News & important updates from MFS Investment Management

Week in Review: Positive economic news propels markets

2012-02-04T00:00:00.000-05:00

For the week ended February 3, 2012

U.S. labor market grows at robust pace
Manufacturing resilient in United States, China, India
Eurozone composite guage shows slight growth
Spain's economy shrinks; unemployment up
Facebook creates buzz over announced IPO

A very strong U.S. labor market report Friday morning topped off what had been a moderately calm yet positive week for global financial markets. The U.S. private sector added more than one-quarter million jobs, and the nation’s unemployment rate fell to 8.3% from 8.5%. Other economic reports were largely positive and broad based, from a slight increase in overall eurozone manufacturing and services activity to reports of manufacturing growth in China, India, and Japan.

Other U.S. economic indicators were mixed, and the housing market continued to show weakness. A breakthrough is still pending in talks to complete a much-anticipated Greek bailout, which could be key to stemming the eurozone debt crisis. Eurozone finance ministers are to meet Monday and possibly seal the deal. Several corporate earnings reports showed substantial quarterly losses, while others, including those of giant oil companies, had mixed results.

U.S. and global economic news

U.S. adds 243,000 jobs in January
The U.S. economy added 243,000 jobs in January. Those jobs included a 257,000 gain in the private sector which countered losses in the public sector, the U.S. Department of Labor reported. The unemployment rate fell to 8.3% in January from 8.5% in December. The nonfarm payroll report showed that job growth was roughly twice as high as had been expected. On Wednesday, the January private sector jobs report, released by Automatic Data Processing (ADP), indicated that companies added 170,000 workers to their payrolls. Orders to U.S. factories rose 1.1% in December after rising 2.2% in November, the U.S. Department of Commerce reported.

U.S., Chinese, Indian manufacturing stays strong
Manufacturing activity improved in the United States, China, and India in January. The U.S. Institute for Supply Management’s index of overall activity climbed one point to 54.1 in January from December, and a measure of new orders rose 2.8 points to 57.6, indicating further growth ahead. The ISM U.S. non-manufacturing index also rose, to 56.8 in January from 53.0 the previous month. The Chinese government’s official gauge of manufacturing activity rose to 50.5 from 50.3, while a separate index from Markit Economics and HSBC Holdings edged up to 48.8 from 48.7. Markit/HSBC’s PMI for India jumped to 57.5 from 54.2 in December.

Eurozone economic activity edges up
A eurozone composite index of manufacturing and services activity rose to 50.4 in January from 48.3 in December, Markit Economics reported. Growth reached a seven-month peak in Germany and a five-month high in France, while Italy and Spain saw growth fall. Germany’s Ifo Institute’s business climate index rose to 108.3 in January from 107.3 in December.

Spain’s economy shrinks, unemployment jumps, but bond yields fall
Spain’s gross domestic product fell 0.3% in the fourth quarter from the third, the first decline in its GDP since climbing out of recession two years ago. The country’s jobless claims rose 4% in January from December, and only 7.3% of new contracts signed in January were for permanent work, indicating that further job losses are likely. However, the Spanish government’s bond sales on Thursday met with enthusiastic buyers. Average yields on bonds maturing in July 2015 and October 2016 dropped by about a half percentage point, to 2.861% and 3.455%, respectively; and yields on January 2017 bonds dropped close to two percentage points, to 3.565%.

Unemployment in Germany at two-decade low; up elsewhere in eurozone
German unemployment fell more than expected in January, to the two-decade low of 6.7%, from 6.8% in December, according to Germany’s Federal Labor Agency. December unemployment rates elsewhere in the eurozone, released by Eurostat, were higher: 22.9% in Spain, 13.6% in Portugal, 8.9% in Italy, 14.5% in Ireland, and 9.9% in France. The eurozone’s overall unemployment rate stood at 10.4% in December, a 14-year high.

Japan’s output rises 4% in December
Japanese industrial production rose 4% in December, according to the country’s Ministry of Economy, Trade, and Industry, benefiting from a recovery from the flooding in Thailand. Japan’s output of cars, mobile phones, and semiconductor manufacturing equipment all made gains.

Weekly U.S. jobless claims fall
Initial jobless claims by U.S. workers fell by 7,000 to 367,000 for the week ended January 28, the U.S. Labor Department reported. The four-week average decreased to 375,750 from 377,750.

U.S. economic signals mixed
Three consumer confidence indices posted mixed results. In January U.S. manufacturing grew at its fastest pace in seven months, according to the Institute for Supply Management, a trade group of purchasing managers. Its index rose to 54.1 from 53.1 in December. The Bloomberg Consumer Comfort Index rose to -44.8 in the period ended January 29, up from -46.4 the previous week. However, the Conference Board’s index of consumer confidence declined to 61.1 in January from 64.8 in December, far below the 68.0 expected by economists surveyed by Dow Jones Newswires.

U.S. home prices fall further
U.S. home prices showed further weakness in November, based on the Standard & Poor’s/Case-Shiller Home Price Indices. Both the 10-city and 20-city indices fell 1.3% from the previous month. The 10-city index dropped 3.6% from November 2010, and the 20-city gauge fell 3.7%.

U.S. and global corporate news

Facebook announces IPO plan
Facebook filed for a long-anticipated initial public offering that could value the ubiquitous social network at $75 billion to $100 billion. The IPO, which is set for sometime this spring, could dwarf the $1.9 billion raised by rival Google in 2004. Facebook hopes to raise up to $10 billion. It recorded a $1 billion profit last year on $3.71 billion in revenues.

AMR outlines job, pension cuts
American Airlines' parent AMR announced a plan to cut 13,000 jobs and terminate pensions in the hope of cutting $2 billion in costs annually. If the company terminates its four underfunded pension plans, it will be the largest pension default in U.S. history. Meanwhile, rivals Delta Air Lines and US Airways Group and private-equity firm TPG Capital are all reportedly considering takeovers or asset purchases.

Archer Daniels Midland’s earnings tumble
Agribusiness giant Archer Daniels Midland reported an 89% drop in fiscal second-quarter earnings because of weakness in three major business segments and a large write-down related to an Iowa facility.

Santander profit plummets
Spain’s Banco Santander, the eurozone’s largest bank by market value, said its fourth-quarter net earnings fell 98%. The banking giant took a €1.81 billion charge on its real estate holdings in Spain and wrote down goodwill on its Portuguese unit by €600 million.

UPS earnings drop on pension charge; outlook optimistic
United Parcel Service reported a 29% drop in quarterly earnings, largely because of a decision to change its pension-accounting method. However, UPS forecast a 2% to 3% increase in U. S. domestic package volume in 2012 and a 5% to 6% rise in international volume. For 2011, U.S. volume rose 0.9%, and international volume was 4.3% higher than a year earlier.

ExxonMobil profit edges up; Shell earnings decline
ExxonMobil, the world’s largest publicly traded oil company, reported a 1.6% increase in fourth-quarter earnings on higher crude oil prices. Revenue rose 16%. Results slightly beat expectations. Netherlands-based Royal Dutch Shell, Europe’s largest oil company, reported a slight decline in fourth-quarter net income from a year earlier as natural gas prices fell. The firm’s oil production was curbed by milder weather and maintenance at rigs in the Gulf of Mexico and the North Sea.

The week ahead

Germany posts its January industrial production figures on Tuesday, February 7.
UBS, Coca Cola, and Disney announce earnings on Tuesday, February 7.
Weekly jobless claims are released by the U.S. Labor Department on Thursday, February 9.
The U.K. releases its January industrial production data on Thursday, February 9.
The University of Michigan announces its consumer sentiment report on Friday, February 10.
France and Italy issue their January industrial production data on Friday, February 10.

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.
24133.5

Strategist's Corner

2012-02-03T13:30:00.015-05:00

By James Swanson, CFA
MFS Chief Investment Strategist
February 3, 2012

Six observations for February

The US Federal Reserve Board has spoken. It is certainly not that at ease with the strength of the current business cycle in the United States. It has announced it will keep interest rates low until 2014. Originally, the Fed had announced that a low-rate regime would last until 2013. But it now stands ready to keep short-term rates low for longer and to enact a third round of quantitative easing to buy long-term bonds. By implication, the Fed is supporting long-term and even risky assets, but its real goal is to stimulate job growth and perhaps to stabilize the housing market.

Europe's slowdown or imminent recession seems contained at this point. It is evident at the beginning of 2012 that the peripheral European countries are showing negative growth or contraction. However, parts of Europe, namely Germany and France, seem to be holding up rather well. We are certainly not witnessing the type of production cuts or rapid deceleration in overall growth that we saw during the financial crisis of 2008. Importantly, initial industrial indices turned up in late 2011, and the weakness of the euro seems to be boosting the exports of Germany, Europe's largest economy. Assets, which are now pricing in a European recession, may be poised to rally if Europe sidesteps the expected recession and bank failures.

Everyone has been looking to the European Central Bank (ECB) to pull out the big guns and unveil a US-style TARP (Troubled Asset Relief Program)-like program to shore up the European banking system and to prevent a widespread credit crisis. The ECB has disappointed, however, and has taken a series of half-measures that have helped to hold the euro together. The ECB has deployed medium- and long-term asset programs that were not highly heralded but seem to have effectively moderated the borrowing costs in some of these countries and in effect blunted the risk of owning peripheral country bonds for European banks. It seems eurozone leaders are intent on holding things together, albeit without a major fix to the underlying crisis.

The US economy - amid its initial signs of acceleration - stands out among many other regions of the world that are slowing and even faltering at the outset of 2012. In the United States fourth-quarter numbers showed improvement over those of the previous three quarters of 2011. The pace of production has quickened. Inventory-to-sales ratios are low; retail consumption is holding up; and gas prices are stable and at this point don't present a threat to consumer spending. While the US economy seems to be in good shape, we are likely to witness a slower pace of growth in the first and second quarters. I say this because we saw significant growth in the fourth quarter of 2011, and while a lot of that growth was organic, some of it was pent-up demand that stemmed from the supply disruption after the Japanese earthquake and tsunami.

