ee presentation 12 march 3 15 final
TRANSCRIPT
FOR INVESTMENT PROFESSIONAL AND INSTITUTIONAL USE ONLY.
FOR MFS INTERNAL USE ONLY.
FOR DEALER USE ONLY. Should not be shown, quoted, or distributed to the public.
CONSISTENCY IN TOUGH MARKETS The benefits of taking a longer-term view in European Equities
Gabrielle Gourgey Institutional Portfolio Manager MFS Investment Management
0 26170.4
See important disclosures on final page of presentation.
See the fund’s offering documents for more details, including information on fund risks and expenses.
The views expressed in this presentation are those of the speaker and are subject to change at any time. These views do not necessarily reflect the views of MFS or others in the MFS organization.
MFS Meridian Funds are not available for sale in the United States or Canada or to US or Canadian citizens or residents.
MFS International Ltd.
For Investment Professional Use Only. Not intended for retail investors. NOT GUARANTEED • MAY LOSE VALUE
For Investment Professional Use Only. Not intended for retail investors.
We've been adding value for centuries…….
1
For Investment Professional Use Only. Not intended for retail investors. 2
…And can you imagine living without…
For Investment Professional Use Only. Not intended for retail investors. 3
Global GDP growth is what drives European earnings growth
0.5
0.1
0.0
0.1
0.2
0.3
0.4
0.5
0.6
Global growth and European earnings European growth and European earnings
Correlation coefficient (1991 onwards)
Sources: Macquarie Research, IMF and FactSet. As at 31 December 2012.
For Investment Professional Use Only. Not intended for retail investors.
Where has all the growth gone?
90
95
100
105
110
115
120
125
130
-8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Ave
rag
e o
f in
dex
ed v
alu
es s
o t
rou
gh
in R
GD
P =
100
Quarters after end of recession
Performance of Real GDP vs. Average of Last Six Expansions
Average of Last Six Post-World War IIExpansions*
Current Expansion
*Dates used for determining economic expansions
are those designated by NBER. The data has been
adjusted for ease of comparison with the currency cycle.
Expansion starting dates used: November 1970,
March 1975, July 1980, November 1982, March 1991 and
November 2001.
Source: Ned Davis Research Group of 9/30/12
4
For Investment Professional Use Only. Not intended for retail investors.
Source: Wolfe Trahan as of 12/31/11
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
% of World GDP coming from countries with a budget deficit >6%
Clearly a global phenomenon…
5
For Investment Professional Use Only. Not intended for retail investors. 6
Developed world economies: Budget deficit
-3.3%
-8.2% -8.7%
-10.0%
-12%
-10%
-8%
-6%
-4%
-2%
0%
2%
Euro area UK US Japan
Budget deficit as a % of GDP (2012F)
Sources: Macquarie Research and IMF. As at 31 December 2012.
For Investment Professional Use Only. Not intended for retail investors. 7
Developed world economies: Government debt
88% 90% 107%
237%
0%
50%
100%
150%
200%
250%
Euro area UK US Japan
Government debt as a % of GDP
Sources: Macquarie Research and IMF. As at 31 December 2012.
For Investment Professional Use Only. Not intended for retail investors. 8
Europe PER premium/ discount to US
-30%
-20%
-10%
0%
10%
20%
30%
1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013
MSCI Europe Premium/Discount to MSCI USA
Source: Factset. As at 31 January 2013.
For Investment Professional Use Only. Not intended for retail investors. 9
Europe: 12-month forward PER
0x
5x
10x
15x
20x
25x
30x
1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013
MSCI Europe forward price-to-earnings ratio
+1SD
-1SD
Average
Source: Factset. As at 31 January 2013.
For Investment Professional Use Only. Not intended for retail investors.
Short-term focus of the market Research coverage for two global large cap companies
Financial Services Technology
2014 Earnings Per
Share
Estimates
# of estimates 28
Range £0.63 - £0.83
# of estimates 49
Range $40.20 - $58.18
Well covered by sell-
side analysts
2016 Earnings Per
Share
Estimates
# of estimates 1
Range £0.94
# of estimates 4
Range $35.12 - $76.00
Minimal coverage
Opportunity to
express different
view
Source: FactSet. As at 21 February 2013
Lengthen the investment time horizon
10
For Investment Professional Use Only. Not intended for retail investors. 11
Identifying opportunities
Adding value through stock selection
Sources: Bloomberg and SPAR
• Cumulative returns shown are for the period from the IPO, 28-Apr-10 to 12-Dec-12
‘Spain’ represents the Spanish market (MSCI Spain Index – gross total return in EUR)
For illustrative purposes only. Not all companies represented are holdings of the fund.
These portfolios are actively managed, and current holdings may be different. This is a list of the positions mentioned above and the percentage
(based on the equivalent exposure of unaudited net assets) they represent in the portfolios as of 31 December 2012:
Inditex: MFS Meridian Funds – European Research Fund (0.9), MFS Meridian Funds – European Core Equity Fund (1.4)
Amadeus IT Holding: MFS Meridian Funds – Continental European Equity Fund (3.1), MFS Meridian Funds – European Value Fund (1.8), MFS Meridian Funds – European Research Fund (1.3),
MFS Meridian Funds – European Smaller Companies Fund (2.8), MFS Meridian Funds – European Core Equity Fund (1.6), MFS Meridian Funds – European Concentrated Equity Fund (3.5)
Returns (EUR) – 2012 Returns (EUR) – 3 years to 31-Dec-12
18%
3%
70%
56%
0%
10%
20%
30%
40%
50%
60%
70%
80%
MSCI Europe MSCI Spain Inditex Amadeus
22%
-20%
161%
81%
-40%
-20%
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
MSCI Europe MSCI Spain Inditex Amadeus
For Investment Professional Use Only. Not intended for retail investors.
What is quality? Rigorous research uncovering quality companies
Market position – brands, differentiated
products
Technology – patents, proprietary knowledge
Distribution – effective route to market
Markets – secular growth, low volatility
Balance sheet – robust financial structure
High return on capital
employed
Pricing power
Sustainable / growing profits
High operating margins
Strong free cash flow
Quality businesses help sustain earnings growth
12
For Investment Professional Use Only. Not intended for retail investors. 13
Consistency of outperformance High quality, low P/E five-year rolling outperformance over MSCI Europe universe
Source: Factset.
Universe MSCI Europe Dec 1994 through Dec 2012 recalculated every 3 months
Quality represented by equal-weighted composite factor of 3 yr average ROE and 3 yr Assets/ Equity with each component scored, summed and quintiled to form buckets Q1 through Q5 at 3 month intervals
All returns are equal-weighted
Combining high quality with low P/E helped drive excess returns
0%
10%
20%
30%
40%
50%
60%
70%
80%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
For Investment Professional Use Only. Not intended for retail investors.
Are consumer staples overvalued? Forward 12-Month Price-to-Earnings Ratios
Quality often not reflected in valuation 1
Source: Factset. As at 31 January 2013.
17.5x
13.4x
16.2x
14.0x 13.9x 12.8x 12.8x 12.2x 11.9x
22.8x
12.2x
0x
5x
10x
15x
20x
25x
14
For Investment Professional Use Only. Not intended for retail investors. 15
Disciplined portfolio construction
Stock picking has helped drive performance in European Equities
• We are long term thinkers - Invest, don't speculate
• Focus on understanding sustainability of business model – Analyse,
don't forecast
• Wary of downside risk – size positions appropriately
• Fundamental research drives stock selection
For Investment Professional Use Only. Not intended for retail investors.
Strategies have added value in diverse market environments
16
Historical quarterly performance
MFS® MeridianSM Funds –
European Research Fund1 vs
MSCI Europe Index
July 1999 – December 2012
MFS® MeridianSM Funds –
European Value Fund1 vs
MSCI Europe Index
January 2003 – December 2012
For Investment Professional Use Only. Not intended for retail investors.
Strategies have added value in diverse market environments
17
Historical quarterly performance
MFS® MeridianSM Funds –
European Smaller Companies Fund1 vs
MSCI Europe Small Mid Index^
January 2002 – December 2012
MFS® MeridianSM Funds –
UK Equity Fund1 vs
FTSE All-Share 5% Capped Index
January 20071 – December 2012
2
2
2
Effective 18 February 2013, the benchmark changed from the MSCI Europe Small Cap Index to the MSCI Europe Small Mid Cap Index
For Investment Professional Use Only. Not intended for retail investors.
