Quarterly Report - Mackenzie Global Equity & Income Team

From the desk of the Mackenzie Global Equity & Income Team Q4, 2025

Mackenzie Global Dividend Fund

Highlights:

• The Fund (Series F) gained 0.1% in Q4 2025 but trailed the MSCI World’s 1.7% return. The Fund delivered a solid 10.9% absolute return in 2025 but lagged the MSCI World benchmark by 450 basis points, reflecting a very difficult year for quality-oriented investors.
• Returns were impacted by sector and style headwinds as markets continued to favor AI-related, momentum-driven, and lower quality names. During the quarter, Financials and Industrials detracted the most, reflecting our under-exposure in European and Canadian banks and capital goods, and greater exposure to data-based financial firms and commercial and professional services companies, respectively. Healthcare contributed positively to returns but our holdings did not keep pace with the sector.
• We remain committed to our long-term investment philosophy focused on quality and durability, viewing periods of style headwinds and market dislocation as a normal part of investing cycles and often an opportunity – while being adaptive of how changes in market structure can influence shorter-term outcomes.

In Q4 25 the Fund (Series F) gained 0.1% and trailed MSCI World’s 1.7% return. This concludes a year in which the fund generated a healthy absolute return of 10.9% but was behind the global benchmark return by 450 basis points. This represents the worst relative result for the Fund since the team took over portfolio management responsibilities at the end of 2013. That’s the bad news. The good news is we generated a double-digit return in the context of what was the harshest environment for our investment style in over 30 years, putting the portfolio well-positioned to outperform as market leadership broadens.

The portfolio’s shortfall in Q4 was driven primarily by sector positioning and style headwinds as the market rewarded growth-sensitive and momentum-heavy names. Outperforming areas came from Communication Services (+9% return in the Fund), along with Energy (+1.6%) and Consumer Staples (+1.4%). Healthcare (+5.3%) was the biggest contributor to returns given overall sector strength and it being our largest overweight position, although our stocks lagged versus the sector’s returns of +9%. Healthcare rebounded based on renewed confidence that the post-COVID drag on medical devices and services will begin to dissipate alongside greater clarity on US drug pricing policy.  Weaker absolute and relative returns in Industrials (-4.9%) and Financials (-0.4%) drove the majority of this quarter’s underperformance.

Reviewing 2025’s “post-mortem”, we started out the year in good shape, as the release of DeepSeek’s LLM (large language model) in January triggered dislocation to the world’s AI leaders. The emergence of a competitive China-based AI model threatened the supremacy of ChatGPT and the brute force compute ecosystem that supported US-based LLMs and hyperscalers. This was followed by market nervousness around tariff uncertainty that favored our more defensive, quality focused mandate. We gave back that outperformance and then some since Liberation Day, as the portfolio failed to keep pace with the rebound in the market that has been led by a concentrated group of perceived AI “winners” along with a fair amount of lower-quality, value-tilted companies. To give some perspective on the AI trade: in the nine months or so since April 2, the semis and related equipment stocks have outperformed the US market by more than 65 percentage points on an equally weighted basis. That’s their biggest run over that timeframe since the aftermath of the dotcom bubble in 2003 and trounces the +27 points of outperformance delivered by all momentum stocks over the past 9 months. These perceived AI winners were of course a big part of the momentum trade the last few years as the top 1/3 of companies with the best momentum outperformed the bottom one-third by roughly 60%, following nearly 40% outperformance in 2024.

On the other end of the spectrum, quality as a factor experienced its weakest relative performance going back 35 years when the factor first began being measured. Looking at what drove global markets beyond technology last year, non-US stocks actually had their strongest relative performance vs the US since 1993, driven by the European and Canadian equities. The shift in monetary and fiscal policy buoyed European stocks (particularly banks) and Canada was driven by banks and mining stocks, which now make up almost 19% of the TSX benchmark. (As a reminder, the fund has consciously never owned any Canadian equities to avoid ownership overlap with our clients’ Canadian investments). The Financials sector was up over 23% in 2025. European banks and commodity-oriented businesses historically sat at the lower end of the quality curve and have never been a core focus on the Fund. The changes for the expectations for growth in Europe and the direction of travel with US interest rates generated significant outperformance in the global money center banks. A weaker US dollar, down about 10% vs other currencies over the year, further supported non-US returns as concerns about government deficit spending increased.

