Q1 2026 Fund Commentary

Commentary and opinions are provided by Dixon Mitchell Investment Counsel Inc..

Market commentary

Global equities experienced a volatile first quarter of 2026 as renewed tariff measures, concerns about technology spending and geopolitical escalation in the Middle East weighed on risk appetites. Energy supply disruptions drove commodities higher, while defensive sectors attracted investor interest. Regional equity performance diverged, with Canadian and Japanese equities posting positive returns while U.S. and European equities declined. U.S. equities lagged amid increased scrutiny of technology valuations and capital expenditures, with both the information technology sector and the broader market weakening toward quarter-end.

Performance

Cenovus Energy Inc. contributed to the Fund’s performance. Oil companies rallied following the start of the conflict in the Middle East, as global oil supply was negatively affected, resulting in a rise in commodity prices. In the sub-advisor’s view, oil prices may remain elevated during the conflict and could persist, as affected supply could take time to come back online. Canadian Natural Resources Ltd. also contributed to performance, benefiting from higher crude oil prices and strong operational execution.

Stock selection in the information technology and industrials sectors contributed to performance.

Colliers International Group Inc. detracted from the Fund’s performance. Commercial real estate services firms declined because of concerns that artificial intelligence (AI) could result in the disintermediation of certain services. In the sub-advisor’s view, Colliers International Group and its peers may be largely insulated from this risk and could use AI to improve efficiencies in delivering services to customers. ICON PLC detracted from performance after the company announced an accounting issue and the need to restate past financial statements. The sub-advisor reassessed the company’s management and the outlook for the business, and sold the Fund’s position in the company.

Stock selection in the health care and financials sectors detracted from performance.

Portfolio activity

The sub-advisor added to the Fund holdings in Compass Group PLC, CSW Industrials Inc., Microsoft Corp., Otis Worldwide Corp. and Siemens Healthineers AG. In the sub-advisor’s view, Compass Group benefits from strong scale advantages and a long runway of outsourcing opportunities. CSW Industrials was added after recent weakness in residential heating, ventilation and air conditioning activity created an attractive entry point. Microsoft was added after a sector-wide sell-off that the sub-advisor believed created an attractive valuation for a high-quality business. Otis Worldwide was added because the sub-advisor believes near-term challenges facing the company are temporary and the company’s high-margin service franchise remains strong. Siemens Healthineers was added because the sub-advisor believes the market is underestimating the durability of the company’s premium imaging platform and the potential for earnings improvement.

The sub-advisor sold the Fund’s holding in ATS Corp. to fund other opportunities. Dollar General Corp. was sold after appreciating to a level that the sub-advisor believed offered a less attractive risk/reward balance. ICON was sold after the accounting issue described above.

Outlook

In the sub-advisor’s view, companies with strong balance sheets, high returns on capital and enduring competitive advantages may be resilient across challenging economic environments. The sub-advisor believes the Fund’s investments offer a degree of protection given the discount to intrinsic value, which provides a margin of safety. This approach has been consistent over more than a decade and is reflected in the Fund’s longer-term results.