Week in Review: Eurozone debt crisis, slow U.S. labor recovery rock global financial markets

U.S. economic news

Employers add fewer jobs than expected
The U.S. economy added fewer jobs than expected in November, and the unemployment rate unexpectedly increased. Nonfarm payrolls increased 39,000, less than expected, and the jobless rate rose to 9.8%, the highest since April. Hours worked and earnings stagnated. The numbers underline the continued weakness in the labor market, whose turnaround is seen as key to economic recovery. This week the law that extended unemployment benefits to as long as 99 weeks expired after Democratic and Republican senators blocked rival attempts to renew it. That means that extended jobless benefits affecting about two million people are set to expire at the end of the year.

Other data suggest recovery gathering momentum
Despite the discouraging signs from the labor market, other reports showed momentum this week. Retailers have reported robust November sales as consumers kept spending despite high unemployment. U.S. manufacturing expanded for the sixteenth month in a row in November, according to the Institute for Supply Management. Factory output grew as consumers and businesses spent more on autos, computers, and other goods. Also last month, consumer confidence rose, according to the Consumer Confidence Index^®. The measure rose to 54.1 in November from 49.9 in October, reaching its highest level in five months

Housing prices still falling
The Standard & Poor's/Case-Shiller index of home values showed that home prices are falling faster in the nation's largest cities than in the rest of the country. The home-price index fell 0.7% in September from August. Eighteen of the 20 cities recorded monthly price declines.

House agrees to extend tax cuts
The U.S. House of Representatives approved legislation this week that would extend the current tax rates on income up to $250,000. They also agreed to allow taxes on higher earnings to increase. However, the legislation is expected to fail in the Senate.

U.S. and global corporate news

S&P puts several Portuguese banks on credit watch
Standard & Poor's said it has put several Portuguese banks on credit watch with negative implications after it did the same with Portugal's long-term rating earlier in the week. The banks put on watch include Banco Santander, Santander Totta, Banco Comercial Portugues, Banco Espirito Santo, Banco BPI and the state-owned Caixa Geral de Depositos. S&P said it believes "that Portugal's macroeconomic challenges and difficult external financing conditions will put pressure on the bank's operating environment, potentially weakening their creditworthiness."

Toll Brothers swings to profit
The luxury home builder Toll Brothers swung to a profit for the second quarter in a row. The builder was helped by a tax benefit and fewer writedowns. At the same time revenues fell less than expected.

Global economic news

ECB extends liquidity measures
As the crisis in Ireland rocked global markets, the European Central Bank opted to extend its special liquidity measures, abandoning plans to wind down emergency support for banks and government debt markets. ECB President Jean-Claude Trichet said the ECB would continue to offer unlimited liquidity to banks for as long as necessary. He added that the bank would continue its special bond purchasing program to support the weakened eurozone debt markets.

Eurozone and U.K. economies show slow recovery
Meanwhile, reports this week showed that the eurozone economy slowed sharply in the third quarter as business investment ground to a halt. The slowing investment suggests companies are still too uncertain about the prospects of recovery to commit more capital. In the United Kingdom, weak confidence and jobs cuts weighed down the dominant services sector, which expanded at a marginally slower pace in November.

India posts 8.9% growth for quarter
India posted an 8.9% year-over-year increase for the quarter ended September 30 as the country's economic expansion continued.


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

December 2010 Schnack Financial Newsletter

"Hi,

The opening paragraph of the report of the National Commission on Fiscal Responsibility and Reform reads as follows: Throughout our nation’s history, Americans have found the courage to do right by our children’s future. Deep down, every American knows we face a moment of truth once again. We cannot play games or put off hard choices any longer. Without regard to party, we have a patriotic duty to keep the promise of America to give our children and grandchildren a better life.

Every American should read it."
FULL REPORT


--Randy

Financial Tips for Twenty-Somethings You're on your own now. You've finished school, are working your first real job, and maybe you're even buying a home or getting married. Here are a few tips to help you start managing your finances. More Details

Cash-In Refinancing: Can You Benefit from This Growing Trend? Mortgage interest rates are at or near historic lows, but stricter lending standards and declining home values have made it harder to refinance. Enter cash-in refinancing. More Details

Fixed Annuities vs. CDs: Is One Better Than the Other? While some features are similar, fixed annuities and bank certificates of deposit (CDs) also have characteristics that differ. What works for you may depend on which of these factors best fits your financial situation and investment objectives. More Details

Can I roll over my traditional 401(k) plan distribution to a Roth IRA? You can roll most traditional 401(k) plan distributions to a Roth IRA. These are treated as taxable conversions. More Details Can I roll over my Roth 401(k) plan distribution to a Roth IRA? You can roll your Roth 401(k) plan distribution over to a Roth IRA. Your rollover will be tax free regardless of whether your distribution from the Roth 401(k) plan is qualified or nonqualified. More Details

Week in Review: World markets wary as eurozone watch intensifies

U.S. economic news

Economy grows 2.5% in third quarter
U.S. gross domestic product (GDP), the value of all goods and services produced in the country, rose at an annual seasonally adjusted rate of 2.5% during the period July through September. The figure is significantly higher than the 2.0% expansion rate reported by the U.S. Department of Commerce in its initial report released on October 29. The government cited stronger exports and increased consumer spending as reasons for the improved GDP. Consumer spending rose 0.4% in October after a 0.3% gain in September.


E-commerce on the rise, accounts for 4.2% of total retail sales
The Commerce Department said e-commerce sales hit $41.5 billion in the third quarter, up 15.1% from the fourth quarter of 2007 at the beginning of the recession. Retail sales excluding Internet sales were down 4.6% for the same time period. According to projections from a number of leading economists, the nation's retailers are cautiously optimistic about a strong holiday shopping season, which traditionally kicks off today, Black Friday. As many as 138 million shoppers are expected to hit stores this weekend.


New and existing home sales fall in October
Sales of new homes unexpectedly fell in October, despite near record-low borrowing costs. New home purchases decreased 8.1% to a 283,000 annual rate, according to figures from the Commerce Department. One group of economists surveyed had projected an increase to a 312,000 home annual pace. The National Association of Realtors said that sales of previously owned homes dipped 2.2% to a 4.43 million annual rate in October from 4.53 million units in September. The drop was larger than was projected by economists, who said sales would decrease to a 4.48 million home pace. Reasons cited for the sales declines include foreclosure moratoriums and a lack of credit in the U.S. housing market.


Initial jobless claims fall sharply
The U.S. Department of Labor said that new unemployment claims fell by 34,000 to a seasonally adjusted 407,000 in the week ending November 20. The drop means that the number of Americans filing for new unemployment benefits was as its lowest level since June 2008. Wall Street analysts had projected a much smaller drop in new claims.

U.S. and global corporate news

Campbell Soup reported its sales slipped 1.4% in the fiscal first quarter ended October 31, 2010, while net income fell 8.2% to $279 million from $304 million a year ago. Heavy promotional spending in the quarter by the world's biggest soup maker failed to spur sales. Campbell's, one of the first large U.S. packaged food makers to focus heavily on reducing salt across its product line, believes it has addressed the sodium issue and is turning its attention to creating better-tasting soups and more varieties.

Cost cuts helped Hormel Foods post a profit of $121.1 million for the fiscal fourth quarter ended October 31, up 17% from $103.9 million one year ago. Hormel, the maker of Spam and Dinty Moore stews, set its earnings outlook for the upcoming year at $3.10 to $3.20 per share. These figures exceed the average analyst estimate of $3.05 per share.


Del Monte Foods agreed on Thursday to a $4 billion takeover by an investor group led by Kohlberg Kravis Roberts & Co. KKR, Vestar Capital Partners, and Centerview Partners bid $19 per share in cash for the maker of pet foods and canned vegetables. If the deal goes through, it would be one of the year's largest private-equity buyouts.

Global economic news

Ireland gets EU, IMF funds; European leaders disagree over eurozone bailout
Although Ireland has enough money to pay its debts until the middle of 2011, it requested a rescue package from the European Union and the International Monetary Fund amid concerns that the cost of bailing out its banks would overwhelm government finances. EU finance ministers accepted Ireland's request for a three-year package of loans totaling approximately 85 billion euros. Of the total, 35 billion euros will be allocated for bailing out ailing banks and 50 billion euros will help finance the Irish government. As part of the bailout, the government said it will cut spending by nearly 20% and raise income taxes to narrow the country's budget deficit to 3% of gross domestic product by the end of 2014.

The EU commission announced a proposal on Wednesday to double the size of Europe's 440 billion euros bailout fund for eurozone governments. The proposal was quickly dismissed by Germany. The heightened tension in the region comes as investors and world leaders fear the eurozone debt crisis could expand to Portugal and Spain.


Eurozone's private sector grows despite debt problems
Financial information services company Markit said that the preliminary composite purchasing managers' index for the eurozone rose to 55.4 in November from 53.8 in October. Growth in the region's private sector was boosted by strong expansion in France and Germany. The increase surpassed projections of economists, who forecast the composite measure would increase to 53.9.

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.

Standard & Poor's 500 Stock Index measures the broad U.S. stock market.
Sources: MFS research; The Wall Street Journal; The Wall Street Journal Online; Bloomberg News; Financial Times; Forbes.com; CNNMoney.com; msnbc.com

Week in Review: Markets await Irish aid package

U.S. economic news

Inflation at lowest level since 1957
Two key inflation gauges showed muted price movements in October. The U.S. Department of Labor reported that the seasonally-adjusted consumer price index (CPI) rose 0.2% from September and 1.2% from October 2009. The core inflation rate excluding food and energy prices was unchanged from September and rose 0.6% from a year earlier.

Meanwhile, wholesale prices remained under control. The Producer Price Index (PPI), which measures how much manufacturers pay for goods and services, rose a seasonally adjusted 0.4% for finished goods in October from September, and 4.3% from a year ago. However, the core index, without food and energy prices included, declined 0.6% last month, in its sharpest monthly drop in four years. The core index was up just 1.5% year over year.


Retail sales rise 1.2%
U.S. consumers appeared to be loosening their purse strings, as retail sales increased 1.2% in October, the fourth consecutive month of rising spending and the largest monthly increase since March. Retail sales risen to their highest level since August 2008.


