The CUIT Core Equity Index fund returned 11.29% (Class B, 11.31%), trailing the S&P 500 Index’s 11.82% return. The performance shortfall was due primarily to the absence of companies restricted under the Fund’s principled purchasing policy; restricted companies outperformed the Index and returned 13.56%.

The Fund benefited from a broad market rally during the quarter and exceeded benchmark returns in three leading sectors — energy (18.23% vs. 18.20%), industrials (17.68% vs. 16.52%) and materials (15.73% vs. 15.39%). All of the Fund’s sector returns were positive for the quarter, ranging from 7.91% (telecom) to 18.23% (energy). Return by the Fund’s consumer staples (+8.07%) exposure fell 217 basis points short of the benchmark sector’s return due to the absence of tobacco stocks, which gained nearly 20%. Likewise, the Fund’s healthcare exposure lagged the corresponding benchmark sector’s return (8.67% versus 9.67%) due to the absence of several pharmaceutical names (restricted names were up close to 12% as a group).

The Fund returned 0.92% for the trailing 12 months (Class B, 1.13%) versus the benchmark’s 2.11%. The dispersion of performance across sectors was wide, ranging from a low of -16.72% (financials) to a high of 19.97% (utilities). As in the fourth quarter, the shortfall in Fund’s relative performance derived from Principled Purchasing exclusions, which returned a strong 11.86% versus the benchmark’s 2.11%. Consistent with the relative strength exhibited by restricted companies for the period, the Fund’s lagging performance was most evident in consumer staples (10.07% versus 13.97%; tobacco gained more than 36 %), industrials (-2.68% versus -0.58%) and healthcare (12.35% versus 12.74%).