Week in Review: Investors cautious, economic concerns ease somewhat

U.S. economic news

Trade deficit narrows in July
The nation’s trade deficit fell 14% in July to $42.8 billion from $49.8 billion in June, according to a report from the U.S. Department of Commerce. The figure is well below the $47.3 billion gap that had been forecast by economists. Led by aircraft and capital goods, exports reached a record $153.3 billion in July, up 2% from June and 18% from one year earlier. Imports fell 2% from June to $196.1 billion. A smaller trade deficit is potentially good news for the economy because it suggests trade will have less negative impact on growth in the third quarter than it had in the second quarter.

Credit card debt plummets
According to the U.S. Federal Reserve Board, revolving credit outstanding (almost entirely credit card debt) fell $4.4 billion to $827.8 billion in July from June. That figure represents a decline of 15% from the peak of $973.6 billion reached in August 2008.

Unexpected gas glut
Gasoline stockpiles increased by a record 5% during July and August. Supplies typically fall 6% in these two months. One benefit to gas buyers from the unexpected surplus: prices at the pump have remained largely the same during the summer months. The extreme gains in gasoline supplies are a result of record refinery output and high imports more than making up for robust consumption.

Fed’s Beige Book reports uneven growth and signs of deceleration
The Fed reported in its Beige Book survey of economic conditions in the central bank’s 12 districts that recovery is occurring unevenly across the country. The report stated that regions dependent on manufacturing and farming were making the most progress while those reliant on housing were struggling. The report also said that while the U.S. economy maintained its expansion overall, five Fed districts have experienced “mixed conditions or a deceleration in overall economic activity” in mid-July through the end of August. The other seven regions all reported modest growth or conditions that were improving.

New unemployment claims fall
The U.S. Department of Labor reported that applications for unemployment benefits fell by 27,000 to 451,000 in the week ended September 4. Economists had predicted a much smaller drop of just 2,000 claims. While total initial jobless claims are still much higher than they would be in a healthy economy, they are now at their lowest level since July 10.

U.S. and global corporate news

Bristol-Myers Squibb announced that it is acquiring biotechnology company ZymoGenetics for $735 million. The deal is the latest in a series of small-to-midsize acquisitions and partnerships that Bristol has made over the past few years in an attempt to strengthen its product lineup.

British Airways and American Airlines, which won approval for their joint venture in July, will start their alliance on flights across the Atlantic in October. The two airlines will align their frequent-flier programs, allowing travelers to earn and use their miles on both airlines.

Talbots reported a profit of $941,000 for the quarter ended July 31, a considerable turnaround from a prior-year loss of $24.5 million. The women’s clothing and accessories retailer cited lower costs and resistance to markdowns as reasons for its improved earnings. Despite posting a profit, net sales decreased 1.3% to $300.7 million and same-store sales fell 1.4%, following a 25% drop in same-store sales one year earlier.

McDonald’s said same-store sales rose 4.9% in August from a year earlier, narrowly falling short of analyst estimates. Analysts projected global sales would increase 5%. The world’s largest restaurant chain reported that sales increased 4.6% in the United States, thanks in part to the popularity of its higher-margin smoothies and frappes.

Global economic news

OECD predicts slowdown in global economy
The Paris-based Organization for Economic Cooperation and Development projected that the pace of global economic expansion during the second half of 2010 will be slower than previously estimated. In its short-term forecast for the Group of Seven leading industrial nations, the think tank said annualized growth in G-7 gross domestic product will slow to 1.4% in the third quarter and 1% in the fourth quarter. That comes on the heels of growth of 3.2% and 2.5% in the first and second quarters of the year, respectively. Saying there is great uncertainty surrounding the world economy in the months ahead, the OECD added that central banks around the world may need to be prepared to provide additional economic stimulus.

Bank of Canada lifts benchmark rate
Canada’s central bank increased its benchmark interest rate for the third time this year, raising its target rate for overnight loans between commercial banks to 1% from 0.75%. Canada’s increases are the first among Group of Seven countries following last year’s global recession. The country seems to be recovering from the global economic downturn faster than most countries, as Canada has already returned to pre-recession employment levels. In addition, “consumption and investment have ‘evolved’ as anticipated and are expected to remain buoyant,” the Bank of Canada said.

Ireland’s state-owned bank to be split
Ireland’s troubled banking system became the latest victim in Europe’s continuing economic crisis, as the government said it would break up the weakest of its major banks to try to prevent a run by depositors. Anglo Irish Bank, which was nationalized by Ireland’s government last year, will likely be divided into a government-backed bank that would hold customer deposits and an “asset recovery” bank that would hold the bank’s increasingly bad loans. The intention is that eventually the recovery bank’s assets will be sold off in whole or in part. The move is being made as Ireland attempts to restore the reputation of its financial system.

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 adviser, 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 as 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 on 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; boston.com.