Fed to require bank capital plans
All 19 banks that went through stress tests in early 2009 will have to submit capital plans to the Fed early next year to demonstrate their ability to withstand losses. This initiative is part of the Fed's efforts to bolster bank supervision in the wake of the financial crisis and make sure large banks are on solid financial ground.


U.S. mortgage delinquencies decline
The rate of U.S. mortgage delinquencies fell in the third quarter of 2010, though still remained quite high. According to the Mortgage Bankers Association, the delinquency rate on single-family homes fell to 9.13%, a drop of 0.72 percentage points. The percentage of loans in foreclosure proceedings fell to 4.39% from 4.57%.


U.S. jobless claims rise slightly
The number of U.S. workers filing first-time claims for unemployment insurance rose 2,000 to 439,000 in the week ended November 13, the U.S. Department of Labor reported. Meanwhile, the four-week moving average of initial claims fell 4,000 to 443,000, its lowest level since September 2008.

U.S. and global corporate news

GM revs up finances with IPO
In the second largest U.S. initial public offering ever, General Motors raised $15.8 billion through common shares in its offering, selling 478 million shares at $33 per share, a higher-than-expected price. Counting additional shares that underwriters may exercise their right to sell, the total common stock sale could reach $18.1 billion. GM also raised $4.35 billion in preferred shares as the automaker sought to re-establish its financial independence after being bailed out by the federal government last year.


Big box stores in the black
A number of high-profile large companies posted third-quarter profits. Wal-Mart's third-quarter earnings climbed 9.3% on strong international operations, but same-store sales in the U.S. fell for the sixth consecutive quarter, reflecting tight spending by low-income earners.


Home Depot's earnings jumped 21% as cost controls and share repurchases offset the impact of the weak U.S. economy. The home improvement retailer also boosted its profit expectations for the year. Competing firm Lowe's also reported rising profits, with earnings up 17% after reduced discounts and increased sales of private-label profits helped offset a shortfall in overall sales. In contrast to Home Depot, Lowe's reduced its full-year outlook.


Sears loss widens while Penney's profit soars
Sears Holdings' third-quarter loss grew as sales fell substantially and the retailer continued to lose business to rivals. Comparable-store sales at Sears' namesake stores declined by 8.2% while the company's Kmart stores comparable-store sales fell just 0.7%, leading to a small profit within the division. In contrast, J.C.Penney's third-quarter earnings rose 63% under improving sales conditions. However, the retailer's inventory rose 6.2% from a year ago, and its gross margin, which indicates profitability, fell slightly.

Global economic news

Irish economic rescue package imminent
The Irish government, despite its distaste for depending on foreign financing, indicated that it would accept an international bailout to rescue its troubled banking industry. Late in the week, the government was negotiating a loan package with the IMF and European Union. Details of the loan, reportedly in the tens of billions of euros, were still being finalized. The Central Bank of Ireland said Friday that largely technical discussions with international delegations would continue for days to come.


China acts to curb inflation
The Chinese government made two decisive moves to counter inflation this week, with China's State Council announcing Wednesday that it would limit price increases on a wide range of products, including grain, oil, sugar and cotton. On Friday, China increased bank reserve requirements for the second time in two weeks, essentially withdrawing cash from the banking system. Last week, official data showed China's consumer price index rose 4.4% year over year in October, its fastest pace in two years and above the targeted 3% inflation rate for 2010.


Spanish economy stalls; bond sales ease fears
Spain's economy continued to struggle in the third quarter, as its gross domestic product remained unchanged from the previous quarter and up just 0.3% from a year earlier, according to the country's National Statistics Institute. Sales of close to $5 billion (3.65 billion euros) of long-term bonds on Thursday paid higher yields than two months ago, resulting in a higher level of confidence in the country's weak economy and troubled banking sector.


Germany's economic indicators are positive
German economic expectations rose more than expected in November. A closely watched economic-expectations index increased to 1.8 points in November from -7.2 points in October. The increase followed six consecutive months of decline. Additionally, a Centre for European Economic Research survey of analysts and institutional investors jumped 8.9 points to 82.5 points.


Eurozone inflation rises
Inflation in the 16 countries that use the euro climbed at the fastest rate in almost two years in October. Eurostat reported that consumer prices rose by 0.4% from September to October, and by 1.9% from a year earlier. The core rate of inflation excluding the prices for food and energy stood at 1.1% in October.

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

Week in Review: Stocks tenuous as G-20 wraps up without firm recovery plan

U.S. economic news

Trade gap narrows more than expected
The U.S. trade gap fell 5.3% to $44 billion in September from $46.5 billion in August, according to the U.S. Department of Commerce. The trade deficit is $379.1 billion year to date, up 40% from the same period last year. U.S. exports were $154.1 billion in September, their highest level in over two years. Imports were $198.1 billion for the month. Exports were boosted by service-sector exports and a weak U.S. dollar.


New jobless claims drop to lowest level since July
The U.S. Department of Labor said that the number of first-time filers for unemployment benefits decreased 24,000 to 435,000 in the week ended November 6. The decline brings new jobless claims to their lowest level in four months. The better-than-expected weekly numbers follow last week's optimistic jobs report, which said 151,000 workers were added to nonfarm payrolls in October.


