SUMMARY PROSPECTUS

February 28, 2013

 

 

MFS ®  Strategic Income Fund

 

Before you invest , you may want to review the fund’s prospectus, which contains more information about the fund and its risks. You can find the fund’s prospectus and other information about the fund, including the fund’s statement of additional information, online at funds.mfs.com.  You can also get this information at no cost by calling 1-800-225-2606 or by sending an e-mail request to orderliterature@mfs.com.  The fund’s prospectus and statement of additional information, both dated February 28, 2013, as may be supplemented from time to time, are incorporated by reference into this Summary Prospectus.

 

CLASS

 

TICKER
SYMBOL

Class A

 

MFIOX

Class B

 

MIOBX

Class C

 

MIOCX

Class I

 

MFIIX

 

Summary of Key Information

 

Investment Objective

 

The fund’s investment objective is to seek total return with an emphasis on high current income, but also considering capital appreciation.

 

Fees and Expenses

 

This table describes the fees and expenses that you may pay when you buy and hold shares of the fund. Expenses have been adjusted to reflect estimated expenses of investing in another MFS fund.

 

You may qualify for sales charge reductions if you and certain members of your family invest, or agree to invest in the future, at least $50,000 in MFS Funds. More information about these and other waivers and reductions is available from your financial intermediary and in “Sales Charges and Waivers or Reductions” on page 10 of the fund’s prospectus and “Waivers of Sales Charges” on page I-13 of the fund’s statement of additional information Part I.

 

Shareholder Fees (fees paid directly from your investment):

 

Share Class

 

A

 

B

 

C

 

I

 

Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price)

 

4.75

%

None

 

None

 

None

 

Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds, whichever is less)

 

1.00

% #

4.00

%

1.00

%

None

 

 

Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment):

 

Share Class

 

A

 

B

 

C

 

I

 

Management Fee

 

0.65

%

0.65

%

0.65

%

0.65

%

Distribution and/or Service (12b-1) Fees

 

0.25

%

1.00

%

1.00

%

None

 

Other Expenses

 

0.28

%

0.28

%

0.28

%

0.28

%

Acquired Fund Fees and Expenses

 

0.01

%

0.01

%

0.01

%

0.01

%

Total Annual Fund Operating Expenses

 

1.19

%

1.94

%

1.94

%

0.94

%

Fee Reductions and/or Expense Reimbursements 1

 

(0.13

)%

(0.13

)%

(0.13

)%

(0.13

)%

Total Annual Fund Operating Expenses After Fee Reductions and/or Expense Reimbursements

 

1.06

%

1.81

%

1.81

%

0.81

%

 

#                  On shares purchased without an initial sales charge and redeemed within 18 months of purchase for shares purchased on or after August 1, 2012, and within 24 months of purchase for shares purchased prior to August 1, 2012.

1                  Massachusetts Financial Services Company has agreed in writing to reduce its management fee to 0.60% of the fund’s average daily net assets annually. This written agreement will remain in effect until modified by the fund’s Board of Trustees, but such agreement will continue until at least February 28, 2014. In addition, MFS has agreed in writing to bear the fund’s expenses, excluding interest, taxes, extraordinary expenses, brokerage and transaction costs, and investment-related expenses (such as interest, borrowing expenses incurred in connection with the fund’s investment activity, and fees and expenses associated with investments in investment companies and other similar investment vehicles), such that “Total Annual Fund Operating Expenses” do not exceed 1.05% of the fund’s average daily net assets annually for Class A shares, 1.80% of the fund’s average daily net assets annually for each of Class B and Class C shares, and 0.80% of the fund’s average daily net assets annually for Class I shares. This written agreement will continue until modified by the fund’s Board of Trustees, but such agreement will continue until at least February 28, 2014.

 

MFO-SUM-022813

 

Page 1 of 4


 

MFS Strategic Income Fund

 

Example

 

This example is intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds.

 

The example assumes that: you invest $10,000 in the fund for the time periods indicated and you redeem your shares at the end of the time periods (unless otherwise indicated); your investment has a 5% return each year; and the fund’s operating expenses remain the same.

