financial products and services for institutions and individuals worldwide; Canon Inc., a Japanese manufacturer and distributor of network digital multifunction devices, copying machines, printers and cameras; and Total SA, a French energy supplier that explores for, produces, refines, transports, and markets oil and natural gas.

Companies held in the global equity portfolio are all based in developed-market regions around the world. As of June 30, 2011, 50.0% of these stocks were based in North America, 22.0% were based in Continental Europe (not including the United Kingdom), 15.0% were from the United Kingdom, 6.9% were from Japan, and 6.1% were from the rest of Asia (not including Japan). The global equity portfolio is similarly well-diversified across a number of industry sectors. The top two sectors, by weight, at June 30, 2011, were information technology (19.8%), which includes computer software, technology hardware, semiconductors, and services companies, and health care (18.3%), which includes health care equipment & services and pharmaceuticals biotechnology & life sciences companies. Other sectors in the portfolio include consumer discretionary, consumer staples, energy, industrials, materials, financials, and telecommunication services. The average dividend yield on the securities held in the global equity portfolio was approximately 3.0% as of June 30, 2011.

Global Equity Markets Review
A number of positive and negative factors moved markets during the quarter. Positive factors included strong corporate earnings, low developed-world interest rates, and abundant liquidity. Negative factors centered around sovereign debt concerns, softening economic growth, the Japanese earthquake aftermath, and Middle East and North African turmoil.

Sovereign debt concerns were once again front and center in investors’ minds, as Greece faced internal protests over the austerity measures required to receive the next tranche in foreign assistance. Meanwhile, the unrest in the Middle East and North Africa continued with Syria also cracking down violently on protests. In the United States, a string of negative readings on housing, employment, and manufacturing, as well as the expected ending of the Fed’s quantitative easing, led investors to question whether growth expectations

for the U.S. economy were too high. European markets performed well despite contagion concerns from the sovereign crisis. Germany contributed to the strong performance, as the nation continues to benefit from exports and low unemployment that is beginning to spur domestic consumer spending. In Asia, markets declined slightly on concerns over slowing growth prospects following weaker manufacturing numbers from China and continuing inflation fears in the region. Japan was an exception, as it edged higher in the quarter in anticipation of a recovery beyond the current slowdown from the earthquake. Emerging markets declined during the quarter on the aforementioned slowing growth and inflation concerns.

Sector leadership was mixed with a defensive bias, as consumer staples and health care, two traditionally defensive sectors were joined by consumer discretionary, a traditionally cyclical sector, to lead markets higher. Among the worst performers were the energy and financials sectors. The energy sector declined, driven by a falling oil price, while financials declined on sovereign debt concerns and tightening regulatory capital requirements. Commodities declined on weakening economic data.

In currency markets, the U.S. dollar weakened relative to most major currencies. The euro gained on the dollar, as investors reacted positively to recent European Central Bank interest rate policy, which signaled a widening yield differential between the U.S. dollar and the euro.

What Helped and What Hurt LGI
Among the areas of positive stock selection were the health care and information technology sectors, as well as U.S. stocks. Within the U.S., pharmaceutical company Johnson & Johnson and information technology companies IBM and Intel were notable performers. Johnson & Johnson performed well following discussions to purchase Synthes, a medical products manufacturer. Meanwhile, IBM and Intel performed well following results that displayed renewed corporate demand. In health care, French pharmaceutical company Sanofi also performed strongly.

In contrast, the Fund was negatively impacted by low exposure and stock selection in the consumer discretionary and utilities sectors. Within consumer discretionary, the Fund was hurt by not holding the best