--see disclaimer below--

Market Week: For Week Ending 9-3

The Markets

So far, so good: September opened with a powerful rally on Wednesday that sent domestic equities up roughly 3%, and Friday's sequel wasn't bad either. The S&P rose above 1,100 once again--it has now recaptured just over 40% of what it's lost since its 2010 high on April 23--and the Dow and Russell 2000 once again turned positive for the year.

Market/Index	2009 Close	Prior Week	As of 9/3	Week Change	YTD Change
DJIA	10428.05	10150.65	10447.93	2.93%	.19%
NASDAQ	2269.15	2153.63	2233.75	3.72%	-1.56%
S&P 500	1115.10	1064.59	1104.51	3.75%	-.95%
Russell 2000	625.39	616.76	643.36	4.31%	2.87%
Global Dow	1984.48	1793.44	1860.16	3.72%	-6.26%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	3.85%	2.66%	2.72%	6 bps	-113 bps

Last Week's Headlines

• Continued unwinding of temporary census jobs helped push unemployment up slightly in July, to 9.6%, according to the Bureau of Labor Statistics. However, nonfarm payrolls declined less than expected and a separate survey of corporate payrolls showed a gain of 67,000 jobs.
• The Bureau of Economic Analysis said Americans' incomes were up 0.2% in July from the month before as companies continued to increase hours for existing workers rather than hire new ones.
• U.S. manufacturing expanded in August, according to the Institute for Supply Management (ISM), rising from 55.5 to 56.3 (any number over 50 indicates growth). The U.S. services sector also expanded in August for the eighth month in a row, the ISM said. However, the rate of growth was almost 3 percentage points lower than in July, and new orders dropped even more.
• Pending home sales rebounded in July after a sharp drop following the April deadline for qualifying for the federal tax credit. According to the National Association of Realtors®, the index rose 5.2% to 79.4, compared to the 2.8% decline of the previous month.
• High levels of cash held by many corporations are helping to spur mergers and acquisitions. HP won a bidding war with Dell over computer storage company 3Par, and Burger King agreed to be acquired by private equity company 3G Capital.

Eye on the Week Ahead

In a trading week that's both short and light on data, weekly initial unemployment claims data could receive extra attention in light of last week's August figures. The Federal Reserve's "beige book" report will provide anecdotal evidence of the state of the economy.
Key data releases: Fed "beige book" report, consumer credit (9/8); international trade (9/9).
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.

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--

U.S. economic news

Job losses moderate
Job losses continued to rise in August but at a more modest pace than expected. Nonfarm payrolls fell by 54,000 last month, matching the level of losses recorded in July. Private employers added 42,000 jobs in August, while a reduction in census workers dragged total payrolls down by 100,000 and pushed the unemployment rate up to 9.6%. Earlier in the week, reports showed that initial jobless claims fell by 6,000; that level indicates that the labor market has not improved this year even as the economy expanded.

Manufacturing gains add to enthusiasm
The Institute for Supply Management said its manufacturing index rose to 56.3 in August from 55.5 the prior month. Faster growth in production, employment, and inventories pushed the U.S. manufacturing index higher last month.

Unexpected jump in pending home sales
Pending home sales unexpectedly grew 5.2% in July. The jump was seen as a sign that the market may be starting to stabilize after the expiration of a homebuyer tax credit.

U.S. and global corporate news

Canadian banks miss expectations
The Bank of Nova Scotia's third-quarter earnings rose 14% as the internationally diverse bank posted a record quarter in its domestic banking business. Still, its results missed analysts' expectations. Toronto-Dominion Bank also missed analysts' expectations, despite a 29% jump in profit. That increase was powered by strong retail results in Canada and the United States and lower loan-loss provisions.

Heinz profits rise 13%
H.J. Heinz's fiscal first-quarter earnings rose 13%, helped by strong sales of ketchup and staples such as Classico pasta sauces. During a conference call to announce its results, the Pittsburgh-based company again signaled its interest in making acquisitions in emerging markets.

Global economic news

ECB extends emergency lending measures
European Central Bank President Jean-Claude Trichet extended emergency lending measures for banks into 2011 as the risk of a renewed U.S. recession put the eurozone's rebound in crisis. The ECB said it will keep offering banks unlimited one-week and one-month loans at least until January 18. The ECB will also offer banks three-month loans in October, November, and December at interest rates linked to the ECB's average benchmark rate over the maturity of the loan.

Japan expands lending program and announces $10.8 billion stimulus
In an effort to combat the rising yen, which analysts have blamed for slower export growth and a sputtering economy, the Bank of Japan announced that it would expand its lending program and that the government would implement a $10.8 billion stimulus package.

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 as 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 on 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; boston.com.

--see disclaimer below--

Week in Review: Stocks under pressure amid signs that recovery is losing momentum

U.S. economic news

Bernanke pledges Fed to do all it can to ensure recovery
U.S. Federal Reserve Board Chairman Ben Bernanke said Friday that the U.S. central bank "will do all that it can" to ensure economic recovery continues. He outlined steps the Fed might take if the economy slows. In his opening remarks to the world's central bankers in Jackson Hole, Wyoming, Bernanke said the Fed is prepared to provide additional monetary accommodation through unconventional measures if necessary.

