Q4 2025 Fund Commentary

Commentary and opinions are provided by Mackenzie Investments.

Market commentary

Canada’s economy showed signs of strain in the fourth quarter as U.S. tariffs and weakening trade flows continued to pressure manufacturing and export?oriented sectors. Business confidence softened, and labour?market momentum faded, although household spending remained stable heading into year?end.

The Bank of Canada held its policy rate at 2.25% in December following its 25-basis-point rate cut in October, citing moderating inflation and persistent economic uncertainty. Canada’s unemployment rate rose to 6.8% in December, as labour?force growth outpaced hiring and trade?sensitive industries showed renewed weakness.

The Canadian equity market advanced in the quarter, with the S&P/TSX Composite Index rising about 6.3%, supported by strength in the materials and consumer discretionary sectors. Information technology also contributed, while energy lagged broader market gains amid softer crude oil prices through year?end.

Performance

Relative exposure to Aritzia Inc. contributed to the Fund’s performance. The company’s shares rose because of positive revenue and earnings performance. Relative exposures to Tamarack Valley Energy Ltd. and Headwater Exploration Inc. contributed to the Fund’s performance based on positive operating results.

Relative exposures to AutoZone Inc., OR Royalties Inc. and Constellation Software Inc. detracted from the Fund’s performance. AutoZone and OR Royalties both posted lower-than-expected earnings expectations. Constellation Software was under pressure from concerns around a surrounding artificial intelligence (AI) disintermediation.

At a sector level, stock selection in the communication services, energy and consumer staples sectors contributed to performance. Underweight exposure to the materials sector and overweight exposure to the industrials sector detracted from performance.

Portfolio activity

A holding in Ross Stores Inc. was added to the Fund because of the company’s store growth and branded merchandise strategy. A holding in Celestica Inc. was added based on the company’s exposure to AI infrastructure. The sub-advisor added a holding in Barrick Mining Corp. because of its lower valuation, cost control and the potential of its Fourmile mine in Nevada. A holding in Lundin Mining Corp. was added for the company’s exposure to copper. A holding in Cameco Corp. was increased because of renewed focus on nuclear power.

The Fund’s holding in Boardwalk REIT was sold because of the company’s modest growth. Several gold and financials sector holdings were reduced after strong performance. A holding in Constellation Software Inc. was reduced because of concerns about the potential impact of AI and the resignation of the company’s Chief Executive Officer.