With 2025 in the rearview mirror, investors can rightly ask what if anything are we doing about our investment style or processes to avoid continued underperformance?  We do not believe it does and see no reason to abandon a long-term approach that has served the portfolio well across cycles. Our focus on paying appropriate prices for industry leaders is because over time it has generated the sort of risk-adjusted returns that this mandate is meant to deliver. What gives us confidence our “style” will work again? Because above average businesses tend to grow faster than their competition, generate higher returns on less capital, and generate superior free cash flow which ultimately gets converted into shareholder value and investment performance. Today the portfolio trades at roughly the same valuation as the market (despite typically trading at a premium) while offering higher projected earnings growth, a higher dividend yield and dividend growth rate, generates far superior ROE and ROIC and is more profitable than the benchmark. After a historically tough year for quality-focused investors, we like our odds going forward. Now is not the time to overhaul our investment philosophy and remain confident in the long-term positioning of the portfolio.

That said, there are areas where we continue to evolve: things that we can and should be better. Markets today are increasingly influenced by systematic strategies, factor-based investing and shorter-term market participants. In other words, active managers who still believe in fundamental research must adapt to a market where roughly two-thirds of price action is driven by quantitative funds, algorithms, and retail traders. Fundamentals still matter—but how and when they are reflected in prices have changed. The edge increasingly comes from understanding why a stock is mispriced today and what will change investor perception tomorrow, not simply identifying intrinsic value, investing, and moving on. Markets have shifted away from being purely bottoms-up and long-term driven. Investor bases are more short-term, factor-aware, and momentum-sensitive. This creates persistent mispricing, particularly when negative momentum or short-term issues make stocks temporarily unownable to a vast cohort of market participants, even if long-term earnings power remains intact. Negative momentum can exacerbate selloffs, while the inflection from negative to stabilizing —often subtle—can itself be a powerful catalyst as short-term constraints ease.

Successful fundamental investors must therefore deeply understand who owns the stock, what data they are reacting to (estimate revisions, factor exposures, overhangs, etc.), and what signals might drive a change in perception—rarely a single event, but often a combination of slowing negative momentum, cyclical shifts, or improving company specific fundamentals. Growth can represent value when earnings power compounds and rerates over time, even if the stock never screens as statistically cheap. Our team have long viewed valuation, quality and growth as part of the continuum rather than in isolation. Maintaining flexibility around that spectrum allows us to identify opportunities across a wide range of businesses while remaining anchored in quality and risk-adjusted returns. We believe this approach positions the portfolio well should market leadership broaden or uncertainty increases and remain optimistic about the long-term prospects for our quality-focused investment style and look forward to better times ahead.

What contributed positively to performance?

Alphabet (+27%) is a great example of how much a stock can move based on “narrative shift”. Alphabet was down over -18% in the first quarter and then was up over 90% the rest of the year: a very different initial reaction to where it ultimately ended up. At the beginning of the year, it was under existential threat as AI was going to completely displace its search business, which was/is the source of over 90% of its profits. Search has gone from ~92% share in 2022 to 91% since ChatGPT was launched – hardly a collapse. Picking the ultimate LLM winner is also becoming more difficult. At the beginning of the year, ChatGPT had over 85% of AI website traffic share (Gemini share was <6%). In Jan 2026 that share has shifted, with ChatGPT now at <65%, Gemini over 21% and many others (DeepSeek, Grok, Claude, Perplexity) gaining ground as well. As far as we can tell, Alphabet is the only company that is truly integrated across the AI stack. On top of its continued search dominance, it is among the industry leaders when it comes to foundational models, cloud services, data platform breadth, and inhouse chips/hardware capability. No other company can boast this sort of scale across AI’s main building blocks. Despite spending almost $120 billion in capex next year Alphabet is still going to generate ~$70 billion of free cash flow. But we are under no illusion that the ground can shift beneath our feet unexpectedly and suddenly and we are continuously stress-testing our views on the resilience of each company’s business models as the world evolves.

