Advisors, LLC (management consulting), President (since 2015); First Capital Corporation (commercial finance), Executive Vice President (until 2015)	N/A

Maureen R. Goldfarb (age 63)	Trustee	January 2009	135	Private investor	N/A

Michael Hegarty (age 74)	Trustee	December 2004	135	Private investor	Rouse Properties Inc., Director (until 2016); Capmark Financial Group Inc., Director (until 2015)

Peter D. Jones (age 63)	Trustee	January 2019	135	Franklin Templeton Distributors, Inc. (investment management), President (until 2015); Franklin Templeton Institutional, LLC (investment management), Chairman (until 2015)	N/A

James W. Kilman, Jr. (age 57)	Trustee	January 2019	135	KielStrand Capital LLC (family office and merchant bank), Chief Executive Officer (since 2016); Morgan Stanley & Co. (financial services), Vice Chairman of Investment Banking,Co-Head of Diversified Financials Coverage – Financial Institutions Investment Banking Group (until 2016)	alpha-En Corporation, Director (since 2016)

MFS Blended Research Small Cap Equity Portfolio

Trustees and Officers – continued


Name, Age	Position(s) Held with Fund	Trustee/Officer Since (h)	Number of MFS Funds overseen by the Trustee	Principal Occupations During the Past Five Years	Other Directorships During the Past Five Years (j)
Clarence Otis, Jr. (age 62)	Trustee	March 2017	135	Darden Restaurants, Inc., Chief Executive Officer (until 2014)	VF Corporation, Director; Verizon Communications, Inc., Director; The Travelers Companies, Director; Federal Reserve Bank of Atlanta, Director (until 2015)

Maryanne L. Roepke (age 62)	Trustee	May 2014	135	American Century Investments (investment management), Senior Vice President and Chief Compliance Officer (until 2014)	N/A

Laurie J. Thomsen (age 61)	Trustee	March 2005	135	Private investor	The Travelers Companies, Director; Dycom Industries, Inc., Director (since 2015)


Name, Age	Position(s) Held with Fund	Trustee/Officer Since (h)	Number of MFS Funds for which the Person is an Officer	Principal Occupations During the Past Five Years
OFFICERS
Christopher R. Bohane (k) (age 45)	Assistant Secretary and Assistant Clerk	July 2005	135	Massachusetts Financial Services Company, Vice President and Assistant General Counsel

Kino Clark (k) (age 50)	Assistant Treasurer	January 2012	135	Massachusetts Financial Services Company, Vice President

John W. Clark, Jr. (k) (age 51)	Assistant Treasurer	April 2017	135	Massachusetts Financial Services Company, Vice President (since March 2017); Deutsche Bank (financial services), Department Head – Treasurer’s Office (until February 2017)

Thomas H. Connors (k) (age 59)	Assistant Secretary and Assistant Clerk	September 2012	135	Massachusetts Financial Services Company, Vice President and Senior Counsel

Ethan D. Corey (k) (age 55)	Assistant Secretary and Assistant Clerk	July 2005	135	Massachusetts Financial Services Company, Senior Vice President and Associate General Counsel

David L. DiLorenzo (k) (age 50)	President	July 2005	135	Massachusetts Financial Services Company, Senior Vice President

Heidi W. Hardin (k) (age 51)	Secretary and Clerk	April 2017	135	Massachusetts Financial Services Company, Executive Vice President and General Counsel (since March 2017); Harris Associates (investment management), General Counsel (from September 2015 to January 2017); Janus Capital Management LLC (investment management), Senior Vice President and General Counsel (until September 2015)

Brian E. Langenfeld (k) (age 45)	Assistant Secretary and Assistant Clerk	June 2006	135	Massachusetts Financial Services Company, Vice President and Senior Counsel

Amanda S. Mooradian (k) (age 39)	Assistant Secretary and Assistant Clerk	September 2018	135	Massachusetts Financial Services Company, Assistant Vice President and Counsel

Susan A. Pereira (k) (age 48)	Assistant Secretary and Assistant Clerk	July 2005	135	Massachusetts Financial Services Company, Vice President and Senior Counsel

Kasey L. Phillips (k) (age 48)	Assistant Treasurer	September 2012	135	Massachusetts Financial Services Company, Vice President

Matthew A. Stowe (k) (age 44)	Assistant Secretary and Assistant Clerk	October 2014	135	Massachusetts Financial Services Company, Vice President and Assistant General Counsel

MFS Blended Research Small Cap Equity Portfolio

Trustees and Officers – continued


Name, Age	Position(s) Held with Fund	Trustee/Officer Since (h)	Number of MFS Funds for which the Person is an Officer	Principal Occupations During the Past Five Years
Frank L. Tarantino (age 74)	Independent Senior Officer	June 2004	135	Tarantino LLC (provider of compliance services), Principal

Richard S. Weitzel (k) (age 48)	Assistant Secretary and Assistant Clerk	October 2007	135	Massachusetts Financial Services Company, Senior Vice President and Associate General Counsel

Martin J. Wolin (k) (age 51)	Chief Compliance Officer	July 2015	135	Massachusetts Financial Services Company, Senior Vice President and Chief Compliance Officer (since July 2015); Mercer (financial service provider), Chief Risk and Compliance Officer, North America and Latin America (until June 2015)

James O. Yost (k) (age 58)	Treasurer	September 1990	135	Massachusetts Financial Services Company, Senior Vice President

(h)

Date first appointed to serve as Trustee/officer of an MFS Fund. Each Trustee has served continuously since appointment unless indicated otherwise. For the period from December 15, 2004 until February 22, 2005, Mr. Manning served as Advisory Trustee. From January 2012 through December 2016, Messrs. DiLorenzo and Yost served as Treasurer and Deputy Treasurer of the Funds, respectively.

(j)	Directorships or trusteeships of companies required to report to the Securities and Exchange Commission (i.e., “public companies”).

(k)

“Interested person” of the Trust within the meaning of the Investment Company Act of 1940 (referred to as the 1940 Act), which is the principal federal law governing investment companies like the fund, as a result of a position with MFS. The address of MFS is 111 Huntington Avenue, Boston, Massachusetts 02199-7618.

Each Trustee has been elected by shareholders and each Trustee and officer holds office until his or her successor is chosen and qualified or until his or her earlier death, resignation, retirement or removal. The Trust does not hold annual meetings for the purpose of electing Trustees, and Trustees are not elected for fixed terms. Under the terms of the Board’s retirement policy, an Independent Trustee shall retire at the end of the calendar year in which he or she reaches the earlier of 75 years of age or 15 years of service on the Board (or, in the case of any Independent Trustee who joined the Board prior to 2015, 20 years of service on the Board).

Messrs. Buller, Hegarty, Kilman and Otis and Ms. Roepke are members of the Trust’s Audit Committee.

Each of the Interested Trustees and certain Officers hold comparable officer positions with certain affiliates of MFS.

The Statement of Additional Information for a Fund includes further information about the Trustees and is available without charge upon request by calling1-800-225-2606.


Investment Adviser Massachusetts Financial Services Company 111 Huntington Avenue Boston, MA 02199-7618		Custodian State Street Bank and Trust Company 1 Lincoln Street Boston, MA 02111-2900

Distributor MFS Fund Distributors, Inc. 111 Huntington Avenue Boston, MA 02199-7618		Independent Registered Public Accounting Firm Deloitte & Touche LLP 200 Berkeley Street Boston, MA 02116

Portfolio Manager(s) Jim Fallon Matt Krummell Jonathan Sage Jed Stocks

MFS Blended Research Small Cap Equity Portfolio

BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT

The Investment Company Act of 1940 requires that both the full Board of Trustees and a majority of thenon-interested (“independent”) Trustees, voting separately, annually approve the continuation of the Fund’s investment advisory agreement with MFS. The Trustees consider matters bearing on the Fund and its advisory arrangements at their meetings throughout the year, including a review of performance data at each regular meeting. In addition, the independent Trustees met several times over the course of three months beginning in May and ending in July, 2018 (“contract review meetings”) for the specific purpose of considering whether to approve the continuation of the investment advisory agreement for the Fund and the other investment companies that the Board oversees (the “MFS Funds”). The independent Trustees were assisted in their evaluation of the Fund’s investment advisory agreement by independent legal counsel, from whom they received separate legal advice and with whom they met separately from MFS during various contract review meetings. The independent Trustees were also assisted in this process by the MFS Funds’ Independent Senior Officer, a senior officer appointed by and reporting to the independent Trustees.

In connection with their deliberations regarding the continuation of the investment advisory agreement, the Trustees, including the independent Trustees, considered such information and factors as they believed, in light of the legal advice furnished to them and their own business judgment, to be relevant. The investment advisory agreement for the Fund was considered separately, although the Trustees also took into account the common interests of all MFS Funds in their review. As described below, the Trustees considered the nature, quality, and extent of the various investment advisory, administrative, and shareholder services performed by MFS under the existing investment advisory agreement and other arrangements with the Fund.

In connection with their contract review meetings, the Trustees received and relied upon materials that included, among other items: (i) information provided by Broadridge Financial Solutions, Inc. (“Broadridge”), an independent third party, on the investment performance of the Fund for various time periods ended December 31, 2017 and the investment performance of a group of funds with substantially similar investment classifications/objectives (the “Broadridge performance universe”), (ii) information provided by Broadridge on the Fund’s advisory fees and other expenses and the advisory fees and other expenses of comparable funds identified by Broadridge (the “Broadridge expense group”), (iii) information provided by MFS on the advisory fees of portfolios of other clients of MFS, including institutional separate accounts and other clients, (iv) information as to whether and to what extent applicable expense waivers, reimbursements or fee “breakpoints” are observed for the Fund, (v) information regarding MFS’ financial results and financial condition, including MFS’ and certain of its affiliates’ estimated profitability from services performed for the Fund and the MFS Funds as a whole, and compared to MFS’ institutional business, (vi) MFS’ views regarding the outlook for the mutual fund industry and the strategic business plans of MFS, (vii) descriptions of various functions performed by MFS for the Funds, such as compliance monitoring and portfolio trading practices, and (viii) information regarding the overall organization of MFS, including information about MFS’ senior management and other personnel providing investment advisory, administrative and other services to the Fund and the other MFS Funds. The comparative performance, fee and expense information prepared and provided by Broadridge was not independently verified and the independent Trustees did not independently verify any information provided to them by MFS.

The Trustees’ conclusion as to the continuation of the investment advisory agreement was based on a comprehensive consideration of all information provided to the Trustees and not the result of any single factor. Some of the factors that figured particularly in the Trustees’ deliberations are described below, although individual Trustees may have evaluated the information presented differently from one another, giving different weights to various factors. It is also important to recognize that the fee arrangements for the Fund and other MFS Funds are the result of years of review and discussion between the independent Trustees and MFS, that certain aspects of such arrangements may receive greater scrutiny in some years than in others, and that the Trustees’ conclusions may be based, in part, on their consideration of these same arrangements during the course of the year and in prior years.

Based on information provided by Broadridge and MFS, the Trustees reviewed the Fund’s total return investment performance as well as the Broadridge performance universe over various time periods. The Trustees placed particular emphasis on the total return performance of the Fund’s Initial Class shares in comparison to the performance of funds in its Broadridge performance universe over the three-year period ended December 31, 2017, which the Trustees believed was a long enough period to reflect differing market conditions. The total return performance of the Fund’s Initial Class shares was in the 2nd quintile relative to the other funds in the universe for this three-year period (the 1st quintile being the best performers and the 5th quintile being the worst performers). The total return performance of the Fund’s Initial Class shares was in the 1st quintile for each of theone- and five-year periods ended December 31, 2017 relative to the Broadridge performance universe. Because of the passage of time, these performance results may differ from the performance results for more recent periods, including those shown elsewhere in this report.

In the course of their deliberations, the Trustees took into account information provided by MFS in connection with the contract review meetings, as well as during investment review meetings conducted with portfolio management personnel during the course of the year regarding the Fund’s performance. After reviewing these and related factors, the Trustees concluded, within the context of their overall conclusions regarding the investment advisory agreement, that they were satisfied with MFS’ responses and efforts relating to investment performance.

MFS Blended Research Small Cap Equity Portfolio

Board Review of Investment Advisory Agreement – continued

In assessing the reasonableness of the Fund’s advisory fee, the Trustees considered, among other information, the Fund’s advisory fee and the total expense ratio of the Fund’s Initial Class shares as a percentage of average daily net assets and the advisory fee and total expense ratios of peer groups of funds based on information provided by Broadridge. The Trustees considered that MFS currently observes an expense limitation for the Fund, which may not be changed without the Trustees’ approval. The Trustees also considered that, according to the data provided by Broadridge (which takes into account any fee reductions or expense limitations that were in effect during the Fund’s last fiscal year), the Fund’s effective advisory fee rate and total expense ratio were each lower than the Broadridge expense group median.

The Trustees also considered the advisory fees charged by MFS to any institutional separate accounts advised by MFS (“separate accounts”) and unaffiliated investment companies for which MFS serves as subadviser (“subadvised funds”) that have comparable investment strategies to the Fund, if any. In comparing these fees, the Trustees considered information provided by MFS as to the generally broader scope of services provided by MFS to the Fund, as well as the more extensive regulatory burdens imposed on MFS in managing the Fund, in comparison to separate accounts and subadvised funds. The Trustees also considered the higher demands placed on MFS’ investment personnel and trading infrastructure as a result of the daily cashin-flows andout-flows of the Fund in comparison to separate accounts.

The Trustees also considered whether the Fund may benefit from any economies of scale in the management of the Fund in the event of growth in assets of the Fund and/or growth in assets of the MFS Funds as a whole. They noted that the Fund’s advisory fee rate schedule is not subject to any breakpoints. Taking into account the expense limitation noted above, the Trustees determined not to recommend any advisory fee breakpoints for the Fund at this time. The Trustees also noted that MFS has agreed in writing to waive a portion of the management fees of certain MFS Funds, including the Fund, if the total combined assets of certain funds within the MFS Funds’ complex increase above agreed upon thresholds (the “group fee waiver”), enabling the Fund’s shareholders to share in the benefits from any economies of scale at the complex level. The group fee waiver is reviewed and renewed annually between the Board and MFS. The Trustees concluded that the group fee waiver was sufficient to allow the Fund to benefit from economies of scale as its assets and overall complex assets grow.

The Trustees also considered information prepared by MFS relating to MFS’ costs and profits with respect to the Fund, the MFS Funds considered as a group, and other investment companies and accounts advised by MFS, as well as MFS’ methodologies used to determine and allocate its costs to the MFS Funds, the Fund and other accounts and products for purposes of estimating profitability.

After reviewing these and other factors described herein, the Trustees concluded, within the context of their overall conclusions regarding the investment advisory agreement, that the advisory fees charged to the Fund represent reasonable compensation in light of the services being provided by MFS to the Fund.

In addition, the Trustees considered MFS’ resources and related efforts to continue to retain, attract and motivate capable personnel to serve the Fund. The Trustees also considered current and developing conditions in the financial services industry, including the presence of large and well-capitalized companies which are spending, and appear to be prepared to continue to spend, substantial sums to engage personnel and to provide services to competing investment companies. In this regard, the Trustees also considered the financial resources of MFS and its ultimate parent, Sun Life Financial Inc. The Trustees also considered the advantages and possible disadvantages to the Fund of having an adviser that also serves other investment companies as well as other accounts.

The Trustees also considered the nature, quality, cost, and extent of administrative, transfer agency, and distribution services provided to the Fund by MFS and its affiliates under agreements and plans other than the investment advisory agreement, including any12b-1 fees the Fund pays to MFS Fund Distributors, Inc., an affiliate of MFS. The Trustees also considered the nature, extent and quality of certain other services MFS performs or arranges for on the Fund’s behalf, which may include securities lending programs, directed expense payment programs, class action recovery programs, and MFS’ interaction with third-party service providers, principally custodians andsub-custodians. The Trustees concluded that the variousnon-advisory services provided by MFS and its affiliates on behalf of the Fund were satisfactory.

The Trustees consideredso-called“fall-out benefits” to MFS such as reputational value derived from serving as investment manager to the MFS Funds. The Trustees also considered that, effective January 3, 2018, MFS had discontinued its historic practice of obtaining investment research from portfolio brokerage commissions paid by certain MFS Funds and would thereafter voluntarily reimburse a Fund, if applicable, for the costs of external research acquired through the use of the Fund’s portfolio brokerage commissions.

Based on their evaluation of factors that they deemed to be material, including those factors described above, the Board of Trustees, including the independent Trustees, concluded that the Fund’s investment advisory agreement with MFS should be continued for an additionalone-year period, commencing August 1, 2018.

MFS Blended Research Small Cap Equity Portfolio

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. The fund’s Form N-Q is 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/vit3 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 athttps://www.mfs.com/en-us/what-we-do/announcements.html or at mfs.com/vit3by 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.

FEDERAL TAX INFORMATION (unaudited)

The following information is provided pursuant to provisions of the Internal Revenue Code.

The fund designates $11,299,000 as capital gain dividends paid during the fiscal year.

For corporate shareholders, 29.59% of the ordinary income dividends paid during the fiscal year qualify for the corporate dividends received deduction.

rev. 3/16



FACTS		WHAT DOES MFS DO WITH YOUR PERSONAL INFORMATION?


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

What?

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

• Social Security number and account balances

• Account transactions and transaction history

• Checking account information and wire transfer instructions

When you areno longer our customer, we continue to share your information as described in this notice.


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


Reasons we can share your personal information	Does MFS share?	Can you limit this sharing?
For our everyday business purposes – such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus	Yes	No
For our marketing purposes – to offer our products and services to you	No	We don’t share
For joint marketing with other financial companies	No	We don’t share
For our affiliates’ everyday business purposes – information about your transactions and experiences	No	We don’t share
For our affiliates’ everyday business purposes – information about your creditworthiness	No	We don’t share
For nonaffiliates to market to you	No	We don’t share



Questions?		Call800-225-2606 or go tomfs.com.


Page 2


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


What we do
How does MFS protect my personal information?		To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include procedural, electronic, and physical safeguards for the protection of the personal information we collect about you.
How does MFS collect my personal information?		We collect your personal information, for example, when you • open an account or provide account information • direct us to buy securities or direct us to sell your securities • make a wire transfer We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
Why can’t I limit all sharing?		Federal law gives you the right to limit only • sharing for affiliates’ everyday business purposes – information about your creditworthiness • affiliates from using your information to market to you • sharing for nonaffiliates to market to you State laws and individual companies may give you additional rights to limit sharing.


Definitions
Affiliates		Companies related by common ownership or control. They can be financial and nonfinancial companies. • MFS does not share personal information with affiliates, except for everyday business purposes as described on page one of this notice.
Nonaffiliates		Companies not related by common ownership or control. They can be financial and nonfinancial companies. • MFS does not share with nonaffiliates so they can market to you.
Joint marketing		A formal agreement between nonaffiliated financial companies that together market financial products or services to you. • MFS doesn’t jointly market.


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

LOGO

Annual Report

December 31, 2018

LOGO

MFS^® Conservative Allocation Portfolio

LOGO

MFS^® Variable Insurance Trust III

VCA-ANN

MFS® Conservative Allocation Portfolio

CONTENTS

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

MFS Conservative Allocation Portfolio

LETTER FROM THE EXECUTIVE CHAIRMAN

LOGO

Dear Contract Owners:

Respectfully,

LOGO

Robert J. Manning

Executive Chairman

MFS Investment Management

February 15, 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.

MFS Conservative Allocation Portfolio

PORTFOLIO COMPOSITION

Portfolio target allocation

LOGO


Portfolio holdings
MFS Total Return Bond Series		17.5%
MFS Limited Maturity Portfolio		12.3%
MFS Government Securities Portfolio		10.4%
MFS Inflation-Adjusted Bond Portfolio		10.2%
MFS Global Governments Portfolio		8.3%
MFS Research Series		5.7%
MFS Value Series		5.7%
MFS Growth Series		5.6%
MFS High Yield Portfolio		5.0%
MFS Research International Portfolio		3.8%
MFS Mid Cap Growth Series		3.7%
MFS Mid Cap Value Portfolio		3.7%
MFS Global Real Estate Portfolio		2.0%
MFS International Value Portfolio		2.0%
MFS International Growth Portfolio	��	1.9%
MFS New Discovery Value Portfolio		0.9%
MFS New Discovery Series		0.9%
Cash & Cash Equivalents		0.4%

Portfolio actual allocation

LOGO

Cash & Cash Equivalents includes any cash, investments in money market funds, short-term securities, and other assets less liabilities. MFS endeavors to fully invest all MFSfunds-of-funds in underlying funds on a daily basis. Any divergence from 0.0% in Cash & Cash Equivalents is typically due to the timing of fund subscriptions/redemptions and the settlement of subsequent investment in/divestment from the underlying funds. While the MFSfunds-of-funds’ subscriptions/redemptions are processed at the same day NAV of the underlying funds, a positive/negative cash balance will be reflected on the MFSfunds-of-funds’ Statements of Assets and Liabilities until the trades with the underlying funds settle, which is typically two business days. Please see the Statements 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 December 31, 2018.

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

MFS Conservative Allocation Portfolio

MANAGEMENT REVIEW

Summary of Results

For the twelve months ended December 31, 2018, Initial Class shares of the MFS Conservative Allocation Portfolio (“fund”) provided a total return of –2.73%, while Service Class shares of the fund provided a total return of –2.92%. These compare with a return of 0.01% for the fund’s benchmark, the Bloomberg Barclays U.S. Aggregate Bond Index. The fund’s other benchmark, the MFS Conservative Allocation Portfolio Blended Index (“Blended Index”), generated a return of –2.23%. The Blended Index reflects the blended returns of various equity and fixed income market indices, with percentage allocations to each index designed to resemble the allocations of the fund. The market indices and related percentage allocations used to compile the Blended Index are set forth in the Performance Summary.

Market Environment

Factors Affecting Performance

During the reporting period, the fund underperformed its benchmark, the Bloomberg Barclays U.S. Aggregate Bond Index, largely due to its allocation to both the equity and real estate markets, which performed poorly during the year. Over the same period, the fund underperformed the Blended Index.

Relative to the Blended Index, the fund’s exposure to the fixed income asset class detracted from performance, led by its allocation to the MFS Inflation-Adjusted Bond Portfolio, where underperformance was driven by the fund’s global exposure in a strong US dollar environment. The fund’s investments in the MFS High Yield Portfolio also held back relative returns as credit spreads widened with the equity market sell-off towards the end of the year. Additionally, the fund’s allocation to the MFS Total Return Bond Series, particularly its exposure to corporate bonds, further held back relative results.

Within the U.S. equity asset class, the fund’s diversification down the market capitalization spectrum, to mid-cap funds and small-cap funds, detracted from relative performance as those segments of the market underperformed large-cap investments. This was partially offset by the fund’s positive performance in the MFS Growth Series, MFS Mid Cap Growth Series and MFS New Discovery Series.

On the positive side, the fund’s exposure to the international equity segment benefited relative performance as both the MFS International Growth Portfolio and MFS International Value Portfolio outperformed their respective benchmarks during the reporting period.

Respectfully,

Portfolio Manager(s)

Joseph Flaherty and Natalie Shapiro

Note to Shareholders: Effective September 1, 2018, Natalie Shapiro became a Portfolio Manager of the Fund.

MFS Conservative Allocation Portfolio

Management Review – continued

MFS Conservative Allocation Portfolio

PERFORMANCE SUMMARY THROUGH 12/31/18

Growth of a Hypothetical $10,000 Investment

LOGO

Total Returns through 12/31/18

Average annual total returns


	Share Class	Class Inception Date	1-yr	5-yr	10-yr
	Initial Class	10/01/08	(2.73)%	3.53%	6.54%
	Service Class	10/01/08	(2.92)%	3.28%	6.29%

Comparative benchmark(s)
	Bloomberg Barclays U.S. Aggregate Bond Index (f)		0.01%	2.52%	3.48%
	MFS Conservative Allocation Portfolio Blended Index (f) (w)		(2.23)%	4.21%	6.73%
	FTSE EPRA/NAREIT Developed Real Estate Index (net div) (f)		(5.63)%	4.34%	9.65%
	MSCI EAFE Index (net div) (f)		(13.79)%	0.53%	6.32%
	Standard & Poor’s 500 Stock Index (f)		(4.38)%	8.49%	13.12%

(f)

Source: FactSet Research Systems Inc.

(w)

As of December 31, 2018, the MFS Conservative Allocation Portfolio Blended Index was comprised of 62% Bloomberg Barclays U.S. Aggregate Bond Index, 28% Standard & Poor’s 500 Stock Index, 8% MSCI EAFE Index (net div), and 2% FTSE EPRA/Nareit Developed Real Estate Index (net div).

Benchmark Definition(s)

Bloomberg Barclays U.S. Aggregate Bond Index – a market capitalization-weighted index that measures the performance of the U.S. investment-grade, fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities with at least one year to final maturity.

FTSE EPRA/NAREIT Developed Real Estate Index (net div) – measures the performance of eligible real estate equities worldwide that generate a majority of their revenue and income through the ownership, disposure and development of income-producing real estate.

MFS Conservative Allocation Portfolio

Performance Summary – continued

MSCI EAFE (Europe, Australasia, Far East) Index (net div) – a market capitalization index that is designed to measure equity market performance in the developed markets, excluding the U.S. and Canada.

Standard & Poor’s 500 Stock Index – a market capitalization index of 500 widely held equity securities, designed to measure broad U.S. equity performance.

It is not possible to invest directly in an index.

Notes to Performance Summary

Average annual total return represents the average annual change in value for each share class for the periods presented.

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

MFS Conservative Allocation Portfolio

EXPENSE TABLE

Fund Expenses Borne by the Contract Holders during the Period,

July 1, 2018 through December 31, 2018

As a contract holder of the fund, you incur ongoing costs, including 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.

In addition to the fees and expenses which the fund bears directly, the fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the fund invests. Because the underlying funds have varied expenses and fee levels and the fund may own different proportions of the underlying funds at different times, the amount of fees and expenses incurred indirectly by the fund will vary. If these indirect costs were included, your costs would have been higher.

The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period

July 1, 2018 through December 31, 2018.

Actual Expenses

Hypothetical Example for Comparison Purposes


Share Class		Annualized Expense Ratio		Beginning Account Value 7/01/18		Ending Account Value 12/31/18		Expenses Paid During Period (p) 7/01/18-12/31/18
Initial Class	Actual		0.03%		$1,000.00		$966.90		$0.15
Initial Class	Hypothetical (h)		0.03%		$1,000.00		$1,025.05		$0.15
Service Class	Actual		0.28%		$1,000.00		$966.60		$1.39
Service Class	Hypothetical (h)		0.28%		$1,000.00		$1,023.79		$1.43

(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 184/365 (to reflect theone-half year period). In addition to the fees and expenses which the fund bears directly, the fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the fund invests. If these indirect costs were included, your costs would have been higher.

MFS Conservative Allocation Portfolio

PORTFOLIO OF INVESTMENTS – 12/31/18

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 ($)

INVESTMENT COMPANIES (h) – 100.0%
Bond Funds – 63.7%
MFS Global Governments Portfolio – Initial Class		3,584,538	$	37,064,117
MFS Government Securities Portfolio – Initial Class		3,826,076		46,065,959
MFS High Yield Portfolio – Initial Class		4,240,405		22,389,339
MFS Inflation-Adjusted Bond Portfolio – Initial Class		4,488,958		45,562,924
MFS Limited Maturity Portfolio – Initial Class		5,415,633		54,697,894
MFS Total Return Bond Series – Initial Class		6,157,866		77,896,999

			$	283,677,232

International Stock Funds – 7.7%
MFS International Growth Portfolio – Initial Class		677,386	$	8,656,994
MFS International Value Portfolio – Initial Class		348,059		8,708,429
MFS Research International Portfolio – Initial Class		1,202,822		16,923,707

			$	34,289,130

Specialty Funds – 2.0%
MFS Global Real Estate Portfolio – Initial Class		669,780	$	8,774,121



Issuer	Shares/Par		Value ($)

INVESTMENT COMPANIES (h) – continued
U.S. Stock Funds – 26.2%
MFS Growth Series – Initial Class		531,410	$	24,981,612
MFS Mid Cap Growth Series – Initial Class		2,020,738		16,630,678
MFS Mid Cap Value Portfolio – Initial Class		2,239,666		16,618,320
MFS New Discovery Series – Initial Class		230,434		4,023,375
MFS New Discovery Value Portfolio – Initial Class		482,079		4,073,567
MFS Research Series – Initial Class		1,011,237		25,210,129
MFS Value Series – Initial Class		1,455,563		25,181,234

			$	116,718,915

Money Market Funds – 0.4%
MFS Institutional Money Market Portfolio, 2.4% (v)		1,647,127	$	1,646,963

Total Investment Companies (Identified Cost, $432,342,282)			$	445,106,361

OTHER ASSETS, LESS LIABILITIES – 0.0%				(56,423	)

NET ASSETS – 100.0%			$	445,049,938

(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 value of the fund’s investments in affiliated issuers was $445,106,361.

(v)

See Notes to Financial Statements

MFS Conservative Allocation Portfolio

FINANCIAL STATEMENTS ^| STATEMENT OF ASSETS AND LIABILITIES

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


At 12/31/18

Assets
Investments in affiliated issuers, at value (identified cost, $432,342,282)			$445,106,361
Receivables for
Investments sold			395,240
Fund shares sold			420
Other assets			2,968
Total assets			$445,504,989

Liabilities
Payables for
Fund shares reacquired			$395,659
Payable to affiliates
Administrator			192
Shareholder servicing costs			73
Distribution and/or service fees			12,093
Payable for independent Trustees’ compensation			4
Accrued expenses and other liabilities			47,030
Total liabilities			$455,051
Net assets			$445,049,938

Net assets consist of
Paid-in capital			$402,882,582
Total distributable earnings (loss)			42,167,356
Net assets			$445,049,938
Shares of beneficial interest outstanding			41,957,124



	Net assets		Shares outstanding		Net asset value per share
Initial Class		$2,062,182		194,899		$10.58
Service Class		442,987,756		41,762,225		10.61

See Notes to Financial Statements

MFS Conservative Allocation Portfolio

FINANCIAL STATEMENTS ^| STATEMENT OF OPERATIONS

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.


Year ended 12/31/18

Net investment income (loss)
Income
Dividends from affiliated issuers	$11,899,501
Expenses
Distribution and/or service fees	$1,271,633
Shareholder servicing costs	8,872
Administrative services fee	17,500
Independent Trustees’ compensation	12,255
Custodian fee	8,879
Shareholder communications	20,065
Audit and tax fees	38,920
Legal fees	4,372
Miscellaneous	24,741
Total expenses	$1,407,237
Net investment income (loss)	$10,492,264

Realized and unrealized gain (loss)
Realized gain (loss) (identified cost basis)
Investments in affiliated issuers	$8,812,385
Capital gain distributions from underlying affiliated funds	12,600,204
Net realized gain (loss)	$21,412,589
Change in unrealized appreciation or depreciation
Affiliated issuers	$(45,032,933	)
Net realized and unrealized gain (loss)	$(23,620,344	)
Change in net assets from operations	$(13,128,080	)

See Notes to Financial Statements

MFS Conservative Allocation Portfolio

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.


	Year ended
	12/31/18			12/31/17
Change in net assets

From operations
Net investment income (loss)		$10,492,264			$9,682,222
Net realized gain (loss)		21,412,589			20,657,881
Net unrealized gain (loss)		(45,032,933	)		32,920,622
Change in net assets from operations		$(13,128,080	)		$63,260,725
Total distributions to shareholders (a)		$(30,510,928	)		$(26,766,992	)
Change in net assets from fund share transactions		$(66,228,101	)		$(96,807,155	)
Total change in net assets		$(109,867,109	)		$(60,313,422	)

Net assets
At beginning of period		554,917,047			615,230,469
At end of period (b)		$445,049,938			$554,917,047

(a)	Distributions from net investment income and from net realized gain are no longer required to be separately disclosed. See Note 2. For the year ended December 31, 2017, distributions from net investment income and from net realized gain were $10,989,398 and $15,777,594, respectively.

(b)	Parenthetical disclosure of undistributed net investment income is no longer required. See Note 2. For the year ended December 31, 2017, end of period net assets included undistributed net investment income of $9,681,018.

See Notes to Financial Statements

MFS Conservative Allocation Portfolio

FINANCIAL STATEMENTS ^| FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand the fund’s financial performance for the past 5 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	Year ended

	12/31/18			12/31/17			12/31/16			12/31/15			12/31/14

Net asset value, beginning of period		$11.61			$10.95			$11.09			$11.79			$11.61

Income (loss) from investment operations
Net investment income (loss) (d)(l)		$0.27			$0.22			$0.22	(c)		$0.24			$0.20
Net realized and unrealized gain (loss)		(0.55	)		1.02			0.36			(0.27	)		0.34
Total from investment operations		$(0.28	)		$1.24			$0.58			$(0.03	)		$0.54

Less distributions declared to shareholders
From net investment income		$(0.26	)		$(0.26	)		$(0.32	)		$(0.41	)		$(0.22	)
From net realized gain		(0.49	)		(0.32	)		(0.40	)		(0.26	)		(0.14	)
Total distributions declared to shareholders		$(0.75	)		$(0.58	)		$(0.72	)		$(0.67	)		$(0.36	)
Net asset value, end of period (x)		$10.58			$11.61			$10.95			$11.09			$11.79
Total return (%) (k)(r)(s)(x)		(2.73	)		11.48			5.03	(c)		(0.19	)		4.61

Ratios (%) (to average net assets) and Supplemental data:
Expenses before expense reductions (f)(h)		0.03			0.02			0.02	(c)		0.01			0.02
Expenses after expense reductions (f)(h)		N/A			N/A			N/A			N/A			0.02
Net investment income (loss) (l)		2.34			1.94			1.92	(c)		2.06			1.66
Portfolio turnover		1			0	(b)		1			2			1
Net assets at end of period (000 omitted)		$2,062			$2,338			$2,266			$2,419			$2,948

Service Class	Year ended

	12/31/18			12/31/17			12/31/16			12/31/15			12/31/14
Net asset value, beginning of period		$11.63			$10.96			$11.10			$11.80			$11.61

Income (loss) from investment operations
Net investment income (loss) (d)(l)		$0.23			$0.19			$0.19	(c)		$0.21			$0.16
Net realized and unrealized gain (loss)		(0.53	)		1.02			0.35			(0.28	)		0.36
Total from investment operations		$(0.30	)		$1.21			$0.54			$(0.07	)		$0.52

Less distributions declared to shareholders
From net investment income		$(0.23	)		$(0.22	)		$(0.28	)		$(0.37	)		$(0.19	)
From net realized gain		(0.49	)		(0.32	)		(0.40	)		(0.26	)		(0.14	)��
Total distributions declared to shareholders		$(0.72	)		$(0.54	)		$(0.68	)		$(0.63	)		$(0.33	)
Net asset value, end of period (x)		$10.61			$11.63			$10.96			$11.10			$11.80
Total return (%) (k)(r)(s)(x)		(2.92	)		11.24			4.73	(c)		(0.49	)		4.41

Ratios (%) (to average net assets) and Supplemental data:
Expenses before expense reductions (f)(h)		0.28			0.27			0.27	(c)		0.26			0.27
Expenses after expense reductions (f)(h)		N/A			N/A			N/A			N/A			0.27
Net investment income (loss) (l)		2.05			1.63			1.66	(c)		1.80			1.36
Portfolio turnover		1			0	(b)		1			2			1
Net assets at end of period (000 omitted)		$442,988			$552,579			$612,965			$691,195			$801,775

See Notes to Financial Statements

MFS Conservative Allocation Portfolio

Financial Highlights – continued

(b)	Less than 0.5%.

(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.

(h)

In addition to the fees and expenses which the fund bears directly, the fund indirectly bears a pro rata share of the fees and expenses of the underlying affiliated funds in which the fund invests. Accordingly, the expense ratio for the fund reflects only those fees and expenses borne directly by the fund. Because the underlying affiliated funds have varied expense and fee levels and the fund may own different proportions of the underlying affiliated funds at different times, the amount of fees and expenses incurred indirectly by the fund will vary.

(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)	The ratios and per share amounts do not include net investment income of the underlying affiliated funds in which the fund invests.

(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

MFS Conservative Allocation Portfolio

NOTES TO FINANCIAL STATEMENTS

(1)

Business and Organization

MFS Conservative Allocation Portfolio (the fund) is a diversified series of MFS Variable Insurance Trust III (the trust). The trust is organized as a Delaware statutory 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.

(2)

Significant Accounting Policies

The fund is a “fund of funds”, which invests the majority of its assets in other MFS mutual funds (hereafter referred to as “underlying affiliated funds” or “underlying funds”), which may have different fiscal year ends than the funds. The underlying funds, in turn, may engage in a number of investment techniques and practices, which involve certain risks. Certain underlying funds invest their portfolio in high-yield securities rated below investment grade. Investments in below investment grade quality securities can involve a substantially greater risk of default or can already be in default, and their values can decline significantly. Below investment grade quality securities tend to be more sensitive to adverse news about the issuer, or the market or economy in general, than higher quality debt instruments. Certain underlying funds invest a significant portion of their assets in asset-backed and/ormortgage-backed securities. For these securities, the value of the debt instrument also depends on the credit quality and adequacy of the underlying assets or collateral as well as whether there is a security interest in the underlying assets or collateral. Enforcing rights, if any, against the underlying assets or collateral may be difficult. U.S. Government securities not supported as to the payment of principal or interest by the U.S. Treasury, such as those issued by Fannie Mae, Freddie Mac, and the Federal Home Loan Banks, are subject to greater credit risk than are U.S. Government securities supported by the U.S. Treasury, such as those issued by Ginnie Mae. Certain underlying funds invest in foreign securities, including securities of emerging market issuers. Investments in foreign securities are vulnerable to the effects of changes in the relative values of the local currency and the U.S. dollar and to the effects of changes in each country’s market, economic, industrial, political, regulatory, geopolitical, and other conditions. Investments in emerging markets can involve additional and greater risks than the risks associated with investments in developed foreign markets. Emerging markets can have less developed markets, greater custody and operational risk, less developed legal, regulatory, and accounting systems, and greater political, social, and economic instability than developed markets.

The accounting policies of the underlying funds in which the fund invests are outlined in the underlying funds’ shareholder reports, which are available without charge by calling1-800-225-2606, at mfs.com and on the Securities and Exchange Commission (SEC) web site at http://www.sec.gov. The underlying funds’ shareholder reports are not covered by this report.

Investment Valuations–Open-end investment companies (underlying funds) are generally valued at their net asset value per share. The investments of underlying funds managed by the adviser are valued as described below. For purposes of this policy disclosure, “fund” also refers to the underlying funds in which thefund-of-funds invests.

MFS Conservative Allocation Portfolio

Notes to Financial Statements – continued

Equity securities, including restricted equity securities and equity securities sold short, 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. Equity securities sold short, for which there were no sales reported for that day, are generally valued at the last quoted daily ask quotation on their primary market or exchange as provided by a third-party pricing service. Debt instruments and floating rate loans, including restricted debt instruments, are generally valued at an evaluated or composite bid as provided by a third-party pricing service. Short-term instruments with a maturity at issuance of 60 days or less may be valued at amortized cost, which approximates market value. Exchange-traded options are generally valued at the last sale or official closing price on their primary exchange as provided by a third-party pricing service. Exchange-traded options for which there were no sales reported that day are generally valued at the last daily bid quotation on their primary exchange as provided by athird-party pricing service. Options not traded on an exchange are generally valued at a broker/dealer bid quotation. Foreign currency options are generally valued at valuations provided by a third-party pricing service. Futures contracts are generally valued at last posted settlement price on their primary exchange as provided by a third-party pricing service. Futures contracts for which there were no trades that day for a particular position are generally valued at the closing bid quotation on their primary exchange as provided by a third-party pricing service. Forward foreign currency exchange contracts are generally valued at the mean of bid and asked prices for the time period interpolated from rates provided by a third-party pricing service for proximate time periods. Swap agreements are generally valued at valuations provided by a third-party pricing service, which for cleared swaps includes an evaluation of any trading activity at the clearinghouses.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 halting of trading of a specific security where trading does not resume prior to the close of the exchange or market on which the security is principally traded. Events that occur on a frequent basis after foreign markets close (such as developments in foreign markets and significant movements in the U.S. markets) and prior to the determination of the fund’s net asset value may be deemed to have a material effect on the value of securities traded in foreign markets. Accordingly, the fund’s foreign equity securities may often be valued at fair value. The adviser generally relies on third-party pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and financial condition of the issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment for purposes of calculating the fund’s net asset value can differ depending on the source and method used to determine value. When fair valuation is used, the value of an investment used to determine the fund’s net asset value may differ from quoted or published prices for the same investment. There can be no assurance that the fund could obtain the fair value assigned to an investment if it were to sell the investment at the same time at which the fund determines its net asset value per share.


Financial Instruments	Level 1		Level 2		Level 3		Total
Mutual Funds		$445,106,361		$—		$—		$445,106,361

MFS Conservative Allocation Portfolio

Notes to Financial Statements – continued

For further information regarding security characteristics, see the Portfolio of Investments. Please refer to the underlying funds’ shareholder reports for further information regarding the levels used in valuing the underlying funds’ assets or liabilities.

Derivatives– The fund does not invest in derivatives directly. The fund does invest in underlying funds that may use derivatives primarily to increase or decrease exposure to a particular market or segment of the market, or security, to increase or decrease interest rate or currency exposure, or as alternatives to direct investments. Derivatives are used for hedging ornon-hedging purposes. While hedging can reduce or eliminate losses, it can also reduce or eliminate gains. When the underlying funds use derivatives as an investment to increase market exposure, or for hedging purposes, gains and losses from derivative instruments may be substantially greater than the derivative’s original cost.

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

Investment Transactions and Income– Investment transactions are recorded on the trade date. Interest income is recorded on the accrual basis. All premium and discount is amortized or accreted for financial statement purposes in accordance with U.S. generally accepted accounting principles. Distributions of income and capital gains from the underlying funds are recorded on theex-dividend date. Recognition of net investment income by the fund is affected by the timing of the declaration of distributions by the underlying funds in which the fund invests. In determining the net gain or loss on securities sold, the cost of securities is determined on the identified cost basis.

The fund and/or the underlying funds 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.

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

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


	Year ended 12/31/18		Year ended 12/31/17
Ordinary income (including any short-term capital gains)		$10,086,518		$11,663,511
Long-term capital gains		20,424,410		15,103,481
Total distributions		$30,510,928		$26,766,992

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


As of 12/31/18

Cost of investments	$435,291,858
Gross appreciation	25,982,380
Gross depreciation	(16,167,877	)
Net unrealized appreciation (depreciation)	$9,814,503

Undistributed ordinary income	10,552,629
Undistributed long-term capital gain	21,800,224

MFS Conservative Allocation Portfolio

Notes to Financial Statements – continued

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


	From net investment income				From net realized gain
	Year ended 12/31/18		Year ended 12/31/17		Year ended 12/31/18		Year ended 12/31/17
Initial Class		$49,715		$49,416		$92,819		$61,677
Service Class		9,632,519		10,939,982		20,735,875		15,715,917
Total		$9,682,234		$10,989,398		$20,828,694		$15,777,594

(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. MFS receives no compensation under this agreement; however MFS receives management fees from the underlying MFS funds.

The investment adviser has agreed in writing to pay a portion of the fund’s operating expenses, excluding distribution and/or service fees, interest, taxes, extraordinary expenses, brokerage and transaction costs, and investment-related expenses such as fees and expenses associated with investments in investment companies and other similar investment vehicles such that fund operating expenses do not exceed 0.20% annually of the fund’s average daily net assets. This written agreement will continue until modified by the fund’s Board of Trustees, but such agreement will continue at least until April 30, 2020. For the year ended December 31, 2018, the fund’s actual operating expenses did not exceed the limit and therefore, the investment adviser did not pay any portion of the fund’s expenses related to this agreement.

Distributor– MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, is the distributor of shares of the fund. The Trustees have adopted a distribution plan for the Service Class shares pursuant to Rule12b-1 under the Investment Company Act of 1940.

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 year ended December 31, 2018, the fee was $8,761, which equated to 0.0017% 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 year ended December 31, 2018, these costs amounted to $111.

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 pays an annual fixed amount of $17,500. The administrative services fee incurred for the year ended December 31, 2018 was equivalent to an annual effective rate of 0.0034% of the fund’s average daily net assets.

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

Other– This fund and certain other funds managed by MFS (the funds) have entered into a service agreement (the ISO Agreement) which provides 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 serves as the ISO and is an officer of the funds and the sole member of Tarantino LLC. The funds can terminate the ISO Agreement with Tarantino LLC at any time under the terms of the ISO Agreement. For the year ended December 31, 2018, the fee paid by the fund under this agreement was $872 and is included in “Miscellaneous”

MFS Conservative Allocation Portfolio

Notes to Financial Statements – continued

expense in the Statement of Operations. MFS has agreed to bear all expenses associated with office space, other administrative support, and supplies provided to the ISO.

(4)

Portfolio Securities

For the year ended December 31, 2018, purchases and sales of shares of underlying funds aggregated $3,148,037 and $101,283,562, 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:


	Year ended 12/31/18						Year ended 12/31/17
	Shares			Amount			Shares			Amount
Shares sold
Initial Class		4,750			$54,877			10,169			$115,023
Service Class		368,488			4,244,692			423,197			4,768,408
		373,238			$4,299,569			433,366			$4,883,431
Shares issued to shareholders in reinvestment of distributions
Initial Class		12,760			$142,534			9,901			$111,093
Service Class		2,709,045			30,368,394			2,369,413			26,655,899
		2,721,805			$30,510,928			2,379,314			$26,766,992
Shares reacquired
Initial Class		(24,024	)		$(272,696	)		(25,609	)		$(286,704	)
Service Class		(8,825,257	)		(100,765,902	)		(11,197,619	)		(128,170,874	)
		(8,849,281	)		$(101,038,598	)		(11,223,228	)		$(128,457,578	)
Net change
Initial Class		(6,514	)		$(75,285	)		(5,539	)		$(60,588	)
Service Class		(5,747,724	)		(66,152,816	)		(8,405,009	)		(96,746,567	)
		(5,754,238	)		$(66,228,101	)		(8,410,548	)		$(96,807,155	)

(6)

Line of Credit

MFS Conservative Allocation Portfolio

Notes to Financial Statements – continued

(7)

Investments in Affiliated Issuers


Affiliated Issuers				Beginning Shares/Par Amount			Acquisitions Shares/Par Amount		Dispositions Shares/Par Amount			Ending Shares/Par Amount

MFS Global Governments Portfolio					4,199,849			42,201		(657,512	)		3,584,538

MFS Global Real Estate Portfolio					776,900			48,648		(155,768	)		669,780

MFS Government Securities Portfolio					4,473,015			163,522		(810,461	)		3,826,076

MFS Growth Series					675,751			45,156		(189,497	)		531,410

MFS High Yield Portfolio					4,796,242			265,090		(820,927	)		4,240,405

MFS Inflation-Adjusted Bond Portfolio					5,136,227			90,519		(737,788	)		4,488,958

MFS Institutional Money Market Portfolio					1,624,261			2,118,951		(2,096,085	)		1,647,127

MFS International Growth Portfolio					716,142			72,185		(110,941	)		677,386

MFS International Value Portfolio					392,455			10,392		(54,788	)		348,059

MFS Limited Maturity Portfolio					6,520,227			140,388		(1,244,982	)		5,415,633

MFS Mid Cap Growth Series					2,318,834			324,816		(622,912	)		2,020,738

MFS Mid Cap Value Portfolio					2,446,894			173,547		(380,775	)		2,239,666

MFS New Discovery Series					274,606			31,769		(75,941	)		230,434

MFS New Discovery Value Portfolio					496,034			77,464		(91,419	)		482,079

MFS Research International Portfolio					1,301,754			61,206		(160,138	)		1,202,822

MFS Research Series					1,120,543			132,531		(241,837	)		1,011,237

MFS Total Return Bond Series					7,126,269			255,728		(1,224,131	)		6,157,866

MFS Value Series					1,581,540			139,374		(265,351	)		1,455,563

Affiliated Issuers	Realized Gain (Loss)			Change in Unrealized Appreciation/ Depreciation			Capital Gain Distributions		Dividend Income			Ending Value

MFS Global Governments Portfolio		$(484,368	)		$(408,442	)		$—		$398,192			$37,064,117

MFS Global Real Estate Portfolio		216,796			(1,014,113	)		66,385		476,079			8,774,121

MFS Government Securities Portfolio		(1,212,908	)		(355,512	)		—		1,648,579			46,065,959

MFS Growth Series		4,434,485			(4,601,673	)		1,792,509		144,022			24,981,612

MFS High Yield Portfolio		(406,299	)		(1,735,171	)		—		1,412,186			22,389,339

MFS Inflation-Adjusted Bond Portfolio		(55,142	)		(3,106,938	)		—		862,004			45,562,924

MFS Institutional Money Market Portfolio		(73	)		12			—		30,840			1,646,963

MFS International Growth Portfolio		396,496			(2,158,041	)		804,587		147,143			8,656,994

MFS International Value Portfolio		534,681			(1,640,544	)		109,616		108,858			8,708,429

MFS Limited Maturity Portfolio		(142,155	)		(351,066	)		—		1,231,854			54,697,894

MFS Mid Cap Growth Series		2,330,335			(4,407,235	)		2,843,009		100,928			16,630,678

MFS Mid Cap Value Portfolio		309,916			(3,789,538	)		1,033,886		383,572			16,618,320

MFS New Discovery Series		383,242			(870,171	)		451,775		152,446			4,023,375

MFS New Discovery Value Portfolio		187,915			(1,392,402	)		590,618		160,979			4,073,567

MFS Research International Portfolio		508,872			(4,023,995	)		259,738		529,954			16,923,707

MFS Research Series		1,841,899			(6,075,219	)		2,762,163		771,886			25,210,129

MFS Total Return Bond Series		(1,157,744	)		(2,787,680	)		—		2,789,023			77,896,999

MFS Value Series		1,126,437			(6,315,205	)		1,885,918		550,956			25,181,234

		$8,812,385			$(45,032,933	)		$12,600,204		$11,899,501			$445,106,361

MFS Conservative Allocation Portfolio

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Trustees of MFS Variable Insurance Trust III and the Shareholders of MFS Conservative Allocation Portfolio:

Opinion on the Financial Statements and Financial Highlights

We have audited the accompanying statement of assets and liabilities of MFS Conservative Allocation Portfolio (the “Fund”), including the portfolio of investments, as of December 31, 2018, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of December 31, 2018, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of December 31, 2018, by correspondence with the transfer agent. We believe that our audits provide a reasonable basis for our opinion.

DELOITTE & TOUCHE LLP

Boston, Massachusetts

February 15, 2019

We have served as the auditor of one or more of the MFS investment companies since 1924.

