 |
as of December 31, 2005 |
| International Portfolio |
| Investment Management Team |
|
|
| Investment Philosophy and
Approach |
- Bottom-up stock selection
- In-depth, independent fundamental research
- High-quality companies with sustainable competitive advantages
- Disciplined valuation approach applying multiple valuation measures
- Long-term vision, resulting in low portfolio turnover
|
| Defining Characteristics |
- Seek to outperform the MSCI EAFE® Index at comparable
market risk
- Focus on global competitors headquartered in developed markets
outside the U.S.
- Manage risk through diversification of geographic sales and
earnings sources
- Structure portfolios for higher quality, superior growth,
and better value
|
| Investment Process |
| Screening |
|
We screen a broad universe of 5,000 companies for the following
criteria:
|
- Strong, consistent growth
- Low-debt balance sheet
|
|
- High profitability
- Rising free cash flow
|
| Fundamental Research |
|
Fundamental research process:
|
|
Develop independent conviction in:
|
- Qualitative industry and business assessment
- Financial analysis
- Valuation modeling
|
|
- Sustainability of competitive advantages
- Management's commitment to shareholders
- Superior return opportunity
|
| Construction & Management |
|
Diversification guidelines:
|
|
Holding period:
|
- 40 to 50 securities
- Economic sectors +/- 10% of MSCI EAFE® Index
- Typically 10 to 20% in any one country (30% country
limit)
|
|
- Generally, three to four years
|
|
| Top 10 Holdings*† |
|
Air Liquide
|
|
GlaxoSmithKline |
|
BBVA
|
Nestlé |
|
BNP Paribas
|
Sanofi-Aventis |
|
BP
|
Statoil
|
|
Credit Suisse |
Total
|
|
| Country Diversification*† |
| Sector Diversification*† |
 |
| Risk-Return Analysis‡ |
| Inception† - December 31, 2005 |
|
| |
Rate
of
Return (%) |
Standard
Deviation (%) |
Beta |
| Annualized |
|
| KAR International (Gross) |
8.01 |
17.83 |
0.94 |
| KAR International (Net)** |
6.94 |
17.80 |
0.94 |
| MSCI EAFE®
Index* |
5.83 |
17.83 |
1.00 |
|
| Historical Returns |
| |
KAR International
(Gross) |
KAR International
(Net)§ |
MSCI EAFE®
Index* |
| Annualized Returns (%)† |
|
| Third Quarter |
9.63 |
9.37 |
10.38 |
| Year to Date |
6.67 |
5.87 |
9.08 |
| One Year |
22.20 |
20.98 |
25.80 |
| Three Years |
19.73 |
18.55 |
24.62 |
| Five Years |
-1.40 |
-2.38 |
3.16 |
| Seven Years |
4.14 |
3.10 |
6.74 |
| Ten Years |
7.87 |
6.79 |
5.83 |
| Inception‡ |
8.01 |
6.94 |
5.83 |
| Annual Returns (%) |
| 2004 |
14.55 |
13.41 |
20.25 |
| 2003 |
28.16 |
26.91 |
38.59 |
| 2002 |
-17.71 |
-18.55 |
-15.94 |
| 2001 |
-25.93 |
-26.66 |
-21.44 |
| 2000 |
-7.41 |
-8.36 |
-14.17 |
| 1999 |
24.67 |
23.45 |
26.96 |
| 1998 |
27.56 |
26.33 |
20.00 |
| 1997 |
20.06 |
18.86 |
1.78 |
| 1996 |
19.81 |
18.63 |
6.05 |
| 1995 |
18.54 |
17.37 |
11.22 |
|
| Disclosure |
All information contained herein is stated as of
December 31, 2005, unless indicated otherwise.Results shown are past performance
which is not an indication of future results.
Kayne Anderson Rudnick Investment Management, LLC has prepared and presented this report
in compliance with the Performance Presentation Standards of the Association for Investment
Management and Research (AIMR-PPS®), the U.S. and Canadian version of the Global
Investment Performance Standards (GIPS®). AIMR has not been involved in the preparation
or review of this report. The firm has been in compliance with the AIMR-PPS® since
the effective date of the Standards, January 1, 1993.