GDP grows more slowly than thought
The U.S. economy grew more slowly that initially estimated in the second quarter and corporate profits nearly dried up. Gross Domestic Product rose from April through June at an annualized seasonally adjusted rate of 1.6%. A month ago, the government estimated the rate at 2.4% after a 3.7% expansion in the first quarter. After-tax earnings rose 0.1%, off the previous quarter's 11.4% gain.

Weak durable goods orders, drop in home sales show recovery losing pace
Weakness in durable goods orders and a drop to historic lows in new-home sales offered more signs that the economy is losing momentum. Durable goods orders rose 0.3% in July from June, mostly on the back of an increase in aircraft orders. Excluding the volatile transportation sector, orders tumbled 3.8%.

Also this week, reports showed that sales of new single-family homes fell 12.4% in July from June to a seasonally adjusted rate of 276,000, the lowest level since the data series began in 1963. Many purchasers seem to have left the markets since the expiration on April 30 of a federal tax credit for homebuyers. Existing home sales suffered a similar decline, dropping a record 27.2% to their lowest level in 15 years, as inventories soared to their highest level in more than a decade. Adding to the discouraging news were reports by the Federal Reserve Bank of Kansas City that manufacturing activity in the district stalled.

Initial jobless claims decline more than expected
More encouragingly, initial jobless claims declined by 31,000 to 473,000, more than the 10,000 drop predicted by economists. However, new claims for the previous week were revised upward, and the four-week moving average rose to the highest level since November 2009.

U.S. and global corporate news

Toyota Motor announced it will recall about 1.13 million Corolla and Matrix cars for an engine defect that U.S. regulators said could cause stalling. The recall will affect model years 2005 to 2008 in the United States and Canada and comes after three reported accidents linked to the defect. GM will recall approximately 200,000 of the Pontiac Vibe, which was designed and engineered by Toyota and built alongside the Matrix at a joint manufacturing plant in California.

Johnson & Johnson pulled two hip-repair implants off the market because of quality problems. That recall, administered through J&J's DePuy Orthopaedics unit, came the same week that J&J's Vision Care unit withdrew about 100,000 boxes of contact lenses sold in Asia and Europe because of a manufacturing problem.

Spirits giant Diageo reported its net profit rose 1.5% for the year ended June 30. Sales increased 5% but were up only 2% when stripping out the effects of currency fluctuations, acquisitions, and disposals. During the fiscal year, Diageo benefited from an 11% jump in organic net sales in emerging markets, including China and India, but suffered a 2% sales decline in the developed world.

Global economic news

U.K. economy expands 1.2%
The U.K. economy expanded 1.2% in the second quarter, marking its biggest growth spurt since 2001, as companies rebuilt inventories and construction work surged.

Standard & Poor's downgrades Ireland; Fitch upgrades Rwanda
Standard & Poor's Ratings Services cut its long-term sovereign credit rating on Ireland one notch to AA-. The company said the projected fiscal cost to the Irish government of supporting the financial sector has increased significantly above prior estimates. Ireland's banks were hit by the property market crash; as a result, the Irish government was forced to pump billions of euros into the banks.

Meanwhile, Fitch Ratings upgraded Rwanda, citing the African nation's "strong growth" and an improvement in its business environment. It noted that the country has posted an "uninterrupted" period of strong economic growth that has more than doubled its per capita income since 1994, when genocide killed some 800,000 people. The rating was upgraded to B, five steps below investment grade.

Japan's exports rise, albeit at a slower rate
Japan's exports rose in July for the eighth month in a row as sales of products, such as cars and electronic components, in emerging markets were still solid. However, the rate of growth slowed for the fifth month in a row. That pace is expected to slow even more if the yen, which this week surged to a 15-year high against the dollar, continues to appreciate.


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 as 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 on 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; boston.com

--see disclaimer below--

Week in Review: Economic weakness weighs on markets

U.S. economic news

U.S. weekly jobless claims reach 500,000
Initial unemployment claims rose unexpectedly again, hitting 500,000 for the week ended August 14. Claims increased by 12,000, though economists surveyed by Dow Jones Newswires had predicted a decline of 4,000. The four-week moving average rose by 8,000 to 482,500. The weekly jobless claims number and the four-week average reached their highest levels since late in 2009. As previously reported, the economy lost 131,000 jobs in July. Together, these reports signal a struggling economic recovery.


Philadelphia-area manufacturing index weakens
The Federal Reserve Bank of Philadelphia’s general economic index turned negative in August, signaling an economic contraction for the first time since July 2009. The widely watched survey fell to minus 7.7 from plus 5.1 in early July. Economists surveyed by Bloomberg News had forecast a rise to plus 7.


Industrial production up slightly
U.S. industrial production rose 1% from June to July, the U.S. Federal Reserve Board reported. This was slightly better than expected.


Producer prices perk up, deflation fears ease
The U.S. Department of Labor’s Producer Price Index increased 0.2% in July after a drop of 0.5% in June. It was the index’s first rise in three months and helped ease growing concerns about deflation.

