Responsibly Active:The MFS® Approach to Sustainable Investing

Why are environmental, social and governance (ESG) issues important to investors? More important, why do they matter? More and more, the way a company behaves — whether it has a diverse workforce and how it treats the environment, to name just two measures — can make or break its long-term sustainability. That’s why it’s so important to look at non-financial in addition to financial information as part of thorough research. At MFS, sustainable investing is very much in line with our heritage of deep fundamental research that gives us the ability to explore an investment opportunity from many angles.

ESG on your mind? Here’s why it matters

Our view of sustainable investing

At MFS, sustainable investing isn’t something new or

extra that we do. We integrate ESG factors into our deep

fundamental research, thoughtful security selection and

overall investment process. It’s part of what we do as

long-term active managers, and it’s critical to our

purpose: creating long-term value by putting investor

assets to work responsibly.

n ESG research helps us identify risks and opportunities

that could affect the future value of the businesses

we invest in.

n We integrate ESG into our research, rather than isolate

companies based on an E, S or G concern because we

think that helps us make better decisions about where

we take risk and find opportunity.

n We are convinced that sustainable investing through

ESG integration, proxy voting and engagement

improves our ability to achieve our clients’ objectives

and meet our fiduciary responsibility. We are not

convinced that offering our clients products with ESG

screens or overlays can do the same.

ESG in action at MFS

We incorporate sustainable investing practices throughout

our global research platform. On a day-to-day basis,

members of our investment team consider all relevant

factors that they believe could affect investment

outcomes. Their activities include the following:

n Analyzing both financial and non-financial information

as we seek to identify anything that could

materially impact the long-term value of specific

companies, sectors

n Collaborating with each other across sectors and asset

classes to share views and make sure we’re aware of all

material risks and opportunities

n Engaging with company management teams and boards

to better understand the risks or opportunities an ESG

issue represents to the business

Our approach to sustainable investingRobust, integrated research combined with consistent proxy voting and thoughtful engagement

ESGInvestmentResearch

ProxyVoting Engagement

Integrated,Sustainable

Investing+ + =

2

ESG integration is a critical part of the way good investment decisions are made. Robust research has always been essential to active managers. Today, however, active managers have to look beyond a company’s balance sheet and consider non-financial drivers of business success to truly understand whether it’s worth investing in that company long term.

What we believe makes our approach different

While there are different ways to approach sustainable

investing, MFS does view ESG through an alpha lens.

n With an eye toward creating long-term value,

we focus our research and investment process

on understanding valuations.

n We favor ESG integration over divestment. We

believe this is better for public markets because it

facilitates engagement to encourage responsible

business practices.

n Unless required by law or a specific client mandate,

we don’t apply exclusions or emphasize non-financial

factors over financial ones.

MFS: Set up for sustainability

MFS has nearly a century of experience investing for the

long term, and ESG has been integrated into our

investment process for more than a decade. Our heritage

has always been about knowing the businesses we own

from all angles, investing responsibly for clients and

helping to guide industry changes.

n Collaboration and sharing viewpoints are part of

our DNA and our integrated approach to ESG.

Our investment team is deliberately organized to

promote collaboration.

n We use our voice to participate in many industry

initiatives and publish timely thought leadership to

help drive the sustainability conversation as the ESG

landscape changes.

n MFS was ranked most-ESG-friendly firm in 2017 and

2018 by Ignites and was awarded “ESG/SRI Provider of

the Year” at the 2019 Irish Pension Awards.

We believe ESG integration drives better investment outcomesSkilled active managers* must consider all relevant information

* We believe skilled active managers are those who can demonstrate conviction through high active share and long holding periods, add value in volatile markets and collaborate on investment decision making.

3

Valuation

Earnings/Cash Flow

Price Multiples

Return on Equity

Return on Capital

Dividend Yield

Leverage Ratio

Strength of Management

Quality of Products and Services

Traditional Metrics ESG Factors

Pollution/Resource Depletion

Water Stress/Deforestation

Carbon Intensity/Climate Change

Supply Chain Management

Human and Labor Rights

Product Safety/Cyber Security

Strength of Management

Board Diversity/Board Tenure

Fraud/Corruption

G

OV

ER

NA

NC

E

S

OC

IAL

EN

VIR

ON

ME

NTA

L

[E]

[S]

[G]

ActiveDecision

MFSE-ESGAPP-FLY 3/20 45231.1

Seven questions about ESG to ask an investment professional

Why do you

think ESG

matters to

investors?

1Do you have

a responsible

investment

policy at the

firm or fund

level?

2How do you

approach ESG —

is it part of your

investment

process (e.g., to

help manage

risk), or is it a

separate

outcome

(e.g., to have

an impact)?

3Do you exclude

any companies

or industries

based on ESG

concerns?

4Which

members

of your

investment

team are

responsible

for looking at

ESG factors?

5Do you engage

with companies

to understand

how they view

ESG risks and

opportunities?

6Do you vote

proxies

in-house or

outsource

proxy voting

responsibility?

7

To learn more about how Sustainable Investing works at MFS, please visit us at mfs.com/sustainability. Please keep in mind that a sustainable investing approach does not guarantee positive results.

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.

Unless otherwise indicated, logos and product and service names are trademarks of MFS® and its affiliates and may be registered in certain countries.

Distributed by: U.S. - MFS Investment Management; Latin America - MFS International Ltd.; Canada - MFS Investment Management Canada Limited. No securities commission or similar regulatory authority in Canada has reviewed this communication.

Please note that in Europe and Asia Pacific, this document is intended for distribution to investment professionals and institutional clients only.

U.K. - MFS International (U.K.) Limited (“MIL UK”), a private limited company registered in England and Wales with the company number 03062718, and authorized and regulated in the conduct of investment business by the U.K. Financial Conduct Authority. MIL UK, One Carter Lane, London, EC4V 5ER UK provides products and investment services to institutional investors. This material shall not be circulated or distributed to any person other than to professional investors (as permitted by local regulations) and should not be relied upon or distributed to persons where such reliance or distribution would be contrary to local regulation; Singapore - MFS International Singapore Pte. Ltd. (CRN 201228809M); Australia/New Zealand - MFS International Australia Pty Ltd (“ MFS Australia”) holds an Australian financial services licence number 485343. MFS Australia is regulated by the Australian Securities and Investments Commission.; Hong Kong - MFS International (Hong Kong) Limited (“MIL HK”), a private limited company licensed and regulated by the Hong Kong Securities and Futures Commission (the “SFC”). MIL HK is approved to engage in dealing in securities and asset management regulated activities and may provide certain investment services to “professional investors” as defined in the Securities and Futures Ordinance (“SFO”). For Professional Investors in China – MFS Financial Management Consulting (Shanghai) Co., Ltd. 2801-12, 28th Floor, 100 Century Avenue, Shanghai World Financial Center, Shanghai Pilot Free Trade Zone, 200120, China, a Chinese limited liability company regulated to provide financial management consulting services.; Japan - MFS Investment Management K.K., is registered as a Financial Instruments Business Operator, Kanto Local Finance Bureau (FIBO) No.312, a member of the Investment Trust Association, Japan and the Japan Investment Advisers Association. As fees to be borne by investors vary depending upon circumstances such as products, services, investment period and market conditions, the total amount nor the calculation methods cannot be disclosed in advance. All investments involve risks, including market fluctuation and investors may lose the principal amount invested. Investors should obtain and read the prospectus and/or document set forth in Article 37-3 of Financial Instruments and Exchange Act carefully before making the investments.