 

Although your actual costs will likely be higher or lower, under these assumptions your costs would be:

 

 

 

1 YEAR

 

3 YEARS

 

5 YEARS

 

10 YEARS

 

Class A Shares

 

$

578

 

$

823

 

$

1,086

 

$

1,839

 

Class B Shares assuming

 

 

 

 

 

 

 

 

 

redemption at end of period

 

$

584

 

$

897

 

$

1,235

 

$

2,059

 

no redemption at end of period

 

$

184

 

$

597

 

$

1,035

 

$

2,059

 

Class C Shares assuming

 

 

 

 

 

 

 

 

 

redemption at end of period

 

$

284

 

$

597

 

$

1,035

 

$

2,254

 

no redemption at end of period

 

$

184

 

$

597

 

$

1,035

 

$

2,254

 

Class I Shares

 

$

83

 

$

287

 

$

507

 

$

1,143

 

 

Portfolio Turnover

 

The fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when shares are held in a taxable account. These transaction costs, which are not reflected in “Annual Fund Operating Expenses” or in the “Example,” affect the fund’s performance.  During the most recent fiscal year, the fund’s portfolio turnover rate was 42% of the average value of its portfolio.

 

Principal Investment Strategies

 

MFS (Massachusetts Financial Services Company, the fund’s investment adviser) normally invests the fund’s assets primarily in debt instruments. MFS may invest the fund’s assets in other mutual funds advised by MFS that invest in securities instead of investing directly in such securities.

 

MFS normally invests the fund’s assets in U.S. Government securities, foreign government securities, mortgage-backed and other asset-backed securities of U.S. and foreign issuers, corporate bonds of U.S. and/or foreign issuers, and/or debt instruments of issuers located in emerging market countries. MFS allocates the fund’s assets across these categories with a view toward broad diversification across and within these categories. MFS may also invest the fund’s assets in equity securities.

 

MFS may invest up to 100% of the fund’s assets directly or indirectly in less than investment grade quality debt instruments (lower quality debt instruments).

 

MFS may invest a large percentage of the fund’s assets in issuers in a single country, a small number of countries, or a particular geographic region.

 

While MFS may use derivatives for any investment purpose, to the extent MFS uses derivatives, MFS expects to use derivatives primarily to increase or decrease exposure to a particular market, segment of the market, or security, to increase or decrease interest rate or currency exposure, or as alternatives to direct investments. Derivatives include futures, forward contracts, options, structured securities, inverse floating rate instruments, and swaps.

 

MFS uses a bottom-up investment approach to buying and selling investments for the fund. Investments are selected primarily based on fundamental analysis of individual issuers and instruments. Quantitative models that systematically evaluate issuers and instruments may also be considered.

 

Principal Risks

 

As with any mutual fund, the fund may not achieve its objective and/or you could lose money on your investment in the fund. An investment in the fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency.

 

The principal risks of investing in the fund are:

 

Interest Rate Risk:   The price of a debt instrument falls when interest rates rise and rises when interest rates fall. Instruments with longer maturities, or that do not pay current interest, are more sensitive to interest rate changes.

 

Credit Risk:  The price of a debt instrument depends, in part, on the credit quality of the issuer, borrower, counterparty, or underlying collateral or assets and the terms of the instrument. The price of a debt instrument can decline in response to changes in the financial condition of the issuer, borrower, counterparty, or underlying collateral or assets, or changes in specific or general market, economic, industry, political, regulatory, geopolitical, and other conditions.

 

Lower quality debt instruments (commonly referred to as “high yield securities” or “junk bonds”) can involve a substantially greater risk of default or can already be in default, and their values can decline significantly. Lower quality debt instruments are regarded as having predominantly speculative characteristics. Lower quality debt instruments tend to be more sensitive to adverse news about the issuer, or the market or economy in general, than higher quality debt instruments.

 

Foreign and Emerging Markets Risk:  Exposure to foreign markets, especially emerging markets, through issuers or currencies can involve additional risks relating to market, economic, industry, political, regulatory, geopolitical, and other conditions. These factors can make foreign investments, especially those in emerging markets, more volatile and less liquid than U.S. investments. In addition, foreign markets can react differently to these conditions than the U.S. market. Emerging markets can have less developed markets, greater custody and operational risk, less developed legal, regulatory, and accounting systems, and greater political, social, and economic instability than developed markets.

