Q1 2026 Fund Commentary

Commentary and opinions are provided by Mackenzie Investments.

Market commentary

The U.S. economy started 2026 on a positive note, with consumer spending and business investment providing support through January. Sentiment shifted in late February after the outbreak of the conflict in the Middle East, and equity markets reversed sharply in March as rising oil prices raised concerns about inflation and potential economic softening.

The U.S. Federal Reserve Board held the federal funds rate steady at 3.50%–3.75% at both its January and March meetings, maintaining a pause in its rate-cutting cycle as policymakers assessed the economic impact of higher energy costs alongside a still-resilient labour market. The unemployment rate ranged between 4.3% and 4.4% throughout the quarter, ending March at 4.3%, as job gains moderated and labour force participation edged lower.

The U.S. equity market declined in the first quarter, with the S&P 500 Index falling about 4.4%. Large-capitalization technology and software stocks underperformed as investors rotated away from high-multiple growth companies amid rising inflation concerns. The energy sector was a notable exception, advancing as crude oil prices surged. Smaller-capitalization equities and the equal-weight index outperformed the market-cap-weighted benchmark as market leadership broadened beyond the largest technology names.

Technology companies faced a difficult quarter as rising energy prices renewed inflation concerns and prompted investors to reassess growth valuations. Mega-capitalization technology firms, including Amazon.com Inc., Microsoft Corp., Alphabet Inc. and Meta Platforms Inc., continued to invest in artificial intelligence infrastructure, but investor appetite for premium-priced growth stocks weakened as rate-cut expectations were pushed out and the macroeconomic outlook became less certain.

Performance

Stock selection in the communication services sector contributed to the Fund’s performance during the first quarter of 2026. Conversely, stock selection in the information technology sector detracted from performance.

ASML Holding NV and Keysight Technologies Inc. contributed to performance.

Micron Technology Inc. and Shopify Inc. detracted from performance.

Portfolio activity

The sub-advisor added Palantir Technologies Inc. and CrowdStrike Holdings Inc. The sub-advisor increased Palo Alto Networks Inc.

Atlassian Corp. was sold and Cadence Design Systems Inc. was reduced.