In the fourth quarter of 2025, the Madison Large Cap Fund demonstrated robust performance, outperforming the S&P 500 Index. The broader market experienced a 2.65% return in Q4, contributing to an impressive 17.9% annual growth for 2025, and an average annual growth exceeding 21% over the past three years. This period saw market leadership largely driven by high-beta and momentum factors with concentrated participation. However, there was a noticeable improvement in previously lagging sectors such as Healthcare, Financials, and Consumer Discretionary during the fourth quarter. Despite this, mega-cap technology firms continued to be the primary contributors to the S&P 500's overall returns, indicating a high concentration of stock performance. Against this backdrop, the Madison Large Cap Fund (Class I) achieved a 3.43% appreciation, surpassing the S&P 500 Index's 2.65% return.

A significant highlight from the Madison Large Cap Fund's Q4 2025 investor letter was its strategic investment in Honeywell International Inc. (NASDAQ:HON). Honeywell, a leading American multinational conglomerate, specializes in advanced aerospace technologies, industrial and building automation solutions, and sustainable energy ventures. As of February 24, 2026, Honeywell's shares closed at $243.61, exhibiting a strong one-month return of 12.45% and an impressive 52-week gain of 22.35%, positioning its market capitalization at approximately $164.16 billion. The fund views Honeywell's ongoing portfolio transformation, which includes the divestiture and spin-off of assets in 2025 and the planned separation of its aerospace and automation segments in the latter half of 2026, as a key driver for future value. This strategic realignment is anticipated to significantly enhance both the return on invested capital and growth prospects for each business unit, a potential that Madison believes is currently underestimated by the wider equity market.

Honeywell's strategic transformation and impressive market performance underscore its potential as a compelling investment opportunity. The proactive restructuring into focused business units is a forward-looking step that promises to unlock greater value and foster sustainable growth. Investors who recognize the long-term benefits of such strategic initiatives are likely to see Honeywell as a beacon of innovation and financial strength in a dynamic global economy.