As far as earnings go, we are coming to the halfway point in the fourth-quarter earnings reporting season. The bottom line is that earnings across the board will probably be comparable with third-quarter earnings. Even though those third-quarter earnings hit records, it is still disappointing that fourth-quarter results aren't better because the fourth quarter is usually the strongest of the year. It doesn’t look like that will be the case this year. Some of this weakening results from a transatlantic transmission mechanism. Sales to Europe and to emerging markets, which have also been affected by Europe, are slower. There is a slowdown in growth in the EM countries and certainly a downward trajectory in Europe. That slowing is affecting the top-line sales of big US multinationals that trade in Europe. It is certainly not a disaster, and in many sectors there have been very good positive surprises. Markets have already priced in a quarter that will not break records.

So, what does all this mean for asset allocation? Again, we are likely to experience a muddle-through, but not a negative, period. The expansion is continuing, and it now has the support of the Fed. From a historical point of view, spreads are wide. At the same time, companies have high liquidity levels and pretty good profits. So credit markets are likely to be a good place to invest. The forward price/earnings ratio of the US stock market is a little better than 12x earnings. The increasing dividend payout now seems to be supported by the Fed's two-year policy of low rates. It is clear that the slowdown in Europe is affecting the large Standard & Poor's companies, but smaller and mid-cap companies, which sell more within the United States, are still experiencing sales and margin growth. One bright spot in this earnings season, among the various sectors of the market, is technology. Many software providers and tech-oriented companies have surprised Wall Street with earnings on the upside of forward estimates.

It is notable that the US economy is growing a bit faster, while many world economies are slowing. It is also interesting to note that US corporate growth and consumer spending, while not moving forward at the torrid pace of the 1980s and 1990s, are moving ahead without added debt. There is no debt expansion relative to total assets on company balance sheets, and the consumer debt load is being whittled away. That decreased debt load is resulting in a consumer much more able to service remaining debt. This strikes me as a much more sustainable and organic expansion, albeit running at a slower pace than normal. This expansion does not suffer from the risky "juiced" effects of leverage. In my view that makes the expansion more durable and able to withstand the painful effects of a possible credit contraction down the road.

No forecasts can be guaranteed.

The views expressed are those of James Swanson and are subject to change at any time. These views are for informational purposes only and should not be relied upon as a recommendation or solicitation or as investment advice from the Advisor.

24134.2

Week in Review: U.S., eurozone news mildly positive, markets muted

2012-01-27T15:31:00.001-05:00

For the week ended January 27, 2012

IMF cuts global growth forecast
Fed to keep rates low through 2014
U.S. economy grows 2.8%, consumer sentiment rises
Apple profit doubles, Nokia falls, Samsung chips away
Ford's profit falls shy of estimates

Financial markets enjoyed a fairly calm week as mildly positive U.S. and European economic reports, along with some corporate earnings news, gave investors encouragement. However, with Greek bailout talks under way again and with a potential resolution expected early next week, we could see renewed capital market volatility. The U.S. gross domestic product (GDP) report released Friday morning showed a pickup in activity, but it fell shy of expectations, sending stocks downward.

As a result of eurozone nervousness, the Japanese yen rose because it was seen as a safe-haven currency. The euro also gained versus the U.S. dollar, which has been weighed down by the U.S. Federal Reserve Board’s renewed commitment to keep interest rates low well into 2014.

U.S. and global economic news

IMF cuts global growth forecast
The International Monetary Fund cut its forecast for global growth, warning that the situation could become even worse if Europe does not take strong action to resolve its debt crisis. The global economy will grow 3.3% in 2012, the IMF said, down from 3.8% in 2011 and down from its forecast of 4% growth made in September.

U.S. Federal Reserve Board to keep rates low longer
The Federal Reserve made clear its intention to maintain low short-term interest rates until at least late 2014, indicating its concern for the U.S. economy’s strength. The Fed’s overall forecast indicated ongoing concern over the weak jobs market and housing sector.

Fourth-quarter U.S. GDP picks up
The U.S. economy grew at an annual rate of 2.8% in the fourth quarter, said the U.S. Department of Commerce in its preliminary report on quarterly GDP. Economists had expected a 3.0% growth pace. The U.S. economy grew 1.7% for 2011 overall.

Japan has first trade deficit in three decades
For the first time since 1980, Japan imported more goods than it exported in 2011. Japan’s exports have been curtailed by a slowdown in global economic growth. Rising energy imports and the strong yen have also contributed to the shifting trade balance.

U.S. consumer sentiment rises
U.S. consumers were more confident than forecast in January, as the Thomson Reuters/University of Michigan final index of consumer sentiment rose to 75 from 69.9 in late December. This beat the average estimate of 74.0 in a Bloomberg News survey. The index averaged 64.2 in the last recession and averaged 89.0 during the previous five years of growth.

U.S. new home sales drop unexpectedly
Sales of new U.S. homes fell unexpectedly in December. The 2.2% decline brought the 2011 full-year tally to 302,000, a drop of 6.2% from 2010, and made 2011 the worst year for the housing industry since records began in 1963.

U.S. leading indicators rise slightly
The leading U.S. economic indicators increased in December, but less than expected, the Conference Board reported. The Conference Board Leading Economic Index, newly composed last month, rose 0.4% after gaining 0.2% in November. The December increase was below the 0.8% that had been forecast by economists surveyed by Dow Jones Newswires. Seven of the 10 leading indicators were higher, particularly the interest rate spread and jobless claims.

Durable goods orders have broad rise
Orders for goods designed to last at least three years rose by 3% in December, the U.S. Commerce Department reported. Orders for nondefense capital goods excluding aircraft, a key gauge of capital spending by businesses, increased by 2.9%, after falling the previous two months. Orders for cars, commercial airplanes, machinery, communications equipment, and primary metals were all higher. Orders for electrical equipment and fabricated metals declined.

Weekly U.S. jobless claims jump by 21,000
Initial jobless claims by U.S. workers rose by 21,000 to a seasonally adjusted 377,000 in the week ended January 21, after falling sharply the week before. The four-week average fell by 2,500 to 377,500.

Eurozone PMI above 50
The eurozone’s private sector grew unexpectedly in January, offering new hope that a potential downturn in the economic region may not be that severe. Markit's Flash Eurozone Purchasing Managers' Composite Index (PMI) rose 2.1 points to 50.4 in January, its highest level in five months, and tentatively indicating growth (above 50). Robust growth in Germany, which makes up about 30% of the eurozone’s economy, outweighed weakness in southern European areas.

Eurozone consumer confidence rises
Eurozone consumer confidence picked up slightly in January, as the European Commission reported that its preliminary consumer confidence reading rose to -20.6 from -21.3 in December. Economists had expected a decline. This was the first rise in eurozone consumer confidence in seven months.

German businesses more confident
German business confidence rose more than expected in January, according to the Ifo Institute’s Business Climate Index, which increased to a five-month high of 108.3, from 107.3 in December. The positive report, along with manufacturing and service industry expansion, indicates that the German economy likely avoided a fourth-quarter contraction.

U.S. and global corporate news

Apple’s profit doubles on iPhone popularity
Apple rode the wave of iPhone success to one of the most profitable quarters ever for a U.S. company, raising its quarterly earnings to $13.1 billion. Sales rose 73% for the quarter ended December 31. On Wednesday, Apple’s market value briefly topped that of Exxon Mobil as the company with the largest market capitalization before receding. Revenue for the iPhone and iPad now account for 72% of Apple’s sales.

Samsung posts profit despite tight smartphone competition
South Korea’s Samsung Electronics posted a 17% rise in quarterly profit on 13% higher revenue. Competitive pressure from Apple’s iPhone in the electronics firm’s smartphone business was more than offset by higher semiconductor chip profits earned on cost efficiencies.

Nokia hurt by cell phone competition
Finland’s Nokia reported a quarterly net loss of €1.07 billion, down from a €745 million profit a year earlier, as sales fell 21%. Nokia’s shipped smartphone units dropped 31%. The firm is now ranked third globally in smartphone sales after Apple and Samsung.

Ford posts record earnings on tax gain; trails estimates
Ford Motor Company reported its largest-ever fourth-quarter profit, $13.6 billion, thanks to a tax gain related to a reversal of a valuation allowance it made five years ago when it struggled financially. Excluding the one-time gain, Ford’s profit of $1.1 billion came to $0.20 per share, shy of the $0.25 average analyst estimate. This was the U.S. automaker’s eleventh consecutive profitable quarter.

McDonald’s serves up profits
McDonald’s continued to dominate the fast-food world, registering an 11% increase in its fourth-quarter earnings on a 9.8% rise in revenue. The company benefited from competitive pricing and an increasingly diverse menu. Its global same-store sales rose 7.5%.

Johnson & Johnson, Novartis earnings drop
Two pharmaceutical firms reported sharply lower profits for the quarter. Johnson & Johnson posted an 89% plunge in fourth-quarter profit after paying costly legal settlements and product liability expenses. However, the company’s quarterly sales rose 3.9%. Switzerland’s Novartis reported a 46% drop in fourth-quarter earnings after absorbing restructuring costs, research and development write-offs, lower prices on its drugs, and the negative impact of the strong Swiss franc.

Procter & Gamble earnings drop by half
Consumer goods giant Procter & Gamble saw its second-quarter earnings fall by 49% as it took a write-down on its unprofitable appliances and salon businesses and had its profit margin narrowed by higher commodity costs. P&G’s sales were 3.7% higher than a year earlier.

The week ahead

The Standard & Poor's/Case-Shiller Home Price Indices are due to be released on Tuesday, January 31.
Exxon-Mobil and Imperial Oil to announce their quarterly earnings on Tuesday, January 31.
The ADP monthly employment report is released on Wednesday, February 1.
The Bloomberg consumer comfort index is due on Thursday, February 2.
The monthly U.S. employment situation report is published on Friday, February 3.