Federal commission proposes $4 trillion in deficit cuts
The federal government's 18-member fiscal commission released a preliminary report that recommends reducing the deficit by $4 trillion over the next 10 years. The report, which has drawn criticism from the political left and the right, calls for significant spending cuts beginning in 2012, including cuts in Social Security benefits, reductions in domestic and defense spending, and the elimination of popular tax breaks. The commission will make its formal recommendations to President Obama on December 1.

U.S. and global corporate news

Third-quarter earnings continued to climb, with nearly 75% of companies in the Standard & Poor's 500 Stock Index reporting profits that are up significantly from a year ago.


General Motors contributed to the quarter's overall positive earnings results by reporting a profit of $1.96 billion as revenue rose 20%. It was the automaker's third-straight quarterly profit and its best quarter since 1999. The latest results were a marked turnaround from the $1.2 billion loss the company posted a year ago. GM's earnings report was released ahead of next week's planned initial public offering - the first time the company is selling shares to the public since it emerged from bankruptcy in July 2009.


Macy's posted a profit of $10 million for the period ended October 30, compared with a prior-year loss of $35 million. The company has benefited from prior consolidations of its divisions, the introduction of several new brands, and a strategy to tailor its offerings to local markets. The turnaround for the department store operator could be a positive sign for retailers, as Macy's typically kicks off the earnings season for major retailers and is seen by many analysts as a barometer of consumer spending.


Cisco Systems reported solid quarterly results but issued a weak sales forecast for the second straight quarter. The computer network equipment maker projected its revenue will increase by less than half of what analysts had projected for its November through January quarter. That disappointing outlook triggered a selloff in technology companies on Thursday.

Global economic news

Tensions high, expectations low as G-20 summit convenes
World leaders met for the Group of 20 Summit in Seoul, South Korea, this week to debate international trade imbalances and develop plans to support a global recovery. Major topics discussed during the two-day summit included currency manipulation, trade gaps, and protectionism. The United States faced a number of setbacks throughout the meetings as President Obama was unable to secure a bilateral free trade agreement with South Korea. The United States was also the target of severe criticism from a number of countries, including China, Japan, Russia, Germany, and the eurozone following the Fed's controversial decision last week to buy $600 billion in U.S. Treasury securities over an eight-month period.


U.S. delegation faces roadblocks in Seoul, especially with China
The United States entered the trade gap discussions at a significant disadvantage. While the U.S. trade gap narrowed slightly to $44 billion in September, China announced a huge trade surplus, $27.2 billion in October, up a staggering 61% from September. The widening trade gap has only heightened tensions between the two countries. The United States was unsuccessful in pressuring China's President Hu Jintao on the importance of currency revaluation, in part because of the Fed's second round of quantitative easing. China believes the Fed's latest move will lead to continued depreciation of the U.S. dollar and an eventual creditor crisis. As a result, the state-backed Dagong Global Credit Rating Co. on Tuesday downgraded its credit rating for the United States to "A+" from "AA."

Leaders of the G-20 nations, despite failing to agree on definitive recovery steps, particularly on the U.S.-China currency dispute, outlined a number of macroeconomic policies and agreed to "refrain" from all-out currency warfare.


China inflation rate hits 25-month high
China's inflation rate jumped to 4.4% in October, according to a Beijing statistics bureau report. The increase was due largely to a 10.1% increase in food prices. The increase exceeded the country's official target rate of 3.0% and was a significant jump from September's 3.6% rate. Although inflation has so far been restricted to food, price increases could spread as funds from Beijing's economic stimulus measures and a surge in bank lending begin to impact the economy.

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.
Standard & Poor's 500 Stock Index measures the broad U.S. stock market.

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

Week in Review: Stocks rally after Fed announces it will pump $600 billion into U.S. economy

U.S. economic news

Fed details more quantitative easing plans
On Wednesday, the Fed announced that it would purchase an additional $600 billion of longer-term Treasury securities by June in a second round of quantitative easing. The central bank said it would also keep reinvesting principal payments from its securities holdings. Demand for Treasuries jumped on the news and pushed the yield of the two-year and five-year notes down to record lows.


Employment rises more than expected
Employment rose more than expected in October, bolstering optimism about the economic recovery. Payrolls climbed by 151,000 jobs, and the jobless rate held at 9.6%. The report also showed gains in hours worked and earnings. Average hourly earnings increased 1.7% in October from the same month last year. The numbers brought increased optimism that improvement in the labor market will boost household spending.


Data show uneven recovery
Other economic news from October continued to point to an uneven recovery. The Institute for Supply Management reported that manufacturing and service sector activity picked up. U.S. productivity exceeded expectations and rose at a 1.9% annual rate in the third quarter. U.S. retailers posted mixed results, with luxury apparel faring well.

U.S. and global corporate news

EPS top estimates at 77% of companies
Earnings per share have topped estimates at about 77% of the companies in the Standard & Poor's 500 Stock Index reporting since October 7, according to data compiled by Bloomberg. Net income has increased 32% for the group amid 9.8% growth in sales.


BNP posts 46% profit increase
BNP Paribas reported a 46% increase in third-quarter profits amid strong growth in its consumer banking networks.


American International Group posted a $2.4 billion net loss for the third quarter because of various restructuring charges totaling $4.5 billion. Its main insurance business, however, improved from a year ago.


