<PAGE>
MFS(R) STRATEGIC INCOME FUND
Supplement dated March 1, 1999 (as revised June 14, 1999)
to the Current Prospectus
This Supplement describes the fund's class I shares, and it supplements certain
information in the fund's Prospectus dated March 1, 1999. The caption headings
used in this Supplement correspond with the caption headings used in the
Prospectus.
You may purchase class I shares only if you are an eligible institutional
investor, as described under the caption "Description of Share Classes" below.
1. RISK RETURN SUMMARY
Performance Table. The "Performance Table" is intended to indicate some of
the risks of investing in the fund by showing changes in the fund's performance
over time. The table is supplemented as follows:
Average Annual Total Returns as of December 31, 1998
1 Year 5 Year 10 Year
------ ------ -------
Class I shares (0.43)% 5.13% 5.13%
Credit Suisse First Boston High Yield Index++* 0.58% 8.16% 10.74%
Lehman Brothers Government Corporate Bond Index+** 9.49% 7.31% 9.24%
Salomon Brothers World Governments Bond Index+*** 15.29% 7.84% 8.97%
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+ Source: CDA/Wiesenberger
++ Source: AIM
* The Credit Suisse First Boston High Yield Index is a broad based
unmanaged, trader-priced portfolio constructed to mirror the high-yield
debt market.
** The Lehman Brothers Government/Corporate Bond Index is an unmanaged,
market-value-weighted index of all debt obligations of the U.S.
Treasury and U.S. government agencies (excluding mortgage-backed
securities) and of all publicly issued fixed-rate, nonconvertible,
investment-grade domestic corporate debt.
*** The Salomon Brothers World Governments Bond Index is unmanaged and
consists of complete universes of government bonds with remaining
maturities of at lest five years.
The fund commenced investment operations on October 29, 1987 with the offering
of class A shares, and subsequently offered class I shares on January 8, 1997.
Class I share performance includes the performance of the fund's class A shares
for periods prior to the offering of class I shares. This blended class I share
performance has been adjusted to take into account the fact that class I shares
have no initial sales charge (load). This blended performance has not been
adjusted to take into account differences in class specific operating expenses.
Because operating expenses of class I shares are lower than those of class A
shares, this blended class I share performance is lower then the performance of
class I shares would have been had class I shares been offered for the entire
period.
2. EXPENSE SUMMARY
Expense Table. The "Expense Table" describes the fees and expenses that you
may pay when you buy, redeem and hold shares of the fund. The table is
supplemented as follows:
Annual Fund Operating Expenses (expenses that are deducted from fund
assets):
Management Fees................................... 1.15%
Distribution and Service (12b-1) Fees............. 0.00%
Other Expenses(1) ................................ 0.38%
----
Total Annual Fund Operating Expenses.............. 1.53%
Fee Waiver and/or Expense Reimbursement(2)...... 1.00%
----
Net Expenses.................................... 0.53%
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(1) The fund has an expense offset arrangement which reduces the fund's
custodian fee based upon the amount of cash maintained by the fund with
its custodian and dividend disbursing agent. The fund may enter into
other similar arrangements and directed brokerage arrangements, which
would also have the effect of reducing the fund's expenses. "Other
Expenses" do not take into account these expense reductions, and
therefore do not represent the actual expenses of the fund.
(2) MFS has agreed to waive its right to receive the management fee to a
maximum of 0.50% annually of the average daily net assets of the Fund.
MFS has also agreed to bear all of the fund's expenses, excluding
management fees, distribution and service fees, taxes, extraordinary
expenses, brokerage and transaction costs and class specific expenses.
These contractual fee arrangements will remain in effect until at least
March 1, 2000 absent an earlier modification approved by the board of
trustees which oversees the Fund.
Example of Expenses. The "Example of Expenses" table is intended to help you
compare the cost of investing in the fund with the cost of investing in other
mutual funds. The table is supplemented as follows:
Share Class Year 1 Year 3 Year 5 Year 10
----------- ------ ------ ------ -------
Class I shares $54 $170 $296 $665
3. DESCRIPTIONS OF SHARE CLASSES
The "Description of Share Classes" is supplemented as follows:
If you are an eligible institutional investor (as described below), you may
purchase class I shares at net asset value without an initial sales charge or
CDSC upon redemption. Class I shares do not have annual distribution and service
fees, and do not convert to any other class of shares of the fund.
