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Registered Investment Advisory Firm

Investment Strategy

A Conservative, Customized Approach

Capital preservation is Cumberland Advisors’ overriding priority in managing portfolios. We seek to offset the erosion of financial assets by inflation, to realize appreciation so that the real value of assets is maintained. Under a conservative umbrella, we construct portfolios of bonds or stocks or a mix of both.

Cumberland’s portfolio managers work as a team to develop the broad investment strategies, which underlay all accounts in our care. However, each client works primarily with one manager, enabling our relationship to be more personal and portfolios customized to address individual requirements.

Cumberland Advisors’ portfolios reflect our clients’ varying needs. Some clients are families with assets to be conserved and enhanced. Some are institutions seeking prudent supervision of retirement, endowment, or cash management funds. Our clients’ objectives range from growth oriented total return to current income.

Since appropriate and realistic investment goals must be defined before management begins, we first help develop portfolio objectives, which reflect each client’s financial needs and tolerance for risk. Once objectives are established, the test of their fulfillment is time. Consistent results evolve when portfolio themes are permitted to mature.

The Underlying Principles

Since its founding in 1973, Cumberland Advisors’ investment strategy has been based upon the following critical economic concepts:

We believe the value of stocks and bonds is enduringly linked to interest rates. The cost of money is paramount. Short term returns on stocks and bonds can vary greatly; however, interest rates eventually dominate that valuation process and are the market’s way of restoring equilibrium. When bond yields approach the long term return on stocks, a shift from stocks to bonds typically occurs. Investors rightfully demand a greater return for taking on the risk of owning stocks.

We believe that the cost of money – the nominal interest rate – has three parts: a “real” interest rate; an expectation of inflation; and a risk premium. These three components vary over time. Ongoing examination of each one and the ways in which they combine to form the nominal rate is essential to understanding how the nature of money controls the world in which we manage portfolios.

We believe opportunities in the markets are present at all times, especially in the midst of euphoria or hysteria. We strive to make portfolio changes at times of market extremes. Benefits accrue as stocks and bonds eventually move from excesses toward their historically established levels of return.

Cumberland’s management of bond, stock, and balanced portfolios has revolved around these concepts since the firm’s inception. Although technology and internationalization have made market participants more numerous, these three essential principles remain remarkably constant. We expect they will continue to govern market behavior and therefore remain the foundation of our investment advisory work.

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Cumberland Advisors® is registered with the SEC under the Investment Advisers Act of 1940. All information contained herein is for informational purposes only and does not constitute a solicitation or offer to sell securities or investment advisory services. Such an offer can only be made in the states where Cumberland Advisors is either registered or is a Notice Filer or where an exemption from such registration or filing is available. New accounts will not be accepted unless and until all local regulations have been satisfied. This presentation does not purport to be a complete description of our performance or investment services.

Please feel free to forward our commentaries (with proper attribution) to others who may be interested.

For a list of all equity recommendations for the past year, please contact Thérèse M. Pantalione at 800-257-7013, ext. 315. It is not our intention to state or imply in any manner that past results and profitability is an indication of future performance. All material presented is compiled from sources believed to be reliable. However, accuracy cannot be guaranteed.