Kayne Anderson Rudnick Investment
Management, LLC is a registered investment adviser. The firm maintains a complete list
and description of composites, which is available
upon request.
The composite is defined as all non-taxable, fully discretionary, non-wrap fee
International Portfolios (including cash) under management for
at least one full quarter. The minimum account
size for this composite is $250,000. For comparison purposes,
the composite is measured against the MSCI EAFE® Index (net
dividends). The MSCI EAFE® Index consists
of approximately 1,000 stocks that are traded on foreign stock
exchanges in Europe, Australia, and the Far East. The composite
was created in October 1994. There was a change in personnel in
March 2000, February 2002, October 2003, February 2004, and
July 2004. No alteration of the composite as presented here has
occurred because of this change.
Prior
to June 30, 2000, the composite represented all taxable and non-taxable, fully discretionary
International Equity Portfolios (including cash) under management
for at least one full quarter. Beginning on July 1, 2000, only non-taxable portfolios
are included in the composite.
The performance information is supplied for reference.
Past performance is no guarantee of future results. Results will vary among accounts.
The U.S. dollar is the currency
used to express performance. Returns are presented gross of management fees and net
of transaction fees and include the reinvestment of all income. Performance is presented
net of withholding taxes on dividends, interest, and capital gains. For withholding
tax purposes, the accounts in the composite are U.S. based, and the MSCI EAFE® Index
is Luxembourg based. Trade date accounting is used. Performance has been calculated
by geometrically linking monthly returns with accounts entering and exiting the composite
quarterly. As of December 31, 2003, the composite invests none of its assets in countries
not included in the benchmark.
Gross annual returns will be reduced by investment
management fees and other expenses that may be incurred in the management of the
account. Net annual returns have been
calculated after the deduction of an assumed maximum annual fee of 1%. The effect
on performance would grow at a compounded rate. Over a five year period, if a $100,000
portfolio had an annual return of 10%, it would grow to $161,051. The net compounded
effect of a 1% annual investment management fee would total $7,189 and result in
a portfolio value of $153,862. A fee schedule is available upon request and is described
in Part II of the firm’s ADV.
If applicable, the annual standard deviation presented
is an asset-weighted calculation of performance dispersion for accounts in the composite
for the entire year.
|
| |
Total Firm
Assets
($ Millions) |
Total
Composite
Assets
($ Millions) |
Percentage
of Firm
Assets |
Accounts
at
Year-End |
Percentage
of Non-
Fee-Paying
Accounts |
Gross
Annual
Return (%) |
Net
Annual
Return (%) |
MSCI EAFE®
Index (Net)
Annual
Return (%) |
Annual
Standard
Deviation (%) |
| 1994* |
1,028 |
1 |
< 1 |
2 |
0 |
-2.60 |
-2.84 |
-1.02 |
0.00 |
| 1995 |
1,641 |
3 |
< 1 |
3 |
0 |
18.54 |
17.37 |
11.22 |
0.99 |
| 1996 |
2,107 |
10 |
< 1 |
9 |
0 |
19.81 |
18.63 |
6.05 |
1.71 |
| 1997 |
2,855 |
24 |
1 |
19 |
0 |
20.06 |
18.86 |
1.78 |
2.65 |
| 1998 |
4,160 |
41 |
1 |
42 |
0 |
27.56 |
26.33 |
20.00 |
2.85 |
| 1999 |
5,381 |
93 |
2 |
80 |
13 |
24.67 |
23.45 |
26.96 |
2.72 |
| 2000 |
6,686 |
58 |
1 |
33 |
7 |
-7.41 |
-8.36 |
-14.17 |
1.49 |
| 2001 |
8,384 |
55 |
1 |
38 |
0 |
-25.93 |
-26.66 |
-21.44 |
0.82 |
| 2002 |
8,612 |
43 |
< 1 |
26 |
0 |
-17.71 |
-18.55 |
-15.94 |
0.33 |
| 2003 |
10,262 |
59 |
1 |
25 |
0 |
28.16 |
26.91 |
38.59 |
0.70 |
| 2004 |
10,320 |
11 |
< 1 |
11 |
0 |
14.55 |
13.41 |
20.25 |
0.39 |
|
* Performance calculations for the three months ended December 31,
1994 have not been annualized. |
|