Toyota Motor posted a lower-than-expected increase in fiscal second-quarter profit but raised its full-year outlook as operating income gains in Asia offset continued losses in Europe and Japan. Nissan Motor and
Honda Motor also raised their full-year earnings forecasts this week but warned that the yen's rapid rise against other currencies was an ongoing risk to the bottom line.

Global economic news

ECB, BOE, BOJ hold rates steady
The European Central Bank kept interest rates at a record low of 1% for the nineteenth month, and the Bank of England left its key rate at 0.5% and maintained its asset purchase program at £200 billion. The Bank of Japan kept interest rates at ultra low levels and finalized its plan to buy exchange-traded funds and real estate investment trusts in a ¥5 trillion asset program that it first announced last month.


Australia and India increase rates
Central banks in Australia and India raised rates to stem inflation pressures. China also signaled that an increase may be imminent.

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.

Standard & Poor's 500 Stock Index measures the broad U.S. stock market. It is not possible to invest directly in an index.


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

Small Business Jobs Act

Small Business Jobs Act

Week in Review: Strong earnings, job numbers unable to allay investor concerns

U.S. economic news

Fed may take more "measured approach" with additional economic stimulus
The U.S. Federal Reserve Board's long awaited quantitative easing policy will most likely be announced following its next policy meeting on November 3. The Wall Street Journal noted this week that the Fed is likely to buy "a few hundred billion" dollars in U.S. Treasury bonds over a period of "several months" to pressure interest rates and stimulate the economy. This amount is well below the $500 billion to $2 trillion figures that have been projected by some analysts and industry experts.


Jobless claims drop to three-month low
The U.S. Department of Labor reported this week that initial unemployment claims unexpectedly fell by 21,000 to 434,000 in the week ended October 23. This was the second weekly drop in the number of new unemployment applicants in the past two weeks. Some economists believe that the latest figures could be an indication that the job market is finally stabilizing.


New home sales climb in September
The U.S. Department of Commerce said that the number of new home sales in September grew 6.6% from August to a seasonally adjusted annual level of 307,000 units. The jump in sales is potentially good news for the battered housing market, which saw sales throughout most of the summer that were the slowest on record since 1963.


Consumer confidence edges up
According to several leading economists, concerns about the job market appear to be keeping U.S. consumer sentiment largely in check. The Conference Board's Consumer Confidence Index increased only slightly to 50.2 in October from a revised 48.6 in September. September's reading was the lowest since February and down sharply from 53.2 in August. A reading of 90 indicates a healthy economy.


U.S. and global corporate news


Exxon Mobil, the largest U.S. oil company by market value, reported third-quarter earnings of $7.35 billion, up from $4.73 billion a year earlier. Strong refining margins, higher commodity prices, and a 20% jump in oil production all contributed to this 55% jump in net income, surpassing analyst projections.


Ford Motor posted record third-quarter earnings gains of 70%, with net income rising to $1.7 billion from $997 million a year ago. The automaker cited a strong product line, momentum in North America, and continued success at Ford Credit as some of the reasons for the company's dramatic turnaround. It was the sixth consecutive quarterly profit for the only U.S. carmaker who avoided a bankruptcy filing last year. Ford's previous best third-quarter earnings were $1.1 billion in 1997.


ArcelorMittal, the world's largest steelmaker, said net profit for the three months ended September 30 was $1.35 billion compared with $910 million for the same period a year earlier. Despite a 48% increase in profits, the Luxembourg-based company cautioned that the remainder of 2010 will likely be difficult, and the firm forecasted lower prices and weak demand.


Procter & Gamble reported that its fiscal first-quarter earnings declined 6.8%, to $3.08 billion from $3.31 billion a year earlier, as higher commodity costs negatively impacted margins. Still, the latest profit figures for the world's largest consumer product company exceeded some analysts' estimates.

Global economic news

U.K.'s economy expands in third quarter
Britain's economy grew at a faster pace than projected during the third quarter, according to a preliminary estimate from the Office for National Statistics. Gross domestic product increased 0.8% between July and September from the second quarter. Most economists had projected growth of only 0.4% for the quarter, following the previous quarter's 1.2% growth rate. After the better-than-expected GDP figures were released, Standard & Poor's raised Britain's credit rating to stable from negative.


Bank of Japan revises growth forecast downward, holds interest rate steady
Japan's central bank said in its October outlook report that the country's economy will grow 2.1% in the year through March 2011 and 1.8% the following year. In July the bank had forecast growth of 2.6% and 1.9%, respectively. The bank, in a statement addressing its moderated forecast, cited declining demand in overseas markets such as the United States and China, the approaching end of government stimulus measures, and the strongly performing yen, which has risen to near historic levels against the dollar. In a separate move, the Bank of Japan voted to keep its key interest rate untouched at 0% to 0.1%.


German consumer confidence unchanged
GfK AG, the Nuremberg-based market research firm, said that its consumer sentiment index will remain at 4.9 in November, its highest level since May 2008. The figure is based on a survey of nearly 2,000 people. German unemployment declined for a fifteenth-straight month in October.