MFS Conservative Allocation Portfolio

TRUSTEES AND OFFICERS – IDENTIFICATION AND BACKGROUND


Name, Age	Position(s) Held with Fund	Trustee/Officer Since (h)	Number of MFS Funds overseen by the Trustee	Principal Occupations During the Past Five Years	Other Directorships During the Past Five Years (j)
INTERESTED TRUSTEES
Robert J. Manning (k) (age 55)	Trustee	February 2004	135	Massachusetts Financial Services Company, Executive Chairman (since January 2017); Director; Chairman of the Board; Chief Executive Officer (until 2015);Co-Chief Executive Officer(2015-2016)	N/A

Robin A. Stelmach (k) (age 57)	Trustee	January 2014	135	Massachusetts Financial Services Company, Vice Chair (since January 2017); Chief Operating Officer and Executive Vice President (until January 2017)	N/A

INDEPENDENT TRUSTEES
John P. Kavanaugh (age 64)	Trustee and Chair of Trustees	January 2009	135	Private investor	N/A

Steven E. Buller (age 67)	Trustee	February 2014	135	Financial Accounting Standards Advisory Council, Chairman(2014-2015); Public Company Accounting Oversight Board, Standing Advisory Group, Member (until 2014); BlackRock, Inc. (investment management), Managing Director (until 2014), BlackRock Finco UK (investment management), Director (until 2014)	N/A

John A. Caroselli (age 64)	Trustee	March 2017	135	JC Global Advisors, LLC (management consulting), President (since 2015); First Capital Corporation (commercial finance), Executive Vice President (until 2015)	N/A

Maureen R. Goldfarb (age 63)	Trustee	January 2009	135	Private investor	N/A

Michael Hegarty (age 74)	Trustee	December 2004	135	Private investor	Rouse Properties Inc., Director (until 2016); Capmark Financial Group Inc., Director (until 2015)

Peter D. Jones (age 63)	Trustee	January 2019	135	Franklin Templeton Distributors, Inc. (investment management), President (until 2015); Franklin Templeton Institutional, LLC (investment management), Chairman (until 2015)	N/A

James W. Kilman, Jr. (age 57)	Trustee	January 2019	135	KielStrand Capital LLC (family office and merchant bank), Chief Executive Officer (since 2016); Morgan Stanley & Co. (financial services), Vice Chairman of Investment Banking,Co-Head of Diversified Financials Coverage – Financial Institutions Investment Banking Group (until 2016)	alpha-En Corporation, Director (since 2016)

MFS Conservative Allocation Portfolio

Trustees and Officers – continued


Name, Age	Position(s) Held with Fund	Trustee/Officer Since (h)	Number of MFS Funds overseen by the Trustee	Principal Occupations During the Past Five Years	Other Directorships During the Past Five Years (j)
Clarence Otis, Jr. (age 62)	Trustee	March 2017	135	Darden Restaurants, Inc., Chief Executive Officer (until 2014)	VF Corporation, Director; Verizon Communications, Inc., Director; The Travelers Companies, Director; Federal Reserve Bank of Atlanta, Director (until 2015)

Maryanne L. Roepke (age 62)	Trustee	May 2014	135	American Century Investments (investment management), Senior Vice President and Chief Compliance Officer (until 2014)	N/A

Laurie J. Thomsen (age 61)	Trustee	March 2005	135	Private investor	The Travelers Companies, Director; Dycom Industries, Inc., Director (since 2015)


Name, Age	Position(s) Held with Fund	Trustee/Officer Since (h)	Number of MFS Funds for which the Person is an Officer	Principal Occupations During the Past Five Years
OFFICERS
Christopher R. Bohane (k) (age 45)	Assistant Secretary and Assistant Clerk	July 2005	135	Massachusetts Financial Services Company, Vice President and Assistant General Counsel

Kino Clark (k) (age 50)	Assistant Treasurer	January 2012	135	Massachusetts Financial Services Company, Vice President

John W. Clark, Jr. (k) (age 51)	Assistant Treasurer	April 2017	135	Massachusetts Financial Services Company, Vice President (since March 2017); Deutsche Bank (financial services), Department Head – Treasurer’s Office (until February 2017)

Thomas H. Connors (k) (age 59)	Assistant Secretary and Assistant Clerk	September 2012	135	Massachusetts Financial Services Company, Vice President and Senior Counsel

Ethan D. Corey (k) (age 55)	Assistant Secretary and Assistant Clerk	July 2005	135	Massachusetts Financial Services Company, Senior Vice President and Associate General Counsel

David L. DiLorenzo (k) (age 50)	President	July 2005	135	Massachusetts Financial Services Company, Senior Vice President

Heidi W. Hardin (k) (age 51)	Secretary and Clerk	April 2017	135	Massachusetts Financial Services Company, Executive Vice President and General Counsel (since March 2017); Harris Associates (investment management), General Counsel (from September 2015 to January 2017); Janus Capital Management LLC (investment management), Senior Vice President and General Counsel (until September 2015)

Brian E. Langenfeld (k) (age 45)	Assistant Secretary and Assistant Clerk	June 2006	135	Massachusetts Financial Services Company, Vice President and Senior Counsel

Amanda S. Mooradian (k) (age 39)	Assistant Secretary and Assistant Clerk	September 2018	135	Massachusetts Financial Services Company, Assistant Vice President and Counsel

Susan A. Pereira (k) (age 48)	Assistant Secretary and Assistant Clerk	July 2005	135	Massachusetts Financial Services Company, Vice President and Senior Counsel

Kasey L. Phillips (k) (age 48)	Assistant Treasurer	September 2012	135	Massachusetts Financial Services Company, Vice President

Matthew A. Stowe (k) (age 44)	Assistant Secretary and Assistant Clerk	October 2014	135	Massachusetts Financial Services Company, Vice President and Assistant General Counsel

MFS Conservative Allocation Portfolio

Trustees and Officers – continued


Name, Age	Position(s) Held with Fund	Trustee/Officer Since (h)	Number of MFS Funds for which the Person is an Officer	Principal Occupations During the Past Five Years
Frank L. Tarantino (age 74)	Independent Senior Officer	June 2004	135	Tarantino LLC (provider of compliance services), Principal

Richard S. Weitzel (k) (age 48)	Assistant Secretary and Assistant Clerk	October 2007	135	Massachusetts Financial Services Company, Senior Vice President and Associate General Counsel

Martin J. Wolin (k) (age 51)	Chief Compliance Officer	July 2015	135	Massachusetts Financial Services Company, Senior Vice President and Chief Compliance Officer (since July 2015); Mercer (financial service provider), Chief Risk and Compliance Officer, North America and Latin America (until June 2015)

James O. Yost (k) (age 58)	Treasurer	September 1990	135	Massachusetts Financial Services Company, Senior Vice President

(h)

(j)	Directorships or trusteeships of companies required to report to the Securities and Exchange Commission (i.e., “public companies”).

(k)

Messrs. Buller, Hegarty, Kilman and Otis and Ms. Roepke are members of the Trust’s Audit Committee.

Each of the Interested Trustees and certain Officers hold comparable officer positions with certain affiliates of MFS.

The Statement of Additional Information for a Fund includes further information about the Trustees and is available without charge upon request by calling1-800-225-2606.


Investment Adviser Massachusetts Financial Services Company 111 Huntington Avenue Boston, MA 02199-7618		Custodian State Street Bank and Trust Company 1 Lincoln Street Boston, MA 02111-2900
Distributor MFS Fund Distributors, Inc. 111 Huntington Avenue Boston, MA 02199-7618		Independent Registered Public Accounting Firm Deloitte & Touche LLP 200 Berkeley Street Boston, MA 02116
Portfolio Manager(s) Joseph Flaherty Natalie Shapiro

MFS Conservative Allocation Portfolio

BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT

In connection with their contract review meetings, the Trustees received and relied upon materials that included, among other items: (i) information provided by Broadridge Financial Solutions, Inc. (“Broadridge”), an independent third party, on the investment performance of the Fund for various time periods ended December 31, 2017 and the investment performance of a group of funds with substantially similar investment classifications/objectives (the “Broadridge performance universe”), (ii) information provided by Broadridge on the Fund’s fees and expenses and the fees and expenses of comparable funds identified by Broadridge (the “Broadridge expense group”), (iii) information as to whether and to what extent applicable expense waivers and reimbursements are observed for the Fund, (iv) information regarding MFS’ financial results and financial condition, including MFS’ and certain of its affiliates’ estimated profitability from services performed for the Fund and the MFS Funds as a whole, and compared to MFS’ institutional business, (v) MFS’ views regarding the outlook for the mutual fund industry and the strategic business plans of MFS, (vi) descriptions of various functions performed by MFS for the Funds, such as compliance monitoring and portfolio trading practices, and (vii) information regarding the overall organization of MFS, including information about MFS’ senior management and other personnel providing investment advisory, administrative and other services to the Fund and the other MFS Funds. The comparative performance, fee and expense information prepared and provided by Broadridge was not independently verified and the independent Trustees did not independently verify any information provided to them by MFS.

Based on information provided by Broadridge and MFS, the Trustees reviewed the Fund’s total return investment performance as well as the Broadridge performance universe over various time periods. The Trustees placed particular emphasis on the total return performance of the Fund’s Initial Class shares in comparison to the performance of funds in its Broadridge performance universe over the three-year period ended December 31, 2017, which the Trustees believed was a long enough period to reflect differing market conditions. The total return performance of the Fund’s Initial Class shares was in the 1st quintile relative to the other funds in the universe for this three-year period (the 1st quintile being the best performers and the 5th quintile being the worst performers). The total return performance of the Fund’s Initial Class shares was in the 1st quintile for each of theone- and five-year periods ended December 31, 2017 relative to the Broadridge performance universe. Because of the passage of time, these performance results may differ from the performance results for more recent periods, including those shown elsewhere in this report.

The Trustees considered that MFS does not charge an advisory fee for providing investment advisory services to the Fund, but that the Fund pays its pro rata share of the advisory fees paid by the underlying funds in which it invests (the “Underlying Funds”).

MFS Conservative Allocation Portfolio

Board Review of Investment Advisory Agreement – continued

In assessing the reasonableness of the Fund’s expenses, the Trustees considered, among other information, the Fund’s total expense ratio of the Fund’s Initial Class shares as a percentage of average daily net assets and the total expense ratios of peer groups of funds based on information provided by Broadridge. The Trustees considered that MFS currently observes an expense limitation for the Fund, which may not be changed without the Trustees’ approval. The Trustees also considered that, according to the data provided by Broadridge (which takes into account any expense limitations that were in effect during the Fund’s last fiscal year), the Fund’s total expense ratio was approximately at the Broadridge expense group median. Because the Fund does not pay an advisory fee, the Trustees did not consider the extent to which economies of scale would be realized due to the Fund’s growth of assets, whether fee levels reflect economies of scale for shareholders, or the fees paid by similar funds to other investment advisers or by similar clients of MFS.

The Trustees also considered the nature, quality, cost, and extent of administrative, transfer agency, and distribution services provided to the Fund by MFS and its affiliates under agreements and plans other than the investment advisory agreement, including any12b-1 fees the Fund pays to MFS Fund Distributors, Inc., an affiliate of MFS. The Trustees also considered the nature, extent and quality of certain other services MFS performs or arranges for on the Fund’s or the Underlying Funds’ behalf, which may include securities lending programs, directed expense payment programs, class action recovery programs, and MFS’ interaction withthird-party service providers, principally custodians andsub-custodians. The Trustees concluded that the variousnon-advisory services provided by MFS and its affiliates on behalf of the Fund were satisfactory.

MFS Conservative Allocation Portfolio

PROXY VOTING POLICIES AND INFORMATION

QUARTERLY PORTFOLIO DISCLOSURE

FURTHER INFORMATION

INFORMATION ABOUT FUND CONTRACTS AND LEGAL CLAIMS

FEDERAL TAX INFORMATION (unaudited)

The following information is provided pursuant to provisions of the Internal Revenue Code.

The fund designates $22,467,000 as capital gain dividends paid during the fiscal year.

For corporate shareholders, 12.74% of the ordinary income dividends paid during the fiscal year qualify for the corporate dividends received deduction.

rev. 3/16


FACTS		WHAT DOES MFS DO WITH YOUR PERSONAL INFORMATION?


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

What?

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

• Social Security number and account balances

• Account transactions and transaction history

• Checking account information and wire transfer instructions

When you areno longer our customer, we continue to share your information as described in this notice.


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


Reasons we can share your personal information	Does MFS share?	Can you limit this sharing?
For our everyday business purposes – such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus	Yes	No
For our marketing purposes – to offer our products and services to you	No	We don’t share
For joint marketing with other financial companies	No	We don’t share
For our affiliates’ everyday business purposes – information about your transactions and experiences	No	We don’t share
For our affiliates’ everyday business purposes – information about your creditworthiness	No	We don’t share
For nonaffiliates to market to you	No	We don’t share


Questions?		Call800-225-2606 or go tomfs.com.


Page 2


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


What we do
How does MFS protect my personal information?		To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include procedural, electronic, and physical safeguards for the protection of the personal information we collect about you.
How does MFS collect my personal information?		We collect your personal information, for example, when you • open an account or provide account information • direct us to buy securities or direct us to sell your securities • make a wire transfer We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
Why can’t I limit all sharing?		Federal law gives you the right to limit only • sharing for affiliates’ everyday business purposes – information about your creditworthiness • affiliates from using your information to market to you • sharing for nonaffiliates to market to you State laws and individual companies may give you additional rights to limit sharing.


Definitions
Affiliates		Companies related by common ownership or control. They can be financial and nonfinancial companies. • MFS does not share personal information with affiliates, except for everyday business purposes as described on page one of this notice.
Nonaffiliates		Companies not related by common ownership or control. They can be financial and nonfinancial companies. • MFS does not share with nonaffiliates so they can market to you.
Joint marketing		A formal agreement between nonaffiliated financial companies that together market financial products or services to you. • MFS doesn’t jointly market.


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

LOGO

Annual Report

December 31, 2018

LOGO

MFS^® Global Real Estate Portfolio

LOGO

MFS^® Variable Insurance Trust III

VRE-ANN

MFS® Global Real Estate Portfolio

CONTENTS

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

MFS Global Real Estate Portfolio

LETTER FROM THE EXECUTIVE CHAIRMAN

LOGO

Dear Contract Owners:

Respectfully,

LOGO

Robert J. Manning

Executive Chairman

MFS Investment Management

February 15, 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.

MFS Global Real Estate Portfolio

PORTFOLIO COMPOSITION

Portfolio structure

LOGO


Top ten holdings
Simon Property Group, Inc., REIT			4.9%
Public Storage, Inc., REIT			4.3%
Link REIT			4.0%
Welltower, Inc., REIT			3.8%
Unibail-Rodamco-Westfield, REIT			3.3%
Hang Lung Properties Ltd.			3.2%
Mid-America Apartment Communities, Inc., REIT			2.9%
AvalonBay Communities, Inc., REIT			2.8%
Advance Residence Investment Corp., REIT			2.8%
Equity Lifestyle Properties, Inc., REIT			2.7%

GICS equity sectors
Real Estate			96.1%
Financials			0.5%


Issuer country weightings (x)
United States			53.7%
Japan			10.4%
Hong Kong			8.5%
United Kingdom			6.1%
Germany			3.6%
Australia			3.5%
France			3.3%
Singapore			3.3%
Belgium			2.3%
Other Countries			5.3%

Currency exposure weightings (y)
United States Dollar			53.7%
Japanese Yen			10.4%
Euro			10.3%
Hong Kong Dollar			8.5%
British Pound Sterling			6.1%
Australian Dollar			3.5%
Singapore Dollar			3.3%
Canadian Dollar			2.1%
Norwegian Krone			1.4%
Other Currencies			0.7%

(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.

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.

Percentages are based on net assets as of December 31, 2018.

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

MFS Global Real Estate Portfolio

MANAGEMENT REVIEW

Summary of Results

For the twelve months ended December 31, 2018, Initial Class shares of the MFS Global Real Estate Portfolio (“fund”) provided a total return of –3.03%, while Service Class shares of the fund provided a total return of –3.33%. These compare with a return of –5.63% over the same period for the fund’s benchmark, the FTSE EPRA/NAREIT Developed Real Estate Index (net div).

Market Environment

Contributors to Performance

Security selection within both United States and Japanese real estate investments contributed to the fund’s performance relative to the FTSE EPRA/NAREIT Developed Real Estate Index. Within the United States, the fund’s overweight positions in real estate investment trust companies Medical Properties Trust, Welltower, Sun Communities, Equity Lifestyle Properties and Store Capital bolstered relative returns. Within Japan, the fund’s overweight positions in real estate investment trust companies Advance Residence Investment, Kenedix Office Investment and Japan Retail Fund Investment strengthened relative performance.

Elsewhere, the fund’s overweight position in real estate investment trust Link REIT (Hong Kong), and holding shares of self-storage provider National Storage (b) (Australia), also supported relative results.

Detractors from Performance

An overweight position in Netherlands-based real estate investments detracted from relative performance. Within this country, an overweight position in shopping destination developer Unibail-Rodamco-Westfield hindered relative returns.

Stock selection in Canadian real estate investments also held back relative results, led by an overweight position in real estate investment trust Boardwalk REIT.

Other notable detractors from relative performance included the fund’s overweight positions in property management company Urban Edge Properties, property developer Hang Lung Properties (Hong Kong), property investment services provider Shaftesbury (United Kingdom), British-based residential property business Grainger (United Kingdom) and real estate investment trust Brixmor

MFS Global Real Estate Portfolio

Management Review – continued

Property Group. Additionally, not holding shares of real estate company Realty Income and real estate investment trust Equity Residential, and the fund’s position in shares of shopping center developer Atrium European Real Estate (b) (United Kingdom), weakened relative returns.

Respectfully,

Portfolio Manager(s)

Rick Gable

(b)	Security is not a benchmark constituent.

MFS Global Real Estate Portfolio

PERFORMANCE SUMMARY THROUGH 12/31/18

Growth of a Hypothetical $10,000 Investment

LOGO

Total Returns through 12/31/18

Average annual total returns


	Share Class	Class Inception Date	1-yr	5-yr	10-yr
	Initial Class	12/07/98	(3.03)%	6.68%	10.09%
	Service Class	2/01/04	(3.33)%	6.40%	9.81%

Comparative benchmark(s)
	FTSE EPRA/NAREIT Developed Real Estate Index (net div) (f)		(5.63)%	4.34%	9.65%

(f)	Source: FactSet Research Systems Inc.

Benchmark Definition(s)

It is not possible to invest directly in an index.

Notes to Performance Summary

Average annual total return represents the average annual change in value for each share class for the periods presented.

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

MFS Global Real Estate Portfolio

EXPENSE TABLE

Fund Expenses Borne by the Contract Holders during the Period,

July 1, 2018 through December 31, 2018

The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2018 through December 31, 2018.

Actual Expenses

Hypothetical Example for Comparison Purposes


Share Class		Annualized Expense Ratio		Beginning Account Value 7/01/18		Ending Account Value 12/31/18		Expenses Paid During Period (p) 7/01/18-12/31/18
Initial Class	Actual		0.92%		$1,000.00		$951.68		$4.53
Initial Class	Hypothetical (h)		0.92%		$1,000.00		$1,020.57		$4.69
Service Class	Actual		1.17%		$1,000.00		$949.87		$5.75
Service Class	Hypothetical (h)		1.17%		$1,000.00		$1,019.31		$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 184/365 (to reflect theone-half year period).

MFS Global Real Estate Portfolio

PORTFOLIO OF INVESTMENTS – 12/31/18

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 – 96.6%
Airlines – 0.9%
Shurgard Self Storage SA (a)		47,585	$	1,322,122

Business Services – 1.3%
Equinix, Inc., REIT		5,681	$	2,002,893

Real Estate – 93.3%
Advance Residence Investment Corp., REIT		1,553	$	4,291,109
Alexandria Real Estate Equities, Inc., REIT		32,801		3,779,987
American Homes 4 Rent, “A”, REIT		138,483		2,748,888
Ascendas India Trust, REIT		3,009,000		2,384,328
Atrium European Real Estate Ltd.		468,333		1,733,193
AvalonBay Communities, Inc., REIT		24,960		4,344,288
Big Yellow Group PLC, REIT		188,035		2,093,512
Boardwalk REIT		117,043		3,241,573
Boston Properties, Inc., REIT		24,088		2,711,104
Brixmor Property Group Inc., REIT		219,942		3,230,948
City Developments Ltd.		2,500		14,894
Derwent London PLC, REIT		59,774		2,173,642
Entra ASA		162,338		2,156,062
Equity Lifestyle Properties, Inc., REIT		42,925		4,169,305
Farmland Partners, Inc., REIT		41,904		190,244
Fortune REIT		1,853,000		2,127,383
Goodman Group, REIT		294,917		2,208,114
Grainger PLC		508,484		1,359,742
Grand City Properties S.A.		138,094		2,998,291
Hang Lung Properties Ltd.		2,553,944		4,866,208
Industrial Logistics Properties Trust, REIT		56,273		1,106,890
Japan Logistics Fund, Inc., REIT		1,375		2,792,245
Japan Retail Fund Investment Corp., REIT		1,696		3,396,487
Kenedix Office Investment Corp., REIT		516		3,295,470
LEG Immobilien AG		24,136		2,519,816
Life Storage, Inc., REIT		21,242		1,975,294
Link REIT		603,264		6,109,295
LondonMetric Property PLC, REIT		700,686		1,553,984
Mapletree Logistics Trust, REIT		2,817,923		2,605,072
Medical Properties Trust, Inc., REIT		219,668		3,532,261
Mid-America Apartment Communities, Inc., REIT		46,020		4,404,114
Mitsui Fudosan Co. Ltd.		95,875		2,124,339
National Storage, REIT		2,611,380		3,228,016
Prologis Property Mexico S.A. de C.V., REIT		695,942		1,073,036
Prologis, Inc., REIT		24,242		1,423,490
Public Storage, Inc., REIT		32,509		6,580,147
Rexford Industrial Realty, Inc., REIT		49,285		1,452,429
RPT Realty, REIT		147,466		1,762,219
Shaftesbury PLC, REIT		140,665		1,489,017
Simon Property Group, Inc., REIT		45,119		7,579,541
STAG Industrial, Inc., REIT		92,183		2,293,513
Starwood Property Trust, Inc., REIT		36,116		711,846
Store Capital Corp., REIT		123,282		3,490,113
Sun Communities, Inc., REIT		34,841		3,543,678
Unibail-Rodamco-Westfield, REIT		32,307		5,011,930
Unite Group PLC, REIT		73,387		753,925



Issuer	Shares/Par		Value ($)
COMMON STOCKS – continued
Real Estate – continued
Urban Edge Properties, REIT		161,194	$	2,679,044
VICI Properties, Inc., REIT		81,410		1,528,880
W.P. Carey, Inc., REIT		22,326		1,458,781
Warehouses De Pauw S.C.A.		16,448		2,170,978
Washington Prime Group, Inc., REIT		192,059		933,407
Welltower, Inc., REIT		83,202		5,775,051

			$	143,177,123

Telecommunications – Wireless – 1.1%
American Tower Corp., REIT		10,478	$	1,657,515

Total Common Stocks (Identified Cost, $131,288,283)			$	148,159,653


INVESTMENT COMPANIES (h) – 3.1%
Money Market Funds – 3.1%
MFS Institutional Money Market Portfolio, 2.4% (v) (Identified Cost, $4,741,034)		4,741,508	$	4,741,034

OTHER ASSETS, LESS LIABILITIES – 0.3%				502,581

NET ASSETS – 100.0%			$	153,403,268

(a)

Non-income producing security.

(h)

(v)

The

following abbreviations are used in this report and are defined:

PLC

Public Limited Company

REIT

Real Estate Investment Trust

See Notes to Financial Statements

MFS Global Real Estate Portfolio

FINANCIAL STATEMENTS ^| STATEMENT OF ASSETS AND LIABILITIES

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


At 12/31/18

Assets
Investments in unaffiliated issuers, at value (identified cost, $131,288,283)			$148,159,653
Investments in affiliated issuers, at value (identified cost, $4,741,034)			4,741,034
Receivables for
Investments sold			159,252
Fund shares sold			1,910
Dividends			603,499
Other assets			1,395
Total assets			$153,666,743

Liabilities
Payables for
Fund shares reacquired			$192,339
Payable to affiliates
Investment adviser			2,016
Shareholder servicing costs			70
Distribution and/or service fees			1,463
Payable for independent Trustees’ compensation			20
Accrued expenses and other liabilities			67,567
Total liabilities			$263,475
Net assets			$153,403,268

Net assets consist of
Paid-in capital			$134,271,150
Total distributable earnings (loss)			19,132,118
Net assets			$153,403,268
Shares of beneficial interest outstanding			11,153,310



	Net assets		Shares outstanding		Net asset value per share
Initial Class		$99,826,061		7,622,412		$13.10
Service Class		53,577,207		3,530,898		15.17

See Notes to Financial Statements

MFS Global Real Estate Portfolio

FINANCIAL STATEMENTS ^| STATEMENT OF OPERATIONS

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.


Year ended 12/31/18

Net investment income (loss)
Income
Dividends	$6,894,529
Dividends from affiliated issuers	37,652
Other	10,262
Foreign taxes withheld	(226,664	)
Total investment income	$6,715,779
Expenses
Management fee	$1,542,459
Distribution and/or service fees	160,993
Shareholder servicing costs	8,464
Administrative services fee	34,642
Independent Trustees’ compensation	3,651
Custodian fee	29,265
Shareholder communications	25,864
Audit and tax fees	54,965
Legal fees	1,525
Miscellaneous	23,191
Total expenses	$1,885,019
Reduction of expenses by investment adviser	(145,775	)
Net expenses	$1,739,244
Net investment income (loss)	$4,976,535

Realized and unrealized gain (loss)
Realized gain (loss) (identified cost basis)
Unaffiliated issuers	$1,523,426
Affiliated issuers	251
Foreign currency	(24,108	)
Net realized gain (loss)	$1,499,569
Change in unrealized appreciation or depreciation
Unaffiliated issuers	$(11,196,730	)
Translation of assets and liabilities in foreign currencies	(2,402	)
Net unrealized gain (loss)	$(11,199,132	)
Net realized and unrealized gain (loss)	$(9,699,563	)
Change in net assets from operations	$(4,723,028	)

See Notes to Financial Statements

MFS Global Real Estate Portfolio

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.


	Year ended
	12/31/18			12/31/17
Change in net assets

From operations
Net investment income (loss)		$4,976,535			$4,624,185
Net realized gain (loss)		1,499,569			3,016,262
Net unrealized gain (loss)		(11,199,132	)		15,800,997
Change in net assets from operations		$(4,723,028	)		$23,441,444
Total distributions to shareholders (a)		$(8,750,189	)		$(17,630,226	)
Change in net assets from fund share transactions		$(17,488,780	)		$(11,722,179	)
Total change in net assets		$(30,961,997	)		$(5,910,961	)

Net assets
At beginning of period		184,365,265			190,276,226
At end of period (b)		$153,403,268			$184,365,265

(a)	Distributions from net investment income and from net realized gain are no longer required to be separately disclosed. See Note 2. For the year ended December 31, 2017, distributions from net investment income and from net realized gain were $7,173,022 and $10,457,204, respectively.

(b)	Parenthetical disclosure of undistributed net investment income is no longer required. See Note 2. For the year ended December 31, 2017, end of period net assets included undistributed net investment income of $6,626,577.

See Notes to Financial Statements

MFS Global Real Estate Portfolio

FINANCIAL STATEMENTS ^| FINANCIAL HIGHLIGHTS


Initial Class	Year ended

	12/31/18			12/31/17			12/31/16			12/31/15			12/31/14

Net asset value, beginning of period		$14.27			$14.01			$13.55			$14.06			$12.43

Income (loss) from investment operations
Net investment income (loss) (d)		$0.42			$0.37			$0.37	(c)		$0.29			$0.26
Net realized and unrealized gain (loss)		(0.79	)		1.42			0.74			(0.23	)		1.68
Total from investment operations		$(0.37	)		$1.79			$1.11			$0.06			$1.94

Less distributions declared to shareholders
From net investment income		$(0.58	)		$(0.63	)		$(0.39	)		$(0.57	)		$(0.31	)
From net realized gain		(0.22	)		(0.90	)		(0.26	)		—			—
Total distributions declared to shareholders		$(0.80	)		$(1.53	)		$(0.65	)		$(0.57	)		$(0.31	)
Net asset value, end of period (x)		$13.10			$14.27			$14.01			$13.55			$14.06
Total return (%) (k)(r)(s)(x)		(3.03	)		13.33			7.94	(c)		0.74			15.62

Ratios (%) (to average net assets) and Supplemental data:
Expenses before expense reductions (f)		1.01			1.00			0.97	(c)		1.00			0.98
Expenses after expense reductions (f)		0.92			0.92			0.91	(c)		0.94			0.95
Net investment income (loss)		3.00			2.56			2.63	(c)		2.11			1.93
Portfolio turnover		24			24			30			40			25
Net assets at end of period (000 omitted)		$99,826			$114,198			$115,023			$124,563			$143,090

Service Class	Year ended

	12/31/18			12/31/17			12/31/16			12/31/15			12/31/14

Net asset value, beginning of period		$16.41			$15.89			$15.28			$15.77			$13.91

Income (loss) from investment operations
Net investment income (loss) (d)		$0.44			$0.38			$0.38	(c)		$0.29			$0.25
Net realized and unrealized gain (loss)		(0.93	)		1.62			0.83			(0.25	)		1.88
Total from investment operations		$(0.49	)		$2.00			$1.21			$0.04			$2.13

Less distributions declared to shareholders
From net investment income		$(0.53	)		$(0.58	)		$(0.34	)		$(0.53	)		$(0.27	)
From net realized gain		(0.22	)		(0.90	)		(0.26	)		—			—
Total distributions declared to shareholders		$(0.75	)		$(1.48	)		$(0.60	)		$(0.53	)		$(0.27	)
Net asset value, end of period (x)		$15.17			$16.41			$15.89			$15.28			$15.77
Total return (%) (k)(r)(s)(x)		(3.33	)		13.07			7.70	(c)		0.47			15.31

Ratios (%) (to average net assets) and Supplemental data:
Expenses before expense reductions (f)		1.26			1.25			1.22	(c)		1.25			1.23
Expenses after expense reductions (f)		1.17			1.17			1.16	(c)		1.19			1.20
Net investment income (loss)		2.74			2.31			2.37	(c)		1.84			1.67
Portfolio turnover		24			24			30			40			25
Net assets at end of period (000 omitted)		$53,577			$70,167			$75,253			$83,135			$99,204

See Notes to Financial Statements

MFS Global Real Estate Portfolio

Financial Highlights – continued

(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.

(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

MFS Global Real Estate Portfolio

NOTES TO FINANCIAL STATEMENTS

(1)

Business and Organization

MFS Global Real Estate Portfolio (the fund) is a diversified series of MFS Variable Insurance Trust III (the trust). The trust is organized as a Delaware statutory 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.

(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 a significant amount of its net assets in U.S. and foreign real estate related investments and as a result is subject to certain risks associated with the direct ownership of real estate and the real estate industry in general. These include risks related to general, regional and local economic conditions; difficulties in valuing and disposing of real estate; fluctuations in interest rates and property tax rates, shifts in zoning laws, environmental regulations and other governmental action; cash flow dependency; increased operating expenses; lack of availability of mortgage funds; losses due to natural disasters; overbuilding; losses due to casualty or condemnation; changes in property values and rental rates; the management skill and creditworthiness of the manager; and other factors. 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

MFS Global Real Estate Portfolio

Notes to Financial Statements – continued

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.


Financial Instruments	Level 1		Level 2		Level 3		Total
Equity Securities:
United States		$77,065,871		$—		$—		$77,065,871
Japan		6,691,958		9,207,692		—		15,899,650
Hong Kong		13,102,886		—		—		13,102,886
United Kingdom		9,423,821		—		—		9,423,821
Germany		5,518,106		—		—		5,518,106
Australia		5,436,130		—		—		5,436,130
France		5,011,930		—		—		5,011,930
Singapore		5,004,294		—		—		5,004,294
Belgium		3,493,100		—		—		3,493,100
Other Countries		6,047,803		2,156,062		—		8,203,865
Mutual Funds		4,741,034		—		—		4,741,034
Total		$141,536,933		$11,363,754		$—		$152,900,687

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.

MFS Global Real Estate Portfolio

Notes to Financial Statements – continued

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

Investment Transactions and Income– Investment transactions are recorded on the trade date. 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.

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.

Book/tax differences primarily relate to passive foreign investment companies and wash sale loss deferrals.

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


	Year ended 12/31/18		Year ended 12/31/17
Ordinary income (including any short-term capital gains)		$7,658,174		$9,358,136
Long-term capital gains		1,092,015		8,272,090
Total distributions		$8,750,189		$17,630,226

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


As of 12/31/18

Cost of investments	$140,760,221
Gross appreciation	21,789,194
Gross depreciation	(9,648,728	)
Net unrealized appreciation (depreciation)	$12,140,466

Undistributed ordinary income	5,927,934
Undistributed long-term capital gain	1,065,566
Other temporary differences	(1,848	)

MFS Global Real Estate Portfolio

Notes to Financial Statements – continued

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


	From net investment income				From net realized gain

	Year ended 12/31/18		Year ended 12/31/17		Year ended 12/31/18		Year ended 12/31/17
Initial Class		$4,260,240		$4,760,935		$1,614,103		$6,757,227
Service Class		2,035,835		2,412,087		840,011		3,699,977
Total		$6,296,075		$7,173,022		$2,454,114		$10,457,204

(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 year ended December 31, 2018, this management fee reduction amounted to $16,324, which is included in the reduction of total expenses in the Statement of Operations. The management fee incurred for the year ended December 31, 2018 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 0.92% 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, 2020. For the year ended December 31, 2018, this reduction amounted to $129,451, 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.

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 year ended December 31, 2018, the fee was $8,056, which equated to 0.0047% 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 year ended December 31, 2018, these costs amounted to $408.

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 year ended December 31, 2018 was equivalent to an annual effective rate of 0.0202% of the fund’s average daily net assets.

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

MFS Global Real Estate Portfolio

Notes to Financial Statements – continued

Other– This fund and certain other funds managed by MFS (the funds) have entered into a service agreement (the ISO Agreement) which provides 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 serves as the ISO and is an officer of the funds and the sole member of Tarantino LLC. The funds can terminate the ISO Agreement with Tarantino LLC at any time under the terms of the ISO Agreement. For the year ended December 31, 2018, the fee paid by the fund under this agreement was $295 and is included in “Miscellaneous” expense in the Statement of Operations. MFS has agreed to bear all expenses associated with office space, other administrative support, and supplies provided to the ISO.

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 year ended December 31, 2018, the fund engaged in sale transactions pursuant to this policy, which amounted to $106,440. The sales transactions resulted in net realized gains (losses) of $(19,832).

Effective on or about January 3, 2018, 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 period on or about January 3, 2018 to December 31, 2018, this reimbursement amounted to $10,123, which is included in “Other” income in the Statement of Operations.

(4)

Portfolio Securities

For the year ended December 31, 2018, purchases and sales of investments, other than short-term obligations, aggregated $41,490,225 and $66,202,391, 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:


	Year ended 12/31/18						Year ended 12/31/17

	Shares			Amount			Shares			Amount
Shares sold
Initial Class		638,619			$8,607,350			150,081			$2,133,782
Service Class		302,157			4,766,175			236,313			3,775,753
		940,776			$13,373,525			386,394			$5,909,535

Shares issued to shareholders in reinvestment of distributions
Initial Class		414,270			$5,874,343			850,049			$11,518,162
Service Class		174,930			2,875,846			391,799			6,112,064
		589,200			$8,750,189			1,241,848			$17,630,226

Shares reacquired
Initial Class		(1,431,815	)		$(20,009,623	)		(1,207,552	)		$(17,436,759	)
Service Class		(1,221,838	)		(19,602,871	)		(1,087,364	)		(17,825,181	)
		(2,653,653	)		$(39,612,494	)		(2,294,916	)		$(35,261,940	)

Net change
Initial Class		(378,926	)		$(5,527,930	)		(207,422	)		$(3,784,815	)
Service Class		(744,751	)		(11,960,850	)		(459,252	)		(7,937,364	)
		(1,123,677	)		$(17,488,780	)		(666,674	)		$(11,722,179	)

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 27%, 11%, and 6%, respectively, of the value of outstanding voting shares of the fund.

(6)

Line of Credit

MFS Global Real Estate Portfolio

Notes to Financial Statements – continued

have established unsecured uncommitted borrowing arrangements with certain banks for temporary financing needs. Interest is charged to each fund, based on its borrowings, at a rate equal to the Overnight Bank Funding rate plus an agreed upon spread. For the year ended December 31, 2018, the fund’s commitment fee and interest expense were $989 and $0, respectively, and are included in “Miscellaneous” expense in the Statement of Operations.

(7)

Investments in Affiliated Issuers


Affiliated Issuers		Beginning Shares/Par Amount		Acquisitions Shares/Par Amount		Dispositions Shares/Par Amount			Ending Shares/Par Amount

MFS Institutional Money Market Portfolio			1,208,889		46,056,750		(42,524,131	)		4,741,508

Affiliated Issuers	Realized Gain (Loss)	Change in Unrealized Appreciation/ Depreciation		Capital Gain Distributions		Dividend Income			Ending Value

MFS Institutional Money Market Portfolio	$251		$—		$—		$37,652			$4,741,034

MFS Global Real Estate Portfolio

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Trustees of MFS Variable Insurance Trust III and the Shareholders of MFS Global Real Estate Portfolio:

Opinion on the Financial Statements and Financial Highlights

We have audited the accompanying statement of assets and liabilities of MFS Global Real Estate Portfolio (the “Fund”), including the portfolio of investments, as of December 31, 2018, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of December 31, 2018, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

DELOITTE & TOUCHE LLP

Boston, Massachusetts

February 15, 2019

We have served as the auditor of one or more of the MFS investment companies since 1924.

MFS Global Real Estate Portfolio

TRUSTEES AND OFFICERS – IDENTIFICATION AND BACKGROUND


Name, Age	Position(s) Held with Fund	Trustee/Officer Since (h)	Number of MFS Funds overseen by the Trustee	Principal Occupations During the Past Five Years	Other Directorships During the Past Five Years (j)
INTERESTED TRUSTEES
Robert J. Manning (k) (age 55)	Trustee	February 2004	135	Massachusetts Financial Services Company, Executive Chairman (since January 2017); Director; Chairman of the Board; Chief Executive Officer (until 2015);Co-Chief Executive Officer(2015-2016)	N/A

Robin A. Stelmach (k) (age 57)	Trustee	January 2014	135	Massachusetts Financial Services Company, Vice Chair (since January 2017); Chief Operating Officer and Executive Vice President (until January 2017)	N/A

INDEPENDENT TRUSTEES
John P. Kavanaugh (age 64)	Trustee and Chair of Trustees	January 2009	135	Private investor	N/A

Steven E. Buller (age 67)	Trustee	February 2014	135	Financial Accounting Standards Advisory Council, Chairman(2014-2015); Public Company Accounting Oversight Board, Standing Advisory Group, Member (until 2014); BlackRock, Inc. (investment management), Managing Director (until 2014), BlackRock Finco UK (investment management), Director (until 2014)	N/A

John A. Caroselli (age 64)	Trustee	March 2017	135	JC Global Advisors, LLC (management consulting), President (since 2015); First Capital Corporation (commercial finance), Executive Vice President (until 2015)	N/A

Maureen R. Goldfarb (age 63)	Trustee	January 2009	135	Private investor	N/A

Michael Hegarty (age 74)	Trustee	December 2004	135	Private investor	Rouse Properties Inc., Director (until 2016); Capmark Financial Group Inc., Director (until 2015)

Peter D. Jones (age 63)	Trustee	January 2019	135	Franklin Templeton Distributors, Inc. (investment management), President (until 2015); Franklin Templeton Institutional, LLC (investment management), Chairman (until 2015)	N/A

James W. Kilman, Jr. (age 57)	Trustee	January 2019	135	KielStrand Capital LLC (family office and merchant bank), Chief Executive Officer (since 2016); Morgan Stanley & Co. (financial services), Vice Chairman of Investment Banking,Co-Head of Diversified Financials Coverage – Financial Institutions Investment Banking Group (until 2016)	alpha-En Corporation, Director (since 2016)

MFS Global Real Estate Portfolio

Trustees and Officers – continued


Name, Age	Position(s) Held with Fund	Trustee/Officer Since (h)	Number of MFS Funds overseen by the Trustee	Principal Occupations During the Past Five Years	Other Directorships During the Past Five Years (j)
Clarence Otis, Jr. (age 62)	Trustee	March 2017	135	Darden Restaurants, Inc., Chief Executive Officer (until 2014)	VF Corporation, Director; Verizon Communications, Inc., Director; The Travelers Companies, Director; Federal Reserve Bank of Atlanta, Director (until 2015)

Maryanne L. Roepke (age 62)	Trustee	May 2014	135	American Century Investments (investment management), Senior Vice President and Chief Compliance Officer (until 2014)	N/A

Laurie J. Thomsen (age 61)	Trustee	March 2005	135	Private investor	The Travelers Companies, Director; Dycom Industries, Inc., Director (since 2015)


Name, Age	Position(s) Held with Fund	Trustee/Officer Since (h)	Number of MFS Funds for which the Person is an Officer	Principal Occupations During the Past Five Years
OFFICERS
Christopher R. Bohane (k) (age 45)	Assistant Secretary and Assistant Clerk	July 2005	135	Massachusetts Financial Services Company, Vice President and Assistant General Counsel

Kino Clark (k) (age 50)	Assistant Treasurer	January 2012	135	Massachusetts Financial Services Company, Vice President

John W. Clark, Jr. (k) (age 51)	Assistant Treasurer	April 2017	135	Massachusetts Financial Services Company, Vice President (since March 2017); Deutsche Bank (financial services), Department Head – Treasurer’s Office (until February 2017)

Thomas H. Connors (k) (age 59)	Assistant Secretary and Assistant Clerk	September 2012	135	Massachusetts Financial Services Company, Vice President and Senior Counsel

Ethan D. Corey (k) (age 55)	Assistant Secretary and Assistant Clerk	July 2005	135	Massachusetts Financial Services Company, Senior Vice President and Associate General Counsel

David L. DiLorenzo (k) (age 50)	President	July 2005	135	Massachusetts Financial Services Company, Senior Vice President

Heidi W. Hardin (k) (age 51)	Secretary and Clerk	April 2017	135	Massachusetts Financial Services Company, Executive Vice President and General Counsel (since March 2017); Harris Associates (investment management), General Counsel (from September 2015 to January 2017); Janus Capital Management LLC (investment management), Senior Vice President and General Counsel (until September 2015)

Brian E. Langenfeld (k) (age 45)	Assistant Secretary and Assistant Clerk	June 2006	135	Massachusetts Financial Services Company, Vice President and Senior Counsel

Amanda S. Mooradian (k) (age 39)	Assistant Secretary and Assistant Clerk	September 2018	135	Massachusetts Financial Services Company, Assistant Vice President and Counsel

Susan A. Pereira (k) (age 48)	Assistant Secretary and Assistant Clerk	July 2005	135	Massachusetts Financial Services Company, Vice President and Senior Counsel

Kasey L. Phillips (k) (age 48)	Assistant Treasurer	September 2012	135	Massachusetts Financial Services Company, Vice President

Matthew A. Stowe (k) (age 44)	Assistant Secretary and Assistant Clerk	October 2014	135	Massachusetts Financial Services Company, Vice President and Assistant General Counsel

MFS Global Real Estate Portfolio

Trustees and Officers – continued


Name, Age	Position(s) Held with Fund	Trustee/Officer Since (h)	Number of MFS Funds for which the Person is an Officer	Principal Occupations During the Past Five Years
Frank L. Tarantino (age 74)	Independent Senior Officer	June 2004	135	Tarantino LLC (provider of compliance services), Principal

Richard S. Weitzel (k) (age 48)	Assistant Secretary and Assistant Clerk	October 2007	135	Massachusetts Financial Services Company, Senior Vice President and Associate General Counsel

Martin J. Wolin (k) (age 51)	Chief Compliance Officer	July 2015	135	Massachusetts Financial Services Company, Senior Vice President and Chief Compliance Officer (since July 2015); Mercer (financial service provider), Chief Risk and Compliance Officer, North America and Latin America (until June 2015)

James O. Yost (k) (age 58)	Treasurer	September 1990	135	Massachusetts Financial Services Company, Senior Vice President

(h)

(j)	Directorships or trusteeships of companies required to report to the Securities and Exchange Commission (i.e., “public companies”).

(k)

Messrs. Buller, Hegarty, Kilman and Otis and Ms. Roepke are members of the Trust’s Audit Committee.

Each of the Interested Trustees and certain Officers hold comparable officer positions with certain affiliates of MFS.

The Statement of Additional Information for a Fund includes further information about the Trustees and is available without charge upon request by calling1-800-225-2606.


Investment Adviser Massachusetts Financial Services Company 111 Huntington Avenue Boston, MA 02199-7618		Custodian State Street Bank and Trust Company 1 Lincoln Street Boston, MA 02111-2900

Distributor MFS Fund Distributors, Inc. 111 Huntington Avenue Boston, MA 02199-7618		Independent Registered Public Accounting Firm Deloitte & Touche LLP 200 Berkeley Street Boston, MA 02116

Portfolio Manager(s) Rick Gable

MFS Global Real Estate Portfolio

BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT

Based on information provided by Broadridge and MFS, the Trustees reviewed the Fund’s total return investment performance as well as the Broadridge performance universe over various time periods. The Trustees placed particular emphasis on the total return performance of the Fund’s Initial Class shares in comparison to the performance of funds in its Broadridge performance universe over the three-year period ended December 31, 2017, which the Trustees believed was a long enough period to reflect differing market conditions. The total return performance of the Fund’s Initial Class shares was in the 1st quintile relative to the other funds in the universe for this three-year period (the 1st quintile being the best performers and the 5th quintile being the worst performers). The total return performance of the Fund’s Initial Class shares was in the 1st quintile for each of theone- and five-year periods ended December 31, 2017 relative to the Broadridge performance universe. Because of the passage of time, these performance results may differ from the performance results for more recent periods, including those shown elsewhere in this report.

MFS Global Real Estate Portfolio

Board Review of Investment Advisory Agreement – continued

The Trustees also considered whether the Fund may benefit from any economies of scale in the management of the Fund in the event of growth in assets of the Fund and/or growth in assets of the MFS Funds as a whole. They noted that the Fund’s advisory fee rate schedule is subject to contractual breakpoints that reduce the Fund’s advisory fee rate on average daily net assets over $1 billion and $2.5 billion. The Trustees also noted that MFS has agreed in writing to waive a portion of the management fees of certain MFS Funds, including the Fund, if the total combined assets of certain funds within the MFS Funds’ complex increase above agreed upon thresholds (the “group fee waiver”), enabling the Fund’s shareholders to share in the benefits from any economies of scale at the complex level. The group fee waiver is reviewed and renewed annually between the Board and MFS. The Trustees concluded that the breakpoints and the group fee waiver were sufficient to allow the Fund to benefit from economies of scale as its assets and overall complex assets grow.

MFS Global Real Estate Portfolio

PROXY VOTING POLICIES AND INFORMATION

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. The fund’s Form N-Q is 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/vit3 by choosing the fund’s name and then selecting the “Resources” tab and clicking on “Prospectus and Reports”.

FURTHER INFORMATION

INFORMATION ABOUT FUND CONTRACTS AND LEGAL CLAIMS

FEDERAL TAX INFORMATION (unaudited)

The following information is provided pursuant to provisions of the Internal Revenue Code.

The fund designates $1,202,000 as capital gain dividends paid during the fiscal year.

rev. 3/16



FACTS		WHAT DOES MFS DO WITH YOUR PERSONAL INFORMATION?


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

What?

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

• Social Security number and account balances

• Account transactions and transaction history

• Checking account information and wire transfer instructions

When you areno longer our customer, we continue to share your information as described in this notice.


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


Reasons we can share your personal information	Does MFS share?	Can you limit this sharing?
For our everyday business purposes – such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus	Yes	No
For our marketing purposes – to offer our products and services to you	No	We don’t share
For joint marketing with other financial companies	No	We don’t share
For our affiliates’ everyday business purposes – information about your transactions and experiences	No	We don’t share
For our affiliates’ everyday business purposes – information about your creditworthiness	No	We don’t share
For nonaffiliates to market to you	No	We don’t share



Questions?		Call800-225-2606 or go tomfs.com.


Page 2


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


What we do
How does MFS protect my personal information?		To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include procedural, electronic, and physical safeguards for the protection of the personal information we collect about you.
How does MFS collect my personal information?		We collect your personal information, for example, when you • open an account or provide account information • direct us to buy securities or direct us to sell your securities • make a wire transfer We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
Why can’t I limit all sharing?		Federal law gives you the right to limit only • sharing for affiliates’ everyday business purposes – information about your creditworthiness • affiliates from using your information to market to you • sharing for nonaffiliates to market to you State laws and individual companies may give you additional rights to limit sharing.


Definitions
Affiliates		Companies related by common ownership or control. They can be financial and nonfinancial companies. • MFS does not share personal information with affiliates, except for everyday business purposes as described on page one of this notice.
Nonaffiliates		Companies not related by common ownership or control. They can be financial and nonfinancial companies. • MFS does not share with nonaffiliates so they can market to you.
Joint marketing		A formal agreement between nonaffiliated financial companies that together market financial products or services to you. • MFS doesn’t jointly market.


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

LOGO

Annual Report

December 31, 2018

LOGO

MFS^® Growth Allocation Portfolio

LOGO

MFS^® Variable Insurance Trust III

VGA-ANN

MFS® Growth Allocation Portfolio

CONTENTS

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

MFS Growth Allocation Portfolio

LETTER FROM THE EXECUTIVE CHAIRMAN

LOGO

Dear Contract Owners:

Respectfully,

LOGO

Robert J. Manning

Executive Chairman

MFS Investment Management

February 15, 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.

MFS Growth Allocation Portfolio

PORTFOLIO COMPOSITION

Portfolio target allocation

LOGO


Portfolio holdings
MFS Growth Series			10.9%
MFS Value Series			10.8%
MFS Research Series			9.9%
MFS Research International Portfolio			9.0%
MFS Mid Cap Growth Series			8.9%
MFS Mid Cap Value Portfolio			8.8%
MFS Total Return Bond Series			5.2%
MFS Inflation-Adjusted Bond Portfolio			5.1%
MFS High Yield Portfolio			5.1%
MFS International Growth Portfolio			5.0%
MFS International Value Portfolio			5.0%
MFS Global Real Estate Portfolio			5.0%
MFS Global Governments Portfolio			4.2%
MFS Limited Maturity Portfolio			2.0%
MFS New Discovery Series			2.0%
MFS New Discovery Value Portfolio			2.0%
MFS Emerging Markets Equity Portfolio			1.0%
Cash & Cash Equivalents			0.1%

Portfolio actual allocation

LOGO

Percentages are based on net assets as of December 31, 2018.

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

MFS Growth Allocation Portfolio

MANAGEMENT REVIEW

Summary of Results

For the twelve months ended December 31, 2018, Initial Class shares of the MFS Growth Allocation Portfolio (“fund”) provided a total return of –5.20%, while Service Class shares of the fund provided a total return of –5.46%. These compare with a return of –4.38% for the fund’s benchmark, the Standard & Poor’s 500 Stock Index (“S&P 500 Index”). The fund’s other benchmark, the MFS Growth Allocation Portfolio Blended Index (“Blended Index”), generated a return of –5.27%. The Blended Index reflects the blended returns of various equity and fixed income market indices, with percentage allocations to each index designed to resemble the allocations of the fund. The market indices and related percentage allocations used to compile the Blended Index are set forth in the Performance Summary.

Market Environment

Factors Affecting Performance

During the reporting period, the fund underperformed its benchmark, the S&P 500 Index, primarily due to its allocation to theweak-performing international equity markets. Over the same period, Initial Class shares of the fund outperformed the Blended Index, while Service Class shares of the fund underperformed the Blended Index.

Respectfully,

Portfolio Manager(s)

Joseph Flaherty and Natalie Shapiro

Note to Shareholders: Effective September 1, 2018, Natalie Shapiro became a Portfolio Manager of the Fund.

MFS Growth Allocation Portfolio

Management Review – continued

MFS Growth Allocation Portfolio

PERFORMANCE SUMMARY THROUGH 12/31/18

Growth of a Hypothetical $10,000 Investment

LOGO

Total Returns through 12/31/18

Average annual total returns


	Share Class	Class Inception Date	1-yr	5-yr	10-yr
	Initial Class	10/01/08	(5.20)%	5.22%	9.53%
	Service Class	10/01/08	(5.46)%	4.94%	9.25%

Comparative benchmark(s)
	Standard & Poor’s 500 Stock Index (f)		(4.38)%	8.49%	13.12%
	MFS Growth Allocation Portfolio Blended Index (f)(w)		(5.27)%	5.55%	9.75%
	Bloomberg Barclays U.S. Aggregate Bond Index (f)		0.01%	2.52%	3.48%
	FTSE EPRA/NAREIT Developed Real Estate Index (net div) (f)		(5.63)%	4.34%	9.65%
	MSCI EAFE Index (net div) (f)		(13.79)%	0.53%	6.32%

(f)

Source: FactSet Research Systems Inc.

(w)

As of December 31, 2018, the MFS Growth Allocation Portfolio Blended Index was comprised of 54% Standard & Poor’s 500 Stock Index, 21% Bloomberg Barclays U.S. Aggregate Bond Index, 20% MSCI EAFE Index (net div), and 5% FTSE EPRA/Nareit Developed Real Estate Index (net div).

