UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-08326
MFS VARIABLE INSURANCE TRUST
(Exact name of registrant as specified in charter)
111 Huntington Avenue, Boston, Massachusetts 02199 (Address of principal executive offices) (Zip code)
Christopher R. Bohane
Massachusetts Financial Services Company
111Huntington 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, 2023
ITEM 1. REPORTS TO STOCKHOLDERS.
Item 1(a):
Annual Report
December 31, 2023
MFS® Global Equity Series
MFS® Variable Insurance Trust
MFS® Global Equity Series
| 1 |
| 2 |
| 4 |
| 6 |
| 7 |
| 11 |
| 12 |
| 13 |
| 14 |
| 16 |
| 22 |
| 23 |
| 26 |
| 29 |
| 29 |
| 29 |
| 29 |
| 29 |
| 30 |
The report is prepared for the general information of shareholders. It is authorized for distribution to prospective investors only when preceded or accompanied by a current prospectus.
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
Portfolio structure
Top ten holdings
| Schneider Electric SE | 3.0% |
| Visa, Inc., “A” | 3.0% |
| Linde PLC | 2.7% |
| Accenture PLC, “A” | 2.6% |
| Thermo Fisher Scientific, Inc. | 2.4% |
| Comcast Corp., “A” | 2.4% |
| Medtronic PLC | 2.4% |
| Charles Schwab Corp. | 2.2% |
| Roche Holding AG | 2.2% |
| Honeywell International, Inc. | 2.2% |
GICS equity sectors (g)
| Industrials | 20.5% |
| Financials | 18.5% |
| Health Care | 17.5% |
| Consumer Staples | 10.7% |
| Information Technology | 9.2% |
| Communication Services | 8.1% |
| Consumer Discretionary | 7.7% |
| Materials | 6.9% |
Issuer country weightings (x)
| United States | 52.9% |
| France | 10.6% |
| Switzerland | 9.3% |
| United Kingdom | 8.7% |
| Canada | 3.5% |
| Germany | 3.0% |
| Japan | 2.7% |
| Netherlands | 2.6% |
| Spain | 1.7% |
| Other Countries | 5.0% |
Currency exposure weightings (y)
| United States Dollar | 57.7% |
| Euro | 18.5% |
| Swiss Franc | 9.3% |
| British Pound Sterling | 8.7% |
| Japanese Yen | 2.7% |
| South Korean Won | 1.2% |
| Swedish Krona | 1.1% |
| Danish Krone | 0.5% |
| Mexican Peso | 0.3% |
| (g) | The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and S&P Global Market Intelligence Inc. (“S&P Global Market Intelligence”). GICS is a service mark of MSCI and S&P Global Market Intelligence and has been licensed for use by MFS. MFS has applied its own internal sector/industry classification methodology for equity securities and non-equity securities that are unclassified by GICS. |
| (x) | Represents the portfolio’s exposure to issuer countries as a percentage of a portfolio’s net assets. For purposes of this presentation, United States includes Cash & Cash Equivalents. |
| (y) | Represents the portfolio’s exposure to a particular currency as a percentage of a portfolio's net assets. For purposes of this presentation, United States Dollar includes Cash & Cash Equivalents. |
Cash & Cash Equivalents includes any cash, investments in money market funds, short-term securities, and other assets less liabilities. Please see the Statement of Assets and Liabilities for additional information related to the fund’s cash position and other assets and liabilities.
Percentages are based on net assets as of December 31, 2023.
The portfolio is actively managed and current holdings may be different.
Management Review
Summary of Results
For the twelve months ended December 31, 2023, Initial Class shares of the MFS Global Equity Series (fund) provided a total return of 14.18%, while Service Class shares of the fund provided a total return of 13.88%. These compare with a return of 23.79% over the same period for the fund’s benchmark, the MSCI World Index (net div).
Market Environment
During the reporting period, central banks around the world had to combat the strongest inflationary pressures in four decades, fueled by the global fiscal response to the pandemic, disrupted supply chains and the dislocations to energy markets stemming from the war in Ukraine. Interest rates rose substantially, but the effects of a tighter monetary policy may not have been fully experienced yet, given that monetary policy works with long and variable lags. Strains resulting from the abrupt tightening of monetary policy began to affect some parts of the economy, most acutely among small and regional US banks, which suffered from deposit flight as depositors sought higher yields on their savings. Additionally, activity in the US housing sector has slowed as a result of higher mortgage rates. China’s abandonment of its Zero-COVID policy ushered in a brief uptick in economic activity in the world’s second-largest economy in early 2023, although its momentum soon stalled as the focus turned to the country’s highly indebted property development sector. In developed markets, consumer demand for services remained stronger than the demand for goods.
Early on, policymakers found themselves in the difficult position of trying to restrain inflation without tipping economies into recession. Despite the challenging macroeconomic and geopolitical environment, central banks focused on controlling price pressures while also confronting increasing financial stability concerns. Central banks had to juggle achieving their inflation mandates while using macroprudential tools (financial policies aimed at safeguarding the stability of the financial system) to keep banking systems liquid, a potentially difficult balancing act, and one that suggested that we may be nearing a peak in policy rates. As inflationary pressures eased toward the end of the period, financial conditions loosened in anticipation of easier monetary policy, boosting the market’s appetite for risk. Rapid advancements in artificial intelligence were a focus for investors.
Normalizing supply chains, low levels of unemployment across developed markets and signs that inflation levels have peaked were supportive factors for the macroeconomic backdrop.
Detractors from Performance
Relative to the MSCI World Index, the combination of an underweight position and security selection in the information technology sector detracted from the fund’s performance. Within this sector, not owning shares of strong-performing computer graphics processor maker NVIDIA, software giant Microsoft, and computer and personal electronics maker Apple weakened relative results. The stock price of Microsoft advanced as the company reported solid financial results, headlined by a reacceleration in constant-currency Azure (cloud) revenue growth and higher-than-expected contributions from AI-enabled services.
Security selection within the consumer discretionary sector also held back the fund’s relative performance. Here, not owning shares of internet retailer Amazon.com hindered relative returns as the stock outperformed the benchmark. The stock price of Amazon appreciated following continued strong growth within its Amazon Web Services segment and a favorable outlook for the company's generative AI business.
Security selection within the communication services sector was another negative factor for the fund’s relative returns. Within this sector, not owning shares of social networking service provider Meta Platforms weakened relative performance. The share price of Meta Platforms climbed as the company cited plans to cut costs and invest in artificial intelligence, including adding generative AI to text, image, and video generators across its network of apps, including Facebook and Instagram.
Stocks in other sectors that were among the top relative detractors included the fund's overweight positions in premium drinks distributor Diageo (United Kingdom), life sciences supply company Thermo Fisher Scientific, global flavors and fragrances supplier International Flavors & Fragrances, pharmaceutical company Merck KGaA (Germany), and pharmaceutical and diagnostic company Roche Holding (Switzerland).
Contributors to Performance
The fund’s avoidance of the energy, utilities and real estate sectors contributed to relative performance as all three sectors underperformed the benchmark. Within the energy sector, not owning poor-performing integrated energy company Chevron and integrated oil and gas company ExxonMobil aided relative performance. The share price of Chevron declined as the company reported revenue that missed expectations due to lower margins in its downstream operations, higher-than-forecasted capital expenditures and costs related to the acquisition of Hess. Additionally, energy stocks were broadly dragged down by weakness in crude oil prices, which suffered from both strong supply and weak demand dynamics. Within both the utilities and real estate sectors, there were no individual stocks, either in the fund or in the benchmark, that were among the fund's top relative contributors over the reporting period.
Management Review - continued
Elsewhere, the fund’s overweight positions in diversified industrial manufacturer Rolls-Royce Holdings (United Kingdom), investment management and banking firm UBS Group (Switzerland), electrical distribution equipment manufacturer Schneider Electric (France), airports terminals operator Aena SME (Spain), and consulting and information technology services provider Accenture benefited relative results. The stock price of UBS advanced as the company reported above-consensus earnings results, primarily due to lower-than-expected funding costs and operating expenses. Management also noted that net new money and net new deposit trends were encouraging. Additionally, not owning shares of weak-performing pharmaceutical giant Pfizer, diversified medical products maker Johnson & Johnson, and health insurance and Medicare/Medicaid provider UnitedHealth Group further boosted relative performance.
Respectfully,
Portfolio Manager(s)
Ryan McAllister and Roger Morley
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.
Performance Summary Through 12/31/23
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 shares, 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 shareholder would pay on fund distributions or the redemption of fund shares. 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
Total Returns through 12/31/23
Average annual total returns
| Share Class | Class Inception Date | 1-yr | 5-yr | 10-yr |
| Initial Class | 5/03/1999 | 14.18% | 10.25% | 7.20% |
| Service Class | 5/01/2000 | 13.88% | 9.96% | 6.93% |
Comparative benchmark(s)
| MSCI World Index (net div) (f) | 23.79% | 12.80% | 8.60% |
| (f) | Source: FactSet Research Systems Inc. |
Benchmark Definition(s)
MSCI World Index(e) (net div) – a market capitalization-weighted index that is designed to measure equity market performance in the global developed markets.
It is not possible to invest directly in an index.
| (e) | Morgan Stanley Capital International (“MSCI”) makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed, or produced by MSCI. |
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 Summary – continued
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.
Expense Table
Fund expenses borne by the shareholders during the period,
July 1, 2023 through December 31, 2023
As a shareholder 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, 2023 through December 31, 2023.
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
7/01/23 | Ending
Account Value
12/31/23 | Expenses
Paid During
Period (p)
701/23-12/31/23 |
| Initial Class | Actual | 0.92% | $1,000.00 | $1,032.91 | $4.71 |
| Hypothetical (h) | 0.92% | $1,000.00 | $1,020.57 | $4.69 |
| Service Class | Actual | 1.17% | $1,000.00 | $1,031.52 | $5.99 |
| Hypothetical (h) | 1.17% | $1,000.00 | $1,019.31 | $5.96 |
| (h) | 5% class return per year before expenses. |
| (p) | “Expenses Paid During Period” are equal to each class's annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). |
Portfolio of Investments − 12/31/23
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – 99.1% |
| Aerospace & Defense – 3.5% | |
| Honeywell International, Inc. | | 5,363 | $ 1,124,675 |
| MTU Aero Engines Holding AG | | 1,021 | 220,073 |
| Rolls-Royce Holdings PLC (a) | | 132,842 | 507,473 |
| | | | | $1,852,221 |
| Airlines – 0.9% | |
| Aena SME S.A. | | 2,726 | $ 493,837 |
| Alcoholic Beverages – 5.5% | |
| Carlsberg A.S., “B” | | 2,269 | $ 284,536 |
| Diageo PLC | | 27,319 | 994,521 |
| Heineken N.V. | | 8,788 | 891,957 |
| Pernod Ricard S.A. | | 3,917 | 690,787 |
| | | | | $2,861,801 |
| Apparel Manufacturers – 4.3% | |
| Burberry Group PLC | | 17,377 | $ 313,638 |
| Compagnie Financiere Richemont S.A. | | 6,306 | 867,867 |
| LVMH Moet Hennessy Louis Vuitton SE | | 1,342 | 1,086,829 |
| | | | | $2,268,334 |
| Automotive – 0.5% | |
| Aptiv PLC (a) | | 2,805 | $ 251,665 |
| Broadcasting – 1.9% | |
| Omnicom Group, Inc. | | 1,656 | $ 143,261 |
| Walt Disney Co. | | 6,132 | 553,658 |
| WPP Group PLC | | 29,319 | 281,407 |
| | | | | $978,326 |
| Brokerage & Asset Managers – 3.6% | |
| Charles Schwab Corp. | | 16,892 | $ 1,162,170 |
| Deutsche Boerse AG | | 1,438 | 296,065 |
| London Stock Exchange Group PLC | | 3,546 | 419,176 |
| | | | | $1,877,411 |
| Business Services – 9.6% | |
| Accenture PLC, “A” | | 3,834 | $ 1,345,389 |
| Adecco S.A. | | 3,210 | 157,513 |
| Brenntag AG | | 2,990 | 274,694 |
| Cognizant Technology Solutions Corp., “A” | | 7,345 | 554,768 |
| Compass Group PLC | | 11,199 | 306,337 |
| Equifax, Inc. | | 1,770 | 437,703 |
| Experian PLC | | 13,476 | 550,014 |
| Fidelity National Information Services, Inc. | | 6,873 | 412,861 |
| Fiserv, Inc. (a) | | 3,899 | 517,943 |
| Intertek Group PLC | | 5,845 | 316,341 |
| PayPal Holdings, Inc. (a) | | 2,387 | 146,586 |
| | | | | $5,020,149 |
| Cable TV – 2.4% | |
| Comcast Corp., “A” | | 28,169 | $ 1,235,211 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Chemicals – 1.9% | |
| 3M Co. | | 3,874 | $ 423,506 |
| PPG Industries, Inc. | | 3,804 | 568,888 |
| | | | | $992,394 |
| Computer Software – 3.0% | |
| Check Point Software Technologies Ltd. (a) | | 4,219 | $ 644,621 |
| Oracle Corp. | | 8,736 | 921,036 |
| | | | | $1,565,657 |
| Computer Software - Systems – 1.2% | |
| Samsung Electronics Co. Ltd. | | 10,233 | $ 622,370 |
| Construction – 0.6% | |
| Otis Worldwide Corp. | | 3,410 | $ 305,093 |
| Consumer Products – 3.5% | |
| Essity AB | | 24,164 | $ 598,946 |
| International Flavors & Fragrances, Inc. | | 7,860 | 636,424 |
| Reckitt Benckiser Group PLC | | 8,503 | 587,439 |
| | | | | $1,822,809 |
| Electrical Equipment – 5.2% | |
| Amphenol Corp., “A” | | 4,286 | $ 424,871 |
| Legrand S.A. | | 6,682 | 694,138 |
| Schneider Electric SE | | 7,893 | 1,583,936 |
| | | | | $2,702,945 |
| Electronics – 1.2% | |
| Hoya Corp. | | 2,700 | $ 337,500 |
| Microchip Technology, Inc. | | 3,504 | 315,991 |
| | | | | $653,491 |
| Food & Beverages – 2.9% | |
| Danone S.A. | | 7,283 | $ 471,791 |
| Nestle S.A. | | 9,089 | 1,053,764 |
| | | | | $1,525,555 |
| Gaming & Lodging – 1.2% | |
| Marriott International, Inc., “A” | | 1,675 | $ 377,729 |
| Whitbread PLC | | 5,575 | 259,802 |
| | | | | $637,531 |
| Insurance – 3.2% | |
| Aon PLC | | 2,148 | $ 625,111 |
| Willis Towers Watson PLC | | 4,293 | 1,035,471 |
| | | | | $1,660,582 |
| Internet – 2.7% | |
| Alphabet, Inc., “A” (a) | | 7,780 | $ 1,086,788 |
| eBay, Inc. | | 7,730 | 337,183 |
| | | | | $1,423,971 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Machinery & Tools – 1.3% | |
| Carrier Global Corp. | | 2,820 | $ 162,009 |
| Kubota Corp. | | 33,900 | 510,303 |
| | | | | $672,312 |
| Major Banks – 4.6% | |
| Erste Group Bank AG | | 7,277 | $ 295,068 |
| Goldman Sachs Group, Inc. | | 2,699 | 1,041,193 |
| UBS Group AG | | 34,606 | 1,073,916 |
| | | | | $2,410,177 |
| Medical Equipment – 13.1% | |
| Abbott Laboratories | | 6,445 | $ 709,401 |
| Boston Scientific Corp. (a) | | 15,064 | 870,850 |
| Cooper Cos., Inc. | | 1,275 | 482,511 |
| EssilorLuxottica | | 1,133 | 227,141 |
| Medtronic PLC | | 14,973 | 1,233,476 |
| Olympus Corp. | | 38,900 | 562,946 |
| Sonova Holding AG | | 1,076 | 351,055 |
| Stryker Corp. | | 1,429 | 427,928 |
| Thermo Fisher Scientific, Inc. | | 2,401 | 1,274,427 |
| Waters Corp. (a) | | 2,222 | 731,549 |
| | | | | $6,871,284 |
| Other Banks & Diversified Financials – 5.0% | |
| American Express Co. | | 3,823 | $ 716,201 |
| Grupo Financiero Banorte S.A. de C.V. | | 17,403 | 175,004 |
| Julius Baer Group Ltd. | | 3,520 | 197,334 |
| Visa, Inc., “A” | | 5,974 | 1,555,331 |
| | | | | $2,643,870 |
| Pharmaceuticals – 3.8% | |
| Merck KGaA | | 5,097 | $ 810,827 |
| Roche Holding AG | | 3,993 | 1,160,797 |
| | | | | $1,971,624 |
| Railroad & Shipping – 4.8% | |
| Canadian National Railway Co. | | 6,779 | $ 851,646 |
| Canadian Pacific Kansas City Ltd. | | 12,611 | 997,026 |
| Union Pacific Corp. | | 2,752 | 675,946 |
| | | | | $2,524,618 |
| Specialty Chemicals – 4.6% | |
| Air Liquide S.A. | | 2,759 | $ 536,426 |
| Akzo Nobel N.V. | | 5,459 | 450,900 |
| Linde PLC | | 3,402 | 1,397,235 |
| | | | | $2,384,561 |
| Specialty Stores – 0.5% | |
| Hermes International | | 113 | $ 239,363 |
| Telecommunications - Wireless – 1.8% | |
| Cellnex Telecom S.A. | | 9,727 | $ 382,922 |
| Liberty Broadband Corp. (a) | | 6,751 | 544,063 |
| | | | | $926,985 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Trucking – 0.8% | |
| United Parcel Service, Inc., “B” | | 2,693 | $ 423,420 |
| Total Common Stocks (Identified Cost, $26,025,805) | | $51,819,567 |
| Investment Companies (h) – 0.0% |
| Money Market Funds – 0.0% | |
| MFS Institutional Money Market Portfolio, 5.42% (v) (Identified Cost, $1,736) | | | 1,735 | $ 1,736 |
| Other Assets, Less Liabilities – 0.9% | | 458,927 |
| Net Assets – 100.0% | $52,280,230 |
| (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 $1,736 and $51,819,567, respectively. | | | |
| (v) | Affiliated issuer that is available only to investment companies managed by MFS. The rate quoted for the MFS Institutional Money Market Portfolio is the annualized seven-day yield of the fund at period end. | | | |
See Notes to Financial Statements
| 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 12/31/23Assets | |
| Investments in unaffiliated issuers, at value (identified cost, $26,025,805) | $51,819,567 |
| Investments in affiliated issuers, at value (identified cost, $1,736) | 1,736 |
| Foreign currency, at value (identified cost, $4) | 4 |
| Receivables for | |
| Investments sold | 460,853 |
| Fund shares sold | 17,960 |
| Interest and dividends | 166,552 |
| Receivable from investment adviser | 3,528 |
| Other assets | 416 |
| Total assets | $52,470,616 |
| Liabilities | |
| Payable to custodian | $19,756 |
| Payables for | |
| Fund shares reacquired | 100,290 |
| Payable to affiliates | |
| Administrative services fee | 195 |
| Shareholder servicing costs | 46 |
| Distribution and/or service fees | 274 |
| Payable for independent Trustees' compensation | 10 |
| Payable for audit and tax fees | 39,136 |
| Payable for shareholder communications | 19,372 |
| Accrued expenses and other liabilities | 11,307 |
| Total liabilities | $190,386 |
| Net assets | $52,280,230 |
| Net assets consist of | |
| Paid-in capital | $23,629,732 |
| Total distributable earnings (loss) | 28,650,498 |
| Net assets | $52,280,230 |
| Shares of beneficial interest outstanding | 2,440,053 |
| | Net assets | Shares
outstanding | Net asset value
per share |
| Initial Class | $42,287,554 | 1,969,860 | $21.47 |
| Service Class | 9,992,676 | 470,193 | 21.25 |
See Notes to Financial Statements
| 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 12/31/23 | |
| Net investment income (loss) | |
| Income | |
| Dividends | $984,376 |
| Dividends from affiliated issuers | 16,827 |
| Interest | 662 |
| Income on securities loaned | 203 |
| Other | 37 |
| Foreign taxes withheld | (66,348) |
| Total investment income | $935,757 |
| Expenses | |
| Management fee | $459,372 |
| Distribution and/or service fees | 24,340 |
| Shareholder servicing costs | 1,841 |
| Administrative services fee | 17,707 |
| Independent Trustees' compensation | 3,065 |
| Custodian fee | 11,171 |
| Shareholder communications | 9,596 |
| Audit and tax fees | 70,011 |
| Legal fees | 320 |
| Miscellaneous | 24,122 |
| Total expenses | $621,545 |
| Reduction of expenses by investment adviser | (126,731) |
| Net expenses | $494,814 |
| Net investment income (loss) | $440,943 |
| Realized and unrealized gain (loss) | |
| Realized gain (loss) (identified cost basis) | |
| Unaffiliated issuers | $2,953,026 |
| Affiliated issuers | 219 |
| Foreign currency | 12 |
| Net realized gain (loss) | $2,953,257 |
| Change in unrealized appreciation or depreciation | |
| Unaffiliated issuers | $3,354,445 |
| Affiliated issuers | (54) |
| Translation of assets and liabilities in foreign currencies | 8,817 |
| Net unrealized gain (loss) | $3,363,208 |
| Net realized and unrealized gain (loss) | $6,316,465 |
| Change in net assets from operations | $6,757,408 |
See Notes to Financial Statements
| 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 |
| | 12/31/23 | 12/31/22 |
| Change in net assets | | |
| From operations | | |
| Net investment income (loss) | $440,943 | $374,997 |
| Net realized gain (loss) | 2,953,257 | 2,133,459 |
| Net unrealized gain (loss) | 3,363,208 | (14,525,344) |
| Change in net assets from operations | $6,757,408 | $(12,016,888) |
| Total distributions to shareholders | $(2,572,354) | $(5,629,118) |
| Change in net assets from fund share transactions | $(1,217,520) | $249,205 |
| Total change in net assets | $2,967,534 | $(17,396,801) |
| Net assets | | |
| At beginning of period | 49,312,696 | 66,709,497 |
| At end of period | $52,280,230 | $49,312,696 |
See Notes to Financial Statements
| 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 |
| | 12/31/23 | 12/31/22 | 12/31/21 | 12/31/20 | 12/31/19 |
| Net asset value, beginning of period | $19.82 | $26.90 | $24.57 | $22.79 | $18.82 |
| Income (loss) from investment operations | | | | | |
| Net investment income (loss) (d) | $0.19 | $0.16 | $0.12 | $0.16 | $0.25 |
| Net realized and unrealized gain (loss) | 2.55 | (4.91) | 4.07 | 2.73 | 5.35 |
| Total from investment operations | $2.74 | $(4.75) | $4.19 | $2.89 | $5.60 |
| Less distributions declared to shareholders | | | | | |
| From net investment income | $(0.17) | $(0.12) | $(0.17) | $(0.26) | $(0.25) |
| From net realized gain | (0.92) | (2.21) | (1.69) | (0.85) | (1.38) |
| Total distributions declared to shareholders | $(1.09) | $(2.33) | $(1.86) | $(1.11) | $(1.63) |
| Net asset value, end of period (x) | $21.47 | $19.82 | $26.90 | $24.57 | $22.79 |
| Total return (%) (k)(r)(s)(x) | 14.18 | (17.73) | 17.21 | 13.29 | 30.57 |
Ratios (%) (to average net assets)
and Supplemental data: | | | | | |
| Expenses before expense reductions | 1.17 | 1.17 | 1.13 | 1.16 | 1.16 |
| Expenses after expense reductions | 0.92 | 0.92 | 0.92 | 0.92 | 0.95 |
| Net investment income (loss) | 0.91 | 0.74 | 0.45 | 0.75 | 1.16 |
| Portfolio turnover | 9 | 7 | 12 | 12 | 11 |
| Net assets at end of period (000 omitted) | $42,288 | $39,840 | $51,966 | $46,879 | $49,771 |
| Service Class | Year ended |
| | 12/31/23 | 12/31/22 | 12/31/21 | 12/31/20 | 12/31/19 |
| Net asset value, beginning of period | $19.62 | $26.64 | $24.37 | $22.62 | $18.70 |
| Income (loss) from investment operations | | | | | |
| Net investment income (loss) (d) | $0.14 | $0.11 | $0.05 | $0.10 | $0.18 |
| Net realized and unrealized gain (loss) | 2.51 | (4.87) | 4.03 | 2.71 | 5.32 |
| Total from investment operations | $2.65 | $(4.76) | $4.08 | $2.81 | $5.50 |
| Less distributions declared to shareholders | | | | | |
| From net investment income | $(0.10) | $(0.05) | $(0.12) | $(0.21) | $(0.20) |
| From net realized gain | (0.92) | (2.21) | (1.69) | (0.85) | (1.38) |
| Total distributions declared to shareholders | $(1.02) | $(2.26) | $(1.81) | $(1.06) | $(1.58) |
| Net asset value, end of period (x) | $21.25 | $19.62 | $26.64 | $24.37 | $22.62 |
| Total return (%) (k)(r)(s)(x) | 13.88 | (17.94) | 16.88 | 13.04 | 30.20 |
Ratios (%) (to average net assets)
and Supplemental data: | | | | | |
| Expenses before expense reductions | 1.42 | 1.42 | 1.38 | 1.41 | 1.41 |
| Expenses after expense reductions | 1.17 | 1.17 | 1.17 | 1.17 | 1.20 |
| Net investment income (loss) | 0.66 | 0.49 | 0.19 | 0.48 | 0.85 |
| Portfolio turnover | 9 | 7 | 12 | 12 | 11 |
| Net assets at end of period (000 omitted) | $9,993 | $9,473 | $14,744 | $13,469 | $11,319 |
See Notes to Financial Statements
Financial Highlights - continued
| (d) | Per share data is based on average shares outstanding. |
| (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
Notes to Financial Statements
(1) Business and Organization
MFS Global Equity Series (the fund) is a diversified series of MFS Variable Insurance Trust (the trust). The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The shareholders of each series of the trust are separate accounts of insurance companies, which offer variable annuity and/or life insurance products, and qualified retirement and pension plans.
The fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services - Investment Companies.
(2) Significant Accounting Policies
General — The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the fund’s Statement of Assets and Liabilities through the date that the financial statements were issued. The fund invests in foreign securities. Investments in foreign securities are vulnerable to the effects of changes in the relative values of the local currency and the U.S. dollar and to the effects of changes in each country’s market, economic, industrial, political, regulatory, geopolitical, environmental, public health, 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’s in-scope financial instruments and transactions.
Investment Valuations — Subject to its oversight, the fund's Board of Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments to MFS as the fund's adviser, pursuant to the fund’s valuation policy and procedures which have been adopted by the adviser and approved by the Board. In accordance with Rule 2a-5 under the Investment Company Act of 1940, the Board of Trustees designated the adviser as the “valuation designee” of the fund. If the adviser, as valuation designee, determines that reliable market quotations are not readily available for an investment, the investment is valued at fair value as determined in good faith by the adviser in accordance with the adviser’s fair valuation policy and procedures.
Under the fund's valuation policy and procedures, 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. 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.
Under the fund’s valuation policy and procedures, market quotations are not considered to be readily available for debt instruments, floating rate loans, and many types of derivatives. These investments are generally valued at fair value based on information from third-party pricing services or otherwise determined by the adviser in accordance with the adviser’s fair valuation policy and procedures. 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, spreads and other market data. An investment may also be valued at fair value if the adviser determines that the investment’s value has been materially affected by events occurring after the close of the exchange or market on which the investment is principally traded (such as foreign exchange or market) and prior to the determination of the fund’s net asset value, or after the halt of trading of a specific security where trading does not resume prior to the close of the exchange or market on which the security is principally traded. Events that occur after foreign markets close (such as developments in foreign markets and significant movements in the U.S. markets) and prior to the determination of the fund’s net asset value may be deemed to have a material effect on the value of securities traded in foreign markets. Accordingly, the fund’s foreign equity securities may often be valued at fair value. The adviser generally relies on third-party
Notes to Financial Statements - continued
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 significant 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, 2023 in valuing the fund's assets and liabilities:
| Financial Instruments | Level 1 | Level 2 | Level 3 | Total |
| Equity Securities: | | | | |
| United States | $27,189,521 | $— | $— | $27,189,521 |
| France | 5,530,411 | — | — | 5,530,411 |
| Switzerland | 4,862,246 | — | — | 4,862,246 |
| United Kingdom | 4,536,148 | — | — | 4,536,148 |
| Canada | 1,848,672 | — | — | 1,848,672 |
| Germany | 1,601,659 | — | — | 1,601,659 |
| Japan | 1,410,749 | — | — | 1,410,749 |
| Netherlands | 1,342,857 | — | — | 1,342,857 |
| Spain | 876,759 | — | — | 876,759 |
| Other Countries | 1,998,175 | 622,370 | — | 2,620,545 |
| Mutual Funds | 1,736 | — | — | 1,736 |
| Total | $51,198,933 | $622,370 | $— | $51,821,303 |
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
Notes to Financial Statements - continued
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, 2023, there were no securities on loan or collateral outstanding.
Indemnifications — Under the fund's organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the fund. Additionally, in the normal course of business, the fund enters into agreements with service providers that may contain indemnification clauses. The fund's maximum exposure under these agreements is unknown as this would involve future claims that may be made against the fund that have not yet occurred.
Investment Transactions and Income — Interest income is recorded on the accrual basis. Dividends received in cash are recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded when the fund is informed of the dividend if such information is obtained subsequent to the ex-dividend date. Dividend and interest payments received in additional securities are recorded on the ex-dividend or ex-interest date in an amount equal to the value of the security on such date.
The fund may receive proceeds from litigation settlements. Any proceeds received from litigation involving portfolio holdings are reflected in the Statement of Operations in realized gain/loss if the security has been disposed of by the fund or in unrealized gain/loss if the security is still held by the fund. Any other proceeds from litigation not related to portfolio holdings are reflected as other income in the Statement of Operations.
Investment transactions are recorded on the trade date. In determining the net gain or loss on securities sold, the cost of securities is determined on the identified cost basis.
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 the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income, expense, gain or loss in different periods for financial statement and tax purposes will reverse at some time in the future.
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
12/31/23 | Year ended
12/31/22 |
| Ordinary income (including any short-term capital gains) | $369,097 | $383,057 |
| Long-term capital gains | 2,203,257 | 5,246,061 |
| Total distributions | $2,572,354 | $5,629,118 |
The federal tax cost and the tax basis components of distributable earnings were as follows:
| As of 12/31/23 | |
| Cost of investments | $26,532,479 |
| Gross appreciation | 26,568,419 |
| Gross depreciation | (1,279,595) |
| Net unrealized appreciation (depreciation) | $25,288,824 |
| Undistributed ordinary income | 498,199 |
| Undistributed long-term capital gain | 2,858,143 |
| Other temporary differences | 5,332 |
| Total distributable earnings (loss) | $28,650,498 |
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:
| | Year
ended
12/31/23 | | Year
ended
12/31/22 |
| Initial Class | $2,088,563 | | $4,432,765 |
| Service Class | 483,791 | | 1,196,353 |
| Total | $2,572,354 | | $5,629,118 |
(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. MFS has also agreed in writing to waive at least 0.01% of its management fee as part of this agreement. The agreement to waive at least 0.01% of the management fee will continue until modified by the fund's Board of Trustees, but such agreement will continue at least until April 30, 2025. For the year ended December 31, 2023, this management fee reduction amounted to $6,525, which is included in the reduction of total expenses in the Statement of Operations. The management fee incurred for the year ended December 31, 2023 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, certain tax reclaim recovery expenses (including contingency fees and closing agreement expenses), 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, 2025. For the year ended December 31, 2023, this reduction amounted to $120,206, 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 Rule 12b-1 under the Investment Company Act of 1940.
The fund’s distribution plan provides that the fund will pay MFD distribution and/or service fees equal to 0.25% per annum of its average daily net assets attributable to Service Class shares as partial consideration for services performed and expenses incurred by MFD and financial intermediaries (including participating insurance companies that invest in the fund to fund variable annuity and variable life insurance contracts, sponsors of qualified retirement and pension plans that invest in the fund, and affiliates of these participating insurance companies and plan sponsors) in connection with the sale and distribution of the Service Class shares as well as shareholder servicing and account maintenance activities. MFD may subsequently pay all, or a portion, of the distribution and/or service fees to financial intermediaries. The distribution and/or service fees are computed daily and paid monthly.
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, 2023, the fee was $1,539, which equated to 0.0030% annually of the fund's average daily net assets. MFSC also receives reimbursement from the fund for out-of-pocket expenses paid by MFSC on behalf of the fund. For the year ended December 31, 2023, these costs amounted to $302.
Notes to Financial Statements - continued
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 is computed daily and paid monthly. The administrative services fee incurred for the year ended December 31, 2023 was equivalent to an annual effective rate of 0.0347% 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. Independent Trustees’ compensation is accrued daily and paid subsequent to each Trustee Board meeting. The fund does not pay compensation directly to Trustees or officers of the fund who are also officers of the investment adviser, all of whom receive remuneration from MFS for their services to the fund. Certain officers and Trustees of the fund are officers or directors of MFS, MFD, and MFSC.
Other — 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 but does incur investment and operating costs.
During the year ended December 31, 2023, pursuant to a policy adopted by the Board of Trustees and designed to comply with Rule 17a-7 under the Investment Company Act of 1940 (the “Act”) and relevant guidance, the fund engaged in purchase and sale transactions with funds and accounts for which MFS serves as investment adviser or sub-adviser (“cross-trades”) which amounted to $66,261 and $23,736, respectively. The sales transactions resulted in net realized gains (losses) of $13,708.
(4) Portfolio Securities
For the year ended December 31, 2023, purchases and sales of investments, other than short-term obligations, aggregated $4,617,571 and $8,153,332, 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
12/31/23 | | Year ended
12/31/22 |
| | Shares | Amount | | Shares | Amount |
| Shares sold | | | | | |
| Initial Class | 193,835 | $4,012,208 | | 212,890 | $4,784,619 |
| Service Class | 73,640 | 1,532,889 | | 80,213 | 1,744,781 |
| | 267,475 | $5,545,097 | | 293,103 | $6,529,400 |
Shares issued to shareholders
in reinvestment of distributions | | | | | |
| Initial Class | 103,805 | $2,088,563 | | 221,860 | $4,432,765 |
| Service Class | 24,262 | 483,791 | | 60,452 | 1,196,353 |
| | 128,067 | $2,572,354 | | 282,312 | $5,629,118 |
| Shares reacquired | | | | | |
| Initial Class | (338,228) | $(7,062,214) | | (356,010) | $(7,569,275) |
| Service Class | (110,591) | (2,272,757) | | (211,201) | (4,340,038) |
| | (448,819) | $(9,334,971) | | (567,211) | $(11,909,313) |
| Net change | | | | | |
| Initial Class | (40,588) | $(961,443) | | 78,740 | $1,648,109 |
| Service Class | (12,689) | (256,077) | | (70,536) | (1,398,904) |
| | (53,277) | $(1,217,520) | | 8,204 | $249,205 |
(6) Line of Credit
The fund and certain other funds managed by MFS participate in a $1.45 billion unsecured committed line of credit of which $1.2 billion is reserved for use by the fund and certain other MFS U.S. funds. The line of credit is provided by a syndicate of banks under a credit agreement. Borrowings may be made for temporary financing needs. Interest is charged to each fund, based on its borrowings, generally at a rate equal to the highest of 1) Daily Simple SOFR (Secured Overnight Financing Rate) plus 0.10%, 2) the Federal Funds Effective Rate, or 3) the Overnight Bank Funding Rate, each plus an agreed upon spread. A commitment fee, based on
Notes to Financial Statements - continued
the average daily unused portion of the committed line of credit, is allocated among the participating funds. The line of credit expires on March 14, 2024 unless extended or renewed. In addition, the fund and other funds managed by MFS have established unsecured uncommitted borrowing arrangements with certain banks for temporary financing needs. Interest is charged to each fund, based on its borrowings, at rates equal to customary reference rates plus an agreed upon spread. For the year ended December 31, 2023, the fund’s commitment fee and interest expense were $276 and $0, respectively, and are included in “Miscellaneous” expense in the Statement of Operations.
(7) Investments in Affiliated Issuers
An affiliated issuer may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. For the purposes of this report, the following were affiliated issuers:
| Affiliated Issuers | Beginning
Value | Purchases | Sales
Proceeds | Realized
Gain
(Loss) | Change in
Unrealized
Appreciation or
Depreciation | Ending
Value |
| MFS Institutional Money Market Portfolio | $182,641 | $7,552,923 | $7,733,993 | $219 | $(54) | $1,736 |
| Affiliated Issuers | Dividend
Income | Capital Gain
Distributions |
| MFS Institutional Money Market Portfolio | $16,827 | $— |
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of MFS Variable Insurance Trust and the Shareholders of MFS Global Equity Series:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities of MFS Global Equity Series (the “Fund”), including the portfolio of investments, as of December 31, 2023, 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, 2023, 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, 2023, by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
February 14, 2024
We have served as the auditor of one or more of the MFS investment companies since 1924.
Trustees and Officers — Identification and Background
The Trustees and Officers of the Trust, as of February 1, 2024, 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 TRUSTEE | | | | | | | | | | |
Michael W. Roberge (k)
(age 57) | | Trustee | | January 2021 | | 136 | | Massachusetts Financial Services Company, Chairman (since January 2021); Chief Executive Officer (since January 2017); Director; Chairman of the Board (since January 2022) | | N/A |
| INDEPENDENT TRUSTEES | | | | | | | | | | |
John P. Kavanaugh
(age 69) | | Trustee and Chair of Trustees | | January 2009 | | 136 | | Private investor | | N/A |
Steven E. Buller
(age 72) | | Trustee | | February 2014 | | 136 | | Private investor | | N/A |
John A. Caroselli
(age 69) | | Trustee | | March 2017 | | 136 | | Private investor; JC Global Advisors, LLC (management consulting), President (since 2015) | | N/A |
Maureen R. Goldfarb
(age 68) | | Trustee | | January 2009 | | 136 | | Private investor | | N/A |
Peter D. Jones
(age 68) | | Trustee | | January 2019 | | 136 | | Private investor | | N/A |
James W. Kilman, Jr.
(age 62) | | Trustee | | January 2019 | | 136 | | Burford Capital Limited (finance and investment management), Senior Advisor (since May 3, 2021), Chief Financial Officer (2019 - May 2, 2021); KielStrand Capital LLC (family office), Chief Executive Officer (since 2016) | | Alpha-En Corporation, Director (2016-2019) |
Clarence Otis, Jr.
(age 67) | | Trustee | | March 2017 | | 136 | | Private investor | | VF Corporation, Director; Verizon Communications, Inc., Director; The Travelers Companies, Director |
Maryanne L. Roepke
(age 67) | | Trustee | | May 2014 | | 136 | | Private investor | | N/A |
Laurie J. Thomsen
(age 66) | | Trustee | | March 2005 | | 136 | | Private investor | | The Travelers Companies, Director; Dycom Industries, Inc., Director |
| 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 50) | | Assistant Secretary and Assistant Clerk | | July 2005 | | 136 | | Massachusetts Financial Services Company, Senior Vice President and Senior Managing Counsel |
Kino Clark (k)
(age 55) | | Assistant Treasurer | | January 2012 | | 136 | | Massachusetts Financial Services Company, Vice President |
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 |
John W. Clark, Jr. (k)
(age 56) | | Assistant Treasurer | | April 2017 | | 136 | | Massachusetts Financial Services Company, Vice President |
David L. DiLorenzo (k)
(age 55) | | President | | July 2005 | | 136 | | Massachusetts Financial Services Company, Senior Vice President |
Heidi W. Hardin (k)
(age 56) | | Secretary and Clerk | | April 2017 | | 136 | | Massachusetts Financial Services Company, Executive Vice President and General Counsel |
Brian E. Langenfeld (k)
(age 50) | | Assistant Secretary and Assistant Clerk | | June 2006 | | 136 | | Massachusetts Financial Services Company, Vice President and Managing Counsel |
Rosa E. Licea-Mailloux (k)
(age 47) | | Chief Compliance Officer | | March 2022 | | 136 | | Massachusetts Financial Services Company, Vice President (since 2018); Director of Corporate Compliance (2018-2021), Senior Director Compliance (2021-2022), Senior Managing Director of North American Compliance & Chief Compliance Officer (since March 2022) |
Amanda S. Mooradian (k)
(age 44) | | Assistant Secretary and Assistant Clerk | | September 2018 | | 136 | | Massachusetts Financial Services Company, Assistant Vice President and Senior Counsel |
Susan A. Pereira (k)
(age 53) | | Assistant Secretary and Assistant Clerk | | July 2005 | | 136 | | Massachusetts Financial Services Company, Vice President and Managing Counsel |
Kasey L. Phillips (k)
(age 53) | | Assistant Treasurer | | September 2012 | | 136 | | Massachusetts Financial Services Company, Vice President |
Matthew A. Stowe (k)
(age 49) | | Assistant Secretary and Assistant Clerk | | October 2014 | | 136 | | Massachusetts Financial Services Company, Vice President and Senior Managing Counsel |
William B. Wilson (k)
(age 41) | | Assistant Secretary and Assistant Clerk | | October 2022 | | 136 | | Massachusetts Financial Services Company, Assistant Vice President and Senior Counsel |
James O. Yost (k)
(age 63) | | Treasurer | | September 1990 | | 136 | | 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. 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 (other than Messrs. Jones, Kilman and Roberge) 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. Mr. Roberge became a Trustee of the Funds on January 1, 2021 and Messrs. Jones and Kilman became Trustees of the Funds on January 1, 2019. 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, Caroselli, Jones and Otis 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.
Trustees and Officers - continued
The Statement of Additional Information for a Fund includes further information about the Trustees and is available without charge upon request by calling 1-800-225-2606.
| Investment Adviser | Custodian |
Massachusetts Financial Services Company
111 Huntington Avenue
Boston, MA 02199-7618 | State Street Bank and Trust Company
1 Congress Street, Suite 1
Boston, MA 02114-2016 |
| Distributor | Independent Registered Public Accounting Firm |
MFS Fund Distributors, Inc.
111 Huntington Avenue
Boston, MA 02199-7618 | Deloitte & Touche LLP
200 Berkeley Street
Boston, MA 02116 |
| Portfolio Manager(s) | |
Ryan McAllister
Roger Morley
| |
Board Review of Investment Advisory Agreement
MFS Global Equity Series
The Investment Company Act of 1940 requires that both the full Board of Trustees and a majority of the non-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, 2023 (“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 an independent consultant who was retained by and reported 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, 2022 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 as well as all other funds in the same investment classification/category (the “Broadridge expense group and universe”), (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 five-year period ended December 31, 2022, 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 five-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 3rd quintile for the one-year period and the 4th quintile for the three-year period ended December 31, 2022 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.
Board Review of Investment Advisory Agreement - continued
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.
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 the Broadridge expense group 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 was lower than the Broadridge expense group median and the Fund’s total expense ratio was higher 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 cash in-flows and out-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 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.
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 any 12b-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 and sub-custodians. The Trustees concluded that the various non-advisory services provided by MFS and its affiliates on behalf of the Fund were satisfactory.
The Trustees considered so-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 MFS discontinued its historic practice of obtaining investment research from portfolio brokerage commissions paid by certain MFS Funds effective January 2018, and directly pays or voluntarily reimburses a Fund, if applicable, for the costs of external research acquired through the use of the Fund’s portfolio brokerage commissions.
Board Review of Investment Advisory Agreement - continued
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 additional one-year period, commencing August 1, 2023.
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 visiting mfs.com/proxyvoting, or by visiting the SEC’s Web site at http://www.sec.gov.
Information regarding how the fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available by August 31 of each year without charge by visiting mfs.com/proxyvoting, or by visiting the SEC’s Web site at http://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 as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s Web site at http://www.sec.gov. A shareholder can obtain the portfolio holdings report for the first and third quarters of the fund's fiscal year at mfs.com/vit1 by choosing the fund's name and then scrolling to the “Resources” section and clicking on the “Prospectus and Reports” tab.
FURTHER INFORMATION
From time to time, MFS may post important information about the fund or the MFS Funds on the MFS Web site (mfs.com). This information is available at https://www.mfs.com/announcements or at mfs.com/vit1 by choosing the fund's name and then scrolling to the “Resources” section and clicking on the “Announcements” tab, if any.
Information About Fund Contracts and Legal Claims
The fund has entered into contractual arrangements with an investment adviser, administrator, distributor, shareholder servicing agent, 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 $2,424,000 as capital gain dividends paid during the fiscal year.
For corporate shareholders, 75.92% of the ordinary income dividends paid during the fiscal year qualify for the corporate dividends received deduction.
Income derived from foreign sources was $664,021. The fund intends to pass through foreign tax credits of $65,392 for the fiscal year.
| 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 are no longer our customer, we continue to share your information as described in this notice. |
| How? | All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MFS chooses to share; and whether you can limit this sharing. |
Reasons we can share your
personal information | Does MFS share? | Can you limit
this sharing? |
For our everyday business purposes –
such as to process your transactions, maintain your
account(s), respond to court orders and legal
investigations, or report to credit bureaus | Yes | No |
For our marketing purposes –
to offer our products and services to you | No | We don't share |
For joint marketing with other
financial companies | No | We don't share |
For our affiliates' everyday business purposes –
information about your transactions and experiences | No | We don't share |
For our affiliates' everyday business purposes –
information about your creditworthiness | No | We don't share |
| For nonaffiliates to market to you | No | We don't share |
| Questions? | Call 800-225-2606 or go to mfs.com. |
| 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. |
Annual Report
December 31, 2023
MFS® Variable Insurance Trust
| 1 |
| 2 |
| 4 |
| 6 |
| 7 |
| 10 |
| 11 |
| 12 |
| 13 |
| 14 |
| 19 |
| 20 |
| 23 |
| 26 |
| 26 |
| 26 |
| 26 |
| 26 |
| 27 |
The report is prepared for the general information of shareholders. It is authorized for distribution to prospective investors only when preceded or accompanied by a current prospectus.
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
Portfolio structure
Top ten holdings
| Microsoft Corp. | 14.5% |
| Amazon.com, Inc. | 6.6% |
| Alphabet, Inc., “A” | 6.3% |
| NVIDIA Corp. | 6.0% |
| Apple, Inc. | 5.9% |
| Meta Platforms, Inc., “A” | 4.6% |
| Mastercard, Inc., “A” | 3.9% |
| Visa, Inc., “A” | 3.4% |
| Eli Lilly & Co. | 2.5% |
| Boston Scientific Corp. | 2.0% |
GICS equity sectors (g)
| Information Technology | 39.8% |
| Communication Services | 13.8% |
| Health Care | 10.8% |
| Financials | 10.4% |
| Consumer Discretionary | 10.4% |
| Industrials | 6.8% |
| Materials | 5.3% |
| Real Estate | 1.2% |
| Consumer Staples | 0.8% |
| Energy | 0.2% |
| (g) | The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and S&P Global Market Intelligence Inc. (“S&P Global Market Intelligence”). GICS is a service mark of MSCI and S&P Global Market Intelligence and has been licensed for use by MFS. MFS has applied its own internal sector/industry classification methodology for equity securities and non-equity securities that are unclassified by GICS. |
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, 2023.
The portfolio is actively managed and current holdings may be different.
Management Review
Summary of Results
For the twelve months ended December 31, 2023, Initial Class shares of the MFS Growth Series (fund) provided a total return of 35.86%, while Service Class shares of the fund provided a total return of 35.51%. These compare with a return of 42.68% over the same period for the fund’s benchmark, the Russell 1000® Growth Index.
Market Environment
During the reporting period, central banks around the world had to combat the strongest inflationary pressures in four decades, fueled by the global fiscal response to the pandemic, disrupted supply chains and the dislocations to energy markets stemming from the war in Ukraine. Interest rates rose substantially, but the effects of a tighter monetary policy may not have been fully experienced yet, given that monetary policy works with long and variable lags. Strains resulting from the abrupt tightening of monetary policy began to affect some parts of the economy, most acutely among small and regional US banks, which suffered from deposit flight as depositors sought higher yields on their savings. Additionally, activity in the US housing sector has slowed as a result of higher mortgage rates. China’s abandonment of its Zero-COVID policy ushered in a brief uptick in economic activity in the world’s second-largest economy in early 2023, although its momentum soon stalled as the focus turned to the country’s highly indebted property development sector. In developed markets, consumer demand for services remained stronger than the demand for goods.
Early on, policymakers found themselves in the difficult position of trying to restrain inflation without tipping economies into recession. Despite the challenging macroeconomic and geopolitical environment, central banks focused on controlling price pressures while also confronting increasing financial stability concerns. Central banks had to juggle achieving their inflation mandates while using macroprudential tools (financial policies aimed at safeguarding the stability of the financial system) to keep banking systems liquid, a potentially difficult balancing act, and one that suggested that we may be nearing a peak in policy rates. As inflationary pressures eased toward the end of the period, financial conditions loosened in anticipation of easier monetary policy, boosting the market’s appetite for risk. Rapid advancements in artificial intelligence were a focus for investors.
Normalizing supply chains, low levels of unemployment across developed markets and signs that inflation levels have peaked were supportive factors for the macroeconomic backdrop.
Detractors from Performance
The fund’s overweight position and, to a lesser extent, stock selection in the financials sector held back performance relative to the Russell 1000® Growth Index. There were no individual stocks within this sector, either in the fund or in the benchmark, that were among the fund's top relative detractors over the reporting period.
An underweight position in the information technology sector also weighed on the fund’s relative performance. Within this sector, not owning shares of broadband communications and networking services company Broadcom weakened relative results. The stock price of Broadcom appreciated in reaction to better-than-expected earnings results, supported by strength in AI-related server demand and an increased earnings outlook.
Elsewhere, not owning shares of electric vehicle manufacturer Tesla, and the fund’s overweight positions in skin care, makeup, fragrance and hair care products manufacturer Estée Lauder Companies, life sciences supply company Thermo Fisher Scientific, healthcare equipment manufacturer Danaher(h) and pharmaceutical and medical products maker Abbott Laboratories(h), detracted from relative performance. The stock price of Estée Lauder Companies declined as the firm lowered its sales outlook due to a slower-than-expected demand recovery from Chinese consumers. The beauty products maker also experienced a significant reduction in the company’s travel retail inventories which notably undercut gains in its North American markets. The fund’s holdings of atmospheric gases manufacturer Air Products & Chemicals(b), building controls and systems supplier Johnson Controls International(b)(h) and medical technology company Becton, Dickinson and Company(b) also hindered relative returns.
The fund’s cash and/or cash equivalents position during the period was another detractor from relative performance. Under normal market conditions, the fund strives to be fully invested and generally holds cash to buy new holdings and to provide liquidity. In a period when equity markets rose, as measured by the fund’s benchmark, holding cash held back performance versus the benchmark, which has no cash position.
Contributors to Performance
The fund’s underweight position in the consumer staples sector contributed to relative performance. Within this sector, not holding shares of beverages, food and snacks producer PepsiCo, beverage maker Coca-Cola, consumer goods company Procter & Gamble Company and merchandise store operator Dollar General benefited relative performance.
Stock selection and an overweight position in the industrials sector also benefited the fund’s relative returns. Within this sector, not holding shares of agricultural equipment manufacturer Deere and defense contractor Lockheed Martin aided relative results.
Management Review - continued
Elsewhere, not owning shares of pharmaceutical company AbbVie, athletic shoes and apparel manufacturer NIKE and building materials and home improvements retailer Home Depot supported relative returns. The stock price of NIKE declined following management's lower-than-expected sales and margin growth outlook, attributed to wholesale headwinds and elevated Selling, General & Administrative costs. Additionally, the fund's underweight position in health insurance and Medicare/Medicaid provider UnitedHealth Group also benefited relative performance. The share price of UnitedHealth Group declined as the company posted subdued medical loss ratio figures and higher than anticipated investment costs in its Optum Insights segment.
Respectfully,
Portfolio Manager(s)
Eric Fischman and Bradford Mak
Note to Shareholders: Effective April 3, 2023, Paul Gordon is no longer a Portfolio Manager of the fund.
| (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.
Performance Summary Through 12/31/23
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 shares, 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 shareholder would pay on fund distributions or the redemption of fund shares. 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
Total Returns through 12/31/23
Average annual total returns
| Share Class | Class Inception Date | 1-yr | 5-yr | 10-yr |
| Initial Class | 7/24/1995 | 35.86% | 15.89% | 12.97% |
| Service Class | 5/01/2000 | 35.51% | 15.59% | 12.69% |
Comparative benchmark(s)
| Russell 1000® Growth Index (f) | 42.68% | 19.50% | 14.86% |
| (f) | Source: FactSet Research Systems Inc. |
Benchmark Definition(s)
Russell 1000® Growth Index(h) – constructed to provide a comprehensive barometer for growth securities in the large-cap segment of the U.S. equity universe. Companies in this index generally have higher price-to-book ratios and higher forecasted growth values.
It is not possible to invest directly in an index.
| (h) | Frank Russell Company (“Russell”) is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes and/or Russell ratings or underlying data and no party may rely on any Russell Indexes and/or Russell ratings and/or underlying data contained in this document. No further distribution of Russell Data is permitted without Russell's express written consent. Russell does not promote, sponsor, or endorse the content of this document. |
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 Summary – continued
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.
Expense Table
Fund expenses borne by the shareholders during the period,
July 1, 2023 through December 31, 2023
As a shareholder 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, 2023 through December 31, 2023.
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
7/01/23 | Ending
Account Value
12/31/23 | Expenses
Paid During
Period (p)
7/01/23-12/31/23 |
| Initial Class | Actual | 0.72% | $1,000.00 | $1,095.57 | $3.80 |
| Hypothetical (h) | 0.72% | $1,000.00 | $1,021.58 | $3.67 |
| Service Class | Actual | 0.97% | $1,000.00 | $1,094.14 | $5.12 |
| Hypothetical (h) | 0.97% | $1,000.00 | $1,020.32 | $4.94 |
| (h) | 5% class return per year before expenses. |
| (p) | “Expenses Paid During Period” are equal to each class's annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). |
Portfolio of Investments − 12/31/23
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – 99.5% |
| Aerospace & Defense – 0.7% | |
| Howmet Aerospace, Inc. | | 237,745 | $ 12,866,759 |
| Apparel Manufacturers – 1.0% | |
| LVMH Moet Hennessy Louis Vuitton SE | | 23,177 | $ 18,770,075 |
| Brokerage & Asset Managers – 0.6% | |
| CME Group, Inc. | | 44,618 | $ 9,396,551 |
| KKR & Co., Inc. | | 22,174 | 1,837,116 |
| | | | | $11,233,667 |
| Business Services – 4.7% | |
| CoStar Group, Inc. (a) | | 255,304 | $ 22,311,016 |
| MSCI, Inc. | | 51,221 | 28,973,159 |
| TransUnion | | 72,656 | 4,992,194 |
| Verisk Analytics, Inc., “A” | | 130,410 | 31,149,733 |
| | | | | $87,426,102 |
| Computer Software – 20.1% | |
| Adobe Systems, Inc. (a) | | 21,664 | $ 12,924,743 |
| Cadence Design Systems, Inc. (a) | | 125,313 | 34,131,502 |
| Datadog, Inc., “A” (a) | | 31,321 | 3,801,743 |
| Intuit, Inc. | | 39,079 | 24,425,547 |
| Microsoft Corp. | | 717,008 | 269,623,688 |
| Synopsys, Inc. (a) | | 56,065 | 28,868,429 |
| | | | | $373,775,652 |
| Computer Software - Systems – 7.7% | |
| Apple, Inc. | | 572,384 | $ 110,201,092 |
| ServiceNow, Inc. (a) | | 47,139 | 33,303,232 |
| | | | | $143,504,324 |
| Construction – 2.9% | |
| Martin Marietta Materials, Inc. | | 15,297 | $ 7,631,826 |
| Sherwin-Williams Co. | | 35,597 | 11,102,705 |
| Vulcan Materials Co. | | 152,115 | 34,531,626 |
| | | | | $53,266,157 |
| Consumer Products – 0.8% | |
| Colgate-Palmolive Co. | | 65,205 | $ 5,197,491 |
| Estée Lauder Cos., Inc., “A” | | 60,910 | 8,908,087 |
| | | | | $14,105,578 |
| Consumer Services – 0.9% | |
| Uber Technologies, Inc. (a) | | 263,702 | $ 16,236,132 |
| Electrical Equipment – 2.7% | |
| AMETEK, Inc. | | 140,225 | $ 23,121,700 |
| Amphenol Corp., “A” | | 169,785 | 16,830,787 |
| Rockwell Automation, Inc. | | 32,698 | 10,152,075 |
| | | | | $50,104,562 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Electronics – 10.2% | |
| Applied Materials, Inc. | | 49,589 | $ 8,036,889 |
| ASML Holding N.V., ADR | | 38,180 | 28,899,206 |
| KLA Corp. | | 25,253 | 14,679,569 |
| Lam Research Corp. | | 20,473 | 16,035,682 |
| Marvell Technology, Inc. | | 71,420 | 4,307,340 |
| NVIDIA Corp. | | 223,664 | 110,762,886 |
| Taiwan Semiconductor Manufacturing Co. Ltd., ADR | | 64,229 | 6,679,816 |
| | | | | $189,401,388 |
| Energy - Independent – 0.2% | |
| Hess Corp. | | 24,303 | $ 3,503,520 |
| Entertainment – 0.6% | |
| Spotify Technology S.A. (a) | | 65,002 | $ 12,214,526 |
| Gaming & Lodging – 1.4% | |
| Hilton Worldwide Holdings, Inc. | | 118,065 | $ 21,498,456 |
| Las Vegas Sands Corp. | | 81,742 | 4,022,524 |
| | | | | $25,520,980 |
| Health Maintenance Organizations – 0.2% | |
| UnitedHealth Group, Inc. | | 8,884 | $ 4,677,160 |
| Insurance – 0.8% | |
| Aon PLC | | 13,356 | $ 3,886,863 |
| Arthur J. Gallagher & Co. | | 51,304 | 11,537,244 |
| | | | | $15,424,107 |
| Internet – 13.5% | |
| Alphabet, Inc., “A” (a) | | 838,209 | $ 117,089,415 |
| Alphabet, Inc., “C” (a) | | 226,597 | 31,934,315 |
| Gartner, Inc. (a) | | 35,622 | 16,069,441 |
| Meta Platforms, Inc., “A” (a) | | 242,715 | 85,911,401 |
| | | | | $251,004,572 |
| Leisure & Toys – 0.5% | |
| Take-Two Interactive Software, Inc. (a) | | 59,339 | $ 9,550,612 |
| Machinery & Tools – 1.5% | |
| Eaton Corp. PLC | | 112,528 | $ 27,098,993 |
| Medical & Health Technology & Services – 0.6% | |
| ICON PLC (a) | | 23,246 | $ 6,580,245 |
| Veeva Systems, Inc. (a) | | 26,840 | 5,167,237 |
| | | | | $11,747,482 |
| Medical Equipment – 4.2% | |
| Agilent Technologies, Inc. | | 34,505 | $ 4,797,230 |
| Becton, Dickinson and Co. | | 34,036 | 8,298,998 |
| Boston Scientific Corp. (a) | | 640,585 | 37,032,219 |
| STERIS PLC | | 32,135 | 7,064,880 |
| Thermo Fisher Scientific, Inc. | | 40,935 | 21,727,888 |
| | | | | $78,921,215 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Other Banks & Diversified Financials – 7.4% | |
| Mastercard, Inc., “A” | | 172,139 | $ 73,419,005 |
| Moody's Corp. | | 4,701 | 1,836,023 |
| Visa, Inc., “A” | | 242,307 | 63,084,627 |
| | | | | $138,339,655 |
| Pharmaceuticals – 5.7% | |
| Argenx SE, ADR (a) | | 10,112 | $ 3,846,908 |
| Eli Lilly & Co. | | 80,205 | 46,753,098 |
| Regeneron Pharmaceuticals, Inc. (a) | | 7,740 | 6,797,965 |
| Vertex Pharmaceuticals, Inc. (a) | | 85,938 | 34,967,313 |
| Zoetis, Inc. | | 66,933 | 13,210,566 |
| | | | | $105,575,850 |
| Railroad & Shipping – 0.1% | |
| Canadian Pacific Kansas City Ltd. | | 20,724 | $ 1,638,439 |
| Restaurants – 0.2% | |
| Chipotle Mexican Grill, Inc., “A” (a) | | 1,808 | $ 4,134,824 |
| Specialty Chemicals – 2.5% | |
| Air Products & Chemicals, Inc. | | 44,072 | $ 12,066,914 |
| Linde PLC | | 82,274 | 33,790,754 |
| | | | | $45,857,668 |
| Specialty Stores – 7.8% | |
| Amazon.com, Inc. (a) | | 801,736 | $ 121,815,768 |
| Lululemon Athletica, Inc. (a) | | 17,167 | 8,777,315 |
| O'Reilly Automotive, Inc. (a) | | 14,413 | 13,693,503 |
| | | | | $144,286,586 |
| Total Common Stocks (Identified Cost, $718,374,796) | | $1,850,186,585 |
| Investment Companies (h) – 0.8% |
| Money Market Funds – 0.8% | |
| MFS Institutional Money Market Portfolio, 5.42% (v) (Identified Cost, $13,842,058) | | | 13,843,116 | $ 13,845,884 |
| Other Assets, Less Liabilities – (0.3)% | | (5,247,422) |
| Net Assets – 100.0% | $1,858,785,047 |
| (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 $13,845,884 and $1,850,186,585, respectively. | | | |
| (v) | Affiliated issuer that is available only to investment companies managed by MFS. The rate quoted for the MFS Institutional Money Market Portfolio is the annualized seven-day yield of the fund at period end. | | | |
| The following abbreviations are used in this report and are defined: |
| ADR | American Depositary Receipt |
See Notes to Financial Statements
| 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 12/31/23Assets | |
| Investments in unaffiliated issuers, at value (identified cost, $718,374,796) | $1,850,186,585 |
| Investments in affiliated issuers, at value (identified cost, $13,842,058) | 13,845,884 |
| Receivables for | |
| Fund shares sold | 310,549 |
| Dividends | 442,893 |
| Other assets | 6,516 |
| Total assets | $1,864,792,427 |
| Liabilities | |
| Payables for | |
| Fund shares reacquired | $5,666,106 |
| Payable to affiliates | |
| Investment adviser | 141,261 |
| Administrative services fee | 2,590 |
| Shareholder servicing costs | 433 |
| Distribution and/or service fees | 13,264 |
| Payable for independent Trustees' compensation | 13 |
| Accrued expenses and other liabilities | 183,713 |
| Total liabilities | $6,007,380 |
| Net assets | $1,858,785,047 |
| Net assets consist of | |
| Paid-in capital | $567,062,778 |
| Total distributable earnings (loss) | 1,291,722,269 |
| Net assets | $1,858,785,047 |
| Shares of beneficial interest outstanding | 31,495,227 |
| | Net assets | Shares
outstanding | Net asset value
per share |
| Initial Class | $1,375,608,948 | 22,817,938 | $60.29 |
| Service Class | 483,176,099 | 8,677,289 | 55.68 |
See Notes to Financial Statements
| 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 12/31/23 | |
| Net investment income (loss) | |
| Income | |
| Dividends | $10,803,652 |
| Dividends from affiliated issuers | 1,338,435 |
| Other | 25,743 |
| Foreign taxes withheld | (104,231) |
| Total investment income | $12,063,599 |
| Expenses | |
| Management fee | $12,165,666 |
| Distribution and/or service fees | 1,086,477 |
| Shareholder servicing costs | 12,349 |
| Administrative services fee | 257,701 |
| Independent Trustees' compensation | 30,289 |
| Custodian fee | 73,112 |
| Shareholder communications | 46,689 |
| Audit and tax fees | 72,407 |
| Legal fees | 9,170 |
| Miscellaneous | 43,017 |
| Total expenses | $13,796,877 |
| Reduction of expenses by investment adviser | (219,514) |
| Net expenses | $13,577,363 |
| Net investment income (loss) | $(1,513,764) |
| Realized and unrealized gain (loss) | |
| Realized gain (loss) (identified cost basis) | |
| Unaffiliated issuers | $161,606,045 |
| Affiliated issuers | (4,127) |
| Foreign currency | 663 |
| Net realized gain (loss) | $161,602,581 |
| Change in unrealized appreciation or depreciation | |
| Unaffiliated issuers | $361,832,969 |
| Affiliated issuers | (10,198) |
| Translation of assets and liabilities in foreign currencies | 180 |
| Net unrealized gain (loss) | $361,822,951 |
| Net realized and unrealized gain (loss) | $523,425,532 |
| Change in net assets from operations | $521,911,768 |
See Notes to Financial Statements
| 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 |
| | 12/31/23 | 12/31/22 |
| Change in net assets | | |
| From operations | | |
| Net investment income (loss) | $(1,513,764) | $(2,629,918) |
| Net realized gain (loss) | 161,602,581 | 135,463,776 |
| Net unrealized gain (loss) | 361,822,951 | (872,241,975) |
| Change in net assets from operations | $521,911,768 | $(739,408,117) |
| Total distributions to shareholders | $(135,763,494) | $(206,493,057) |
| Change in net assets from fund share transactions | $(71,275,107) | $109,659,888 |
| Total change in net assets | $314,873,167 | $(836,241,286) |
| Net assets | | |
| At beginning of period | 1,543,911,880 | 2,380,153,166 |
| At end of period | $1,858,785,047 | $1,543,911,880 |
See Notes to Financial Statements
| 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 |
| | 12/31/23 | 12/31/22 | 12/31/21 | 12/31/20 | 12/31/19 |
| Net asset value, beginning of period | $48.02 | $79.36 | $73.81 | $59.40 | $47.01 |
| Income (loss) from investment operations | | | | | |
| Net investment income (loss) (d) | $(0.01) | $(0.05) | $(0.25) | $(0.14) | $(0.04) |
| Net realized and unrealized gain (loss) | 16.76 | (24.26) | 17.21 | 18.88 | 17.53 |
| Total from investment operations | $16.75 | $(24.31) | $16.96 | $18.74 | $17.49 |
| Less distributions declared to shareholders | | | | | |
| From net realized gain | $(4.48) | $(7.03) | $(11.41) | $(4.33) | $(5.10) |
| Net asset value, end of period (x) | $60.29 | $48.02 | $79.36 | $73.81 | $59.40 |
| Total return (%) (k)(r)(s)(x) | 35.86 | (31.63) | 23.53 | 31.86 | 38.15 |
Ratios (%) (to average net assets)
and Supplemental data: | | | | | |
| Expenses before expense reductions | 0.74 | 0.74 | 0.72 | 0.74 | 0.74 |
| Expenses after expense reductions | 0.73 | 0.73 | 0.71 | 0.72 | 0.73 |
| Net investment income (loss) | (0.03) | (0.09) | (0.32) | (0.21) | (0.06) |
| Portfolio turnover | 23 | 18 | 12 | 29 | 11 |
| Net assets at end of period (000 omitted) | $1,375,609 | $1,160,108 | $1,805,385 | $1,681,327 | $1,467,280 |
| Service Class | Year ended |
| | 12/31/23 | 12/31/22 | 12/31/21 | 12/31/20 | 12/31/19 |
| Net asset value, beginning of period | $44.74 | $74.74 | $70.23 | $56.82 | $45.26 |
| Income (loss) from investment operations | | | | | |
| Net investment income (loss) (d) | $(0.14) | $(0.18) | $(0.42) | $(0.29) | $(0.17) |
| Net realized and unrealized gain (loss) | 15.56 | (22.79) | 16.34 | 18.03 | 16.83 |
| Total from investment operations | $15.42 | $(22.97) | $15.92 | $17.74 | $16.66 |
| Less distributions declared to shareholders | | | | | |
| From net realized gain | $(4.48) | $(7.03) | $(11.41) | $(4.33) | $(5.10) |
| Net asset value, end of period (x) | $55.68 | $44.74 | $74.74 | $70.23 | $56.82 |
| Total return (%) (k)(r)(s)(x) | 35.51 | (31.80) | 23.24 | 31.54 | 37.78 |
Ratios (%) (to average net assets)
and Supplemental data: | | | | | |
| Expenses before expense reductions | 0.99 | 0.99 | 0.97 | 0.99 | 0.99 |
| Expenses after expense reductions | 0.98 | 0.98 | 0.96 | 0.97 | 0.98 |
| Net investment income (loss) | (0.27) | (0.34) | (0.57) | (0.46) | (0.31) |
| Portfolio turnover | 23 | 18 | 12 | 29 | 11 |
| Net assets at end of period (000 omitted) | $483,176 | $383,804 | $574,768 | $514,102 | $401,008 |
| (d) | Per share data is based on average shares outstanding. |
| (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
Notes to Financial Statements
(1) Business and Organization
MFS Growth Series (the fund) is a diversified series of MFS Variable Insurance Trust (the trust). The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The shareholders of each series of the trust are separate accounts of insurance companies, which offer variable annuity and/or life insurance products, and qualified retirement and pension plans.
The fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services - Investment Companies.
(2) Significant Accounting Policies
General — The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the fund’s Statement of Assets and Liabilities through the date that the financial statements were issued.
Balance Sheet Offsetting — The fund's accounting policy with respect to balance sheet offsetting is that, absent an event of default by the counterparty or a termination of the agreement, the International Swaps and Derivatives Association (ISDA) Master Agreement, or similar agreement, does not result in an offset of reported amounts of financial assets and financial liabilities in the Statement of Assets and Liabilities across transactions between the fund and the applicable counterparty. The fund's right to setoff may be restricted or prohibited by the bankruptcy or insolvency laws of the particular jurisdiction to which a specific master netting agreement counterparty is subject. Balance sheet offsetting disclosures, to the extent applicable to the fund, have been included in the fund’s Significant Accounting Policies note under the captions for each of the fund’s in-scope financial instruments and transactions.
Investment Valuations — Subject to its oversight, the fund's Board of Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments to MFS as the fund's adviser, pursuant to the fund’s valuation policy and procedures which have been adopted by the adviser and approved by the Board. In accordance with Rule 2a-5 under the Investment Company Act of 1940, the Board of Trustees designated the adviser as the “valuation designee” of the fund. If the adviser, as valuation designee, determines that reliable market quotations are not readily available for an investment, the investment is valued at fair value as determined in good faith by the adviser in accordance with the adviser’s fair valuation policy and procedures.
Under the fund's valuation policy and procedures, 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. 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.
Under the fund’s valuation policy and procedures, market quotations are not considered to be readily available for debt instruments, floating rate loans, and many types of derivatives. These investments are generally valued at fair value based on information from third-party pricing services or otherwise determined by the adviser in accordance with the adviser’s fair valuation policy and procedures. 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, spreads and other market data. An investment may also be valued at fair value if the adviser determines that the investment’s value has been materially affected by events occurring after the close of the exchange or market on which the investment is principally traded (such as foreign exchange or market) and prior to the determination of the fund’s net asset value, or after the halt of trading of a specific security where trading does not resume prior to the close of the exchange or market on which the security is principally traded. Events that occur after foreign markets close (such as developments in foreign markets and significant movements in the U.S. markets) and prior to the determination of the fund’s net asset value may be deemed to have a material effect on the value of securities traded in foreign markets. Accordingly, the fund’s foreign equity securities may often be valued at fair value. The adviser generally relies on third-party pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and financial condition of the issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment
Notes to Financial Statements - continued
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 significant 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, 2023 in valuing the fund's assets and liabilities:
| Financial Instruments | Level 1 | Level 2 | Level 3 | Total |
| Equity Securities | $1,850,186,585 | $— | $— | $1,850,186,585 |
| Mutual Funds | 13,845,884 | — | — | 13,845,884 |
| Total | $1,864,032,469 | $— | $— | $1,864,032,469 |
For further information regarding security characteristics, see the Portfolio of Investments.
Foreign Currency Translation — Purchases and sales of foreign investments, income, and expenses are converted into U.S. dollars based upon currency exchange rates prevailing on the respective dates of such transactions or on the reporting date for foreign denominated receivables and payables. Gains and losses attributable to foreign currency exchange rates on sales of securities are recorded for financial statement purposes as net realized gains and losses on investments. Gains and losses attributable to foreign exchange rate movements on receivables, payables, income and expenses are recorded for financial statement purposes as foreign currency transaction gains and losses. That portion of both realized and unrealized gains and losses on investments that results from fluctuations in foreign currency exchange rates is not separately disclosed.
Indemnifications — Under the fund's organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the fund. Additionally, in the normal course of business, the fund enters into agreements with service providers that may contain indemnification clauses. The fund's maximum exposure under these agreements is unknown as this would involve future claims that may be made against the fund that have not yet occurred.
Investment Transactions and Income — Dividends received in cash are recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded when the fund is informed of the dividend if such information is obtained subsequent to the ex-dividend date. Dividend payments received in additional securities are recorded on the ex-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.
Investment transactions are recorded on the trade date. In determining the net gain or loss on securities sold, the cost of securities is determined on the identified cost basis.
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.
Notes to Financial Statements - continued
Distributions to shareholders are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income, expense, gain or loss in different periods for financial statement and tax purposes will reverse at some time in the future.
Book/tax differences primarily relate to net operating losses and wash sale loss deferrals.
The tax character of distributions declared to shareholders for the last two fiscal years is as follows:
| | Year ended
12/31/23 | Year ended
12/31/22 |
| Ordinary income (including any short-term capital gains) | $— | $8,852,271 |
| Long-term capital gains | 135,763,494 | 197,640,786 |
| Total distributions | $135,763,494 | $206,493,057 |
The federal tax cost and the tax basis components of distributable earnings were as follows:
| As of 12/31/23 | |
| Cost of investments | $733,465,997 |
| Gross appreciation | 1,134,825,929 |
| Gross depreciation | (4,259,457) |
| Net unrealized appreciation (depreciation) | $1,130,566,472 |
| Undistributed long-term capital gain | 161,155,412 |
| Other temporary differences | 385 |
| Total distributable earnings (loss) | $1,291,722,269 |
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:
| | Year
ended
12/31/23 | | Year
ended
12/31/22 |
| Initial Class | $99,594,045 | | $153,225,412 |
| Service Class | 36,169,449 | | 53,267,645 |
| Total | $135,763,494 | | $206,493,057 |
(3) Transactions with Affiliates
Investment Adviser — The fund has an investment advisory agreement with MFS to provide overall investment management and related administrative services and facilities to the fund. The management fee is computed daily and paid monthly at the following annual rates based on the fund's average daily net assets:
| Up to $1 billion | 0.75% |
| In excess of $1 billion | 0.65% |
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. MFS has also agreed in writing to waive at least 0.01% of its management fee as part of this agreement. The agreement to waive at least 0.01% of the management fee will continue until modified by the fund's Board of Trustees, but such agreement will continue at least until April 30, 2025. For the year ended December 31, 2023, this management fee reduction amounted to $219,514, which is included in the reduction of total expenses in the Statement of Operations. The management fee incurred for the year ended December 31, 2023 was equivalent to an annual effective rate of 0.69% of the fund's average daily net assets.
