Kotok May 11 06

614 Landis Avenue, Vineland, NJ 08360800-257-7013www.cumber.com

David R. KotokChairman & Chief Investment Officer

Cumberland Advisors

May 11, 2006 ConferenceTerrorism Tomorrow

Malvern, PA

614 Landis Avenue, Vineland, NJ 08360800-257-7013www.cumber.com Chart 2

Terrorism Shocks

1994 1996 1998 2000 2002 2004 2006

Feb 1993:WTC Bombing

Aug 1998:Simultaneous

U.S. Embassy Bombings –

Nairobi, Kenya& Dar es Salaam,

Tanzania

Oct. 2000:USS Cole attacked in Aden, Yemen

Sept. 11

Mar. 2004:Madrid train bomb

Jul. 2005:London publictransportationbombings

Nov. 2002:bombing of Hong KongShanghaiBank


Financial Shocks

1994-1995:MexicanPeso Crisis

Jul. 1997:Thai Bahtcurrency

crisis

1998:Long Term Capital Mgt. /Russian Ruble collapse

1999:Y2K

Fears

2000:Global Tech Stock BubbleCollapse

1994 1996 1998 2000 2002 2004 2006

2002-2003:CorporateGovernanceFailures(Enron, WorldCom, Parmalat)

Nov. 2002:Argentinadefault


Reactions to Shocks

1994 1996 1998 2000 2002 2004 2006

Feb 1993:WTC Bombing

Aug 1998:Simultaneous

U.S. Embassy Bombings –

Nairobi, Kenya& Dar es Salaam,

Tanzania

Oct. 2000:USS Cole attacked in Aden, Yemen

Sept. 11

Mar. 2004:Madrid train bomb

Jul. 2005:London publictransportationbombings

Nov. 2002:bombing of Hong KongShanghaiBank

1990s: Global Talks for Greater Cooperation begin

Apr. 1999: Financial

Stability Forum (FSF) Created

1994-1995:MexicanPeso Crisis

Jul. 1997:Thai Bahtcurrency

crisis

1998:Long Term Capital Mgt. /Russian Ruble collapse

1999:Y2K

Fears

2000:Global Tech Stock BubbleCollapse

2002-2003:CorporateGovernanceFailures(Enron, WorldCom, Parmalat)

Nov. 2002:Argentinadefault

1997-1998:Dialogue

Intensifies

1999: Global Prep for Y2K

Financial Stability Forumstarts regularly consulting with senior financial officials of other countries in Regional Meetings, including China,India, Korea, Indonesia, Thailand, Russia, Hungary, Poland, Brazil,

Mexico, Argentina, Chile, and South Africa.


0

200

400

600

800

1000

1200

1400

1600

1800

1998 1999 2000 2001 2002 2003 2004 2005 2006

Result: Global Bond Risk Premiums are ShrinkingOutside the United States

Source: JP Morgan and Cumberland Advisors. © Cumberland Advisors

Daily Spreads of JPMorgan's Emerging Market Bond Index (EMBI)+ Sovereign over US Benchmark Bond Yields

Bas

is P

oint

s

LTCM

9/11 Argentinadefault


Mar-06334

0

200

400

600

800

1000

1200

Apr-98 Apr-00 Apr-02 Apr-04 Apr-06

Result: Global Bond Risk Premiums are ShrinkingInside the United States

Source: Bloomberg and Cumberland Advisors. © Cumberland Advisors

CS High Yield Index II (formerly DLJ High Yield Index) Spread to Worst expressed in basis points. Monthly data.

Bas

is P

oint

s LTCM

9/11 Argentinadefault


Source: Ned Davis Research chart B336A and Cumberland Advisors. © Cumberland Advisors

Monthly Data 1/31/1987 - 3/31/2006 (Log Scale)

Junk BondYields BasisPoints/AnnumWhen:

HighYield/CorpCredit Points/ %Yield RatioIs: Annum of Time

Above 177.2 -286 19. 1* Between133.9 and 177.2 20 68. 3

133.9 and Below 157 12. 6

LehmanBrothers High YieldCorporate Bond Yield

( )

Lehman BrothersUS Corporate Credit Yield

( )

4

5

6

7

8

9

10

11

13

15

17

20

4

5

6

7

8

9

10

11

13

15

17

20

Extreme Fear

Excessive Optimism

Fear Index III (High Yield/Corporate Credit Yields)

3/31/2006 = 140.2%131137143150157165173181190199208218228239

131137143150157165173181190199208218228239

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Bond market Fear Index III (Junk Yields vs Investment Grade Corporate Yields)

LTCM 9/11

Result: Global Bond Risk Premiums are ShrinkingIn the United States

Arg.default


Equity Risk premiums are shrinking in stock markets, too.

