The Model or The Endowment Model. The performance information shows the performance of a sample portfolio (“Model”) for the period January 1999 to December 2015 (“Period”). This portfolio was designed to be used for comparison purposes. During the period the investments in the Model consist of the Barclays US Aggregate Bond Index (30%), Russell 3000 (35%), MSCI ACWI ex US (20%), Alternatives (20%), Bloomberg Commodity Index (3%), and Dow Jones US Select Real Estate (2%). The Model does not use leverage. The performance results shown assume reinvestment of all income and are net of fees.
The KDI Financial Roadmap Model. The performance information shows the performance of the KDI Financial Roadmap Model (“Roadmap Model”) for the period January 1999 to December 2015 (“Period”). The Roadmap Model reflects the Roadmap strategy managed by KDI Capital Partners, LLC (“Advisor”). This strategy utilizes a balanced process. This process offers a balanced portfolio of safer assets (Treasuries, CD’s and Bonds), market risk assets (ETF’s) and counterweight investments (active equity management). Investments in the Roadmap Model consist primarily of bonds, exchange-traded funds, and common stocks. During the period, the Roadmap Model was generally comprised of U.S. Large Cap, U.S. Mid Cap, U.S. Small Cap, Bonds and ETF’s. The Model does not use leverage. The Roadmap Model illustrated consists of 30% Bonds, 30% U.S. ETF’s, 20% International ETF’s and 20% in KDI’s Concentrated Equities Strategy. A 1% manager fee is assumed on the Concentrated Equities portion, which is the highest fee the Advisor is currently changing, a .20% manager fee for the Bonds, and a .10% advisory fee and .20% manager fee charged for ETF’s . Returns were calculated using a time-weighted rate of return, and accrual accounting was used for all dividend income. All performance results reflect the deduction of trading costs (e.g., commission) and the reinvestment of dividends.
Model Limitations. The performance shown does not represent actual trading, but represents the results of a hypothetical portfolio managed by Advisor using the Model and Roadmap Model investment strategies discussed above. The results are subject to imitations inherent in the use of models, including, without limitation, that the results: (i) do not reflect the potential adverse impact of additions, distributions and redemptions in an account; (ii) do not reflect potential adverse effects of delays in implementation of investment recommendations due to market conditions, administrative difficulties, or limited trading liquidity; and (iii) do not reflect deviations from the Model and Roadmap Model strategies for individual accounts due to individual investment objectives, financial circumstances, tax considerations, liquidity needs or other issues. The Model and Roadmap Model are rebalanced as necessary. As a result of the foregoing, Model and Roadmap Model performance may have been different had the Advisor been managing an actual portfolio during the Period, and individual investor performance may have deviated from the Model and Roadmap Model results shown.
Index Comparison. The performance of the various indexes shown are presented along with the performance of the KDI Performance for comparative purposes. The S&P 500 ® Index is an unmanaged readily available, carefully constructed, market-value-weighted benchmark of common stock performance from Standard & Poors. Market-value-weighted means that the weight of each stock in the index, for a given month, is proportionate to its market capitalization (price times the number of shares outstanding) at the beginning of that month. Currently, the S&P ® Composite includes 500 of the largest stocks (in terms of stock market value) in the United States. It is not possible to invest in the S&P 500 ® Index, which is unmanaged and does not incur fees and charges.
The Russell 3000® Index is an unmanaged index produced by Russell Investments that measures the performance of 3,000 publicly held US companies. It is not possible to invest in the Russell 3000® Index, which is unmanaged and does not incur fees and charges.
The Barclays Capital Aggregate Bond Index is a market capitalization weighted index, meaning the securities in the index are weighted according to the market size of each bond type. Most U.S. traded investment grade bonds are represented. Municipal bonds and Treasury Inflation-Protected Securities are excluded, due to tax treatment issues. The index includes Treasury securities, Government agency bonds, Mortgage-backed bonds, Corporate bonds, and a small amount of foreign bonds traded in the U.S.
The HFRI Hedge Fund of Funds Composite (HFRI) are equally weighted performance indexes, utilized by numerous hedge fund managers as a benchmark for their own hedge funds. The HFRI are broken down into 4 main strategies, each with multiple substrategies. All single-manager HFRI Index constituents are included in the HFRI Fund Weighted Composite, which accounts for over 2200 funds listed on the internal HFR Database. There are 500 constituents included in the HFRI Fund of Funds Composite. All numbers are net of fees. Due to mutual agreements with the hedge fund managers listed in the HFR Database, we are not at liberty to disclose the particular funds behind any index to non-database subscribers.
The Bloomberg Commodity Index (BCOM) is a broadly diversified commodity price index distributed by Bloomberg Indexes. The BCOM tracks prices of future contracts on physical commodities on the commodity markets. The index is designed to minimize concentration in any one commodity or sector. It currently has 22 commodity futures in seven sectors. No one commodity can compose less than 2% or more than 15% of the index, and no sector can represent more than 33% of the index (as of the annual weightings of the components). The weightings for each commodity included in BCOM are calculated in accordance with rules that ensure that the relative proportion of each of the underlying individual commodities reflects its global economic significance and market liquidity. Annual rebalancing and reweighting ensure that diversity is maintained over time.
The MSCI ACWI ex U.S. Index captures large and mid-cap representation across 22 of 23 Developed Markets (DM) countries (excluding the US) and 23 Emerging Markets (EM) countries*. With 1,856 constituents, the index covers approximately 85% of the global equity opportunity set outside the US.
The Dow Jones U.S. Select Real Estate Index Securities Index is designed to measure the performance of publicly traded real estate securities. The index is designed to serve as a proxy for direct real estate investment, in part by excluding companies whose performance may be driven by factors other than the value of real estate. The Dow Jones U.S. Select Real Estate Securities Index (RESI) represents equity real estate investment trusts (REITs) and real estate operating companies (REOCs) traded globally.
Other Information. Past performance is not necessarily indicative of future results. Individual investor performance may be different than the performance results shown. Individual investors may have different investment objectives, financial circumstances, tax consideration, liquidity needs and other individual needs, each of which can affect an investor’s performance. All investments are subject to risk, and investing in accordance with any KDI Strategy or model strategy, like all investments, may lose money. An investment with KDI may be more volatile than an Index. There is no guarantee that any KDI Strategy will be successful. The KDI Strategies may not be suitable for each potential investor. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. This is not to be considered as an offer to buy or sell any financial instruments. Additional information regarding policies for calculating and reporting returns is available upon request. The information in this presentation is subject to change. KDI reserves the right to revise the KDI Strategies at any time without prior notice.