Switzerland consumer index falls to lowest level in six months
Switzerland's economic recovery may be stalling, at least according to one consumer indicator. UBS AG's index of consumption dropped to 1.7 in September from 1.95 in August. The latest figure is the lowest index reading since March. The consumer indicator is based on new car sales, retail sales, overnight hotel stays within the country by Swiss residents, consumer confidence, and UBS credit card transactions.

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

Week in Review: Stocks steady as corporate earnings continue to surprise to the upside

U.S. economic news

Beige book shows modest recovery
The U.S. Federal Reserve Board's "beige book" showed a modest pace for economic recovery. The report failed to quell speculation that policymakers will increase asset purchases to spur inflation and employment. Eight Federal Reserve banks reported some form of growth, according to the beige book survey, which is released two weeks before meetings of central bank policymakers.


Jobless claims fall
Initial unemployment claims fell 23,000 to 452,000 in the week ended October 16. While lower, the claims remain at a level that indicates businesses are doing little hiring.


Mortgage applications drop
The number of mortgage applications in the United States dropped by the most in four months. The drop was led by an 11% decline in refinancing, which fell as mortgage rates rose.

U.S. and global corporate news

Of the 129 companies in the Standard & Poor's 500 Stock Index that have reported results since October 7, 111 beat analysts' per-share earnings estimates, according to data compiled by Bloomberg. Analysts surveyed by Bloomberg predict 24% growth in third-quarter profits from a year earlier for S&P 500 companies.


Morgan Stanley's, Goldman Sachs' profits drop; Wells Fargo beats estimates
Morgan Stanley's third-quarter earnings fell 67% from a year earlier as a steep drop in trading volumes weighed on results at Wall Street's second-largest investment bank. Revenue in the firm's international securities unit dropped 42% from a year earlier.


Goldman Sachs Group reported its third-quarter net income fell 40% from a year earlier, and net revenue declinded 28%, hurt mostly by a steep downturn in fixed-income and stock trading.


Wells Fargo reported record third-quarter profits that beat most analysts' estimates as credit conditions improved. Results included a 13% increase from its community banking division.

Global economic news

China raises rates
To combat inflation, China unexpectedly raised interest rates for the first time since 2007 . China's move is part of an effort to dry up some of the liquidity made available to combat global recession.


U.K. government details spending cuts
The British government detailed sweeping spending cuts that are intended to help the country reduce its £155 billion budget deficit. Treasury chief George Osborne this week unveiled £81 billion in cuts over four years. It is hoped that by weaning the United Kingdom off robust public spending, lending costs can be kept low, giving a boost to the private sector.


German business confidence rises
German business confidence rose unexpectedly in October to the highest level in three and a half years. The positive sentiment suggests that growth may not slow as much as some economists had forecast. The Munich-based Ifo Institute said its business climate rose to 107.6 from 106.8 in September.

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.

Considerations in Claiming Social Security Retirement Benefits

Week in Review: Currency tensions increase as dollar hits fresh lows

U.S. economic news

Economy sheds more jobs than expected
The U.S. economy shed more jobs than expected in September as government payrolls declined by 159,000. Overall, employers cut staffing by 95,000 workers, a jump from the 75,000 workers let go in August. Private payrolls that exclude government agencies climbed 64,000, a lower number than forecast. The unemployment rate remained at 9.6%. The average work week held at 34.2 hours.


U.S. data show mixed recovery
Other data released this week showed a U.S. economy still on the course of an uneven recovery. Factory orders dropped more than expected in August. The decline was the third in the past four months. Commercial airplanes drove the decease; excluding transportation, all other factory orders rose. There were, however, positives in the report. A barometer of capital spending increased, and non-defense capital goods orders, excluding airplanes, rose by 5.1%. Meanwhile, the U.S. service sector expanded in September, allaying some of the fears that the economy could slip back into recession as manufacturing cools. An index based on a survey of U.S. purchasing managers at nonmanufacturing firms rose to 53.2 in September, from 51.5 in August, the Institute for Supply Management reported. Service sector firms account for two-thirds of the economy and employ four of every five private sector workers in the United States.

Also this week, the National Association of Realtors Pending Home Sales Index increased 4.3% to 82.3 for August. Year over year the index was 20.1% below its level of 103 in August 2009, and consumer credit fell $3.3 billion in August from July to $2.414 trillion, the lowest level since early 2007. The decline was driven by a $5 billion drop in credit-card and other revolving credit to $822.2 billion. Car loans and other non-revolving credit rose $1.7 billion to $1.592 trillion.

U.S. and global corporate news

Alcoa kicks off earnings season with 21% drop in profits
Alcoa's profit fell 21% on higher operating expenses, even as sales benefited from higher prices and rising world demand for metals. Alcoa was the first Dow Jones Industrial Average company to report third-quarter results.


American, British Air, and Iberia launch trans-Atlantic venture
In an effort to compete with rivals and defend market share, American Airlines, British Airways, and Spain's Iberia Airlines forged a trans-Atlantic joint venture. International joint ventures have picked up as many countries keep foreign ownership limits on airlines and three major global alliances - Star Alliance, SkyTeam, and Oneworld - battle for the upper hand on cross-continental routes.


Renault sells 14.9% stake in Volvo
Renault, the second-largest car maker in France, sold a 14.9% stake in Volvo.

