Market Sector Update

• The quarter saw a continuation of strength in global equity markets with the MSCI World Index posting a 14% return in the period. Equity markets were hit hard in the first quarter of the year as a result of the uncertainty of the COVID- 19 pandemic and pressure it put on global economies. However, global equities recovered each of the subsequent three quarters of the year despite economic pressures.
• The fourth quarter was particularly positive as vaccines posted efficacy of greater than 90% in clinical studies. As a result, investors accelerated their anticipation of a return to a normal environment, driving up equities across the board.
• Cyclical sectors outperformed in the quarter with energy and financials both up more than 20%. Consumer discretionary, industrials, materials and communication services were also strong performers in the quarter. On the other hand, consumer staples, health care, utilities and real estate all underperformed as investors favored cyclicality over stable growth.
• Value finally outperformed growth for the quarter after growth dominating most of the year. Emerging markets outperformed developed markets for the quarter as the largest developed market, the U.S., modestly underperformed. Japan did well along with Australia, France and southern Europe.

Portfolio Strategy

• The Portfolio posted positive performance and performed in line with the benchmark for the quarter. Positive stock selection in financials and information technology was offset by weaker selection in consumer discretionary, consumer staples and energy.
• Strong individual stock performers included Discover Financial Services and Airbus SE, both benefiting from an anticipation of return to normal. Discover’s performance was driven by investors anticipation of increased consumer spending with lower default risk. In the case of Airbus, a return to air travel benefited the company. In addition, Ambarella, Inc. and Baidu.com, Inc. ADR were both strong performers and beneficiaries of a push towards electric vehicles and autonomous driving. Detractors to performance included Alibaba Group Holding Ltd. ADR, Reliance Industries Ltd. and Alimentation Couche-Tard, Inc.
• We remain overweight information technology stocks, focusing on sustainable growth trends such as a move toward electric vehicles, the need for technology that allows for workforce flexibility, and an increase in electronic payments. We also remain overweight industrials, benefiting from robust gross domestic product (GDP) growth rate recovery and increased infrastructure spending.
• We are overweight emerging markets given perceived attractive valuations and positive earnings outlooks. We are underweight consumer stables as we are finding less compelling opportunities in that sector. We remain underweight the U.S. and Japan, while overweight Europe and emerging markets given the relative attractiveness of opportunities we see around the world.

Outlook

• We expect a strong consumer response globally when social activities become safer in the back half of 2021. Consumer stimulus in the U.S. has been robust, and we expect the consumer sector to rebound more quickly with local entertainment (restaurants in particular) benefiting first and then travel-related industries recovering.

The opinions expressed are those of the Fund’s manager and are not meant as investment advice or to predict or project the future performance of any investment product. The opinions are current through December 31, 2020, are subject to change at any time based on market and other current conditions, and no forecasts can be guaranteed. This commentary is being provided as a general source of information and is not intended as a recommendation to purchase, sell, or hold any specific security or to engage in any investment strategy. Investment decisions should always be made based on an investor’s specific objectives, financial needs, risk tolerance and time horizon.Past performance is not a guarantee of future results.

Top 10 holdings as a percent of net assets as of 12/31/2020 include: Amazon.com, Inc. 4.7%, Microsoft Corp. 3.7%, Apple, Inc. 3.7%, Ferrari N.V. 3.3%, Discover Financial Services 3.2%, PayPal Inc. 3.0%, Airbus SE 2.6%, Schneider Electric S.A. 2.6%, Taiwan Semiconductor Manufacturing Co. Ltd. ADR 2.5% and Ferguson plc 2.4%.

The impact of COVID-19, and other infectious illness outbreaks that may arise in the future, could adversely affect the economies of many nations or the entire global economy, individual issuers and capital markets in ways that cannot necessarily be foreseen. In addition, the impact of infectious illnesses in emerging market countries may be greater due to generally less established healthcare systems. Public health crises caused by the COVID-19 outbreak may exacerbate other pre-existing political, social and economic risks in certain countries or globally. The duration of the COVID-19 outbreak and its effects cannot be determined with certainty.

MSCI World is an unmanaged index comprised of securities that represent the securities markets around the world. It is not possible to invest directly in an index.

Risk factors: The value of the Portfolio's shares will change, and you could lose money on your investment. An investment in the Portfolio is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Prices of growth stocks may be more sensitive to changes in current or expected earnings than the prices of other stocks. Growth stocks may be more volatile or not perform as well as value stocks or the stock market in general. International investing involves additional risks including currency fluctuations, political or economic conditions affecting the foreign country, and differences in accounting standards and foreign regulations. These risks are magnified in emerging markets. The Portfolio typically holds a limited number of stocks (generally 50 to 70). As a result, the appreciation or depreciation of any one security held by the Portfolio may have a greater impact on the Portfolio’s net asset value than it would if the Portfolio invested in a larger number of securities. These and other risks are more fully described in the Portfolio's prospectus.