Benchmark Definition(s)

MFS Growth Allocation Portfolio

Performance Summary – continued

Standard & Poor’s 500 Stock Index – a market capitalization-weighted index of 500 widely held equity securities, designed to measure broad U.S. equity performance.

It is not possible to invest directly in an index.

Notes to Performance Summary

Average annual total return represents the average annual change in value for each share class for the periods presented.

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

MFS Growth Allocation Portfolio

EXPENSE TABLE

Fund Expenses Borne by the Contract Holders during the Period,

July 1, 2018 through December 31, 2018

The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2018 through December 31, 2018.

Actual Expenses

Hypothetical Example for Comparison Purposes


Share Class		Annualized Expense Ratio		Beginning Account Value 7/01/18		Ending Account Value 12/31/18		Expenses Paid During Period (p) 7/01/18-12/31/18
Initial Class	Actual		0.03%		$1,000.00		$925.97		$0.15
Initial Class	Hypothetical (h)		0.03%		$1,000.00		$1,025.05		$0.15
Service Class	Actual		0.28%		$1,000.00		$924.96		$1.36
Service Class	Hypothetical (h)		0.28%		$1,000.00		$1,023.79		$1.43

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

(p)

MFS Growth Allocation Portfolio

PORTFOLIO OF INVESTMENTS – 12/31/18

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 ($)
INVESTMENT COMPANIES (h) – 100.0%
Bond Funds – 21.6%
MFS Global Governments Portfolio – Initial Class		1,346,158	$	13,919,268
MFS High Yield Portfolio – Initial Class		3,203,323		16,913,547
MFS Inflation-Adjusted Bond Portfolio – Initial Class		1,688,956		17,142,907
MFS Limited Maturity Portfolio – Initial Class		679,437		6,862,313
MFS Total Return Bond Series – Initial Class		1,363,084		17,243,017

			$	72,081,052

International Stock Funds – 20.0%
MFS Emerging Markets Equity Portfolio – Initial Class		229,862	$	3,390,469
MFS International Growth Portfolio – Initial Class		1,319,728		16,866,121
MFS International Value Portfolio – Initial Class		672,765		16,832,584
MFS Research International Portfolio – Initial Class		2,130,375		29,974,372

			$	67,063,546

Specialty Funds – 5.0%
MFS Global Real Estate Portfolio – Initial Class		1,275,712	$	16,711,826

U.S. Stock Funds – 53.3%
MFS Growth Series – Initial Class		776,204	$	36,489,353
MFS Mid Cap Growth Series – Initial Class		3,625,088		29,834,478
MFS Mid Cap Value Portfolio – Initial Class		3,975,696		29,499,667
MFS New Discovery Series – Initial Class		374,513		6,538,988
MFS New Discovery Value Portfolio – Initial Class		771,261		6,517,153
MFS Research Series – Initial Class		1,323,836		33,003,221
MFS Value Series – Initial Class		2,088,600		36,132,780

			$	178,015,640



Issuer	Shares/Par		Value ($)
INVESTMENT COMPANIES (h) – continued
Money Market Funds – 0.1%
MFS Institutional Money Market Portfolio, 2.4% (v)		265,727	$	265,700

Total Investment Companies (Identified Cost, $296,130,251)			$	334,137,764

OTHER ASSETS, LESS LIABILITIES – 0.0%				(47,779	)

NET ASSETS – 100.0%			$	334,089,985

(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 value of the fund’s investments in affiliated issuers was $334,137,764.

(v)

See Notes to Financial Statements

MFS Growth Allocation Portfolio

FINANCIAL STATEMENTS ^| STATEMENT OF ASSETS AND LIABILITIES

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


At 12/31/18

Assets
Investments in affiliated issuers, at value (identified cost, $296,130,251)			$334,137,764
Receivables for
Investments sold			515,344
Fund shares sold			194
Other assets			2,459
Total assets			$334,655,761

Liabilities
Payables for
Fund shares reacquired			$515,538
Payable to affiliates
Administrator			192
Shareholder servicing costs			58
Distribution and/or service fees			9,001
Payable for independent Trustees’ compensation			19
Accrued expenses and other liabilities			40,968
Total liabilities			$565,776
Net assets			$334,089,985

Net assets consist of
Paid-in capital			$258,049,490
Total distributable earnings (loss)			76,040,495
Net assets			$334,089,985
Shares of beneficial interest outstanding			31,372,505



	Net assets		Shares outstanding		Net asset value per share
Initial Class		$3,770,090		354,400		$10.64
Service Class		330,319,895		31,018,105		10.65

See Notes to Financial Statements

MFS Growth Allocation Portfolio

FINANCIAL STATEMENTS ^| STATEMENT OF OPERATIONS

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.


Year ended 12/31/18

Net investment income (loss)
Income
Dividends from affiliated issuers	$8,099,851
Expenses
Distribution and/or service fees	$962,020
Shareholder servicing costs	7,219
Administrative services fee	17,500
Independent Trustees’ compensation	7,387
Custodian fee	7,309
Shareholder communications	15,596
Audit and tax fees	38,873
Legal fees	3,395
Miscellaneous	22,399
Total expenses	$1,081,698
Net investment income (loss)	$7,018,153

Realized and unrealized gain (loss)
Realized gain (loss) (identified cost basis)
Investments in affiliated issuers	$12,970,698
Capital gain distributions from underlying affiliated funds	19,707,640
Net realized gain (loss)	$32,678,338
Change in unrealized appreciation or depreciation
Affiliated issuers	$(57,580,295	)
Net realized and unrealized gain (loss)	$(24,901,957	)
Change in net assets from operations	$(17,883,804	)

See Notes to Financial Statements

MFS Growth Allocation Portfolio

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.


	Year ended
	12/31/18			12/31/17
Change in net assets

From operations
Net investment income (loss)		$7,018,153			$5,975,521
Net realized gain (loss)		32,678,338			24,826,102
Net unrealized gain (loss)		(57,580,295	)		45,331,921
Change in net assets from operations		$(17,883,804	)		$76,133,544
Total distributions to shareholders (a)		$(30,865,393	)		$(28,707,309	)
Change in net assets from fund share transactions		$(37,200,488	)		$(51,183,005	)
Total change in net assets		$(85,949,685	)		$(3,756,770	)

Net assets
At beginning of period		420,039,670			423,796,440
At end of period (b)		$334,089,985			$420,039,670

(a)	Distributions from net investment income and from net realized gain are no longer required to be separately disclosed. See Note 2. For the year ended December 31, 2017, distributions from net investment income and from net realized gain were $6,734,034 and $21,973,275, respectively.

(b)	Parenthetical disclosure of undistributed net investment income is no longer required. See Note 2. For the year ended December 31, 2017, end of period net assets included undistributed net investment income of $5,975,290.

See Notes to Financial Statements

MFS Growth Allocation Portfolio

FINANCIAL STATEMENTS ^| FINANCIAL HIGHLIGHTS


Initial Class	Year ended

	12/31/18			12/31/17			12/31/16			12/31/15			12/31/14

Net asset value, beginning of period		$12.21			$10.97			$11.27			$12.42			$12.19

Income (loss) from investment operations
Net investment income (loss) (d)(l)		$0.26			$0.21			$0.20	(c)		$0.21			$0.16
Net realized and unrealized gain (loss)		(0.78	)		1.91			0.62			(0.19	)		0.50
Total from investment operations		$(0.52	)		$2.12			$0.82			$0.02			$0.66

Less distributions declared to shareholders
From net investment income		$(0.23	)		$(0.23	)		$(0.32	)		$(0.58	)		$(0.21	)
From net realized gain		(0.82	)		(0.65	)		(0.80	)		(0.59	)		(0.22	)
Total distributions declared to shareholders		$(1.05	)		$(0.88	)		$(1.12	)		$(1.17	)		$(0.43	)
Net asset value, end of period (x)		$10.64			$12.21			$10.97			$11.27			$12.42
Total return (%) (k)(r)(s)(x)		(5.20	)		19.86			7.15	(c)		0.53			5.39

Ratios (%) (to average net assets) and Supplemental data:
Expenses before expense reductions (f)(h)		0.03			0.03			0.03	(c)		0.02			0.03
Expenses after expense reductions (f)(h)		N/A			N/A			N/A			N/A			0.03
Net investment income (loss) (l)		2.13			1.75			1.81	(c)		1.75			1.29
Portfolio turnover		2			2			1			1			1
Net assets at end of period (000 omitted)		$3,770			$4,116			$3,140			$2,908			$2,939

Service Class	Year ended

	12/31/18			12/31/17			12/31/16			12/31/15			12/31/14

Net asset value, beginning of period		$12.22			$10.98			$11.27			$12.41			$12.19

Income (loss) from investment operations
Net investment income (loss) (d)(l)		$0.22			$0.17			$0.17	(c)		$0.17			$0.12
Net realized and unrealized gain (loss)		(0.77	)		1.92			0.63			(0.18	)		0.50
Total from investment operations		$(0.55	)		$2.09			$0.80			$(0.01	)		$0.62

Less distributions declared to shareholders
From net investment income		$(0.20	)		$(0.20	)		$(0.29	)		$(0.54	)		$(0.18	)
From net realized gain		(0.82	)		(0.65	)		(0.80	)		(0.59	)		(0.22	)
Total distributions declared to shareholders		$(1.02	)		$(0.85	)		$(1.09	)		$(1.13	)		$(0.40	)
Net asset value, end of period (x)		$10.65			$12.22			$10.98			$11.27			$12.41
Total return (%) (k)(r)(s)(x)		(5.46	)		19.51			6.94	(c)		0.30			5.04

Ratios (%) (to average net assets) and Supplemental data:
Expenses before expense reductions (f)(h)		0.28			0.28			0.28	(c)		0.27			0.28
Expenses after expense reductions (f)(h)		N/A			N/A			N/A			N/A			0.28
Net investment income (loss) (l)		1.80			1.40			1.50	(c)		1.40			1.00
Portfolio turnover		2			2			1			1			1
Net assets at end of period (000 omitted)		$330,320			$415,923			$420,657			$468,237			$538,164

See Notes to Financial Statements

MFS Growth Allocation Portfolio

Financial Highlights – continued

(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.

(h)

(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)	The ratios and per share amounts do not include net investment income of the underlying affiliated funds in which the fund invests.

(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

MFS Growth Allocation Portfolio

NOTES TO FINANCIAL STATEMENTS

(1)

Business and Organization

MFS Growth Allocation Portfolio (the fund) is a diversified series of MFS Variable Insurance Trust III (the trust). The trust is organized as a Delaware statutory 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.

(2)

Significant Accounting Policies

The fund is a “fund of funds”, which invests the majority of its assets in other MFS mutual funds (hereafter referred to as “underlying affiliated funds” or “underlying funds”), which may have different fiscal year ends than the funds. The underlying funds, in turn, may engage in a number of investment techniques and practices, which involve certain risks. Certain underlying funds invest their portfolio in high-yield securities rated below investment grade. Investments in below investment grade quality securities can involve a substantially greater risk of default or can already be in default, and their values can decline significantly. Below investment grade quality securities tend to be more sensitive to adverse news about the issuer, or the market or economy in general, than higher quality debt instruments. Certain underlying funds invest a significant portion of their assets in asset-backed and/or mortgage-backed securities. For these securities, the value of the debt instrument also depends on the credit quality and adequacy of the underlying assets or collateral as well as whether there is a security interest in the underlying assets or collateral. Enforcing rights, if any, against the underlying assets or collateral may be difficult. U.S. Government securities not supported as to the payment of principal or interest by the U.S. Treasury, such as those issued by Fannie Mae, Freddie Mac, and the Federal Home Loan Banks, are subject to greater credit risk than are U.S. Government securities supported by the U.S. Treasury, such as those issued by Ginnie Mae. Certain underlying funds invest in foreign securities, including securities of emerging market issuers. Investments in foreign securities are vulnerable to the effects of changes in the relative values of the local currency and the U.S. dollar and to the effects of changes in each country’s market, economic, industrial, political, regulatory, geopolitical, and other conditions. Investments in emerging markets can involve additional and greater risks than the risks associated with investments in developed foreign markets. Emerging markets can have less developed markets, greater custody and operational risk, less developed legal, regulatory, and accounting systems, and greater political, social, and economic instability than developed markets.

Investment Valuations –Open-end investment companies (underlying funds) are generally valued at their net asset value per share. The investments of underlying funds managed by the adviser are valued as described below. For purposes of this policy disclosure, “fund” also refers to the underlying funds in which thefund-of-funds invests.

MFS Growth Allocation Portfolio

Notes to Financial Statements – continued


Financial Instruments	Level 1		Level 2		Level 3		Total
Mutual Funds		$334,137,764		$—		$—		$334,137,764

MFS Growth Allocation Portfolio

Notes to Financial Statements – continued

Derivatives – The fund does not invest in derivatives directly. The fund does invest in underlying funds that may use derivatives primarily to increase or decrease exposure to a particular market or segment of the market, or security, to increase or decrease interest rate or currency exposure, or as alternatives to direct investments. Derivatives are used for hedging ornon-hedging purposes. While hedging can reduce or eliminate losses, it can also reduce or eliminate gains. When the underlying funds use derivatives as an investment to increase market exposure, or for hedging purposes, gains and losses from derivative instruments may be substantially greater than the derivative’s original cost.

Investment Transactions and Income – Investment transactions are recorded on the trade date. Interest income is recorded on the accrual basis. All premium and discount is amortized or accreted for financial statement purposes in accordance with U.S. generally accepted accounting principles. Distributions of income and capital gains from the underlying funds are recorded on theex-dividend date. Recognition of net investment income by the fund is affected by the timing of the declaration of distributions by the underlying funds in which the fund invests. In determining the net gain or loss on securities sold, the cost of securities is determined on the identified cost basis.

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

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


	Year ended 12/31/18		Year ended 12/31/17
Ordinary income (including any short-term capital gains)		$6,786,173		$6,853,058
Long-term capital gains		24,079,220		21,854,251
Total distributions		$30,865,393		$28,707,309

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


As of 12/31/18

Cost of investments	$297,777,307
Gross appreciation	42,701,943
Gross depreciation	(6,341,486	)
Net unrealized appreciation (depreciation)	$36,360,457

Undistributed ordinary income	7,017,005
Undistributed long-term capital gain	32,663,033

MFS Growth Allocation Portfolio

Notes to Financial Statements – continued

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

	Year ended 12/31/18		Year ended 12/31/17		Year ended 12/31/18		Year ended 12/31/17
Initial Class		$77,625		$73,606		$274,764		$206,198
Service Class		5,898,467		6,660,428		24,614,537		21,767,077
Total		$5,976,092		$6,734,034		$24,889,301		$21,973,275

(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. MFS receives no compensation under this agreement; however MFS receives management fees from the underlying MFS funds.

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 year ended December 31, 2018, the fee was $7,091, which equated to 0.0018% 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 year ended December 31, 2018, these costs amounted to $128.

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 pays an annual fixed amount of $17,500. The administrative services fee incurred for the year ended December 31, 2018 was equivalent to an annual effective rate of 0.0045% of the fund’s average daily net assets.

Other – This fund and certain other funds managed by MFS (the funds) have entered into a service agreement (the ISO Agreement) which provides 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 serves as the ISO and is an officer of the funds and the sole member of Tarantino LLC. The funds can terminate the ISO Agreement with Tarantino LLC at any time under the terms of the ISO Agreement. For the year ended December 31, 2018, the fee paid by the fund under this agreement was $664 and is included in “Miscellaneous” expense in the Statement of Operations. MFS has agreed to bear all expenses associated with office space, other administrative support, and supplies provided to the ISO.

MFS Growth Allocation Portfolio

Notes to Financial Statements – continued

(4)

Portfolio Securities

For the year ended December 31, 2018, purchases and sales of shares of underlying funds aggregated $6,954,493 and $76,096,296, 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:


	Year ended 12/31/18						Year ended 12/31/17
	Shares			Amount			Shares			Amount
Shares sold
Initial Class		13,965			$169,132			52,316			$607,045
Service Class		658,752			7,641,180			1,144,381			13,421,704
		672,717			$7,810,312			1,196,697			$14,028,749
Shares issued to shareholders in reinvestment of distributions
Initial Class		29,489			$352,389			24,523			$279,804
Service Class		2,549,123			30,513,004			2,487,096			28,427,505
		2,578,612			$30,865,393			2,511,619			$28,707,309
Shares reacquired
Initial Class		(26,098	)		$(312,340	)		(25,904	)		$(303,523	)
Service Class		(6,219,141	)		(75,563,853	)		(7,917,693	)		(93,615,540	)
		(6,245,239	)		$(75,876,193	)		(7,943,597	)		$(93,919,063	)
Net change
Initial Class		17,356			$209,181			50,935			$583,326
Service Class		(3,011,266	)		(37,409,669	)		(4,286,216	)		(51,766,331	)
		(2,993,910	)		$(37,200,488	)		(4,235,281	)		$(51,183,005	)

(6)

Line of Credit

MFS Growth Allocation Portfolio

Notes to Financial Statements – continued

(7)

Investments in Affiliated Issuers


Affiliated Issuers				Beginning Shares/Par Amount			Acquisitions Shares/Par Amount		Dispositions Shares/Par Amount			Ending Shares/Par Amount

MFS Emerging Markets Equity Portfolio					244,952			9,789		(24,879	)		229,862

MFS Global Governments Portfolio					1,594,242			43,701		(291,785	)		1,346,158

MFS Global Real Estate Portfolio					1,475,141			123,354		(322,783	)		1,275,712

MFS Growth Series					941,343			66,702		(231,841	)		776,204

MFS High Yield Portfolio					3,643,033			226,307		(666,017	)		3,203,323

MFS Inflation-Adjusted Bond Portfolio					1,949,655			70,099		(330,798	)		1,688,956

MFS Institutional Money Market Portfolio					263,952			1,248,022		(1,246,247	)		265,727

MFS International Growth Portfolio					1,359,489			138,158		(177,919	)		1,319,728

MFS International Value Portfolio					744,930			22,970		(95,135	)		672,765

MFS Limited Maturity Portfolio					825,077			19,438		(165,078	)		679,437

MFS Mid Cap Growth Series					3,965,067			611,788		(951,767	)		3,625,088

MFS Mid Cap Value Portfolio					4,184,248			365,165		(573,717	)		3,975,696

MFS New Discovery Series					417,359			60,334		(103,180	)		374,513

MFS New Discovery Value Portfolio					753,947			143,550		(126,236	)		771,261

MFS Research International Portfolio					2,224,083			126,178		(219,886	)		2,130,375

MFS Research Series					1,419,152			176,838		(272,154	)		1,323,836

MFS Total Return Bond Series					1,589,342			68,232		(294,490	)		1,363,084

MFS Value Series					2,203,345			226,820		(341,565	)		2,088,600

Affiliated Issuers	Realized Gain (Loss)			Change in Unrealized Appreciation/ Depreciation			Capital Gain Distributions		Dividend Income			Ending Value

MFS Emerging Markets Equity Portfolio		$74,225			$(622,076	)		$—		$13,642			$3,390,469

MFS Global Governments Portfolio		(219,055	)		(122,461	)		—		153,561			13,919,268

MFS Global Real Estate Portfolio		243,295			(1,804,577	)		129,480		928,563			16,711,826

MFS Growth Series		5,113,500			(5,697,260	)		2,571,489		206,611			36,489,353

MFS High Yield Portfolio		(369,150	)		(1,291,646	)		—		1,097,896			16,913,547

MFS Inflation-Adjusted Bond Portfolio		(22,654	)		(1,184,306	)		—		332,052			17,142,907

MFS Institutional Money Market Portfolio		(49	)		3			—		4,909			265,700

MFS International Growth Portfolio		497,515			(3,986,791	)		1,567,944		286,745			16,866,121

MFS International Value Portfolio		805,648			(2,993,550	)		214,219		212,738			16,832,584

MFS Limited Maturity Portfolio		(20,623	)		(43,814	)		—		159,100			6,862,313

MFS Mid Cap Growth Series		2,847,861			(6,745,636	)		5,018,348		178,151			29,834,478

MFS Mid Cap Value Portfolio		263,000			(6,430,454	)		1,817,529		674,303			29,499,667

MFS New Discovery Series		522,247			(1,349,460	)		708,604		239,111			6,538,988

MFS New Discovery Value Portfolio		200,489			(2,107,026	)		924,930		252,098			6,517,153

MFS Research International Portfolio		692,396			(6,912,082	)		454,913		928,179			29,974,372

MFS Research Series		1,613,885			(7,252,022	)		3,600,317		1,006,108			33,003,221

MFS Total Return Bond Series		(342,660	)		(552,487	)		—		637,340			17,243,017

MFS Value Series		1,070,828			(8,484,650	)		2,699,867		788,744			36,132,780

		$12,970,698			$(57,580,295	)		$19,707,640		$8,099,851			$334,137,764

MFS Growth Allocation Portfolio

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Trustees of MFS Variable Insurance Trust III and the Shareholders of

MFS Growth Allocation Portfolio:

Opinion on the Financial Statements and Financial Highlights

We have audited the accompanying statement of assets and liabilities of MFS Growth Allocation Portfolio (the “Fund”), including the portfolio of investments, as of December 31, 2018, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of December 31, 2018, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of December 31, 2018, by correspondence with the transfer agent. We believe that our audits provide a reasonable basis for our opinion.

DELOITTE & TOUCHE LLP

Boston, Massachusetts

February 15, 2019

We have served as the auditor of one or more of the MFS investment companies since 1924.

MFS Growth Allocation Portfolio

TRUSTEES AND OFFICERS – IDENTIFICATION AND BACKGROUND


Name, Age	Position(s) Held with Fund	Trustee/Officer Since (h)	Number of MFS Funds overseen by the Trustee	Principal Occupations During the Past Five Years	Other Directorships During the Past Five Years (j)
INTERESTED TRUSTEES
Robert J. Manning (k) (age 55)	Trustee	February 2004	135	Massachusetts Financial Services Company, Executive Chairman (since January 2017); Director; Chairman of the Board; Chief Executive Officer (until 2015);Co-Chief Executive Officer(2015-2016)	N/A

Robin A. Stelmach (k) (age 57)	Trustee	January 2014	135	Massachusetts Financial Services Company, Vice Chair (since January 2017); Chief Operating Officer and Executive Vice President (until January 2017)	N/A

INDEPENDENT TRUSTEES
John P. Kavanaugh (age 64)	Trustee and Chair of Trustees	January 2009	135	Private investor	N/A

Steven E. Buller (age 67)	Trustee	February 2014	135	Financial Accounting Standards Advisory Council, Chairman(2014-2015); Public Company Accounting Oversight Board, Standing Advisory Group, Member (until 2014); BlackRock, Inc. (investment management), Managing Director (until 2014), BlackRock Finco UK (investment management), Director (until 2014)	N/A

John A. Caroselli (age 64)	Trustee	March 2017	135	JC Global Advisors, LLC (management consulting), President (since 2015); First Capital Corporation (commercial finance), Executive Vice President (until 2015)	N/A

Maureen R. Goldfarb (age 63)	Trustee	January 2009	135	Private investor	N/A

Michael Hegarty (age 74)	Trustee	December 2004	135	Private investor	Rouse Properties Inc., Director (until 2016); Capmark Financial Group Inc., Director (until 2015)

Peter D. Jones (age 63)	Trustee	January 2019	135	Franklin Templeton Distributors, Inc. (investment management), President (until 2015); Franklin Templeton Institutional, LLC (investment management), Chairman (until 2015)	N/A

James W. Kilman, Jr. (age 57)	Trustee	January 2019	135	KielStrand Capital LLC (family office and merchant bank), Chief Executive Officer (since 2016); Morgan Stanley & Co. (financial services), Vice Chairman of Investment Banking,Co-Head of Diversified Financials Coverage – Financial Institutions Investment Banking Group (until 2016)	alpha-En Corporation, Director (since 2016)

MFS Growth Allocation Portfolio

Trustees and Officers – continued


Name, Age	Position(s) Held with Fund	Trustee/Officer Since (h)	Number of MFS Funds overseen by the Trustee	Principal Occupations During the Past Five Years	Other Directorships During the Past Five Years (j)
Clarence Otis, Jr. (age 62)	Trustee	March 2017	135	Darden Restaurants, Inc., Chief Executive Officer (until 2014)	VF Corporation, Director; Verizon Communications, Inc., Director; The Travelers Companies, Director; Federal Reserve Bank of Atlanta, Director (until 2015)

Maryanne L. Roepke (age 62)	Trustee	May 2014	135	American Century Investments (investment management), Senior Vice President and Chief Compliance Officer (until 2014)	N/A

Laurie J. Thomsen (age 61)	Trustee	March 2005	135	Private investor	The Travelers Companies, Director; Dycom Industries, Inc., Director (since 2015)


Name, Age	Position(s) Held with Fund	Trustee/Officer Since (h)	Number of MFS Funds for which the Person is an Officer	Principal Occupations During the Past Five Years
OFFICERS
Christopher R. Bohane (k) (age 45)	Assistant Secretary and Assistant Clerk	July 2005	135	Massachusetts Financial Services Company, Vice President and Assistant General Counsel

Kino Clark (k) (age 50)	Assistant Treasurer	January 2012	135	Massachusetts Financial Services Company, Vice President

John W. Clark, Jr. (k) (age 51)	Assistant Treasurer	April 2017	135	Massachusetts Financial Services Company, Vice President (since March 2017); Deutsche Bank (financial services), Department Head – Treasurer’s Office (until February 2017)

Thomas H. Connors (k) (age 59)	Assistant Secretary and Assistant Clerk	September 2012	135	Massachusetts Financial Services Company, Vice President and Senior Counsel

Ethan D. Corey (k) (age 55)	Assistant Secretary and Assistant Clerk	July 2005	135	Massachusetts Financial Services Company, Senior Vice President and Associate General Counsel

David L. DiLorenzo (k) (age 50)	President	July 2005	135	Massachusetts Financial Services Company, Senior Vice President

Heidi W. Hardin (k) (age 51)	Secretary and Clerk	April 2017	135	Massachusetts Financial Services Company, Executive Vice President and General Counsel (since March 2017); Harris Associates (investment management), General Counsel (from September 2015 to January 2017); Janus Capital Management LLC (investment management), Senior Vice President and General Counsel (until September 2015)

Brian E. Langenfeld (k) (age 45)	Assistant Secretary and Assistant Clerk	June 2006	135	Massachusetts Financial Services Company, Vice President and Senior Counsel

Amanda S. Mooradian (k) (age 39)	Assistant Secretary and Assistant Clerk	September 2018	135	Massachusetts Financial Services Company, Assistant Vice President and Counsel

Susan A. Pereira (k) (age 48)	Assistant Secretary and Assistant Clerk	July 2005	135	Massachusetts Financial Services Company, Vice President and Senior Counsel

Kasey L. Phillips (k) (age 48)	Assistant Treasurer	September 2012	135	Massachusetts Financial Services Company, Vice President

Matthew A. Stowe (k) (age 44)	Assistant Secretary and Assistant Clerk	October 2014	135	Massachusetts Financial Services Company, Vice President and Assistant General Counsel

MFS Growth Allocation Portfolio

Trustees and Officers – continued


Name, Age	Position(s) Held with Fund	Trustee/Officer Since (h)	Number of MFS Funds for which the Person is an Officer	Principal Occupations During the Past Five Years
Frank L. Tarantino (age 74)	Independent Senior Officer	June 2004	135	Tarantino LLC (provider of compliance services), Principal

Richard S. Weitzel (k) (age 48)	Assistant Secretary and Assistant Clerk	October 2007	135	Massachusetts Financial Services Company, Senior Vice President and Associate General Counsel

Martin J. Wolin (k) (age 51)	Chief Compliance Officer	July 2015	135	Massachusetts Financial Services Company, Senior Vice President and Chief Compliance Officer (since July 2015); Mercer (financial service provider), Chief Risk and Compliance Officer, North America and Latin America (until June 2015)

James O. Yost (k) (age 58)	Treasurer	September 1990	135	Massachusetts Financial Services Company, Senior Vice President

(h)

(j)	Directorships or trusteeships of companies required to report to the Securities and Exchange Commission (i.e., “public companies”).

(k)

Messrs. Buller, Hegarty, Kilman and Otis and Ms. Roepke are members of the Trust’s Audit Committee.

Each of the Interested Trustees and certain Officers hold comparable officer positions with certain affiliates of MFS.

The Statement of Additional Information for a Fund includes further information about the Trustees and is available without charge upon request by calling1-800-225-2606.


Investment Adviser Massachusetts Financial Services Company 111 Huntington Avenue Boston, MA 02199-7618		Custodian State Street Bank and Trust Company 1 Lincoln Street Boston, MA 02111-2900
Distributor MFS Fund Distributors, Inc. 111 Huntington Avenue Boston, MA 02199-7618		Independent Registered Public Accounting Firm Deloitte & Touche LLP 200 Berkeley Street Boston, MA 02116
Portfolio Manager(s) Joseph Flaherty Natalie Shapiro

MFS Growth Allocation Portfolio

BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT

In connection with their contract review meetings, the Trustees received and relied upon materials that included, among other items: (i) information provided by Broadridge Financial Solutions, Inc. (“Broadridge”), an independent third party, on the investment performance of the Fund for various time periods ended December 31, 2017 and the investment performance of a group of funds with substantially similar investment classifications/objectives (the “Broadridge performance universe”), (ii) information provided by Broadridge on the Fund’s fees and expenses and the fees and expenses of comparable funds identified by Broadridge (the “Broadridge expense group”), (iii) information as to whether and to what extent applicable expense waivers and reimbursements are observed for the Fund, (iv) information regarding MFS’ financial results and financial condition, including MFS’ and certain of its affiliates’ estimated profitability from services performed for the Fund and the MFS Funds as a whole, and compared to MFS’ institutional business, (v) MFS’ views regarding the outlook for the mutual fund industry and the strategic business plans of MFS, (vi) descriptions of various functions performed by MFS for the Funds, such as compliance monitoring and portfolio trading practices, and (vii) information regarding the overall organization of MFS, including information about MFS’ senior management and other personnel providing investment advisory, administrative and other services to the Fund and the other MFS Funds. The comparative performance, fee and expense information prepared and provided by Broadridge was not independently verified and the independent Trustees did not independently verify any information provided to them by MFS.

Based on information provided by Broadridge and MFS, the Trustees reviewed the Fund’s total return investment performance as well as the Broadridge performance universe over various time periods. The Trustees placed particular emphasis on the total return performance of the Fund’s Initial Class shares in comparison to the performance of funds in its Broadridge performance universe over the three-year period ended December 31, 2017, which the Trustees believed was a long enough period to reflect differing market conditions. The total return performance of the Fund’s Initial Class shares was in the 1st quintile relative to the other funds in the universe for this three-year period (the 1st quintile being the best performers and the 5th quintile being the worst performers). The total return performance of the Fund’s Initial Class shares was in the 1st quintile for each of theone- and five-year periods ended December 31, 2017 relative to the Broadridge performance universe. Because of the passage of time, these performance results may differ from the performance results for more recent periods, including those shown elsewhere in this report.

MFS Growth Allocation Portfolio

Board Review of Investment Advisory Agreement – continued

In assessing the reasonableness of the Fund’s expenses, the Trustees considered, among other information, the Fund’s total expense ratio of the Fund’s Initial Class shares as a percentage of average daily net assets and the total expense ratios of peer groups of funds based on information provided by Broadridge. The Trustees considered that MFS currently observes an expense limitation for the Fund, which may not be changed without the Trustees’ approval. The Trustees also considered that, according to the data provided by Broadridge (which takes into account any expense limitations that were in effect during the Fund’s last fiscal year), the Fund’s total expense ratio was higher than the Broadridge expense group median. Because the Fund does not pay an advisory fee, the Trustees did not consider the extent to which economies of scale would be realized due to the Fund’s growth of assets, whether fee levels reflect economies of scale for shareholders, or the fees paid by similar funds to other investment advisers or by similar clients of MFS.

The Trustees also considered the nature, quality, cost, and extent of administrative, transfer agency, and distribution services provided to the Fund by MFS and its affiliates under agreements and plans other than the investment advisory agreement, including any12b-1 fees the Fund pays to MFS Fund Distributors, Inc., an affiliate of MFS. The Trustees also considered the nature, extent and quality of certain other services MFS performs or arranges for on the Fund’s or the Underlying Funds’ behalf, which may include securities lending programs, directed expense payment programs, class action recovery programs, and MFS’ interaction withthird-party service providers, principally custodians andsub-custodians. The Trustees concluded that the variousnon-advisory services provided by MFS and its affiliates on behalf of the Fund were satisfactory.

MFS Growth Allocation Portfolio

PROXY VOTING POLICIES AND INFORMATION

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. The fund’s Form N-Q is 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/vit3 by choosing the fund’s name and then selecting the “Resources” tab and clicking on “Prospectus and Reports”.

FURTHER INFORMATION

INFORMATION ABOUT FUND CONTRACTS AND LEGAL CLAIMS

FEDERAL TAX INFORMATION (unaudited)

The following information is provided pursuant to provisions of the Internal Revenue Code.

The fund designates $26,488,000 as capital gain dividends paid during the fiscal year.

For corporate shareholders, 25.97% of the ordinary income dividends paid during the fiscal year qualify for the corporate dividends received deduction.

rev. 3/16


FACTS		WHAT DOES MFS DO WITH YOUR PERSONAL INFORMATION?


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

What?

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

• Social Security number and account balances

• Account transactions and transaction history

• Checking account information and wire transfer instructions

When you areno longer our customer, we continue to share your information as described in this notice.


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


Reasons we can share your personal information	Does MFS share?	Can you limit this sharing?
For our everyday business purposes – such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus	Yes	No
For our marketing purposes – to offer our products and services to you	No	We don’t share
For joint marketing with other financial companies	No	We don’t share
For our affiliates’ everyday business purposes – information about your transactions and experiences	No	We don’t share
For our affiliates’ everyday business purposes – information about your creditworthiness	No	We don’t share
For nonaffiliates to market to you	No	We don’t share


Questions?		Call800-225-2606 or go tomfs.com.


Page 2


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


What we do
How does MFS protect my personal information?		To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include procedural, electronic, and physical safeguards for the protection of the personal information we collect about you.
How does MFS collect my personal information?		We collect your personal information, for example, when you • open an account or provide account information • direct us to buy securities or direct us to sell your securities • make a wire transfer We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
Why can’t I limit all sharing?		Federal law gives you the right to limit only • sharing for affiliates’ everyday business purposes – information about your creditworthiness • affiliates from using your information to market to you • sharing for nonaffiliates to market to you State laws and individual companies may give you additional rights to limit sharing.


Definitions
Affiliates		Companies related by common ownership or control. They can be financial and nonfinancial companies. • MFS does not share personal information with affiliates, except for everyday business purposes as described on page one of this notice.
Nonaffiliates		Companies not related by common ownership or control. They can be financial and nonfinancial companies. • MFS does not share with nonaffiliates so they can market to you.
Joint marketing		A formal agreement between nonaffiliated financial companies that together market financial products or services to you. • MFS doesn’t jointly market.


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

LOGO

Annual Report

December 31, 2018

LOGO

MFS^® Inflation-Adjusted Bond Portfolio

LOGO

MFS^® Variable Insurance Trust III

VIA-ANN

MFS® Inflation-Adjusted Bond Portfolio

CONTENTS


Letter from the Executive Chairman			1
Portfolio composition			2
Management review			4
Performance summary			5
Expense table			6
Portfolio of investments			7
Statement of assets and liabilities			11
Statement of operations			12
Statements of changes in net assets			13
Financial highlights			14
Notes to financial statements			16
Report of independent registered public accounting firm			24
Trustees and officers			25
Board review of investment advisory agreement			28
Proxy voting policies and information			30
Quarterly portfolio disclosure			30
Further information			30
Information about fund contracts and legal claims			30
MFS^® privacy notice			31

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

MFS Inflation-Adjusted Bond Portfolio

LETTER FROM THE EXECUTIVE CHAIRMAN

LOGO

Dear Contract Owners:

Respectfully,

LOGO

Robert J. Manning

Executive Chairman

MFS Investment Management

February 15, 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.

MFS Inflation-Adjusted Bond Portfolio

PORTFOLIO COMPOSITION

Portfolio structure (i)

LOGO


Fixed income sectors (i)
Non-U.S. Government Bonds			54.2%
U.S. Treasury Securities			43.1%
Collateralized Debt Obligations			1.7%
Investment Grade Corporates			0.5%

Composition including fixed income credit quality (a)(i)
AAA			7.0%
AA			27.8%
A			2.9%
BBB			18.5%
U.S. Government			43.1%
Not Rated			0.2%
Cash & Cash Equivalents			0.8%
Other			(0.3)%


Portfolio facts (i)
Average Duration (d)			9.1
Average Effective Maturity (m)			14.1 yrs.

Issuer country weightings (i)(x)
United States			45.8%
United Kingdom			24.8%
Italy			7.9%
Portugal			5.3%
Spain			4.8%
Canada			3.3%
Japan			2.9%
France			1.6%
Australia			1.3%
Other Countries			2.3%

Currency exposure weightings (i)(y)
United States Dollar			43.3%
British Pound Sterling			28.6%
Euro			20.1%
Japanese Yen			4.5%
Norwegian Krone			1.5%
Swedish Krona			0.9%
Australian Dollar			0.6%
Danish Krone			0.3%
Canadian Dollar			0.2%

(a)

For all securities other than those specifically described below, ratings are assigned to underlying securities utilizing ratings from Moody’s, Fitch, and Standard & Poor’s rating agencies and applying the following hierarchy: If all three agencies provide a rating, the middle rating (after dropping the highest and lowest ratings) is assigned; if two of the three agencies rate a security, the lower of the two is assigned. Ratings are shown in the S&P and Fitch scale (e.g., AAA). 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. 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.

MFS Inflation-Adjusted Bond Portfolio

Portfolio Composition – continued

(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 and Other.

(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 and Other.

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

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 December 31, 2018.

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

MFS Inflation-Adjusted Bond Portfolio

MANAGEMENT REVIEW

Summary of Results

For the twelve months ended December 31, 2018, Initial Class shares of the MFS Inflation-Adjusted Bond Portfolio (“fund”) provided a total return of –4.47%, while Service Class shares of the fund provided a total return of –4.70%. These compare with a return of –4.07% over the same period for the fund’s benchmark, the Bloomberg Barclays World Government Inflation-Linked Bond Index.

Market Environment

Factors Affecting Performance

Relative to the Bloomberg Barclays World Government Inflation-Linked Bond Index, bond allocation, most notably the fund’s underweight exposure to bonds with maturities of less than five years, held back performance. An underweight exposure to bonds issued in the United Kingdom further detracted from relative performance. Additionally, the fund’s longer relative duration (d) exposure to the British Pound, and shorter relative duration exposure to euro yield curves, weighed on relative returns.

On the positive side, the fund’s shorter relative duration exposure to the United States, New Zealand and Canadian dollar yield curves contributed to relative returns. The fund’sout-of-benchmark exposure to bonds issued in Portugal, and bond selection withinUS-issued securities, also benefited relative results.

Respectfully,

Portfolio Manager(s)

Erik Weisman

(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.

MFS Inflation-Adjusted Bond Portfolio

PERFORMANCE SUMMARY THROUGH 12/31/18

Growth of a Hypothetical $10,000 Investment

LOGO

Total Returns through 12/31/18

Average annual total returns


	Share Class	Class Inception Date	1-yr	5-yr	10-yr
	Initial Class	10/01/08	(4.47)%	0.89%	3.19%
	Service Class	10/01/08	(4.70)%	0.64%	2.92%

Comparative benchmark(s)
	Bloomberg Barclays World Government Inflation-Linked Bond Index (f)		(4.07)%	1.44%	3.59%

(f)	Source: FactSet Research Systems Inc.

Benchmark Definition(s)

Bloomberg Barclays World Government Inflation-Linked Bond Index – measures the performance of the major governmentinflation-linked bond markets.

It is not possible to invest directly in an index.

Notes to Performance Summary

Average annual total return represents the average annual change in value for each share class for the periods presented.

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

MFS Inflation-Adjusted Bond Portfolio

EXPENSE TABLE

Fund Expenses Borne by the Contract Holders during the Period,

July 1, 2018 through December 31, 2018

The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2018 through December 31, 2018.

Actual Expenses

Hypothetical Example for Comparison Purposes


Share Class		Annualized Expense Ratio		Beginning Account Value 7/01/18		Ending Account Value 12/31/18		Expenses Paid During Period (p) 7/01/18-12/31/18
Initial Class	Actual		0.56%		$1,000.00		$974.23		$2.79
Initial Class	Hypothetical (h)		0.56%		$1,000.00		$1,022.38		$2.85
Service Class	Actual		0.81%		$1,000.00		$973.03		$4.03
Service Class	Hypothetical (h)		0.81%		$1,000.00		$1,021.12		$4.13

(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 184/365 (to reflect theone-half year period).

MFS Inflation-Adjusted Bond Portfolio

PORTFOLIO OF INVESTMENTS – 12/31/18

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 – 99.0%
Asset-Backed & Securitized – 1.7%
Dryden Senior Loan Fund,2018-55A, “A1”, CLO, FLR, 3.456% (LIBOR - 3mo. + 1.02%), 4/15/2031 (n)	$	725,000	$	714,503
Loomis, Sayles & Co., CLO, “A2”, FLR, 3.836% (LIBOR - 3mo. + 1.4%), 4/15/2028 (n)		854,664		834,408
Madison Park Funding Ltd.,2014-13A, “BR2”, FLR, 3.949% (LIBOR - 3mo. + 1.5%), 4/19/2030 (n)		901,666		875,397
Symphony CLO Ltd.,2016-17A, “BR”, FLR, 3.636% (LIBOR - 3mo. + 1.2%), 4/15/2028 (n)		764,124		744,481
TICP CLO Ltd., FLR, 3.309% (LIBOR -3mo. + 0.8%), 4/20/2028 (n)		1,283,440		1,264,793

			$	4,433,582

Conglomerates – 0.0%
United Technologies Corp., 3.95%, 8/16/2025	$	82,000	$	81,402

Food & Beverages – 0.2%
Anheuser-Busch InBev Finance, Inc., 2.65%, 2/01/2021	$	563,000	$	553,376

International Market Sovereign – 54.0%
Commonwealth of Australia, Inflation Linked Bond, 3%, 9/20/2025	AUD	3,290,467	$	2,663,972
Commonwealth of Australia, Inflation Linked Bond, 2.5%, 9/20/2030		418,425		351,763
Commonwealth of Australia, Inflation Linked Bond, 2%, 8/21/2035		221,600		183,583
Commonwealth of Australia, Inflation Linked Bond, 1.25%, 8/21/2040		478,440		357,886
Federal Republic of Germany, Inflation Linked Bond, 0.5%, 4/15/2030	EUR	1,156,991		1,531,287
Federal Republic of Germany, Inflation Linked Bond, 0.1%, 4/15/2046		200,813		282,289
Government of Canada, 2%, 6/01/2028	CAD	5,000,000		3,672,722
Government of Canada, Inflation Linked Bond, 4.25%, 12/01/2026		1,030,502		966,130
Government of Canada, Inflation Linked Bond, 4%, 12/01/2031		924,368		954,376
Government of Canada, Inflation Linked Bond, 3%, 12/01/2036		911,302		914,339
Government of Canada, Inflation Linked Bond, 2%, 12/01/2041		977,709		896,890
Government of Canada, Inflation Linked Bond, 1.5%, 12/01/2044		811,909		693,744
Government of Canada, Inflation Linked Bond, 1.25%, 12/01/2047		978,768		805,347
Government of France, Inflation Linked Bond, 3.4%, 7/25/2029	EUR	330,069		534,171
Government of France, Inflation Linked Bond, 0.7%, 7/25/2030		1,043,830		1,341,780


Issuer	Shares/Par		Value ($)
BONDS – continued
International Market Sovereign – continued
Government of France, Inflation Linked Bond, 3.15%, 7/25/2032	EUR	577,845	$	979,261
Government of France, Inflation Linked Bond, 0.1%, 7/25/2036 (z)		409,528		486,437
Government of France, Inflation Linked Bond, 1.8%, 7/25/2040		536,463		868,306
Government of Japan, Inflation Linked Bond, 0.1%, 3/10/2026	JPY	821,591,100		7,739,545
Government of New Zealand, Inflation Linked Bond, 2%, 9/20/2025	NZD	1,237,515		872,696
Government of New Zealand,
Inflation Linked Bond, 3%, 9/20/2030		640,020		500,563
Government of New Zealand, Inflation Linked Bond, 2.5%, 9/20/2035		420,080		318,748
Kingdom of Denmark, Inflation Linked Bond, 0.1%, 11/15/2023	DKK	6,410,460		1,041,433
Kingdom of Spain, Inflation Linked Bond, 1.8%, 11/30/2024	EUR	4,768,660		6,168,506
Kingdom of Spain, Inflation Linked Bond, 0.65%, 11/30/2027		1,244,964		1,490,135
Kingdom of Spain, Inflation Linked Bond, 1%, 11/ 30/2030		4,152,683		5,057,228
Kingdom of Sweden, Inflation Linked Bond, 3.5%, 12/01/2028	SEK	8,390,362		1,441,350
Republic of Italy, Inflation Linked Bond, 2.1%, 9/15/2021	EUR	4,511,000		5,381,728
Republic of Italy, Inflation Linked Bond, 2.6%, 9/15/2023		3,232,475		3,950,979
Republic of Italy, Inflation Linked Bond, 2.35%, 9/15/2024		1,098,395		1,327,803
Republic of Italy, Inflation Linked Bond, 3.1%, 9/15/2026		1,650,330		2,093,150
Republic of Italy, Inflation Linked Bond, 1.3%, 5/15/2028		3,960,647		4,339,059
Republic of Italy, Inflation Linked Bond, 1.25%, 9/15/2032		1,351,740		1,410,452
Republic of Italy, Inflation Linked Bond, 2.35%, 9/15/2035		1,480,800		1,797,236
Republic of Italy, Inflation Linked Bond, 2.55%, 9/15/2041		565,475		688,215
Republic of Portugal, 4.125%, 4/14/2027		8,000,000		11,002,002
Republic of Portugal, 3.875%, 2/15/2030		2,000,000		2,723,878
United Kingdom Treasury, 4.75%, 12/07/2030	GBP	2,671,000		4,651,988
United Kingdom Treasury, 4.25%, 3/07/2036		1,775,000		3,123,143
United Kingdom Treasury, 3.25%, 1/22/2044		660,000		1,075,251
United Kingdom Treasury, Inflation Linked Bond, 1.25%, 11/22/2032		492,665		938,416

MFS Inflation-Adjusted Bond Portfolio

Portfolio of Investments – continued



Issuer	Shares/Par		Value ($)

BONDS – continued
International Market Sovereign – continued
United Kingdom Treasury, Inflation Linked Bond, 0.75%, 3/22/2034	GBP	4,796,266	$	8,825,855
United Kingdom Treasury, Inflation Linked Bond, 2%, 1/26/2035		1,696,165		3,666,047
United Kingdom Treasury, Inflation Linked Bond, 1.125%, 11/22/2037		1,209,796		2,530,784
United Kingdom Treasury, Inflation Linked Bond, 0.625%, 3/22/2040		2,027,456		4,078,593
United Kingdom Treasury, Inflation Linked Bond, 0.625%, 11/22/2042		1,593,481		3,355,335
United Kingdom Treasury, Inflation Linked Bond, 0.125%, 3/22/2044		1,719,295		3,329,488
United Kingdom Treasury, Inflation Linked Bond, 0.125%, 3/22/2046		1,357,453		2,687,810
United Kingdom Treasury, Inflation Linked Bond, 0.75%, 11/22/2047		1,770,557		4,115,395
United Kingdom Treasury, Inflation Linked Bond, 0.5%, 3/22/2050		1,529,169		3,503,574
United Kingdom Treasury, Inflation Linked Bond, 0.25%, 3/22/2052		1,345,822		2,998,223
United Kingdom Treasury, Inflation Linked Bond, 1.25%, 11/22/2055		1,471,368		4,371,703
United Kingdom Treasury, Inflation Linked Bond, 0.125%, 11/22/2056		214,814		492,456
United Kingdom Treasury, Inflation Linked Bond, 0.125%, 3/22/2058		1,289,723		3,003,304
United Kingdom Treasury, Inflation Linked Bond, 0.375%, 3/22/2062		1,380,122		3,680,729
United Kingdom Treasury, Inflation Linked Bond, 0.125%, 11/22/2065		699,149		1,843,972
United Kingdom Treasury, Inflation Linked Bond, 0.125%, 3/22/2068		1,321,681		3,644,528

			$	143,745,583

Restaurants – 0.2%
Starbucks Corp., 3.8%, 8/15/2025	$	658,000	$	651,004

U.S. Treasury Inflation Protected Securities – 42.9%
U.S. Treasury Bonds, 1.125%, 1/15/2021	$	1,876,042	$	1,867,533
U.S. Treasury Bonds, 0.375%, 7/15/2023		1,715,647		1,677,576
U.S. Treasury Bonds, 0.625%, 1/15/2024		3,502,486		3,447,964
U.S. Treasury Bonds, 0.25%, 1/15/2025		5,270,593		5,047,446



Issuer	Shares/Par		Value ($)

BONDS – continued
U.S. Treasury Inflation Protected Securities – continued
U.S. Treasury Bonds, 2.375%, 1/15/2025	$	3,585,669	$	3,877,208
U.S. Treasury Bonds, 0.625%, 1/15/2026		6,810,688		6,629,960
U.S. Treasury Bonds, 2%, 1/15/2026		1,693,133		1,807,181
U.S. Treasury Bonds, 0.375%, 1/15/2027		1,962,694		1,864,425
U.S. Treasury Bonds, 2.375%, 1/15/2027		2,624,308		2,897,344
U.S. Treasury Bonds, 1.75%, 1/15/2028		3,437,479		3,650,627
U.S. Treasury Bonds, 3.625%, 4/15/2028		5,498,337		6,747,854
U.S. Treasury Bonds, 2.5%, 1/15/2029		7,120,555		8,104,868
U.S. Treasury Bonds, 3.875%, 4/15/2029		3,913,003		4,978,189
U.S. Treasury Bonds, 3.375%, 4/15/2032		346,166		443,945
U.S. Treasury Bonds, 2.125%, 2/15/2040		1,264,640		1,486,574
U.S. Treasury Bonds, 2.125%, 2/15/2041		2,652,231		3,132,416
U.S. Treasury Bonds, 0.75%, 2/15/2042		2,514,460		2,281,816
U.S. Treasury Bonds, 0.625%, 2/15/2043		2,952,990		2,588,501
U.S. Treasury Bonds, 1.375%, 2/15/2044		5,952,036		6,146,175
U.S. Treasury Bonds, 0.75%, 2/15/2045		2,936,816		2,626,311
U.S. Treasury Bonds, 1%, 2/15/2046		2,521,699		2,391,193
U.S. Treasury Bonds, 0.875%, 2/15/2047		1,661,335		1,525,412
U.S. Treasury Notes, 0.125%, 4/15/2021		4,746,549		4,615,597
U.S. Treasury Notes, 0.625%, 7/15/2021		2,684,707		2,655,458
U.S. Treasury Notes, 0.125%, 1/15/2022		5,078,700		4,929,908
U.S. Treasury Notes, 0.125%, 7/15/2022		2,055,078		1,996,154
U.S. Treasury Notes, 0.125%, 1/15/2023		4,943,856		4,775,269
U.S. Treasury Notes, 0.125%, 7/15/2024		4,074,346		3,907,292
U.S. Treasury Notes, 0.375%, 7/15/2025		3,719,115		3,585,677
U.S. Treasury Notes, 0.125%, 7/15/2026		3,985,374		3,741,963
U.S. Treasury Notes, 0.375%, 7/15/2027		3,101,040		2,942,159
U.S. Treasury Notes, 0.5%, 1/15/2028		6,191,604		5,909,480

			$	114,279,475

Total Bonds (Identified Cost, $258,998,502)			$	263,744,422


INVESTMENT COMPANIES (h) – 0.4%
Money Market Funds – 0.4%
MFS Institutional Money Market Portfolio, 2.4% (v) (Identified Cost, $950,035)		950,130	$	950,035

OTHER ASSETS, LESS LIABILITIES – 0.6%				1,582,347

NET ASSETS – 100.0%			$	266,276,804

(h)

(n)

Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be sold in the ordinary course of business in transactions exempt from registration, normally to qualified institutional buyers. At period end, the aggregate value of these securities was $4,433,582, representing 1.7% of net assets.

