I’d like to talk a little bit about our outlook for energy over the next year or so and why we’re optimistic about the prospects for Energy.

Sentry Select will have exposure to the great evolving energy discoveries at a much earlier stage. We recognized very early the opportunities in non-conventional well completions that have lead to the enormous success of the Bakken oil shales and various gas shale plays.

With the precipitous declines in energy prices that we saw in 2008 now behind us, we believe that the opening months of 2009 are setting up for a process of bottoming in both oil and gas prices. To a large extent, the bottoming process for crude oil will be determined by the actions of OPEC as it attempts to balance declines in demand by taking barrels off the market. Typically in past cycles, oil prices generally find a bottom and begin to rise again approximately a year after the commencement of cuts by the cartel. If this pattern repeats itself, we might anticipate this to occur in the fourth quarter of this year. Following a second round of quota reductions by OPEC in December, the cumulative production cuts to date total 4.2 mmbbl/d. To date, compliance by the members of OPEC is approximately 3.7 mmbbl/d, or about 88%. This is higher than the typical compliance by members and we believe indicative of the commitment of the cartel to defend the commodity. Many of the dozen countries in the organization require significantly higher oil prices than current levels to balance revenues with government expenditures.

At present, OPEC is discussing the possibility of another round of production cuts this month. While many are forecasting an incremental quota cut of approximately 1 mmbbl/d, we don’t believe another cut will be necessary because there are already signs that demand is returning to take advantage of the lower prices. Americans are driving again! Gasoline prices are currently sitting around $2 per gallon in the U.S. and are down substantially from last year’s peak of $4.17/gallon in July. We pay particular attention to this segment of the market given that U.S. gasoline consumption accounts for about 11% of global demand for oil.

Looking forward, we believe that oil prices will remain range bound from $30 to $35 per barrel of the lower end, which is the marginal cost of production to an upper bound of about $50 per barrel. Once balance is restored in the market, it is our view that oil could move to $60-65 by year-end.

Despite current surplus capacity in the system of between 5 to 6 mmbbl/d, natural declines are starting to catch up with the oil market. Production from Russia and Mexico declined by 4.2% and 9.0% respectively in 2008. It is our view that once demand starts to recover, we could find ourselves short of capacity once again and could see oil prices soaring again. In fact, the Chief Economist of Switzerland-based IEA (International Energy Agency) recently commented that approximately $100 billion worth of drilling projects mostly in non-OPEC countries have been either delayed or cancelled over the past year because of the world's financial problems and weak oil prices. It is their view that the current period of underinvestment in the industry presents longer-term problems for consumers if enough potential supply goes undeveloped and that it will only exacerbate the reserve replacement issue facing big oil companies. Our view is that the longer oil prices languish below levels required for healthy levels of industry investment, the better the prospects are for a dramatic rebound in oil prices and energy stocks.

Turning to the gas side, it is apparent that a particularly cold winter in the northern U.S. states and Canada was not enough to sustain gas prices in an environment of weak industrial and electrical demand. In fact, this price weakness in natural gas has seen prices less than $4 per MMBtu in recent weeks. In addition to sagging demand, the U.S. is feeling the after effects as it comes off of a record drilling year. In general, it typically takes about 3 to 6 months to tie in new wells and we are still tying in gas that was drilled last year.

On the plus side, Chesapeake has elected to hose 200 mmcf/d of gas production in response to lower prices. At the current depressed prices for natural gas, only the core Barnett, Haynesville and Marcellus shales are economical, so companies are reducing budgets to more closely match an environment of low prices. Since September 2008, the U.S. gas-directed rig count has dropped approximately 40% from its peak and E&P companies are actually paying penalties to get out of their rig contracts.

More importantly, the horizontal rig count in the U.S. has declined approximately 30% from its peak. These types of wells are associated with the high productivity shale gas wells. In Canada, the Canadian Association of Drilling Contractors recently published their rig count forecast for 2009 and at just over 11,000 wells, it represents just half of the average 22,000 per year wells drilled between 2004 and 2007. Rig counts are an important leading indicator for future prices in addition to storage levels which are currently above average levels for this time of year.

While the supply fundamentals seem to be moving in the right direction to be supportive of a recovery in prices, it is our view that natural gas could have a rough time as we exit the winter heating season. However, we anticipate that gas should return to its marginal cost level of $7.50 by the fourth quarter, in time for next winter’s gas trade. The full impact of base decline rates of nearly 30% should be apparent by then following the current period of significantly depressed activity.

Turning now to Canadian oil and gas royalty trusts, we would highlight that current valuations are particularly attractive. From the perspective of replacement costs, the three-year average finding and development costs for the trust sector are $19.23 per boe. By contrast, the trust sector’s barrels in the ground are currently trading at $13.00 on the open market, which implies a 28% discount to the replacement cost. With the exception of Crescent Point, all trusts are currently trading cheaper than their replacement costs. At this point of the cycle, it is significantly cheaper to buy another company or buy back your own stock than to drill.

Laura Lau CFA Senior Portfolio Manager

Our top three picks are currently Keyera Facilities Income Fund, Vermilion Energy Trust and Crescent Point Energy Trust. We believe that these three energy investments are excellent examples of the defensive strategy we’re employing in the current market. Our focus continues to be on companies with strong balance sheets, which is particularly important in a capital-constrained environment like we are currently in. We are particularly sensitive in this environment of impending debt maturities, and the likelihood and terms under which issuers will refinance these maturities.

We favour Keyera as a defensive constituent in the portfolios. The majority of the company’s asset base is gathering and processing assets to generate relatively stable income from fee-based processing agreements. The company has been very successful in recent years at demonstrating strong cash flow per unit growth and has increased distributions a number of times since inception. Keyera is well positioned to continue consolidating facilities assets in West Central Alberta and also stands to benefit from the eventual exploitation of the oil sands with its condensate terminal and planned expansions into Edmonton.

Vermilion is another favorite. Its appeal is rooted and our investment is predicated upon its long-term distribution stability and strong balance sheet, which make it one of the more defensive names within its peer group. With the recently announced sale of its investment in Verenex, the company is virtually debt-free, which positions it well to maintain the current distribution and to make acquisitions. Vermilion is also well positioned to see only a minimal impact as a result of the new taxation rules on trusts post- 2010 given it is already cash taxable in its foreign jurisdictions (70% of total cash flow) and given its sizeable capital pools available in Canada. Crescent Point is another that we consider to be a core holding because of its dominant position in the Bakken resource play in southeast Saskatchewan, which offers the company considerable upside by virtue of the depth of its drilling inventory in the play. The trust also has an active hedging program, providing downside protection during downturns in crude oil prices and adds to the stability of the distribution profile going forward. With the announcement of the acquisition of additional assets in the Bakken, Crescent Point has also announced that it will be converting its structure from a trust to a corporation.

Despite deciding to convert to a corporation, Crescent Point plans to make no changes to their distribution rate of $0.23 per month which will now be a dividend. In fact, taxable Canadian shareholders should be receiving more income on an after-tax basis due to the dividend tax credit. Crescent Point has $1.8 billion in tax pools and does not believe it will be taxable until 2012. With the trust tax horizon rapidly approaching in 2011, it is our view that the portfolio will continue to add to positions in dividend-paying corporations such as Crescent Point and Progress Resources, which resulted from the recent combination of Progress Energy Trust and ProEx Energy. We are targeting high-quality royalty trusts with strong balance sheets employing sustainable models. We would expect that many of the royalty trusts will adapt their corporate structure such that they will continue to pay consistent monthly distributions to shareholders, an approach consistent with their asset base.

It is also our view that the current shakeout in the credit markets is creating some excellent opportunities in fixed-income markets to invest in bonds and convertible debt instruments of issuers. We expect this to become a larger component of our asset mix going forward. In summary, we believe this is an attractive time to enter the energy space at or very near what we believe to be the bottom of the energy cycle. Our view is that while we are close to the bottom, we think that we are likely to be range bound for some time. Under the assumption that we are to see a “U” shaped recovery in energy, Sentry Select’s Fund’s provides an excellent opportunity for investors to position themselves for the eventual turn in energy markets with the added benefit of a current monthly return in the form of a distribution on a monthly basis.

Despite turbulent times, many energy - and metal-related markets stabilized somewhat during the first quarter of 2009 after experiencing sharp declines during the second half of 2008. However, as economic growth continues to contract in many regions as a result of ongoing recessional pressures, demand for many commodities remains muted. While we are cautiously optimistic over the long term, substantial inventory build among many commodities, combined with weakened economic conditions, can be expected to pressure resource markets in the near term.

Energy markets experienced bouts of volatility alongside broader equity markets during the quarter. Crude oil prices closed at $US49.66 per barrel, up from $US44.60 from the start of the year. The outlook for world oil prices will remain largely dependant on the speed at which global economies recover. According to the Energy Information Agency (EIA), if growth rebounds sooner than expected, oil demand may experience stronger-than-expected growth, outpacing production increases, which has the potential to lead to rising prices. However, also according to the EIA, upward price increases may be dampened by relatively high commercial inventories and surplus production capacity.

Natural gas prices continued their decline, falling from $US5.62 MMBtu to $US3.79 MMBtu. Declines in natural gas consumption, particularly in the industrial sector, have impacted prices negatively during the quarter. After declining by more than 27% during the final quarter of 2008 and over 33% during the year, the S&P/TSX Energy Index remained relatively flat, returning negative 0.44% for the quarter. Gold continued to show strength through the first quarter. The price of an ounce of gold rose to $US918.96 by quarter end, a rise of over $US200 from a November 2008 low of $US712.30. Strong fundamentals and investor concerns over the loss of capital continue to underpin the demand for gold moving forward. Ongoing production declines with limited supply response, unprecedented levels of fiscal stimulus combined with increasing investment demand should support long-term price growth for gold. According to the World Gold Council, most recently available data indicates investment demand for 2008 rose 64% and increased 182% during the fourth quarter alone.

Despite weak fundamentals in the near term, base metal markets moved up significantly during the quarter. After unprecedented declines during the latter half of 2008, short covering and opportunistic buying moved markets higher during the quarter. The S&P/TSX Diversified Metals and Mining Index rose 47.3%. However, as with many other commodities, until the global economy recovers, demand is firmly established and inventories are reduced, downward price pressure for many base metals may remain.

Forward-looking statements Disclaimer:

Certain statements in this document about the Funds, including their strategies and expected future per­formance, are forward-looking. Forward-looking statements are statements that are predictive in nature, depend upon or refer to future events or conditions, or that include words such as “may,” “will,” “should,” “could,” “expect,” “anticipate,” “intend,” “plan,” “believe,” or “estimate,” or other similar expressions. Statements that look forward in time or include anything other than historical information are subject to risks and uncertainties, and actual results, actions or events could differ materially from those set forth in the forward-looking statements.

Forward-looking statements are not guarantees of future performance and forward-looking statements are by their nature based on numerous assumptions, which include, amongst other things, that (i) the Funds can attract and maintain investors and have sufficient capital under management to effect their investment strategies, (ii) the investment strategies will produce the results intended by the portfolio managers, and (iii) the markets will react and perform in a manner consistent with the investment strategies. Although the forward-looking statements contained herein are based upon what the portfolio managers believe to be reasonable assumptions, the portfolio managers cannot assure that actual results will be consistent with these forward-looking statements.

The foregoing list is not exhaustive and one should look at the other factors that are discussed in detail in the applicable continuous disclosure filings required by law that we have made on SEDAR. The reader is cautioned to consider these and other factors carefully and not to place undue reliance on forward-looking statements. Unless required by applicable law, it is not undertaken, and it is specifically disclaimed that there is any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.