The following eligible institutional investors may purchase class I shares:
o certain retirement plans established for the benefit of employees of
MFS and employees of MFS' affiliates;
o any fund distributed by MFS, if the fund seeks to achieve its
investment objective by investing primarily in shares of the fund and
other MFS funds;
o any retirement plan, endowment or foundation which:
purchases shares directly through MFD (rather than through a
third party broker or dealer or other financial adviser);
has, at the time of purchase of class I shares, aggregate assets
of at least $100 million; and
invests at least $10 million in class I shares of the fund either
alone or in combination with investments in class I shares of
other MFS Funds (additional investments may be made in any
amount).
MFD may accept purchases from smaller plans, endowments or foundations
or in smaller amounts if it believes, in its sole discretion, that such
entity's aggregate assets will equal or exceed $100 million, or that
such entity will make additional investments which will cause its total
investment to equal or exceed $10 million, within a reasonable period
of time;
o bank trust departments or law firms acting as trustee or manager for
trust accounts which initially invest, on behalf of their clients, at
least $100,000 in class I shares of the fund (additional investments
may be made in any amount). MFD may accept smaller initial purchases if
it believes, in its sole discretion, that the bank trust department or
law firm will make additional investments, on behalf of its trust
clients, which will cause its total investment to equal or exceed
$100,000 within a reasonable period of time; and
o certain retirement plans offered, administered or sponsored by
insurance companies, provided that these plans and insurance companies
meet certain criteria established by MFD from time to time.
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In no event will the fund, MFS, MFD or any of their affiliates pay any sales
commissions or compensation to any third party in connection with the sale of
class I shares. The payment of any such sales commission or compensation would,
under the fund's policies, disqualify the purchaser as an eligible investor in
class I shares.
4. HOW TO PURCHASE, EXCHANGE AND REDEEM SHARES
The discussion of "How to Purchase, Exchange and Redeem Shares" is supplemented
as follows:
You may purchase, redeem and exchange class I shares only through your MFD
representative or by contacting MFSC (see the back cover of the Prospectus for
address and phone number). You may exchange your class I shares for class I
shares of another MFS Fund (if you are eligible to purchase them) and for shares
of the MFS Money Market Fund at net asset value.
5. FINANCIAL HIGHLIGHTS
The "Financial Highlights" table is intended to help you understand the fund's
financial performance. It is supplemented as follows:
Financial Statements - class I Shares
<TABLE>
<CAPTION>
<S> <C> <C>
Year Ended Period Ended
October 31, 1998 October 31, 1997*
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 8.25 $ 8.15
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Income from Investment Operations# -
Net investment income lossss. $ 0.72 $ 0.49
Net realized and unrealized gain on investments
and foreign currency transactions (0.85) 0.15
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Total from investment operations $(0.13) $ 0.64
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Less distributions declared to shareholders -
From net investment income $(0.66) $ (0.54)
From net realized gain on investments and
foreign currency transactions $(0.13) --
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Net asset value - end of period $ 7.33 $ 8.25
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Total return (2.00)% 5.98%++
Ratios (to average net assets)/Supplemental datass. -
Expenses## 0.50% 0.44%+
Net investment loss 8.51% 7.69%+
Portfolio turnover 299% 217%
Net assets at end of period (000 omitted) $238 $230
</TABLE>
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* For the period from the inception of class I shares, January 8,
1997,through October 31, 1997.
+ Annualized.
++ Not annualized.
# Per share data are based on average shares outstanding.
## The fund has an expense offset arrangement which reduces the fund's
custodian fee based upon the amount of cash maintained by the fund with its
custodian and dividend disbursing agent. The fund's expenses are calculated
without reduction for this expense offset arrangement.
ss. The Investment Adviser and/or the distributor voluntarily waived a portion
of their management and/or other fees and/or distribution fee,
respectively, for certain periods indicated. If the fee had been incurred
by the Fund, the net investment income per share and the ratios would have
been:
<TABLE>
<CAPTION>
<S> <C> <C>
Net investment loss $0.63 $0.40
Ratios (to average net assets):
Expenses## 1.49% 1.66%+
Net Investment loss 7.49% 6.47%+
</TABLE>
The date of this Supplement is March 1, 1999 (as
revised June 14, 1999).
