OUTLOOKANNUAL INSIGHTS

Building a sustainable business has neverbeen theater to us. In other words, saying

things that give the impression that thefirm is well intentioned about building along-term franchise, but never executing

on those ideas. As evidenced by thestrategic initiatives we have undertakenover the past ten years, DVI is seriousabout creating a firm “Built to Last.”

We recognize it is far easier to kick thecan down the road than disrupt the

status quo, but our duty of loyalty toour clients extends far beyond just doingthe right thing. It is personal. Success for

us is defined by creating a firm that isuniquely positioned to serve our clients’

needs well into the future.

Brian Christensen, CFASenior Vice President & CIO

Will WilliamsChairman, President & CEO

BE THE TRUSTEDSTRATEGIC ADVISOR

TO OUR CLIENTS

2018MILESTONES

� The transformation of DVI’s professionalpractice continues to move forward. Onceknown exclusively for our expertise inmanufacturing low risk investmentstrategies utilizing individualsecurities, we are increasinglygaining traction as a thought leaderon behalf of our clients. DVI hasdeveloped staff resources to provideinsight and problem solving on a widerange of complex financial issues.

� Our human capital initiatives were frontand center for most of the year. We addedfive associates to our team; the most staffadditions in our history! These new hires will

be targeted towards building additionalcapacity and capabilities. We wish tobe proactive in our planning,building adequate redundancy in

anticipation of future staffretirements. DVI continuesto emphasize careerdevelopment plans for allassociates, but has also

identified the need for aformal mentoring program for select membersof our leadership team.

� The partnership with Morton CommunityBank (MCB) and our engagement with MCBTrust & Wealth Management completed itsfirst full year of operation. On both sides ofthe transaction, there is a greaterunderstanding of the advantages of being“Independently United,” marching forward astwo successful private financialinstitutions. However, there is alsoa growing awareness of strategicopportunities best exploited bythe partnership working together.We are convinced that under thesecircumstances we can truly movethe needle on behalf of our clients.

INVESTMENT STRATEGY:Lessons Learned

� 2018 does not represent the new normal, itis simply normal. Market volatility in 2017was an anomaly, likely never to be seen again.The volatility and market correction thatwe experienced last year wasstatistically in keeping withthe long-term averages.According to researchperformed by DavisAdvisors, roughly a twentypercent correction in the equitymarket occurs every 635 days. Sorather than abandoning strategies thatembrace risk management as a core attribute,more attention should be placed onunderstanding portfolio level risk.

� Tax efficiency flies under the radar screenuntil April. DVI has historically embracedstrategies that enable a significant percentageof pre-tax investment gain to be retained on apost-tax basis. Some researchers wouldsuggest that managing an all equity portfoliothat embraces tax optimization can annuallyadd as much as 1% a year inpositive relative returnversus a traditionallymanaged portfolio.1 In2018, many investorswere shocked by thelarge capital gains, eitherrealized or distributed,from various equity strategies.Each circumstance is different, butDVI will not lose sight of the importance oftax minimization.

1 Capital Sigma: The Sources of Advisor-Created Value (2015)

“BU

ILT

TO

LA

ST”

2019STRATEGIC PRIORITIES

Part of the DNA of our management team isan ongoing restlessness that we can and must dobetter. As we identified our topstrategic priorities for theyear, it really came downto a handful of simpleconcepts. We mustembrace a greater level ofaccountability ineverything that we do and do a better job of effectivelycommunicating to bothour colleagues and to ourexternal stakeholders. We are also blessed withsome wonderful business opportunities in boththe Florida marketplace and with our newpartnership with MCB Trust & WealthManagement. In both instances, we are excitedabout DVI’s prospects for future growth, butrecognize the importance of executing anincremental business plan that does not impedeour ability to serve our existing clients.

The Best Path ForwardAfter over forty years serving as a Registered

Investment Advisor, one would think that DVIwould have confronted and solved the myriad ofchallenges that face management teams inbuilding and sustaining an asset managementfirm. Unfortunately, that couldn’t be further fromthe truth. Each year, we learn from our mistakesand hopefully apply that experience tothe host of problems we will face inthe future. The one constant inthis process is our unwaveringcommitment to our clients andthe knowledge that our solefocus is their best interest.

Wall Street in general has always beenenamored with the investment side of thebusiness. Their idea of product developmentalways seemed to be more about them and theirshort-term economic interestsrather than providing clients withthoughtful solutions to pressingfinancial needs.