U.S. and global corporate news

BHP Billiton aims to take over Potash Corp.
Australian mining powerhouse BHP Billiton said it would ask Saskatchewan-based Potash Corp.’s shareholders directly to approve its $38.6 billion all-cash takeover bid after the fertilizer company’s board rejected the offer. The proposed acquisition needs approval from at least 50% of Potash shareholders.


Intel to acquire McAfee
Computer maker Intel agreed to pay $7.7 billion to buy computer-security software maker McAfee in the latest in a series of technology company acquisitions as profitable companies take advantage of low valuations to make bargain purchases.


GM files for an IPO
General Motors filed for a public stock offering that would allow the federal government to begin selling its 61% stake in the automaker and help GM raise money for its turnaround. GM’s interim CEO, Edward E. Whitacre, Jr., who oversaw the automaker’s dramatic return to profitability this year, will step down as chief executive September 1 and as chairman at year end. Last week, GM announced a second-quarter profit of $1.3 billion, its strongest quarter in six years.


Tech bellwethers post profits
Hewlett-Packard and Dell both reported improved profits for the quarter just ended, signaling strength in the technology sector. HP posted a 6% increase in profits on an 11% rise in revenue. Rival computer maker Dell’s profit rose 15% and its revenues were 22% higher than a year earlier.


Deere’s profit leaps
Deere & Company, the world’s largest manufacturer of farm machinery, announced a 47% jump in quarterly earnings as sales of large farm machinery and construction equipment rebounded. U.S. sales rose because of robust commodity prices, strong cash receipts from farming, and low interest rates. However, European demand continued to be weak.


Wal-Mart earnings up on non-U.S. results
Wal-Mart Stores posted a 3.6% increase in second-quarter earnings, with strong international results leading the way. The discount retail chain’s international sales and operating income had double-digit growth. However, its U.S. same-store sales fell for the fifth straight quarter.


Williams-Sonoma earnings soar
Williams-Sonoma, a retailer of housewares and home decor, posted a $30.8 billion profit for its quarter ended July 31, compared with just $399,000 during the same period a year ago. Excluding restructuring and other charges, the company grew its earnings six-fold. Revenue rose 15% and same-store sales grew 14%.

Global economic news

China passes Japan as world’s second-largest economy
In the latest reminder of China’s growing clout and Japan’s decline as an economic giant, China replaced Japan as the world’s second-largest economy in the second quarter. China’s economic output was valued at $1.33 trillion in the second quarter while Japan’s economy stood at $1.28 trillion. Japan has had the world’s second-largest economy for most of the last four decades. In comparison, U.S. second-quarter gross domestic product was $14.6 trillion, according to the U.S. Department of Commerce.


German central bank raises economic forecast
The Deutsche Bundesbank raised its 2010 forecast for German economic growth to 3% from 1.9% after second-quarter figures released last week showed surprising strength. The country's economy grew at its fastest pace in 20 years, fueled by robust growth in exports.


Japan’s GDP slows to a crawl
Japan’s economy grew at an anemic 0.4% in the second quarter, falling far below expectations because of stagnant consumption and weak exports. Strength in the yen is weighing down demand for Japanese exports.


Taiwan economy grows
Taiwan’s economy grew at a robust 12.53% in the second quarter, much faster than the median forecast of 10.5% in a Dow Jones Newswires poll, prompting the Taiwanese government to raise its full-year GDP growth forecast to 8.24% for 2010, from 6.14%.


Inflation climbs in eurozone, eases in India
An increase in eurozone inflation and a decrease in the rate of rising prices in India could both be considered good news. Higher energy prices in Europe caused the eurozone annual inflation rate to rise to 1.7%, its highest annual rate since November 2008, but still below the European Central Bank’s target of 2.0%. In India, wholesale inflation tapered to 9.97% in July from 10.55% in June.

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 as 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 on mfs.com.
Please check with your compliance deptartment before distributing to clients.

Past performance is no guarantee of future results.


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

--see disclaimer below--

Market Week: For Week Ending 8-13

The Markets

Cautious words from the Fed, a wider than expected trade deficit, slowing Chinese imports, worse-than-expected weekly initial unemployment claims, and a resulting pessimism about global economic growth for the rest of 2010 all helped push the four major domestic equities indexes back into negative territory for the year once again. Wednesday saw a 265-point drop in the Dow, while small caps and the NASDAQ were hit even harder. Treasury prices rose as the 10-year note's yield fell to a 16-month low. Oil prices fell to roughly $75 a barrel, hit by concerns over the potential for a double-dip global recession.