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 Rule 12b-1 under the Investment Company Act of 1940.
The fund’s distribution plan provides that the fund will pay MFD distribution and/or service fees equal to 0.25% per annum of its average daily net assets attributable to Service Class shares as partial consideration for services performed and expenses incurred by MFD and financial intermediaries (including participating insurance companies that invest in the fund to fund variable annuity and variable life insurance contracts, sponsors of qualified retirement and pension plans that invest in the fund, and affiliates of these participating insurance companies and plan sponsors) in connection with the sale and distribution of the Service Class shares as well as shareholder servicing and account maintenance activities. MFD may subsequently pay all, or a portion, of the distribution and/or service fees to financial intermediaries. The distribution and/or service fees are computed daily and paid monthly.
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, 2023, the fee was $9,346, which equated to 0.0005% annually of the fund's average daily net assets. MFSC also receives reimbursement from the fund for out-of-pocket expenses paid by MFSC on behalf of the fund. For the year ended December 31, 2023, these costs amounted to $3,003.
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 is computed daily and paid monthly. The administrative services fee incurred for the year ended December 31, 2023 was equivalent to an annual effective rate of 0.0150% 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. Independent Trustees’ compensation is accrued daily and paid subsequent to each Trustee Board meeting. The fund does not pay compensation directly to Trustees or officers of the fund who are also officers of the investment adviser, all of whom receive remuneration from MFS for their services to the fund. Certain officers and Trustees of the fund are officers or directors of MFS, MFD, and MFSC.
Other — 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 but does incur investment and operating costs.
During the year ended December 31, 2023, pursuant to a policy adopted by the Board of Trustees and designed to comply with Rule 17a-7 under the Investment Company Act of 1940 (the “Act”) and relevant guidance, the fund engaged in purchase and sale transactions with funds and accounts for which MFS serves as investment adviser or sub-adviser (“cross-trades”) which amounted to $591,871 and $4,322,334, respectively. The sales transactions resulted in net realized gains (losses) of $(141,690).
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 year ended December 31, 2023, this reimbursement amounted to $25,276, which is included in “Other” income in the Statement of Operations.
(4) Portfolio Securities
For the year ended December 31, 2023, purchases and sales of investments, other than short-term obligations, aggregated $395,316,004 and $573,267,392, 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
12/31/23 | | Year ended
12/31/22 |
| | Shares | Amount | | Shares | Amount |
| Shares sold | | | | | |
| Initial Class | 928,786 | $51,260,023 | | 1,752,561 | $104,011,257 |
| Service Class | 908,256 | 46,708,016 | | 1,084,357 | 60,672,539 |
| | 1,837,042 | $97,968,039 | | 2,836,918 | $164,683,796 |
Notes to Financial Statements - continued
| | Year ended
12/31/23 | | Year ended
12/31/22 |
| | Shares | Amount | | Shares | Amount |
Shares issued to shareholders
in reinvestment of distributions | | | | | |
| Initial Class | 1,810,341 | $98,772,215 | | 2,803,820 | $151,742,716 |
| Service Class | 717,079 | 36,169,449 | | 1,055,432 | 53,267,645 |
| | 2,527,420 | $134,941,664 | | 3,859,252 | $205,010,361 |
| Shares reacquired | | | | | |
| Initial Class | (4,078,799) | $(225,454,826) | | (3,148,754) | $(188,392,601) |
| Service Class | (1,526,205) | (78,729,984) | | (1,252,072) | (71,641,668) |
| | (5,605,004) | $(304,184,810) | | (4,400,826) | $(260,034,269) |
| Net change | | | | | |
| Initial Class | (1,339,672) | $(75,422,588) | | 1,407,627 | $67,361,372 |
| Service Class | 99,130 | 4,147,481 | | 887,717 | 42,298,516 |
| | (1,240,542) | $(71,275,107) | | 2,295,344 | $109,659,888 |
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 and the MFS Growth Allocation Portfolio were the owners of record of approximately 5% and 2%, respectively, of the value of outstanding voting shares of the fund. In addition, the MFS Conservative Allocation Portfolio was the owner of record of less than 1% of the value of outstanding voting shares of the fund.
(6) Line of Credit
The fund and certain other funds managed by MFS participate in a $1.45 billion unsecured committed line of credit of which $1.2 billion is reserved for use by the fund and certain other MFS U.S. funds. The line of credit is provided by a syndicate of banks under a credit agreement. Borrowings may be made for temporary financing needs. Interest is charged to each fund, based on its borrowings, generally at a rate equal to the highest of 1) Daily Simple SOFR (Secured Overnight Financing Rate) plus 0.10%, 2) the Federal Funds Effective Rate, or 3) the Overnight Bank Funding Rate, each 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. The line of credit expires on March 14, 2024 unless extended or renewed. In addition, the fund and other funds managed by MFS have established unsecured uncommitted borrowing arrangements with certain banks for temporary financing needs. Interest is charged to each fund, based on its borrowings, at rates equal to customary reference rates plus an agreed upon spread. For the year ended December 31, 2023, the fund’s commitment fee and interest expense were $8,464 and $0, respectively, and are included in “Miscellaneous” expense in the Statement of Operations.
(7) Investments in Affiliated Issuers
An affiliated issuer may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. For the purposes of this report, the following were affiliated issuers:
| Affiliated Issuers | Beginning
Value | Purchases | Sales
Proceeds | Realized
Gain
(Loss) | Change in
Unrealized
Appreciation or
Depreciation | Ending
Value |
| MFS Institutional Money Market Portfolio | $42,297,287 | $197,646,474 | $226,083,552 | $(4,127) | $(10,198) | $13,845,884 |
| Affiliated Issuers | Dividend
Income | Capital Gain
Distributions |
| MFS Institutional Money Market Portfolio | $1,338,435 | $— |
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of MFS Variable Insurance Trust and the Shareholders of MFS Growth Series:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities of MFS Growth Series (the “Fund”), including the portfolio of investments, as of December 31, 2023, 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, 2023, 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, 2023, by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
February 14, 2024
We have served as the auditor of one or more of the MFS investment companies since 1924.
Trustees and Officers — Identification and Background
The Trustees and Officers of the Trust, as of February 1, 2024, 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 TRUSTEE | | | | | | | | | | |
Michael W. Roberge (k)
(age 57) | | Trustee | | January 2021 | | 136 | | Massachusetts Financial Services Company, Chairman (since January 2021); Chief Executive Officer (since January 2017); Director; Chairman of the Board (since January 2022) | | N/A |
| INDEPENDENT TRUSTEES | | | | | | | | | | |
John P. Kavanaugh
(age 69) | | Trustee and Chair of Trustees | | January 2009 | | 136 | | Private investor | | N/A |
Steven E. Buller
(age 72) | | Trustee | | February 2014 | | 136 | | Private investor | | N/A |
John A. Caroselli
(age 69) | | Trustee | | March 2017 | | 136 | | Private investor; JC Global Advisors, LLC (management consulting), President (since 2015) | | N/A |
Maureen R. Goldfarb
(age 68) | | Trustee | | January 2009 | | 136 | | Private investor | | N/A |
Peter D. Jones
(age 68) | | Trustee | | January 2019 | | 136 | | Private investor | | N/A |
James W. Kilman, Jr.
(age 62) | | Trustee | | January 2019 | | 136 | | Burford Capital Limited (finance and investment management), Senior Advisor (since May 3, 2021), Chief Financial Officer (2019 - May 2, 2021); KielStrand Capital LLC (family office), Chief Executive Officer (since 2016) | | Alpha-En Corporation, Director (2016-2019) |
Clarence Otis, Jr.
(age 67) | | Trustee | | March 2017 | | 136 | | Private investor | | VF Corporation, Director; Verizon Communications, Inc., Director; The Travelers Companies, Director |
Maryanne L. Roepke
(age 67) | | Trustee | | May 2014 | | 136 | | Private investor | | N/A |
Laurie J. Thomsen
(age 66) | | Trustee | | March 2005 | | 136 | | Private investor | | The Travelers Companies, Director; Dycom Industries, Inc., Director |
| 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 50) | | Assistant Secretary and Assistant Clerk | | July 2005 | | 136 | | Massachusetts Financial Services Company, Senior Vice President and Senior Managing Counsel |
Kino Clark (k)
(age 55) | | Assistant Treasurer | | January 2012 | | 136 | | Massachusetts Financial Services Company, Vice President |
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 |
John W. Clark, Jr. (k)
(age 56) | | Assistant Treasurer | | April 2017 | | 136 | | Massachusetts Financial Services Company, Vice President |
David L. DiLorenzo (k)
(age 55) | | President | | July 2005 | | 136 | | Massachusetts Financial Services Company, Senior Vice President |
Heidi W. Hardin (k)
(age 56) | | Secretary and Clerk | | April 2017 | | 136 | | Massachusetts Financial Services Company, Executive Vice President and General Counsel |
Brian E. Langenfeld (k)
(age 50) | | Assistant Secretary and Assistant Clerk | | June 2006 | | 136 | | Massachusetts Financial Services Company, Vice President and Managing Counsel |
Rosa E. Licea-Mailloux (k)
(age 47) | | Chief Compliance Officer | | March 2022 | | 136 | | Massachusetts Financial Services Company, Vice President (since 2018); Director of Corporate Compliance (2018-2021), Senior Director Compliance (2021-2022), Senior Managing Director of North American Compliance & Chief Compliance Officer (since March 2022) |
Amanda S. Mooradian (k)
(age 44) | | Assistant Secretary and Assistant Clerk | | September 2018 | | 136 | | Massachusetts Financial Services Company, Assistant Vice President and Senior Counsel |
Susan A. Pereira (k)
(age 53) | | Assistant Secretary and Assistant Clerk | | July 2005 | | 136 | | Massachusetts Financial Services Company, Vice President and Managing Counsel |
Kasey L. Phillips (k)
(age 53) | | Assistant Treasurer | | September 2012 | | 136 | | Massachusetts Financial Services Company, Vice President |
Matthew A. Stowe (k)
(age 49) | | Assistant Secretary and Assistant Clerk | | October 2014 | | 136 | | Massachusetts Financial Services Company, Vice President and Senior Managing Counsel |
William B. Wilson (k)
(age 41) | | Assistant Secretary and Assistant Clerk | | October 2022 | | 136 | | Massachusetts Financial Services Company, Assistant Vice President and Senior Counsel |
James O. Yost (k)
(age 63) | | Treasurer | | September 1990 | | 136 | | 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. 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 (other than Messrs. Jones, Kilman and Roberge) 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. Mr. Roberge became a Trustee of the Funds on January 1, 2021 and Messrs. Jones and Kilman became Trustees of the Funds on January 1, 2019. 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, Caroselli, Jones and Otis 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.
Trustees and Officers - continued
The Statement of Additional Information for a Fund includes further information about the Trustees and is available without charge upon request by calling 1-800-225-2606.
| Investment Adviser | Custodian |
Massachusetts Financial Services Company
111 Huntington Avenue
Boston, MA 02199-7618 | State Street Bank and Trust Company
1 Congress Street, Suite 1
Boston, MA 02114-2016 |
| Distributor | Independent Registered Public Accounting Firm |
MFS Fund Distributors, Inc.
111 Huntington Avenue
Boston, MA 02199-7618 | Deloitte & Touche LLP
200 Berkeley Street
Boston, MA 02116 |
| Portfolio Manager(s) | |
Eric Fischman
Bradford Mak | |
Board Review of Investment Advisory Agreement
MFS Growth Series
The Investment Company Act of 1940 requires that both the full Board of Trustees and a majority of the non-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, 2023 (“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 an independent consultant who was retained by and reported 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, 2022 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 as well as all other funds in the same investment classification/category (the “Broadridge expense group and universe”), (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 five-year period ended December 31, 2022, 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 five-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 3rd quintile for the one-year period and the 4th quintile for the three-year period ended December 31, 2022 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.
Board Review of Investment Advisory Agreement - continued
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.
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 the Broadridge expense group 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 higher than the Broadridge expense group median and the Fund’s total expense ratio was approximately at 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 cash in-flows and out-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 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.
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 any 12b-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 and sub-custodians. The Trustees concluded that the various non-advisory services provided by MFS and its affiliates on behalf of the Fund were satisfactory.
The Trustees considered so-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 MFS discontinued its historic practice of obtaining investment research from portfolio brokerage commissions paid by certain MFS Funds effective January 2018, and directly pays or voluntarily reimburses a Fund, if applicable, for the costs of external research acquired through the use of the Fund’s portfolio brokerage commissions.
Board Review of Investment Advisory Agreement - continued
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 additional one-year period, commencing August 1, 2023.
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 visiting mfs.com/proxyvoting, or by visiting the SEC’s Web site at http://www.sec.gov.
Information regarding how the fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available by August 31 of each year without charge by visiting mfs.com/proxyvoting, or by visiting the SEC’s Web site at http://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 as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s Web site at http://www.sec.gov. A shareholder can obtain the portfolio holdings report for the first and third quarters of the fund's fiscal year at mfs.com/vit1 by choosing the fund's name and then scrolling to the “Resources” section and clicking on the “Prospectus and Reports” tab.
FURTHER INFORMATION
From time to time, MFS may post important information about the fund or the MFS Funds on the MFS Web site (mfs.com). This information is available at https://www.mfs.com/announcements or at mfs.com/vit1 by choosing the fund's name and then scrolling to the “Resources” section and clicking on the “Announcements” tab, if any.
Information About Fund Contracts and Legal Claims
The fund has entered into contractual arrangements with an investment adviser, administrator, distributor, shareholder servicing agent, 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 $149,340,000 as capital gain dividends paid during the fiscal year.
| 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 are no longer our customer, we continue to share your information as described in this notice. |
| How? | All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MFS chooses to share; and whether you can limit this sharing. |
Reasons we can share your
personal information | Does MFS share? | Can you limit
this sharing? |
For our everyday business purposes –
such as to process your transactions, maintain your
account(s), respond to court orders and legal
investigations, or report to credit bureaus | Yes | No |
For our marketing purposes –
to offer our products and services to you | No | We don't share |
For joint marketing with other
financial companies | No | We don't share |
For our affiliates' everyday business purposes –
information about your transactions and experiences | No | We don't share |
For our affiliates' everyday business purposes –
information about your creditworthiness | No | We don't share |
| For nonaffiliates to market to you | No | We don't share |
| Questions? | Call 800-225-2606 or go to mfs.com. |
| 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. |
Annual Report
December 31, 2023
MFS® Investors Trust Series
MFS® Variable Insurance Trust
MFS® Investors Trust Series
| 1 |
| 2 |
| 4 |
| 6 |
| 7 |
| 11 |
| 12 |
| 13 |
| 14 |
| 16 |
| 22 |
| 23 |
| 26 |
| 28 |
| 28 |
| 28 |
| 28 |
| 28 |
| 29 |
The report is prepared for the general information of shareholders. It is authorized for distribution to prospective investors only when preceded or accompanied by a current prospectus.
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 Investors Trust Series
Portfolio structure
Top ten holdings
| Microsoft Corp. | 9.0% |
| Alphabet, Inc., “A” | 5.3% |
| Apple, Inc. | 4.1% |
| JPMorgan Chase & Co. | 2.8% |
| ConocoPhillips | 2.7% |
| NVIDIA Corp. | 2.6% |
| Amazon.com, Inc. | 2.4% |
| Visa, Inc., “A” | 2.2% |
| Mastercard, Inc., “A” | 2.0% |
| Vertex Pharmaceuticals, Inc. | 1.9% |
GICS equity sectors (g)
| Information Technology | 26.3% |
| Financials | 15.9% |
| Health Care | 13.5% |
| Communication Services | 9.1% |
| Industrials | 9.1% |
| Consumer Staples | 7.8% |
| Consumer Discretionary | 5.6% |
| Materials | 4.1% |
| Energy | 4.0% |
| Real Estate | 2.8% |
| Utilities | 0.9% |
| (g) | The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and S&P Global Market Intelligence Inc. (“S&P Global Market Intelligence”). GICS is a service mark of MSCI and S&P Global Market Intelligence and has been licensed for use by MFS. MFS has applied its own internal sector/industry classification methodology for equity securities and non-equity securities that are unclassified by GICS. |
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, 2023.
The portfolio is actively managed and current holdings may be different.
MFS Investors Trust Series
Management Review
Summary of Results
For the twelve months ended December 31, 2023, Initial Class shares of the MFS Investors Trust Series (fund) provided a total return of 18.98%, while Service Class shares of the fund provided a total return of 18.66%. These compare with a return of 26.29% over the same period for the fund’s benchmark, the Standard & Poor’s 500 Stock Index (S&P 500 Index).
Market Environment
During the reporting period, central banks around the world had to combat the strongest inflationary pressures in four decades, fueled by the global fiscal response to the pandemic, disrupted supply chains and the dislocations to energy markets stemming from the war in Ukraine. Interest rates rose substantially, but the effects of a tighter monetary policy may not have been fully experienced yet, given that monetary policy works with long and variable lags. Strains resulting from the abrupt tightening of monetary policy began to affect some parts of the economy, most acutely among small and regional US banks, which suffered from deposit flight as depositors sought higher yields on their savings. Additionally, activity in the US housing sector has slowed as a result of higher mortgage rates. China’s abandonment of its Zero-COVID policy ushered in a brief uptick in economic activity in the world’s second-largest economy in early 2023, although its momentum soon stalled as the focus turned to the country’s highly indebted property development sector. In developed markets, consumer demand for services remained stronger than the demand for goods.
Early on, policymakers found themselves in the difficult position of trying to restrain inflation without tipping economies into recession. Despite the challenging macroeconomic and geopolitical environment, central banks focused on controlling price pressures while also confronting increasing financial stability concerns. Central banks had to juggle achieving their inflation mandates while using macroprudential tools (financial policies aimed at safeguarding the stability of the financial system) to keep banking systems liquid, a potentially difficult balancing act, and one that suggested that we may be nearing a peak in policy rates. As inflationary pressures eased toward the end of the period, financial conditions loosened in anticipation of easier monetary policy, boosting the market’s appetite for risk. Rapid advancements in artificial intelligence were a focus for investors.
Normalizing supply chains, low levels of unemployment across developed markets and signs that inflation levels have peaked were supportive factors for the macroeconomic backdrop.
Detractors from Performance
Relative to the S&P 500 Index, security selection and underweight positions in both the information technology and consumer discretionary sectors detracted from the fund’s performance. Within the information technology sector, the timing of the fund’s ownership in shares of strong-performing computer graphics processor maker NVIDIA, an underweight position in computer and personal electronics maker Apple, and not owning shares of broadband communications and networking services company Broadcom weakened relative results. The stock price of NVIDIA climbed as the company reported earnings per share results well above expectations, primarily due to stronger-than-expected revenue growth within its data center, generative AI, and networking segments. Revenue and earnings per share guidance were significantly above expectations, driven by continued robust demand related to generative AI. Within the consumer discretionary sector, not owning shares of strong-performing electric vehicle manufacturer Tesla hindered relative performance. Despite operating margin pressures due to aggressive vehicle price cuts, Tesla’s share price advanced as the company delivered a record number of vehicles.
Stock selection and an overweight position in the financials sector also held back relative returns led by the fund’s overweight position in securities exchange services provider NASDAQ. The stock price of NASDAQ fell as the company reported lower-than-expected revenue and growth in its capital access platform products.
Elsewhere, not owning shares of social networking service provider Meta Platforms weakened relative performance. The share price of Meta Platforms rose as the company cited plans to cut costs and invest in artificial intelligence, including adding generative AI to text, image, and video generators. Additionally, the fund’s overweight positions in merchandise store operator Dollar General(h), oil and gas company ConocoPhillips, building controls and systems supplier Johnson Controls International, and global health services provider Cigna were also among the top relative detractors for the reporting period.
Contributors to Performance
Security selection within the health care sector contributed to relative performance led by the timing of the fund’s position in pharmaceutical giant Pfizer and its avoidance of poor-performing health insurance and Medicare/Medicaid provider UnitedHealth Group. The share price of Pfizer fell as the company reported revenue below expectations due to lower-than-estimated sales. Additionally, the company took a large non-cash charge for accumulated inventory write-offs, which further pressured the stock. The fund’s holdings of clinical research provider ICON(b) (Ireland) also bolstered relative returns as the stock outperformed the benchmark.
MFS Investors Trust Series
Management Review - continued
The fund’s underweight allocation to the utilities sector benefited relative performance. Within this sector, not owning shares of electricity provider NextEra Energy contributed to relative returns. The stock price of NextEra Energy declined as the company cut guidance for its distribution per unit growth rate, owing to financing challenges driven by higher interest rates.
Stocks in other sectors that strengthened relative performance included the fund’s overweight positions in technology company Alphabet, software giant Microsoft, software company Adobe Systems, and customer information software manager Salesforce. The share price of Alphabet rose as the company reported better-than-expected revenue and robust margins. Financial results across the board were positive with strong revenue contributions from video website YouTube and cloud services.The company also benefited from a reduced employee headcount that helped lower its operating expenses. Additionally, not owning shares of integrated energy company Chevron and household products maker Procter & Gamble boosted relative returns as both stocks underperformed the benchmark.
Respectfully,
Portfolio Manager(s)
Jude Jason and Alison O'Neill Mackey
Note to Shareholders: Effective May 1, 2023, Ted Maloney is no longer a Portfolio Manager of the fund.
| (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 Investors Trust Series
Performance Summary Through 12/31/23
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 shares, 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 shareholder would pay on fund distributions or the redemption of fund shares. 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
Total Returns through 12/31/23
Average annual total returns
| Share Class | Class Inception Date | 1-yr | 5-yr | 10-yr |
| Initial Class | 10/09/1995 | 18.98% | 13.55% | 10.27% |
| Service Class | 5/01/2000 | 18.66% | 13.27% | 10.00% |
Comparative benchmark(s)
| Standard & Poor's 500 Stock Index (f) | 26.29% | 15.69% | 12.03% |
| (f) | Source: FactSet Research Systems Inc. |
Benchmark Definition(s)
Standard & Poor's 500 Stock Index(g) – 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.
| (g) | “Standard & Poor's®” and “S&P®” are registered trademarks of Standard & Poor's Financial Services LLC (“S&P”) and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”) and have been licensed for use by S&P Dow Jones Indices LLC and sublicensed for certain purposes by MFS. The S&P 500® is a product of S&P Dow Jones Indices LLC, and has been licensed for use by MFS. MFS's product(s) is not sponsored, endorsed, sold, or promoted by S&P Dow Jones Indices LLC, Dow Jones, S&P, or their respective affiliates, and neither S&P Dow Jones Indices LLC, Dow Jones, S&P, nor their respective affiliates make any representation regarding the advisability of investing in such product(s). |
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.
MFS Investors Trust Series
Performance Summary – continued
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 Investors Trust Series
Expense Table
Fund expenses borne by the shareholders during the period,
July 1, 2023 through December 31, 2023
As a shareholder 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, 2023 through December 31, 2023.
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
7/01/23 | Ending
Account Value
12/31/23 | Expenses
Paid During
Period (p)
7/01/23-12/31/23 |
| Initial Class | Actual | 0.78% | $1,000.00 | $1,068.29 | $4.07 |
| Hypothetical (h) | 0.78% | $1,000.00 | $1,021.27 | $3.97 |
| Service Class | Actual | 1.03% | $1,000.00 | $1,067.03 | $5.37 |
| Hypothetical (h) | 1.03% | $1,000.00 | $1,020.01 | $5.24 |
| (h) | 5% class return per year before expenses. |
| (p) | “Expenses Paid During Period” are equal to each class's annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). |
MFS Investors Trust Series
Portfolio of Investments − 12/31/23
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – 99.1% |
| Aerospace & Defense – 3.5% | |
| Honeywell International, Inc. | | 70,022 | $ 14,684,314 |
| Howmet Aerospace, Inc. | | 243,375 | 13,171,455 |
| | | | | $27,855,769 |
| Alcoholic Beverages – 1.7% | |
| Diageo PLC | | 180,147 | $ 6,558,073 |
| Pernod Ricard S.A. | | 39,511 | 6,968,003 |
| | | | | $13,526,076 |
| Apparel Manufacturers – 1.0% | |
| LVMH Moet Hennessy Louis Vuitton SE | | 9,716 | $ 7,868,579 |
| Brokerage & Asset Managers – 1.4% | |
| Charles Schwab Corp. | | 70,616 | $ 4,858,381 |
| NASDAQ, Inc. | | 106,632 | 6,199,584 |
| | | | | $11,057,965 |
| Business Services – 1.5% | |
| Fiserv, Inc. (a) | | 85,774 | $ 11,394,218 |
| Cable TV – 1.8% | |
| Cable One, Inc. | | 6,813 | $ 3,792,048 |
| Comcast Corp., “A” | | 241,167 | 10,575,173 |
| | | | | $14,367,221 |
| Chemicals – 0.5% | |
| PPG Industries, Inc. | | 24,143 | $ 3,610,586 |
| Computer Software – 13.0% | |
| Adobe Systems, Inc. (a) | | 14,010 | $ 8,358,366 |
| Check Point Software Technologies Ltd. (a) | | 67,625 | 10,332,424 |
| Microsoft Corp. | | 188,914 | 71,039,220 |
| Salesforce, Inc. (a) | | 47,719 | 12,556,778 |
| | | | | $102,286,788 |
| Computer Software - Systems – 4.1% | |
| Apple, Inc. | | 167,078 | $ 32,167,527 |
| Construction – 1.1% | |
| Masco Corp. | | 44,180 | $ 2,959,176 |
| Summit Materials, Inc., “A” (a) | | 154,835 | 5,954,954 |
| | | | | $8,914,130 |
| Consumer Products – 2.6% | |
| Colgate-Palmolive Co. | | 107,066 | $ 8,534,231 |
| Kenvue, Inc. | | 329,531 | 7,094,802 |
| Kimberly-Clark Corp. | | 39,850 | 4,842,174 |
| | | | | $20,471,207 |
| Containers – 0.8% | |
| Crown Holdings, Inc. | | 67,118 | $ 6,180,897 |
MFS Investors Trust Series
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Electrical Equipment – 4.1% | |
| AMETEK, Inc. | | 48,593 | $ 8,012,500 |
| Fortive Corp. | | 58,885 | 4,335,703 |
| Johnson Controls International PLC | | 145,882 | 8,408,638 |
| TE Connectivity Ltd. | | 83,394 | 11,716,857 |
| | | | | $32,473,698 |
| Electronics – 7.8% | |
| Analog Devices, Inc. | | 69,757 | $ 13,850,950 |
| Applied Materials, Inc. | | 66,733 | 10,815,417 |
| ASML Holding N.V. | | 9,578 | 7,208,047 |
| NVIDIA Corp. | | 40,709 | 20,159,911 |
| Texas Instruments, Inc. | | 53,325 | 9,089,779 |
| | | | | $61,124,104 |
| Energy - Independent – 2.7% | |
| ConocoPhillips | | 183,742 | $ 21,326,934 |
| Energy - Integrated – 1.3% | |
| Exxon Mobil Corp. | | 99,721 | $ 9,970,106 |
| Food & Beverages – 0.9% | |
| Mondelez International, Inc. | | 98,000 | $ 7,098,140 |
| Forest & Paper Products – 0.6% | |
| Rayonier, Inc., REIT | | 131,414 | $ 4,390,542 |
| Health Maintenance Organizations – 1.6% | |
| Cigna Group | | 42,180 | $ 12,630,801 |
| Insurance – 3.0% | |
| Aon PLC | | 21,358 | $ 6,215,605 |
| Chubb Ltd. | | 46,780 | 10,572,280 |
| Willis Towers Watson PLC | | 29,530 | 7,122,636 |
| | | | | $23,910,521 |
| Internet – 6.0% | |
| Alphabet, Inc., “A” (a) | | 300,617 | $ 41,993,189 |
| Alphabet, Inc., “C” (a) | | 39,415 | 5,554,756 |
| | | | | $47,547,945 |
| Leisure & Toys – 1.2% | |
| Electronic Arts, Inc. | | 69,642 | $ 9,527,722 |
| Machinery & Tools – 1.2% | |
| Eaton Corp. PLC | | 40,360 | $ 9,719,495 |
| Major Banks – 5.8% | |
| Bank of America Corp. | | 319,953 | $ 10,772,817 |
| Goldman Sachs Group, Inc. | | 33,335 | 12,859,643 |
| JPMorgan Chase & Co. | | 131,746 | 22,409,995 |
| | | | | $46,042,455 |
| Medical & Health Technology & Services – 1.3% | |
| ICON PLC (a) | | 37,216 | $ 10,534,733 |
MFS Investors Trust Series
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Medical Equipment – 4.3% | |
| Agilent Technologies, Inc. | | 74,488 | $ 10,356,067 |
| Becton, Dickinson and Co. | | 43,529 | 10,613,676 |
| Medtronic PLC | | 152,571 | 12,568,799 |
| | | | | $33,538,542 |
| Other Banks & Diversified Financials – 4.2% | |
| Mastercard, Inc., “A” | | 36,495 | $ 15,565,483 |
| Visa, Inc., “A” | | 67,924 | 17,684,013 |
| | | | | $33,249,496 |
| Pharmaceuticals – 6.4% | |
| Eli Lilly & Co. | | 21,134 | $ 12,319,432 |
| Merck & Co., Inc. | | 83,207 | 9,071,227 |
| Pfizer, Inc. | | 216,256 | 6,226,010 |
| Vertex Pharmaceuticals, Inc. (a) | | 36,183 | 14,722,501 |
| Zoetis, Inc. | | 39,144 | 7,725,851 |
| | | | | $50,065,021 |
| Pollution Control – 0.7% | |
| Waste Management, Inc. | | 30,655 | $ 5,490,310 |
| Railroad & Shipping – 0.6% | |
| Canadian Pacific Kansas City Ltd. | | 57,852 | $ 4,573,779 |
| Specialty Chemicals – 2.1% | |
| DuPont de Nemours, Inc. | | 112,749 | $ 8,673,781 |
| Linde PLC | | 19,514 | 8,014,595 |
| | | | | $16,688,376 |
| Specialty Stores – 7.1% | |
| Amazon.com, Inc. (a) | | 123,476 | $ 18,760,943 |
| Costco Wholesale Corp. | | 17,506 | 11,555,361 |
| Home Depot, Inc. | | 35,839 | 12,420,005 |
| Target Corp. | | 60,074 | 8,555,739 |
| Tractor Supply Co. | | 21,768 | 4,680,773 |
| | | | | $55,972,821 |
| Telecommunications - Wireless – 1.5% | |
| American Tower Corp., REIT | | 54,588 | $ 11,784,457 |
| Telephone Services – 0.8% | |
| Equinix, Inc., REIT | | 7,625 | $ 6,141,099 |
| Utilities - Electric Power – 0.9% | |
| Xcel Energy, Inc. | | 118,062 | $ 7,309,218 |
| Total Common Stocks (Identified Cost, $421,402,585) | | $780,811,278 |
| Investment Companies (h) – 0.2% |
| Money Market Funds – 0.2% | |
| MFS Institutional Money Market Portfolio, 5.42% (v) (Identified Cost, $1,511,618) | | | 1,511,753 | $ 1,512,055 |
| Other Assets, Less Liabilities – 0.7% | | 5,665,065 |
| Net Assets – 100.0% | $787,988,398 |
MFS Investors Trust Series
Portfolio of Investments – continued
| (a) | Non-income producing security. | | | |
| (h) | An affiliated issuer, which may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. At period end, the aggregate values of the fund's investments in affiliated issuers and in unaffiliated issuers were $1,512,055 and $780,811,278, respectively. | | | |
| (v) | Affiliated issuer that is available only to investment companies managed by MFS. The rate quoted for the MFS Institutional Money Market Portfolio is the annualized seven-day yield of the fund at period end. | | | |
| The following abbreviations are used in this report and are defined: |
| REIT | Real Estate Investment Trust |
See Notes to Financial Statements
MFS Investors Trust Series
| 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 12/31/23Assets | |
| Investments in unaffiliated issuers, at value (identified cost, $421,402,585) | $780,811,278 |
| Investments in affiliated issuers, at value (identified cost, $1,511,618) | 1,512,055 |
| Receivables for | |
| Investments sold | 5,735,010 |
| Fund shares sold | 145,754 |
| Dividends | 851,225 |
| Other assets | 234,866 |
| Total assets | $789,290,188 |
| Liabilities | |
| Payables for | |
| Fund shares reacquired | $1,106,232 |
| Payable to affiliates | |
| Investment adviser | 63,813 |
| Administrative services fee | 1,169 |
| Shareholder servicing costs | 262 |
| Distribution and/or service fees | 11,499 |
| Payable for independent Trustees' compensation | 12 |
| Accrued expenses and other liabilities | 118,803 |
| Total liabilities | $1,301,790 |
| Net assets | $787,988,398 |
| Net assets consist of | |
| Paid-in capital | $368,317,772 |
| Total distributable earnings (loss) | 419,670,626 |
| Net assets | $787,988,398 |
| Shares of beneficial interest outstanding | 22,131,114 |
| | Net assets | Shares
outstanding | Net asset value
per share |
| Initial Class | $369,576,656 | 10,269,785 | $35.99 |
| Service Class | 418,411,742 | 11,861,329 | 35.28 |
See Notes to Financial Statements
MFS Investors Trust Series
| 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 12/31/23 | |
| Net investment income (loss) | |
| Income | |
| Dividends | $11,323,759 |
| Dividends from affiliated issuers | 318,256 |
| Income on securities loaned | 27,547 |
| Other | 15,806 |
| Foreign taxes withheld | (58,104) |
| Total investment income | $11,627,264 |
| Expenses | |
| Management fee | $5,741,051 |
| Distribution and/or service fees | 1,023,562 |
| Shareholder servicing costs | 8,058 |
| Administrative services fee | 120,665 |
| Independent Trustees' compensation | 14,698 |
| Custodian fee | 35,378 |
| Shareholder communications | 35,800 |
| Audit and tax fees | 66,839 |
| Legal fees | 4,273 |
| Miscellaneous | 32,274 |
| Total expenses | $7,082,598 |
| Reduction of expenses by investment adviser | (97,876) |
| Net expenses | $6,984,722 |
| Net investment income (loss) | $4,642,542 |
| Realized and unrealized gain (loss) | |
| Realized gain (loss) (identified cost basis) | |
| Unaffiliated issuers | $57,784,425 |
| Affiliated issuers | 1,635 |
| Foreign currency | (2,880) |
| Net realized gain (loss) | $57,783,180 |
| Change in unrealized appreciation or depreciation | |
| Unaffiliated issuers | $70,055,214 |
| Affiliated issuers | (2,269) |
| Translation of assets and liabilities in foreign currencies | 5,244 |
| Net unrealized gain (loss) | $70,058,189 |
| Net realized and unrealized gain (loss) | $127,841,369 |
| Change in net assets from operations | $132,483,911 |
See Notes to Financial Statements
MFS Investors Trust Series
| Financial Statements | Statements of Changes in Net Assets |
These statements describe the increases and/or decreases in net assets resulting from operations, any distributions, and any shareholder transactions.
| | Year ended |
| | 12/31/23 | 12/31/22 |
| Change in net assets | | |
| From operations | | |
| Net investment income (loss) | $4,642,542 | $4,347,033 |
| Net realized gain (loss) | 57,783,180 | 40,767,162 |
| Net unrealized gain (loss) | 70,058,189 | (185,010,919) |
| Change in net assets from operations | $132,483,911 | $(139,896,724) |
| Total distributions to shareholders | $(46,552,177) | $(109,065,257) |
| Change in net assets from fund share transactions | $(58,548,389) | $177,975,178 |
| Total change in net assets | $27,383,345 | $(70,986,803) |
| Net assets | | |
| At beginning of period | 760,605,053 | 831,591,856 |
| At end of period | $787,988,398 | $760,605,053 |
See Notes to Financial Statements
MFS Investors Trust Series
| Financial Statements | Financial Highlights |
The financial highlights table is intended to help you understand the fund's financial performance for the 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 |
| | 12/31/23 | 12/31/22 | 12/31/21 | 12/31/20 | 12/31/19 |
| Net asset value, beginning of period | $32.27 | $44.72 | $36.57 | $33.27 | $27.05 |
| Income (loss) from investment operations | | | | | |
| Net investment income (loss) (d) | $0.25 | $0.27 | $0.21 | $0.25 | $0.25 |
| Net realized and unrealized gain (loss) | 5.69 | (7.41) | 9.53 | 4.26 | 8.08 |
| Total from investment operations | $5.94 | $(7.14) | $9.74 | $4.51 | $8.33 |
| Less distributions declared to shareholders | | | | | |
| From net investment income | $(0.26) | $(0.26) | $(0.26) | $(0.21) | $(0.22) |
| From net realized gain | (1.96) | (5.05) | (1.33) | (1.00) | (1.89) |
| Total distributions declared to shareholders | $(2.22) | $(5.31) | $(1.59) | $(1.21) | $(2.11) |
| Net asset value, end of period (x) | $35.99 | $32.27 | $44.72 | $36.57 | $33.27 |
| Total return (%) (k)(r)(s)(x) | 18.98 | (16.49) | 26.81 | 13.87 | 31.58 |
Ratios (%) (to average net assets)
and Supplemental data: | | | | | |
| Expenses before expense reductions | 0.79 | 0.80 | 0.79 | 0.80 | 0.80 |
| Expenses after expense reductions | 0.78 | 0.78 | 0.78 | 0.79 | 0.79 |
| Net investment income (loss) | 0.74 | 0.74 | 0.50 | 0.78 | 0.80 |
| Portfolio turnover | 20 | 17 | 13 | 19 | 18 |
| Net assets at end of period (000 omitted) | $369,577 | $357,428 | $296,678 | $269,852 | $265,499 |
| Service Class | Year ended |
| | 12/31/23 | 12/31/22 | 12/31/21 | 12/31/20 | 12/31/19 |
| Net asset value, beginning of period | $31.67 | $43.97 | $35.99 | $32.77 | $26.68 |
| Income (loss) from investment operations | | | | | |
| Net investment income (loss) (d) | $0.16 | $0.16 | $0.10 | $0.17 | $0.17 |
| Net realized and unrealized gain (loss) | 5.57 | (7.26) | 9.38 | 4.19 | 7.97 |
| Total from investment operations | $5.73 | $(7.10) | $9.48 | $4.36 | $8.14 |
| Less distributions declared to shareholders | | | | | |
| From net investment income | $(0.16) | $(0.15) | $(0.17) | $(0.14) | $(0.16) |
| From net realized gain | (1.96) | (5.05) | (1.33) | (1.00) | (1.89) |
| Total distributions declared to shareholders | $(2.12) | $(5.20) | $(1.50) | $(1.14) | $(2.05) |
| Net asset value, end of period (x) | $35.28 | $31.67 | $43.97 | $35.99 | $32.77 |
| Total return (%) (k)(r)(s)(x) | 18.66 | (16.69) | 26.51 | 13.60 | 31.25 |
Ratios (%) (to average net assets)
and Supplemental data: | | | | | |
| Expenses before expense reductions | 1.04 | 1.05 | 1.04 | 1.05 | 1.05 |
| Expenses after expense reductions | 1.03 | 1.03 | 1.03 | 1.04 | 1.04 |
| Net investment income (loss) | 0.49 | 0.44 | 0.24 | 0.53 | 0.55 |
| Portfolio turnover | 20 | 17 | 13 | 19 | 18 |
| Net assets at end of period (000 omitted) | $418,412 | $403,177 | $534,914 | $496,093 | $453,132 |
See Notes to Financial Statements
MFS Investors Trust Series
Financial Highlights - continued
| (d) | Per share data is based on average shares outstanding. |
| (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 Investors Trust Series
Notes to Financial Statements
(1) Business and Organization
MFS Investors Trust Series (the fund) is a diversified series of MFS Variable Insurance Trust (the trust). The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The shareholders of each series of the trust are separate accounts of insurance companies, which offer variable annuity and/or life insurance products, and qualified retirement and pension plans.
The fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services - Investment Companies.
(2) Significant Accounting Policies
General — The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the fund’s Statement of Assets and Liabilities through the date that the financial statements were issued.
Balance Sheet Offsetting — The fund's accounting policy with respect to balance sheet offsetting is that, absent an event of default by the counterparty or a termination of the agreement, the International Swaps and Derivatives Association (ISDA) Master Agreement, or similar agreement, does not result in an offset of reported amounts of financial assets and financial liabilities in the Statement of Assets and Liabilities across transactions between the fund and the applicable counterparty. The fund's right to setoff may be restricted or prohibited by the bankruptcy or insolvency laws of the particular jurisdiction to which a specific master netting agreement counterparty is subject. Balance sheet offsetting disclosures, to the extent applicable to the fund, have been included in the fund’s Significant Accounting Policies note under the captions for each of the fund’s in-scope financial instruments and transactions.
Investment Valuations — Subject to its oversight, the fund's Board of Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments to MFS as the fund's adviser, pursuant to the fund’s valuation policy and procedures which have been adopted by the adviser and approved by the Board. In accordance with Rule 2a-5 under the Investment Company Act of 1940, the Board of Trustees designated the adviser as the “valuation designee” of the fund. If the adviser, as valuation designee, determines that reliable market quotations are not readily available for an investment, the investment is valued at fair value as determined in good faith by the adviser in accordance with the adviser’s fair valuation policy and procedures.
Under the fund's valuation policy and procedures, 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. 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.
Under the fund’s valuation policy and procedures, market quotations are not considered to be readily available for debt instruments, floating rate loans, and many types of derivatives. These investments are generally valued at fair value based on information from third-party pricing services or otherwise determined by the adviser in accordance with the adviser’s fair valuation policy and procedures. 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, spreads and other market data. An investment may also be valued at fair value if the adviser determines that the investment’s value has been materially affected by events occurring after the close of the exchange or market on which the investment is principally traded (such as foreign exchange or market) and prior to the determination of the fund’s net asset value, or after the halt of trading of a specific security where trading does not resume prior to the close of the exchange or market on which the security is principally traded. Events that occur after foreign markets close (such as developments in foreign markets and significant movements in the U.S. markets) and prior to the determination of the fund’s net asset value may be deemed to have a material effect on the value of securities traded in foreign markets. Accordingly, the fund’s foreign equity securities may often be valued at fair value. The adviser generally relies on third-party pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and financial condition of the issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment
MFS Investors Trust Series
Notes to Financial Statements - continued
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 significant 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, 2023 in valuing the fund's assets and liabilities:
| Financial Instruments | Level 1 | Level 2 | Level 3 | Total |
| Equity Securities | $780,811,278 | $— | $— | $780,811,278 |
| Mutual Funds | 1,512,055 | — | — | 1,512,055 |
| Total | $782,323,333 | $— | $— | $782,323,333 |
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, 2023, there were no securities on loan or collateral outstanding.
Indemnifications — Under the fund's organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the fund. Additionally, in the normal course of business, the fund enters into agreements with service providers that may contain indemnification clauses. The fund's maximum exposure under these agreements is unknown as this would involve future claims that may be made against the fund that have not yet occurred.
Investment Transactions and Income — Dividends received in cash are recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded when the fund is informed of the dividend if such information is obtained subsequent to the ex-dividend date. Dividend payments received in additional securities are recorded on the ex-dividend date in an amount equal to the value of the security on such date.
MFS Investors Trust Series
Notes to Financial Statements - continued
The fund may receive proceeds from litigation settlements. Any proceeds received from litigation involving portfolio holdings are reflected in the Statement of Operations in realized gain/loss if the security has been disposed of by the fund or in unrealized gain/loss if the security is still held by the fund. Any other proceeds from litigation not related to portfolio holdings are reflected as other income in the Statement of Operations.
Investment transactions are recorded on the trade date. In determining the net gain or loss on securities sold, the cost of securities is determined on the identified cost basis.
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 the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income, expense, gain or loss in different periods for financial statement and tax purposes will reverse at some time in the future.
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
12/31/23 | Year ended
12/31/22 |
| Ordinary income (including any short-term capital gains) | $4,374,191 | $11,904,201 |
| Long-term capital gains | 42,177,986 | 97,161,056 |
| Total distributions | $46,552,177 | $109,065,257 |
The federal tax cost and the tax basis components of distributable earnings were as follows:
| As of 12/31/23 | |
| Cost of investments | $424,842,931 |
| Gross appreciation | 365,382,811 |
| Gross depreciation | (7,902,409) |
| Net unrealized appreciation (depreciation) | $357,480,402 |
| Undistributed ordinary income | 4,639,208 |
| Undistributed long-term capital gain | 57,551,171 |
| Other temporary differences | (155) |
| Total distributable earnings (loss) | $419,670,626 |
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:
| | Year
ended
12/31/23 | | Year
ended
12/31/22 |
| Initial Class | $21,538,672 | | $49,941,824 |
| Service Class | 25,013,505 | | 59,123,433 |
| Total | $46,552,177 | | $109,065,257 |
MFS Investors Trust Series
Notes to Financial Statements - continued
(3) Transactions with Affiliates
Investment Adviser — The fund has an investment advisory agreement with MFS to provide overall investment management and related administrative services and facilities to the fund. The management fee is computed daily and paid monthly at the following annual rates based on the fund's average daily net assets:
| Up to $1 billion | 0.75% |
| In excess of $1 billion and up to $2.5 billion | 0.65% |
| In excess of $2.5 billion | 0.60% |
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. MFS has also agreed in writing to waive at least 0.01% of its management fee as part of this agreement. The agreement to waive at least 0.01% of the management fee will continue until modified by the fund's Board of Trustees, but such agreement will continue at least until April 30, 2025. For the year ended December 31, 2023, this management fee reduction amounted to $97,876, which is included in the reduction of total expenses in the Statement of Operations. The management fee incurred for the year ended December 31, 2023 was equivalent to an annual effective rate of 0.74% of the fund's average daily net assets.
The investment adviser has agreed in writing to pay a portion of the fund’s total annual operating expenses, excluding interest, taxes, extraordinary expenses, brokerage and transaction costs, certain tax reclaim recovery expenses (including contingency fees and closing agreement expenses), and investment-related expenses, such that total annual operating expenses do not exceed 0.79% of average daily net assets for the Initial Class shares and 1.04% of average daily net assets for the Service Class shares. This written agreement will continue until modified by the fund’s Board of Trustees, but such agreement will continue at least until April 30, 2025. For the year ended December 31, 2023, the fund’s actual operating expenses did not exceed the limit and therefore, the investment adviser did not pay any portion of the fund’s expenses related to this agreement.
Distributor — MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, is the distributor of shares of the fund. The Trustees have adopted a distribution plan for the Service Class shares pursuant to Rule 12b-1 under the Investment Company Act of 1940.
The fund’s distribution plan provides that the fund will pay MFD distribution and/or service fees equal to 0.25% per annum of its average daily net assets attributable to Service Class shares as partial consideration for services performed and expenses incurred by MFD and financial intermediaries (including participating insurance companies that invest in the fund to fund variable annuity and variable life insurance contracts, sponsors of qualified retirement and pension plans that invest in the fund, and affiliates of these participating insurance companies and plan sponsors) in connection with the sale and distribution of the Service Class shares as well as shareholder servicing and account maintenance activities. MFD may subsequently pay all, or a portion, of the distribution and/or service fees to financial intermediaries. The distribution and/or service fees are computed daily and paid monthly.
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, 2023, the fee was $6,344, which equated to 0.0008% annually of the fund's average daily net assets. MFSC also receives reimbursement from the fund for out-of-pocket expenses paid by MFSC on behalf of the fund. For the year ended December 31, 2023, these costs amounted to $1,714.
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 is computed daily and paid monthly. The administrative services fee incurred for the year ended December 31, 2023 was equivalent to an annual effective rate of 0.0158% 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. Independent Trustees’ compensation is accrued daily and paid subsequent to each Trustee Board meeting. The fund does not pay compensation directly to Trustees or officers of the fund who are also officers of the investment adviser, all of whom receive remuneration from MFS for their services to the fund. Certain officers and Trustees of the fund are officers or directors of MFS, MFD, and MFSC.
Other — 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 but does incur investment and operating costs.
MFS Investors Trust Series
Notes to Financial Statements - continued
During the year ended December 31, 2023, pursuant to a policy adopted by the Board of Trustees and designed to comply with Rule 17a-7 under the Investment Company Act of 1940 (the “Act”) and relevant guidance, the fund engaged in purchase transactions with funds and accounts for which MFS serves as investment adviser or sub-adviser (“cross-trades”) which amounted to $778,428.
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 year ended December 31, 2023, this reimbursement amounted to $15,570, which is included in “Other” income in the Statement of Operations.
(4) Portfolio Securities
For the year ended December 31, 2023, purchases and sales of investments, other than short-term obligations, aggregated $152,707,011 and $250,140,857, 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
12/31/23 | | Year ended
12/31/22 |
| | Shares | Amount | | Shares | Amount |
| Shares sold | | | | | |
| Initial Class | 878,229 | $29,356,546 | | 4,180,159 | $160,083,504 |
| Service Class | 376,902 | 12,504,945 | | 388,092 | 14,141,886 |
| | 1,255,131 | $41,861,491 | | 4,568,251 | $174,225,390 |
Shares issued to shareholders
in reinvestment of distributions | | | | | |
| Initial Class | 648,365 | $21,538,672 | | 1,477,569 | $49,941,824 |
| Service Class | 767,521 | 25,013,505 | | 1,780,826 | 59,123,433 |
| | 1,415,886 | $46,552,177 | | 3,258,395 | $109,065,257 |
| Shares reacquired | | | | | |
| Initial Class | (2,331,464) | $(79,361,286) | | (1,216,784) | $(46,566,318) |
| Service Class | (2,014,339) | (67,600,771) | | (1,603,763) | (58,749,151) |
| | (4,345,803) | $(146,962,057) | | (2,820,547) | $(105,315,469) |
| Net change | | | | | |
| Initial Class | (804,870) | $(28,466,068) | | 4,440,944 | $163,459,010 |
| Service Class | (869,916) | (30,082,321) | | 565,155 | 14,516,168 |
| | (1,674,786) | $(58,548,389) | | 5,006,099 | $177,975,178 |
(6) Line of Credit
The fund and certain other funds managed by MFS participate in a $1.45 billion unsecured committed line of credit of which $1.2 billion is reserved for use by the fund and certain other MFS U.S. funds. The line of credit is provided by a syndicate of banks under a credit agreement. Borrowings may be made for temporary financing needs. Interest is charged to each fund, based on its borrowings, generally at a rate equal to the highest of 1) Daily Simple SOFR (Secured Overnight Financing Rate) plus 0.10%, 2) the Federal Funds Effective Rate, or 3) the Overnight Bank Funding Rate, each 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. The line of credit expires on March 14, 2024 unless extended or renewed. In addition, the fund and other funds managed by MFS have established unsecured uncommitted borrowing arrangements with certain banks for temporary financing needs. Interest is charged to each fund, based on its borrowings, at rates equal to customary reference rates plus an agreed upon spread. For the year ended December 31, 2023, the fund’s commitment fee and interest expense were $4,114 and $0, respectively, and are included in “Miscellaneous” expense in the Statement of Operations.
MFS Investors Trust Series
Notes to Financial Statements - continued
(7) Investments in Affiliated Issuers
An affiliated issuer may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. For the purposes of this report, the following were affiliated issuers:
| Affiliated Issuers | Beginning
Value | Purchases | Sales
Proceeds | Realized
Gain
(Loss) | Change in
Unrealized
Appreciation or
Depreciation | Ending
Value |
| MFS Institutional Money Market Portfolio | $9,390,392 | $74,852,821 | $82,730,524 | $1,635 | $(2,269) | $1,512,055 |
| Affiliated Issuers | Dividend
Income | Capital Gain
Distributions |
| MFS Institutional Money Market Portfolio | $318,256 | $— |
MFS Investors Trust Series
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of MFS Variable Insurance Trust and the Shareholders of MFS Investors Trust Series:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities of MFS Investors Trust Series (the “Fund”), including the portfolio of investments, as of December 31, 2023, 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, 2023, 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, 2023, by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
February 14, 2024
We have served as the auditor of one or more of the MFS investment companies since 1924.
MFS Investors Trust Series
Trustees and Officers — Identification and Background
The Trustees and Officers of the Trust, as of February 1, 2024, 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 TRUSTEE | | | | | | | | | | |
Michael W. Roberge (k)
(age 57) | | Trustee | | January 2021 | | 136 | | Massachusetts Financial Services Company, Chairman (since January 2021); Chief Executive Officer (since January 2017); Director; Chairman of the Board (since January 2022) | | N/A |
| INDEPENDENT TRUSTEES | | | | | | | | | | |
John P. Kavanaugh
(age 69) | | Trustee and Chair of Trustees | | January 2009 | | 136 | | Private investor | | N/A |
Steven E. Buller
(age 72) | | Trustee | | February 2014 | | 136 | | Private investor | | N/A |
John A. Caroselli
(age 69) | | Trustee | | March 2017 | | 136 | | Private investor; JC Global Advisors, LLC (management consulting), President (since 2015) | | N/A |
Maureen R. Goldfarb
(age 68) | | Trustee | | January 2009 | | 136 | | Private investor | | N/A |
Peter D. Jones
(age 68) | | Trustee | | January 2019 | | 136 | | Private investor | | N/A |
James W. Kilman, Jr.
(age 62) | | Trustee | | January 2019 | | 136 | | Burford Capital Limited (finance and investment management), Senior Advisor (since May 3, 2021), Chief Financial Officer (2019 - May 2, 2021); KielStrand Capital LLC (family office), Chief Executive Officer (since 2016) | | Alpha-En Corporation, Director (2016-2019) |
Clarence Otis, Jr.
(age 67) | | Trustee | | March 2017 | | 136 | | Private investor | | VF Corporation, Director; Verizon Communications, Inc., Director; The Travelers Companies, Director |
Maryanne L. Roepke
(age 67) | | Trustee | | May 2014 | | 136 | | Private investor | | N/A |
Laurie J. Thomsen
(age 66) | | Trustee | | March 2005 | | 136 | | Private investor | | The Travelers Companies, Director; Dycom Industries, Inc., Director |
| 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 50) | | Assistant Secretary and Assistant Clerk | | July 2005 | | 136 | | Massachusetts Financial Services Company, Senior Vice President and Senior Managing Counsel |
Kino Clark (k)
(age 55) | | Assistant Treasurer | | January 2012 | | 136 | | Massachusetts Financial Services Company, Vice President |
MFS Investors Trust Series
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 |
John W. Clark, Jr. (k)
(age 56) | | Assistant Treasurer | | April 2017 | | 136 | | Massachusetts Financial Services Company, Vice President |
David L. DiLorenzo (k)
(age 55) | | President | | July 2005 | | 136 | | Massachusetts Financial Services Company, Senior Vice President |
Heidi W. Hardin (k)
(age 56) | | Secretary and Clerk | | April 2017 | | 136 | | Massachusetts Financial Services Company, Executive Vice President and General Counsel |
Brian E. Langenfeld (k)
(age 50) | | Assistant Secretary and Assistant Clerk | | June 2006 | | 136 | | Massachusetts Financial Services Company, Vice President and Managing Counsel |
Rosa E. Licea-Mailloux (k)
(age 47) | | Chief Compliance Officer | | March 2022 | | 136 | | Massachusetts Financial Services Company, Vice President (since 2018); Director of Corporate Compliance (2018-2021), Senior Director Compliance (2021-2022), Senior Managing Director of North American Compliance & Chief Compliance Officer (since March 2022) |
Amanda S. Mooradian (k)
(age 44) | | Assistant Secretary and Assistant Clerk | | September 2018 | | 136 | | Massachusetts Financial Services Company, Assistant Vice President and Senior Counsel |
Susan A. Pereira (k)
(age 53) | | Assistant Secretary and Assistant Clerk | | July 2005 | | 136 | | Massachusetts Financial Services Company, Vice President and Managing Counsel |
Kasey L. Phillips (k)
(age 53) | | Assistant Treasurer | | September 2012 | | 136 | | Massachusetts Financial Services Company, Vice President |
Matthew A. Stowe (k)
(age 49) | | Assistant Secretary and Assistant Clerk | | October 2014 | | 136 | | Massachusetts Financial Services Company, Vice President and Senior Managing Counsel |
William B. Wilson (k)
(age 41) | | Assistant Secretary and Assistant Clerk | | October 2022 | | 136 | | Massachusetts Financial Services Company, Assistant Vice President and Senior Counsel |
James O. Yost (k)
(age 63) | | Treasurer | | September 1990 | | 136 | | 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. 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 (other than Messrs. Jones, Kilman and Roberge) 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. Mr. Roberge became a Trustee of the Funds on January 1, 2021 and Messrs. Jones and Kilman became Trustees of the Funds on January 1, 2019. 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, Caroselli, Jones and Otis 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.
MFS Investors Trust Series
Trustees and Officers - continued
The Statement of Additional Information for a Fund includes further information about the Trustees and is available without charge upon request by calling 1-800-225-2606.
| Investment Adviser | Custodian |
Massachusetts Financial Services Company
111 Huntington Avenue
Boston, MA 02199-7618 | State Street Bank and Trust Company
1 Congress Street, Suite 1
Boston, MA 02114-2016 |
| Distributor | Independent Registered Public Accounting Firm |
MFS Fund Distributors, Inc.
111 Huntington Avenue
Boston, MA 02199-7618 | Deloitte & Touche LLP
200 Berkeley Street
Boston, MA 02116 |
| Portfolio Manager(s) | |
Jude Jason
Alison O'Neill Mackey | |
MFS Investors Trust Series
Board Review of Investment Advisory Agreement
MFS Investors Trust Series
The Investment Company Act of 1940 requires that both the full Board of Trustees and a majority of the non-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, 2023 (“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 an independent consultant who was retained by and reported 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, 2022 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 as well as all other funds in the same investment classification/category (the “Broadridge expense group and universe”), (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 five-year period ended December 31, 2022, 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 4th quintile relative to the other funds in the universe for this five-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 the one-year period and the 4th quintile for the three-year period ended December 31, 2022 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. The Trustees noted that the total return performance (Class I shares) of the Fund’s retail counterpart, Massachusetts Investors Trust, which has substantially similar investment strategies, was in the 2nd quintile relative
MFS Investors Trust Series
Board Review of Investment Advisory Agreement - continued
to the other funds in its Broadridge performance universe for the five-year period ended December 31, 2022. 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.
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 the Broadridge expense group 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 higher 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 cash in-flows and out-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 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.
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 any 12b-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 and sub-custodians. The Trustees concluded that the various non-advisory services provided by MFS and its affiliates on behalf of the Fund were satisfactory.
The Trustees considered so-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 MFS discontinued its historic practice of obtaining investment research from portfolio brokerage commissions paid by certain MFS Funds effective January 2018, and directly pays or voluntarily reimburses 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 additional one-year period, commencing August 1, 2023.
MFS Investors Trust Series
Proxy Voting Policies and Information
MFS votes proxies on behalf of the fund pursuant to proxy voting policies and procedures that are available without charge, upon request, by calling 1-800-225-2606, by visiting mfs.com/proxyvoting, or by visiting the SEC’s Web site at http://www.sec.gov.
Information regarding how the fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available by August 31 of each year without charge by visiting mfs.com/proxyvoting, or by visiting the SEC’s Web site at http://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 as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s Web site at http://www.sec.gov. A shareholder can obtain the portfolio holdings report for the first and third quarters of the fund's fiscal year at mfs.com/vit1 by choosing the fund's name and then scrolling to the “Resources” section and clicking on the “Prospectus and Reports” tab.
FURTHER INFORMATION
From time to time, MFS may post important information about the fund or the MFS Funds on the MFS Web site (mfs.com). This information is available at https://www.mfs.com/announcements or at mfs.com/vit1 by choosing the fund's name and then scrolling to the “Resources” section and clicking on the “Announcements” tab, if any.
Information About Fund Contracts and Legal Claims
The fund has entered into contractual arrangements with an investment adviser, administrator, distributor, shareholder servicing agent, 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 $46,396,000 as capital gain dividends paid during the fiscal year.
For corporate shareholders, 100.00% of the ordinary income dividends paid during the fiscal year qualify for the corporate dividends received deduction.
| 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 are no longer our customer, we continue to share your information as described in this notice. |
| How? | All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MFS chooses to share; and whether you can limit this sharing. |
Reasons we can share your
personal information | Does MFS share? | Can you limit
this sharing? |
For our everyday business purposes –
such as to process your transactions, maintain your
account(s), respond to court orders and legal
investigations, or report to credit bureaus | Yes | No |
For our marketing purposes –
to offer our products and services to you | No | We don't share |
For joint marketing with other
financial companies | No | We don't share |
For our affiliates' everyday business purposes –
information about your transactions and experiences | No | We don't share |
For our affiliates' everyday business purposes –
information about your creditworthiness | No | We don't share |
| For nonaffiliates to market to you | No | We don't share |
| Questions? | Call 800-225-2606 or go to mfs.com. |
| 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. |
Annual Report
December 31, 2023
MFS® Mid Cap Growth Series
MFS® Variable Insurance Trust
MFS® Mid Cap Growth Series
| 1 |
| 2 |
| 4 |
| 6 |
| 7 |
| 11 |
| 12 |
| 13 |
| 14 |
| 15 |
| 21 |
| 22 |
| 25 |
| 27 |
| 27 |
| 27 |
| 27 |
| 27 |
| 28 |
The report is prepared for the general information of shareholders. It is authorized for distribution to prospective investors only when preceded or accompanied by a current prospectus.
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 Growth Series
Portfolio structure
Top ten holdings
| Monolithic Power Systems, Inc. | 3.5% |
| Cadence Design Systems, Inc. | 3.2% |
| Arthur J. Gallagher & Co. | 2.8% |
| Verisk Analytics, Inc., “A” | 2.6% |
| AMETEK, Inc. | 2.5% |
| MSCI, Inc. | 2.5% |
| Vulcan Materials Co. | 2.4% |
| Take-Two Interactive Software, Inc. | 2.3% |
| Gartner, Inc. | 2.3% |
| Copart, Inc. | 2.3% |
GICS equity sectors (g)
| Information Technology | 24.5% |
| Industrials | 21.8% |
| Health Care | 16.3% |
| Consumer Discretionary | 12.0% |
| Financials | 9.6% |
| Communication Services | 4.8% |
| Materials | 2.8% |
| Real Estate | 2.4% |
| Energy | 1.9% |
| Consumer Staples | 1.6% |
| Equity Warrants (o) | 0.0% |
| (g) | The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and S&P Global Market Intelligence Inc. (“S&P Global Market Intelligence”). GICS is a service mark of MSCI and S&P Global Market Intelligence and has been licensed for use by MFS. MFS has applied its own internal sector/industry classification methodology for equity securities and non-equity securities that are unclassified by GICS. |
Cash & Cash Equivalents includes any cash, investments in money market funds, short-term securities, and other assets less liabilities. Please see the Statement of Assets and Liabilities for additional information related to the fund’s cash position and other assets and liabilities.
Other includes equivalent exposure from currency derivatives and/or any offsets to derivative positions and may be negative.
Percentages are based on net assets as of December 31, 2023.
The portfolio is actively managed and current holdings may be different.
MFS Mid Cap Growth Series
Management Review
Summary of Results
For the twelve months ended December 31, 2023, Initial Class shares of the MFS Mid Cap Growth Series (fund) provided a total return of 21.32%, while Service Class shares of the fund provided a total return of 20.97%. These compare with a return of 25.87% over the same period for the fund’s benchmark, the Russell Midcap® Growth Index.
Market Environment
During the reporting period, central banks around the world had to combat the strongest inflationary pressures in four decades, fueled by the global fiscal response to the pandemic, disrupted supply chains and the dislocations to energy markets stemming from the war in Ukraine. Interest rates rose substantially, but the effects of a tighter monetary policy may not have been fully experienced yet, given that monetary policy works with long and variable lags. Strains resulting from the abrupt tightening of monetary policy began to affect some parts of the economy, most acutely among small and regional US banks, which suffered from deposit flight as depositors sought higher yields on their savings. Additionally, activity in the US housing sector has slowed as a result of higher mortgage rates. China’s abandonment of its Zero-COVID policy ushered in a brief uptick in economic activity in the world’s second-largest economy in early 2023, although its momentum soon stalled as the focus turned to the country’s highly indebted property development sector. In developed markets, consumer demand for services remained stronger than the demand for goods.
Early on, policymakers found themselves in the difficult position of trying to restrain inflation without tipping economies into recession. Despite the challenging macroeconomic and geopolitical environment, central banks focused on controlling price pressures while also confronting increasing financial stability concerns. Central banks had to juggle achieving their inflation mandates while using macroprudential tools (financial policies aimed at safeguarding the stability of the financial system) to keep banking systems liquid, a potentially difficult balancing act, and one that suggested that we may be nearing a peak in policy rates. As inflationary pressures eased toward the end of the period, financial conditions loosened in anticipation of easier monetary policy, boosting the market’s appetite for risk. Rapid advancements in artificial intelligence were a focus for investors.
Midcap growth equities posted broad based gains during the year supported by better than expected earnings results and hopes the US Federal Reserve will cut rates sooner in 2024. However there was a great deal of volatility during the year in reaction to macro data where factors dominated short term performance. Comments from the US Federal Reserve led investors to believe the Fed would be more aggressive cutting rates in 2024. This catalyzed a sharp rebound in low quality stocks with no regard to earnings, often characterized as a high beta rally. This high beta rally was a headwind to portfolio relative returns.
Detractors from Performance
Relative to the Russell Midcap® Growth Index, security selection within the consumer discretionary sector detracted from performance. There were no individual stocks within this sector, either in the fund or the benchmark, that were among the fund’s top relative detractors during the reporting period.
Stock selection and an overweight position in the financials sector also held back relative results, led by the fund’s holdings of securities exchange services provider NASDAQ(b).
Security selection and an underweight allocation to the information technology sector weakened relative performance. Here, not owning shares of strong-performing cybersecurity firm CrowdStrike Holdings and data integration and software solutions provider Palantir Technologies hurt relative returns. The stock price of CrowdStrike climbed as the company posted stronger-than-expected revenue growth, fueled by the high-beta rally.
Elsewhere, the fund’s holdings of oil and gas company Chesapeake Energy(b), health science solutions provider Revvity(b)(h) and dental equipment manufacturer Envista Holdings(b) weighed on relative returns. The timing of the fund’s ownership in shares of pharmaceutical company West Pharmaceutical Services and engineering solutions provider IDEX(h) further weakened relative results. Additionally, the fund’s overweight position in real estate investment trust SBA Communications dampened relative performance.
The fund's cash and/or cash equivalents position during the period was another detractor from relative performance. Under normal market conditions, the fund strives to be fully invested and generally holds cash to buy new holdings and to provide liquidity. In a period when equity markets increased, as measured by the fund's benchmark, holding cash hurt performance versus the benchmark, which has no cash position.
Contributors to Performance
Stock selection within the materials sector contributed to the fund’s relative performance. There were no individual stocks within this sector, either in the fund or the benchmark, that were among the fund’s top relative contributors for the period.
Stocks in other sectors that strengthened relative results included the fund’s overweight positions in semiconductor-based power electronics solutions provider Monolithic Power Systems and integrated circuits and electronic devices developer Cadence Design Systems. The stock price of Monolithic Power Systems rose as the company posted better-than-feared total revenue results driven by
MFS Mid Cap Growth Series
Management Review - continued
strength in chips for AI servers. The company also announced reassuring 2024 guidance in an environment where competitors are lowering expectations, which further supported the stock. The fund’s holdings of semiconductor equipment manufacturer ASM International(b) (Netherlands), enterprise software solutions Constellation Software(b) (Canada), enterprise cloud computing solutions provider ServiceNow(b), and building products manufacturer AZEK(b) also contributed to relative returns. The timing of the fund’s ownership in shares of medical device manufacturing company Dexcom was also among the top relative contributors for the period. Avoiding shares of poor-performing medical equipment manufacturer and distributor Resmed, medical device manufacturer Insulet, and cloud-based human capital management software solutions provider Paycom Software further benefited relative performance.
Respectfully,
Portfolio Manager(s)
Eric Braz and Eric Fischman
Note to Shareholders: Effective April 3, 2023, Paul Gordon is no longer a Portfolio Manager of the fund.
| (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 Mid Cap Growth Series
Performance Summary Through 12/31/23
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 shares, 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 shareholder would pay on fund distributions or the redemption of fund shares. 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
Total Returns through 12/31/23
Average annual total returns
| Share Class | Class Inception Date | 1-yr | 5-yr | 10-yr |
| Initial Class | 4/28/2000 | 21.32% | 13.31% | 11.12% |
| Service Class | 5/01/2000 | 20.97% | 13.05% | 10.85% |
Comparative benchmark(s)
| Russell Midcap® Growth Index (f) | 25.87% | 13.81% | 10.57% |
| (f) | Source: FactSet Research Systems Inc. |
Benchmark Definition(s)
Russell Midcap® Growth Index(h) - constructed to provide a comprehensive barometer for growth securities in the mid-cap segment of the U.S. equity universe. Companies in this index generally have higher price-to-book ratios and higher forecasted growth values.
It is not possible to invest directly in an index.
| (h) | Frank Russell Company (“Russell”) is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes and/or Russell ratings or underlying data and no party may rely on any Russell Indexes and/or Russell ratings and/or underlying data contained in this document. No further distribution of Russell Data is permitted without Russell's express written consent. Russell does not promote, sponsor, or endorse the content of this document. |
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.
MFS Mid Cap Growth Series
Performance Summary – continued
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 Mid Cap Growth Series
Expense Table
Fund expenses borne by the shareholders during the period,
July 1, 2023 through December 31, 2023
As a shareholder 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, 2023 through December 31, 2023.
