XAI Madison Equity Premium Income Fund Common Shares

Good morning, everyone. Welcome to the MCN webinar for the fourth quarter of 2025. And I will pass it over to

Great. Thank you, Lauren. I appreciate you getting us going. And thanks to Ray and Drew from Madison joining us today on the webinar. We're here to talk about the fourth quarter of 2025 for MCN, which is the XAI Madison Equity Premium Income Fund. And we're joined, as we normally are on these quarterly webinars, by our portfolio managers. And we'll cover a few housekeeping matters, and then we'll turn things over to Ray and Drew to talk about performance for the fourth quarter. So maybe we'll go to the next slide. Just a note in terms of we always cover some forward-looking matters, and we also cover past performance in the presentation. And as you know, past performance does not guarantee future results. and any forward-looking statements are speculative in nature. Now with respect to the webinar, we love questions. So at the bottom of your toolbar, there's a Q&A function, and you can type a question anonymously or not, and we will take questions along the way and then spend a little bit of time at the end addressing questions. So make sure to use that functionality and drop a question at any point. We do have some prepared Q&A that we'll cover with the group before we get to the audience Q&A. So really a pleasure to be working with Ray and Drew, the portfolio managers for Madison Investments. Ray has been a portfolio manager and part of MCN since the fund's inception in July of 2004. And And we love to hear from Ray and Drew in terms of the insights, what they're seeing in the market. There's been a lot of volatility in the equity market more recently, and hopefully Ray and Drew can address some of that today with the audience. My name is Kimberly Flynn. I'm the president of XA Investments. one of the founders and spent a lot of time on product management. So it's great to be in front of investors. If you have questions after today's webinar, please reach out to me or my colleague, Lauren, and we can get that information for you. Just one recent update that I wanted to cover on the webinar. My colleague, Lauren, spent a lot of time working with the Madison team to publish a white paper, and that was published just a few weeks ago, so I wanted to make mention of that. So it goes into covered call investing, and if you're new to covered call investing, take a look at that white paper on the xainvestments.com website. And if you would like it, we can also push it to you by email. So let's go ahead now. I just want to cover performance, and let's focus on 2025 performance. The fund ended with a NAV return of $9.92, strong relative to the buy-write index, which is the fund's benchmark, which ended at $8.91. And furthermore – You know, we think that navigating the sort of volatile markets in 2025, subsequent to the Independence Day and a number of the events that roiled the equity market, we're very pleased with the NAV performance that the Madison team put up. And I think it showcases the benefit of a cover call strategy that, in a volatile equity market. So thanks to the team for another strong year of performance in a, you know, up and down equity market. Let's see, maybe we could now turn to Ray, and if you could talk about the performance and some of the main drivers of that performance in 2025, that would be great. And, Ray, if you wouldn't mind commenting on the active management style that you've always used in managing MCN's cover call strategy and maybe how that contributed to performance in 2025, that would be great as well.

Yeah, sure, Kim. Hi there, everybody. Thanks for joining us. We appreciate it. Let me, you know, step back and look at what's been happening over the last year or so in the markets because things seem to be changing right now, but the environment that we have been in, you know, where we have been very, very defensively postured in the fund, you know, particularly in the middle part of the year was kind of counter to what was happening. So, as you noted earlier in the year, we had a lot of volatility. In the early part of the year, January and February, the markets were continuing to move higher as they did in 2024. So, the mega cap rally that drove the markets for most of 24 continued in the early stages of the year. Then we had some jitters around tariffs, and from kind of mid to late February through most of March, the markets took a pause and came back down somewhat, 5% or 6%. But then we had that Liberation Day volatility in the first week of April where the markets really, really dramatically went down, but then recovered very, very quickly. So you had a significant amount of volatility, and from that point on, the markets really took off again, led by the same factors that were leading them in 2024, primarily mega cap growth stocks and anything tied to artificial intelligence. So from the bottom of the market in April through the end of the year, the S&P 500 rallied 40% or so. So it was pretty much a straight-up market for most of the year, with the exception of that kind of tariff hiccup in March and early April. The influence of the Magnificent Seven, those mega-cap growth stocks, really had a big impact, and it was a very narrow market for most of that middle part of the year. That started to change a little bit in the fourth quarter. So Magnificent Seven stocks, the big companies, Still had a positive influence, but it was really spotty. And, you know, you had Google up 29% during the fourth quarter. But you also had some stocks that didn't perform nearly as well. You know, you had, you know, Amazon down somewhat, Microsoft down somewhat. You know, not really consistent performance as we'd seen in 2024 and the summer of 2025, where virtually all of these stocks were really taking off to the upside. So if it wasn't for really that strong performance out of Google, the Magnificent Seven or the Mega Capital stocks would not have had such a big influence. But they still had an influence. You know, the market was up 2.7% in the fourth quarter. The Magnificent Seven stocks were up 4.5%, primarily because of Google. Now, the fund hung in there very, very well. It was up in line with the market. Actually, we technically outperformed by a couple of basis points, so we'll take that. But it was a pretty strong market with some added volatility, and that helped us perform in line, and we were pleased with that. Leadership changed a little bit in the fourth quarter as opposed to earlier in the year where it was a very narrow group of companies that driving performance, things broadened out in the fourth quarter. Healthcare was the top performing sector rather than those sectors that had the magnificent seven stocks such as technology and communication services and consumer discretionary. They were not among the top performers. They were in the middle of the pack. And it was really healthcare. Communication services did okay because of Google on its own because it's such a large piece of that sector. But really, it was a bit of a changing of the guard. And we've seen that. even get even more pronounced in the early part of 2026, where you've got real asset sectors like energy and materials really driving performance and consumer staples early in 2026. And that's something we just didn't see in the last two or three years. So we were, in terms of active management style investments, We've been defensive for quite some time. We've been underweight some of those high-flying, magnificent seven sectors. And we were early in getting defensive, so we didn't participate as much in the middle part of the year. But then we started to participate more in the fourth quarter. And definitely in the first six weeks of 2026, the performance has been very, very strong. for the fund relative to the S&P. So, you know, the leadership seems to be changing. We'll see if this continues throughout the rest of the year, and we'll talk about our outlook in a little while. But, you know, I think the active management kind of worked against us earlier in the year, but it's starting to work for us again in the fourth quarter and moving into the new year.