SIERRA'S 
HIGH YIELD CORPORATE BOND PROGRAM PERFORMANCE INFORMATION

Many investors have investment goals — including risk constraints — that tend to limit their choices to Certificates of Deposit, Treasuries, money-market accounts and muni bonds, which in recent years have not been very productive (see first column in the table below). Yet far better returns are available in diversified, HYCB bond funds such as Kemper High Yield.

Sierra’s HYCB Program offers a professionally-selected portfolio diversified among several of the best-performing no-load HYCB funds, plus our proven risk-management disciplines. Even though Kemper High Yield was a top choice for many years, there are now over 100 High-Yield Corporate Bonds funds to choose from. As you can see from the final column in the table below, our more recent HYCB fund choices — with our daily monitoring and Risk-limiting TechniquesSM — offer an excellent approach for the conservative investor.

YEAR

 SCUDDER MONEY MARKET FRANKLIN U.S. GOV'T SECS SCUDDER HIGH INCOME SCUDDER HI INCOME W/TIMING** HYCB PROGRAM***
1978 7.5% -1.0% 0.1% 2.2% —
1979 10.8% 0.4% 2.4% 11.4% —
1980 12.6% -12.6% -0.9% 17.8% —
1981 16.4% 6.7% 8.7% 21.6% —
1982 12.6% 33.3% 39.5% 38.2% —
1983 8.9% 9.3% 17.7% 20.3% —
1984 10.1% 12.9% 10.2% 13.9% —
1985 7.8% 19.9% 23.1% 21.5% —
1986 6.5% 10.5% 18.3% 14.8% —
1987 6.4% 4.3% 9.0% 11.5% —
1988 7.3% 7.3% 14.4% 12.6% —
1989 8.9% 12.7% -1.1% 1.9% —
1990 7.9% 10.3% -13.0% 9.9% —
1991 5.9% 14.0% 46.8% 38.6% —
1992 3.4% 7.3% 17.1% 14.9% —
1993 2.8% 6.9% 20.3% 18.4% —
1994 3.9% -2.7% -1.7% -0.9% —
1995 5.5% 16.7% 17.5% 15.5% 15.3%
1996 5.1% 4.6% 13.5% 10.5% 13.5%
1997 5.6% 9.5% 11.5% 9.6% 13.7%
1998 5.3% 6.6% 1.3% 9.2% 8.2%
1999 5.0% 0.8% 2.4% 3.0% 7.4%
2000 6.3% 10.6% -9.2% -1.9% 3.9%
2001 3.9% 7.7% 3.6% 1.5% 3.7%
2002 1.5% 8.6% -1.0%  4.7% 11.4%
2003 0.8% 1.8% 25.0% 21.6% 29.4%.
2004 1.0% 3.8% 12.3% 10.9% 5.0%.
2005 3.9% 2.8% 4.0% 3.3% 3.5%.
LATEST 28 YRS +481.8% +621.0% +1230.9% +2484.1% N/A
CRR* +6.5% +7.3% +9.7% +12.3% N/A

 

* Compounded Rate of Return:  the equivilant smooth rte which would compound to the same final gain
** After fees.  Periods prior to 3/86 are hypothetical (backtested)
*** Several selected HYCB funds, after timing and fees.  Periods prior to 12/98 are hypothetical (backtested):  although some HYCB funds used by Sierra in actual accounts had comparable results, Sierra did not have any actual managed accounts using this particular portfolio until 12/98

    To see a comparison graph of the most recent ten years, click here.

Cautions and Limitations

While Sierra believes that our investment strategy in general – and our Defensive Timing discipline in particular – can reduce the impact of sustained market declines and provide other benefits over periods of 18 months or more, there will be intervals when any given timing system will underperform a buy-and-hold strategy. Past performance of a particular fund or timing system, such as those used by Sierra, is no guarantee of future performance, particularly over periods shorter than 18 months.

Periods prior to 12/98 are hypothetical (backtested): although some HYCB funds used by Sierra in actual accounts had comparable results, Sierra did not have any actual managed accounts using this particular portfolio until 12/98.

The hypothetical data for the period prior to 12/98 represent actual results for some HYCB funds, with Sierra's timing, and hypothetical (backtested) results for other HYCB funds, using the same timing formula.  The funds used for the backtesting were those selected in June 1998 to be used in the HYCB Program as of then, since there is no clear way to know which HYCB funds Sierra would have chosen in those prior years; and in fact Sierra "upgraded" some of the fund choices when actual accounts were started in December 1998.  Such upgrades are made from time to time in actual accounts when a fund changes managers or its performance otherwise begins to lag the peer group.

Cautions regarding backtested (hypothetical) performance: A portion of the attached performance data is backtested (hypothetical), so please note the following cautions (based on SEC requirements):

(a)    Performance does not represent actual account performance, and should not be interpreted as an indication of such performance.  (b) There is no assurance that these backtested results could, or would, have been achieved by Sierra had it been in business during the years presented.  (c) The backtested portion of the performance data does not represent the impact that material economic and market factors might have on an investment advisor's decision-making if the advisor were actually managing clients' money.  (d) The SEC mandates that we state: The investment strategy that the backtested results were based upon can (theoretically) be changed at any time with the benefit of hindsight in order to show better backtested performance, and (theoretically) the strategy can continue to be tested and adjusted until the desired results are achieved.  Please note that at Sierra, no such "data fitting" adjustments have in fact been made.

Other information: Performance for the first three columns comes from the fund companies and/or industry sources such as Morningstar.  Performance for the last two columns (except as noted above as to backtested periods) comes from actual managed accounts at Sierra Ύ or its predecessor California Fund Timing Service -- either by selecting an account which we believe to reflect typical results (a "marker account") for that period, or by averaging all actual accounts in the Program.

All performance results are presented on a Total Return basis, that is, assuming the reinvestment of fund dividends and other distributions.  Results in your account, of course, will be impacted if you add or withdraw significant amounts during a given period.

 

SIERRA INVESTMENT MANAGEMENT, INC.
3420 OCEAN PARK BOULEVARD, SUITE 3060
SANTA MONICA, CA 90405
310/452-1887   800/729-1467   FAX 310/452-2680

Click here to write to us: Info@SierraInvestment.com