Global economic news

IMF reports stronger-than-expected growth for the first half of the year
The International Monetary Fund reported this week that growth in the first half of the year has turned out slightly stronger than it had expected with the global economy expanding at an annualized 5.25% rate.


ECB and BOE keep rates unchanged
The European Central Bank and Bank of England both held interest rates unchanged this week. Speaking before the meeting of the Group of Seven this week, ECB President Jean-Claude Trichet said he opposes disorderly currency moves as concerns about "currency wars" mount. Worries about such wars have risen as countries around the world take measures to devalue currencies and loosen monetary policy to safeguard export-led growth.


German exports fall for second month in a row
German exports fell in August for the second month as a strengthening euro and slowing global growth curbed demand. The decline comes after exports helped growth in Europe's largest economy accelerate in the second quarter at the fastest pace in two decades.

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: DJIA posts best September since 1939 despite uneven economic recovery

U.S. economic news

U.S. manufacturing sector expands in September
The Institute for Supply Management said its purchasing managers' index expanded in September for the 14^th consecutive month. The reading rose to 54.4%. The overall picture, however, was less encouraging.The U.S. new orders measure fell to 51.1 from 53.1, and the production index dropped to 56.5 from 59.9. The employment gauge fell to 56.5, the lowest in six months, and the ISM's the index of export orders dropped to 54.5, the lowest level this year.

U.S. consumers spend more for second month in row
The U.S. Department of Commerce said U.S. consumer spending rose 0.4% in August after rising the same amount in July. Incomes increased 0.5% in August after a 0.2% rise in July.

Consumer confidence dips
Consumer confidence fell in September amid mounting gloom over the outlook for jobs and wages, according to the Conference Board's Consumer Confidence Index, which declined to 48.5, the weakest level since February.

Business spending on the rise
Business spending on buildings and machinery has risen since the end of the recession. An index of capital expenditures moved up 6.5 points to 93 in the third quarter, according to the Business Roundtable's quarterly CEO Economic Outlook survey of chief executives of big companies, Any number over 50 indicates expansion. After the index hit a low of -6.7 last year, firms tapped into their stockpiles of cash for business investment instead of for hiring.

Home prices rise at a slower pace
Home prices in 20 cities rose at a slower pace in July from a year earlier, according to the Standard & Poor's/Case-Shiller Home Price Indices. The group's index of property values increased 3.2% from July 2009. Ten of the 20 cities showed a year-over-year increase in prices, led by an 11% gain in San Francisco.

U.S. and global corporate news

U.S. government to sell stake in AIG
The U.S. government will sell its stake in American International Group under a plan that could end its controversial bailout sooner than many expected. The plan would involve the U.S. Department of the Treasury selling at least $50 billion of shares to private investors over months or years. While the government has recouped and even made money on its investments in many of the nation's biggest banks, AIG has been one of the biggest contributors to the government's expected loss on the Troubled Asset Relief Program (TARP.) More than $120 billion in taxpayers' support provided to AIG remains outstanding, of which $49 billion came from the TARP program. Analysts have cautioned that the sale of AIG shares could prove difficult and that a smooth and swift exit from the giant insurer was far from certain.


Prudential Financial to buy two AIG units
Meanwhile, Prudential Financial Group has agreed to buy two life insurance units from AIG for $4.8 billion in order to expand its presence in Japan. Prudential will pay $4.2 billion in cash and take on $600 million in debt and will pay for the acquisition in part through a $1.3 billion stock sale and $1.2 billion in senior notes.

Sinopec to invest $7.1 billion in Repsol
China Petroleum and Chemical, (also known as Sinopec) which is China's second-largest oil and gas producer, will invest $7.1 billion in Repsol YPF's Brazilian unit as the Spanish oil company raises funds to develop offshore projects. The acquisition is the second-largest overseas purchase by a Chinese company, taking place as the world's largest energy consumer attempts to satisfy internal demand.

Global economic news

Ireland moves to avert bailout
Ireland vowed to pump billions more euros into its hardest-hit lenders in an effort to persuade investors it would not need a European Union bailout.

Chinese manufacturing growth picks up
Growth in Chinese manufacturing picked up in September, adding to evidence that China's economic recovery remains on track. The state-affiliated China Federation of Logistics and Purchasing said its purchasing managers' index, or PMI, rose to 53.8 in September, from 51.7 in August. A number above 50 shows manufacturing activity is expanding. The index has remained above 50 for 19 straight months, after slowing in late 2008 and early 2009. September's index reflected the highest level since it hit 53.9 in May.

Tankan shows Japanese manufacturers turned more pessimistic
Japanese manufacturers turned more pessimistic in their outlook for the rest of the year because of the yen's appreciation and increased uncertainty over the global economy, according to the Bank of Japan's quarterly business sentiment survey, known as the tankan.