(v)

(z)

Restricted securities are not registered under the Securities Act of 1933 and are subject to legal restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are subsequently registered. Disposal of these securities may involvetime-consuming negotiations and prompt sale at an acceptable price may be difficult. The fund holds the following restricted securities:


Restricted Securities	Acquisition Date	Cost		Value

Government of France, Inflation Linked Bond, 0.1%, 7/25/2036	6/25/18		$520,925		$486,437

% of Net assets					0.2%

MFS Inflation-Adjusted Bond Portfolio

Portfolio of Investments – continued

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

CLO

Collateralized Loan Obligation

FLR

Floating Rate. Interest rate resets periodically based on the parenthetically disclosed reference rate plus a spread (if any). Theperiod-end rate reported may not be the current rate. All reference rates are USD unless otherwise noted.

LIBOR

London Interbank Offered Rate PLC Public Limited Company

Abbreviations indicate amounts shown in currencies other than the U.S. dollar. All amounts are stated in U.S. dollars unless otherwise indicated. A list of abbreviations is shown below:

AUD

Australian Dollar

CAD

Canadian Dollar

DKK

Danish Krone

EUR

Euro

GBP

British Pound

JPY

Japanese Yen

MXN

Mexican Peso

NOK

Norwegian Krone

NZD

New Zealand Dollar

SEK

Swedish Krona

Derivative Contracts at 12/31/18

Forward Foreign Currency Exchange Contracts


Currency Purchased		Currency Sold		Counterparty	Settlement Date		Unrealized Appreciation (Depreciation)
Asset Derivatives
EUR	8,084,723	USD	9,233,788	State Street Bank Corp.		1/11/2019		$35,389
EUR	595,031	USD	681,641	Citibank N.A.		1/11/2019		565
EUR	3,830,000	USD	4,362,722	Goldman Sachs International		1/11/2019		28,395
GBP	1,980,582	USD	2,509,231	State Street Bank Corp.		1/11/2019		16,215
GBP	567,830	USD	719,855	Brown Brothers Harriman		1/11/2019		4,187
JPY	46,982,000	USD	417,588	State Street Bank Corp.		1/11/2019		11,198
JPY	959,207,000	USD	8,589,983	Brown Brothers Harriman		1/11/2019		164,329
JPY	78,264,000	USD	694,940	Deutsche Bank AG		1/11/2019		19,345
JPY	48,082,014	USD	432,309	JPMorgan Chase Bank N.A.		1/11/2019		6,517
JPY	107,369,000	USD	974,471	Morgan Stanley Capital Services, Inc.		1/11/2019		5,444
NOK	11,721,000	USD	1,339,205	Citibank N.A.		1/11/2019		16,878
NZD	4,365,000	USD	2,886,605	Citibank N.A.		1/11/2019		43,575
NZD	4,160,000	USD	2,757,111	Goldman Sachs International		1/11/2019		35,457
NZD	6,819,228	USD	4,490,776	UBS AG		1/11/2019		86,904
SEK	15,257,703	USD	1,680,535	State Street Bank Corp.		1/11/2019		42,180
SEK	25,799,000	USD	2,873,842	Brown Brothers Harriman		1/11/2019		39,070
SEK	12,427,000	USD	1,386,129	Goldman Sachs International		1/11/2019		16,978
SEK	25,782,000	USD	2,904,075	JPMorgan Chase Bank N.A.		1/11/2019		6,918
USD	1,370,943	AUD	1,910,000	Citibank N.A.		1/11/2019		25,398
USD	4,917,431	AUD	6,899,044	Deutsche Bank AG		1/11/2019		57,235
USD	5,976,904	AUD	8,376,265	Goldman Sachs International		1/11/2019		76,045
USD	3,668,090	AUD	5,135,361	JPMorgan Chase Bank N.A.		1/11/2019		50,363
USD	2,973,837	AUD	4,206,000	Morgan Stanley Capital Services, Inc.		1/11/2019		10,820
USD	5,909,201	CAD	7,794,000	Goldman Sachs International		1/11/2019		198,739
USD	2,742,343	CAD	3,636,259	JPMorgan Chase Bank N.A.		1/11/2019		78,150
USD	809,719	CAD	1,085,000	Morgan Stanley Capital Services, Inc.		1/11/2019		14,768
USD	956,574	CAD	1,270,444	UBS AG		1/11/2019		25,752
USD	373,501	DKK	2,386,894	Citibank N.A.		1/11/2019		6,958
USD	1,569,008	EUR	1,350,000	Citibank N.A.		1/11/2019		21,225
USD	3,272,878	EUR	2,804,818	Deutsche Bank AG		1/11/2019		57,138
USD	3,221,766	EUR	2,761,901	Goldman Sachs International		1/11/2019		55,232
USD	2,883,521	EUR	2,499,000	Morgan Stanley Capital Services, Inc.		1/11/2019		18,404
USD	1,547,432	EUR	1,349,351	UBS AG		1/11/2019		393
USD	6,320,530	GBP	4,920,229	State Street Bank Corp.		1/11/2019		46,732
USD	201,850	GBP	153,000	Barclays Bank PLC		1/11/2019		6,760

MFS Inflation-Adjusted Bond Portfolio

Portfolio of Investments – continued

Forward Foreign Currency Exchange Contracts - continued


Currency Purchased		Currency Sold		Counterparty	Settlement Date		Unrealized Appreciation (Depreciation)
Asset Derivatives - continued
USD	1,890,427	GBP	1,466,000	Citibank N.A.		1/11/2019		$21,126
USD	643,271	GBP	502,259	Deutsche Bank AG		1/11/2019		2,839
USD	2,825,432	NOK	23,781,000	Goldman Sachs International		1/11/2019		74,045
USD	2,889,039	NOK	23,887,000	JPMorgan Chase Bank N.A.		1/11/2019		125,387
USD	2,898,377	NZD	4,250,000	Citibank N.A.		1/11/2019		45,394
USD	4,765,883	NZD	7,029,000	Goldman Sachs International		1/11/2019		47,384

								$1,645,831

Liability Derivatives
AUD	4,045,000	USD	2,937,501	State Street Bank Corp.		1/11/2019		$(87,904	)
AUD	8,644,440	USD	6,259,152	Citibank N.A.		1/11/2019		(169,371	)
AUD	9,201,824	USD	6,683,119	Deutsche Bank AG		1/11/2019		(200,675	)
AUD	2,033,000	USD	1,481,606	Goldman Sachs International		1/11/2019		(49,410	)
CAD	1,876,000	USD	1,450,747	Brown Brothers Harriman		1/11/2019		(76,250	)
CAD	290,281	USD	223,130	Merrill Lynch International		1/11/2019		(10,449	)
EUR	925,000	USD	1,062,297	Goldman Sachs International		1/11/2019		(1,779	)
GBP	1,120,000	USD	1,431,324	State Street Bank Corp.		1/11/2019		(3,208	)
GBP	1,940,885	USD	2,512,837	Brown Brothers Harriman		1/11/2019		(38,007	)
GBP	433,442	USD	563,861	Citibank N.A.		1/11/2019		(11,178	)
GBP	8,243,285	USD	10,894,779	Deutsche Bank AG		1/11/2019		(383,742	)
GBP	1,889,381	USD	2,440,653	Morgan Stanley Capital Services, Inc.		1/11/2019		(31,499	)
GBP	1,072,000	USD	1,369,106	NatWest Markets PLC		1/11/2019		(2,196	)
GBP	152,000	USD	193,969	UBS AG		1/11/2019		(154	)
MXN	133,881	USD	7,031	Goldman Sachs International		1/11/2019		(225	)
NOK	23,744,000	USD	2,903,614	Brown Brothers Harriman		1/11/2019		(156,508	)
NOK	47,610,000	USD	5,863,599	Goldman Sachs International		1/11/2019		(355,270	)
NZD	1,237,185	USD	834,392	Citibank N.A.		1/11/2019		(3,882	)
NZD	1,939,000	USD	1,331,562	Deutsche Bank AG		1/11/2019		(29,930	)
NZD	6,354,597	USD	4,326,944	Goldman Sachs International		1/11/2019		(61,168	)
USD	347,671	EUR	304,000	State Street Bank Corp.		1/11/2019		(867	)
USD	170,591	EUR	150,000	Brown Brothers Harriman		1/11/2019		(1,385	)
USD	453,294	EUR	400,000	Citibank N.A.		1/11/2019		(5,308	)
USD	898,954	EUR	789,000	Deutsche Bank AG		1/11/2019		(5,639	)
USD	1,085,768	EUR	953,000	Goldman Sachs International		1/11/2019		(6,852	)
USD	410,351	EUR	361,000	HSBC Bank		1/11/2019		(3,537	)
USD	1,625,045	GBP	1,286,000	Citibank N.A.		1/11/2019		(14,737	)
USD	1,298,537	GBP	1,021,000	Goldman Sachs International		1/11/2019		(3,343	)
USD	246,701	GBP	196,000	Morgan Stanley Capital Services, Inc.		1/11/2019		(3,219	)
USD	3,097,441	JPY	350,454,000	State Street Bank Corp.		1/11/2019		(101,016	)
USD	844,265	JPY	95,425,000	Citibank N.A.		1/11/2019		(26,642	)
USD	2,899,693	JPY	326,352,000	Deutsche Bank AG		1/11/2019		(78,796	)
USD	91,163	JPY	10,241,000	Goldman Sachs International		1/11/2019		(2,303	)
USD	10,607,046	NZD	16,198,563	NatWest Markets PLC		1/11/2019		(266,887	)
USD	1,421,602	SEK	12,847,000	Citibank N.A.		1/11/2019		(28,926	)
USD	5,558,899	SEK	50,275,000	Deutsche Bank AG		1/11/2019		(117,548	)
USD	132,575	SEK	1,200,000	Goldman Sachs International		1/11/2019		(2,915	)
USD	660,785	SEK	5,873,010	JPMorgan Chase Bank N.A.		1/11/2019		(2,325	)

								$(2,345,050	)

At December 31, 2018, the fund had cash collateral with an aggregate value of $610,000 to cover any collateral or margin obligations for certain derivative contracts. Restricted cash in the Statement of Assets and Liabilities is comprised of cash collateral.

See Notes to Financial Statements

MFS Inflation-Adjusted Bond Portfolio

FINANCIAL STATEMENTS ^| STATEMENT OF ASSETS AND LIABILITIES

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


At 12/31/18

Assets
Investments in unaffiliated issuers, at value (identified cost, $258,998,502)			$263,744,422
Investments in affiliated issuers, at value (identified cost, $950,035)			950,035
Cash			6
Restricted cash for
Forward foreign currency exchange contracts			610,000
Receivables for
Forward foreign currency exchange contracts			1,645,831
Investments sold			1,198,400
Interest			1,162,878
Other assets			2,128
Total assets			$269,313,700

Liabilities
Payables for
Forward foreign currency exchange contracts			$2,345,050
Fund shares reacquired			610,105
Payable to affiliates
Investment adviser			14,771
Shareholder servicing costs			47
Distribution and/or service fees			3,612
Accrued expenses and other liabilities			63,311
Total liabilities			$3,036,896
Net assets			$266,276,804

Net assets consist of
Paid-in capital			$259,813,033
Total distributable earnings (loss)			6,463,771
Net assets			$266,276,804
Shares of beneficial interest outstanding			26,384,052



	Net assets		Shares outstanding		Net asset value per share
Initial Class		$134,598,726		13,258,480		$10.15
Service Class		131,678,078		13,125,572		10.03

See Notes to Financial Statements

MFS Inflation-Adjusted Bond Portfolio

FINANCIAL STATEMENTS ^| STATEMENT OF OPERATIONS

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.


Year ended 12/31/18

Net investment income (loss)
Income
Interest		$6,927,384
Dividends from affiliated issuers		132,048
Other		65
Total investment income		$7,059,497
Expenses
Management fee		$1,510,725
Distribution and/or service fees		381,406
Shareholder servicing costs		5,203
Administrative services fee		53,120
Independent Trustees’ compensation		7,236
Custodian fee		39,715
Shareholder communications	��	20,577
Audit and tax fees		42,960
Legal fees		2,626
Miscellaneous		25,576
Total expenses		$2,089,144
Reduction of expenses by investment adviser		(28,745	)
Net expenses		$2,060,399
Net investment income (loss)		$4,999,098

Realized and unrealized gain (loss)
Realized gain (loss) (identified cost basis)
Unaffiliated issuers		$1,879,551
Affiliated issuers		(559	)
Futures contracts		239,877
Swap agreements		(33,609	)
Forward foreign currency exchange contracts		(81,500	)
Foreign currency		48,819
Net realized gain (loss)		$2,052,579
Change in unrealized appreciation or depreciation
Unaffiliated issuers		$(20,131,718	)
Affiliated issuers		806
Futures contracts		(92,707	)
Forward foreign currency exchange contracts		(788,001	)
Translation of assets and liabilities in foreign currencies		(12,512	)
Net unrealized gain (loss)		$(21,024,132	)
Net realized and unrealized gain (loss)		$(18,971,553	)
Change in net assets from operations		$(13,972,455	)

See Notes to Financial Statements

MFS Inflation-Adjusted Bond Portfolio

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.


	Year ended
	12/31/18			12/31/17
Change in net assets

From operations
Net investment income (loss)		$4,999,098			$3,853,425
Net realized gain (loss)		2,052,579			2,093,747
Net unrealized gain (loss)		(21,024,132	)		20,292,792
Change in net assets from operations		$(13,972,455	)		$26,239,964
Total distributions to shareholders		$(4,685,058	)		$—
Change in net assets from fund share transactions		$(42,912,583	)		$(36,327,130	)
Total change in net assets		$(61,570,096	)		$(10,087,166	)

Net assets
At beginning of period		327,846,900			337,934,066
At end of period (b)		$266,276,804			$327,846,900

(b)	Parenthetical disclosure of undistributed net investment income is no longer required. See Note 2. For the year ended December 31, 2017, end of period net assets included undistributed net investment income of $4,516,656.

See Notes to Financial Statements

MFS Inflation-Adjusted Bond Portfolio

FINANCIAL STATEMENTS ^| FINANCIAL HIGHLIGHTS


Initial Class	Year ended
	12/31/18			12/31/17		12/31/16			12/31/15			12/31/14
Net asset value, beginning of period		$10.81			$9.98		$9.73			$10.32			$10.04
Income (loss) from investment operations
Net investment income (loss) (d)		$0.19			$0.13		$0.07	(c)		$(0.01	)		$0.08
Net realized and unrealized gain (loss)		(0.67	)		0.70		0.18			(0.51	)		0.29
Total from investment operations		$(0.48	)		$0.83		$0.25			$(0.52	)		$0.37
Less distributions declared to shareholders		��
From net investment income		$(0.18	)		$—		$—			$(0.07	)		$(0.09	)
Net asset value, end of period (x)		$10.15			$10.81		$9.98			$9.73			$10.32
Total return (%) (k)(r)(s)(x)		(4.47	)		8.32		2.57	(c)		(5.04	)		3.71
Ratios (%) (to average net assets) and Supplemental data:
Expenses before expense reductions (f)		0.57			0.56		0.55	(c)		0.56			0.55
Expenses after expense reductions (f)		0.56			0.55		0.54	(c)		0.55			0.54
Net investment income (loss)		1.78			1.28		0.65	(c)		(0.11	)		0.72
Portfolio turnover		63			40		47			44			24
Net assets at end of period (000 omitted)		$134,599			$162,429		$168,857			$184,691			$214,183

Service Class	Year ended
	12/31/18			12/31/17		12/31/16			12/31/15			12/31/14
Net asset value, beginning of period		$10.68			$9.89		$9.66			$10.24			$9.96
Income (loss) from investment operations
Net investment income (loss) (d)		$0.16			$0.11		$0.04	(c)		$(0.04	)		$0.05
Net realized and unrealized gain (loss)		(0.66	)		0.68		0.19			(0.50	)		0.29
Total from investment operations		$(0.50	)		$0.79		$0.23			$(0.54	)		$0.34
Less distributions declared to shareholders
From net investment income		$(0.15	)		$—		$—			$(0.04	)		$(0.06	)
Net asset value, end of period (x)		$10.03			$10.68		$9.89			$9.66			$10.24
Total return (%) (k)(r)(s)(x)		(4.70	)		7.99		2.38	(c)		(5.27	)		3.43
Ratios (%) (to average net assets) and Supplemental data:
Expenses before expense reductions (f)		0.82			0.81		0.80	(c)		0.81			0.80
Expenses after expense reductions (f)		0.81			0.80		0.79	(c)		0.80			0.79
Net investment income (loss)		1.54			1.03		0.40	(c)		(0.37	)		0.46
Portfolio turnover		63			40		47			44			24
Net assets at end of period (000 omitted)		$131,678			$165,418		$169,077			$176,909			$217,249

See Notes to Financial Statements

MFS Inflation-Adjusted Bond Portfolio

Financial Highlights – continued

(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.

(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

MFS Inflation-Adjusted Bond Portfolio

NOTES TO FINANCIAL STATEMENTS

(1)

Business and Organization

MFS Inflation-Adjusted Bond Portfolio (the fund) is anon-diversified series of MFS Variable Insurance Trust III (the trust). The trust is organized as a Delaware statutory 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.

(2)

Significant Accounting Policies

In March 2017, the FASB issued Accounting Standards Update2017-08, Receivables – Nonrefundable Fees and Other Costs (Subtopic310-20) – Premium Amortization on Purchased Callable Debt Securities (“ASU2017-08”). For entities that hold callable debt securities at a premium, ASU2017-08 requires that the premium be amortized to the earliest call date. ASU2017-08 will be effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Management has evaluated the potential impacts of ASU2017-08 and believes that adoption of ASU2017-08 will not have a material effect on the fund’s overall financial position or its overall results of operations.

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– Debt instruments and floating rate loans, including restricted debt instruments, are generally valued at an evaluated or composite bid as provided by a third-party pricing service. Short-term instruments with a maturity at issuance of 60 days or less may be valued at amortized cost, which approximates market value. Futures contracts are generally valued at last posted settlement price on their primary exchange as provided by a third-party pricing service. Futures contracts for which there were no trades that day for a particular position are generally valued at the closing bid quotation on their primary exchange as provided by a third-party pricing service. Forward foreign currency exchange contracts are generally valued at the mean of bid and asked prices for the time period interpolated from rates provided by a third-party pricing service for proximate time periods. Swap agreements are generally valued at valuations provided by a third-party pricing service, which for cleared swaps includes an evaluation of any trading activity at the clearinghouses.Open-end investment companies are generally valued at net asset value per share. Securities and other

MFS Inflation-Adjusted Bond Portfolio

Notes to Financial Statements – continued

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 halting of trading of a specific security where trading does not resume prior to the close of the exchange or market on which the security is principally traded. The adviser generally relies on third-party pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and financial condition of the issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment for purposes of calculating the fund’s net asset value can differ depending on the source and method used to determine value. When fair valuation is used, the value of an investment used to determine the fund’s net asset value may differ from quoted or published prices for the same investment. There can be no assurance that the fund could obtain the fair value assigned to an investment if it were to sell the investment at the same time at which the fund determines its net asset value per share.

Various inputs are used in determining the value of the fund’s assets or liabilities. These inputs are categorized into three broad levels. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fund’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. Level 1 includes unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes other significant observable market-based inputs (including quoted prices for similar securities, interest rates, prepayment speed, and credit risk). Level 3 includes unobservable inputs, which may include the adviser’s own assumptions in determining the fair value of investments. Other financial instruments are derivative instruments, such as forward foreign currency exchange contracts. The following is a summary of the levels used as of December 31, 2018 in valuing the fund’s assets or liabilities:



Financial Instruments	Level 1		Level 2			Level 3		Total
U.S. Treasury Bonds & U.S. Government
Agency & Equivalents		$—		$114,279,475			$—		$114,279,475
Non-U.S. Sovereign Debt		—		143,745,583			—		143,745,583
U.S. Corporate Bonds		—		1,285,782			—		1,285,782
Asset-Backed Securities (including CDOs)		—		4,433,582			—		4,433,582
Mutual Funds		950,035		—			—		950,035
Total		$950,035		$263,744,422			$—		$264,694,457

Other Financial Instruments
Forward Foreign Currency Exchange Contracts – Assets		$—		$1,645,831			$—		$1,645,831
Forward Foreign Currency Exchange Contracts – Liabilities		—		(2,345,050	)		—		(2,345,050	)

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

Inflation-Adjusted Debt Securities– The fund invests in inflation-adjusted debt securities issued by the U.S. Treasury. The fund also invests in inflation-adjusted debt securities issued by U.S. Government agencies and instrumentalities other than the U.S. Treasury and by other entities such as U.S. and foreign corporations and foreign governments. The principal value of these debt securities is adjusted through income according to changes in the Consumer Price Index or another general price or wage index. These debt securities typically pay a fixed rate of interest, but this fixed rate is applied to the inflation-adjusted principal amount. The principal paid at maturity of the debt security is typically equal to the inflation-adjusted principal amount, or the security’s original par value, whichever is greater. Other types of inflation-adjusted securities may use other methods to adjust for other measures of inflation.

MFS Inflation-Adjusted Bond Portfolio

Notes to Financial Statements – continued

Derivatives– The fund uses derivatives primarily to increase or decrease exposure to a particular market or segment of the market, or security, to increase or decrease interest rate or currency exposure, or as alternatives to direct investments. Derivatives are used for hedging ornon-hedging purposes. While hedging can reduce or eliminate losses, it can also reduce or eliminate gains. When the fund uses derivatives as an investment to increase market exposure, or for hedging purposes, gains and losses from derivative instruments may be substantially greater than the derivative’s original cost.

The derivative instruments used by the fund during the period were futures contracts, forward foreign currency exchange contracts, and swap agreements. Depending on the type of derivative, the fund may exit a derivative position by entering into an offsetting transaction with a counterparty or exchange, negotiating an agreement with the derivative counterparty, or novating the position to a third party. The fund’s period end derivatives, as presented in the Portfolio of Investments and the associated Derivative Contract tables, generally are indicative of the volume of its derivative activity during the period.

The following table presents, by major type of derivative contract, the fair value, on a gross basis, of the asset and liability components of derivatives held by the fund at December 31, 2018 as reported in the Statement of Assets and Liabilities:


		Fair Value
Risk	Derivative Contracts	Asset Derivatives		Liability Derivatives
Foreign Exchange	Forward Foreign Currency Exchange Contracts		$1,645,831		$(2,345,050	)

The following table presents, by major type of derivative contract, the realized gain (loss) on derivatives held by the fund for the year ended December 31, 2018 as reported in the Statement of Operations:


Risk	Futures Contracts		Swap Agreements			Forward Foreign Currency Exchange Contracts
Interest Rate		$239,877		$(33,609	)		$—
Foreign Exchange		—		—			(81,500	)
Total		$239,877		$(33,609	)		$(81,500	)

The following table presents, by major type of derivative contract, the change in unrealized appreciation or depreciation on derivatives held by the fund for the year ended December 31, 2018 as reported in the Statement of Operations:


Risk	Futures Contracts			Forward Foreign Currency Exchange Contracts
Interest Rate		$(92,707	)		$—
Foreign Exchange		—			(788,001	)
Total		$(92,707	)		$(788,001	)

Derivative counterparty credit risk is managed through formal evaluation of the creditworthiness of all potential counterparties. On certain, but not all, uncleared derivatives, the fund attempts to reduce its exposure to counterparty credit risk whenever possible by entering into an ISDA Master Agreement on a bilateral basis. The ISDA Master Agreement gives each party to the agreement the right to terminate all transactions traded under such agreement if there is a specified deterioration in the credit quality of the other party. Upon an event of default or a termination of the ISDA Master Agreement, thenon-defaulting party has the right to close out all transactions traded under such agreement and to net amounts owed under each agreement to one net amount payable by one party to the other. This right to close out and net payments across all transactions traded under the ISDA Master Agreement could result in a reduction of the fund’s credit risk to such counterparty equal to any amounts payable by the fund under the applicable transactions, if any.

MFS Inflation-Adjusted Bond Portfolio

Notes to Financial Statements – continued

uncleared derivatives (e.g., forward foreign currency exchange contracts, uncleared swap agreements, and uncleared options) and collateral, in the form of cash and securities, is held in segregated accounts with the fund’s custodian in connection with these agreements. For derivatives traded under an ISDA Master Agreement, which contains a collateral support annex, the collateral requirements are netted across all transactions traded under such counterparty-specific agreement and an amount is posted from one party to the other to collateralize such obligations. Cash that has been segregated or delivered to cover the fund’s collateral or margin obligations under derivative contracts, if any, will be reported separately in the Statement of Assets and Liabilities as restricted cash for uncleared derivatives and/or deposits with brokers for cleared derivatives. Securities pledged as collateral or margin for the same purpose, if any, are noted in the Portfolio of Investments. The fund may be required to make payments of interest on uncovered collateral or margin obligations with the broker. Any such payments are included in “Miscellaneous” expense in the Statement of Operations.

Futures Contracts– The fund entered into futures contracts which may be used to hedge against or obtain broad market exposure, interest rate exposure, currency exposure, or to manage duration. A futures contract represents a commitment for the future purchase or sale of an asset at a specified price on a specified date.

Upon entering into a futures contract, the fund is required to deposit with the broker, either in cash or securities, an initial margin in an amount equal to a specified percentage of the notional amount of the contract. Subsequent payments (variation margin) are made or received by the fund each day, depending on the daily fluctuations in the value of the contract, and are recorded for financial statement purposes as unrealized gain or loss by the fund until the contract is closed or expires at which point the gain or loss on futures contracts is realized.

The fund bears the risk of interest rates, exchange rates or securities prices moving unexpectedly, in which case, the fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. While futures contracts may present less counterparty risk to the fund since the contracts are exchange traded and the exchange’s clearinghouse guarantees payments to the broker, there is still counterparty credit risk due to the insolvency of the broker. The fund’s maximum risk of loss due to counterparty credit risk is equal to the margin posted by the fund to the broker plus any gains or minus any losses on the outstanding futures contracts.

Forward Foreign Currency Exchange Contracts– The fund entered into forward foreign currency exchange contracts for the purchase or sale of a specific foreign currency at a fixed price on a future date. These contracts may be used to hedge the fund’s currency risk or fornon-hedging purposes. For hedging purposes, the fund may enter into contracts to deliver or receive foreign currency that the fund will receive from or use in its normal investment activities. The fund may also use contracts to hedge against declines in the value of foreign currency denominated securities due to unfavorable exchange rate movements. Fornon-hedging purposes, the fund may enter into contracts with the intent of changing the relative exposure of the fund’s portfolio of securities to different currencies to take advantage of anticipated exchange rate changes.

Forward foreign currency exchange contracts are adjusted by the daily exchange rate of the underlying currency and any unrealized gains or losses are recorded as a receivable or payable for forward foreign currency exchange contracts until the contract settlement date. On contract settlement date, any gain or loss on the contract is recorded as realized gains or losses on forward foreign currency exchange contracts.

Risks may arise upon entering into these contracts from unanticipated movements in the value of the contract and from the potential inability of counterparties to meet the terms of their contracts. Generally, the fund’s maximum risk due to counterparty credit risk is the unrealized gain on the contract due to the use of Continuous Linked Settlement, a multicurrency cash settlement system for the centralized settlement of foreign transactions. This risk is mitigated in cases where there is an ISDA Master Agreement between the fund and the counterparty providing for netting as described above and, where applicable, by the posting of collateral by the counterparty to the fund to cover the fund’s exposure to the counterparty under such ISDA Master Agreement.

Swap Agreements– During the period the fund entered into swap agreements. Swap agreements generally involve a periodic exchange of cash payments on a net basis, at specified intervals or upon the occurrence of specified events, between the fund and a counterparty. Certain swap agreements may be entered into as a bilateral contract (“uncleared swaps”) while others are required to be centrally cleared (“cleared swaps”). In a cleared swap transaction, the ultimate counterparty to the transaction is a clearinghouse (the “clearinghouse”). The contract is transferred and accepted by the clearinghouse immediately following execution of the swap contract with an executing broker. Thereafter, throughout the term of the cleared swap, the fund interfaces indirectly with the clearinghouse through a clearing broker and has counterparty risk to the clearing broker as well.

Amounts paid or received at the inception of uncleared swap agreements are presented parenthetically as premiums paid or received and reflected in the value of the uncleared swap in the Statement of Assets and Liabilities. Those premiums are amortized using the effective interest method over the term of the agreement as realized gain or loss on swap agreements in the Statement of Operations. The value of the uncleared swap agreements, which is adjusted daily and includes any related interest accruals to be paid or received by the fund, is recorded in the Statement of Assets and Liabilities as “Uncleared swaps, at value”. The daily change in the value of uncleared swaps, including any related interest accruals to be paid or received, is recorded as unrealized appreciation or

MFS Inflation-Adjusted Bond Portfolio

Notes to Financial Statements – continued

depreciation on swap agreements in the Statement of Operations. For cleared swaps, the daily change in valuation is recorded as a receivable or payable for variation margin in the Statement of Assets and Liabilities and reflected in unrealized appreciation or depreciation on swap agreements in the Statement of Operations. The periodic exchange of net cash payments, at specified intervals or upon the occurrence of specified events as stipulated by the agreement, is recorded as realized gain or loss on swap agreements in the Statement of Operations. A liquidation payment received or made upon early termination is recorded as a realized gain or loss on swap agreements in the Statement of Operations.

Risks related to swap agreements include the possible lack of a liquid market, unfavorable market and interest rate movements of the underlying instrument and the failure of the counterparty to perform under the terms of the agreements. The fund’s maximum risk of loss from counterparty credit risk is the discounted net value of the cash flows to be received from/paid to the counterparty over the contract’s remaining life, to the extent that the amount is positive. To address counterparty risk, uncleared swap agreements are limited to only highly-rated counterparties. Risk is further reduced by having an ISDA Master Agreement between the fund and the counterparty providing for netting as described above and, where applicable, by the posting of collateral by the counterparty to the fund to cover the fund’s exposure to the counterparty under such ISDA Master Agreement. The fund’s counterparty risk due to cleared swaps is mitigated by the fact that the clearinghouse is the true counterparty to the transaction and the regulatory requirement safeguards in the event of a clearing broker bankruptcy.

The fund entered into inflation swap agreements in order to manage its exposure to inflation risk. Inflation swap agreements involve the periodic exchange of cash flows, between the fund and a counterparty, based on the difference between two rates applied to a notional principal amount. The two rates exchanged are generally a fixed rate and a floating rate based on an inflation index.

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

Investment Transactions and Income– Investment transactions are recorded on the trade date. Interest income is recorded on the accrual basis. All premium and discount is amortized or accreted for financial statement purposes in accordance with U.S. generally accepted accounting principles. Inflation-indexed bonds are fixed-income securities whose principal value is periodically adjusted upward or downward based on the rate of inflation. Interest is accrued based on the principal value, which is adjusted for inflation. Any increase or decrease in the principal amount of an inflation-indexed bond is generally recorded as an increase or decrease in interest income, respectively, even though the adjusted principal is not received until maturity. Interest payments received in additional securities are recorded on theex-interest date in an amount equal to the value of the security on such date.

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.

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

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


	Year ended 12/31/18		Year ended 12/31/17
Ordinary income (including any short-term capital gains)		$4,685,058		$—

MFS Inflation-Adjusted Bond Portfolio

Notes to Financial Statements – continued

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


As of 12/31/18

Cost of investments	$260,008,274
Gross appreciation	9,488,712
Gross depreciation	(5,501,748	)
Net unrealized appreciation (depreciation)	$3,986,964

Undistributed ordinary income	4,024,081
Capital loss carryforwards	(1,543,720	)
Other temporary differences	(3,554	)

As of December 31, 2018, the fund had capital loss carryforwards available to offset future realized gains. These net capital losses may be carried forward indefinitely and their character is retained as short-term and/or long-term losses. Such losses are characterized as follows:


Short-Term			$(1,543,720	)

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

	Year ended 12/31/18		Year ended 12/31/17
Initial Class		$2,528,387		$—
Service Class		2,156,671		—
Total		$4,685,058		$—

(3)

Transactions with Affiliates

Investment Adviser– The fund has an investment advisory agreement with MFS to provide overall investment management and related administrative services and facilities to the fund. The management fee is computed daily and paid monthly at an annual rate of 0.50% of the fund’s average daily net assets.

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 year ended December 31, 2018, this management fee reduction amounted to $28,745, which is included in the reduction of total expenses in the Statement of Operations. The management fee incurred for the year ended December 31, 2018 was equivalent to an annual effective rate of 0.49% 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.

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 year ended December 31, 2018, the fee was $5,036, which equated to 0.0017% 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 year ended December 31, 2018, these costs amounted to $167.

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 year ended December 31, 2018 was equivalent to an annual effective rate of 0.0176% of the fund’s average daily net assets.

MFS Inflation-Adjusted Bond Portfolio

Notes to Financial Statements – continued

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

Other– This fund and certain other funds managed by MFS (the funds) have entered into a service agreement (the ISO Agreement) which provides 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 serves as the ISO and is an officer of the funds and the sole member of Tarantino LLC. The funds can terminate the ISO Agreement with Tarantino LLC at any time under the terms of the ISO Agreement. For the year ended December 31, 2018, the fee paid by the fund under this agreement was $516 and is included in “Miscellaneous” expense in the Statement of Operations. MFS has agreed to bear all expenses associated with office space, other administrative support, and supplies provided to the ISO.

(4)

Portfolio Securities

For the year ended December 31, 2018, purchases and sales of investments, other than short-term obligations, were as follows:


	Purchases		Sales
U.S. Government securities		$59,507,868		$67,706,183
Non-U.S. Government securities		$124,374,109		$143,859,051

(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:


	Year ended 12/31/18						Year ended 12/31/17
	Shares			Amount			Shares			Amount
Shares sold
Initial Class		65,473			$692,556			182,892			$1,884,961
Service Class		856,820			8,882,666			1,081,322			10,987,114
		922,293			$9,575,222			1,264,214			$12,872,075
Shares issued to shareholders in reinvestment of distributions
Initial Class		244,999			$2,528,387			—			$—
Service Class		211,231			2,156,671			—			—
		456,230			$4,685,058			—			$—
Shares reacquired
Initial Class		(2,077,892	)		$(21,819,363	)		(2,068,811	)		$(21,629,213	)
Service Class		(3,429,568	)		(35,353,500	)		(2,689,558	)		(27,569,992	)
		(5,507,460	)		$(57,172,863	)		(4,758,369	)		$(49,199,205	)
Net change
Initial Class		(1,767,420	)		$(18,598,420	)		(1,885,919	)		$(19,744,252	)
Service Class		(2,361,517	)		(24,314,163	)		(1,608,236	)		(16,582,878	)
		(4,128,937	)		$(42,912,583	)		(3,494,155	)		$(36,327,130	)

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 Conservative Allocation Portfolio, and the MFS Growth Allocation Portfolio were the owners of record of approximately 27%, 17%, and 6%, respectively, of the value of outstanding voting shares of the fund.

(6)

Line of Credit

MFS Inflation-Adjusted Bond Portfolio

Notes to Financial Statements – continued

(7)

Investments in Affiliated Issuers


Affiliated Issuers		Beginning Shares/Par Amount		Acquisitions Shares/Par Amount		Dispositions Shares/Par Amount			Ending Shares/Par Amount
MFS Institutional Money Market Portfolio			18,951,029		100,681,151		(118,682,050	)		950,130

Affiliated Issuers	Realized Gain (Loss)	Change in Unrealized Appreciation/ Depreciation		Capital Gain Distributions		Dividend Income			Ending Value
MFS Institutional Money Market Portfolio	$(559)		$806		$—		$132,048			$950,035

MFS Inflation-Adjusted Bond Portfolio

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Trustees of MFS Variable Insurance Trust III and the Shareholders of MFS Inflation-Adjusted Bond Portfolio:

Opinion on the Financial Statements and Financial Highlights

We have audited the accompanying statement of assets and liabilities of MFS Inflation-Adjusted Bond Portfolio (the “Fund”), including the portfolio of investments, as of December 31, 2018, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of December 31, 2018, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of December 31, 2018, by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.

DELOITTE & TOUCHE LLP

Boston, Massachusetts

February 15, 2019

We have served as the auditor of one or more of the MFS investment companies since 1924.

MFS Inflation-Adjusted Bond Portfolio

TRUSTEES AND OFFICERS – IDENTIFICATION AND BACKGROUND


Name, Age	Position(s) Held with Fund	Trustee/Officer Since (h)	Number of MFS Funds overseen by the Trustee	Principal Occupations During the Past Five Years	Other Directorships During the Past Five Years (j)
INTERESTED TRUSTEES
Robert J. Manning (k) (age 55)	Trustee	February 2004	135	Massachusetts Financial Services Company, Executive Chairman (since January 2017); Director; Chairman of the Board; Chief Executive Officer (until 2015);Co-Chief Executive Officer(2015-2016)	N/A

Robin A. Stelmach (k) (age 57)	Trustee	January 2014	135	Massachusetts Financial Services Company, Vice Chair (since January 2017); Chief Operating Officer and Executive Vice President (until January 2017)	N/A

INDEPENDENT TRUSTEES
John P. Kavanaugh (age 64)	Trustee and Chair of Trustees	January 2009	135	Private investor	N/A

Steven E. Buller (age 67)	Trustee	February 2014	135	Financial Accounting Standards Advisory Council, Chairman(2014-2015); Public Company Accounting Oversight Board, Standing Advisory Group, Member (until 2014); BlackRock, Inc. (investment management), Managing Director (until 2014), BlackRock Finco UK (investment management), Director (until 2014)	N/A

John A. Caroselli (age 64)	Trustee	March 2017	135	JC Global Advisors, LLC (management consulting), President (since 2015); First Capital Corporation (commercial finance), Executive Vice President (until 2015)	N/A

Maureen R. Goldfarb (age 63)	Trustee	January 2009	135	Private investor	N/A

Michael Hegarty (age 74)	Trustee	December 2004	135	Private investor	Rouse Properties Inc., Director (until 2016); Capmark Financial Group Inc., Director (until 2015)

Peter D. Jones (age 63)	Trustee	January 2019	135	Franklin Templeton Distributors, Inc. (investment management), President (until 2015); Franklin Templeton Institutional, LLC (investment management), Chairman (until 2015)	N/A

James W. Kilman, Jr. (age 57)	Trustee	January 2019	135	KielStrand Capital LLC (family office and merchant bank), Chief Executive Officer (since 2016); Morgan Stanley & Co. (financial services), Vice Chairman of Investment Banking,Co-Head of Diversified Financials Coverage – Financial Institutions Investment Banking Group (until 2016)	alpha-En Corporation, Director (since 2016)

MFS Inflation-Adjusted Bond Portfolio

Trustees and Officers – continued


Name, Age	Position(s) Held with Fund	Trustee/Officer Since (h)	Number of MFS Funds overseen by the Trustee	Principal Occupations During the Past Five Years	Other Directorships During the Past Five Years (j)
Clarence Otis, Jr. (age 62)	Trustee	March 2017	135	Darden Restaurants, Inc., Chief Executive Officer (until 2014)	VF Corporation, Director; Verizon Communications, Inc., Director; The Travelers Companies, Director; Federal Reserve Bank of Atlanta, Director (until 2015)

Maryanne L. Roepke (age 62)	Trustee	May 2014	135	American Century Investments (investment management), Senior Vice President and Chief Compliance Officer (until 2014)	N/A

Laurie J. Thomsen (age 61)	Trustee	March 2005	135	Private investor	The Travelers Companies, Director; Dycom Industries, Inc., Director (since 2015)


Name, Age	Position(s) Held with Fund	Trustee/Officer Since (h)	Number of MFS Funds for which the Person is an Officer	Principal Occupations During the Past Five Years
OFFICERS
Christopher R. Bohane (k) (age 45)	Assistant Secretary and Assistant Clerk	July 2005	135	Massachusetts Financial Services Company, Vice President and Assistant General Counsel

Kino Clark (k) (age 50)	Assistant Treasurer	January 2012	135	Massachusetts Financial Services Company, Vice President

John W. Clark, Jr. (k) (age 51)	Assistant Treasurer	April 2017	135	Massachusetts Financial Services Company, Vice President (since March 2017); Deutsche Bank (financial services), Department Head – Treasurer’s Office (until February 2017)

Thomas H. Connors (k) (age 59)	Assistant Secretary and Assistant Clerk	September 2012	135	Massachusetts Financial Services Company, Vice President and Senior Counsel

Ethan D. Corey (k) (age 55)	Assistant Secretary and Assistant Clerk	July 2005	135	Massachusetts Financial Services Company, Senior Vice President and Associate General Counsel

David L. DiLorenzo (k) (age 50)	President	July 2005	135	Massachusetts Financial Services Company, Senior Vice President

Heidi W. Hardin (k) (age 51)	Secretary and Clerk	April 2017	135	Massachusetts Financial Services Company, Executive Vice President and General Counsel (since March 2017); Harris Associates (investment management), General Counsel (from September 2015 to January 2017); Janus Capital Management LLC (investment management), Senior Vice President and General Counsel (until September 2015)

Brian E. Langenfeld (k) (age 45)	Assistant Secretary and Assistant Clerk	June 2006	135	Massachusetts Financial Services Company, Vice President and Senior Counsel

Amanda S. Mooradian (k) (age 39)	Assistant Secretary and Assistant Clerk	September 2018	135	Massachusetts Financial Services Company, Assistant Vice President and Counsel

Susan A. Pereira (k) (age 48)	Assistant Secretary and Assistant Clerk	July 2005	135	Massachusetts Financial Services Company, Vice President and Senior Counsel

Kasey L. Phillips (k) (age 48)	Assistant Treasurer	September 2012	135	Massachusetts Financial Services Company, Vice President

Matthew A. Stowe (k) (age 44)	Assistant Secretary and Assistant Clerk	October 2014	135	Massachusetts Financial Services Company, Vice President and Assistant General Counsel

MFS Inflation-Adjusted Bond Portfolio

Trustees and Officers – continued


Name, Age	Position(s) Held with Fund	Trustee/Officer Since (h)	Number of MFS Funds for which the Person is an Officer	Principal Occupations During the Past Five Years
Frank L. Tarantino (age 74)	Independent Senior Officer	June 2004	135	Tarantino LLC (provider of compliance services), Principal

Richard S. Weitzel (k) (age 48)	Assistant Secretary and Assistant Clerk	October 2007	135	Massachusetts Financial Services Company, Senior Vice President and Associate General Counsel

Martin J. Wolin (k) (age 51)	Chief Compliance Officer	July 2015	135	Massachusetts Financial Services Company, Senior Vice President and Chief Compliance Officer (since July 2015); Mercer (financial service provider), Chief Risk and Compliance Officer, North America and Latin America (until June 2015)

James O. Yost (k) (age 58)	Treasurer	September 1990	135	Massachusetts Financial Services Company, Senior Vice President

(h)

(j)	Directorships or trusteeships of companies required to report to the Securities and Exchange Commission (i.e., “public companies”).

(k)

Messrs. Buller, Hegarty, Kilman and Otis and Ms. Roepke are members of the Trust’s Audit Committee.

Each of the Interested Trustees and certain Officers hold comparable officer positions with certain affiliates of MFS.

The Statement of Additional Information for a Fund includes further information about the Trustees and is available without charge upon request by calling1-800-225-2606.


Investment Adviser Massachusetts Financial Services Company 111 Huntington Avenue Boston, MA 02199-7618		Custodian State Street Bank and Trust Company 1 Lincoln Street Boston, MA 02111-2900
Distributor MFS Fund Distributors, Inc. 111 Huntington Avenue Boston, MA 02199-7618		Independent Registered Public Accounting Firm Deloitte & Touche LLP 200 Berkeley Street Boston, MA 02116
Portfolio Manager(s) Erik Weisman

MFS Inflation-Adjusted Bond Portfolio

BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT

Based on information provided by Broadridge and MFS, the Trustees reviewed the Fund’s total return investment performance as well as the Broadridge performance universe over various time periods. The Trustees placed particular emphasis on the total return performance of the Fund’s Initial Class shares in comparison to the performance of funds in its Broadridge performance universe over the three-year period ended December 31, 2017, which the Trustees believed was a long enough period to reflect differing market conditions. The total return performance of the Fund’s Initial Class shares was in the 3rd quintile relative to the other funds in the universe for this three-year period (the 1st quintile being the best performers and the 5th quintile being the worst performers). The total return performance of the Fund’s Initial Class shares was in the 1st quintile for each of theone- and five-year periods ended December 31, 2017 relative to the Broadridge performance universe. Because of the passage of time, these performance results may differ from the performance results for more recent periods, including those shown elsewhere in this report.

MFS Inflation-Adjusted Bond Portfolio

Board Review of Investment Advisory Agreement – continued

In assessing the reasonableness of the Fund’s advisory fee, the Trustees considered, among other information, the Fund’s advisory fee and the total expense ratio of the Fund’s Initial Class shares as a percentage of average daily net assets and the advisory fee and total expense ratios of peer groups of funds based on information provided by Broadridge. The Trustees considered that, according to the data provided by Broadridge (which takes into account any fee reductions or expense limitations that were in effect during the Fund’s last fiscal year), the Fund’s effective advisory fee rate and total expense ratio were each approximately at the Broadridge expense group median.

The Trustees also considered whether the Fund may benefit from any economies of scale in the management of the Fund in the event of growth in assets of the Fund and/or growth in assets of the MFS Funds as a whole. They noted that the Fund’s advisory fee rate schedule is not subject to any breakpoints. Taking into account that the Fund’s effective advisory fee rate was approximately at the Broadridge expense group median described above, the Trustees determined not to recommend any advisory fee breakpoints for the Fund at this time. The Trustees also noted that MFS has agreed in writing to waive a portion of the management fees of certain MFS Funds, including the Fund, if the total combined assets of certain funds within the MFS Funds’ complex increase above agreed upon thresholds (the “group fee waiver”), enabling the Fund’s shareholders to share in the benefits from any economies of scale at the complex level. The group fee waiver is reviewed and renewed annually between the Board and MFS. The Trustees concluded that the group fee waiver was sufficient to allow the Fund to benefit from economies of scale as its assets and overall complex assets grow.

MFS Inflation-Adjusted Bond Portfolio

PROXY VOTING POLICIES AND INFORMATION

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. The fund’s Form N-Q is 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/vit3 by choosing the fund’s name and then selecting the “Resources” tab and clicking on “Prospectus and Reports”.

FURTHER INFORMATION

INFORMATION ABOUT FUND CONTRACTS AND LEGAL CLAIMS

rev. 3/16



FACTS		WHAT DOES MFS DO WITH YOUR PERSONAL INFORMATION?


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

What?

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

• Social Security number and account balances

• Account transactions and transaction history

• Checking account information and wire transfer instructions

When you areno longer our customer, we continue to share your information as described in this notice.


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


Reasons we can share your personal information	Does MFS share?	Can you limit this sharing?
For our everyday business purposes – such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus	Yes	No
For our marketing purposes – to offer our products and services to you	No	We don’t share
For joint marketing with other financial companies	No	We don’t share
For our affiliates’ everyday business purposes – information about your transactions and experiences	No	We don’t share
For our affiliates’ everyday business purposes – information about your creditworthiness	No	We don’t share
For nonaffiliates to market to you	No	We don’t share



Questions?		Call800-225-2606 or go tomfs.com.


Page 2


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


What we do
How does MFS protect my personal information?		To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include procedural, electronic, and physical safeguards for the protection of the personal information we collect about you.
How does MFS collect my personal information?		We collect your personal information, for example, when you • open an account or provide account information • direct us to buy securities or direct us to sell your securities • make a wire transfer We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
Why can’t I limit all sharing?		Federal law gives you the right to limit only • sharing for affiliates’ everyday business purposes – information about your creditworthiness • affiliates from using your information to market to you • sharing for nonaffiliates to market to you State laws and individual companies may give you additional rights to limit sharing.


Definitions
Affiliates		Companies related by common ownership or control. They can be financial and nonfinancial companies. • MFS does not share personal information with affiliates, except for everyday business purposes as described on page one of this notice.
Nonaffiliates		Companies not related by common ownership or control. They can be financial and nonfinancial companies. • MFS does not share with nonaffiliates so they can market to you.
Joint marketing		A formal agreement between nonaffiliated financial companies that together market financial products or services to you. • MFS doesn’t jointly market.


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

LOGO

Annual Report

December 31, 2018

LOGO

MFS^® Limited Maturity Portfolio

LOGO

MFS^® Variable Insurance Trust III

VLT-ANN

MFS® Limited Maturity Portfolio

CONTENTS


Letter from the Executive Chairman			1
Portfolio composition			2
Management review			4
Performance summary			5
Expense table			6
Portfolio of investments			7
Statement of assets and liabilities			14
Statement of operations			15
Statements of changes in net assets			16
Financial highlights			17
Notes to financial statements			19
Report of independent registered public accounting firm			26
Trustees and officers			27
Board review of investment advisory agreement			30
Proxy voting policies and information			32
Quarterly portfolio disclosure			32
Further information			32
Information about fund contracts and legal claims			32
MFS^® privacy notice			33

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

MFS Limited Maturity Portfolio

LETTER FROM THE EXECUTIVE CHAIRMAN

LOGO

Dear Contract Owners:

Respectfully,

LOGO

Robert J. Manning

Executive Chairman

MFS Investment Management

February 15, 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.

MFS Limited Maturity Portfolio

PORTFOLIO COMPOSITION

Portfolio structure (i)

LOGO


Fixed income sectors (i)
Investment Grade Corporates			52.9%
Asset-Backed Securities			11.8%
Collateralized Debt Obligations			11.0%
U.S. Treasury Securities			11.0%
Commercial Mortgage-Backed Securities			5.7%
Emerging Markets Bonds			2.8%
Non-U.S. Government Bonds			2.7%
Residential Mortgage-Backed Securities			2.0%
U.S. Government Agencies			0.8%
Mortgage-Backed Securities			0.8%
Municipal Bonds			0.7%
High Yield Corporates			0.3%


Composition including fixed income credit quality (a)(i)
AAA			10.4%
AA			17.7%
A			26.4%
BBB			31.7%
BB			0.3%
U.S. Government			8.2%
Federal Agencies			1.6%
Not Rated			6.2%
Cash & Cash Equivalents			0.3%
Other			(2.8)%

Portfolio facts (i)
Average Duration (d)			1.8
Average Effective Maturity (m)			3.2 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 a 5-year duration is likely to lose about 5.00% of its value due to the interest rate move.

(i)

(m)

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

MFS Limited Maturity Portfolio

Portfolio Composition – continued

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 December 31, 2018.

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

MFS Limited Maturity Portfolio

MANAGEMENT REVIEW

Summary of Results

For the twelve months ended December 31, 2018, Initial Class shares of the MFS Limited Maturity Portfolio (“fund”) provided a total return of 1.28%, while Service Class shares of the fund provided a total return of 0.99%. These compare with a return of 1.60% over the same period for the fund’s benchmark, the Bloomberg Barclays1-3 Year U.S. Government/Credit Bond Index.

Market Environment

Factors Affecting Performance

During the reporting period, the fund’s greater exposure to thefinancial institutionssector, and lesser exposure to thetreasurysector, detracted from performance relative to the Bloomberg Barclays1-3 Year U.S. Government/Credit Bond Index. Additionally, security selection in “BBB” rated (r) securities held back relative returns.

On the positive side, the fund’s yield curve (y) positioning, particularly a greater exposure to the5-year segment of the yield curve, benefited relative performance. Anout-of-benchmark exposure to theasset-backed securities (ABS) sector, and security selection in “A” rated bonds, also contributed to the fund’s relative results.

Respectfully,

Portfolio Manager(s)

Philipp Burgener and Alexander Mackey

(r)

Bonds rated “BBB”, “Baa”, or higher are considered investment grade; bonds rated “BB”, “Ba”, or below are considerednon-investment grade. The source for bond quality ratings is Moody’s Investors Service, Standard & Poor’s and Fitch, Inc. and are applied using 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). For securities which are not rated by any of the three agencies, the security is considered Not Rated.

(y)	A yield curve graphically depicts the yields of different maturity bonds of the same credit quality and type; a normal yield curve is upward sloping, with short-term rates lower than long-term rates.

