Summary

• Portfolio stock selection was negative in the quarter (-234 bps), though Exxon, Equinix, and Baker Hughes were the best performing stocks.
• Software stocks have been pressured as emerging AI tools, like Anthropic's Claude Cowork, look to have the potential to upend companies historically perceived to have wide moats.
• Cisco Systems was added to the portfolio as an aging networking installed base creates significant upgrade potential for enterprises modernizing networks to support AI workloads.
• Church & Dwight launched a restructuring and strategic review of its struggling vitamin business to focus resources on power brands with more compelling long-term growth prospects.
• Amgen was eliminated from the portfolio after reaching its price target, as the fund views 2026 as a waiting year ahead of major clinical catalysts in 2027.