ANALYTICS
DISCLOSURE STATEMENT FOR MEMBERS
OF THE PUBLIC
CLARIFICATION OF PERFORMANCE DATA
The following hypothetical illustrations of past performance of two
types of diversified portfolios were created to indicate the differences
in results which might have been obtained as a function of different investment
objectives and risk tolerances. These results are not intended to be representative
of what an actual client of Glenn Woody Financial Consultants would have
achieved in this time period.
These studies are known as back tests. They make and use assumptions
which are held constant over the time period tested. In these cases, it
has been assumed that the current asset mix would have been held constant
by rebalancing the mix each month. In practice, GWFC would rebalance much
less frequently. GWFC's actual shifts would be to increase proportions
held in undervalued asset classes and to decrease proportions of overvalued
assets. If such changes are done correctly, they could increase portfolio
performance; if not, they could reduce returns.
CHART EXPLANATION
The upper chart contains two lines. They each represent the result of
hypothetical investments of $100 on 6-30-86 in the S & P 500 stock
index and in a fund of funds selected and rebalanced monthly by our management
(see the explanatory notes in the preceding disclosure statement and in
the following "clarification"...pages). For example, the lines
show what the values would have been as of each month end from 6-30-86
through 3-31-96. The Defensive portfolio would have grown at a compound
annual rate of 10.5% over this 93/4 year period, 3 .2% less than the growth
of the S & P 500 stock index. The Growth portfolio had a compound annual
growth rate of 11.7%.
The lower charts measure the responsiveness of the respective portfolios
to the moves of the S & P 500 index in months during which the index
either went up or went down. The sensitivity in each direction is calculated
as a percent of the S & P 500 using separate up months and, in the
bottom chart, separate down months. On average, over the total time period,
the Defensive portfolio would have captured 55% of the upside moves of
the index while only participating in 31% of the downside. These data show
that the fund had an upside/downside ration of 1.8 (55%/31%). The Growth
portfolio had an upside/downside ratio of 1.4 (68%/48%).
These characteristics would indicate that the funds each had achieved
the goal of participating with the S & P over the long-term, while
being relatively defensive during short-term declines in the stock market.
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