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
7/01/23 | Ending
Account Value
12/31/23 | Expenses
Paid During
Period (p)
7/01/23-12/31/23 |
| Initial Class | Actual | 0.80% | $1,000.00 | $1,073.75 | $4.18 |
| Hypothetical (h) | 0.80% | $1,000.00 | $1,021.17 | $4.08 |
| Service Class | Actual | 1.05% | $1,000.00 | $1,073.59 | $5.49 |
| Hypothetical (h) | 1.05% | $1,000.00 | $1,019.91 | $5.35 |
| (h) | 5% class return per year before expenses. |
| (p) | “Expenses Paid During Period” are equal to each class's annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). |
MFS Mid Cap Growth Series
Portfolio of Investments − 12/31/23
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – 97.7% |
| Aerospace & Defense – 3.3% | |
| Hexcel Corp. | | 29,101 | $ 2,146,199 |
| Howmet Aerospace, Inc. | | 134,063 | 7,255,489 |
| TransDigm Group, Inc. | | 1,863 | 1,884,611 |
| | | | | $11,286,299 |
| Automotive – 2.3% | |
| Copart, Inc. (a) | | 161,902 | $ 7,933,198 |
| Brokerage & Asset Managers – 1.1% | |
| LPL Financial Holdings, Inc. | | 11,464 | $ 2,609,436 |
| NASDAQ, Inc. | | 20,947 | 1,217,858 |
| | | | | $3,827,294 |
| Business Services – 13.5% | |
| CoStar Group, Inc. (a) | | 78,862 | $ 6,891,750 |
| Equifax, Inc. | | 11,482 | 2,839,384 |
| Factset Research Systems, Inc. | | 6,557 | 3,128,017 |
| FleetCor Technologies, Inc. (a) | | 10,234 | 2,892,231 |
| Morningstar, Inc. | | 18,136 | 5,191,248 |
| MSCI, Inc. | | 15,206 | 8,601,274 |
| TransUnion | | 42,104 | 2,892,966 |
| Tyler Technologies, Inc. (a) | | 12,920 | 5,402,110 |
| Verisk Analytics, Inc., “A” | | 37,337 | 8,918,316 |
| | | | | $46,757,296 |
| Computer Software – 8.6% | |
| ANSYS, Inc. (a) | | 8,085 | $ 2,933,885 |
| Autodesk, Inc. (a) | | 12,467 | 3,035,465 |
| Bumble, Inc., “A” (a) | | 22,532 | 332,121 |
| Cadence Design Systems, Inc. (a) | | 40,160 | 10,938,379 |
| Datadog, Inc., “A” (a) | | 31,494 | 3,822,742 |
| Dun & Bradstreet Holdings, Inc. | | 80,744 | 944,705 |
| Synopsys, Inc. (a) | | 14,856 | 7,649,503 |
| | | | | $29,656,800 |
| Computer Software - Systems – 5.9% | |
| Arista Networks, Inc. (a) | | 11,924 | $ 2,808,221 |
| Constellation Software, Inc. | | 2,904 | 7,200,048 |
| Guidewire Software, Inc. (a) | | 10,497 | 1,144,593 |
| HubSpot, Inc. (a) | | 5,181 | 3,007,778 |
| ServiceNow, Inc. (a) | | 8,757 | 6,186,733 |
| | | | | $20,347,373 |
| Construction – 3.8% | |
| AZEK Co., Inc. (a) | | 91,022 | $ 3,481,592 |
| Martin Marietta Materials, Inc. | | 3,100 | 1,546,621 |
| Vulcan Materials Co. | | 35,936 | 8,157,831 |
| | | | | $13,186,044 |
| Consumer Products – 1.6% | |
| Church & Dwight Co., Inc. | | 49,758 | $ 4,705,117 |
| ODDITY Tech Ltd. (a) | | 21,114 | 982,434 |
| | | | | $5,687,551 |
MFS Mid Cap Growth Series
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Consumer Services – 1.4% | |
| Bright Horizons Family Solutions, Inc. (a) | | 49,832 | $ 4,696,168 |
| Electrical Equipment – 5.4% | |
| AMETEK, Inc. | | 53,610 | $ 8,839,753 |
| Hubbell, Inc. | | 7,720 | 2,539,340 |
| Littlefuse, Inc. | | 10,864 | 2,906,772 |
| nVent Electric PLC | | 34,772 | 2,054,677 |
| Rockwell Automation, Inc. | | 8,114 | 2,519,235 |
| | | | | $18,859,777 |
| Electronics – 5.7% | |
| ASM International N.V. | | 13,406 | $ 6,955,051 |
| Entegris, Inc. | | 4,724 | 566,030 |
| Monolithic Power Systems, Inc. | | 19,372 | 12,219,470 |
| | | | | $19,740,551 |
| Energy - Independent – 1.9% | |
| Chesapeake Energy Corp. | | 47,293 | $ 3,638,723 |
| Diamondback Energy, Inc. | | 19,910 | 3,087,643 |
| | | | | $6,726,366 |
| Engineering - Construction – 0.6% | |
| Quanta Services, Inc. | | 9,098 | $ 1,963,348 |
| Entertainment – 1.6% | |
| Spotify Technology S.A. (a) | | 28,757 | $ 5,403,728 |
| Gaming & Lodging – 3.5% | |
| DraftKings, Inc. (a) | | 85,179 | $ 3,002,560 |
| Hyatt Hotels Corp. | | 39,243 | 5,117,680 |
| Las Vegas Sands Corp. | | 31,631 | 1,556,561 |
| Red Rock Resorts, Inc. | | 45,235 | 2,412,382 |
| | | | | $12,089,183 |
| General Merchandise – 0.4% | |
| Five Below, Inc. (a) | | 6,825 | $ 1,454,817 |
| Insurance – 2.8% | |
| Arthur J. Gallagher & Co. | | 42,533 | $ 9,564,821 |
| Internet – 2.6% | |
| Gartner, Inc. (a) | | 17,841 | $ 8,048,254 |
| Match Group, Inc. (a) | | 29,427 | 1,074,085 |
| | | | | $9,122,339 |
| Leisure & Toys – 2.6% | |
| Electronic Arts, Inc. | | 7,047 | $ 964,100 |
| Take-Two Interactive Software, Inc. (a) | | 50,205 | 8,080,495 |
| | | | | $9,044,595 |
| Machinery & Tools – 2.4% | |
| Ingersoll Rand, Inc. | | 43,991 | $ 3,402,264 |
| Wabtec Corp. | | 39,974 | 5,072,701 |
| | | | | $8,474,965 |
MFS Mid Cap Growth Series
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Medical & Health Technology & Services – 4.9% | |
| Chemed Corp. | | 4,033 | $ 2,358,297 |
| Henry Schein, Inc. (a) | | 13,062 | 988,924 |
| ICON PLC (a) | | 21,127 | 5,980,420 |
| IDEXX Laboratories, Inc. (a) | | 6,572 | 3,647,788 |
| Veeva Systems, Inc. (a) | | 21,146 | 4,071,028 |
| | | | | $17,046,457 |
| Medical Equipment – 8.9% | |
| Agilent Technologies, Inc. | | 40,050 | $ 5,568,152 |
| Bio-Techne Corp. | | 4,568 | 352,467 |
| Bruker BioSciences Corp. | | 68,731 | 5,050,354 |
| DexCom, Inc. (a) | | 37,527 | 4,656,725 |
| Envista Holdings Corp. (a) | | 30,756 | 739,989 |
| Masimo Corp. (a) | | 15,179 | 1,779,131 |
| STERIS PLC | | 30,427 | 6,689,376 |
| Waters Corp. (a) | | 4,963 | 1,633,968 |
| West Pharmaceutical Services, Inc. | | 12,817 | 4,513,122 |
| | | | | $30,983,284 |
| Pharmaceuticals – 2.4% | |
| Alnylam Pharmaceuticals, Inc. (a) | | 2,210 | $ 423,016 |
| Argenx SE, ADR (a) | | 5,879 | 2,236,548 |
| Ascendis Pharma, ADR (a) | | 29,416 | 3,704,945 |
| Legend Biotech Corp., ADR (a) | | 34,470 | 2,074,060 |
| | | | | $8,438,569 |
| Pollution Control – 1.1% | |
| GFL Environmental, Inc. | | 87,036 | $ 3,003,612 |
| Waste Connections, Inc. | | 6,067 | 905,621 |
| | | | | $3,909,233 |
| Printing & Publishing – 2.3% | |
| Warner Music Group Corp. | | 26,251 | $ 939,523 |
| Wolters Kluwer N.V. | | 49,465 | 7,027,908 |
| | | | | $7,967,431 |
| Restaurants – 1.9% | |
| Chipotle Mexican Grill, Inc., “A” (a) | | 2,032 | $ 4,647,103 |
| Wingstop, Inc. | | 8,105 | 2,079,581 |
| | | | | $6,726,684 |
| Specialty Stores – 4.8% | |
| Lululemon Athletica, Inc. (a) | | 10,790 | $ 5,516,819 |
| O'Reilly Automotive, Inc. (a) | | 6,340 | 6,023,507 |
| Tractor Supply Co. | | 7,811 | 1,679,600 |
| Ulta Beauty, Inc. (a) | | 6,915 | 3,388,281 |
| | | | | $16,608,207 |
| Telecommunications - Wireless – 0.4% | |
| SBA Communications Corp., REIT | | 5,822 | $ 1,476,983 |
| Total Common Stocks (Identified Cost, $191,465,542) | | $338,979,361 |
MFS Mid Cap Growth Series
Portfolio of Investments – continued
| Issuer | Strike
Price | First
Exercise | Shares/Par | Value ($) |
| Warrants – 0.0% | | | | |
| Computer Software - Systems – 0.0% |
Constellation Software, Inc. (CAD 100 principal amount of Series 2 Debentures for 1 warrant, Expiration 3/31/40) (a)
(Identified Cost, $0) | CAD 11.5 | N/A | 2,984 | $ 0 |
| | | | | |
| Investment Companies (h) – 2.4% |
| Money Market Funds – 2.4% | |
| MFS Institutional Money Market Portfolio, 5.42% (v) (Identified Cost, $8,192,058) | | | 8,192,205 | $ 8,193,843 |
| Other Assets, Less Liabilities – (0.1)% | | (420,963) |
| Net Assets – 100.0% | $346,752,241 |
| (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 $8,193,843 and $338,979,361, respectively. | | | |
| (v) | Affiliated issuer that is available only to investment companies managed by MFS. The rate quoted for the MFS Institutional Money Market Portfolio is the annualized seven-day yield of the fund at period end. | | | |
| The following abbreviations are used in this report and are defined: |
| ADR | American Depositary Receipt |
| REIT | Real Estate Investment Trust |
| Abbreviations indicate amounts shown in currencies other than the U.S. dollar. All amounts are stated in U.S. dollars unless otherwise indicated. A list of abbreviations is shown below: |
| CAD | Canadian Dollar |
See Notes to Financial Statements
MFS Mid Cap Growth Series
| 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 12/31/23Assets | |
| Investments in unaffiliated issuers, at value (identified cost, $191,465,542) | $338,979,361 |
| Investments in affiliated issuers, at value (identified cost, $8,192,058) | 8,193,843 |
| Foreign currency, at value (identified cost, $22) | 22 |
| Receivables for | |
| Fund shares sold | 78,087 |
| Dividends | 54,033 |
| Other assets | 1,539 |
| Total assets | $347,306,885 |
| Liabilities | |
| Payables for | |
| Fund shares reacquired | $455,126 |
| Payable to affiliates | |
| Investment adviser | 28,112 |
| Administrative services fee | 585 |
| Shareholder servicing costs | 180 |
| Distribution and/or service fees | 3,295 |
| Payable for independent Trustees' compensation | 15 |
| Accrued expenses and other liabilities | 67,331 |
| Total liabilities | $554,644 |
| Net assets | $346,752,241 |
| Net assets consist of | |
| Paid-in capital | $176,168,716 |
| Total distributable earnings (loss) | 170,583,525 |
| Net assets | $346,752,241 |
| Shares of beneficial interest outstanding | 42,633,449 |
| | Net assets | Shares
outstanding | Net asset value
per share |
| Initial Class | $226,799,231 | 26,460,505 | $8.57 |
| Service Class | 119,953,010 | 16,172,944 | 7.42 |
See Notes to Financial Statements
MFS Mid Cap Growth Series
| 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 12/31/23 | |
| Net investment income (loss) | |
| Income | |
| Dividends | $2,018,154 |
| Dividends from affiliated issuers | 417,403 |
| Other | 7,194 |
| Interest | 5,341 |
| Income on securities loaned | 5,185 |
| Foreign taxes withheld | (44,349) |
| Total investment income | $2,408,928 |
| Expenses | |
| Management fee | $2,477,130 |
| Distribution and/or service fees | 279,185 |
| Shareholder servicing costs | 4,895 |
| Administrative services fee | 57,897 |
| Independent Trustees' compensation | 7,633 |
| Custodian fee | 18,689 |
| Shareholder communications | 10,640 |
| Audit and tax fees | 70,821 |
| Legal fees | 1,835 |
| Miscellaneous | 26,411 |
| Total expenses | $2,955,136 |
| Reduction of expenses by investment adviser | (42,220) |
| Net expenses | $2,912,916 |
| Net investment income (loss) | $(503,988) |
| Realized and unrealized gain (loss) | |
| Realized gain (loss) (identified cost basis) | |
| Unaffiliated issuers | $23,936,437 |
| Affiliated issuers | 547 |
| Foreign currency | 460 |
| Net realized gain (loss) | $23,937,444 |
| Change in unrealized appreciation or depreciation | |
| Unaffiliated issuers | $40,315,984 |
| Affiliated issuers | (910) |
| Translation of assets and liabilities in foreign currencies | 732 |
| Net unrealized gain (loss) | $40,315,806 |
| Net realized and unrealized gain (loss) | $64,253,250 |
| Change in net assets from operations | $63,749,262 |
See Notes to Financial Statements
MFS Mid Cap Growth Series
| Financial Statements | Statements of Changes in Net Assets |
These statements describe the increases and/or decreases in net assets resulting from operations, any distributions, and any shareholder transactions.
| | Year ended |
| | 12/31/23 | 12/31/22 |
| Change in net assets | | |
| From operations | | |
| Net investment income (loss) | $(503,988) | $(853,816) |
| Net realized gain (loss) | 23,937,444 | 4,209,338 |
| Net unrealized gain (loss) | 40,315,806 | (131,622,812) |
| Change in net assets from operations | $63,749,262 | $(128,267,290) |
| Total distributions to shareholders | $(4,657,287) | $(51,377,023) |
| Change in net assets from fund share transactions | $(28,044,013) | $46,656,883 |
| Total change in net assets | $31,047,962 | $(132,987,430) |
| Net assets | | |
| At beginning of period | 315,704,279 | 448,691,709 |
| At end of period | $346,752,241 | $315,704,279 |
See Notes to Financial Statements
MFS Mid Cap Growth Series
| Financial Statements | Financial Highlights |
The financial highlights table is intended to help you understand the fund's financial performance for the 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 |
| | 12/31/23 | 12/31/22 | 12/31/21 | 12/31/20 | 12/31/19 |
| Net asset value, beginning of period | $7.16 | $11.72 | $12.64 | $9.96 | $8.23 |
| Income (loss) from investment operations | | | | | |
| Net investment income (loss) (d) | $(0.01) | $(0.01) | $(0.05) | $(0.03) | $(0.01) |
| Net realized and unrealized gain (loss) | 1.53 | (3.28) | 1.78 | 3.53 | 3.10 |
| Total from investment operations | $1.52 | $(3.29) | $1.73 | $3.50 | $3.09 |
| Less distributions declared to shareholders | | | | | |
| From net realized gain | $(0.11) | $(1.27) | $(2.65) | $(0.82) | $(1.36) |
| Net asset value, end of period (x) | $8.57 | $7.16 | $11.72 | $12.64 | $9.96 |
| Total return (%) (k)(r)(s)(x) | 21.32 | (28.70) | 14.11 | 36.48 | 38.66 |
Ratios (%) (to average net assets)
and Supplemental data: | | | | | |
| Expenses before expense reductions | 0.81 | 0.81 | 0.81 | 0.81 | 0.81 |
| Expenses after expense reductions | 0.80 | 0.80 | 0.79 | 0.80 | 0.80 |
| Net investment income (loss) | (0.07) | (0.17) | (0.44) | (0.26) | (0.07) |
| Portfolio turnover | 31 | 27 | 18 | 40 | 17 |
| Net assets at end of period (000 omitted) | $226,799 | $210,790 | $306,174 | $311,988 | $290,512 |
| Service Class | Year ended |
| | 12/31/23 | 12/31/22 | 12/31/21 | 12/31/20 | 12/31/19 |
| Net asset value, beginning of period | $6.23 | $10.43 | $11.53 | $9.17 | $7.68 |
| Income (loss) from investment operations | | | | | |
| Net investment income (loss) (d) | $(0.02) | $(0.03) | $(0.08) | $(0.05) | $(0.03) |
| Net realized and unrealized gain (loss) | 1.32 | (2.90) | 1.63 | 3.23 | 2.88 |
| Total from investment operations | $1.30 | $(2.93) | $1.55 | $3.18 | $2.85 |
| Less distributions declared to shareholders | | | | | |
| From net realized gain | $(0.11) | $(1.27) | $(2.65) | $(0.82) | $(1.36) |
| Net asset value, end of period (x) | $7.42 | $6.23 | $10.43 | $11.53 | $9.17 |
| Total return (%) (k)(r)(s)(x) | 20.97 | (28.79) | 13.88 | 36.12 | 38.28 |
Ratios (%) (to average net assets)
and Supplemental data: | | | | | |
| Expenses before expense reductions | 1.06 | 1.06 | 1.06 | 1.06 | 1.06 |
| Expenses after expense reductions | 1.05 | 1.05 | 1.04 | 1.05 | 1.05 |
| Net investment income (loss) | (0.32) | (0.41) | (0.68) | (0.51) | (0.32) |
| Portfolio turnover | 31 | 27 | 18 | 40 | 17 |
| Net assets at end of period (000 omitted) | $119,953 | $104,914 | $142,517 | $131,845 | $103,504 |
| (d) | Per share data is based on average shares outstanding. |
| (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 Growth Series
Notes to Financial Statements
(1) Business and Organization
MFS Mid Cap Growth Series (the fund) is a diversified series of MFS Variable Insurance Trust (the trust). The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The shareholders of each series of the trust are separate accounts of insurance companies, which offer variable annuity and/or life insurance products, and qualified retirement and pension plans.
The fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services - Investment Companies.
(2) Significant Accounting Policies
General — The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the fund’s Statement of Assets and Liabilities through the date that the financial statements were issued.
Balance Sheet Offsetting — The fund's accounting policy with respect to balance sheet offsetting is that, absent an event of default by the counterparty or a termination of the agreement, the International Swaps and Derivatives Association (ISDA) Master Agreement, or similar agreement, does not result in an offset of reported amounts of financial assets and financial liabilities in the Statement of Assets and Liabilities across transactions between the fund and the applicable counterparty. The fund's right to setoff may be restricted or prohibited by the bankruptcy or insolvency laws of the particular jurisdiction to which a specific master netting agreement counterparty is subject. Balance sheet offsetting disclosures, to the extent applicable to the fund, have been included in the fund’s Significant Accounting Policies note under the captions for each of the fund’s in-scope financial instruments and transactions.
Investment Valuations — Subject to its oversight, the fund's Board of Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments to MFS as the fund's adviser, pursuant to the fund’s valuation policy and procedures which have been adopted by the adviser and approved by the Board. In accordance with Rule 2a-5 under the Investment Company Act of 1940, the Board of Trustees designated the adviser as the “valuation designee” of the fund. If the adviser, as valuation designee, determines that reliable market quotations are not readily available for an investment, the investment is valued at fair value as determined in good faith by the adviser in accordance with the adviser’s fair valuation policy and procedures.
Under the fund's valuation policy and procedures, 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. 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.
Under the fund’s valuation policy and procedures, market quotations are not considered to be readily available for debt instruments, floating rate loans, and many types of derivatives. These investments are generally valued at fair value based on information from third-party pricing services or otherwise determined by the adviser in accordance with the adviser’s fair valuation policy and procedures. 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, spreads and other market data. An investment may also be valued at fair value if the adviser determines that the investment’s value has been materially affected by events occurring after the close of the exchange or market on which the investment is principally traded (such as foreign exchange or market) and prior to the determination of the fund’s net asset value, or after the halt of trading of a specific security where trading does not resume prior to the close of the exchange or market on which the security is principally traded. Events that occur after foreign markets close (such as developments in foreign markets and significant movements in the U.S. markets) and prior to the determination of the fund’s net asset value may be deemed to have a material effect on the value of securities traded in foreign markets. Accordingly, the fund’s foreign equity securities may often be valued at fair value. The adviser generally relies on third-party pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and financial condition of the issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment
MFS Mid Cap Growth Series
Notes to Financial Statements - continued
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 significant 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, 2023 in valuing the fund's assets and liabilities:
| Financial Instruments | Level 1 | Level 2 | Level 3 | Total |
| Equity Securities: | | | | |
| United States | $304,889,133 | $— | $— | $304,889,133 |
| Netherlands | 13,982,959 | — | — | 13,982,959 |
| Canada | 11,109,282 | 0 | — | 11,109,282 |
| Denmark | 3,704,945 | — | — | 3,704,945 |
| Belgium | 2,236,548 | — | — | 2,236,548 |
| China | 2,074,060 | — | — | 2,074,060 |
| Israel | 982,434 | — | — | 982,434 |
| Mutual Funds | 8,193,843 | — | — | 8,193,843 |
| Total | $347,173,204 | $— | $— | $347,173,204 |
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, 2023, there were no securities on loan or collateral outstanding.
Indemnifications — Under the fund's organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the fund. Additionally, in the normal course of business, the fund enters into agreements with service providers that may contain indemnification clauses. The fund's maximum exposure under these agreements is unknown as this would involve future claims that may be made against the fund that have not yet occurred.
MFS Mid Cap Growth Series
Notes to Financial Statements - continued
Investment Transactions and Income — Interest income is recorded on the accrual basis. Dividends received in cash are recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded when the fund is informed of the dividend if such information is obtained subsequent to the ex-dividend date. Dividend and interest payments received in additional securities are recorded on the ex-dividend or ex-interest date in an amount equal to the value of the security on such date.
The fund may receive proceeds from litigation settlements. Any proceeds received from litigation involving portfolio holdings are reflected in the Statement of Operations in realized gain/loss if the security has been disposed of by the fund or in unrealized gain/loss if the security is still held by the fund. Any other proceeds from litigation not related to portfolio holdings are reflected as other income in the Statement of Operations.
Investment transactions are recorded on the trade date. In determining the net gain or loss on securities sold, the cost of securities is determined on the identified cost basis.
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 the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income, expense, gain or loss in different periods for financial statement and tax purposes will reverse at some time in the future.
Book/tax differences primarily relate to net operating losses and wash sale loss deferrals.
The tax character of distributions declared to shareholders for the last two fiscal years is as follows:
| | Year ended
12/31/23 | Year ended
12/31/22 |
| Long-term capital gains | $4,657,287 | $51,377,023 |
The federal tax cost and the tax basis components of distributable earnings were as follows:
| As of 12/31/23 | |
| Cost of investments | $200,367,863 |
| Gross appreciation | 151,383,081 |
| Gross depreciation | (4,577,740) |
| Net unrealized appreciation (depreciation) | $146,805,341 |
| Undistributed long-term capital gain | 23,778,984 |
| Other temporary differences | (800) |
| Total distributable earnings (loss) | $170,583,525 |
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:
| | Year
ended
12/31/23 | | Year
ended
12/31/22 |
| Initial Class | $2,924,090 | | $33,177,661 |
| Service Class | 1,733,197 | | 18,199,362 |
| Total | $4,657,287 | | $51,377,023 |
MFS Mid Cap Growth Series
Notes to Financial Statements - continued
(3) Transactions with Affiliates
Investment Adviser — The fund has an investment advisory agreement with MFS to provide overall investment management and related administrative services and facilities to the fund. The management fee is computed daily and paid monthly at the following annual rates based on the fund's average daily net assets:
| Up to $1 billion | 0.75% |
| In excess of $1 billion | 0.70% |
MFS has agreed in writing to reduce its management fee by a specified amount if certain MFS mutual fund assets exceed thresholds agreed to by MFS and the fund's Board of Trustees. MFS has also agreed in writing to waive at least 0.01% of its management fee as part of this agreement. The agreement to waive at least 0.01% of the management fee will continue until modified by the fund's Board of Trustees, but such agreement will continue at least until April 30, 2025. For the year ended December 31, 2023, this management fee reduction amounted to $42,220, which is included in the reduction of total expenses in the Statement of Operations. The management fee incurred for the year ended December 31, 2023 was equivalent to an annual effective rate of 0.74% of the fund's average daily net assets.
Distributor — MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, is the distributor of shares of the fund. The Trustees have adopted a distribution plan for the Service Class shares pursuant to Rule 12b-1 under the Investment Company Act of 1940.
The fund’s distribution plan provides that the fund will pay MFD distribution and/or service fees equal to 0.25% per annum of its average daily net assets attributable to Service Class shares as partial consideration for services performed and expenses incurred by MFD and financial intermediaries (including participating insurance companies that invest in the fund to fund variable annuity and variable life insurance contracts, sponsors of qualified retirement and pension plans that invest in the fund, and affiliates of these participating insurance companies and plan sponsors) in connection with the sale and distribution of the Service Class shares as well as shareholder servicing and account maintenance activities. MFD may subsequently pay all, or a portion, of the distribution and/or service fees to financial intermediaries. The distribution and/or service fees are computed daily and paid monthly.
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, 2023, the fee was $3,610, which equated to 0.0011% annually of the fund's average daily net assets. MFSC also receives reimbursement from the fund for out-of-pocket expenses paid by MFSC on behalf of the fund. For the year ended December 31, 2023, these costs amounted to $1,285.
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 is computed daily and paid monthly. The administrative services fee incurred for the year ended December 31, 2023 was equivalent to an annual effective rate of 0.0175% 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. Independent Trustees’ compensation is accrued daily and paid subsequent to each Trustee Board meeting. The fund does not pay compensation directly to Trustees or officers of the fund who are also officers of the investment adviser, all of whom receive remuneration from MFS for their services to the fund. Certain officers and Trustees of the fund are officers or directors of MFS, MFD, and MFSC.
Other — 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 but does incur investment and operating costs.
During the year ended December 31, 2023, pursuant to a policy adopted by the Board of Trustees and designed to comply with Rule 17a-7 under the Investment Company Act of 1940 (the “Act”) and relevant guidance, the fund engaged in purchase and sale transactions with funds and accounts for which MFS serves as investment adviser or sub-adviser (“cross-trades”) which amounted to $423,106 and $241,402, respectively. The sales transactions resulted in net realized gains (losses) of $(108,489).
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 year ended December 31, 2023, this reimbursement amounted to $7,073, which is included in “Other” income in the Statement of Operations.
MFS Mid Cap Growth Series
Notes to Financial Statements - continued
(4) Portfolio Securities
For the year ended December 31, 2023, purchases and sales of investments, other than short-term obligations, aggregated $99,478,764 and $132,565,433, 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
12/31/23 | | Year ended
12/31/22 |
| | Shares | Amount | | Shares | Amount |
| Shares sold | | | | | |
| Initial Class | 2,145,987 | $16,486,910 | | 2,834,622 | $24,426,303 |
| Service Class | 2,192,563 | 14,771,729 | | 3,913,069 | 29,932,462 |
| | 4,338,550 | $31,258,639 | | 6,747,691 | $54,358,765 |
Shares issued to shareholders
in reinvestment of distributions | | | | | |
| Initial Class | 372,623 | $2,895,280 | | 4,314,495 | $32,833,305 |
| Service Class | 257,533 | 1,733,197 | | 2,749,148 | 18,199,362 |
| | 630,156 | $4,628,477 | | 7,063,643 | $51,032,667 |
| Shares reacquired | | | | | |
| Initial Class | (5,479,008) | $(42,898,608) | | (3,856,490) | $(32,740,496) |
| Service Class | (3,122,292) | (21,032,521) | | (3,480,324) | (25,994,053) |
| | (8,601,300) | $(63,931,129) | | (7,336,814) | $(58,734,549) |
| Net change | | | | | |
| Initial Class | (2,960,398) | $(23,516,418) | | 3,292,627 | $24,519,112 |
| Service Class | (672,196) | (4,527,595) | | 3,181,893 | 22,137,771 |
| | (3,632,594) | $(28,044,013) | | 6,474,520 | $46,656,883 |
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 20%, 7%, and 3%, respectively, of the value of outstanding voting shares of the fund.
(6) Line of Credit
The fund and certain other funds managed by MFS participate in a $1.45 billion unsecured committed line of credit of which $1.2 billion is reserved for use by the fund and certain other MFS U.S. funds. The line of credit is provided by a syndicate of banks under a credit agreement. Borrowings may be made for temporary financing needs. Interest is charged to each fund, based on its borrowings, generally at a rate equal to the highest of 1) Daily Simple SOFR (Secured Overnight Financing Rate) plus 0.10%, 2) the Federal Funds Effective Rate, or 3) the Overnight Bank Funding Rate, each 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. The line of credit expires on March 14, 2024 unless extended or renewed. In addition, the fund and other funds managed by MFS have established unsecured uncommitted borrowing arrangements with certain banks for temporary financing needs. Interest is charged to each fund, based on its borrowings, at rates equal to customary reference rates plus an agreed upon spread. For the year ended December 31, 2023, the fund’s commitment fee and interest expense were $1,680 and $0, respectively, and are included in “Miscellaneous” expense in the Statement of Operations.
(7) Investments in Affiliated Issuers
An affiliated issuer may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. For the purposes of this report, the following were affiliated issuers:
MFS Mid Cap Growth Series
Notes to Financial Statements - continued
| Affiliated Issuers | Beginning
Value | Purchases | Sales
Proceeds | Realized
Gain
(Loss) | Change in
Unrealized
Appreciation or
Depreciation | Ending
Value |
| MFS Institutional Money Market Portfolio | $7,781,244 | $43,345,344 | $42,932,382 | $547 | $(910) | $8,193,843 |
| Affiliated Issuers | Dividend
Income | Capital Gain
Distributions |
| MFS Institutional Money Market Portfolio | $417,403 | $— |
MFS Mid Cap Growth Series
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of MFS Variable Insurance Trust and the Shareholders of MFS Mid Cap Growth Series:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities of MFS Mid Cap Growth Series (the “Fund”), including the portfolio of investments, as of December 31, 2023, 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, 2023, 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, 2023, by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
February 14, 2024
We have served as the auditor of one or more of the MFS investment companies since 1924.
MFS Mid Cap Growth Series
Trustees and Officers — Identification and Background
The Trustees and Officers of the Trust, as of February 1, 2024, 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 TRUSTEE | | | | | | | | | | |
Michael W. Roberge (k)
(age 57) | | Trustee | | January 2021 | | 136 | | Massachusetts Financial Services Company, Chairman (since January 2021); Chief Executive Officer (since January 2017); Director; Chairman of the Board (since January 2022) | | N/A |
| INDEPENDENT TRUSTEES | | | | | | | | | | |
John P. Kavanaugh
(age 69) | | Trustee and Chair of Trustees | | January 2009 | | 136 | | Private investor | | N/A |
Steven E. Buller
(age 72) | | Trustee | | February 2014 | | 136 | | Private investor | | N/A |
John A. Caroselli
(age 69) | | Trustee | | March 2017 | | 136 | | Private investor; JC Global Advisors, LLC (management consulting), President (since 2015) | | N/A |
Maureen R. Goldfarb
(age 68) | | Trustee | | January 2009 | | 136 | | Private investor | | N/A |
Peter D. Jones
(age 68) | | Trustee | | January 2019 | | 136 | | Private investor | | N/A |
James W. Kilman, Jr.
(age 62) | | Trustee | | January 2019 | | 136 | | Burford Capital Limited (finance and investment management), Senior Advisor (since May 3, 2021), Chief Financial Officer (2019 - May 2, 2021); KielStrand Capital LLC (family office), Chief Executive Officer (since 2016) | | Alpha-En Corporation, Director (2016-2019) |
Clarence Otis, Jr.
(age 67) | | Trustee | | March 2017 | | 136 | | Private investor | | VF Corporation, Director; Verizon Communications, Inc., Director; The Travelers Companies, Director |
Maryanne L. Roepke
(age 67) | | Trustee | | May 2014 | | 136 | | Private investor | | N/A |
Laurie J. Thomsen
(age 66) | | Trustee | | March 2005 | | 136 | | Private investor | | The Travelers Companies, Director; Dycom Industries, Inc., Director |
| 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 50) | | Assistant Secretary and Assistant Clerk | | July 2005 | | 136 | | Massachusetts Financial Services Company, Senior Vice President and Senior Managing Counsel |
Kino Clark (k)
(age 55) | | Assistant Treasurer | | January 2012 | | 136 | | Massachusetts Financial Services Company, Vice President |
MFS Mid Cap Growth Series
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 |
John W. Clark, Jr. (k)
(age 56) | | Assistant Treasurer | | April 2017 | | 136 | | Massachusetts Financial Services Company, Vice President |
David L. DiLorenzo (k)
(age 55) | | President | | July 2005 | | 136 | | Massachusetts Financial Services Company, Senior Vice President |
Heidi W. Hardin (k)
(age 56) | | Secretary and Clerk | | April 2017 | | 136 | | Massachusetts Financial Services Company, Executive Vice President and General Counsel |
Brian E. Langenfeld (k)
(age 50) | | Assistant Secretary and Assistant Clerk | | June 2006 | | 136 | | Massachusetts Financial Services Company, Vice President and Managing Counsel |
Rosa E. Licea-Mailloux (k)
(age 47) | | Chief Compliance Officer | | March 2022 | | 136 | | Massachusetts Financial Services Company, Vice President (since 2018); Director of Corporate Compliance (2018-2021), Senior Director Compliance (2021-2022), Senior Managing Director of North American Compliance & Chief Compliance Officer (since March 2022) |
Amanda S. Mooradian (k)
(age 44) | | Assistant Secretary and Assistant Clerk | | September 2018 | | 136 | | Massachusetts Financial Services Company, Assistant Vice President and Senior Counsel |
Susan A. Pereira (k)
(age 53) | | Assistant Secretary and Assistant Clerk | | July 2005 | | 136 | | Massachusetts Financial Services Company, Vice President and Managing Counsel |
Kasey L. Phillips (k)
(age 53) | | Assistant Treasurer | | September 2012 | | 136 | | Massachusetts Financial Services Company, Vice President |
Matthew A. Stowe (k)
(age 49) | | Assistant Secretary and Assistant Clerk | | October 2014 | | 136 | | Massachusetts Financial Services Company, Vice President and Senior Managing Counsel |
William B. Wilson (k)
(age 41) | | Assistant Secretary and Assistant Clerk | | October 2022 | | 136 | | Massachusetts Financial Services Company, Assistant Vice President and Senior Counsel |
James O. Yost (k)
(age 63) | | Treasurer | | September 1990 | | 136 | | 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. 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 (other than Messrs. Jones, Kilman and Roberge) 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. Mr. Roberge became a Trustee of the Funds on January 1, 2021 and Messrs. Jones and Kilman became Trustees of the Funds on January 1, 2019. 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, Caroselli, Jones and Otis 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.
MFS Mid Cap Growth Series
Trustees and Officers - continued
The Statement of Additional Information for a Fund includes further information about the Trustees and is available without charge upon request by calling 1-800-225-2606.
| Investment Adviser | Custodian |
Massachusetts Financial Services Company
111 Huntington Avenue
Boston, MA 02199-7618 | State Street Bank and Trust Company
1 Congress Street, Suite 1
Boston, MA 02114-2016 |
| Distributor | Independent Registered Public Accounting Firm |
MFS Fund Distributors, Inc.
111 Huntington Avenue
Boston, MA 02199-7618 | Deloitte & Touche LLP
200 Berkeley Street
Boston, MA 02116 |
| Portfolio Manager(s) | |
Eric Braz
Eric Fischman | |
MFS Mid Cap Growth Series
Board Review of Investment Advisory Agreement
MFS Mid Cap Growth Series
The Investment Company Act of 1940 requires that both the full Board of Trustees and a majority of the non-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, 2023 (“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 an independent consultant who was retained by and reported 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, 2022 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 as well as all other funds in the same investment classification/category (the “Broadridge expense group and universe”), (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 five-year period ended December 31, 2022, 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 five-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 4th quintile for the one-year period and the 3rd quintile for the three-year period ended December 31, 2022 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 Mid Cap Growth Series
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 the Broadridge expense group 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 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 cash in-flows and out-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 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.
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 any 12b-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 and sub-custodians. The Trustees concluded that the various non-advisory services provided by MFS and its affiliates on behalf of the Fund were satisfactory.
The Trustees considered so-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 MFS discontinued its historic practice of obtaining investment research from portfolio brokerage commissions paid by certain MFS Funds effective January 2018, and directly pays or voluntarily reimburses 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 additional one-year period, commencing August 1, 2023.
MFS Mid Cap Growth Series
Proxy Voting Policies and Information
MFS votes proxies on behalf of the fund pursuant to proxy voting policies and procedures that are available without charge, upon request, by calling 1-800-225-2606, by visiting mfs.com/proxyvoting, or by visiting the SEC’s Web site at http://www.sec.gov.
Information regarding how the fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available by August 31 of each year without charge by visiting mfs.com/proxyvoting, or by visiting the SEC’s Web site at http://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 as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s Web site at http://www.sec.gov. A shareholder can obtain the portfolio holdings report for the first and third quarters of the fund's fiscal year at mfs.com/vit1 by choosing the fund's name and then scrolling to the “Resources” section and clicking on the “Prospectus and Reports” tab.
FURTHER INFORMATION
From time to time, MFS may post important information about the fund or the MFS Funds on the MFS Web site (mfs.com). This information is available at https://www.mfs.com/announcements or at mfs.com/vit1 by choosing the fund's name and then scrolling to the “Resources” section and clicking on the “Announcements” tab, if any.
Information About Fund Contracts and Legal Claims
The fund has entered into contractual arrangements with an investment adviser, administrator, distributor, shareholder servicing agent, 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 $5,124,000 as capital gain dividends paid during the fiscal year.
| 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 are no longer our customer, we continue to share your information as described in this notice. |
| How? | All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MFS chooses to share; and whether you can limit this sharing. |
Reasons we can share your
personal information | Does MFS share? | Can you limit
this sharing? |
For our everyday business purposes –
such as to process your transactions, maintain your
account(s), respond to court orders and legal
investigations, or report to credit bureaus | Yes | No |
For our marketing purposes –
to offer our products and services to you | No | We don't share |
For joint marketing with other
financial companies | No | We don't share |
For our affiliates' everyday business purposes –
information about your transactions and experiences | No | We don't share |
For our affiliates' everyday business purposes –
information about your creditworthiness | No | We don't share |
| For nonaffiliates to market to you | No | We don't share |
| Questions? | Call 800-225-2606 or go to mfs.com. |
| 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. |
Annual Report
December 31, 2023
MFS® New Discovery Series
MFS® Variable Insurance Trust
MFS® New Discovery Series
| 1 |
| 2 |
| 4 |
| 6 |
| 7 |
| 12 |
| 13 |
| 14 |
| 15 |
| 16 |
| 22 |
| 23 |
| 26 |
| 28 |
| 28 |
| 28 |
| 28 |
| 29 |
The report is prepared for the general information of shareholders. It is authorized for distribution to prospective investors only when preceded or accompanied by a current prospectus.
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
Top ten holdings
| GFL Environmental, Inc. | 2.1% |
| Summit Materials, Inc., “A” | 2.1% |
| Sensata Technologies Holding PLC | 1.9% |
| RB Global, Inc. | 1.8% |
| DoubleVerify Holdings, Inc. | 1.8% |
| Jacobs Solutions, Inc. | 1.7% |
| TopBuild Corp. | 1.7% |
| nVent Electric PLC | 1.7% |
| Five9, Inc. | 1.7% |
| Crane Co. | 1.7% |
GICS equity industries (g)
| Industrials | 24.0% |
| Information Technology | 20.5% |
| Health Care | 19.5% |
| Consumer Discretionary | 11.5% |
| Materials | 5.2% |
| Energy | 4.8% |
| Financials | 4.4% |
| Consumer Staples | 3.6% |
| Real Estate | 2.3% |
| Communication Services | 0.5% |
| Equity Warrants (o) | 0.0% |
| (g) | The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and S&P Global Market Intelligence Inc. (“S&P Global Market Intelligence”). GICS is a service mark of MSCI and S&P Global Market Intelligence and has been licensed for use by MFS. MFS has applied its own internal sector/industry classification methodology for equity securities and non-equity securities that are unclassified by GICS. |
Cash & Cash Equivalents includes any cash, investments in money market funds, short-term securities, and other assets less liabilities. Please see the Statement of Assets and Liabilities for additional information related to the fund’s cash position and other assets and liabilities.
Other includes equivalent exposure from currency derivatives and/or any offsets to derivative positions and may be negative.
Percentages are based on net assets as of December 31, 2023.
The portfolio is actively managed and current holdings may be different.
Management Review
Summary of Results
For the twelve months ended December 31, 2023, Initial Class shares of the MFS New Discovery Series (fund) provided a total return of 14.41%, while Service Class shares of the fund provided a total return of 14.25%. These compare with a return of 18.66% over the same period for the fund’s benchmark, the Russell 2000® Growth Index.
Market Environment
During the reporting period, central banks around the world had to combat the strongest inflationary pressures in four decades, fueled by the global fiscal response to the pandemic, disrupted supply chains and the dislocations to energy markets stemming from the war in Ukraine. Interest rates rose substantially, but the effects of a tighter monetary policy may not have been fully experienced yet, given that monetary policy works with long and variable lags. Strains resulting from the abrupt tightening of monetary policy began to affect some parts of the economy, most acutely among small and regional US banks, which suffered from deposit flight as depositors sought higher yields on their savings. Additionally, activity in the US housing sector has slowed as a result of higher mortgage rates. China’s abandonment of its Zero-COVID policy ushered in a brief uptick in economic activity in the world’s second-largest economy in early 2023, although its momentum soon stalled as the focus turned to the country’s highly indebted property development sector. In developed markets, consumer demand for services remained stronger than the demand for goods.
Early on, policymakers found themselves in the difficult position of trying to restrain inflation without tipping economies into recession. Despite the challenging macroeconomic and geopolitical environment, central banks focused on controlling price pressures while also confronting increasing financial stability concerns. Central banks had to juggle achieving their inflation mandates while using macroprudential tools (financial policies aimed at safeguarding the stability of the financial system) to keep banking systems liquid, a potentially difficult balancing act, and one that suggested that we may be nearing a peak in policy rates. As inflationary pressures eased toward the end of the period, financial conditions loosened in anticipation of easier monetary policy, boosting the market’s appetite for risk. Rapid advancements in artificial intelligence were a focus for investors.
Normalizing supply chains, low levels of unemployment across developed markets and signs that inflation levels have peaked were supportive factors for the macroeconomic backdrop.
Detractors from Performance
Relative to the Russell 2000® Growth Index, stock selection within the information technology, health care, and consumer staples sectors detracted from performance. Within the information technology sector, the fund’s overweight position in global technology consultancy firm Thoughtworks Holdings held back relative results. The share price of Thoughtworks Holdings fell as the company reduced its outlook amid ongoing industry pressures and announced a decline in revenue in its retail and consumer segments, along with depressed margins due to higher employee costs. Not owning shares of strong-performing server and storage systems services provider Super Micro Computer also hurt relative performance. The fund’s holdings of video game services company Keywords Studios(b) (United Kingdom) and subsystem device manufacturer Methode Electronics(b)(h) further weighed on relative returns. Within the health care sector, the fund’s holdings of dental equipment manufacturer Envista Holdings(b), and an overweight position in medical device manufacturer Silk Road Medical(h), weakened relative results. Within the consumer staples sector, an overweight position in luxury wine producer Duckhorn Portfolio was also among the fund’s top relative detractors for the reporting period.
Elsewhere, the fund’s holdings of business process management solutions provider WNS Holdings(b) (India), pet health and wellness services provider Petco Health & Wellness(b)(h), and global industrial technology company Sensata Technologies(b) further weighed on relative performance.
Contributors to Performance
Stock selection within the consumer discretionary sector contributed to relative returns led by the fund’s holdings of insulation product distributor TopBuild(b), discount retailer Ollie's Bargain Outlet(b), and sports footwear manufacturer On Holdings(b) (Switzerland). The stock price of TopBuild rose as the company posted above-consensus operating results led by higher-than-expected TruTeam (a division of TopBuild) and specialty distribution sales and margins.
Individual stocks in other sectors that also strengthened relative performance included the fund’s holdings of freight transportation services provider XPO(b), global life science company Abcam(b)(h) (United Kingdom), building products manufacturer AZEK(b), purpose-made drug and medication packaging manufacturer Gerresheimer(b) (Germany), industrial products manufacturer Crane(b), and software platform developer DoubleVerify(b). The fund’s overweight position in digital automotive wholesale retailer ACV Auctions further benefited relative returns.
Management Review - continued
Respectfully,
Portfolio Manager(s)
Michael Grossman
| (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.
Performance Summary Through 12/31/23
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 shares, 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 shareholder would pay on fund distributions or the redemption of fund shares. 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
Total Returns through 12/31/23
Average annual total returns
| Share Class | Class Inception Date | 1-yr | 5-yr | 10-yr |
| Initial Class | 5/01/1998 | 14.41% | 11.08% | 7.67% |
| Service Class | 5/01/2000 | 14.25% | 10.81% | 7.41% |
Comparative benchmark(s)
| Russell 2000® Growth Index (f) | 18.66% | 9.22% | 7.16% |
| (f) | Source: FactSet Research Systems Inc. |
Benchmark Definition(s)
Russell 2000® Growth Index(h) - constructed to provide a comprehensive barometer for growth securities in the small-cap segment of the U.S. equity universe. Companies in this index generally have higher price-to-book ratios and higher forecasted growth values.
It is not possible to invest directly in an index.
| (h) | Frank Russell Company (“Russell”) is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes and/or Russell ratings or underlying data and no party may rely on any Russell Indexes and/or Russell ratings and/or underlying data contained in this document. No further distribution of Russell Data is permitted without Russell's express written consent. Russell does not promote, sponsor, or endorse the content of this document. |
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 Summary – continued
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.
Expense Table
Fund expenses borne by the shareholders during the period,
July 1, 2023 through December 31, 2023
As a shareholder 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, 2023 through December 31, 2023.
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
7/01/23 | Ending
Account Value
12/31/23 | Expenses
Paid During
Period (p)
7/01/23-12/31/23 |
| Initial Class | Actual | 0.87% | $1,000.00 | $1,032.72 | $4.46 |
| Hypothetical (h) | 0.87% | $1,000.00 | $1,020.82 | $4.43 |
| Service Class | Actual | 1.12% | $1,000.00 | $1,031.67 | $5.74 |
| Hypothetical (h) | 1.12% | $1,000.00 | $1,019.56 | $5.70 |
| (h) | 5% class return per year before expenses. |
| (p) | “Expenses Paid During Period” are equal to each class's annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). |
Portfolio of Investments − 12/31/23
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – 96.3% |
| Aerospace & Defense – 3.7% | |
| AeroVironment, Inc. (a) | | 29,590 | $ 3,729,524 |
| CACI International, Inc., “A” (a) | | 33,807 | 10,948,735 |
| KBR, Inc. | | 212,240 | 11,760,218 |
| | | | | $26,438,477 |
| Apparel Manufacturers – 1.9% | |
| Deckers Outdoor Corp. (a) | | 7,197 | $ 4,810,691 |
| On Holding AG (a) | | 92,600 | 2,497,422 |
| Skechers USA, Inc., “A” (a) | | 99,974 | 6,232,379 |
| | | | | $13,540,492 |
| Automotive – 1.1% | |
| Visteon Corp. (a) | | 60,395 | $ 7,543,336 |
| Biotechnology – 1.7% | |
| Adaptive Biotechnologies Corp. (a) | | 419,614 | $ 2,056,109 |
| BioAtla, Inc. (a) | | 105,598 | 259,771 |
| Immunocore Holdings PLC, ADR (a) | | 60,076 | 4,104,392 |
| Lyell Immunopharma, Inc. (a) | | 210,617 | 408,597 |
| MaxCyte, Inc. (a) | | 491,000 | 2,307,700 |
| Oxford Nanopore Technologies PLC (a) | | 663,620 | 1,761,129 |
| Prelude Therapeutics, Inc. (a) | | 101,925 | 435,220 |
| Sana Biotechnology, Inc. (a) | | 162,437 | 662,743 |
| | | | | $11,995,661 |
| Brokerage & Asset Managers – 2.6% | |
| GCM Grosvenor, Inc., “A” | | 637,985 | $ 5,716,346 |
| Hamilton Lane, Inc., “A” | | 57,675 | 6,542,652 |
| WisdomTree Investments, Inc. | | 947,296 | 6,564,761 |
| | | | | $18,823,759 |
| Business Services – 6.7% | |
| ExlService Holdings, Inc. (a) | | 382,206 | $ 11,791,055 |
| Keywords Studios PLC | | 328,382 | 6,956,669 |
| Remitly Global, Inc. (a) | | 432,054 | 8,390,489 |
| Thoughtworks Holding, Inc. (a) | | 1,031,905 | 4,963,463 |
| TriNet Group, Inc. (a) | | 41,858 | 4,978,172 |
| WNS (Holdings) Ltd., ADR (a) | | 169,667 | 10,722,955 |
| | | | | $47,802,803 |
| Chemicals – 0.7% | |
| Element Solutions, Inc. | | 207,186 | $ 4,794,284 |
| Computer Software – 9.4% | |
| Alkami Technology, Inc. (a) | | 304,614 | $ 7,386,889 |
| AvidXchange Holdings, Inc. (a) | | 343,722 | 4,258,716 |
| Definitive Healthcare Corp. (a) | | 669,062 | 6,650,476 |
| DoubleVerify Holdings, Inc. (a) | | 354,538 | 13,039,908 |
| Kinaxis, Inc. (a) | | 58,751 | 6,593,609 |
| Pagerduty, Inc. (a) | | 410,908 | 9,512,520 |
| Paylocity Holding Corp. (a) | | 17,656 | 2,910,592 |
| Procore Technologies, Inc. (a) | | 125,443 | 8,683,164 |
| Sabre Corp. (a) | | 1,018,661 | 4,482,108 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Computer Software – continued | |
| Zeta Global Holdings Corp. (a) | | 410,513 | $ 3,620,725 |
| | | | | $67,138,707 |
| Computer Software - Systems – 4.9% | |
| Five9, Inc. (a) | | 153,835 | $ 12,105,276 |
| Guidewire Software, Inc. (a) | | 58,623 | 6,392,252 |
| Q2 Holdings, Inc. (a) | | 220,569 | 9,574,900 |
| Rapid7, Inc. (a) | | 126,950 | 7,248,845 |
| | | | | $35,321,273 |
| Construction – 3.0% | |
| AZEK Co., Inc. (a) | | 178,812 | $ 6,839,559 |
| Summit Materials, Inc., “A” (a) | | 381,504 | 14,672,644 |
| | | | | $21,512,203 |
| Consumer Products – 0.9% | |
| e.l.f. Beauty, Inc. (a) | | 30,920 | $ 4,462,993 |
| ODDITY Tech Ltd. (a) | | 36,852 | 1,714,723 |
| | | | | $6,177,716 |
| Consumer Services – 1.8% | |
| Boyd Group Services, Inc. | | 33,647 | $ 7,071,697 |
| European Wax Center, Inc., “A” (a) | | 424,147 | 5,764,158 |
| | | | | $12,835,855 |
| Electrical Equipment – 4.6% | |
| Littlefuse, Inc. | | 27,262 | $ 7,294,221 |
| nVent Electric PLC | | 205,565 | 12,146,836 |
| Sensata Technologies Holding PLC | | 359,173 | 13,494,129 |
| | | | | $32,935,186 |
| Electronics – 5.5% | |
| Advanced Energy Industries, Inc. | | 98,091 | $ 10,684,072 |
| Allegro MicroSystems, Inc. (a) | | 208,762 | 6,319,226 |
| Formfactor, Inc. (a) | | 187,499 | 7,820,583 |
| Nova Ltd. (a) | | 33,209 | 4,562,584 |
| Onto Innovation, Inc. (a) | | 66,421 | 10,155,771 |
| | | | | $39,542,236 |
| Energy - Independent – 2.5% | |
| Matador Resources Co. | | 154,746 | $ 8,798,858 |
| Permian Resources Corp. | | 658,682 | 8,958,075 |
| | | | | $17,756,933 |
| Energy - Renewables – 0.4% | |
| Nextracker, Inc. “A” (a) | | 58,499 | $ 2,740,678 |
| Engineering - Construction – 4.2% | |
| Corporacion Inmobiliaria Vesta S.A.B. de C.V., ADR | | 127,589 | $ 5,055,076 |
| Jacobs Solutions, Inc. | | 96,102 | 12,474,040 |
| TopBuild Corp. (a) | | 33,143 | 12,404,099 |
| | | | | $29,933,215 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Entertainment – 0.5% | |
| Vivid Seats, Inc., “A” (a) | | 624,053 | $ 3,944,015 |
| Food & Beverages – 1.2% | |
| Duckhorn Portfolio, Inc. (a) | | 724,344 | $ 7,134,788 |
| Oatly Group AB, ADR (a)(l) | | 1,383,197 | 1,632,173 |
| | | | | $8,766,961 |
| Gaming & Lodging – 0.9% | |
| Genius Sports Ltd. (a) | | 1,032,755 | $ 6,382,426 |
| General Merchandise – 2.0% | |
| Five Below, Inc. (a) | | 37,707 | $ 8,037,624 |
| Ollie's Bargain Outlet Holdings, Inc. (a) | | 86,741 | 6,582,775 |
| | | | | $14,620,399 |
| Leisure & Toys – 1.9% | |
| Brunswick Corp. | | 78,714 | $ 7,615,580 |
| Corsair Gaming, Inc. (a) | | 269,334 | 3,797,609 |
| Funko, Inc., “A” (a) | | 236,553 | 1,828,555 |
| | | | | $13,241,744 |
| Machinery & Tools – 3.5% | |
| Crane Co. | | 102,093 | $ 12,061,267 |
| RB Global, Inc. | | 195,826 | 13,098,801 |
| | | | | $25,160,068 |
| Medical & Health Technology & Services – 1.8% | |
| Certara, Inc. (a) | | 498,766 | $ 8,773,294 |
| HealthEquity, Inc. (a) | | 66,549 | 4,412,199 |
| | | | | $13,185,493 |
| Medical Equipment – 10.7% | |
| Bio-Techne Corp. | | 97,282 | $ 7,506,279 |
| Bruker BioSciences Corp. | | 107,904 | 7,928,786 |
| CryoPort, Inc. (a) | | 384,643 | 5,958,120 |
| Envista Holdings Corp. (a) | | 240,663 | 5,790,352 |
| Gerresheimer AG | | 72,953 | 7,598,616 |
| Inari Medical, Inc. (a) | | 62,716 | 4,071,523 |
| Maravai Lifesciences Holdings, Inc., “A” (a) | | 208,685 | 1,366,887 |
| Masimo Corp. (a) | | 65,608 | 7,689,914 |
| Natera, Inc. (a) | | 85,631 | 5,363,926 |
| OptiNose, Inc. (a) | | 581,679 | 750,366 |
| Outset Medical, Inc. (a) | | 135,860 | 735,002 |
| PROCEPT BioRobotics Corp. (a) | | 110,295 | 4,622,463 |
| QIAGEN N.V. (a) | | 200,881 | 8,724,262 |
| Shockwave Medical, Inc. (a) | | 43,386 | 8,267,636 |
| | | | | $76,374,132 |
| Oil Services – 2.3% | |
| Cactus, Inc., “A” | | 92,750 | $ 4,210,850 |
| ChampionX Corp. | | 99,607 | 2,909,521 |
| TechnipFMC PLC | | 468,052 | 9,426,567 |
| | | | | $16,546,938 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Pharmaceuticals – 4.4% | |
| Amicus Therapeutics, Inc. (a) | | 442,083 | $ 6,273,158 |
| Annexon, Inc. (a) | | 157,851 | 716,644 |
| Ascendis Pharma, ADR (a) | | 20,031 | 2,522,904 |
| Collegium Pharmaceutical, Inc. (a) | | 128,893 | 3,967,326 |
| Harmony Biosciences Holdings (a) | | 97,099 | 3,136,298 |
| Kymera Therapeutics, Inc. (a) | | 81,476 | 2,074,379 |
| Legend Biotech Corp., ADR (a) | | 49,816 | 2,997,429 |
| Neurocrine Biosciences, Inc. (a) | | 32,117 | 4,231,736 |
| SpringWorks Therapeutics, Inc. (a) | | 89,957 | 3,283,430 |
| Viking Therapeutics, Inc. (a) | | 128,472 | 2,390,864 |
| | | | | $31,594,168 |
| Pollution Control – 2.1% | |
| GFL Environmental, Inc. | | 437,893 | $ 15,111,687 |
| Real Estate – 1.6% | |
| STAG Industrial, Inc., REIT | | 285,881 | $ 11,223,688 |
| Restaurants – 1.5% | |
| U.S. Foods Holding Corp. (a) | | 231,781 | $ 10,525,175 |
| Specialty Chemicals – 2.5% | |
| Ashland, Inc. | | 57,384 | $ 4,838,045 |
| Axalta Coating Systems Ltd. (a) | | 183,377 | 6,229,317 |
| Chemours Co. | | 205,438 | 6,479,514 |
| | | | | $17,546,876 |
| Specialty Stores – 1.8% | |
| ACV Auctions, Inc. (a) | | 327,966 | $ 4,968,685 |
| Chewy, Inc., “A” (a) | | 345,088 | 8,154,429 |
| | | | | $13,123,114 |
| Trucking – 2.0% | |
| Knight-Swift Transportation Holdings, Inc. | | 157,632 | $ 9,087,485 |
| XPO Logistics, Inc. (a) | | 63,121 | 5,528,768 |
| | | | | $14,616,253 |
| Total Common Stocks (Identified Cost, $614,938,296) | | $688,795,951 |
| | Strike
Price | First
Exercise | | |
| Warrants – 0.0% | | | | |
| Medical Equipment – 0.0% |
OptiNose, Inc. (1 share for 1 warrant, Expiration 11/23/27) (a)
(Identified Cost, $1,867) | $ 2.57 | 11/23/22 | 186,662 | $ 0 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Investment Companies (h) – 3.7% |
| Money Market Funds – 3.7% | |
| MFS Institutional Money Market Portfolio, 5.42% (v) (Identified Cost, $26,801,172) | | | 26,802,330 | $ 26,807,690 |
| Collateral for Securities Loaned – 0.3% |
| State Street Navigator Securities Lending Government Money Market Portfolio, 5.36% (j) (Identified Cost, $1,858,865) | | | 1,858,865 | $ 1,858,865 |
| Other Assets, Less Liabilities – (0.3)% | | (2,273,086) |
| Net Assets – 100.0% | $715,189,420 |
| (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 $26,807,690 and $690,654,816, respectively. | | | |
| (j) | The rate quoted is the annualized seven-day yield of the fund at period end. | | | |
| (l) | A portion of this security is on loan. See Note 2 for additional information. | | | |
| (v) | Affiliated issuer that is available only to investment companies managed by MFS. The rate quoted for the MFS Institutional Money Market Portfolio is the annualized seven-day yield of the fund at period end. | | | |
| The following abbreviations are used in this report and are defined: |
| ADR | American Depositary Receipt |
| REIT | Real Estate Investment Trust |
See Notes to Financial Statements
| 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 12/31/23Assets | |
| Investments in unaffiliated issuers, at value, including $1,468,955 of securities on loan (identified cost, $616,799,028) | $690,654,816 |
| Investments in affiliated issuers, at value (identified cost, $26,801,172) | 26,807,690 |
| Receivables for | |
| Fund shares sold | 694,816 |
| Interest and dividends | 320,940 |
| Other assets | 2,608 |
| Total assets | $718,480,870 |
| Liabilities | |
| Payables for | |
| Fund shares reacquired | $1,240,036 |
| Collateral for securities loaned, at value (c) | 1,858,865 |
| Payable to affiliates | |
| Investment adviser | 33,536 |
| Administrative services fee | 1,081 |
| Shareholder servicing costs | 468 |
| Distribution and/or service fees | 11,259 |
| Payable for independent Trustees' compensation | 15 |
| Accrued expenses and other liabilities | 146,190 |
| Total liabilities | $3,291,450 |
| Net assets | $715,189,420 |
| Net assets consist of | |
| Paid-in capital | $798,760,117 |
| Total distributable earnings (loss) | (83,570,697) |
| Net assets | $715,189,420 |
| Shares of beneficial interest outstanding | 64,113,324 |
| | Net assets | Shares
outstanding | Net asset value
per share |
| Initial Class | $308,483,565 | 23,833,477 | $12.94 |
| Service Class | 406,705,855 | 40,279,847 | 10.10 |
| (c) | Non-cash collateral is not included. |
See Notes to Financial Statements
| 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 12/31/23 | |
| Net investment income (loss) | |
| Income | |
| Dividends | $3,259,869 |
| Dividends from affiliated issuers | 1,628,942 |
| Income on securities loaned | 122,964 |
| Other | 62,895 |
| Foreign taxes withheld | (87,423) |
| Total investment income | $4,987,247 |
| Expenses | |
| Management fee | $6,144,508 |
| Distribution and/or service fees | 971,092 |
| Shareholder servicing costs | 10,786 |
| Administrative services fee | 108,730 |
| Independent Trustees' compensation | 13,445 |
| Custodian fee | 50,879 |
| Shareholder communications | 11,280 |
| Audit and tax fees | 70,180 |
| Legal fees | 3,760 |
| Miscellaneous | 30,594 |
| Total expenses | $7,415,254 |
| Reduction of expenses by investment adviser | (495,888) |
| Net expenses | $6,919,366 |
| Net investment income (loss) | $(1,932,119) |
| Realized and unrealized gain (loss) | |
| Realized gain (loss) (identified cost basis) | |
| Unaffiliated issuers | $(56,640,289) |
| Affiliated issuers | 7,529 |
| Foreign currency | (403) |
| Net realized gain (loss) | $(56,633,163) |
| Change in unrealized appreciation or depreciation | |
| Unaffiliated issuers | $151,093,063 |
| Affiliated issuers | (3,550) |
| Translation of assets and liabilities in foreign currencies | 5,459 |
| Net unrealized gain (loss) | $151,094,972 |
| Net realized and unrealized gain (loss) | $94,461,809 |
| Change in net assets from operations | $92,529,690 |
See Notes to Financial Statements
| 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 |
| | 12/31/23 | 12/31/22 |
| Change in net assets | | |
| From operations | | |
| Net investment income (loss) | $(1,932,119) | $(2,757,964) |
| Net realized gain (loss) | (56,633,163) | (88,725,335) |
| Net unrealized gain (loss) | 151,094,972 | (207,358,071) |
| Change in net assets from operations | $92,529,690 | $(298,841,370) |
| Total distributions to shareholders | $— | $(245,542,542) |
| Change in net assets from fund share transactions | $(38,689,026) | $200,448,615 |
| Total change in net assets | $53,840,664 | $(343,935,297) |
| Net assets | | |
| At beginning of period | 661,348,756 | 1,005,284,053 |
| At end of period | $715,189,420 | $661,348,756 |
See Notes to Financial Statements
| 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 |
| | 12/31/23 | 12/31/22 | 12/31/21 | 12/31/20 | 12/31/19 |
| Net asset value, beginning of period | $11.31 | $23.30 | $26.96 | $20.28 | $17.46 |
| Income (loss) from investment operations | | | | | |
| Net investment income (loss) (d) | $(0.02) | $(0.04) | $(0.11) | $(0.06) | $(0.07) |
| Net realized and unrealized gain (loss) | 1.65 | (6.56) | 0.92 | 8.84 | 6.89 |
| Total from investment operations | $1.63 | $(6.60) | $0.81 | $8.78 | $6.82 |
| Less distributions declared to shareholders | | | | | |
| From net realized gain | $— | $(5.39) | $(4.47) | $(2.10) | $(4.00) |
| Net asset value, end of period (x) | $12.94 | $11.31 | $23.30 | $26.96 | $20.28 |
| Total return (%) (k)(r)(s)(x) | 14.41 | (29.76) | 1.80 | 45.89 | 41.70 |
Ratios (%) (to average net assets)
and Supplemental data: | | | | | |
| Expenses before expense reductions | 0.94 | 0.95 | 0.94 | 0.95 | 0.95 |
| Expenses after expense reductions | 0.87 | 0.87 | 0.87 | 0.91 | 0.94 |
| Net investment income (loss) | (0.14) | (0.23) | (0.42) | (0.30) | (0.33) |
| Portfolio turnover | 61 | 48 | 79 | 80 | 54 |
| Net assets at end of period (000 omitted) | $308,484 | $286,747 | $433,168 | $465,663 | $343,133 |
| Service Class | Year ended |
| | 12/31/23 | 12/31/22 | 12/31/21 | 12/31/20 | 12/31/19 |
| Net asset value, beginning of period | $8.84 | $19.84 | $23.61 | $18.02 | $15.91 |
| Income (loss) from investment operations | | | | | |
| Net investment income (loss) (d) | $(0.04) | $(0.06) | $(0.16) | $(0.10) | $(0.11) |
| Net realized and unrealized gain (loss) | 1.30 | (5.55) | 0.86 | 7.79 | 6.22 |
| Total from investment operations | $1.26 | $(5.61) | $0.70 | $7.69 | $6.11 |
| Less distributions declared to shareholders | | | | | |
| From net realized gain | $— | $(5.39) | $(4.47) | $(2.10) | $(4.00) |
| Net asset value, end of period (x) | $10.10 | $8.84 | $19.84 | $23.61 | $18.02 |
| Total return (%) (k)(r)(s)(x) | 14.25 | (29.99) | 1.57 | 45.58 | 41.27 |
Ratios (%) (to average net assets)
and Supplemental data: | | | | | |
| Expenses before expense reductions | 1.19 | 1.20 | 1.19 | 1.20 | 1.20 |
| Expenses after expense reductions | 1.12 | 1.12 | 1.12 | 1.16 | 1.19 |
| Net investment income (loss) | (0.39) | (0.48) | (0.66) | (0.56) | (0.58) |
| Portfolio turnover | 61 | 48 | 79 | 80 | 54 |
| Net assets at end of period (000 omitted) | $406,706 | $374,602 | $572,116 | $584,928 | $472,393 |
| (d) | Per share data is based on average shares outstanding. |
| (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
Notes to Financial Statements
(1) Business and Organization
MFS New Discovery Series (the fund) is a diversified series of MFS Variable Insurance Trust (the trust). The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The shareholders of each series of the trust are separate accounts of insurance companies, which offer variable annuity and/or life insurance products, and qualified retirement and pension plans.
The fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services - Investment Companies.
(2) Significant Accounting Policies
General — The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the fund’s Statement of Assets and Liabilities through the date that the financial statements were issued. The fund will generally focus on securities of small size companies which may be more volatile than those of larger companies. 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, environmental, public health, 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’s in-scope financial instruments and transactions.
Investment Valuations — Subject to its oversight, the fund's Board of Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments to MFS as the fund's adviser, pursuant to the fund’s valuation policy and procedures which have been adopted by the adviser and approved by the Board. In accordance with Rule 2a-5 under the Investment Company Act of 1940, the Board of Trustees designated the adviser as the “valuation designee” of the fund. If the adviser, as valuation designee, determines that reliable market quotations are not readily available for an investment, the investment is valued at fair value as determined in good faith by the adviser in accordance with the adviser’s fair valuation policy and procedures.
Under the fund's valuation policy and procedures, 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. 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.
Under the fund’s valuation policy and procedures, market quotations are not considered to be readily available for debt instruments, floating rate loans, and many types of derivatives. These investments are generally valued at fair value based on information from third-party pricing services or otherwise determined by the adviser in accordance with the adviser’s fair valuation policy and procedures. 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, spreads and other market data. An investment may also be valued at fair value if the adviser determines that the investment’s value has been materially affected by events occurring after the close of the exchange or market on which the investment is principally traded (such as foreign exchange or market) and prior to the determination of the fund’s net asset value, or after the halt of trading of a specific security where trading does not resume prior to the close of the exchange or market on which the security is principally traded. Events that occur after foreign markets close (such as developments in foreign markets and significant movements in the U.S. markets) and prior to the determination of the fund’s net asset value may be deemed to have a material effect on the value of securities traded in foreign
Notes to Financial Statements - continued
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 significant 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, 2023 in valuing the fund's assets and liabilities:
| Financial Instruments | Level 1 | Level 2 | Level 3 | Total |
| Equity Securities: | | | | |
| United States | $581,319,570 | $0 | $— | $581,319,570 |
| Canada | 41,875,794 | — | — | 41,875,794 |
| United Kingdom | 19,204,616 | — | — | 19,204,616 |
| Germany | 16,322,878 | — | — | 16,322,878 |
| India | 10,722,955 | — | — | 10,722,955 |
| Israel | 6,277,307 | — | — | 6,277,307 |
| Mexico | 5,055,076 | — | — | 5,055,076 |
| China | 2,997,429 | — | — | 2,997,429 |
| Denmark | 2,522,904 | — | — | 2,522,904 |
| Other Countries | 2,497,422 | — | — | 2,497,422 |
| Mutual Funds | 28,666,555 | — | — | 28,666,555 |
| Total | $717,462,506 | $0 | $— | $717,462,506 |
For further information regarding security characteristics, see the Portfolio of Investments.
Foreign Currency Translation — Purchases and sales of foreign investments, income, and expenses are converted into U.S. dollars based upon currency exchange rates prevailing on the respective dates of such transactions or on the reporting date for foreign denominated receivables and payables. Gains and losses attributable to foreign currency exchange rates on sales of securities are recorded for financial statement purposes as net realized gains and losses on investments. Gains and losses attributable to foreign exchange rate movements on receivables, payables, income and expenses are recorded for financial statement purposes as foreign currency transaction gains and losses. That portion of both realized and unrealized gains and losses on investments that results from fluctuations in foreign currency exchange rates is not separately disclosed.
Security Loans — Under its Securities Lending Agency Agreement with the fund, State Street Bank and Trust Company, as lending agent, loans the securities of the fund to certain qualified institutions (the “Borrowers”) approved by the fund. Security loans can be terminated at the discretion of either the lending agent or the fund and the related securities must be returned within the earlier of the standard trade settlement period for such securities or within three business days. The loans are collateralized by cash and/or U.S. Treasury and federal agency obligations in an amount typically at least equal to the market value of the securities loaned. On loans collateralized by cash, the cash collateral is invested in a money market fund. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. The lending agent provides the fund with indemnification against Borrower default. In the event of Borrower default, the lending agent will, for the benefit of the fund, either purchase securities identical to those loaned or, when such purchase is commercially impracticable, pay the fund the market value of the loaned securities. In return, the lending agent assumes the fund's rights to the related collateral. If the collateral value is less than the cost to purchase identical securities, the lending agent is responsible for the shortfall, but only to the extent that such shortfall is not due to a decline in collateral value resulting from collateral reinvestment for which the fund bears the risk of loss. At period end, the fund had investment securities on loan, all of which were classified as equity securities in the fund's Portfolio of Investments, with a fair value of $1,468,955. The fair value of the fund's investment securities on loan and a related liability of $1,858,865 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
Notes to Financial Statements - continued
$7,136 held by the custodian. 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 — Dividends received in cash are recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded when the fund is informed of the dividend if such information is obtained subsequent to the ex-dividend date. Dividend payments received in additional securities are recorded on the ex-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.
Investment transactions are recorded on the trade date. In determining the net gain or loss on securities sold, the cost of securities is determined on the identified cost basis.
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 the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income, expense, gain or loss in different periods for financial statement and tax purposes will reverse at some time in the future.
Book/tax differences primarily relate to net operating losses, 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
12/31/23 | Year ended
12/31/22 |
| Ordinary income (including any short-term capital gains) | $— | $79,285,102 |
| Long-term capital gains | — | 166,257,440 |
| Total distributions | $— | $245,542,542 |
Notes to Financial Statements - continued
The federal tax cost and the tax basis components of distributable earnings were as follows:
| As of 12/31/23 | |
| Cost of investments | $658,274,228 |
| Gross appreciation | 149,173,556 |
| Gross depreciation | (89,985,278) |
| Net unrealized appreciation (depreciation) | $59,188,278 |
| Capital loss carryforwards | (142,756,856) |
| Other temporary differences | (2,119) |
| Total distributable earnings (loss) | $(83,570,697) |
As of December 31, 2023, 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 | $(54,227,495) |
| Long-Term | (88,529,361) |
| Total | $(142,756,856) |
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:
| | Year ended
12/31/23 | | Year ended
12/31/22 |
| Initial Class | $— | | $97,259,181 |
| Service Class | — | | 148,283,361 |
| Total | $— | | $245,542,542 |
(3) Transactions with Affiliates
Investment Adviser — The fund has an investment advisory agreement with MFS to provide overall investment management and related administrative services and facilities to the fund. The management fee is computed daily and paid monthly at the following annual rates based on the fund's average daily net assets:
| Up to $1 billion | 0.90% |
| In excess of $1 billion | 0.80% |
MFS has agreed in writing to reduce its management fee by a specified amount if certain MFS mutual fund assets exceed thresholds agreed to by MFS and the fund's Board of Trustees. MFS has also agreed in writing to waive at least 0.01% of its management fee as part of this agreement. The agreement to waive at least 0.01% of the management fee will continue until modified by the fund's Board of Trustees, but such agreement will continue at least until April 30, 2025. For the year ended December 31, 2023, this management fee reduction amounted to $87,283, which is included in the reduction of total expenses in the Statement of Operations. The management fee incurred for the year ended December 31, 2023 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, certain tax reclaim recovery expenses (including contingency fees and closing agreement expenses), and investment-related expenses, such that total annual operating expenses do not exceed 0.87% of average daily net assets for the Initial Class shares and 1.12% 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, 2025. For the year ended December 31, 2023, this reduction amounted to $408,605, 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 Rule 12b-1 under the Investment Company Act of 1940.
Notes to Financial Statements - continued
The fund’s distribution plan provides that the fund will pay MFD distribution and/or service fees equal to 0.25% per annum of its average daily net assets attributable to Service Class shares as partial consideration for services performed and expenses incurred by MFD and financial intermediaries (including participating insurance companies that invest in the fund to fund variable annuity and variable life insurance contracts, sponsors of qualified retirement and pension plans that invest in the fund, and affiliates of these participating insurance companies and plan sponsors) in connection with the sale and distribution of the Service Class shares as well as shareholder servicing and account maintenance activities. MFD may subsequently pay all, or a portion, of the distribution and/or service fees to financial intermediaries. The distribution and/or service fees are computed daily and paid monthly.
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, 2023, the fee was $7,270, which equated to 0.0011% annually of the fund's average daily net assets. MFSC also receives reimbursement from the fund for out-of-pocket expenses paid by MFSC on behalf of the fund. For the year ended December 31, 2023, these costs amounted to $3,516.
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 is computed daily and paid monthly. The administrative services fee incurred for the year ended December 31, 2023 was equivalent to an annual effective rate of 0.0159% 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. Independent Trustees’ compensation is accrued daily and paid subsequent to each Trustee Board meeting. The fund does not pay compensation directly to Trustees or officers of the fund who are also officers of the investment adviser, all of whom receive remuneration from MFS for their services to the fund. Certain officers and Trustees of the fund are officers or directors of MFS, MFD, and MFSC.
Other — 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 but does incur investment and operating costs.
During the year ended December 31, 2023, pursuant to a policy adopted by the Board of Trustees and designed to comply with Rule 17a-7 under the Investment Company Act of 1940 (the “Act”) and relevant guidance, the fund engaged in purchase and sale transactions with funds and accounts for which MFS serves as investment adviser or sub-adviser (“cross-trades”) which amounted to $360,518 and $1,726,457, respectively. The sales transactions resulted in net realized gains (losses) of $(1,294,930).
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 year ended December 31, 2023, this reimbursement amounted to $62,637, which is included in “Other” income in the Statement of Operations.
(4) Portfolio Securities
For the year ended December 31, 2023, purchases and sales of investments, other than short-term obligations, aggregated $398,212,592 and $435,928,424, 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
12/31/23 | | Year ended
12/31/22 |
| | Shares | Amount | | Shares | Amount |
| Shares sold | | | | | |
| Initial Class | 2,137,934 | $25,862,792 | | 2,032,873 | $34,222,306 |
| Service Class | 3,454,011 | 32,281,580 | | 11,519,641 | 168,576,091 |
| | 5,591,945 | $58,144,372 | | 13,552,514 | $202,798,397 |
Notes to Financial Statements - continued
| | Year ended
12/31/23 | | Year ended
12/31/22 |
| | Shares | Amount | | Shares | Amount |
Shares issued to shareholders
in reinvestment of distributions | | | | | |
| Initial Class | — | $— | | 8,064,609 | $97,259,181 |
| Service Class | — | — | | 15,707,983 | 148,283,361 |
| | — | $— | | 23,772,592 | $245,542,542 |
| Shares reacquired | | | | | |
| Initial Class | (3,664,075) | $(44,513,823) | | (3,327,692) | $(53,400,187) |
| Service Class | (5,536,298) | (52,319,575) | | (13,705,736) | (194,492,137) |
| | (9,200,373) | $(96,833,398) | | (17,033,428) | $(247,892,324) |
| Net change | | | | | |
| Initial Class | (1,526,141) | $(18,651,031) | | 6,769,790 | $78,081,300 |
| Service Class | (2,082,287) | (20,037,995) | | 13,521,888 | 122,367,315 |
| | (3,608,428) | $(38,689,026) | | 20,291,678 | $200,448,615 |
The fund is one of several mutual funds in which certain MFS funds may invest. The MFS funds do not invest in the underlying funds for the purpose of exercising management or control. At the end of the period, the MFS Moderate Allocation Portfolio was the owner of record of approximately 2% of the value of outstanding voting shares of the fund. In addition, the MFS Growth Allocation Portfolio and the MFS Conservative Allocation Portfolio were the owners of record of less than 1% of the value of outstanding voting shares of the fund.