Strategist's Corner

2012-01-23T16:00:00.015-05:00

By James Swanson, CFA
MFS Chief Investment Strategist
January 23, 2012

A year of living dangerously

As this election year gets firmly underway, investors have to understand that it will be accompanied by uncertainty and for financial markets that means volatility. Markets are already dealing with so many unknowns — the European debt crisis, U.S. fiscal imbalances, and continual tensions in the Middle East. It's obviously not an appealing option to add a U.S. presidential election to that mix.

So what I want to do here is look historically at what election years have meant for markets and how much the choice of a president really matters in the grand scheme of things…economic things, that is. While I cannot predict the future, I can look at lessons from the past.
In fact, if we look at history, presidential elections have a profound impact on the economy and the stock market. Wars, recessions, and bear markets have tended to start or occur in the first half of a term while prosperous times and bull markets have happened more often in the last two years.

Historically, an election year has not been the best for stocks. Since 1896, the Dow Jones Industrial Average has gained an annual average of 7.6%. The third year of the cycle has typically shown the biggest gains — 14.8%. Last year the Dow underperformed that average, returning only 8.38%. So it is hard to know how that sub-par return might affect election year returns. Let's look at some other historical averages as well:
- average gain if Republicans win: 10.3%
- average gain if Democrats win: 3.9%
- average gain if incumbent party wins: 15.1%
- average loss if incumbent party loses: -4.
The president can have a large amount of influence over the economy. The U.S. economy is not a command economy. Economic cycles are long lived and have their roots in a combination of factors, including trade and demographics. But because of a series of interventionist laws, the president has broad powers to help extend expansions and accelerate the ending of recessions. The acts include the Budget and Accounting Act of 1921, the Reorganization Act of 1939, the Employment Act of 1946, and the War Powers Act.
The defense and financial services industries could be favored by a Republican win.
The alternative energy, wind, water, and solar power industries could be favored by a Democratic win.
Along with increased globalization, greater world competition, and the shrinkage of the U.S. economy as a percentage of the world economy, the power of the president to influence the U.S. economy has lessened.
We are now seeing a return to a greater level of regulation of financial markets and businesses. That's a result of the most recent economic and banking problems. The bottom line is that the financial system and amount of outstanding credit remain too important to ignore.
The biggest issues that the next president — Democrat or Republican — will face are:
- mounting federal deficits and rising Medicare and Social Security costs
- divergent interests of those who wish to protect U.S. jobs and those who seek greater trade freedoms
- energy policy and the maintenance of the national infrastructure

Remember: Democrat or Republican, historically we have seen that election years are moderately good for stock markets. At the time of this writing, employment seems to be increasing, a condition that has historically helped the incumbent. In addition, U.S. productivity is high, unit labor costs are comparatively low, and final sales in the United States are rising.

As an observer, by all means focus on the platforms, the speeches, and the excitement of the campaign. But as an investor, distance yourself from the rhetoric and hype. Remember that the long-term trends in company earnings, worker productivity, and competitiveness matter the most.

No forecasts can be guaranteed.

The views expressed are those of James Swanson and are subject to change at any time. These views are for informational purposes only and should not be relied upon as a recommendation or solicitation or as investment advice from the Advisor.

24134.1

Week in Review: Markets rise on slightly upbeat earnings and economic news

2012-01-20T16:00:00.035-05:00

For the week ended January 20, 2012

U.S. jobless claims down sharply
U.S. inflation tame
China shows signs of slowing growth
German economic sentiment jumps
Earnings mixed for major financial and technology firms

Markets were positive overall as talks between the Greek government and the Institute of International Finance continued Friday in an effort to cut a deal that would substantially lower Greece’s debt payments to private-sector creditors. U.S. economic news was modestly encouraging, as jobless numbers fell, U.S. price indices stayed fairly flat, and home sales improved somewhat. The Chinese economy showed signs of slowing, while German economic sentiment rebounded.

A steady stream of corporate earnings reports were mixed. Many reflected the challenges faced by large U.S. banks. Others, including earnings results from U.S. technology giants, were more encouraging. Stocks rose overall globally, and U.S. Treasury yields rose as demand for the safe-haven securities eased, reflecting improved investor sentiment.

U.S. and global economic news

Greek debt deal looms
Discussions between the Greek government and private sector creditors continued for a third day Friday, ahead of efforts to complete a second rescue package for the troubled country. With a potential bailout in the works for next week, time is critically important. A senior delegation from the International Monetary Fund, European Central Bank, and European Union arrived in Athens Friday to discuss the rescue package. Next Monday, European finance ministers will meet in Brussels to work out their portion of the next Greek bailout, forecast at €130 billion.

Weekly U.S. jobless claims drop by 50,000
Initial jobless claims fell by 50,000 to a seasonally adjusted 352,000 in the week ending January 21, decreasing the four-week average by 3,500 to 379,000. Both numbers are well below the 400,000 mark, widely viewed as indicative of the U.S. economy adding jobs overall.

U.S. housing market improves slightly, misses expectations
Sales of U.S. existing homes rose 5.0% in December from November, the third straight monthly increase, according to the National Association of Realtors. However, the results fell short of a forecast of 5.2% growth. For all of 2011, 1.7% more homes sold than in 2010. Overall, 4.26 million homes were sold last year, down from a peak of more than 7 million in 2005.

Consumer, producer inflation tame
Readings on U.S. producer and consumer prices, released by the U.S. Department of Labor, showed little month-to-month change in December. The producer price index fell 0.1% in December from November on lower food and energy costs. However, core prices, stripping of food and energy, rose 0.3%. For the year, producer prices rose 4.8%. The consumer price index was unchanged in December, and increased 3.0% for the year. The core CPI edged up 0.1% for the month and rose 2.2% for all of 2011.

Chinese economy and manufacturing gauge slip
China’s gross domestic product grew 8.9% in the final quarter of 2011 compared with a year earlier, a higher-than-expected growth rate but an indication of a slowdown for the world’s fastest economic engine. On a quarterly basis, China’s GDP growth was 8.2%. A separate report showed that China’s manufacturing purchasing managers index stood at 48.8, just below the threshold of 50 that separates growth from contraction. This was the third straight month of declining manufacturing activity in China.

German economic sentiment index has record rise
Germany’s latest ZEW monthly economic sentiment index rose to -21.6 in January from -53.8 in December, the single largest monthly increase since the survey’s inception in 1991. Germany also paid the lowest interest rate ever on two-year Treasury notes Wednesday, 0.17%, as debt downgrades on France and Austria last Friday made German debt more appealing.

Germany cuts growth forecast
The German government cut its economic forecast for 2012 for the second time in recent months. Currently, Germany expects its economy to grow 0.7%, down from 1.0% in October, which was a reduction from its original 1.8% projection for the year.

U.S. and global corporate news

Kodak files for bankruptcy
Following through on its rumored move, Eastman Kodak filed for bankruptcy protection after running short of cash. The photography icon has secured close to $1 billion in financing from Citigroup to help keep it in business through its bankruptcy proceedings. Kodak is hoping to improve liquidity, sell some of its patent portfolio, and shed some legacy liabilities, including pension and health care obligations.

Goldman-Sachs reported a 58% drop in fourth-quarter profit on a slump in investment-banking revenue and trading activity, as many of the firm’s individual and corporate clients remain leery about investment prospects.

Morgan Stanley swung from a quarterly profit of $871 million a year ago to a loss of $227 million in the fourth quarter of 2011 because of weakness in its institutional securities business as well as a large legal settlement with bond insurer MBIA. Revenue in Morgan Stanley’s institutional business fell by 42%.

Bank of America had better-then-expected results, posting a profit just shy of $2 billion, as weaknesses in trading (profits down 73%) and investment banking (fees 34% lower) were more than offset by large one-time asset sales. These sales included divestiture of a major interest in China Construction Bank and some Canadian credit card operations.

Citigroup’s profit fell 11% from a year earlier, and its revenue slipped by 7%. The global bank is aggressively cutting costs but has been challenged by weak capital markets, as equity underwriting, trading, and advisory revenue fell.

BlackRock’s profit declined 16% as the number-one global money manager by assets saw a shrinkage in assets under management, investment advisory fees, and securities lending revenue. BlackRock’s overall revenue fell 11%.

Wells Fargo, the largest U.S. consumer lender, reported a 20% increase in its fourth-quarter profit on improvements in its consumer loan portfolio and limited exposure to investment banking.

Tech bellwether Intel has strong quarter
Intel posted a 5.7% gain in fourth-quarter earnings as the technology bellwether’s business withstood tougher competitive pressures and economic constraints in Europe and China. Intel’s revenue rose 21% on strong demand from a number of its business divisions.

Google’s 7% profit growth disappoints
Search engine giant Google posted weaker-than-expected earnings results despite a 7% profit growth and 25% rise in revenue from its year-earlier period. These numbers were down sharply from its third-quarter results of a 26% profit growth and 33% gain in revenue.

IBM software success offsets hardware weakness
IBM grew its fourth-quarter earnings 4.4% as gains in software and services revenue offset a slowdown in its hardware business.

Microsoft flat profit beats expectations
Software giant Microsoft profited from strength in its Office program suite and Xbox gaming system to outweigh weakness in its Windows operating system. For its second fiscal quarter, ended December 31, Microsoft’s overall earnings were down by the slightest margin, to $6.62 billion from $6.63 billion.

GE profit slides 18%
General Electric’s fourth-quarter earnings fell 18% on a decline in revenue after it sold its majority stake in NBC Universal. However, GE’s industrial business saw infrastructure orders grow 15% from a year earlier. Revenue shrank 7.9% overall.

Japanese group to pay $7.3 billion for RBS aircraft leasing business
A group of Japanese companies, headed by Sumitomo Mitsui Financial, has agreed to buy the Royal Bank of Scotland’s aircraft leasing business for $7.3 billion, the British bank’s largest divestiture since being bailed out three years ago. The British government holds an 82% interest in RBS.

