In this issue

1 Why selectivity matters

2 Keeping calm in volatile markets

3 The CARES Act and you

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Summer 2020

MFS® Commentary

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Investment Insights

Selectivity When We Emerge From CrisisGlobal Investment Strategist Rob Almeida explores the potential for alpha opportunities ahead.

Looking back over this very long economic cycle, we’ve seen two distinct things: An environment of below-

average economic growth and all-time-high profits. During this period, companies have prioritized free

cash flow maximization, and the fulcrum for that has been balance sheet borrowing.

That’s come at the expense of labor investment and capital investment — property, plant, equipment.

The focus has been maximizing profits and returning capital to shareholders. Looking at the S&P 500 Index

over this 11-year cycle, more than $10 trillion of capital has been distributed to shareholders against a

backdrop of the weakest economic expansion in 150 years.

More recently, stopping economic activity in response to COVID-19 has created a liquidity crisis, which has

reversed corporate priorities. Priority one is now survival. And how do you do survive? Procure liquidity —

cash. That was the catalyst for the liquidity crisis in bond markets in February and March. The companies

that survive this crisis will be weaker on the other side. Many of them will be overloaded with more debt,

and many will need to be recapitalized.

How do we think about that from a market return standpoint looking into the future? There are three things

that drive equity asset prices: Returns on the business, the growth rate of those returns and the inherent

risk in the business. So returns, growth and volatility. Simplistically speaking, thinking about the past 11 or

12 years, we’ve had all-time highs in returns and above average business growth, driven by borrowing. Risk

was markedly below average.

Going forward, we expect return and risk profiles will be materially different than the ones investors have

enjoyed over the past decade-plus. Against this backdrop, security selection should focus on:

■ avoiding franchises that may go bankrupt

■ avoiding franchises that might survive but would need recapitalization

Continued on page 2

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Continued from page 1

■ owning survivors unburdened with a huge amount of debt and in no need of recapitalization that can potentially take advantage

of a fragmented market, consolidate share and grow earnings at their fastest rate ever

So while the aggregate return on the market might be more muted than it has been in the past, the opportunity for alpha

generation and above-average return — for those that security-select judiciously — could be pretty powerful.

The views expressed are those of the speaker 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.

Financial Strategies

10 principles of long-term investing resilience

It’s hard to stay calm when markets are volatile. The 10 principles of long-term investing resilience can help you keep calm and

stay invested when markets seemingly go crazy.

1. It’s important to understand market movements. Over time, stock markets have moved higher, recovering from disruptive,

but ultimately short-term, declines and gone on to post gains. If investors sell when the market falls, they will likely miss a

potential rebound and any subsequent gains, possibly falling short of their goals.

2. Volatility is normal. While unsettling, volatility is part of investing. Remember that historically bull markets have beaten bears

and driven long-term portfolio gains. Moving in and out of the market to avoid volatility — market timing — rarely works.

3. You control your emotions and behavior. All too often, emotions — anxiety when the market declines or excitement when

it rallies — can cause investors to buy when prices are high and sell when they’re low. Poor market timing can lessen long-term

potential. Investing for the long term and resisting the urge to time may be a better way to achieve goals.

4. Take a longer view. Historically, investing in stocks has been one of the best ways to build wealth because of the long-term

growth potential of stocks relative to bonds and/or cash. Yet many investors underinvest in stocks or try to time the market to

achieve short-term gains. In either case, investor may miss opportunities.

5. Compounding and how it works: Compounding is reinvesting an asset’s gains or income to generate additional earnings; it’s

what typically drives the long-term value of a portfolio.

6. There are benefits to diversification. Asset classes tend to react differently to market conditions. Spreading investments

among different asset classes, such as stocks, bonds and cash — diversifying — can help investors offset poor performance from

one asset with potentially better performance from another, reducing risk in a portfolio.

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MFS Commentary Summer 2020

7. Investments should align with your goals. Market performance shifts over time. For example, bonds outperform stocks.

These shifts can result in changes to your asset allocation, and in response, your portfolio can become too aggressive or too

conservative. Rebalancing — bringing your portfolio back to its original allocation — can help your portfolio stay in line with your

goals and risk tolerance.

8. Proper allocation is key. Your allocation — the mix of stocks, bonds and cash in your portfolio — should change over time. In

your 20s, 30s and 40s, you want your savings to grow, and having a larger allocation to stocks versus bonds has historically

helped portfolios grow. When older, a larger allocation to bonds and cash may help investors reduce risk in their portfolio.

9. Understanding risk is critical. While you can’t avoid risk, by understanding its nature, investors may be able to manage it.

Think about how your asset manager tackles risk and consider an asset manager that places a premium on managing it, because

managing the downside is just as important as capturing the upside.

10. Working with a professional can make a difference. Studies have shown that the average investor underperforms.1

A financial advisor can help you build a resilient portfolio aligned with your long-term financial goals — and give you confidence

to stick to your plan through the market’s ups and downs.

1Dalbar, 2020 QAIB Report, as of December 31, 2019.

Financial Planning

The CARES ActOn March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) was approved by the US House of Representatives and signed into law shortly thereafter. The CARES Act includes several welcome changes to the rules regarding employer sponsored retirement plans and IRAs. Below are some that will have an immediate impact.

■ Suspension of 2020 required minimum distributions (RMDs). Required minimum distributions (RMDs) are waived for 2020.

In addition to RMDs for the calendar year 2020, the waiver applies to 2019 RMDs for those who were required to take their first

RMD by April 1, 2020, if they had not taken their distribution before January 1.

■ Rollover of RMD. If already taken, amounts otherwise subject to the RMD rules in 2020 may be recontributed to an eligible

retirement plan or IRA as a rollover. The deadline for rolling over a distribution taken on or after February 1, 2020 that is no longer

an RMD under this legislation, is the later of July 15, 2020 or the 60th day following the date of distribution.

■ Coronavirus Distributions. Distributions of up to $100,000 taken by a qualified individual in 2020 may be exempt from the 10%

excise tax on premature distributions, and the federal income tax due on the distribution may be spread over three years. A

qualified individual is someone who meets either of the following requirements. (Consult your tax advisor to see if you qualify):

– Diagnosed with SARS-CoV-2 or COVID-19 (the “virus”) by means of a test approved by the Centers for Disease Control and

Prevention (also applies to any spouse or dependents)

– Experiencing adverse financial consequences because of being quarantined, furloughed or laid off or having work hours

reduced due to the virus; being unable to work due to lack of childcare on account of the virus; having the hours of your

business reduced or your business closed due to the virus; or other factors determined by the secretary of the Treasury.

MFS does not provide legal, tax or accounting advice. Clients of MFS should obtain their own independent tax and legal advice based on their particular circumstances.

This has been provided for informational purposes only, and reflects the current opinion of the author which is subject to change without notice, as are statements of financial market trends, which are based on current market conditions. Integrated Retirement is not affiliated with MFS Investment Management® or any of its subsidiaries.

MFS Investment Management. MFS Fund Distributors, Inc., Boston, MA

MFS Commentary Summer 2020

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1-800-637-8255 24 hours a day

Account service and literature

(Shareholders) 1-800-225-2606

(Financial advisors) 1-800-343-2829

Retirement plan services

1-800-637-1255

Mailing address

MFS Service Center, Inc. P.O. Box 219341 Kansas City, MO 64121-9341

Overnight mail

MFS Service Center, Inc. Suite 219341 430 W 7th Street Kansas City, MO 64105 -1407

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