(6) Line of Credit
The fund and certain other funds managed by MFS participate in a $1.45 billion unsecured committed line of credit of which $1.2 billion is reserved for use by the fund and certain other MFS U.S. funds. The line of credit is provided by a syndicate of banks under a credit agreement. Borrowings may be made for temporary financing needs. Interest is charged to each fund, based on its borrowings, generally at a rate equal to the highest of 1) Daily Simple SOFR (Secured Overnight Financing Rate) plus 0.10%, 2) the Federal Funds Effective Rate, or 3) the Overnight Bank Funding Rate, each 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. The line of credit expires on March 14, 2024 unless extended or renewed. In addition, the fund and other funds managed by MFS have established unsecured uncommitted borrowing arrangements with certain banks for temporary financing needs. Interest is charged to each fund, based on its borrowings, at rates equal to customary reference rates plus an agreed upon spread. For the year ended December 31, 2023, the fund’s commitment fee and interest expense were $3,462 and $0, respectively, and are included in “Miscellaneous” expense in the Statement of Operations.
(7) Investments in Affiliated Issuers
An affiliated issuer may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. For the purposes of this report, the following were affiliated issuers:
| Affiliated Issuers | Beginning
Value | Purchases | Sales
Proceeds | Realized
Gain
(Loss) | Change in
Unrealized
Appreciation or
Depreciation | Ending
Value |
| MFS Institutional Money Market Portfolio | $29,980,397 | $165,079,028 | $168,255,714 | $7,529 | $(3,550) | $26,807,690 |
| Affiliated Issuers | Dividend
Income | Capital Gain
Distributions |
| MFS Institutional Money Market Portfolio | $1,628,942 | $— |
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of MFS Variable Insurance Trust and the Shareholders of MFS New Discovery Series:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities of MFS New Discovery Series (the “Fund”), including the portfolio of investments, as of December 31, 2023, 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, 2023, 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, 2023, 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 14, 2024
We have served as the auditor of one or more of the MFS investment companies since 1924.
Trustees and Officers — Identification and Background
The Trustees and Officers of the Trust, as of February 1, 2024, 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 TRUSTEE | | | | | | | | | | |
Michael W. Roberge (k)
(age 57) | | Trustee | | January 2021 | | 136 | | Massachusetts Financial Services Company, Chairman (since January 2021); Chief Executive Officer (since January 2017); Director; Chairman of the Board (since January 2022) | | N/A |
| INDEPENDENT TRUSTEES | | | | | | | | | | |
John P. Kavanaugh
(age 69) | | Trustee and Chair of Trustees | | January 2009 | | 136 | | Private investor | | N/A |
Steven E. Buller
(age 72) | | Trustee | | February 2014 | | 136 | | Private investor | | N/A |
John A. Caroselli
(age 69) | | Trustee | | March 2017 | | 136 | | Private investor; JC Global Advisors, LLC (management consulting), President (since 2015) | | N/A |
Maureen R. Goldfarb
(age 68) | | Trustee | | January 2009 | | 136 | | Private investor | | N/A |
Peter D. Jones
(age 68) | | Trustee | | January 2019 | | 136 | | Private investor | | N/A |
James W. Kilman, Jr.
(age 62) | | Trustee | | January 2019 | | 136 | | Burford Capital Limited (finance and investment management), Senior Advisor (since May 3, 2021), Chief Financial Officer (2019 - May 2, 2021); KielStrand Capital LLC (family office), Chief Executive Officer (since 2016) | | Alpha-En Corporation, Director (2016-2019) |
Clarence Otis, Jr.
(age 67) | | Trustee | | March 2017 | | 136 | | Private investor | | VF Corporation, Director; Verizon Communications, Inc., Director; The Travelers Companies, Director |
Maryanne L. Roepke
(age 67) | | Trustee | | May 2014 | | 136 | | Private investor | | N/A |
Laurie J. Thomsen
(age 66) | | Trustee | | March 2005 | | 136 | | Private investor | | The Travelers Companies, Director; Dycom Industries, Inc., Director |
| 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 50) | | Assistant Secretary and Assistant Clerk | | July 2005 | | 136 | | Massachusetts Financial Services Company, Senior Vice President and Senior Managing Counsel |
Kino Clark (k)
(age 55) | | Assistant Treasurer | | January 2012 | | 136 | | Massachusetts Financial Services Company, Vice President |
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 |
John W. Clark, Jr. (k)
(age 56) | | Assistant Treasurer | | April 2017 | | 136 | | Massachusetts Financial Services Company, Vice President |
David L. DiLorenzo (k)
(age 55) | | President | | July 2005 | | 136 | | Massachusetts Financial Services Company, Senior Vice President |
Heidi W. Hardin (k)
(age 56) | | Secretary and Clerk | | April 2017 | | 136 | | Massachusetts Financial Services Company, Executive Vice President and General Counsel |
Brian E. Langenfeld (k)
(age 50) | | Assistant Secretary and Assistant Clerk | | June 2006 | | 136 | | Massachusetts Financial Services Company, Vice President and Managing Counsel |
Rosa E. Licea-Mailloux (k)
(age 47) | | Chief Compliance Officer | | March 2022 | | 136 | | Massachusetts Financial Services Company, Vice President (since 2018); Director of Corporate Compliance (2018-2021), Senior Director Compliance (2021-2022), Senior Managing Director of North American Compliance & Chief Compliance Officer (since March 2022) |
Amanda S. Mooradian (k)
(age 44) | | Assistant Secretary and Assistant Clerk | | September 2018 | | 136 | | Massachusetts Financial Services Company, Assistant Vice President and Senior Counsel |
Susan A. Pereira (k)
(age 53) | | Assistant Secretary and Assistant Clerk | | July 2005 | | 136 | | Massachusetts Financial Services Company, Vice President and Managing Counsel |
Kasey L. Phillips (k)
(age 53) | | Assistant Treasurer | | September 2012 | | 136 | | Massachusetts Financial Services Company, Vice President |
Matthew A. Stowe (k)
(age 49) | | Assistant Secretary and Assistant Clerk | | October 2014 | | 136 | | Massachusetts Financial Services Company, Vice President and Senior Managing Counsel |
William B. Wilson (k)
(age 41) | | Assistant Secretary and Assistant Clerk | | October 2022 | | 136 | | Massachusetts Financial Services Company, Assistant Vice President and Senior Counsel |
James O. Yost (k)
(age 63) | | Treasurer | | September 1990 | | 136 | | 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. 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 (other than Messrs. Jones, Kilman and Roberge) 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. Mr. Roberge became a Trustee of the Funds on January 1, 2021 and Messrs. Jones and Kilman became Trustees of the Funds on January 1, 2019. 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, Caroselli, Jones and Otis 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.
Trustees and Officers - continued
The Statement of Additional Information for a Fund includes further information about the Trustees and is available without charge upon request by calling 1-800-225-2606.
| Investment Adviser | Custodian |
Massachusetts Financial Services Company
111 Huntington Avenue
Boston, MA 02199-7618 | State Street Bank and Trust Company
1 Congress Street, Suite 1
Boston, MA 02114-2016 |
| Distributor | Independent Registered Public Accounting Firm |
MFS Fund Distributors, Inc.
111 Huntington Avenue
Boston, MA 02199-7618 | Deloitte & Touche LLP
200 Berkeley Street
Boston, MA 02116 |
| Portfolio Manager(s) | |
| Michael Grossman | |
Board Review of Investment Advisory Agreement
MFS New Discovery Series
The Investment Company Act of 1940 requires that both the full Board of Trustees and a majority of the non-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, 2023 (“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 an independent consultant who was retained by and reported 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, 2022 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 as well as all other funds in the same investment classification/category (the “Broadridge expense group and universe”), (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 five-year period ended December 31, 2022, 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 five-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 3rd quintile for the one-year period and the 4th quintile for the three-year period ended December 31, 2022 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.
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 the Broadridge expense group 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 was higher than the Broadridge expense group median and the Fund’s total expense ratio was approximately at 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 cash in-flows and out-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 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.
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 any 12b-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 and sub-custodians. The Trustees concluded that the various non-advisory services provided by MFS and its affiliates on behalf of the Fund were satisfactory.
The Trustees considered so-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 MFS discontinued its historic practice of obtaining investment research from portfolio brokerage commissions paid by certain MFS Funds effective January 2018, and directly pays or voluntarily reimburses 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 additional one-year period, commencing August 1, 2023.
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 visiting mfs.com/proxyvoting, or by visiting the SEC’s Web site at http://www.sec.gov.
Information regarding how the fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available by August 31 of each year without charge by visiting mfs.com/proxyvoting, or by visiting the SEC’s Web site at http://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 as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s Web site at http://www.sec.gov. A shareholder can obtain the portfolio holdings report for the first and third quarters of the fund's fiscal year at mfs.com/vit1 by choosing the fund's name and then scrolling to the “Resources” section and clicking on the “Prospectus and Reports” tab.
FURTHER INFORMATION
From time to time, MFS may post important information about the fund or the MFS Funds on the MFS Web site (mfs.com). This information is available at https://www.mfs.com/announcements or at mfs.com/vit1 by choosing the fund's name and then scrolling to the “Resources” section and clicking on the “Announcements” tab, if any.
Information About Fund Contracts and Legal Claims
The fund has entered into contractual arrangements with an investment adviser, administrator, distributor, shareholder servicing agent, 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.
| 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 are no longer our customer, we continue to share your information as described in this notice. |
| How? | All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MFS chooses to share; and whether you can limit this sharing. |
Reasons we can share your
personal information | Does MFS share? | Can you limit
this sharing? |
For our everyday business purposes –
such as to process your transactions, maintain your
account(s), respond to court orders and legal
investigations, or report to credit bureaus | Yes | No |
For our marketing purposes –
to offer our products and services to you | No | We don't share |
For joint marketing with other
financial companies | No | We don't share |
For our affiliates' everyday business purposes –
information about your transactions and experiences | No | We don't share |
For our affiliates' everyday business purposes –
information about your creditworthiness | No | We don't share |
| For nonaffiliates to market to you | No | We don't share |
| Questions? | Call 800-225-2606 or go to mfs.com. |
| 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. |
Annual Report
December 31, 2023
MFS® Variable Insurance Trust
| 1 |
| 2 |
| 4 |
| 6 |
| 7 |
| 12 |
| 13 |
| 14 |
| 15 |
| 17 |
| 23 |
| 24 |
| 27 |
| 29 |
| 29 |
| 29 |
| 29 |
| 29 |
| 30 |
The report is prepared for the general information of shareholders. It is authorized for distribution to prospective investors only when preceded or accompanied by a current prospectus.
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
Portfolio structure
Top ten holdings
| Microsoft Corp. | 9.0% |
| Alphabet, Inc., “A” | 4.1% |
| Amazon.com, Inc. | 3.9% |
| Apple, Inc. | 3.7% |
| Visa, Inc., “A” | 2.7% |
| Meta Platforms, Inc., “A” | 2.4% |
| JPMorgan Chase & Co. | 2.1% |
| Salesforce, Inc. | 1.9% |
| Accenture PLC, “A” | 1.6% |
| ConocoPhillips | 1.6% |
Global equity sectors (k)
| Technology | 35.2% |
| Financial Services | 13.3% |
| Health Care | 13.2% |
| Capital Goods | 12.7% |
| Consumer Cyclicals | 11.5% |
| Energy | 6.6% |
| Consumer Staples | 4.5% |
| Telecommunications/Cable Television (s) | 2.2% |
| (k) | The sectors set forth above and the associated portfolio composition are based on MFS’ own custom sector classification methodology. |
| (s) | Includes securities sold short. |
Cash & Cash Equivalents includes any cash, investments in money market funds, short-term securities, and other assets less liabilities. Please see the Statement of Assets and Liabilities for additional information related to the fund’s cash position and other assets and liabilities.
Other includes equivalent exposure from currency derivatives and/or any offsets to derivative positions and may be negative.
Percentages are based on net assets as of December 31, 2023.
The portfolio is actively managed and current holdings may be different.
Management Review
Summary of Results
For the twelve months ended December 31, 2023, Initial Class shares of the MFS Research Series (fund) provided a total return of 22.42%, while Service Class shares of the fund provided a total return of 22.12%. These compare with a return of 26.29% over the same period for the fund’s benchmark, the Standard & Poor’s 500 Stock Index (S&P 500 Index).
Market Environment
During the reporting period, central banks around the world had to combat the strongest inflationary pressures in four decades, fueled by the global fiscal response to the pandemic, disrupted supply chains and the dislocations to energy markets stemming from the war in Ukraine. Interest rates rose substantially, but the effects of a tighter monetary policy may not have been fully experienced yet, given that monetary policy works with long and variable lags. Strains resulting from the abrupt tightening of monetary policy began to affect some parts of the economy, most acutely among small and regional US banks, which suffered from deposit flight as depositors sought higher yields on their savings. Additionally, activity in the US housing sector has slowed as a result of higher mortgage rates. China’s abandonment of its Zero-COVID policy ushered in a brief uptick in economic activity in the world’s second-largest economy in early 2023, although its momentum soon stalled as the focus turned to the country’s highly indebted property development sector. In developed markets, consumer demand for services remained stronger than the demand for goods.
Early on, policymakers found themselves in the difficult position of trying to restrain inflation without tipping economies into recession. Despite the challenging macroeconomic and geopolitical environment, central banks focused on controlling price pressures while also confronting increasing financial stability concerns. Central banks had to juggle achieving their inflation mandates while using macroprudential tools (financial policies aimed at safeguarding the stability of the financial system) to keep banking systems liquid, a potentially difficult balancing act, and one that suggested that we may be nearing a peak in policy rates. As inflationary pressures eased toward the end of the period, financial conditions loosened in anticipation of easier monetary policy, boosting the market’s appetite for risk. Rapid advancements in artificial intelligence were a focus for investors.
Normalizing supply chains, low levels of unemployment across developed markets and signs that inflation levels have peaked were supportive factors for the macroeconomic backdrop.
Detractors from Performance
Relative to the S&P 500 Index, security selection and, to a lesser extent, an underweight position in the technology sector detracted from the fund’s performance. Within this sector, the timing of the fund’s ownership in shares of computer graphics processor maker NVIDIA and social networking service provider Meta Platforms, and its underweight position in computer and personal electronics maker Apple weighed on relative results. Not owning shares of broadband communications and networking services company Broadcom also weakened relative performance. The stock price of NVIDIA advanced as the company reported earnings per share results well above expectations, primarily due to stronger-than-expected revenue growth within its data center, generative AI (artificial intelligence), and networking segments. Revenue and earnings-per-share guidance were significantly above expectations, driven by continued robust demand related to generative AI.
Stock selection within both the capital goods and consumer cyclicals sectors also hindered relative results. Within the capital goods sector, not owning shares of strong-performing electric vehicle manufacturer Tesla held back relative performance. Despite operating margin pressures due to aggressive vehicle price cuts, the share price of Tesla climbed as the company delivered a record number of vehicles. Within the consumer cyclicals sector, the fund’s overweight position in merchandise store operator Dollar General weakened relative returns. The stock price of Dollar General declined as the company’s financial results came in below market consensus estimates due to weaker-than-expected comparable-store sales and higher expenses.
Elsewhere, the fund’s overweight positions in real estate investment trust SBA Communications, financial services provider Charles Schwab, and global health services provider Cigna Group detracted from relative returns. Additionally, the fund’s holdings of internet and cable services provider Cable One(b) further weighed on relative performance.
Contributors to Performance
Stock selection within the health care, consumer staples, and energy sectors contributed to relative performance. Within the health care sector, not owning shares of weak-performing health insurance and Medicare/Medicaid provider UnitedHealth Group helped relative results. The share price of UnitedHealth Group fell as the company posted elevated medical loss ratio figures and higher-than-anticipated investment costs in its Optum Insights segment. Within the consumer staples sector, not owning shares of poor-performing household products maker Procter & Gamble benefited relative returns. Despite announcing stronger-than-expected organic sales growth in the US, the share price of Procter & Gamble declined as weaker sales in China and foreign exchange headwinds dampened the company’s overall profits. Within the energy sector, avoiding shares of weak-performing integrated oil and gas companies, ExxonMobil and Chevron, helped relative performance. The share price of Chevron declined as the company reported revenue that missed expectations due to lower margins in its downstream operations, higher-than-forecasted capital expenditures, and costs related to the acquisition of Hess.
Management Review - continued
Stocks in other sectors that strengthened relative performance included the fund’s overweight positions in customer information software manager Salesforce, technology company Alphabet, software giant Microsoft, integrated circuits and electronic devices developer Cadence Design Systems, and semiconductor chips and electronics engineering solutions provider Applied Materials. The stock price of Cadence Design Systems advanced as the company delivered above-consensus earnings per share figures driven by strong revenue and margin results. Management also raised its outlook for chip design activity, which further supported the stock. Additionally, the fund’s holdings of enterprise software solutions Constellation Software(b) further lifted relative returns as the stock outperformed the benchmark.
Respectfully,
Portfolio Manager(s)
Joseph MacDougall
| (b) | Security is not a benchmark constituent. |
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.
Performance Summary Through 12/31/23
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 shares, 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 shareholder would pay on fund distributions or the redemption of fund shares. 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
Total Returns through 12/31/23
Average annual total returns
| Share Class | Class Inception Date | 1-yr | 5-yr | 10-yr |
| Initial Class | 7/26/1995 | 22.42% | 14.41% | 10.82% |
| Service Class | 5/01/2000 | 22.12% | 14.13% | 10.55% |
Comparative benchmark(s)
| Standard & Poor's 500 Stock Index (f) | 26.29% | 15.69% | 12.03% |
| (f) | Source: FactSet Research Systems Inc. |
Benchmark Definition(s)
Standard & Poor's 500 Stock Index(g) – 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.
| (g) | “Standard & Poor's®” and “S&P®” are registered trademarks of Standard & Poor's Financial Services LLC (“S&P”) and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”) and have been licensed for use by S&P Dow Jones Indices LLC and sublicensed for certain purposes by MFS. The S&P 500® is a product of S&P Dow Jones Indices LLC, and has been licensed for use by MFS. MFS's product(s) is not sponsored, endorsed, sold, or promoted by S&P Dow Jones Indices LLC, Dow Jones, S&P, or their respective affiliates, and neither S&P Dow Jones Indices LLC, Dow Jones, S&P, nor their respective affiliates make any representation regarding the advisability of investing in such product(s). |
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 Summary – continued
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.
Expense Table
Fund expenses borne by the shareholders during the period,
July 1, 2023 through December 31, 2023
As a shareholder 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, 2023 through December 31, 2023.
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
7/01/23 | Ending
Account Value
12/31/23 | Expenses
Paid During
Period (p)
7/01/23-12/31/23 |
| Initial Class | Actual | 0.80% | $1,000.00 | $1,083.56 | $4.20 |
| Hypothetical (h) | 0.80% | $1,000.00 | $1,021.17 | $4.08 |
| Service Class | Actual | 1.05% | $1,000.00 | $1,082.34 | $5.51 |
| Hypothetical (h) | 1.05% | $1,000.00 | $1,019.91 | $5.35 |
| (h) | 5% class return per year before expenses. |
| (p) | “Expenses Paid During Period” are equal to each class's annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). |
Notes to Expense Table
Expense ratios include 0.03% of investment related expenses from short sales (See Note 2 of the Notes to Financial Statements) that are outside of the expense limitation arrangement (See Note 3 of the Notes to Financial Statements).
Portfolio of Investments − 12/31/23
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – 99.3% |
| Aerospace & Defense – 3.4% | |
| Boeing Co. (a) | | 24,248 | $ 6,320,484 |
| General Dynamics Corp. | | 16,603 | 4,311,301 |
| Honeywell International, Inc. | | 37,171 | 7,795,130 |
| Howmet Aerospace, Inc. | | 67,937 | 3,676,751 |
| Leidos Holdings, Inc. | | 29,551 | 3,198,600 |
| | | | | $25,302,266 |
| Alcoholic Beverages – 0.5% | |
| Constellation Brands, Inc., “A” | | 15,748 | $ 3,807,079 |
| Apparel Manufacturers – 0.7% | |
| NIKE, Inc., “B” | | 49,987 | $ 5,427,089 |
| Automotive – 0.3% | |
| Aptiv PLC (a) | | 22,977 | $ 2,061,496 |
| Broadcasting – 1.1% | |
| Walt Disney Co. | | 87,017 | $ 7,856,765 |
| Brokerage & Asset Managers – 1.9% | |
| Charles Schwab Corp. | | 112,609 | $ 7,747,499 |
| CME Group, Inc. | | 31,131 | 6,556,189 |
| | | | | $14,303,688 |
| Business Services – 2.6% | |
| Accenture PLC, “A” | | 34,202 | $ 12,001,824 |
| TransUnion | | 60,776 | 4,175,919 |
| Tyler Technologies, Inc. (a) | | 6,552 | 2,739,522 |
| | | | | $18,917,265 |
| Cable TV – 0.7% | |
| Cable One, Inc. | | 9,373 | $ 5,216,918 |
| Computer Software – 12.7% | |
| Cadence Design Systems, Inc. (a) | | 34,926 | $ 9,512,795 |
| Microsoft Corp. (s) | | 175,949 | 66,163,862 |
| Palo Alto Networks, Inc. (a) | | 12,378 | 3,650,025 |
| Salesforce, Inc. (a) | | 51,681 | 13,599,338 |
| | | | | $92,926,020 |
| Computer Software - Systems – 6.0% | |
| Apple, Inc. (s) | | 140,115 | $ 26,976,341 |
| Constellation Software, Inc. | | 2,838 | 7,036,411 |
| HubSpot, Inc. (a) | | 5,921 | 3,437,377 |
| ServiceNow, Inc. (a) | | 9,741 | 6,881,919 |
| | | | | $44,332,048 |
| Construction – 2.3% | |
| AZEK Co., Inc. (a) | | 89,951 | $ 3,440,626 |
| Sherwin-Williams Co. | | 18,594 | 5,799,469 |
| Summit Materials, Inc., “A” (a) | | 113,011 | 4,346,403 |
| Vulcan Materials Co. | | 14,058 | 3,191,306 |
| | | | | $16,777,804 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Consumer Products – 1.4% | |
| Colgate-Palmolive Co. | | 64,962 | $ 5,178,121 |
| International Flavors & Fragrances, Inc. | | 27,783 | 2,249,590 |
| Kenvue, Inc. | | 136,080 | 2,929,802 |
| | | | | $10,357,513 |
| Electrical Equipment – 1.1% | |
| Johnson Controls International PLC | | 74,138 | $ 4,273,314 |
| TE Connectivity Ltd. | | 25,567 | 3,592,164 |
| | | | | $7,865,478 |
| Electronics – 5.5% | |
| Applied Materials, Inc. | | 49,556 | $ 8,031,541 |
| Lam Research Corp. | | 8,494 | 6,653,010 |
| Marvell Technology, Inc. | | 102,572 | 6,186,117 |
| NVIDIA Corp. | | 23,275 | 11,526,246 |
| NXP Semiconductors N.V. | | 36,101 | 8,291,678 |
| | | | | $40,688,592 |
| Energy - Independent – 3.5% | |
| ConocoPhillips | | 99,321 | $ 11,528,188 |
| Diamondback Energy, Inc. | | 27,235 | 4,223,604 |
| Hess Corp. | | 45,732 | 6,592,725 |
| Valero Energy Corp. | | 27,499 | 3,574,870 |
| | | | | $25,919,387 |
| Food & Beverages – 2.0% | |
| General Mills, Inc. | | 29,688 | $ 1,933,876 |
| Mondelez International, Inc. | | 79,763 | 5,777,234 |
| PepsiCo, Inc. | | 41,800 | 7,099,312 |
| | | | | $14,810,422 |
| Gaming & Lodging – 0.6% | |
| Marriott International, Inc., “A” | | 18,652 | $ 4,206,213 |
| General Merchandise – 0.8% | |
| Dollar General Corp. | | 21,660 | $ 2,944,677 |
| Five Below, Inc. (a) | | 14,214 | 3,029,856 |
| | | | | $5,974,533 |
| Health Maintenance Organizations – 1.2% | |
| Cigna Group | | 29,353 | $ 8,789,756 |
| Insurance – 2.6% | |
| Aon PLC | | 21,196 | $ 6,168,460 |
| Chubb Ltd. | | 40,494 | 9,151,644 |
| Willis Towers Watson PLC | | 16,250 | 3,919,500 |
| | | | | $19,239,604 |
| Internet – 8.4% | |
| Alphabet, Inc., “A” (a)(s) | | 216,769 | $ 30,280,462 |
| Alphabet, Inc., “C” (a) | | 60,134 | 8,474,685 |
| Gartner, Inc. (a) | | 11,203 | 5,053,785 |
| Meta Platforms, Inc., “A” (a) | | 50,137 | 17,746,492 |
| | | | | $61,555,424 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Leisure & Toys – 0.7% | |
| Electronic Arts, Inc. | | 35,487 | $ 4,854,976 |
| Machinery & Tools – 2.6% | |
| Eaton Corp. PLC | | 21,371 | $ 5,146,564 |
| Ingersoll Rand, Inc. | | 65,039 | 5,030,116 |
| Regal Rexnord Corp. | | 24,323 | 3,600,291 |
| Wabtec Corp. | | 39,887 | 5,061,660 |
| | | | | $18,838,631 |
| Major Banks – 4.1% | |
| JPMorgan Chase & Co. (s) | | 88,907 | $ 15,123,081 |
| Morgan Stanley | | 73,915 | 6,892,574 |
| PNC Financial Services Group, Inc. | | 49,972 | 7,738,164 |
| | | | | $29,753,819 |
| Medical & Health Technology & Services – 1.3% | |
| ICON PLC (a) | | 14,126 | $ 3,998,647 |
| McKesson Corp. | | 12,589 | 5,828,455 |
| | | | | $9,827,102 |
| Medical Equipment – 4.8% | |
| Agilent Technologies, Inc. | | 53,008 | $ 7,369,702 |
| Becton, Dickinson and Co. | | 21,029 | 5,127,501 |
| Boston Scientific Corp. (a) | | 126,043 | 7,286,546 |
| Envista Holdings Corp. (a) | | 84,060 | 2,022,484 |
| Masimo Corp. (a) | | 10,074 | 1,180,773 |
| Medtronic PLC | | 87,757 | 7,229,422 |
| STERIS PLC | | 23,781 | 5,228,253 |
| | | | | $35,444,681 |
| Oil Services – 0.5% | |
| Schlumberger Ltd. | | 68,051 | $ 3,541,374 |
| Other Banks & Diversified Financials – 3.8% | |
| Moody's Corp. | | 10,485 | $ 4,095,022 |
| Northern Trust Corp. | | 49,233 | 4,154,280 |
| Visa, Inc., “A” | | 75,054 | 19,540,309 |
| | | | | $27,789,611 |
| Pharmaceuticals – 5.8% | |
| AbbVie, Inc. | | 48,005 | $ 7,439,335 |
| Eli Lilly & Co. | | 17,033 | 9,928,876 |
| Johnson & Johnson | | 58,727 | 9,204,870 |
| Pfizer, Inc. | | 182,885 | 5,265,259 |
| Vertex Pharmaceuticals, Inc. (a) | | 15,017 | 6,110,267 |
| Zoetis, Inc. | | 23,088 | 4,556,879 |
| | | | | $42,505,486 |
| Railroad & Shipping – 0.8% | |
| Canadian Pacific Kansas City Ltd. | | 72,918 | $ 5,764,897 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Real Estate – 0.9% | |
| Extra Space Storage, Inc., REIT | | 26,131 | $ 4,189,583 |
| Jones Lang LaSalle, Inc. (a) | | 12,737 | 2,405,637 |
| | | | | $6,595,220 |
| Restaurants – 1.0% | |
| Starbucks Corp. | | 55,425 | $ 5,321,354 |
| Wendy's Co. | | 120,891 | 2,354,957 |
| | | | | $7,676,311 |
| Specialty Chemicals – 1.7% | |
| Air Products & Chemicals, Inc. | | 17,648 | $ 4,832,023 |
| Corteva, Inc. | | 45,951 | 2,201,972 |
| DuPont de Nemours, Inc. | | 74,897 | 5,761,826 |
| | | | | $12,795,821 |
| Specialty Stores – 6.6% | |
| Amazon.com, Inc. (a)(s) | | 190,042 | $ 28,874,981 |
| Home Depot, Inc. | | 28,419 | 9,848,604 |
| Ross Stores, Inc. | | 38,699 | 5,355,555 |
| Target Corp. | | 28,933 | 4,120,638 |
| | | | | $48,199,778 |
| Telecommunications - Wireless – 1.7% | |
| SBA Communications Corp., REIT | | 40,928 | $ 10,383,025 |
| T-Mobile USA, Inc. | | 11,219 | 1,798,742 |
| | | | | $12,181,767 |
| Tobacco – 0.6% | |
| Philip Morris International, Inc. | | 44,998 | $ 4,233,412 |
| Trucking – 0.5% | |
| J.B. Hunt Transport Services, Inc. | | 20,226 | $ 4,039,941 |
| Utilities - Electric Power – 2.6% | |
| Alliant Energy Corp. | | 74,628 | $ 3,828,416 |
| CMS Energy Corp. | | 32,463 | 1,885,126 |
| Duke Energy Corp. | | 48,995 | 4,754,475 |
| PG&E Corp. | | 284,648 | 5,132,204 |
| PPL Corp. | | 124,478 | 3,373,354 |
| | | | | $18,973,575 |
| Total Common Stocks (Identified Cost, $434,086,571) | | $729,351,762 |
| | Strike
Price | First
Exercise | | |
| Warrants – 0.0% | | | | |
| Computer Software - Systems – 0.0% |
Constellation Software, Inc. (CAD 100 principal amount of Series 2 Debentures for 1 warrant, Expiration 3/31/40) (a)
(Identified Cost, $0) | CAD 11.5 | N/A | 2,981 | $ 0 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Investment Companies (h) – 0.7% |
| Money Market Funds – 0.7% | |
| MFS Institutional Money Market Portfolio, 5.42% (v) (Identified Cost, $5,173,133) | | | 5,172,747 | $ 5,173,782 |
| Securities Sold Short – (0.1)% |
| Telecommunications - Wireless – (0.1)% |
| Crown Castle, Inc., REIT (Proceeds Received, $1,381,346) | | | (7,925) | $ (912,881) |
| Other Assets, Less Liabilities – 0.1% | | 504,714 |
| Net Assets – 100.0% | $734,117,377 |
| (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 $5,173,782 and $729,351,762, respectively. | | | |
| (s) | Security or a portion of the security was pledged to cover collateral requirements for securities sold short. | | | |
| (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 annualized seven-day yield of the fund at period end. | | | |
| The following abbreviations are used in this report and are defined: |
| REIT | Real Estate Investment Trust |
| Abbreviations indicate amounts shown in currencies other than the U.S. dollar. All amounts are stated in U.S. dollars unless otherwise indicated. A list of abbreviations is shown below: |
| CAD | Canadian Dollar |
At December 31, 2023, the fund had cash collateral of $4,269 and other liquid securities with an aggregate value of $4,216,630 to cover any collateral or margin obligations for securities sold short. Restricted cash and/or deposits with brokers in the Statement of Assets and Liabilities are comprised of cash collateral.
See Notes to Financial Statements
| 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 12/31/23Assets | |
| Investments in unaffiliated issuers, at value (identified cost, $434,086,571) | $729,351,762 |
| Investments in affiliated issuers, at value (identified cost, $5,173,133) | 5,173,782 |
| Deposits with brokers for | |
| Securities sold short | 4,269 |
| Receivables for | |
| Fund shares sold | 172,433 |
| Dividends | 724,117 |
| Other assets | 278,781 |
| Total assets | $735,705,144 |
| Liabilities | |
| Payable to custodian | $13,000 |
| Payables for | |
| Securities sold short, at value (proceeds received, $1,381,346) | 912,881 |
| Fund shares reacquired | 491,332 |
| Payable to affiliates | |
| Investment adviser | 49,762 |
| Administrative services fee | 1,097 |
| Shareholder servicing costs | 263 |
| Distribution and/or service fees | 8,518 |
| Payable for independent Trustees' compensation | 12 |
| Accrued expenses and other liabilities | 110,902 |
| Total liabilities | $1,587,767 |
| Net assets | $734,117,377 |
| Net assets consist of | |
| Paid-in capital | $392,966,751 |
| Total distributable earnings (loss) | 341,150,626 |
| Net assets | $734,117,377 |
| Shares of beneficial interest outstanding | 23,160,750 |
| | Net assets | Shares
outstanding | Net asset value
per share |
| Initial Class | $423,942,291 | 13,258,665 | $31.97 |
| Service Class | 310,175,086 | 9,902,085 | 31.32 |
See Notes to Financial Statements
| 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 12/31/23 | |
| Net investment income (loss) | |
| Income | |
| Dividends | $9,897,575 |
| Dividends from affiliated issuers | 307,486 |
| Other | 36,910 |
| Income on securities loaned | 15,839 |
| Foreign taxes withheld | (53,273) |
| Total investment income | $10,204,537 |
| Expenses | |
| Management fee | $5,308,731 |
| Distribution and/or service fees | 746,391 |
| Shareholder servicing costs | 7,156 |
| Administrative services fee | 112,340 |
| Independent Trustees' compensation | 13,762 |
| Custodian fee | 43,967 |
| Shareholder communications | 20,510 |
| Audit and tax fees | 71,967 |
| Legal fees | 3,935 |
| Dividend and interest expense on securities sold short | 170,224 |
| Interest expense and fees | 3,824 |
| Miscellaneous | 27,744 |
| Total expenses | $6,530,551 |
| Reduction of expenses by investment adviser | (155,394) |
| Net expenses | $6,375,157 |
| Net investment income (loss) | $3,829,380 |
| Realized and unrealized gain (loss) | |
| Realized gain (loss) (identified cost basis) | |
| Unaffiliated issuers | $44,118,369 |
| Affiliated issuers | 175 |
| Securities sold short | (155,584) |
| Foreign currency | 214 |
| Net realized gain (loss) | $43,963,174 |
| Change in unrealized appreciation or depreciation | |
| Unaffiliated issuers | $94,412,061 |
| Affiliated issuers | (1,244) |
| Securities sold short | 729,183 |
| Translation of assets and liabilities in foreign currencies | (64) |
| Net unrealized gain (loss) | $95,139,936 |
| Net realized and unrealized gain (loss) | $139,103,110 |
| Change in net assets from operations | $142,932,490 |
See Notes to Financial Statements
| 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 |
| | 12/31/23 | 12/31/22 |
| Change in net assets | | |
| From operations | | |
| Net investment income (loss) | $3,829,380 | $3,931,589 |
| Net realized gain (loss) | 43,963,174 | 35,481,317 |
| Net unrealized gain (loss) | 95,139,936 | (176,047,562) |
| Change in net assets from operations | $142,932,490 | $(136,634,656) |
| Total distributions to shareholders | $(40,656,283) | $(99,101,437) |
| Change in net assets from fund share transactions | $(63,758,641) | $149,469,874 |
| Total change in net assets | $38,517,566 | $(86,266,219) |
| Net assets | | |
| At beginning of period | 695,599,811 | 781,866,030 |
| At end of period | $734,117,377 | $695,599,811 |
See Notes to Financial Statements
| 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 |
| | 12/31/23 | 12/31/22 | 12/31/21 | 12/31/20 | 12/31/19 |
| Net asset value, beginning of period | $27.74 | $38.59 | $32.87 | $29.49 | $24.93 |
| Income (loss) from investment operations | | | | | |
| Net investment income (loss) (d) | $0.19 | $0.21 | $0.13 | $0.18 | $0.23 |
| Net realized and unrealized gain (loss) | 5.86 | (6.62) | 7.92 | 4.62 | 7.66 |
| Total from investment operations | $6.05 | $(6.41) | $8.05 | $4.80 | $7.89 |
| Less distributions declared to shareholders | | | | | |
| From net investment income | $(0.16) | $(0.16) | $(0.20) | $(0.22) | $(0.24) |
| From net realized gain | (1.66) | (4.28) | (2.13) | (1.20) | (3.09) |
| Total distributions declared to shareholders | $(1.82) | $(4.44) | $(2.33) | $(1.42) | $(3.33) |
| Net asset value, end of period (x) | $31.97 | $27.74 | $38.59 | $32.87 | $29.49 |
| Total return (%) (k)(r)(s)(x) | 22.42 | (17.21) | 24.80 | 16.59 | 32.95 |
Ratios (%) (to average net assets)
and Supplemental data: | | | | | |
| Expenses before expense reductions | 0.82 | 0.82 | 0.80 | 0.82 | 0.83 |
| Expenses after expense reductions | 0.79 | 0.79 | 0.78 | 0.79 | 0.81 |
| Net investment income (loss) | 0.64 | 0.68 | 0.35 | 0.62 | 0.82 |
| Portfolio turnover | 22 | 24 | 19 | 39 | 35 |
| Net assets at end of period (000 omitted) | $423,942 | $405,178 | $384,928 | $372,405 | $361,842 |
| Supplemental Ratios (%): | | | | | |
| Ratios of expenses to average net assets after expense reductions excluding short sale expenses and interest expense and fees | 0.77 | 0.77 | 0.77 | 0.77 | 0.78 |
See Notes to Financial Statements
Financial Highlights - continued
| Service Class | Year ended |
| | 12/31/23 | 12/31/22 | 12/31/21 | 12/31/20 | 12/31/19 |
| Net asset value, beginning of period | $27.20 | $37.92 | $32.34 | $29.05 | $24.61 |
| Income (loss) from investment operations | | | | | |
| Net investment income (loss) (d) | $0.12 | $0.12 | $0.04 | $0.11 | $0.16 |
| Net realized and unrealized gain (loss) | 5.73 | (6.50) | 7.79 | 4.54 | 7.55 |
| Total from investment operations | $5.85 | $(6.38) | $7.83 | $4.65 | $7.71 |
| Less distributions declared to shareholders | | | | | |
| From net investment income | $(0.07) | $(0.06) | $(0.12) | $(0.16) | $(0.18) |
| From net realized gain | (1.66) | (4.28) | (2.13) | (1.20) | (3.09) |
| Total distributions declared to shareholders | $(1.73) | $(4.34) | $(2.25) | $(1.36) | $(3.27) |
| Net asset value, end of period (x) | $31.32 | $27.20 | $37.92 | $32.34 | $29.05 |
| Total return (%) (k)(r)(s)(x) | 22.12 | (17.43) | 24.51 | 16.31 | 32.60 |
Ratios (%) (to average net assets)
and Supplemental data: | | | | | |
| Expenses before expense reductions | 1.07 | 1.07 | 1.05 | 1.07 | 1.08 |
| Expenses after expense reductions | 1.04 | 1.04 | 1.03 | 1.04 | 1.06 |
| Net investment income (loss) | 0.40 | 0.39 | 0.10 | 0.37 | 0.57 |
| Portfolio turnover | 22 | 24 | 19 | 39 | 35 |
| Net assets at end of period (000 omitted) | $310,175 | $290,421 | $396,938 | $375,322 | $319,842 |
| Supplemental Ratios (%): | | | | | |
| Ratios of expenses to average net assets after expense reductions excluding short sale expenses and interest expense and fees | 1.02 | 1.02 | 1.02 | 1.02 | 1.03 |
| (d) | Per share data is based on average shares outstanding. |
| (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
Notes to Financial Statements
(1) Business and Organization
MFS Research Series (the fund) is a diversified series of MFS Variable Insurance Trust (the trust). The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The shareholders of each series of the trust are separate accounts of insurance companies, which offer variable annuity and/or life insurance products, and qualified retirement and pension plans.
The fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services - Investment Companies.
(2) Significant Accounting Policies
General — The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the fund’s Statement of Assets and Liabilities through the date that the financial statements were issued.
Balance Sheet Offsetting — The fund's accounting policy with respect to balance sheet offsetting is that, absent an event of default by the counterparty or a termination of the agreement, the International Swaps and Derivatives Association (ISDA) Master Agreement, or similar agreement, does not result in an offset of reported amounts of financial assets and financial liabilities in the Statement of Assets and Liabilities across transactions between the fund and the applicable counterparty. The fund's right to setoff may be restricted or prohibited by the bankruptcy or insolvency laws of the particular jurisdiction to which a specific master netting agreement counterparty is subject. Balance sheet offsetting disclosures, to the extent applicable to the fund, have been included in the fund’s Significant Accounting Policies note under the captions for each of the fund’s in-scope financial instruments and transactions.
Investment Valuations — Subject to its oversight, the fund's Board of Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments to MFS as the fund's adviser, pursuant to the fund’s valuation policy and procedures which have been adopted by the adviser and approved by the Board. In accordance with Rule 2a-5 under the Investment Company Act of 1940, the Board of Trustees designated the adviser as the “valuation designee” of the fund. If the adviser, as valuation designee, determines that reliable market quotations are not readily available for an investment, the investment is valued at fair value as determined in good faith by the adviser in accordance with the adviser’s fair valuation policy and procedures.
Under the fund's valuation policy and procedures, 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 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. 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. 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.
Under the fund’s valuation policy and procedures, market quotations are not considered to be readily available for debt instruments, floating rate loans, and many types of derivatives. These investments are generally valued at fair value based on information from third-party pricing services or otherwise determined by the adviser in accordance with the adviser’s fair valuation policy and procedures. 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, spreads and other market data. An investment may also be valued at fair value if the adviser determines that the investment’s value has been materially affected by events occurring after the close of the exchange or market on which the investment is principally traded (such as foreign exchange or market) and prior to the determination of the fund’s net asset value, or after the halt of trading of a specific security where trading does not resume prior to the close of the exchange or market on which the security is principally traded. Events that occur after foreign markets close (such as developments in foreign markets and significant movements in the U.S. markets) and prior to the determination of the fund’s net asset value may be deemed to have a material effect on the value of securities traded in foreign markets. Accordingly, the fund’s foreign equity securities may often be valued at fair value. The adviser generally relies on third-party pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets;
Notes to Financial Statements - continued
the type, cost and investment characteristics of the security; the business and financial condition of the issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment for purposes of calculating the fund’s net asset value can differ depending on the source and method used to determine value. When fair valuation is used, the value of an investment used to determine the fund’s net asset value may differ from quoted or published prices for the same investment. There can be no assurance that the fund could obtain the fair value assigned to an investment if it were to sell the investment at the same time at which the fund determines its net asset value per share.
Various inputs are used in determining the value of the fund's assets or liabilities. These inputs are categorized into three broad levels. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fund's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. Level 1 includes unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 includes other significant observable market-based inputs (including quoted prices for similar securities, interest rates, prepayment speed, and credit risk). Level 3 includes significant 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, 2023 in valuing the fund's assets and liabilities:
| Financial Instruments | Level 1 | Level 2 | Level 3 | Total |
| Equity Securities: | | | | |
| United States | $716,550,454 | $— | $— | $716,550,454 |
| Canada | 12,801,308 | 0 | — | 12,801,308 |
| Mutual Funds | 5,173,782 | — | — | 5,173,782 |
| Total | $734,525,544 | $0 | $— | $734,525,544 |
| Securities Sold Short | $(912,881) | $— | $— | $(912,881) |
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.
Short Sales — The fund entered into short sales whereby it sells a security it does not own in anticipation of a decline in the value of that security. The fund will realize a gain if the security price decreases and a loss if the security price increases between the date of the short sale and the date on which the fund replaces the borrowed security. Losses from short sales can exceed the proceeds of the security sold; and they can also exceed the potential loss from an ordinary buy and sell transaction. The amount of any premium, dividends, or interest the fund may be required to pay in connection with a short sale will be recognized as a fund expense. During the year ended December 31, 2023, this expense amounted to $170,224.
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
Notes to Financial Statements - continued
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, 2023, there were no securities on loan or collateral outstanding.
Indemnifications — Under the fund's organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the fund. Additionally, in the normal course of business, the fund enters into agreements with service providers that may contain indemnification clauses. The fund's maximum exposure under these agreements is unknown as this would involve future claims that may be made against the fund that have not yet occurred.
Investment Transactions and Income — Dividends received in cash are recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded when the fund is informed of the dividend if such information is obtained subsequent to the ex-dividend date. Dividend payments received in additional securities are recorded on the ex-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.
Investment transactions are recorded on the trade date. In determining the net gain or loss on securities sold, the cost of securities is determined on the identified cost basis.
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 the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income, expense, gain or loss in different periods for financial statement and tax purposes will reverse at some time in the future.
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
12/31/23 | Year ended
12/31/22 |
| Ordinary income (including any short-term capital gains) | $2,769,284 | $14,039,255 |
| Long-term capital gains | 37,886,999 | 85,062,182 |
| Total distributions | $40,656,283 | $99,101,437 |
The federal tax cost and the tax basis components of distributable earnings were as follows:
| As of 12/31/23 | |
| Cost of investments | $440,856,705 |
| Gross appreciation | 305,751,897 |
| Gross depreciation | (12,995,939) |
| Net unrealized appreciation (depreciation) | $292,755,958 |
| Undistributed ordinary income | 3,881,673 |
| Undistributed long-term capital gain | 44,513,038 |
| Other temporary differences | (43) |
| Total distributable earnings (loss) | $341,150,626 |
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:
| | Year
ended
12/31/23 | | Year
ended
12/31/22 |
| Initial Class | $23,516,766 | | $56,469,294 |
| Service Class | 17,139,517 | | 42,632,143 |
| Total | $40,656,283 | | $99,101,437 |
(3) Transactions with Affiliates
Investment Adviser — The fund has an investment advisory agreement with MFS to provide overall investment management and related administrative services and facilities to the fund. The management fee is computed daily and paid monthly at the following annual rates based on the fund's average daily net assets:
| Up to $1 billion | 0.75% |
| In excess of $1 billion | 0.65% |
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. MFS has also agreed in writing to waive at least 0.01% of its management fee as part of this agreement. The agreement to waive at least 0.01% of the management fee will continue until modified by the fund's Board of Trustees, but such agreement will continue at least until April 30, 2025. For the year ended December 31, 2023, this management fee reduction amounted to $90,497, which is included in the reduction of total expenses in the Statement of Operations. The management fee incurred for the year ended December 31, 2023 was equivalent to an annual effective rate of 0.74% of the fund's average daily net assets.
The investment adviser has agreed in writing to pay a portion of the fund’s total annual operating expenses, excluding interest, taxes, extraordinary expenses, brokerage and transaction costs, certain tax reclaim recovery expenses (including contingency fees and closing agreement expenses), and investment-related expenses (such as short sale dividend and interest expenses incurred in connection with the fund's investment activity), such that total annual operating expenses do not exceed 0.77% of average daily net assets for the Initial Class shares and 1.02% 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, 2025. For the year ended December 31, 2023, this reduction amounted to $64,897, 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 Rule 12b-1 under the Investment Company Act of 1940.
The fund’s distribution plan provides that the fund will pay MFD distribution and/or service fees equal to 0.25% per annum of its average daily net assets attributable to Service Class shares as partial consideration for services performed and expenses incurred by MFD and financial intermediaries (including participating insurance companies that invest in the fund to fund variable annuity and variable life insurance contracts, sponsors of qualified retirement and pension plans that invest in the fund, and affiliates of these participating insurance companies and plan sponsors) in connection with the sale and distribution of the Service Class shares as well as shareholder servicing and account maintenance activities. MFD may subsequently pay all, or a portion, of the distribution and/or service fees to financial intermediaries. The distribution and/or service fees are computed daily and paid monthly.
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, 2023, the fee was $5,403, which equated to 0.0008% annually of the fund's average daily net assets. MFSC also receives reimbursement from the fund for out-of-pocket expenses paid by MFSC on behalf of the fund. For the year ended December 31, 2023, these costs amounted to $1,753.
Notes to Financial Statements - continued
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 is computed daily and paid monthly. The administrative services fee incurred for the year ended December 31, 2023 was equivalent to an annual effective rate of 0.0159% 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. Independent Trustees’ compensation is accrued daily and paid subsequent to each Trustee Board meeting. The fund does not pay compensation directly to Trustees or officers of the fund who are also officers of the investment adviser, all of whom receive remuneration from MFS for their services to the fund. Certain officers and Trustees of the fund are officers or directors of MFS, MFD, and MFSC.
Other — 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 but does incur investment and operating costs.
During the year ended December 31, 2023, pursuant to a policy adopted by the Board of Trustees and designed to comply with Rule 17a-7 under the Investment Company Act of 1940 (the “Act”) and relevant guidance, the fund engaged in purchase transactions with funds and accounts for which MFS serves as investment adviser or sub-adviser (“cross-trades”) which amounted to $1,478,506.
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 year ended December 31, 2023, this reimbursement amounted to $13,786, which is included in “Other” income in the Statement of Operations.
(4) Portfolio Securities
For the year ended December 31, 2023, purchases and sales of investments, other than short sales and short-term obligations, aggregated $157,543,086 and $255,256,616, 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
12/31/23 | | Year ended
12/31/22 |
| | Shares | Amount | | Shares | Amount |
| Shares sold | | | | | |
| Initial Class | 885,857 | $25,881,107 | | 4,166,754 | $136,162,513 |
| Service Class | 453,869 | 13,191,893 | | 546,740 | 17,085,861 |
| | 1,339,726 | $39,073,000 | | 4,713,494 | $153,248,374 |
Shares issued to shareholders
in reinvestment of distributions | | | | | |
| Initial Class | 804,817 | $23,516,766 | | 1,929,255 | $56,469,294 |
| Service Class | 598,238 | 17,139,517 | | 1,483,889 | 42,632,143 |
| | 1,403,055 | $40,656,283 | | 3,413,144 | $99,101,437 |
| Shares reacquired | | | | | |
| Initial Class | (3,040,890) | $(89,909,468) | | (1,460,747) | $(46,824,246) |
| Service Class | (1,828,510) | (53,578,456) | | (1,820,168) | (56,055,691) |
| | (4,869,400) | $(143,487,924) | | (3,280,915) | $(102,879,937) |
| Net change | | | | | |
| Initial Class | (1,350,216) | $(40,511,595) | | 4,635,262 | $145,807,561 |
| Service Class | (776,403) | (23,247,046) | | 210,461 | 3,662,313 |
| | (2,126,619) | $(63,758,641) | | 4,845,723 | $149,469,874 |
Notes to Financial Statements - continued
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 10%, 4%, and 3%, respectively, of the value of outstanding voting shares of the fund.
(6) Line of Credit
The fund and certain other funds managed by MFS participate in a $1.45 billion unsecured committed line of credit of which $1.2 billion is reserved for use by the fund and certain other MFS U.S. funds. The line of credit is provided by a syndicate of banks under a credit agreement. Borrowings may be made for temporary financing needs. Interest is charged to each fund, based on its borrowings, generally at a rate equal to the highest of 1) Daily Simple SOFR (Secured Overnight Financing Rate) plus 0.10%, 2) the Federal Funds Effective Rate, or 3) the Overnight Bank Funding Rate, each 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. The line of credit expires on March 14, 2024 unless extended or renewed. In addition, the fund and other funds managed by MFS have established unsecured uncommitted borrowing arrangements with certain banks for temporary financing needs. Interest is charged to each fund, based on its borrowings, at rates equal to customary reference rates plus an agreed upon spread. For the year ended December 31, 2023, the fund’s commitment fee and interest expense were $3,824 and $0, respectively, and are included in “Interest expense and fees” in the Statement of Operations.
(7) Investments in Affiliated Issuers
An affiliated issuer may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. For the purposes of this report, the following were affiliated issuers:
| Affiliated Issuers | Beginning
Value | Purchases | Sales
Proceeds | Realized
Gain
(Loss) | Change in
Unrealized
Appreciation or
Depreciation | Ending
Value |
| MFS Institutional Money Market Portfolio | $7,722,089 | $96,686,610 | $99,233,848 | $175 | $(1,244) | $5,173,782 |
| Affiliated Issuers | Dividend
Income | Capital Gain
Distributions |
| MFS Institutional Money Market Portfolio | $307,486 | $— |
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of MFS Variable Insurance Trust and the Shareholders of MFS Research Series:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities of MFS Research Series (the “Fund”), including the portfolio of investments, as of December 31, 2023, 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, 2023, 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, 2023, 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 14, 2024
We have served as the auditor of one or more of the MFS investment companies since 1924.
Trustees and Officers — Identification and Background
The Trustees and Officers of the Trust, as of February 1, 2024, 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 TRUSTEE | | | | | | | | | | |
Michael W. Roberge (k)
(age 57) | | Trustee | | January 2021 | | 136 | | Massachusetts Financial Services Company, Chairman (since January 2021); Chief Executive Officer (since January 2017); Director; Chairman of the Board (since January 2022) | | N/A |
| INDEPENDENT TRUSTEES | | | | | | | | | | |
John P. Kavanaugh
(age 69) | | Trustee and Chair of Trustees | | January 2009 | | 136 | | Private investor | | N/A |
Steven E. Buller
(age 72) | | Trustee | | February 2014 | | 136 | | Private investor | | N/A |
John A. Caroselli
(age 69) | | Trustee | | March 2017 | | 136 | | Private investor; JC Global Advisors, LLC (management consulting), President (since 2015) | | N/A |
Maureen R. Goldfarb
(age 68) | | Trustee | | January 2009 | | 136 | | Private investor | | N/A |
Peter D. Jones
(age 68) | | Trustee | | January 2019 | | 136 | | Private investor | | N/A |
James W. Kilman, Jr.
(age 62) | | Trustee | | January 2019 | | 136 | | Burford Capital Limited (finance and investment management), Senior Advisor (since May 3, 2021), Chief Financial Officer (2019 - May 2, 2021); KielStrand Capital LLC (family office), Chief Executive Officer (since 2016) | | Alpha-En Corporation, Director (2016-2019) |
Clarence Otis, Jr.
(age 67) | | Trustee | | March 2017 | | 136 | | Private investor | | VF Corporation, Director; Verizon Communications, Inc., Director; The Travelers Companies, Director |
Maryanne L. Roepke
(age 67) | | Trustee | | May 2014 | | 136 | | Private investor | | N/A |
Laurie J. Thomsen
(age 66) | | Trustee | | March 2005 | | 136 | | Private investor | | The Travelers Companies, Director; Dycom Industries, Inc., Director |
| 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 50) | | Assistant Secretary and Assistant Clerk | | July 2005 | | 136 | | Massachusetts Financial Services Company, Senior Vice President and Senior Managing Counsel |
Kino Clark (k)
(age 55) | | Assistant Treasurer | | January 2012 | | 136 | | Massachusetts Financial Services Company, Vice President |
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 |
John W. Clark, Jr. (k)
(age 56) | | Assistant Treasurer | | April 2017 | | 136 | | Massachusetts Financial Services Company, Vice President |
David L. DiLorenzo (k)
(age 55) | | President | | July 2005 | | 136 | | Massachusetts Financial Services Company, Senior Vice President |
Heidi W. Hardin (k)
(age 56) | | Secretary and Clerk | | April 2017 | | 136 | | Massachusetts Financial Services Company, Executive Vice President and General Counsel |
Brian E. Langenfeld (k)
(age 50) | | Assistant Secretary and Assistant Clerk | | June 2006 | | 136 | | Massachusetts Financial Services Company, Vice President and Managing Counsel |
Rosa E. Licea-Mailloux (k)
(age 47) | | Chief Compliance Officer | | March 2022 | | 136 | | Massachusetts Financial Services Company, Vice President (since 2018); Director of Corporate Compliance (2018-2021), Senior Director Compliance (2021-2022), Senior Managing Director of North American Compliance & Chief Compliance Officer (since March 2022) |
Amanda S. Mooradian (k)
(age 44) | | Assistant Secretary and Assistant Clerk | | September 2018 | | 136 | | Massachusetts Financial Services Company, Assistant Vice President and Senior Counsel |
Susan A. Pereira (k)
(age 53) | | Assistant Secretary and Assistant Clerk | | July 2005 | | 136 | | Massachusetts Financial Services Company, Vice President and Managing Counsel |
Kasey L. Phillips (k)
(age 53) | | Assistant Treasurer | | September 2012 | | 136 | | Massachusetts Financial Services Company, Vice President |
Matthew A. Stowe (k)
(age 49) | | Assistant Secretary and Assistant Clerk | | October 2014 | | 136 | | Massachusetts Financial Services Company, Vice President and Senior Managing Counsel |
William B. Wilson (k)
(age 41) | | Assistant Secretary and Assistant Clerk | | October 2022 | | 136 | | Massachusetts Financial Services Company, Assistant Vice President and Senior Counsel |
James O. Yost (k)
(age 63) | | Treasurer | | September 1990 | | 136 | | 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. 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 (other than Messrs. Jones, Kilman and Roberge) 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. Mr. Roberge became a Trustee of the Funds on January 1, 2021 and Messrs. Jones and Kilman became Trustees of the Funds on January 1, 2019. 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, Caroselli, Jones and Otis 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.
Trustees and Officers - continued
The Statement of Additional Information for a Fund includes further information about the Trustees and is available without charge upon request by calling 1-800-225-2606.
| Investment Adviser | Custodian |
Massachusetts Financial Services Company
111 Huntington Avenue
Boston, MA 02199-7618 | State Street Bank and Trust Company
1 Congress Street, Suite 1
Boston, MA 02114-2016 |
| Distributor | Independent Registered Public Accounting Firm |
MFS Fund Distributors, Inc.
111 Huntington Avenue
Boston, MA 02199-7618 | Deloitte & Touche LLP
200 Berkeley Street
Boston, MA 02116 |
| Portfolio Manager(s) | |
| Joseph MacDougall | |
Board Review of Investment Advisory Agreement
MFS Research Series
The Investment Company Act of 1940 requires that both the full Board of Trustees and a majority of the non-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, 2023 (“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 an independent consultant who was retained by and reported 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, 2022 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 as well as all other funds in the same investment classification/category (the “Broadridge expense group and universe”), (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 five-year period ended December 31, 2022, 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 five-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 the one-year period and the 4th quintile for the three-year period ended December 31, 2022 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.
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 the Broadridge expense group 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 higher 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 cash in-flows and out-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 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.
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 any 12b-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 and sub-custodians. The Trustees concluded that the various non-advisory services provided by MFS and its affiliates on behalf of the Fund were satisfactory.
The Trustees considered so-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 MFS discontinued its historic practice of obtaining investment research from portfolio brokerage commissions paid by certain MFS Funds effective January 2018, and directly pays or voluntarily reimburses 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 additional one-year period, commencing August 1, 2023.
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 visiting mfs.com/proxyvoting, or by visiting the SEC’s Web site at http://www.sec.gov.
Information regarding how the fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available by August 31 of each year without charge by visiting mfs.com/proxyvoting, or by visiting the SEC’s Web site at http://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 as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s Web site at http://www.sec.gov. A shareholder can obtain the portfolio holdings report for the first and third quarters of the fund's fiscal year at mfs.com/vit1 by choosing the fund's name and then scrolling to the “Resources” section and clicking on the “Prospectus and Reports” tab.
FURTHER INFORMATION
From time to time, MFS may post important information about the fund or the MFS Funds on the MFS Web site (mfs.com). This information is available at https://www.mfs.com/announcements or at mfs.com/vit1 by choosing the fund's name and then scrolling to the “Resources” section and clicking on the “Announcements” tab, if any.
Information About Fund Contracts and Legal Claims
The fund has entered into contractual arrangements with an investment adviser, administrator, distributor, shareholder servicing agent, 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 $41,676,000 as capital gain dividends paid during the fiscal year.
For corporate shareholders, 100.00% of the ordinary income dividends paid during the fiscal year qualify for the corporate dividends received deduction.
| 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 are no longer our customer, we continue to share your information as described in this notice. |
| How? | All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MFS chooses to share; and whether you can limit this sharing. |
Reasons we can share your
personal information | Does MFS share? | Can you limit
this sharing? |
For our everyday business purposes –
such as to process your transactions, maintain your
account(s), respond to court orders and legal
investigations, or report to credit bureaus | Yes | No |
For our marketing purposes –
to offer our products and services to you | No | We don't share |
For joint marketing with other
financial companies | No | We don't share |
For our affiliates' everyday business purposes –
information about your transactions and experiences | No | We don't share |
For our affiliates' everyday business purposes –
information about your creditworthiness | No | We don't share |
| For nonaffiliates to market to you | No | We don't share |
| Questions? | Call 800-225-2606 or go to mfs.com. |
| 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. |
Annual Report
December 31, 2023
MFS® Total Return Bond Series
MFS® Variable Insurance Trust
MFS® Total Return Bond Series
| 1 |
| 3 |
| 4 |
| 6 |
| 7 |
| 17 |
| 18 |
| 19 |
| 20 |
| 22 |
| 30 |
| 31 |
| 34 |
| 36 |
| 36 |
| 36 |
| 36 |
| 36 |
| 37 |
The report is prepared for the general information of shareholders. It is authorized for distribution to prospective investors only when preceded or accompanied by a current prospectus.
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 Total Return Bond Series
Portfolio structure at value (v)
Portfolio structure reflecting equivalent exposure of derivative positions (i)
Fixed income sectors (i)
| U.S. Treasury Securities | 34.4% |
| Investment Grade Corporates | 29.4% |
| Mortgage-Backed Securities | 21.9% |
| Commercial Mortgage-Backed Securities | 8.0% |
| Collateralized Debt Obligations | 7.9% |
| High Yield Corporates | 6.3% |
| Municipal Bonds | 1.4% |
| Asset-Backed Securities | 1.4% |
| U.S. Government Agencies | 0.8% |
| Emerging Markets Bonds | 0.4% |
| Non-U.S. Government Bonds | 0.3% |
Composition including fixed income credit quality (a)(i)
| AAA | 8.2% |
| AA | 4.4% |
| A | 9.8% |
| BBB | 25.3% |
| BB | 5.6% |
| B | 1.7% |
| CCC | 0.2% |
| C (o) | 0.0% |
| U.S. Government | 21.0% |
| Federal Agencies | 22.7% |
| Not Rated | 13.3% |
| Cash & Cash Equivalents | 1.1% |
| Other (q) | (13.3)% |
Portfolio facts
| Average Duration (d) | 6.2 |
| Average Effective Maturity (m) | 7.2 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. If none of the 3 rating agencies above assign a rating, but the security is rated by DBRS Morningstar, then the DBRS Morningstar rating is assigned. If none of the 4 rating agencies listed above rate the security, but the security is rated by the Kroll Bond Rating Agency (KBRA), then the KBRA rating 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, |
MFS Total Return Bond Series
Portfolio Composition - continued
and collateralized mortgage obligations of U.S. Agency mortgage-backed securities. Not Rated includes fixed income securities and fixed income derivatives that 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. The Average Duration calculation reflects the impact of the equivalent exposure of derivative positions, if any. |
| (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 feature (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. |
| (q) | For purposes of this presentation, Other includes equivalent exposure from currency derivatives and/or any offsets to derivative positions and may be negative. |
| (v) | For purposes of this presentation, market value of fixed income and/or equity derivatives, if any, is included in Cash & Cash Equivalents. |
Cash & Cash Equivalents includes any cash, investments in money market funds, short-term securities, and other assets less liabilities. Please see the Statement of Assets and Liabilities for additional information related to the fund’s cash position and other assets and liabilities.
Percentages are based on net assets as of December 31, 2023.
The portfolio is actively managed and current holdings may be different.
MFS Total Return Bond Series
Management Review
Summary of Results
For the twelve months ended December 31, 2023, Initial Class shares of the MFS Total Return Bond Series (fund) provided a total return of 7.38%, while Service Class shares of the fund provided a total return of 7.13%. These compare with a return of 5.53% over the same period for the fund’s benchmark, the Bloomberg U.S. Aggregate Bond Index.
Market Environment
During the reporting period, central banks around the world had to combat the strongest inflationary pressures in four decades, fueled by the global fiscal response to the pandemic, disrupted supply chains and the dislocations to energy markets stemming from the war in Ukraine. Interest rates rose substantially, but the effects of a tighter monetary policy may not have been fully experienced yet, given that monetary policy works with long and variable lags. Strains resulting from the abrupt tightening of monetary policy began to affect some parts of the economy, most acutely among small and regional US banks, which suffered from deposit flight as depositors sought higher yields on their savings. Additionally, activity in the US housing sector has slowed as a result of higher mortgage rates. China’s abandonment of its Zero-COVID policy ushered in a brief uptick in economic activity in the world’s second-largest economy in early 2023, although its momentum soon stalled as the focus turned to the country’s highly indebted property development sector. In developed markets, consumer demand for services remained stronger than the demand for goods.
Early on, policymakers found themselves in the difficult position of trying to restrain inflation without tipping economies into recession. Despite the challenging macroeconomic and geopolitical environment, central banks focused on controlling price pressures while also confronting increasing financial stability concerns. Central banks had to juggle achieving their inflation mandates while using macroprudential tools (financial policies aimed at safeguarding the stability of the financial system) to keep banking systems liquid, a potentially difficult balancing act, and one that suggested that we may be nearing a peak in policy rates. As inflationary pressures eased toward the end of the period, financial conditions loosened in anticipation of easier monetary policy, boosting the market’s appetite for risk. Rapid advancements in artificial intelligence were a focus for investors.
Normalizing supply chains, low levels of unemployment across developed markets and signs that inflation levels have peaked were supportive factors for the macroeconomic backdrop.
Factors Affecting Performance
Relative to the Bloomberg U.S. Aggregate Bond Index, the fund’s asset allocation decisions contributed to relative performance. From a sector perspective, the fund's exposure to the collateralized mortgage obligation (CMO) sector, for which the benchmark has no exposure, and an underweight allocation to the treasury sector, strengthened relative returns. The fund’s overweight allocation to both the industrials and financial institutions sectors further benefited relative results. From a quality perspective, the fund's exposure to “BB” rated(r) bonds, for which the benchmark has no exposure, and an overweight exposure to both “A” and “BBB” rated bonds, helped relative returns. The fund's shorter relative duration(d) stance was another area of relative strength as interest rates generally rose over the reporting period. Additionally, bond selection within the industrials sector, particularly within “BBB” rated bonds, aided relative performance.
Conversely, the fund’s yield curve(y) positioning detracted from relative returns.
Respectfully,
Portfolio Manager(s)
Alexander Mackey and Joshua Marston
| (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. |
| (r) | Securities rated “BBB”, “Baa”, or higher are considered investment grade; securities rated “BB”, “Ba”, or below are considered non-investment grade. Ratings are assigned to underlying securities utilizing ratings from Moody's, Fitch, and Standard & Poor's 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. If none of the 3 rating agencies above assign a rating, but the security is rated by DBRS Morningstar, then the DBRS Morningstar rating is assigned. If none of the 4 rating agencies listed above rate the security, but the security is rated by the Kroll Bond Rating Agency (KBRA), then the KBRA rating is assigned. Ratings are shown in the S&P and Fitch scale (e.g., AAA). For securities that are not rated by any of the rating 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. |
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 Total Return Bond Series
Performance Summary Through 12/31/23
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 shares, 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 shareholder would pay on fund distributions or the redemption of fund shares. 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
Total Returns through 12/31/23
Average annual total returns
| Share Class | Class Inception Date | 1-yr | 5-yr | 10-yr |
| Initial Class | 10/24/1995 | 7.38% | 1.85% | 2.22% |
| Service Class | 5/01/2000 | 7.13% | 1.58% | 1.96% |
Comparative benchmark(s)
| Bloomberg U.S. Aggregate Bond Index (f) | 5.53% | 1.10% | 1.81% |
| (f) | Source: FactSet Research Systems Inc. |
Benchmark Definition(s)
Bloomberg U.S. Aggregate Bond Index(a) – 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.
It is not possible to invest directly in an index.
| (a) | Source: Bloomberg Index Services Limited. BLOOMBERG® is a trademark and service mark of Bloomberg Finance L.P. and its affiliates (collectively “Bloomberg”). Bloomberg or Bloomberg's licensors own all proprietary rights in the Bloomberg Indices. Bloomberg neither approves or endorses this material, or guarantees the accuracy or completeness of any information herein, or makes any warranty, express or implied, as to the results to be obtained therefrom and, to the maximum extent allowed by law, neither shall have any liability or responsibility for injury or damages arising in connection therewith. |
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.
MFS Total Return Bond Series
Performance Summary – continued
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 Total Return Bond Series
Expense Table
Fund expenses borne by the shareholders during the period,
July 1, 2023 through December 31, 2023
As a shareholder 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, 2023 through December 31, 2023.
