We would like to share with you our thoughts on the current market conditions. The U.S. stock market, as represented by the S&P 500 Index, finished May 2010 down 10.5% from its April 23, 2010 high, giving back a quarter of the ground it had gained since March 9, 2009. A correction of this magnitude is not unusual and typically follows a prolonged period of stock market gains.

Although the U.S. economy has shown signs of improvement recently, these signs have been somewhat overshadowed by growing concerns about the expanding global debt crisis and the fate of the euro. In response, many investors are selling out of perceived riskier securities and purchasing U.S. Treasuries and gold, driving stock prices and Treasury yields down, and gold prices up. 

Stock markets of highly leveraged economies tend to be very volatile, driven primarily by uncertainty about how and when government debt will be reduced. Given the level of debt in this country and abroad, we expect volatility in the global equity markets to continue in the foreseeable future.