Pzena International Value Fund Q3 2026 Performance Overview

Introduction The third quarter of 2026 presented a dynamic environment for global equity markets. Investors navigated shifting macroeconomic signals, changing interest rate expectations, and regional economic divergences across developed and emerging markets. Within this context, the Pzena International Value Fund continued to execute its disciplined strategy centered on identifying deeply undervalued international companies with strong long-term fundamentals. Market Environment and Portfolio Performance Global stock markets experienced notable volatility throughout the third quarter. Growth-oriented sectors faced continued scrutiny as market participants re-evaluated high valuations in light of persistent inflation and evolving monetary policies. Conversely, value-oriented equities demonstrated resilience, particularly in international jurisdictions where cyclical sectors offered attractive entry points for patient capital. The fund navigated these market oscillations by sticking strictly to its core philosophy. Rather than chasing short-term market momentum, the investment team focused on businesses trading at significant discounts to their intrinsic worth. This approach allowed the portfolio to capture value as market sentiment shifted toward cash-flow-generative enterprises with solid balance sheets. Sector Allocation and Key Contributors During the quarter, performance was bolstered by targeted exposure to sectors that have historically been overlooked by mainstream market indices. Financials and industrial companies within Europe and Asia were notable contributors to the fund's overall results. Many of these businesses delivered robust operational metrics despite broader economic headwinds. European financial institutions continued to benefit from disciplined capital allocation and attractive dividend yields. As these firms improved their operational efficiency and repaired their balance sheets over recent years, the market began to reward their fundamental strength. The fund's holdings in this sector capitalized on this narrowing valuation gap. In the industrial sector, select international manufacturers demonstrated impressive pricing power and effective supply chain management. Even amidst softening demand in certain geographic pockets, these well-managed businesses maintained healthy operating margins and generated reliable free cash flow. Detractors and Challenges Not all portfolio segments experienced positive momentum during the quarter. Certain cyclical holdings, particularly those tied to consumer discretionary spending in sluggish regional economies, faced downward pressure on their share prices. Weak consumer confidence and higher borrowing costs weighed on near-term earnings expectations for these companies. However, the investment philosophy views such drawdowns not as permanent losses, but as opportunities to acquire shares in fundamentally sound businesses at even more compelling valuations. The management team conducted rigorous fundamental reviews of these underperforming holdings to ensure that the original investment theses remained intact. Portfolio Adjustments and Strategic Positioning During the third quarter, trading activity remained relatively measured. The investment team made selective adjustments, trimming positions that had appreciated closer to their estimated intrinsic values and reallocating capital into more discounted opportunities. Particular attention was paid to international markets where macroeconomic pessimism had created extreme mispricings. By focusing on normalized earnings power rather than transient quarterly fluctuations, the fund established new positions in companies possessing durable competitive advantages. Outlook for the Remainder of the Year Looking ahead, the investment team remains cautiously optimistic about the prospects for international value equities. While macroeconomic uncertainties are likely to persist, attractive valuations provide a meaningful margin of safety for long-term investors. The divergence between growth and value stocks remains historically wide in many global markets. This dynamic offers a fertile landscape for active managers who rely on deep fundamental research rather than passive index tracking. The fund remains fully committed to its time-tested value discipline, seeking to deliver sustainable long-term returns for its unitholders.