Let’s look around the world and see where and how…


World Total 40,219,240 % World Total 29,633,310 % World Total 25,683,171 %

1. United States 8,650,777 21.5 1. United States 8,694,600 29.3 1. United States 12,926,177 50.3

2. China** 4,185,190 10.4 2. Japan 3,931,051 13.3 2. Japan 2,495,757 9.7

3. Japan 3,114,543 7.7 3. Euronext* 2,208,083 7.5 3. U.K. 2,372,738 9.2

4. Euronext* 2,213,188 5.5 4. Germany 2,144,493 7.2 4. Euronext* 1,903,278 7.4

5. India 2,127,580 5.3 5. U.K. 1,423,379 4.8 5. Germany 1,093,962 4.3

6. Germany 1,930,148 4.8 6. China** 1,111,543 3.8 6. Switzerland 689,199 2.7

7. U.K. 1,413,974 3.5 7. Italy 1,196,631 4.0 7. China** 579,,427 2.3

8. Italy 1,333,139 3.3 8. Spain 588,011 2.0 8. Italy 569,732 2.2

9. Brazil 1,140,947 2.8 9. Canada 606,909 2.1 9. Canada 547,841 2.1

10. Russia 865,820 2.1 10. India 413,825 1.4 10. Spain 402,163 1.6

Rest of World 11,732,128 29.2 Rest of World 6,256,091 21.1 Rest of World 2,102,897 8.2(171 Countries) (36 exchanges)

1998 PPP 1998 GDP World’s 10 Largest($mm) ($mm) Stock Markets ($mm)

Measured in USD at 12/31/98 exchange rates

* Euronext includes Belgium, France, Netherlands, and Portugal.** China includes China and Hong Kong.*** India includes National Stock Exchange of India and Mumbai Exchange.Source: World Bank Data 2004, World Federation of Stock Exchanges, and Cumberland Advisors. © Cumberland Advisors.

Three Ways to View The World - 1998


World Total 55,938,191 % World Total 40,887,837 % World Total 44,384,409 %

1. United States 11,628,083 20.8 1. United States 11,667,515 28.5 1. United States 17,941,481 40.4

2. China** 7,334,392 13.1 2. Japan 4,623,398 11.3 2. Japan 4,774,550 10.8

3. Japan 3,774,086 6.7 3. Euronext* 3,097,953 7.6 3. U.K. 3,253,372 7.3

4. India 3,362,960 6.0 4. Germany 2,714,418 6.6 4. Euronext* 3,115,780 7.0

5. Euronext* 2,793,365 5.0 5. U.K. 2,140,898 5.2 5. China** 1,654,242 3.7

6. Germany 2,325,828 4.2 6. China** 1,812,334 4.4 6. Canada 1,620,894 3.7

7. U.K. 1,832,252 3.3 7. Italy 1,672,302 4.1 7. Germany 1,399,555 3.2

8. Italy 1,621,372 2.9 8. Spain 991,442 2.4 8. India*** 1,309,411 3.0

9. Brazil 1,482,859 2.7 9. Canada 979,764 2.4 9. Spain 1,094,120 2.5

10. Russia 1,408,603 2.5 10. India 691,876 1.7 10. Switzerland 1,015,937 2.3

Rest of World 17,238,142 31.0 Rest of World 9,816,263 24.0 Rest of World 7,205,069 16.2(171 Countries) (36 exchanges)

2004 PPP 2004 GDP World’s 10 Largest($mm) ($mm) Stock Markets ($mm)

Measured in USD at 3/31/06 exchange rates

* Euronext includes Belgium, France, Netherlands, and Portugal.** China includes China and Hong Kong.*** India includes National Stock Exchange of India and Mumbai Exchange.Source: World Bank Data 2004, World Federation of Stock Exchanges, and Cumberland Advisors. © Cumberland Advisors.

