Pershing Square Capital Management LP funds' outperformed the major market indexes in the first quarter, according to founder and chief executive William Ackman's letter to investors.

Pershing reported the funds saw gross returns between 2.5% and 4.1%, while growth net of all fees was 2.1% to 3.8%.

Major indexes posted losses of 2.8% to 12.4%, including dividend reinvestment, for the first three months of the year. The smallest loss was at the Nasdaq Composite Index, while the largest loss was seen at Dow Jones Industrial Average.

In the group's letter to investors dated Monday, Pershing said that while it lost its proxy battle with Target Corp. (TGT) last month, it "achieved many of the objectives" identified before the battle, including catalyzing Target to exit the credit and funding risk associated with its credit-card operations and improving the company's governance.

Pershing said that it expects new Securities and Exchange Commission-mandated rules to reduce the cost of a proxy contest and said if the changes were improved, it would put Pershing and others in a position to "more easily replaced directors at Target or other companies."

Ackman also touted the changes and investments made to management at Borders Group Inc. (BGP) and bankrupt General Growth Properties. Inc. (GGWPQ). Ackman was appointed to General Growth's board on Friday, the first board he has joined since the formation of Pershing.

-By John Kell, Dow Jones Newswires; 201-938-5285; john.kell@dowjones.com