Income Fund

September 30, 2025

Market Context

• The Canadian bond market gained 1.4% in the quarter (income and capital appreciation).
• Bond yields fell. The benchmark 10-year Government of Canada yield dropped from 3.3 to 3.2%.
• Canadian stocks rose 12.4%. The three largest sectors – financials, basic materials and energy – contributed to the strong performance.

Portfolio Specifics

• The fixed income component accounts for 75% of the portfolio. Bonds had a positive return in the quarter, in line with the broader market. Returns were helped with a slight decrease in longer-term yields, and the interest income (as a reminder, bond prices fall when yields rise).
• High-yield bonds, which account for 5% of the portfolio, have also been a positive contributor as investors have been willing to pay more for riskier investments. CC&L takes a less risky approach to high-yield bonds, but these, too, have benefited.
• The fund’s equities (25% of the portfolio) were a positive contributor but couldn’t keep up with the market. Its focus on dividend-paying stocks results in it holding fewer resource companies than the Canadian market. This hurt performance, as resource companies were the top-performing area of the market.
• While the Canadian economy has slowed down, it hasn’t yet experienced a recession. The risk remains due to the impact of tariff uncertainty on both businesses and consumers, but our manager, Connor Clark & Lunn, believes the probability has declined from earlier in the year.
• With economic activity slowing and inflation still a concern, our focus is on high-quality bonds and stocks with a history of resilient earnings growth. This year, we’ve added bonds from the telecom, REIT and auto sectors. All sectors have been in a negative news cycle, and the risks are now well recognized. There are good businesses that are well-financed and will honour their obligations to lenders.
• The fund paid a distribution of $0.07/unit at the end of September.

Positioning

• With economic activity slowing and inflation still a concern, our focus is on high-quality bonds and stocks with a history of resilient earnings growth.
• Stocks make up 25% of the fund and remain an important source of diversification.

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Important information about the Steadyhand funds is contained in our Simplified Prospectus. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated.