MFS Investment Management

STAYING CALM WHEN THE

MARKET GOES WILD

STAYING CALM WHEN THE

MARKET GOES WILD
Today could be one of the best-performing days in the
stock markets history.

Or it could be one of its worst days. No one can say for certain what
will happen. No one has ever been able to, or likely ever will.
However, as a long-term investor, you probably know just how volatile
and unpredictable the market can be. But how does this affect your
portfolio, and what steps, if any, can you take to deal with it?
In our opinion, the best response may be to do nothing if you
already have a sound, long-term plan for pursuing your financial goals.
To help you take periods of market volatility in stride, we have
compiled some facts and a few opinions you may want to consider
the next time you talk with your financial advisor.

Before investing, consider the funds investment objectives, risks, charges, and expenses. For a prospectus or summary prospectus containing
this and other information, contact your investment professional or view online at mfs.com. Please read it carefully.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE

FACT
Over the long term, stocks historically have been
the best investment for outpacing inflation.

$250,993

Over the long term, stocks have led the way1

Growth of hypothetical $10,000 investments over three decades
U.S. Stocks
U.S. bonds
U.S. Treasury bills
Inflation

$86,147

$32,468
$22,299
$10,000
1/85

1/90

1/95

1/00

1/05

MFS VIEW
U.S. government bonds and U.S. Treasury bills offer investors a government guarantee as to
timely payment of interest and guaranteed return of principal if held to maturity. But, unlike
stocks, guaranteed investments generally do not offer opportunities for growth of capital
and income.
Having a well-planned investment strategy that spreads your assets among stocks, bonds, and
cash may be the smartest approach for pursuing long-term financial goals. Keep in mind,
however, that no investing strategy, including asset allocation and diversification, can
guarantee a profit or protect against loss.
1

1/10

12/14

Over time, stocks have

played an important
role for investors
seeking to build and
preserve wealth.

S ources: SPAR, FactSet Research Systems Inc. For illustrative purposes only. Results are not intended to represent the future performance of any MFS product. Stocks are
represented by the Standard & Poors 500 Stock Index (S&P 500), which measures the broad U.S. stock market. Bonds reflect performance of the Barclays U.S. Aggregate Bond
Index, which measures the U.S. bond market. U.S. Treasury bills are represented by the BofA Merrill Lynch 3-Month U.S. Treasury Bill Index. The principal value and interest
on Treasury securities are guaranteed by the U.S. government if held to maturity. Inflation is measured by the Consumer Price Index, a measure of inflation, as reported by
the U.S. Bureau of Labor Statistics. These indices represent asset types that are subject to risk, including loss of principal. Index performance does not include any investmentrelated fees or expenses. It is not possible to invest directly in an index.
Past p
erformance is no guarantee of future results.

page 1

FACT
Market declines create opportunity
for long-term investors.
Bear markets have not stopped stocks
Tracking the S&P 500 (closing values 1985 - 2014)

BEAR MARKET: 9/00 9/02

-44.73%*

BEAR MARKET: 11/07 2/09

-50.95%*

BEAR MARKET: 9/87 11/87

-29.58%*

1/85

1/90

1/95

1/00

1/05

1/10

12/14

MFS VIEW
Historically, bull
markets have been
prolonged, while bear
markets have been
relatively short.

Sometimes corrections which tend to be shorter and less severe than bear markets
are good for the market. That is why optimistic investors often refer to them as buying
opportunities.
It has always been our view that one of the best strategies against market volatility is to
invest in stocks and bonds of fundamentally good companies selling at reasonable prices.
When discussing potential investments with your financial advisor, you may want to ask
how they fared in previous downturns as well as in the good times.

* Bear market returns are cumulative for each period.

Source: Morningstar, Inc. For illustrative purposes only. Results are not intended to represent the future performance of any MFS product. A bear market is defined
as a peak-to-trough decline of 20% or more over a prolonged period. Bear markets are calculated based on month-to-month changes in the S&P 500. A correction
is defined as a peak-to-trough decline of 10% or more but less than 20% over a relatively short period.
page 2

Past performance is no guarantee of future results.