 

Currency Risk:  The value of foreign currencies relative to the U.S. dollar fluctuates in response to market, economic, industry, political, regulatory, geopolitical, and other conditions, and a decline in the value of a foreign currency versus the U.S. dollar reduces the value in U.S. dollars of investments denominated in that foreign currency.

 

Geographic Concentration Risk: The fund’s performance could be closely tied to the market, currency, economic, political, regulatory, geopolitical, and other conditions in the countries or regions in which the fund invests and could be more volatile than the performance of more geographically-diversified funds.

 

Prepayment/Extension Risk:   Instruments subject to prepayment and/or extension can reduce the potential for gain for the instrument’s holders if the instrument is prepaid and increase the potential for loss if the maturity of the instrument is extended.

 

Inflation-Adjusted Debt Instruments Risk:   Interest payments on inflation-adjusted debt instruments can be unpredictable and vary based on the level of inflation. If inflation is negative, principal and income can both decline.

 

Page 2 of 4


 

MFS Strategic Income Fund

 

Municipal Risk:   The price of a municipal instrument can be volatile and significantly affected by adverse tax or court rulings, legislative or political changes, changes in specific or general market and economic conditions, and the financial condition of municipal issuers and insurers. Because many municipal instruments are issued to finance similar projects, conditions in these industries can significantly affect the fund and the overall municipal market.

 

Stock Market/Company Risk:   Stock markets are volatile and can decline significantly in response to issuer, market, economic, industry, political, regulatory, geopolitical, and other conditions, as well as to investor perceptions of these conditions. The price of an equity security can decrease significantly in response to these conditions, and these conditions can affect a single issuer or type of security, issuers within a broad market sector, industry or geographic region, or the market in general.

 

Derivatives Risk:   Derivatives can be highly volatile and involve risks in addition to the risks of the underlying indicator(s) on which the derivative is based. Gains or losses from derivatives can be substantially greater than the derivatives’ original cost.  Derivatives can involve leverage.

 

Leveraging Risk:   Leverage involves investment exposure in an amount exceeding the initial investment. Leverage can cause increased volatility by magnifying gains or losses.

 

Investment Selection Risk:  MFS’ investment analysis and its selection of investments may not produce the intended results and/or can lead to an investment focus that results in the fund underperforming other funds with similar investment strategies and/or underperforming the markets in which the fund invests.

 

Counterparty and Third Party Risk:   Transactions involving a counterparty or third party other than the issuer of the instrument are subject to the credit risk of the counterparty or third party, and to the counterparty’s or third party’s ability to perform in accordance with the terms of the transaction.

 

Liquidity Risk:   It may not be possible to sell certain investments, types of investments, and/or segments of the market at any particular time or at an acceptable price.

 

Performance Information

 

The bar chart and performance table below are intended to provide some indication of the risks of investing in the fund by showing changes in the fund’s performance over time and how the fund’s performance over time compares with that of a broad measure of market performance and one or more other measures of performance for markets in which the fund may invest.

 

The fund’s past performance (before and after taxes) does not necessarily indicate how the fund will perform in the future. Updated performance is available online at mfs.com or by calling 1-800-225-2606.

 

Class A Bar Chart.  The bar chart does not take into account any sales charges (loads) that you may be required to pay upon purchase or redemption of the fund’s shares. If these sales charges were included, they would reduce the returns shown.

 

 

During the period(s) shown in the bar chart, the highest quarterly return was 10.14% (for the calendar quarter ended June 30, 2009) and the lowest quarterly return was (7.06)% (for the calendar quarter ended December 31, 2008).

 

Performance Table.