The week ahead

McDonald’s and Apple announce their quarterly earnings on Tuesday, January 24.
Boeing releases its earnings on Wednesday, January 25.
Germany’s Ifo survey is released on Wednesday, January 25.
The National Association of Realtors announces its pending home sales on Wednesday, January 25.
The Conference Board releases its monthly leading economic indicators on Thursday, January 26.
The U.S. Department of Commerce publishes its durable goods orders report on Thursday, January 26.
Ford releases its earnings on Thursday, January 26.
The U.S. Labor Department releases its initial estimate for fourth- quarter GDP on Friday, January 27.

Week in Review: Markets pressured by Europe downgrade rumors

2012-01-13T16:00:00.000-05:00

For the week ended January 13, 2012

U.S. weekly jobless numbers rise
U.S. consumers went on credit spree in November
Eurozone, U.K. output slumps
German economy contracts in fourth quarter
Hostess seeks bankruptcy protection

Markets were flat overall for the week, as a mixed bag of U.S. economic reports balanced slightly positive indications from the eurozone. The most disappointing U.S. economic news was a fairly sharp rise in U.S. initial jobless claims. Countering that was a U.S. Federal Reserve Board report noting widespread improvement in economic activity in the final six weeks of 2011 along with a jump in U.S. consumer credit and consumer sentiment.

Markets came under pressure on Friday after news that credit rating agency Standard & Poor's is reportedly going to announce a multi-country credit downgrade after New York markets close at 4 p.m. EDT. According to news reports, France and Austria will be downgraded from their AAA ratings to AA+. Slovakia will also be affected according to a Reuters report, which noted that Germany and the Netherlands will retain their top-notch ratings.Yields on 2-year and 10-year U.S. Treasuries fell, as investors sought safe havens and the euro fell to a 16-month low. Eurozone economic reports were mixed. A slump in economic output was offset by a November eurozone trade surplus and falling bond yields in Italy and Spain. That drop indicated the easing of concerns in those two vulnerable economies.

U.S. and global economic news

Weekly U.S. jobless numbers rise
Initial jobless claims rose by 24,000 to 399,000 for the week ended January 7, the ninth time in 10 weeks that the weekly jobless number was below the 400,000 threshold, though just barely this time. The four-week average rose by 7,750 to 381,750.

Fed beige book notes economic upswing in late 2011
The U.S. economy finished 2011 on a relatively strong note across all regions from November 18 to December 31, according to the U.S. Federal Reserve Board's beige book. Strong holiday sales helped, according to the report, while weakness in housing held back growth in most areas. Seven of 12 regions had “modest” growth; Dallas and San Francisco were slightly better, with “moderate” growth; New York and Chicago had a “pickup” in growth; and “activity flattened or improved slightly” in the Richmond district. This economic snapshot will help shape discussions at the Fed’s policy-setting meeting January 24-25.

U.S. retail sales muted in December
The U.S. Department of Commerce reported that December U.S. retail sales were flat, as accelerating vehicle sales countered declines in electronic sales as well as purchases of gasoline and groceries. Overall, retail and food services sales rose 0.1% from November and 6.5% from December 2010.

U.S. consumer credit jumped in November
U.S. consumer borrowing rose in November at its fastest pace in a decade, according to the Fed. Consumer credit outstanding increased by $20.37 billion to $2.48 trillion. Roughly two-thirds of the increase came from nonrevolving credit while one-third came from revolving credit, including credit card debt.

Consumer sentiment rises
Consumer sentiment rose in January, according to the Thomson Reuters/University of Michigan preliminary index of consumer sentiment. Its gauge jumped to 74.0 from 69.9 in December, surpassing a median estimate of 71.5.

U.S. trade gap widens
The U.S. trade gap grew by 10.4% in November, to $47.75 billion, the first time in five months that the trade gap widened, the Commerce Department reported. The trade gap was much wider than expected and was affected by rising oil prices, causing the cost of imports to rise, and the eurozone slowdown, which led exports to fall.

Economic output slumps in eurozone, United Kingdom
Eurozone factory output fell 0.1% in November, the third straight monthly decline, according to Eurostat, the European Union’s statistics agency. Industrial production for the 17-nation bloc also fell 0.3% year to year, its first annual decline since December 2009. The United Kingdom experienced a slump in industrial output as well –– 0.6% on a monthly basis in November and 3.1% year over year.

German economy contracts in final quarter of 2011
Germany’s economy, the biggest and strongest in Europe, contracted slightly in the fourth quarter, according to the country’s statistics office. Germany’s gross domestic product shrank about 0.25% from the third quarter to the fourth, ending two years of growth. The slowdown is unusual as German unemployment has dipped to its lowest level in a decade and business sentiment rose at year-end.

Debt yields fall in Germany, Italy, Spain, and United States
Yields on government bonds fell in several nations this week. U.S. 10-year Treasury notes sold at a record low yield of 1.90%. Italian 12-month bills yielded 2.735%, much lower than the 5.952% yield of a month ago. However, Italian 10-year notes were still elevated, yielding 6.56%, a drop of a 0.42 percentage point. Spanish 10-year bond yields declined by a 0.11 percentage point to 5.18%. And Germany’s six-month bills had an average yield of -0.0122%, down from 0.0005% at the December 5 auction. Investors effectively paid Germany to hold their money.

Eurozone posts trade surplus in November
The eurozone unexpectedly posted a €6.9 billion trade surplus in November, according to Eurostat. Economists surveyed by Dow Jones Newswires had predicted a €1 billion deficit. This bodes well for the troubled economic region and marks only the second November trade surplus since records began in 1999.

Industrial output bounces back in India
India’s industrial output rose 5.9% in November from a year earlier, recovering from a 4.7% contraction in October, according to government data. The reading surpassed an expected 2.5% rise, the median estimate in a poll of economists, and it lessens the urgent need for India’s central bank to begin easing its monetary policy.

U.S. and global corporate news

Alcoa reports fourth-quarter loss
Alcoa posted a loss of $191 million in the fourth quarter, after a year-earlier profit of $258 million, as falling aluminum prices and restructuring charges hurt the world’s largest aluminum maker. The price of aluminum has dropped about 20% over the past year.

Hostess files for bankruptcy protection
Hostess Brands, maker of Twinkies and Wonder Bread, filed for Chapter 11 bankruptcy protection. This is its second court restructuring in the past three years. Hostess said it would maintain operations with the help of a $75 million financing commitment from a group of lenders. It will continue to negotiate with 12 unions to modify collective bargaining agreements with the goal of lowering legacy pension and medical obligations.

Chevron profits slide
Chevron, the second-largest U.S. energy firm, reported that its fourth-quarter profit was “significantly below” third-quarter results as fuel output was curbed by maintenance work that idled part of a California refinery and by the sale of a Welsh refinery to Valero Energy.

Audi takes second place among premium-car brands
Audi passed Daimler’s Mercedes-Benz as the world’s second most popular premium-car brand last year, behind BMW. Audi benefited from record sales in the booming Chinese and U.S. markets. For 2011, BMW sold 1.38 million cars, up 13% from 2010; Audi sold 1.3 million, a rise of 19% annually; and Mercedes-Benz sold 1.26 million, an 8% increase. Audi’s sales in China rose 37%.

The week ahead

The German ZEW Indicator of Economic Sentiment is published on Tuesday, January 17.
Wells Fargo and Citigroup announce their quarterly earnings on Tuesday, January 17; Goldman Sachs reports its quarterly earnings on Wednesday, January 18.
The U.S. Department of Labor releases the December Producer Price Index on Wednesday, January 18, and the Consumer Price Index on Thursday, January 19.
The National Association of Home Builders releases its Housing Market Index for on Wednesday, January 18.
Morgan Stanley, Microsoft, Intel, and IBM report their quarterly earnings on Thursday, January 19.
The National Association of Realtors announces its Existing Home Sales report on Friday, January 20.

The Investor Wall of Worry Continues to Grow

2012-01-04T16:00:00.076-05:00

MFS Investing Sentiment Survey 2011 Recap: Investors' Concerns and Pessimism Grew throughout Year, Investors Soured on Most Asset Classes

BOSTON (January 4, 2012) – Investors' wall of worry continued to rise throughout 2011, according to the MFS^® Investing Sentiment Survey. In addition, pessimism, as measured by investors' risk tolerance, continued to grow during the year as well. Furthermore, investors' positive perceptions of financial products waned considerably during the year as well.

"Across the board, investors' concerns rose in every major category. With a growing appetite to shun risk – 29% will never feel comfortable investing in stocks – and consistently high cash balances, investors are determined to avoid market volatility," said William Finnegan, senior managing director and head of U.S. retail marketing for MFS. "The challenge for investors and advisors is finding a middle ground, where they can feel comfortable investing, while coping with the immediate emotional concerns of today's economic challenges."

Figure 1: Concerns that Build the Wall of Worry

Figure 1 shows that investors surveyed throughout the year grew more concerned as the year progressed in every category of economic issues presented. Of note, concerns over a major drop in the stock market, weakness in the global economy and legislative gridlock in Washington, D.C., rose the most out of 12 categories, from February to October.

Figure 2: Risk Tolerance

Figure 2 shows the percentage of investors who agreed with statements about decreasing their risk and a lack of comfort investing. It illustrates investors' increasing tendency to shy away from risk as well as their lack of comfort investing in the stock market in general as 2011 progressed.

Figure 3: Asset Class Perception

Figure 3 illustrates that investors have shown a declining favorability across the board in commonly used asset classes in most investing and savings products in which to invest over the next 12 months. Investors soured on equities, bonds, and even cash, where many continued to have larger-than-expected allocations.

"As we have noted in past findings, the blow to investors' psyches from the Great Recession is longer-lasting than many financial advisors may have expected," Finnegan reiterated. "As we begin 2012, investors and their financial advisors need to reconsider their asset allocation, assess their true risk tolerance, separate out fear, and re-think their overall approach to investing for their long term goals."

