Global economic news 

U.S. economy adds jobs; unemployment rate fallsThe U.S. economy added 192,000 jobs in February, according to the nonfarms payroll report issued Friday by the U.S. Department of Labor. The unemployment rate fell to 8.9% from 9.0% in January. This was the first time the rate has been below 9.0% since April 2009. Job growth was widespread, with gains in manufacturing, construction, services, wholesale trade, and transportation and warehousing. Earlier in the week, Automatic Data Processing (ADP), a payroll services provider, reported that the number of U.S. private sector jobs rose by 217,000 in February.

Initial jobless claims fall in U.S.The Labor Department said that first-time jobless claims by American workers continued their trend downward in the week ended February 26. The number of new claims filed has dropped in four of the past five weeks. First-time claims for unemployment benefits dropped by 20,000 to a seasonally adjusted 368,000. The four-week average now stands at 388,500 — its lowest level since July 2008.

Global manufacturing expandsGlobal manufacturing activity grew in February, based on higher readings on a number of indices. The Institute for Supply Management’s monthly index of U.S. manufacturing rose to 61.4 for the month, from 60.8 in January. That was its highest level since May 2004. The eurozone purchasing managers’ index (PMI) reached 59 in February, up from 57.3 in January, its highest level in 11 years, according to Markit, an economic data provider. China’s PMI fell to 52.2 in February from 52.9 in January. A reading of 50 or greater indicates an expansion of manufacturing activity. China’s reading was said to reflect its week-long Lunar New Year holiday rather than a real slowdown.

German job market improvesGermany’s labor market improved in February, with 52,000 fewer unemployed workers, according to the country’s Federal Labor Office. The jobless rate fell to 7.3% from 7.4%, its lowest level since 1999 when records were first kept.

Oil prices spike on more supply uncertaintyThe threat of a widespread oil supply interruption continued as a result of ongoing unrest and violence in leading Middle East oil-exporting nations, including Libya, Oman, Iran, and Iraq. Oil futures traded above $103 per barrel on Friday, their highest price in two-and-a-half years. U.S. gasoline prices reflected higher global oil prices, with the average price per gallon of regular unleaded gasoline hitting $3.47 by week's end, up from $3.29 a week ago.

ECB issues warning on inflationThe European Central Bank (ECB) announced that it would likely raise interest rates in April and possibly again in July. Eurozone inflation reached 2.4% in February, a 28-month high and above the ECB’s 2% target inflation rate. While the eurozone economy might warrant raising interest rates, a tightening of monetary policy risks choking the flow of capital within the region’s weaker economies.

Global corporate news

Standard Chartered’s earnings rise 29%Standard Chartered, a U.K.-based global lender, registered a 29% gain in its annual profit in 2010, largely on increased wholesale income and a 56% reduction in loan impairment charges.

Petrobras posts strong profitPetrobras, a giant Brazilian energy firm, reported that its fourth-quarter profit rose 38% from a year earlier on higher oil prices and an increase in crude oil production. The company’s revenue rose 14% for the same time period.

Canadian banks increase profitsThree of Canada’s biggest banks, Bank of Montreal, Royal Bank of Canada, and Toronto-Dominion Bank, reported solid increases in fiscal first-quarter profits on reduced loan-loss provisions as credit quality improved along with operating performance.

Strong U.S. retail salesU.S. retail sales were healthy in February, with numerous large retailers reporting solid consumer spending growth. High-end stores Saks and Nordstrom had particularly strong sales. Same-stores sales at Saks grew 15%, while Nordstrom reported a 7.3% growth in comparable-store sales. Macy’s, Kohl’s, and JCPenney also reported strong sales growth for February.

Bombardier lands two orders worth more than $14 billionBombardier announced two landmark deals this week. First, the Canadian global transportation manufacturer received its largest-ever order — worth up to $6.7 billion — for business jets from NetJets, a subsidiary of Warren Buffett’s Berkshire Hathaway. Then, Bombardier Aerospace, a subsidiary, said it had signed an $8 billion aircraft-leasing deal with the Industrial and Commercial Bank of China (ICBC) and ICBC Financial Leasing Co.

U.S. car sales accelerateGeneral Motors, Toyota, and Nissan each reported major increases in U.S. sales of cars and light trucks for February. All three benefited from buyer incentives. However, with year-over-year sales increases of 46%, 42%, and 32%, respectively, GM, Toyota, and Nissan all had reason to celebrate. Overall, the three automakers sold more than 993,000 cars and trucks in February, a 27% increase over February 2010.

