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Brad Rutan, CFA

Director, Investment Product Specialist

MFS Investment Management®

The views expressed in this presentation are those of MFS and are subject to change at any time. These views should not be relied upon as investment advice, as securities recommendations, or as an indication of trading intent on behalf of any other MFS investment product.

38155.2

Business Disruption – Opportunity or Risk?

• Why is business disruption accelerating?

• Major shifts occurring in the global economy

• Changes in consumer behavior

• Changes in business behavior

• Artificial intelligence

• With these shifts come large shifts in profit pools

• Will create winners/losers

• Know what you own

Agenda

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When should you own innovators?"s Curve"

% U

ser

Ad

op

tio

n

Time

Contact

Awareness

Trial Use

Understanding

Adoption

Maturity

Saturation

3

Why is disruption happening on such a large scale?Steeper "S Curves"

Source: CLSA, as of 12/28/15.

% o

f p

op

ula

tio

n a

do

ptin

g te

ch

no

log

y

4

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0 5 10 15 20 25 30 35 40 45 50

Electricity

Telephone

Radio

Television

PC

Mobile phone

Internet

Facebook

Years until use by 1/4 of US population

Years until use by 1/4 of US population

Why is disruption happening on such a large scale?Adoption rates accelerating for technology

Source: Citi Global Perspectives & Solutions "Disruptive innovations II" published July 2015 (latest data available)

5

Source: HSBC. A digital native is defined as someone that has spent their entire secondary education age onwards in a country where the internet saturation rate is above 50%.

Why is disruption happening on such a large scale?Population of digital natives exploding

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Source: Intel as of 12/31/16.

1,000

10,000

100,000

1,000,000

10,000,000

100,000,000

1,000,000,000

10,000,000,000

1971 1972 1974 1978 1982 1985 1989 1993 1997 1999 2000 2002 2003 2008 2010 2012 2016

Moore's Law

Intel Itanium Processor

Intel Xeon Phi Processor

Intel 8080

Intel Pentium Processor

# tr

ansi

sto

rs o

n a

pro

cess

or

Intel 286

Why is disruption happening on such a large scale?Computing power is exploding

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Disruption in major profit poolsSmartphone penetration has surged but growth slowing

8

Source: Kleiner Perkins / Morgan Stanley Research May 2017.

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0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Print Radio TV Desktop/laptop Mobile

US time spent US ad dollars spent

$16

$20B

Disruption in major profit poolsAdvertising

9

Source: Magna Global, eMarketer. As of 6/30/2016.

10

Sources: Kleiner Perkins May 2017 /bNewzoo Global eSports Market Report (2/17), Newzoo press release (1/16), Newzoo Casual Connect

Europe Presentation (2/15)

Disruption in major profit poolsMedia/Advertising

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11

Disruption in major profit poolsMedia/Advertising

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Millenials Non-millenials All responses

Popularity of eSports vs. traditional sports is growing

No preference Slightly prefer favorite traditional sport

Significantly prefer favorite traditional sport Slighlty prefer favorite eSports

Significantly prefer favorite eSport

27%

13%

27%

15%

18%

13%

13%

45%

11%

20%

21%

13%

34%

13%

19%

Source: L.E.K 2017 Sports Survey (February 2017)

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

E-Commerce Share of Total Retail Sales 1998 Through 2016

Disruption in major profit poolsBrick and mortar retailing

12

Source: US Census Bureau, Comscore, Empirical Research Partners Analysis.

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Source: ICSC September 2015 (latest data available).

Country Shopping Center

GLA (sq ft)

Population

(millions)

GLA per capita

U.S. 7,527 319 24

Canada 542 36 15

U.K. 318 64 5

France 264 64 4

Italy 171 60 3

Spain 142 46 3

Germany 195 80 2

Disruption in major profit poolsBrick and mortar retailing

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0

50

100

150

200

250

300

350

400

450

500

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E

BPaaS SaaS PaaS IaaS

To

tal p

ub

lic c

loud

ma

rke

ts (

US

$B

)

Disruption in major profit poolsThe IT stack: compute, storage, service

14

Source: Forrester Research. Most recent data available. ("E" denotes estimates)

As-of 9/1/2016

BPaaS: Business Process as a Service, SaaS: Software as a Service, PaaS: Platform as a Service and IaaS: Infrastructure as a Service

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Sources: CLSA / IDC, as of 12/31/15 (latest data available), forecast 2016 – 2020.