Market/Index	2009 Close	Prior Week	As of 8/13	Week Change	YTD Change
DJIA	10428.05	10653.56	10303.15	-3.29%	-1.20%
NASDAQ	2269.15	2288.47	2173.48	-5.02%	-4.22%
S&P 500	1115.10	1121.64	1079.25	-3.78%	-3.21%
Russell 2000	625.39	650.68	609.49	-6.33%	-2.54%
Global Dow	1984.48	1908.24	1827.75	-4.22%	-7.90%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	3.85%	2.86%	2.68%	-18 bps	-117 bps

Last Week's Headlines

• The Federal Reserve Board said it will continue to help support the weak economy by buying Treasury and mortgage-backed bonds with the proceeds of maturing bonds it already holds.
• The U.S. trade deficit widened dramatically in June, jumping 18.8% from May's $42.1 billion to just under $50 billion. Imports, especially consumer goods, rose while exports fell during the month. The deficit is the largest since October 2008, the Commerce Department said. Meanwhile, China announced that its imports grew more slowly in July. That raised concerns that any decline in demand by emerging economies for products manufactured in the U.S. and elsewhere might hamper economic recovery worldwide.
• Inflation at the consumer level remained low despite a 0.3% increase in July. That translates to a 1.2% annual inflation rate, according to the Bureau of Labor Statistics.
• The faster we go, the behinder we get: Even though Americans worked longer hours in the year's second quarter, overall business productivity fell. After five quarters of strong growth, business productivity declined at an annual rate of 0.9%. The 3.6% increase in the total number of hours worked was the biggest jump since Q1 2006, according to the Bureau of Labor Statistics, while the output produced by those workers increased only 2.6%.
• Freddie Mac followed Fannie Mae in asking for an additional $1.8 billion ($1.5 billion for Fannie) from the U.S. Treasury to help it cope with ongoing losses on bad mortgages. Though Fannie Mae had said the previous week that its Q2 loss was the smallest in three years, Freddie's losses continued to rise during the second quarter.

Eye on the Week Ahead

Wholesale inflation data will be watched for any signs of deflation, and Thursday's leading economic indicators report will suggest what the next few months may hold. Other than that, earnings reports and end-of-week options expiration are the most likely catalysts for domestic equities, which could continue to see light trading volume.

Key data releases: International capital flows (8/16); housing starts, wholesale inflation, industrial production (8/17); leading economic indicators (8/19); options expiration (8/20).

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.

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: Stocks slide as worries about slowing global growth intensify

U.S. economic news

Fed downgrades assessment of U.S. economic recovery
The Fed said this week that "the pace of economic recovery is likely to be more modest in the near term than had been anticipated." The central bank said it will buy U.S. Treasuries with proceeds from mortgage holdings. It set a $2.05 trillion floor on its holdings of government bonds and housing debt to buoy an economic recovery. The Fed's statement followed a government report last month that showed the recession that started in December 2007 was worse than estimated.


Increase in jobless claims adds to evidence of weakening economy
An unexpected increase in jobless claims this week added to evidence that the economy is weakening. The number of U.S. workers making new claims for jobless benefits climbed last week to the highest level in six months. Initial unemployment claims rose by 2,000 to 484,000 in the week ended August 7, according to the U.S. Department of Labor. Also this week, reports showed personal incomes fell in the United States last year, except in areas with a high concentration of federal government and military jobs.


Retail sales rise less than forecast
Retail sales rose less than forecast in July as a lack of jobs caused consumers to hold back on spending. Sales rose 0.4%, led by autos and gasoline. Economists predicted a 0.5% gain.


Cost of living rises
The cost of living in the United States rose for the first time in four months as the Consumer Price Index increased 0.3%, the most in a year. The gauge, excluding volatile food and energy costs, rose 0.1%.

U.S. and global corporate news

Cisco Systems results fall short of expectations
Cisco Systems' revenue from its latest quarter and its forecast for future revenue fell short of analysts' expectations. Cisco is seen as a bellwether for the technology sector and the drop in the profits of the company was viewed as a sign that consumers' reluctance to spend is starting to affect corporate sales and profits.



Freddie loses; Disney gains
Freddie Mac reported a second-quarter loss of $4.7 billion and asked the United States for $1.8 billion more in aid. Disney posted strong earnings and revenue growth aided by hit movies and an improving economic climate.


Merger and acquisition activity rises
Deal activity rose this week, boosting hopes that U.S companies are ready to put their $1.8 trillion of stockpiled cash to work. The Blackstone Group agreed to buy Dynegy for $4.7 billion, and International Business Machines said it would acquire Unica for about $480 million.

Global economic news

European economy expands more than expected
Europe’s economy expanded more than economists forecast in the second quarter as the fastest growth in Germany in two decades powered the region’s recovery. The eurozone's gross domestic product increased 1% from the first quarter when it rose 0.2%. This is the fastest growth rate that the 16-country region has experienced in four years, and it is the first time eurozone growth has outpaced that of the United States since the second quarter of 2009. Germany's exports surged in June to near prerecession levels.


China pushes currency lower
China pushed its currency sharply lower on Thursday; the move essentially wiped out gains the yuan had made since the Chinese government loosened its peg against the dollar in June. The country's trade surplus rose in July to its highest level in a year and a half.


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 as 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 on mfs.com.
Please check with your compliance department before distributing to clients.


