I am happy to report that FedEx posted record financial results for FY06. The strong demand for our portfolio of services, improved productivity and cost controls contributed to increased operating margins at each of our transportation companies.

While we are pleased with our business results, the management team at FedEx also exhibited a disciplined approach to investing in our business. We announced two strategic acquisitions in FY06 — the purchase of the China domestic express network of DTW Group and its 50 percent share in our International Priority express joint venture and the purchase of Watkins Motor Lines, an industry leader in the long-haul, less-than-truckload market. We expect both acquisitions will close in the first half of FY07. These transactions are smart, strategic investments that are expected to drive profitable growth for FedEx.

Our consistent performance and an ongoing focus on our financial goals have also paid off for our shareowners. We increased our dividend payment, boosting our quarterly dividend by 12.5 percent to 9 cents per share on May 26, 2006. Even more significantly, for the five-year period ending May 31, 2006, our total cumulative return to shareowners is up 177 percent — easily outperforming the S&P 500 and the Dow Jones Transportation Average.

Thank you for your continued support as a FedEx shareowner. I hope you will share my enthusiasm for the strong financial performance for this fiscal year as well as the bright future ahead for the company.

Alan B. Graf, Jr.
Executive Vice President and Chief Financial Officer

* Shows the value, at the end of each of the last five fiscal years, of $100 invested in FedEx Corporation common stock or the relevant index on May 31, 2001, and assumes reinvestment of dividends. Fiscal year ended May 31.