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Inside This Issue—First Quarter 2010

Regulation Redux - Government Puts Final Touches On New Money Market Guidelines
Written by Eric Hiatt, CFA, Senior Portfolio Manager
On January 27, the Securities and Exchange Commission adopted amendments to Rule 2a-7 and related rules in an effort to overhaul the governance of money market funds. The changes, which were enacted in the wake of the financial crisis and the Reserve Primary Fund subsequently “breaking the buck,” aim to increase transparency, decrease risk, and ultimately provide more protection for money market fund investors.

Fixed Income Sector Review
Written by Dwight Sector Specialists
The Treasury component of the Barclays Capital Aggregate Index returned 1.12% in the first quarter. Oversold market conditions and concerns about the deteriorating fiscal situation in Greece helped contain rates to a narrow range during the quarter, despite ongoing improvement on the economic front. The yield curve continued to steepen as the Fed reiterated its commitment to maintain its target overnight lending rate at its effective floor while President Obama managed to pass his estimated trillion-dollar healthcare overhaul.

Economic Update
Written by Jane Caron, CFA, Chief Economic Strategist
While most economists will now agree that the economy has embarked on a sustainable recovery, there is still widespread disagreement about the pace of future growth. The Bloomberg median forecast for real GDP growth in 2010 is 3%, but estimates range from 2% to 4%. We anticipate 3.5% growth.

International Bond Market Update
Written by Peter Vutz, Head of Corporate Credit; International & Non-Dollar
The first quarter proved to be a challenging one for non-dollar investors. Bonds denominated in the local currencies of most developed nations underperformed U.S.-denominated bond markets on an un-hedged basis.

Investment Results as of 3/31/10 [login required]
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