Tokyo
Sydney
London
Mexico City
Boston
Sao Paulo
Hong Kong
Toronto
Singapore
Integrated global research platform
Collaborative culture builds better insights
4
Extensive integration
• 8 global sector teams, incorporating
fundamental, quantitative and credit
perspectives
• Strong communication – regular team
meetings, frequent travel together and
off-sites
Supportive culture
• Long-term focus with emphasis on
in-depth business analysis
• Optimal sized team and low staff
turnover enable investors to know each
other well
Incentives aligned
• Rigorous hiring process to find
independent thinkers who want to work
in a team environment
• Compensation based on:
– Long-term, consistent stock-picking
– Collaborative investment process
18
For Investment Professional Use Only. Not intended for retail investors. 19
Thinking ahead — Focus on European funds Morningstar rankings as at 31 December 2012
Keep in mind a high relative ranking does not always mean the fund achieved a positive return during the period.
Results, sales charges, and expenses will differ for other classes of shares.
©2013 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not
warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. 4
MFS® MeridianSM Funds
Europe OE
Morningstar
Category
Start of Fund
Performance 1 year 3 years 5 years 10 years
UK Equity Fund – I1GBP UK Large-Cap Blend
Equity 17/12/2001
23rd
127/566
2nd
9/498
2nd
6/451
4th
12/280
Continental European Equity Fund – I1GBP
Europe ex-UK Large-
Cap Equity 17/12/2001
49th
203/416
12th
43/350
3rd
10/299
5th
10/180
European Value Fund – I1EUR
Europe Large-Cap
Blend Equity 1/10/2002
41st
588/1436
2nd
23/1202
1st
6/963 -
European Research Fund – I1EUR
Europe Large-Cap
Blend Equity 12/3/1999
13th
175/1436
6th
68/1202
8th
74/963 -
European Smaller Companies Fund – I1EUR
Europe Flex-Cap
Equity 5/11/2001
1st
2/369
1st
1/315
2nd
5/245 -
European Core Equity Fund – I1EUR Europe Large-Cap
Growth Equity 1/10/2002
5th
8/155
10th
12/120
14th
14/95 -
For Investment Professional Use Only. Not intended for retail investors.
MFS® MeridianSM Funds –– U.K. EQUITY FUND Portfolio performance (GBP) as of 31 December 2012
A proven history of performance
1 Year 3 Years 5 Years 10 Years
Per
cent
(%
) 15.71
13.1411.28
8.096.69
2.94
10.549.33
Portfolio FTSE All-Share 5% Capped Index
20
For Investment Professional Use Only. Not intended for retail investors. 21
MFS® MeridianSM Funds –– EUROPEAN VALUE FUND Portfolio performance (EUR) as of 31 December 2012
A proven history of performance
1 Year 3 Years 5 Years 10 Years
Per
cent
(%
)
18.6517.29
11.17
6.203.60
-2.34
9.68
5.93
Portfolio MSCI Europe Index (net div)
For Investment Professional Use Only. Not intended for retail investors.
MFS® MeridianSM Funds — EUROPEAN RESEARCH FUND Portfolio performance (EUR) as of 31 December 2012
A proven history of performance
22
For Investment Professional Use Only. Not intended for retail investors. 23
MFS® MeridianSM Funds — EUROPEAN SMALLER COMPANIES FUND Portfolio performance (EUR) as of 31 December 2012
A proven history of performance
The performance shown is attributable in part to unusual market conditions. These conditions may not be repeated in the future.
For Investment Professional Use Only. Not intended for retail investors.
MFS® MeridianSM Funds — CONTINENTAL EUROPEAN EQUITY FUND Portfolio performance (GBP) as of 31 December 2012
A proven history of performance
1 Year 3 Years 5 Years 10 Years
18.89
15.95
5.85
1.22
5.70
-1.59
12.65
8.50
Portfolio MSCI Europe (ex-UK) Index (net div)
24
For Investment Professional Use Only. Not intended for retail investors. 25
MFS® MeridianSM Funds — EUROPEAN CORE EQUITY FUND Portfolio performance (EUR) as of 31 December 2012
A proven history of performance
1 Year 3 Years 5 Years 10 Years
Per
cent
(%
)
30.07
17.2915.20
6.204.44
-2.34
8.925.93
Portfolio MSCI Europe Index (net div)
For Investment Professional Use Only. Not intended for retail investors.