Strength in Switzerland-based Roche (+25%) was the driven off a more supportive overall environment for healthcare companies as well as positive Phase 3 readouts for giredestrant, a product that addresses early-stage breast cancer and the first significant endocrine therapy advance in over 20 years. Positive trial results for their BTK inhibitor addressing primary progressive and relapsing multiple sclerosis also supported the shares. Roche also made progress refilling its late-stage pipeline, making five additional Phase 3 additions in the quarter.

AngloGold Ashanti was a strong outperformer during the quarter, rising over 20% alongside higher gold prices. Gold strength was driven by inflationary policy expectations tied to the Trump administration, ongoing central bank de-dollarization, and robust retail demand from China. AngloGold benefited from high operating leverage to gold, an attractive valuation (~5x EV/EBITDA with a ~4% dividend yield), and continued portfolio optimization and capital discipline under CEO Alberto Calderon. Over the past several years, the company has reshaped its portfolio toward lower-cost, longer-life assets, supporting stronger margins and free cash flow through the cycle. With a diversified footprint across Africa, Australia, and the Americas, a strong balance sheet, and limited incremental capex needs, AngloGold remains well positioned. The quality and longevity of its asset base provide resilience in weaker gold environments and meaningful upside when prices rise.

What detracted from performance?

Wolters Kluwer’s (-25%) share price underperformed in Q4/25 largely due to negative sentiment surrounding potential AI disruption of their clinical product – Up To Date (10% of WKL sales) which is widely used by doctors. As a result, valuation has collapsed 50% from 28x to 15x P/E throughout 2025 rather than a sudden fundamental change in the business. Despite reporting a 6% organic revenue growth in November and confirming their FY25 guidance, the stock underperformed. The company continues to support their stock by buying back EUR1bn in shares in 2025 and adding an additional EUR200mln to the buyback program. WKL’s products are essential tools for professionals such as accountants, doctors, and lawyers to fulfill their services – this is clearly demonstrated in the 90%+ retention rates WKL has on their products. What differentiates these products from their competitors is that their content is “trusted” since WKL employs in-house experts to validate the “raw content” so doctors can trust that the content they are reading have been validated and confirmed by their peers. Another important element is that the cost of the product is low relative to the risks of using bad information and bad advice for the doctor’s or lawyer’s practice which is a key reason why “free content” has never successfully taken share from WKL in the past. The company can continue to report stable results, but the stock won’t work until sentiment has shifted more positively and new competitive threats does not materialize.  We continue to hold Wolters in our fund, but we are also mindful of the potential disruption risk of AI and as such we are waiting to gain more visibility before deciding to add.

Motorola Solutions (-17%) has been a strong long-term performer in the portfolio over time – we first purchased shares in 2015, sold the stock several years later and then repurchased in 2020. It underperformed over the past year as investor capital rotated toward AI-centric technology hardware names and out of software. The stock de-rated despite continued double-digit earnings growth. The business remains fundamentally strong, supported by a record backlog of $14.6 billion, approximately 75% of which is high-margin software and services. This backlog has steadily grown over multiple years and should continue to benefit from increased municipal spending, with incremental support from federal agencies. The acquisition of Silvus will further improve overall margins, deepen their US military footprint and expand Motorola’s capabilities in mobile ad-hoc networks, extending the company into a multi-billion dollar, rapidly growing addressable market for drone and unmanned systems. We believe the market is mispricing this long-term opportunity. In the meantime, Motorola continues to play a mission-critical role in public safety communications, including high-bandwidth video and voice applications, with long contract durations, high switching costs, and strong revenue visibility.

Meta (-11%) underperformed despite delivering 26% revenue growth last quarter, as investors focused on sharply higher AI-related capital spending for data centers and servers, reviving concerns around free cash flow compression and uncertain returns that echo skepticism seen in 2022 (before CEO Mark Zuckerberg’s declared 2023 to be the “year of efficiency”). Persistent losses in Reality Labs and limited near-term monetization visibility for generative AI further weighed on sentiment. This has overshadowed improving fundamentals in the core business. We maintain our position given Meta’s highly profitable advertising engine, supported by ~3.5 billion daily active users across Facebook and Instagram, alongside early, tangible AI-driven improvements in ad targeting and content recommendations. The scale, engagement, and data embedded across Meta’s platforms continue to underpin strong advertiser demand, and investments in Llama and AI infrastructure could unlock additional monetization avenues over time.

