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October 19, 2015

Income Review

Third Quarter Review and Outlook Cumberland Income Fund September 2015

Central Bank decision making continued to fuel volatility in fixed income markets during the third quarter of 2015. The pick-up in volatility that had surfaced in the government bond market during the first quarter finally migrated over to other asset classes including high yield bonds and equities in the third quarter, triggered primarily by a change in China’s foreign exchange policy in August. Aside from bonds issued by the Government of Canada, the other income sectors including local government bonds (provincial, municipal), corporate bonds (investment grade and high yield), and dividend paying equities (preferred and common) all declined in value during the quarter as investors reduced exposure to risk assets. The Cumberland Income Fund’s strategy of owning a diversified group of income-producing securities while keeping cash and short-term securities levels elevated mitigated the majority of the negative performance in the sectors mentioned above during the quarter.

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