Disruption in major profit poolsThe IT stack: compute, storage, service

15

0

10

20

30

40

50

60

70

80

2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E

Global sales of biologics/biosimilars

Brand biologics Biosimilars

Disruption in major profit poolsPharmaceuticals

16

Source:. Citi GPS: Global Perspectives & Solutions, July 2015

Estimates for 2016 to 2025

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340

169

340

1767

423

Semis PCs Handsets Autos Auto Suppliers

Market size ($billion revenue)

Disruption in major profit poolsAutos

17Sources: Bernstein "Global Energy Storage & Electric Vehicles" paper. February 2017. Strategy Analytics, Gartner, IDC, Bloomberg, Bernstein.

Steal

Aluminum

Plastic

…

Auto parts

ECU

…

Engine Traditional car

OEM

Dealers Dealers

OEM

Oil Changes

Lithium Graphite

Cobalt

Nickle

…

Battery

components

Battery

Semiconductors

Traditional car

OEM

New players

Dealers/ Direct

sale

Battery

components

Battery

Semiconductors

Sensors

Traditional car

OEM

New players

Dealers/ Direct

sale

ADAS-software

AI-Learning

Mobility Apps-

i.e. Uber

Value

Value

Value

Traditional

car

Electric

Vehicle

Autonomous

Electric

Vehicle

Disruption in major profit poolsAutos

18

Sources: Bernstein "Global Energy Storage & Electric Vehicles" paper. February 2017.

Value

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Every year, 50% digital data growth

Every minute,

• 200 million emails sent

• 2 million Facebook posts

• 3 million Google searches

60 trillion webpages

1991 1996 2001 2006 2011 2016

Dig

ital D

ata

World

wid

e

Source: Google; Kevin Kelly, The Inevitable (published 2016).

Artificial intelligenceRecent data growth necessary for artificial intelligence

19

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

2016 2017e 2018E 2019e 2020e 2021e 2022e 2023e 2024e 2025e

Artificial Intelligence Revenue, World Markets: 2016-2025

Source: Tractica as of latest data available (2/28/17). Years 2017-2025 are estimates.

Artificial intelligenceWe expect to see an explosion of AI generated revenues

Rev

enu

e (i

n m

illio

ns)

20

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Artificial intelligenceArtificial intelligence could dramatically boost productivity

0% 5% 10% 15% 20% 25% 30% 35% 40%

Sweden

Finland

United States

Japan

Austria

Germany

Netherlands

United Kingdom

France

Belgium

Italy

Spain

Potential boost to productivity of labor from artificialintelligence

Source: Accenture Institute for Higher Performance, in collaboration with Frontier Economics. Report dated 9/28/16.

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2.6

2.1

2.5

1.7 1.61.4 1.4

1.7

0.8

1.6 1.7

1.0

4.6

4.13.9

3.6

3.23.0 3.0 2.9

2.7 2.72.5

1.8

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

Basline AI steady state

Artificial intelligenceArtificial intelligence could dramatically boost growth

Source: Accenture Institute for Higher Performance, in collaboration with Frontier Economics. Report dated 9/28/16. Chart compares baseline growth by 2035 to an artificial intelligence scenario where AI has been absorbed into the economy

Annual growth rates by 2035 of gross value added (a close approximation of GDP)

%

22

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Source: Jefferies research report on technology dated February 6, 2017

Artificial intelligenceBreadth and depth of companies investing in AI is exploding

The breadth of industries investing in artificial intelligence is exploding (number of companies

working with NVIDIA on deep learning)

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"If you don't like

change…you will like

irrelevance even less."-General Eric Shinseki

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THANK YOU

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