MFS Limited Maturity Portfolio

PERFORMANCE SUMMARY THROUGH 12/31/18

Growth of a Hypothetical $10,000 Investment

LOGO

Total Returns through 12/31/18

Average annual total returns


	Share Class	Class Inception Date	1-yr	5-yr	10-yr
	Initial Class	3/07/08	1.28%	1.19%	1.56%
	Service Class	3/07/08	0.99%	0.93%	1.30%

Comparative benchmark(s)
	Bloomberg Barclays1-3 Year U.S. Government/Credit Bond Index (f)		1.60%	1.03%	1.52%

(f)	Source: FactSet Research Systems Inc.

Benchmark Definition(s)

Bloomberg Barclays 1-3 Year U.S. Government/Credit Bond Index – a market capitalization-weighted index that measures the performance of the short-term (1 to 3 years) investment-grade corporate and U.S. government bond markets.

It is not possible to invest directly in an index.

Notes to Performance Summary

Average annual total return represents the average annual change in value for each share class for the periods presented.

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

MFS Limited Maturity Portfolio

EXPENSE TABLE

Fund Expenses Borne by the Contract Holders during the Period,

July 1, 2018 through December 31, 2018

The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2018 through December 31, 2018.

Actual Expenses

Hypothetical Example for Comparison Purposes


Share Class		Annualized Expense Ratio		Beginning Account Value 7/01/18		Ending Account Value 12/31/18		Expenses Paid During Period (p) 7/01/18-12/31/18
Initial Class	Actual		0.44%		$1,000.00		$1,010.77		$2.23
Initial Class	Hypothetical (h)		0.44%		$1,000.00		$1,022.99		$2.24
Service Class	Actual		0.69%		$1,000.00		$1,009.87		$3.50
Service Class	Hypothetical (h)		0.69%		$1,000.00		$1,021.73		$3.52

(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 184/365 (to reflect theone-half year period).

MFS Limited Maturity Portfolio

PORTFOLIO OF INVESTMENTS – 12/31/18

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 – 99.0%
Asset-Backed & Securitized – 30.4%
A Voce CLO Ltd.,2014-1A, “A2R”, FLR, 3.986% (LIBOR - 3mo. + 1.55%), 7/15/2026 (n)	$	1,735,000	$	1,717,496
A Voce CLO Ltd.,2014-1A, “BR”, FLR, 4.586% (LIBOR - 3mo. + 2.15%), 7/15/2026 (n)		2,276,000		2,228,957
AIMCO Properties CLO LP,2014-AA, “B1R”, FLR, 4.069% (LIBOR - 3mo. + 1.6%), 7/20/2026 (n)		1,715,000		1,703,684
AIMCO Properties CLO LP,2014-AA, “B2R”, 3.49%, 7/20/2026 (n)		545,000		522,468
ALM Loan Funding CLO,2015-12A, “A2A2”, FLR, 3.786% (LIBOR - 3mo. + 1.35%), 4/16/2027 (n)		3,511,841		3,380,337
ALM Loan Funding CLO,2015-16A, “BR2”, FLR, 4.336% (LIBOR - 3mo. + 1.9%), 7/15/2027 (n)		1,900,315		1,832,278
Americredit Automobile Receivables Trust,2017-2, “C”, 2.97%, 3/20/2023		1,837,000		1,823,105
Avery Point CLO Ltd.,2014-1A, “CR”, FLR, 4.839% (LIBOR - 3mo. + 2.35%), 4/25/2026 (n)		1,720,000		1,717,645
Ballyrock Ltd., CLO,2018-1A, “A2”, FLR, 4.069% (LIBOR - 3mo. + 1.6%), 4/20/2031 (n)		1,748,737		1,677,455
Ballyrock Ltd., CLO,2018-1A, “B”, FLR, 4.369% (LIBOR - 3mo. + 1.9%), 4/20/2031 (n)		741,069		683,945
Bancorp Commercial Mortgage Trust,2018-CR3, “B”, FLR, 4.005%(LIBOR - 1mo. + 1.55%), 1/15/2033 (n)		1,605,087		1,593,541
Bancorp Commercial Mortgage Trust, 2018-CRE4, “AS”, FLR, 3.555% (LIBOR -1mo. + 1.1%), 9/15/2035 (n)		1,736,000		1,730,290
Barclays Commercial Mortgage Securities LLC,2018-C2, “XA”, 0.773%, 12/15/2051 (i)(z)		22,201,655		1,333,127
BSPRT,2018-FL4 Issuer, Ltd., FLR, 4.555% (LIBOR - 1mo. + 2.1%), 9/15/2035 (z)		2,076,000		2,030,825
Business Jet Securities LLC,2018-1, “A”, 4.335%, 2/15/2033 (z)		2,103,721		2,115,522
CD Commercial Mortgage Trust,2017-CD4, “XA”, 1.319%, 5/10/2050 (i)		17,615,518		1,368,801
Chesapeake Funding II LLC,2016-1A, “A2”, FLR, 3.605% (LIBOR - 1mo. + 1.15%), 3/15/2028 (n)		430,960		431,771
Chesapeake Funding II LLC,2017-2A, “B”, 2.81%, 5/15/2029 (n)		1,200,000		1,187,385
Chesapeake Funding II LLC,2017-2A, “C”, 3.01%, 5/15/2029 (n)		536,000		531,389
Chesapeake Funding II LLC,2017-3A, “B”, 2.57%, 8/15/2029 (n)		869,000		855,655



Issuer	Shares/Par		Value ($)
BONDS – continued
Asset-Backed & Securitized – continued
Chesapeake Funding II LLC,2017-4A, “B”, 2.59%, 11/15/2029 (n)	$	741,000	$	727,884
Chesapeake Funding II LLC,2017-4A, “C”, 2.76%, 11/15/2029 (n)		994,000		973,873
CNH Equipment Trust,2016-C, “A4”, 1.76%, 9/15/2023		2,518,811		2,469,014
Colony Starwood Homes,2016-2A, “A”, FLR, 3.705% (LIBOR - 1mo. + 1.25%), 12/17/2033 (n)		1,796,959		1,800,686
CPS Auto Trust,2016-D, “B”, 2.11%, 3/15/2021 (n)		1,954,156		1,948,414
CPS Auto Trust,2017-C, “C”, 2.86%, 6/15/2023 (n)		1,340,000		1,330,959
Credit Acceptance Auto Loan Trust,2016-3A, “A”, 2.15%, 4/15/2024 (n)		1,976,953		1,967,860
Credit Acceptance Auto Loan Trust,2017-2A, “B”, 3.02%, 4/15/2026 (n)		2,607,000		2,583,453
Cutwater CLO Ltd.,2015-1A, “AR”, FLR, 3.656% (LIBOR - 3mo. + 1.22%), 1/15/2029 (n)		2,579,418		2,560,640
Dell Equipment Finance Trust,2017-2, “B”, 2.47%, 10/24/2022 (n)		692,000		685,828
Dell Equipment Finance Trust,2018-2, “B”, 3.55%, 10/22/2023 (n)		1,843,000		1,859,081
DLL Securitization Trust,2017-A, “A3”, 2.14%, 12/15/2021 (n)		868,000		859,336
Drive Auto Receivables Trust,2017-1, “B”, 2.36%, 3/15/2021		127,530		127,479
DT Auto Owner Trust,2017-1A, “D”, 3.55%, 11/15/2022 (n)		1,032,000		1,033,181
DT Auto Owner Trust,2017-2A, “C”, 3.03%, 1/17/2023 (n)		2,017,000		2,014,893
DT Auto Owner Trust,2017-3A, “C”, 3.01%, 5/15/2023 (n)		1,461,000		1,458,778
DT Auto Owner Trust,2018-2A, “C”, 3.67%, 3/15/2024 (n)		803,000		806,822
Enterprise Fleet Financing LLC, 1.74%, 2/22/2022 (n)		418,934		417,375
Exeter Automobile Receivables Trust,2017-1A, “A”, 1.96%, 3/15/2021 (n)		54,665		54,596
Exeter Automobile Receivables Trust,2018-1A, “B”, 2.75%, 4/15/2022 (n)		1,900,000		1,890,890
Exeter Automobile Receivables Trust,2018-2A, “C”, 3.69%, 3/15/2023 (n)		2,340,000		2,348,155
Figueroa CLO Ltd.,2014-1A, “BR”, FLR, 3.936% (LIBOR - 3mo. + 1.5%), 1/15/2027 (n)		2,520,000		2,481,872
Flagship Credit Auto Trust,2016-1, “A”, 2.77%, 12/15/2020 (n)		139,815		139,730
Fort Cre LLC,2018-1A, “A1”, FLR, 3.829% (LIBOR - 1mo. + 1.2%), 10/21/2023 (n)		1,680,500		1,671,713
GMF Floorplan Owner Revolving Trust,2017-A1, “A”, 2.22%, 1/18/2022 (n)		1,730,000		1,715,139

MFS Limited Maturity Portfolio

Portfolio of Investments – continued



Issuer	Shares/Par		Value ($)
BONDS – continued
Asset-Backed & Securitized – continued
Granite Point Mortgage Trust Inc., FLR, 3.379% (LIBOR - 1mo. + 0.9%), 11/21/2035 (n)	$	2,340,000	$	2,329,061
GS Mortgage Securities Trust, 4.592%, 8/10/2043 (n)		2,890,000		2,946,289
GS Mortgage Securities Trust,2017-GS6, “XA”, 1.047%, 5/10/2050 (i)		15,841,704		1,126,614
GS Mortgage Securities Trust,2017-GS7, “XA”, 1.136%, 8/10/2050 (i)		15,805,391		1,154,407
Hertz Fleet Lease Funding LP,2016-1, “A2”, 1.96%, 4/10/2030 (n)		542,213		541,795
Hertz Fleet Lease Funding LP,2018-1, “B”, 3.64%, 5/10/2032 (n)		1,106,000		1,116,112
Hertz Fleet Lease Funding LP,2018-1, “C”, 3.77%, 5/10/2032 (n)		635,000		640,896
Invitation Homes Trust, 2018-SFR1, “B”, 3.405% (LIBOR - 1mo. + 0.95%), 3/17/2037 (n)		1,366,000		1,348,392
Invitation Homes Trust, 2018-SFR2, “A”, 3.305% (LIBOR - 1mo. + 0.85%), 12/17/2036 (n)		2,751,278		2,717,690
JPMorgan Chase & Co., 4.717%, 2/15/2046 (n)		2,482,558		2,536,334
JPMorgan Chase Commercial Mortgage Securities Corp., 1.085%, 9/15/2050 (i)		15,155,693		995,332
KREF2018-FL1 Ltd., “C”, FLR, 4.302% (LIBOR - 1mo. + 2%), 6/15/2036 (n)		1,355,500		1,355,473
LoanCore Ltd., 2018-CRE1, “AS”, FLR, 3.955% (LIBOR - 1mo. + 1.5%), 5/15/2028 (n)		2,225,000		2,191,846
LoanCore Ltd., 2018-CRE1, “C”, FLR, 5.005% (LIBOR - 1mo. + 2.55%), 5/15/2028 (n)		741,500		727,331
Loomis, Sayles & Co., CLO, “A2”, FLR, 3.836% (LIBOR - 3mo. + 1.4%), 4/15/2028 (n)		1,854,111		1,810,167
Loomis, Sayles & Co., CLO,2015-2A, “A1R”, FLR, 3.336% (LIBOR - 3mo. + 0.9%), 4/15/2028 (n)		1,646,843		1,631,088
Madison Park Funding Ltd.,2014-13A, “BR2”, FLR, 3.949% (LIBOR - 3mo. + 1.5%), 4/19/2030 (n)		2,779,008		2,698,044
Magnetite CLO Ltd.,2015-16A, “BR”, FLR, 3.644% (LIBOR - 3mo. + 1.2%), 1/18/2028 (n)		3,559,000		3,456,714
Magnetite XI Ltd.,2014-11A, “BR”, FLR, 4.544% (LIBOR - 3mo. + 2.1%), 1/18/2027 (n)		1,204,000		1,191,741
Man GLG US CLO2018-2 Ltd.,2018-2A, “BR”, FLR, 5.101% (LIBOR - 3mo. + 2.45%), 10/15/2028		2,309,265		2,263,096
Morgan Stanley Bank of America Merrill Lynch Trust,2017-C33, “XA”, 1.437%, 5/15/2050 (i)		17,403,679		1,334,234



Issuer	Shares/Par		Value ($)
BONDS – continued
Asset-Backed & Securitized – continued
Morgan Stanley Capital I Trust,2017-H1, “XA”, 1.448%, 6/15/2050 (i)	$	7,840,684	$	639,552
Morgan Stanley Capital I Trust,2018-H4, “XA”, 0.868%, 12/15/2051 (i)		18,125,125		1,185,274
Mountain Hawk CLO Ltd.,2014-3A, “BR”, FLR, 4.244% (LIBOR - 3mo. + 1.8%), 4/18/2025 (n)		3,468,000		3,459,046
Nationstar HECM Loan Trust,2018-1A, “M1”, 3.238%, 2/25/2028 (n)		1,392,000		1,387,484
Navistar Financial Dealer Note Master Owner Trust II, Series2018-1, “B”, FLR, 3.306% (LIBOR - 1mo. + 0.8%), 9/25/2023 (n)		347,000		347,306
Navistar Financial Dealer Note Master Owner Trust II, Series2018-1, “C”, FLR, 3.556% (LIBOR - 1mo. + 1.05%), 9/25/2023 (z)		391,000		391,633
Neuberger Berman CLO Ltd.,2016-21A, “CR”, FLR, 4.069% (LIBOR - 3mo. + 1.6%), 4/20/2027 (n)		2,056,577		1,937,261
NextGear Floorplan Master Owner Trust,2017-1A, “A2”, 2.54%, 4/18/2022 (n)		1,378,000		1,368,798
NextGear Floorplan Master Owner Trust,2017-2A, “B”, 3.02%, 10/17/2022 (n)		1,038,000		1,032,305
Oaktree CLO Ltd.,2014-2A, “BR”, FLR, 5.019% (LIBOR - 3mo. + 2.55%), 10/20/2026 (n)		1,752,000		1,745,272
OneMain Financial Issuance Trust,2017-1A, “A1”, 2.37%, 9/14/2032 (n)		2,089,000		2,056,665
Oscar U.S. Funding Trust,2017-1A, “A3”, 2.82%, 6/10/2021 (n)		1,980,000		1,973,561
Oscar U.S. Funding Trust,2017-2A, “A2B”, FLR, 3.036% (LIBOR - 1mo. + 0.65%), 11/10/2020 (n)		692,364		692,732
PFS Financing Corp.,2017-C, “A”, FLR, 2.925% (LIBOR - 1mo. + 0.47%), 10/15/2021 (n)		908,000		906,838
Santander Drive Auto Receivable Trust,2018-1, “B”, 2.63%, 7/15/2022		1,790,000		1,779,377
Santander Drive Auto Receivables Trust,2017-2, “C”, 2.79%, 8/15/2022		1,109,000		1,103,743
Santander Retail Auto Lease Trust,2017-A, “B”, 2.68%, 1/20/2022 (n)		1,288,000		1,278,057
Shackelton Ltd., CLO,2013-4RA, “B”, FLR, 4.336% (LIBOR - 3mo. + 1.9%), 4/13/2031 (n)		927,055		864,236
Sierra Receivables Funding Co. LLC,2015-1A, “A”, 2.4%, 3/22/2032 (n)		401,151		398,732
Starwood Waypoint Homes Trust,2017-1, “B”, FLR, 3.625% (LIBOR - 1mo. + 1.17%), 1/17/2035 (n)		2,055,201		2,038,859
Student Loan Consolidation Center, “A”, FLR, 3.726% (LIBOR - 1mo. + 1.22%), 10/25/2027 (n)		458,453		461,133

MFS Limited Maturity Portfolio

Portfolio of Investments – continued



Issuer	Shares/Par		Value ($)
BONDS – continued
Asset-Backed & Securitized – continued
Thacher Park CLO Ltd.2014-1A. “CR”, FLR, 4.669% (LIBOR - 3mo. + 2.2%), 10/20/2026 (n)	$	1,743,000	$	1,706,660
TICP Ltd., CLO,2018-3R, “B”, FLR, 3.819% (LIBOR - 3mo. + 1.35%), 4/20/2028 (n)		870,756		845,165
TICP Ltd., CLO,2018-3R, “C”, FLR, 4.269% (LIBOR - 3mo. + 1.8%), 4/20/2028 (n)		1,528,084		1,450,384
TPG Real Estate Finance,2018-FL2, “AS”, FLR, 3.905% (LIBOR - 1mo. + 1.45%), 11/15/2037 (n)		2,192,500		2,164,204
Tricon American Homes 2015-SFR1, Trust “1A”, 2.589%, 11/17/2033 (n)		1,701,038		1,652,581
UBS Commercial Mortgage Trust,2017-C1, “XA”, 1.022%, 11/15/2050 (i)		12,047,573		757,890
UBS Commercial Mortgage Trust,2018-C14, “XA”, 1.009%, 12/15/2051 (i)		9,168,212		682,638
Verizon Owner Trust,2017-3A, “B”, 2.38%, 4/20/2022 (n)		1,230,000		1,216,729
Veros Auto Receivables Trust,2017-1, “A”, 2.84%, 4/17/2023 (n)		321,452		320,495
Veros Auto Receivables Trust,2018-1, “A”, 3.63%, 5/15/2023 (n)		1,688,022		1,688,278
Volvo Financial Equipment Master Owner Trust,2017-A, “A”, FLR, 2.955% (LIBOR - 1mo. + 0.5%), 11/15/2022 (n)		1,354,000		1,356,865
West CLO Ltd.,2013-1A, “A2BR”, 3.393%, 11/07/2025 (n)		1,720,000		1,703,299

			$	145,099,035

Automotive – 2.7%
BMW US Capital LLC, 3.1%, 4/12/2021 (n)	$	2,383,000	$	2,359,840
Ford Motor Credit Co. LLC, 3.157%, 8/04/2020		1,359,000		1,331,504
Ford Motor Credit Co. LLC, 2.343%, 11/02/2020		2,496,000		2,400,897
Harley-Davidson Financial Services, FLR, 3.646% (LIBOR - 3mo. + 0.94%), 3/02/2021 (n)		1,672,000		1,670,113
Hyundai Capital America, 3.75%, 7/08/2021 (n)		976,000		972,957
Toyota Motor Credit Corp., 1.7%, 2/19/2019		1,510,000		1,507,114
Volkswagen Group of America Co., 3.875%, 11/13/2020 (n)		1,356,000		1,362,351
Volkswagen Group of America Co., 4%, 11/12/2021 (n)		1,356,000		1,358,718

			$	12,963,494

Broadcasting – 0.6%
Interpublic Group of Companies, Inc., 3.5%, 10/01/2020	$	1,734,000	$	1,735,829
SES Global Americas Holdings GP, 2.5%, 3/25/2019 (n)		1,141,000		1,138,264

			$	2,874,093



Issuer	Shares/Par		Value ($)
BONDS – continued
Brokerage & Asset Managers – 0.8%
E*TRADE Financial Corp., 2.95%, 8/24/2022	$	1,518,000	$	1,472,618
Intercontinental Exchange, Inc., 2.75%, 12/01/2020		2,516,000		2,499,447

			$	3,972,065

Cable TV – 1.3%
Comcast Corp., 3.45%, 10/01/2021	$	1,718,000	$	1,735,343
NBCUniversal Media LLC, 4.375%, 4/01/2021		1,087,000		1,114,112
Time Warner Cable, Inc., 5%, 2/01/2020		3,475,000		3,523,335

			$	6,372,790

Chemicals – 1.0%
E.I. du Pont de Nemours & Co., 2.2%, 5/01/2020	$	2,145,000	$	2,129,642
LyondellBasell Industries N.V., 5%, 4/15/2019		1,267,000		1,268,380
Sasol Chemicals (USA) LLC, 5.875%, 3/27/2024		1,150,000		1,147,497

			$	4,545,519

Computer Software – 1.0%
Dell Investments LLC / EMC Corp., 4.42%, 6/15/2021	$	3,089,000	$	3,085,824
Diamond 1 Finance Corp./Diamond 2 Finance Corp., 3.48%, 6/01/2019 (n)		1,660,000		1,655,100

			$	4,740,924

Conglomerates – 1.0%
Roper Technologies, Inc., 2.8%, 12/15/2021	$	783,000	$	767,053
Westinghouse Air Brake Technologies Corp., 4.15%, 3/15/2024		3,320,000		3,208,048
Westinghouse Air Brake Technologies Corp., FLR, 3.838% (LIBOR - 3mo. + 1.05%), 9/15/2021		871,000		867,795

			$	4,842,896

Consumer Products – 0.2%
Reckitt Benckiser Treasury Services PLC, 2.375%, 6/24/2022 (n)	$	750,000	$	720,314

Consumer Services – 0.6%
Alibaba Group Holding Ltd., 2.8%, 6/06/2023	$	1,223,000	$	1,183,802
QVC, Inc., 5.125%, 7/02/2022		1,482,000		1,497,581

			$	2,681,383

Electrical Equipment – 0.3%
Molex Electronic Technologies LLC, 2.878%, 4/15/2020 (n)	$	1,198,000	$	1,186,274

Electronics – 0.6%
Broadcom Corp./Broadcom Cayman Finance Ltd., 3%, 1/15/2022	$	1,530,000	$	1,471,343
Microchip Technology, Inc., 3.922%, 6/01/2021 (n)		1,607,000		1,594,064

			$	3,065,407

MFS Limited Maturity Portfolio

Portfolio of Investments – continued



Issuer	Shares/Par		Value ($)
BONDS – continued
Emerging Market Quasi-Sovereign – 0.7%
Corporacion Financiera de Desarrollo S.A., 3.25%, 7/15/2019 (n)	$	2,022,000	$	2,014,418
PT Indonesia Asahan Aluminium (Persero), 5.71%, 11/15/2023 (n)		1,169,000		1,189,505

			$	3,203,923

Energy – Integrated – 1.0%
BP Capital Markets PLC, 2.521%, 1/15/2020	$	1,371,000	$	1,366,392
Eni S.p.A., 4%, 9/12/2023 (n)		860,000		846,757
Shell International Finance B.V., 1.375%, 5/10/2019		2,640,000		2,625,762

			$	4,838,911

Entertainment – 0.3%
Royal Caribbean Cruises Ltd., 2.65%, 11/28/2020	$	1,207,000	$	1,184,619

Food & Beverages – 1.5%
Anheuser-Busch InBev Finance, Inc., 2.65%, 2/01/2021	$	1,235,000	$	1,213,888
Conagra Brands, Inc., 3.8%, 10/22/2021		1,197,000		1,197,369
Conagra Brands, Inc., FLR, 3.219% (LIBOR - 3mo. + 0.75%), 10/22/2020		855,000		852,598
Constellation Brands, Inc., FLR, 3.209% (LIBOR - 3mo. + 0.7%), 11/15/2021		852,000		841,795
Diageo PLC, 3%, 5/18/2020		1,460,000		1,461,081
General Mills, Inc., 3.2%, 4/16/2021		794,000		789,819
Pernod Ricard S.A., 5.75%, 4/07/2021 (n)		810,000		848,923

			$	7,205,473

Insurance – 1.3%
American International Group, Inc., 2.3%, 7/16/2019	$	408,000	$	406,296
American International Group, Inc., 3.3%, 3/01/2021		3,039,000		3,028,589
Metropolitan Life Global Funding I, 2%, 4/14/2020 (n)		2,660,000		2,621,774

			$	6,056,659

Insurance – Health – 0.9%
Halfmoon Parent, Inc., FLR, 3.438% (LIBOR - 3mo. + 0.65%), 9/17/2021 (n)	$	1,734,000	$	1,709,507
UnitedHealth Group, Inc., 1.95%, 10/15/2020		2,580,000		2,534,493

			$	4,244,000

Insurance – Property & Casualty – 0.2%
Marsh & McLennan Cos., Inc., 2.75%, 1/30/2022	$	860,000	$	842,881

International Market Quasi-Sovereign – 2.5%
Caisse d’Amortissement de la Dette Sociale, 1.875%, 1/13/2020 (n)	$	4,000,000	$	3,968,570
Dexia Credit Local S.A., 2.25%, 1/30/2019 (n)		1,390,000		1,389,290



Issuer	Shares/Par		Value ($)
BONDS – continued
International Market Quasi-Sovereign – continued
Dexia Credit Local S.A., 2.25%, 2/18/2020 (n)	$	3,880,000	$	3,856,688
Electricite de France, 2.15%, 1/22/2019 (n)		2,500,000		2,498,519

			$	11,713,067

International Market Sovereign – 0.2%
Republic of Finland, 1%, 4/23/2019 (n)	$	1,190,000	$	1,184,148

Internet – 0.4%
Baidu, Inc., 2.75%, 6/09/2019	$	440,000	$	439,055
Baidu, Inc., 3.875%, 9/29/2023		1,702,000		1,694,293

			$	2,133,348

Machinery & Tools – 0.5%
CNH Industrial Capital LLC, 4.2%, 1/15/2024	$	2,496,000	$	2,466,529

Major Banks – 14.3%
ABN AMRO Bank N.V., 2.1%, 1/18/2019 (n)	$	3,280,000	$	3,279,121
ABN AMRO Bank N.V., 2.65%, 1/19/2021 (n)		2,079,000		2,049,075
Bank of America Corp., 2.151%, 11/09/2020		2,661,000		2,612,751
Bank of America Corp., 2.369% to 7/21/2020, FLR (LIBOR - 3mo. + 0.66%) to 7/21/2021		2,408,000		2,364,848
Bank of America Corp., 2.738% to 1/23/2021, FLR (LIBOR - 3mo. + 2.738%) to 1/23/2022		1,454,000		1,431,888
Bank of America Corp., 2.881% to 4/24/2022, FLR (LIBOR - 3mo. + 1.021%) to 4/24/2023		3,106,000		3,020,733
Barclays PLC, 3.25%, 1/12/2021		4,360,000		4,269,739
Citibank N.A., 2.125%, 10/20/2020		2,381,000		2,333,368
Commonwealth Bank of Australia, 2.3%, 9/06/2019		2,579,000		2,566,303
Credit Agricole, “A”, FLR, 3.844% (LIBOR - 3mo. + 1.43%), 1/10/2022 (n)		1,270,000		1,274,869
Credit Suisse Group AG, 3.8%, 9/15/2022		2,127,000		2,111,374
Credit Suisse Group AG, 3.574%, 1/09/2023 (n)		2,020,000		1,970,464
DNB Bank A.S.A., 2.125%, 10/02/2020 (n)		2,620,000		2,567,906
Goldman Sachs Group, Inc., 2%, 4/25/2019		60,000		59,791
Goldman Sachs Group, Inc., 2.55%, 10/23/2019		3,414,000		3,392,478
Goldman Sachs Group, Inc., 2.6%, 12/27/2020		2,544,000		2,495,856
Goldman Sachs Group, Inc., 3%, 4/26/2022		1,970,000		1,907,744
HSBC Holdings PLC, 3.262% to 3/13/2022, FLR (LIBOR - 3mo. + 1.055%) to 3/13/2023		1,745,000		1,707,680
HSBC Holdings PLC, 3.033% to 11/22/2022, FLR (LIBOR - 3mo. + 0.923%) to 11/22/2023		1,294,000		1,252,411
JPMorgan Chase & Co., 2.776% to 4/25/2022, FLR (LIBOR - 3mo. + 0.935%) to 4/25/2023		2,896,000		2,807,963

MFS Limited Maturity Portfolio

Portfolio of Investments – continued



Issuer	Shares/Par		Value ($)
BONDS – continued
Major Banks – continued
JPMorgan Chase Bank N.A., 3.086% to 4/26/2020, FLR (LIBOR - 3mo. + 0.35%) to 4/26/2021	$	2,701,000	$	2,689,708
Mitsubishi UFJ Financial Group, Inc., 2.95%, 3/01/2021		771,000		763,228
Mitsubishi UFJ Financial Group, Inc., 3.535%, 7/26/2021		1,749,000		1,753,969
Morgan Stanley, 2.375%, 7/23/2019		1,459,000		1,452,677
Morgan Stanley, 2.65%, 1/27/2020		2,300,000		2,282,477
National Australia Bank Ltd., 1.375%, 7/12/2019		1,900,000		1,884,348
PNC Bank N.A., 2.25%, 7/02/2019		1,080,000		1,076,142
Sumitomo Mitsui Financial Group, Inc., 3.102%, 1/17/2023		1,604,000		1,573,347
Svenska Handelsbanken AB, 2.25%, 6/17/2019		2,580,000		2,569,323
UBS AG, 2.375%, 8/14/2019		1,660,000		1,653,295
UBS Group Funding (Switzerland) AG, 3.491%, 5/23/2023 (n)		3,498,000		3,411,154
UBS Group Funding Ltd., 3%, 4/15/2021 (n)		1,590,000		1,577,646

			$	68,163,676

Medical & Health Technology & Services – 0.5%
Becton, Dickinson and Co., 2.404%, 6/05/2020	$	1,234,000	$	1,215,189
Becton, Dickinson and Co., 2.894%, 6/06/2022		1,367,000		1,323,903

			$	2,539,092

Medical Equipment – 0.6%
Zimmer Biomet Holdings, Inc., 2.7%, 4/01/2020	$	2,589,000	$	2,563,954
Zimmer Biomet Holdings, Inc., FLR, 3.554% (LIBOR - 3mo. + 0.75%), 3/19/2021		511,000		506,215

			$	3,070,169

Metals & Mining – 0.4%
Glencore Finance (Canada) Ltd., 4.95%, 11/15/2021 (n)	$	899,000	$	918,206
Glencore Funding LLC, 3%, 10/27/2022 (n)		886,000		841,168

			$	1,759,374

Midstream – 1.6%
Andeavor Logistics LP/Tesoro Logistics
Finance Corp., 3.5%, 12/01/2022	$	2,340,000	$	2,264,701
El Paso LLC, 6.5%, 9/15/2020		2,578,000		2,700,330
EnLink Midstream Partners LP, 2.7%, 4/01/2019		1,342,000		1,333,609
Enterprise Products Operating LP, 6.5%, 1/31/2019		630,000		631,385
MPLX LP, 3.375%, 3/15/2023		690,000		669,533

			$	7,599,558

Mortgage-Backed – 0.8%
Fannie Mae, 5.5%, 5/01/2025	$	63,401	$	64,195
Fannie Mae, 5%, 7/01/2039 - 3/01/2042		1,199,065		1,272,026



Issuer	Shares/Par		Value ($)
BONDS – continued
Mortgage-Backed – continued
Fannie Mae, 2%, 5/25/2044	$	2,516,086	$	2,426,766
Freddie Mac, 0.881%, 4/25/2024 (i)		627,318		23,740

			$	3,786,727

Municipals – 0.7%
New Jersey Economic Development Authority State Pension Funding Rev., Capital Appreciation, “B”, 0%, 2/15/2023	$	4,091,000	$	3,501,241

Network & Telecom – 1.4%
AT&T, Inc., 2.3%, 3/11/2019	$	1,530,000	$	1,527,277
AT&T, Inc., 2.45%, 6/30/2020		3,240,000		3,197,332
AT&T, Inc., 3.2%, 3/01/2022		2,171,000		2,141,500

			$	6,866,109

Oils – 0.2%
Phillips 66, FLR, 3.289% (LIBOR - 3mo. + 0.6%), 2/26/2021	$	1,196,000	$	1,182,626

Other Banks & Diversified Financials – 8.9%
American Express Co., 3.7%, 11/05/2021	$	1,704,000	$	1,719,234
Banque Federative du Credit Mutuel, 2.75%, 1/22/2019 (n)		798,000		797,733
Banque Federative du Credit Mutuel, 2%, 4/12/2019 (n)		2,430,000		2,422,017
Banque Federative du Credit Mutuel, 2.2%, 7/20/2020 (n)		2,614,000		2,565,617
Branch Banking & Trust Co., 1.45%, 5/10/2019		2,610,000		2,594,866
Capital One Financial Corp., 2.5%, 5/12/2020		1,708,000		1,685,655
Capital One Financial Corp., 2.4%, 10/30/2020		868,000		849,625
Capital One Financial Corp., 3.2%, 1/30/2023		1,806,000		1,757,357
Citigroup, Inc., 2.4%, 2/18/2020		4,151,000		4,112,812
Citigroup, Inc., 3.142% to 1/24/2022, FLR (LIBOR - 3mo. + 0.722%) to 1/24/2023		2,378,000		2,335,691
Compass Bank, 3.5%, 6/11/2021		1,920,000		1,914,574
Compass Bank, 2.875%, 6/29/2022		2,717,000		2,603,362
Fifth Third Bancorp, 2.3%, 3/01/2019		1,171,000		1,169,812
Fifth Third Bancorp, 2.3%, 3/15/2019		1,200,000		1,198,498
First Republic Bank, 2.375%, 6/17/2019		849,000		845,353
Groupe BPCE S.A., 4%, 9/12/2023 (n)		1,385,000		1,360,654
Groupe BPCE S.A., FLR, 4.015% (LIBOR - 3mo. + 1.24%), 9/12/2023 (n)		1,385,000		1,362,774
Intesa Sanpaolo S.p.A., FLR, 3.078% (LIBOR - 3mo. + 0.63%), 7/17/2019		4,329,000		4,330,129
Lloyds Bank PLC, FLR, 3.469% (LIBOR -3mo. + 1%), 1/22/2019		730,000		730,168
Santander UK Group Holdings PLC, 2.875%, 8/05/2021		1,590,000		1,533,800
U.S. Bank NA Cincinnati, 2.05%, 10/23/2020		2,945,000		2,890,398
UniCredito Italiano S.p.A., 3.75%, 4/12/2022 (n)		1,687,000		1,624,113

			$	42,404,242

MFS Limited Maturity Portfolio

Portfolio of Investments – continued



Issuer	Shares/Par		Value ($)
BONDS – continued
Pharmaceuticals – 2.3%
Actavis Funding SCS, 3.45%, 3/15/2022	$	886,000	$	872,406
Bayer U.S. Finance II LLC, 3.5%, 6/25/2021 (n)		3,162,000		3,139,493
Celgene Corp., 2.875%, 8/15/2020		2,591,000		2,572,620
Celgene Corp., 2.75%, 2/15/2023		1,806,000		1,727,994
Shire Acquisitions Investments Ireland Designated Activity Co., 1.9%, 9/23/2019		1,540,000		1,518,443
Takeda Pharmaceutical Co. Ltd., 3.8%, 11/26/2020 (n)		1,180,000		1,186,883

			$	11,017,839

Printing & Publishing – 0.3%
Moody’s Corp., 3.25%, 6/07/2021	$	1,626,000	$	1,619,666

Retailers – 0.5%
Alimentation Couche-Tard, Inc., 2.35%, 12/13/2019 (n)	$	2,587,000	$	2,562,907

Supranational – 0.3%
Corporacion Andina de Fomento, 2%, 5/10/2019	$	1,330,000	$	1,325,195

Telecommunications – Wireless – 1.8%
American Tower Corp., REIT, 2.8%, 6/01/2020	$	857,000	$	850,287
American Tower Corp., REIT, 2.25%, 1/15/2022		500,000		478,483
American Tower Corp., REIT, 3%, 6/15/2023		2,118,000		2,037,652
Crown Castle International Corp., 3.4%, 2/15/2021		1,000,000		999,618
Crown Castle International Corp., 3.15%, 7/15/2023		1,093,000		1,050,618
SBA Tower Trust, 2.877%, 7/09/2021 (n)		629,000		617,357
SBA Tower Trust, 2.898%, 10/15/2044 (n)		2,395,000		2,380,922

			$	8,414,937

Tobacco – 1.3%
B.A.T Capital Corp., 2.297%, 8/14/2020	$	2,930,000	$	2,860,180
Imperial Tobacco Finance PLC, 2.95%, 7/21/2020 (n)		1,343,000		1,322,726
Imperial Tobacco Finance PLC, 3.75%, 7/21/2022 (n)		2,045,000		2,028,433

			$	6,211,339

Transportation – Services – 0.3%
TTX Co., 2.6%, 6/15/2020 (n)	$	1,660,000	$	1,640,889

U.S. Government Agencies and Equivalents – 0.8%
Hashemite Kingdom of Jordan, 1.945%, 6/23/2019	$	2,040,000	$	2,032,025
National Credit Union Administration,
“1-A”, FLR, 2.829% (LIBOR - 1mo. + 0.45%), 1/08/2020		507,495		508,176
National Credit Union Administration,
FLR, 2.8% (LIBOR - 1mo. + 0.4%), 3/11/2020		789,673		790,641



Issuer	Shares/Par		Value ($)
BONDS – continued
U.S. Government Agencies and Equivalents – continued
National Credit Union Administration,
FLR, 2.829% (LIBOR - 1mo. + 0.45%), 10/07/2020	$	262,263	$	262,588
National Credit Union Administration,
FLR, 2.736% (LIBOR - 1mo. + 0.35%), 12/07/2020		411,052		411,349

			$	4,004,779

U.S. Treasury Obligations – 8.1%
U.S. Treasury Notes, 1.875%, 2/28/2022 (f)	$	28,239,000	$	27,725,319
U.S. Treasury Notes, 2.375%, 1/31/2023		10,990,000		10,939,765

			$	38,665,084

Utilities – Electric Power – 3.9%
Dominion Energy, Inc., 2.962%, 7/01/2019	$	1,310,000	$	1,305,356
Dominion Energy, Inc., 1.6%, 8/15/2019		1,070,000		1,058,102
Dominion Energy, Inc., 2.579%, 7/01/2020		1,761,000		1,733,169
Emera U.S. Finance LP, 2.15%, 6/15/2019		2,021,000		2,004,484
Enel Finance International N.V., 2.875%, 5/25/2022 (n)		2,670,000		2,515,572
Engie Energia Chile S.A., 5.625%, 1/15/2021		3,076,000		3,145,165
Eversource Energy, 2.5%, 3/15/2021		1,240,000		1,218,660
FirstEnergy Corp., 2.85%, 7/15/2022		856,000		834,239
NextEra Energy Capital Holdings, Inc., 2.3%, 4/01/2019		1,722,000		1,718,054
Southern Co., 1.85%, 7/01/2019		1,379,000		1,372,258
WEC Energy Group, Inc., 3.375%, 6/15/2021		1,635,000		1,633,910

			$	18,538,969

Total Bonds (Identified Cost, $477,741,548)			$	473,012,170


INVESTMENT COMPANIES (h) – 0.5%
Money Market Funds – 0.5%
MFS Institutional Money Market Portfolio, 2.4% (v) (Identified Cost, $2,322,779)		2,323,011	$	2,322,779

OTHER ASSETS, LESS LIABILITIES – 0.5%				2,371,899

NET ASSETS – 100.0%			$	477,706,848

MFS Limited Maturity Portfolio

Portfolio of Investments – continued

(f)

All or a portion of the security has been segregated as collateral for open futures contracts.

(h)

(i)

Interest only security for which the fund receives interest on notional principal (Par amount). Par amount shown is the notional principal and does not reflect the cost of the security.

(n)

(v)

(z)

Restricted securities are not registered under the Securities Act of 1933 and are subject to legal restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are subsequently registered. Disposal of these securities may involve time-consuming negotiations and prompt sale at an acceptable price may be difficult. The fund holds the following restricted securities:


Restricted Securities	Acquisition Date	Cost		Value

Barclays Commercial Mortgage Securities LLC,2018-C2, “XA”, 0.773%, 12/15/2051	12/06/18		$1,330,976		$1,333,127

BSPRT,2018-FL4 Issuer, Ltd., FLR, 4.555% (LIBOR - 1mo. + 2.1%), 9/15/2035	9/27/18		2,076,000		2,030,825

Business Jet Securities LLC,2018-1, “A”, 4.335%, 2/15/2033	2/21/18		2,103,686		2,115,522

Navistar Financial Dealer Note Master Owner Trust II, Series2018-1, “C”, FLR, 3.556% (LIBOR - 1mo. + 1.05%), 9/25/2023	9/17/18		391,000		391,633

Total Restricted Securities					$5,871,107

% of Net assets					1.2%

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

CLO

Collateralized Loan Obligation

FLR

LIBOR

London Interbank Offered Rate

PLC

Public Limited Company

REIT

Real Estate Investment Trust

Derivative Contracts at 12/31/18

Futures Contracts

Description

Long/
Short

Currency

Contracts

Notional
Amount

Expiration
Date

Value/
Unrealized
Appreciation
(Depreciation)

Asset Derivatives

Interest Rate Futures

U.S. Treasury Note 2 yr

Long

USD

$13,375,688

March - 2019

$92,309

At December 31, 2018, the fund had liquid securities with an aggregate value of $37,309 to cover any collateral or margin obligations for certain derivative contracts.

See Notes to Financial Statements

MFS Limited Maturity Portfolio

FINANCIAL STATEMENTS ^| STATEMENT OF ASSETS AND LIABILITIES

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


At 12/31/18

Assets
Investments in unaffiliated issuers, at value (identified cost, $477,741,548)			$473,012,170
Investments in affiliated issuers, at value (identified cost, $2,322,779)			2,322,779
Receivables for
Net daily variation margin on open futures contracts			8,851
Fund shares sold			17,447
Interest			3,121,060
Other assets			3,332
Total assets			$478,485,639

Liabilities
Payables for
Fund shares reacquired			$660,023
Payable to affiliates
Investment adviser			21,119
Shareholder servicing costs			63
Distribution and/or service fees			3,227
Payable for independent Trustees’ compensation			19
Accrued expenses and other liabilities			94,340
Total liabilities			$778,791
Net assets			$477,706,848

Net assets consist of
Paid-in capital			$473,324,306
Total distributable earnings (loss)			4,382,542
Net assets			$477,706,848
Shares of beneficial interest outstanding			47,312,083



	Net assets		Shares outstanding		Net asset value per share
Initial Class		$359,909,169		35,637,469		$10.10
Service Class		117,797,679		11,674,614		10.09

See Notes to Financial Statements

MFS Limited Maturity Portfolio

FINANCIAL STATEMENTS ^| STATEMENT OF OPERATIONS

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.


Year ended 12/31/18

Net investment income (loss)
Income
Interest	$14,692,839
Dividends from affiliated issuers	108,683
Other	436
Total investment income	$14,801,958
Expenses
Management fee	$2,148,275
Distribution and/or service fees	332,197
Shareholder servicing costs	7,534
Administrative services fee	86,242
Independent Trustees’ compensation	12,289
Custodian fee	28,943
Shareholder communications	37,777
Audit and tax fees	64,669
Legal fees	4,632
Miscellaneous	34,518
Total expenses	$2,757,076
Reduction of expenses by investment adviser	(51,120	)
Net expenses	$2,705,956
Net investment income (loss)	$12,096,002

Realized and unrealized gain (loss)
Realized gain (loss) (identified cost basis)
Unaffiliated issuers	$(2,222,405	)
Affiliated issuers	(273	)
Futures contracts	(100,758	)
Net realized gain (loss)	$(2,323,436	)
Change in unrealized appreciation or depreciation
Unaffiliated issuers	$(3,865,533	)
Futures contracts	92,309
Net unrealized gain (loss)	$(3,773,224	)
Net realized and unrealized gain (loss)	$(6,096,660	)
Change in net assets from operations	$5,999,342

See Notes to Financial Statements

MFS Limited Maturity Portfolio

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.


	Year ended
	12/31/18			12/31/17
Change in net assets

From operations
Net investment income (loss)		$12,096,002			$10,285,492
Net realized gain (loss)		(2,323,436	)		943,408
Net unrealized gain (loss)		(3,773,224	)		(1,178,743	)
Change in net assets from operations		$5,999,342			$10,050,157
Total distributions to shareholders (a)		$(10,355,191	)		$(9,144,192	)
Change in net assets from fund share transactions		$(94,953,212	)		$(51,599,224	)
Total change in net assets		$(99,309,061	)		$(50,693,259	)

Net assets
At beginning of period		577,015,909			627,709,168
At end of period (b)		$477,706,848			$577,015,909

(a)	Distributions from net investment income and from net realized gain are no longer required to be separately disclosed. See Note 2. For the year ended December 31, 2017, distributions from net investment income were $9,144,192.

(b)	Parenthetical disclosure of undistributed net investment income is no longer required. See Note 2. For the year ended December 31, 2017, end of period net assets included undistributed net investment income of $10,354,473.

See Notes to Financial Statements

MFS Limited Maturity Portfolio

FINANCIAL STATEMENTS ^| FINANCIAL HIGHLIGHTS


Initial Class	Year ended

	12/31/18			12/31/17			12/31/16			12/31/15			12/31/14

Net asset value, beginning of period		$10.18			$10.17			$10.14			$10.23			$10.32

Income (loss) from investment operations
Net investment income (loss) (d)		$0.23			$0.18			$0.15	(c)		$0.12			$0.11
Net realized and unrealized gain (loss)		(0.10	)		(0.00	)(w)		0.02			(0.07	)		(0.03	)
Total from investment operations		$0.13			$0.18			$0.17			$0.05			$0.08

Less distributions declared to shareholders
From net investment income		$(0.21	)		$(0.17	)		$(0.14	)		$(0.14	)		$(0.13	)
From net realized gain		—			—			—			—			(0.04	)
Total distributions declared to shareholders		$(0.21	)		$(0.17	)		$(0.14	)		$(0.14	)		$(0.17	)
Net asset value, end of period (x)		$10.10			$10.18			$10.17			$10.14			$10.23
Total return (%) (k)(r)(s)(x)		1.28			1.73			1.68	(c)		0.48			0.80

Ratios (%) (to average net assets) and Supplemental data:
Expenses before expense reductions (f)		0.45			0.45			0.42	(c)		0.45			0.44
Expenses after expense reductions (f)		0.44			0.45			0.42	(c)		0.44			0.44
Net investment income (loss)		2.31			1.77			1.43	(c)		1.13			1.10
Portfolio turnover		62			54			30			26			24
Net assets at end of period (000 omitted)		$359,909			$434,320			$473,730			$520,750			$627,457

Service Class	Year ended

	12/31/18			12/31/17			12/31/16			12/31/15			12/31/14

Net asset value, beginning of period		$10.17			$10.16			$10.12			$10.20			$10.30

Income (loss) from investment operations
Net investment income (loss) (d)		$0.21			$0.16			$0.12	(c)		$0.09			$0.09
Net realized and unrealized gain (loss)		(0.11	)		(0.01	)		0.03			(0.06	)		(0.04	)
Total from investment operations		$0.10			$0.15			$0.15			$0.03			$0.05

Less distributions declared to shareholders
From net investment income		$(0.18	)		$(0.14	)		$(0.11	)		$(0.11	)		$(0.11	)
From net realized gain		—			—			—			—			(0.04	)
Total distributions declared to shareholders		$(0.18	)		$(0.14	)		$(0.11	)		$(0.11	)		$(0.15	)
Net asset value, end of period (x)		$10.09			$10.17			$10.16			$10.12			$10.20
Total return (%) (k)(r)(s)(x)		0.99			1.45			1.48	(c)		0.28			0.49

Ratios (%) (to average net assets) and Supplemental data:
Expenses before expense reductions (f)		0.70			0.70			0.68	(c)		0.70			0.69
Expenses after expense reductions (f)		0.69			0.70			0.67	(c)		0.69			0.69
Net investment income (loss)		2.06			1.52			1.18	(c)		0.88			0.85
Portfolio turnover		62			54			30			26			24
Net assets at end of period (000 omitted)		$117,798			$142,696			$153,979			$172,581			$211,505

See Notes to Financial Statements

MFS Limited Maturity Portfolio

Financial Highlights – continued

(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.

(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

MFS Limited Maturity Portfolio

NOTES TO FINANCIAL STATEMENTS

(1)

Business and Organization

MFS Limited Maturity Portfolio (the fund) is a diversified series of MFS Variable Insurance Trust III (the trust). The trust is organized as a Delaware statutory 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.

(2)

Significant Accounting Policies

Investment Valuations – Debt instruments and floating rate loans, including restricted debt instruments, are generally valued at an evaluated or composite bid as provided by a third-party pricing service. Short-term instruments with a maturity at issuance of 60 days or less may be valued at amortized cost, which approximates market value. Futures contracts are generally valued at last posted settlement price on their primary exchange as provided by a third-party pricing service. Futures contracts for which there were no trades that day for a particular position are generally valued at the closing bid quotation on their primary exchange as provided by a third-party pricing service.Open-end investment companies are generally valued at net asset value per share. Securities and other assets generally valued on the basis of information from a third-party pricing service may also be valued at a broker/dealer bid quotation. In determining values, third-party pricing services can utilize both transaction data and market information such as yield,

MFS Limited Maturity Portfolio

Notes to Financial Statements – continued

quality, coupon rate, maturity, type of issue, trading characteristics, and other market data. The values of foreign securities and other assets and liabilities expressed in foreign currencies are converted to U.S. dollars using the mean of bid and asked prices for rates provided by a third-party pricing service.

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

Various inputs are used in determining the value of the fund’s assets or liabilities. These inputs are categorized into three broad levels. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fund’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. Level 1 includes unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes other significant observable market-based inputs (including quoted prices for similar securities, interest rates, prepayment speed, and credit risk). Level 3 includes unobservable inputs, which may include the adviser’s own assumptions in determining the fair value of investments. Other financial instruments are derivative instruments, such as futures contracts. The following is a summary of the levels used as of December 31, 2018 in valuing the fund’s assets or liabilities:


Financial Instruments	Level 1		Level 2		Level 3		Total
U.S. Treasury Bonds & U.S. Government
Agency & Equivalents		$—		$42,669,863		$—		$42,669,863
Non-U.S. Sovereign Debt		—		17,426,333		—		17,426,333
Municipal Bonds		—		3,501,241		—		3,501,241
U.S. Corporate Bonds		—		162,008,378		—		162,008,378
Residential Mortgage-Backed Securities		—		13,344,934		—		13,344,934
Commercial Mortgage-Backed Securities		—		26,904,773		—		26,904,773
Asset-Backed Securities (including CDOs)		—		108,636,055		—		108,636,055
Foreign Bonds		—		98,520,593		—		98,520,593
Multual Funds		2,322,779		—		—		2,322,779
Total		$2,322,779		$473,012,170		$—		$475,334,949

Other Financial Instruments
Futures Contracts – Assets		$92,309		$—		$—		$92,309

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.

MFS Limited Maturity Portfolio

Notes to Financial Statements – continued

hedging ornon-hedging purposes. While hedging can reduce or eliminate losses, it can also reduce or eliminate gains. When the fund uses derivatives as an investment to increase market exposure, or for hedging purposes, gains and losses from derivative instruments may be substantially greater than the derivative’s original cost.

The derivative instruments used by the fund during the period were futures contracts. Depending on the type of derivative, the fund may exit a derivative position by entering into an offsetting transaction with a counterparty or exchange, negotiating an agreement with the derivative counterparty, or novating the position to a third party. The fund may be unable to promptly close out a futures position in instances where the daily fluctuation in the price for that type of future exceeds the daily limit set by the exchange. The fund’s period end derivatives, as presented in the Portfolio of Investments and the associated Derivative Contract tables, generally are indicative of the volume of its derivative activity during the period.

(a)	Values presented in this table for futures contracts correspond to the values reported in the fund’s Portfolio of Investments. Only the current day net variation margin for futures contracts is separately reported within the fund’s Statement of Assets and Liabilities.


Risk	Futures Contracts
Interest Rate		$(100,758	)


Risk	Futures Contracts
Interest Rate		$92,309

Collateral and margin requirements differ by type of derivative. For cleared derivatives (e.g., futures contracts, cleared swaps, and exchange-traded options), margin requirements are set by the clearing broker and the clearing house and collateral, in the form of cash or securities, is posted by the fund directly with the clearing broker. Collateral terms are counterparty agreement specific for uncleared derivatives (e.g., forward foreign currency exchange contracts, uncleared swap agreements, and uncleared options) and collateral, in the form of cash and securities, is held in segregated accounts with the fund’s custodian in connection with these agreements. For derivatives traded under an ISDA Master Agreement, which contains a collateral support annex, the collateral requirements are netted across all transactions traded under such counterparty-specific agreement and an amount is posted from one party to the other to collateralize such obligations. Cash that has been segregated or delivered to cover the fund’s collateral or margin obligations under derivative contracts, if any, will be reported separately in the Statement of Assets and Liabilities as restricted cash for uncleared derivatives and/or deposits with brokers for cleared derivatives. Securities pledged as collateral or margin for the same purpose, if any, are noted in the Portfolio of Investments. The fund may be required to make payments of interest on uncovered collateral or margin obligations with the broker. Any such payments are included in “Miscellaneous” expense in the Statement of Operations.