Three Ways to View The World


United States21.5%

China10.4%

Japan7.7%

Brazil2.8%

India 5.3%

Italy3.3%

Russia2.2%

Rest of World29.2%

Euronext5.5%

U.K.3.5%

Germany4.8%

World Measured by Purchasing Power Parity (PPP)

Source: World Federation of Stock Exchanges, World Bank Data 2004, and Cumberland Advisors. © Cumberland Advisors

United States20.8%

China13.1%

Japan6.7%

India6.0%

Rest of World31.0%

U.K.3.3%

Brazil2.7%

Russia2.5%

Germany4.2%

Euronext5.0%

Italy2.9%

1998(Total $40.219 trillion)



World Measured byGross Domestic Product (GDP)

United States29.3%

Japan13.3%

Euronext7.5%

Rest of World21.1%

Germany7.2%

U.K.4.8%

Spain2.0%

China3.8%Italy

4.0%

Canada2.0%India

1.4%




United States28.5%

Japan11.3%

Euronext7.6%

Germany6.6%

U.K.5.2%

Canada2.4%

China4.4%

Rest of World24.0%

Italy4.1%

India1.7%

Spain2.4%


World Measured by Stock Market Capitalization

United States50.3%

Japan9.7%

U.K.9.2%

Rest of World8.2%

Spain1.6%

Euronext7.4%

Italy2.2%

Germany4.3%

China2.3%

Sw itzerland2.7%

Canada2.1%




United States43.9%

Japan9.6%

U.K.7.7%

Sw itzerland2.2%

China3.5%

Germany3.2%India

2.0%

Euronext6.6%

Canada3.2%

Rest of World15.6%

Spain2.5%


Look What Has Happened Since 2004



Mar. 2006(Total $44.384 trillion)

United States40.4%

Japan10.8% U.K.

7.3%

Spain2.5%Rest of World

16.2%

Canada3.7%

Euronext7.0%

India3.0%

Germany3.2%

China3.7%

Sw itzerland2.3%

United States43.9%

Japan9.6%

U.K.7.7%

Sw itzerland2.2%

China3.5%

Germany3.2%India

2.0%

Euronext6.6%

Canada3.2%

Rest of World15.6%

Spain2.5%


Share of World Stock Market Value

Source: World Federation of Stock Exchanges and Cumberland Advisors. © Cumberland Advisors

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1998 1999 2000 2001 2002 2003 2004 2005

1998 marks end of the LTCM crisis

US Share Shrinking

Rest of World

U.S.

1998 ROW49.7%

1998 U.S.50.3%

Mar. 2006ROW59.6%

Mar. 2006U.S.

40.4%


Share of World Stock Market Value

U.S.50.3%

Canada2.1%

Asia14.9%

Europe30.6%

Other0.7%

Latin America

1.4%

Note: See appendix at the end of this presentation for chart details.Source: World Federation of Stock Exchanges and Cumberland Advisors. © Cumberland Advisors



U.S.40.4%

Canada3.7%

Asia22.8%

Europe28.1%

Other2.6%

Latin America

2.5%


Share of World Stock Market Value:Japan



US 43.0%

ROW53.5%

US 50%

ROW 40%

Japan10%

$2,495.8 Bn

US 40.4%

ROW 48.8%

Japan10.8%

$4,774.5 Bn



Share of World Stock Market Value:China


US 50.3%

ROW 47.4%

China2.3%

$579.4 BnUS

40.4%

ROW55.8%

China3.7%

$1,654.2 Bn




Share of World Stock Market Value:India



US 43.0%

ROW53.5%

US 50%

ROW 50%

India0%

$0.0 Bn US 40.4%

ROW 56.6%

India3.0%

$1,309.4 Bn

India was not a member of the World Federation of Stock Exchanges until 2002.



Share of World Stock Market Value:Other Asia, Middle East & Africa

Indonesia, Iran, Israel, Korea, Malaysia, Philippines, Sri Lanka, Taiwan, Thailand, Turkey, Singapore, South Africa, Mauritius, Egypt



US 50%

ROW 47%

Other Asia, ME, Africa3.1%

$798.1 MmUS

40.4%

ROW 52.6%

Other Asia, MEAfrica7.0%

$3,108.2 Bn



Share of World Stock Market Value:25 European Union (EU) Members



US 43.0%

ROW53.5%

US 50%

ROW 22%

25 EU Members28%

$7,118.4 Bn

US 40.4%

ROW 34.0%

25 EU Members25.6%

$11,346.7 Bn



Share of World Stock Market Value:Original 11 European Monetary Union (EMU) Members



