BI > MAY 2006

Annual Opportunity To Benchmark Your Club's Performance

Portfolio Diversification Is a Key Criterion

BetterInvesting's annual Investment Club Performance Survey, a traditional survey of investment performance that dates to 1960, is an opportunity for participants to gauge the annual and lifetime rates of return for their investment clubs.

The survey is also an opportunity for participants to benchmark against the S&P 500 index and the records of other investment clubs in the same state. Results, which are shown on a certificate (see sample certificate) sent to every club participating in the survey, cover both the 12-month period ending April 30, 2006, and the lifetime of the club.

Top-performing clubs also receive national and state honors -- and perhaps some attention in their local newspapers.

280 Clubs Participated Last Year

Last year more than 280 clubs participated in the survey, representing about 1.7 percent of all BetterInvesting clubs. In hopes of encouraging strong participation, the cost of entering the survey remains at last year's low rate of $4.

"We would like to encourage as many clubs as possible to take advantage of this special once-a-year offer we make to measure and compare their club's track record," says Kenneth S. Janke, Sr., chairman of NAIC's Board of Trustees. "To double in value every five years, a club has to earn a compound annual return of 14.9 percent. Clubs that take part in this survey will see not only how they compare to this benchmark, but also how their performance compares with other clubs."

Performance Awards

Other advantages to participation are prizes and recognition awarded to selected clubs. These awards are based on several criteria, including lifetime performance relative to the S&P 500 benchmark, length of time a club has been in existence, portfolio size and diversification. The portfolio is evaluated for overall quality and for diversification by industry and size.

In other words, results aren't everything. Last year, for example, some clubs had excellent results but lacked what judges deemed a proper amount of diversification.

The top prize will be payment of up to $1,200 in expenses for the winning club to attend a BetterInvesting national, regional or local event.

The clubs with the strongest (and longest) lifetime performance are featured in an Honor Roll published in BetterInvesting. State winners also receive special recognition.

To participate, a club must complete the club performance summary form that appears on the following pages and mail it -- along with a check for $4 and a copy of the club's valuation statement closest to April 30, 2006 -- to the address on the form.

"Your club's earnings over the past year and over its lifetime will be calculated from the information you present," Janke says. "We have done our best to design the form so that it's easy to complete, yet complete enough to give us the information we need to calculate your actual results, using professionally accepted methods."

An internal rate-of-return calculation is used, taking into account both the amounts and timing of cash flows. We hope to mail certificates about 10 weeks after the June 9 deadline. Individual club results will be kept totally confidential, but we reserve the right to publish names of the top clubs.