610 KIEWIT PLAZA OMAHA, NEBRASKA 68131 January 25, 1967 The First Decade The Partnership had its tenth anniversary during 1966. The celebration was appropriate -an all-time record (both past and future) was established for our performance margin relative to the Dow. Our advantage was 36 points which resulted from a plus 20.4% for the Partnership and a minus 15.6% for the Dow. This pleasant but non-repeatable experience was partially due to a lackluster performance by the Dow. Virtually all investment managers outperformed it during the year. The Dow is weighted by the dollar price of the thirty stocks involved. Several of the highest priced components, which thereby carry disproportionate weight (Dupont, General Motors), were particularly poor performers in 1966. This, coupled with the general aversion to conventional blue chips, caused the Dow to suffer relative to general investment experience, particularly during the last quarter. The following summarizes the year-by-year performance of the Dow, the performance of the Partnership before allocation (one quarter of the excess over 6%) to the general partner, and the results for limited partners: Year Overall Results From Dow (1) Partnership Results (2) Limited Partners’ Results (3) 1957 -8.4% 10.4% 9.3% 1958 38.5% 40.9% 32.2% 1959 20.0% 25.9% 20.9% 1960 -6.2% 22.8% 18.6% 1961 22.4% 45.9% 35.9% 1962 -7.6% 13.9% 11.9% 1963 20.6% 38.7% 30.5% 1964 18.7% 27.8% 22.3% 1965 14.2% 47.2% 36.9% 1966 -15.6% 20.4% 16.8% Cumulative Results 141.1% 1028.7% 641.5% Annual Compounded Rate 9.7% 29.0% 23.5% (1) Based on yearly changes in the value of the Dow plus dividends that would have been received through ownership of the Dow during that year. The table includes all complete years of partnership activity. (2) For 1957-61 consists of combined results of all predecessor limited partnerships operating throughout the entire year after all expenses, but before distributions to partners or allocations to the general partner. (3) For 1957-61 computed on the basis of the preceding column of partnership results allowing for allocation to the general partner based upon the present partnership agreement. but before monthly withdrawals by limited partners. On a cumulative or compounded basis, the results are: Year Overall Results From Dow Partnership Results Limited Partners’ Results 1957 -8.4% 10.4% 9.3% 1957 – 58 26.9% 55.6% 44.5% 1957 – 59 52.3% 95.9% 74.7% 1957 – 60 42.9% 140.6% 107.2% 1957 – 61 74.9% 251.0% 181.6% 1957 – 62 61.6% 299.8% 215.1% 1957 – 63 95.1% 454.5% 311.2% 1957 – 64 131.3% 608.7% 402.9% 1957 – 65 164.1% 943.2% 588.5% 1957 – 66 122.9% 1156.0% 704.2% Annual Compounded Rate 11.4% 29.8% 23.9% Investment Companies On the following page is the usual tabulation showing the results of the two largest open-end investment companies (mutual funds) that follow a policy of being, typically, 95-100% invested in common stocks, and the two largest diversified closed-end investment companies.
Year Mass. Inv. Trust (1) Investors Stock (1) Lehman (2) Tri-Cont (2) Dow Limited Partners 1957 -11.4% -12.4% -11.4% -2.4% -8.4% 9.3% 1958 42.7% 47.5% 40.8% 33.2% 38.5% 32.2% 1959 9.0% 10.3% 8.1% 8.4% 20.0% 20.9% 1960 -1.0% -0.6% 2.5% 2.8% -6.2% 18.6% 1961 25.6% 24.9% 23.6% 22.5% 22.4% 35.9% 1962 -9.8% -13.4% -14.4% -10.0% -7.6% 11.9% 1963 20.0% 16.5% 23.7% 18.3% 20.6% 30.5% 1964 15.9% 14.3% 13.6% 12.6% 18.7% 22.3% 1965 10.2% 9.8% 19.0% 10.7% 14.2% 36.9% 1966 -7.7% -10.0% -2.6% -6.9% -15.6% 16.8% Cumulative Results 118.1% 106.3% 142.8% 126.9% 141.1% 641.5% Annual Compounded Rate 8.6% 7.9% 9.8% 9.0% 9.7% 23.5% (1) Computed from changes in asset value plus any distributions to holders of record during year. (2) From 1966 Moody's Bank & Finance Manual for 1957-1965. Estimated for 1966. These investment company performance figures have been regularly reported here to show that the now is no patsy as an investment standard. It should again be emphasized that the companies were not selected on the basis of comparability to