Futures Contracts – The fund entered into futures contracts which may be used to hedge against or obtain broad market exposure, interest rate exposure, currency exposure, or to manage duration. A futures contract represents a commitment for the future purchase or sale of an asset at a specified price on a specified date.

MFS Limited Maturity Portfolio

Notes to Financial Statements – continued

made or received by the fund each day, depending on the daily fluctuations in the value of the contract, and are recorded for financial statement purposes as unrealized gain or loss by the fund until the contract is closed or expires at which point the gain or loss on futures contracts is realized.

The fund invests a significant portion of its assets in asset-backed and/or mortgage-backed securities. For these securities, the value of the debt instrument also depends on the credit quality and adequacy of the underlying assets or collateral as well as whether there is a security interest in the underlying assets or collateral. Enforcing rights, if any, against the underlying assets or collateral may be difficult. U.S. Government securities not supported as to the payment of principal or interest by the U.S. Treasury, such as those issued by Fannie Mae, Freddie Mac, and the Federal Home Loan Banks, are subject to greater credit risk than are U.S. Government securities supported by the U.S. Treasury, such as those issued by Ginnie Mae.

The fund purchased or sold debt securities on a when-issued or delayed delivery basis, or in a “To Be Announced” (TBA) or “forward commitment” transaction with delivery or payment to occur at a later date beyond the normal settlement period. At the time a fund enters into a commitment to purchase or sell a security, the transaction is recorded and the value of the security acquired is reflected in the fund’s net asset value. The price of such security and the date that the security will be delivered and paid for are fixed at the time the transaction is negotiated. The value of the security may vary with market fluctuations. No interest accrues to the fund until payment takes place. At the time that a fund enters into this type of transaction, the fund is required to have sufficient cash and/or liquid securities to cover its commitments. Losses may arise due to changes in the value of the underlying securities or if the counterparty does not perform under the contract’s terms, or if the issuer does not issue the securities due to political, economic or other factors. Additionally, losses may arise due to declines in the value of the securities prior to settlement date.

To mitigate this risk of loss on TBA securities and other types of forward settling mortgage-backed securities, the fund whenever possible enters into a Master Securities Forward Transaction Agreement (“MSFTA”) on a bilateral basis with each of the counterparties with whom it undertakes a significant volume of transactions. The MSFTA gives each party to the agreement the right to terminate all transactions traded under such agreement if there is a specified deterioration in the credit quality of the other party. Upon an event of default or a termination of the MSFTA, thenon-defaulting party has the right to close out all transactions traded under such agreement and to net amounts owed under each transaction to one net amount payable by one party to the other. This right to close out and net payments across all transactions traded under the MSFTA could result in a reduction of the fund’s credit risk to such counterparty equal to any amounts payable by the fund under the applicable transactions, if any.

For mortgage-backed securities traded under a MSFTA, the collateral and margining requirements are contract specific. Collateral amounts across all transactions traded under such agreement are netted and one amount is posted from one party to the other to collateralize such obligations. Cash that has been pledged to cover the fund’s collateral or margin obligations under a MSFTA, if any, will be reported separately on the Statement of Assets and Liabilities as restricted cash. Securities pledged as collateral or margin for the same purpose, if any, are noted in the Portfolio of Investments.

MFS Limited Maturity Portfolio

Notes to Financial Statements – continued

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.

During the year ended December 31, 2018, there were no significant adjustments due to differences between book and tax accounting.

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


	Year ended 12/31/18		Year ended 12/31/17
Ordinary income (including any short-term capital gains)		$10,355,191		$9,144,192

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


As of 12/31/18

Cost of investments	$480,176,400
Gross appreciation	516,234
Gross depreciation	(5,265,376	)
Net unrealized appreciation (depreciation)	$(4,749,142	)

Undistributed ordinary income	12,197,851
Capital loss carryforwards	(3,066,167	)


Short-Term	$(1,385,748	)
Long-Term	(1,680,419	)
Total	$(3,066,167	)


	From net investment income

	Year ended 12/31/18		Year ended 12/31/17
Initial Class		$8,077,594		$7,201,547
Service Class		2,277,597		1,942,645
Total		$10,355,191		$9,144,192

(3)

Transactions with Affiliates

Investment Adviser– The fund has an investment advisory agreement with MFS to provide overall investment management and related administrative services and facilities to the fund. The management fee is computed daily and paid monthly at an annual rate of 0.40% of the fund’s average daily net assets.

MFS has also 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 year ended December 31, 2018, this management fee reduction amounted to $51,120, which is included in the reduction of total expenses in the Statement of Operations. The management fee incurred for the year ended December 31, 2018 was equivalent to an annual effective rate of 0.39% of the fund’s average daily net assets.

MFS Limited Maturity Portfolio

Notes to Financial Statements – 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.

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 year ended December 31, 2018, the fee was $7,315, which equated to 0.0014% 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 year ended December 31, 2018, these costs amounted to $219.

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 year ended December 31, 2018 was equivalent to an annual effective rate of 0.0161% of the fund’s average daily net assets.

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

Other– This fund and certain other funds managed by MFS (the funds) have entered into a service agreement (the ISO Agreement) which provides 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 serves as the ISO and is an officer of the funds and the sole member of Tarantino LLC. The funds can terminate the ISO Agreement with Tarantino LLC at any time under the terms of the ISO Agreement. For the year ended December 31, 2018, the fee paid by the fund under this agreement was $915 and is included in “Miscellaneous” expense in the Statement of Operations. MFS has agreed to bear all expenses associated with office space, other administrative support, and supplies provided to the ISO.

(4)

Portfolio Securities

For the year ended December 31, 2018, purchases and sales of investments, other than short-term obligations, were as follows:


	Purchases		Sales
U.S. Government securities		$135,266,038		$141,283,695
Non-U.S. Government securities		$195,815,533		$265,811,329

(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:


	Year ended 12/31/18						Year ended 12/31/17

	Shares			Amount			Shares			Amount
Shares sold
Initial Class		848,249			$8,593,262			2,833,100			$28,942,654
Service Class		431,006			4,357,141			1,288,904			13,145,834
		1,279,255			$12,950,403			4,122,004			$42,088,488

Shares issued to shareholders in reinvestment of distributions
Initial Class		804,541			$8,077,594			706,727			$7,201,547
Service Class		226,852			2,277,597			190,830			1,942,645
		1,031,393			$10,355,191			897,557			$9,144,192

Shares reacquired
Initial Class		(8,670,149	)		$(87,766,829	)		(7,449,956	)		$(76,219,352	)
Service Class		(3,014,572	)		(30,491,977	)		(2,606,511	)		(26,612,552	)
		(11,684,721	)		$(118,258,806	)		(10,056,467	)		$(102,831,904	)

MFS Limited Maturity Portfolio

Notes to Financial Statements – continued


	Year ended 12/31/18						Year ended 12/31/17

	Shares			Amount			Shares			Amount
Net change
Initial Class		(7,017,359	)		$(71,095,973	)		(3,910,129	)		$(40,075,151	)
Service Class		(2,356,714	)		(23,857,239	)		(1,126,777	)		(11,524,073	)
		(9,374,073	)		$(94,953,212	)		(5,036,906	)		$(51,599,224	)

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 Conservative Allocation Portfolio, and the MFS Growth Allocation Portfolio were the owners of record of approximately 12%, 11%, and 1%, respectively, of the value of outstanding voting shares of the fund.

(6)

Line of Credit

(7)

Investments in Affiliated Issuers


Affiliated Issuers		Beginning Shares/Par Amount		Acquisitions Shares/Par Amount		Dispositions Shares/Par Amount			Ending Shares/Par Amount

MFS Institutional Money Market Portfolio			17,896,983		208,257,369		(223,831,341	)		2,323,011

Affiliated Issuers	Realized Gain (Loss)	Change in Unrealized Appreciation/ Depreciation		Capital Gain Distributions		Dividend Income			Ending Value

MFS Institutional Money Market Portfolio	$(273)		$—		$—		$108,683			$2,322,779

MFS Limited Maturity Portfolio

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Trustees of MFS Variable Insurance Trust III and the Shareholders of MFS Limited Maturity Portfolio:

Opinion on the Financial Statements and Financial Highlights

We have audited the accompanying statement of assets and liabilities of MFS Limited Maturity Portfolio (the “Fund”), including the portfolio of investments, as of December 31, 2018, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of December 31, 2018, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of December 31, 2018, by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.

DELOITTE & TOUCHE LLP

Boston, Massachusetts

February 15, 2019

We have served as the auditor of one or more of the MFS investment companies since 1924.

MFS Limited Maturity Portfolio

TRUSTEES AND OFFICERS – IDENTIFICATION AND BACKGROUND


Name, Age	Position(s) Held with Fund	Trustee/Officer Since (h)	Number of MFS Funds overseen by the Trustee	Principal Occupations During the Past Five Years	Other Directorships During the Past Five Years (j)
INTERESTED TRUSTEES
Robert J. Manning (k) (age 55)	Trustee	February 2004	135	Massachusetts Financial Services Company, Executive Chairman (since January 2017); Director; Chairman of the Board; Chief Executive Officer (until 2015);Co-Chief Executive Officer(2015-2016)	N/A

Robin A. Stelmach (k) (age 57)	Trustee	January 2014	135	Massachusetts Financial Services Company, Vice Chair (since January 2017); Chief Operating Officer and Executive Vice President (until January 2017)	N/A

INDEPENDENT TRUSTEES
John P. Kavanaugh (age 64)	Trustee and Chair of Trustees	January 2009	135	Private investor	N/A

Steven E. Buller (age 67)	Trustee	February 2014	135	Financial Accounting Standards Advisory Council, Chairman(2014-2015); Public Company Accounting Oversight Board, Standing Advisory Group, Member (until 2014); BlackRock, Inc. (investment management), Managing Director (until 2014), BlackRock Finco UK (investment management), Director (until 2014)	N/A

John A. Caroselli (age 64)	Trustee	March 2017	135	JC Global Advisors, LLC (management consulting), President (since 2015); First Capital Corporation (commercial finance), Executive Vice President (until 2015)	N/A

Maureen R. Goldfarb (age 63)	Trustee	January 2009	135	Private investor	N/A

Michael Hegarty (age 74)	Trustee	December 2004	135	Private investor	Rouse Properties Inc., Director (until 2016); Capmark Financial Group Inc., Director (until 2015)

Peter D. Jones (age 63)	Trustee	January 2019	135	Franklin Templeton Distributors, Inc. (investment management), President (until 2015); Franklin Templeton Institutional, LLC (investment management), Chairman (until 2015)	N/A

James W. Kilman, Jr. (age 57)	Trustee	January 2019	135	KielStrand Capital LLC (family office and merchant bank), Chief Executive Officer (since 2016); Morgan Stanley & Co. (financial services), Vice Chairman of Investment Banking,Co-Head of Diversified Financials Coverage – Financial Institutions Investment Banking Group (until 2016)	alpha-En Corporation, Director (since 2016)

MFS Limited Maturity Portfolio

Trustees and Officers – continued


Name, Age	Position(s) Held with Fund	Trustee/Officer Since (h)	Number of MFS Funds overseen by the Trustee	Principal Occupations During the Past Five Years	Other Directorships During the Past Five Years (j)
Clarence Otis, Jr. (age 62)	Trustee	March 2017	135	Darden Restaurants, Inc., Chief Executive Officer (until 2014)	VF Corporation, Director; Verizon Communications, Inc., Director; The Travelers Companies, Director; Federal Reserve Bank of Atlanta, Director (until 2015)

Maryanne L. Roepke (age 62)	Trustee	May 2014	135	American Century Investments (investment management), Senior Vice President and Chief Compliance Officer (until 2014)	N/A

Laurie J. Thomsen (age 61)	Trustee	March 2005	135	Private investor	The Travelers Companies, Director; Dycom Industries, Inc., Director (since 2015)


Name, Age	Position(s) Held with Fund	Trustee/Officer Since (h)	Number of MFS Funds for which the Person is an Officer	Principal Occupations During the Past Five Years
OFFICERS
Christopher R. Bohane (k) (age 45)	Assistant Secretary and Assistant Clerk	July 2005	135	Massachusetts Financial Services Company, Vice President and Assistant General Counsel

Kino Clark (k) (age 50)	Assistant Treasurer	January 2012	135	Massachusetts Financial Services Company, Vice President

John W. Clark, Jr. (k) (age 51)	Assistant Treasurer	April 2017	135	Massachusetts Financial Services Company, Vice President (since March 2017); Deutsche Bank (financial services), Department Head – Treasurer’s Office (until February 2017)

Thomas H. Connors (k) (age 59)	Assistant Secretary and Assistant Clerk	September 2012	135	Massachusetts Financial Services Company, Vice President and Senior Counsel

Ethan D. Corey (k) (age 55)	Assistant Secretary and Assistant Clerk	July 2005	135	Massachusetts Financial Services Company, Senior Vice President and Associate General Counsel

David L. DiLorenzo (k) (age 50)	President	July 2005	135	Massachusetts Financial Services Company, Senior Vice President

Heidi W. Hardin (k) (age 51)	Secretary and Clerk	April 2017	135	Massachusetts Financial Services Company, Executive Vice President and General Counsel (since March 2017); Harris Associates (investment management), General Counsel (from September 2015 to January 2017); Janus Capital Management LLC (investment management), Senior Vice President and General Counsel (until September 2015)

Brian E. Langenfeld (k) (age 45)	Assistant Secretary and Assistant Clerk	June 2006	135	Massachusetts Financial Services Company, Vice President and Senior Counsel

Amanda S. Mooradian (k) (age 39)	Assistant Secretary and Assistant Clerk	September 2018	135	Massachusetts Financial Services Company, Assistant Vice President and Counsel

Susan A. Pereira (k) (age 48)	Assistant Secretary and Assistant Clerk	July 2005	135	Massachusetts Financial Services Company, Vice President and Senior Counsel

Kasey L. Phillips (k) (age 48)	Assistant Treasurer	September 2012	135	Massachusetts Financial Services Company, Vice President

Matthew A. Stowe (k) (age 44)	Assistant Secretary and Assistant Clerk	October 2014	135	Massachusetts Financial Services Company, Vice President and Assistant General Counsel

MFS Limited Maturity Portfolio

Trustees and Officers – continued


Name, Age	Position(s) Held with Fund	Trustee/Officer Since (h)	Number of MFS Funds for which the Person is an Officer	Principal Occupations During the Past Five Years
Frank L. Tarantino (age 74)	Independent Senior Officer	June 2004	135	Tarantino LLC (provider of compliance services), Principal

Richard S. Weitzel (k) (age 48)	Assistant Secretary and Assistant Clerk	October 2007	135	Massachusetts Financial Services Company, Senior Vice President and Associate General Counsel

Martin J. Wolin (k) (age 51)	Chief Compliance Officer	July 2015	135	Massachusetts Financial Services Company, Senior Vice President and Chief Compliance Officer (since July 2015); Mercer (financial service provider), Chief Risk and Compliance Officer, North America and Latin America (until June 2015)

James O. Yost (k) (age 58)	Treasurer	September 1990	135	Massachusetts Financial Services Company, Senior Vice President

(h)

(j)	Directorships or trusteeships of companies required to report to the Securities and Exchange Commission (i.e., “public companies”).

(k)

Messrs. Buller, Hegarty, Kilman and Otis and Ms. Roepke are members of the Trust’s Audit Committee.

Each of the Interested Trustees and certain Officers hold comparable officer positions with certain affiliates of MFS.

The Statement of Additional Information for a Fund includes further information about the Trustees and is available without charge upon request by calling1-800-225-2606.


Investment Adviser Massachusetts Financial Services Company 111 Huntington Avenue Boston, MA 02199-7618		Custodian State Street Bank and Trust Company 1 Lincoln Street Boston, MA 02111-2900
Distributor MFS Fund Distributors, Inc. 111 Huntington Avenue Boston, MA 02199-7618		Independent Registered Public Accounting Firm Deloitte & Touche LLP 200 Berkeley Street Boston, MA 02116
Portfolio Manager(s) Philipp Burgener Alexander Mackey

MFS Limited Maturity Portfolio

BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT

Based on information provided by Broadridge and MFS, the Trustees reviewed the Fund’s total return investment performance as well as the Broadridge performance universe over various time periods. The Trustees placed particular emphasis on the total return performance of the Fund’s Initial Class shares in comparison to the performance of funds in its Broadridge performance universe over the three-year period ended December 31, 2017, which the Trustees believed was a long enough period to reflect differing market conditions. The total return performance of the Fund’s Initial Class shares was in the 1st quintile relative to the other funds in the universe for this three-year period (the 1st quintile being the best performers and the 5th quintile being the worst performers). The total return performance of the Fund’s Initial Class shares was in the 2nd quintile for theone-year period and the 1st quintile for the five-year period ended December 31, 2017 relative to the Broadridge performance universe. Because of the passage of time, these performance results may differ from the performance results for more recent periods, including those shown elsewhere in this report.

MFS Limited Maturity Portfolio

Board Review of Investment Advisory Agreement – continued

In assessing the reasonableness of the Fund’s advisory fee, the Trustees considered, among other information, the Fund’s advisory fee and the total expense ratio of the Fund’s Initial Class shares as a percentage of average daily net assets and the advisory fee and total expense ratios of peer groups of funds based on information provided by Broadridge. The Trustees considered that, according to the data provided by Broadridge (which takes into account any fee reductions or expense limitations that were in effect during the Fund’s last fiscal year), the Fund’s effective advisory fee rate was approximately at the Broadridge expense group median and the Fund’s total expense ratio was lower than the Broadridge expense group median.

The Trustees also considered whether the Fund may benefit from any economies of scale in the management of the Fund in the event of growth in assets of the Fund and/or growth in assets of the MFS Funds as a whole. They noted that the Fund’s advisory fee rate schedule is not subject to any breakpoints. Taking into account that the Fund’s effective advisory fee rate was approximately at the Broadridge expense group median described above, the Trustees determined not to recommend any advisory fee breakpoints for the Fund at this time. The Trustees also noted that MFS has agreed in writing to waive a portion of the management fees of certain MFS Funds, including the Fund, if the total combined assets of certain funds within the MFS Funds’ complex increase above agreed upon thresholds (the “group fee waiver”), enabling the Fund’s shareholders to share in the benefits from any economies of scale at the complex level. The group fee waiver is reviewed and renewed annually between the Board and MFS. The Trustees concluded that the group fee waiver was sufficient to allow the Fund to benefit from economies of scale as its assets and overall complex assets grow.

MFS Limited Maturity Portfolio

PROXY VOTING POLICIES AND INFORMATION

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. The fund’s Form N-Q is 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/vit3 by choosing the fund’s name and then selecting the “Resources” tab and clicking on “Prospectus and Reports”.

FURTHER INFORMATION

INFORMATION ABOUT FUND CONTRACTS AND LEGAL CLAIMS

rev. 3/16



FACTS		WHAT DOES MFS DO WITH YOUR PERSONAL INFORMATION?


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

What?

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

• Social Security number and account balances

• Account transactions and transaction history

• Checking account information and wire transfer instructions

When you areno longer our customer, we continue to share your information as described in this notice.


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


Reasons we can share your personal information	Does MFS share?	Can you limit this sharing?
For our everyday business purposes – such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus	Yes	No
For our marketing purposes – to offer our products and services to you	No	We don’t share
For joint marketing with other financial companies	No	We don’t share
For our affiliates’ everyday business purposes – information about your transactions and experiences	No	We don’t share
For our affiliates’ everyday business purposes – information about your creditworthiness	No	We don’t share
For nonaffiliates to market to you	No	We don’t share



Questions?		Call800-225-2606 or go tomfs.com.


Page 2


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


What we do
How does MFS protect my personal information?		To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include procedural, electronic, and physical safeguards for the protection of the personal information we collect about you.
How does MFS collect my personal information?		We collect your personal information, for example, when you • open an account or provide account information • direct us to buy securities or direct us to sell your securities • make a wire transfer We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
Why can’t I limit all sharing?		Federal law gives you the right to limit only • sharing for affiliates’ everyday business purposes – information about your creditworthiness • affiliates from using your information to market to you • sharing for nonaffiliates to market to you State laws and individual companies may give you additional rights to limit sharing.


Definitions
Affiliates		Companies related by common ownership or control. They can be financial and nonfinancial companies. • MFS does not share personal information with affiliates, except for everyday business purposes as described on page one of this notice.
Nonaffiliates		Companies not related by common ownership or control. They can be financial and nonfinancial companies. • MFS does not share with nonaffiliates so they can market to you.
Joint marketing		A formal agreement between nonaffiliated financial companies that together market financial products or services to you. • MFS doesn’t jointly market.


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

LOGO

Annual Report

December 31, 2018

LOGO

MFS^® Mid Cap Value Portfolio

LOGO

MFS^® Variable Insurance Trust III

VMC-ANN

MFS® Mid Cap Value Portfolio

CONTENTS

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

MFS Mid Cap Value Portfolio

LETTER FROM THE EXECUTIVE CHAIRMAN

LOGO

Dear Contract Owners:

Respectfully,

LOGO

Robert J. Manning

Executive Chairman

MFS Investment Management

February 15, 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.

MFS Mid Cap Value Portfolio

PORTFOLIO COMPOSITION

Portfolio structure

LOGO


Top ten holdings
Hartford Financial Services Group, Inc.			1.5%
NASDAQ, Inc.			1.4%
Fidelity National Information Services, Inc.			1.3%
Life Storage, Inc., REIT			1.2%
Public Service Enterprise Group, Inc.			1.2%
Stanley Black & Decker, Inc.			1.2%
KeyCorp			1.1%
Pinnacle West Capital Corp.			1.1%
Amdocs Ltd.			1.1%
Huntington Bancshares, Inc.			1.1%


GICS equity sectors
Financials			21.2%
Information Technology			12.3%
Industrials			11.9%
Utilities			10.0%
Consumer Discretionary			8.9%
Materials			7.8%
Real Estate			7.2%
Energy			6.3%
Health Care			5.8%
Consumer Staples			5.4%
Communication Services			1.5%

Percentages are based on net assets as of December 31, 2018.

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

MFS Mid Cap Value Portfolio

MANAGEMENT REVIEW

Summary of Results

For the twelve months ended December 31, 2018, Initial Class shares of the MFS Mid Cap Value Portfolio (“fund”) provided a total return of –11.45%, while Service Class shares of the fund provided a total return of –11.61%. These compare with a return of –12.29% over the same period for the fund’s benchmark, the Russell Midcap® Value Index.

Market Environment

Contributors to Performance

A combination of security selection and an overweight position in theinformation technology sector contributed to performance relative to the Russell Midcap® Value Index. Within this sector, the fund’s overweight position in electrical equipment manufacturer KeySight Technologies and not holding shares of poor-performing computer hard drive maker Western Digital lifted relative results. Shares of Keysight Technologies rose, throughout the period, on the back of solid earnings results, as better-than-expected demand for 5G broadband components drove double-digit order growth.

Stock selection in both thefinancials andconsumer staples sectors further benefited relative returns. Within thefinancials sector, the fund’s overweight position in general insurance services provider XL Group (h) supported relative returns. Within theconsumer staples sector, holding shares of beverage distributor Coca-Cola European Partners (b) (United Kingdom) helped relative performance. Shares of Coca-Cola European Partners outpaced the benchmark, notably late in the reporting period, as the company raised its full-year guidance and announced a€1.5 billion share repurchase program.

Elsewhere, overweight positions in real estate investment trust Medical Properties Trust, crude oil and refined products asset manager Andeavor Logistics (h), oil and gas exploration company Energen (h) and self-storage property manager Life Storage were among the fund’s top relative contributors. Holding shares of specialty rural lifestyle retailer Tractor Supply Company (b) and not holding shares of mining company Freeport-McMoRan also strengthened relative performance.

Detractors from Performance

Security selection in theconsumer discretionary sector weighed on relative returns during the reporting period. Within this sector, holding shares of apparel retailer Hanesbrands (b) and an overweight position in specialty retailer L Brands held back relative performance. The share price of Hanesbrands fell, notablymid-period, after the company announced that Target would not renew the contract for its exclusive C9 by Champion line, which is a significant portion of the company’s sales of the Champion brand.

An underweight position in thecommunication services sector further weakened the fund’s relative results. Not holding shares of strong-performing social media company Twitter negatively impacted relative performance. Shares of Twitter performed well in the

MFS Mid Cap Value Portfolio

Management Review – continued

first-half of the reporting period, when the stock was held by the benchmark, and benefited from stronger-than-expected growth in Asia. Twitter was not a benchmark constituent the second half of the reporting period.

Stocks in other sectors that detracted from relative performance included the fund’s overweight positions in investment management firm Invesco, independent natural gas and oil company WPX Energy, residential and commercial building materials manufacturer Owens Corning, industrial and specialty chemicals distributor Univar and beauty products company Coty. The timing of the the fund’s position in shares of oil and gas exploration company Marathon Petroleum and holding shares of global oilfield products company Forum Energy Technologies (b) also weakened relative results.

Respectfully,

Portfolio Manager(s)

Kevin Schmitz and Brooks Taylor

(b)	Security is not a benchmark constituent.

(h)	Security was not held in the portfolio at period end.

MFS Mid Cap Value Portfolio

PERFORMANCE SUMMARY THROUGH 12/31/18

Growth of a Hypothetical $10,000 Investment

LOGO

Total Returns through 12/31/18

Average annual total returns


	Share Class	Class Inception Date	1-yr	5-yr	10-yr
	Initial Class	3/07/08	(11.45)%	4.70%	12.17%
	Service Class	3/07/08	(11.61)%	4.47%	11.89%

Comparative benchmark(s)
	Russell Midcap® Value Index (f)		(12.29)%	5.44%	13.03%

(f)	Source: FactSet Research Systems Inc.

Benchmark Definition(s)

Russell Midcap® Value Index – constructed to provide a comprehensive barometer for value securities in the mid-cap segment of the U.S. equity universe. Companies in this index generally have lower price-to-book ratios and lower forecasted growth values. The Russell Midcap® Value Index is a trademark/service mark of the Frank Russell Company. Russell® is a trademark of the Frank Russell Company.

It is not possible to invest directly in an index.

Notes to Performance Summary

Average annual total return represents the average annual change in value for each share class for the periods presented.

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

MFS Mid Cap Value Portfolio

EXPENSE TABLE

Fund Expenses Borne by the Contract Holders during the Period,

July 1, 2018 through December 31, 2018

The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2018 through December 31, 2018.

Actual Expenses

Hypothetical Example for Comparison Purposes


Share Class		Annualized Expense Ratio		Beginning Account Value 7/01/18		Ending Account Value 12/31/18		Expenses Paid During Period (p) 7/01/18-12/31/18
Initial Class	Actual		0.81%		$1,000.00		$882.58		$3.84
Initial Class	Hypothetical (h)		0.81%		$1,000.00		$1,021.12		$4.13
Service Class	Actual		1.06%		$1,000.00		$881.89		$5.03
Service Class	Hypothetical (h)		1.06%		$1,000.00		$1,019.86		$5.40

(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 184/365 (to reflect theone-half year period).

MFS Mid Cap Value Portfolio

PORTFOLIO OF INVESTMENTS – 12/31/18

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 – 98.3%
Aerospace – 2.0%
Harris Corp.		12,541	$	1,688,646
L3 Technologies, Inc.		11,488		1,995,006
Leidos Holdings, Inc.		31,780		1,675,441

			$	5,359,093

Airlines – 1.4%
Alaska Air Group, Inc.		18,417	$	1,120,675
Delta Air Lines, Inc.		50,906		2,540,209

			$	3,660,884

Alcoholic Beverages – 0.4%
Molson Coors Brewing Co.		20,864	$	1,171,722

Apparel Manufacturers – 1.0%
Hanesbrands, Inc.		107,047	$	1,341,299
PVH Corp.		15,105		1,404,010

			$	2,745,309

Automotive – 1.0%
Harley-Davidson, Inc.		37,569	$	1,281,854
Lear Corp.		11,609		1,426,282

			$	2,708,136

Broadcasting – 0.7%
Interpublic Group of Companies, Inc.		95,564	$	1,971,485

Brokerage & Asset Managers – 4.4%
Apollo Global Management LLC, “A”		71,059	$	1,743,788
Invesco Ltd.		90,740		1,518,988
NASDAQ, Inc.		45,622		3,721,386
Raymond James Financial, Inc.		29,546		2,198,518
TD Ameritrade Holding Corp.		50,156		2,455,638

			$	11,638,318

Business Services – 3.8%
Amdocs Ltd.		48,646	$	2,849,683
Fidelity National Information Services, Inc.		32,529		3,335,849
First Data Corp. (a)		124,482		2,104,991
Global Payments, Inc.		17,773		1,832,929

			$	10,123,452

Cable TV – 0.4%
Altice USA, Inc.		64,177	$	1,060,204

Chemicals – 3.3%
Celanese Corp.		18,659	$	1,678,750
Eastman Chemical Co.		35,477		2,593,723
FMC Corp.		28,683		2,121,395
PPG Industries, Inc.		23,061		2,357,526

			$	8,751,394

Computer Software – 0.7%
Check Point Software Technologies Ltd. (a)		18,779	$	1,927,664



Issuer	Shares/Par		Value ($)
COMMON STOCKS – continued
Computer Software – Systems – 2.1%
NCR Corp. (a)		55,068	$	1,270,969
NICE Systems Ltd., ADR (a)		21,017		2,274,249
Verint Systems, Inc. (a)		21,996		930,651
Xerox Corp.		57,297		1,132,189

			$	5,608,058

Construction – 3.7%
Mohawk Industries, Inc. (a)		9,524	$	1,113,927
Owens Corning		41,237		1,813,603
Stanley Black & Decker, Inc.		25,587		3,063,788
Toll Brothers, Inc.		62,211		2,048,608
Vulcan Materials Co.		18,154		1,793,615

			$	9,833,541

Consumer Products – 0.6%
Coty, Inc., “A”		105,973	$	695,183
Newell Brands, Inc.		51,187		951,566

			$	1,646,749

Containers – 2.5%
Berry Global Group, Inc. (a)		48,706	$	2,314,996
Graphic Packaging Holding Co.		161,754		1,721,063
Sealed Air Corp.		39,730		1,384,193
WestRock Co.		33,491		1,264,620

			$	6,684,872

Electrical Equipment – 2.3%
HD Supply Holdings, Inc. (a)		73,741	$	2,766,762
Sensata Technologies Holding PLC (a)		40,871		1,832,656
TE Connectivity Ltd.		20,220		1,529,239

			$	6,128,657

Electronics – 3.7%
Analog Devices, Inc.		29,931	$	2,568,978
IPG Photonics Corp. (a)		6,615		749,413
Keysight Technologies, Inc. (a)		42,680		2,649,574
Marvell Technology Group Ltd.		101,040		1,635,838
Maxim Integrated Products, Inc.		42,602		2,166,312

			$	9,770,115

Energy – Independent – 4.2%
Cabot Oil & Gas Corp.		91,543	$	2,045,986
Concho Resources, Inc. (a)		8,844		909,075
Hess Corp.		43,941		1,779,611
Marathon Petroleum Corp.		38,802		2,289,706
Pioneer Natural Resources Co.		18,266		2,402,344
WPX Energy, Inc. (a)		146,849		1,666,736

			$	11,093,458

Engineering – Construction – 0.8%
KBR, Inc.		131,110	$	1,990,250

Food & Beverages – 4.5%
Archer Daniels Midland Co.		39,766	$	1,629,213
Coca-Cola European Partners PLC		48,500		2,223,725

MFS Mid Cap Value Portfolio

Portfolio of Investments – continued



Issuer	Shares/Par		Value ($)
COMMON STOCKS – continued
Food & Beverages – continued
Ingredion, Inc.		18,593	$	1,699,400
J.M. Smucker Co.		17,167		1,604,943
Post Holdings, Inc. (a)		10,377		924,902
Sanderson Farms, Inc.		16,232		1,611,676
TreeHouse Foods, Inc. (a)		16,700		846,857
Tyson Foods, Inc., “A”		24,263		1,295,644

			$	11,836,360

Furniture & Appliances – 0.6%
Whirlpool Corp.		15,550	$	1,661,829

Gaming & Lodging – 1.3%
Hilton Worldwide Holdings, Inc.		24,589	$	1,765,490
Royal Caribbean Cruises Ltd.		17,115		1,673,676

			$	3,439,166

General Merchandise – 0.7%
Dollar Tree, Inc. (a)		18,973	$	1,713,641

Insurance – 7.7%
Aon PLC		16,456	$	2,392,044
Arthur J. Gallagher & Co.		35,520		2,617,824
Assurant, Inc.		24,372		2,179,832
Athene Holding Ltd. (a)		46,031		1,833,415
Everest Re Group Ltd.		10,569		2,301,505
Hanover Insurance Group, Inc.		17,836		2,082,710
Hartford Financial Services Group, Inc.		86,998		3,867,061
Lincoln National Corp.		38,598		1,980,463
Unum Group		41,889		1,230,699

			$	20,485,553

Leisure & Toys – 1.0%
Brunswick Corp.		37,807	$	1,756,135
Electronic Arts, Inc. (a)		12,692		1,001,526

			$	2,757,661

Machinery & Tools – 3.2%
AGCO Corp.		33,546	$	1,867,506
Eaton Corp. PLC		35,293		2,423,217
Gates Industrial Corp. PLC (a)		67,604		895,077
ITT, Inc.		37,761		1,822,723
Regal Beloit Corp.		21,571		1,511,049

			$	8,519,572

Major Banks – 3.1%
Comerica, Inc.		35,988	$	2,472,016
Huntington Bancshares, Inc.		238,738		2,845,757
KeyCorp		198,152		2,928,686

			$	8,246,459

Medical & Health Technology & Services – 3.2%
AmerisourceBergen Corp.		25,871	$	1,924,802
Premier, Inc., “A” (a)		41,960		1,567,206
Quest Diagnostics, Inc.		30,311		2,523,997
Universal Health Services, Inc.		21,916		2,554,529

			$	8,570,534



Issuer	Shares/Par		Value ($)
COMMON STOCKS – continued
Medical Equipment – 2.0%
PerkinElmer, Inc.		21,358	$	1,677,671
Steris PLC		9,412		1,005,672
Zimmer Biomet Holdings, Inc.		26,408		2,739,038

			$	5,422,381

Natural Gas – Distribution – 1.8%
NiSource, Inc.		67,609	$	1,713,888
Sempra Energy		19,384		2,097,155
South Jersey Industries, Inc.		31,067		863,663

			$	4,674,706

Natural Gas – Pipeline – 1.2%
Equitrans Midstream Corp. (a)		48,925	$	979,479
Plains GP Holdings LP		109,530		2,201,553

			$	3,181,032

Network & Telecom – 0.8%
Motorola Solutions, Inc.		17,636	$	2,028,845

Oil Services – 1.3%
Forum Energy Technologies, Inc. (a)		75,667	$	312,505
Frank’s International N.V. (a)		152,544		796,280
NOW, Inc. (a)		78,397		912,541
Oil States International, Inc. (a)		44,482		635,203
Patterson-UTI Energy, Inc.		74,336		769,377

			$	3,425,906

Other Banks & Diversified Financials – 5.7%
Discover Financial Services		39,688	$	2,340,798
Element Fleet Management Corp.		151,207		765,339
M&T Bank Corp.		15,188		2,173,859
Northern Trust Corp.		29,821		2,492,737
Signature Bank		25,216		2,592,457
SunTrust Banks, Inc.		53,144		2,680,583
Wintrust Financial Corp.		30,147		2,004,474

			$	15,050,247

Pharmaceuticals – 0.5%
Mylan N.V. (a)		51,790	$	1,419,046

Railroad & Shipping – 0.8%
Kansas City Southern Co.		23,220	$	2,216,349

Real Estate – 7.6%
Annaly Mortgage Management, Inc., REIT		94,912	$	932,036
Brixmor Property Group Inc., REIT		121,076		1,778,606
EPR Properties, REIT		32,892		2,106,075
Life Storage, Inc., REIT		35,685		3,318,348
Medical Properties Trust, Inc., REIT		165,452		2,660,468
Mid-America Apartment Communities, Inc., REIT		24,673		2,361,206
Spirit Realty Capital, Inc., REIT		23,983		845,401
Sun Communities, Inc., REIT		22,061		2,243,824
VICI Properties, Inc., REIT		78,800		1,479,864
W.P. Carey, Inc., REIT		37,602		2,456,915

			$	20,182,743

MFS Mid Cap Value Portfolio

Portfolio of Investments – continued



Issuer	Shares/Par		Value ($)
COMMON STOCKS – continued
Restaurants – 0.5%
Aramark		47,108	$	1,364,719

Specialty Chemicals – 1.8%
Axalta Coating Systems Ltd. (a)		89,013	$	2,084,685
RPM International, Inc.		25,522		1,500,183
Univar, Inc. (a)		69,576		1,234,278

			$	4,819,146

Specialty Stores – 1.8%
BJ’s Wholesale Club Holdings, Inc. (a)		30,858	$	683,813
L Brands, Inc.		45,641		1,171,605
Michaels Co., Inc. (a)		57,646		780,527
Tractor Supply Co.		14,613		1,219,309
Urban Outfitters, Inc. (a)		25,472		845,670

			$	4,700,924

Utilities – Electric Power – 8.2%
AES Corp.		123,680	$	1,788,413
CenterPoint Energy, Inc.		80,447		2,271,019
CMS Energy Corp.		56,441		2,802,295
Eversource Energy		41,767		2,716,526
FirstEnergy Corp.		47,776		1,793,989
Pinnacle West Capital Corp.		34,028		2,899,185
Public Service Enterprise Group, Inc.		59,859		3,115,661
Southern Co.		52,640		2,311,949
WEC Energy Group, Inc.		31,192		2,160,358

			$	21,859,395

Total Common Stocks (Identified Cost, $232,980,921)			$	261,449,575



Issuer	Shares/Par		Value ($)
INVESTMENT COMPANIES (h) – 1.7%
Money Market Funds – 1.7%
MFS Institutional Money Market Portfolio, 2.4% (v) (Identified Cost, $4,541,246)		4,541,693	$	4,541,238

OTHER ASSETS, LESS LIABILITIES – 0.0%				64,802

NET ASSETS – 100.0%			$	266,055,615

(a)

Non-income producing security.

(h)

(v)

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

ADR

American Depositary Receipt

PLC

Public Limited Company

REIT

Real Estate Investment Trust

See Notes to Financial Statements

MFS Mid Cap Value Portfolio

FINANCIAL STATEMENTS ^| STATEMENT OF ASSETS AND LIABILITIES

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


At 12/31/18

Assets
Investments in unaffiliated issuers, at value (identified cost, $232,980,921)			$261,449,575
Investments in affiliated issuers, at value (identified cost, $4,541,246)			4,541,238
Receivables for
Fund shares sold			123,331
Dividends			445,951
Other assets			2,205
Total assets			$266,562,300

Liabilities
Payables for			$421,676
Fund shares reacquired
Payable to affiliates
Investment adviser			21,879
Shareholder servicing costs			98
Distribution and/or service fees			1,519
Payable for independent Trustees’ compensation			7
Accrued expenses and other liabilities			61,506
Total liabilities			$506,685
Net assets			$266,055,615

Net assets consist of
Paid-in capital			$210,575,776
Total distributable earnings (loss)			55,479,839
Net assets			$266,055,615
Shares of beneficial interest outstanding			35,922,171



	Net assets		Shares outstanding		Net asset value per share
Initial Class		$210,218,496		28,323,159		$7.42
Service Class		55,837,119		7,599,012		7.35

See Notes to Financial Statements

MFS Mid Cap Value Portfolio

FINANCIAL STATEMENTS ^| STATEMENT OF OPERATIONS

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.


Year ended 12/31/18

Net investment income (loss)
Income
Dividends	$6,263,239
Dividends from affiliated issuers	73,667
Other	17,477
Income on securities loaned	9,299
Foreign taxes withheld	(9,343	)
Total investment income	$6,354,339
Expenses
Management fee	$2,467,507
Distribution and/or service fees	198,872
Shareholder servicing costs	13,259
Administrative services fee	56,991
Independent Trustees’ compensation	7,295
Custodian fee	19,776
Shareholder communications	23,815
Audit and tax fees	55,092
Legal fees	3,018
Miscellaneous	25,946
Total expenses	$2,871,571
Reduction of expenses by investment adviser	(31,299	)
Net expenses	$2,840,272
Net investment income (loss)	$3,514,067

Realized and unrealized gain (loss)
Realized gain (loss) (identified cost basis)
Unaffiliated issuers	$25,287,997
Affiliated issuers	(1,472	)
Foreign currency	344
Net realized gain (loss)	$25,286,869
Change in unrealized appreciation or depreciation
Unaffiliated issuers	$(62,853,282	)
Affiliated issuers	(8	)
Translation of assets and liabilities in foreign currencies	(165	)
Net unrealized gain (loss)	$(62,853,455	)
Net realized and unrealized gain (loss)	$(37,566,586	)
Change in net assets from operations	$(34,052,519	)

See Notes to Financial Statements

MFS Mid Cap Value Portfolio

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.


	Year ended
	12/31/18			12/31/17
Change in net assets

From operations
Net investment income (loss)		$3,514,067			$2,638,628
Net realized gain (loss)		25,286,869			20,701,883
Net unrealized gain (loss)		(62,853,455	)		21,479,357
Change in net assets from operations		$(34,052,519	)		$44,819,868
Total distributions to shareholders (a)		$(23,606,272	)		$(14,155,662	)
Change in net assets from fund share transactions		$(30,219,129	)		$(7,277,298	)
Total change in net assets		$(87,877,920	)		$23,386,908

Net assets
At beginning of period		353,933,535			330,546,627
At end of period (b)		$266,055,615			$353,933,535

(a)	Distributions from net investment income and from net realized gain are no longer required to be separately disclosed. See Note 2. For the year ended December 31, 2017, distributions from net investment income and from net realized gain were $4,029,207 and $10,126,455, respectively.

(b)	Parenthetical disclosure of undistributed net investment income is no longer required. See Note 2. For the year ended December 31, 2017, end of period net assets included undistributed net investment income of $2,859,678.

See Notes to Financial Statements

MFS Mid Cap Value Portfolio

FINANCIAL STATEMENTS ^| FINANCIAL HIGHLIGHTS


Initial Class	Year ended

	12/31/18			12/31/17			12/31/16			12/31/15			12/31/14

Net asset value, beginning of period		$9.01			$8.29			$7.84			$9.80			$10.05

Income (loss) from investment operations
Net investment income (loss) (d)		$0.10			$0.07			$0.10	(c)		$0.08			$0.09
Net realized and unrealized gain (loss)		(1.03	)		1.03			1.12			(0.37	)		0.93
Total from investment operations		$(0.93	)		$1.10			$1.22			$(0.29	)		$1.02

Less distributions declared to shareholders
From net investment income		$(0.08	)		$(0.11	)		$(0.07	)		$(0.10	)		$(0.11	)
From net realized gain		(0.58	)		(0.27	)		(0.70	)		(1.57	)		(1.16	)
Total distributions declared to shareholders		$(0.66	)		$(0.38	)		$(0.77	)		$(1.67	)		$(1.27	)
Net asset value, end of period (x)		$7.42			$9.01			$8.29			$7.84			$9.80
Total return (%) (k)(r)(s)(x)		(11.45	)		13.67			15.98	(c)		(2.33	)		10.36

Ratios (%) (to average net assets) and Supplemental data:
Expenses before expense reductions (f)		0.81			0.81			0.77	(c)		0.82			0.81
Expenses after expense reductions (f)		0.80			0.81			0.76	(c)		0.81			0.81
Net investment income (loss)		1.13			0.82			1.31	(c)		0.82			0.86
Portfolio turnover		32			36			32			51			55
Net assets at end of period (000 omitted)		$210,218			$268,291			$271,001			$274,753			$322,888

Service Class	Year ended

	12/31/18			12/31/17			12/31/16			12/31/15			12/31/14

Net asset value, beginning of period		$8.93			$8.22			$7.78			$9.74			$9.99

Income (loss) from investment operations
Net investment income (loss) (d)		$0.08			$0.05			$0.08	(c)		$0.06			$0.06
Net realized and unrealized gain (loss)		(1.02	)		1.02			1.12			(0.38	)		0.93
Total from investment operations		$(0.94	)		$1.07			$1.20			$(0.32	)		$0.99

Less distributions declared to shareholders
From net investment income		$(0.06	)		$(0.09	)		$(0.06	)		$(0.07	)		$(0.08	)
From net realized gain		(0.58	)		(0.27	)		(0.70	)		(1.57	)		(1.16	)
Total distributions declared to shareholders		$(0.64	)		$(0.36	)		$(0.76	)		$(1.64	)		$(1.24	)
Net asset value, end of period (x)		$7.35			$8.93			$8.22			$7.78			$9.74
Total return (%) (k)(r)(s)(x)		(11.61	)		13.41			15.76	(c)		(2.66	)		10.16

Ratios (%) (to average net assets) and Supplemental data:
Expenses before expense reductions (f)		1.06			1.06			1.02	(c)		1.07			1.06
Expenses after expense reductions (f)		1.05			1.05			1.01	(c)		1.06			1.06
Net investment income (loss)		0.86			0.59			1.06	(c)		0.62			0.62
Portfolio turnover		32			36			32			51			55
Net assets at end of period (000 omitted)		$55,837			$85,643			$59,545			$55,100			$38,611

See Notes to Financial Statements

MFS Mid Cap Value Portfolio

Financial Highlights – continued

(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.

(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

MFS Mid Cap Value Portfolio

NOTES TO FINANCIAL STATEMENTS

(1)

Business and Organization

MFS Mid Cap Value Portfolio (the fund) is a diversified series of MFS Variable Insurance Trust III (the trust). The trust is organized as a Delaware statutory 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.

(2)

Significant Accounting Policies

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.

MFS Mid Cap Value Portfolio

Notes to Financial Statements – continued

has been materially affected by events occurring after the close of the exchange or market on which the investment is principally traded (such as foreign exchange or market) and prior to the determination of the fund’s net asset value, or after the halting of trading of a specific security where trading does not resume prior to the close of the exchange or market on which the security is principally traded. Events that occur on a frequent basis after foreign markets close (such as developments in foreign markets and significant movements in the U.S. markets) and prior to the determination of the fund’s net asset value may be deemed to have a material effect on the value of securities traded in foreign markets. Accordingly, the fund’s foreign equity securities may often be valued at fair value. The adviser generally relies on third-party pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and financial condition of the issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment for purposes of calculating the fund’s net asset value can differ depending on the source and method used to determine value. When fair valuation is used, the value of an investment used to determine the fund’s net asset value may differ from quoted or published prices for the same investment. There can be no assurance that the fund could obtain the fair value assigned to an investment if it were to sell the investment at the same time at which the fund determines its net asset value per share.


Financial Instruments	Level 1		Level 2		Level 3		Total
Equity Securities		$261,449,575		$—		$—		$261,449,575
Mutual Funds		4,541,238		—		—		4,541,238
Total		$265,990,813		$—		$—		$265,990,813

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

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 December 31, 2018, there were no securities on loan or collateral outstanding.

MFS Mid Cap Value Portfolio

Notes to Financial Statements – continued

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

Investment Transactions and Income– Investment transactions are recorded on the trade date. Interest income is recorded on the accrual basis. 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.

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.

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

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


	Year ended 12/31/18		Year ended 12/31/17
Ordinary income (including any short-term capital gains)		$6,261,207		$4,671,333
Long-term capital gains		17,345,065		9,484,329
Total distributions		$23,606,272		$14,155,662

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


As of 12/31/18

Cost of investments	$239,190,195
Gross appreciation	49,520,181
Gross depreciation	(22,719,563	)
Net unrealized appreciation (depreciation)	$26,800,618

Undistributed ordinary income	5,691,407
Undistributed long-term capital gain	22,988,153
Other temporary differences	(339	)

MFS Mid Cap Value Portfolio

Notes to Financial Statements – 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 investment income				From net realized gain

	Year ended 12/31/18		Year ended 12/31/17		Year ended 12/31/18			Year ended 12/31/17
Initial Class		$2,162,159		$3,360,693		$15,550,404			$8,162,163
Service Class		566,847		668,514		5,326,862			1,964,292
Total		$2,729,006		$4,029,207		$20,877,266	��		$10,126,455

(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 year ended December 31, 2018, this management fee reduction amounted to $31,299, which is included in the reduction of total expenses in the Statement of Operations. The management fee incurred for the year ended December 31, 2018 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.

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 year ended December 31, 2018, the fee was $12,465, which equated to 0.0038% 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 year ended December 31, 2018, these costs amounted to $794.

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 year ended December 31, 2018 was equivalent to an annual effective rate of 0.0173% of the fund’s average daily net assets.

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

Other– This fund and certain other funds managed by MFS (the funds) have entered into a service agreement (the ISO Agreement) which provides 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 serves as the ISO and is an officer of the funds and the sole member of Tarantino LLC. The funds can terminate the ISO Agreement with Tarantino LLC at any time under the terms of the ISO Agreement. For the year ended December 31, 2018, the fee paid by the fund under this agreement was $564 and is included in “Miscellaneous” expense in the Statement of Operations. MFS has agreed to bear all expenses associated with office space, other administrative support, and supplies provided to the ISO.

MFS Mid Cap Value Portfolio

Notes to Financial Statements – continued

ensure that cross-trades conducted by the fund comply with Rule17a-7 under the Investment Company Act of 1940. During the year ended December 31, 2018, the fund engaged in purchase and sale transactions pursuant to this policy, which amounted to $39,680 and $123,765, respectively. The sales transactions resulted in net realized gains (losses) of $44,969.

Effective on or about January 3, 2018, 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 period on or about January 3, 2018 to December 31, 2018, this reimbursement amounted to $17,324, which is included in “Other” income in the Statement of Operations.

(4)

Portfolio Securities

For the year ended December 31, 2018, purchases and sales of investments, other than short-term obligations, aggregated $102,492,907 and $153,270,820, 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:


	Year ended 12/31/18						Year ended 12/31/17

	Shares			Amount			Shares			Amount
Shares sold
Initial Class		1,537,323			$12,807,175			1,411,404			$12,144,591
Service Class		704,611			5,837,659			2,990,095			24,813,034
		2,241,934			$18,644,834			4,401,499			$36,957,625

Shares issued to shareholders in reinvestment of distributions
Initial Class		2,003,667			$17,712,418			1,400,024			$11,522,200
Service Class		673,567			5,893,709			322,253			2,632,806
		2,677,234			$23,606,127			1,722,277			$14,155,006

Shares reacquired
Initial Class		(4,984,368	)		$(44,609,006	)		(5,754,275	)		$(50,046,081	)
Service Class		(3,367,267	)		(27,861,084	)		(971,461	)		(8,343,848	)
		(8,351,635	)		$(72,470,090	)		(6,725,736	)		$(58,389,929	)

Net change
Initial Class		(1,443,378	)		$(14,089,413	)		(2,942,847	)		$(26,379,290	)
Service Class		(1,989,089	)		(16,129,716	)		2,340,887			19,101,992
		(3,432,467	)		$(30,219,129	)		(601,960	)		$(7,277,298	)

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 35%, 11%, and 6%, respectively, of the value of outstanding voting shares of the fund.

(6)

Line of Credit

MFS Mid Cap Value Portfolio

Notes to Financial Statements – continued

(7)

Investments in Affiliated Issuers


Affiliated Issuers		Beginning Shares/Par Amount			Acquisitions Shares/Par Amount		Dispositions Shares/Par Amount			Ending Shares/Par Amount

MFS Institutional Money Market Portfolio			3,634,056			72,829,438		(71,921,801	)		4,541,693

Affiliated Issuers	Realized Gain (Loss)	Change in Unrealized Appreciation/ Depreciation			Capital Gain Distributions		Dividend Income			Ending Value

MFS Institutional Money Market Portfolio	$(1,472)		$(8	)		$—		$73,667			$4,541,238

MFS Mid Cap Value Portfolio

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Trustees of MFS Variable Insurance Trust III and the Shareholders of

MFS Mid Cap Value Portfolio:

Opinion on the Financial Statements and Financial Highlights

We have audited the accompanying statement of assets and liabilities of MFS Mid Cap Value Portfolio (the “Fund”), including the portfolio of investments, as of December 31, 2018, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of December 31, 2018, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

DELOITTE & TOUCHE LLP

Boston, Massachusetts

February 15, 2019

We have served as the auditor of one or more of the MFS investment companies since 1924.