The preceding survey results are the second set of data from the third series of the MFS Investing Sentiment Survey, conducted in October. In November, MFS reported on advisors growing pessimism. Previously, MFS conducted its second survey in June 2011 and reported its findings in September regarding Generation Y's investing sentiment and perceptions and in August about investors' perceptions and use of cash as part of their investment process. MFS conducted its first survey in February and issued three reports based on those results, detailing the disconnects between financial advisors and their clients in March, the challenges facing Generation X/Y and Baby Boomers in April, and the pessimism that permeates the mass affluent investor segment in May.

About the survey
MFS, through Research Collaborative, an independent research firm, sponsored an online survey from September 28 to October 13, 2011, of 929 individual investors with $100k+ in household investable assets and 644 licensed financial advisors (either FINRA or SEC) who have been licensed for at least three years with at least $500,000 or more in annual mutual fund sales. All investor respondents make or share in making financial decisions for their households. MFS was not identified as the sponsor of the survey. Generation Y investors are those under the age of 31. Generation X is defined as investors between the ages of 31 and 45. Baby Boomer investors are those between the ages of 46-64.

About MFS Investment Management^®
MFS is a premier global money management firm with investment offices in Boston, London, Mexico City, Singapore, Sydney, Tokyo, and Toronto. The firm’s history dates back to March 21, 1924, and the establishment of the first U.S. “open-end” mutual fund. MFS manages $253.5 billion in assets on behalf of individual and institutional investors worldwide, as of November 30, 2011. Please visit mfs.com for more information.

# # #

MFS Investment Management
500 Boylston St., Boston, MA 02116

24053.5

Strategist's Corner

2011-12-24T08:00:00.018-05:00

By James Swanson, CFA
MFS Chief Investment Strategist
December 23, 2011
From fear to revival in the US economy

Worries of 2011	Realities heading toward 2012
1. Energy prices rise during much of 2011, nearing 7.5% of disposable income — a real threat to the consumer.	1. Gas prices are falling and recently dipped below $3.30 per gallon. Energy now represents less than 7% of disposable income, and that percentage is falling.
2. Recession fears threaten company fundamentals.	2. Company profits are now at record quarterly highs.
3. Increasing foreclosures add to housing inventory.	3. 2012 begins with housing starts at a 12-month high. Credit is tight, but homes are affordable. At the same time, families are forming and looking for places to live.
4. Jobs grow slowly as companies delay hiring decisions.	4. Job creation is rising; claims and unemployment rates are falling.
5. Credit spreads widen as recession fears grow.	5. Credit is supported by rising cash flow and declining defaults.
6. Market valuation is 12 times forward earnings per share.	6. Equities are still 12 times earnings per share.
7. US debt crisis threatens business cycle.	7. Economy grows despite the lingering debt crisis.
8. Interest rates are on hold.	8. Interest rates are still on hold.
9. The US dollar remains in flux.	9. The US dollar shows strength.

As we enter 2012, myriad forces will propel the US business cycle
I believe that spending will be boosted by pent-up demand among consumers and companies seeking to replace everything from cars to business software. I expect the combined forces of a free market, population growth, and easy money, as well as strong corporate profits, will keep this business cycle turning in 2012.

The market action, however, remains out of sync with the fundamentals. Profits and cash flow continue to rise, costs are contained, and jobs are growing, albeit slowly. But market action does not tend to reflect this solid data. The market, instead, remains focused on Europe and its sovereign debt crisis. As we move into 2012, it is the fear of contagion and the reality shown by the numbers that most threatens the business cycle. But the US business cycle, while moderate, is now going from strength to strength.

No forecasts can be guaranteed.

The views expressed are those of James Swanson and are subject to change at any time. These views are for informational purposes only and should not be relied upon as a recommendation or solicitation or as investment advice from the Advisor.

21490.12

Strategist's Corner

2011-12-02T17:00:00.017-05:00

By James Swanson, CFA
MFS Chief Investment Strategist
December 2, 2011

Fears of policy error versus hopes for policy miracles: Investors in the middle

As we near 2012, we see three main themes.

Despite all the pessimism, the U.S. economy is growing and even accelerating on a quarter-to-quarter basis. This expansion has been buoyed by consumer spending and corporate strength.
Growth in the eurozone, a region almost the size of the United States, is moving toward zero. Recession may be in the future as all forward indicators there dim.
In the United States and in the eurozone, politics have taken a central role not seen in decades. As a result, investors, not traders, have been paralyzed by fear. These investors are not sure whether the eurozone is about to break apart or whether some TARP-like plan — grand enough to convince investors that Europe's problems can be solved — will be put in place. Meanwhile, the costs of saving the eurozone rise as do the costs of borrowing on a country-by-country basis.

The U.S. economy, still the largest in the world, can diverge and hasdiverged, in terms of growth, from the rest of the world for short periods of time. But this divergence will not persist for an entire business cycle. These two blocs of economic power, the United States and the eurozone, are too interconnected by banks, lending, and trade, to run on entirely separate cycles. These linkages seem distant, but are very real.

Why so much pessimism?

Much to our surprise and despite the widespread pessimism, the U.S. economy, as measured by economic growth, corporate profits, and retail sales, improved into the latter part of 2011. In fact, for all the doomsayers, there were myriad positive events throughout 2011. For companies in the Standard & Poor's 500 Stock Index, corporate profits hit record quarterly levels and sales (ex-financials) rose at a 12% annual rate. Overall, U.S. companies showed that their profits as a percentage of the economy grew and their debt levels as a percentage of net worth fell. The energy and tech sectors showed resilience and a huge ability to generate free cash flow. Consumers have been paying down their debt, earning higher wages, working longer hours, and benefiting from lower interest rates.

And yet the proportion of federal government debt to gross domestic product keeps rising, and the failure of the congressional super committee has further convinced investors that the politicians are not taking the problems as seriously as they should be.

Shifting to reverse?

In Europe, the pessimism is more understandable. The region's economy continues to slow and may even be returning to recession. Growth in the peripheral countries is at zero or has already turned negative. Industrial production in the big northern countries (Germany and France) is slowing, as banks rein in lending to strengthen their balance sheets. The cost of borrowing for countries in the periphery of Europe keeps rising, and so has the cost of wholesale funding for the European banks. In other words, you can't go on forever rolling over debt at interest rates that far exceed economic growth rates. The credit markets are registering high stress in this regard.

Brace. Don't chase!

Investors should ready themselves for intermittent choppiness throughout the year as traders run stocks up one day and down the next on alternating morsels of good and bad news. However, long-term investors should not be tempted to chase this market, no matter how strong fundamentals appear. Why? Despite strong corporate profits and rising US growth, it is just too difficult to guess how European finance ministers will act.

The United States and Europe are tied inextricably to banks and their ability and willingness to lend. Policy delays continue to raise the eventual cost of fixing the European debt problem. The risks to the euro system and possibly to world growth, while currently not overwhelming, rise each day that finance ministers wait and debate.

Steady, long-term, and patient investors should not think that they can beat this market by hoping for some major policy miracle. For every hope of a policy miracle there is the chance of a policy error. This brings us to the warning of Ben Bernanke, head of the world's largest central bank. His theories that politicians should never commit policy error in the wake of deep recessions or bank/credit collapses helped him rise to prominence. Policy error is defined as one or a combination of the following: prematurely tightening monetary conditions, clamping down on government spending, or raising taxes and tariffs while economic recovery is still fragile or newly under way.

If the United States economy were isolated, the decision as to where to invest would be easier, especially as the U.S. economic path brightens. But in reality, because of the ties between U.S. and European banks, and the countries and companies to which they lend, this investment decision is far more complicated. As we wait and see whether policymakers on both continents commit policy error, buy time, or act forcibly, investor wariness, not fear, seems the best prescription for the year 2012.

No forecasts can be guaranteed.

The views expressed are those of James Swanson and are subject to change at any time. These views are for informational purposes only and should not be relied upon as a recommendation or solicitation or as investment advice from the Advisor.

21490.11

Press Release: Financial Advisors Growing More Pessimistic about U.S. Economy

2011-11-16T14:43:00.062-05:00

MFS Investing Sentiment Survey Shows Advisors Closing Pessimism Gap with Investors

Investors Want More Advice, Communication and Customized Solutions from Advisors

BOSTON (November 16, 2011) -- Financial advisors have grown decidedly more pessimistic during 2011, according to the MFS^® Investing Sentiment Survey, moving more in line with the declining sentiment of investors.

27% of advisors said they were pessimistic about the U.S. economy over the next five years, up from only 7% back in February 2011.
Only 45% of advisors surveyed believe U.S. equities are an excellent or very good place to invest over the next 12 months, down from 72% in February. Similarly, advisors dropped from 60% to 29% when asked about international equities.
53% of investors are pessimistic about the U.S. economy, up from 37% in February.
Overall, investors say 27% of their investable assets are in cash. And younger investors lead the pack, with Generation Y indicating a 33% allocation to cash, up from 30% in February.

But advisors have to find a way to cut through this wave of pessimism and meet investors' ever rising need for advice.

27% of surveyed investors say their need for professional financial advice has increased over the past 12 months, up from 21% in February. Again, younger investors lead the pack, with 45% of Generation Y and 36% of Generation X indicating an increased need for advice.

"It should come as no surprise that advisors, like investors, have grown more pessimistic throughout 2011, a year wrought with shock waves from natural disasters, market volatility, persistent high unemployment and political infighting," said William Finnegan, senior managing director and head of U.S. marketing for MFS. "But advisors need to laser focus on their clients' life experiences today, both from an investment standpoint as well as from a personal and emotional perspective. Investors are burdened by a mounting weight of socioeconomic concerns and their increased need for advice reflects a growing uncertainty about their future."

In the survey, investors spoke loud and clear about what they want from their advisors today: proactive contact, timely information and customized support.

Proactive contact:

69% of investors expect their financial advisor to contact them regularly during times of market volatility.

