July 21st, 2015

Income Review

Second Quarter Review and Outlook Cumberland Income Fund June 2015

The second quarter of 2015 can be primarily characterized by the reversal of the outsized gains generated by major global bond markets in the first quarter of 2015. Moreover, in Canada, other than high yield bonds generally, all income producing sub-asset classes generated negative returns during the quarter. Government bonds, investment grade corporate bonds, preferred shares, and dividend paying common stocks were all under pressure. Uncertainty over both the strength of the Canadian economy and the potential policy response by the Bank of Canada permitted the high level of volatility experienced in the first quarter to persist during the second quarter. The peak of the Greek crisis and jarring selloff of the Chinese stock market then punctuated quarter end causing a flightto-safety into sovereign bonds globally, including Canada. Cumberland continues to be positioned to reduce the level of volatility currently experienced in fixed income markets generally by keeping duration low and by holding a diversified portfolio of incomegenerating securities.