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
7/01/23 | Ending
Account Value
12/31/23 | Expenses
Paid During
Period (p)
7/01/23-12/31/23 |
| Initial Class | Actual | 0.52% | $1,000.00 | $1,042.32 | $2.68 |
| Hypothetical (h) | 0.52% | $1,000.00 | $1,022.58 | $2.65 |
| Service Class | Actual | 0.77% | $1,000.00 | $1,040.20 | $3.96 |
| Hypothetical (h) | 0.77% | $1,000.00 | $1,021.32 | $3.92 |
| (h) | 5% class return per year before expenses. |
| (p) | “Expenses Paid During Period” are equal to each class's annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). |
MFS Total Return Bond Series
Portfolio of Investments − 12/31/23
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
| Issuer | | | Shares/Par | Value ($) |
| Bonds – 98.0% |
| Aerospace & Defense – 0.9% |
| Boeing Co., 2.196%, 2/04/2026 | | $ | 6,236,000 | $ 5,892,315 |
| Boeing Co., 5.15%, 5/01/2030 | | | 1,704,000 | 1,734,691 |
| Boeing Co., 5.705%, 5/01/2040 | | | 1,595,000 | 1,649,125 |
| TransDigm, Inc., 4.625%, 1/15/2029 | | | 5,158,000 | 4,842,717 |
| | | | | $14,118,848 |
| Asset-Backed & Securitized – 17.2% |
| ACREC 2021-FL1 Ltd., “C”, FLR, 7.596% ((SOFR - 1mo. + 0.11448%) + 2.15%), 10/16/2036 (n) | | $ | 2,546,000 | $ 2,450,936 |
| ACREC 2021-FL1 Ltd., “D”, FLR, 8.122% ((SOFR - 1mo. + 0.11448%) + 2.65%), 10/16/2036 (n) | | | 3,070,500 | 2,908,228 |
| ACRES 2021-FL2 Issuer Ltd., “C”, FLR, 8.126% ((SOFR - 1mo. + 0.11448%) + 2.65%), 1/15/2037 (n) | | | 3,129,000 | 3,023,207 |
| Allegro CLO Ltd., 2014-1RA, “A2”, FLR, 7.273% ((SOFR - 3mo. + 0.26161%) + 1.6%), 10/21/2028 (n) | | | 5,554,267 | 5,553,750 |
| Arbor Realty Trust, Inc., CLO, 2021-FL1, “C”, FLR, 7.448% ((SOFR - 1mo. + 0.11448%) + 2%), 12/15/2035 (n) | | | 905,000 | 878,969 |
| Arbor Realty Trust, Inc., CLO, 2021-FL1, “D”, FLR, 8.398% ((SOFR - 1mo. + 0.11448%) + 2.95%), 12/15/2035 (n) | | | 831,500 | 814,292 |
| Arbor Realty Trust, Inc., CLO, 2021-FL2, “B”, FLR, 7.048% ((SOFR - 1mo. + 0.11448%) + 1.6%), 5/15/2036 (n) | | | 1,152,500 | 1,121,770 |
| Arbor Realty Trust, Inc., CLO, 2021-FL3, “C”, FLR, 7.326% ((SOFR - 1mo. + 0.11448%) + 1.85%), 8/15/2034 (n) | | | 1,740,000 | 1,653,908 |
| Arbor Realty Trust, Inc., CLO, 2021-FL3, “D”, FLR, 7.676% ((SOFR - 1mo. + 0.11448%) + 2.2%), 8/15/2034 (n) | | | 964,500 | 906,591 |
| Arbor Realty Trust, Inc., CLO, 2021-FL4, “C”, FLR, 7.748% ((SOFR - 1mo. + 0.11448%) + 2.3%), 11/15/2036 (n) | | | 3,443,500 | 3,328,953 |
| Arbor Realty Trust, Inc., CLO, 2022-FL1, “D”, FLR, 8.346% (SOFR - 30 day + 3%), 1/15/2037 (n) | | | 9,290,000 | 8,532,879 |
| AREIT 2019-CRE3 Trust, “B”, FLR, 7.026% ((SOFR - 1mo. + 0.11448%) + 1.55%), 9/14/2036 (n) | | | 2,569,500 | 2,477,733 |
| AREIT 2019-CRE3 Trust, “C”, FLR, 7.376% (SOFR - 1mo. + 2.014%), 9/14/2036 (n) | | | 2,242,500 | 2,045,797 |
| AREIT 2019-CRE3 Trust, “D”, FLR, 8.126% ((SOFR - 1mo. + 0.11448%) + 2.65%), 9/14/2036 (n) | | | 1,849,000 | 1,657,066 |
| AREIT 2022-CRE6 Trust, “B”, FLR, 7.187% (SOFR - 30 day + 1.85%), 1/20/2037 (n) | | | 1,126,000 | 1,091,172 |
| AREIT 2022-CRE6 Trust, “C”, FLR, 7.488% (SOFR - 30 day + 2.15%), 1/20/2037 (n) | | | 2,322,000 | 2,210,869 |
| AREIT 2022-CRE6 Trust, “D”, FLR, 8.188% (SOFR - 30 day + 2.85%), 1/20/2037 (n) | | | 987,000 | 928,643 |
| ARI Fleet Lease Trust, 2023-B, “A2”, 6.05%, 7/15/2032 (n) | | | 883,776 | 893,594 |
| Bayview Commercial Asset Trust, 0%, 12/25/2036 (i)(n) | | | 58,296 | 6 |
| Bayview Financial Revolving Mortgage Loan Trust, FLR, 7.071% ((SOFR - 1mo. + 0.11448%) + 1.6%), 12/28/2040 (n) | | | 20,585 | 30,267 |
| BBCMS Mortgage Trust, 2019-C5, “A4”, 3.063%, 11/15/2052 | | | 2,755,000 | 2,476,921 |
| BDS 2021-FL7 Ltd., “B”, FLR, 6.972% ((SOFR - 1mo. + 0.11448%) + 1.5%), 6/16/2036 (n) | | | 1,259,500 | 1,232,713 |
| Benchmark 2023-V3 Mortgage Trust, “A3”, 6.362%, 7/15/2056 | | | 991,415 | 1,038,631 |
| Brazos Securitization LLC, 5.413%, 9/01/2050 (n) | | | 3,427,000 | 3,502,391 |
| BSPDF 2021-FL1 Issuer Ltd., “B”, FLR, 7.276% ((SOFR - 1mo. + 0.11448%) + 1.8%), 10/15/2036 (n) | | | 4,380,500 | 4,138,946 |
| BSPRT 2021-FL6 Issuer Ltd., “B”, FLR, 7.076% ((SOFR - 1mo. + 0.11448%) + 1.6%), 3/15/2036 (n) | | | 3,669,500 | 3,522,680 |
| BSPRT 2021-FL6 Issuer Ltd., “C”, FLR, 7.526% ((SOFR - 1mo. + 0.11448%) + 2.05%), 3/15/2036 (n) | | | 1,288,000 | 1,231,806 |
| BSPRT 2021-FL7 Issuer Ltd., “C”, FLR, 7.748% ((SOFR - 1mo. + 0.11448%) + 2.3%), 12/15/2038 (n) | | | 836,500 | 815,255 |
| BSPRT 2021-FL7 Issuer Ltd., “D”, FLR, 8.198% ((SOFR - 1mo. + 0.11448%) + 2.75%), 12/15/2038 (n) | | | 952,500 | 897,060 |
| Business Jet Securities LLC, 2020-1A, “A”, 2.981%, 11/15/2035 (n) | | | 438,787 | 419,300 |
| Business Jet Securities LLC, 2021-1A, “B”, 2.918%, 4/15/2036 (n) | | | 349,171 | 319,083 |
| BXMT 2020-FL2 Ltd., “B”, FLR, 6.876% ((SOFR - 1mo. + 0.11448%) + 1.4%), 2/15/2038 (n) | | | 1,731,000 | 1,516,747 |
| Cantor Commercial Real Estate, 2019-CF2, “A5”, 2.874%, 11/15/2052 | | | 6,645,635 | 5,841,986 |
| Capital Automotive, 2020-1A, “A4”, REIT, 3.19%, 2/15/2050 (n) | | | 2,378,439 | 2,276,437 |
| CHCP 2021-FL1 Ltd., “B”, FLR, 7.102% ((SOFR - 1mo. + 0.11448%) + 1.65%), 2/15/2038 (n) | | | 1,102,500 | 1,084,191 |
| CHCP 2021-FL1 Ltd., “C”, FLR, 7.572% ((SOFR - 1mo. + 0.11448%) + 2.1%), 2/15/2038 (n) | | | 1,249,000 | 1,211,672 |
| Chesapeake Funding II LLC, 2023-1A, “A1”, 5.65%, 5/15/2035 (n) | | | 1,150,670 | 1,153,699 |
| Citigroup Commercial Mortgage Trust, 2014-GC25, “A4”, 3.635%, 10/10/2047 | | | 3,128,793 | 3,068,224 |
| Citigroup Commercial Mortgage Trust, 2016-P6, “A5”, 3.72%, 12/10/2049 | | | 1,754,000 | 1,652,722 |
| CLNC 2019-FL1 Ltd., “B”, FLR, 7.37% (SOFR - 1mo. + 2.01448%), 8/20/2035 (n) | | | 1,850,000 | 1,784,782 |
| CLNC 2019-FL1 Ltd., “C”, FLR, 7.87% (SOFR - 1mo. + 2.51448%), 8/20/2035 (n) | | | 3,006,500 | 2,922,506 |
| Commercial Mortgage Pass-Through Certificates, 2023-BNK46, “A4”, 5.745%, 8/15/2056 | | | 4,656,029 | 4,895,423 |
| Commercial Mortgage Pass-Through Certificates, 2023-BNK46, “AS”, 6.385%, 8/15/2056 | | | 2,699,147 | 2,800,518 |
| Commercial Mortgage Trust, 2015-LC21, “A4”, 3.708%, 7/10/2048 | | | 10,000,000 | 9,699,549 |
| Commercial Mortgage Trust, 2015-PC1, “A5”, 3.902%, 7/10/2050 | | | 2,888,848 | 2,807,906 |
| Consumers 2023 Securitization Funding LLC, 5.55%, 3/01/2028 | | | 2,493,000 | 2,502,711 |
| Credit Acceptance Auto Loan Trust, 2021-3A, “C”, 1.63%, 9/16/2030 (n) | | | 523,000 | 497,689 |
| Credit Acceptance Auto Loan Trust, 2023-3A, “A”, 6.39%, 8/15/2033 (n) | | | 973,000 | 986,685 |
MFS Total Return Bond Series
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Bonds – continued |
| Asset-Backed & Securitized – continued |
| CSAIL Commercial Mortgage Trust, 2015-C2, “A4”, 3.504%, 6/15/2057 | | $ | 2,695,346 | $ 2,607,320 |
| Cutwater 2015-1A Ltd., “BR”, FLR, 7.455% ((SOFR - 3mo. + 0.26161%) + 1.8%), 1/15/2029 (n) | | | 10,770,000 | 10,708,643 |
| DT Auto Owner Trust, 2023-1A, “A”, 5.48%, 4/15/2027 (n) | | | 1,939,385 | 1,935,762 |
| Enterprise Fleet Financing LLC, 2023-3, “A2”, 6.4%, 3/20/2030 (n) | | | 2,225,000 | 2,274,224 |
| GLGU 2023-1A Ltd., “B”, FLR, 8.362% (SOFR - 3mo. + 3%), 7/20/2035 (n) | | | 3,420,864 | 3,422,441 |
| GLS Auto Select Receivables Trust, 2023-2A, 6.37%, 6/15/2028 (n) | | | 1,660,000 | 1,674,269 |
| GS Mortgage Securities Trust, 2015-GC30, “A4”, 3.382%, 5/10/2050 | | | 7,904,407 | 7,631,639 |
| HarbourView CLO VII Ltd., 7RA, “B”, FLR, 7.356% ((SOFR - 3mo. + 0.26161%) + 1.7%), 7/18/2031 (n) | | | 6,545,000 | 6,374,326 |
| JPMBB Commercial Mortgage Securities Trust, 2015-C28, “A4”, 3.227%, 10/15/2048 | | | 12,188,428 | 11,743,937 |
| JPMorgan Chase Commercial Mortgage Securities Corp., 5.707%, 7/15/2042 (n) | | | 964 | 839 |
| JPMorgan Mortgage Trust, “A1”, 4.517%, 10/25/2033 | | | 34,603 | 31,635 |
| KKR Static CLO I Ltd. 2022-1A, “BR”, 7.365% (SOFR - 3mo. + 2%), 7/19/2031 (n)(w) | | | 4,871,468 | 4,871,468 |
| Kubota Credit Owner Trust, 2023-2A, “A2”, 5.61%, 7/15/2026 (n) | | | 1,192,482 | 1,196,069 |
| LCCM 2021-FL2 Trust, “C”, FLR, 7.626% ((SOFR - 1mo. + 0.11448%) + 2.15%), 12/13/2038 (n) | | | 1,985,500 | 1,842,332 |
| LoanCore 2019-CRE2 Ltd., “D”, FLR, 7.926% ((SOFR - 1mo. + 0.11448%) + 2.45%), 5/15/2036 (n) | | | 1,121,500 | 1,042,784 |
| LoanCore 2021-CRE5 Ltd., “AS”, FLR, 7.198% ((SOFR - 1mo. + 0.11448%) + 1.75%), 7/15/2036 (n) | | | 5,666,000 | 5,579,114 |
| LoanCore 2021-CRE5 Ltd., “B”, FLR, 7.476% ((SOFR - 1mo. + 0.11448%) + 2.0%), 7/15/2036 (n) | | | 5,318,000 | 5,129,772 |
| LoanCore 2021-CRE6 Ltd., “B”, FLR, 7.376% ((SOFR - 1mo. + 0.11448%) + 1.9%), 11/15/2038 (n) | | | 9,970,000 | 9,507,591 |
| Madison Park Funding Ltd., 2017- 23A, “CR”, FLR, 7.649% ((SOFR - 3mo. + 0.26161%) + 2%), 7/27/2031 (n) | | | 5,894,060 | 5,829,844 |
| Merrill Lynch Mortgage Investors, Inc., “A”, 5.47%, 5/25/2036 | | | 43,667 | 42,478 |
| Merrill Lynch Mortgage Investors, Inc., “A5”, 4.325%, 4/25/2035 | | | 64,249 | 56,362 |
| MF1 2020-FL4 Ltd., “AS”, FLR, 7.576% ((SOFR - 1mo. + 0.11448%) + 2.1%), 11/15/2035 (n) | | | 2,602,500 | 2,591,771 |
| MF1 2021-FL5 Ltd., “C”, FLR, 7.176% ((SOFR - 1mo. + 0.11448%) + 1.7%), 7/15/2036 (n) | | | 2,589,000 | 2,482,903 |
| MF1 2022-FL8 Ltd., “C”, FLR, 7.556% (SOFR - 30 day + 2.2%), 2/19/2037 (n) | | | 2,433,741 | 2,335,206 |
| MF1 2022-FL8 Ltd., “D”, FLR, 8.006% (SOFR - 30 day + 2.65%), 2/19/2037 (n) | | | 1,407,473 | 1,322,838 |
| MSWF Commercial Mortgage Trust 2023-2, “A5”, 6.014%, 12/15/2056 | | | 3,231,641 | 3,470,589 |
| Neuberger Berman CLO Ltd., 2013-15A, “CR2”, FLR, 7.505% ((SOFR - 3mo. + 0.26161%) + 1.85%), 10/15/2029 (n) | | | 7,481,614 | 7,380,507 |
| Oaktree CLO 2019-1A Ltd., “BR”, FLR, 7.424% ((SOFR - 3mo. + 0.26161%) + 1.75%), 4/22/2030 (n) | | | 5,000,000 | 4,932,415 |
| Oaktree CLO 2019-1A Ltd., “CR”, FLR, 8.023% ((SOFR - 3mo. + 0.26161%) + 2.35%), 4/22/2030 (n) | | | 5,744,568 | 5,668,659 |
| PFP III 2021-7 Ltd., “C”, FLR, 7.102% ((SOFR - 1mo. + 0.11448%) + 1.65%), 4/14/2038 (n) | | | 258,447 | 251,841 |
| PFP III 2021-8 Ltd., “D”, FLR, 7.626% ((SOFR - 1mo. + 0.11448%) + 2.15%), 8/09/2037 (n) | | | 3,737,500 | 3,529,274 |
| Preferred Term Securities XIX Ltd., CDO, FLR, 5.996% ((SOFR - 3mo. + 0.26161%) + 0.35%), 12/21/2035 (n) | | | 125,111 | 113,225 |
| Race Point CLO Ltd., 2013-8A, “AR-2”, FLR, 6.669% ((SOFR - 3mo. + 0.26161%) + 1.04%), 2/20/2030 (n) | | | 2,769,191 | 2,765,613 |
| ReadyCap Commercial Mortgage Trust, 2021-FL7, “C”, FLR, 7.67% ((SOFR - 1mo. + 0.11448%) + 2.95%), 11/25/2036 (z) | | | 1,340,000 | 1,279,150 |
| ReadyCap Commercial Mortgage Trust, 2021-FL7, “D”, FLR, 8.42% ((SOFR - 1mo. + 0.11448%) + 2.95%), 11/25/2036 (z) | | | 1,575,000 | 1,438,465 |
| Residential Funding Mortgage Securities, Inc., FGIC, 3.889%, 12/25/2035 (d)(q) | | | 2,975 | 101 |
| Starwood Commercial Mortgage, 2021-FL2, “C”, FLR, 7.546% ((SOFR - 1mo. + 0.11448)% + 2.1%), 4/18/2038 (n) | | | 2,027,000 | 1,796,459 |
| Starwood Commercial Mortgage, 2022-FL3, “B”, FLR, 7.296% (SOFR - 30 day + 1.95%), 11/15/2038 (n) | | | 1,391,000 | 1,349,878 |
| Starwood Commercial Mortgage, 2022-FL3, “C”, FLR, 7.546% (SOFR - 30 day + 2.2%), 11/15/2038 (n) | | | 2,632,000 | 2,510,100 |
| Toyota Lease Owner Trust, 2023-A, “A2”, 5.3%, 8/20/2025 (n) | | | 914,176 | 912,761 |
| UBS Commercial Mortgage Trust, 2017-C8, “A4”, 3.983%, 2/15/2051 | | | 5,865,766 | 5,514,822 |
| Voya CLO 2012-4A Ltd., “A2R3”, FLR, 7.105% ((SOFR - 3mo. + 0.26161%) + 1.45%), 10/15/2030 (n) | | | 1,957,793 | 1,940,698 |
| Voya CLO 2012-4A Ltd., “BR3”, FLR, 7.605% ((SOFR - 3mo. + 0.26161%) + 1.95%), 10/15/2030 (n) | | | 828,265 | 808,544 |
| Voya CLO 2012-4A Ltd., “C1R3”, FLR, 8.955% ((SOFR - 3mo. + 0.26161%) + 3.3%), 10/15/2030 (n) | | | 1,187,823 | 1,179,174 |
| Wells Fargo Commercial Mortgage Trust, 2016-LC25, “A4”, 3.64%, 12/15/2059 | | | 13,071,416 | 12,467,232 |
| Wells Fargo Commercial Mortgage Trust, 2017-C42, “A5”, 3.589%, 12/15/2050 | | | 3,970,000 | 3,635,416 |
| | | | | $263,987,353 |
| Broadcasting – 1.0% |
| Discovery Communications LLC, 4.65%, 5/15/2050 | | $ | 4,028,000 | $ 3,235,576 |
| WarnerMedia Holdings, Inc., 5.05%, 3/15/2042 | | | 5,334,000 | 4,702,352 |
| WarnerMedia Holdings, Inc., 5.141%, 3/15/2052 | | | 4,694,000 | 4,029,122 |
| WarnerMedia Holdings, Inc., 5.391%, 3/15/2062 | | | 1,915,000 | 1,639,988 |
| WMG Acquisition Corp., 3%, 2/15/2031 (n) | | | 1,568,000 | 1,343,962 |
| | | | | $14,951,000 |
MFS Total Return Bond Series
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Bonds – continued |
| Brokerage & Asset Managers – 0.9% |
| Charles Schwab Corp., 5.853% to 5/19/2033, FLR (SOFR - 1 day + 2.5%) to 5/19/2034 | | $ | 2,300,000 | $ 2,374,179 |
| Charles Schwab Corp., 5% to 6/01/2027, FLR (CMT - 5yr. + 3.256%) to 6/01/2170 | | | 6,058,000 | 5,468,963 |
| LPL Holdings, Inc., 6.75%, 11/17/2028 | | | 1,167,000 | 1,244,045 |
| LPL Holdings, Inc., 4%, 3/15/2029 (n) | | | 4,555,000 | 4,215,273 |
| | | | | $13,302,460 |
| Building – 0.7% |
| Standard Industries, Inc., 4.375%, 7/15/2030 (n) | | $ | 5,875,000 | $ 5,395,531 |
| Standard Industries, Inc., 3.375%, 1/15/2031 (n) | | | 2,760,000 | 2,374,346 |
| Vulcan Materials Co., 3.5%, 6/01/2030 | | | 3,356,000 | 3,121,520 |
| | | | | $10,891,397 |
| Business Services – 1.2% |
| Equinix, Inc., 2.15%, 7/15/2030 | | $ | 4,789,000 | $ 4,057,388 |
| Fiserv, Inc., 3.5%, 7/01/2029 | | | 2,280,000 | ��� 2,145,087 |
| Fiserv, Inc., 5.6%, 3/02/2033 | | | 2,183,000 | 2,278,772 |
| Global Payments, Inc., 2.9%, 5/15/2030 | | | 5,153,000 | 4,532,480 |
| Global Payments, Inc., 2.9%, 11/15/2031 | | | 1,508,000 | 1,289,927 |
| Iron Mountain, Inc., 4.5%, 2/15/2031 (n) | | | 5,315,000 | 4,812,825 |
| | | | | $19,116,479 |
| Cable TV – 1.7% |
| CCO Holdings LLC/CCO Holdings Capital Corp., 4.5%, 8/15/2030 (n) | | $ | 6,587,000 | $ 5,938,076 |
| Charter Communications Operating LLC/Charter Communications Operating Capital Corp., 5.25%, 4/01/2053 | | | 6,586,000 | 5,516,069 |
| CSC Holdings LLC, 4.125%, 12/01/2030 (n) | | | 2,940,000 | 2,236,605 |
| CSC Holdings LLC, 4.5%, 11/15/2031 (n) | | | 4,065,000 | 3,073,448 |
| Sirius XM Radio, Inc., 5.5%, 7/01/2029 (n) | | | 2,184,000 | 2,111,557 |
| Sirius XM Radio, Inc., 4.125%, 7/01/2030 (n) | | | 3,995,000 | 3,559,855 |
| Time Warner Cable, Inc., 4.5%, 9/15/2042 | | | 3,558,000 | 2,792,090 |
| Time Warner Entertainment Co. LP, 8.375%, 7/15/2033 | | | 290,000 | 335,784 |
| | | | | $25,563,484 |
| Chemicals – 0.1% |
| Axalta Coating Systems Ltd., 3.375%, 2/15/2029 (n) | | $ | 1,402,000 | $ 1,258,196 |
| Computer Software – 0.5% |
| Dell International LLC/EMC Corp., 5.3%, 10/01/2029 | | $ | 6,901,000 | $ 7,106,663 |
| Computer Software - Systems – 0.3% |
| SS&C Technologies Holdings, Inc., 5.5%, 9/30/2027 (n) | | $ | 4,802,000 | $ 4,733,488 |
| Conglomerates – 1.0% |
| Regal Rexnord Corp., 6.05%, 4/15/2028 (n) | | $ | 1,521,000 | $ 1,539,672 |
| Regal Rexnord Corp., 6.3%, 2/15/2030 (n) | | | 4,643,000 | 4,763,305 |
| Regal Rexnord Corp., 6.4%, 4/15/2033 (n) | | | 3,600,000 | 3,752,171 |
| Westinghouse Air Brake Technologies Corp., 4.7%, 9/15/2028 | | | 4,993,000 | 4,937,341 |
| | | | | $14,992,489 |
| Consumer Products – 0.2% |
| Haleon US Capital LLC, 3.625%, 3/24/2032 | | $ | 3,229,000 | $ 2,978,424 |
| Consumer Services – 0.9% |
| Match Group Holdings II LLC, 3.625%, 10/01/2031 (n) | | $ | 4,782,000 | $ 4,131,744 |
| Toll Road Investors Partnership II LP, Capital Appreciation, NPFG, 0%, 2/15/2026 (n) | | | 2,145,000 | 1,848,969 |
| Toll Road Investors Partnership II LP, Capital Appreciation, NPFG, 0%, 2/15/2029 (n) | | | 6,221,000 | 4,322,840 |
MFS Total Return Bond Series
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Bonds – continued |
| Consumer Services – continued |
| Toll Road Investors Partnership II LP, Capital Appreciation, NPFG, 0%, 2/15/2031 (n) | | $ | 2,145,000 | $ 1,282,796 |
| Toll Road Investors Partnership II LP, Capital Appreciation, NPFG, 0%, 2/15/2043 (n) | | | 5,294,766 | 1,684,225 |
| | | | | $13,270,574 |
| Electrical Equipment – 0.3% |
| Arrow Electronics, Inc., 2.95%, 2/15/2032 | | $ | 4,838,000 | $ 4,089,205 |
| Electronics – 0.4% |
| Broadcom, Inc., 3.137%, 11/15/2035 (n) | | $ | 3,219,000 | $ 2,642,747 |
| Broadcom, Inc., 4.926%, 5/15/2037 (n) | | | 3,219,000 | 3,115,124 |
| | | | | $5,757,871 |
| Energy - Independent – 0.8% |
| EQT Corp., 3.9%, 10/01/2027 | | $ | 2,315,000 | $ 2,214,636 |
| EQT Corp., 5%, 1/15/2029 | | | 1,294,000 | 1,281,865 |
| EQT Corp., 3.625%, 5/15/2031 (n) | | | 1,506,000 | 1,344,963 |
| Leviathan Bond Ltd., 6.75%, 6/30/2030 (n) | | | 2,670,000 | 2,430,106 |
| Santos Finance Ltd., 6.875%, 9/19/2033 (n) | | | 3,007,000 | 3,188,994 |
| Tengizchevroil Finance Co. International Ltd., 3.25%, 8/15/2030 | | | 3,294,000 | 2,705,560 |
| | | | | $13,166,124 |
| Financial Institutions – 1.2% |
| AerCap Ireland Capital DAC/AerCap Global Aviation Trust, 6.5%, 7/15/2025 | | $ | 3,195,000 | $ 3,235,481 |
| AerCap Ireland Capital DAC/AerCap Global Aviation Trust, 3%, 10/29/2028 | | | 2,329,000 | 2,126,350 |
| AerCap Ireland Capital DAC/AerCap Global Aviation Trust, 3.3%, 1/30/2032 | | | 2,763,000 | 2,404,721 |
| Avolon Holdings Funding Ltd., 2.125%, 2/21/2026 (n) | | | 2,890,000 | 2,677,933 |
| Avolon Holdings Funding Ltd., 4.25%, 4/15/2026 (n) | | | 1,779,000 | 1,718,183 |
| Avolon Holdings Funding Ltd., 2.75%, 2/21/2028 (n) | | | 2,615,000 | 2,323,006 |
| Global Aircraft Leasing Co. Ltd., 6.5% (6.5% Cash or 7.25% PIK), 9/15/2024 (n)(p) | | | 3,989,171 | 3,749,821 |
| | | | | $18,235,495 |
| Food & Beverages – 0.5% |
| JBS USA Lux S.A./JBS USA Food Co./JBS USA Finance, Inc., 5.5%, 1/15/2030 | | $ | 4,965,000 | $ 4,879,484 |
| Post Holdings, Inc., 5.5%, 12/15/2029 (n) | | | 1,441,000 | 1,388,501 |
| Post Holdings, Inc., 4.625%, 4/15/2030 (n) | | | 1,225,000 | 1,126,808 |
| Post Holdings, Inc., 4.5%, 9/15/2031 (n) | | | 216,000 | 193,568 |
| | | | | $7,588,361 |
| Gaming & Lodging – 0.2% |
| Marriott International, Inc., 3.5%, 10/15/2032 | | $ | 3,330,000 | $ 2,968,877 |
| Insurance – 0.5% |
| Corebridge Financial, Inc., 3.9%, 4/05/2032 | | $ | 3,293,000 | $ 2,976,761 |
| Corebridge Financial, Inc., 5.75%, 1/15/2034 | | | 2,801,000 | 2,863,083 |
| Corebridge Financial, Inc., 4.35%, 4/05/2042 | | | 442,000 | 374,618 |
| Corebridge Financial, Inc., 4.4%, 4/05/2052 | | | 1,291,000 | 1,082,042 |
| | | | | $7,296,504 |
| Insurance - Health – 0.3% |
| Humana, Inc., 5.875%, 3/01/2033 | | $ | 4,131,000 | $ 4,400,725 |
| Insurance - Property & Casualty – 1.3% |
| Allied World Assurance Co. Holdings Ltd., 4.35%, 10/29/2025 | | $ | 6,835,000 | $ 6,654,816 |
| Aon Corp., 3.75%, 5/02/2029 | | | 3,245,000 | 3,104,048 |
| Fairfax Financial Holdings Ltd., 4.85%, 4/17/2028 | | | 5,692,000 | 5,603,771 |
MFS Total Return Bond Series
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Bonds – continued |
| Insurance - Property & Casualty – continued |
| Fairfax Financial Holdings Ltd., 3.375%, 3/03/2031 | | $ | 1,060,000 | $ 931,492 |
| Fairfax Financial Holdings Ltd., 5.625%, 8/16/2032 | | | 2,374,000 | 2,371,696 |
| Liberty Mutual Group, Inc., 3.951%, 10/15/2050 (n) | | | 2,221,000 | 1,678,524 |
| | | | | $20,344,347 |
| International Market Quasi-Sovereign – 0.3% |
| Electricite de France S.A., 4.875%, 9/21/2038 (n) | | $ | 2,687,000 | $ 2,482,724 |
| Electricite de France S.A., 6.9%, 5/23/2053 (n) | | | 1,704,000 | 1,927,072 |
| | | | | $4,409,796 |
| Machinery & Tools – 0.3% |
| Ashtead Capital, Inc., 5.55%, 5/30/2033 (n) | | $ | 3,631,000 | $ 3,592,700 |
| CNH Industrial N.V., 3.85%, 11/15/2027 | | | 1,328,000 | 1,279,284 |
| | | | | $4,871,984 |
| Major Banks – 7.3% |
| Bank of America Corp., 2.496% to 2/13/2030, FLR ((SOFR - 3mo. + 0.26161%) + 0.99%) to 2/13/2031 | | $ | 4,007,000 | $ 3,440,877 |
| Bank of America Corp., 2.572% to 10/20/2031, FLR (SOFR - 1 day + 1.21%) to 10/20/2032 | | | 10,928,000 | 9,060,096 |
| Bank of America Corp., 5.875% to 3/15/2028, FLR ((SOFR - 3mo. + 0.26161%) + 2.931%) to 9/15/2171 | | | 3,924,000 | 3,756,685 |
| Bank of America Corp., 6.1%, 9/17/2171 | | | 6,096,000 | 6,038,137 |
| Bank of America Corp., 6.5% to 10/23/2024, FLR ((SOFR - 3mo. + 0.26161%) + 4.174%) to 4/23/2172 | | | 3,843,000 | 3,824,375 |
| Barclays PLC, 4.972% to 5/16/2028, FLR (LIBOR - 3mo. + 1.902%) to 5/16/2029 | | | 3,191,000 | 3,132,508 |
| Barclays PLC, 2.894% to 11/24/2031, FLR (CMT - 1yr. + 1.3%) to 11/24/2032 | | | 3,776,000 | 3,094,735 |
| Capital One Financial Corp., 5.817% to 2/01/2033, FLR (SOFR - 1 day + 2.6%) to 2/01/2034 | | | 2,325,000 | 2,313,668 |
| Capital One Financial Corp., 6.377% to 6/08/2033, FLR (SOFR - 1 day + 2.860%) to 6/08/2034 | | | 2,325,000 | 2,392,884 |
| Deutsche Bank AG, 2.311% to 11/16/2026, FLR (SOFR - 1 day + 1.219%) to 11/16/2027 | | | 5,055,000 | 4,622,248 |
| Deutsche Bank AG, 6.72% to 1/18/2028, FLR (SOFR - 1 day + 3.18%) to 1/18/2029 | | | 5,453,000 | 5,710,418 |
| Goldman Sachs Group, Inc., 2.6%, 2/07/2030 | | | 6,000,000 | 5,272,448 |
| HSBC Holdings PLC, 4.7% to 9/09/2031, FLR (CMT - 1yr. + 3.25%) to 9/09/2169 | | | 6,176,000 | 5,030,009 |
| HSBC Holdings PLC, 4% to 9/09/2026, FLR (CMT - 1yr. + 3.222%) to 9/09/2170 | | | 2,447,000 | 2,245,188 |
| JPMorgan Chase & Co., 3.509% to 1/23/2028, FLR ((SOFR - 3mo. + 0.26161%) + 0.945%) to 1/23/2029 | | | 2,290,000 | 2,169,937 |
| JPMorgan Chase & Co., 4.005% to 4/23/2028, FLR ((SOFR - 3mo. + 0.26161%) + 1.12%) to 4/23/2029 | | | 5,871,000 | 5,648,746 |
| JPMorgan Chase & Co., 4.203% to 7/23/2028, FLR ((SOFR - 3mo. + 0.26161%) + 1.26%) to 7/23/2029 | | | 2,576,000 | 2,503,153 |
| JPMorgan Chase & Co., 2.956% to 5/13/2030, FLR (SOFR - 1 day + 2.515%) to 5/13/2031 | | | 4,435,000 | 3,897,361 |
| JPMorgan Chase & Co., 2.545% to 11/08/2031, FLR (SOFR - 1 day + 1.18%) to 11/08/2032 | | | 3,363,000 | 2,806,014 |
| Lloyds Bank PLC, 3.75%, 1/11/2027 | | | 2,765,000 | 2,653,474 |
| Morgan Stanley, 5.449% to 7/20/2028, FLR (SOFR - 1 day + 1.63%) to 7/20/2029 | | | 1,239,000 | 1,262,481 |
| Morgan Stanley, 2.511% to 10/20/2031, FLR (SOFR - 1 day + 1.2%) to 10/20/2032 | | | 6,985,000 | 5,783,848 |
| Morgan Stanley, 5.424% to 7/21/2033, FLR (SOFR - 1 day + 1.88%) to 7/21/2034 | | | 2,940,000 | 2,983,741 |
| NatWest Group PLC, 6.016% to 3/02/2033, FLR (CMT - 1yr. + 2.1%) to 3/02/2034 | | | 769,000 | 807,425 |
| Sumitomo Mitsui Financial Group, Inc., 2.13%, 7/08/2030 | | | 5,402,000 | 4,549,365 |
| Sumitomo Mitsui Trust Bank Ltd., 0.85%, 3/25/2024 (n) | | | 1,311,000 | 1,297,599 |
| UBS Group AG, 4.375% to 2/10/2031, FLR (CMT - 1yr. + 3.313%) to 12/31/2164 (n) | | | 7,084,000 | 5,594,794 |
| UBS Group Funding (Jersey) Ltd., 4.125%, 9/24/2025 (n) | | | 4,524,000 | 4,424,420 |
| Wells Fargo & Co., 2.572% to 2/11/2030, FLR ((SOFR - 3mo. + 0.26161%) + 1%) to 2/11/2031 | | | 4,514,000 | 3,900,639 |
| Westpac Banking Corp., 2.894% to 2/04/2025, FLR (CMT - 5yr. + 1.35%) to 2/04/2030 | | | 2,633,000 | 2,536,533 |
| | | | | $112,753,806 |
| Medical & Health Technology & Services – 1.9% |
| Adventist Health System/West, 5.43%, 3/01/2032 | | $ | 4,476,000 | $ 4,552,718 |
| Alcon Finance Corp., 2.75%, 9/23/2026 (n) | | | 593,000 | 557,140 |
| Alcon Finance Corp., 2.6%, 5/27/2030 (n) | | | 1,096,000 | 950,043 |
| Alcon Finance Corp., 5.375%, 12/06/2032 (n) | | | 1,318,000 | 1,359,429 |
| HCA, Inc., 4.125%, 6/15/2029 | | | 3,255,000 | 3,112,168 |
| HCA, Inc., 4.375%, 3/15/2042 | | | 3,251,000 | 2,746,431 |
| Marin General Hospital, 7.242%, 8/01/2045 | | | 2,243,000 | 2,410,863 |
MFS Total Return Bond Series
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Bonds – continued |
| Medical & Health Technology & Services – continued |
| Northwell Healthcare, Inc., 3.979%, 11/01/2046 | | $ | 1,503,000 | $ 1,214,435 |
| ProMedica Toledo Hospital, “B”, 5.325%, 11/15/2028 | | | 7,120,000 | 6,523,700 |
| ProMedica Toledo Hospital, “B”, AGM, 5.75%, 11/15/2038 | | | 2,562,000 | 2,544,786 |
| Tower Health, 4.451%, 2/01/2050 | | | 6,211,000 | 2,934,697 |
| | | | | $28,906,410 |
| Metals & Mining – 1.4% |
| Anglo American Capital PLC, 2.25%, 3/17/2028 (n) | | $ | 2,504,000 | $ 2,231,302 |
| Anglo American Capital PLC, 3.875%, 3/16/2029 (n) | | | 3,434,000 | 3,220,831 |
| Anglo American Capital PLC, 2.875%, 3/17/2031 (n) | | | 2,927,000 | 2,489,239 |
| Anglo American Capital PLC, 4.75%, 3/16/2052 (n) | | | 4,511,000 | 3,869,259 |
| FMG Resources Ltd., 4.375%, 4/01/2031 (n) | | | 3,922,000 | 3,586,723 |
| Glencore Funding LLC, 2.85%, 4/27/2031 (n) | | | 4,010,000 | 3,457,826 |
| Novelis Corp., 3.875%, 8/15/2031 (n) | | | 2,661,000 | 2,344,964 |
| | | | | $21,200,144 |
| Midstream – 2.4% |
| Cheniere Corpus Christi Holdings LLC, 2.742%, 12/31/2039 | | $ | 1,939,000 | $ 1,544,779 |
| Cheniere Energy Partners LP, 4.5%, 10/01/2029 | | | 2,483,000 | 2,374,907 |
| Enbridge, Inc., 5.7%, 3/08/2033 | | | 1,601,000 | 1,664,075 |
| Energy Transfer LP, 5.55%, 2/15/2028 | | | 1,261,000 | 1,286,346 |
| Energy Transfer LP, 5.75%, 2/15/2033 | | | 3,863,000 | 3,982,672 |
| Kinder Morgan (Delaware), Inc., 7.75%, 1/15/2032 | | | 3,350,000 | 3,808,597 |
| Kinder Morgan Energy Partners LP, 6.375%, 3/01/2041 | | | 2,040,000 | 2,095,215 |
| MPLX LP, 4.95%, 3/14/2052 | | | 5,874,000 | 5,225,195 |
| Plains All American Pipeline LP, 3.55%, 12/15/2029 | | | 2,839,000 | 2,613,782 |
| Sabine Pass Liquefaction LLC, 4.5%, 5/15/2030 | | | 1,975,000 | 1,930,100 |
| Targa Resources Corp., 4.2%, 2/01/2033 | | | 930,000 | 855,073 |
| Targa Resources Corp., 6.125%, 3/15/2033 | | | 4,345,000 | 4,574,581 |
| Targa Resources Corp., 4.95%, 4/15/2052 | | | 1,533,000 | 1,344,893 |
| Venture Global Calcasieu Pass LLC, 6.25%, 1/15/2030 (n) | | | 4,349,000 | 4,325,469 |
| | | | | $37,625,684 |
| Mortgage-Backed – 21.9% | |
| Fannie Mae, 5%, 3/01/2024 - 3/01/2042 | | $ | 2,281,688 | $ 2,317,869 |
| Fannie Mae, 4.5%, 5/01/2024 - 6/01/2044 | | | 7,555,460 | 7,523,937 |
| Fannie Mae, 5.5%, 7/01/2024 - 4/01/2040 | | | 3,204,803 | 3,298,810 |
| Fannie Mae, 3.5%, 3/01/2026 - 7/01/2046 | | | 6,106,958 | 5,752,588 |
| Fannie Mae, 3.95%, 1/01/2027 | | | 309,387 | 304,959 |
| Fannie Mae, 3%, 11/01/2028 - 8/01/2047 | | | 5,366,282 | 4,936,359 |
| Fannie Mae, 2.5%, 11/01/2031 - 11/01/2046 | | | 712,246 | 623,945 |
| Fannie Mae, 6.5%, 7/01/2032 - 1/01/2033 | | | 1,868 | 1,945 |
| Fannie Mae, 3%, 2/25/2033 (i) | | | 321,902 | 26,691 |
| Fannie Mae, 6%, 10/01/2035 - 3/01/2039 | | | 828,194 | 862,792 |
| Fannie Mae, 4%, 12/01/2039 - 1/01/2047 | | | 12,580,362 | 12,239,755 |
| Fannie Mae, 3.25%, 5/25/2040 | | | 102,499 | 94,917 |
| Fannie Mae, 2%, 4/25/2046 | | | 239,133 | 216,807 |
| Fannie Mae, 4%, 7/25/2046 (i) | | | 364,667 | 68,007 |
| Fannie Mae, 3.5%, 12/01/2046 (f) | | | 1,283,248 | 1,201,223 |
| Fannie Mae, UMBS, 2%, 10/01/2036 - 3/01/2052 | | | 46,180,816 | 39,085,249 |
| Fannie Mae, UMBS, 2.5%, 11/01/2036 - 6/01/2052 | | | 44,161,777 | 38,109,272 |
| Fannie Mae, UMBS, 3%, 9/01/2037 - 10/01/2052 | | | 18,543,747 | 16,643,273 |
| Fannie Mae, UMBS, 1.5%, 2/01/2042 | | | 168,182 | 139,374 |
| Fannie Mae, UMBS, 6.5%, 4/01/2043 - 10/01/2053 | | | 900,001 | 922,249 |
| Fannie Mae, UMBS, 3.5%, 5/01/2052 - 4/01/2053 | | | 2,506,349 | 2,302,149 |
| Fannie Mae, UMBS, 4.5%, 9/01/2052 | | | 754,637 | 735,969 |
MFS Total Return Bond Series
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Bonds – continued |
| Mortgage-Backed – continued | |
| Fannie Mae, UMBS, 5%, 12/01/2052 - 3/01/2053 | | $ | 6,242,213 | $ 6,179,949 |
| Fannie Mae, UMBS, 6%, 12/01/2052 - 2/01/2053 | | | 2,019,881 | 2,072,067 |
| Fannie Mae, UMBS, 5.5%, 4/01/2053 - 11/01/2053 | | | 3,797,343 | 3,813,928 |
| Federal Home Loan Bank, 5%, 7/01/2035 | | | 686,018 | 698,083 |
| Freddie Mac, 2.67%, 12/25/2024 | | | 2,784,000 | 2,721,575 |
| Freddie Mac, 2.811%, 1/25/2025 | | | 3,379,996 | 3,301,798 |
| Freddie Mac, 4%, 7/01/2025 - 4/01/2044 | | | 1,239,709 | 1,202,333 |
| Freddie Mac, 4.5%, 7/01/2025 - 5/01/2042 | | | 1,954,506 | 1,952,306 |
| Freddie Mac, 3.3%, 10/25/2026 | | | 2,958,000 | 2,866,035 |
| Freddie Mac, 3%, 6/15/2028 - 2/25/2059 | | | 9,580,885 | 8,756,962 |
| Freddie Mac, 1.09%, 7/25/2029 (i) | | | 4,028,617 | 198,928 |
| Freddie Mac, 1.142%, 8/25/2029 (i) | | | 6,945,267 | 361,914 |
| Freddie Mac, 1.868%, 4/25/2030 (i) | | | 1,901,414 | 183,104 |
| Freddie Mac, 5.5%, 5/01/2034 - 1/01/2038 | | | 148,896 | 153,411 |
| Freddie Mac, 6%, 8/01/2034 - 7/01/2038 | | | 43,182 | 44,999 |
| Freddie Mac, 5%, 11/01/2035 - 7/01/2041 | | | 674,806 | 686,425 |
| Freddie Mac, 5.5%, 2/15/2036 (i) | | | 66,917 | 11,991 |
| Freddie Mac, 3.5%, 11/01/2037 - 10/25/2058 | | | 10,791,847 | 10,127,369 |
| Freddie Mac, 4.5%, 12/15/2040 (i) | | | 38,597 | 3,105 |
| Freddie Mac, 4%, 8/15/2044 (i) | | | 69,281 | 7,142 |
| Freddie Mac, 3.25%, 11/25/2061 | | | 759,340 | 657,944 |
| Freddie Mac, UMBS, 2%, 4/01/2037 - 5/01/2052 | | | 38,469,268 | 31,907,580 |
| Freddie Mac, UMBS, 3.5%, 12/01/2046 - 4/01/2053 | | | 3,041,519 | 2,801,313 |
| Freddie Mac, UMBS, 3%, 3/01/2047 - 6/01/2052 | | | 2,785,179 | 2,499,580 |
| Freddie Mac, UMBS, 2.5%, 2/01/2051 - 9/01/2052 | | | 18,394,793 | 15,670,110 |
| Freddie Mac, UMBS, 5%, 8/01/2052 - 10/01/2052 | | | 737,463 | 730,609 |
| Freddie Mac, UMBS, 4%, 10/01/2052 | | | 1,340,766 | 1,268,065 |
| Freddie Mac, UMBS, 4.5%, 10/01/2052 | | | 1,573,660 | 1,525,911 |
| Freddie Mac, UMBS, 5.5%, 4/01/2053 - 10/01/2053 | | | 6,809,293 | 6,847,161 |
| Ginnie Mae, 5.5%, 5/15/2033 - 4/20/2053 | | | 5,103,295 | 5,153,032 |
| Ginnie Mae, 4.5%, 10/20/2033 - 12/20/2052 | | | 13,245,718 | 13,011,375 |
| Ginnie Mae, 6%, 1/20/2036 - 1/15/2039 | | | 78,141 | 80,818 |
| Ginnie Mae, 4%, 10/20/2040 - 10/20/2052 | | | 8,206,940 | 7,857,709 |
| Ginnie Mae, 3.5%, 11/15/2040 - 9/20/2053 | | | 9,856,072 | 9,238,253 |
| Ginnie Mae, 3%, 11/20/2044 - 10/20/2052 | | | 12,734,932 | 11,622,626 |
| Ginnie Mae, 2.5%, 8/20/2051 - 4/20/2052 | | | 12,021,109 | 10,510,711 |
| Ginnie Mae, 2%, 1/20/2052 - 4/20/2052 | | | 13,715,695 | 11,603,774 |
| Ginnie Mae, 5%, 1/20/2053 - 5/20/2053 | | | 11,901,898 | 11,817,095 |
| Ginnie Mae, TBA, 3%, 1/15/2054 | | | 1,925,000 | 1,742,722 |
| Ginnie Mae, TBA, 6%, 1/15/2054 | | | 1,975,000 | 2,008,097 |
| Ginnie Mae, TBA, 6.5%, 1/15/2054 | | | 2,475,000 | 2,533,491 |
| UMBS, TBA, 2%, 1/18/2039 | | | 125,000 | 112,051 |
| UMBS, TBA, 2.5%, 1/18/2039 - 1/16/2054 | | | 2,003,626 | 1,773,118 |
| UMBS, TBA, 5%, 1/25/2039 | | | 275,000 | 276,633 |
| | | | | $336,001,341 |
| Municipals – 1.3% |
| Bridgeview, IL, Stadium and Redevelopment Projects, Taxable, AAC, 5.06%, 12/01/2025 | | $ | 415,000 | $ 409,197 |
| Bridgeview, IL, Stadium and Redevelopment Projects, Taxable, AAC, 5.14%, 12/01/2036 | | | 8,850,000 | 7,927,120 |
| Escambia County, FL, Health Facilities Authority Rev., Taxable (Baptist Health Care Corp.), “B”, AGM, 3.607%, 8/15/2040 | | | 1,295,000 | 1,041,990 |
| Oklahoma Development Finance Authority, Health System Rev., Taxable (OU Medicine Project), “C”, 5.45%, 8/15/2028 | | | 3,770,000 | 3,383,963 |
| Philadelphia, PA, School District, Taxable, “B”, AGM, 6.615%, 6/01/2030 | | | 3,250,000 | 3,481,882 |
| State of Florida, Taxable, “A”, 2.154%, 7/01/2030 | | | 5,223,000 | 4,455,212 |
| | | | | $20,699,364 |
MFS Total Return Bond Series
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Bonds – continued |
| Natural Gas - Distribution – 0.7% |
| Boston Gas Co., 3.15%, 8/01/2027 (n) | | $ | 9,122,000 | $ 8,573,693 |
| NiSource, Inc., 3.6%, 5/01/2030 | | | 2,622,000 | 2,439,604 |
| | | | | $11,013,297 |
| Oils – 0.2% |
| Marathon Petroleum Corp., 5.85%, 12/15/2045 | | $ | 2,507,000 | $ 2,454,874 |
| Other Banks & Diversified Financials – 1.8% |
| Discover Financial Services, 6.7%, 11/29/2032 | | $ | 7,435,000 | $ 7,788,457 |
| Groupe BPCE S.A., 4.5%, 3/15/2025 (n) | | | 5,458,000 | 5,353,479 |
| Macquarie Bank Ltd. of London, 6.125% to 3/08/2027, FLR (Swap Rate - 5yr. + 4.332%) to 12/31/2099 (n) | | | 4,694,000 | 4,360,501 |
| Macquarie Group Ltd., 4.442% to 6/21/2032, FLR (SOFR - 1 day + 2.405%) to 6/21/2033 (n) | | | 11,447,000 | 10,444,584 |
| | | | | $27,947,021 |
| Real Estate - Office – 0.4% |
| Boston Properties LP, REIT, 2.55%, 4/01/2032 | | $ | 7,238,000 | $ 5,761,953 |
| Retailers – 0.3% |
| Penske Automotive Group Co., 3.75%, 6/15/2029 | | $ | 5,509,000 | $ 4,900,448 |
| Specialty Chemicals – 0.2% |
| International Flavors & Fragrances, Inc., 2.3%, 11/01/2030 (n) | | $ | 4,745,000 | $ 3,923,528 |
| Specialty Stores – 0.2% |
| DICK'S Sporting Goods, 3.15%, 1/15/2032 | | $ | 3,801,000 | $ 3,237,978 |
| Telecommunications - Wireless – 1.2% |
| Rogers Communications, Inc., 4.5%, 3/15/2042 | | $ | 6,129,000 | $ 5,406,468 |
| Rogers Communications, Inc., 4.55%, 3/15/2052 | | | 6,129,000 | 5,345,011 |
| SBA Communications Corp., 3.125%, 2/01/2029 | | | 4,025,000 | 3,616,449 |
| T-Mobile USA, Inc., 2.55%, 2/15/2031 | | | 1,939,000 | 1,670,088 |
| T-Mobile USA, Inc., 4.375%, 4/15/2040 | | | 635,000 | 572,949 |
| Vodafone Group PLC, 5.625%, 2/10/2053 | | | 1,337,000 | 1,348,115 |
| | | | | $17,959,080 |
| Tobacco – 1.1% |
| B.A.T. Capital Corp., 4.742%, 3/16/2032 | | $ | 5,611,000 | $ 5,382,685 |
| B.A.T. International Finance PLC, 4.448%, 3/16/2028 | | | 4,936,000 | 4,854,370 |
| Philip Morris International, Inc., 5.125%, 11/17/2027 | | | 2,140,000 | 2,178,127 |
| Philip Morris International, Inc., 5.625%, 11/17/2029 | | | 922,000 | 966,815 |
| Philip Morris International, Inc., 5.125%, 2/15/2030 | | | 3,757,000 | 3,818,314 |
| | | | | $17,200,311 |
| Transportation - Services – 0.1% |
| ERAC USA Finance LLC, 7%, 10/15/2037 (n) | | $ | 1,983,000 | $ 2,317,317 |
| U.S. Government Agencies and Equivalents – 0.8% |
| Small Business Administration, 4.93%, 1/01/2024 | | $ | 267 | $ 267 |
| Small Business Administration, 4.34%, 3/01/2024 | | | 523 | 522 |
| Small Business Administration, 4.99%, 9/01/2024 | | | 791 | 785 |
| Small Business Administration, 4.86%, 1/01/2025 | | | 2,840 | 2,815 |
| Small Business Administration, 4.625%, 2/01/2025 | | | 3,743 | 3,700 |
| Small Business Administration, 5.11%, 4/01/2025 | | | 1,602 | 1,584 |
| Small Business Administration, 4.43%, 5/01/2029 | | | 68,040 | 66,600 |
| Small Business Administration, 3.21%, 9/01/2030 | | | 1,216,349 | 1,166,934 |
MFS Total Return Bond Series
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Bonds – continued |
| U.S. Government Agencies and Equivalents – continued |
| Small Business Administration, 3.25%, 11/01/2030 | | $ | 116,802 | $ 111,711 |
| Small Business Administration, 2.85%, 9/01/2031 | | | 247,788 | 233,227 |
| Small Business Administration, 2.37%, 8/01/2032 | | | 194,149 | 177,933 |
| Small Business Administration, 2.13%, 1/01/2033 | | | 930,004 | 854,335 |
| Small Business Administration, 2.21%, 2/01/2033 | | | 235,290 | 217,064 |
| Small Business Administration, 2.22%, 3/01/2033 | | | 747,698 | 688,350 |
| Small Business Administration, 2.08%, 4/01/2033 | | | 1,364,694 | 1,245,469 |
| Small Business Administration, 2.45%, 6/01/2033 | | | 1,436,065 | 1,318,135 |
| Small Business Administration, 3.15%, 7/01/2033 | | | 1,956,024 | 1,856,438 |
| Small Business Administration, 3.16%, 8/01/2033 | | | 2,256,125 | 2,138,822 |
| Small Business Administration, 3.62%, 9/01/2033 | | | 1,858,195 | 1,788,982 |
| | | | | $11,873,673 |
| U.S. Treasury Obligations – 20.8% |
| U.S. Treasury Bonds, 1.375%, 11/15/2040 (f) | | $ | 30,300,000 | $ 20,103,340 |
| U.S. Treasury Bonds, 1.75%, 8/15/2041 | | | 9,700,000 | 6,746,047 |
| U.S. Treasury Bonds, 2.375%, 2/15/2042 | | | 9,900,000 | 7,595,930 |
| U.S. Treasury Bonds, 4%, 11/15/2042 | | | 17,580,000 | 17,084,876 |
| U.S. Treasury Bonds, 4.375%, 8/15/2043 | | | 9,600,000 | 9,799,500 |
| U.S. Treasury Bonds, 2.375%, 11/15/2049 | | | 14,700,000 | 10,547,250 |
| U.S. Treasury Bonds, 1.625%, 11/15/2050 | | | 3,500,000 | 2,085,234 |
| U.S. Treasury Bonds, 2.25%, 2/15/2052 | | | 12,000,000 | 8,318,437 |
| U.S. Treasury Notes, 3.875%, 3/31/2025 | | | 5,600,000 | 5,550,781 |
| U.S. Treasury Notes, 4.625%, 6/30/2025 | | | 46,200,000 | 46,310,086 |
| U.S. Treasury Notes, 4.75%, 7/31/2025 | | | 75,300,000 | 75,641,203 |
| U.S. Treasury Notes, 5%, 8/31/2025 | | | 53,400,000 | 53,892,281 |
| U.S. Treasury Notes, 4.125%, 7/31/2028 | | | 51,400,000 | 51,930,063 |
| U.S. Treasury Notes, 3.875%, 8/15/2033 | | | 3,500,000 | 3,495,625 |
| | | | | $319,100,653 |
| Utilities - Electric Power – 1.3% |
| American Electric Power Co., Inc., 5.95%, 11/01/2032 | | $ | 2,985,000 | $ 3,185,981 |
| Calpine Corp., 3.75%, 3/01/2031 (n) | | | 3,680,000 | 3,227,661 |
| Enel Finance International N.V., 7.5%, 10/14/2032 (n) | | | 746,000 | 851,614 |
| Jersey Central Power & Light Co., 2.75%, 3/01/2032 (n) | | | 5,303,000 | 4,475,632 |
| Pacific Gas & Electric Co., 3%, 6/15/2028 | | | 2,630,000 | 2,396,860 |
| Pacific Gas & Electric Co., 3.3%, 8/01/2040 | | | 8,840,000 | 6,468,785 |
| | | | | $20,606,533 |
| Total Bonds (Identified Cost, $1,596,428,260) | | $1,504,883,559 |
| Investment Companies (h) – 2.0% |
| Money Market Funds – 2.0% | |
| MFS Institutional Money Market Portfolio, 5.42% (v) (Identified Cost, $31,023,958) | | | 31,022,184 | $ 31,028,388 |
| Other Assets, Less Liabilities – 0.0% | | 537,782 |
| Net Assets – 100.0% | $1,536,449,729 |
| (d) | In default. |
| (f) | All or a portion of the security has been segregated as collateral for open futures contracts. |
| (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 $31,028,388 and $1,504,883,559, respectively. |
| (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. |
MFS Total Return Bond Series
Portfolio of Investments – continued
| (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 $360,480,321, representing 23.5% of net assets. |
| (p) | Payment-in-kind (PIK) security for which interest income may be received in additional securities and/or cash. |
| (q) | Interest received was less than stated coupon rate. |
| (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 annualized seven-day yield of the fund at period end. |
| (w) | When-issued security. |
| (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 |
| ReadyCap Commercial Mortgage Trust, 2021-FL7, “C”, FLR, 7.67% ((SOFR - 1mo. + 0.11448%) + 2.95%), 11/25/2036 | 11/12/21 | $1,340,000 | $1,279,150 |
| ReadyCap Commercial Mortgage Trust, 2021-FL7, “D”, FLR, 8.42% ((SOFR - 1mo. + 0.11448%) + 2.95%), 11/25/2036 | 11/12/21 | 1,575,000 | 1,438,465 |
| Total Restricted Securities | | | $2,717,615 |
| % of Net assets | | | 0.2% |
| The following abbreviations are used in this report and are defined: |
| AAC | Ambac Assurance Corp. |
| AGM | Assured Guaranty Municipal |
| CDO | Collateralized Debt Obligation |
| CLO | Collateralized Loan Obligation |
| CMT | Constant Maturity Treasury |
| FGIC | Financial Guaranty Insurance Co. |
| FLR | Floating Rate. Interest rate resets periodically based on the parenthetically disclosed reference rate plus a spread (if any). The period-end rate reported may not be the current rate. All reference rates are USD unless otherwise noted. |
| LIBOR | London Interbank Offered Rate |
| NPFG | National Public Finance Guarantee Corp. |
| REIT | Real Estate Investment Trust |
| SOFR | Secured Overnight Financing Rate |
| TBA | To Be Announced |
| UMBS | Uniform Mortgage-Backed Security |
| Derivative Contracts at 12/31/23 |
| 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 | 219 | $45,095,180 | March – 2024 | $462,661 |
| U.S. Treasury Note 5 yr | Long | USD | 522 | 56,779,735 | March – 2024 | 1,304,464 |
| U.S. Treasury Ultra Bond 30 yr | Long | USD | 742 | 99,126,562 | March – 2024 | 9,479,712 |
| U.S. Treasury Ultra Note 10 yr | Long | USD | 32 | 3,776,500 | March – 2024 | 140,526 |
| | | | | | | $11,387,363 |
At December 31, 2023, the fund had liquid securities with an aggregate value of $6,466,087 to cover any collateral or margin obligations for certain derivative contracts.
See Notes to Financial Statements
MFS Total Return Bond Series
| 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 12/31/23Assets | |
| Investments in unaffiliated issuers, at value (identified cost, $1,596,428,260) | $1,504,883,559 |
| Investments in affiliated issuers, at value (identified cost, $31,023,958) | 31,028,388 |
| Receivables for | |
| Fund shares sold | 146,839 |
| Interest | 15,166,774 |
| Other assets | 5,363 |
| Total assets | $1,551,230,923 |
| Liabilities | |
| Payables for | |
| Net daily variation margin on open futures contracts | $324,908 |
| When-issued investments purchased | 4,871,468 |
| TBA purchase commitments | 8,374,720 |
| Fund shares reacquired | 946,873 |
| Payable to affiliates | |
| Investment adviser | 82,198 |
| Administrative services fee | 2,159 |
| Shareholder servicing costs | 242 |
| Distribution and/or service fees | 21,520 |
| Payable for independent Trustees' compensation | 11 |
| Accrued expenses and other liabilities | 157,095 |
| Total liabilities | $14,781,194 |
| Net assets | $1,536,449,729 |
| Net assets consist of | |
| Paid-in capital | $1,702,072,103 |
| Total distributable earnings (loss) | (165,622,374) |
| Net assets | $1,536,449,729 |
| Shares of beneficial interest outstanding | 132,665,098 |
| | Net assets | Shares
outstanding | Net asset value
per share |
| Initial Class | $752,929,074 | 64,367,911 | $11.70 |
| Service Class | 783,520,655 | 68,297,187 | 11.47 |
See Notes to Financial Statements
MFS Total Return Bond Series
| 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 12/31/23 | |
| Net investment income (loss) | |
| Income | |
| Interest | $69,643,356 |
| Dividends from affiliated issuers | 1,334,552 |
| Other | 378,249 |
| Total investment income | $71,356,157 |
| Expenses | |
| Management fee | $7,600,129 |
| Distribution and/or service fees | 1,972,753 |
| Shareholder servicing costs | 8,808 |
| Administrative services fee | 229,546 |
| Independent Trustees' compensation | 26,961 |
| Custodian fee | 77,198 |
| Shareholder communications | 6,671 |
| Audit and tax fees | 91,597 |
| Legal fees | 8,205 |
| Miscellaneous | 106,877 |
| Total expenses | $10,128,745 |
| Reduction of expenses by investment adviser | (194,398) |
| Net expenses | $9,934,347 |
| Net investment income (loss) | $61,421,810 |
| Realized and unrealized gain (loss) | |
| Realized gain (loss) (identified cost basis) | |
| Unaffiliated issuers | $(32,151,143) |
| Affiliated issuers | 4,449 |
| Futures contracts | (14,953,873) |
| Net realized gain (loss) | $(47,100,567) |
| Change in unrealized appreciation or depreciation | |
| Unaffiliated issuers | $78,414,448 |
| Affiliated issuers | (8,522) |
| Futures contracts | 12,535,211 |
| Net unrealized gain (loss) | $90,941,137 |
| Net realized and unrealized gain (loss) | $43,840,570 |
| Change in net assets from operations | $105,262,380 |
See Notes to Financial Statements
MFS Total Return Bond Series
| Financial Statements | Statements of Changes in Net Assets |
These statements describe the increases and/or decreases in net assets resulting from operations, any distributions, and any shareholder transactions.
| | Year ended |
| | 12/31/23 | 12/31/22 |
| Change in net assets | | |
| From operations | | |
| Net investment income (loss) | $61,421,810 | $47,125,406 |
| Net realized gain (loss) | (47,100,567) | (91,828,320) |
| Net unrealized gain (loss) | 90,941,137 | (225,379,690) |
| Change in net assets from operations | $105,262,380 | $(270,082,604) |
| Total distributions to shareholders | $(47,036,950) | $(62,907,525) |
| Change in net assets from fund share transactions | $(53,888,548) | $(106,813,226) |
| Total change in net assets | $4,336,882 | $(439,803,355) |
| Net assets | | |
| At beginning of period | 1,532,112,847 | 1,971,916,202 |
| At end of period | $1,536,449,729 | $1,532,112,847 |
See Notes to Financial Statements
MFS Total Return Bond Series
| 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 |
| | 12/31/23 | 12/31/22 | 12/31/21 | 12/31/20 | 12/31/19 |
| Net asset value, beginning of period | $11.26 | $13.63 | $14.12 | $13.48 | $12.65 |
| Income (loss) from investment operations | | | | | |
| Net investment income (loss) (d) | $0.48 | $0.36 | $0.29 | $0.37 | $0.42 |
| Net realized and unrealized gain (loss) | 0.33 | (2.25) | (0.40) | 0.76 | 0.87 |
| Total from investment operations | $0.81 | $(1.89) | $(0.11) | $1.13 | $1.29 |
| Less distributions declared to shareholders | | | | | |
| From net investment income | $(0.37) | $(0.34) | $(0.38) | $(0.49) | $(0.46) |
| From net realized gain | — | (0.14) | (0.00)(w) | — | — |
| Total distributions declared to shareholders | $(0.37) | $(0.48) | $(0.38) | $(0.49) | $(0.46) |
| Net asset value, end of period (x) | $11.70 | $11.26 | $13.63 | $14.12 | $13.48 |
| Total return (%) (k)(r)(s)(x) | 7.38 | (13.93) | (0.81) | 8.47 | 10.21 |
Ratios (%) (to average net assets)
and Supplemental data: | | | | | |
| Expenses before expense reductions | 0.54 | 0.54 | 0.54 | 0.54 | 0.54 |
| Expenses after expense reductions | 0.52 | 0.53 | 0.53 | 0.53 | 0.53 |
| Net investment income (loss) | 4.17 | 2.94 | 2.10 | 2.71 | 3.14 |
| Portfolio turnover | 58 | 120 | 161 | 112 | 79 |
| Net assets at end of period (000 omitted) | $752,929 | $730,323 | $928,578 | $921,342 | $939,179 |
| Supplemental Ratios (%): | | | | | |
| Portfolio turnover (excluding TBA transactions) (e) | 39 | — | — | — | — |
See Notes to Financial Statements
MFS Total Return Bond Series
Financial Highlights - continued
| Service Class | Year ended |
| | 12/31/23 | 12/31/22 | 12/31/21 | 12/31/20 | 12/31/19 |
| Net asset value, beginning of period | $11.04 | $13.37 | $13.86 | $13.24 | $12.43 |
| Income (loss) from investment operations | | | | | |
| Net investment income (loss) (d) | $0.44 | $0.32 | $0.25 | $0.33 | $0.38 |
| Net realized and unrealized gain (loss) | 0.33 | (2.21) | (0.40) | 0.74 | 0.85 |
| Total from investment operations | $0.77 | $(1.89) | $(0.15) | $1.07 | $1.23 |
| Less distributions declared to shareholders | | | | | |
| From net investment income | $(0.34) | $(0.30) | $(0.34) | $(0.45) | $(0.42) |
| From net realized gain | — | (0.14) | (0.00)(w) | — | — |
| Total distributions declared to shareholders | $(0.34) | $(0.44) | $(0.34) | $(0.45) | $(0.42) |
| Net asset value, end of period (x) | $11.47 | $11.04 | $13.37 | $13.86 | $13.24 |
| Total return (%) (k)(r)(s)(x) | 7.13 | (14.18) | (1.07) | 8.17 | 9.92 |
Ratios (%) (to average net assets)
and Supplemental data: | | | | | |
| Expenses before expense reductions | 0.79 | 0.79 | 0.79 | 0.79 | 0.79 |
| Expenses after expense reductions | 0.77 | 0.78 | 0.78 | 0.78 | 0.78 |
| Net investment income (loss) | 3.92 | 2.68 | 1.85 | 2.46 | 2.89 |
| Portfolio turnover | 58 | 120 | 161 | 112 | 79 |
| Net assets at end of period (000 omitted) | $783,521 | $801,789 | $1,043,338 | $1,090,009 | $1,105,005 |
| Supplemental Ratios (%): | | | | | |
| Portfolio turnover (excluding TBA transactions) (e) | 39 | — | — | — | — |
| (d) | Per share data is based on average shares outstanding. |
| (e) | Beginning with the period ending December 31, 2023, portfolio turnover rates excluding TBA transactions are being added as supplemental data. Refer to Note 2 for more information on TBA transactions and mortgage dollar rolls. |
| (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 Total Return Bond Series
Notes to Financial Statements
(1) Business and Organization
MFS Total Return Bond Series (the fund) is a diversified series of MFS Variable Insurance Trust (the trust). The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The shareholders of each series of the trust are separate accounts of insurance companies, which offer variable annuity and/or life insurance products, and qualified retirement and pension plans.
The fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services - Investment Companies.
(2) Significant Accounting Policies
General — The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the fund’s Statement of Assets and Liabilities through the date that the financial statements were issued. The fund invests in foreign securities. Investments in foreign securities are vulnerable to the effects of changes in the relative values of the local currency and the U.S. dollar and to the effects of changes in each country’s market, economic, industrial, political, regulatory, geopolitical, environmental, public health, 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’s in-scope financial instruments and transactions.
Investment Valuations — Subject to its oversight, the fund's Board of Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments to MFS as the fund's adviser, pursuant to the fund’s valuation policy and procedures which have been adopted by the adviser and approved by the Board. In accordance with Rule 2a-5 under the Investment Company Act of 1940, the Board of Trustees designated the adviser as the “valuation designee” of the fund. If the adviser, as valuation designee, determines that reliable market quotations are not readily available for an investment, the investment is valued at fair value as determined in good faith by the adviser in accordance with the adviser’s fair valuation policy and procedures.
Under the fund's valuation policy and procedures, 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. 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.
Under the fund’s valuation policy and procedures, market quotations are not considered to be readily available for debt instruments, floating rate loans, and many types of derivatives. These investments are generally valued at fair value based on information from third-party pricing services or otherwise determined by the adviser in accordance with the adviser’s fair valuation policy and procedures. 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, spreads and other market data. An investment may also be valued at fair value if the adviser determines that the investment’s value has been materially affected by events occurring after the close of the exchange or market on which the investment is principally traded (such as foreign exchange or market) and prior to the determination of the fund’s net asset value, or after the halt of trading of a specific security where trading does not resume prior to the close of the exchange or market on which the security is principally traded. 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
MFS Total Return Bond Series
Notes to Financial Statements - continued
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 significant 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, 2023 in valuing the fund's assets and liabilities:
| Financial Instruments | Level 1 | Level 2 | Level 3 | Total |
| U.S. Treasury Bonds & U.S. Government Agencies & Equivalents | $— | $330,974,326 | $— | $330,974,326 |
| Non - U.S. Sovereign Debt | — | 4,409,796 | — | 4,409,796 |
| Municipal Bonds | — | 20,699,364 | — | 20,699,364 |
| U.S. Corporate Bonds | — | 396,040,871 | — | 396,040,871 |
| Residential Mortgage-Backed Securities | — | 336,001,442 | — | 336,001,442 |
| Commercial Mortgage-Backed Securities | — | 122,638,463 | — | 122,638,463 |
| Asset-Backed Securities (including CDOs) | — | 141,348,789 | — | 141,348,789 |
| Foreign Bonds | — | 152,770,508 | — | 152,770,508 |
| Mutual Funds | 31,028,388 | — | — | 31,028,388 |
| Total | $31,028,388 | $1,504,883,559 | $— | $1,535,911,947 |
| Other Financial Instruments | | | | |
| Futures Contracts – Assets | $11,387,363 | $— | $— | $11,387,363 |
For further information regarding security characteristics, see the Portfolio of Investments.
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 or non-hedging purposes. While hedging can reduce or eliminate losses, it can also reduce or eliminate gains. When the fund uses derivatives as an investment to increase market exposure, or for hedging purposes, gains and losses from derivative instruments may be substantially greater than the derivative’s original cost.
The derivative instruments used by the fund during the period were futures contracts. Depending on the type of derivative, a 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.
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, 2023 as reported in the Statement of Assets and Liabilities:
| | | Fair Value (a) |
| Risk | Derivative Contracts | Asset Derivatives |
| Interest Rate | Futures Contracts | $11,387,363 |
(a) Values presented in this table for futures contracts agreements correspond to the values reported in the Portfolio of Investments. Only the current day net variation margin for futures contracts is reported separately within the Statement of Assets and Liabilities.
The following table presents, by major type of derivative contract, the realized gain (loss) on derivatives held by the fund for the year ended December 31, 2023 as reported in the Statement of Operations:
MFS Total Return Bond Series
Notes to Financial Statements - continued
| Risk | Futures
Contracts |
| Interest Rate | $(14,953,873) |
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, 2023 as reported in the Statement of Operations:
| Risk | Futures
Contracts |
| Interest Rate | $12,535,211 |
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, the non-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.
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 credit 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.
Mortgage-Backed/Asset-Backed Securities — 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.
MFS Total Return Bond Series
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 — 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. Interest payments received in additional securities are recorded on the ex-interest date in an amount equal to the value of the security on such date.
Debt obligations may be placed on non-accrual status or set to accrue at a rate of interest less than the contractual coupon when the collection of all or a portion of interest has become doubtful. Interest income for those debt obligations may be further reduced by the write-off of the related interest receivables when deemed uncollectible.
The fund may receive proceeds from litigation settlements. Any proceeds received from litigation involving portfolio holdings are reflected in the Statement of Operations in realized gain/loss if the security has been disposed of by the fund or in unrealized gain/loss if the security is still held by the fund. Any other proceeds from litigation not related to portfolio holdings are reflected as other income in the Statement of Operations.
Investment transactions are recorded on the trade date. In determining the net gain or loss on securities sold, the cost of securities is determined on the identified cost basis.
The fund may purchase or sell mortgage-backed securities on a “To Be Announced” (TBA) basis. A TBA transaction is subject to extended settlement and typically does not designate the actual security to be delivered, but instead includes an approximate principal amount. The price of the TBA security and the date that it will be settled are fixed at the time the transaction is negotiated. The value of the security varies with market fluctuations and no interest accrues to the fund until settlement takes place. TBA purchase and sale commitments are held at carrying amount, which approximates fair value and are categorized as level 2 within the fair value hierarchy and included in TBA purchase and TBA sale commitments in the Statement of Assets and Liabilities, as applicable. Losses may arise as a result of changes in the value of the TBA investment prior to settlement date or due to counterparty non-performance.
The fund may also enter into mortgage dollar rolls, typically TBA dollar rolls, in which the fund sells TBA mortgage-backed securities to financial institutions and simultaneously agrees to repurchase similar (same issuer, type and coupon) securities at a later date at an agreed-upon price. During the period between the sale and repurchase, the fund will not be entitled to receive interest and principal payments on the securities sold. The fund accounts for dollar roll transactions as purchases and sales and realizes gains and losses on these transactions. As such, these transactions may result in an increase to the fund’s portfolio turnover rate. Portfolio turnover rates including and excluding TBA transactions are presented in the Financial Highlights. Dollar roll transactions involve the risk that the market value of the securities that the fund is required to purchase may decline below the agreed upon repurchase price of those securities.
The fund may purchase or sell securities on a when-issued or delayed delivery basis. In these extended settlement transactions, the receipt or delivery of the securities by the fund and related payments occur at a future date, usually beyond the customary settlement period. The price of such security and the date that the security will be settled are generally fixed at the time the transaction is negotiated. The value of the security varies with market fluctuations and for debt securities no interest accrues to the fund until settlement takes place. When the fund sells securities on a when-issued or delayed delivery basis, the fund typically owns or has the right to acquire securities equivalent in kind and amount to the securities sold. Purchase and sale commitments for when-issued or delayed delivery securities are held at carrying amount, which approximates fair value and are categorized as level 2 within the fair value hierarchy and included in When-issued investments purchased and When-issued investments sold in the Statement of Assets and Liabilities, as applicable. Losses may arise due to changes in the value of the underlying securities prior to settlement date 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.
To mitigate the counterparty credit risk on TBA transactions, mortgage dollar rolls, and other types of forward settling mortgage-backed and asset-backed security transactions, 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, the non-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.
MFS Total Return Bond Series
Notes to Financial Statements - continued
For mortgage-backed and asset-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 an 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.
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 the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income, expense, gain or loss in different periods for financial statement and tax purposes will reverse at some time in the future.
Book/tax differences primarily relate to amortization of premium and accretion of discount of debt securities and derivative transactions.
The tax character of distributions declared to shareholders for the last two fiscal years is as follows:
| | Year ended
12/31/23 | Year ended
12/31/22 |
| Ordinary income (including any short-term capital gains) | $47,036,950 | $43,461,158 |
| Long-term capital gains | — | 19,446,367 |
| Total distributions | $47,036,950 | $62,907,525 |
The federal tax cost and the tax basis components of distributable earnings were as follows:
| As of 12/31/23 | |
| Cost of investments | $1,642,898,449 |
| Gross appreciation | 11,950,647 |
| Gross depreciation | (107,549,786) |
| Net unrealized appreciation (depreciation) | $(95,599,139) |
| Undistributed ordinary income | 63,319,741 |
| Capital loss carryforwards | (133,342,976) |
| Total distributable earnings (loss) | $(165,622,374) |
As of December 31, 2023, 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 | $(45,153,075) |
| Long-Term | (88,189,901) |
| Total | $(133,342,976) |
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:
MFS Total Return Bond Series
Notes to Financial Statements - continued
| | Year
ended
12/31/23 | | Year
ended
12/31/22 |
| Initial Class | $23,510,514 | | $30,812,385 |
| Service Class | 23,526,436 | | 32,095,140 |
| Total | $47,036,950 | | $62,907,525 |
(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 $2.5 billion | 0.50% |
| In excess of $2.5 billion and up to $5 billion | 0.45% |
| In excess of $5 billion | 0.40% |
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. MFS has also agreed in writing to waive at least 0.01% of its management fee as part of this agreement. The agreement to waive at least 0.01% of the management fee will continue until modified by the fund's Board of Trustees, but such agreement will continue at least until April 30, 2025. For the year ended December 31, 2023, this management fee reduction amounted to $194,398, which is included in the reduction of total expenses in the Statement of Operations. The management fee incurred for the year ended December 31, 2023 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 Rule 12b-1 under the Investment Company Act of 1940.
The fund’s distribution plan provides that the fund will pay MFD distribution and/or service fees equal to 0.25% per annum of its average daily net assets attributable to Service Class shares as partial consideration for services performed and expenses incurred by MFD and financial intermediaries (including participating insurance companies that invest in the fund to fund variable annuity and variable life insurance contracts, sponsors of qualified retirement and pension plans that invest in the fund, and affiliates of these participating insurance companies and plan sponsors) in connection with the sale and distribution of the Service Class shares as well as shareholder servicing and account maintenance activities. MFD may subsequently pay all, or a portion, of the distribution and/or service fees to financial intermediaries. The distribution and/or service fees are computed daily and paid monthly.
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, 2023, the fee was $7,345, which equated to 0.0005% annually of the fund's average daily net assets. MFSC also receives reimbursement from the fund for out-of-pocket expenses paid by MFSC on behalf of the fund. For the year ended December 31, 2023, these costs amounted to $1,463.
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 is computed daily and paid monthly. The administrative services fee incurred for the year ended December 31, 2023 was equivalent to an annual effective rate of 0.0151% 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. Independent Trustees’ compensation is accrued daily and paid subsequent to each Trustee Board meeting. The fund does not pay compensation directly to Trustees or officers of the fund who are also officers of the investment adviser, all of whom receive remuneration from MFS for their services to the fund. Certain officers and Trustees of the fund are officers or directors of MFS, MFD, and MFSC.
Other — 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 but does incur investment and operating costs.
MFS Total Return Bond Series
Notes to Financial Statements - continued
(4) Portfolio Securities
For the year ended December 31, 2023, purchases and sales of investments, other than short-term obligations, were as follows:
| | Purchases | Sales |
| U.S. Government securities | $761,521,944 | $660,798,133 |
| Non-U.S. Government securities | 111,630,458 | 251,035,541 |
(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
12/31/23 | | Year ended
12/31/22 |
| | Shares | Amount | | Shares | Amount |
| Shares sold | | | | | |
| Initial Class | 6,642,627 | $76,276,502 | | 5,320,660 | $64,038,372 |
| Service Class | 7,562,789 | 85,214,347 | | 5,776,933 | 68,112,867 |
| | 14,205,416 | $161,490,849 | | 11,097,593 | $132,151,239 |
Shares issued to shareholders
in reinvestment of distributions | | | | | |
| Initial Class | 2,091,130 | $23,044,258 | | 2,598,960 | $30,225,899 |
| Service Class | 2,176,359 | 23,526,436 | | 2,810,433 | 32,095,140 |
| | 4,267,489 | $46,570,694 | | 5,409,393 | $62,321,039 |
| Shares reacquired | | | | | |
| Initial Class | (9,248,852) | $(105,025,789) | | (11,162,526) | $(135,116,602) |
| Service Class | (14,050,307) | (156,924,302) | | (13,997,512) | (166,168,902) |
| | (23,299,159) | $(261,950,091) | | (25,160,038) | $(301,285,504) |
| Net change | | | | | |
| Initial Class | (515,095) | $(5,705,029) | | (3,242,906) | $(40,852,331) |
| Service Class | (4,311,159) | (48,183,519) | | (5,410,146) | (65,960,895) |
| | (4,826,254) | $(53,888,548) | | (8,653,052) | $(106,813,226) |
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 and the
MFS Conservative Allocation Portfolio were the owners of record of approximately 8% and 3%, respectively, of the value ofoutstanding voting shares of the fund. In addition, the MFS Growth Allocation Portfolio was the owner of record of less than 1%
of the value of the outstanding voting shares of the fund.
