Limited Duration Fund Commentary

3Q 2023

Market Overview

Yields shifted markedly higher in the third quarter, resulting in negative year-to-date returns for the Bloomberg Barclays Aggregate Index. The rise in yields was brought on by stronger-than-expected economic growth and declining inflation rates, which brought hope the economy could weather higher rates and a soft landing will ensue, instead of a potential recession. While not our base case, this argument has gained significant steam as economic data continue to come in better than expected and inflation has fallen below 4%. Additionally, equity markets have held up well, and company earnings have remained strong. Two economic pillars, housing and autos, have outperformed expectations.

The Federal Reserve (the Fed) raised rates by 25 basis points (0.25%) during the quarter, bringing the target federal funds rate to 5.25%-5.50%, the highest level since 2007. While the overall inflation rate fell further, core inflation remains above 4%, making it difficult for the Fed to end its long series of rate hikes. The yield curve remains inverted inside of 10 years, though not as deeply as it has been. For the quarter, the Bloomberg Barclays Aggregate index returned -3.23%.

Positioning the Bond Fund

Portfolio composition is subject to change.

With heightened market risks, and the potential for credit deterioration in 2023, we have increased credit quality. We believe agency mortgage-backed securities offer compelling value. We are increasing the liquidity of the Fund’s holdings. To quickly capture favorable changes among rate opportunities, the Fund’s duration is positioned shorter than that of its benchmark.

Why Should Investors Consider Investing in This Fund?

Expected fixed income market returns are higher than they have been in many years. With economic growth slowing and an aggressive Fed working to bring inflation down, high quality fixed income should be an attractive asset class. We believe this fund’s conservative positioning should be beneficial in a more risk-averse economic environment.

An investor should consider a fund’s investment objectives, risks and charges and expenses carefully before investing or sending money This and other important information about an investment company can be found in the fund’s prospectus. To obtain a Cavanal Hill Funds prospectus or summary prospectus, please call 800-762-7085 or visit us at www.cavanalhillfunds.com. Please read it carefully before investing.

Cavanal Hill Investment Management, Inc. is an SEC registered investment adviser and a wholly-owned subsidiary of BOK Financial Corporation, a financial holding company (“BOKF”). BOKF, NA serves as the custodian for the Cavanal Hill Funds. Cavanal Hill Investment Management, Inc. provides investment advice, administration and other services for the Funds and receives a fee for providing such services as fully described in the prospectus. The Funds are distributed by Cavanal Hill Distributors, Inc. a registered Broker/Dealer, member FINRA and wholly-owned subsidiary of BOKF.

Commentary provided is for the indicated period and is designed to provide a frame of reference. It does not constitute investment advice. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. The opinions expressed herein reflect the judgment of the authors at this date and are subject to change without notice and are not a complete analysis of any sector, industry or security. This document contains forward-looking statements that are based on management’s beliefs, assumptions, current expectations, estimates and projections about the Cavanal Hill Funds, the securities and credit markets and the economy in general. Words such as “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “plans,” “projects,” variations of such words and similar expressions are intended to identify such forward-looking statements. Management judgments relating to and discussion of the value and potential future value or performance of any security, group of securities, type of security or market segment involve judgments as to expected events are inherently forward-looking statements. Management judgments relating to and discussion of the value and potential future value or performance of any security, group of securities, type of security, group of securities, type of security or market segment involve certain risks, uncertainties and assumptions that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what is expressed, implied, or forecasted in such forward-looking statements. The potential realization of these forward-looking statements is subject to a number of limitations and risks, which are described in the Fund’s prospectuses, and investors or potential investors, are cautioned to review the Funds’ prospectuses and the description of such risks. Neither the Funds not the Funds’ investment adviser, Cavanal Hill, undertake any obligation to update, amend, or clarify forward-looking statement, whether as a result of new information, future events or otherwise.

Investment Risks

Fixed income securities are subject to interest rate risks. The principal value of a bond falls when interest rates rise and rise when interest rates fall. During periods of rising interest rates, the value of a bond investment is at greater risk than during periods of stable or falling rates. Bond funds will tend to experience smaller fluctuations in value than stock funds. However, investors in any bond fund should anticipate fluctuations in prices, especially for longer-term issues and in environments of changing interest rates.

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