UPDATE to June 30, 2026

Dear investor,

Tralucent Asset Management Inc. (“Tralucent”) launched the Tralucent Global Alternative (Long/Short) Equity Fund (“the Fund”) on March 31, 2020. It became a public fund on October 11, 2023, and Class E units of the Fund began trading on the Toronto Stock Exchange on November 16, 2023.

Allow us to update you on our results:

The above performance of the Fund is not a discrete event. It is a continuation of our solid performance over the past few decades.

Here is our composite performance from inception in September 2008:

Critique on Current Period

We are pleased to report an extremely strong second quarter for the Fund. After a difficult start to the year, Q2 delivered a 17.4% quarter over quarter return – a meaningful recovery we believe reflects both the quality of our portfolio and of our overall process.

The Fund’s quarterly return was driven primarily by strength on the long side, however, the more noteworthy story may be our shorts. In a quarter where the broader market rose sharply, our short portfolio to date is only -3.51%, which we consider as a disciplined outcome given the large positive returns the equity market saw. As discussed in our previous updates, we began shifting our shorting approach to incorporate price momentum more rigorously when entering and sizing short positions. We believe this change is showing up in the results and see it as a structural improvement rather than a quarter-to-quarter phenomenon.

A significant portion of the quarter’s gains came from the broader recovery across technology companies. After a prolonged period of skepticism and valuation compression, the market’s view on technology, and specifically AI adoption, saw a more constructive outlook for AI-driven revenue and semiconductor names. We have maintained conviction in many of these names throughout – Broadcom, NVIDIA, Microsoft, and Google – which we see as robust, competitive, high-quality companies. (It should be noted that almost all of these positions were initiated many years ago, with most being held for over a decade).     

Of course, the macro environment cannot be ignored and remains complex. The conflict involving Iran continues to cast a shadow, with its effects being felt worldwide. Energy prices have remained both elevated and volatile, contributing to increased inflation. Inflation itself has proven to be sticky, and the Federal Reserve is expected to raise interest rates once more before the end of the year. We believe that this will bring the Fed funds rate to between 4.0-4.5%. To put this into context, the 10-year US Treasury yield currently sits at 4.485%. With a projected rate hike, long term yields could approach 5%, which is a level that can represent a meaningful alternative to equities. Here we encourage investors to keep this in perspective. Macro developments undoubtedly influence sentiment and trigger short term asset prices, but these don’t not necessarily alter our fundamental investment philosophy: our focus remains on identifying businesses with sustainable competitive advantages, strong balance sheets, and the ability to compound earnings over the long term. On a long-term basis, equities have returned approximately 8-10% – a much more attractive, and significant return for investors which believe will persist. As such, we encourage investors to be fully invested in the equity market.

Q2 was a strong quarter, and we are extremely pleased with both the absolute return, and the improving quality of how this return was generated. Looking forward inflation, interest rate uncertainty, and geopolitical instability are all factors that will continue to shape the markets. Our focus remains clear and consistent: identifying well-run, competitive, quality companies that we intend to hold for the next decade and beyond.

Outlook

Overall, our outlook remains similar to past quarters. As ever, we are optimistic about the future of equities. We remain confident and urge investors to think long-term.

We remind investors that over time, the equity markets significantly outperform other asset classes. Looking ahead to the next ten years, we have little reason to believe otherwise.

We encourage those with available cash to consider entering the market or adding to their current holdings.

Tralucent and you:

We would be pleased to meet with you if you are interested in investing in the Fund or learning more about the Fund. Please feel free to contact us at general@tralucent.ca.

Disclaimers:

Prior to October 11, 2023, the Fund was offered via offering memorandum only and the Fund was not a reporting issuer during such prior period. The expenses of the Fund would have been higher during such prior period had the Fund been subject to the additional regulatory requirements applicable to a reporting issuer. Tralucent has obtained exemptive relief on behalf of the Fund to permit the disclosure of the prior performance data for the Fund for the period prior to it becoming a reporting issuer.

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus of the Fund before investing. The indicated rates of return are the historical annual compounded total returns of the Fund including changes in unit value and reinvestment of all distributions and does not consider sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated.