Q4 2025 Fund Commentary

Commentary and opinions are provided by Mackenzie Investments.

Market commentary

The U.S. economy remained resilient in the fourth quarter despite significant disruptions from the record?long government shutdown and slowing job creation. Consumer spending and continued strength in artificial intelligence (AI)?related business investment helped support overall activity.

The U.S. Federal Reserve Board delivered two additional 25?basis?point interest rate cuts in October and December, lowering the federal funds rate to 3.50%–3.75% as policymakers responded to softer labour?market conditions and elevated economic uncertainty. The unemployment rate was 4.4% in December as job gains moderated and labour?market momentum cooled.

The U.S. equity market advanced, with the S&P 500 Index rising 2.7% and reaching fresh record highs in December. Information technology and communication services remained influential, and health care outperformed as investors rotated toward stability amid slowing economic growth signals.

Performance

Relative exposures to Parker Hannifin Corp. and Cisco Systems Inc. contributed to the Fund’s performance. Parker Hannifin stock rose after the company reported better order rates and raised its 2026 outlook. Cisco Systems reported positive earnings because of wins in the networking space and demand from hyperscalers. No ownership in Meta Platforms Inc. and Oracle Corp. also contributed to the Fund’s performance. Both stocks fell because of expected infrastructure spending.

Relative exposures to AT&T Inc. and Eaton Corp. PLC detracted from the Fund’s performance. AT&T was affected by competition, which raised concerns about future profitability. Eaton Corp. posted lower-than-expected revenue and growth.

At a sector level, stock selection in the information technology and financials sectors contributed to the Fund’s performance. Underweight exposure to the consumer staples sector contributed to performance, as did overweight exposure to the financials sector. Stock selection in the health care sector detracted from performance.

Portfolio activity

A holding in Eli Lilly and Co. was added to the Fund as many pharmaceutical companies made drug pricing and tariff relief deals with the U.S. administration. In addition, the company has new versions of its weight-loss drugs as possible growth catalysts. The Fund’s transportation sub-sector exposure was increased. The sub-sector has been affected by a freight recession for a few years, and the sub-advisor sees signs of rising market demand.

The Fund’s holding in ServiceNow Inc. was sold as there are potential threats from AI in the software industry. Consumer staples sector exposure was reduced amid lower sales and earnings growth as margins are pressured.