The portfolio outperformed its benchmark index during the quarter. This was primarily due to positive sector allocation (overweight technology and underweight consumer staples). Positive stock selection in the healthcare and industrial sectors was slightly offset by negative stock selection in the consumer discretionary and financial sectors.

Q1 winners included Zealand, Disco, Tokyo Electron, Advantest and Japan Exchange, all due to positive news. We trimmed them back to model weight. Q1 losers included Aixtron, B3, Globant, Fortescue and AstraZeneca, all due to disappointing news. We sold Aixtron and AstraZeneca due to deteriorating earnings outlook; the rest are currently under review.

Year-to-date transactions and themes:

1. Weed out the losers quicker: sold Aixtron, AstraZeneca, Novartis, and Rio Tinto as their earnings outlook and price momentum deteriorated.
2. New bull market in Japan: bought NEC as its earnings outlook and price momentum improved.
3. New bull market in small-mid cap biotechnology: bought next-generation anti-obesity company Zealand Pharma with positive drug results.
4. Obesity drug success is bad news for the consumer staples sector: consumer staples is our biggest underweight relative to the index.
5. European companies with the majority US revenues relisting in the US creates significant value: holdings CRH and Linde continue to outperform since they moved their listing from Europe to the US last year.
6. Emerging markets growth stocks (avoid the value traps): holdings Mercadolibre (Latin American retail) and Hynix (Korean high bandwidth memory).
7. Growth stocks in the financial sector are working again, and now the rate shock is over: holdings Partners Group and EQT(European private equity).
8. Broadening bull market into mid-caps away from mega-caps: bought mid-cap Publicis (digital marketing) and will probably continue increasing mid-caps.
9. Our momentum stocks (semiconductors & anti-obesity) are due a pause after a big run: we trimmed our biggest winners back to model weight.
10. What’s next? Lead indicators are improving; the global industrial/manufacturing recession appears to be ending and we expect a broadening bull market with better performance from more cyclical stocks/sectors/regions.

We are positioned for 2024 probably being a vice versa of 2023 in several ways, with better performance from 2023’s laggards, such as small and mid-caps, select emerging markets, and Japanese equities as earnings recover in these areas.

Our scenario analysis and outlook is 80% bullish and 20% bearish: 
Scenario 1 = 10% probability US Magnificent Seven leadership continues. The Magnificent 7 is now down to the Magnificent 4, as Tesla and Apple earnings disappointed, and Google earnings are now being questioned.
Scenario 2 = 70% probability of a broadening bull market. Inflation & interest rates stabilising and China (the world’s second-largest economy) stabilising are catalysts for this positive outcome.
Scenario 3 = 20% probability of bear market or zig-zag. Resurgent inflation and interest rates rising, or geopolitics/Middle East escalating, are catalysts for this negative outcome.

After the significant rally in Q1 2024, we would not be surprised by a momentum reversal or a shallow correction in Q2 2024.The momentum signals we’ve seen recently suggest that small and mid-caps will see strong gains and outperform over the next 6 to 12 months. However, just because small and mid-caps look poised to outperform doesn’t mean there isn’t a place for some mega-caps with positive earnings revisions in the portfolio, particularly those exposed to the mega-trends of AI and obesity drugs.

Our top-down scorecard shows several important changes. The technology sector has become significantly overvalued but still has good fundamentals and trend. We expect other cyclical sectors fundamentals and trend to improve next. The success of the new anti-obesity drugs is becoming bad news for both the Healthcare and Consumer Staples sectors (i.e. less comorbidities and less food & beverage consumption).

The performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. The Fund's current performance may be lower or higher than the performance data quoted. Investors may obtain performance information current to the most recent month-end, within 7 business days at www.johcm.com or by calling 866-260-9549 or 312-557-5913.

Returns shown, unless otherwise indicated, are total returns, with dividends and income reinvested. Returns for periods of less than one year are not annualized. Fee waivers are in effect; if they had not been in effect performance would have been lower.

The MSCI EAFE Index (Europe, Australasia, Far East) is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the US & Canada. Any Indicies mentioned are unmanaged statistical composites of stock market performance. Investing in an index is not possible.

Historical performance of the International Select Fund for Class II Shares prior to its inception is based on the performance of Class I Shares. The performance of Class II Shares has been adjusted to reflect differences in expenses.

*Expense ratios as stated in the latest prospectus. JOHCM (USA) Inc. has contractually agreed to waive fees and reimburse expenses so that the Net Total Operating Expenses do not exceed the stated amounts until January 28, 2024.

Fund holdings, sector allocation, regional allocation and top 10 countries are subject to change without notification.

The performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. The Fund's current performance may be lower or higher than the performance data quoted. Investors may obtain performance information current to the most recent month-end, within 7 business days at www.johcm.com or by calling 866-260-9549 or 312-557-5913.

Returns shown, unless otherwise indicated, are total returns, with dividends and income reinvested. Returns for periods of less than one year are not annualized. Fee waivers are in effect; if they had not been in effect performance would have been lower.

The MSCI EAFE Index (Europe, Australasia, Far East) is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the US & Canada. Any Indicies mentioned are unmanaged statistical composites of stock market performance. Investing in an index is not possible.

Historical performance of the International Select Fund for Class II Shares prior to its inception is based on the performance of Class I Shares. The performance of Class II Shares has been adjusted to reflect differences in expenses.

*Expense ratios as stated in the latest prospectus. JOHCM (USA) Inc. has contractually agreed to waive fees and reimburse expenses so that the Net Total Operating Expenses do not exceed the stated amounts until January 28, 2024.