Global developed markets delivered positive returns in the first quarter but lagged the U.S. market. Concerns regarding Cyprus roiled the international markets in March, as investors grew worried about the possible resurgence of Europe’s debt crisis. These concerns were eased when lenders agreed to bailout terms with Cyprus at the end of the month, although the country was forced to implement severe capital controls to avoid massive bank runs. News from Europe may continue to impact U.S. equity returns, but crisis fears could be balanced by continued stable growth and monetary stimulus.

On the plus side, economic data was generally positive in the United States, and a lack of negative news in Europe for much of the quarter helped to calm the global markets. The rally was also fueled by central bank actions, as U.S. and European monetary authorities maintained stimulative policies. Japan announced plans to take significant actions to combat deflation, which drove down the value of the yen and sent Japanese stocks higher.

The Fund returned 9.08% during the quarter, tracking the 9.36% return of the MSCI World ESG Index. The benchmark outperformed the 7.73% return of the MSCI World Index. The United States, which makes up approximately 50% of the benchmark, returned 12.67%. Israel, Greece, Switzerland and Australia had the best performance, returning 20.14%, 15.01%, 14.99% and 13.96%, respectively. Japan and the United Kingdom, which each make up approximately 10% of the Index, returned 12.44% and 4.94%, respectively.

• Seek to duplicate the investment composition and overall performance of the stocks included in the MSCI World ESG Index.
• The Index is a diversified, sector neutral global benchmark constructed using environmental, social and governance (ESG) factors.
• Sector and regional neutrality is designed to help the Index outperform other social responsibility and sustainability indices.