Timely information:

52% of investors indicated that advisors should ideally support them by "keeping them informed" of investment opportunities or recommended changes to their portfolios.
44% of investors indicated that advisors should ideally support them by "keeping them informed of where they stand financially relative to their goals.
40% of investors indicated that advisors should ideally support them by "keeping them informed" of market changes and how they impact them.

Customized support:

80% of investors indicate that the willingness of an advisor to customize support for their specific needs is a key consideration when evaluating advisors.
But one-third of investors believe most advisors tend to recommend generic portfolios instead of customized plans.

"Investors are providing clear direction and it does not match conventional wisdom," added Finnegan. "What matters is providing solutions that address not just goals, but fears. Investors, many with a defensive mindset, will likely continue to reject traditional investment recommendations from their advisors. They expect a plan that is specific to them, customized not only to their goals, but one that also addresses their broader economic concerns along with their individual market experience"

The preceding survey results are from the third series of the MFS Investing Sentiment Survey. Previously, MFS conducted its second survey in June 2011 and reported its findings in September regarding Generation Y's investing sentiment and perceptions and in August about investors' perceptions and use of cash as part of their investment process. MFS conducted its first survey in February and issued three reports earlier this year based on those results, detailing the disconnects between financial advisors and their clients in March, the challenges facing Generation X/Y and Baby Boomers in April, and the pessimism that permeates the mass affluent investor segment in May.

About the survey
MFS, through Research Collaborative, an independent research firm, sponsored an online survey from September 28 to October 13, 2011, of 929 individual investors with $100k+ in household investable assets and 644 licensed financial advisors (either FINRA or SEC) who have been licensed for at least three years with at least $500,000 or more in annual mutual fund sales. All investor respondents make or share in making financial decisions for their households. MFS was not identified as the sponsor of the survey. Generation Y investors are those under the age of 31. Generation X is defined as investors between the ages of 31 and 45. Baby Boomer investors are those between the ages of 46-64.

About MFS Investment Management^®
MFS is a premier global money management firm with investment offices in Boston, London, Mexico City, Singapore, Sydney, Tokyo, and Toronto. The firm’s history dates back to March 21, 1924, and the establishment of the first U.S. “open-end” mutual fund. MFS manages $227.3 billion in assets on behalf of individual and institutional investors worldwide, as of October 31, 2011. Please visit mfs.com for more information.

# # #

MFS Investment Management
500 Boylston St., Boston, MA 02116

23827.3

Editor's note: attached graphic, source MFS Investment Management.

Press Release: MFS Names Geremia and Jessee as Co-Heads of Global Distribution

2011-10-03T16:00:00.006-04:00

For Immediate Release

MFS Names Geremia and Jessee as Co-Heads of Global Distribution

BOSTON (October 3, 2011) – MFS Investment Management^® (MFS^®) announced today that Carol Geremia and James Jessee have been named as co-heads of global distribution.

The two take over the role previously held by Martin Beaulieu, who has been named CEO of MFS's Canadian business, formed by the recent acquisition by MFS of Toronto-based McLean Budden.

In addition to their responsibilities as co-heads of global distribution, Geremia will continue to serve as President of MFS Institutional Advisors Inc., and Jessee will continue as President of MFS Fund Distributors Inc.

"Carol and Jim have done outstanding jobs in leading our institutional and retail businesses over the past several years. We congratulate them on their new roles and look forward to their continued leadership as we seek to provide best-in-class investment returns and service to our clients," said Robert Manning, CEO of MFS.

Geremia joined MFS in 1984 and held a variety of positions in the firm's defined contribution business – MFS Retirement Services – including president of the unit from 2001 to 2004, when she was named president of MFS Institutional Advisors. In that role she oversees asset management for the company's global institutional clients and discretionary managers, which include corporate and public pension and defined contribution plans, multi-employer plans, investment authorities, and endowments and foundations.

Jessee joined MFS in 1987 and worked for 15 years as a wholesaler before joining the home office in senior sales management and dealer relations roles; he was named President of MFS Fund Distributors in 2004. His group is responsible for the marketing and sales of MFS domestic mutual funds and separately managed accounts, as well as the distribution of MFS investments through insurance company variable products.

Beaulieu joined MFS in 1990 and served as President of MFS Retirement Services and of MFS Fund Distributors before being named head of global distribution in 2002. He also served as a Vice Chairman and member of the Management Committee of MFS. In September 2011, Sun Life Financial, parent company of MFS and McLean Budden, announced it was purchasing the minority shares it did not already own in McLean Budden and transferring the business in an affiliated transaction to MFS, naming Beaulieu as the new CEO.

About MFS Investment Management
MFS is a premier global money management firm with investment offices in Boston, London, Mexico City, Singapore, Sydney, and Tokyo. The firm’s history dates back to March 21, 1924, and the establishment of the first U.S. “open-end” mutual fund. MFS manages $223.6 billion in assets on behalf of individual and institutional investors worldwide, as of August 31, 2011. Please visit mfs.com for more information.

Copyright 2011 MFS Investment Management

# # #

23532.1

Press Release - MFS Investing Sentiment Survey Offers Insight into Generation Y Investing Behaviors

2011-09-06T12:00:00.061-04:00

Gen Y Paints Confused Investing Picture: Conservative, Overwhelmed,
Optimistic, Open to Advice
Younger Investors are a Demographic Imperative for Financial Advisors

BOSTON (September 6, 2011) – Generation Y investors are conservative investors and invest more like their Baby Boomer parents, despite their long-term time horizon, according to the MFS Investing Sentiment Survey. The survey offers an in-depth look into the investing habits and sentiments of Generation Y, the next large wave of investors that encompasses approximately 77 million Americans between the ages of 18 and 30 with nearly $1 trillion in spending power.¹

"Gen Y is investing more like their parents and grandparents, many of whom grew up in the shadow of the Great Depression. Similarly, many Gen Y's reached investing age during the 'dot-com' bust, lived through 2008's Great Recession and continue to experience significant economic uncertainty and market volatility today," said William Finnegan, senior managing director of U.S. retail marketing for MFS. "Gen Y, coupled with their slightly older Gen X brethren, combine to form a group of investors today that is larger than the Baby Boomer generation, with nearly equal spending power, a demographic fact the financial services industry needs to embrace."²

MFS' survey identified several attributes about Gen Y that are cause for concern, especially as this group ages and takes on additional expenses and life goals.

Red flag: Lack of risk orientation

40% of Gen Y agreed with the statement "I will never feel comfortable investing in the stock market.”
Gen Y investors agreed that they are likely to feel overwhelmed by all the choices they have (54%), put off investment decisions (47%), and consider themselves to be savers more than investors (59%).
30% of Gen Y said that their primary investment objective was protecting principal/not losing money, only marginally smaller than those who said their primary goal was growing assets, at 34%.
Gen Y has allocated more money to cash than other age groups, at 30% on average -- nearly as much as they have allocated to U.S. stocks/stock funds (33%).

Red flag: Worried about debt, retirement; spending increasing

38% of Gen Y investors say they live paycheck to paycheck and that saving consistently is not an option.
Gen Y investors were more likely than others to have increased spending on both discretionary (42%) and nondiscretionary (49%) expenses over the past 12 months and add debt as well (36%).
41% agreed that they were concerned about the amount of credit card debt their households carry.
54% of Gen Y agreed with the statement, "I'm more concerned than ever about being able to retire when I thought," and 44% agreed with the statement "I have lowered my expectations about the quality of my life in retirement."

"We've identified significant red flags. However, Gen Y has exhibited certain positive attributes that, over time, may help them transition to a less conservative approach," added Finnegan. "Gen Y investors are engaged with advisors, take an active interest in managing their portfolios, and are generally optimistic about their own futures."

Positive sign: Optimistic and engaged

64% and 78% are optimistic about the economy and their own five-year future, respectively.
Gen Y is more likely than Boomers to say they are very knowledgeable/expert investors, 39%.
62% of Gen Y agreed that they enjoy investing.

Positive sign: Open to advice

Of those who reviewed or rebalanced in the past 12 months, 89% of Gen Y, more than any other age group, reported an advisor playing a key role.
69% reported at least consulting with an advisor regarding investment decisions, more than other age group.
59% of Gen Y investors have received investment advice in the past 12 months, and 42% report an increased need for investment advice in the past 12 months.

Positive sign: Evidence of a disciplined approach

71% report they are disciplined about putting aside money for saving and investing.
52% report an increase in savings outside of retirement accounts over the past 12 months.
58% agreed with the statement, "Since the downturn, I prefer to pay with cash or debit cards as much as possible."

"Whether wealth is transferred to Gen Y from older generations or they generate it themselves, it is a demographic imperative that the financial services industry embraces younger investors," Finnegan concluded. "We've identified challenges and opportunities for Gen Y investors that financial advisors are uniquely qualified to address. However, they are operating in a business model geared toward serving older generations. Changing how they engage younger generations and helping them transition from conservative savers to long-term investors might just be the ultimate challenge for today's financial advisors."

The preceding survey results are from the second series of the MFS Investing Sentiment Survey. Last month, MFS issued findings detailing investors' perceptions and use of cash as part of their investment process. MFS issued three reports earlier this year based on its first survey results, detailing the disconnects between financial advisors and their clients in March, the challenges facing Generation X/Y and Baby Boomers in April, and the pessimism that permeates the mass affluent investor segment in May. MFS also plans to conduct and report on a third survey in the fourth quarter.

^1. According to research firm Iconoculture, Inc., Generation Y, also often referred to as "Millennials" comprises approximately 76.6 million individuals with $889.3 billion in spending power and the Baby Boomer Generation comprises approximately 75.6 million individuals with $2.5 trillion in spending power.

^2. According to Iconoculture, Inc., Generation X comprises approximately 54.0 million individuals with $1.7 trillion in spending power. Combined, Generation X and Generation Y represent more than roughly 130 million individuals with more than $2.5 trillion in spending power.

About the survey
MFS^®, through Research Collaborative, an independent research firm, sponsored an online survey from May 31 to June 7, 2011, of 974 individual investors with $100,000 or more in household investable assets. All investor respondents make or share in making financial decisions for their households. MFS was not identified as the sponsor of the survey. Generation Y refers to investor respondents between the ages of 18-30. Generation X refers to investor respondents between the ages of 31-45. Baby Boomer or Boomers refers to investor respondents between the ages of 46-64.

About MFS Investment Management^®
MFS is a premier global money management firm with investment offices in Boston, London, Mexico City, Singapore, Sydney, and Tokyo. The firm’s history dates back to March 21, 1924, and the establishment of the first U.S. “open-end” mutual fund. MFS manages $237.1 billion in assets on behalf of individual and institutional investors worldwide, as of July 31, 2011. Please visit mfs.com for more information.

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23206.1

Press Release - MFS Investing Sentiment Survey: Shift to Cash is Deliberate, Fundamental Change for Investors

2011-08-08T17:00:00.079-04:00

Uncertainty, Fear, Access, and Safety Continue to Keep Cash Balances High
Despite Long-Term Inflation Risk, Investors Confident in Cash

BOSTON (August 8, 2011) – Investors of all ages are turning to cash in what appears to be a deliberate and longer-term fundamental change in investing – and Generation Y is leading the pack – according to the latest findings of the MFS^® Investing Sentiment Survey. The research shows investors are driven by fear, leading to a strong desire to protect their assets. Nearly three in five investors cite fear (about volatility or needing money someday) as a reason they hold high or increasing levels of cash. They also want immediate access to their assets and say it will take a meaningful change in either the economy or their personal circumstances to instill enough confidence for them to return to the equity market.

"Investors are in cash for a reason and, regardless of time horizon, conventional investing wisdom no longer applies. The Great Recession of 2008 has had a profound – and longer-lasting – impact on investors' confidence than expected," said William Finnegan, senior managing director of U.S. retail marketing for MFS. "Investors, especially younger ones, would rather keep cash in the bank than chance the stock market."

Results from the MFS Investing Sentiment Survey pertaining to investors use and perception of cash can be broken down into four major themes.

Cash: a deliberate, fundamental shift in investing

Investors surveyed had on average 26% of their portfolio in cash, with Generation Y (Gen Y) having the highest cash position, 30%.
The typical investor had 12 months' worth of cash on hand, and that cash allocation is increasing for more investors (24%) than it is decreasing (12%).
62% reported that cash was an important part of their investment strategy.

Cash: driven by fear

One-quarter said they liquidated a portion of their portfolio in 2010 or 2011 because of market concerns, with 52% of Gen Y having liquidated – more than any other age group.
Rising health care costs (78%), growing federal deficit (72%), and increases in taxes and legislative gridlock (both 66%) are the top concerns over the next 12 months.
More than one-half (53%) feared a major drop in the stock market over the next year as well, an increase from 47% from MFS' Investing Sentiment Survey results reported earlier this year.

Cash: access and safety

One-third viewed cash as a safe alternative in the current market, especially Gen Y investors.
One-half agreed with the statement, "Keeping my savings in cash makes me feel more secure."
82% agreed with the statement, "It is very important for me to have instant access to my cash if/when I need it" and on average, 65% of cash was held in banks.

Cash: when will it move back to equity?

Only one-quarter of investors have reinvested all or most of the cash they liquidated in the past year and a half, while 35% said they will reinvest in the next 12 months, and 24% said they would not reinvest in the next 12 months.
Consistent improvement in economic indicators (55%), leadership on a clear deficit reduction plan (45%), and sustained improvement in the global economy (40%) were the top three factors investors need to feel more comfortable investing in the stock market.
However, younger investors, especially Gen Y, need to see an improvement in their personal wealth (Gen Y, 34%; Gen X, 30%) or overall personal situation (Gen Y, 37%; Gen X, 32%) before feeling comfortable investing in the stock market.

"With persistently high unemployment, spotty economic data, and uncertainty in Washington, D.C., no one is going to tell investors they are wrong to have high cash balances. To the contrary, the data confirm that they are confident in their decisions to hold cash and they consider high cash balances to be integral to their investing approach," Finnegan added. "A majority, 64%, agree that they worry about inflation eating into their nest eggs, but it seems investors are willing to trade long-term inflation risk with the safety, security, and low volatility that comes with keeping cash in the bank."

The preceding survey results are from the second series of the MFS Investing Sentiment Survey. MFS issued three reports earlier this year based on its first survey results, detailing the disconnects between financial advisors and their clients in March, the challenges facing both Generation X/Y and Baby Boomers in April, and the pessimism that permeates the mass affluent investor segment in May. MFS plans to issue additional findings from this second series over the next several weeks, highlighting for the first time Generation Y investing sentiment. MFS also plans to conduct and report on a third survey in the fourth quarter.

About the survey
MFS, through Research Collaborative, an independent research firm, sponsored an online survey from May 31 to June 7, 2011, of 974 individual investors with $100,000 or more in household investable assets. All investor respondents make or share in making financial decisions for their households. MFS was not identified as the sponsor of the survey. Generation Y refers to investor respondents between the ages of 18-30. Generation X refers to investor respondents between the ages of 31-45. Baby Boomer or Boomers refers to investor respondents between the ages of 46-64.

About MFS Investment Management
MFS is a premier global money management firm with investment offices in Boston, London, Mexico City, Singapore, Sydney, and Tokyo. The firm’s history dates back to March 21, 1924, and the establishment of the first U.S. “open-end” mutual fund. MFS manages $237.1 billion in assets on behalf of individual and institutional investors worldwide, as of July 31, 2011. Please visit mfs.com for more information.

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23018.1

Press release: Pessimism Pervades Mass Affluent Investors According to MFS' Investing Sentiment Survey

2011-05-16T14:00:00.036-04:00

Pessimism Pervades Mass Affluent Investors According to MFS' Investing Sentiment Survey

Mass Affluent in Better Financial Shape than Sentiment Would Indicate

BOSTON (May 16, 2011) ¬ The MFS Investment Management® Investing Sentiment Survey shows that Mass Affluent investors have pessimistic attitudes and behaviors toward investing. This is due to the lasting impact of 2008's financial crisis and concerns over potential reductions in Social Security, both of which could impact investors' ability to retire. The findings state that despite having accumulated significant assets, the mindset of Mass Affluent investors is not matching the reality of their situation. For the purposes of the survey, MFS^® defined Mass Affluent as those investors with between $100,000 and $1 million in household investable assets.

Pessimism seems to be pervasive regarding attitudes about spending, self-assessments, and outlook, as well as government spending and entitlement programs, considering:

44% of Mass Affluent investors have reduced their discretionary spending over the last 12 months; only 14% reported an increase in discretionary purchases.
59% agreed with the statement: "I am more concerned than ever about being able to retire when I thought I would," with only 16% disagreeing.
Similarly, 49% agreed with the statement: "Over the past few years, I've lowered my expectations about what life will be like in retirement."
32% of Mass Affluent investors describe themselves as protective, 17% as pessimistic, and 16% as fearful; only 41% describe themselves as hopeful.
Mass Affluent investors report that their portfolios, on average, had 35% in U.S. equity exposure and 28% in cash positions, with fewer than one-half (42%) highly confident that their portfolios are properly balanced to meet their long-term goals.
Mass Affluent investors report nearly an even split when it comes to their primary investing goals: 33% protecting principal, 32% growing assets, and 30% generating income.
48% agreed with the statement: "I'm a saver more than an investor," while nearly two in five (39%) are novice or beginner investors.
Rising health care costs (18%), the growing federal deficit (15%), and a reduction in Social Security benefits (15%) were reported to be their greatest financial concerns over the next 12 months.

"Mass Affluent investors are holding significant amounts of cash and are specifically concerned about rising health care costs, the federal deficit and reductions in Social Security. Their high cash balances mean they may be overly exposed to the effects of inflation. Plus, this portfolio positioning may increase their risk of not being able to reach their long-term financial goals," said William Finnegan, senior managing director of U.S. retail marketing for MFS. "The concern going forward is if this group can adequately—and confidently—position itself to meet long-term financial goals based on these current pessimistic sentiments."

Despite their pessimism, there are several factors working in the Mass Affluent investors' favor:

They have accumulated significant wealth, considering that their reported median household investable assets are approximately $306,000.
They have a strong disposition toward working with financial advisors, with 57% having received financial advice in the last 12 months.
95% reported owning their own homes, with more than $194,000 in median home equity.
The group reported a median 10.6 years until retirement (for those not already retired).

"Mass Affluent investors are in better financial shape than they give themselves credit for, with significant assets and strong home equity positions despite a weakened national housing market. Their challenge, contrasted to wealthier investors, is they do not feel like they can 'play offense' with their portfolios," Finnegan added. "They demonstrate a willingness to seek professional investment advice, which can open the door for advisors to deliver the emotional reassurance needed and to engage them about topics important to their long term financial wellbeing, including risk tolerance assumptions and current portfolio allocations."

Important risk considerations
Stock markets and investments in individual stocks are volatile and can decline significantly in response to issuer, market, economic, political, regulatory, geopolitical, and other conditions.

About the survey
MFS, through Research Collaborative, an independent research firm, sponsored an online survey from February 7 to February 14, 2011, of 596 individual investors with $100,000 or more in household investable assets and 610 licensed financial advisors (either FINRA or SEC) who have been licensed for at least three years with at least $500,000 or more in annual mutual fund sales. All investor respondents make or share in making financial decisions for their households. MFS was not identified as the sponsor of the survey. "Mass Affluent" refers to investors who report having between $100,000 and $1 million in household investable assets.

About MFS Investment Management^®
MFS is a premier global money management firm with investment offices in Boston, London, Mexico City, Singapore, Sydney, and Tokyo. The firm’s history dates back to March 21, 1924, and the establishment of the first U.S. “open-end” mutual fund. MFS manages $242.1 billion in assets on behalf of individual and institutional investors worldwide, as of April 30, 2011. Please visit mfs.com for more information.

