Week Ended December 31, 2010

The large-cap stock indexes ended the week roughly unchanged but closed out the year with substantial gains. The smaller-cap indexes and the technology-oriented Nasdaq experienced modest losses for the week but enjoyed even stronger gains for the year. Trading activity was exceptionally light due to both the holiday vacation season and heavy snowstorms in New York, which prevented many traders from getting to work. The week's economic data were mixed. The Conference Board's gauge of consumer confidence surprised many observers by declining in December even as Americans increased their holiday spending. An index of national home prices also fell for the fifth straight month, with every major metropolitan area suffering a decline for the first time since early 2009. While the data suggested that the housing sector was suffering a "double dip," pending home sales defied expectations and increased modestly in November. The unemployment insurance claims report provided the best economic news of the week. The Department of Labor reported that 388,000 workers filed initial claims during the week, the first time the figure had fallen below 400,000 since July 2008.

U.S. Stocks¹
Index²	Friday's Close	Week's Change	% Change Year-to-Date
DJIA	11577.51	4.02	11.02%
S&P 500	1257.64	0.87	12.78%
NASDAQ Composite	2652.87	-12.73	16.91%
S&P MidCap 400	907.25	-3.54	24.85%
Russell 2000	785.27	-3.70	23.85%

This chart is for illustrative purposes only and does not represent the performance of any specific security. Past performance cannot guarantee future results.

¹Source of data Reuters, obtained through Yahoo! Finance Closing data as of 4:10 p.m. ET.

²The Dow Jones Industrial Average and the Standard & Poor's 500 Stock Index of blue chip stocks, the Standard & Poor's MidCap 400 Index, and the Russell 2000 Index are unmanaged indexes representing various segments by market capitalization of the U.S. equity markets. The Nasdaq Composite is an unmanaged index representing the companies traded on the Nasdaq stock market and the National Market System.

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U.S. Bond Market

Week Ended December 31, 2010

Investors in financial assets, precious metals, and assorted commodities were amply rewarded in 2010, with all of them enjoying impressive gains. The U.S. dollar also did well, climbing about 7% versus the euro. Retail sales during the holiday season were stronger than anticipated, returning to levels reached just before the recession began in 2007. The results were not so good in other areas, however, with unemployment ending the year at 9.8% and the U.S. housing market finishing on a weak note. Housing prices declined across 20 major metropolitan areas, wiping out hopes for an imminent upturn just as the overall economy has been showing signs of a modest recovery. The bond market closed at 2 p.m. on Friday, the last day of trading for the year, with Treasury yields falling during the week.

We would like to wish everyone a Happy New Year as we close the books on 2010.

U.S. Treasury Yields¹
Maturity	December 31, 2010	December 23, 2010
2-Year	0.59%	0.65%
10-Year	3.28%	3.38%
30-Year	4.34%	4.47%

This table is for illustrative purposes only. Past performance cannot guarantee future results.

¹Source of data: Bloomberg.com, as of 2 p.m. ET Friday, December 31, 2010.

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International Market

Week Ended December 23, 2010

International Stocks

Foreign stock markets closed higher for the week ending December 23, 2010 with the broad international measure, the MSCI EAFE Index (Europe, Australasia, and Far East), gaining 1%.


Region/Country	Week's Return	% Change Year-to-Date
EAFE	1.00%	7.35%
Europe ex-U.K.	0.42%	1.77%
Denmark	1.19%	28.59%
France	-0.21%	-3.18%
Germany	-0.36%	8.70%
Italy	1.09%	-13.93%
Netherlands	0.25%	-0.01%
Spain	-0.06%	-21.18%
Sweden	0.46%	32.41%
Switzerland	1.58%	12.14%
United Kingdom	0.72%	8.80%
Japan	1.90%	13.75%
AC Far East ex-Japan	1.24%	17.69%
Hong Kong	1.49%	22.72%
Korea	2.16%	24.91%
Malaysia	1.93%	35.41%
Singapore	0.78%	17.48%
Taiwan	0.97%	18.51%
Thailand	-0.59%	54.63%
EM Latin America	2.03%	11.85%
Brazil	2.56%	3.07%
Mexico	1.84%	26.25%
Argentina	0.82%	74.59%
EM (Emerging Markets)	1.49%	16.74%
Hungary	-1.32%	-11.06%
India	1.07%	16.68%
Israel	-1.38%	1.50%
Russia	1.94%	19.53%
Turkey	1.13%	21.60%

International Bond Markets

International bond markets in developed countries were higher this week, with the J.P. Morgan Global Government Bond Less U.S. Index gaining 0.71%.


Region/Country	Week's Return	% Change Year-to-Date
Developed Markets	0.71%	3.97%
Europe
Denmark	-0.05%	-1.71%
France	-0.16%	-4.11%
Germany	-0.05%	-3.38%
Italy	-0.66%	-8.91%
Spain	0.11%	-13.19%
Sweden	-0.06%	7.33%
United Kingdom	0.36%	1.64%
Japan	1.63%	14.45%
Emerging Markets	1.11%	11.68%
Argentina	4.25%	35.81%
Brazil	1.44%	9.68%
Bulgaria	0.36%	8.04%
Russia	0.69%	8.25%

International Currency Markets

On the currency front, the U.S. dollar was stronger against the major currencies for the week.


Currency	Close (December 23, 2010)	Week's Return (U.S. $)	% Change Year-to-Date (U.S. $)
Japanese yen	83.055	-1.55%	-12.09%
Euro	1.3068¹	0.96%	8.92%
British pound	1.5405¹	1.20%	4.60%

¹U.S. dollars per national currency unit.

Sources: Foreign stock markets and currency sections are from Rimes Technologies, using MSCI data. International bond markets are from J.P. Morgan.

Note: All returns are in U.S. dollars. All bond indices are J.P. Morgan. All stock indices are Morgan Stanley Capital International (MSCI).

Equity Indices
EAFE:	MSCI Europe, Australasia, and Far East Index
Europe Ex-U.K.:	MSCI Europe ex-U.K. Index
Far East Ex-Japan:	MSCI AC Far East ex-Japan Index
Latin America:	MSCI Emerging Markets Latin America Index
Emerging Markets:	MSCI Emerging Markets Index

Bond Indices
Developed Markets:	J.P. Morgan Global Government Bond Less U.S. Index
Emerging Markets:	J.P. Morgan Emerging Markets Bond Index Plus

All charts are for illustrative purposes only and do not represent the performance of any specific security. Past performance cannot guarantee future results.