MFS Mid Cap Value Portfolio

TRUSTEES AND OFFICERS – IDENTIFICATION AND BACKGROUND


Name, Age	Position(s) Held with Fund	Trustee/Officer Since (h)	Number of MFS Funds overseen by the Trustee	Principal Occupations During the Past Five Years	Other Directorships During the Past Five Years (j)
INTERESTED TRUSTEES
Robert J. Manning (k) (age 55)	Trustee	February 2004	135	Massachusetts Financial Services Company, Executive Chairman (since January 2017); Director; Chairman of the Board; Chief Executive Officer (until 2015);Co-Chief Executive Officer(2015-2016)	N/A

Robin A. Stelmach (k) (age 57)	Trustee	January 2014	135	Massachusetts Financial Services Company, Vice Chair (since January 2017); Chief Operating Officer and Executive Vice President (until January 2017)	N/A

INDEPENDENT TRUSTEES
John P. Kavanaugh (age 64)	Trustee and Chair of Trustees	January 2009	135	Private investor	N/A

Steven E. Buller (age 67)	Trustee	February 2014	135	Financial Accounting Standards Advisory Council, Chairman(2014-2015); Public Company Accounting Oversight Board, Standing Advisory Group, Member (until 2014); BlackRock, Inc. (investment management), Managing Director (until 2014), BlackRock Finco UK (investment management), Director (until 2014)	N/A

John A. Caroselli (age 64)	Trustee	March 2017	135	JC Global Advisors, LLC (management consulting), President (since 2015); First Capital Corporation (commercial finance), Executive Vice President (until 2015)	N/A

Maureen R. Goldfarb (age 63)	Trustee	January 2009	135	Private investor	N/A

Michael Hegarty (age 74)	Trustee	December 2004	135	Private investor	Rouse Properties Inc., Director (until 2016); Capmark Financial Group Inc., Director (until 2015)

Peter D. Jones (age 63)	Trustee	January 2019	135	Franklin Templeton Distributors, Inc. (investment management), President (until 2015); Franklin Templeton Institutional, LLC (investment management), Chairman (until 2015)	N/A

James W. Kilman, Jr. (age 57)	Trustee	January 2019	135	KielStrand Capital LLC (family office and merchant bank), Chief Executive Officer (since 2016); Morgan Stanley & Co. (financial services), Vice Chairman of Investment Banking,Co-Head of Diversified Financials Coverage – Financial Institutions Investment Banking Group (until 2016)	alpha-En Corporation, Director (since 2016)

MFS Mid Cap Value Portfolio

Trustees and Officers – continued


Name, Age	Position(s) Held with Fund	Trustee/Officer Since (h)	Number of MFS Funds overseen by the Trustee	Principal Occupations During the Past Five Years	Other Directorships During the Past Five Years (j)
Clarence Otis, Jr. (age 62)	Trustee	March 2017	135	Darden Restaurants, Inc., Chief Executive Officer (until 2014)	VF Corporation, Director; Verizon Communications, Inc., Director; The Travelers Companies, Director; Federal Reserve Bank of Atlanta, Director (until 2015)

Maryanne L. Roepke (age 62)	Trustee	May 2014	135	American Century Investments (investment management), Senior Vice President and Chief Compliance Officer (until 2014)	N/A

Laurie J. Thomsen (age 61)	Trustee	March 2005	135	Private investor	The Travelers Companies, Director; Dycom Industries, Inc., Director (since 2015)


Name, Age	Position(s) Held with Fund	Trustee/Officer Since (h)	Number of MFS Funds for which the Person is an Officer	Principal Occupations During the Past Five Years
OFFICERS
Christopher R. Bohane (k) (age 45)	Assistant Secretary and Assistant Clerk	July 2005	135	Massachusetts Financial Services Company, Vice President and Assistant General Counsel

Kino Clark (k) (age 50)	Assistant Treasurer	January 2012	135	Massachusetts Financial Services Company, Vice President

John W. Clark, Jr. (k) (age 51)	Assistant Treasurer	April 2017	135	Massachusetts Financial Services Company, Vice President (since March 2017); Deutsche Bank (financial services), Department Head – Treasurer’s Office (until February 2017)

Thomas H. Connors (k) (age 59)	Assistant Secretary and Assistant Clerk	September 2012	135	Massachusetts Financial Services Company, Vice President and Senior Counsel

Ethan D. Corey (k) (age 55)	Assistant Secretary and Assistant Clerk	July 2005	135	Massachusetts Financial Services Company, Senior Vice President and Associate General Counsel

David L. DiLorenzo (k) (age 50)	President	July 2005	135	Massachusetts Financial Services Company, Senior Vice President

Heidi W. Hardin (k) (age 51)	Secretary and Clerk	April 2017	135	Massachusetts Financial Services Company, Executive Vice President and General Counsel (since March 2017); Harris Associates (investment management), General Counsel (from September 2015 to January 2017); Janus Capital Management LLC (investment management), Senior Vice President and General Counsel (until September 2015)

Brian E. Langenfeld (k) (age 45)	Assistant Secretary and Assistant Clerk	June 2006	135	Massachusetts Financial Services Company, Vice President and Senior Counsel

Amanda S. Mooradian (k) (age 39)	Assistant Secretary and Assistant Clerk	September 2018	135	Massachusetts Financial Services Company, Assistant Vice President and Counsel

Susan A. Pereira (k) (age 48)	Assistant Secretary and Assistant Clerk	July 2005	135	Massachusetts Financial Services Company, Vice President and Senior Counsel

Kasey L. Phillips (k) (age 48)	Assistant Treasurer	September 2012	135	Massachusetts Financial Services Company, Vice President

Matthew A. Stowe (k) (age 44)	Assistant Secretary and Assistant Clerk	October 2014	135	Massachusetts Financial Services Company, Vice President and Assistant General Counsel

MFS Mid Cap Value Portfolio

Trustees and Officers – continued


Name, Age	Position(s) Held with Fund	Trustee/Officer Since (h)	Number of MFS Funds for which the Person is an Officer	Principal Occupations During the Past Five Years
Frank L. Tarantino (age 74)	Independent Senior Officer	June 2004	135	Tarantino LLC (provider of compliance services), Principal

Richard S. Weitzel (k) (age 48)	Assistant Secretary and Assistant Clerk	October 2007	135	Massachusetts Financial Services Company, Senior Vice President and Associate General Counsel

Martin J. Wolin (k) (age 51)	Chief Compliance Officer	July 2015	135	Massachusetts Financial Services Company, Senior Vice President and Chief Compliance Officer (since July 2015); Mercer (financial service provider), Chief Risk and Compliance Officer, North America and Latin America (until June 2015)

James O. Yost (k) (age 58)	Treasurer	September 1990	135	Massachusetts Financial Services Company, Senior Vice President

(h)

(j)	Directorships or trusteeships of companies required to report to the Securities and Exchange Commission (i.e., “public companies”).

(k)

Messrs. Buller, Hegarty, Kilman and Otis and Ms. Roepke are members of the Trust’s Audit Committee.

Each of the Interested Trustees and certain Officers hold comparable officer positions with certain affiliates of MFS.

The Statement of Additional Information for a Fund includes further information about the Trustees and is available without charge upon request by calling1-800-225-2606.


Investment Adviser Massachusetts Financial Services Company 111 Huntington Avenue Boston, MA 02199-7618		Custodian State Street Bank and Trust Company 1 Lincoln Street Boston, MA 02111-2900

Distributor MFS Fund Distributors, Inc. 111 Huntington Avenue Boston, MA 02199-7618		Independent Registered Public Accounting Firm Deloitte & Touche LLP 200 Berkeley Street Boston, MA 02116

Portfolio Manager(s) Kevin Schmitz Brooks Taylor

MFS Mid Cap Value Portfolio

BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT

Based on information provided by Broadridge and MFS, the Trustees reviewed the Fund’s total return investment performance as well as the Broadridge performance universe over various time periods. The Trustees placed particular emphasis on the total return performance of the Fund’s Initial Class shares in comparison to the performance of funds in its Broadridge performance universe over the three-year period ended December 31, 2017, which the Trustees believed was a long enough period to reflect differing market conditions. The total return performance of the Fund’s Initial Class shares was in the 2nd quintile relative to the other funds in the universe for this three-year period (the 1st quintile being the best performers and the 5th quintile being the worst performers). The total return performance of the Fund’s Initial Class shares was in the 2nd quintile for theone-year period and the 1st quintile for the five-year period ended December 31, 2017 relative to the Broadridge performance universe. Because of the passage of time, these performance results may differ from the performance results for more recent periods, including those shown elsewhere in this report.

MFS Mid Cap Value Portfolio

Board Review of Investment Advisory Agreement – continued

In assessing the reasonableness of the Fund’s advisory fee, the Trustees considered, among other information, the Fund’s advisory fee and the total expense ratio of the Fund’s Initial Class shares as a percentage of average daily net assets and the advisory fee and total expense ratios of peer groups of funds based on information provided by Broadridge. The Trustees considered that, according to the data provided by Broadridge (which takes into account any fee reductions or expense limitations that were in effect during the Fund’s last fiscal year), the Fund’s effective advisory fee rate and total expense ratio were each approximately at the Broadridge expense group median.

The Trustees also considered whether the Fund may benefit from any economies of scale in the management of the Fund in the event of growth in assets of the Fund and/or growth in assets of the MFS Funds as a whole. They noted that the Fund’s advisory fee rate schedule is subject to a contractual breakpoint that reduces the Fund’s advisory fee rate on average daily net assets over $1 billion. The Trustees also noted that MFS has agreed in writing to waive a portion of the management fees of certain MFS Funds, including the Fund, if the total combined assets of certain funds within the MFS Funds’ complex increase above agreed upon thresholds (the “group fee waiver”), enabling the Fund’s shareholders to share in the benefits from any economies of scale at the complex level. The group fee waiver is reviewed and renewed annually between the Board and MFS. The Trustees concluded that the breakpoint and the group fee waiver were sufficient to allow the Fund to benefit from economies of scale as its assets and overall complex assets grow.

MFS Mid Cap Value Portfolio

PROXY VOTING POLICIES AND INFORMATION

QUARTERLY PORTFOLIO DISCLOSURE

FURTHER INFORMATION

INFORMATION ABOUT FUND CONTRACTS AND LEGAL CLAIMS

FEDERAL TAX INFORMATION (unaudited)

The following information is provided pursuant to provisions of the Internal Revenue Code.

The fund designates $19,080,000 as capital gain dividends paid during the fiscal year.

For corporate shareholders, 65.53% of the ordinary income dividends paid during the fiscal year qualify for the corporate dividends received deduction.

rev. 3/16



FACTS		WHAT DOES MFS DO WITH YOUR PERSONAL INFORMATION?


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

What?

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

• Social Security number and account balances

• Account transactions and transaction history

• Checking account information and wire transfer instructions

When you areno longer our customer, we continue to share your information as described in this notice.


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


Reasons we can share your personal information	Does MFS share?	Can you limit this sharing?
For our everyday business purposes – such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus	Yes	No
For our marketing purposes – to offer our products and services to you	No	We don’t share
For joint marketing with other financial companies	No	We don’t share
For our affiliates’ everyday business purposes – information about your transactions and experiences	No	We don’t share
For our affiliates’ everyday business purposes – information about your creditworthiness	No	We don’t share
For nonaffiliates to market to you	No	We don’t share



Questions?		Call800-225-2606 or go tomfs.com.


Page 2


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


What we do
How does MFS protect my personal information?		To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include procedural, electronic, and physical safeguards for the protection of the personal information we collect about you.
How does MFS collect my personal information?		We collect your personal information, for example, when you • open an account or provide account information • direct us to buy securities or direct us to sell your securities • make a wire transfer We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
Why can’t I limit all sharing?		Federal law gives you the right to limit only • sharing for affiliates’ everyday business purposes – information about your creditworthiness • affiliates from using your information to market to you • sharing for nonaffiliates to market to you State laws and individual companies may give you additional rights to limit sharing.


Definitions
Affiliates		Companies related by common ownership or control. They can be financial and nonfinancial companies. • MFS does not share personal information with affiliates, except for everyday business purposes as described on page one of this notice.
Nonaffiliates		Companies not related by common ownership or control. They can be financial and nonfinancial companies. • MFS does not share with nonaffiliates so they can market to you.
Joint marketing		A formal agreement between nonaffiliated financial companies that together market financial products or services to you. • MFS doesn’t jointly market.


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

LOGO

Annual Report

December 31, 2018

LOGO

MFS^® Moderate Allocation Portfolio

LOGO

MFS^® Variable Insurance Trust III

VMA-ANN

MFS® Moderate Allocation Portfolio

CONTENTS

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

MFS Moderate Allocation Portfolio

LETTER FROM THE EXECUTIVE CHAIRMAN

LOGO

Dear Contract Owners:

Respectfully,

LOGO

Robert J. Manning

Executive Chairman

MFS Investment Management

February 15, 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.

MFS Moderate Allocation Portfolio

PORTFOLIO COMPOSITION

Portfolio target allocation

LOGO


Portfolio holdings
MFS Total Return Bond Series			12.5%
MFS Government Securities Portfolio			10.5%
MFS Growth Series			8.7%
MFS Value Series			8.7%
MFS Research Series			7.8%
MFS Research International Portfolio			6.8%
MFS Mid Cap Growth Series			6.7%
MFS Mid Cap Value Portfolio			6.7%
MFS Global Governments Portfolio			5.3%
MFS Inflation-Adjusted Bond Portfolio			5.2%
MFS High Yield Portfolio			5.1%
MFS Limited Maturity Portfolio			4.1%
MFS International Value Portfolio			3.0%
MFS International Growth Portfolio			3.0%
MFS Global Real Estate Portfolio			3.0%
MFS New Discovery Value Portfolio			1.4%
MFS New Discovery Series			1.4%
Cash & Cash Equivalents			0.1%

Portfolio actual allocation

LOGO

Percentages are based on net assets as of December 31, 2018.

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

MFS Moderate Allocation Portfolio

MANAGEMENT REVIEW

Summary of Results

For the twelve months ended December 31, 2018, Initial Class shares of the MFS Moderate Allocation Portfolio (“fund”) provided a total return of –3.85%, while Service Class shares of the fund provided a total return of –4.13%. These compare with a return of –4.38% for the fund’s benchmark, the Standard & Poor’s 500 Stock Index (“S&P 500 Index”). The fund’s other benchmark, the MFS Moderate Allocation Portfolio Blended Index (“Blended Index”), generated a return of –3.64%. The Blended Index reflects the blended returns of various equity and fixed income market indices, with percentage allocations to each index designed to resemble the allocations of the fund. The market indices and related percentage allocations used to compile the Blended Index are set forth in the Performance Summary.

Market Environment

Factors Affecting Performance

During the reporting period, the fund outperformed its benchmark, the S&P 500 Index, primarily as a result of its fixed income allocation, which performed better than the equity markets during a down year. Over the same period, the fund underperformed the Blended Index.

Relative to the Blended Index, the fund’s exposure to the fixed income asset class detracted from performance, led by its allocation to the MFS Inflation-Adjusted Bond Portfolio, where underperformance was driven by the fund’s global exposure in a strong US dollar environment. The fund’s investments in the MFS High Yield Portfolio also held back relative returns as credit spreads widened with the equity marketsell-off towards the end of the year. Additionally, the fund’s allocation to the MFS Total Return Bond Series, particularly its exposure to corporate bonds, further held back relative results.

Within the U.S. equity asset class, the fund’s diversification down the market capitalization spectrum, tomid-cap funds andsmall-cap funds, detracted from relative performance as those segments of the market underperformedlarge-cap investments. This was partially offset by the fund’s positive performance in the MFS Growth Series, MFS Mid Cap Growth Series and MFS New Discovery Series.

Respectfully,

Portfolio Manager(s)

Joseph Flaherty and Natalie Shapiro

Note to Shareholders: Effective September 1, 2018, Natalie Shapiro became a Portfolio Manager of the Fund.

MFS Moderate Allocation Portfolio

Management Review – continued

MFS Moderate Allocation Portfolio

PERFORMANCE SUMMARY THROUGH 12/31/18

Growth of a Hypothetical $10,000 Investment

LOGO

Total Returns through 12/31/18

Average annual total returns


	Share Class	Class Inception Date	1-yr	5-yr	10-yr
	Initial Class	10/01/08	(3.85)%	4.49%	8.22%
	Service Class	10/01/08	(4.13)%	4.23%	7.94%

Comparative benchmark(s)
	Standard & Poor’s 500 Stock Index (f)		(4.38)%	8.49%	13.12%
	MFS Moderate Allocation Portfolio Blended Index (f)(w)		(3.64)%	5.04%	8.40%
	Bloomberg Barclays U.S. Aggregate Bond Index (f)		0.01%	2.52%	3.48%
	FTSE EPRA/NAREIT Developed Real Estate Index (net div) (f)		(5.63)%	4.34%	9.65%
	MSCI EAFE Index (net div) (f)		(13.79)%	0.53%	6.32%

(f)

Source: FactSet Research Systems Inc.

(w)

As of December 31, 2018, the MFS Moderate Allocation Portfolio Blended Index was comprised of 43% Standard & Poor’s 500 Stock Index, 41% Bloomberg Barclays U.S. Aggregate Bond Index, 13% MSCI EAFE Index (net div), and 3% FTSE EPRA/Nareit Developed Real Estate Index (net div).

Benchmark Definition(s)

MFS Moderate Allocation Portfolio

Performance Summary – continued

Standard & Poor’s 500 Stock Index – a market capitalization-weighted index of 500 widely held equity securities, designed to measure broad U.S. equity performance.

It is not possible to invest directly in an index.

Notes to Performance Summary

Average annual total return represents the average annual change in value for each share class for the periods presented.

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

MFS Moderate Allocation Portfolio

EXPENSE TABLE

Fund Expenses Borne by the Contract Holders during the Period,

July 1, 2018 through December 31, 2018

The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2018 through December 31, 2018.

Actual Expenses

Hypothetical Example for Comparison Purposes


Share Class		Annualized Expense Ratio		Beginning Account Value 7/01/18		Ending Account Value 12/31/18		Expenses Paid During Period (p) 7/01/18-12/31/18
Initial Class	Actual		0.02%		$1,000.00		$946.54		$0.10
Initial Class	Hypothetical (h)		0.02%		$1,000.00		$1,025.10		$0.10
Service Class	Actual		0.27%		$1,000.00		$945.95		$1.32
Service Class	Hypothetical (h)		0.27%		$1,000.00		$1,023.84		$1.38

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

(p)

MFS Moderate Allocation Portfolio

PORTFOLIO OF INVESTMENTS – 12/31/18

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 ($)
INVESTMENT COMPANIES (h) – 100.0%
Bond Funds – 42.7%
MFS Global Governments Portfolio – Initial Class		6,981,752	$	72,191,316
MFS Government Securities Portfolio – Initial Class		11,933,683	��	143,681,547
MFS High Yield Portfolio – Initial Class		13,185,462		69,619,240
MFS Inflation-Adjusted Bond Portfolio – Initial Class		6,988,887		70,937,202
MFS Limited Maturity Portfolio – Initial Class		5,617,857		56,740,356
MFS Total Return Bond Series – Initial Class		13,546,588		171,364,336

			$	584,533,997

International Stock Funds – 12.8%
MFS International Growth Portfolio – Initial Class		3,212,878	$	41,060,583
MFS International Value Portfolio – Initial Class		1,643,520		41,120,873
MFS Research International Portfolio – Initial Class		6,652,584		93,601,861

			$	175,783,317

Specialty Funds – 3.0%
MFS Global Real Estate Portfolio – Initial Class		3,129,659	$	40,998,536



Issuer	Shares/Par		Value ($)
INVESTMENT COMPANIES (h) – continued
U.S. Stock Funds – 41.4%
MFS Growth Series – Initial Class MFS Mid Cap Growth Series – Initial Class		2,535,969 11,224,547	$	119,215,888 92,378,020
MFS Mid Cap Value Portfolio – Initial Class		12,387,337		91,914,038
MFS New Discovery Series – Initial Class		1,107,288		19,333,252
MFS New Discovery Value Portfolio – Initial Class		2,291,452		19,362,771
MFS Research Series – Initial Class		4,260,762		106,220,785
MFS Value Series – Initial Class		6,878,851		119,004,128

			$	567,428,882

Money Market Funds – 0.1%
MFS Institutional Money Market Portfolio, 2.4% (v)		1,566,062	$	1,565,905

Total Investment Companies (Identified Cost, $1,288,797,728)			$	1,370,310,637

OTHER ASSETS, LESS LIABILITIES – 0.0%				(103,668	)

NET ASSETS – 100.0%			$	1,370,206,969

(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 value of the fund’s investments in affiliated issuers was $1,370,310,637.

(v)

See Notes to Financial Statements

MFS Moderate Allocation Portfolio

FINANCIAL STATEMENTS ^| STATEMENT OF ASSETS AND LIABILITIES

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


At 12/31/18

Assets
Investments in affiliated issuers, at value (identified cost, $1,288,797,728)			$1,370,310,637
Receivables for
Investments sold			2,172,247
Fund shares sold			1,640
Other assets			8,278
Total assets			$1,372,492,802

Liabilities
Payables for
Fund shares reacquired			$2,172,248
Payable to affiliates
Administrator			192
Shareholder servicing costs			194
Distribution and/or service fees			37,235
Accrued expenses and other liabilities			75,964
Total liabilities			$2,285,833
Net assets			$1,370,206,969

Net assets consist of
Paid-in capital			$1,164,114,487
Total distributable earnings (loss)			206,092,482
Net assets			$1,370,206,969
Shares of beneficial interest outstanding			114,716,014



	Net assets		Shares outstanding		Net asset value per share
Initial Class		$5,332,529		446,079		$11.95
Service Class		1,364,874,440		114,269,935		11.94

See Notes to Financial Statements

MFS Moderate Allocation Portfolio

FINANCIAL STATEMENTS ^| STATEMENT OF OPERATIONS

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.


Year ended 12/31/18

Net investment income (loss)
Income
Dividends from affiliated issuers	$35,730,967
Other	261
Total investment income	$35,731,228
Expenses
Distribution and/or service fees	$3,893,571
Shareholder servicing costs	23,789
Administrative services fee	17,500
Independent Trustees’ compensation	26,074
Custodian fee	26,444
Shareholder communications	37,154
Audit and tax fees	39,229
Legal fees	13,445
Miscellaneous	43,444
Total expenses	$4,120,650
Net investment income (loss)	$31,610,578

Realized and unrealized gain (loss)
Realized gain (loss) (identified cost basis)
Investments in affiliated issuers	$37,032,018
Capital gain distributions from underlying affiliated funds	60,563,615
Net realized gain (loss)	$97,595,633
Change in unrealized appreciation or depreciation
Affiliated issuers	$(183,982,990	)
Net realized and unrealized gain (loss)	$(86,387,357	)
Change in net assets from operations	$(54,776,779	)

See Notes to Financial Statements

MFS Moderate Allocation Portfolio

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.


	Year ended
	12/31/18			12/31/17
Change in net assets

From operations
Net investment income (loss)		$31,610,578			$28,658,801
Net realized gain (loss)		97,595,633			73,077,797
Net unrealized gain (loss)		(183,982,990	)		142,345,119
Change in net assets from operations		$(54,776,779	)		$244,081,717
Total distributions to shareholders (a)		$(101,853,938	)		$(94,684,262	)
Change in net assets from fund share transactions		$(165,219,330	)		$(184,197,023	)
Total change in net assets		$(321,850,047	)		$(34,799,568	)

Net assets
At beginning of period		1,692,057,016			1,726,856,584
At end of period (b)		$1,370,206,969			$1,692,057,016

(a)	Distributions from net investment income and from net realized gain are no longer required to be separately disclosed. See Note 2. For the year ended December 31, 2017, distributions from net investment income and from net realized gain were $30,618,005 and $64,066,257, respectively.

(b)	Parenthetical disclosure of undistributed net investment income is no longer required. See Note 2. For the year ended December 31, 2017, end of period net assets included undistributed net investment income of $28,658,537.

See Notes to Financial Statements

MFS Moderate Allocation Portfolio

FINANCIAL STATEMENTS ^| FINANCIAL HIGHLIGHTS


Initial Class	Year ended

	12/31/18			12/31/17			12/31/16			12/31/15			12/31/14

Net asset value, beginning of period		$13.33			$12.25			$12.48			$13.34			$13.02

Income (loss) from investment operations
Net investment income (loss) (d)(l)		$0.30			$0.26			$0.24	(c)		$0.29			$0.21
Net realized and unrealized gain (loss)		(0.74	)		1.60			0.55			(0.27	)		0.48
Total from investment operations		$(0.44	)		$1.86			$0.79			$0.02			$0.69

Less distributions declared to shareholders
From net investment income		$(0.29	)		$(0.28	)		$(0.37	)		$(0.55	)		$(0.21	)
From net realized gain		(0.65	)		(0.50	)		(0.65	)		(0.33	)		(0.16	)
Total distributions declared to shareholders		$(0.94	)		$(0.78	)		$(1.02	)		$(0.88	)		$(0.37	)
Net asset value, end of period (x)		$11.95			$13.33			$12.25			$12.48			$13.34
Total return (%) (k)(s)(x)		(3.85	)		15.52			6.16	(c)		0.35			5.28

Ratios (%) (to average net assets) and Supplemental data:
Expenses before expense reductions (f)(h)		0.01			0.01			0.02	(c)		0.01			0.01
Expenses after expense reductions (f)(h)		N/A			N/A			N/A			N/A			0.01
Net investment income (loss) (l)		2.29			1.98			1.95	(c)		2.16			1.55
Portfolio turnover		1			0	(b)		0	(b)		1			2
Net assets at end of period (000 omitted)		$5,333			$6,053			$5,460			$5,509			$7,240

Service Class	Year ended

	12/31/18			12/31/17			12/31/16			12/31/15			12/31/14

Net asset value, beginning of period		$13.32			$12.24			$12.47			$13.32			$13.00

Income (loss) from investment operations
Net investment income (loss) (d)(l)		$0.27			$0.22			$0.21	(c)		$0.22			$0.17
Net realized and unrealized gain (loss)		(0.75	)		1.60			0.54			(0.23	)		0.49
Total from investment operations		$(0.48	)		$1.82			$0.75			$(0.01	)		$0.66

Less distributions declared to shareholders
From net investment income		$(0.25	)		$(0.24	)		$(0.33	)		$(0.51	)		$(0.18	)
From net realized gain		(0.65	)		(0.50	)		(0.65	)		(0.33	)		(0.16	)
Total distributions declared to shareholders		$(0.90	)		$(0.74	)		$(0.98	)		$(0.84	)		$(0.34	)
Net asset value, end of period (x)		$11.94			$13.32			$12.24			$12.47			$13.32
Total return (%) (k)(s)(x)		(4.13	)		15.23			5.87	(c)		0.13			5.04

Ratios (%) (to average net assets) and Supplemental data:
Expenses before expense reductions (f)(h)		0.26			0.26			0.27	(c)		0.26			0.26
Expenses after expense reductions (f)(h)		N/A			N/A			N/A			N/A			0.26
Net investment income (loss) (l)		2.02			1.66			1.71	(c)		1.69			1.29
Portfolio turnover		1			0	(b)		0	(b)		1			2
Net assets at end of period (000 omitted)		$1,364,874			$1,686,004			$1,721,397			$1,837,130			$2,121,968

See Notes to Financial Statements

MFS Moderate Allocation Portfolio

Financial Highlights – continued

(b)	Less than 0.5%.

(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.

(h)

(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)	The ratios and per share amounts do not include net investment income of the underlying affiliated funds in which the fund invests.

(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

MFS Moderate Allocation Portfolio

NOTES TO FINANCIAL STATEMENTS

(1)

Business and Organization

MFS Moderate Allocation Portfolio (the fund) is a diversified series of MFS Variable Insurance Trust III (the trust). The trust is organized as a Delaware statutory 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.

(2)

Significant Accounting Policies

The fund is a “fund of funds”, which invests the majority of its assets in other MFS mutual funds (hereafter referred to as “underlying affiliated funds” or “underlying funds”), which may have different fiscal year ends than the funds. The underlying funds, in turn, may engage in a number of investment techniques and practices, which involve certain risks. Certain underlying funds invest their portfolio in high-yield securities rated below investment grade. Investments in below investment grade quality securities can involve a substantially greater risk of default or can already be in default, and their values can decline significantly. Below investment grade quality securities tend to be more sensitive to adverse news about the issuer, or the market or economy in general, than higher quality debt instruments. Certain underlying funds invest a significant portion of their assets in asset-backed and/or mortgage-backed securities. For these securities, the value of the debt instrument also depends on the credit quality and adequacy of the underlying assets or collateral as well as whether there is a security interest in the underlying assets or collateral. Enforcing rights, if any, against the underlying assets or collateral may be difficult. U.S. Government securities not supported as to the payment of principal or interest by the U.S. Treasury, such as those issued by Fannie Mae, Freddie Mac, and the Federal Home Loan Banks, are subject to greater credit risk than are U.S. Government securities supported by the U.S. Treasury, such as those issued by Ginnie Mae. Certain underlying funds invest in foreign securities, including securities of emerging market issuers. Investments in foreign securities are vulnerable to the effects of changes in the relative values of the local currency and the U.S. dollar and to the effects of changes in each country’s market, economic, industrial, political, regulatory, geopolitical, and other conditions. Investments in emerging markets can involve additional and greater risks than the risks associated with investments in developed foreign markets. Emerging markets can have less developed markets, greater custody and operational risk, less developed legal, regulatory, and accounting systems, and greater political, social, and economic instability than developed markets.

MFS Moderate Allocation Portfolio

Notes to Financial Statements – continued


Financial Instruments	Level 1		Level 2		Level 3		Total
Mutual Funds		$1,370,310,637		$—		$—		$1,370,310,637

MFS Moderate Allocation Portfolio

Notes to Financial Statements – continued

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

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

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


	Year ended		Year ended
	12/31/18		12/31/17
Ordinary income (including any short-term capital gains)		$31,476,824		$32,261,217
Long-term capital gains		70,377,114		62,423,045
Total distributions		$101,853,938		$94,684,262

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


As of 12/31/18
Cost of investments	$1,293,899,190
Gross appreciation	125,083,780
Gross depreciation	(48,672,333	)
Net unrealized appreciation (depreciation)	$76,411,447
Undistributed ordinary income	31,666,992
Undistributed long-term capital gain	98,014,043

MFS Moderate Allocation Portfolio

Notes to Financial Statements – continued

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


	From net investment income				From net realized gain

	Year ended 12/31/18		Year ended 12/31/17		Year ended 12/31/18		Year ended 12/31/17
Initial Class		$123,640		$120,775		$274,674		$220,632
Service Class		28,535,760		30,497,230		72,919,864		63,845,625
Total		$28,659,400		$30,618,005		$73,194,538		$64,066,257

(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. MFS receives no compensation under this agreement; however MFS receives management fees from the underlying MFS funds.

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.

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 year ended December 31, 2018, the fee was $23,668, which equated to 0.0015% 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 year ended December 31, 2018, these costs amounted to $121.

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

MFS Moderate Allocation Portfolio

Notes to Financial Statements – continued

For the year ended December 31, 2018, the fee paid by the fund under this agreement was $2,667 and is included in “Miscellaneous” expense in the Statement of Operations. MFS has agreed to bear all expenses associated with office space, other administrative support, and supplies provided to the ISO.

(4)

Portfolio Securities

For the year ended December 31, 2018, purchases and sales of shares of underlying funds aggregated $11,631,486 and $282,814,600, 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:


	Year ended 12/31/18						Year ended 12/31/17

	Shares			Amount			Shares			Amount
Shares sold
Initial Class		15,595			$205,746			32,383			$421,018
Service Class		1,127,406			14,024,178			656,936			8,333,736
		1,143,001			$14,229,924			689,319			$8,754,754

Shares issued to shareholders in reinvestment of distributions
Initial Class		30,592			$398,314			26,946			$341,407
Service Class		7,792,291			101,455,624			7,452,042			94,342,855
		7,822,883			$101,853,938			7,478,988			$94,684,262

Shares reacquired
Initial Class		(54,192	)		$(721,918	)		(50,857	)		$(650,991	)
Service Class		(21,261,806	)		(280,581,274	)		(22,148,040	)		(286,985,048	)
		(21,315,998	)		$(281,303,192	)		(22,198,897	)		$(287,636,039	)

Net change
Initial Class		(8,005	)		$(117,858	)		8,472			$111,434
Service Class		(12,342,109	)		(165,101,472	)		(14,039,062	)		(184,308,457	)
		(12,350,114	)		$(165,219,330	)		(14,030,590	)		$(184,197,023	)

(6)

Line of Credit

MFS Moderate Allocation Portfolio

Notes to Financial Statements – continued

(7)

Investments in Affiliated Issuers


Affiliated Issuers				Beginning Shares/Par Amount			Acquisitions Shares/Par Amount		Dispositions Shares/Par Amount			Ending Shares/Par Amount

MFS Global Governments Portfolio					8,017,102			86,206		(1,121,556	)		6,981,752

MFS Global Real Estate Portfolio					3,563,341			182,087		(615,769	)		3,129,659

MFS Government Securities Portfolio					13,652,904			435,380		(2,154,601	)		11,933,683

MFS Growth Series					3,102,150			212,789		(778,970	)		2,535,969

MFS High Yield Portfolio					14,658,937			803,274		(2,276,749	)		13,185,462

MFS Inflation-Adjusted Bond Portfolio					7,836,431			140,061		(987,605	)		6,988,887

MFS Institutional Money Market Portfolio					1,547,664			5,308,602		(5,290,204	)		1,566,062

MFS International Growth Portfolio					3,280,462			337,131		(404,715	)		3,212,878

MFS International Value Portfolio					1,798,268			48,200		(202,948	)		1,643,520

MFS Limited Maturity Portfolio					6,643,380			129,204		(1,154,727	)		5,617,857

MFS Mid Cap Growth Series					12,435,101			1,858,673		(3,069,227	)		11,224,547

MFS Mid Cap Value Portfolio					13,124,085			1,030,022		(1,766,770	)		12,387,337

MFS New Discovery Series					1,261,710			166,669		(321,091	)		1,107,288

MFS New Discovery Value Portfolio					2,278,555			383,982		(371,085	)		2,291,452

MFS Research International Portfolio					6,957,247			360,951		(665,614	)		6,652,584

MFS Research Series					4,573,372			555,078		(867,688	)		4,260,762

MFS Total Return Bond Series					15,356,076			492,113		(2,301,601	)		13,546,588

MFS Value Series					7,261,373			647,524		(1,030,046	)		6,878,851

Affiliated Issuers	Realized Gain (Loss)			Change in Unrealized Appreciation/ Depreciation			Capital Gain Distributions		Dividend Income			Ending Value

MFS Global Governments Portfolio		$(771,119	)		$(882,215	)		$—		$760,296			$72,191,316

MFS Global Real Estate Portfolio		657,506			(4,431,600	)		308,377		2,211,518			40,998,536

MFS Government Securities Portfolio		(3,262,259	)		(1,539,239	)		—		5,091,747			143,681,547

MFS Growth Series		15,900,500			(17,558,269	)		8,369,795		672,486			119,215,888

MFS High Yield Portfolio		(1,269,551	)		(5,396,065	)		—		4,369,824			69,619,240

MFS Inflation-Adjusted Bond Portfolio		(303,590	)		(4,515,459	)		—		1,314,946			70,937,202

MFS Institutional Money Market Portfolio		(238	)		84			—		29,026			1,565,905

MFS International Growth Portfolio		1,465,273			(9,799,136	)		3,742,470		684,422			41,060,583

MFS International Value Portfolio		1,910,098			(7,160,754	)		511,209		507,672			41,120,873

MFS Limited Maturity Portfolio		(138,514	)		(369,656	)		—		1,267,536			56,740,356

MFS Mid Cap Growth Series		9,574,132			(21,466,632	)		15,508,856		550,569			92,378,020

MFS Mid Cap Value Portfolio		1,073,361			(20,268,189	)		5,615,193		2,083,236			91,914,038

MFS New Discovery Series		1,966,748			(4,392,792	)		2,112,068		712,693			19,333,252

MFS New Discovery Value Portfolio		627,069			(6,312,488	)		2,751,771		750,022			19,362,771

MFS Research International Portfolio		2,327,423			(21,630,594	)		1,406,251		2,869,234			93,601,861

MFS Research Series		5,472,743			(23,484,900	)		11,451,673		3,200,167			106,220,785

MFS Total Return Bond Series		(2,598,040	)		(5,971,879	)		—		6,088,826			171,364,336

MFS Value Series		4,400,476			(28,803,207	)		8,785,952		2,566,747			119,004,128

		$37,032,018			$(183,982,990	)		$60,563,615		$35,730,967			$1,370,310,637

MFS Moderate Allocation Portfolio

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Trustees of MFS Variable Insurance Trust III and the Shareholders of MFS Moderate Allocation Portfolio:

Opinion on the Financial Statements and Financial Highlights

We have audited the accompanying statement of assets and liabilities of MFS Moderate Allocation Portfolio (the “Fund”), including the portfolio of investments, as of December 31, 2018, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of December 31, 2018, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of December 31, 2018, by correspondence with the transfer agent. We believe that our audits provide a reasonable basis for our opinion.

DELOITTE & TOUCHE LLP

Boston, Massachusetts

February 15, 2019

We have served as the auditor of one or more of the MFS investment companies since 1924.

MFS Moderate Allocation Portfolio

TRUSTEES AND OFFICERS – IDENTIFICATION AND BACKGROUND


Name, Age	Position(s) Held with Fund	Trustee/Officer Since (h)	Number of MFS Funds overseen by the Trustee	Principal Occupations During the Past Five Years	Other Directorships During the Past Five Years (j)
INTERESTED TRUSTEES
Robert J. Manning (k) (age 55)	Trustee	February 2004	135	Massachusetts Financial Services Company, Executive Chairman (since January 2017); Director; Chairman of the Board; Chief Executive Officer (until 2015);Co-Chief Executive Officer(2015-2016)	N/A

Robin A. Stelmach (k) (age 57)	Trustee	January 2014	135	Massachusetts Financial Services Company, Vice Chair (since January 2017); Chief Operating Officer and Executive Vice President (until January 2017)	N/A

INDEPENDENT TRUSTEES
John P. Kavanaugh (age 64)	Trustee and Chair of Trustees	January 2009	135	Private investor	N/A

Steven E. Buller (age 67)	Trustee	February 2014	135	Financial Accounting Standards Advisory Council, Chairman(2014-2015); Public Company Accounting Oversight Board, Standing Advisory Group, Member (until 2014); BlackRock, Inc. (investment management), Managing Director (until 2014), BlackRock Finco UK (investment management), Director (until 2014)	N/A

John A. Caroselli (age 64)	Trustee	March 2017	135	JC Global Advisors, LLC (management consulting), President (since 2015); First Capital Corporation (commercial finance), Executive Vice President (until 2015)	N/A

Maureen R. Goldfarb (age 63)	Trustee	January 2009	135	Private investor	N/A

Michael Hegarty (age 74)	Trustee	December 2004	135	Private investor	Rouse Properties Inc., Director (until 2016); Capmark Financial Group Inc., Director (until 2015)

Peter D. Jones (age 63)	Trustee	January 2019	135	Franklin Templeton Distributors, Inc. (investment management), President (until 2015); Franklin Templeton Institutional, LLC (investment management), Chairman (until 2015)	N/A

James W. Kilman, Jr. (age 57)	Trustee	January 2019	135	KielStrand Capital LLC (family office and merchant bank), Chief Executive Officer (since 2016); Morgan Stanley & Co. (financial services), Vice Chairman of Investment Banking,Co-Head of Diversified Financials Coverage – Financial Institutions Investment Banking Group (until 2016)	alpha-En Corporation, Director (since 2016)

MFS Moderate Allocation Portfolio

Trustees and Officers – continued


Name, Age	Position(s) Held with Fund	Trustee/Officer Since (h)	Number of MFS Funds overseen by the Trustee	Principal Occupations During the Past Five Years	Other Directorships During the Past Five Years (j)
Clarence Otis, Jr. (age 62)	Trustee	March 2017	135	Darden Restaurants, Inc., Chief Executive Officer (until 2014)	VF Corporation, Director; Verizon Communications, Inc., Director; The Travelers Companies, Director; Federal Reserve Bank of Atlanta, Director (until 2015)

Maryanne L. Roepke (age 62)	Trustee	May 2014	135	American Century Investments (investment management), Senior Vice President and Chief Compliance Officer (until 2014)	N/A

Laurie J. Thomsen (age 61)	Trustee	March 2005	135	Private investor	The Travelers Companies, Director; Dycom Industries, Inc., Director (since 2015)


Name, Age	Position(s) Held with Fund	Trustee/Officer Since (h)	Number of MFS Funds for which the Person is an Officer	Principal Occupations During the Past Five Years
OFFICERS
Christopher R. Bohane (k) (age 45)	Assistant Secretary and Assistant Clerk	July 2005	135	Massachusetts Financial Services Company, Vice President and Assistant General Counsel

Kino Clark (k) (age 50)	Assistant Treasurer	January 2012	135	Massachusetts Financial Services Company, Vice President

John W. Clark, Jr. (k) (age 51)	Assistant Treasurer	April 2017	135	Massachusetts Financial Services Company, Vice President (since March 2017); Deutsche Bank (financial services), Department Head – Treasurer’s Office (until February 2017)

Thomas H. Connors (k) (age 59)	Assistant Secretary and Assistant Clerk	September 2012	135	Massachusetts Financial Services Company, Vice President and Senior Counsel

Ethan D. Corey (k) (age 55)	Assistant Secretary and Assistant Clerk	July 2005	135	Massachusetts Financial Services Company, Senior Vice President and Associate General Counsel

David L. DiLorenzo (k) (age 50)	President	July 2005	135	Massachusetts Financial Services Company, Senior Vice President

Heidi W. Hardin (k) (age 51)	Secretary and Clerk	April 2017	135	Massachusetts Financial Services Company, Executive Vice President and General Counsel (since March 2017); Harris Associates (investment management), General Counsel (from September 2015 to January 2017); Janus Capital Management LLC (investment management), Senior Vice President and General Counsel (until September 2015)

Brian E. Langenfeld (k) (age 45)	Assistant Secretary and Assistant Clerk	June 2006	135	Massachusetts Financial Services Company, Vice President and Senior Counsel

Amanda S. Mooradian (k) (age 39)	Assistant Secretary and Assistant Clerk	September 2018	135	Massachusetts Financial Services Company, Assistant Vice President and Counsel

Susan A. Pereira (k) (age 48)	Assistant Secretary and Assistant Clerk	July 2005	135	Massachusetts Financial Services Company, Vice President and Senior Counsel

Kasey L. Phillips (k) (age 48)	Assistant Treasurer	September 2012	135	Massachusetts Financial Services Company, Vice President

Matthew A. Stowe (k) (age 44)	Assistant Secretary and Assistant Clerk	October 2014	135	Massachusetts Financial Services Company, Vice President and Assistant General Counsel

MFS Moderate Allocation Portfolio

Trustees and Officers – continued


Name, Age	Position(s) Held with Fund	Trustee/Officer Since (h)	Number of MFS Funds for which the Person is an Officer	Principal Occupations During the Past Five Years
Frank L. Tarantino (age 74)	Independent Senior Officer	June 2004	135	Tarantino LLC (provider of compliance services), Principal

Richard S. Weitzel (k) (age 48)	Assistant Secretary and Assistant Clerk	October 2007	135	Massachusetts Financial Services Company, Senior Vice President and Associate General Counsel

Martin J. Wolin (k) (age 51)	Chief Compliance Officer	July 2015	135	Massachusetts Financial Services Company, Senior Vice President and Chief Compliance Officer (since July 2015); Mercer (financial service provider), Chief Risk and Compliance Officer, North America and Latin America (until June 2015)

James O. Yost (k) (age 58)	Treasurer	September 1990	135	Massachusetts Financial Services Company, Senior Vice President

(h)

(j)	Directorships or trusteeships of companies required to report to the Securities and Exchange Commission (i.e., “public companies”).

(k)

Messrs. Buller, Hegarty, Kilman and Otis and Ms. Roepke are members of the Trust’s Audit Committee.

Each of the Interested Trustees and certain Officers hold comparable officer positions with certain affiliates of MFS.

The Statement of Additional Information for a Fund includes further information about the Trustees and is available without charge upon request by calling1-800-225-2606.


Investment Adviser Massachusetts Financial Services Company 111 Huntington Avenue Boston, MA 02199-7618		Custodian State Street Bank and Trust Company 1 Lincoln Street Boston, MA 02111-2900
Distributor MFS Fund Distributors, Inc. 111 Huntington Avenue Boston, MA 02199-7618		Independent Registered Public Accounting Firm Deloitte & Touche LLP 200 Berkeley Street Boston, MA 02116
Portfolio Manager(s) Joseph Flaherty Natalie Shapiro

MFS Moderate Allocation Portfolio

BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT

In connection with their contract review meetings, the Trustees received and relied upon materials that included, among other items: (i) information provided by Broadridge Financial Solutions, Inc. (“Broadridge”), an independent third party, on the investment performance of the Fund for various time periods ended December 31, 2017 and the investment performance of a group of funds with substantially similar investment classifications/objectives (the “Broadridge performance universe”), (ii) information provided by Broadridge on the Fund’s fees and expenses and the fees and expenses of comparable funds identified by Broadridge (the “Broadridge expense group”), (iii) information as to whether and to what extent applicable expense waivers and reimbursements are observed for the Fund, (iv) information regarding MFS’ financial results and financial condition, including MFS’ and certain of its affiliates’ estimated profitability from services performed for the Fund and the MFS Funds as a whole, and compared to MFS’ institutional business, (v) MFS’ views regarding the outlook for the mutual fund industry and the strategic business plans of MFS, (vi) descriptions of various functions performed by MFS for the Funds, such as compliance monitoring and portfolio trading practices, and (vii) information regarding the overall organization of MFS, including information about MFS’ senior management and other personnel providing investment advisory, administrative and other services to the Fund and the other MFS Funds. The comparative performance, fee and expense information prepared and provided by Broadridge was not independently verified and the independent Trustees did not independently verify any information provided to them by MFS.

Based on information provided by Broadridge and MFS, the Trustees reviewed the Fund’s total return investment performance as well as the Broadridge performance universe over various time periods. The Trustees placed particular emphasis on the total return performance of the Fund’s Initial Class shares in comparison to the performance of funds in its Broadridge performance universe over the three-year period ended December 31, 2017, which the Trustees believed was a long enough period to reflect differing market conditions. The total return performance of the Fund’s Initial Class shares was in the 1st quintile relative to the other funds in the universe for this three-year period (the 1st quintile being the best performers and the 5th quintile being the worst performers). The total return performance of the Fund’s Initial Class shares was in the 1st quintile for theone-year period and the 2nd quintile for the five-year period ended December 31, 2017 relative to the Broadridge performance universe. Because of the passage of time, these performance results may differ from the performance results for more recent periods, including those shown elsewhere in this report.

MFS Moderate Allocation Portfolio

Board Review of Investment Advisory Agreement – continued

In assessing the reasonableness of the Fund’s expenses, the Trustees considered, among other information, the Fund’s total expense ratio of the Fund’s Initial Class shares as a percentage of average daily net assets and the total expense ratios of peer groups of funds based on information provided by Broadridge. The Trustees considered that MFS currently observes an expense limitation for the Fund, which may not be changed without the Trustees’ approval. The Trustees also considered that, according to the data provided by Broadridge (which takes into account any expense limitations that were in effect during the Fund’s last fiscal year), the Fund’s total expense ratio was lower than the Broadridge expense group median. Because the Fund does not pay an advisory fee, the Trustees did not consider the extent to which economies of scale would be realized due to the Fund’s growth of assets, whether fee levels reflect economies of scale for shareholders, or the fees paid by similar funds to other investment advisers or by similar clients of MFS.

The Trustees also considered the nature, quality, cost, and extent of administrative, transfer agency, and distribution services provided to the Fund by MFS and its affiliates under agreements and plans other than the investment advisory agreement, including any12b-1 fees the Fund pays to MFS Fund Distributors, Inc., an affiliate of MFS. The Trustees also considered the nature, extent and quality of certain other services MFS performs or arranges for on the Fund’s or the Underlying Funds’ behalf, which may include securities lending programs, directed expense payment programs, class action recovery programs, and MFS’ interaction withthird-party service providers, principally custodians andsub-custodians. The Trustees concluded that the variousnon-advisory services provided by MFS and its affiliates on behalf of the Fund were satisfactory.

MFS Moderate Allocation Portfolio

PROXY VOTING POLICIES AND INFORMATION

QUARTERLY PORTFOLIO DISCLOSURE

FURTHER INFORMATION

INFORMATION ABOUT FUND CONTRACTS AND LEGAL CLAIMS

FEDERAL TAX INFORMATION (unaudited)

The following information is provided pursuant to provisions of the Internal Revenue Code.

The fund designates $77,415,000 as capital gain dividends paid during the fiscal year.

For corporate shareholders, 18.23% of the ordinary income dividends paid during the fiscal year qualify for the corporate dividends received deduction.

rev. 3/16


FACTS		WHAT DOES MFS DO WITH YOUR PERSONAL INFORMATION?


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

What?

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

• Social Security number and account balances

• Account transactions and transaction history

• Checking account information and wire transfer instructions

When you areno longer our customer, we continue to share your information as described in this notice.


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


Reasons we can share your personal information	Does MFS share?	Can you limit this sharing?
For our everyday business purposes – such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus	Yes	No
For our marketing purposes – to offer our products and services to you	No	We don’t share
For joint marketing with other financial companies	No	We don’t share
For our affiliates’ everyday business purposes – information about your transactions and experiences	No	We don’t share
For our affiliates’ everyday business purposes – information about your creditworthiness	No	We don’t share
For nonaffiliates to market to you	No	We don’t share


Questions?		Call800-225-2606 or go tomfs.com.


Page 2


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


What we do
How does MFS protect my personal information?		To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include procedural, electronic, and physical safeguards for the protection of the personal information we collect about you.
How does MFS collect my personal information?		We collect your personal information, for example, when you • open an account or provide account information • direct us to buy securities or direct us to sell your securities • make a wire transfer We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
Why can’t I limit all sharing?		Federal law gives you the right to limit only • sharing for affiliates’ everyday business purposes – information about your creditworthiness • affiliates from using your information to market to you • sharing for nonaffiliates to market to you State laws and individual companies may give you additional rights to limit sharing.


Definitions
Affiliates		Companies related by common ownership or control. They can be financial and nonfinancial companies. • MFS does not share personal information with affiliates, except for everyday business purposes as described on page one of this notice.
Nonaffiliates		Companies not related by common ownership or control. They can be financial and nonfinancial companies. • MFS does not share with nonaffiliates so they can market to you.
Joint marketing		A formal agreement between nonaffiliated financial companies that together market financial products or services to you. • MFS doesn’t jointly market.


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

LOGO

Annual Report

December 31, 2018

LOGO

MFS^® New Discovery Value Portfolio

LOGO

MFS^® Variable Insurance Trust III

VDV-ANN

MFS® New Discovery Value Portfolio

CONTENTS

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

MFS New Discovery Value Portfolio

LETTER FROM THE EXECUTIVE CHAIRMAN

LOGO

Dear Contract Owners:

Respectfully,

LOGO

Robert J. Manning

Executive Chairman

MFS Investment Management

February 15, 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.

MFS New Discovery Value Portfolio

PORTFOLIO COMPOSITION

Portfolio structure

LOGO


Top ten holdings
Toll Brothers, Inc.			1.9%
Berry Global Group, Inc.			1.8%
Black Hills Corp.			1.8%
Portland General Electric Co.			1.8%
Graphic Packaging Holding Co.			1.7%
Prosperity Bancshares, Inc.			1.7%
Owens Corning			1.7%
UMB Financial Corp.			1.7%
STAG Industrial, Inc., REIT			1.6%
Premier, Inc., “A”			1.6%


GICS equity sectors
Financials			22.7%
Industrials			20.0%
Real Estate			11.4%
Information Technology			10.6%
Consumer Discretionary			8.3%
Materials			7.8%
Utilities			6.2%
Consumer Staples			4.7%
Energy			3.4%
Health Care			3.0%
Communication Services			0.9%

Percentages are based on net assets as of December 31, 2018.