# # #
MFS Investment Management
500 Boylston St., Boston, MA 02116

22444.3

Press Release: MFS Investing Sentiment Survey Results: Gen X/Y Attitudes toward Investing Improving, But Long Term Goals May Be Challenged

2011-04-12T17:00:00.050-04:00

MFS Investing Sentiment Survey Results: Gen X/Y Attitudes toward Investing Improving,

But Long Term Goals May Be Challenged

Boomers Feeling Squeeze of Markets, Approaching Retirement

BOSTON (April 12, 2011) – MFS Investment Management^® (MFS^®) reports that Generation X/Y appear to be more optimistic about investing and Baby Boomers are feeling the strains of the market and their approaching retirement, according to recent findings from the MFS Investing Sentiment Survey.

Based on responses, it appears Gen X/Y investors are somewhat more optimistic in their approach to investing, considering:

42% of Gen X/Y investors reported they increased the amount they contributed to their IRAs/401ks in last 12 months; MFS' 2010 Client Confidence Survey showed only 30% of Gen X/Y reported a net increase to tax-deferred retirement accounts since 2008's economic downturn.
In addition, 51% say they increased the amount saved in non-retirement accounts, a greater percentage than older generations.
36% of Gen X/Y investors report a net increase in willingness to take on increased risk, more than any other age cohort.
55% of Gen X/Y investors agree that an effective portfolio should always include a sizeable portion of international investments, more than Boomers (40%) or those aged 65+ (36%).
47% of Gen X/Y disagreed with the statement "I will never feel comfortable investing in the stock market", an improvement in sentiment over MFS' 2010 survey, which showed that 39% disagreed with a similar statement.

However, the survey results suggest a concern over Gen X/Y's ability to save enough to meet long term goals:

Gen X/Y investors on average had a lower percentage of their portfolios in equities (34%) than older generations (Boomers, 36%; 65+, 38%)
Gen X/Y reported on average a higher percentage of their portfolio in cash (30%) than older generations.
22% of Gen X/Y report their top investing goal is protecting principal/not losing money.
71% of Gen X/Y report inflation as a primary concern, but have 30% of their portfolios in cash.
Despite a median 23 years until retirement, 61% of Gen X/Y reported being more concerned than ever about being able to retire when they thought they would.
45% of Gen X/Y agree that they are overwhelmed by all the different investment choices available.
42% say their need for financial advice has increased in the past year – far more than Boomers or investors aged 65+.

"The data suggest that the financial services industry needs to re-think its approach to younger investors. Let's put aside demographic labels that appear to color our impression and consider how to approach potential investors in their 30s and 40s who clearly need our help," said William Finnegan, senior managing director of retail marketing for MFS. "From their responses, we can see that Gen X/Y have accumulated significant assets, are willing to invest those assets, and have an increasing need for advice. However, their behavior and sentiment suggests that their needs are not being fully met by financial advisors."

While younger investors still have time on their side, Baby Boomers' responses suggest an age group feeling both the strains of the market and an approaching retirement:

Boomers reported lower home equity on average than Gen X/Y and those aged 65+.
59% of non-retired Boomers agree with the statement, "I'm more concerned than ever about being able to retire when I thought I would."
50% agreed that they have lowered their expectations about what life would be like in retirement.
30% of Boomers reported a net decrease in the risk they were willing to take to achieve higher returns over the last 12 months; only 12% reported a net increase.
Past MFS research (2010) showed that Boomers were more likely than others to say the 2008/09 economic downturn had a negative effect on them personally.

Boomers recognize the need to save and grow their assets but their current approach may be not enough to help them reach their savings goals for their retirement plans:

Boomers are approximately evenly split when describing their primary investing goal: 34% reported it to be growing assets/increasing portfolio value as much as possible while 33% reported protecting principal/not losing money as their primary goal.
Boomers' average asset allocation included 26% of their portfolios in cash.
Nearly four times as many Boomers would describe themselves as protective investors (37%) vs. opportunistic investors (10%).
Only 13% of Boomers surveyed reported having $1 million or more in median household investable assets, while on average, retirement was within 10 years.

"Boomers appear to be in a bind, knowing they need to save more for a retirement that is not far off, but they have a protective mindset driving their investing approach," Finnegan concluded. "In light of this sentiment, advisors should discuss with their clients both the risks associated with investing too aggressively or too conservatively as they approach retirement. With those risks in mind, Boomers and their advisors should be assessing their financial plans for the ability to achieve a certain level of wealth that could sustain the lifestyle they envision for themselves in retirement."

The preceding results are the second of three planned reports from MFS' Investing Sentiment Survey. On March 21, 2011, MFS reported on disconnects between advisors and investors perceptions. Additional survey findings reviewing the investing behavior and sentiment of mass affluent investors are planned for release in the next several weeks.

Important Risk Considerations
Stock markets and investments in individual stocks are volatile and can decline significantly in response to issuer, market, economic, political, regulatory, geopolitical, and other conditions. Investments in bonds may decline in value as the result of increases in interest rates, declines in the credit quality of the issuer, borrower, counterparty or other conditions. Certain types of bonds can be more sensitive to these factors and therefore more volatile.

About the survey
MFS, through Research Collaborative, an independent research firm, sponsored a survey from February 7-14, 2011, of 596 individual investors with $100k+ in household investable assets and 610 licensed financial advisors (either FINRA or SEC) who have been licensed for at least three years with at least $500,000 or more in annual mutual fund sales. All investor respondents make or share in making financial decisions for their households. MFS was not identified as the sponsor of the survey. Gen X/Y refers to those respondents under age 46. Boomers refer to those 46 to 64 years old. Seniors or older generations refer to those 65 or older.

About MFS Investment Management
MFS is a premier global money management firm with investment offices in Boston, London, Mexico City, Singapore, Sydney, and Tokyo. The firm’s history dates back to March 21, 1924, and the establishment of the first U.S. “open-end” mutual fund. MFS manages $232.0 billion in assets on behalf of individual and institutional investors worldwide, as of March 31, 2011. Please visit mfs.com for more information.

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MFS Investment Management

500 Boylston St., Boston, MA 02116

22123.4

Press Release: MFS Investing Sentiment Survey Results: Advisors' and Investors' Perceptions Vary Wildly

2011-03-21T17:00:00.026-04:00

MFS Investing Sentiment Survey Results: Advisors' and Investors' Perceptions Vary Wildly

Advisors More Bullish on U.S. and Foreign Equities than Investors

Generation X/Y Less Aggressive than Advisors Think

BOSTON (March 21, 2011)-- MFS Investment Management^® (MFS^®) announced key preliminary findings from its Investing Sentiment Survey, the first of three surveys America's oldest mutual fund company plans to report on this year. In this first wave, MFS will address both investors' and financial advisors' attitudes toward and perceptions of investing.

MFS has identified a number of major disconnects between advisors and their clients, especially with Generation X/Y:

20% of advisors think a major drop in the stock market is investors' top financial concern, but only 5% of investors say it is.
72% of advisors think US equities are an excellent or very good place to invest; only 35% of investors agree.
60% of advisors think international stocks are an excellent or very good place to invest; only 22% of investors agree.
75% of advisors perceive that investors have become much more or somewhat more risk tolerant over the past 12 months; however, only 15% of investors report an increase in their willingness to take on more risk.
16% of advisors perceive that investors have become more risk averse in comparison to 12 months ago; in fact, 26% of investors report they are less willing to take on risk to achieve higher returns.
84% of advisors think Gen X/Y investors have a primary investing goal of growing assets; only 39% of Gen X/Y investors report this as a primary goal.
9% of advisors think Gen X/Y have a primary goal of protecting principal; 22% of GenX/Y have this as a primary goal.
Advisors think Gen X/Y have 50% of their investments in US equities and 9% in cash; in fact, Gen X/Y report significantly less equity exposure, 34%, and 3 times greater cash exposure, 30%.
Advisors are underestimating investors' optimism about the U.S. economy over the next 5 years, with 35% of advisors reporting that investors are optimistic, while 47% of investors reported being optimistic.

"While these disconnects show a need for advisors to reconsider how they view their clients, the survey showed that advisors are underestimating investors' optimism about the future of the U.S. economy," said William Finnegan, senior managing director of retail marketing for MFS. "With Gen X/Y maturing and Boomers approaching critical decision points for retirement, we believe advisors should reassess how they communicate with clients, and what the lasting impact of 2008's financial crisis has had on investors' risk tolerance."

MFS plans to report on additional findings from the survey over the next several weeks, focusing on the investing attitudes of Gen X/Y and Baby Boomers as well as mass affluent and millionaires.

Important Risk Considerations
Stock markets and investments in individual stocks are volatile and can decline significantly in response to issuer, market, economic, political, regulatory, geopolitical, and other conditions.
Investments in bonds may decline in value as the result of increases in interest rates, declines in the credit quality of the issuer, borrower, counterparty or other conditions. Certain types of bonds can be more sensitive to these factors and therefore more volatile.

About the survey
MFS, through Research Collaborative, an independent research firm, sponsored an online survey from February 7-15, 2011, of 596 individual investors with $100k+ in household investable assets and 612 licensed financial advisors (either FINRA or SEC) who have been licensed for at least three years with at least $500,000 or more in annual mutual fund sales. All investor respondents make or share in making financial decisions for their households. MFS was not identified as the sponsor of the survey. Gen X/Y refers to those respondents under age 46. Boomers refer to those 46 to 64 years old. Seniors or older generations refer to those 65 or older.

About MFS Investment Management
MFS is a premier global money management firm with investment offices in Boston, London, Mexico City, Singapore, Sydney, and Tokyo. The firm’s history dates back to March 21, 1924, and the establishment of the first U.S. “open-end” mutual fund. MFS manages $231.2 billion in assets on behalf of individual and institutional investors worldwide, as of February 28, 2011. Please visit mfs.com for more information.

# # #
MFS Investment Management
500 Boylston St., Boston, MA 02116

22081.2