What changes have we made to the Mackenzie Global Dividend Fund?

We initiated a position in National Grid, which operates electricity transmission grid in the UK and Northeastern US. National Grid is a Dream Team company, and we have owned it in the past. We saw an opportunity to re-invest in the company this quarter, as the uncertainty created by their new capital investment program created weakness in the stock price. We believe National Grid is a defensive compounder with clear growth visibility. Its regulated networks in the UK and US sit at the center of a multi-decade grid upgrade cycle, driving high-single digit growth in the regulated asset base and EPS growth. Earnings are linked to inflation and protected by supportive regulatory mechanisms. National Grid offers an attractive dividend yield of 4%.

DSV is the largest freight forwarder in the world after acquiring DB Schenker in 2025. We have owned DSV in the past and believe the market is underpricing its idiosyncratic earnings growth driven by synergies coming from the integration of Schenker. DSV has guided to DKK9bn (over $1.9B) in cost synergies from its acquisition and integration of Schenker plus underlying mid-single digit EBIT growth could easily translate to double digit earnings growth for DSV. Additionally, Schenker provides DSV greater volume scale in their Road business, allowing further expansion in Road margins. More importantly, Schenker brings to DSV a proprietary software platform that will allow DSV to reduce their reliance on WiseTech’s CargoWise One software system. DSV already has the best technology architecture in the industry and they’re well positioned for agentic AI as it is increasingly adopted.

We initiated a position in NextEra Energy during the quarter. Approximately 70% of assets and earnings are derived from Florida Power & Light, the largest regulated electric utility in the U.S., which has consistently delivered top decile returns on equity under a constructive regulatory framework. FPL’s cost structure is structurally advantaged, supporting customer affordability and continued reinvestment. The remaining ~30% of earnings come from NextEra Energy Resources, a long-standing leader in large-scale power generation assets. Together, the businesses position NextEra to benefit from rising electricity demand driven by grid modernization and technology-related load growth. The combination of regulated stability and operating efficiency allows the company to grow faster and earn higher returns than most utilities, while also providing an attractive ~3% dividend yield.

We re-initiated a position in Thermo Fisher this quarter. Thermo provides the critical tools that support discovery, development, and manufacturing across biopharma therapeutic platforms and has spent decades embedding its systems into regulatory workflows. These mission-critical, closed-loop systems create durable, long-term customer relationships. The timing is attractive, with bioprocessing demand emerging from a prolonged destocking cycle, improving utilization rates, and stabilizing order trends as funding conditions normalize. Against this backdrop, Thermo is positioned for accelerating growth driven by bioprocessing recovery, vendor consolidation, and pharmaceutical reshoring. The company’s breadth, scale, and integration across the drug lifecycle make it a trusted partner rather than a transactional supplier.

We initiated a position in Wells Fargo during the quarter, returning to a long-time “dream team” bank and former holding. Wells Fargo is the third-largest U.S. bank by revenues and deposits and has historically been one of the strongest consumer banking franchises in the country. Since a 2016 sales-practices scandal, the bank operated under an asset cap that constrained growth for nearly a decade. In 2025, that cap was lifted following substantial remediation efforts and a new management team focused on sustainable growth. With the constraint removed, Wells Fargo is now able to reinvest across credit cards, investment banking, and trading—areas that historically drove returns. Early progress is evident, with the investment banking franchise climbing to 8th globally in M&A advisory in 2025 (up from 12^th two years earlier). A large, low-cost deposit base and national consumer footprint provide a strong foundation for improved earnings growth.

We sold out of our position in Aena. While we continue to like the company and its airport assets, we believe there’s better opportunities elsewhere, especially in the next few years as Aena is ramping up capital investments to add airport capacity. We expect FCF generation during this period to weaken and limits any potential for dividend growth. Since Aena’s IPO a decade ago, the underlying thesis was based on its ability to grow traffic without additional capital investments but with traffic doubling the past 10 years to 321 million passengers in 2025, Aena needs to invest in additional capacity. The company recently outlined a €10 billion capital investments program running to 2031 under the new DORA 3 plan. Aena continues to be a Dream Team company and will be monitoring the progress of their capex plan.

During the quarter, we exited our position in Sysco, the world’s largest food distributor. Sysco’s scale, purchasing power, and nationwide distribution network remain meaningful strengths, particularly in serving large, multi-unit customers. However, weakness in foodservice end markets - especially within the restaurant segment - has weighed on volume growth and kept results below long-term averages. In addition, prolonged merger speculation involving Sysco’s largest competitors has created uncertainty and constrained the stock. While we believe these pressures are more cyclical than structural, we chose to reallocate capital to opportunities with clearer near-term growth and return potential.

We exited our position in Qualcomm during the quarter as the stock rallied based on speculation that their accelerator chips designed for AI inference would be coming to market in 2026, diversifying its revenues away from smartphones and entering into a market dominated by Nvidia and AMD. Qualcomm remains a technology leader in connectivity chips and licensing, with a long track record of innovation. However, the lack of meaningful exposure to data center markets has held the stock back relative to semiconductor peers in the current cycle, and it remains to be seen whether their new AI chips will gain traction beyond the Middle East AI startup customer who has committed deployment. This dynamic has been compounded by Apple’s gradual move toward in-house chip development, which has weighed on near-term growth visibility despite being well understood by the market. While Qualcomm’s automotive business has been growing at a healthy pace, we expect overall earnings growth to remain constrained over the next few years, leading us to favor better-positioned opportunities.

We sold Marsh & McLennan during the quarter due to a more challenging P&C pricing environment and increased competition in M&A advisory, which have pressured near-term growth. Marsh operates as an insurance broker and does not assume underwriting risk, but its commission-based revenue model is sensitive to insurance pricing cycles. While Marsh remains a high-quality business with deep client relationships and global scale, we believe near-term growth headwinds outweigh the current opportunity and see more attractive risk-reward elsewhere in financials.

We exited our position in AT&T during the quarter. While AT&T executed well operationally, supported by wireless subscriber gains and a differentiated fiber-to-the-home strategy, the investment backdrop changed. Slowing industry subscriber growth, an upcoming smartphone cycle that could prompt more aggressive competitive behavior from weaker peers, and AT&T’s decision to pursue additional spectrum through acquisition altered the capital allocation profile and reduced the margin of safety embedded in our original thesis. With the risk-reward less compelling, we chose to redeploy capital elsewhere.

Our remaining shares in Unilever were sold and consolidated our position into Nestle. We believe Unilever is further along its restructuring path capping off a multi-year transformation process with the recent spin-off of their ice cream business – Magnum. Since Nelson Peltz got involved with Unilever in 2022 the stock has outperformed Nestle by 64pts. Unilever remains a Dream Team company, but we think Nestle offers a better return opportunity with the further upside from restructuring the business.

We sold out of Shell this past quarter and reallocated the capital towards TotalEnergies. This reallocation was primarily supported by the view of a natural gas oversupply leading to lower natural gas costs over the medium term, to which Shell is more exposed. Total also provides the fund with greater asymmetric return potential driven by corporate improvements. The company has targeted ~20% FCF per share growth over the next 5 years through to 2030. This is driven by the company’s existing low-cost assets and future upstream projects becoming operational over the next 5 years – leading to 4% annual production growth at under $30/boe after-tax cash breakevens. Total’s Integrated Power business has also scaled to the point where it will be FCF positive by 2028 and expected to generate 12% ROCE by 2030. While Shell remains on the Dream Team, Total offers more opportunity due to its structurally improving business and capital allocation, and a dividend yield of almost 6%.

Portfolio Management Team

Darren McKiernan, Head of Team, Senior Vice President, Portfolio Manager, Investment Management, Mackenzie Investments

Katherine Owen, Vice President, Portfolio Manager, Investment Management, Mackenzie Investments

Dave Chan, Vice President, Portfolio Manager, Investment Management, Mackenzie Investments

James Barnby, AVP, Portfolio Manager, Investment Management, Mackenzie Investments

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On July 26, 2013 the Mackenzie Global Dividend Fund changed its mandate from investing in equity and fixed income securities of companies that operate primarily in infrastructure related businesses to investing primarily in equity securities of companies anywhere in the world that pay or are expected to pay dividends. The past performance before this date was achieved under the previous objectives.

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