The PATHFINDER Convertible Debenture Fund has a significant weighting in convertible debentures issued by Canadian issuers. However, to provide further diversification and incremental income, we have added selected dividend-paying equities to the portfolio. In order to mitigate risk, we continue to focus on companies that possess high quality assets, low payout ratios, modest levels of third party debt, proven management teams and the ability to build value through internal operations.

Driven by the strength in investor demand for higher yielding securities as well as the improving strength in corporate profitability and balance sheets, many of the Fund's convertible debenture investments performed well in 2010 and 2011.