FACT
Everyone wants to be in the
best-performing asset class every year.
Market leadership is unpredictable

WORSTBEST

Asset class annual returns, best to worst, 2005 2014

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Commodities2
21.36%

REITs
34.35%

Commodities
16.23%

Global
Bonds
12.00%

Large Cap
Growth
37.21%

REITs
27.58%

Bonds
7.84%

REITs
20.14%

Small/
Mid Cap
36.80%

REITs
27.15%

International3
14.02%

International
26.86%

Large Cap
Growth
11.81%

Bonds
5.24%

Small/
Mid Cap
34.39%

Small/
Mid Cap
26.71%

REITs
7.28%

International
17.90%

Large Cap
Growth
33.48%

Large Cap
Value
13.45%

REITs4
8.29%

Large Cap
Value
22.25%

International
11.63%

Cash
1.80%

International
32.46%

Commodities
16.83%

Global
Bonds
7.22%

Small/
Mid Cap
17.88%

Large Cap
Value
32.53%

Large Cap
Growth
13.05%

Small/
Mid Cap5
8.11%

Small/
Mid Cap
16.17%

Global
Bonds
10.81%

Diversified
Portfolio
26.72%

REITs
27.45%

Large Cap
Growth
16.71%

Large Cap
Growth
2.64%

Large Cap
Value
17.51%

International
23.29%

Small/
Mid Cap
7.07%

Diversified
Portfolio6
7.69%

Diversified
Portfolio
15.00%

Bonds
6.97%

Commodities
35.65%

Diversified
Portfolio
23.08%

Diversified
Portfolio
15.93%

Large Cap
Value
0.39%

Large Cap
Growth
15.26%

Diversified
Portfolio
13.21%

Bonds
5.97%

Large Cap
Value7
7.05%

Large Cap
Growth
9.07%

Diversified
Portfolio
4.92%

Small/
Mid Cap
36.79%

Large Cap
Value
19.69%

Large Cap
Value
15.51%

Diversified
Portfolio
0.13%

Diversified
Portfolio
11.70%

REITs
3.21%

Diversified
Portfolio
5.39%

Large Cap
Growth8
5.26%

Global
Bonds
5.94%

Cash
4.74%

Large Cap
Value
36.85%

Commodities
18.91%

International
8.21%

Cash
0.08%

Bonds
4.21%

Cash
0.05%

Global
Bonds
0.67%

Cash9
3.00%

Cash
4.76%

Small/
Mid Cap
1.38%

REITs
37.34%

Bonds
5.93%

Bonds
6.54%

Small/
Mid Cap
2.51%

Global
Bonds
1.30%

Bonds
2.02%

Cash
0.03%

Bonds10
2.43%

Bonds
4.33%

Large Cap
Value
0.17%

Large Cap
Growth
38.44%

Global
Bonds
1.90%

Global
Bonds
6.42%

International
11.73%

Cash
0.07%

Global
Bonds
4.50%

International
4.48%

Global
Bonds11
6.53%

Commodities
2.07%

REITs
17.83%

International
43.06%

Cash
0.16%

Cash
0.13%

Commodities
13.32%

Commodities
1.06%

Commodities
9.52%

Commodities
17.01%

MFS VIEW
Over the long term,
spreading your
investments among
several asset classes
beats guesswork and
chasing performance.

In our opinion, one of the dangers of not having a sound investment plan is that you may
be tempted to move money into whichever asset class appears to be outperforming at the
moment. The problem with this approach is that by the time a particular area is generally
recognized as hot, you may have already missed some of the best performance.
Even if you get it right, you still never know how long that performance will be sustained.
We would suggest that one way to potentially benefit from swings in the market to
potentially be invested in various asset classes before the market shifts in their favor is
with a broadly diversified portfolio covering several asset classes.

Source: SPAR, FactSet Research Systems Inc. For illustrative purposes only. Results are not intended to represent the future performance of any MFS product.
2Bloomberg Commodity Index is composed of futures contracts on physical commodities. 3 MSCI EAFE Index measures the non-U.S. stock market. 4FTSE
NAREIT All REITs Total Return Index tracks the performance of commercial real estate across the U.S. economy. 5 Russell 2500 Index measures small- and
mid-cap U.S. stocks. 6 Diversified Portfolio is made up of equal allocations of all segments disclosed herein, excluding cash. 7 Russell 1000 Value Index
measures large-cap U.S. value stocks. 8 Russell 1000 Growth Index measures large-cap U.S. growth stocks. 9 Citigroup 3-month T-bill Index is derived
from secondary market Treasury bill rates published by the Federal Reserve Bank. 10 Barclays U.S. Aggregate Bond Index measures the U.S. bond market.
11JPMorgan Global Government Bond Index (Unhedged) measures government bond markets around the world. Index performance does not include any
investment-related fees or expenses. It is not possible to invest directly in an index.
Past p
erformance is no guarantee of future results.

page 3

PLANNING AND
PREPARATION ARE KEY

We encourage you to discuss these facts and opinions with your financial advisor and then
factor them into your long-range financial planning. Hopefully, whenever the market turns
volatile, you will be confident enough to just sit back and let your plan keep working for you.
We also urge you to consider why many investors use financial advisors and mutual funds:
they do not want to worry about their investments every time the market goes down,
and they do not want to make a hobby or a second profession out of investing.
Long-term investors simply want their money to work for them so they have a better
likelihood of realizing their dreams.
Keep in mind that all investments, including mutual funds, carry a certain amount of risk
including the possible loss of the principal amount invested.

Long-term
investors simply
want their money
to work for them
so they have a
better likelihood
of realizing their
dreams.

Asset class risk considerations

Stock markets and investments in individual stocks are volatile and can decline significantly in response to
issuer, market, economic, industry, political, regulatory, geopolitical, and other conditions. Investments in debt
instruments may decline in value as the result of declines in the credit quality of the issuer, borrower, counterparty, or
other entity responsible for payment, underlying collateral, or changes in economic, political, issuer-specific, or other
conditions. Certain types of debt instruments can be more sensitive to these factors and therefore more volatile. In
addition, debt instruments entail interest rate risk (as interest rates rise, prices usually fall), therefore the Funds share
price may decline during rising rate environments as the underlying debt instruments in the portfolio adjust to the rise
in rates. Funds that consist of debt instruments with longer durations are generally more sensitive to a rise in interest
rates than those with shorter durations. At times, and particularly during periods of market turmoil, all or a large
portion of segments of the market may not have an active trading market. As a result, it may be difficult to value
these investments and it may not be possible to sell a particular investment or type of investment at any particular
time or at an acceptable price. Emerging markets can have less market structure, depth, and regulatory, custodial
or operational oversight and greater political, social, and economic instability than developed markets. Investments
in small-cap companies can be more volatile than investments in larger companies. Investments in lower-quality
debt instruments can be more volatile and have greater risk of default, or already be in default, than higher-quality
debt instruments. Commodity-related investments can be more volatile than investments in equity securities or
debt instruments and can be affected by changes in overall market movements, commodity index volatility, changes
in interest rates, factors affecting a particular industry or commodity, and demand/supply imbalances in the market
for the commodity. Events that affect the financial services sector may have a significant adverse effect on the fund.
Please see the prospectus for further information on these and other risk considerations.
There is no guarantee that these investment strategies will work under all market conditions, and each investor
should evaluate the ability to invest for the long term, especially during periods of downturn in the market.
The investments you choose should correspond to your financial needs, goals, and risk tolerance. For
assistance in determining your financial situation, please consult an investment professional.
page 4

Past performance is no guarantee of future results.

EXPERTISE THROUGHCOLLABORATION

SM

We recognize that investors look for investment

managers with the expertise to deliver consistent returns
over the long term. A long-term discipline drives the
way we think, the way we invest and the way we are
rewarded. MFS is an active, global investment manager
with a uniquely collaborative approach that brings you
our best insights and expertise through:
Integrated Research
We analyze opportunities across geographies, across
fundamental and quantitative disciplines and across an
organizations entire capital structure to develop a fuller
perspective on securities we select for our clients.
Global Collaboration
Our people, teams and compensation structure ensure
collaboration so that our clients benefit from a shared,
worldwide view of investing opportunities.
Active Risk Management
Every member of our investment team is responsible for
managing risk and delivering to our clients the greatest
possible return within each portfolios risk guidelines.

The views expressed are those of the author(s) and are subject to change at any time. These views are for informational purposes only and should not be relied
upon as a recommendation to purchase any security or as a solicitation or investment advice from the Advisor.
Issued in the United States by MFS Institutional Advisors, Inc. (MFSI) and MFS Investment Management. Issued in Canada by MFS McLean Budden

Limited. No securities
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MFS
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Inc.,65
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