Core Canadian Dividend Trust [cdd.un] Management Report of Fund Performance A new index, S&P/TSX VIX Index (“VIXC”), was released this year to track the volatility of the S&P/TSX 60 Index. Like the Chicago Board Options Exchange Volatility Index (“VIX”), its counterpart in the U.S., the VIXC was in decline entering 2010. Volatility jumped towards the end of the first quarter after surprisingly weak employment report and concerns over debt levels in many European countries. Going forward, the VIXC will be a better proxy than the VIX for the volatility of securities within the Fund. During the course of the year, volatility reached its peak in the middle of May before gradually decreasing with intermittent spikes towards the end of the year. The Manager took advantage of the spikes in volatility by increasing the overwriting activity in the months of February, June, and September. The Fund ended the year with calls overwritten on approximately 5 percent of the notional value of the Fund versus an average level of 8 percent for the year. The gross premium from overwriting contributed approximately 1 percent to the return of the Fund. The Fund was positioned very defensively during the summer before becoming more invested by fall. The Manager purchased put protection during the summer when expectations were particularly uncertain, which proved to be unnecessary as the market moved meaningfully higher for most of the second half of 2010. The put protection negatively impacted the return of the Fund by approximately 55 basis points. The outlook for 2011 is cautiously optimistic for Canadian equities and therefore the Fund had no put protection at year-end. Related Party Transactions The manager and investment manager of the Fund is MCM (“Manager “ or “Investment Manager”). MCM became the Manager of the Fund on September 1, 2010 as successor by amalgamation with Mulvihill Fund Services Inc. MCM manages the Fund’s investment portfolio in a manner consistent with the investment objectives, strategy and criteria of the Fund pursuant to an Investment Management Agreement made between the Fund and MCM dated October 27, 2006. MCM is the Manager of the Fund pursuant to a Management Agreement made between the Fund and MCM dated October 27, 2006, and as such, is responsible for providing or arranging for required administrative services to the Fund. MCM is paid the fees described under the Management Fees section of this report. Independent Review Committee National Instrument 81-107 - Independent Review Committee for Investment Funds (“NI 81-107”). NI 81-107 requires all publicly offered investment funds to establish an independent review committee (“IRC”) to whom the Manager must refer conflict of interest matters for review or approval. NI 81-107 also imposes obligations upon the Manager to establish written policies and procedures for dealing with conflict of interest matters, maintaining records in respect of these matters and providing assistance to the IRC in carrying out its functions. Members of the IRC are Robert W. Korthals, Michael M. Koerner and Robert G. Bertram. We confirm the Fund did not rely on any approvals or recommendations of the IRC concerning related party transactions during the year. Forward-Looking Statements This report may contain forward-looking statements about the Fund. Forward-looking statements include statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “estimates” or negative versions thereof and similar expressions. In addition, any statement that may be made concerning future performance, strategies or prospects, and possible future Fund action, is also forward-looking. Forward-looking statements are based on current expectations and projections about future events and are inherently subject to, among other things, risks, uncertainties and assumptions about the Fund and economic factors. Forward-looking statements are not guarantees of future performance, and actual events and results could differ materially from those expressed or implied in any forward-looking statements made by the Fund. Any number of important factors could contribute to any divergence between what is anticipated and what actually occurs, including, but not limited to, general economic, political and market factors, interest and foreign exchange rates, global equity and capital markets, business competition, technology change, changes in government regulations, unexpected judicial or regulatory proceedings, and catastrophic events. The above-mentioned list of important factors is not exhaustive. You should consider these and other factors carefully before making any investment decisions and you should avoid placing undue reliance on forward-looking statements. While the Fund currently anticipates that subsequent events and developments may cause the Fund’s views to change, the Fund does not undertake to update any forwardlooking statements. Annual Report 2010 7