US 43.0%

ROW53.5%

US 50%ROW

33%

11 EMU Members17%

$4,264.5 Bn

US 40.4%

ROW 44.2%

11 EMU Members15.4%

$6,843.1 Bn



Share of World Stock Market Value:United Kingdom



US 43.0%

ROW53.5%

US 51%

ROW 40%

U.K.9%

$2,372.7 BnUS

40.4%

ROW 52.2%

U.K.7.3%

$3,253.4 Bn



Share of World Stock Market Value:Germany



US 43.0%

ROW53.5%

US 50.3%

ROW 45.4%

Germany4.3%

$1,093.9 BnUS

40.4%

ROW 56.4%

Germany3.2%

$1,399.6 Bn



Share of World Stock Market Value:Switzerland



US 43.0%

ROW53.5%

US 50.3%

ROW 47%

Switzerland2.7%

$689.1 Mm

US 40.4%

ROW 57.3%

Switzerland2.3%

$1,015.9 Bn



Share of World Stock Market Value:Euronext (France, Portugal, Belgium, Netherlands)



US 50%ROW

43%

US 43.0%

ROW53.5%

France, Portugal, Belgium, Netherlands

7%$1,903.3 Bn

US 40.4%

ROW 52.6%

Euronext7.0%

$3,115.8 Bn



Share of World Stock Market Value:Norway



US 43.0%

ROW53.5%

US 50.3%

ROW 49.5%

Norway0.2%

$46.3 MmUS

40.4%

ROW 59.0%

Norway0.5%

$238.4 Mm



Share of World Stock Market Value:Other Europe (OMX)

Denmark, Finland, Sweden, Estonia, Latvia, Lithuania



US 43.0%

ROW53.5%

US 50.3%ROW

47.6%

Other Europe2.1%

$532.4 Mm

US 40.4%

ROW 57.5%

OMX Exchanges2.1%

$917.7 Mm

Lithuania ESTONIA and Latvia are not included in 1998.



Share of World Stock Market Value:Central Europe Poland, Hungary, Slovenia

(Czech Republic and Slovakia do not report to the WFE.)

Note: See appendix at the end of this presentation for chart details.Source: World Federation of Stock Exchanges (WFE) and Cumberland Advisors. © Cumberland Advisors


US 43.0%

ROW53.5%

US 50%

ROW 49%

Central Europe0.1%

$23.4 MmUS

40.4%

ROW 59.2%

Central Europe0.3%

$147.8 Mm



Share of World Stock Market Value:Australia, New Zealand



US 43.0%

ROW53.5%

US 50.3%

ROW 48.3%

Australia, NZ1.4%

$353.4 Mm US

40.4%

ROW 57.6%

Australia, NZ2.0%

$893.5 Mm



Share of World Stock Market Value:Latin America

Argentina, Brazil, Chile, Colombia, Peru, Mexico



US 43.0%

ROW53.5%

US 51%

ROW 49%

Latin America1%

$359.7 Mm US

40.4%

ROW 57.1%

Latin America2.5%

$1,106.4 Mm



Conclusion

• Global economic / financial dialogue expanding

• Money is leaving the U.S. for foreign markets

• Risk premiums are low

• Watch out for shocks• Terrorism• Nuclear• Bird Flu• Protectionism


Appendix: Data Tables for Pie Charts (USD Bn)Chart Page 11 – World

1998 03/2006U.S. 12926177 17941481

Canada 547841 1620894

Asia 3785465 10099792

Europe 7853892 12481332

Latin America 359700 1106435

Other 210096 1134475

Chart Page 12 – Other Asia

1998 03/2006U.S. 12926177 17941481ROW 12109540 23334746Indonesia 647454 100204Iran 11115 33660Israel 39230 132338Korea 114593 751687Malaysia 95561 195397Philippines 34911 45363Sri Lanka 1705 6710Taiwan 260498 490433Thailand 34118 135276Turkey 33646 176561Singapore 96472 293961South Africa 150670 665626

Mauritius 2747Egypt 78221

Chart Page 16 – 25 EU Members

1998 03/2006U.S. 12926177 17941481ROW 5638574 15096272Denmark / OMX 98881 917774UK 2372738 3253372Sweden 278708 OMXSlovenia 2985 8192Poland 20461 104855Netherlands 603182 EuronextGreece 80126 169827Belgium 245657 EuronextGermany 1093962 1399555Finland 154833 OMXIreland 66593 127498Italy 569732 896506Portugal 62954 EuronextLuxembourg 38182 59115France 991484 EuronextSpain 402163 1094120

