CEDARWINDS MODEL PORTFOLIO DISCLOSURE INFORMATION
Cedarwinds Investment Management, LLC, a SEC registered investment adviser, was incorporated in March 2004 and established its first independent client investments in 2004. Performance data shown represents hypothetical, time-weighted results of Cedarwinds’ model portfolios. All model portfolios have been designed to seek certain risk-return relationships. The Strategic and Target model portfolios have been constructed using a blend of up to 16 underlying mutual funds managed by Dimensional Fund Advisors (DFA), Austin TX. The Tactical model portfolio has been constructed using a blend of underlying exchange-traded funds (ETFs) managed by BlackRock (www.blackrock.com), under the “iShares” trademark, and Vanguard (www.vanguard.com).
The underlying fund composition and weightings used in our Strategic Core model portfolios generally reflect the asset allocation strategy used in portfolio models developed by DFA beginning in 1993. In 2010 and 2011, certain modifications were made to the fund weightings used in our strategic asset allocation models. The underlying fund composition and weightings used in our Target model portfolios were developed by Cedarwinds in 2004, shortly after the firm’s inception. The underlying iShares fund composition and weightings used in our Tactical portfolio were developed by Cedarwinds in 2009. In 2010, a stop-loss strategy was instituted in the Tactical portfolio.
In all cases, model portfolios have been developed with the benefit of hindsight using back-tested performance results. Back-tested performance is a hypothetical reconstruction based on historical market data accumulated after the end of a given time period. With respect to the historical model portfolio performance data presented by Cedarwinds prior to the firm’s formation, performance results reflect what would have hypothetically occurred during periods had the firm been managing accounts. This hypothetical performance record is merely a reflection of what worked in the past, a representation made with the benefit of hindsight.
Along with live data, simulated data has been used for performance reporting periods prior to the inception date of the underlying mutual funds and exchange traded funds used in the construction of the model portfolios. Simulated index data is based on the performance of indexes that are representative of the DFA mutual funds and exchange traded funds used in the Cedarwinds’ model portfolios. Simulated performance does not represent actual performance and should not be construed as an indication of such performance. The simulated performance results do not represent the impact that material economic and market factors might have had on the fund management decision-making process compared to the fund manager actually managing client money during that period. Simulated performance also differs from actual performance because it is achieved through the retroactive application of a strategy designed with the benefit of hindsight.
Performance results for clients that invested in accordance with the model index portfolios will vary from the simulated performance data due to market conditions and other factors, including client objectives, investment cash flows, size and timing of mutual fund and exchange traded fund allocations, trading costs, frequency and precision of rebalancing and reconstitution, tax-management strategies, cash balances, varying custodian fees, and/or the timing of fee deductions. The net compounded impact of the deduction of Cedarwinds’ fees over time will be affected by the amount of the fees, the time period and investment performance. These and other factors may materially influence performance results and therefore actual client performance for any portfolio would only match model performance by coincidence. Actual performance for client accounts may be materially lower or higher than that of the model portfolios. Clients should consult their account statements for information about how their actual performance compares to that of the model portfolios.
Indexes and simulated data used prior to portfolio inception date do not reflect deduction of DFA, iShares or Vanguard fees, trading and other expenses. Average annual total returns of live data at the underlying fund level are net of DFA, iShares and Vanguard fees and include reinvestment of dividends and capital gains. For the Strategic and Target model portfolios, historical performance results reflect the deduction of Cedarwinds’ standard annual investment management fee of 40 basis points. For the Tactical model portfolio, historical performance results reflect the deduction of Cedarwinds’ annual advisor fees of 100 basis points. In all cases, monthly fee deduction is a requirement of our software used for back-testing, however, actual fees are deducted quarterly, in advance. Depending on the size of client assets under management or account type, the investment management fees may be less. Transaction costs and account maintenance charges are not considered. When used for comparison purposes, it should be noted that the composition and variability of the S&P 500 and the MSCI All Country World Index, both unmanaged market-value weighted indices, and the composition and volatility of the models managed by Cedarwinds are materially different. Simulated and live performance data reflect annual rebalancing for the Strategic and Target model portfolios. For the Tactical model portfolio, simulated and live performance data reflect monthly reconstitution. Results have not been audited or reviewed by any third party.
As with any investment strategy, there is potential for profit as well as the possibility of loss. Asset allocation does not ensure a profit or guarantee against a loss. Cedarwinds does not guarantee any minimum level of investment performance or the success of any index portfolio or investment strategy. All investments involve risk and investment recommendations will not always be profitable. Past performance is no guarantee of future results and current performance may be higher or lower than the performance shown. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Please contact Cedarwinds Investment Management (firstname.lastname@example.org) for additional information on fund and portfolio performance results, data sources and descriptions, fund prospectus and fees