 

Average Annual Total Returns
(for the Periods Ended December 31, 2012)

 

Share Class 

 

1 YEAR

 

5 YEARS

 

10 YEARS

 

Returns Before Taxes

 

 

 

 

 

 

 

B Shares

 

5.94

%

5.97

%

6.34

%

C Shares

 

9.13

%

6.32

%

6.21

%

I Shares

 

10.99

%

7.27

%

7.21

%

A Shares

 

5.45

%

5.91

%

6.37

%

Returns After Taxes on Distributions

 

 

 

 

 

 

 

A Shares

 

3.75

%

3.80

%

4.22

%

Returns After Taxes on Distributions and Sale of Fund Shares

 

 

 

 

 

 

 

A Shares

 

3.50

%

3.75

%

4.16

%

Index Comparisons (Reflects no deduction for fees, expenses or taxes)

 

 

 

 

 

 

 

Barclays U.S. High-Yield Corporate Bond 2% Issuer Capped Index

 

15.78

%

10.45

%

10.60

%

MFS Strategic Income Blended Index*

 

9.76

%

8.03

%

7.97

%

 

*        As of December 31, 2012, the MFS Strategic Income Blended Index (the “Blended Index”) consisted of the following indices and weightings: 10% Barclays U.S. Credit Bond Index; 14% JPMorgan Emerging Markets Bond Index Global; 8.5% Citigroup World Government Bond Non-Dollar Index; 8.5% Citigroup World Government Bond Non-Dollar Hedged Index; 26% Barclays U.S. Government/Mortgage Bond Index; and 33% Barclays U.S. High-Yield Corporate Bond 2% Issuer Capped Index. The underlying indices and weightings of the Blended Index may have differed during the period, and may differ in the future.

 

Aft er-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns will depend on your own tax situation, and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. The after-tax returns are shown for only one of the fund’s classes of shares, and after-tax returns for the fund’s other classes of shares will vary from the returns shown.

 

Page 3 of 4


 

MFS Strategic Income Fund

 

Investment Adviser

 

MFS serves as the investment adviser for the fund.

 

Portfolio Manager(s)

 

Portfolio Manager

 

Since

 

Title

James J. Calmas

 

2005

 

Investment Officer of MFS

Robert D. Persons

 

2005

 

Investment Officer of MFS

Matthew W. Ryan

 

2005

 

Investment Officer of MFS

Erik S. Weisman

 

2005

 

Investment Officer of MFS

William J. Adams

 

2011

 

Investment Officer of MFS

David P. Cole

 

2011

 

Investment Officer of MFS

 

Effective April 30, 2013, the chart above will be restated as follows:

 

Portfolio Manager

 

Since

 

Title

James J. Calmas

 

2005

 

Investment Officer of MFS

Robert D. Persons

 

2005

 

Investment Officer of MFS

Matthew W. Ryan

 

2005

 

Investment Officer of MFS

Erik S. Weisman

 

2005

 

Investment Officer of MFS

William J. Adams

 

2011

 

Investment Officer of MFS

David P. Cole

 

2011

 

Investment Officer of MFS

Ward Brown

 

April 2013

 

Investment Officer of MFS

 

Purchase and Sale of Fund Shares

 

You may purchase and redeem shares of the fund each day the New York Stock Exchange is open for trading. You may purchase or redeem shares either by having your financial intermediary process your purchase or redemption, or through MFS Service Center, Inc. (MFSC) by overnight mail (MFSC, c/o Boston Financial Data Services, 30 Dan Road, Canton, MA 02021-2809), by mail ([Fund Name], P.O. Box 55824, Boston, MA 02205-5824), by telephone (1-800-225-2606), or via the Internet at mfs.com (MFS Access).

 

The fund’s initial and subsequent investment minimums generally are as follows:

 

Class

 

Initial Minimum

 

Subsequent Minimum

Class A, Class B, Class C

 

None – automatic investment plans and certain asset-based fee programs
$25 – employer-sponsored retirement plans
$250 – Traditional and Roth IRAs
$1,000 – other accounts

 

$50 – by check and non-systematic written exchange request, and via MFSC telephone representatives
None – other purchases

 

 

 

 

 

Class I

 

None

 

None

 

Taxes

 

If your shares are held in a taxable account, the fund’s distributions are taxable to you, and will be taxed as ordinary income and/or capital gains.

 

Payments to Broker/Dealers and Other Financial Intermediaries

 

If you purchase shares of the fund through a broker/dealer or other financial intermediary (such as a bank), the fund, MFS, and MFS’ affiliates may pay the financial intermediary for the sale of shares of a fund and/or the servicing of shareholder accounts. These payments may create a conflict of interest by influencing your broker/dealer or other financial intermediary and your salesperson to recommend the fund over another investment. Ask your financial intermediary or visit your financial intermediary’s Web site for more information.

 

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