The week ahead

• Japanese GDP data released Wednesday, March 9
• U.S. weekly jobless claims figures released Thursday, March 10
• France, Italy, the U.K., and China industrial production data released Thursday, March 10
• Chinese CPI data released Thursday, March 10
• Volkswagen AG earnings due Thursday, March 10
• National Semiconductor earnings due Thursday, March 10
• German CPI data released Friday, March 11

Stay focused and diversified
In any market environment, we strongly believe that investors should stay diversified across a variety of asset classes. By working closely with your financial advisor, you can help ensure that your portfolio is properly diversified and that your financial plan supports your long-term goals, time horizon, and tolerance for risk.

Diversification does not guarantee a profit or protect against loss.

The information included above as well as individual companies and/or securities mentioned should not be construed as investment advice, a recommendation to buy or sell, or an indication of trading intent on behalf of any MFS product.

Securities discussed may or may not be holdings in any of the MFS funds. For a complete list of holdings for any MFS portfolio, please see the most recent annual, semiannual, or quarterly report. Full holdings are also available on the individual Fund Profile tab in the Products and Performance section of mfs.com.

Past performance is no guarantee of future results.

Sources: MFS research; The Wall Street Journal; The Wall Street Journal Online; Bloomberg News; Financial Times; Forbes.com; CNNMoney.com; msnbc.com.

--see disclaimer below--

MARKET WEEK: FEBRUARY 28, 2011

The Markets Despite three straight days of selling that included back-to-back triple-digit losses, the Dow managed to stay above 12,000; the S&P did the same with the 1300 mark. However, the domestic equity indexes lost anywhere from a quarter to a third of their year-to-date gains to profit-taking from the recent multi-week rally and unease about political conflict. Market/Index 2010 Close Prior Week As of 2/25 Week Change YTD Change DJIA 11577.51 12391.25 12130.45 -2.10% 4.78% NASDAQ 2652.87 2833.95 2781.05 -1.87% 4.83% S&P 500 1257.64 1343.01 1319.88 -1.72% 4.95% Russell 2000 783.65 834.82 821.95 -1.54% 4.89% Global Dow 2087.44 2241.29 2194.22 -2.10% 5.12% Fed. Funds .25% .25% .25% 0 bps 0 bps 10-year Treasuries 3.30% 3.59% 3.42% -17 bps 12 bps Last Week's Headlines ·         As the rebellion in Libya spiraled out of control, oil prices reached their highest level since fall 2008. ·         Home prices in the 20 cities tracked by the S&P/Case-Shiller index fell by an average of a full percent in December. Prices are now down 2.4% from the previous December, and average prices for the fourth quarter of 2010 were at roughly the same level as in the first quarter of 2003. ·         January sales of existing homes were up 2.7% from the previous month, according to the National Association of Realtors®. However, the Commerce Department said sales of new homes fell 2.4% in January compared to December. ·         The economy grew more slowly in the fourth quarter than the Commerce Department originally estimated. The 2.8% revised figure was down slightly from the original 3.2% estimate. The Bureau of Economic Analysis said higher consumer spending, exports, and residential investment were offset by a decline in nonresidential fixed investments, slower private inventory investments, and reduced federal, state, and local government spending. Eye on the Week Ahead Investors will keep a nervous eye on the conflict in Tripoli, assessing the potential impact that higher oil prices might have on the economy. Also watched will be the congressional conflict over the budget deficit as the March 4 deadline for raising the nation's debt ceiling approaches. Finally, Friday brings unemployment data. Key dates and data releases: Personal income/spending, pending home sales (2/28); U.S. manufacturing, construction spending (3/1); Federal Reserve "beige book" report (3/2); labor productivity and costs, U.S. services sector (3/3); unemployment, factory orders (3/4). Data source: Includes data provided by Brounes & Associates. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. Equities data reflect price change, not total return. The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indexes listed are unmanaged and are not available for direct investment. --see disclaimer below--

Week in Review: Oil prices rise, stocks retrench as Libyan violence escalates

Global economic news

Oil futures crest at $100 a barrelCrude oil prices reached their highest levels in more than two years as a result of growing violence and oil supply disruptions in Libya. Oil futures in London hit $120 a barrel on Thursday before receding to $112. The April contract on the New York Mercantile Exchange traded above $103 a barrel on Thursday before retreating below $98. Prices stabilized after Saudi Arabia, the United States, and the International Energy Agency reassured markets that global supplies would be sufficient, even without Libya's production. Just last week, oil had traded in the range of $86 to $87 a barrel.