Increasingly we find our clientschallenged by the daunting task oftrying to determine “how much isenough?” The mechanics behindincome replacement are welldocumented, but the tools and thepractical application of the steps alongthe way can be overwhelming to the family whois beginning to approach retirement age. At DVIwe are increasingly challenging ourselves tocreate the impactful resources that our clientsneed to navigate this once in a lifetimetransition. Our goal is straightforward; ourclient’s financial peace of mind.

Financial PlanningOver the years, we have assembled a team

of six investment professionals that have allearned the Certified Financial Planner (CFP®)certification. We have armed these professionalswith state-of-the-art software that enables themto assist our clients with 1) the formation of acomprehensive balance sheet, 2) the creation offuture cashflow scenarios, 3) an understandingof the impact of taxation on future incomedistributions and 4) the objectiveevaluation of investment strategiesand the sustainability of investmentassets under various distributionscenarios. We do not representthat we have a crystal ball, but byincorporating reasonableassumptions we can model scenariosthat help guide prudent decision-making by our clients.

DVI Client PortalThe management and consolidation of

financial information is becomingincreasingly important toclients as they strive tomake sense out of allthe moving parts oftheir financial lives.DVI began to offer aClient Portal (a cloud basedsolution) a number of years ago to allow clientsaccess to not only DVI-directed assets, butfinancial assets held away as well. Helping tofacilitate this account aggregation provides ourclients the ability to track and organize theirfinancial affairs all within one simple solution.

Investment StrategiesAs our clients enter the “Distribution

Phase,” it is important to manage the liquidityneeds that support the systematic(monthly/quarterly) distribution of funds. Ifthere are required minimum distribution(RMDs) amounts from retirement plans, wewant to be proactive as to the timing and dollaramount of those future needs. DVI hasincorporated an asset/liability frameworkwith individual fixed incomesecurities and exchange tradedfunds to ensure that we avoid,if possible, market risk whenaccessing needed liquidity.

When a DVI client facesa major life transition, likeretirement, we want to be thefirst call. It is our duty tocontinue to develop both thehuman capital and financial solutions thattransform complexity into simplicity.

CLIENT FOCUS:The Transition from the Accumulation Phase to the Distribution Phase

2018 | 981

2017 | 885

2016 | 805

2015 | 767

2014 | 716

981

885

805| 2016

|2017

| 2018

981

885

805

|

767

716 |2014

|2015

767

716

OFFICERS & SHAREHOLDERS

Lawrence “Will” Williams IV *President & CEO

Brian A. Christensen, CFA *Senior Vice President & CIO

Patrick J. Smarjesse, CEBS *Vice President

Todd M. Sheridan, CFA *Vice President

James D. Sinclair, CPA *Treasurer & CCO

Michael A. PriceChief Administrative Officer

Stephen K. Hinrichs, CFA *Director of Investment Research

Beth W. Salmon, CPADirector of Business Operations

Jeff J. Huizenga, CFP®, ChFCDirector of Relationship Management* DVI Capital Corp Shareholder

BOARD OF DIRECTORS

Lawrence “Will” Williams IVDVI - Chairman

Brian A. Christensen, CFA DVI

David J. Vaughan, MD Board Certified Physician

Andrew A. HoneggerPresident & Co-CEO, MCB

Dirk W. RoeckerChief Financial Officer, MCB

Wayne E. Baum**Chairman, Core Construction

Michael L. DeWalt**Retired, Caterpillar Inc.

John V. N. McClure**Retired, Northern Trust Corp.

Virginia Johnson Pillman, CPA**Retired, Ernst & Young

Kevin D. Schoeplein**Retired, OSF Healthcare System

** Independant Director

OTHER

2%

CONSULTING

12%BALANCED

36%

EQUITY - INCOME

50%

%05EQUITY - INCOME

%63BALANCED

2OTHER

%21TINGCONSULLTING

%2OTHER

KEY FIRM STATISTICS1 NUMBER OF CLIENTS

INVESTMENT STRATEGY MIX

800.332.5944 | www.DVIinc.com | Peoria, IL | Winter Park, FL

Quiet Quality

$2,750,177,933

1 AS OF 12/31/20182 DISCRETIONARY PLUS DVI CONSULTING GROUP ASSETS

$2,428,499,008

981

$2,524,427

32

Total Assets under

Advisement2

Total DiscretionaryAssets underManagement

AverageDiscretionaryClient Size

Numberof Client

Relationships

Number of DVI

Associates