Comparing Merit's 24.5 Years of High Yield Bond Returns with 2 Buy and Hold Strategies

Merit's results have been taken from audits by MoniResearch Corp.  In the early years our Buy and Sell signals were applied to the DWS High Income Fund (KHYAX).  In 1996, when Lipper began publishing its index of high yield funds, we began using it as a proxy for the high yield bond market.  All returns assume dividends and capital gains were reinvested.  Merit's results are net of a 1.6% annual management fee.  No provision was made for income taxes paid by non-qualified accounts.  Merit used several different bond funds in managing client accounts.  Some produced returns higher than those shown for the Lipper Index.  Some produced returns lower than those shown for the Lipper index.  The highest return of the three strategies for each year is in bold type.

Year S&P 500 Buy-Hold Lipper HY Buy-Hold Merit's HY Results
1987** -16.81% (6Mo) 1.51% (6Mo) 3.37% (6Mo)
1988** 16.61% 14.43% 12.68%
1989** 31.69% -1.17% 7.97%
1990** -3.10% -13.06% 12.98%
1991** 30.47% 46.98% 39.50%
1992** 7.62% 17.08% 14.37%
1993** 10.08% 20.32% 15.25%
1994** 1.32% -1.65% 5.30%
1995** 37.53% 17.55% 9.02%
1996 22.96% 12.98% 10.22%
1997 33.36% 13.17% 13.62%
1998 28.58% -0.07% 10.48%
1999 21.09% 4.78% 7.82%
2000 -9.10% -9.71% 2.14%
2001 -11.89% -1.04% 9.99%
2002 -22.10% -2.41% 9.50%
2003 28.68% 26.36% 25.27%
2004 10.88% 10.34% 9.65%
2005 4.91% 3.00% 3.92%
2006 15.79% 10.17% 9.01%
2007 5.49% 2.13% 4.67%
2008 -37.00% -28.84% -1.96%
2009 26.46% 49.49% 46.12%
2010 15.06% 14.91% 13.97%
2011 2.11% 2.85% 2.17%
2012 16.00%  15.44%  10.02% 

Average Annual Compounded Rates of Return for 26.5 Years

S&P 500 Buy-Hold Lipper HY Buy-Hold Merit's HY Results
8.55% 7.49% 11.37%

Comparing 10 years of Returns

Year S&P 500 Buy-Hold Lipper HY Buy-Hold Merit's HY Results
2003 28.68% 26.36% 25.27%
2004 10.88% 10.34% 9.65%
2005 4.91% 3.00% 3.92%
2006 15.79% 10.17% 9.01%
2007 5.49% 2.13% 4.67%
2008 -37.00% -28.84% -1.96%
2009 26.46% 49.49% 46.12%
2010 12.78%  14.91%  13.97% 
2011 2.11% 2.85%  2.17% 
2012  16.00%  15.44%  10.02% 

Average Annual Compounded Rates of Return for the 10-Year Period

S&P 500 Buy-Hold Lipper HY Buy-Hold Merit's HY Results
7.10% 8.90% 11.57%

**From 1987 to 1995, Merit results are from using the DWS High Income Fund. From 1996 to Present, Merit signals were applied to the Lipper High Yield Index of 30 high yield funds.  When not invested in high yield bonds, 90 day T-Bill returns were used. The use of the Lipper Index should not be construed as Lipper's endorsement of Merit's management service. Returns from Merit's high yield bond service are NOT BANK GUARANTEED, NOT FDIC INSURED and MAY LOSE MONEY. Before you invest, you should obtain and study the fund's prospectus. All investment strategies have the potential for profit or loss. Performance results are presented net of fees and reflect the reinvestment of dividends and capital gains. There are no assurances that any portfolio will match or outperform any particular benchmark. Investors cannot invest directly in Lipper's Indices. Therefore, actual client results varied from the performance shown in this report. Please see additional disclosures.