U.S. economy grows, but shy of the 3.2% forecastU.S. real gross domestic product grew at an annual rate of 2.8% in the fourth quarter of 2010, below the estimate of 3.2%, the U.S. Department of Commerce reported. Real GDP increased 2.6% in the third quarter. Personal consumption expenditures, exports, and nonresidential fixed investments contributed to growth, while personal inventory investment and state and local government spending detracted. Imports, which are deducted from GDP, decreased. Overall, the 2.8% growth figure is consistent with forecasts of a slow-growth economic recovery.


First-time U.S. jobless claims decrease againU.S. initial jobless claims declined for the third time in four weeks, and the four-week average dipped to its lowest level in two and a half years, the U.S. Department of Labor reported. For the week ending February 19, first-time unemployment claims dropped by 22,000 to a seasonally adjusted 391,000. The four-week average fell to 402,000.


U.S. new home sales fall more than expectedSales of new homes in the U.S. fell more than forecast in January, slipping 13% to a pace of 284,000 a year, according to a report from the Commerce Department. Tight credit standards and 9% unemployment are weighing down home construction. However, mortgage rates fell to 4.95% for a 30-year mortgage, a result of the drop in Treasury yields, as investor demand for safe-haven assets rose. Lower rates could help stimulate home sales.



Eurozone confidence risesEconomic confidence within the eurozone, as measured by the European Commission’s Economic Sentiment Indicator, rose to 107.8 from 106.8 in January, its highest reading since September 2007.


U.S. consumer confidence climbsConsumer confidence in the United States rebounded to its highest level since April 2008, based on the Bloomberg Consumer Comfort Index’s -39.2 reading in the week ended February 20, up from -43.4 the previous week.

Global corporate news

GM posts first profit in six yearsGeneral Motors earned $4.7 billion in 2010, its best annual performance in more than a decade and its first yearly profit since 2004. GM’s global sales rose 12.2% in 2010, to 8.39 million. It sold just 30,000 fewer vehicles than Toyota, the automaker that a year ago displaced GM as the world’s largest.


Boeing lands $35 billion government contractThe U.S. Air Force awarded Boeing a $35 billion contract to build aerial refueling tankers, preserving Boeing’s longstanding position as a leading Air Force supplier.


RBS registers small quarterly profitRoyal Bank of Scotland posted a modest profit in the fourth quarter of 2010 and reduced its annual loss to £1.13 billion from £3.6 billion pounds in 2009. Net profit for the fourth quarter was £12 million pounds. The bank’s net interest margin rose while income at its investment banking division fell substantially.


Allianz increases earnings, raises dividendAllianz, Europe’s largest insurer by gross premium income, reported an 11% increase in fourth-quarter net profit on improvements in its property and casualty business, higher revenues, and fewer natural-disaster claims.


European telecom giants stumbleSpanish telecommunications giant Telefonica posted a 45% drop in fourth-quarter net profit because of sharply higher operating costs, while Deutsche Telekom’s loss deepened as a result of steeper impairment and restructuring charges (€400 million) in 2010.


Toyota recalls 2.2 million vehiclesToyota announced a recall of 2.2 million vehicles over the much-publicized sticky-accelerator pedal problem, which has caused pedals to become trapped under floor mats because of faulty design.

The week ahead

• Chicago PMI purchasing managers survey released Monday, February 28
• Canadian GDP data released Monday, February 28
• European Union unemployment rate released Tuesday, March 1
• European Union GDP data released Thursday, March 3
• Canadian banks to post earnings Tuesday, March 1 (BMO) and Thursday, March 3 (RBC and TD Bank)
• U.S. nonfarm payrolls data released Friday, March 4

Stay focused and diversified
In any market environment, we strongly believe that investors should stay diversified across a variety of asset classes. By working closely with your financial advisor, you can help ensure that your portfolio is properly diversified and that your financial plan supports your long-term goals, time horizon, and tolerance for risk. Diversification does not guarantee a profit or protect against loss.

The information included above as well as individual companies and/or securities mentioned should not be construed as investment advice, a recommendation to buy or sell, or an indication of trading intent on behalf of any MFS product.

Securities discussed may or may not be holdings in any of the MFS funds. For a complete list of holdings for any MFS portfolio, please see the most recent annual, semiannual, or quarterly report. Full holdings are also available on the individual Fund Profile tab in the Products and Performance section of mfs.com.


Past performance is no guarantee of future results.

Sources: MFS research; The Wall Street Journal; The Wall Street Journal Online; Bloomberg News; Financial Times; Forbes.com; CNNMoney.com; msnbc.com.

--see disclaimer below--