Austria 35779 150505

Cyprus 9355Hungary 34718.9Malta 5487Euronext 3115780

Chart Page 17 – 11 EMU Members

1998 03/2006U.S. 12926177 17941481ROW 8492473 19599851Netherlands 603182 Euronext

Belgium 245657 Euronext

Germany 1093962 1399555Finland / OMX 154833 917774Ireland 66593 127498Italy 569732 896506Portugal 62954 Euronext

Luxembourg 38182 59115France 991484 Euronext

Spain 402163 1094120Austria 35779 150505Euronext 3115780

Note:Euronext includes Belgium, France, Netherlands and Portugal.OMX Exchanges include Denmark, Finland, Sweden, Estonia, Lithuania, and Latvia.


Appendix: Data Tables - Pie Charts (USD Bn)

Chart Page 27 – Latin America

1998 03/2006

U.S. 12926177 17941481

ROW 12397295 25336496

Argentina 45333 46962

Brazil 160886 583354

Chile 51866 143251

Colombia 57948Peru 9869 23310

Mexico 91746 251611

Chart Page 22 – Euronext1998 03/2006

U.S. 12926177 17941481ROW 10853717 23327148France 991484 Euronext

Portugal 62954 Euronext

Belgium 245657 Euronext

Netherlands 603182 Euronext

Euronext 3115780

Chart Page 23 – Other Europe1998 03/2006

U.S. 12926177 17941481ROW 11130611 25525155Denmark 98881 OMX

Finland 154833 OMX

Sweden 278708 OMX

OMX Exchanges 917774

Chart Page 24 – Central Europe1998 03/2006

US 12926177 17941481

ROW 12697769 26295163

Slovenia 2985 8192

SlovakiaPoland 20461 104855

Hungary 34719

Czech Rep.

Note:Euronext includes Belgium, France, Netherlands and Portugal.OMX Exchanges include Denmark, Finland, Sweden, Lithuania, and Latvia.


About Cumberland AdvisorsCumberland Advisors supervises approximately $820 million in separate account assets for individuals, institutions, retirement plans, government entities, and cash management portfolios. Cumberland manages portfolios for clients in 39 states, the District of Columbia, and in countries outside the U.S. Cumberland Advisors is an SEC registered investment adviser.

Munis, Taxables, ETFs Cumberland’s portfolio management efforts emphasize long lasting relationships and continuous dialogue among clients, their consultants, tax advisors, accountants, estate planners and their assigned portfolio management contact at Cumberland. Cumberland offers several different investment portfolio management styles. Our investment strategy is described in detail on our web site.

Fixed IncomeAll of our fixed-income offerings are total return strategies, but can take the client’s current income needs into consideration. Our fixed income styles are Tax-Free Municipal Bonds, Taxable Bonds, Tax-Free Tobacco Bonds, and Short Term Investment Program.

StocksCumberland uses Exchange-Traded Funds to manage global equities. Exchange-Traded Funds (ETFs) are securities that mimic the price performance and dividend yield of an index, or a basket, of securities. Cumberland uses ETFs as building blocks in crafting a portfolio, investing in attractive equity sectors, industries, market capitalization strata, styles and regions. Our equity portfolios are U.S. Exchange-Traded Funds (ETF) Equity, International Exchange-Traded Funds (ETF) Equity, Emerging Markets Exchange Traded Funds, and Global Multi-Asset Class Exchange Traded Funds.

Balanced AccountsCumberland can blend the strategies presented above to create a balanced mix of stocks and bonds.

For further information about Cumberland Advisors, please visit our website at www.cumber.com.

Seated (L to R): Maribel Echevarria, VP of Trading; Terri Pantalione, VP of Compliance; Daisy Lopez, VP of Operations. Standing (L to R): David Kotok, Chairman and Chief Investment Officer; John Mousseau, CFA, VP and Portfolio Manager; Matthew Forester, VP and Portfolio Manager; Bill Witherell, VP and Chief Global Economist; Sam Santiago, VP of Information Technology; Peter Demirali, VP and Portfolio Manager. Donna Sooy, VP of New Accounts, not pictured.

http://www.cumber.com/

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