Q1 2026 Fund Commentary

Commentary and opinions are provided by Mackenzie Investments.

Market commentary

Global equities experienced a volatile first quarter of 2026 as renewed tariff measures, concerns about technology spending and geopolitical escalation in the Middle East shifted investor focus from growth to inflation risks. Energy supply disruptions drove strong commodities performance, while equities broadly declined amid heightened risk aversion and a stronger U.S. dollar. Regional performance diverged, with Japanese equities advancing on fiscal stimulus expectations and European equities declining because of rising energy costs. U.K. equities posted positive returns, supported by commodities exposure. Emerging market equities edged lower despite strength in South Korea and Taiwan, as artificial intelligence (AI) optimism faded. U.S. equities lagged amid increased scrutiny of technology valuations.

Canadian equities delivered gains during the quarter, driven by strong performance in resource-oriented sectors, particularly energy and materials, and a continued rotation toward value stocks. The Bank of Canada maintained its policy interest rate, helping ease concerns around upcoming mortgage renewals. Elevated bond yields later in the quarter weighed on bank valuations, though the Canadian equity market’s relatively high weight in the financials sector proved supportive of overall market performance.

Performance

A holding in Coherent Corp. contributed to the Fund’s performance. The company supplies lasers, optical components and transceivers to data centre and communications markets and has seen strong demand driven by the buildout of AI-driven data centres.

A holding in Methanex Corp. also contributed to performance. The company, which is the world’s largest producer and marketer of methanol, saw supply tighten because of geopolitical disruption in the Middle East, pushing methanol prices higher.

A holding in Canadian Natural Resources Ltd. was another contributor to performance. The company, a large, diversified oil and gas producer, saw higher crude oil prices support its upstream cash flow.

At a sector level, stock selection in the information technology, industrials and materials sectors contributed to the Fund’s performance. On a geographic basis, an underweight position and stock selection in the U.S. and stock selection in Australia and the U.K. contributed to performance.

A holding in Shopify Inc. detracted from the Fund’s performance. The company’s share price declined because of concerns about AI disruption in e-commerce. The sub-advisor considers the decline temporary.

A holding in ICON PLC also detracted from performance. The company faced slower growth because of reduced biotech and pharmaceutical funding, along with an accounting review that delayed results and suspended earnings guidance. In the sub-advisor’s view, fundamentals are showing signs of improvement as biotech funding trends begin to recover.

A holding in Colliers International Group Inc. was another detractor from performance because of weaker commercial real estate transaction activity, as higher interest rates and slower property investment affected growth.

An underweight position in the energy sector and stock selection in the health care and real estate sectors detracted from the Fund’s performance. On a geographic basis, stock selection in France and no exposure in South Korea detracted from performance.

Portfolio activity

The sub-advisor added holdings in Amphenol Inc., a supplier of connectors and interconnect systems that enable power, data and signal flow across global electronics, and Badger Infrastructure Solutions Ltd., a provider of non-destructive excavation services across North America.

The sub-advisor increased Fund positions in Arm Holdings PLC, following a share price decline, and Texas Instruments Inc., as improving order trends and the nearing completion of a major capital expenditure cycle support a stronger earnings outlook.

The sub-advisor sold Fund holdings in Premium Brands Holdings Corp., because of deteriorating earnings and margin pressure, Air Liquide SA, to make room for new ideas, and Fairfax Financial Holdings Ltd., after strong share price performance.

The sub-advisor reduced positions in Coherent and Bombardier Inc. to manage the their size in the Fund’s portfolio.

Outlook

The sub-advisor remains focused on applying the sub-advisor’s long-term, bottom-up investment process designed to identify attractively valued, high-quality growth companies. While the sub-advisor expects geopolitical and macroeconomic uncertainty to remain elevated, the sub-advisor’s approach remains consistent and disciplined, with flexibility to adapt as conditions evolve. The sub-advisor has added to the Fund companies with improving returns on invested capital across areas, including the financials, energy, materials and utilities sectors. While capital-light businesses with durable competitive advantages remain a core focus, the sub-advisor also seeks companies capable of sustaining higher returns over time.