January 24, 1962 Our Performance in 1961 I have consistently told partners that it is my expectation and hope (it's always hard to tell which is which) that we will do relatively well compared to the general market in down or static markets, but that we may not look so good in advancing markets. In strongly advancing markets I expect to have real difficulty keeping up with the general market. Although 1961 was certainly a good year for the general market, and in addition, a very good year for us on both an absolute and relative basis, the expectations in the previous paragraph remain unchanged. During 1961, the general market as measured by the Dow-Jones Industrial Average (hereinafter called the “Dow”) showed an over-all gain of 22.2% including dividends received through ownership of the Dow. The gain for all partnerships operating throughout the entire year, after all expenses of operation, but before payments to limited partners or accrual to the general partner, averaged 45.9%. The details of this gain by partnership are shown in the appendix along with results for the partnerships started during the year. We have now completed five full years of partnership operation, and the results of these five years are shown below on a year-by-year basis and also on a cumulative or compounded basis. These results are stated on the basis described in the preceding paragraph; after expenses, but before division of gains among partners or payments to partners. Year Partnerships Operating Entire Year Partnership Gain Dow-Jones Industrials Gain* 1957 3 10.4% -8.4% 1958 5 40.9% 38.5% 1959 6 25.9% 19.9% 1960 7 22.8% -6.3% 1961 7 45.9% 22.2% * Including dividends received through ownership of the Dow. On a compounded basis, the cumulative results have been: Year Partnership Gain Dow-Jones Industrials Gain 1957 10.4% -8.4% 1957-58 55.6% 26.9% 1057-59 95.9% 52.2% 1957-60 140.6% 42.6% 1957-61 251.0% 74.3% These results do not measure the gain to the limited partner, which of course, is the figure in which you are most interested. Because of the varying partnership arrangements that have existed in the past, I have used the over- all net gain (based on market values at the beginning and end of the year) to the partnership as being the fairest measure of over-all performance. On a pro-forma basis adjusted to the division of gains entailed in our present