MFS® MeridianSM Funds — EUROPEAN CONCENTRATED FUND Portfolio performance (EUR) as of 31 December 2012
A proven history of performance
1 Year Since inception(22-Aug-11)
21.07
17.29
22.8221.08
Portfolio MSCI Europe Index (net div)
2012
MFS® MeridianSM Funds -
European Concentrated Fund 21.07
MSCI Europe Index (net return) 17.29
26
For Investment Professional Use Only. Not intended for retail investors.
Risk disclosure
MFS Meridian Funds:
UK Equity Fund (1,2,5,6), Continental European Equity Fund ( 1,2,5,6), European Value
Fund (1,2,3,6), European Research Fund (1,2,6), European Smaller Companies Fund
(1,2,4,6), European Core Equity Fund (1,2,6), European Concentrated Fund (1,2,5,6).
1 The fund may not achieve its objective and/or you could lose money on your investment in the fund.
2 Stock markets and investments in individual stocks are volatile and can decline
significantly in response to issuer, market, economic, political, regulatory, geopolitical, and other conditions.
3 Investments in value companies can continue to be undervalued for long periods of time
and be more volatile than the stock market in general. 4 Investments in small-cap companies can be more volatile than investments in larger
companies. 5 The fund’s performance could be more volatile than the performance of more diversified
funds. 6 Because the portfolio may invest a substantial amount of its assets in issuers located in a
single country or in a limited number of countries, it may be more volatile than a portfolio that is more geographically diversified.
Please see the prospectus for further information on these and other risk considerations.
27
For Investment Professional Use Only. Not intended for retail investors. 28
Fund regulatory details
See the fund's offering documents for more details, including information on fund risks and expenses. For additional information, call
European Union: MFS International (U.K.) Ltd., Paternoster House, 65 St. Paul's Churchyard, London, EC4M 8AB UK. Tel: 44 (0)20 7429
7200.
Switzerland: Carnegie Fund Services S.A., 11 rue du General-Dufour, 1204 Geneve, Switzerland. Tel: 41.22.705.1177.
MFS Meridian Funds from time to time may be registered for sale in other jurisdictions or otherwise offered where registration is not required.
MFS Meridian Funds are not available for sale in the United States or Canada or to US or Canadian citizens or residents.
Unless otherwise indicated, logos, product and service names are trademarks of MFS and its affiliates and may be registered in certain countries.
MFS International Ltd.
This material is for use only in Germany, Switzerland, United Kingdom.
FOR INSTITUTIONAL AND INVESTMENT PROFESSIONAL USE ONLY
CONSISTENCY IN TOUGH MARKETS THE BENEFITS OF TAKING A LONGER-TERM VIEW
For Investment Professional Use Only. Not intended for retail investors.
Appendix
30 For Investment Professional Use Only. Not intended for retail investors.
For Investment Professional Use Only. Not intended for retail investors.
MFS European equity team MFS European based investment resources
Title Name Years of
Industry Experience
Director of Equity Europe Christopher Jennings CFA 15 Portfolio Managers Peter Fruzzetti 19
Roger Morley 16 Benjamin Stone 17 Barnaby Wiener 19
Institutional Portfolio Gabrielle Gourgey 18
Managers Victoria Higley, ASIP 18 Ben Kottler, CFA 23
Research Analysts Matthew Barrett, ASIP 17 Consumer Staples Filipe Benzhino 6 Business Services Shanti Das-Wermes 3 Mid-Cap Consumer Staples Philip Evans 4 Leisure Anne-Christine Farstad 11 Telecom Services, Insurance, Banks David Falco, CFA 9 Chemicals Ward Griffiths, CFA 9 Consumer Cyclicals Pablo de la Mata, CFA 9 Autos, Technology, Healthcare Stuart McPherson 26 Capital Goods, Metals & Mining Sandeep Mehta 5 Non-US Small-Cap Specialist James Neale 15 Energy
Florence Taj 17 Financial, Banks, Brokers, Specialty Finance, Utilities
Traders Jennifer Blanchette 18
Alan Brown 14
Additional resource: Investment Product Specialist
Nicole Neubelt 15
31
For Investment Professional Use Only. Not intended for retail investors.
Diverse European equity product range
26276.2 As of 31-Dec-12.
-
32
For Investment Professional Use Only. Not intended for retail investors.
Risk management integral to investment process
Multi-faceted approach to risk
Risk management integral to investment process
As of 31-Dec-12.
33