610 KIEWIT PLAZA OMAHA, NEBRASKA 68131 January 24, 1968 Our Performance in 1967 By most standards, we had a good year in 1967. Our overall performance was plus 35.9% compared to plus 19.0% for the Dow, thus surpassing our previous objective of performance ten points superior to the Dow. Our overall gain was $19,384,250 which, even under accelerating inflation, will buy a lot of Pepsi. And, due to the sale of some longstanding large positions in marketable securities, we had realized taxable income of $27,376,667 which has nothing to do with 1967 performance but should give all of you a feeling of vigorous participation in The Great Society on April 15th. The minor thrills described above are tempered by any close observation of what really took place in the stock market during 1967. Probably a greater percentage of participants in the securities markets did substantially better than the Dow last year than in virtually any year in history. In 1967, for many, it rained gold and it paid to be out playing the bass tuba. I don't have a final tabulation at this time but my guess is that at least 95% of investment companies following a common stock program achieved better results than the Dow - in many cases by very substantial amounts. It was a year when profits achieved were in inverse proportion to age - and I am in the geriatric ward, philosophically. The following summarizes the year-by-year performance of the Dow, 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% 1967 19.0% 35.9% 28.4% (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% 1957 – 67 165.3% 1606.9% 932.6% Annual Compounded Rate 9.3% 29.4% 23.6% Investment Companies On the following page is the usual tabulation showing the results of what were the two largest mutual funds (they have stood at the top in size since BPL was formed - this year, however, Dreyfus Fund overtook them) 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% 1967 20.0% 22.8% 28.0% 25.4% 19.0% 28.4% Cumulative Results 162.3% 147.6% 206.2% 181.5% 165.3% 932.6% Annual Compounded Rate 9.2% 8.6% 10.7% 9.9% 9.3% 23.6% (1) Computed from changes in asset value plus any distributions to holders of record during year. (2) From 1967 Moody's Bank & Finance Manual for 1957-1966. Estimated for 1967. Last year I said: “A few mutual funds and some private investment operations have compiled records vastly superior to the Dow and, in some cases, substantially superior to