Manager Commentary

View Q1 Market Commentary

As of March 31, 2009

What factors contributed to the Fund’s performance?
The Fund’s relative outperformance was a result of stock selection in independent power producers, auto component manufacturers and waste management businesses (commercial services); paper recyclers (containers and packaging) and building products. In addition, the Fund’s relative underweighting in poorly-performing sectors such as financials, specifically commercial banks, diversified financials and consumer finance, helped relative performance, as did an average cash position of 8.34% during the period.

Can you discuss any significant changes in the Fund’s positioning throughout the period?
We increased weightings of companies with relative defensive characteristics in response to the general market volatility, while making small increases to positions in companies which we believe remain inexpensive and which have experienced cyclical downturns. We maintained our positions in specialist waste treatment companies such as Covanta (2.5%*) (waste to energy) and Stericycle (2.2%*) (clinical waste management), due to the long-term nature of their contracts and relative defensive characteristics. We also added to existing positions in this space after what we perceive to be recent profit taking in the sector. We have been buying early cycle names, adding to positions in construction-related companies. We added to positions in automotive suppliers, such as Denso (0.8%*) (Japan) and BorgWarner (1.2%*) (U.S.). As we move into the second quarter and second half of 2009, we anticipate adding additional inexpensive, early cycle companies to benefit further from what we believe to be a recovery in the global credit markets which could stimulate early cycle sectors.

Which stocks contributed positively to performance?
Energy companies with exposure to early cycle end markets performed strongly. Japanese suppliers to the automotive sector including Stanley Electric (1.3%*) (automotive LEDs, Japan) and NSK (0.7%*) (bearings, Japan) contributed positively to performance, helped by the continued relative weakness of the Japanese Yen, and press speculation of May volume increases at Toyota*. In addition, energy efficiency companies EPISTAR (0.3%*) (LEDs, Taiwan) and Nibe Industrier (0.2%*) (heat pumps, Sweden) also contributed positively to performance. Selected renewable energy companies, including project developers EDP Renovaveis (2.1%*) (Portugal) and EDF Energies Nouvelles (1.6%*) (France), performed well during the quarter, following the announcement of President Obama’s environmental stimulus measures. Cost cutting at industrial gases group Praxair (1.4%*)(industrial gases, U.S.) offset lower volumes at the company’s core business and prompted a rise in its share price. Among the best performing water and pollution control companies were again those with exposure to early cycle end markets. Selected automotive and related companies with low valuations performed well, with Denso (0.8%*) (hybrid and electric vehicle technology, Japan) rising based on a combination of the relative weakness of the Japanese Yen, and press speculation of the May volume increases at Toyota*. Horiba (1.2%*) (auto emission testing, Japan) was also a beneficiary, rising signifcantly during the quarter. Once again, companies with undemanding valuations that have exposure to construction and stimulus packages performed well during the quarter, helped by news of emerging signs that product distributors are starting to restock inventory levels. LKQ (2.2%*) (waste technologies and resource management, U.S.) continued to perform strongly on the increased use of low-cost alternative automotive parts, and precious metal recycler Asahi Pretec (1.4%*) (Japan) rose during the quarter due to the increase in the gold price caused by stock market volatility.

Which stocks detracted from performance?
During the quarter, credit market conditions applied increased pressure at the smaller end of the wind market. Turbine manufacturer order postponements weighed on the performance of Gamesa (1.8%*) (Spain) and Vestas Wind Systems (1.2%*) (Denmark). Despite being beneficiaries of the U.S. stimulus package, project delays due to utility capex plan postponements and high levels of debt weighed on the performance of Itron (1.9%*) (automated meter reading, U.S.), while exposure to the troubled Big Four automotive groups impacted the performance of Johnson Controls (1.4%*) (auto supply and buildings energy efficiency, U.S.). Water filtration company Pall Corp. (2.3%*) (water and pollution control, U.S.) disappointed on results that were impacted by weakness in life sciences, medical and electronics markets. In Europe, Veolia (1.9%*) (water utility, France) underperformed, due to uncertainty over the company’s cash flow, disposal strategy and return on capital employed of recent acquisitions. Reduced recycling revenues due to lower commodity prices, as well as exposure to merchant power pricing, weighed on Covanta (2.5%*). In addition, Stantec (0.9%*) (environmental consultancy, Canada) underperformed in a broader derating of the consultancy sector.

What is your market outlook, particularly with respect to how it will impact your Fund?
We remain cautious on the outlook for 2009, while remaining optimistic that the legislative measures and impact of global financial stimulus are increasingly likely to benefit Fund positions in late 2009 and early 2010. We believe that short-term profit taking in selected areas of the portfolio has been disproportionate and indiscriminate, and believe that a combination of legislation, stimulus spending, earnings visibility and measured exposure to selected early cycle sectors will underpin potential portfolio outperformance. We believe that these elements remain undiscounted in the portfolio valuation and continue to believe that this valuation is extremely attractive given the long-term growth prospects of the companies in the portfolio which are exceeding the growth rates of companies in the portfolio benchmarks.

*Portfolio holdings as of 3/31/09. Holdings are subject to change. Toyota is currently not held by the Fund.

An investment in the fund involves risk, including loss of principal. Performance data quoted represents past performance, which does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Total annual Global Green Fund operating expenses, gross of any fee waivers or reimbursements, are 9.06%. To obtain performance for the most recent month-end, click here. For standardized performance, click here.

Total annual Global Green Fund operating expenses, gross of any fee waivers or reimbursements, are 6.25% for the Individual Class Shares and 6.00% for the Institutional Class shares. The Global Green Fund’s investment adviser has contractually agreed to reimburse expenses (excluding Acquired Fund Fees and Expenses) allocable to Individual Class shares of the Global Green Fund to the extent such expenses exceed 1.40% of the average daily net assets of Individual Investor Class and 1.15% of the Institutional Class Shares. This reimbursement arrangement will remain in effect through at least December 31, 2012.

The FTSE Environmental Opportunities Index measures the performance of global companies that have significant involvement in environmental business activities, including renewable & alternative energy, energy efficiency, water technology and waste & pollution control. The FTSE Environmental Opportunities Index Series requires companies to have at least 20% of their business derived from environmental markets and technologies.The FTSE Environmental Opportunities Index Series is published by a joint venture of Impax Asset Management, plc (“Impax”) with FTSE International. Impax is also the sub-adviser to the Pax World Global Green Fund. Investors cannot invest directly in any index.

The Morgan Stanley Capital International (MSCI) World Index is a market capitalization weighted index composed of companies representative of the market structure of 22 developed market countries in North America, Europe, and the Asia/Pacific Region. The index is calculated without dividends, with net or with gross dividends reinvested, in both US dollars and local currencies. Investors cannot invest directly in any index.