Past performance is no guarantee of future results.
 
Sources: MFS research; The Wall Street Journal; The Wall Street Journal Online; Bloomberg News; Financial Times; boston.com.

--see disclaimer below--

Market Week Ending August 6, 2010

The Markets

Investor optimism that sent domestic equities surging on Monday was dampened but not extinguished by so-so economic news throughout the week. With large caps leading the way, stocks rebounded strongly from Friday's early swoon after a less-than-encouraging unemployment report. The week's action returned the Standard & Poor's 500 and the NASDAQ to positive territory for the year (although just barely), while the Russell 2000 remained roughly where it was two weeks ago.

Market/Index	2009 Close	Prior Week	As of 8/6	Week Change	YTD Change
DJIA	10428.05	10465.94	10653.56	1.79%	2.16%
NASDAQ	2269.15	2254.70	2288.47	1.50%	.85%
S&P 500	1115.10	1101.60	1121.64	1.82%	.59%
Russell 2000	625.39	650.89	650.68	-.03%	4.04%
Global Dow	1984.48	1855.79	1908.24	2.83%	-3.84%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	3.85%	2.94%	2.86%	-8 bps	-99 bps

Last Week's Headlines

• An increase of 71,000 private-sector jobs in July wasn't enough to overcome the demise of 143,000 temporary census jobs, according to the Bureau of Labor Statistics. As a result, the unemployment rate stubbornly remained at 9.5%. If people considered underemployed are included, that percentage increases to 16.5%.
• July was the twelfth consecutive month of growth for the U.S. manufacturing sector, according to the Institute for Supply Management. However, that growth as well as new orders continued to taper off; it was the third month in a row in which the rate of growth has been slower than the month before.
• American incomes stalled out in June, and what people had they tended to save. According to the Commerce Department, incomes failed to grow for the first time since last July. However, the savings rate hit its highest level in over a year--6.4% of income--while consumer spending flatlined.

Eye on the Week Ahead

In light of one Federal Reserve Board official's recent warning about the potential for an extended period of deflation, the Fed's announcement Tuesday will be closely watched for any hints at possible new quantitative easing measures. So will inflation data at the end of the week, which will have a bearing on any future Fed moves. Retail sales also will be a focus, with overall July sales data and several major retailers' second-quarter earnings reports on tap.

Key data releases: Federal Reserve Board announcement, productivity/labor costs (8/10); international trade (8/11); consumer inflation, retail sales (8/13).

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.

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--

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	What You Should Know about Trusteed IRAs The tax code allows IRAs to be created as trust accounts, custodial accounts, and annuity contracts. The same tax rules apply, regardless of how the IRA is structured. But the form can have a significant impact on how your IRA is administered. This article will focus on "trusteed IRAs," also known as individual retirement trusts (or IRTs).
	More Details

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	Ways to Trim College Costs How can students and parents avoid the "extreme borrowing" phenomenon that can lead to years of burdensome loan payments? They can start by looking for ways to trim college costs so they won't have to borrow and/or pay as much in the first place. Here are some ideas.
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Avoiding Probate: Is It Worth It? When you die, your estate goes through a process that manages, settles, and distributes your property according to the terms of your will. This process is governed by state law and is called probate. Usually, everything goes smoothly during the probate process as long as the executor does what needs to be done in a timely fashion and there are no family squabbles. Nevertheless, some people may want to avoid this process.

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	What is a rewards program? Offered by merchants of all types, rewards programs are marketing tools that encourage brand loyalty purchasing through price discounts, bonus points and/or coupons toward future purchases, donations to your favorite charity, and even cash rebates. If you're part of the program, you access it by using a membership card that looks like (and often is) a credit card.
	More Details

	How can I reap the most from a rewards card? As you sow, so may you reap. To reap the most from a credit card rewards program, here are some things to consider.
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Week in Review: Investors remain cautious in face of conflicting data

U.S. economic news

Employment falls more than expected; unemployment rate steady at 9.5%
Employment fell more than expected in July as the economy shed 131,000 jobs; the unemployment rate held steady at 9.5%. The numbers are another sign that the economic recovery may be losing momentum. Nonfarm payrolls fell last month because the rise in private-sector employment was not enough to make up for the government jobs lost.


U.S. service sector growth picks up; manufacturing growth slows
The Institute for Supply Management reported that U.S. service sector growth picked up in July. Service companies have expanded every month this year, but the sector continues to grow at a less robust pace than in the manufacturing sector. Its slow recovery has put a damper on overall hiring because it accounts for 80% of U.S. employment. Despite its strong recovery to date, growth in manufacturing slowed in July.


Retail sales rise but fall short of expectations
Retail sales at U.S. chain stores rose 2.9% in July, falling short of forecasts, as markdowns failed to inspire consumers.

U.S. and global corporate news

European banks post solid profits
HSBC's reported pretax profit more than doubled to $11.1 billion in the first half, while BNP Paribas posted a 31% increase in net income as provisions for bad loans dropped. Barclay's posted a 29% increase in net profit, but costs soared and revenue fell at Barclay Capital's investment banking unit. Société Générale's earnings more than tripled as strong retail operations and lower provisions helped offset a weaker investment banking business. American International Group swung to a $2.7 billion net loss for the second quarter because of charges associated with a unit that is being sold. That loss compares with a $1.8 billion net profit a year ago. Still, the company's insurance business generated an operating profit.


Toyota raises forecast; Rio Tinto profits more than triple
Toyota Motor raised its profit forecast for its fiscal year and posted its highest quarterly net profit in two years after it was able to improve its U.S. finance division and reduce costs. Rio Tinto's profits more than tripled in the first half, and the company made plans to increase output in Australia and Africa.
Newsweek sold; Barnes and Noble on block


The Washington Post Company agreed to sell the 77-year-old Newsweek magazine to stereo tycoon Sidney Harman. Barnes and Noble put itself up for sale as digital books eroded its traditional business.

Global economic news

Global manufacturing activity slows
Growth in manufacturing activity slowed in many of the world's major economies in July; the weaker pace indicates that factories will not be the strong driver of growth that they were earlier in the year. Growth slowed in a large portion of Asia, with China's manufacturing activity expanding at the slowest pace in 17 months amid tightening measures and uncertain global demand. In Europe, however, activity strengthened.


ECB and BOE keep rates steady
The European Central Bank and Bank of England kept their main interest rates unchanged this week. ECB President Jean-Claude Trichet said Europe is recovering faster than forecast and money markets are improving. Markets saw these remarks as an indication that the ECB is looking for ways to phase out liquidity tools put in place to fight the financial crisis.


Wheat prices rise after Russia bans exports
Wheat futures prices in Europe and the United States soared to their highest levels in 23 months after Russia said it would ban grain exports because of a severe drought. That move has heightened concerns about global supplies of grain and the possible impact on food prices. Russia's troubles are all the more problematic because many of the world's wheat exporters have also experienced crop problems. Canada has been hit with heavy rains, Australia has battled locusts, and part of the wheat-growing region in the European Union has, like Russia, been hit by drought.


Greece hits austerity targets
Greece met European Union and International Monetary Fund austerity targets, but monitors warned of overspending at local levels.

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 views expressed here 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 MFS investment product. Individual securities mentioned are for illustrative purposes only and may not be relied upon as investment advice or as 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.

Past performance is no guarantee of future results.
Sources: MFS research; The Wall Street Journal; The Wall Street Journal Online; Bloomberg News; Financial Times; boston.com.

--see disclaimer below--

Summary of New Consumer Protection Act

Summary of the Provisions of Dodd-Frank Wall Street Reform and Consumer Protection Act - July 27, 2010

On July 21, 2010, President Obama signed into law the most wide-ranging reform of the U.S. financial system in decades. The Act establishes new consumer protection provisions regarding lending and credit. It also attempts to provide greater transparency and accountability for investments and financial services, and establish processes to deal with systemic financial emergencies. For a brief summary of the Act, see: Forefield Update: Financial Reform: The Dodd-Frank Wall Street Reform and Consumer Protection Act

We've created a new Text Client Alert that summarizes some of the provisions in the Act. Just click the link below. Watch for our Flash Client Alert, coming very soon. Text Client Alert: Summary of New Financial Reform Law

Week in Review: U.S. stocks lose ground as data show slower-than-expected U.S. growth

U.S. economic news


U.S. economy slows; government says recession worse than believed
The U.S. economy slowed in the second quarter as growth rose at an annualized rate of 2.4%. The expansion was supported to a greater degree by business investments and exports than by consumer spending, which continued to play a smaller role in the recovery. For instance, business spending increased 21.9%, while consumer spending rose only 1.6%. In the first quarter, the economy grew by 3.7%.

The U.S. Department of Commerce reported that the recession was deeper, and subsequent recovery slower, than earlier estimated. The government revised downward its earlier estimates of gross domestic product for seven of the 12 quarters of 2007, 2008, and 2009, primarily because consumer spending grew more slowly and homebuilding fell more sharply than previously estimated. The overall depth of the most recent recession surpassed any other since the late 1940s. GDP fell by 4.1% between the fourth quarter of 2007, when the recession officially began, and the second quarter of 2009, when many economists believe it ended. The previous estimate for the overall decline was 3.7%.


Better-than-expected U.S. home prices
Home prices rose in May but were expected to lose momentum with the expiration of federal tax credits.


U.S. labor market slow to improve; consumer confidence falls
The number of Americans filing first-time claims for unemployment insurance fell to 457,000 last week. Claims dropped 11,000, while the number of people receiving unemployment benefits rose. Amid these still-weak job markets and pessimism about business conditions in the coming months, the Conference Board said its Consumer Confidence Index fell to 50.4 in July, the second consecutive monthly decrease.

U.S. global and corporate news


Basel team moves to define capital
International regulators and central bankers participating in the Basel Committee on Banking Supervisions agreed on key aspects of new global standards aimed at constraining risk at the world's largest banks. Details on what counts as capital were ironed out. Limits were placed on the degree to which banks can count assets such as deferred taxes, mortgage serving rights, and minority interest toward minimal capital levels. That limitation will effectively force banks to reinforce their balance sheets with common equity.


Oil producers post impressive results
Higher energy prices and stronger refining markets helped buoy earnings at oil producers in the second quarter. Exxon's earnings jumped 91% as commodity prices rose and refining profits and production surged. Royal Dutch Shell posted a 15% rise as oil and gas production rose 5% and a restructuring aimed at trimming costs was completed early. Chevron's earnings more than tripled as the oil company benefited from increased production and prices as well as a stronger market for refined products. French oil company Total posted a 43% increase in profits on the back of stronger production, higher oil prices, and a stronger dollar.


Sony announced strong quarterly results and a more bullish full-year outlook. The company raised its full-year profit forecast 20%. Meanwhile, Panasonic revised its projection by 70%. Both companies posted first-quarter earnings that exceeded analysts’ estimates.


Merck reported a 50% decline in second-quarter profits as merger-related and restructuring costs offset a near doubling in sales, resulting from its takeover of Schering-Plough. That profit still beat analysts' expectations.

Global economic news


Eurozone's economic prospects improve
European confidence in the economic outlook rose in July to the highest level in more than two years, and German unemployment declined for a thirteenth month as exports sustained a recovery in the region. Growth in Europe's services and manufacturing industries accelerated in July.


U.K. consumer confidence falls
U.K. consumer confidence fell more than forecast in July as the prospect of government spending cuts undermined optimism on economic recovery. An index of sentiment released by the market research firm GfK NOP fell to its lowest level in 11 months.


India's central bank raises rates
India's central bank raised interest rates more than anticipated in a move to quell double-digit inflation.


Japan's recovery still mixed
Japan's factory output slid 1.5% in June from the previous month, and its jobless rate rose to 5.3%, the highest level since November.

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 views expressed here 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 MFS investment product. Individual securities mentioned are for illustrative purposes only and may not be relied upon as investment advice or as 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.
Please check with your compliance deptartment before distributing to clients.


Past performance is no guarantee of future results.

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

--see disclaimer below--

Market Week: July 26, 2010

The Markets

Domestic equities put in a strong week, led by the small caps. Despite all the flip-flops in the indexes this summer, the Dow and NASDAQ are now roughly flat for the year. The S&P 500 is slightly negative for 2010, though it managed to edge above the 1100 mark last week, and the Russell 2000 is slightly ahead for the year.

Market/Index	2009 Close	Prior Week	As of 7/23	Week Change	YTD Change
DJIA	10428.05	10097.90	10424.62	3.24%	-0.03%
NASDAQ	2269.15	2179.05	2269.47	4.15%	0.01%
S&P 500	1115.10	1064.88	1102.66	3.55%	-1.12%
Russell 2000	625.39	610.39	650.65	6.60%	4.04%
Global Dow	1984.48	1788.16	1837.81	2.78%	-7.39%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	3.85%	2.96%	3.02%	6 bps	-83 bps

Last Week's Headlines

• Federal Reserve Chairman Ben Bernanke sent the stock market into a tailspin by saying that though the Fed expects moderate growth in 2010, the economic outlook remains "unusually uncertain." Though it's reluctant to take new steps to support the economy, he said, the Fed has several options for taking further action if necessary.
• Sales of existing homes fell by 5.1% in June, according to the National Association of Realtors®, though they were 9.8% higher than a year ago. The inventory of unsold homes represented almost a nine-months supply. The Census Bureau said residential housing starts also were down 5% in June, and 5.8% lower than June a year ago. Though building permits were up 2.1%, single-family permits were down even more.
• All but seven of 91 European banks that underwent stress tests to determine their vulnerability passed the tests, indicating that they had access to enough capital to weather harsher economic conditions. The Committee of European Bank Supervisors said five of the seven that failed were in Spain.
• A government review of executive pay at 17 banks that accepted government assistance during the financial crisis called the $1.6 billion worth of compensation under scrutiny "ill-advised." However, pay czar Kenneth Feinberg did not insist that such bonuses and retention awards be returned.
• The Conference Board's Index of Leading Economic Indicators dropped 0.2% in June. Though officials said the index is pointing toward slower growth in the fall, it's still 4.5% higher than at its previous peak before the recession began.
• Treasury Secretary Timothy Geithner said tax cuts for top earners will be allowed to expire on schedule at the end of 2010 as part of the Obama administration's effort to bring down the budget deficit.

Eye on the Week Ahead
The tension between economic data on one side and earnings reports on the other will continue. This will be European equities' first chance to react to the results of bank stress tests released last Friday, and the end of the week sees the first estimate of second-quarter Gross Domestic Product.

Key data releases: New home sales (7/26); home prices, consumer confidence (7/27); durable goods orders (7/28); preliminary Q2 GDP, consumer sentiment (7/30).

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.

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--