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

MFS New Discovery Value Portfolio

MANAGEMENT REVIEW

Summary of Results

For the twelve months ended December 31, 2018, Initial Class shares of the MFS New Discovery Value Portfolio (“fund”) provided a total return of –10.78%, while Service Class shares of the fund provided a total return of –11.00%. These compare with a return of –12.86% over the same period for the fund’s benchmark, the Russell 2000® Value Index.

Market Environment

Contributors to Performance

Security selection in theinformation technology,real estate andhealth care sectors contributed to performance relative to the Russell 2000® Value Index. Within theinformation technology sector, the fund’s overweight positions in travel and tourism commerce provider Travelport Worldwide and payments solutions provider EVO Payments benefited relative returns. Shares of Travelport Worldwide advanced as, early in the period, activist investor Elliott Management acquired approximately a 12% stake in the firm with the intention of making value-adding changes to the company in preparation for a sale. Late in the period, it was announced that the company would be sold to Siris Capital Group and Evergreen Coast Capital in a deal valued at $4.4 billion. Within thereal estate sector, holding shares of real estate investment trust Medical Properties Trust (b) and self-storage property manager Life Storage (b) aided relative results. Shares of Medical Properties Trust rose as the company expanded its portfolio of hospital properties via a joint venture with wealth management firm Primonial Group, acquiring 71 hospitals throughout Germany. Management noted that it expected to continue to grow through acquisitions in 2019 and provided a favorable outlook for the coming year, which further supported the stock. Within thehealth care sector, holding health care services provider Premier (b), and an overweight position in health care cost containment solutions provider HMS (h), supported relative returns.

Elsewhere, the fund’s overweight positions in diversified energy company Black Hills and electric utility company Portland General Electric, as well as the timing of the fund’s ownership in shares of poultry processing company Sanderson Farms, benefited relative results. Holding shares of coatings, sealants and building materials manufacturer RPM International (b) also helped relative performance.

Detractors from Performance

Stock selection in both theindustrials andfinancials sectors weighed on relative performance during the reporting period. Within theindustrials sector, holding shares of residential and commercial building materials manufacturer Owens Corning (b) and industrial and specialty chemicals distributor Univar (b), and the fund’s overweight positions in suspended ceilings systems distributor GMS, product labels manufacturer Multi-Color Corp. and intermodal container lessor Textainer Group Holdings, weakened relative returns. Shares of Owens Corning came under pressure as higher-than-expected cost inflation and soft business conditions weighed on corporate earnings. Within thefinancials sector, holding shares of poor-performing financial services firm Element Fleet Management (b)

MFS New Discovery Value Portfolio

Management Review – continued

(Canada) diminished relative performance. The stock price of Element Fleet Management declined, notably early in the reporting period, as management reduced its full-year guidance to reflect an expected loss of clients following an unsuccessful migration of client data to new lease management software. Shortly after this announcement, a new CEO and four new independent board of directors were appointed.

Stocks in other sectors that were also among the fund’s top relative detractors included holdings of specialty metals producer Ferroglobe (b) (United Kingdom), onshore oil and gas drilling services providerPatterson-UTI Energy (b) and arts and crafts specialty retailer Michaels Co. (b), and an overweight position in global oilfield products company Forum Energy Technologies.

Respectfully,

Portfolio Manager(s)

Kevin Schmitz

(b)	Security is not a benchmark constituent.

(h)	Security was not held in the portfolio at period end.

MFS New Discovery Value Portfolio

PERFORMANCE SUMMARY THROUGH 12/31/18

Growth of a Hypothetical $10,000 Investment

LOGO

Total Returns through 12/31/18

Average annual total returns


	Share Class	Class Inception Date	1-yr	5-yr	10-yr
	Initial Class	10/01/08	(10.78)%	5.65%	11.65%
	Service Class	10/01/08	(11.00)%	5.39%	11.37%

Comparative benchmark(s)
	Russell 2000® Value Index (f)		(12.86)%	3.61%	10.40%

(f)	Source: FactSet Research Systems Inc.

Benchmark Definition(s)

Russell 2000® Value Index – a market-capitalization-weighted, value-oriented index that measures the performance of small-capitalization stocks that have relatively low price-to-book ratios and lower forecasted growth values. The Russell 2000® Value Index is a trademark/service mark of the Frank Russell Company. Russell® is a trademark of the Frank Russell Company.

It is not possible to invest directly in an index.

Notes to Performance Summary

Average annual total return represents the average annual change in value for each share class for the periods presented.

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

MFS New Discovery Value Portfolio

EXPENSE TABLE

Fund Expenses Borne by the Contract Holders during the Period,

July 1, 2018 through December 31, 2018

The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2018 through December 31, 2018.

Actual Expenses

Hypothetical Example for Comparison Purposes


Share Class		Annualized Expense Ratio		Beginning Account Value 7/01/18		Ending Account Value 12/31/18		Expenses Paid During Period (p) 7/01/18-12/31/18
Initial Class	Actual		0.88%		$1,000.00		$864.27		$4.14
Initial Class	Hypothetical (h)		0.88%		$1,000.00		$1,020.77		$4.48
Service Class	Actual		1.13%		$1,000.00		$863.45		$5.31
Service Class	Hypothetical (h)		1.13%		$1,000.00		$1,019.51		$5.75

(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 184/365 (to reflect theone-half year period).

MFS New Discovery Value Portfolio

PORTFOLIO OF INVESTMENTS – 12/31/18

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 – 1.6%
CACI International, Inc., “A” (a)		2,345	$	337,750
ManTech International Corp., “A”		7,019		367,059

			$	704,809

Apparel Manufacturers – 1.0%
Skechers USA, Inc., “A” (a)		20,337	$	465,514

Automotive – 0.6%
Visteon Corp. (a)		4,616	$	278,252

Brokerage & Asset Managers – 1.7%
Apollo Global Management LLC, “A”		8,761	$	214,995
TMX Group Ltd.		10,436		540,681

			$	755,676

Business Services – 3.6%
BrightView Holdings, Inc. (a)		31,142	$	317,960
EVO Payments, Inc., “A” (a)		12,462		307,438
Forrester Research, Inc.		6,868		307,000
PRA Group, Inc. (a)		11,569		281,936
Travelport Worldwide Ltd.		24,562		383,658

			$	1,597,992

Computer Software – 1.1%
8x8, Inc. (a)		15,143	$	273,179
Sabre Corp.		9,934		214,972

			$	488,151

Computer Software – Systems – 3.9%
Kinaxis, Inc. (a)		3,267	$	157,703
Model N, Inc. (a)		21,391		283,003
NICE Systems Ltd., ADR (a)		2,044		221,181
Presidio, Inc.		37,079		483,881
Verint Systems, Inc. (a)		13,894		587,855

			$	1,733,623

Construction – 4.7%
Eagle Materials, Inc.		4,916	$	300,024
GMS, Inc. (a)		15,607		231,920
Owens Corning		17,105		752,278
Toll Brothers, Inc.		25,356		834,973

			$	2,119,195

Consumer Products – 1.9%
Prestige Brands Holdings, Inc. (a)		9,391	$	289,994
Sensient Technologies Corp.		10,143		566,487

			$	856,481

Containers – 3.5%
Berry Global Group, Inc. (a)		17,366	$	825,406
Graphic Packaging Holding Co.		71,645		762,303

			$	1,587,709

Electrical Equipment – 3.6%
AZZ, Inc.		6,842	$	276,143
HD Supply Holdings, Inc. (a)		15,603		585,425


Issuer	Shares/Par		Value ($)
COMMON STOCKS – continued
Electrical Equipment – continued
TriMas Corp. (a)		13,663	$	372,863
WESCO International, Inc. (a)		7,579		363,792

			$	1,598,223

Electronics – 2.6%
nLIGHT, Inc. (a)		14,590	$	259,410
OSI Systems, Inc. (a)		7,755		568,442
Plexus Corp. (a)		6,656		339,988

			$	1,167,840

Energy – Independent – 0.6%
Matador Resources Co. (a)		18,248	$	283,391

Engineering – Construction – 1.9%
Construction Partners, Inc., “A” (a)		25,465	$	224,856
KBR, Inc.		42,499		645,135

			$	869,991

Entertainment – 2.1%
IMAX Corp. (a)		22,712	$	427,213
Merlin Entertainment		93,792		379,563
Parques Reunidos Servicios Centrales S.A.U.		11,487		142,141

			$	948,917

Food & Beverages – 4.0%
Cal-Maine Foods, Inc.		8,101	$	342,672
Hostess Brands, Inc. (a)		44,318		484,839
Sanderson Farms, Inc.		6,439		639,328
TreeHouse Foods, Inc. (a)		6,750		342,293

			$	1,809,132

Gaming & Lodging – 0.6%
Wyndham Hotels Group, LLC		5,537	$	251,214

Insurance – 3.0%
Everest Re Group Ltd.		2,119	$	461,433
Hanover Insurance Group, Inc.		3,855		450,148
Safety Insurance Group, Inc.		2,232		182,600
Third Point Reinsurance Ltd. (a)		26,659		256,993

			$	1,351,174

Leisure & Toys – 1.0%
Brunswick Corp.		10,075	$	467,984

Machinery & Tools – 5.3%
AGCO Corp.		5,761	$	320,715
Gardner Denver Holdings, Inc. (a)		9,266		189,490
ITT, Inc.		7,214		348,220
Kennametal, Inc.		17,916		596,244
Regal Beloit Corp.		6,501		455,395
Ritchie Bros. Auctioneers, Inc.		14,627		478,595

			$	2,388,659

Medical & Health Technology & Services – 1.6%
Premier, Inc., “A” (a)		19,446	$	726,308

MFS New Discovery Value Portfolio

Portfolio of Investments – continued



Issuer	Shares/Par		Value ($)
COMMON STOCKS – continued
Medical Equipment – 0.4%
STERIS PLC		1,732	$	185,064

Natural Gas – Distribution – 2.7%
New Jersey Resources Corp.		12,180	$	556,261
South Jersey Industries, Inc.		24,000		667,200

			$	1,223,461

Oil Services – 3.8%
Apergy Corp. (a)		5,098	$	138,054
Forum Energy Technologies, Inc. (a)		29,664		122,512
Frank’s International N.V. (a)		76,914		401,491
Liberty Oilfield Services, Inc.		15,795		204,545
NOW, Inc. (a)		41,443		482,397
Patterson-UTI Energy, Inc.		34,448		356,537

			$	1,705,536

Other Banks & Diversified Financials – 18.5%
Air Lease Corp.		9,176	$	277,207
Bank of Hawaii Corp.		8,089		544,551
Berkshire Hills Bancorp, Inc.		9,347		252,089
Brookline Bancorp, Inc.		33,731		466,162
Cathay General Bancorp, Inc.		13,183		442,026
Element Fleet Management Corp.		100,141		506,867
First Hawaiian, Inc.		31,780		715,368
Hanmi Financial Corp.		20,967		413,050
Lakeland Financial Corp.		14,331		575,533
Legacytextas Financial Group, Inc.		15,573		499,737
Prosperity Bancshares, Inc.		12,163		757,755
Sandy Spring Bancorp, Inc.		10,498		329,007
Signature Bank		6,539		672,274
TCF Financial Corp.		24,179		471,249
Textainer Group Holdings Ltd. (a)		23,185		230,923
UMB Financial Corp.		12,220		745,053
Wintrust Financial Corp.		6,640		441,494

			$	8,340,345

Pharmaceuticals – 0.3%
Genomma Lab Internacional S.A., “B” (a)		217,848	$	129,367

Pollution Control – 2.1%
Advanced Disposal Services, Inc. (a)		20,051	$	480,021
Evoqua Water Technologies LLC (a)		34,526		331,450
Stericycle, Inc. (a)		3,806		139,642

			$	951,113

Printing & Publishing – 0.6%
Multi-Color Corp.		8,200	$	287,738

Real Estate – 11.5%
Brixmor Property Group Inc., REIT		29,890	$	439,084
Corporate Office Properties Trust, REIT		21,353		449,054
Equity Commonwealth, REIT		15,096		453,031
Industrial Logistics Properties Trust, REIT		30,219		594,399
Life Storage, Inc., REIT		6,454		600,157
Medical Properties Trust, Inc., REIT		39,802		640,016
Select Income REIT		50,038		368,280
Spirit Realty Capital, Inc., REIT		8,302		292,645
STAG Industrial, Inc., REIT		29,770		740,678



Issuer	Shares/Par		Value ($)
COMMON STOCKS – continued
Real Estate – continued
Store Capital Corp., REIT		20,533	$	581,289

			$	5,158,633

Specialty Chemicals – 3.0%
Axalta Coating Systems Ltd. (a)		10,521	$	246,402
Ferro Corp. (a)		28,980		454,406
Ferroglobe PLC		35,713		56,784
RPM International, Inc.		4,863		285,847
Univar, Inc. (a)		18,136		321,733

			$	1,365,172

Specialty Stores – 2.7%
BJ’s Wholesale Club Holdings, Inc. (a)		14,091	$	312,256
Michaels Co., Inc. (a)		23,693		320,803
Urban Outfitters, Inc. (a)		6,503		215,900
Zumiez, Inc. (a)		19,434		372,550

			$	1,221,509

Utilities – Electric Power – 3.5%
Black Hills Corp.		12,731	$	799,252
Portland General Electric Co.		17,245		790,683

			$	1,589,935

Total Common Stocks (Identified Cost, $45,503,774)			$	44,608,108


INVESTMENT COMPANIES (h) – 1.0%
Money Market Funds – 1.0%
MFS Institutional Money Market Portfolio, 2.4% (v) (Identified Cost, $429,251)		429,294	$	429,251

OTHER ASSETS, LESS LIABILITIES – 0.0%				15,251

NET ASSETS – 100.0%			$	45,052,610

(a)

Non-income producing security.

(h)

(v)

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

ADR

American Depositary Receipt

PLC

Public Limited Company

REIT

Real Estate Investment Trust

See Notes to Financial Statements

MFS New Discovery Value Portfolio

FINANCIAL STATEMENTS ^| STATEMENT OF ASSETS AND LIABILITIES

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


At 12/31/18

Assets
Investments in unaffiliated issuers, at value (identified cost, $45,503,774)			$44,608,108
Investments in affiliated issuers, at value (identified cost, $429,251)			429,251
Receivables for
Fund shares sold			87
Interest and dividends			546,900
Receivable from investment adviser			7,573
Other assets			654
Total assets			$45,592,573

Liabilities
Payables for
Investments purchased			$481,769
Fund shares reacquired			20,199
Payable to affiliates
Shareholder servicing costs			23
Distribution and/or service fees			228
Payable for independent Trustees’ compensation			4
Accrued expenses and other liabilities			37,740
Total liabilities			$539,963
Net assets			$45,052,610

Net assets consist of
Paid-in capital			$38,130,780
Total distributable earnings (loss)			6,921,830
Net assets			$45,052,610
Shares of beneficial interest outstanding			5,339,340



	Net assets		Shares outstanding		Net asset value per share
Initial Class		$36,665,158		4,338,459		$8.45
Service Class		8,387,452		1,000,881		8.38

See Notes to Financial Statements

MFS New Discovery Value Portfolio

FINANCIAL STATEMENTS ^| STATEMENT OF OPERATIONS

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.


Year ended 12/31/18

Net investment income (loss)
Income
Dividends	$347,931
Non-cash dividends	481,769
Dividends from affiliated issuers	17,181
Other	4,449
Income on securities loaned	1,957
Foreign taxes withheld	(7,994	)
Total investment income	$845,293
Expenses
Management fee	$476,799
Distribution and/or service fees	24,928
Shareholder servicing costs	2,986
Administrative services fee	18,010
Independent Trustees’ compensation	2,102
Custodian fee	6,375
Shareholder communications	7,735
Audit and tax fees	53,649
Legal fees	497
Miscellaneous	19,479
Total expenses	$612,560
Reduction of expenses by investment adviser	(121,510	)
Net expenses	$491,050
Net investment income (loss)	$354,243

Realized and unrealized gain (loss)
Realized gain (loss) (identified cost basis)
Unaffiliated issuers	$7,783,995
Affiliated issuers	17
Foreign currency	96
Net realized gain (loss)	$7,784,108
Change in unrealized appreciation or depreciation
Unaffiliated issuers	$(13,225,079	)
Translation of assets and liabilities in foreign currencies	(66	)
Net unrealized gain (loss)	$(13,225,145	)
Net realized and unrealized gain (loss)	$(5,441,037	)
Change in net assets from operations	$(5,086,794	)

See Notes to Financial Statements

MFS New Discovery Value Portfolio

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.


	Year ended
	12/31/18			12/31/17
Change in net assets

From operations
Net investment income (loss)		$354,243			$244,177
Net realized gain (loss)		7,784,108			7,830,942
Net unrealized gain (loss)		(13,225,145	)		(22,948	)
Change in net assets from operations		$(5,086,794	)		$8,052,171
Total distributions to shareholders (a)		$(8,120,059	)		$(5,787,150	)
Change in net assets from fund share transactions		$1,882,024			$(899,193	)
Total change in net assets		$(11,324,829	)		$1,365,828

Net assets
At beginning of period		56,377,439			55,011,611
At end of period (b)		$45,052,610			$56,377,439

(a)	Distributions from net investment income and from net realized gain are no longer required to be separately disclosed. See Note 2. For the year ended December 31, 2017, distributions from net investment income and from net realized gain were $523,089 and $5,264,061, respectively.

(b)	Parenthetical disclosure of undistributed net investment income is no longer required. See Note 2. For the year ended December 31, 2017, end of period net assets included undistributed net investment income of $243,875.

See Notes to Financial Statements

MFS New Discovery Value Portfolio

FINANCIAL STATEMENTS ^| FINANCIAL HIGHLIGHTS


Initial Class	Year ended

	12/31/18			12/31/17			12/31/16			12/31/15			12/31/14

Net asset value, beginning of period		$11.13			$10.79			$9.44			$10.74			$12.12

Income (loss) from investment operations
Net investment income (loss) (d)		$0.08			$0.05			$0.09	(c)		$0.09			$0.06
Net realized and unrealized gain (loss)		(0.94	)		1.44			2.34			(0.40	)		0.35
Total from investment operations		$(0.86	)		$1.49			$2.43			$(0.31	)		$0.41

Less distributions declared to shareholders
From net investment income		$(0.06	)		$(0.11	)		$(0.10	)		$(0.07	)		$(0.07	)
From net realized gain		(1.76	)		(1.04	)		(0.98	)		(0.92	)		(1.72	)
Total distributions declared to shareholders		$(1.82	)		$(1.15	)		$(1.08	)		$(0.99	)		$(1.79	)
Net asset value, end of period (x)		$8.45			$11.13			$10.79			$9.44			$10.74
Total return (%) (k)(r)(s)(x)		(10.78	)		15.24			27.03	(c)		(2.56	)		3.44

Ratios (%) (to average net assets) and Supplemental data:
Expenses before expense reductions (f)		1.11			1.08			1.05	(c)		1.10			1.10
Expenses after expense reductions (f)		0.88			0.88			0.87	(c)		0.88			0.98
Net investment income (loss)		0.72			0.48			0.91	(c)		0.83			0.56
Portfolio turnover		55			52			48			53			49
Net assets at end of period (000 omitted)		$36,665			$45,470			$46,635			$47,068			$54,917

Service Class	Year ended

	12/31/18			12/31/17			12/31/16			12/31/15			12/31/14

Net asset value, beginning of period		$11.05			$10.72			$9.38			$10.68			$12.06

Income (loss) from investment operations
Net investment income (loss) (d)		$0.05			$0.03			$0.06	(c)		$0.06			$0.03
Net realized and unrealized gain (loss)		(0.93	)		1.43			2.33			(0.40	)		0.34
Total from investment operations		$(0.88	)		$1.46			$2.39			$(0.34	)		$0.37

Less distributions declared to shareholders
From net investment income		$(0.03	)		$(0.09	)		$(0.07	)		$(0.04	)		$(0.03	)
From net realized gain		(1.76	)		(1.04	)		(0.98	)		(0.92	)		(1.72	)
Total distributions declared to shareholders		$(1.79	)		$(1.13	)		$(1.05	)		$(0.96	)		$(1.75	)
Net asset value, end of period (x)		$8.38			$11.05			$10.72			$9.38			$10.68
Total return (%) (k)(r)(s)(x)		(11.00	)		15.01			26.73	(c)		(2.90	)		3.19

Ratios (%) (to average net assets) and Supplemental data:
Expenses before expense reductions (f)		1.36			1.33			1.30	(c)		1.35			1.35
Expenses after expense reductions (f)		1.13			1.13			1.12	(c)		1.13			1.23
Net investment income (loss)		0.45			0.24			0.66	(c)		0.58			0.30
Portfolio turnover		55			52			48			53			49
Net assets at end of period (000 omitted)		$8,387			$10,907			$8,376			$8,437			$10,305

See Notes to Financial Statements

MFS New Discovery Value Portfolio

Financial Highlights – continued

(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.

(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

MFS New Discovery Value Portfolio

NOTES TO FINANCIAL STATEMENTS

(1)

Business and Organization

MFS New Discovery Value Portfolio (the fund) is a diversified series of MFS Variable Insurance Trust III (the trust). The trust is organized as a Delaware statutory 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.

(2)

Significant Accounting Policies

MFS New Discovery Value Portfolio

Notes to Financial Statements – continued

third-party pricing services. In addition, investments may be valued at fair value if the adviser determines that an investment’s value has been materially affected by events occurring after the close of the exchange or market on which the investment is principally traded (such as foreign exchange or market) and prior to the determination of the fund’s net asset value, or after the halting of trading of a specific security where trading does not resume prior to the close of the exchange or market on which the security is principally traded. Events that occur on a frequent basis after foreign markets close (such as developments in foreign markets and significant movements in the U.S. markets) and prior to the determination of the fund’s net asset value may be deemed to have a material effect on the value of securities traded in foreign markets. Accordingly, the fund’s foreign equity securities may often be valued at fair value. The adviser generally relies on third-party pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and financial condition of the issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment for purposes of calculating the fund’s net asset value can differ depending on the source and method used to determine value. When fair valuation is used, the value of an investment used to determine the fund’s net asset value may differ from quoted or published prices for the same investment. There can be no assurance that the fund could obtain the fair value assigned to an investment if it were to sell the investment at the same time at which the fund determines its net asset value per share.


Financial Instruments	Level 1		Level 2		Level 3		Total
Equity Securities		$44,608,108		$—		$—		$44,608,108
Mutual Funds		429,251		—		—		429,251
Total		$45,037,359		$—		$—		$45,037,359

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 December 31, 2018, there were no securities on loan or collateral outstanding.

MFS New Discovery Value Portfolio

Notes to Financial Statements – continued

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

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


	Year ended 12/31/18		Year ended 12/31/17
Ordinary income (including any short-term capital gains)		$1,718,040		$1,411,113
Long-term capital gains		6,402,019		4,376,037
Total distributions		$8,120,059		$5,787,150

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


As of 12/31/18

Cost of investments	$46,282,022
Gross appreciation	4,336,730
Gross depreciation	(5,581,393	)
Net unrealized appreciation (depreciation)	$(1,244,663	)

Undistributed ordinary income	1,923,003
Undistributed long-term capital gain	6,199,599
Other temporary differences	43,891

MFS New Discovery Value Portfolio

Notes to Financial Statements – continued


	From net investment income				From net realized gain
	Year ended 12/31/18		Year ended 12/31/17		Year ended 12/31/18		Year ended 12/31/17
Initial Class		$210,688		$439,568		$6,343,164		$4,255,688
Service Class		24,321		83,521		1,541,886		1,008,373
Total		$235,009		$523,089		$7,885,050		$5,264,061

(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 $250 million			0.90%
In excess of $250 million			0.85%

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 year ended December 31, 2018, this management fee reduction amounted to $5,043, which is included in the reduction of total expenses in the Statement of Operations. The management fee incurred for the year ended December 31, 2018 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 0.88% of average daily net assets for the Initial Class shares and 1.13% 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, 2020. For the year ended December 31, 2018, this reduction amounted to $116,467, 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.

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 year ended December 31, 2018, the fee was $2,780, which equated to 0.0053% 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 year ended December 31, 2018, these costs amounted to $206.

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 year ended December 31, 2018 was equivalent to an annual effective rate of 0.0340% of the fund’s average daily net assets.

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

MFS New Discovery Value Portfolio

Notes to Financial Statements – continued

For the year ended December 31, 2018, the fee paid by the fund under this agreement was $90 and is included in “Miscellaneous” expense in the Statement of Operations. MFS has agreed to bear all expenses associated with office space, other administrative support, and supplies provided to the ISO.

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 year ended December 31, 2018, the fund engaged in purchase transactions pursuant to this policy, which amounted to $24,267.

Effective on or about January 3, 2018, 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 period on or about January 3, 2018 to December 31, 2018, this reimbursement amounted to $4,184, which is included in “Other” income in the Statement of Operations.

(4)

Portfolio Securities

For the year ended December 31, 2018, purchases and sales of investments, other than short-term obligations, aggregated $28,654,916 and $33,994,766, 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:


	Year ended 12/31/18						Year ended 12/31/17
	Shares			Amount			Shares			Amount
Shares sold
Initial Class		294,759			$2,955,370			93,805			$1,023,916
Service Class		176,624			1,734,797			371,261			4,044,312
		471,383			$4,690,167			465,066			$5,068,228
Shares issued to shareholders in reinvestment of distributions
Initial Class		632,611			$6,553,852			478,619			$4,695,256
Service Class		152,355			1,566,207			111,989			1,091,894
		784,966			$8,120,059			590,608			$5,787,150
Shares reacquired
Initial Class		(675,413	)		$(7,576,858	)		(807,724	)		$(8,747,810	)
Service Class		(315,574	)		(3,351,344	)		(276,792	)		(3,006,761	)
		(990,987	)		$(10,928,202	)		(1,084,516	)		$(11,754,571	)
Net change
Initial Class		251,957			$1,932,364			(235,300	)		$(3,028,638	)
Service Class		13,405			(50,340	)		206,458			2,129,445
		265,362			$1,882,024			(28,842	)		$(899,193	)

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 43%, 14%, and 9%, respectively, of the value of outstanding voting shares of the fund.

(6)

Line of Credit

MFS New Discovery Value Portfolio

Notes to Financial Statements – continued

(7)

Investments in Affiliated Issuers


Affiliated Issuers		Beginning Shares/Par Amount		Acquisitions Shares/Par Amount		Dispositions Shares/Par Amount			Ending Shares/Par Amount

MFS Institutional Money Market Portfolio			125,102		16,366,901		(16,062,709	)		429,294

Affiliated Issuers	Realized Gain (Loss)	Change in Unrealized Appreciation/ Depreciation		Capital Gain Distributions		Dividend Income			Ending Value

MFS Institutional Money Market Portfolio	$17		$—		$—		$17,181			$429,251

MFS New Discovery Value Portfolio

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Trustees of MFS Variable Insurance Trust III and the Shareholders of MFS New Discovery Value Portfolio:

Opinion on the Financial Statements and Financial Highlights

We have audited the accompanying statement of assets and liabilities of MFS New Discovery Value Portfolio (the “Fund”), including the portfolio of investments, as of December 31, 2018, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of December 31, 2018, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of December 31, 2018, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

DELOITTE & TOUCHE LLP

Boston, Massachusetts

February 15, 2019

We have served as the auditor of one or more of the MFS investment companies since 1924.

MFS New Discovery Value Portfolio

TRUSTEES AND OFFICERS – IDENTIFICATION AND BACKGROUND


Name, Age	Position(s) Held with Fund	Trustee/Officer Since (h)	Number of MFS Funds overseen by the Trustee	Principal Occupations During the Past Five Years	Other Directorships During the Past Five Years (j)
INTERESTED TRUSTEES
Robert J. Manning (k) (age 55)	Trustee	February 2004	135	Massachusetts Financial Services Company, Executive Chairman (since January 2017); Director; Chairman of the Board; Chief Executive Officer (until 2015);Co-Chief Executive Officer(2015-2016)	N/A

Robin A. Stelmach (k) (age 57)	Trustee	January 2014	135	Massachusetts Financial Services Company, Vice Chair (since January 2017); Chief Operating Officer and Executive Vice President (until January 2017)	N/A

INDEPENDENT TRUSTEES
John P. Kavanaugh (age 64)	Trustee and Chair of Trustees	January 2009	135	Private investor	N/A

Steven E. Buller (age 67)	Trustee	February 2014	135	Financial Accounting Standards Advisory Council, Chairman(2014-2015); Public Company Accounting Oversight Board, Standing Advisory Group, Member (until 2014); BlackRock, Inc. (investment management), Managing Director (until 2014), BlackRock Finco UK (investment management), Director (until 2014)	N/A

John A. Caroselli (age 64)	Trustee	March 2017	135	JC Global Advisors, LLC (management consulting), President (since 2015); First Capital Corporation (commercial finance), Executive Vice President (until 2015)	N/A

Maureen R. Goldfarb (age 63)	Trustee	January 2009	135	Private investor	N/A

Michael Hegarty (age 74)	Trustee	December 2004	135	Private investor	Rouse Properties Inc., Director (until 2016); Capmark Financial Group Inc., Director (until 2015)

Peter D. Jones (age 63)	Trustee	January 2019	135	Franklin Templeton Distributors, Inc. (investment management), President (until 2015); Franklin Templeton Institutional, LLC (investment management), Chairman (until 2015)	N/A

James W. Kilman, Jr. (age 57)	Trustee	January 2019	135	KielStrand Capital LLC (family office and merchant bank), Chief Executive Officer (since 2016); Morgan Stanley & Co. (financial services), Vice Chairman of Investment Banking,Co-Head of Diversified Financials Coverage – Financial Institutions Investment Banking Group (until 2016)	alpha-En Corporation, Director (since 2016)

MFS New Discovery Value Portfolio

Trustees and Officers – continued


Name, Age	Position(s) Held with Fund	Trustee/Officer Since (h)	Number of MFS Funds overseen by the Trustee	Principal Occupations During the Past Five Years	Other Directorships During the Past Five Years (j)
Clarence Otis, Jr. (age 62)	Trustee	March 2017	135	Darden Restaurants, Inc., Chief Executive Officer (until 2014)	VF Corporation, Director; Verizon Communications, Inc., Director; The Travelers Companies, Director; Federal Reserve Bank of Atlanta, Director (until 2015)

Maryanne L. Roepke (age 62)	Trustee	May 2014	135	American Century Investments (investment management), Senior Vice President and Chief Compliance Officer (until 2014)	N/A

Laurie J. Thomsen (age 61)	Trustee	March 2005	135	Private investor	The Travelers Companies, Director; Dycom Industries, Inc., Director (since 2015)


Name, Age	Position(s) Held with Fund	Trustee/Officer Since (h)	Number of MFS Funds for which the Person is an Officer	Principal Occupations During the Past Five Years
OFFICERS
Christopher R. Bohane (k) (age 45)	Assistant Secretary and Assistant Clerk	July 2005	135	Massachusetts Financial Services Company, Vice President and Assistant General Counsel

Kino Clark (k) (age 50)	Assistant Treasurer	January 2012	135	Massachusetts Financial Services Company, Vice President

John W. Clark, Jr. (k) (age 51)	Assistant Treasurer	April 2017	135	Massachusetts Financial Services Company, Vice President (since March 2017); Deutsche Bank (financial services), Department Head – Treasurer’s Office (until February 2017)

Thomas H. Connors (k) (age 59)	Assistant Secretary and Assistant Clerk	September 2012	135	Massachusetts Financial Services Company, Vice President and Senior Counsel

Ethan D. Corey (k) (age 55)	Assistant Secretary and Assistant Clerk	July 2005	135	Massachusetts Financial Services Company, Senior Vice President and Associate General Counsel

David L. DiLorenzo (k) (age 50)	President	July 2005	135	Massachusetts Financial Services Company, Senior Vice President

Heidi W. Hardin (k) (age 51)	Secretary and Clerk	April 2017	135	Massachusetts Financial Services Company, Executive Vice President and General Counsel (since March 2017); Harris Associates (investment management), General Counsel (from September 2015 to January 2017); Janus Capital Management LLC (investment management), Senior Vice President and General Counsel (until September 2015)

Brian E. Langenfeld (k) (age 45)	Assistant Secretary and Assistant Clerk	June 2006	135	Massachusetts Financial Services Company, Vice President and Senior Counsel

Amanda S. Mooradian (k) (age 39)	Assistant Secretary and Assistant Clerk	September 2018	135	Massachusetts Financial Services Company, Assistant Vice President and Counsel

Susan A. Pereira (k) (age 48)	Assistant Secretary and Assistant Clerk	July 2005	135	Massachusetts Financial Services Company, Vice President and Senior Counsel

Kasey L. Phillips (k) (age 48)	Assistant Treasurer	September 2012	135	Massachusetts Financial Services Company, Vice President

Matthew A. Stowe (k) (age 44)	Assistant Secretary and Assistant Clerk	October 2014	135	Massachusetts Financial Services Company, Vice President and Assistant General Counsel

MFS New Discovery Value Portfolio

Trustees and Officers – continued


Name, Age	Position(s) Held with Fund	Trustee/Officer Since (h)	Number of MFS Funds for which the Person is an Officer	Principal Occupations During the Past Five Years
Frank L. Tarantino (age 74)	Independent Senior Officer	June 2004	135	Tarantino LLC (provider of compliance services), Principal

Richard S. Weitzel (k) (age 48)	Assistant Secretary and Assistant Clerk	October 2007	135	Massachusetts Financial Services Company, Senior Vice President and Associate General Counsel

Martin J. Wolin (k) (age 51)	Chief Compliance Officer	July 2015	135	Massachusetts Financial Services Company, Senior Vice President and Chief Compliance Officer (since July 2015); Mercer (financial service provider), Chief Risk and Compliance Officer, North America and Latin America (until June 2015)

James O. Yost (k) (age 58)	Treasurer	September 1990	135	Massachusetts Financial Services Company, Senior Vice President

(h)

(j)	Directorships or trusteeships of companies required to report to the Securities and Exchange Commission (i.e., “public companies”).

(k)

Messrs. Buller, Hegarty, Kilman and Otis and Ms. Roepke are members of the Trust’s Audit Committee.

Each of the Interested Trustees and certain Officers hold comparable officer positions with certain affiliates of MFS.

The Statement of Additional Information for a Fund includes further information about the Trustees and is available without charge upon request by calling1-800-225-2606.


Investment Adviser Massachusetts Financial Services Company 111 Huntington Avenue Boston, MA 02199-7618		Custodian State Street Bank and Trust Company 1 Lincoln Street Boston, MA 02111-2900
Distributor MFS Fund Distributors, Inc. 111 Huntington Avenue Boston, MA 02199-7618		Independent Registered Public Accounting Firm Deloitte & Touche LLP 200 Berkeley Street Boston, MA 02116
Portfolio Manager(s) Kevin Schmitz

MFS New Discovery Value Portfolio

BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT

Based on information provided by Broadridge and MFS, the Trustees reviewed the Fund’s total return investment performance as well as the Broadridge performance universe over various time periods. The Trustees placed particular emphasis on the total return performance of the Fund’s Initial Class shares in comparison to the performance of funds in its Broadridge performance universe over the three-year period ended December 31, 2017, which the Trustees believed was a long enough period to reflect differing market conditions. The total return performance of the Fund’s Initial Class shares was in the 1st quintile relative to the other funds in the universe for this three-year period (the 1st quintile being the best performers and the 5th quintile being the worst performers). The total return performance of the Fund’s Initial Class shares was in the 1st quintile for each of theone- and five-year periods ended December 31, 2017 relative to the Broadridge performance universe. Because of the passage of time, these performance results may differ from the performance results for more recent periods, including those shown elsewhere in this report.

MFS New Discovery Value Portfolio

Board Review of Investment Advisory Agreement – continued

The Trustees also considered whether the Fund may benefit from any economies of scale in the management of the Fund in the event of growth in assets of the Fund and/or growth in assets of the MFS Funds as a whole. They noted that the Fund’s advisory fee rate schedule is subject to a contractual breakpoint that reduces the Fund’s advisory fee rate on average daily net assets over $250 million. The Trustees also noted that MFS has agreed in writing to waive a portion of the management fees of certain MFS Funds, including the Fund, if the total combined assets of certain funds within the MFS Funds’ complex increase above agreed upon thresholds (the “group fee waiver”), enabling the Fund’s shareholders to share in the benefits from any economies of scale at the complex level. The group fee waiver is reviewed and renewed annually between the Board and MFS. The Trustees concluded that the breakpoint and the group fee waiver were sufficient to allow the Fund to benefit from economies of scale as its assets and overall complex assets grow.

The Trustees also considered the nature, quality, cost, and extent of administrative, transfer agency, and distribution services provided to the Fund by MFS and its affiliates under agreements and plans other than the investment advisory agreement, including any12b-1 fees the Fund pays to MFS Fund Distributors, Inc., an affiliate of MFS. The Trustees also considered the nature, extent and quality of certain other services MFS performs or arranges for on the Fund’s behalf, which may include securities lending programs, directed expense payment programs, class action recovery programs, and MFS�� interaction with third-party service providers, principally custodians andsub-custodians. The Trustees concluded that the variousnon-advisory services provided by MFS and its affiliates on behalf of the Fund were satisfactory.

MFS New Discovery Value Portfolio

PROXY VOTING POLICIES AND INFORMATION

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. The fund’s Form N-Q is 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/vit3 by choosing the fund’s name and then selecting the “Resources” tab and clicking on “Prospectus and Reports”.

FURTHER INFORMATION

INFORMATION ABOUT FUND CONTRACTS AND LEGAL CLAIMS

FEDERAL TAX INFORMATION (unaudited)

The following information is provided pursuant to provisions of the Internal Revenue Code.

The fund designates $7,043,000 as capital gain dividends paid during the fiscal year.

For corporate shareholders, 26.85% of the ordinary income dividends paid during the fiscal year qualify for the corporate dividends received deduction.

rev. 3/16



FACTS		WHAT DOES MFS DO WITH YOUR PERSONAL INFORMATION?


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

What?

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

• Social Security number and account balances

• Account transactions and transaction history

• Checking account information and wire transfer instructions

When you areno longer our customer, we continue to share your information as described in this notice.


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


Reasons we can share your personal information	Does MFS share?	Can you limit this sharing?
For our everyday business purposes – such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus	Yes	No
For our marketing purposes – to offer our products and services to you	No	We don’t share
For joint marketing with other financial companies	No	We don’t share
For our affiliates’ everyday business purposes – information about your transactions and experiences	No	We don’t share
For our affiliates’ everyday business purposes – information about your creditworthiness	No	We don’t share
For nonaffiliates to market to you	No	We don’t share



Questions?		Call800-225-2606 or go tomfs.com.


Page 2


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


What we do
How does MFS protect my personal information?		To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include procedural, electronic, and physical safeguards for the protection of the personal information we collect about you.
How does MFS collect my personal information?		We collect your personal information, for example, when you • open an account or provide account information • direct us to buy securities or direct us to sell your securities • make a wire transfer We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
Why can’t I limit all sharing?		Federal law gives you the right to limit only • sharing for affiliates’ everyday business purposes – information about your creditworthiness • affiliates from using your information to market to you • sharing for nonaffiliates to market to you State laws and individual companies may give you additional rights to limit sharing.


Definitions
Affiliates		Companies related by common ownership or control. They can be financial and nonfinancial companies. • MFS does not share personal information with affiliates, except for everyday business purposes as described on page one of this notice.
Nonaffiliates		Companies not related by common ownership or control. They can be financial and nonfinancial companies. • MFS does not share with nonaffiliates so they can market to you.
Joint marketing		A formal agreement between nonaffiliated financial companies that together market financial products or services to you. • MFS doesn’t jointly market.


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

LOGO

ITEM 2.

CODE OF ETHICS.

The Registrant has adopted a Code of Ethics (the “Code”) pursuant to Section 406 of the Sarbanes-Oxley Act and as defined in FormN-CSR that applies to the Registrant’s principal executive officer and principal financial and accounting officer. During the period covered by this report, the Registrant has not amended any provision in the Code that relates to an element of the Code’s definition enumerated in paragraph (b) of Item 2 of this FormN-CSR. During the period covered by this report, the Registrant did not grant a waiver, including an implicit waiver, from any provision of the Code.

A copy of the Code is filed as an exhibit to this FormN-CSR.

ITEM 3.

AUDIT COMMITTEE FINANCIAL EXPERT.

Messrs. Steven E. Buller, Clarence Otis, Jr., Michael Hegarty, and James W. Kilman, Jr. and Ms. Maryanne L. Roepke, members of the Audit Committee, have been determined by the Board of Trustees in their reasonable business judgment to meet the definition of “audit committee financial expert” as such term is defined in FormN-CSR. In addition, Messrs. Buller, Otis, Hegarty, and Kilman, and Ms. Roepke are “independent” members of the Audit Committee (as such term has been defined by the Securities and Exchange Commission in regulations implementing Section 407 of the Sarbanes-Oxley Act of 2002). The Securities and Exchange Commission has stated that the designation of a person as an audit committee financial expert pursuant to this Item 3 on the FormN-CSR does not impose on such a person any duties, obligations or liability that are greater than the duties, obligations or liability imposed on such person as a member of the Audit Committee and the Board of Trustees in the absence of such designation or identification.

ITEM 4.

PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Items 4(a) through 4(d) and 4(g):

The Board of Trustees has appointed Deloitte & Touche LLP (“Deloitte”) to serve as independent accountants to the Registrant (hereinafter the “Registrant” or the “Fund”). The tables below set forth the audit fees billed to the Fund as well as fees fornon-audit services provided to the Fund and/or to the Fund’s investment adviser, Massachusetts Financial Services Company (“MFS”), and to various entities either controlling, controlled by, or under common control with MFS that provide ongoing services to the Fund (“MFS Related Entities”).

For the fiscal years ended December 31, 2018 and 2018, audit fees billed to the Fund by Deloitte were as follows:


	Audit Fees
	2018		2017
Fees billed by Deloitte:
MFS Blended Research Small Cap Equity Portfolio		44,613		43,618
MFS Conservative Allocation Portfolio		30,371		29,683
MFS Global Real Estate Portfolio		45,564		44,549
MFS Growth Allocation Portfolio		30,371		29,683
MFS Inflation-Adjusted Bond Portfolio		35,055		34,266
MFS Limited Maturity Portfolio		55,855		54,618
MFS Mid Cap Value Portfolio		45,979		44,955
MFS Moderate Allocation Portfolio		30,371		29,683
MFS New Discovery Value Portfolio		44,613		43,618

Total		362,792		354,673

For the fiscal years ended December 31, 2018 and 2017, fees billed by Deloitte for audit-related, tax and other services provided to each Fund and for audit-related, tax and other services provided to MFS and MFS Related Entities were as follows:


	Audit-Related Fees¹				Tax Fees²				All Other Fees³
	2018		2017		2018		2017		2018		2017
Fees billed by Deloitte:
To MFS Blended Research Small Cap Equity Portfolio		2,400		2,400		4,985		4,878		0		0
To MFS Conservative Allocation Portfolio		2,400		2,400		4,985		4,878		0		0
To MFS Global Real Estate Portfolio		2,400		2,400		5,314		5,200		0		0
To MFS Growth Allocation Portfolio		2,400		2,400		4,985		4,878		0		0
To MFS Inflation-Adjusted Bond Portfolio		2,400		2,400		4,153		4,064		0		0
To MFS Limited Maturity Portfolio		2,400		2,400		4,985		4,878		0		0
To MFS Mid Cap Value Portfolio		2,400		2,400		4,985		4,878		0		0
To MFS Moderate Allocation Portfolio		2,400		2,400		4,985		4,878		0		0
To MFS New Discovery Value Portfolio		2,400		2,400		4,985		4,878		0		0
Total fees billed by Deloitte To above Funds:		21,600		21,600		44,362		43,410		0		0


	Audit-Related Fees¹				Tax Fees²				All Other Fees³
	2018		2017		2018		2017		2018		2017
Fees billed by Deloitte:
To MFS and MFS Related Entities of MFS Blended Research Small Cap Equity Portfolio*		0		0		0		0		5,390		5,390
To MFS and MFS Related Entities of MFS Conservative Allocation Portfolio*		0		0		0		0		5,390		5,390
To MFS and MFS Related Entities of MFS Global Real Estate Portfolio*		0		0		0		0		5,390		5,390
To MFS and MFS Related Entities of MFS Growth Allocation Portfolio*		0		0		0		0		5,390		5,390
To MFS and MFS Related Entities of MFS Inflation-Adjusted Bond Portfolio*		0		0		0		0		5,390		5,390
To MFS and MFS Related Entities of MFS Limited Maturity Portfolio*		0		0		0		0		5,390		5,390
To MFS and MFS Related Entities of MFS Mid Cap Value Portfolio*		0		0		0		0		5,390		5,390
To MFS and MFS Related Entities of MFS Moderate Allocation Portfolio*		0		0		0		0		5,390		5,390
To MFS and MFS Related Entities of MFS New Discovery Value Portfolio*		0		0		0		0		5,390		5,390


	Aggregate fees for non-audit services:
	2018		2017
Fees billed by Deloitte:
To MFS Blended Research Small Cap Equity Portfolio, MFS and MFS Related Entities^#		12,775		811,904
To MFS Conservative Allocation Portfolio, MFS and MFS Related Entities^#		12,775		811,904
To MFS Global Real Estate Portfolio, MFS and MFS Related Entities^#		13,104		812,226
To MFS Growth Allocation Portfolio, MFS and MFS Related Entities^#		12,775		811,904
To MFS Inflation-Adjusted Bond Portfolio, MFS and MFS Related Entities^#		11,943		811,090
To MFS Limited Maturity Portfolio, MFS and MFS Related Entities^#		12,775		811,904
To MFS Mid Cap Value Portfolio, MFS and MFS Related Entities^#		12,775		811,904
To MFS Moderate Allocation Portfolio, MFS and MFS Related Entities^#		12,775		811,904
To MFS New Discovery Value Portfolio, MFS and MFS Related Entities^#		12,775		811,904

^*	This amount reflects the fees billed to MFS and MFS Related Entities fornon-audit services relating directly to the operations and financial reporting of the Fund (portions of which services also related to the operations and financial reporting of other funds within the MFS Funds complex).

#	This amount reflects the aggregate fees billed by Deloitte fornon-audit services rendered to the Fund and fornon-audit services rendered to MFS and the MFS Related Entities.

The fees included under “Audit-Related Fees” are fees related to assurance and related services that are reasonably related to the performance of the audit or review of financial statements, but not reported under “Audit Fees,” including accounting consultations, agreed-upon procedure reports, attestation reports, comfort letters and internal control reviews.

²	The fees included under “Tax Fees” are fees associated with tax compliance, tax advice and tax planning, including services relating to the filing or amendment of federal, state or local income tax returns, regulated investment company qualification reviews and tax distribution and analysis.

³	The fees included under “All Other Fees” are fees for products and services provided by Deloitte other than those reported under “Audit Fees,” “Audit-Related Fees” and “Tax Fees”.

Item 4(e)(1):

Set forth below are the policies and procedures established by the Audit Committee of the Board of Trustees relating to thepre-approval of audit andnon-audit related services:

To the extent required by applicable law,pre-approval by the Audit Committee of the Board is needed for all audit and permissiblenon-audit services rendered to the Fund and all permissiblenon-audit services rendered to MFS or MFS Related Entities if the services relate directly to the operations and financial reporting of the Registrant.Pre-approval is currently on anengagement-by-engagement basis. In the eventpre-approval of such services is necessary between regular meetings of the Audit Committee and it is not practical to wait to seekpre-approval at the next regular meeting of the Audit Committee,pre-approval of such services may be referred to the Chair of the Audit Committee for approval; provided that the Chair may notpre-approve any individual engagement for such services exceeding $50,000 or multiple engagements for such services in the aggregate exceeding $100,000 between such regular meetings of the Audit Committee. Any engagementpre-approved by the Chair between regular meetings of the Audit Committee shall be presented for ratification by the entire Audit Committee at its next regularly scheduled meeting.

Item 4(e)(2):

None, or 0%, of the services relating to the Audit-Related Fees, Tax Fees and All Other Fees paid by the Fund and MFS and MFS Related Entities relating directly to the operations and financial reporting of the Registrant disclosed above were approved by the audit committee pursuant to paragraphs (c)(7)(i)(C) of Rule2-01 of RegulationS-X (which permits audit committee approval after the start of the engagement with respect to services other than audit, review or attest services, if certain conditions are satisfied).

Item 4(f):

Not applicable.

Item 4(h):

The Registrant’s Audit Committee has considered whether the provision by a Registrant’s independent registered public accounting firm ofnon-audit services to MFS and MFS Related Entities that were notpre-approved by the Committee (because such services were provided prior to the effectiveness of SEC rules requiringpre-approval or because such services did not relate directly to the operations and financial reporting of the Registrant) was compatible with maintaining the independence of the independent registered public accounting firm as the Registrant’s principal auditors.

ITEM 5.

AUDIT COMMITTEE OF LISTED REGISTRANTS.

Not applicable to the Registrant.

ITEM 6.

SCHEDULE OF INVESTMENTS

A schedule of investments of each series of the Registrant is included as part of the report to shareholders of such series under Item 1 of this FormN-CSR.

ITEM 7.

DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FORCLOSED-END MANAGEMENT INVESTMENT COMPANIES.

Not applicable to the Registrant.

ITEM 8.

PORTFOLIO MANAGERS OFCLOSED-END MANAGEMENT INVESTMENT COMPANIES.

Not applicable to the Registrant.

ITEM 9.

PURCHASES OF EQUITY SECURITIES BYCLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.

Not applicable to the Registrant.

ITEM 10.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

There were no material changes to the procedures by which shareholders may send recommendations to the Board for nominees to the Registrant’s Board since the Registrant last provided disclosure as to such procedures in response to the requirements of Item 407 (c)(2)(iv) of RegulationS-K or this Item.

ITEM 11.

CONTROLS AND PROCEDURES.

(a)

Based upon their evaluation of the effectiveness of the registrant’s disclosure controls and procedures (as defined in Rule30a-3(c) under the Investment Company Act of 1940 (the “Act”)) as conducted within 90 days of the filing date of this report on FormN-CSR, the registrant’s principal financial officer and principal executive officer have concluded that those disclosure controls and procedures provide reasonable assurance that the material information required to be disclosed by the registrant on this report is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

(b)

There were no changes in the Registrant’s internal controls over financial reporting (as defined in Rule30a-3(d) under the Act) that occurred during the second fiscal quarter of the period covered by the report that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

ITEM 12.

DISCLOSURE OF SECURITIES LENDING ACTIVITIES FORCLOSED-END MANAGEMENT INVESTMENT COMPANIES.

Not applicable to the Registrant.

ITEM 13.

EXHIBITS.


(a)	(1)	Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit: Attached hereto as EX-99.COE.

	(2)	A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Act (17 CFR 270.30a-2): Attached hereto as EX-99.302CERT.

	(3)	Any written solicitation to purchase securities under Rule 23c-1 under the Act (17 CFR 270.23c-1) sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons. Not applicable.

	(4)	Change in the registrant’s independent public accountant. Not applicable.

(b)	If the report is filed under Section 13(a) or 15(d) of the Exchange Act, provide the certifications required by Rule 30a-2(b) under the Act (17 CFR 270.30a-2(b)), Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR 240.13a-14(b) or 240.15d-14(b)) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350) as an exhibit. A certification furnished pursuant to this paragraph will not be deemed “filed” for the purposes of Section 18 of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference. Attached hereto as EX-99.906CERT.

Notice

Notice is hereby given that this instrument is executed on behalf of the Registrant by an officer of the Registrant as an officer and not individually and the obligations of or arising out of this instrument are not binding upon any of the Trustees or shareholders individually, but are binding only upon the assets and property of the respective constituent series of the Registrant.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

(Registrant) MFS VARIABLE INSURANCE TRUST III


By (Signature and Title)*		DAVID L. DILORENZO
		David L. DiLorenzo, President

Date: February 15, 2019

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By (Signature and Title)*

DAVID L. DILORENZO

David L. DiLorenzo, President

(Principal Executive Officer)

Date: February 15, 2019

By (Signature and Title)*

JAMES O. YOST

James O. Yost, Treasurer

(Principal Financial Officer

and Accounting Officer)

Date: February 15, 2019

*	Print name and title of each signing officer under his or her signature.

Fair Value (a)

Derivative Contracts

Asset Derivatives

Interest Rate

Interest Rate Futures Contracts