(6) Line of Credit
The fund and certain other funds managed by MFS participate in a $1.45 billion unsecured committed line of credit of which $1.2 billion is reserved for use by the fund and certain other MFS U.S. funds. The line of credit is provided by a syndicate of banks under a credit agreement. Borrowings may be made for temporary financing needs. Interest is charged to each fund, based on its borrowings, generally at a rate equal to the highest of 1) Daily Simple SOFR (Secured Overnight Financing Rate) plus 0.10%, 2) the Federal Funds Effective Rate, or 3) the Overnight Bank Funding Rate, each 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. The line of credit expires on March 14, 2024 unless extended or renewed. In addition, the fund and other funds managed by MFS have established unsecured uncommitted borrowing arrangements with certain banks for temporary financing needs. Interest is charged to each fund, based on its borrowings, at rates equal to customary reference rates plus an agreed upon spread. For the year ended December 31, 2023, the fund’s commitment fee and interest expense were $7,515 and $0, respectively, and are included in “Miscellaneous” expense in the Statement of Operations.
(7) Investments in Affiliated Issuers
An affiliated issuer may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. For the purposes of this report, the following were affiliated issuers:
MFS Total Return Bond Series
Notes to Financial Statements - continued
| Affiliated Issuers | Beginning
Value | Purchases | Sales
Proceeds | Realized
Gain
(Loss) | Change in
Unrealized
Appreciation or
Depreciation | Ending
Value |
| MFS Institutional Money Market Portfolio | $43,144,046 | $420,635,084 | $432,746,669 | $4,449 | $(8,522) | $31,028,388 |
| Affiliated Issuers | Dividend
Income | Capital Gain
Distributions |
| MFS Institutional Money Market Portfolio | $1,334,552 | $— |
(8) LIBOR Transition
The London Interbank Offered Rate (LIBOR) was intended to represent the rate at which contributing banks may obtain short-term borrowings from each other in the London interbank market. Certain of the fund's investments, payment obligations, and financing terms were historically based on LIBOR. In 2017, the United Kingdom Financial Conduct Authority (FCA) announced plans to transition away from LIBOR by the end of 2021. LIBOR's administrator, ICE Benchmark Administration (IBA), ceased publication (on a representative basis) of many of its LIBOR settings as of December 31, 2021 and ceased publication (on a representative basis) of the remaining U.S. dollar LIBOR settings as of June 30, 2023. In addition, global regulators announced that, with limited exceptions, no new LIBOR-based contracts should be entered into after 2021. Although the FCA has announced that it will require the IBA to continue to publish certain select LIBOR rates on a synthetic basis after the relevant cessation dates, such synthetic rates are not considered to be representative of the underlying market and economic reality they are intended to measure, are expected to be published for a limited time period, and are intended solely for use on a limited basis for legacy transactions.
Regulators and industry groups have implemented measures to facilitate the transition away from LIBOR and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate (SOFR). SOFR is a broad measure of the cost of borrowing cash overnight collateralized by U.S. Treasury securities in the repurchase agreement (repo) market. SOFR is published in various forms including as a daily, compounded, and forward-looking term rate. The transition to alternative reference rates may affect the liquidity and valuation of investments that were tied to LIBOR or other interbank offered rates and may lead to other consequences affecting securities and credit markets more broadly. For example, while some investments that were tied to LIBOR provided for an alternative or “fallback” rate-setting methodology in the event LIBOR is not available, there is uncertainty regarding the effectiveness of any such alternative methodologies to replace LIBOR and certain investments tied to LIBOR may not have fallback provisions. While legislation passed in the United States facilitates by operation of law the replacement of U.S. dollar LIBOR settings in certain legacy instruments with a specified replacement rate, such as SOFR, there is uncertainty regarding the effectiveness of such legislation. There also remains uncertainty regarding the willingness and ability of parties to add or amend fallback provisions in certain other legacy instruments maturing after the cessation of the applicable LIBOR rates, which could create market and litigation risk.
It is difficult to quantify or predict the impact on the fund resulting from the transition from LIBOR to alternative reference rates and the potential effects of the transition from LIBOR on the fund, or on certain instruments in which the fund invests, are not known. The transition process may involve, among other things, increased volatility or illiquidity in markets for instruments that relied on LIBOR to determine interest rates. The transition may also result in a reduction in value of certain LIBOR-related investments held by the fund or reduce the effectiveness of related transactions such as hedges. Any such effects of the transition away from LIBOR and the adoption of alternative reference rates, as well as other unforeseen effects, could have an adverse impact on the fund's performance.
With respect to the fund’s accounting for investments, including investments in certain debt instruments and derivatives, as well as borrowings by the fund and any other contractual arrangements of the fund that undergo reference rate-related modifications as a result of the transition, management has and will continue to rely upon the relief provided by FASB Codification Topic 848 – Reference Rate Reform (Topic 848). The guidance in Topic 848 permits the fund to account for such contract modifications made on or before December 31, 2024 as a continuation of the existing contracts. The situation remains fluid, and management believes, based on best available information, that the impact of the transition will not be material to the fund.
MFS Total Return Bond Series
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of MFS Variable Insurance Trust and the Shareholders of MFS Total Return Bond Series:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities of MFS Total Return Bond Series (the “Fund”), including the portfolio of investments, as of December 31, 2023, 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, 2023, 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, 2023, 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 14, 2024
We have served as the auditor of one or more of the MFS investment companies since 1924.
MFS Total Return Bond Series
Trustees and Officers — Identification and Background
The Trustees and Officers of the Trust, as of February 1, 2024, 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 TRUSTEE | | | | | | | | | | |
Michael W. Roberge (k)
(age 57) | | Trustee | | January 2021 | | 136 | | Massachusetts Financial Services Company, Chairman (since January 2021); Chief Executive Officer (since January 2017); Director; Chairman of the Board (since January 2022) | | N/A |
| INDEPENDENT TRUSTEES | | | | | | | | | | |
John P. Kavanaugh
(age 69) | | Trustee and Chair of Trustees | | January 2009 | | 136 | | Private investor | | N/A |
Steven E. Buller
(age 72) | | Trustee | | February 2014 | | 136 | | Private investor | | N/A |
John A. Caroselli
(age 69) | | Trustee | | March 2017 | | 136 | | Private investor; JC Global Advisors, LLC (management consulting), President (since 2015) | | N/A |
Maureen R. Goldfarb
(age 68) | | Trustee | | January 2009 | | 136 | | Private investor | | N/A |
Peter D. Jones
(age 68) | | Trustee | | January 2019 | | 136 | | Private investor | | N/A |
James W. Kilman, Jr.
(age 62) | | Trustee | | January 2019 | | 136 | | Burford Capital Limited (finance and investment management), Senior Advisor (since May 3, 2021), Chief Financial Officer (2019 - May 2, 2021); KielStrand Capital LLC (family office), Chief Executive Officer (since 2016) | | Alpha-En Corporation, Director (2016-2019) |
Clarence Otis, Jr.
(age 67) | | Trustee | | March 2017 | | 136 | | Private investor | | VF Corporation, Director; Verizon Communications, Inc., Director; The Travelers Companies, Director |
Maryanne L. Roepke
(age 67) | | Trustee | | May 2014 | | 136 | | Private investor | | N/A |
Laurie J. Thomsen
(age 66) | | Trustee | | March 2005 | | 136 | | Private investor | | The Travelers Companies, Director; Dycom Industries, Inc., Director |
| 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 50) | | Assistant Secretary and Assistant Clerk | | July 2005 | | 136 | | Massachusetts Financial Services Company, Senior Vice President and Senior Managing Counsel |
Kino Clark (k)
(age 55) | | Assistant Treasurer | | January 2012 | | 136 | | Massachusetts Financial Services Company, Vice President |
MFS Total Return Bond Series
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 |
John W. Clark, Jr. (k)
(age 56) | | Assistant Treasurer | | April 2017 | | 136 | | Massachusetts Financial Services Company, Vice President |
David L. DiLorenzo (k)
(age 55) | | President | | July 2005 | | 136 | | Massachusetts Financial Services Company, Senior Vice President |
Heidi W. Hardin (k)
(age 56) | | Secretary and Clerk | | April 2017 | | 136 | | Massachusetts Financial Services Company, Executive Vice President and General Counsel |
Brian E. Langenfeld (k)
(age 50) | | Assistant Secretary and Assistant Clerk | | June 2006 | | 136 | | Massachusetts Financial Services Company, Vice President and Managing Counsel |
Rosa E. Licea-Mailloux (k)
(age 47) | | Chief Compliance Officer | | March 2022 | | 136 | | Massachusetts Financial Services Company, Vice President (since 2018); Director of Corporate Compliance (2018-2021), Senior Director Compliance (2021-2022), Senior Managing Director of North American Compliance & Chief Compliance Officer (since March 2022) |
Amanda S. Mooradian (k)
(age 44) | | Assistant Secretary and Assistant Clerk | | September 2018 | | 136 | | Massachusetts Financial Services Company, Assistant Vice President and Senior Counsel |
Susan A. Pereira (k)
(age 53) | | Assistant Secretary and Assistant Clerk | | July 2005 | | 136 | | Massachusetts Financial Services Company, Vice President and Managing Counsel |
Kasey L. Phillips (k)
(age 53) | | Assistant Treasurer | | September 2012 | | 136 | | Massachusetts Financial Services Company, Vice President |
Matthew A. Stowe (k)
(age 49) | | Assistant Secretary and Assistant Clerk | | October 2014 | | 136 | | Massachusetts Financial Services Company, Vice President and Senior Managing Counsel |
William B. Wilson (k)
(age 41) | | Assistant Secretary and Assistant Clerk | | October 2022 | | 136 | | Massachusetts Financial Services Company, Assistant Vice President and Senior Counsel |
James O. Yost (k)
(age 63) | | Treasurer | | September 1990 | | 136 | | 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. 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 (other than Messrs. Jones, Kilman and Roberge) 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. Mr. Roberge became a Trustee of the Funds on January 1, 2021 and Messrs. Jones and Kilman became Trustees of the Funds on January 1, 2019. 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, Caroselli, Jones and Otis 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.
MFS Total Return Bond Series
Trustees and Officers - continued
The Statement of Additional Information for a Fund includes further information about the Trustees and is available without charge upon request by calling 1-800-225-2606.
| Investment Adviser | Custodian |
Massachusetts Financial Services Company
111 Huntington Avenue
Boston, MA 02199-7618 | State Street Bank and Trust Company
1 Congress Street, Suite 1
Boston, MA 02114-2016 |
| Distributor | Independent Registered Public Accounting Firm |
MFS Fund Distributors, Inc.
111 Huntington Avenue
Boston, MA 02199-7618 | Deloitte & Touche LLP
200 Berkeley Street
Boston, MA 02116 |
| Portfolio Manager(s) | |
Alexander Mackey
Joshua Marston | |
MFS Total Return Bond Series
Board Review of Investment Advisory Agreement
MFS Total Return Bond Series
The Investment Company Act of 1940 requires that both the full Board of Trustees and a majority of the non-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, 2023 (“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 an independent consultant who was retained by and reported 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, 2022 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 as well as all other funds in the same investment classification/category (the “Broadridge expense group and universe”), (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 five-year period ended December 31, 2022, 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 five-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 each of the one- and three-year periods ended December 31, 2022 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 Total Return Bond Series
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 the Broadridge expense group 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 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 cash in-flows and out-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 subject to contractual breakpoints that reduce the Fund’s advisory fee rate on average daily net assets over $2.5 billion and $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.
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 any 12b-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 and sub-custodians. The Trustees concluded that the various non-advisory services provided by MFS and its affiliates on behalf of the Fund were satisfactory.
The Trustees considered so-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 MFS discontinued its historic practice of obtaining investment research from portfolio brokerage commissions paid by certain MFS Funds effective January 2018, and directly pays or voluntarily reimburses 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 additional one-year period, commencing August 1, 2023.
MFS Total Return Bond Series
Proxy Voting Policies and Information
MFS votes proxies on behalf of the fund pursuant to proxy voting policies and procedures that are available without charge, upon request, by calling 1-800-225-2606, by visiting mfs.com/proxyvoting, or by visiting the SEC’s Web site at http://www.sec.gov.
Information regarding how the fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available by August 31 of each year without charge by visiting mfs.com/proxyvoting, or by visiting the SEC’s Web site at http://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 as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s Web site at http://www.sec.gov. A shareholder can obtain the portfolio holdings report for the first and third quarters of the fund's fiscal year at mfs.com/vit1 by choosing the fund's name and then scrolling to the “Resources” section and clicking on the “Prospectus and Reports” tab.
FURTHER INFORMATION
From time to time, MFS may post important information about the fund or the MFS Funds on the MFS Web site (mfs.com). This information is available at https://www.mfs.com/announcements or at mfs.com/vit1 by choosing the fund's name and then scrolling to the “Resources” section and clicking on the “Announcements” tab, if any.
Information About Fund Contracts and Legal Claims
The fund has entered into contractual arrangements with an investment adviser, administrator, distributor, shareholder servicing agent, 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 intends to pass through the maximum amount allowable as Section 163(j) Interest Dividends as defined in Treasury Regulation §1.163(j)-1(b).
| 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 are no longer our customer, we continue to share your information as described in this notice. |
| How? | All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MFS chooses to share; and whether you can limit this sharing. |
Reasons we can share your
personal information | Does MFS share? | Can you limit
this sharing? |
For our everyday business purposes –
such as to process your transactions, maintain your
account(s), respond to court orders and legal
investigations, or report to credit bureaus | Yes | No |
For our marketing purposes –
to offer our products and services to you | No | We don't share |
For joint marketing with other
financial companies | No | We don't share |
For our affiliates' everyday business purposes –
information about your transactions and experiences | No | We don't share |
For our affiliates' everyday business purposes –
information about your creditworthiness | No | We don't share |
| For nonaffiliates to market to you | No | We don't share |
| Questions? | Call 800-225-2606 or go to mfs.com. |
| 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. |
Annual Report
December 31, 2023
MFS® Variable Insurance Trust
| 1 |
| 3 |
| 5 |
| 7 |
| 8 |
| 22 |
| 23 |
| 24 |
| 25 |
| 27 |
| 35 |
| 36 |
| 39 |
| 41 |
| 41 |
| 41 |
| 41 |
| 41 |
| 42 |
The report is prepared for the general information of shareholders. It is authorized for distribution to prospective investors only when preceded or accompanied by a current prospectus.
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
Portfolio structure (i)
Top ten holdings (i)
| U.S. Treasury Note 5 yr Future - MAR 2024 | 3.1% |
| Goldman Sachs Group, Inc. | 2.3% |
| JPMorgan Chase & Co. | 2.1% |
| UMBS, 2.5%, 30 year (h) | 1.9% |
| Charles Schwab Corp. | 1.9% |
| Comcast Corp., “A” | 1.8% |
| Microsoft Corp. | 1.8% |
| Cigna Group | 1.5% |
| Eaton Corp. PLC | 1.5% |
| U.S. Treasury Notes, 0.375%, 11/30/2025 | 1.4% |
Composition including fixed income credit quality (a)(i)
| AAA | 4.4% |
| AA | 2.0% |
| A | 4.8% |
| BBB | 7.8% |
| BB (o) | 0.0% |
| CCC (o) | 0.0% |
| U.S. Government | 7.9% |
| Federal Agencies | 13.0% |
| Not Rated | 4.1% |
| Non-Fixed Income | 59.3% |
| Cash & Cash Equivalents | 0.8% |
| Other | (4.1)% |
GICS equity sectors (g)
| Financials | 15.7% |
| Industrials | 9.2% |
| Health Care | 7.9% |
| Information Technology | 6.9% |
| Communication Services | 4.8% |
| Consumer Staples | 3.7% |
| Energy | 3.6% |
| Utilities | 2.8% |
| Consumer Discretionary | 2.4% |
| Materials | 2.3% |
Fixed income sectors (i)
| Mortgage-Backed Securities | 13.0% |
| Investment Grade Corporates | 12.4% |
| U.S. Treasury Securities | 11.9% |
| Collateralized Debt Obligations | 3.3% |
| Commercial Mortgage-Backed Securities | 2.0% |
| Asset-Backed Securities | 0.8% |
| Municipal Bonds | 0.4% |
| Emerging Markets Bonds | 0.1% |
| High Yield Corporates | 0.1% |
| Non-U.S. Government Bonds (o) | 0.0% |
| U.S. Government Agencies (o) | 0.0% |
| (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. If none of the 3 rating agencies above assign a rating, but the security is rated by DBRS Morningstar, then the DBRS Morningstar rating is assigned. If none of the 4 rating agencies listed above rate the security, but the security is rated by the Kroll Bond Rating Agency (KBRA), then the KBRA rating 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 |
Portfolio Composition - continued
that have not been rated by any rating agency. Non-Fixed Income includes equity securities (including convertible bonds and equity derivatives), ETFs and Options on ETFs, and/or commodity-linked derivatives. The fund may or may not have held all of these instruments on this date. The fund is not rated by these agencies.
| (g) | The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and S&P Global Market Intelligence Inc. (“S&P Global Market Intelligence”). GICS is a service mark of MSCI and S&P Global Market Intelligence and has been licensed for use by MFS. MFS has applied its own internal sector/industry classification methodology for equity securities and non-equity securities that are unclassified by GICS. |
| (h) | UMBS may include both Fannie Mae and Freddie Mac securities. |
| (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. |
Where the fund holds convertible bonds, they are treated as part of the equity portion of the portfolio.
Cash & Cash Equivalents includes any cash, investments in money market funds, short-term securities, and other assets less liabilities. Please see the Statement of Assets and Liabilities for additional information related to the fund’s cash position and other assets and liabilities.
Other includes equivalent exposure from currency derivatives and/or any offsets to derivative positions and may be negative.
Percentages are based on net assets as of December 31, 2023.
The portfolio is actively managed and current holdings may be different.
Management Review
Summary of Results
For the twelve months ended December 31, 2023, Initial Class shares of the MFS Total Return Series (fund) provided a total return of 10.44%, while Service Class shares of the fund provided a total return of 10.22%. These compare with returns of 26.29% and 5.53% over the same period for the fund’s benchmarks, the Standard & Poor’s 500 Stock Index (S&P 500 Index) and the Bloomberg U.S. Aggregate Bond Index, respectively. The fund’s other benchmark, the MFS Total Return Blended Index (Blended Index), generated a return of 17.67%. The Blended Index reflects the blended returns of equity and fixed income market indices, with percentage allocations to each index designed to resemble the equity and fixed income 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
During the reporting period, central banks around the world had to combat the strongest inflationary pressures in four decades, fueled by the global fiscal response to the pandemic, disrupted supply chains and the dislocations to energy markets stemming from the war in Ukraine. Interest rates rose substantially, but the effects of a tighter monetary policy may not have been fully experienced yet, given that monetary policy works with long and variable lags. Strains resulting from the abrupt tightening of monetary policy began to affect some parts of the economy, most acutely among small and regional US banks, which suffered from deposit flight as depositors sought higher yields on their savings. Additionally, activity in the US housing sector has slowed as a result of higher mortgage rates. China’s abandonment of its Zero-COVID policy ushered in a brief uptick in economic activity in the world’s second-largest economy in early 2023, although its momentum soon stalled as the focus turned to the country’s highly indebted property development sector. In developed markets, consumer demand for services remained stronger than the demand for goods.
Early on, policymakers found themselves in the difficult position of trying to restrain inflation without tipping economies into recession. Despite the challenging macroeconomic and geopolitical environment, central banks focused on controlling price pressures while also confronting increasing financial stability concerns. Central banks had to juggle achieving their inflation mandates while using macroprudential tools (financial policies aimed at safeguarding the stability of the financial system) to keep banking systems liquid, a potentially difficult balancing act, and one that suggested that we may be nearing a peak in policy rates. As inflationary pressures eased toward the end of the period, financial conditions loosened in anticipation of easier monetary policy, boosting the market’s appetite for risk. Rapid advancements in artificial intelligence were a focus for investors.
Normalizing supply chains, low levels of unemployment across developed markets and signs that inflation levels have peaked were supportive factors for the macroeconomic backdrop.
Detractors from Performance
Within the equity portion of the fund, an underweight position and stock selection within the information technology sector detracted from performance relative to the S&P 500 Index. Within this sector, not owning shares of strong-performing computer graphics processor maker NVIDIA and computer and personal electronics maker Apple, and an underweight position in software giant Microsoft hindered relative results. The stock price of NVIDIA advanced as the company reported earnings per share results well above expectations, primarily driven by stronger-than-expected revenue growth within its data center, generative AI (artificial intelligence), and networking segments. Revenue and earnings-per-share guidance were significantly above expectations, driven by continued robust demand related to generative AI.
Stock selection and an overweight position in the financials sector also held back relative returns, led by the fund’s overweight position in financial services provider Charles Schwab.
Security selection and an underweight position in the consumer discretionary sector further dampened relative results. Here, not owning shares of strong-performing internet retailer Amazon.com and electric vehicle manufacturer Tesla detracted from relative returns. Despite operating margin pressures due to aggressive vehicle price cuts, Tesla’s share price advanced as the company delivered a record number of vehicles.
Elsewhere, not owning shares of social networking service provider Meta Platforms, and the fund’s overweight positions in global health services provider Cigna and building controls and systems supplier Johnson Controls International, detracted from relative performance. The stock price of Meta Platforms advanced as the company reported better-than-expected earnings driven by solid revenue results and strong user engagement across its applications. In addition, the company cited plans to cut costs and invest in AI, including adding generative AI to text, image, and video generators across its network of apps, including Facebook and Instagram, which further supported the stock. Additionally, the fund’s holdings of crop science and pharmaceuticals company Bayer(b) (Germany) weakened relative performance as the stock underperformed the benchmark.
Within the fixed income portion of the fund, yield curve(y) positioning detracted from performance relative to the Bloomberg U.S. Aggregate Bond Index. Bond selection within Agency Mortgage-Backed securities also weighed on the fund’s relative returns.
Management Review - continued
Contributors to Performance
Within the equity portion of the fund, stock selection within the industrials sector contributed to performance relative to the S&P 500 Index, led by the fund’s overweight positions in diversified industrial manufacturer Eaton and home improvement products maker Masco. The stock price of Eaton advanced as the company reported above-consensus earnings per share results and raised its organic sales guidance driven by a favorable outlook in its Electrical Americas division.
Stocks in other sectors that supported relative results included the fund’s overweight positions in semiconductor company Intel and semiconductor solutions provider NXP Semiconductors (Netherlands). An underweight position in integrated energy company Chevron also helped. Additionally, not owning shares of integrated oil and gas company ExxonMobil, health insurance and Medicare/Medicaid provider UnitedHealth Group, household products maker Procter & Gamble, electricity provider NextEra Energy, and global pharmaceutical company Bristol-Myers Squibb further benefited the fund’s relative returns. The share price of UnitedHealth Group declined as the company posted subdued medical loss ratio figures and higher-than-anticipated investment costs in its Optum Insights segment.
Within the fixed income portion of the fund, an underweight exposure to the Treasury sector, and the fund’s out-of-benchmark exposure to Collateralized Loan Obligations (CLOs), contributed to relative performance. Favorable bond selection within both the industrials and financial institutions sectors further benefited the fund’s relative returns.
Respectfully,
Portfolio Manager(s)
Steven Gorham, Alexander Mackey, Joshua Marston, and Johnathan Munko
Note to Shareholders: Effective January 20, 2023, Henry Peabody is no longer a Portfolio Manager of the fund.
| (b) | Security is not a benchmark constituent. |
| (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. |
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.
Performance Summary Through 12/31/23
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 shares, 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 shareholder would pay on fund distributions or the redemption of fund shares. 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
Total Returns through 12/31/23
Average annual total returns
| Share Class | Class Inception Date | 1-yr | 5-yr | 10-yr |
| Initial Class | 1/03/1995 | 10.44% | 8.54% | 6.53% |
| Service Class | 5/01/2000 | 10.22% | 8.27% | 6.27% |
Comparative benchmark(s)
| Standard & Poor's 500 Stock Index (f) | 26.29% | 15.69% | 12.03% |
| Bloomberg U.S. Aggregate Bond Index (f) | 5.53% | 1.10% | 1.81% |
| MFS Total Return Blended Index (f)(w) | 17.67% | 9.98% | 8.09% |
| (f) | Source: FactSet Research Systems Inc. |
| (w) | The MFS Total Return Blended Index (a custom index) was comprised of the following at the beginning and at the end of the reporting period: |
| | 12/31/23 |
| Standard & Poor's 500 Stock Index | 60% |
| Bloomberg U.S. Aggregate Bond Index | 40% |
Benchmark Definition(s)
Bloomberg U.S. Aggregate Bond Index(a) – 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.
Standard & Poor's 500 Stock Index(g) – 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.
Performance Summary – continued
| (a) | Source: Bloomberg Index Services Limited. BLOOMBERG® is a trademark and service mark of Bloomberg Finance L.P. and its affiliates (collectively “Bloomberg”). Bloomberg or Bloomberg's licensors own all proprietary rights in the Bloomberg Indices. Bloomberg neither approves or endorses this material, or guarantees the accuracy or completeness of any information herein, or makes any warranty, express or implied, as to the results to be obtained therefrom and, to the maximum extent allowed by law, neither shall have any liability or responsibility for injury or damages arising in connection therewith. |
| (g) | “Standard & Poor's®” and “S&P®” are registered trademarks of Standard & Poor's Financial Services LLC (“S&P”) and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”) and have been licensed for use by S&P Dow Jones Indices LLC and sublicensed for certain purposes by MFS. The S&P 500® is a product of S&P Dow Jones Indices LLC, and has been licensed for use by MFS. MFS's product(s) is not sponsored, endorsed, sold, or promoted by S&P Dow Jones Indices LLC, Dow Jones, S&P, or their respective affiliates, and neither S&P Dow Jones Indices LLC, Dow Jones, S&P, nor their respective affiliates make any representation regarding the advisability of investing in such product(s). |
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 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.
Expense Table
Fund expenses borne by the shareholders during the period,
July 1, 2023 through December 31, 2023
As a shareholder 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, 2023 through December 31, 2023.
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
7/01/23 | Ending
Account Value
12/31/23 | Expenses
Paid During
Period (p)
7/01/23-12/31/23 |
| Initial Class | Actual | 0.61% | $1,000.00 | $1,058.32 | $3.16 |
| Hypothetical (h) | 0.61% | $1,000.00 | $1,022.13 | $3.11 |
| Service Class | Actual | 0.86% | $1,000.00 | $1,057.37 | $4.46 |
| Hypothetical (h) | 0.86% | $1,000.00 | $1,020.87 | $4.38 |
| (h) | 5% class return per year before expenses. |
| (p) | “Expenses Paid During Period” are equal to each class's annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). |
Portfolio of Investments − 12/31/23
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – 58.5% |
| Aerospace & Defense – 1.8% | |
| General Dynamics Corp. | | 33,985 | $ 8,824,885 |
| Honeywell International, Inc. | | 64,148 | 13,452,477 |
| Howmet Aerospace, Inc. | | 97,715 | 5,288,336 |
| L3Harris Technologies, Inc. | | 60,167 | 12,672,373 |
| | | | | $40,238,071 |
| Alcoholic Beverages – 0.8% | |
| Constellation Brands, Inc., “A” | | 40,945 | $ 9,898,454 |
| Diageo PLC | | 217,566 | 7,920,274 |
| | | | | $17,818,728 |
| Automotive – 1.9% | |
| Aptiv PLC (a) | | 186,573 | $ 16,739,330 |
| Lear Corp. | | 75,511 | 10,662,908 |
| LKQ Corp. | | 286,981 | 13,714,822 |
| | | | | $41,117,060 |
| Broadcasting – 0.9% | |
| Omnicom Group, Inc. | | 164,899 | $ 14,265,413 |
| Warner Bros. Discovery, Inc. (a) | | 540,869 | 6,155,089 |
| | | | | $20,420,502 |
| Brokerage & Asset Managers – 2.9% | |
| Cboe Global Markets, Inc. | | 54,185 | $ 9,675,274 |
| Charles Schwab Corp. | | 594,960 | 40,933,248 |
| CME Group, Inc. | | 36,678 | 7,724,387 |
| Invesco Ltd. | | 261,538 | 4,665,838 |
| | | | | $62,998,747 |
| Business Services – 2.3% | |
| Accenture PLC, “A” | | 36,163 | $ 12,689,958 |
| Amdocs Ltd. | | 91,567 | 8,047,824 |
| Cognizant Technology Solutions Corp., “A” | | 108,548 | 8,198,630 |
| Fidelity National Information Services, Inc. | | 143,637 | 8,628,275 |
| Fiserv, Inc. (a) | | 92,171 | 12,243,996 |
| | | | | $49,808,683 |
| Cable TV – 1.8% | |
| Comcast Corp., “A” | | 891,309 | $ 39,083,900 |
| Chemicals – 0.7% | |
| PPG Industries, Inc. | | 99,167 | $ 14,830,425 |
| Computer Software – 2.7% | |
| Dun & Bradstreet Holdings, Inc. | | 1,045,151 | $ 12,228,267 |
| Microsoft Corp. | | 103,848 | 39,051,002 |
| Oracle Corp. | | 70,858 | 7,470,559 |
| | | | | $58,749,828 |
| Computer Software - Systems – 0.1% | |
| Seagate Technology Holdings PLC | | 29,040 | $ 2,479,145 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Construction – 1.9% | |
| Masco Corp. | | 379,017 | $ 25,386,559 |
| Stanley Black & Decker, Inc. | | 112,723 | 11,058,126 |
| Summit Materials, Inc., “A” (a) | | 111,362 | 4,282,982 |
| | | | | $40,727,667 |
| Consumer Products – 0.5% | |
| Kenvue, Inc. | | 514,592 | $ 11,079,166 |
| Consumer Services – 0.3% | |
| Booking Holdings, Inc. (a) | | 1,675 | $ 5,941,593 |
| Electrical Equipment – 1.3% | |
| Johnson Controls International PLC | | 483,454 | $ 27,866,289 |
| Electronics – 3.1% | |
| Analog Devices, Inc. | | 25,977 | $ 5,157,993 |
| Applied Materials, Inc. | | 58,489 | 9,479,312 |
| Intel Corp. | | 455,977 | 22,912,844 |
| NXP Semiconductors N.V. | | 93,252 | 21,418,120 |
| Taiwan Semiconductor Manufacturing Co. Ltd., ADR | | 81,956 | 8,523,424 |
| | | | | $67,491,693 |
| Energy - Independent – 2.7% | |
| ConocoPhillips | | 238,506 | $ 27,683,391 |
| Hess Corp. | | 139,880 | 20,165,101 |
| Pioneer Natural Resources Co. | | 52,199 | 11,738,511 |
| | | | | $59,587,003 |
| Energy - Integrated – 0.9% | |
| Chevron Corp. | | 42,122 | $ 6,282,917 |
| Suncor Energy, Inc. | | 381,334 | 12,216,617 |
| | | | | $18,499,534 |
| Food & Beverages – 0.4% | |
| Archer Daniels Midland Co. | | 81,917 | $ 5,916,046 |
| J.M. Smucker Co. | | 28,748 | 3,633,172 |
| | | | | $9,549,218 |
| Health Maintenance Organizations – 1.6% | |
| Cigna Group | | 112,688 | $ 33,744,422 |
| Insurance – 3.2% | |
| Aon PLC | | 71,729 | $ 20,874,573 |
| Chubb Ltd. | | 95,487 | 21,580,062 |
| Travelers Cos., Inc. | | 48,069 | 9,156,664 |
| Willis Towers Watson PLC | | 75,793 | 18,281,272 |
| | | | | $69,892,571 |
| Internet – 1.0% | |
| Alphabet, Inc., “A” (a) | | 160,010 | $ 22,351,797 |
| Leisure & Toys – 0.2% | |
| Electronic Arts, Inc. | | 33,993 | $ 4,650,582 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Machinery & Tools – 2.8% | |
| Eaton Corp. PLC | | 136,098 | $ 32,775,120 |
| Ingersoll Rand, Inc. | | 172,892 | 13,371,467 |
| Regal Rexnord Corp. | | 100,291 | 14,845,074 |
| | | | | $60,991,661 |
| Major Banks – 7.0% | |
| Bank of America Corp. | | 904,009 | $ 30,437,983 |
| Goldman Sachs Group, Inc. | | 132,951 | 51,288,507 |
| JPMorgan Chase & Co. | | 265,307 | 45,128,721 |
| Morgan Stanley | | 182,836 | 17,049,457 |
| PNC Financial Services Group, Inc. | | 64,086 | 9,923,717 |
| | | | | $153,828,385 |
| Medical & Health Technology & Services – 1.4% | |
| ICON PLC (a) | | 38,515 | $ 10,902,441 |
| McKesson Corp. | | 43,177 | 19,990,088 |
| | | | | $30,892,529 |
| Medical Equipment – 1.7% | |
| Becton, Dickinson and Co. | | 45,186 | $ 11,017,703 |
| Boston Scientific Corp. (a) | | 125,567 | 7,259,028 |
| Medtronic PLC | | 232,979 | 19,192,810 |
| | | | | $37,469,541 |
| Metals & Mining – 0.2% | |
| Glencore PLC | | 846,058 | $ 5,091,258 |
| Other Banks & Diversified Financials – 1.7% | |
| Northern Trust Corp. | | 241,800 | $ 20,403,084 |
| Truist Financial Corp. | | 429,197 | 15,845,953 |
| | | | | $36,249,037 |
| Pharmaceuticals – 3.2% | |
| Bayer AG | | 277,750 | $ 10,311,703 |
| Johnson & Johnson | | 165,058 | 25,871,191 |
| Organon & Co. | | 148,355 | 2,139,279 |
| Pfizer, Inc. | | 725,057 | 20,874,391 |
| Roche Holding AG | | 39,141 | 11,378,604 |
| | | | | $70,575,168 |
| Railroad & Shipping – 1.1% | |
| Union Pacific Corp. | | 98,852 | $ 24,280,028 |
| Restaurants – 0.2% | |
| Wendy's Co. | | 220,690 | $ 4,299,041 |
| Specialty Chemicals – 1.2% | |
| Axalta Coating Systems Ltd. (a) | | 407,084 | $ 13,828,643 |
| DuPont de Nemours, Inc. | | 161,049 | 12,389,500 |
| | | | | $26,218,143 |
| Specialty Stores – 0.2% | |
| Target Corp. | | 32,771 | $ 4,667,246 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Telecommunications - Wireless – 0.8% | |
| T-Mobile USA, Inc. | | 112,268 | $ 17,999,928 |
| Tobacco – 1.2% | |
| Altria Group, Inc. | | 144,591 | $ 5,832,801 |
| Philip Morris International, Inc. | | 214,364 | 20,167,365 |
| | | | | $26,000,166 |
| Utilities - Electric Power – 2.8% | |
| Dominion Energy, Inc. | | 106,297 | $ 4,995,959 |
| Duke Energy Corp. | | 152,070 | 14,756,873 |
| Exelon Corp. | | 216,077 | 7,757,164 |
| National Grid PLC | | 499,614 | 6,737,694 |
| PG&E Corp. | | 793,750 | 14,311,313 |
| Southern Co. | | 176,826 | 12,399,039 |
| | | | | $60,958,042 |
| Total Common Stocks (Identified Cost, $760,659,446) | | $1,278,446,797 |
| Bonds – 39.6% |
| Aerospace & Defense – 0.1% |
| BAE Systems PLC, 3.4%, 4/15/2030 (n) | | $ | 1,108,000 | $ 1,022,369 |
| Asset-Backed & Securitized – 6.0% |
| ACRES 2021-FL2 Issuer Ltd., “AS”, FLR, 7.226% ((SOFR - 1mo. + 0.11448%) + 1.75%), 1/15/2037 (n) | | $ | 1,851,500 | $ 1,818,662 |
| Allegro CLO Ltd., 2016-1A, “BR2”, FLR, 7.205% ((SOFR - 3mo. + 0.26161%) + 1.55%), 1/15/2030 (n) | | | 2,407,803 | 2,398,107 |
| Arbor Realty Trust, Inc., CLO, 2021-FL1, “AS”, FLR, 6.676% ((SOFR - 1mo. + 0.11448%) + 1.2%), 12/15/2035 (n) | | | 2,115,000 | 2,063,553 |
| Arbor Realty Trust, Inc., CLO, 2021-FL3, “B”, FLR, 7.076% ((SOFR - 1mo. + 0.11448%) + 1.6%), 8/15/2034 (n) | | | 1,807,500 | 1,734,210 |
| Arbor Realty Trust, Inc., CLO, 2022-FL1, “B”, FLR, 7.446% (SOFR - 30 day + 2.1%), 1/15/2037 (n) | | | 5,076,500 | 4,950,789 |
| AREIT 2019-CRE3 Trust, “AS”, FLR, 6.776% ((SOFR - 1mo. + 0.11448%) + 1.3%), 9/14/2036 (n) | | | 2,670,329 | 2,642,245 |
| AREIT 2022-CRE6 Trust, “B”, FLR, 7.187% (SOFR - 30 day + 1.85%), 1/20/2037 (n) | | | 3,088,500 | 2,992,970 |
| ARI Fleet Lease Trust, 2023-B, “A2”, 6.05%, 7/15/2032 (n) | | | 478,070 | 483,381 |
| Bain Capital Credit CLO Ltd., 2020-4A, “A1R”, 7.165% (SOFR - 3mo. + 1.75%), 10/19/2036 (n) | | | 3,189,862 | 3,195,192 |
| Bayview Financial Revolving Mortgage Loan Trust, FLR, 7.071% ((SOFR - 1mo. + 0.11448%) + 1.6%), 12/28/2040 (n) | | | 420,682 | 618,526 |
| Benchmark 2023-V3 Mortgage Trust, “A3”, 6.362%, 7/15/2056 | | | 134,138 | 140,526 |
| Brazos Securitization LLC, 5.243%, 9/01/2040 (n) | | | 1,552,000 | 1,603,835 |
| BSPRT 2021-FL6 Issuer Ltd., “AS”, FLR, 6.776% ((SOFR - 1mo. + 0.11448%) + 1.3%), 3/15/2036 (n) | | | 4,964,000 | 4,791,561 |
| BSPRT 2021-FL7 Issuer Ltd., “B”, FLR, 7.498% ((SOFR - 1mo. + 0.11448%) + 2.05%), 12/15/2038 (n) | | | 849,500 | 831,485 |
| BSPRT 2022-FL8 Issuer Ltd., “B”, FLR, 7.396% (SOFR - 30 day + 2.05%), 2/15/2037 (n) | | | 1,817,000 | 1,769,998 |
| Business Jet Securities LLC, 2021-1A, “A”, 2.162%, 4/15/2036 (n) | | | 741,142 | 685,578 |
| BXMT 2021-FL4 Ltd., “AS”, FLR, 6.776% ((SOFR - 1mo. + 0.11448%) + 1.3%), 5/15/2038 (n) | | | 5,214,000 | 4,825,626 |
| CHCP 2021-FL1 Ltd., “AS”, FLR, 6.773% ((SOFR - 1mo. + 0.11448%) + 1.3%), 2/15/2038 (n) | | | 2,203,500 | 2,186,441 |
| Chesapeake Funding II LLC, 2023-1A, “A1”, 5.65%, 5/15/2035 (n) | | | 1,995,328 | 2,000,581 |
| Columbia Cent CLO 28 Ltd., “A-2-R”, 7.342%, 11/07/2030 (n) | | | 3,492,733 | 3,467,896 |
| Commercial Mortgage Pass-Through Certificates, 2023-BNK46, “A4”, 5.745%, 8/15/2056 | | | 1,872,416 | 1,968,688 |
| Commercial Mortgage Trust, 2015-LC21, “A4”, 3.708%, 7/10/2048 | | | 3,980,975 | 3,861,366 |
| Consumers 2023 Securitization Funding LLC, 5.55%, 3/01/2028 | | | 1,340,000 | 1,345,220 |
| Credit Acceptance Auto Loan Trust, 2021-3A, “B”, 1.38%, 7/15/2030 (n) | | | 1,118,000 | 1,080,992 |
| Credit Acceptance Auto Loan Trust, 2023-3A, “A”, 6.39%, 8/15/2033 (n) | | | 546,000 | 553,680 |
| CSAIL Commercial Mortgage Trust, 2015-C2, “A4”, 3.504%, 6/15/2057 | | | 2,316,427 | 2,240,776 |
| Cutwater 2015-1A Ltd., “AR”, FLR, 6.875% ((SOFR - 3mo. + 0.26161%) + 1.22%), 1/15/2029 (n) | | | 628,673 | 628,361 |
| Dryden Senior Loan Fund, 2013-26A, “AR”, CLO, FLR, 6.555% ((SOFR - 3mo. + 0.26161%) + 0.9%), 4/15/2029 (n) | | | 1,540,583 | 1,538,741 |
| Dryden Senior Loan Fund, 2018-55A, “A1”, CLO, FLR, 6.675% ((SOFR - 3mo. + 0.26161%) + 1.02%), 4/15/2031 (n) | | | 4,265,873 | 4,259,073 |
| Enterprise Fleet Financing LLC, 2023-3, “A2”, 6.4%, 3/20/2030 (n) | | | 1,326,000 | 1,355,335 |
| GLS Auto Select Receivables Trust, 2023-1A, “A2”, 6.27%, 8/16/2027 (n) | | | 1,827,588 | 1,834,530 |
| GLS Auto Select Receivables Trust, 2023-2A, 6.37%, 6/15/2028 (n) | | | 379,000 | 382,258 |
| GMAC Mortgage Corp. Loan Trust, FGIC, 5.805%, 10/25/2036 | | | 84,178 | 83,830 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Bonds – continued |
| Asset-Backed & Securitized – continued |
| GS Mortgage Securities Trust, 2015-GC30, “A4”, 3.382%, 5/10/2050 | | $ | 4,243,101 | $ 4,096,678 |
| JPMBB Commercial Mortgage Securities Trust, 2014-C26, “A4”, 3.494%, 1/15/2048 | | | 4,880,000 | 4,756,423 |
| JPMBB Commercial Mortgage Securities Trust, 2015-C28, “A4”, 3.227%, 10/15/2048 | | | 3,256,792 | 3,138,022 |
| Kubota Credit Owner Trust, 2023-2A, “A2”, 5.61%, 7/15/2026 (n) | | | 1,580,599 | 1,585,353 |
| LCCM 2021-FL2 Trust, “B”, FLR, 7.376% ((SOFR - 1mo. + 0.11448%) + 1.9%), 12/13/2038 (n) | | | 2,562,000 | 2,415,218 |
| LoanCore 2021-CRE5 Ltd., “AS”, FLR, 7.198% ((SOFR - 1mo. + 0.11448%) + 1.75%), 7/15/2036 (n) | | | 5,288,000 | 5,206,910 |
| MF1 2020-FL4 Ltd., “A”, FLR, 7.176% ((SOFR - 1mo. + 0.11448%) + 1.7%), 11/15/2035 (n) | | | 869,749 | 869,810 |
| MF1 2021-FL5 Ltd., “AS”, FLR, 6.676% ((SOFR - 1mo. + 0.11448%) + 1.2%), 7/15/2036 (n) | | | 5,459,500 | 5,341,837 |
| MF1 2022-FL8 Ltd., “B”, FLR, 7.305% (SOFR - 30 day + 1.95%), 2/19/2037 (n) | | | 2,251,053 | 2,192,701 |
| MidOcean Credit CLO, 2013-2A, “BR”, FLR, 7.302% ((SOFR - 3mo. + 0.26161%) + 1.65%), 1/29/2030 (n) | | | 3,932,725 | 3,913,958 |
| Morgan Stanley Bank of America Merrill Lynch Trust, 2017-C34, “A4”, 3.536%, 11/15/2052 | | | 1,600,004 | 1,491,160 |
| MSWF Commercial Mortgage Trust 2023-2, “A5”, 6.014%, 12/15/2056 | | | 2,080,986 | 2,234,854 |
| Neuberger Berman CLO Ltd., 2013-15A, “BR2”, FLR, 7.005% ((SOFR - 3mo. + 0.26161%) + 1.35%), 10/15/2029 (n) | | | 1,750,540 | 1,738,066 |
| Neuberger Berman CLO Ltd., 2015-20A, “ARR”, FLR, 6.815% ((SOFR - 3mo. + 0.26161%) + 1.16%), 7/15/2034 (n) | | | 1,900,000 | 1,896,210 |
| Oaktree CLO 2019-1A Ltd., “BR”, FLR, 7.424% ((SOFR - 3mo. + 0.26161%) + 1.75%), 4/22/2030 (n) | | | 5,195,227 | 5,125,003 |
| OneMain Financial Issuance Trust 2022-3A, “A”, 5.94%, 5/15/2034 (n) | | | 2,137,000 | 2,141,831 |
| ReadyCap Commercial Mortgage Trust, 2021-FL5, “A”, FLR, 6.47% ((SOFR - 1mo. + 0.11448%) + 1%), 4/25/2038 (z) | | | 1,052,365 | 1,042,303 |
| ReadyCap Commercial Mortgage Trust, 2021-FL7, “B”, FLR, 7.27% ((SOFR - 1mo. + 0.11448%) + 1.8%), 11/25/2036 (z) | | | 1,130,000 | 1,101,199 |
| Residential Funding Mortgage Securities, Inc., FGIC, 3.889%, 12/25/2035 (d)(q) | | | 63,221 | 2,152 |
| Starwood Commercial Mortgage, 2022-FL3, “AS”, FLR, 7.146% (SOFR - 30 day + 1.8%), 11/15/2038 (n) | | | 5,210,500 | 5,020,070 |
| Toyota Lease Owner Trust, 2023-A, “A2”, 5.3%, 8/20/2025 (n) | | | 393,236 | 392,627 |
| TPG Real Estate Finance, 2021-FL4, “A”, FLR, 6.676% ((SOFR - 1mo. + 0.11448%) + 1.2%), 3/15/2038 (n) | | | 3,800,809 | 3,748,266 |
| Voya CLO 2012-4A Ltd., “A2R3”, FLR, 7.105% ((SOFR - 3mo. + 0.26161%) + 1.45%), 10/15/2030 (n) | | | 2,010,166 | 1,992,613 |
| Wells Fargo Commercial Mortgage Trust, 2015-C28, “A4”, 3.54%, 5/15/2048 | | | 4,315,766 | 4,172,343 |
| | | | | $131,949,619 |
| Automotive – 0.1% |
| Lear Corp., 4.25%, 5/15/2029 | | $ | 656,000 | $ 631,161 |
| Stellantis Finance US, Inc., 2.691%, 9/15/2031 (n) | | | 2,944,000 | 2,463,157 |
| | | | | $3,094,318 |
| Broadcasting – 0.2% |
| WarnerMedia Holdings, Inc., 5.05%, 3/15/2042 | | $ | 2,979,000 | $ 2,626,229 |
| WarnerMedia Holdings, Inc., 5.141%, 3/15/2052 | | | 1,692,000 | 1,452,338 |
| | | | | $4,078,567 |
| Brokerage & Asset Managers – 0.4% |
| Charles Schwab Corp., 5.853% to 5/19/2033, FLR (SOFR - 1 day + 2.5%) to 5/19/2034 | | $ | 3,736,000 | $ 3,856,492 |
| Intercontinental Exchange, Inc., 2.1%, 6/15/2030 | | | 2,155,000 | 1,867,221 |
| LPL Holdings, Inc., 6.75%, 11/17/2028 | | | 355,000 | 378,437 |
| LPL Holdings, Inc., 4.375%, 5/15/2031 (n) | | | 2,714,000 | 2,457,611 |
| | | | | $8,559,761 |
| Building – 0.2% |
| Martin Marietta Materials, Inc., 2.5%, 3/15/2030 | | $ | 190,000 | $ 167,275 |
| Masco Corp., 2%, 2/15/2031 | | | 3,622,000 | 2,976,529 |
| Vulcan Materials Co., 3.5%, 6/01/2030 | | | 380,000 | 353,450 |
| | | | | $3,497,254 |
| Business Services – 0.6% |
| Equinix, Inc., 2.625%, 11/18/2024 | | $ | 2,863,000 | $ 2,788,555 |
| Equinix, Inc., 1.8%, 7/15/2027 | | | 1,829,000 | 1,655,677 |
| Equinix, Inc., 2.5%, 5/15/2031 | | | 2,363,000 | 2,005,772 |
| Experian Finance PLC, 4.25%, 2/01/2029 (n) | | | 1,450,000 | 1,435,785 |
| Fiserv, Inc., 2.65%, 6/01/2030 | | | 730,000 | 641,774 |
| Global Payments, Inc., 2.9%, 11/15/2031 | | | 1,699,000 | 1,453,306 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Bonds – continued |
| Business Services – continued |
| Verisk Analytics, Inc., 4.125%, 3/15/2029 | | $ | 1,857,000 | $ 1,811,507 |
| Verisk Analytics, Inc., 5.75%, 4/01/2033 | | | 1,422,000 | 1,525,213 |
| | | | | $13,317,589 |
| Cable TV – 0.4% |
| Charter Communications Operating LLC/Charter Communications Operating Capital Corp., 6.384%, 10/23/2035 | | $ | 1,053,000 | $ 1,068,894 |
| Charter Communications Operating LLC/Charter Communications Operating Capital Corp., 3.5%, 6/01/2041 | | | 2,122,000 | 1,499,845 |
| Charter Communications Operating LLC/Charter Communications Operating Capital Corp., 5.375%, 5/01/2047 | | | 430,000 | 365,424 |
| Charter Communications Operating LLC/Charter Communications Operating Capital Corp., 5.25%, 4/01/2053 | | | 1,734,000 | 1,452,302 |
| Cox Communications, Inc., 1.8%, 10/01/2030 (n) | | | 1,333,000 | 1,083,858 |
| Time Warner Entertainment Co. LP, 8.375%, 7/15/2033 | | | 2,526,000 | 2,924,799 |
| | | | | $8,395,122 |
| Chemicals – 0.1% |
| RPM International, Inc., 2.95%, 1/15/2032 | | $ | 1,427,000 | $ 1,202,540 |
| Computer Software – 0.1% |
| Oracle Corp., 4.9%, 2/06/2033 | | $ | 740,000 | $ 736,633 |
| Roper Technologies, Inc., 2%, 6/30/2030 | | | 1,302,000 | 1,105,253 |
| | | | | $1,841,886 |
| Conglomerates – 0.1% |
| Westinghouse Air Brake Technologies Corp., 3.2%, 6/15/2025 | | $ | 808,000 | $ 781,091 |
| Westinghouse Air Brake Technologies Corp., 4.7%, 9/15/2028 | | | 2,112,000 | 2,088,456 |
| | | | | $2,869,547 |
| Consumer Products – 0.1% |
| Kenvue, Inc., 4.9%, 3/22/2033 | | $ | 2,970,000 | $ 3,061,446 |
| Consumer Services – 0.1% |
| Booking Holdings, Inc., 4.625%, 4/13/2030 | | $ | 1,430,000 | $ 1,440,700 |
| Electrical Equipment – 0.1% |
| Arrow Electronics, Inc., 2.95%, 2/15/2032 | | $ | 2,690,000 | $ 2,273,659 |
| Electronics – 0.1% |
| Broadcom, Inc., 4.3%, 11/15/2032 | | $ | 1,329,000 | $ 1,274,995 |
| Broadcom, Inc., 4.926%, 5/15/2037 (n) | | | 683,000 | 660,960 |
| | | | | $1,935,955 |
| Energy - Integrated – 0.3% |
| BP Capital Markets America, Inc., 2.721%, 1/12/2032 | | $ | 4,182,000 | $ 3,643,555 |
| Eni S.p.A., 4.75%, 9/12/2028 (n) | | | 3,564,000 | 3,562,682 |
| | | | | $7,206,237 |
| Financial Institutions – 0.7% |
| AerCap Ireland Capital DAC/AerCap Global Aviation Trust, 4.875%, 1/16/2024 | | $ | 362,000 | $ 361,769 |
| AerCap Ireland Capital DAC/AerCap Global Aviation Trust, 2.45%, 10/29/2026 | | | 4,225,000 | 3,912,017 |
| AerCap Ireland Capital DAC/AerCap Global Aviation Trust, 3.65%, 7/21/2027 | | | 2,329,000 | 2,212,921 |
| Air Lease Corp., 2.2%, 1/15/2027 | | | 1,394,000 | 1,276,478 |
| Air Lease Corp., 2.875%, 1/15/2032 | | | 1,830,000 | 1,548,474 |
| Avolon Holdings Funding Ltd., 4.375%, 5/01/2026 (n) | | | 682,000 | 659,899 |
| Avolon Holdings Funding Ltd., 3.25%, 2/15/2027 (n) | | | 2,183,000 | 2,018,927 |
| Avolon Holdings Funding Ltd., 2.528%, 11/18/2027 (n) | | | 1,821,000 | 1,613,115 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Bonds – continued |
| Financial Institutions – continued |
| Park Aerospace Holdings Ltd., 5.5%, 2/15/2024 (n) | | $ | 639,000 | $ 637,809 |
| | | | | $14,241,409 |
| Food & Beverages – 0.3% |
| Anheuser-Busch InBev S.A., 8%, 11/15/2039 | | $ | 2,950,000 | $ 3,807,583 |
| Anheuser-Busch InBev Worldwide, Inc., 4.375%, 4/15/2038 | | | 737,000 | 698,915 |
| Diageo Capital PLC, 2.375%, 10/24/2029 | | | 2,618,000 | 2,356,976 |
| Keurig Dr Pepper, Inc., 3.2%, 5/01/2030 | | | 304,000 | 279,476 |
| | | | | $7,142,950 |
| Gaming & Lodging – 0.3% |
| GLP Capital LP/GLP Financing II, Inc., 5.3%, 1/15/2029 | | $ | 1,593,000 | $ 1,583,789 |
| Las Vegas Sands Corp., 3.9%, 8/08/2029 | | | 783,000 | 721,462 |
| Marriott International, Inc., 4.625%, 6/15/2030 | | | 1,979,000 | 1,943,362 |
| Marriott International, Inc., 2.85%, 4/15/2031 | | | 7,000 | 6,058 |
| Marriott International, Inc., 2.75%, 10/15/2033 | | | 1,600,000 | 1,320,193 |
| | | | | $5,574,864 |
| Insurance – 0.5% |
| AIA Group Ltd., 3.375%, 4/07/2030 (n) | | $ | 2,338,000 | $ 2,154,142 |
| Corebridge Financial, Inc., 3.9%, 4/05/2032 | | | 3,078,000 | 2,782,408 |
| Corebridge Financial, Inc., 5.75%, 1/15/2034 | | | 1,237,000 | 1,264,418 |
| Metropolitan Life Global Funding I, 3.3%, 3/21/2029 (n) | | | 4,200,000 | 3,895,317 |
| | | | | $10,096,285 |
| Insurance - Health – 0.1% |
| Humana, Inc., 5.875%, 3/01/2033 | | $ | 1,227,000 | $ 1,307,114 |
| Insurance - Property & Casualty – 0.4% |
| Aon Corp., 4.5%, 12/15/2028 | | $ | 1,979,000 | $ 1,954,712 |
| Aon Corp., 3.75%, 5/02/2029 | | | 1,893,000 | 1,810,774 |
| Brown & Brown, Inc., 4.2%, 3/17/2032 | | | 2,124,000 | 1,937,190 |
| Fairfax Financial Holdings Ltd., 5.625%, 8/16/2032 | | | 3,006,000 | 3,003,083 |
| Liberty Mutual Group, Inc., 3.951%, 10/15/2050 (n) | | | 1,087,000 | 821,502 |
| | | | | $9,527,261 |
| International Market Quasi-Sovereign – 0.0% |
| Electricite de France S.A., 6.9%, 5/23/2053 (n) | | $ | 629,000 | $ 711,343 |
| Machinery & Tools – 0.3% |
| Ashtead Capital, Inc., 5.5%, 8/11/2032 (n) | | $ | 3,963,000 | $ 3,914,749 |
| CNH Industrial Capital LLC, 4.2%, 1/15/2024 | | | 1,679,000 | 1,677,707 |
| | | | | $5,592,456 |
| Major Banks – 2.3% |
| Bank of America Corp., 3.5%, 4/19/2026 | | $ | 1,361,000 | $ 1,324,347 |
| Bank of America Corp., 2.572% to 10/20/2031, FLR (SOFR - 1 day + 1.21%) to 10/20/2032 | | | 3,452,000 | 2,861,956 |
| Barclays PLC, 2.894% to 11/24/2031, FLR (CMT - 1yr. + 1.3%) to 11/24/2032 | | | 877,000 | 718,772 |
| Barclays PLC, 7.437% to 11/02/2032, FLR (CMT - 1yr. + 3.5%) to 11/02/2033 | | | 2,666,000 | 2,985,184 |
| Capital One Financial Corp., 3.75%, 3/09/2027 | | | 1,728,000 | 1,649,910 |
| Capital One Financial Corp., 3.273% to 3/01/2029, FLR (SOFR - 1 day + 1.79%) to 3/01/2030 | | | 4,532,000 | 4,047,542 |
| Deutsche Bank AG, 7.146% to 7/13/2026, FLR (SOFR - 1 day + 2.52%) to 7/13/2027 | | | 838,000 | 869,830 |
| Deutsche Bank AG, 2.311% to 11/16/2026, FLR (SOFR - 1 day + 1.219%) to 11/16/2027 | | | 880,000 | 804,664 |
| Deutsche Bank AG, 6.72% to 1/18/2028, FLR (SOFR - 1 day + 3.18%) to 1/18/2029 | | | 2,180,000 | 2,282,910 |
| Goldman Sachs Group, Inc., 2.6%, 2/07/2030 | | | 2,258,000 | 1,984,198 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Bonds – continued |
| Major Banks – continued |
| Goldman Sachs Group, Inc., 2.383% to 7/21/2031, FLR (SOFR - 1 day + 1.248%) to 7/21/2032 | | $ | 2,831,000 | $ 2,326,024 |
| HSBC Holdings PLC, 4.7% to 9/09/2031, FLR (CMT - 1yr. + 3.25%) to 9/09/2169 | | | 922,000 | 750,918 |
| HSBC Holdings PLC, 4% to 9/09/2026, FLR (CMT - 1yr. + 3.222%) to 9/09/2170 | | | 442,000 | 405,547 |
| JPMorgan Chase & Co., 2.956% to 5/13/2030, FLR (SOFR - 1 day + 2.515%) to 5/13/2031 | | | 476,000 | 418,296 |
| JPMorgan Chase & Co., 2.545% to 11/08/2031, FLR (SOFR - 1 day + 1.18%) to 11/08/2032 | | | 4,631,000 | 3,864,006 |
| JPMorgan Chase & Co., 2.963% to 1/25/2032, FLR (SOFR - 1 day + 1.26%) to 1/25/2033 | | | 1,781,000 | 1,526,027 |
| JPMorgan Chase & Co., 3.897% to 1/23/2048, FLR ((SOFR - 3mo. + 0.26161%) + 1.22%) to 1/23/2049 | | | 938,000 | 777,483 |
| Mitsubishi UFJ Financial Group, Inc., 2.852% to 1/19/2032, FLR (CMT - 1yr. + 1.1%) to 1/19/2033 | | | 2,674,000 | 2,290,549 |
| Morgan Stanley, 2.699% to 1/22/2030, FLR (SOFR - 1 day + 1.143%) to 1/22/2031 | | | 2,483,000 | 2,170,580 |
| Morgan Stanley, 2.943% to 1/21/2032, FLR (SOFR - 1 day + 1.29%) to 1/21/2033 | | | 3,130,000 | 2,662,561 |
| Sumitomo Mitsui Financial Group, Inc., 2.472%, 1/14/2029 | | | 5,230,000 | 4,652,702 |
| UBS Group AG, 2.095% to 2/11/2031, FLR (CMT - 1yr. + 1.0%) to 2/11/2032 (n) | | | 6,416,000 | 5,117,521 |
| Wells Fargo & Co., 3.35% to 3/02/2032, FLR (SOFR - 1 day + 1.5%) to 3/02/2033 | | | 5,150,000 | 4,498,094 |
| | | | | $50,989,621 |
| Medical & Health Technology & Services – 0.4% |
| Adventist Health System/West, 5.43%, 3/01/2032 | | $ | 2,533,000 | $ 2,576,415 |
| Alcon Finance Corp., 2.6%, 5/27/2030 (n) | | | 302,000 | 261,782 |
| Cigna Corp., 3.2%, 3/15/2040 | | | 474,000 | 370,532 |
| CVS Health Corp., 5.3%, 6/01/2033 | | | 2,530,000 | 2,596,332 |
| HCA, Inc., 5.125%, 6/15/2039 | | | 1,932,000 | 1,841,017 |
| Laboratory Corp. of America Holdings, 4.7%, 2/01/2045 | | | 980,000 | 903,107 |
| Northwell Healthcare, Inc., 3.979%, 11/01/2046 | | | 153,000 | 123,625 |
| Northwell Healthcare, Inc., 4.26%, 11/01/2047 | | | 1,205,000 | 1,020,348 |
| | | | | $9,693,158 |
| Medical Equipment – 0.1% |
| Boston Scientific Corp., 2.65%, 6/01/2030 | | $ | 1,590,000 | $ 1,419,699 |
| Metals & Mining – 0.4% |
| Anglo American Capital PLC, 3.875%, 3/16/2029 (n) | | $ | 496,000 | $ 465,210 |
| Anglo American Capital PLC, 5.625%, 4/01/2030 (n) | | | 1,394,000 | 1,414,888 |
| Anglo American Capital PLC, 2.625%, 9/10/2030 (n) | | | 4,564,000 | 3,882,502 |
| Glencore Funding LLC, 2.5%, 9/01/2030 (n) | | | 1,695,000 | 1,454,239 |
| Glencore Funding LLC, 2.85%, 4/27/2031 (n) | | | 709,000 | 611,371 |
| | | | | $7,828,210 |
| Midstream – 0.3% |
| Kinder Morgan Energy Partners LP, 4.15%, 2/01/2024 | | $ | 1,030,000 | $ 1,028,417 |
| Plains All American Pipeline LP, 3.8%, 9/15/2030 | | | 1,881,000 | 1,730,883 |
| Sabine Pass Liquefaction LLC, 4.5%, 5/15/2030 | | | 512,000 | 500,360 |
| Spectra Energy Partners LP, 3.375%, 10/15/2026 | | | 828,000 | 797,138 |
| Targa Resources Corp., 4.2%, 2/01/2033 | | | 746,000 | 685,897 |
| Targa Resources Corp., 6.125%, 3/15/2033 | | | 2,281,000 | 2,401,524 |
| | | | | $7,144,219 |
| Mortgage-Backed – 13.0% | |
| Fannie Mae, 5%, 3/25/2025 - 3/01/2041 | | $ | 1,515,482 | $ 1,537,407 |
| Fannie Mae, 3%, 11/01/2028 - 9/01/2046 | | | 2,674,179 | 2,532,789 |
| Fannie Mae, 6.5%, 6/01/2031 - 7/01/2037 | | | 566,593 | 591,636 |
| Fannie Mae, 2.5%, 11/01/2031 | | | 52,848 | 49,831 |
| Fannie Mae, 5.5%, 2/01/2033 - 4/01/2040 | | | 3,501,302 | 3,599,488 |
| Fannie Mae, 3%, 2/25/2033 (i) | | | 250,549 | 20,782 |
| Fannie Mae, 4.5%, 8/01/2033 - 6/01/2044 | | | 3,468,249 | 3,463,025 |
| Fannie Mae, 6%, 1/01/2034 - 7/01/2037 | | | 2,073,231 | 2,154,179 |
| Fannie Mae, 3.5%, 4/01/2038 - 7/01/2046 | | | 9,303,426 | 8,740,121 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Bonds – continued |
| Mortgage-Backed – continued | |
| Fannie Mae, 3.25%, 5/25/2040 | | $ | 72,299 | $ 66,950 |
| Fannie Mae, 4%, 9/01/2040 - 6/01/2047 | | | 6,447,746 | 6,268,203 |
| Fannie Mae, 2%, 5/25/2044 - 4/25/2046 | | | 191,697 | 175,385 |
| Fannie Mae, 4%, 7/25/2046 (i) | | | 276,646 | 51,592 |
| Fannie Mae, UMBS, 5.5%, 10/01/2025 - 11/01/2053 | | | 8,619,529 | 8,662,629 |
| Fannie Mae, UMBS, 2%, 10/01/2036 - 3/01/2052 | | | 30,827,834 | 26,088,549 |
| Fannie Mae, UMBS, 2.5%, 11/01/2036 - 6/01/2052 | | | 36,516,626 | 31,457,003 |
| Fannie Mae, UMBS, 5%, 10/01/2037 - 5/01/2053 | | | 3,519,707 | 3,485,375 |
| Fannie Mae, UMBS, 4.5%, 4/01/2038 - 10/01/2052 | | | 3,731,508 | 3,641,688 |
| Fannie Mae, UMBS, 1.5%, 2/01/2042 - 4/01/2052 | | | 2,702,713 | 2,115,844 |
| Fannie Mae, UMBS, 3%, 6/01/2051 - 8/01/2052 | | | 14,888,566 | 13,205,484 |
| Fannie Mae, UMBS, 3.5%, 5/01/2052 - 4/01/2053 | | | 3,352,595 | 3,077,597 |
| Fannie Mae, UMBS, 6%, 12/01/2052 - 2/01/2053 | | | 881,697 | 912,065 |
| Freddie Mac, 0.904%, 4/25/2024 (i) | | | 3,071,672 | 3,866 |
| Freddie Mac, 0.51%, 7/25/2024 (i) | | | 14,179,000 | 40,202 |
| Freddie Mac, 0.602%, 7/25/2024 (i) | | | 3,476,018 | 6,839 |
| Freddie Mac, 4.5%, 8/01/2024 - 5/01/2042 | | | 569,577 | 569,618 |
| Freddie Mac, 0.39%, 8/25/2024 (i) | | | 15,246,000 | 47,144 |
| Freddie Mac, 0.46%, 8/25/2024 (i) | | | 21,622,405 | 52,504 |
| Freddie Mac, 3.064%, 8/25/2024 | | | 673,607 | 663,207 |
| Freddie Mac, 0.339%, 10/25/2024 (i) | | | 17,702,183 | 28,674 |
| Freddie Mac, 0.275%, 11/25/2024 (i) | | | 15,385,000 | 42,056 |
| Freddie Mac, 2.67%, 12/25/2024 | | | 1,261,000 | 1,232,725 |
| Freddie Mac, 0.639%, 6/25/2027 (i) | | | 13,682,000 | 300,506 |
| Freddie Mac, 0.745%, 6/25/2027 (i) | | | 4,538,339 | 95,423 |
| Freddie Mac, 0.57%, 7/25/2027 (i) | | | 11,646,139 | 197,728 |
| Freddie Mac, 0.327%, 8/25/2027 - 1/25/2031 (i) | | | 14,966,321 | 210,559 |
| Freddie Mac, 0.418%, 8/25/2027 (i) | | | 6,384,435 | 84,610 |
| Freddie Mac, 0.279%, 9/25/2027 (i) | | | 10,419,000 | 107,205 |
| Freddie Mac, 0.195%, 11/25/2027 (i) | | | 16,290,000 | 127,422 |
| Freddie Mac, 0.284%, 11/25/2027 (i) | | | 11,356,560 | 104,382 |
| Freddie Mac, 0.324%, 11/25/2027 (i) | | | 10,105,925 | 109,915 |
| Freddie Mac, 0.247%, 12/25/2027 (i) | | | 10,109,000 | 96,646 |
| Freddie Mac, 0.289%, 12/25/2027 (i) | | | 11,210,000 | 126,292 |
| Freddie Mac, 0.365%, 12/25/2027 (i) | | | 17,242,552 | 223,351 |
| Freddie Mac, 1.09%, 7/25/2029 (i) | | | 824,628 | 40,719 |
| Freddie Mac, 1.142%, 8/25/2029 (i) | | | 5,169,489 | 269,379 |
| Freddie Mac, 1.799%, 4/25/2030 (i) | | | 900,000 | 86,080 |
| Freddie Mac, 1.868%, 4/25/2030 (i) | | | 2,701,417 | 260,144 |
| Freddie Mac, 1.665%, 5/25/2030 (i) | | | 1,301,002 | 115,952 |
| Freddie Mac, 1.797%, 5/25/2030 (i) | | | 3,334,078 | 315,014 |
| Freddie Mac, 1.341%, 6/25/2030 (i) | | | 1,327,631 | 96,606 |
| Freddie Mac, 1.599%, 8/25/2030 (i) | | | 1,191,673 | 105,289 |
| Freddie Mac, 1.169%, 9/25/2030 (i) | | | 775,587 | 50,715 |
| Freddie Mac, 1.08%, 11/25/2030 (i) | | | 1,356,411 | 84,507 |
| Freddie Mac, 0.78%, 1/25/2031 (i) | | | 2,233,850 | 102,705 |
| Freddie Mac, 0.935%, 1/25/2031 (i) | | | 1,493,151 | 81,445 |
| Freddie Mac, 0.514%, 3/25/2031 (i) | | | 4,281,755 | 124,614 |
| Freddie Mac, 0.732%, 3/25/2031 (i) | | | 1,837,683 | 81,981 |
| Freddie Mac, 1.216%, 5/25/2031 (i) | | | 822,353 | 60,172 |
| Freddie Mac, 0.937%, 7/25/2031 (i) | | | 1,237,840 | 72,268 |
| Freddie Mac, 0.508%, 8/25/2031 (i) | | | 1,664,744 | 52,300 |
| Freddie Mac, 0.536%, 9/25/2031 (i) | | | 5,442,448 | 182,251 |
| Freddie Mac, 0.855%, 9/25/2031 (i) | | | 1,567,181 | 83,173 |
| Freddie Mac, 0.349%, 11/25/2031 (i) | | | 8,030,040 | 187,337 |
| Freddie Mac, 0.498%, 12/25/2031 (i) | | | 7,179,988 | 231,046 |
| Freddie Mac, 0.568%, 12/25/2031 (i) | | | 12,162,189 | 438,699 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Bonds – continued |
| Mortgage-Backed – continued | |
| Freddie Mac, 0.294%, 11/25/2032 (i) | | $ | 8,299,181 | $ 153,619 |
| Freddie Mac, 5%, 9/01/2033 - 1/15/2040 | | | 817,644 | 830,582 |
| Freddie Mac, 5.5%, 12/01/2033 - 2/01/2037 | | | 577,189 | 594,476 |
| Freddie Mac, 6%, 4/01/2034 - 6/01/2037 | | | 745,511 | 777,251 |
| Freddie Mac, 6.5%, 5/01/2034 - 7/01/2037 | | | 338,903 | 354,587 |
| Freddie Mac, 5.5%, 2/15/2036 (i) | | | 50,821 | 9,107 |
| Freddie Mac, 4%, 8/01/2037 - 4/01/2044 | | | 2,108,707 | 2,054,056 |
| Freddie Mac, 3.5%, 11/01/2037 - 10/25/2058 | | | 6,251,026 | 5,877,450 |
| Freddie Mac, 3%, 1/01/2038 - 2/25/2059 | | | 8,073,683 | 7,389,295 |
| Freddie Mac, 4.5%, 12/15/2040 (i) | | | 29,305 | 2,357 |
| Freddie Mac, 4%, 8/15/2044 (i) | | | 52,616 | 5,424 |
| Freddie Mac, 3.25%, 11/25/2061 | | | 589,995 | 511,212 |
| Freddie Mac, UMBS, 2%, 12/01/2031 - 4/01/2052 | | | 28,665,468 | 23,968,274 |
| Freddie Mac, UMBS, 6.5%, 10/01/2034 | | | 20,536 | 21,260 |
| Freddie Mac, UMBS, 5%, 10/01/2035 - 8/01/2053 | | | 1,977,999 | 1,960,954 |
| Freddie Mac, UMBS, 6%, 1/01/2036 - 9/01/2053 | | | 238,540 | 243,329 |
| Freddie Mac, UMBS, 3%, 4/01/2037 - 2/01/2053 | | | 5,118,602 | 4,538,646 |
| Freddie Mac, UMBS, 4.5%, 6/01/2038 - 10/01/2052 | | | 3,842,772 | 3,746,857 |
| Freddie Mac, UMBS, 3.5%, 12/01/2046 - 5/01/2052 | | | 2,198,810 | 2,035,280 |
| Freddie Mac, UMBS, 4%, 8/01/2047 - 10/01/2052 | | | 5,798,652 | 5,497,735 |
| Freddie Mac, UMBS, 2.5%, 4/01/2048 - 9/01/2052 | | | 17,034,268 | 14,511,748 |
| Freddie Mac, UMBS, 1.5%, 3/01/2051 - 2/01/2052 | | | 3,388,533 | 2,643,405 |
| Freddie Mac, UMBS, 5.5%, 7/01/2052 - 9/01/2053 | | | 1,686,280 | 1,702,212 |
| Ginnie Mae, 6%, 9/15/2032 - 1/15/2038 | | | 877,602 | 911,716 |
| Ginnie Mae, 5.5%, 5/15/2033 - 6/20/2053 | | | 6,168,123 | 6,216,678 |
| Ginnie Mae, 4.5%, 7/20/2033 - 12/20/2052 | | | 8,193,538 | 8,021,992 |
| Ginnie Mae, 5%, 7/20/2033 - 9/20/2053 | | | 8,686,562 | 8,627,260 |
| Ginnie Mae, 4%, 1/20/2041 - 10/20/2052 | | | 5,053,381 | 4,853,860 |
| Ginnie Mae, 3.5%, 12/15/2041 - 10/20/2052 | | | 6,459,276 | 6,061,146 |
| Ginnie Mae, 3%, 4/20/2045 - 10/20/2052 | | | 8,243,711 | 7,520,270 |
| Ginnie Mae, 2.5%, 8/20/2051 - 4/20/2052 | | | 15,163,993 | 13,258,012 |
| Ginnie Mae, 2%, 1/20/2052 - 4/20/2052 | | | 10,665,800 | 9,023,495 |
| Ginnie Mae, 0.584%, 2/16/2059 (i) | | | 2,341,554 | 71,742 |
| Ginnie Mae, TBA, 3%, 1/15/2054 | | | 2,025,000 | 1,833,253 |
| Ginnie Mae, TBA, 6%, 1/15/2054 | | | 1,500,000 | 1,525,137 |
| Ginnie Mae, TBA, 6.5%, 1/15/2054 | | | 2,000,000 | 2,047,266 |
| UMBS, TBA, 2%, 1/18/2039 - 1/25/2054 | | | 1,875,000 | 1,603,524 |
| UMBS, TBA, 2.5%, 1/18/2039 - 1/16/2054 | | | 2,734,977 | 2,472,825 |
| UMBS, TBA, 5%, 1/25/2039 | | | 350,000 | 352,078 |
| | | | | $283,320,262 |
| Municipals – 0.4% |
| New Jersey Turnpike Authority Rev., Taxable (Build America Bonds), “F”, 7.414%, 1/01/2040 | | $ | 3,685,000 | $ 4,591,416 |
| Rhode Island Student Loan Authority Education Loan Rev., Taxable, 6.081%, 12/01/2042 | | | 2,820,000 | 2,889,420 |
| State of Florida, Taxable, “A”, 2.154%, 7/01/2030 | | | 1,032,000 | 880,295 |
| | | | | $8,361,131 |
| Natural Gas - Distribution – 0.0% |
| NiSource, Inc., 5.65%, 2/01/2045 | | $ | 414,000 | $ 415,765 |
| Natural Gas - Pipeline – 0.0% |
| APA Infrastructure Ltd., 4.25%, 7/15/2027 (n) | | $ | 253,000 | $ 245,438 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Bonds – continued |
| Network & Telecom – 0.1% |
| Verizon Communications, Inc., 3.15%, 3/22/2030 | | $ | 1,053,000 | $ 962,453 |
| Verizon Communications, Inc., 4.812%, 3/15/2039 | | | 1,877,000 | 1,814,720 |
| | | | | $2,777,173 |
| Oils – 0.2% |
| Phillips 66 Co., 2.15%, 12/15/2030 | | $ | 2,934,000 | $ 2,470,785 |
| Valero Energy Corp., 6.625%, 6/15/2037 | | | 2,124,000 | 2,328,235 |
| | | | | $4,799,020 |
| Other Banks & Diversified Financials – 0.4% |
| Macquarie Group Ltd., 4.442% to 6/21/2032, FLR (SOFR - 1 day + 2.405%) to 6/21/2033 (n) | | $ | 5,881,000 | $ 5,365,999 |
| Northern Trust Corp., 6.125%, 11/02/2032 | | | 2,959,000 | 3,177,475 |
| | | | | $8,543,474 |
| Pollution Control – 0.3% |
| Republic Services, Inc., 1.45%, 2/15/2031 | | $ | 851,000 | $ 690,334 |
| Waste Management, Inc., 4.875%, 2/15/2034 | | | 5,777,000 | 5,892,785 |
| | | | | $6,583,119 |
| Real Estate - Office – 0.1% |
| Boston Properties LP, REIT, 2.55%, 4/01/2032 | | $ | 1,316,000 | $ 1,047,628 |
| Real Estate - Other – 0.2% |
| Public Storage Operating, REIT, 5.1%, 8/01/2033 | | $ | 4,289,000 | $ 4,439,973 |
| Real Estate - Retail – 0.1% |
| Brixmor Operating Partnership LP, REIT, 4.125%, 5/15/2029 | | $ | 172,000 | $ 163,684 |
| Brixmor Operating Partnership LP, REIT, 4.05%, 7/01/2030 | | | 1,681,000 | 1,570,813 |
| Realty Income Corp., REIT, 3.25%, 1/15/2031 | | | 485,000 | 440,653 |
| | | | | $2,175,150 |
| Retailers – 0.1% |
| Alimentation Couche-Tard, Inc., 3.439%, 5/13/2041 (n) | | $ | 2,106,000 | $ 1,585,454 |
| Specialty Stores – 0.1% |
| Genuine Parts Co., 2.75%, 2/01/2032 | | $ | 3,528,000 | $ 2,947,939 |
| Telecommunications - Wireless – 0.4% |
| Crown Castle, Inc., REIT, 3.65%, 9/01/2027 | | $ | 2,565,000 | $ 2,438,260 |
| Rogers Communications, Inc., 3.8%, 3/15/2032 | | | 5,197,000 | 4,782,400 |
| T-Mobile USA, Inc., 2.05%, 2/15/2028 | | | 1,892,000 | 1,707,132 |
| Vodafone Group PLC, 5.625%, 2/10/2053 | | | 750,000 | 756,235 |
| | | | | $9,684,027 |
| Tobacco – 0.4% |
| B.A.T. International Finance PLC, 4.448%, 3/16/2028 | | $ | 4,780,000 | $ 4,700,950 |
| Philip Morris International, Inc., 5.125%, 11/17/2027 | | | 869,000 | 884,482 |
| Philip Morris International, Inc., 5.625%, 11/17/2029 | | | 374,000 | 392,179 |
| Philip Morris International, Inc., 5.125%, 2/15/2030 | | | 1,404,000 | 1,426,913 |
| Philip Morris International, Inc., 5.75%, 11/17/2032 | | | 1,653,000 | 1,734,759 |
| | | | | $9,139,283 |
| Transportation - Services – 0.0% |
| ERAC USA Finance LLC, 7%, 10/15/2037 (n) | | $ | 757,000 | $ 884,624 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Bonds – continued |
| U.S. Government Agencies and Equivalents – 0.0% |
| Small Business Administration, 4.77%, 4/01/2024 | | $ | 6,332 | $ 6,302 |
| Small Business Administration, 5.18%, 5/01/2024 | | | 8,356 | 8,314 |
| Small Business Administration, 5.52%, 6/01/2024 | | | 402 | 401 |
| Small Business Administration, 4.99%, 9/01/2024 | | | 16,776 | 16,654 |
| Small Business Administration, 4.95%, 3/01/2025 | | | 1,035 | 1,032 |
| Small Business Administration, 5.11%, 8/01/2025 | | | 105,019 | 104,052 |
| | | | | $136,755 |
| U.S. Treasury Obligations – 7.8% |
| U.S. Treasury Bonds, 1.75%, 8/15/2041 | | $ | 4,700,000 | $ 3,268,703 |
| U.S. Treasury Bonds, 2.375%, 2/15/2042 | | | 6,600,000 | 5,063,953 |
| U.S. Treasury Bonds, 4%, 11/15/2042 | | | 6,000,000 | 5,831,016 |
| U.S. Treasury Bonds, 2.875%, 5/15/2043 | | | 9,096,000 | 7,466,892 |
| U.S. Treasury Bonds, 2.5%, 2/15/2045 | | | 9,797,000 | 7,418,549 |
| U.S. Treasury Bonds, 3%, 11/15/2045 | | | 3,638,000 | 2,993,108 |
| U.S. Treasury Bonds, 2.875%, 5/15/2049 | | | 900,000 | 715,148 |
| U.S. Treasury Bonds, 2.375%, 11/15/2049 (f) | | | 43,390,000 | 31,132,325 |
| U.S. Treasury Bonds, 2.25%, 2/15/2052 | | | 7,800,000 | 5,406,984 |
| U.S. Treasury Bonds, 4%, 11/15/2052 | | | 2,700,000 | 2,663,930 |
| U.S. Treasury Bonds, 4.125%, 8/15/2053 | | | 5,100,000 | 5,154,984 |
| U.S. Treasury Notes, 4.625%, 6/30/2025 | | | 10,400,000 | 10,424,781 |
| U.S. Treasury Notes, 4.75%, 7/31/2025 | | | 15,900,000 | 15,972,047 |
| U.S. Treasury Notes, 5%, 8/31/2025 | | | 7,200,000 | 7,266,375 |
| U.S. Treasury Notes, 0.375%, 11/30/2025 | | | 33,750,000 | 31,341,357 |
| U.S. Treasury Notes, 2.5%, 3/31/2027 | | | 29,500,000 | 28,194,395 |
| | | | | $170,314,547 |
| Utilities - Electric Power – 0.9% |
| American Electric Power Co., Inc., 5.95%, 11/01/2032 | | $ | 1,273,000 | $ 1,358,711 |
| American Transmission Systems, Inc., 2.65%, 1/15/2032 (n) | | | 250,000 | 211,510 |
| Duke Energy Carolinas LLC, 4.95%, 1/15/2033 | | | 3,995,000 | 4,068,988 |
| Duke Energy Corp., 4.5%, 8/15/2032 | | | 3,023,000 | 2,926,115 |
| Enel Finance International N.V., 6.8%, 10/14/2025 (n) | | | 926,000 | 949,281 |
| Enel Finance International N.V., 4.75%, 5/25/2047 (n) | | | 392,000 | 341,010 |
| Exelon Corp., 4.05%, 4/15/2030 | | | 1,632,000 | 1,556,873 |
| Georgia Power Co., 3.7%, 1/30/2050 | | | 147,000 | 116,044 |
| Jersey Central Power & Light Co., 4.3%, 1/15/2026 (n) | | | 1,333,000 | 1,303,902 |
| Jersey Central Power & Light Co., 2.75%, 3/01/2032 (n) | | | 924,000 | 779,839 |
| Oncor Electric Delivery Co. LLC, 5.75%, 3/15/2029 | | | 2,121,000 | 2,238,585 |
| Pacific Gas & Electric Co., 2.1%, 8/01/2027 | | | 480,000 | 432,592 |
| Pacific Gas & Electric Co., 3%, 6/15/2028 | | | 1,410,000 | 1,285,009 |
| Pacific Gas & Electric Co., 2.5%, 2/01/2031 | | | 1,738,000 | 1,433,660 |
| Pacific Gas & Electric Co., 3.3%, 8/01/2040 | | | 926,000 | 677,612 |
| Xcel Energy, Inc., 3.4%, 6/01/2030 | | | 968,000 | 895,154 |
| | | | | $20,574,885 |
| Utilities - Gas – 0.0% |
| East Ohio Gas Co., 2%, 6/15/2030 (n) | | $ | 1,135,000 | $ 943,404 |
| Total Bonds (Identified Cost, $923,533,906) | | $865,934,209 |
| Preferred Stocks – 0.8% |
| Computer Software - Systems – 0.3% | | | | |
| Samsung Electronics Co. Ltd. | | 114,746 | $ 5,533,260 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Preferred Stocks – continued |
| Consumer Products – 0.5% | | | | |
| Henkel AG & Co. KGaA | | 140,252 | $ 11,281,003 |
| Total Preferred Stocks (Identified Cost, $15,975,433) | | $16,814,263 |
| Investment Companies (h) – 1.2% |
| Money Market Funds – 1.2% | |
| MFS Institutional Money Market Portfolio, 5.42% (v) (Identified Cost, $25,145,020) | | | 25,145,434 | $ 25,150,462 |
| Other Assets, Less Liabilities – (0.1)% | | (2,269,363) |
| Net Assets – 100.0% | $2,184,076,368 |
| (a) | Non-income producing security. |
| (d) | In default. |
| (f) | All or a portion of the security has been segregated as collateral for open futures contracts. |
| (h) | An affiliated issuer, which may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. At period end, the aggregate values of the fund's investments in affiliated issuers and in unaffiliated issuers were $25,150,462 and $2,161,195,269, respectively. |
| (i) | Interest only security for which the fund receives interest on notional principal (Par amount). Par amount shown is the notional principal and does not reflect the cost of the security. |
| (n) | Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be sold in the ordinary course of business in transactions exempt from registration, normally to qualified institutional buyers. At period end, the aggregate value of these securities was $155,205,278, representing 7.1% of net assets. |
| (q) | Interest received was less than stated coupon rate. |
| (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 annualized seven-day yield of the fund at period end. |
| (z) | Restricted securities are not registered under the Securities Act of 1933 and are subject to legal restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are subsequently registered. Disposal of these securities may involve time-consuming negotiations and prompt sale at an acceptable price may be difficult. The fund holds the following restricted securities: |
| Restricted Securities | Acquisition
Date | Cost | Value |
| ReadyCap Commercial Mortgage Trust, 2021-FL5, “A”, FLR, 6.47% ((SOFR - 1mo. + 0.11448%) + 1%), 4/25/2038 | 3/19/2021 | $1,052,365 | $1,042,303 |
| ReadyCap Commercial Mortgage Trust, 2021-FL7, “B”, FLR, 7.27% ((SOFR - 1mo. + 0.11448%) + 1.8%), 11/25/2036 | 11/12/2021 | 1,130,000 | 1,101,199 |
| Total Restricted Securities | | | $2,143,502 |
| % of Net assets | | | 0.1% |
| The following abbreviations are used in this report and are defined: |
| ADR | American Depositary Receipt |
| CLO | Collateralized Loan Obligation |
| CMT | Constant Maturity Treasury |
| FGIC | Financial Guaranty Insurance Co. |
| FLR | Floating Rate. Interest rate resets periodically based on the parenthetically disclosed reference rate plus a spread (if any). The period-end rate reported may not be the current rate. All reference rates are USD unless otherwise noted. |
| REIT | Real Estate Investment Trust |
| SOFR | Secured Overnight Financing Rate |
| TBA | To Be Announced |
| UMBS | Uniform Mortgage-Backed Security |
Portfolio of Investments – continued
| Derivative Contracts at 12/31/23 |
| 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 | 117 | $24,091,945 | March – 2024 | $247,175 |
| U.S. Treasury Note 5 yr | Long | USD | 617 | 67,113,211 | March – 2024 | 1,541,867 |
| U.S. Treasury Ultra Bond 30 yr | Long | USD | 154 | 20,573,438 | March – 2024 | 1,894,008 |
| | | | | | | $3,683,050 |
| Liability Derivatives |
| Interest Rate Futures | | |
| U.S. Treasury Ultra Note 10 yr | Short | USD | 199 | $23,485,109 | March – 2024 | $(1,051,832) |
At December 31, 2023, the fund had liquid securities with an aggregate value of $1,752,135 to cover any collateral or margin obligations for certain derivative contracts.
