UPDATE to December 31, 2025

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

2025 ended on a high note: GDP growth in North America advanced higher; unemployment ticked lower and is showing signs of stabilizing; despite being above the central bank’s 2% target, there are signs that the current inflation rate will be driven lower through 2026; and interest rates are holding steady.

Combined, these factors create an ideal environment for investing. The stock market is performing well, as we are seeing companies grow and generate positive earnings growth. On the Long side, Class A units of the Fund delivered a strong 13.34% for 2025, and our global market benchmark returned a healthy 18.85%.

In a perfect world we never want to see underperformance, however we are quite encouraged by our shorts for two reasons. First, our shift in shorting strategy. In our Q3 report, our return from shorting was -5.48% where we made mention of incorporating new strategies into our shorting approach. After implementing these changes, we feel very encouraged for our future of shorting, mitigating our losses to only -4.48% for the year. Second, the strength of the market is buoying our short portfolio. We are reminded of the phrase “a rising tide lifts all boats” – a strong economy can help mask poorly performing and badly run companies. In the face of a rising bull market, we deem our return from shorts as acceptable. We also remind investors that in the face of a market downturn, our shorts have historically contributed positively to our portfolio.

Ultimately, the Fund underperformed our global benchmark. For the year 2025, the Fund saw a return of 8.86%, and our global benchmark returned 18.85%. We want to take this opportunity to remind investors that we are active managers – we make the decisions on the companies and their respective weighting within the Fund. We pride ourselves on the diversification of the Fund, which comprises some 250 different positions in which no one or group of companies have an oversized position. Currently, several popular indices are extremely overweight in higher performing stocks. For example, the S&P500 saw an almost 17% return from the quarter – of which only 7 stocks saw an average return of 20%, and the remaining 493 stocks saw an average return of 6%. We attribute this difference in Fund composition as a primary reason for an observable difference between our returns and that of our global benchmark.

It is crucial to remind investors that there will be times where our benchmark outperforms the Fund, and that it is likely expected to happen again.

Overall, we remain confident. We urge investors to think long term. One or two years of underperformance does not meaningfully shape long term returns. Our composite outperforms the global benchmark over a 5 and 10-year time horizon. As well, the combination of our long and short strategies is, and has been, very effective. Not only does the Fund provide robust returns, but these returns are worth the periods of volatility the Fund experiences.

Outlook

Overall, our outlook is very similar to the past few quarters:

This year has shown that volatility is normal, and to be expected. We remind investors that these are the moments to maintain composure and stay the course. As ever, we are optimistic about the future of equities.

Equity markets are not black boxes. Instead, they represent businesses run by millions of human beings that are continuously striving to be better and provide positive returns to their shareholders. It is this human aspiration to succeed which results in higher earnings of the underlying businesses and stock prices. Globally, economies continue to grow despite policy uncertainty. As well, central banks have signalled their willingness to support markets with the lowering of interest rates. 

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 or at +1 (519) 835-7183.

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 take into account 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.