Q4 2025 Fund Commentary

Commentary and opinions are provided by Fidelity Investments Canada ULC.

Market commentary

Global equity markets rose in the fourth quarter of 2025, with the MSCI ACWI returning 1.8% (in Canadian-dollar terms). Global investment-grade bonds, represented by the Bloomberg Global Aggregate Bond Index, fell 1.2% (in Canadian-dollar terms). International markets outpaced U.S. markets, and value-tilted segments showed strength. Corporate earnings momentum held, and monetary policy expectations supported markets.

In the U.S., inflation rose to 2.7% on a year-over-year basis in November, and the U.S. economy grew at an annualized rate of 4.3%, the strongest pace in two years. Growth was driven by consumer spending, rebounding exports and government spending. The U.S. unemployment rate remained elevated, rising to 4.6% in November. On trade, headlines turned incrementally supportive as the U.S. and China announced a one-year trade truce. The U.S. Federal Reserve Board cut the range of its federal funds rate, ending December at 3.50%–3.75%.

Against this backdrop, eight of the 11 MSCI ACWI sectors rose, led by the health care, materials and financials sectors. The real estate, consumer discretionary and consumer staples sectors lagged.

Performance

The Fund’s relative exposures to iShares COMEX Gold Trust ETF, Fidelity Canadian Disciplined Equity Fund and Fidelity Emerging Markets Fund contributed to performance. Relative exposure to Fidelity Developed International Bond Multi-Asset Base Fund detracted from the Fund’s performance.

At a sector level, exposure to gold contributed to the Fund’s performance.

At a regional level, exposure to U.S. equities contributed to performance. Canadian equity exposure detracted from performance.

In fixed income, underweight exposure to global investment-grade bonds contributed to the Fund’s performance. Exposure to U.S. investment-grade bonds detracted from the Fund’s performance.

Portfolio activity

The sub-advisor increased exposures to U.S. and Canadian equities. The Fund’s exposure to global investment-grade bonds was reduced.

Outlook

According to the sub-advisor, global economic activity remains supportive, with a low risk of recession across major economies, including the U.S. Consumer resilience and corporate fundamentals underpin this view, even as labour markets show signs of cooling.

Concerns around U.S. policy credibility reinforce the sub-advisor’s case for maintaining diversification beyond U.S. markets. The U.S. administration’s preference for a weaker U.S. dollar, combined with fiscal stimulus measures and potential interest rate cuts, adds complexity to the sub-advisor’s outlook. While these factors may support near-term economic growth, they also heighten currency risk and erode trust in U.S. institutions.

The Fund has overweight exposures to international and emerging market equities, complemented by commodity-related assets for diversification and inflation protection. U.S. equities remain an underweight exposure in the Fund, while Canadian equities have shifted to a neutral weight. The sub-advisor believes the outlook for Canadian assets has improved, supported by fiscal initiatives targeting infrastructure and resource development, as well as efforts to reduce interprovincial trade barriers. Nonetheless, productivity challenges persist, and execution risk around policy remains.

Within fixed income, the Fund has underweight exposures to Canadian and global investment-grade bonds. The sub-advisor prefers credit-spread assets and inflation-linked securities to provide resilience against inflation and capitalize on strong corporate fundamentals. The Fund’s duration (interest rate sensitivity) exposure is underweight.