See Notes to Financial Statements
| 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 12/31/23Assets | |
| Investments in unaffiliated issuers, at value (identified cost, $1,700,168,785) | $2,161,195,269 |
| Investments in affiliated issuers, at value (identified cost, $25,145,020) | 25,150,462 |
| Receivables for | |
| Net daily variation margin on open futures contracts | 4,534 |
| Fund shares sold | 299,769 |
| Interest and dividends | 8,888,543 |
| Other assets | 7,486 |
| Total assets | $2,195,546,063 |
| Liabilities | |
| Payables for | |
| TBA purchase commitments | $9,710,672 |
| Fund shares reacquired | 1,501,117 |
| Payable to affiliates | |
| Investment adviser | 3,952 |
| Administrative services fee | 3,016 |
| Shareholder servicing costs | 379 |
| Distribution and/or service fees | 32,482 |
| Payable for independent Trustees' compensation | 12 |
| Accrued expenses and other liabilities | 218,065 |
| Total liabilities | $11,469,695 |
| Net assets | $2,184,076,368 |
| Net assets consist of | |
| Paid-in capital | $1,582,411,740 |
| Total distributable earnings (loss) | 601,664,628 |
| Net assets | $2,184,076,368 |
| Shares of beneficial interest outstanding | 95,203,092 |
| | Net assets | Shares
outstanding | Net asset value
per share |
| Initial Class | $1,000,723,151 | 43,020,059 | $23.26 |
| Service Class | 1,183,353,217 | 52,183,033 | 22.68 |
See Notes to Financial Statements
| 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 12/31/23 | |
| Net investment income (loss) | |
| Income | |
| Interest | $34,538,180 |
| Dividends | 30,208,764 |
| Dividends from affiliated issuers | 1,354,085 |
| Other | 124,092 |
| Income on securities loaned | 38,881 |
| Foreign taxes withheld | (426,016) |
| Total investment income | $65,837,986 |
| Expenses | |
| Management fee | $14,457,014 |
| Distribution and/or service fees | 2,911,505 |
| Shareholder servicing costs | 13,662 |
| Administrative services fee | 320,017 |
| Independent Trustees' compensation | 37,181 |
| Custodian fee | 111,422 |
| Shareholder communications | 43,167 |
| Audit and tax fees | 84,749 |
| Legal fees | 11,708 |
| Miscellaneous | 85,730 |
| Total expenses | $18,076,155 |
| Reduction of expenses by investment adviser | (2,039,935) |
| Net expenses | $16,036,220 |
| Net investment income (loss) | $49,801,766 |
| Realized and unrealized gain (loss) | |
| Realized gain (loss) (identified cost basis) | |
| Unaffiliated issuers | $105,807,421 |
| Affiliated issuers | 1,000 |
| Futures contracts | (3,365,123) |
| Foreign currency | 2,372 |
| Net realized gain (loss) | $102,445,670 |
| Change in unrealized appreciation or depreciation | |
| Unaffiliated issuers | $54,701,320 |
| Affiliated issuers | (2,573) |
| Futures contracts | 3,106,931 |
| Translation of assets and liabilities in foreign currencies | 34,581 |
| Net unrealized gain (loss) | $57,840,259 |
| Net realized and unrealized gain (loss) | $160,285,929 |
| Change in net assets from operations | $210,087,695 |
See Notes to Financial Statements
| 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 |
| | 12/31/23 | 12/31/22 |
| Change in net assets | | |
| From operations | | |
| Net investment income (loss) | $49,801,766 | $39,724,474 |
| Net realized gain (loss) | 102,445,670 | 92,004,343 |
| Net unrealized gain (loss) | 57,840,259 | (389,683,653) |
| Change in net assets from operations | $210,087,695 | $(257,954,836) |
| Total distributions to shareholders | $(133,623,219) | $(236,287,143) |
| Change in net assets from fund share transactions | $(74,083,306) | $(5,860,762) |
| Total change in net assets | $2,381,170 | $(500,102,741) |
| Net assets | | |
| At beginning of period | 2,181,695,198 | 2,681,797,939 |
| At end of period | $2,184,076,368 | $2,181,695,198 |
See Notes to Financial Statements
| 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 |
| | 12/31/23 | 12/31/22 | 12/31/21 | 12/31/20 | 12/31/19 |
| Net asset value, beginning of period | $22.49 | $27.78 | $26.02 | $24.90 | $21.78 |
| Income (loss) from investment operations | | | | | |
| Net investment income (loss) (d) | $0.55 | $0.45 | $0.39 | $0.47 | $0.52 |
| Net realized and unrealized gain (loss) | 1.69 | (3.10) | 3.24 | 1.88 | 3.83 |
| Total from investment operations | $2.24 | $(2.65) | $3.63 | $2.35 | $4.35 |
| Less distributions declared to shareholders | | | | | |
| From net investment income | $(0.48) | $(0.44) | $(0.51) | $(0.57) | $(0.58) |
| From net realized gain | (0.99) | (2.20) | (1.36) | (0.66) | (0.65) |
| Total distributions declared to shareholders | $(1.47) | $(2.64) | $(1.87) | $(1.23) | $(1.23) |
| Net asset value, end of period (x) | $23.26 | $22.49 | $27.78 | $26.02 | $24.90 |
| Total return (%) (k)(r)(s)(x) | 10.44 | (9.58) | 14.12 | 9.81 | 20.38 |
Ratios (%) (to average net assets)
and Supplemental data: | | | | | |
| Expenses before expense reductions | 0.71 | 0.71 | 0.70 | 0.71 | 0.70 |
| Expenses after expense reductions | 0.61 | 0.61 | 0.61 | 0.61 | 0.62 |
| Net investment income (loss) | 2.45 | 1.84 | 1.43 | 1.95 | 2.18 |
| Portfolio turnover | 38 | 67 | 98 | 84 | 42 |
| Net assets at end of period (000 omitted) | $1,000,723 | $1,001,860 | $1,274,331 | $1,219,438 | $1,223,166 |
| Service Class | Year ended |
| | 12/31/23 | 12/31/22 | 12/31/21 | 12/31/20 | 12/31/19 |
| Net asset value, beginning of period | $21.95 | $27.18 | $25.50 | $24.43 | $21.38 |
| Income (loss) from investment operations | | | | | |
| Net investment income (loss) (d) | $0.49 | $0.38 | $0.32 | $0.40 | $0.45 |
| Net realized and unrealized gain (loss) | 1.65 | (3.04) | 3.17 | 1.83 | 3.76 |
| Total from investment operations | $2.14 | $(2.66) | $3.49 | $2.23 | $4.21 |
| Less distributions declared to shareholders | | | | | |
| From net investment income | $(0.42) | $(0.37) | $(0.45) | $(0.50) | $(0.51) |
| From net realized gain | (0.99) | (2.20) | (1.36) | (0.66) | (0.65) |
| Total distributions declared to shareholders | $(1.41) | $(2.57) | $(1.81) | $(1.16) | $(1.16) |
| Net asset value, end of period (x) | $22.68 | $21.95 | $27.18 | $25.50 | $24.43 |
| Total return (%) (k)(r)(s)(x) | 10.22 | (9.84) | 13.84 | 9.52 | 20.12 |
Ratios (%) (to average net assets)
and Supplemental data: | | | | | |
| Expenses before expense reductions | 0.96 | 0.96 | 0.95 | 0.96 | 0.95 |
| Expenses after expense reductions | 0.86 | 0.86 | 0.86 | 0.86 | 0.87 |
| Net investment income (loss) | 2.20 | 1.60 | 1.17 | 1.71 | 1.93 |
| Portfolio turnover | 38 | 67 | 98 | 84 | 42 |
| Net assets at end of period (000 omitted) | $1,183,353 | $1,179,835 | $1,407,467 | $1,319,320 | $1,323,813 |
See Notes to Financial Statements
Financial Highlights - continued
| (d) | Per share data is based on average shares outstanding. |
| (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
Notes to Financial Statements
(1) Business and Organization
MFS Total Return Series (the fund) is a diversified series of MFS Variable Insurance Trust (the trust). The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The shareholders of each series of the trust are separate accounts of insurance companies, which offer variable annuity and/or life insurance products, and qualified retirement and pension plans.
The fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services - Investment Companies.
(2) Significant Accounting Policies
General — The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the fund’s Statement of Assets and Liabilities through the date that the financial statements were issued.
Balance Sheet Offsetting — The fund's accounting policy with respect to balance sheet offsetting is that, absent an event of default by the counterparty or a termination of the agreement, the International Swaps and Derivatives Association (ISDA) Master Agreement, or similar agreement, does not result in an offset of reported amounts of financial assets and financial liabilities in the Statement of Assets and Liabilities across transactions between the fund and the applicable counterparty. The fund's right to setoff may be restricted or prohibited by the bankruptcy or insolvency laws of the particular jurisdiction to which a specific master netting agreement counterparty is subject. Balance sheet offsetting disclosures, to the extent applicable to the fund, have been included in the fund’s Significant Accounting Policies note under the captions for each of the fund’s in-scope financial instruments and transactions.
Investment Valuations — Subject to its oversight, the fund's Board of Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments to MFS as the fund's adviser, pursuant to the fund’s valuation policy and procedures which have been adopted by the adviser and approved by the Board. In accordance with Rule 2a-5 under the Investment Company Act of 1940, the Board of Trustees designated the adviser as the “valuation designee” of the fund. If the adviser, as valuation designee, determines that reliable market quotations are not readily available for an investment, the investment is valued at fair value as determined in good faith by the adviser in accordance with the adviser’s fair valuation policy and procedures.
Under the fund's valuation policy and procedures, 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. 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. Debt instruments sold short are generally valued at an evaluated or composite mean 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. 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.
Under the fund’s valuation policy and procedures, market quotations are not considered to be readily available for debt instruments, floating rate loans, and many types of derivatives. These investments are generally valued at fair value based on information from third-party pricing services or otherwise determined by the adviser in accordance with the adviser’s fair valuation policy and procedures. 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, spreads and other market data. An investment may also be valued at fair value if the adviser determines that the investment’s value has been materially affected by events occurring after the close of the exchange or market on which the investment is principally traded (such as foreign exchange or market) and prior to the determination of the fund’s net asset value, or after the halt of trading of a specific security where trading does not resume prior to the close of the exchange or market on which the security is principally traded. Events that occur after foreign markets close (such as developments in foreign markets and significant movements in the U.S. markets) and prior to the
Notes to Financial Statements - continued
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 significant 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, 2023 in valuing the fund's assets and liabilities:
| Financial Instruments | Level 1 | Level 2 | Level 3 | Total |
| Equity Securities: | | | | |
| United States | $1,216,267,223 | $— | $— | $1,216,267,223 |
| Germany | 21,592,706 | — | — | 21,592,706 |
| United Kingdom | 19,749,226 | — | — | 19,749,226 |
| Canada | 12,216,617 | — | — | 12,216,617 |
| Switzerland | 11,378,604 | — | — | 11,378,604 |
| Taiwan | 8,523,424 | — | — | 8,523,424 |
| South Korea | — | 5,533,260 | — | 5,533,260 |
| U.S. Treasury Bonds & U.S. Government Agencies & Equivalents | — | 170,451,302 | — | 170,451,302 |
| Non - U.S. Sovereign Debt | — | 711,343 | — | 711,343 |
| Municipal Bonds | — | 8,361,131 | — | 8,361,131 |
| U.S. Corporate Bonds | — | 191,508,240 | — | 191,508,240 |
| Residential Mortgage-Backed Securities | — | 283,406,244 | — | 283,406,244 |
| Commercial Mortgage-Backed Securities | — | 43,768,587 | — | 43,768,587 |
| Asset-Backed Securities (including CDOs) | — | 88,095,050 | — | 88,095,050 |
| Foreign Bonds | — | 79,632,312 | — | 79,632,312 |
| Mutual Funds | 25,150,462 | — | — | 25,150,462 |
| Total | $1,314,878,262 | $871,467,469 | $— | $2,186,345,731 |
| Other Financial Instruments | | | | |
| Futures Contracts – Assets | $3,683,050 | $— | $— | $3,683,050 |
| Futures Contracts – Liabilities | (1,051,832) | — | — | (1,051,832) |
For further information regarding security characteristics, see the Portfolio of Investments.
Foreign Currency Translation — Purchases and sales of foreign investments, income, and expenses are converted into U.S. dollars based upon currency exchange rates prevailing on the respective dates of such transactions or on the reporting date for foreign denominated receivables and payables. Gains and losses attributable to foreign currency exchange rates on sales of securities are recorded for financial statement purposes as net realized gains and losses on investments. Gains and losses attributable to foreign exchange rate movements on receivables, payables, income and expenses are recorded for financial statement purposes as foreign currency transaction gains and losses. That portion of both realized and unrealized gains and losses on investments that results from fluctuations in foreign currency exchange rates is not separately disclosed.
Derivatives — The fund uses derivatives 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 or non-hedging purposes. While hedging can reduce or eliminate losses, it can also reduce or eliminate gains. When the fund uses derivatives as an investment to increase market exposure, or for hedging purposes, gains and losses from derivative instruments may be substantially greater than the derivative’s original cost.
Notes to Financial Statements - continued
The derivative instruments used by the fund during the period were futures contracts. Depending on the type of derivative, a 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.
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, 2023 as reported in the Statement of Assets and Liabilities:
| | | Fair Value (a) |
| Risk | Derivative Contracts | Asset Derivatives | Liability Derivatives |
| Interest Rate | Futures Contracts | $3,683,050 | $(1,051,832) |
(a) Values presented in this table for futures contracts correspond to the values reported in the Portfolio of Investments. Only the current day net variation margin for futures contracts is reported separately within the Statement of Assets and Liabilities.
The following table presents, by major type of derivative contract, the realized gain (loss) on derivatives held by the fund for the year ended December 31, 2023 as reported in the Statement of Operations:
| Risk | Futures
Contracts |
| Interest Rate | $(3,365,123) |
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, 2023 as reported in the Statement of Operations:
| Risk | Futures
Contracts |
| Interest Rate | $3,106,931 |
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, the non-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.
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 credit 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.
Notes to Financial Statements - continued
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.
Mortgage-Backed/Asset-Backed Securities — 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.
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, 2023, there were no securities on loan or collateral outstanding.
Indemnifications — Under the fund's organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the fund. Additionally, in the normal course of business, the fund enters into agreements with service providers that may contain indemnification clauses. The fund's maximum exposure under these agreements is unknown as this would involve future claims that may be made against the fund that have not yet occurred.
Investment Transactions and Income — Interest income is recorded on the accrual basis. All premium and discount is amortized or accreted for financial statement purposes in accordance with U.S. generally accepted accounting principles. Dividends received in cash are recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded when the fund is informed of the dividend if such information is obtained subsequent to the ex-dividend date. Dividend and interest payments received in additional securities are recorded on the ex-dividend or ex-interest date in an amount equal to the value of the security on such date.
The fund may receive proceeds from litigation settlements. Any proceeds received from litigation involving portfolio holdings are reflected in the Statement of Operations in realized gain/loss if the security has been disposed of by the fund or in unrealized gain/loss if the security is still held by the fund. Any other proceeds from litigation not related to portfolio holdings are reflected as other income in the Statement of Operations.
Investment transactions are recorded on the trade date. In determining the net gain or loss on securities sold, the cost of securities is determined on the identified cost basis.
The fund may purchase or sell mortgage-backed securities on a “To Be Announced” (TBA) basis. A TBA transaction is subject to extended settlement and typically does not designate the actual security to be delivered, but instead includes an approximate principal amount. The price of the TBA security and the date that it will be settled are fixed at the time the transaction is negotiated.
Notes to Financial Statements - continued
The value of the security varies with market fluctuations and no interest accrues to the fund until settlement takes place. TBA purchase and sale commitments are held at carrying amount, which approximates fair value and are categorized as level 2 within the fair value hierarchy and included in TBA purchase and TBA sale commitments in the Statement of Assets and Liabilities, as applicable. Losses may arise as a result of changes in the value of the TBA investment prior to settlement date or due to counterparty non-performance.
The fund may also enter into mortgage dollar rolls, typically TBA dollar rolls, in which the fund sells TBA mortgage-backed securities to financial institutions and simultaneously agrees to repurchase similar (same issuer, type and coupon) securities at a later date at an agreed-upon price. During the period between the sale and repurchase, the fund will not be entitled to receive interest and principal payments on the securities sold. The fund accounts for dollar roll transactions as purchases and sales and realizes gains and losses on these transactions. Dollar roll transactions involve the risk that the market value of the securities that the fund is required to purchase may decline below the agreed upon repurchase price of those securities.
To mitigate the counterparty credit risk on TBA transactions, mortgage dollar rolls, and other types of forward settling mortgage-backed and asset-backed security transactions, 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, the non-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 and asset-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 an 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.
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 the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income, expense, gain or loss in different periods for financial statement and tax purposes will reverse at some time in the future.
Book/tax differences primarily relate to amortization of premium and accretion of discount of debt securities, 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
12/31/23 | Year ended
12/31/22 |
| Ordinary income (including any short-term capital gains) | $41,248,649 | $50,184,261 |
| Long-term capital gains | 92,374,570 | 186,102,882 |
| Total distributions | $133,623,219 | $236,287,143 |
The federal tax cost and the tax basis components of distributable earnings were as follows:
Notes to Financial Statements - continued
| As of 12/31/23 | |
| Cost of investments | $1,743,934,064 |
| Gross appreciation | 543,024,194 |
| Gross depreciation | (97,981,309) |
| Net unrealized appreciation (depreciation) | $445,042,885 |
| Undistributed ordinary income | 52,307,287 |
| Undistributed long-term capital gain | 104,280,554 |
| Other temporary differences | 33,902 |
| Total distributable earnings (loss) | $601,664,628 |
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:
| | Year
ended
12/31/23 | | Year
ended
12/31/22 |
| Initial Class | $61,608,118 | | $109,061,121 |
| Service Class | 72,015,101 | | 127,226,022 |
| Total | $133,623,219 | | $236,287,143 |
(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 | 0.70% |
| In excess of $1 billion and up to $2.5 billion | 0.65% |
| In excess of $2.5 billion and up to $5 billion | 0.55% |
| In excess of $5 billion | 0.50% |
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. MFS has also agreed in writing to waive at least 0.01% of its management fee as part of this agreement. The agreement to waive at least 0.01% of the management fee will continue until modified by the fund's Board of Trustees, but such agreement will continue at least until April 30, 2025. For the year ended December 31, 2023, this management fee reduction amounted to $274,619, which is included in the reduction of total expenses in the Statement of Operations. The management fee incurred for the year ended December 31, 2023 was equivalent to an annual effective rate of 0.66% 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, certain tax reclaim recovery expenses (including contingency fees and closing agreement expenses), and investment-related expenses, such that total annual operating expenses do not exceed 0.61% of average daily net assets for the Initial Class shares and 0.86% 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, 2025. For the year ended December 31, 2023, this reduction amounted to $1,765,316, 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 Rule 12b-1 under the Investment Company Act of 1940.
The fund’s distribution plan provides that the fund will pay MFD distribution and/or service fees equal to 0.25% per annum of its average daily net assets attributable to Service Class shares as partial consideration for services performed and expenses incurred by MFD and financial intermediaries (including participating insurance companies that invest in the fund to fund variable annuity and variable life insurance contracts, sponsors of qualified retirement and pension plans that invest in the fund, and affiliates of these
Notes to Financial Statements - continued
participating insurance companies and plan sponsors) in connection with the sale and distribution of the Service Class shares as well as shareholder servicing and account maintenance activities. MFD may subsequently pay all, or a portion, of the distribution and/or service fees to financial intermediaries. The distribution and/or service fees are computed daily and paid monthly.
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, 2023, the fee was $11,132, which equated to 0.0005% annually of the fund's average daily net assets. MFSC also receives reimbursement from the fund for out-of-pocket expenses paid by MFSC on behalf of the fund. For the year ended December 31, 2023, these costs amounted to $2,530.
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 is computed daily and paid monthly. The administrative services fee incurred for the year ended December 31, 2023 was equivalent to an annual effective rate of 0.0149% of the fund's average daily net assets.
Trustees’ and Officers’ Compensation — The fund pays compensation to independent Trustees in the form of a retainer, attendance fees, and additional compensation to Board and Committee chairpersons. Independent Trustees’ compensation is accrued daily and paid subsequent to each Trustee Board meeting. The fund does not pay compensation directly to Trustees or officers of the fund who are also officers of the investment adviser, all of whom receive remuneration from MFS for their services to the fund. Certain officers and Trustees of the fund are officers or directors of MFS, MFD, and MFSC.
Other — 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 but does incur investment and operating costs.
During the year ended December 31, 2023, pursuant to a policy adopted by the Board of Trustees and designed to comply with Rule 17a-7 under the Investment Company Act of 1940 (the “Act”) and relevant guidance, the fund engaged in purchase transactions with funds and accounts for which MFS serves as investment adviser or sub-adviser (“cross-trades”) which amounted to $8,452,057.
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 year ended December 31, 2023, this reimbursement amounted to $18,415, which is included in “Other” income in the Statement of Operations.
(4) Portfolio Securities
For the year ended December 31, 2023, purchases and sales of investments, other than short-term obligations, were as follows:
| | Purchases | Sales |
| U.S. Government securities | $525,325,678 | $504,067,133 |
| Non-U.S. Government securities | 274,703,951 | 457,266,244 |
(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
12/31/23 | | Year ended
12/31/22 |
| | Shares | Amount | | Shares | Amount |
| Shares sold | | | | | |
| Initial Class | 950,911 | $21,602,464 | | 1,216,820 | $28,906,952 |
| Service Class | 3,478,173 | 77,777,705 | | 3,979,494 | 96,027,646 |
| | 4,429,084 | $99,380,169 | | 5,196,314 | $124,934,598 |
Shares issued to shareholders
in reinvestment of distributions | | | | | |
| Initial Class | 2,843,014 | $61,608,118 | | 4,817,187 | $109,061,121 |
| Service Class | 3,406,580 | 72,015,101 | | 5,751,628 | 127,226,022 |
| | 6,249,594 | $133,623,219 | | 10,568,815 | $236,287,143 |
Notes to Financial Statements - continued
| | Year ended
12/31/23 | | Year ended
12/31/22 |
| | Shares | Amount | | Shares | Amount |
| Shares reacquired | | | | | |
| Initial Class | (5,328,147) | $(120,472,432) | | (7,347,668) | $(180,956,671) |
| Service Class | (8,448,565) | (186,614,262) | | (7,768,222) | (186,125,832) |
| | (13,776,712) | $(307,086,694) | | (15,115,890) | $(367,082,503) |
| Net change | | | | | |
| Initial Class | (1,534,222) | $(37,261,850) | | (1,313,661) | $(42,988,598) |
| Service Class | (1,563,812) | (36,821,456) | | 1,962,900 | 37,127,836 |
| | (3,098,034) | $(74,083,306) | | 649,239 | $(5,860,762) |
(6) Line of Credit
The fund and certain other funds managed by MFS participate in a $1.45 billion unsecured committed line of credit of which $1.2 billion is reserved for use by the fund and certain other MFS U.S. funds. The line of credit is provided by a syndicate of banks under a credit agreement. Borrowings may be made for temporary financing needs. Interest is charged to each fund, based on its borrowings, generally at a rate equal to the highest of 1) Daily Simple SOFR (Secured Overnight Financing Rate) plus 0.10%, 2) the Federal Funds Effective Rate, or 3) the Overnight Bank Funding Rate, each 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. The line of credit expires on March 14, 2024 unless extended or renewed. In addition, the fund and other funds managed by MFS have established unsecured uncommitted borrowing arrangements with certain banks for temporary financing needs. Interest is charged to each fund, based on its borrowings, at rates equal to customary reference rates plus an agreed upon spread. For the year ended December 31, 2023, the fund’s commitment fee and interest expense were $11,269 and $0, respectively, and are included in “Miscellaneous” expense in the Statement of Operations.
(7) Investments in Affiliated Issuers
An affiliated issuer may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. For the purposes of this report, the following were affiliated issuers:
| Affiliated Issuers | Beginning
Value | Purchases | Sales
Proceeds | Realized
Gain
(Loss) | Change in
Unrealized
Appreciation or
Depreciation | Ending
Value |
| MFS Institutional Money Market Portfolio | $23,640,356 | $368,659,684 | $367,148,005 | $1,000 | $(2,573) | $25,150,462 |
| Affiliated Issuers | Dividend
Income | Capital Gain
Distributions |
| MFS Institutional Money Market Portfolio | $1,354,085 | $— |
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of MFS Variable Insurance Trust and the Shareholders of MFS Total Return Series:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities of MFS Total Return Series (the “Fund”), including the portfolio of investments, as of December 31, 2023, 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, 2023, 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, 2023, 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 14, 2024
We have served as the auditor of one or more of the MFS investment companies since 1924.
Trustees and Officers — Identification and Background
The Trustees and Officers of the Trust, as of February 1, 2024, 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 TRUSTEE | | | | | | | | | | |
Michael W. Roberge (k)
(age 57) | | Trustee | | January 2021 | | 136 | | Massachusetts Financial Services Company, Chairman (since January 2021); Chief Executive Officer (since January 2017); Director; Chairman of the Board (since January 2022) | | N/A |
| INDEPENDENT TRUSTEES | | | | | | | | | | |
John P. Kavanaugh
(age 69) | | Trustee and Chair of Trustees | | January 2009 | | 136 | | Private investor | | N/A |
Steven E. Buller
(age 72) | | Trustee | | February 2014 | | 136 | | Private investor | | N/A |
John A. Caroselli
(age 69) | | Trustee | | March 2017 | | 136 | | Private investor; JC Global Advisors, LLC (management consulting), President (since 2015) | | N/A |
Maureen R. Goldfarb
(age 68) | | Trustee | | January 2009 | | 136 | | Private investor | | N/A |
Peter D. Jones
(age 68) | | Trustee | | January 2019 | | 136 | | Private investor | | N/A |
James W. Kilman, Jr.
(age 62) | | Trustee | | January 2019 | | 136 | | Burford Capital Limited (finance and investment management), Senior Advisor (since May 3, 2021), Chief Financial Officer (2019 - May 2, 2021); KielStrand Capital LLC (family office), Chief Executive Officer (since 2016) | | Alpha-En Corporation, Director (2016-2019) |
Clarence Otis, Jr.
(age 67) | | Trustee | | March 2017 | | 136 | | Private investor | | VF Corporation, Director; Verizon Communications, Inc., Director; The Travelers Companies, Director |
Maryanne L. Roepke
(age 67) | | Trustee | | May 2014 | | 136 | | Private investor | | N/A |
Laurie J. Thomsen
(age 66) | | Trustee | | March 2005 | | 136 | | Private investor | | The Travelers Companies, Director; Dycom Industries, Inc., Director |
| 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 50) | | Assistant Secretary and Assistant Clerk | | July 2005 | | 136 | | Massachusetts Financial Services Company, Senior Vice President and Senior Managing Counsel |
Kino Clark (k)
(age 55) | | Assistant Treasurer | | January 2012 | | 136 | | Massachusetts Financial Services Company, Vice President |
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 |
John W. Clark, Jr. (k)
(age 56) | | Assistant Treasurer | | April 2017 | | 136 | | Massachusetts Financial Services Company, Vice President |
David L. DiLorenzo (k)
(age 55) | | President | | July 2005 | | 136 | | Massachusetts Financial Services Company, Senior Vice President |
Heidi W. Hardin (k)
(age 56) | | Secretary and Clerk | | April 2017 | | 136 | | Massachusetts Financial Services Company, Executive Vice President and General Counsel |
Brian E. Langenfeld (k)
(age 50) | | Assistant Secretary and Assistant Clerk | | June 2006 | | 136 | | Massachusetts Financial Services Company, Vice President and Managing Counsel |
Rosa E. Licea-Mailloux (k)
(age 47) | | Chief Compliance Officer | | March 2022 | | 136 | | Massachusetts Financial Services Company, Vice President (since 2018); Director of Corporate Compliance (2018-2021), Senior Director Compliance (2021-2022), Senior Managing Director of North American Compliance & Chief Compliance Officer (since March 2022) |
Amanda S. Mooradian (k)
(age 44) | | Assistant Secretary and Assistant Clerk | | September 2018 | | 136 | | Massachusetts Financial Services Company, Assistant Vice President and Senior Counsel |
Susan A. Pereira (k)
(age 53) | | Assistant Secretary and Assistant Clerk | | July 2005 | | 136 | | Massachusetts Financial Services Company, Vice President and Managing Counsel |
Kasey L. Phillips (k)
(age 53) | | Assistant Treasurer | | September 2012 | | 136 | | Massachusetts Financial Services Company, Vice President |
Matthew A. Stowe (k)
(age 49) | | Assistant Secretary and Assistant Clerk | | October 2014 | | 136 | | Massachusetts Financial Services Company, Vice President and Senior Managing Counsel |
William B. Wilson (k)
(age 41) | | Assistant Secretary and Assistant Clerk | | October 2022 | | 136 | | Massachusetts Financial Services Company, Assistant Vice President and Senior Counsel |
James O. Yost (k)
(age 63) | | Treasurer | | September 1990 | | 136 | | 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. 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 (other than Messrs. Jones, Kilman and Roberge) 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. Mr. Roberge became a Trustee of the Funds on January 1, 2021 and Messrs. Jones and Kilman became Trustees of the Funds on January 1, 2019. 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, Caroselli, Jones and Otis 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.
Trustees and Officers - continued
The Statement of Additional Information for a Fund includes further information about the Trustees and is available without charge upon request by calling 1-800-225-2606.
| Investment Adviser | Custodian |
Massachusetts Financial Services Company
111 Huntington Avenue
Boston, MA 02199-7618 | State Street Bank and Trust Company
1 Congress Street, Suite 1
Boston, MA 02114-2016 |
| Distributor | Independent Registered Public Accounting Firm |
MFS Fund Distributors, Inc.
111 Huntington Avenue
Boston, MA 02199-7618 | Deloitte & Touche LLP
200 Berkeley Street
Boston, MA 02116 |
| Portfolio Manager(s) | |
Steven Gorham
Alexander Mackey
Joshua Marston
Johnathan Munko
| |
Board Review of Investment Advisory Agreement
MFS Total Return Series
The Investment Company Act of 1940 requires that both the full Board of Trustees and a majority of the non-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, 2023 (“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 an independent consultant who was retained by and reported 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, 2022 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 as well as all other funds in the same investment classification/category (the “Broadridge expense group and universe”), (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 five-year period ended December 31, 2022, 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 five-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 the one- and three-year periods ended December 31, 2022 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.
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 the Broadridge expense group 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 approximately at 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 cash in-flows and out-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 subject to contractual breakpoints that reduce the Fund’s advisory fee rate on average daily net assets over $1 billion, $2.5 billion, and $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.
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 any 12b-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 and sub-custodians. The Trustees concluded that the various non-advisory services provided by MFS and its affiliates on behalf of the Fund were satisfactory.
The Trustees considered so-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 MFS discontinued its historic practice of obtaining investment research from portfolio brokerage commissions paid by certain MFS Funds effective January 2018, and directly pays or voluntarily reimburses 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 additional one-year period, commencing August 1, 2023.
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 visiting mfs.com/proxyvoting, or by visiting the SEC’s Web site at http://www.sec.gov.
Information regarding how the fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available by August 31 of each year without charge by visiting mfs.com/proxyvoting, or by visiting the SEC’s Web site at http://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 as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s Web site at http://www.sec.gov. A shareholder can obtain the portfolio holdings report for the first and third quarters of the fund's fiscal year at mfs.com/vit1 by choosing the fund's name and then scrolling to the “Resources” section and clicking on the “Prospectus and Reports” tab.
FURTHER INFORMATION
From time to time, MFS may post important information about the fund or the MFS Funds on the MFS Web site (mfs.com). This information is available at https://www.mfs.com/announcements or at mfs.com/vit1 by choosing the fund's name and then scrolling to the “Resources” section and clicking on the “Announcements” tab, if any.
Information About Fund Contracts and Legal Claims
The fund has entered into contractual arrangements with an investment adviser, administrator, distributor, shareholder servicing agent, 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 $101,613,000 as capital gain dividends paid during the fiscal year.
For corporate shareholders, 59.94% of the ordinary income dividends paid during the fiscal year qualify for the corporate dividends received deduction.
The fund intends to pass through the maximum amount allowable as Section 163(j) Interest Dividends as defined in Treasury Regulation §1.163(j)-1(b).
| 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 are no longer our customer, we continue to share your information as described in this notice. |
| How? | All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MFS chooses to share; and whether you can limit this sharing. |
Reasons we can share your
personal information | Does MFS share? | Can you limit
this sharing? |
For our everyday business purposes –
such as to process your transactions, maintain your
account(s), respond to court orders and legal
investigations, or report to credit bureaus | Yes | No |
For our marketing purposes –
to offer our products and services to you | No | We don't share |
For joint marketing with other
financial companies | No | We don't share |
For our affiliates' everyday business purposes –
information about your transactions and experiences | No | We don't share |
For our affiliates' everyday business purposes –
information about your creditworthiness | No | We don't share |
| For nonaffiliates to market to you | No | We don't share |
| Questions? | Call 800-225-2606 or go to mfs.com. |
| 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. |
Annual Report
December 31, 2023
MFS® Variable Insurance Trust
| 1 |
| 2 |
| 4 |
| 6 |
| 7 |
| 9 |
| 10 |
| 11 |
| 12 |
| 14 |
| 21 |
| 22 |
| 25 |
| 27 |
| 27 |
| 27 |
| 27 |
| 27 |
| 28 |
The report is prepared for the general information of shareholders. It is authorized for distribution to prospective investors only when preceded or accompanied by a current prospectus.
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
Portfolio structure
Top ten holdings
| NextEra Energy, Inc. | 10.8% |
| PG&E Corp. | 6.6% |
| Dominion Energy, Inc. | 5.6% |
| DTE Energy Co. | 4.6% |
| Southern Co. | 4.6% |
| Sempra Energy | 4.1% |
| RWE AG | 4.0% |
| Edison International | 3.9% |
| EDP Renovaveis S.A. | 3.7% |
| PPL Corp. | 3.5% |
Top five industries
| Utilities-Electric Power | 81.5% |
| Telecommunications - Wireless | 7.4% |
| Energy - Renewables | 5.3% |
| Natural Gas - Distribution | 2.7% |
| Utilities - Water | 1.7% |
Issuer country weightings (x)
| United States | 73.1% |
| Germany | 5.4% |
| Portugal | 5.2% |
| United Kingdom | 4.6% |
| Spain | 3.9% |
| Italy | 2.4% |
| France | 1.3% |
| Canada | 1.2% |
| Denmark | 0.7% |
| Other Countries | 2.2% |
| (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 (included in Other Countries) includes Cash & Cash Equivalents. |
Where the fund holds convertible bonds, they are treated as part of the equity portion of the portfolio.
Cash & Cash Equivalents includes any cash, investments in money market funds, short-term securities, and other assets less liabilities. Please see the Statement of Assets and Liabilities for additional information related to the fund’s cash position and other assets and liabilities.
Other includes equivalent exposure from currency derivatives and/or any offsets to derivative positions and may be negative.
Percentages are based on net assets as of December 31, 2023.
The portfolio is actively managed and current holdings may be different.
Management Review
Summary of Results
For the twelve months ended December 31, 2023, Initial Class shares of the MFS Utilities Series (fund) provided a total return of -2.11%, while Service Class shares of the fund provided a total return of -2.33%. These compare with a return of 26.29% over the same period for the fund’s benchmark, the Standard & Poor’s 500 Stock Index, and a return of -7.08% for the fund’s other benchmark, the Standard & Poor’s 500 Utilities Index (S&P Utilities Index).
Market Environment
During the reporting period, central banks around the world had to combat the strongest inflationary pressures in four decades, fueled by the global fiscal response to the pandemic, disrupted supply chains and the dislocations to energy markets stemming from the war in Ukraine. Interest rates rose substantially, but the effects of a tighter monetary policy may not have been fully experienced yet, given that monetary policy works with long and variable lags. Strains resulting from the abrupt tightening of monetary policy began to affect some parts of the economy, most acutely among small and regional US banks, which suffered from deposit flight as depositors sought higher yields on their savings. Additionally, activity in the US housing sector has slowed as a result of higher mortgage rates. China’s abandonment of its Zero-COVID policy ushered in a brief uptick in economic activity in the world’s second-largest economy in early 2023, although its momentum soon stalled as the focus turned to the country’s highly indebted property development sector. In developed markets, consumer demand for services remained stronger than the demand for goods.
Early on, policymakers found themselves in the difficult position of trying to restrain inflation without tipping economies into recession. Despite the challenging macroeconomic and geopolitical environment, central banks focused on controlling price pressures while also confronting increasing financial stability concerns. Central banks had to juggle achieving their inflation mandates while using macroprudential tools (financial policies aimed at safeguarding the stability of the financial system) to keep banking systems liquid, a potentially difficult balancing act, and one that suggested that we may be nearing a peak in policy rates. As inflationary pressures eased toward the end of the period, financial conditions loosened in anticipation of easier monetary policy, boosting the market’s appetite for risk. Rapid advancements in artificial intelligence were a focus for investors.
Normalizing supply chains, low levels of unemployment across developed markets and signs that inflation levels have peaked were supportive factors for the macroeconomic backdrop.
Detractors from Performance
Relative to the S&P Utilities Index, not owning shares of strong-performing power generation company NRG Energy, power and natural gas distributor Duke Energy, energy products and services supplier Consolidated Edison, and natural gas and electricity provider NiSource detracted from relative performance. The stock price for NRG Energy rose due to stable retail margins, strong free cash flow generation, an activist shareholder, and management's commitment to the existing strategy after the unexpected departure of the CEO. The fund’s underweight holdings of retail electric services provider Southern Company, clean and renewable energy producer Constellation Energy, and electricity and natural gas provider Public Service Enterprise Group further weakened relative results. The stock price of Constellation Energy advanced as the company reported financial results above consensus estimates, driven by higher energy prices. The fund’s holdings of renewable energy solutions provider Orsted(b) (Denmark) and integrated electric power company AES(b) also held back relative returns. The share price for Orsted fell sharply following the company's announcement of further impairments related to US projects, reflecting supply chain constraints, the rising uncertainty of its ability to receive incremental tax credits, and higher long-term sovereign rates. Additionally, the fund’s overweight position in electric and natural gas services provider Ameren further weighed on relative returns. The stock price of Ameren dropped after the final electric rate order from the Illinois Commerce Commission was materially worse than expected.
Contributors to Performance
Favorable security selection within the electric utilities industry benefited relative performance led by the fund’s holdings of electricity and gas distributor Enel(b) (Italy), electric services provider SSE(b) (United Kingdom), and electric utility company Iberdrola(b) (Spain). An underweight position in electricity provider NextEra Energy also supported relative performance. The stock price for NextEra Energy declined due to higher interest rates and due to a guidance cut at its affiliated entity NextEra Energy Partners. The fund’s overweight position in utility company PG&E, and not owning shares of natural gas and electricity distributor Eversource Energy, contributed to relative results. Although the company posted better-than-expected earnings per share figures, Eversource Energy’s stock price fell as the company posted lower-than-expected sales results and announced that the carrying value of its total offshore wind investment was impaired. Additionally, the company took a higher-than-anticipated pretax charge on the sale of undeveloped offshore acreage leases for wind farms, which further pressured the stock.
Stock selection within the multi-utilities industry strengthened relative performance. Here, the fund’s holdings of power and gas company E.ON(b) (Germany) and electricity and gas provider National Grid(b) (United Kingdom) boosted relative returns as both stocks outperformed the benchmark.
Management Review - continued
Elsewhere, the fund’s holdings of telecommunications services provider Cellnex Telecom(b) (Spain) and electricity and gas provider RWE(b) (Germany) contributed to relative performance. The stock price of RWE climbed as the company announced earnings ahead of consensus estimates, primarily driven by strong performance in its supply and trading division. Cellnex shares rose on the selection of a new CEO, an improved outlook for free cash flow generation, and continued commitment to strengthening its balance sheet.
During the reporting period, the fund's relative currency exposure, resulting primarily from differences between the fund's and the benchmark's exposures to holdings of securities denominated in foreign currencies, was a contributor to relative performance. All of MFS' investment decisions are driven by the fundamentals of each individual opportunity and as such, it is common for our funds to have different currency exposure than the benchmark.
Respectfully,
Portfolio Manager(s)
Claud Davis and J. Scott Walker
| (b) | Security is not a benchmark constituent. |
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.
Performance Summary Through 12/31/23
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 shares, 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 shareholder would pay on fund distributions or the redemption of fund shares. 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
Total Returns through 12/31/23
Average annual total returns
| Share Class | Class Inception Date | 1-yr | 5-yr | 10-yr |
| Initial Class | 1/03/1995 | (2.11)% | 8.31% | 6.39% |
| Service Class | 5/01/2000 | (2.33)% | 8.05% | 6.13% |
Comparative benchmark(s)
| Standard & Poor's 500 Stock Index (f) | 26.29% | 15.69% | 12.03% |
| Standard & Poor's 500 Utilities Index (f) | (7.08)% | 7.11% | 8.91% |
| (f) | Source: FactSet Research Systems Inc. |
Benchmark Definition(s)
Standard & Poor's 500 Stock Index(g) – a market capitalization-weighted index of 500 widely held equity securities, designed to measure broad U.S. equity performance.
Standard & Poor's 500 Utilities Index(g) – a market capitalization-weighted index designed to measure the utilities sector, including those companies considered electric, gas or water utilities, or companies that operate as independent producers and/or distributors of power.
It is not possible to invest directly in an index.
| (g) | “Standard & Poor's®” and “S&P®” are registered trademarks of Standard & Poor's Financial Services LLC (“S&P”) and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”) and have been licensed for use by S&P Dow Jones Indices LLC and sublicensed for certain purposes by MFS. The S&P 500® is a product of S&P Dow Jones Indices LLC, and has been licensed for use by MFS. MFS's product(s) is not sponsored, endorsed, sold, or promoted by S&P Dow Jones Indices LLC, Dow Jones, S&P, or their respective affiliates, and neither S&P Dow Jones Indices LLC, Dow Jones, S&P, nor their respective affiliates make any representation regarding the advisability of investing in such product(s). |
Performance Summary – continued
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 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.
Expense Table
Fund expenses borne by the shareholders during the period,
July 1, 2023 through December 31, 2023
As a shareholder 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, 2023 through December 31, 2023.
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
7/01/23 | Ending
Account Value
12/31/23 | Expenses
Paid During
Period (p)
7/01/23-12/31/23 |
| Initial Class | Actual | 0.77% | $1,000.00 | $987.89 | $3.86 |
| Hypothetical (h) | 0.77% | $1,000.00 | $1,021.32 | $3.92 |
| Service Class | Actual | 1.02% | $1,000.00 | $986.97 | $5.11 |
| Hypothetical (h) | 1.02% | $1,000.00 | $1,020.06 | $5.19 |
| (h) | 5% class return per year before expenses. |
| (p) | “Expenses Paid During Period” are equal to each class's annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). |
Portfolio of Investments − 12/31/23
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – 99.1% |
| Energy - Renewables – 5.3% | |
| AES Corp. | | 518,396 | $ 9,979,123 |
| EDP Renovaveis S.A. | | 1,983,963 | 40,573,386 |
| Orsted A/S | | 137,952 | 7,646,635 |
| | | | | $58,199,144 |
| Natural Gas - Distribution – 2.7% | |
| Atmos Energy Corp. | | 149,102 | $ 17,280,922 |
| China Resources Gas Group Ltd. | | 1,823,100 | 5,976,994 |
| Southwest Gas Holdings, Inc. | | 97,071 | 6,149,448 |
| | | | | $29,407,364 |
| Telecommunications - Wireless – 7.4% | |
| Cellnex Telecom S.A. | | 870,322 | $ 34,261,847 |
| Rogers Communications, Inc., “B” | | 284,925 | 13,338,287 |
| SBA Communications Corp., REIT | | 133,820 | 33,948,796 |
| | | | | $81,548,930 |
| Telephone Services – 0.5% | |
| Hellenic Telecommunications Organization S.A. | | 411,479 | $ 5,859,855 |
| Utilities - Electric Power – 81.5% | |
| Alliant Energy Corp. | | 550,885 | $ 28,260,400 |
| Ameren Corp. | | 450,171 | 32,565,370 |
| American Electric Power Co., Inc. | | 363,439 | 29,518,516 |
| CenterPoint Energy, Inc. | | 310,258 | 8,864,071 |
| CLP Holdings Ltd. | | 767,500 | 6,334,811 |
| Constellation Energy | | 283,951 | 33,191,032 |
| Dominion Energy, Inc. | | 1,318,418 | 61,965,646 |
| DTE Energy Co. | | 462,085 | 50,949,492 |
| E.ON SE | | 1,190,112 | 15,962,966 |
| Edison International | | 596,176 | 42,620,622 |
| Enel S.p.A. | | 3,582,989 | 26,620,120 |
| Energias de Portugal S.A. | | 3,272,294 | 16,454,707 |
| Equatorial Energia S.A. | | 756,300 | 5,561,396 |
| Evergy, Inc. | | 355,935 | 18,579,807 |
| Exelon Corp. | | 432,982 | 15,544,056 |
| Iberdrola S.A. | | 646,576 | 8,472,660 |
| National Grid PLC | | 1,500,466 | 20,234,982 |
| NextEra Energy, Inc. | | 1,965,086 | 119,359,324 |
| PG&E Corp. | | 4,024,239 | 72,557,029 |
| Pinnacle West Capital Corp. | | 224,651 | 16,138,928 |
| Portland General Electric Co. | | 359,129 | 15,564,651 |
| PPL Corp. | | 1,433,202 | 38,839,774 |
| Public Service Enterprise Group, Inc. | | 242,547 | 14,831,749 |
| RWE AG | | 962,698 | 43,764,893 |
| Sempra Energy | | 611,195 | 45,674,603 |
| Southern Co. | | 720,816 | 50,543,618 |
| SSE PLC | | 1,124,519 | 26,603,316 |
| Xcel Energy, Inc. | | 542,345 | 33,576,579 |
| | | | | $899,155,118 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Utilities - Water – 1.7% | |
| United Utilities Group PLC | | 320,225 | $ 4,324,612 |
| Veolia Environnement S.A. | | 469,262 | 14,795,276 |
| | | | | $19,119,888 |
| Total Common Stocks (Identified Cost, $872,290,192) | | $1,093,290,299 |
| Investment Companies (h) – 1.3% |
| Money Market Funds – 1.3% | |
| MFS Institutional Money Market Portfolio, 5.42% (v) (Identified Cost, $14,002,159) | | | 14,001,567 | $ 14,004,367 |
| Other Assets, Less Liabilities – (0.4)% | | (4,114,962) |
| Net Assets – 100.0% | $1,103,179,704 |
| (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 $14,004,367 and $1,093,290,299, respectively. | | | |
| (v) | Affiliated issuer that is available only to investment companies managed by MFS. The rate quoted for the MFS Institutional Money Market Portfolio is the annualized seven-day yield of the fund at period end. | | | |
| The following abbreviations are used in this report and are defined: |
| REIT | Real Estate Investment Trust |
| Abbreviations indicate amounts shown in currencies other than the U.S. dollar. All amounts are stated in U.S. dollars unless otherwise indicated. A list of abbreviations is shown below: |
| CAD | Canadian Dollar |
| EUR | Euro |
| GBP | British Pound |
| Derivative Contracts at 12/31/23 |
| Forward Foreign Currency Exchange Contracts |
Currency
Purchased | Currency
Sold | Counterparty | Settlement
Date | Unrealized
Appreciation
(Depreciation) |
| Asset Derivatives |
| CAD | 2,520 | USD | 1,883 | UBS AG | 1/19/2024 | $19 |
| EUR | 1,629,518 | USD | 1,770,683 | Morgan Stanley Capital Services, Inc. | 1/19/2024 | 29,344 |
| EUR | 784 | USD | 858 | NatWest Markets PLC | 1/19/2024 | 8 |
| EUR | 1,834,466 | USD | 2,004,543 | State Street Bank Corp. | 1/19/2024 | 21,878 |
| GBP | 5,936 | USD | 7,548 | Brown Brothers Harriman | 1/19/2024 | 19 |
| GBP | 1,656,508 | USD | 2,024,973 | Morgan Stanley Capital Services, Inc. | 1/19/2024 | 86,680 |
| | | | | | | $137,948 |
| Liability Derivatives |
| USD | 792,888 | CAD | 1,087,560 | Morgan Stanley Capital Services, Inc. | 1/19/2024 | $(28,084) |
| USD | 7,658,960 | CAD | 10,434,709 | State Street Bank Corp. | 1/19/2024 | (217,952) |
| USD | 1,312,757 | EUR | 1,233,705 | HSBC Bank | 1/19/2024 | (50,040) |
| USD | 11,034,184 | EUR | 10,244,549 | Morgan Stanley Capital Services, Inc. | 1/19/2024 | (282,335) |
| USD | 119,286,780 | EUR | 112,068,036 | State Street Bank Corp. | 1/19/2024 | (4,507,837) |
| USD | 2,649,697 | GBP | 2,110,147 | Brown Brothers Harriman | 1/19/2024 | (40,237) |
| USD | 2,607,726 | GBP | 2,107,218 | HSBC Bank | 1/19/2024 | (78,473) |
| USD | 29,096,848 | GBP | 23,862,877 | State Street Bank Corp. | 1/19/2024 | (1,322,619) |
| | | | | | | $(6,527,577) |
See Notes to Financial Statements
| 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 12/31/23Assets | |
| Investments in unaffiliated issuers, at value (identified cost, $872,290,192) | $1,093,290,299 |
| Investments in affiliated issuers, at value (identified cost, $14,002,159) | 14,004,367 |
| Receivables for | |
| Forward foreign currency exchange contracts | 137,948 |
| Fund shares sold | 322,801 |
| Interest and dividends | 3,815,861 |
| Other assets | 4,013 |
| Total assets | $1,111,575,289 |
| Liabilities | |
| Payables for | |
| Forward foreign currency exchange contracts | $6,527,577 |
| Fund shares reacquired | 1,561,394 |
| Payable to affiliates | |
| Investment adviser | 88,636 |
| Administrative services fee | 1,584 |
| Shareholder servicing costs | 458 |
| Distribution and/or service fees | 16,439 |
| Payable for independent Trustees' compensation | 11 |
| Accrued expenses and other liabilities | 199,486 |
| Total liabilities | $8,395,585 |
| Net assets | $1,103,179,704 |
| Net assets consist of | |
| Paid-in capital | $833,296,698 |
| Total distributable earnings (loss) | 269,883,006 |
| Net assets | $1,103,179,704 |
| Shares of beneficial interest outstanding | 34,627,781 |
| | Net assets | Shares
outstanding | Net asset value
per share |
| Initial Class | $503,825,977 | 15,622,184 | $32.25 |
| Service Class | 599,353,727 | 19,005,597 | 31.54 |
See Notes to Financial Statements
| 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 12/31/23 | |
| Net investment income (loss) | |
| Income | |
| Dividends | $37,545,537 |
| Dividends from affiliated issuers | 479,977 |
| Interest | 306,119 |
| Other | 75,631 |
| Income on securities loaned | 3,995 |
| Foreign taxes withheld | (356,955) |
| Total investment income | $38,054,304 |
| Expenses | |
| Management fee | $8,533,210 |
| Distribution and/or service fees | 1,583,003 |
| Shareholder servicing costs | 12,074 |
| Administrative services fee | 175,923 |
| Independent Trustees' compensation | 20,930 |
| Custodian fee | 117,774 |
| Shareholder communications | 17,532 |
| Audit and tax fees | 70,899 |
| Legal fees | 6,361 |
| Miscellaneous | 229,690 |
| Total expenses | $10,767,396 |
| Reduction of expenses by investment adviser | (146,772) |
| Net expenses | $10,620,624 |
| Net investment income (loss) | $27,433,680 |
| Realized and unrealized gain (loss) | |
| Realized gain (loss) (identified cost basis) | |
| Unaffiliated issuers | $29,977,682 |
| Affiliated issuers | 1,880 |
| Forward foreign currency exchange contracts | (9,800,468) |
| Foreign currency | (1,220,931) |
| Net realized gain (loss) | $18,958,163 |
| Change in unrealized appreciation or depreciation | |
| Unaffiliated issuers | $(83,754,776) |
| Affiliated issuers | (604) |
| Forward foreign currency exchange contracts | 7,673,749 |
| Translation of assets and liabilities in foreign currencies | 49,490 |
| Net unrealized gain (loss) | $(76,032,141) |
| Net realized and unrealized gain (loss) | $(57,073,978) |
| Change in net assets from operations | $(29,640,298) |
See Notes to Financial Statements
| 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 |
| | 12/31/23 | 12/31/22 |
| Change in net assets | | |
| From operations | | |
| Net investment income (loss) | $27,433,680 | $22,268,570 |
| Net realized gain (loss) | 18,958,163 | 96,439,674 |
| Net unrealized gain (loss) | (76,032,141) | (114,645,691) |
| Change in net assets from operations | $(29,640,298) | $4,062,553 |
| Total distributions to shareholders | $(101,554,945) | $(77,825,621) |
| Change in net assets from fund share transactions | $(16,299,587) | $28,354,613 |
| Total change in net assets | $(147,494,830) | $(45,408,455) |
| Net assets | | |
| At beginning of period | 1,250,674,534 | 1,296,082,989 |
| At end of period | $1,103,179,704 | $1,250,674,534 |
See Notes to Financial Statements
| 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 |
| | 12/31/23 | 12/31/22 | 12/31/21 | 12/31/20 | 12/31/19 |
| Net asset value, beginning of period | $36.32 | $38.31 | $35.33 | $35.18 | $29.38 |
| Income (loss) from investment operations | | | | | |
| Net investment income (loss) (d) | $0.86 | $0.71 | $0.78 | $0.87 | $0.90 |
| Net realized and unrealized gain (loss) | (1.75) | (0.32) | 4.11 | 0.99 | 6.37 |
| Total from investment operations | $(0.89) | $0.39 | $4.89 | $1.86 | $7.27 |
| Less distributions declared to shareholders | | | | | |
| From net investment income | $(1.25) | $(0.92) | $(0.65) | $(0.84) | $(1.37) |
| From net realized gain | (1.93) | (1.46) | (1.26) | (0.87) | (0.10) |
| Total distributions declared to shareholders | $(3.18) | $(2.38) | $(1.91) | $(1.71) | $(1.47) |
| Net asset value, end of period (x) | $32.25 | $36.32 | $38.31 | $35.33 | $35.18 |
| Total return (%) (k)(r)(s)(x) | (2.11) | 0.76 | 14.09 | 5.90 | 25.07 |
Ratios (%) (to average net assets)
and Supplemental data: | | | | | |
| Expenses before expense reductions | 0.80 | 0.78 | 0.79 | 0.80 | 0.79 |
| Expenses after expense reductions | 0.79 | 0.77 | 0.77 | 0.79 | 0.78 |
| Net investment income (loss) | 2.53 | 1.92 | 2.16 | 2.63 | 2.69 |
| Portfolio turnover | 15 | 29 | 16 | 32 | 28 |
| Net assets at end of period (000 omitted) | $503,826 | $549,238 | $584,216 | $537,240 | $556,301 |
| Service Class | Year ended |
| | 12/31/23 | 12/31/22 | 12/31/21 | 12/31/20 | 12/31/19 |
| Net asset value, beginning of period | $35.57 | $37.58 | $34.69 | $34.56 | $28.86 |
| Income (loss) from investment operations | | | | | |
| Net investment income (loss) (d) | $0.76 | $0.60 | $0.68 | $0.77 | $0.80 |
| Net realized and unrealized gain (loss) | (1.71) | (0.32) | 4.03 | 0.97 | 6.27 |
| Total from investment operations | $(0.95) | $0.28 | $4.71 | $1.74 | $7.07 |
| Less distributions declared to shareholders | | | | | |
| From net investment income | $(1.15) | $(0.83) | $(0.56) | $(0.74) | $(1.27) |
| From net realized gain | (1.93) | (1.46) | (1.26) | (0.87) | (0.10) |
| Total distributions declared to shareholders | $(3.08) | $(2.29) | $(1.82) | $(1.61) | $(1.37) |
| Net asset value, end of period (x) | $31.54 | $35.57 | $37.58 | $34.69 | $34.56 |
| Total return (%) (k)(r)(s)(x) | (2.33) | 0.48 | 13.82 | 5.62 | 24.80 |
Ratios (%) (to average net assets)
and Supplemental data: | | | | | |
| Expenses before expense reductions | 1.05 | 1.03 | 1.04 | 1.05 | 1.04 |
| Expenses after expense reductions | 1.04 | 1.02 | 1.02 | 1.04 | 1.03 |
| Net investment income (loss) | 2.28 | 1.66 | 1.91 | 2.38 | 2.44 |
| Portfolio turnover | 15 | 29 | 16 | 32 | 28 |
| Net assets at end of period (000 omitted) | $599,354 | $701,436 | $711,867 | $679,629 | $733,992 |
See Notes to Financial Statements
Financial Highlights - continued
| (d) | Per share data is based on average shares outstanding. |
| (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
Notes to Financial Statements
(1) Business and Organization
MFS Utilities Series (the fund) is a diversified series of MFS Variable Insurance Trust (the trust). The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The shareholders of each series of the trust are separate accounts of insurance companies, which offer variable annuity and/or life insurance products, and qualified retirement and pension plans.
The fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services - Investment Companies.
(2) Significant Accounting Policies
General — The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the fund’s Statement of Assets and Liabilities through the date that the financial statements were issued. The fund invests primarily in securities of issuers in the utility industry. Issuers in a single industry can react similarly to market, currency, political, economic, regulatory, geopolitical, environmental, public health, and other conditions. The value of stocks in the utilities sector can be very volatile due to supply and/or demand for services or fuel, financing costs, conservation efforts, the negative impact of regulation, 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, environmental, public health, 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’s in-scope financial instruments and transactions.
Investment Valuations — Subject to its oversight, the fund's Board of Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments to MFS as the fund's adviser, pursuant to the fund’s valuation policy and procedures which have been adopted by the adviser and approved by the Board. In accordance with Rule 2a-5 under the Investment Company Act of 1940, the Board of Trustees designated the adviser as the “valuation designee” of the fund. If the adviser, as valuation designee, determines that reliable market quotations are not readily available for an investment, the investment is valued at fair value as determined in good faith by the adviser in accordance with the adviser’s fair valuation policy and procedures.
Under the fund's valuation policy and procedures, 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. Forward foreign currency exchange contracts are generally valued at the mean of bid and asked prices for the time period interpolated from rates provided by a third-party pricing service for proximate time periods. Open-end investment companies are generally valued at net asset value per share. 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.
Under the fund’s valuation policy and procedures, market quotations are not considered to be readily available for debt instruments, floating rate loans, and many types of derivatives. These investments are generally valued at fair value based on information from third-party pricing services or otherwise determined by the adviser in accordance with the adviser’s fair valuation policy and procedures. 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, spreads and other market data. An investment may also be valued at fair value if the adviser determines that the 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
Notes to Financial Statements - continued
market) and prior to the determination of the fund’s net asset value, or after the halt of trading of a specific security where trading does not resume prior to the close of the exchange or market on which the security is principally traded. Events that occur after foreign markets close (such as developments in foreign markets and significant movements in the U.S. markets) and prior to the determination of the fund’s net asset value may be deemed to have a material effect on the value of securities traded in foreign markets. Accordingly, the fund’s foreign equity securities may often be valued at fair value. The adviser generally relies on third-party pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and financial condition of the issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment for purposes of calculating the fund’s net asset value can differ depending on the source and method used to determine value. When fair valuation is used, the value of an investment used to determine the fund’s net asset value may differ from quoted or published prices for the same investment. There can be no assurance that the fund could obtain the fair value assigned to an investment if it were to sell the investment at the same time at which the fund determines its net asset value per share.
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 significant 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, 2023 in valuing the fund's assets and liabilities:
| Financial Instruments | Level 1 | Level 2 | Level 3 | Total |
| Equity Securities | $1,093,290,299 | $— | $— | $1,093,290,299 |
| Mutual Funds | 14,004,367 | — | — | 14,004,367 |
| Total | $1,107,294,666 | $— | $— | $1,107,294,666 |
| Other Financial Instruments | | | | |
| Forward Foreign Currency Exchange Contracts – Assets | $— | $137,948 | $— | $137,948 |
| Forward Foreign Currency Exchange Contracts – Liabilities | — | (6,527,577) | — | (6,527,577) |
For further information regarding security characteristics, see the Portfolio of Investments.
Foreign Currency Translation — Purchases and sales of foreign investments, income, and expenses are converted into U.S. dollars based upon currency exchange rates prevailing on the respective dates of such transactions or on the reporting date for foreign denominated receivables and payables. Gains and losses attributable to foreign currency exchange rates on sales of securities are recorded for financial statement purposes as net realized gains and losses on investments. Gains and losses attributable to foreign exchange rate movements on receivables, payables, income and expenses are recorded for financial statement purposes as foreign currency transaction gains and losses. That portion of both realized and unrealized gains and losses on investments that results from fluctuations in foreign currency exchange rates is not separately disclosed.
Derivatives — The fund uses derivatives 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 or non-hedging purposes. While hedging can reduce or eliminate losses, it can also reduce or eliminate gains. When the fund uses derivatives as an investment to increase market exposure, or for hedging purposes, gains and losses from derivative instruments may be substantially greater than the derivative’s original cost.
The derivative instruments used by the fund during the period were forward foreign currency exchange contracts. Depending on the type of derivative, a 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, 2023 as reported in the Statement of Assets and Liabilities:
Notes to Financial Statements - continued
| | | Fair Value |
| Risk | Derivative Contracts | Asset Derivatives | Liability Derivatives |
| Foreign Exchange | Forward Foreign Currency Exchange Contracts | $137,948 | $(6,527,577) |
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, 2023 as reported in the Statement of Operations:
| Risk | Forward Foreign
Currency
Exchange
Contracts |
| Foreign Exchange | $(9,800,468) |
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, 2023 as reported in the Statement of Operations:
| Risk | Forward Foreign
Currency
Exchange
Contracts |
| Foreign Exchange | $7,673,749 |
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, the non-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.
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 credit 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.
Forward Foreign Currency Exchange Contracts — The fund entered into forward foreign currency exchange contracts for the purchase or sale of a specific foreign currency at a fixed price on a future date. These contracts may be used to hedge the fund’s currency risk or for non-hedging purposes. For hedging purposes, the fund may enter into contracts to deliver or receive foreign currency that the fund will receive from or use in its normal investment activities. The fund may also use contracts to hedge against declines in the value of foreign currency denominated securities due to unfavorable exchange rate movements. For non-hedging purposes, the fund may enter into contracts with the intent of changing the relative exposure of the fund’s portfolio of securities to different currencies to take advantage of anticipated exchange rate changes.
Forward foreign currency exchange contracts are adjusted by the daily exchange rate of the underlying currency and any unrealized gains or losses are recorded as a receivable or payable for forward foreign currency exchange contracts until the contract settlement date. On contract settlement date, any gain or loss on the contract is recorded as realized gains or losses on forward foreign currency exchange contracts.
Notes to Financial Statements - continued
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.
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, 2023, there were no securities on loan or collateral outstanding.
Indemnifications — Under the fund's organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the fund. Additionally, in the normal course of business, the fund enters into agreements with service providers that may contain indemnification clauses. The fund's maximum exposure under these agreements is unknown as this would involve future claims that may be made against the fund that have not yet occurred.
Investment Transactions and Income — Interest income is recorded on the accrual basis. Dividends received in cash are recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded when the fund is informed of the dividend if such information is obtained subsequent to the ex-dividend date. Dividend and interest payments received in additional securities are recorded on the ex-dividend or ex-interest date in an amount equal to the value of the security on such date.
The fund may receive proceeds from litigation settlements. Any proceeds received from litigation involving portfolio holdings are reflected in the Statement of Operations in realized gain/loss if the security has been disposed of by the fund or in unrealized gain/loss if the security is still held by the fund. Any other proceeds from litigation not related to portfolio holdings are reflected as other income in the Statement of Operations.
Investment transactions are recorded on the trade date. In determining the net gain or loss on securities sold, the cost of securities is determined on the identified cost basis.
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 the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income, expense, gain or loss in different periods for financial statement and tax purposes will reverse at some time in the future.
Notes to Financial Statements - continued
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
12/31/23 | Year ended
12/31/22 |
| Ordinary income (including any short-term capital gains) | $38,810,049 | $42,430,357 |
| Long-term capital gains | 62,744,896 | 35,395,264 |
| Total distributions | $101,554,945 | $77,825,621 |
The federal tax cost and the tax basis components of distributable earnings were as follows:
| As of 12/31/23 | |
| Cost of investments | $886,903,652 |
| Gross appreciation | 269,798,845 |
| Gross depreciation | (55,797,460) |
| Net unrealized appreciation (depreciation) | $214,001,385 |
| Undistributed ordinary income | 24,181,787 |
| Undistributed long-term capital gain | 31,718,375 |
| Other temporary differences | (18,541) |
| Total distributable earnings (loss) | $269,883,006 |
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:
| | Year
ended
12/31/23 | | Year
ended
12/31/22 |
| Initial Class | $46,111,772 | | $34,761,572 |
| Service Class | 55,443,173 | | 43,064,049 |
| Total | $101,554,945 | | $77,825,621 |
(3) Transactions with Affiliates
Investment Adviser — The fund has an investment advisory agreement with MFS to provide overall investment management and related administrative services and facilities to the fund. The management fee is computed daily and paid monthly at the following annual rates based on the fund's average daily net assets:
| Up to $1 billion | 0.75% |
| In excess of $1 billion and up to $3 billion | 0.70% |
| In excess of $3 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. MFS has also agreed in writing to waive at least 0.01% of its management fee as part of this agreement. The agreement to waive at least 0.01% of the management fee will continue until modified by the fund's Board of Trustees, but such agreement will continue at least until April 30, 2025. For the year ended December 31, 2023, this management fee reduction amounted to $146,772, which is included in the reduction of total expenses in the Statement of Operations. The management fee incurred for the year ended December 31, 2023 was equivalent to an annual effective rate of 0.73% of the fund's average daily net assets.
Distributor — MFS Fund Distributors, Inc. (MFD), a wholly-owned subsidiary of MFS, is the distributor of shares of the fund. The Trustees have adopted a distribution plan for the Service Class shares pursuant to Rule 12b-1 under the Investment Company Act of 1940.
The fund’s distribution plan provides that the fund will pay MFD distribution and/or service fees equal to 0.25% per annum of its average daily net assets attributable to Service Class shares as partial consideration for services performed and expenses incurred by MFD and financial intermediaries (including participating insurance companies that invest in the fund to fund variable annuity and
Notes to Financial Statements - continued
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 as well as shareholder servicing and account maintenance activities. MFD may subsequently pay all, or a portion, of the distribution and/or service fees to financial intermediaries. The distribution and/or service fees are computed daily and paid monthly.
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, 2023, the fee was $8,821, which equated to 0.0008% annually of the fund's average daily net assets. MFSC also receives reimbursement from the fund for out-of-pocket expenses paid by MFSC on behalf of the fund. For the year ended December 31, 2023, these costs amounted to $3,253.
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 is computed daily and paid monthly. The administrative services fee incurred for the year ended December 31, 2023 was equivalent to an annual effective rate of 0.0153% of the fund's average daily net assets.
Trustees’ and Officers’ Compensation — The fund pays compensation to independent Trustees in the form of a retainer, attendance fees, and additional compensation to Board and Committee chairpersons. Independent Trustees’ compensation is accrued daily and paid subsequent to each Trustee Board meeting. The fund does not pay compensation directly to Trustees or officers of the fund who are also officers of the investment adviser, all of whom receive remuneration from MFS for their services to the fund. Certain officers and Trustees of the fund are officers or directors of MFS, MFD, and MFSC.
Other — 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 but does incur investment and operating costs.
During the year ended December 31, 2023, pursuant to a policy adopted by the Board of Trustees and designed to comply with Rule 17a-7 under the Investment Company Act of 1940 (the “Act”) and relevant guidance, the fund engaged in sale transactions with funds and accounts for which MFS serves as investment adviser or sub-adviser (“cross-trades”) which amounted to $2,343,767. The sales transactions resulted in net realized gains (losses) of $664,389.
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 year ended December 31, 2023, this reimbursement amounted to $74,566, which is included in “Other” income in the Statement of Operations.
(4) Portfolio Securities
For the year ended December 31, 2023, purchases and sales of investments, other than short-term obligations, aggregated $170,896,468 and $261,619,975, 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
12/31/23 | | Year ended
12/31/22 |
| | Shares | Amount | | Shares | Amount |
| Shares sold | | | | | |
| Initial Class | 1,697,934 | $58,956,930 | | 1,003,536 | $37,516,319 |
| Service Class | 1,232,587 | 41,110,574 | | 2,874,003 | 106,408,790 |
| | 2,930,521 | $100,067,504 | | 3,877,539 | $143,925,109 |
Shares issued to shareholders
in reinvestment of distributions | | | | | |
| Initial Class | 1,483,648 | $46,111,772 | | 917,434 | $34,761,572 |
| Service Class | 1,822,590 | 55,443,173 | | 1,159,194 | 43,064,049 |
| | 3,306,238 | $101,554,945 | | 2,076,628 | $77,825,621 |
Notes to Financial Statements - continued
| | Year ended
12/31/23 | | Year ended
12/31/22 |
| | Shares | Amount | | Shares | Amount |
| Shares reacquired | | | | | |
| Initial Class | (2,681,537) | $(91,889,876) | | (2,047,407) | $(75,308,977) |
| Service Class | (3,767,894) | (126,032,160) | | (3,259,548) | (118,087,140) |
| | (6,449,431) | $(217,922,036) | | (5,306,955) | $(193,396,117) |
| Net change | | | | | |
| Initial Class | 500,045 | $13,178,826 | | (126,437) | $(3,031,086) |
| Service Class | (712,717) | (29,478,413) | | 773,649 | 31,385,699 |
| | (212,672) | $(16,299,587) | | 647,212 | $28,354,613 |
(6) Line of Credit
The fund and certain other funds managed by MFS participate in a $1.45 billion unsecured committed line of credit of which $1.2 billion is reserved for use by the fund and certain other MFS U.S. funds. The line of credit is provided by a syndicate of banks under a credit agreement. Borrowings may be made for temporary financing needs. Interest is charged to each fund, based on its borrowings, generally at a rate equal to the highest of 1) Daily Simple SOFR (Secured Overnight Financing Rate) plus 0.10%, 2) the Federal Funds Effective Rate, or 3) the Overnight Bank Funding Rate, each 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. The line of credit expires on March 14, 2024 unless extended or renewed. In addition, the fund and other funds managed by MFS have established unsecured uncommitted borrowing arrangements with certain banks for temporary financing needs. Interest is charged to each fund, based on its borrowings, at rates equal to customary reference rates plus an agreed upon spread. For the year ended December 31, 2023, the fund’s commitment fee and interest expense were $6,207 and $0, respectively, and are included in “Miscellaneous” expense in the Statement of Operations.
(7) Investments in Affiliated Issuers
An affiliated issuer may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. For the purposes of this report, the following were affiliated issuers:
| Affiliated Issuers | Beginning
Value | Purchases | Sales
Proceeds | Realized
Gain
(Loss) | Change in
Unrealized
Appreciation or
Depreciation | Ending
Value |
| MFS Institutional Money Market Portfolio | $15,431,494 | $176,746,218 | $178,174,621 | $1,880 | $(604) | $14,004,367 |
| Affiliated Issuers | Dividend
Income | Capital Gain
Distributions |
| MFS Institutional Money Market Portfolio | $479,977 | $— |
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of MFS Variable Insurance Trust and the Shareholders of MFS Utilities Series:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities of MFS Utilities Series (the “Fund”), including the portfolio of investments, as of December 31, 2023, 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, 2023, 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, 2023, 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 14, 2024
We have served as the auditor of one or more of the MFS investment companies since 1924.
Trustees and Officers — Identification and Background
The Trustees and Officers of the Trust, as of February 1, 2024, 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 TRUSTEE | | | | | | | | | | |
Michael W. Roberge (k)
(age 57) | | Trustee | | January 2021 | | 136 | | Massachusetts Financial Services Company, Chairman (since January 2021); Chief Executive Officer (since January 2017); Director; Chairman of the Board (since January 2022) | | N/A |
| INDEPENDENT TRUSTEES | | | | | | | | | | |
John P. Kavanaugh
(age 69) | | Trustee and Chair of Trustees | | January 2009 | | 136 | | Private investor | | N/A |
Steven E. Buller
(age 72) | | Trustee | | February 2014 | | 136 | | Private investor | | N/A |
John A. Caroselli
(age 69) | | Trustee | | March 2017 | | 136 | | Private investor; JC Global Advisors, LLC (management consulting), President (since 2015) | | N/A |
Maureen R. Goldfarb
(age 68) | | Trustee | | January 2009 | | 136 | | Private investor | | N/A |
Peter D. Jones
(age 68) | | Trustee | | January 2019 | | 136 | | Private investor | | N/A |
James W. Kilman, Jr.
(age 62) | | Trustee | | January 2019 | | 136 | | Burford Capital Limited (finance and investment management), Senior Advisor (since May 3, 2021), Chief Financial Officer (2019 - May 2, 2021); KielStrand Capital LLC (family office), Chief Executive Officer (since 2016) | | Alpha-En Corporation, Director (2016-2019) |
Clarence Otis, Jr.
(age 67) | | Trustee | | March 2017 | | 136 | | Private investor | | VF Corporation, Director; Verizon Communications, Inc., Director; The Travelers Companies, Director |
Maryanne L. Roepke
(age 67) | | Trustee | | May 2014 | | 136 | | Private investor | | N/A |
Laurie J. Thomsen
(age 66) | | Trustee | | March 2005 | | 136 | | Private investor | | The Travelers Companies, Director; Dycom Industries, Inc., Director |
| 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 50) | | Assistant Secretary and Assistant Clerk | | July 2005 | | 136 | | Massachusetts Financial Services Company, Senior Vice President and Senior Managing Counsel |
Kino Clark (k)
(age 55) | | Assistant Treasurer | | January 2012 | | 136 | | Massachusetts Financial Services Company, Vice President |
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 |
John W. Clark, Jr. (k)
(age 56) | | Assistant Treasurer | | April 2017 | | 136 | | Massachusetts Financial Services Company, Vice President |
David L. DiLorenzo (k)
(age 55) | | President | | July 2005 | | 136 | | Massachusetts Financial Services Company, Senior Vice President |
Heidi W. Hardin (k)
(age 56) | | Secretary and Clerk | | April 2017 | | 136 | | Massachusetts Financial Services Company, Executive Vice President and General Counsel |
Brian E. Langenfeld (k)
(age 50) | | Assistant Secretary and Assistant Clerk | | June 2006 | | 136 | | Massachusetts Financial Services Company, Vice President and Managing Counsel |
Rosa E. Licea-Mailloux (k)
(age 47) | | Chief Compliance Officer | | March 2022 | | 136 | | Massachusetts Financial Services Company, Vice President (since 2018); Director of Corporate Compliance (2018-2021), Senior Director Compliance (2021-2022), Senior Managing Director of North American Compliance & Chief Compliance Officer (since March 2022) |
Amanda S. Mooradian (k)
(age 44) | | Assistant Secretary and Assistant Clerk | | September 2018 | | 136 | | Massachusetts Financial Services Company, Assistant Vice President and Senior Counsel |
Susan A. Pereira (k)
(age 53) | | Assistant Secretary and Assistant Clerk | | July 2005 | | 136 | | Massachusetts Financial Services Company, Vice President and Managing Counsel |
Kasey L. Phillips (k)
(age 53) | | Assistant Treasurer | | September 2012 | | 136 | | Massachusetts Financial Services Company, Vice President |
Matthew A. Stowe (k)
(age 49) | | Assistant Secretary and Assistant Clerk | | October 2014 | | 136 | | Massachusetts Financial Services Company, Vice President and Senior Managing Counsel |
William B. Wilson (k)
(age 41) | | Assistant Secretary and Assistant Clerk | | October 2022 | | 136 | | Massachusetts Financial Services Company, Assistant Vice President and Senior Counsel |
James O. Yost (k)
(age 63) | | Treasurer | | September 1990 | | 136 | | 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. 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 (other than Messrs. Jones, Kilman and Roberge) 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. Mr. Roberge became a Trustee of the Funds on January 1, 2021 and Messrs. Jones and Kilman became Trustees of the Funds on January 1, 2019. 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, Caroselli, Jones and Otis 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.
Trustees and Officers - continued
The Statement of Additional Information for a Fund includes further information about the Trustees and is available without charge upon request by calling 1-800-225-2606.
| Investment Adviser | Custodian |
Massachusetts Financial Services Company
111 Huntington Avenue
Boston, MA 02199-7618 | State Street Bank and Trust Company
1 Congress Street, Suite 1
Boston, MA 02114-2016 |
| Distributor | Independent Registered Public Accounting Firm |
MFS Fund Distributors, Inc.
111 Huntington Avenue
Boston, MA 02199-7618 | Deloitte & Touche LLP
200 Berkeley Street
Boston, MA 02116 |
| Portfolio Manager(s) | |
Claud Davis
J. Scott Walker | |
Board Review of Investment Advisory Agreement
MFS Utilities Series
The Investment Company Act of 1940 requires that both the full Board of Trustees and a majority of the non-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, 2023 (“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 an independent consultant who was retained by and reported 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, 2022 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 as well as all other funds in the same investment classification/category (the “Broadridge expense group and universe”), (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 five-year period ended December 31, 2022, 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 five-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 3rd quintile for the one-year period and the 2nd quintile for the three-year period ended December 31, 2022 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.
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 the Broadridge expense group 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 higher 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 cash in-flows and out-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 subject to contractual breakpoints that reduce the Fund’s advisory fee rate on average daily net assets over $1 billion and $3 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.
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 any 12b-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 and sub-custodians. The Trustees concluded that the various non-advisory services provided by MFS and its affiliates on behalf of the Fund were satisfactory.
The Trustees considered so-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 MFS discontinued its historic practice of obtaining investment research from portfolio brokerage commissions paid by certain MFS Funds effective January 2018, and directly pays or voluntarily reimburses 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 additional one-year period, commencing August 1, 2023.
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 visiting mfs.com/proxyvoting, or by visiting the SEC’s Web site at http://www.sec.gov.
Information regarding how the fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available by August 31 of each year without charge by visiting mfs.com/proxyvoting, or by visiting the SEC’s Web site at http://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 as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s Web site at http://www.sec.gov. A shareholder can obtain the portfolio holdings report for the first and third quarters of the fund's fiscal year at mfs.com/vit1 by choosing the fund's name and then scrolling to the “Resources” section and clicking on the “Prospectus and Reports” tab.
FURTHER INFORMATION
From time to time, MFS may post important information about the fund or the MFS Funds on the MFS Web site (mfs.com). This information is available at https://www.mfs.com/announcements or at mfs.com/vit1 by choosing the fund's name and then scrolling to the “Resources” section and clicking on the “Announcements” tab, if any.
Information About Fund Contracts and Legal Claims
The fund has entered into contractual arrangements with an investment adviser, administrator, distributor, shareholder servicing agent, 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 $69,020,000 as capital gain dividends paid during the fiscal year.
For corporate shareholders, 58.85% of the ordinary income dividends paid during the fiscal year qualify for the corporate dividends received deduction.
| 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 are no longer our customer, we continue to share your information as described in this notice. |
| How? | All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MFS chooses to share; and whether you can limit this sharing. |
Reasons we can share your
personal information | Does MFS share? | Can you limit
this sharing? |
For our everyday business purposes –
such as to process your transactions, maintain your
account(s), respond to court orders and legal
investigations, or report to credit bureaus | Yes | No |
For our marketing purposes –
to offer our products and services to you | No | We don't share |
For joint marketing with other
financial companies | No | We don't share |
For our affiliates' everyday business purposes –
information about your transactions and experiences | No | We don't share |
For our affiliates' everyday business purposes –
information about your creditworthiness | No | We don't share |
| For nonaffiliates to market to you | No | We don't share |
| Questions? | Call 800-225-2606 or go to mfs.com. |
| 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. |
Annual Report
December 31, 2023
MFS® Variable Insurance Trust
| 1 |
| 2 |
| 4 |
| 6 |
| 7 |
| 11 |
| 12 |
| 13 |
| 14 |
| 16 |
| 22 |
| 23 |
| 26 |
| 28 |
| 28 |
| 28 |
| 28 |
| 28 |
| 29 |
The report is prepared for the general information of shareholders. It is authorized for distribution to prospective investors only when preceded or accompanied by a current prospectus.
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
Portfolio structure
Top ten holdings
| JPMorgan Chase & Co. | 4.5% |
| Cigna Group | 2.9% |
| Progressive Corp. | 2.8% |
| ConocoPhillips | 2.7% |
| Comcast Corp., “A” | 2.5% |
| Marsh & McLennan Cos., Inc. | 2.4% |
| McKesson Corp. | 2.3% |
| Johnson & Johnson | 2.2% |
| Northrop Grumman Corp. | 2.2% |
| Aon PLC | 2.2% |
GICS equity sectors (g)
| Financials | 25.1% |
| Industrials | 16.6% |
| Health Care | 14.6% |
| Information Technology | 8.5% |
| Consumer Staples | 7.8% |
| Utilities | 7.6% |
| Energy | 5.8% |
| Consumer Discretionary | 3.5% |
| Materials | 3.4% |
| Communication Services | 3.3% |
| Real Estate | 2.2% |
| (g) | The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and S&P Global Market Intelligence Inc. (“S&P Global Market Intelligence”). GICS is a service mark of MSCI and S&P Global Market Intelligence and has been licensed for use by MFS. MFS has applied its own internal sector/industry classification methodology for equity securities and non-equity securities that are unclassified by GICS. |
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, 2023.
The portfolio is actively managed and current holdings may be different.
Management Review
Summary of Results
For the twelve months ended December 31, 2023, Initial Class shares of the MFS Value Series (fund) provided a total return of 7.93%, while Service Class shares of the fund provided a total return of 7.63%. These compare with a return of 11.46% over the same period for the fund’s benchmark, the Russell 1000® Value Index.
Market Environment
During the reporting period, central banks around the world had to combat the strongest inflationary pressures in four decades, fueled by the global fiscal response to the pandemic, disrupted supply chains and the dislocations to energy markets stemming from the war in Ukraine. Interest rates rose substantially, but the effects of a tighter monetary policy may not have been fully experienced yet, given that monetary policy works with long and variable lags. Strains resulting from the abrupt tightening of monetary policy began to affect some parts of the economy, most acutely among small and regional US banks, which suffered from deposit flight as depositors sought higher yields on their savings. Additionally, activity in the US housing sector has slowed as a result of higher mortgage rates. China’s abandonment of its Zero-COVID policy ushered in a brief uptick in economic activity in the world’s second-largest economy in early 2023, although its momentum soon stalled as the focus turned to the country’s highly indebted property development sector. In developed markets, consumer demand for services remained stronger than the demand for goods.
Early on, policymakers found themselves in the difficult position of trying to restrain inflation without tipping economies into recession. Despite the challenging macroeconomic and geopolitical environment, central banks focused on controlling price pressures while also confronting increasing financial stability concerns. Central banks had to juggle achieving their inflation mandates while using macroprudential tools (financial policies aimed at safeguarding the stability of the financial system) to keep banking systems liquid, a potentially difficult balancing act, and one that suggested that we may be nearing a peak in policy rates. As inflationary pressures eased toward the end of the period, financial conditions loosened in anticipation of easier monetary policy, boosting the market’s appetite for risk. Rapid advancements in artificial intelligence were a focus for investors.
Normalizing supply chains, low levels of unemployment across developed markets and signs that inflation levels have peaked were supportive factors for the macroeconomic backdrop.
Detractors from Performance
Relative to the Russell 1000® Value Index, a combination of the fund’s underweight position and stock selection in the communications services sector detracted from performance. Within this sector, not owning shares of social networking service provider Meta Platforms and technology company Alphabet held back relative returns. The stock price of Meta Platforms advanced as the company reported better-than-expected earnings driven by solid revenue results and strong user engagement across its applications. In addition, the company cited plans to cut costs and invest in artificial intelligence, including adding generative AI to text, image, and video generators across its network of apps, including Facebook and Instagram, which further supported the stock.
Stock selection within the industrials sector also hindered relative results. Within this sector, the fund’s overweight position in global security company Northrop Grumman, and not holding shares of industrial conglomerate General Electric, hurt relative returns. The stock price of Northrop Grumman declined early in the period after it disclosed potential significant losses in its B-21 Raider program, citing inflationary and supply chain headwinds.
Stock selection and, to a lesser extent, the fund’s underweight position in the information technology sector also weakened relative performance. Within this sector, not holding shares of semiconductor company Intel and customer information software manager Salesforce.com held back relative results.
Elsewhere, the fund’s overweight positions in pharmaceutical giant Pfizer, global health services provider Cigna and energy products and services supplier Dominion Energy, and its holdings of premium drinks distributor Diageo(b) (United Kingdom), further dampened relative performance.
Contributors to Performance
A combination of the fund’s underweight position and stock selection in the energy sector contributed to relative returns, driven by an underweight position in integrated energy company Chevron and not holding shares of integrated oil and gas company ExxonMobil. The stock price of Chevron declined as the company reported revenue that missed expectations due to lower margins in its downstream operations, higher-than-forecasted capital expenditures and costs related to the acquisition of Hess. Additionally, energy stocks were broadly dragged down by weakness in crude oil prices, which suffered from both strong supply and weak demand dynamics.
Stock selection in the consumer discretionary sector also supported relative results led by the fund’s position in hotel and residential properties operator Marriott International(b).
Management Review - continued
Stocks in other sectors that aided relative performance included the fund’s holdings of semiconductor industry services provider KLA(b), IT servicing firm Accenture(b), and semiconductor solutions provider NXP Semiconductors(b) (Netherlands), and its overweight positions in diversified industrial manufacturer Eaton and global financial services firm JPMorgan Chase. The stock price of KLA appreciated as the company reported earnings per share results that beat market expectations, driven by strength in its trailing node business as demand in China increased significantly. In addition, not holding shares of electricity provider NextEra Energy and pharmaceutical company Bristol-Myers Squibb further supported the fund’s relative returns.
During the reporting period, the fund’s relative currency exposure, resulting primarily from differences between the fund's and the benchmark's exposures to holdings of securities denominated in foreign currencies, was another contributor to relative performance. All of MFS’ investment decisions are driven by the fundamentals of each individual opportunity and as such, it is common for our funds to have different currency exposure than the benchmark.
Respectfully,
Portfolio Manager(s)
Katherine Cannan and Nevin Chitkara
| (b) | Security is not a benchmark constituent. |
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.
Performance Summary Through 12/31/23
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 shares, 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 shareholder would pay on fund distributions or the redemption of fund shares. 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
Total Returns through 12/31/23
Average annual total returns
| Share Class | Class Inception Date | 1-yr | 5-yr | 10-yr |
| Initial Class | 1/02/2002 | 7.93% | 11.34% | 8.52% |
| Service Class | 1/02/2002 | 7.63% | 11.07% | 8.25% |
Comparative benchmark(s)
| Russell 1000® Value Index (f) | 11.46% | 10.91% | 8.40% |
| (f) | Source: FactSet Research Systems Inc. |
Benchmark Definition(s)
Russell 1000® Value Index(h) – constructed to provide a comprehensive barometer for the value securities in the large-cap segment of the U.S. equity universe. Companies in this index generally have lower price-to-book ratios and lower forecasted growth values.
It is not possible to invest directly in an index.
| (h) | Frank Russell Company (“Russell”) is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes and/or Russell ratings or underlying data and no party may rely on any Russell Indexes and/or Russell ratings and/or underlying data contained in this document. No further distribution of Russell Data is permitted without Russell's express written consent. Russell does not promote, sponsor, or endorse the content of this document. |
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 Summary – continued
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.
Expense Table
Fund expenses borne by the shareholders during the period,
July 1, 2023 through December 31, 2023
As a shareholder 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, 2023 through December 31, 2023.
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
7/01/23 | Ending
Account Value
12/31/23 | Expenses
Paid During
Period (p)
7/01/23-12/31/23 |
| Initial Class | Actual | 0.69% | $1,000.00 | $1,058.68 | $3.58 |
| Hypothetical (h) | 0.69% | $1,000.00 | $1,021.73 | $3.52 |
| Service Class | Actual | 0.94% | $1,000.00 | $1,057.23 | $4.87 |
| Hypothetical (h) | 0.94% | $1,000.00 | $1,020.47 | $4.79 |
| (h) | 5% class return per year before expenses. |
| (p) | “Expenses Paid During Period” are equal to each class's annualized expense ratio, as shown above, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). |
Portfolio of Investments − 12/31/23
The Portfolio of Investments is a complete list of all securities owned by your fund. It is categorized by broad-based asset classes.
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – 98.4% |
| Aerospace & Defense – 7.4% | |
| General Dynamics Corp. | | 178,373 | $ 46,318,117 |
| Honeywell International, Inc. | | 206,499 | 43,304,905 |
| Northrop Grumman Corp. | | 115,531 | 54,084,683 |
| RTX Corp. | | 450,458 | 37,901,536 |
| | | | | $181,609,241 |
| Alcoholic Beverages – 1.3% | |
| Diageo PLC | | 886,106 | $ 32,257,810 |
| Brokerage & Asset Managers – 4.8% | |
| BlackRock, Inc. | | 34,895 | $ 28,327,761 |
| Citigroup, Inc. | | 618,819 | 31,832,049 |
| KKR & Co., Inc. | | 254,740 | 21,105,209 |
| NASDAQ, Inc. | | 627,989 | 36,511,281 |
| | | | | $117,776,300 |
| Business Services – 3.1% | |
| Accenture PLC, “A” | | 145,205 | $ 50,953,887 |
| Equifax, Inc. | | 101,038 | 24,985,687 |
| | | | | $75,939,574 |
| Cable TV – 3.3% | |
| Charter Communications, Inc., “A” (a) | | 48,366 | $ 18,798,897 |
| Comcast Corp., “A” | | 1,411,695 | 61,902,826 |
| | | | | $80,701,723 |
| Chemicals – 0.7% | |
| PPG Industries, Inc. | | 113,760 | $ 17,012,808 |
| Construction – 1.1% | |
| Otis Worldwide Corp. | | 92,110 | $ 8,241,082 |
| Sherwin-Williams Co. | | 58,334 | 18,194,374 |
| | | | | $26,435,456 |
| Consumer Products – 2.1% | |
| Kenvue, Inc. | | 1,210,017 | $ 26,051,666 |
| Kimberly-Clark Corp. | | 143,903 | 17,485,654 |
| Reckitt Benckiser Group PLC | | 114,858 | 7,935,084 |
| | | | | $51,472,404 |
| Electrical Equipment – 0.7% | |
| Johnson Controls International PLC | | 279,123 | $ 16,088,650 |
| Electronics – 6.4% | |
| Analog Devices, Inc. | | 247,099 | $ 49,063,978 |
| KLA Corp. | | 73,091 | 42,487,798 |
| NXP Semiconductors N.V. | | 127,748 | 29,341,161 |
| Texas Instruments, Inc. | | 215,564 | 36,745,039 |
| | | | | $157,637,976 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Energy - Independent – 5.1% | |
| ConocoPhillips | | 574,004 | $ 66,624,644 |
| EOG Resources, Inc. | | 181,671 | 21,973,107 |
| Pioneer Natural Resources Co. | | 161,744 | 36,372,991 |
| | | | | $124,970,742 |
| Energy - Integrated – 0.7% | |
| Chevron Corp. | | 123,239 | $ 18,382,329 |
| Food & Beverages – 3.0% | |
| Archer Daniels Midland Co. | | 90,155 | $ 6,510,994 |
| Nestle S.A. | | 325,041 | 37,684,737 |
| PepsiCo, Inc. | | 180,548 | 30,664,272 |
| | | | | $74,860,003 |
| Gaming & Lodging – 1.5% | |
| Marriott International, Inc., “A” | | 158,849 | $ 35,822,038 |
| Health Maintenance Organizations – 3.4% | |
| Cigna Group | | 233,864 | $ 70,030,575 |
| Elevance Health, Inc. | | 30,187 | 14,234,981 |
| | | | | $84,265,556 |
| Insurance – 10.9% | |
| Aon PLC | | 181,604 | $ 52,850,396 |
| Chubb Ltd. | | 203,535 | 45,998,910 |
| Marsh & McLennan Cos., Inc. | | 314,390 | 59,567,473 |
| Progressive Corp. | | 430,489 | 68,568,288 |
| Travelers Cos., Inc. | | 209,085 | 39,828,602 |
| | | | | $266,813,669 |
| Machinery & Tools – 4.4% | |
| Eaton Corp. PLC | | 146,805 | $ 35,353,580 |
| Illinois Tool Works, Inc. | | 132,612 | 34,736,387 |
| PACCAR, Inc. | | 167,489 | 16,355,301 |
| Trane Technologies PLC | | 83,141 | 20,278,090 |
| Veralto Corp. | | 15,282 | 1,257,097 |
| | | | | $107,980,455 |
| Major Banks – 7.6% | |
| JPMorgan Chase & Co. | | 644,386 | $ 109,610,059 |
| Morgan Stanley | | 518,756 | 48,373,997 |
| PNC Financial Services Group, Inc. | | 177,843 | 27,538,988 |
| | | | | $185,523,044 |
| Medical & Health Technology & Services – 2.3% | |
| McKesson Corp. | | 120,119 | $ 55,612,695 |
| Medical Equipment – 2.3% | |
| Abbott Laboratories | | 230,956 | $ 25,421,327 |
| Boston Scientific Corp. (a) | | 293,669 | 16,977,005 |
| Medtronic PLC | | 161,942 | 13,340,782 |
| | | | | $55,739,114 |
Portfolio of Investments – continued
| Issuer | | | Shares/Par | Value ($) |
| Common Stocks – continued |
| Other Banks & Diversified Financials – 1.9% | |
| American Express Co. | | 243,981 | $ 45,707,400 |
| Pharmaceuticals – 6.6% | |
| AbbVie, Inc. | | 186,214 | $ 28,857,584 |
| Johnson & Johnson | | 350,185 | 54,887,997 |
| Merck & Co., Inc. | | 295,552 | 32,221,079 |
| Pfizer, Inc. | | 1,380,602 | 39,747,531 |
| Roche Holding AG | | 26,196 | 7,615,388 |
| | | | | $163,329,579 |
| Railroad & Shipping – 2.7% | |
| Canadian National Railway Co. | | 116,238 | $ 14,602,980 |
| Union Pacific Corp. | | 214,694 | 52,733,140 |
| | | | | $67,336,120 |
| Real Estate – 2.2% | |
| Prologis, Inc., REIT | | 345,084 | $ 45,999,697 |
| Public Storage, Inc., REIT | | 29,973 | 9,141,765 |
| | | | | $55,141,462 |
| Specialty Chemicals – 1.9% | |
| Corteva, Inc. | | 256,145 | $ 12,274,468 |
| DuPont de Nemours, Inc. | | 461,459 | 35,500,041 |
| | | | | $47,774,509 |
| Specialty Stores – 3.4% | |
| Lowe's Cos., Inc. | | 228,795 | $ 50,918,327 |
| Target Corp. | | 233,170 | 33,208,072 |
| | | | | $84,126,399 |
| Utilities - Electric Power – 7.6% | |
| American Electric Power Co., Inc. | | 142,262 | $ 11,554,520 |
| Dominion Energy, Inc. | | 620,893 | 29,181,971 |
| Duke Energy Corp. | | 454,375 | 44,092,550 |
| Exelon Corp. | | 497,392 | 17,856,373 |
| PG&E Corp. | | 1,045,883 | 18,857,271 |
| Southern Co. | | 622,087 | 43,620,740 |
| Xcel Energy, Inc. | | 330,807 | 20,480,261 |
| | | | | $185,643,686 |
| Total Common Stocks (Identified Cost, $1,320,399,349) | | $2,415,960,742 |
| Investment Companies (h) – 0.4% |
| Money Market Funds – 0.4% | |
| MFS Institutional Money Market Portfolio, 5.42% (v) (Identified Cost, $8,423,770) | | | 8,423,433 | $ 8,425,117 |
| Other Assets, Less Liabilities – 1.2% | | 29,826,917 |
| Net Assets – 100.0% | $2,454,212,776 |
| (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 $8,425,117 and $2,415,960,742, respectively. | | | |
| (v) | Affiliated issuer that is available only to investment companies managed by MFS. The rate quoted for the MFS Institutional Money Market Portfolio is the annualized seven-day yield of the fund at period end. | | | |
Portfolio of Investments – continued
| The following abbreviations are used in this report and are defined: |
| REIT | Real Estate Investment Trust |
See Notes to Financial Statements
| 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 12/31/23Assets | |
| Investments in unaffiliated issuers, at value (identified cost, $1,320,399,349) | $2,415,960,742 |
| Investments in affiliated issuers, at value (identified cost, $8,423,770) | 8,425,117 |
| Cash | 132,108 |
| Receivables for | |
| Investments sold | 23,475,002 |
| Fund shares sold | 5,909,225 |
| Interest and dividends | 2,720,740 |
| Other assets | 8,160 |
| Total assets | $2,456,631,094 |
| Liabilities | |
| Payables for | |
| Fund shares reacquired | $2,044,127 |
| Payable to affiliates | |
| Investment adviser | 160,989 |
| Administrative services fee | 3,366 |
| Shareholder servicing costs | 337 |
| Distribution and/or service fees | 33,117 |
| Payable for independent Trustees' compensation | 13 |
| Accrued expenses and other liabilities | 176,369 |
| Total liabilities | $2,418,318 |
| Net assets | $2,454,212,776 |
| Net assets consist of | |
| Paid-in capital | $1,141,152,166 |
| Total distributable earnings (loss) | 1,313,060,610 |
| Net assets | $2,454,212,776 |
| Shares of beneficial interest outstanding | 116,904,443 |
| | Net assets | Shares
outstanding | Net asset value
per share |
| Initial Class | $1,246,269,332 | 58,592,120 | $21.27 |
| Service Class | 1,207,943,444 | 58,312,323 | 20.72 |
See Notes to Financial Statements
| 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 12/31/23 | |
| Net investment income (loss) | |
| Income | |
| Dividends | $57,443,041 |
| Dividends from affiliated issuers | 1,006,489 |
| Income on securities loaned | 84,510 |
| Other | 22,583 |
| Foreign taxes withheld | (328,374) |
| Total investment income | $58,228,249 |
| Expenses | |
| Management fee | $16,623,624 |
| Distribution and/or service fees | 2,975,794 |
| Shareholder servicing costs | 13,495 |
| Administrative services fee | 356,959 |
| Independent Trustees' compensation | 41,330 |
| Custodian fee | 84,891 |
| Shareholder communications | 28,730 |
| Audit and tax fees | 69,098 |
| Legal fees | 13,250 |
| Miscellaneous | 51,876 |
| Total expenses | $20,259,047 |
| Reduction of expenses by investment adviser | (672,280) |
| Net expenses | $19,586,767 |
| Net investment income (loss) | $38,641,482 |
| Realized and unrealized gain (loss) | |
| Realized gain (loss) (identified cost basis) | |
| Unaffiliated issuers | $185,225,580 |
| Affiliated issuers | (11,246) |
| Foreign currency | 47,201 |
| Net realized gain (loss) | $185,261,535 |
| Change in unrealized appreciation or depreciation | |
| Unaffiliated issuers | $(45,384,172) |
| Affiliated issuers | (1,718) |
| Translation of assets and liabilities in foreign currencies | 27,546 |
| Net unrealized gain (loss) | $(45,358,344) |
| Net realized and unrealized gain (loss) | $139,903,191 |
| Change in net assets from operations | $178,544,673 |
See Notes to Financial Statements
| 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 |
| | 12/31/23 | 12/31/22 |
| Change in net assets | | |
| From operations | | |
| Net investment income (loss) | $38,641,482 | $37,120,192 |
| Net realized gain (loss) | 185,261,535 | 168,424,957 |
| Net unrealized gain (loss) | (45,358,344) | (384,367,410) |
| Change in net assets from operations | $178,544,673 | $(178,822,261) |
| Total distributions to shareholders | $(206,485,454) | $(183,745,122) |
| Change in net assets from fund share transactions | $35,588,362 | $(23,553,592) |
| Total change in net assets | $7,647,581 | $(386,120,975) |
| Net assets | | |
| At beginning of period | 2,446,565,195 | 2,832,686,170 |
| At end of period | $2,454,212,776 | $2,446,565,195 |
See Notes to Financial Statements
| 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 |
| | 12/31/23 | 12/31/22 | 12/31/21 | 12/31/20 | 12/31/19 |
| Net asset value, beginning of period | $21.55 | $24.72 | $20.40 | $20.95 | $17.30 |
| Income (loss) from investment operations | | | | | |
| Net investment income (loss) (d) | $0.36 | $0.35 | $0.31 | $0.31 | $0.33 |
| Net realized and unrealized gain (loss) | 1.22 | (1.83) | 4.84 | 0.29 | 4.68 |
| Total from investment operations | $1.58 | $(1.48) | $5.15 | $0.60 | $5.01 |
| Less distributions declared to shareholders | | | | | |
| From net investment income | $(0.36) | $(0.32) | $(0.31) | $(0.30) | $(0.44) |
| From net realized gain | (1.50) | (1.37) | (0.52) | (0.85) | (0.92) |
| Total distributions declared to shareholders | $(1.86) | $(1.69) | $(0.83) | $(1.15) | $(1.36) |
| Net asset value, end of period (x) | $21.27 | $21.55 | $24.72 | $20.40 | $20.95 |
| Total return (%) (k)(r)(s)(x) | 7.93 | (5.91) | 25.45 | 3.48 | 29.80 |
Ratios (%) (to average net assets)
and Supplemental data: | | | | | |
| Expenses before expense reductions | 0.72 | 0.72 | 0.72 | 0.73 | 0.73 |
| Expenses after expense reductions | 0.69 | 0.70 | 0.70 | 0.71 | 0.72 |
| Net investment income (loss) | 1.73 | 1.60 | 1.33 | 1.64 | 1.67 |
| Portfolio turnover | 16 | 13 | 9 | 17 | 13 |
| Net assets at end of period (000 omitted) | $1,246,269 | $1,207,158 | $1,363,583 | $1,183,318 | $945,183 |
| Service Class | Year ended |
| | 12/31/23 | 12/31/22 | 12/31/21 | 12/31/20 | 12/31/19 |
| Net asset value, beginning of period | $21.03 | $24.16 | $19.96 | $20.52 | $16.96 |
| Income (loss) from investment operations | | | | | |
| Net investment income (loss) (d) | $0.30 | $0.29 | $0.24 | $0.25 | $0.27 |
| Net realized and unrealized gain (loss) | 1.19 | (1.79) | 4.75 | 0.29 | 4.59 |
| Total from investment operations | $1.49 | $(1.50) | $4.99 | $0.54 | $4.86 |
| Less distributions declared to shareholders | | | | | |
| From net investment income | $(0.30) | $(0.26) | $(0.27) | $(0.25) | $(0.38) |
| From net realized gain | (1.50) | (1.37) | (0.52) | (0.85) | (0.92) |
| Total distributions declared to shareholders | $(1.80) | $(1.63) | $(0.79) | $(1.10) | $(1.30) |
| Net asset value, end of period (x) | $20.72 | $21.03 | $24.16 | $19.96 | $20.52 |
| Total return (%) (k)(r)(s)(x) | 7.69 | (6.14) | 25.16 | 3.22 | 29.51 |
Ratios (%) (to average net assets)
and Supplemental data: | | | | | |
| Expenses before expense reductions | 0.97 | 0.97 | 0.97 | 0.98 | 0.98 |
| Expenses after expense reductions | 0.94 | 0.95 | 0.95 | 0.96 | 0.97 |
| Net investment income (loss) | 1.48 | 1.35 | 1.08 | 1.38 | 1.42 |
| Portfolio turnover | 16 | 13 | 9 | 17 | 13 |
| Net assets at end of period (000 omitted) | $1,207,943 | $1,239,407 | $1,469,104 | $1,267,251 | $1,279,123 |
See Notes to Financial Statements
Financial Highlights - continued
| (d) | Per share data is based on average shares outstanding. |
| (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
Notes to Financial Statements
(1) Business and Organization
MFS Value Series (the fund) is a diversified series of MFS Variable Insurance Trust (the trust). The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The shareholders of each series of the trust are separate accounts of insurance companies, which offer variable annuity and/or life insurance products, and qualified retirement and pension plans.
The fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services - Investment Companies.
(2) Significant Accounting Policies
General — The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the fund’s Statement of Assets and Liabilities through the date that the financial statements were issued.
Balance Sheet Offsetting — The fund's accounting policy with respect to balance sheet offsetting is that, absent an event of default by the counterparty or a termination of the agreement, the International Swaps and Derivatives Association (ISDA) Master Agreement, or similar agreement, does not result in an offset of reported amounts of financial assets and financial liabilities in the Statement of Assets and Liabilities across transactions between the fund and the applicable counterparty. The fund's right to setoff may be restricted or prohibited by the bankruptcy or insolvency laws of the particular jurisdiction to which a specific master netting agreement counterparty is subject. Balance sheet offsetting disclosures, to the extent applicable to the fund, have been included in the fund’s Significant Accounting Policies note under the captions for each of the fund’s in-scope financial instruments and transactions.
Investment Valuations — Subject to its oversight, the fund's Board of Trustees has delegated primary responsibility for determining or causing to be determined the value of the fund’s investments to MFS as the fund's adviser, pursuant to the fund’s valuation policy and procedures which have been adopted by the adviser and approved by the Board. In accordance with Rule 2a-5 under the Investment Company Act of 1940, the Board of Trustees designated the adviser as the “valuation designee” of the fund. If the adviser, as valuation designee, determines that reliable market quotations are not readily available for an investment, the investment is valued at fair value as determined in good faith by the adviser in accordance with the adviser’s fair valuation policy and procedures.
Under the fund's valuation policy and procedures, 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. 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.
Under the fund’s valuation policy and procedures, market quotations are not considered to be readily available for debt instruments, floating rate loans, and many types of derivatives. These investments are generally valued at fair value based on information from third-party pricing services or otherwise determined by the adviser in accordance with the adviser’s fair valuation policy and procedures. 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, spreads and other market data. An investment may also be valued at fair value if the adviser determines that the investment’s value has been materially affected by events occurring after the close of the exchange or market on which the investment is principally traded (such as foreign exchange or market) and prior to the determination of the fund’s net asset value, or after the halt of trading of a specific security where trading does not resume prior to the close of the exchange or market on which the security is principally traded. Events that occur after foreign markets close (such as developments in foreign markets and significant movements in the U.S. markets) and prior to the determination of the fund’s net asset value may be deemed to have a material effect on the value of securities traded in foreign markets. Accordingly, the fund’s foreign equity securities may often be valued at fair value. The adviser generally relies on third-party pricing services or other information (such as the correlation with price movements of similar securities in the same or other markets; the type, cost and investment characteristics of the security; the business and financial condition of the issuer; and trading and other market data) to assist in determining whether to fair value and at what value to fair value an investment. The value of an investment
Notes to Financial Statements - continued
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 significant 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, 2023 in valuing the fund's assets and liabilities:
| Financial Instruments | Level 1 | Level 2 | Level 3 | Total |
| Equity Securities | $2,415,960,742 | $— | $— | $2,415,960,742 |
| Mutual Funds | 8,425,117 | — | — | 8,425,117 |
| Total | $2,424,385,859 | $— | $— | $2,424,385,859 |
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, 2023, there were no securities on loan or collateral outstanding.
Indemnifications — Under the fund's organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the fund. Additionally, in the normal course of business, the fund enters into agreements with service providers that may contain indemnification clauses. The fund's maximum exposure under these agreements is unknown as this would involve future claims that may be made against the fund that have not yet occurred.
Investment Transactions and Income — Dividends received in cash are recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded when the fund is informed of the dividend if such information is obtained subsequent to the ex-dividend date. Dividend payments received in additional securities are recorded on the ex-dividend date in an amount equal to the value of the security on such date.
Notes to Financial Statements - continued
The fund may receive proceeds from litigation settlements. Any proceeds received from litigation involving portfolio holdings are reflected in the Statement of Operations in realized gain/loss if the security has been disposed of by the fund or in unrealized gain/loss if the security is still held by the fund. Any other proceeds from litigation not related to portfolio holdings are reflected as other income in the Statement of Operations.
Investment transactions are recorded on the trade date. In determining the net gain or loss on securities sold, the cost of securities is determined on the identified cost basis.
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 the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles. Certain capital accounts in the financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These adjustments have no impact on net assets or net asset value per share. Temporary differences which arise from recognizing certain items of income, expense, gain or loss in different periods for financial statement and tax purposes will reverse at some time in the future.
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
12/31/23 | Year ended
12/31/22 |
| Ordinary income (including any short-term capital gains) | $37,786,809 | $43,571,664 |
| Long-term capital gains | 168,698,645 | 140,173,458 |
| Total distributions | $206,485,454 | $183,745,122 |
The federal tax cost and the tax basis components of distributable earnings were as follows:
| As of 12/31/23 | |
| Cost of investments | $1,338,717,702 |
| Gross appreciation | 1,124,833,688 |
| Gross depreciation | (39,165,531) |
| Net unrealized appreciation (depreciation) | $1,085,668,157 |
| Undistributed ordinary income | 39,125,440 |
| Undistributed long-term capital gain | 188,223,272 |
| Other temporary differences | 43,741 |
| Total distributable earnings (loss) | $1,313,060,610 |
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:
| | Year
ended
12/31/23 | | Year
ended
12/31/22 |
| Initial Class | $105,947,750 | | $91,353,058 |
| Service Class | 100,537,704 | | 92,392,064 |
| Total | $206,485,454 | | $183,745,122 |
Notes to Financial Statements - continued
(3) Transactions with Affiliates
Investment Adviser — The fund has an investment advisory agreement with MFS to provide overall investment management and related administrative services and facilities to the fund. The management fee is computed daily and paid monthly at the following annual rates based on the fund's average daily net assets:
| Up to $1 billion | 0.75% |
| In excess of $1 billion and up to $2.5 billion | 0.65% |
| In excess of $2.5 billion | 0.60% |
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. MFS has also agreed in writing to waive at least 0.01% of its management fee as part of this agreement. The agreement to waive at least 0.01% of the management fee will continue until modified by the fund's Board of Trustees, but such agreement will continue at least until April 30, 2025. For the year ended December 31, 2023, this management fee reduction amounted to $307,369, which is included in the reduction of total expenses in the Statement of Operations. The management fee incurred for the year ended December 31, 2023 was equivalent to an annual effective rate of 0.68% 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, certain tax reclaim recovery expenses (including contingency fees and closing agreement expenses), and investment-related expenses, such that total annual operating expenses do not exceed 0.69% of average daily net assets for the Initial Class shares and 0.94% 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, 2025. For the year ended December 31, 2023, this reduction amounted to $364,911, 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 Rule 12b-1 under the Investment Company Act of 1940.
The fund’s distribution plan provides that the fund will pay MFD distribution and/or service fees equal to 0.25% per annum of its average daily net assets attributable to Service Class shares as partial consideration for services performed and expenses incurred by MFD and financial intermediaries (including participating insurance companies that invest in the fund to fund variable annuity and variable life insurance contracts, sponsors of qualified retirement and pension plans that invest in the fund, and affiliates of these participating insurance companies and plan sponsors) in connection with the sale and distribution of the Service Class shares as well as shareholder servicing and account maintenance activities. MFD may subsequently pay all, or a portion, of the distribution and/or service fees to financial intermediaries. The distribution and/or service fees are computed daily and paid monthly.
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, 2023, the fee was $11,274, which equated to 0.0005% annually of the fund's average daily net assets. MFSC also receives reimbursement from the fund for out-of-pocket expenses paid by MFSC on behalf of the fund. For the year ended December 31, 2023, these costs amounted to $2,221.
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 is computed daily and paid monthly. The administrative services fee incurred for the year ended December 31, 2023 was equivalent to an annual effective rate of 0.0148% of the fund's average daily net assets.
Trustees’ and Officers’ Compensation — The fund pays compensation to independent Trustees in the form of a retainer, attendance fees, and additional compensation to Board and Committee chairpersons. Independent Trustees’ compensation is accrued daily and paid subsequent to each Trustee Board meeting. The fund does not pay compensation directly to Trustees or officers of the fund who are also officers of the investment adviser, all of whom receive remuneration from MFS for their services to the fund. Certain officers and Trustees of the fund are officers or directors of MFS, MFD, and MFSC.
Other — 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 but does incur investment and operating costs.
Notes to Financial Statements - continued
During the year ended December 31, 2023, pursuant to a policy adopted by the Board of Trustees and designed to comply with Rule 17a-7 under the Investment Company Act of 1940 (the “Act”) and relevant guidance, the fund engaged in purchase and sale transactions with funds and accounts for which MFS serves as investment adviser or sub-adviser (“cross-trades”) which amounted to $1,721,101 and $71,113, respectively. The sales transactions resulted in net realized gains (losses) of $27,233.
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 year ended December 31, 2023, this reimbursement amounted to $21,896, which is included in “Other” income in the Statement of Operations.
(4) Portfolio Securities
For the year ended December 31, 2023, purchases and sales of investments, other than short-term obligations, aggregated $380,588,453 and $533,336,801, 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
12/31/23 | | Year ended
12/31/22 |
| | Shares | Amount | | Shares | Amount |
| Shares sold | | | | | |
| Initial Class | 7,468,912 | $159,547,620 | | 6,563,655 | $146,371,031 |
| Service Class | 5,808,561 | 120,426,998 | | 24,366,893 | 539,149,730 |
| | 13,277,473 | $279,974,618 | | 30,930,548 | $685,520,761 |
Shares issued to shareholders
in reinvestment of distributions | | | | | |
| Initial Class | 5,329,364 | $105,947,750 | | 4,288,876 | $91,353,058 |
| Service Class | 5,187,704 | 100,537,704 | | 4,439,792 | 92,392,064 |
| | 10,517,068 | $206,485,454 | | 8,728,668 | $183,745,122 |
| Shares reacquired | | | | | |
| Initial Class | (10,223,245) | $(211,616,295) | | (9,999,661) | $(220,090,375) |
| Service Class | (11,621,721) | (239,255,415) | | (30,676,378) | (672,729,100) |
| | (21,844,966) | $(450,871,710) | | (40,676,039) | $(892,819,475) |
| Net change | | | | | |
| Initial Class | 2,575,031 | $53,879,075 | | 852,870 | $17,633,714 |
| Service Class | (625,456) | (18,290,713) | | (1,869,693) | (41,187,306) |
| | 1,949,575 | $35,588,362 | | (1,016,823) | $(23,553,592) |
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 and the MFS Growth Allocation Portfolio were the owners of record of approximately 4% and 1%, respectively, of the value of outstanding voting shares of the fund. In addition, the MFS Conservative Allocation Portfolio was the owner of record of less than 1% of the value of outstanding voting shares of the fund.
(6) Line of Credit
The fund and certain other funds managed by MFS participate in a $1.45 billion unsecured committed line of credit of which $1.2 billion is reserved for use by the fund and certain other MFS U.S. funds. The line of credit is provided by a syndicate of banks under a credit agreement. Borrowings may be made for temporary financing needs. Interest is charged to each fund, based on its borrowings, generally at a rate equal to the highest of 1) Daily Simple SOFR (Secured Overnight Financing Rate) plus 0.10%, 2) the Federal Funds Effective Rate, or 3) the Overnight Bank Funding Rate, each 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. The line of credit expires on March 14, 2024 unless extended or renewed. In addition, the fund and other funds managed by MFS have established unsecured
Notes to Financial Statements - continued
uncommitted borrowing arrangements with certain banks for temporary financing needs. Interest is charged to each fund, based on its borrowings, at rates equal to customary reference rates plus an agreed upon spread. For the year ended December 31, 2023, the fund’s commitment fee and interest expense were $12,957 and $0, respectively, and are included in “Miscellaneous” expense in the Statement of Operations.
(7) Investments in Affiliated Issuers
An affiliated issuer may be considered one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common control. For the purposes of this report, the following were affiliated issuers:
| Affiliated Issuers | Beginning
Value | Purchases | Sales
Proceeds | Realized
Gain
(Loss) | Change in
Unrealized
Appreciation or
Depreciation | Ending
Value |
| MFS Institutional Money Market Portfolio | $29,657,201 | $334,673,070 | $355,892,190 | $(11,246) | $(1,718) | $8,425,117 |
| Affiliated Issuers | Dividend
Income | Capital Gain
Distributions |
| MFS Institutional Money Market Portfolio | $1,006,489 | $— |
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of MFS Variable Insurance Trust and the Shareholders of MFS Value Series:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities of MFS Value Series (the “Fund”), including the portfolio of investments, as of December 31, 2023, 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, 2023, 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, 2023, by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
February 14, 2024
We have served as the auditor of one or more of the MFS investment companies since 1924.
Trustees and Officers — Identification and Background
The Trustees and Officers of the Trust, as of February 1, 2024, 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 TRUSTEE | | | | | | | | | | |
Michael W. Roberge (k)
(age 57) | | Trustee | | January 2021 | | 136 | | Massachusetts Financial Services Company, Chairman (since January 2021); Chief Executive Officer (since January 2017); Director; Chairman of the Board (since January 2022) | | N/A |
| INDEPENDENT TRUSTEES | | | | | | | | | | |
John P. Kavanaugh
(age 69) | | Trustee and Chair of Trustees | | January 2009 | | 136 | | Private investor | | N/A |
Steven E. Buller
(age 72) | | Trustee | | February 2014 | | 136 | | Private investor | | N/A |
John A. Caroselli
(age 69) | | Trustee | | March 2017 | | 136 | | Private investor; JC Global Advisors, LLC (management consulting), President (since 2015) | | N/A |
Maureen R. Goldfarb
(age 68) | | Trustee | | January 2009 | | 136 | | Private investor | | N/A |
Peter D. Jones
(age 68) | | Trustee | | January 2019 | | 136 | | Private investor | | N/A |
James W. Kilman, Jr.
(age 62) | | Trustee | | January 2019 | | 136 | | Burford Capital Limited (finance and investment management), Senior Advisor (since May 3, 2021), Chief Financial Officer (2019 - May 2, 2021); KielStrand Capital LLC (family office), Chief Executive Officer (since 2016) | | Alpha-En Corporation, Director (2016-2019) |
Clarence Otis, Jr.
(age 67) | | Trustee | | March 2017 | | 136 | | Private investor | | VF Corporation, Director; Verizon Communications, Inc., Director; The Travelers Companies, Director |
Maryanne L. Roepke
(age 67) | | Trustee | | May 2014 | | 136 | | Private investor | | N/A |
Laurie J. Thomsen
(age 66) | | Trustee | | March 2005 | | 136 | | Private investor | | The Travelers Companies, Director; Dycom Industries, Inc., Director |
| 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 50) | | Assistant Secretary and Assistant Clerk | | July 2005 | | 136 | | Massachusetts Financial Services Company, Senior Vice President and Senior Managing Counsel |
Kino Clark (k)
(age 55) | | Assistant Treasurer | | January 2012 | | 136 | | Massachusetts Financial Services Company, Vice President |
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 |
John W. Clark, Jr. (k)
(age 56) | | Assistant Treasurer | | April 2017 | | 136 | | Massachusetts Financial Services Company, Vice President |
David L. DiLorenzo (k)
(age 55) | | President | | July 2005 | | 136 | | Massachusetts Financial Services Company, Senior Vice President |
Heidi W. Hardin (k)
(age 56) | | Secretary and Clerk | | April 2017 | | 136 | | Massachusetts Financial Services Company, Executive Vice President and General Counsel |
Brian E. Langenfeld (k)
(age 50) | | Assistant Secretary and Assistant Clerk | | June 2006 | | 136 | | Massachusetts Financial Services Company, Vice President and Managing Counsel |
Rosa E. Licea-Mailloux (k)
(age 47) | | Chief Compliance Officer | | March 2022 | | 136 | | Massachusetts Financial Services Company, Vice President (since 2018); Director of Corporate Compliance (2018-2021), Senior Director Compliance (2021-2022), Senior Managing Director of North American Compliance & Chief Compliance Officer (since March 2022) |
Amanda S. Mooradian (k)
(age 44) | | Assistant Secretary and Assistant Clerk | | September 2018 | | 136 | | Massachusetts Financial Services Company, Assistant Vice President and Senior Counsel |
Susan A. Pereira (k)
(age 53) | | Assistant Secretary and Assistant Clerk | | July 2005 | | 136 | | Massachusetts Financial Services Company, Vice President and Managing Counsel |
Kasey L. Phillips (k)
(age 53) | | Assistant Treasurer | | September 2012 | | 136 | | Massachusetts Financial Services Company, Vice President |
Matthew A. Stowe (k)
(age 49) | | Assistant Secretary and Assistant Clerk | | October 2014 | | 136 | | Massachusetts Financial Services Company, Vice President and Senior Managing Counsel |
William B. Wilson (k)
(age 41) | | Assistant Secretary and Assistant Clerk | | October 2022 | | 136 | | Massachusetts Financial Services Company, Assistant Vice President and Senior Counsel |
James O. Yost (k)
(age 63) | | Treasurer | | September 1990 | | 136 | | 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. 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 (other than Messrs. Jones, Kilman and Roberge) 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. Mr. Roberge became a Trustee of the Funds on January 1, 2021 and Messrs. Jones and Kilman became Trustees of the Funds on January 1, 2019. 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, Caroselli, Jones and Otis 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.
Trustees and Officers - continued
The Statement of Additional Information for a Fund includes further information about the Trustees and is available without charge upon request by calling 1-800-225-2606.
| Investment Adviser | Custodian |
Massachusetts Financial Services Company
111 Huntington Avenue
Boston, MA 02199-7618 | State Street Bank and Trust Company
1 Congress Street, Suite 1
Boston, MA 02114-2016 |
| Distributor | Independent Registered Public Accounting Firm |
MFS Fund Distributors, Inc.
111 Huntington Avenue
Boston, MA 02199-7618 | Deloitte & Touche LLP
200 Berkeley Street
Boston, MA 02116 |
| Portfolio Manager(s) | |
Katherine Cannan
Nevin Chitkara | |
Board Review of Investment Advisory Agreement
MFS Value Series
The Investment Company Act of 1940 requires that both the full Board of Trustees and a majority of the non-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, 2023 (“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 an independent consultant who was retained by and reported 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, 2022 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 as well as all other funds in the same investment classification/category (the “Broadridge expense group and universe”), (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 five-year period ended December 31, 2022, 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 five-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 4th quintile for each of the one- and three-year periods ended December 31, 2022 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.
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 the Broadridge expense group 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 higher 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 cash in-flows and out-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 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.
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 any 12b-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 and sub-custodians. The Trustees concluded that the various non-advisory services provided by MFS and its affiliates on behalf of the Fund were satisfactory.
The Trustees considered so-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 MFS discontinued its historic practice of obtaining investment research from portfolio brokerage commissions paid by certain MFS Funds effective January 2018, and directly pays or voluntarily reimburses 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 additional one-year period, commencing August 1, 2023.
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 visiting mfs.com/proxyvoting, or by visiting the SEC’s Web site at http://www.sec.gov.
Information regarding how the fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available by August 31 of each year without charge by visiting mfs.com/proxyvoting, or by visiting the SEC’s Web site at http://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 as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s Web site at http://www.sec.gov. A shareholder can obtain the portfolio holdings report for the first and third quarters of the fund's fiscal year at mfs.com/vit1 by choosing the fund's name and then scrolling to the “Resources” section and clicking on the “Prospectus and Reports” tab.
FURTHER INFORMATION
From time to time, MFS may post important information about the fund or the MFS Funds on the MFS Web site (mfs.com). This information is available at https://www.mfs.com/announcements or at mfs.com/vit1 by choosing the fund's name and then scrolling to the “Resources” section and clicking on the “Announcements” tab, if any.
Information About Fund Contracts and Legal Claims
The fund has entered into contractual arrangements with an investment adviser, administrator, distributor, shareholder servicing agent, 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 $185,569,000 as capital gain dividends paid during the fiscal year.
For corporate shareholders, 100.00% of the ordinary income dividends paid during the fiscal year qualify for the corporate dividends received deduction.
| 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 are no longer our customer, we continue to share your information as described in this notice. |
| How? | All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MFS chooses to share; and whether you can limit this sharing. |
Reasons we can share your
personal information | Does MFS share? | Can you limit
this sharing? |
For our everyday business purposes –
such as to process your transactions, maintain your
account(s), respond to court orders and legal
investigations, or report to credit bureaus | Yes | No |
For our marketing purposes –
to offer our products and services to you | No | We don't share |
For joint marketing with other
financial companies | No | We don't share |
For our affiliates' everyday business purposes –
information about your transactions and experiences | No | We don't share |
For our affiliates' everyday business purposes –
information about your creditworthiness | No | We don't share |
| For nonaffiliates to market to you | No | We don't share |
| Questions? | Call 800-225-2606 or go to mfs.com. |
| 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. |
Item 1(b):
Not applicable.
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 Form N-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 Form N-CSR. During the period covered by this report, the Registrant did not grant a waiver, including an implicit waiver, from any provision of the Code.
A copy of the Code is attached hereto as EX-99.COE.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Messrs. Steven E. Buller and Clarence Otis, Jr., 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 Form N-CSR. In addition, Messrs. Buller and Otis 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 Form N-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 for non-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, 2023 and 2022, audit fees billed to the Fund by Deloitte were as follows:
Fees billed by Deloitte: | | Audit Fees |
| 2023 | | 2022 |
MFS Global Equity Series | 55,676 | | 51,335 |
MFS Growth Series | 56,668 | | 52,252 |
MFS Investors Trust Series | 55,676 | | 51,335 |
MFS Mid Cap Growth Series | 55,676 | | 51,335 |
MFS New Discovery Series | 55,676 | | 51,335 |
MFS Research Series | 56,793 | | 52,368 |
MFS Total Return Bond Series | 79,577 | | 73,425 |
MFS Total Return Series | 72,327 | | 72,327 |
MFS Utilities Series | 55,802 | | 51,452 |
MFS Value Series | 56,668 | | 52,252 |
Total | 600,539 | | 559,416 |
For the fiscal years ended December 31, 2023 and 2022, 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:
Fees billed by Deloitte: | Audit-Related Fees1 | | Tax Fees2 | | All Other Fees3 |
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 |
To MFS Global Equity Series | 2,400 | 2,400 | 0 | 0 | 0 | 0 |
| | | | | | | | | | | |
To MFS Growth Series | 2,400 | 2,400 | 0 | 0 | 0 | 0 |
| | | | | | | | | | | |
To MFS Investors Trust Series | 2,400 | 2,400 | 0 | 0 | 0 | 0 |
| | | | | | | | | | | |
To MFS Mid Cap Growth | 2,400 | 2,400 | 0 | 0 | 0 | 0 |
Series | | | | | | | | | | | |
To MFS New Discovery Series | 2,400 | 2,400 | 0 | 0 | 0 | 0 |
| | | | | | | | | | | |
To MFS Research Series | 2,400 | 2,400 | 0 | 0 | 0 | 0 |
| | | | | | | | | | | |
To MFS Total Return Bond | 2,400 | 2,400 | 0 | 0 | 0 | 0 |
Series | | | | | | | | | | | |
To MFS Total Return Series | 2,400 | 2,400 | 0 | 0 | 0 | 0 |
| | | | | | | | | | | |
To MFS Utilities Series | 2,400 | 2,400 | 0 | 0 | 0 | 0 |
| | | | | | | | | | | |
To MFS Value Series | 2,400 | 2,400 | 0 | 0 | 0 | 0 |
| | | | | | | | | | | |
Total fees billed by | | | | | | | | | | | |
Deloitte to above Funds: | 24,000 | 24,000 | 0 | 0 | 0 | 0 |
| | | | | | | | |
Fees billed by Deloitte: | Audit-Related Fees1 | | Tax Fees2 | | All Other Fees3 |
| 2023 | | 2022 | | 2023 | | 2022 | | 2023 | | 2022 |
To MFS and MFS Related | 0 | | 0 | | 0 | | 0 | | 0 | | 3,790 |
Entities of MFS Global Equity | | | | | | | | | | | |
Series* | | | | | | | | | | | |
To MFS and MFS Related | 0 | | 0 | | 0 | | 0 | | 0 | | 3,790 |
Entities of MFS Growth Series* | | | | | | | | | | | |
To MFS and MFS Related | 0 | | 0 | | 0 | | 0 | | 0 | | 3,790 |
Entities of MFS Investors Trust | | | | | | | | | | | |
Series* | | | | | | | | | | | |
To MFS and MFS Related | 0 | | 0 | 0 | | 0 | 0 | | 3,790 |
Entities of MFS Mid Cap | | | | | | | | | | | |
Growth Series* | | | | | | | | | | | |
To MFS and MFS Related | 0 | | 0 | 0 | | 0 | 0 | | 3,790 |
Entities of MFS New Discovery | | | | | | | | | | | |
Series* | | | | | | | | | | | |
To MFS and MFS Related | 0 | | 0 | 0 | | 0 | 0 | | 3,790 |
Entities of MFS Research | | | | | | | | | | | |
Series* | | | | | | | | | | | |
To MFS and MFS Related | 0 | | 0 | 0 | | 0 | 0 | | 3,790 |
Entities of MFS Total Return | | | | | | | | | | | |
Bond Series* | | | | | | | | | | | |
To MFS and MFS Related | 0 | | 0 | 0 | | 0 | 0 | | 3,790 |
Entities of MFS Total Return | | | | | | | | | | | |
Series* | | | | | | | | | | | |
To MFS and MFS Related | 0 | | 0 | 0 | | 0 | 0 | | 3,790 |
Entities of MFS Utilities | | | | | | | | | | | |
Series* | | | | | | | | | | | |
To MFS and MFS Related | 0 | | 0 | 0 | | 0 | 0 | | 3,790 |
Entities of MFS Value | | | | | | | | | | | |
Series* | | | | | | | | | | | |
| | | | | | |
Fees billed by Deloitte: | | | | | Aggregate fees for non-audit services: |
| | | | | 2023 | | | | 2022 |
To MFS Global Equity Series, MFS and MFS Related | | | | | | | | | |
Entities# | | | | | 2,400 | | | | 6,190 |
To MFS Growth Series, MFS and MFS Related Entities# | | 2,400 | | | | 6,190 |
To MFS Investors Trust Series, MFS and MFS Related | | | | | | | | |
Entities# | | | | | 2,400 | | | | 6,190 |
To MFS Mid Cap Growth Series, MFS and MFS Related | | | | | | | | |
Entities# | | | | | 2,400 | | | | 6,190 |
To MFS New Discovery Series, MFS and MFS Related | | | | | | | | |
Entities# | | | | | 2,400 | | | | 6,190 |
To MFS Research Series, MFS and MFS Related Entities# | | 2,400 | | | | 6,190 |
To MFS Total Return Bond Series, MFS and MFS Related | | | | | | | | |
Entities# | | | | | 2,400 | | | | 6,190 |
To MFS Total Return Series, MFS and MFS Related | | | | | | | | | |
Entities# | | | | | 2,400 | | | | 6,190 |
To MFS Utilities Series, MFS and MFS Related Entities# | | 2,400 | | | | 6,190 |
To MFS Value Series, MFS and MFS Related Entities# | | 2,400 | | | | 6,190 |
*This amount reflects the fees billed to MFS and MFS Related Entities for non-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 for non-audit services rendered to the Fund and for non-audit services rendered to MFS and the MFS Related Entities.
1 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 the pre- approval of audit and non-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 permissible non-audit services rendered to the Fund and all permissible non-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 an engagement-by-engagement basis. In the event pre-approval of such services is necessary between regular meetings of the Audit Committee and it is not practical to wait to seek pre-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 not pre-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 engagement pre-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 Rule 2-01 of Regulation S-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 of non-audit services to MFS and MFS Related Entities that were not pre-approved by the Committee (because such services were provided prior to the effectiveness of SEC rules requiring pre-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 4(i):
Not applicable.
Item 4(j):
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to the Registrant.
ITEM 6. INVESTMENTS
A schedule of investments for each series covered by this Form N-CSR is included as part of the report to shareholders of such series under Item 1(a) of this Form N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the Registrant.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the Registrant.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable to the Registrant.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no material changes to the procedures by which shareholders may send recommendations to the Board for nominees to the Registrant's Board since the Registrant last provided disclosure as to such procedures in response to the requirements of Item 407 (c)(2)(iv) of Regulation S-K or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a)Based upon their evaluation of the effectiveness of the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the "Act")) as conducted within 90 days of the filing date of this report on Form N-CSR, the Registrant's principal financial officer and principal executive officer have concluded that those disclosure controls and procedures provide reasonable assurance that the material information required to be disclosed by the Registrant on this report is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms.
(b)There were no changes in the Registrant's internal controls over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the 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 FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the Registrant.
ITEM 13. RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION.
Not Applicable.
ITEM 14. 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
A copy of the Amended and Restated Declaration of Trust, as amended, of the Registrant is on file with the Secretary of State of The Commonwealth of Massachusetts and notice is hereby given that this instrument is executed on behalf of the Registrant by an officer of the Registrant as an officer and not individually and the obligations of or arising out of this instrument are not binding upon any of the Trustees or shareholders individually, but are binding only upon the assets and property of the respective constituent series of the Registrant.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) MFS VARIABLE INSURANCE TRUST
By (Signature and Title)*
/S/ DAVID L. DILORENZO
David L. DiLorenzo, President
Date: February 14, 2024
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)*
/S/ DAVID L. DILORENZO
David L. DiLorenzo, President (Principal Executive Officer)
Date: February 14, 2024
By (Signature and Title)*
/S/ JAMES O. YOST
James O. Yost, Treasurer (Principal Financial Officer and Accounting Officer) Date: February 14, 2024
* Print name and title of each signing officer under his or her signature.
