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Week Ended March 5, 2010

Stocks regained momentum during the week, with the smaller-cap indexes and the technology-oriented Nasdaq performing particularly well. Share prices jumped on Monday in response to favorable news on the bellwether semiconductor industry, which avoided its typical contraction following the end of the holiday shopping season. Investors also appeared encouraged that factories increased production for the seventh consecutive month in February despite logistical troubles caused by massive snowstorms on the East Coast. A reported rise in consumer spending in January may have also boosted sentiment. On Thursday, the favorable news on manufacturing was matched by a positive reading on the larger services sector, which has been slower to emerge from the recession. The Institute for Supply Management announced that its non-manufacturing index rose to its highest level since December 2007, the month the recession began. On Friday, investors reacted with relief when the Labor Department announced that payrolls had declined by only 36,000 in February, while the unemployment rate had remained steady at 9.7%. Over one million people reported being unable to work because of the weather, and many experts had feared that February’s storms might deal a much larger setback to the elusive employment recovery. Sentiment also got a boost from a Federal Reserve report showing the first increase in consumer borrowing in a year.

U.S. Stocks¹
Index²	Friday’s Close	Week’s Change	% Change Year-to-Date
DJIA	10566.20	248.04	1.32%
S&P 500	1138.69	36.30	2.12%
NASDAQ Composite	2326.35	93.96	2.52%
S&P MidCap 400	770.47	34.70	6.03%
Russell 2000	665.61	38.14	4.97%

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 March 5, 2010

Unit labor costs fell 4.7% throughout 2009, the lowest annual rate in the 62 years these costs have been measured. Labor cost deflation has been restraining overall inflation in the U.S. economy, but that does not mean that we have entered a period of deflation (generally falling prices) or even disinflation (a slowing rate of price increases). In fact, the trend of inflation has been turning higher, creating conditions that will eventually prompt the Federal Reserve to start raising short-term interest rates—most likely later this year. We believe this shift in Fed policy could begin as early as the third quarter. Unemployment continues to be a problem, holding steady at a lofty 9.7% in February. Treasury yields climbed during the week as investors anticipated higher rates down the road.

U.S. Treasury Yields¹
Maturity	March 5, 2010	February 19, 2010
2-Year	0.89%	0.80%
10-Year	3.69%	3.60%
30-Year	4.64%	4.55%

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

¹Source of data: Bloomberg.com, as of 4 p.m. ET Friday, March 5, 2010.

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Week Ended February 26, 2010

International Stocks

Foreign stock markets closed higher for the week ending February 26, 2010 with the broad international measure, the MSCI EAFE Index (Europe, Australasia, and Far East), gaining 0.54%.


Region/Country	Week’s Return	% Change Year-to-Date
EAFE	0.54%	-5.05%
Europe ex-U.K.	-0.55%	-8.51%
Denmark	-0.20%	1.80%
France	-0.39%	-9.51%
Germany	-1.20%	-10.66%
Italy	-2.47%	-13.58%
Netherlands	-1.33%	-7.93%
Spain	-2.44%	-18.10%
Sweden	1.45%	0.31%
Switzerland	1.00%	-1.52%
United Kingdom	-1.23%	-6.19%
Japan	4.04%	3.04%
AC Far East ex-Japan	1.39%	-5.71%
Hong Kong	3.37%	-2.94%
Korea	-0.26%	-4.86%
Malaysia	1.25%	-0.01%
Singapore	1.02%	-5.25%
Taiwan	-0.74%	-9.91%
Thailand	4.88%	-1.19%
EM Latin America	-1.03%	-5.04%
Brazil	-1.31%	-6.88%
Mexico	-0.80%	-2.25%
Argentina	-5.44%	-7.77%
EM (Emerging Markets)	0.32%	-5.21%
Hungary	0.57%	-4.39%
India	2.05%	-4.02%
Israel	2.00%	2.50%
Russia	-1.80%	-2.98%
Turkey	-7.93%	-10.41%

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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 2.49%.


Region/Country	Week’s Return	% Change Year-to-Date
Developed Markets	2.49%	0.27%
Europe
Denmark	2.34%	-2.20%
France	2.04%	-2.68%
Germany	2.05%	-2.51%
Italy	1.56%	-3.75%
Spain	1.97%	-3.57%
Sweden	3.61%	2.09%
United Kingdom	0.20%	-5.49%
Japan	3.73%	4.83%
Emerging Markets	1.29%	1.47%
Argentina	0.16%	-9.27%
Brazil	1.10%	1.18%
Bulgaria	0.40%	-0.18%
Russia	0.71%	2.01%

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International Currency Markets

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


Currency	Close (February 26, 2010)	Week’s Return (U.S. $)	% Change Year-to-Date (U.S. $)
Japanese yen	88.865	-3.51%	-4.76%
Euro	1.3647¹	-1.00%	4.88%
British pound	1.5224¹	1.25%	5.72%

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.