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 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.

Mega-capitalization technology firms, including Amazon.com Inc., Microsoft Corp., Alphabet Inc. and Meta Platforms Inc., raised capital-expenditure guidance as AI-infrastructure investment continued to expand across cloud and software ecosystems. The “Magnificent 7” group remained central to overall market leadership, reinforcing technology’s role as the dominant engine of U.S. equity growth.

Performance

An overweight allocation to the health care sector contributed to the Fund’s performance. A holding in Intuitive Surgical Inc. contributed to performance because of a strong third-quarter 2025 earnings report that boosted confidence in the company. A holding in Amphenol Corp. also contributed to performance because of artificial intelligence (AI) growth and a strong earnings report that investors believed could lead to continued free cash flow growth.

Stock selection in the information technology and communication services sectors detracted from the Fund’s performance. A holding in Advanced Micro Devices Inc. detracted from performance as the company’s stock price fell in November. A lack of exposure to Micron Technology Inc. also detracted from performance as the company performed well.

Portfolio activity

A holding in Celestica Inc. was added to the Fund because AI infrastructure continued to attract massive capital expenditure. A holding in Advanced Micro Devices Inc. was added because the sub-advisor believes the company is well positioned as a long-term provider for a range of microchips for AI applications.

The Fund’s holding in Lam Research Corp. was increased. The sub-advisor believes the company is a premier provider of the technology required to produce increasingly complex and specialized microchips for AI computing, and that it has a strong growth profile.

The Fund’s holding in Verisk Analytics Inc. was sold as the sub-advisor believed AI disintermediation fears cooled investor sentiment for the company. A holding in S&P Global Inc. was sold to reallocate assets into semiconductor companies.

The Fund’s holdings in Meta Platforms Inc. and Amazon.com Inc. were reduced.