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 MFSmfs.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--

October Newsletter

Medicare Annual Enrollment Season Is Here The annual enrollment period for Medicare runs from November 15 through December 31. During this period, you can make changes to your Medicare coverage that will be effective on January 1, 2011. Even if you like the Medicare coverage you already have, it's a good time to explore your options, especially if your health or financial circumstances have changed. More Details

They're Baaack: RMDs for 2010 In response to deteriorating economic conditions in 2008, Congress waived required minimum distributions (RMDs) from IRAs and defined contribution employer plans for the 2009 calendar year. This allowed individuals to avoid having to deplete retirement plan assets while the value of those assets was suddenly depressed. But RMDs are back for 2010. Here's how the rules apply. More Details

Year-End Investment Planning Is More Challenging in 2010 Significant changes in the tax code scheduled to go into effect in 2011 could substantially alter the taxation of your portfolio. That could in turn affect whether your current investments will still be appropriate in the future. More Details

What does a stronger dollar mean for my portfolio? A stronger dollar can have a profound impact on the value of your portfolio, even if you don't think you own any international investments. More Details Why should I care about Europe's debt problems? How is it possible for the debt of such a relatively small country as Greece to have such a profound impact on investments in a 401(k) plan a continent away? More Details --see disclaimer below--

Week in Review: U.S. stocks rise on positive economic news

U.S. economic news

Home sales, home starts rise
A couple of positive reports on the U.S. housing market were released this week. The U.S. Department of Commerce reported that U.S. housing starts rose 10.5% in August to a seasonally adjusted 598,000 annual rate. This unexpectedly positive news was followed by a report from the National Association of Realtors that August home sales rose 7.6% from the previous month to 4.13 million on a seasonally adjusted annual basis. However, the price of U.S. homes fell 0.5%, according to the Federal Housing Finance Agency.

Fed says it could take future action
Although the Federal Reserve made no changes to its key short-term interest rate and took no other immediate steps, it said in a statement that it “is prepared to provide additional accommodation if needed to support the economic recovery,” and it expressed concern about inflation being too low.

Consumer Price Index flat
The U.S. core Consumer Price Index, excluding energy and food, was flat from July to August, according to the U.S. Department of Labor. The overall CPI rose 0.3%. Year over year, the CPI rose 1.1%, with the core CPI up 0.9% in August from a year earlier. Because sluggish domestic demand is likely to keep inflation tame, many analysts expect the Fed to make large-scale asset purchases in the coming months.

Weekly jobless number rises
Initial unemployment claims rose by 12,000 to 465,000 in the week ended September 18, the U.S. Department of Labor said, but the four-week moving average fell by 3,250 to 463,250, reinforcing a longer-term positive trend.

Economic indicators lead upwards
The Conference Board’s index of leading economic indicators rose slightly, but more than expected in August. This suggests a continued weak economic recovery, but eases immediate concerns of a double-dip recession.

Corporate debt defaults down
The default rate for U.S. corporate debt is expected to drop below 3% by the end of 2010, according to Moody’s Investors Service. This is a sharp drop from a peak of 14.6% in November 2009 and below the default rate of 3.1% from August 2008, a month before the financial crisis began.

Demand for capital goods rises
Although durable goods orders declined overall by 1.3% in August, orders for non-defense capital goods, excluding aircraft – a gauge of capital spending by businesses – increased by 4.1%. A sharp drop in demand for airplanes and cars was balanced by rising demand for machinery, computers, and fabricated metal products.

U.S. and global corporate news

Brazil’s Petrobras offers record share sale
Petroleo Brasileiro (Petrobras), Brazil’s federal oil company, introduced a share offer of $70 billion, which was snapped up, with the Brazilian government buying $43 billion and the market purchasing the remaining shares. Strong demand allowed Petrobras to sell the shares almost at par with Thursday’s closing price. The proceeds will go to develop recently discovered large offshore oil fields. Petrobras expects to double its oil output by 2014, making Brazil the world’s fifth-largest oil producer, according to The Wall Street Journal.

Nike’s profit rises 9%
Shoe and athletic apparel manufacturer Nike announced a 9% growth in its quarterly profit on higher demand for its athletic apparel and less costly discounting. The company says its revenue has rebounded in the last three quarters, following lagging demand during the recession.

Darden announces higher sales
Darden Restaurants, the casual-dining giant that owns Olive Garden, LongHorn Steakhouse, and Red Lobster, posted a 20% rise in first-quarter earnings. Although same-store sales fell 1.7% at Red Lobster, they rose more than 2% at Olive Garden and LongHorn in a positive sign for the casual-dining industry.

General Mills has healthy earnings
General Mills’ earnings rose 12% on higher sales of certain cereal brands and changes in the value of some commodity hedges. Profit was somewhat diminished by higher raw-material costs.

Global economic news

Eurozone growth slows
Private sector output growth in the eurozone slumped to a seven-month low in September and is expected to slow more in the fourth quarter, according to a survey by financial-information company Markit. The firm's monthly measure of private-sector activity fell to 53.8 in September from 56.2 in August. However, any number above 50 indicates growth. Meanwhile, new industrial orders in the eurozone posted their sharpest monthly drop in a year and a half in July. Factory orders fell 2.4% from June but rose 11.2% above year-earlier numbers.

German business confidence rises
German business confidence rose surprisingly in September, according to the German research institute Ifo. Its closely watched German business sentiment index rose to 106.8 in September from 106.7 in August, beating expectations of a slight drop.

Irish GDP stumbles
Just after Ireland recovered from its recession in the first quarter of 2010, its Central Statistics Office announced this week that its second-quarter gross domestic product unexpectedly fell 1.2%. Ireland was the first country in the eurozone to slide into recession and was one of the most troubled economies in the area last year.

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--