ASSET MANAGEMENT PROGRAM
Investment Advisory Services Provided Through Partnervest Advisory Services LLC
Washington Investment Management
Professional Relationship Diagram
We Work As Your Investment Management Professional With
An SEC Registered Investment Advisor
Business activities are audited for Compliance with PV’s Policies and Procedures
Our licensing and Continuing Education requirement are met
All printed documents and correspondence are approved through PV
Broker Dealer Services
Provided through PV with Pershing
Allows us to offer a full line products to investors that
Have accounts that are not Fee Based accounts.
Partnervest Advisory Services is the back office service provider for
our managed account(s) transactions, reporting, billing and distributions
PV works in tandem with Datalynx who acts as account trustee for our
Fee Based clients.
First Trust Corp. Broker Dealer
Washington Investment Management
The primary philosophy of the WIM Asset Management Program is to:
Understand the client’s investment objective and
Identify / quantify risk in the clients’ portfolio
Analyze & determine the optimal mix of assets
classes & investment styles in order to achieve the
client’s investment objectives within his/her risk
Monitor & rebalance the client’s portfolio as the
investment environment, the client’s objective and
/ or risk profile change.
Our challenge is to read the markets ongoing relationship to developments as they occur and invest in asset
classes that will prosper as the evolution of these events continue.
Our Professional services offer a unique departure from
Traditional brokerage or commissioned tactics that fail to meet
This is achieved through:
Proper Asset Selection
Low Cost No-Load / Institutional Class Funds
Low Cost Third Party Custodian Charges
Full Time Account Monitoring
Our concept is to maintain well diversified portfolios that reduce the negative effects of too much risk and
maximize the positive results of controlled volatility.
Diversification through asset allocation is not a guarantee of positive returns. Investment Advisory Services through Partnervest Advisory Services LLC
How Do We Measure Up?
Washington Investment Management Offers Return Information
As Measured Against The S&P 500 & Weight Adjusted Benchmarks
We Manage Risk Utilizing 3 Portfolios…WIM Flexible,
RGI Income Strategy and…
WIM Flexible: ACCOUNT DESCRIPTION
Manager will utilize an allocation in mutual funds to include but not limited to equities, bonds, exchange
traded funds, closed end funds and money market funds. Manager may overweight particular investments
that look attractive for capital gain purposes. Capital preservation & capital gain are the primary objectives.
Income is a secondary consideration.
WIM TOTAL RETURN PORTFOLIO
WIM Total Return Account Description:
Washington Investment Management will select investments for the portfolio from a broad universe of mutual
funds that includes equities, bonds, exchange traded funds, closed end funds and money market funds.
Manager will look for transitory imbalances between relative returns of different asset classes. Shifts
between asset classes are usually done over longer periods of time & in smaller increments. Emphasis is
placed on capital preservation and income. Capital gain, although an important consideration is not primary.
This portfolio is suitable as a core holding.
*RGI Income Strategy:
The RGI Income Strategy offers investors access to a portfolio of closed-end (ETF’s) and open-end income
producing mutual funds. Using manager’s proprietary quantitative analysis, clients will have access to a
diverse universe of income producing investments that can be tailored to their income needs, tax efficiencies
and risk level. Investors seeking total return with an emphasis on current income and a longer term
3 month 6 month 1 Year 2 Year 3 Year
Performance Data through 3/31/2005
WHAT ABOUT RISK?
Washington Investment Management’s Goal is to Seek High Return on Assets
With Low Volatility in Each Account.
(WIM FLEXIBLE ACCT. DATA)
A scatter gram is a graphical representation of a manager’s risk/return profile within a peer group or related database – typically over a 5- or 10-year time period. Crosshairs
depicts appropriate comparative index.
This statistic is a commonly used measure of risk-adjusted return. It is calculated by subtracting the Risk-Free Return (usually three-month Treasury bill) from the portfolio
return and dividing the resulting excess return by the portfolio’s total risk level (standard deviation). The result is a measure of return gained per unit of total risk taken. The
higher the Sharpe ratio, the better the fund’s historical risk-adjusted performance.
This statistic measures a portfolio’s return in excess of the market’s return adjusted for risk. It is a measure of the manager’s contribution to performance with reference to security
selection. A positive alpha indicates that a portfolio was positively rewarded for the residual risk taken for that level of market exposure.
Alpha = Mean of excess returns of portfolio – mean of excess returns of index
Beta is a statistical measure of the volatility, or sensitivity, of rates of return on a portfolio or security in comparison to a market index. The beta value measures the expected change
in return per one percent change in the return on the market. Thus, a portfolio with a beta of 1.1 would move 10 percent or more than the market.
Formally called the coefficient of determination, this measures the overall strength or explanatory, power of a statistical relationship. In general, a higher R2 means a stronger
statistical relationship between the variables that have been estimated, and therefore more confidence in using the estimation for decision making.
WIM Total Return Data
This statistic is a commonly used measure of risk-adjusted return. It is calculated by subtracting the Risk-Free Return (usually three-month Treasury bill) from the
portfolio return and dividing the resulting excess return by the portfolio’s total risk level (standard deviation). The result is a measure of return gained per unit of total risk
taken. The higher the Sharpe ratio, the better the fund’s historical risk-adjusted performance.
Standard deviation is a statistical measure of portfolio risk. It reflects the average deviation of the observations from their sample mean. Standard deviation is used as
an estimate of risk since it measures how wide the range of returns typically is. The wider the typical range of returns, the higher the standard deviations of
returns, and the higher the portfolio risk. The returns are normally distributed (i.e., have a bell-shaped curve distribution) then approximately 2/3 of the returns would
occur within plus or minus one standard deviation from the sample mean.
The above charts contain returns for periods of time, prior to May 2004, for which the portfolio
was not in existence. These hypothetical model portfolios which are illustrative of how the
quantitative model as currently structured might have performed had it been in existence at the
time. It is not a description of actual historical performance, and specific recommendations
could have and may vary among clients based upon different material market conditions and
client circumstances. Model presentations are inherently limited in their ability to indicate
future performance and benefit from hindsight. In addition, stated model returns include
reinvestment of dividends and other earnings. Thus, model returns are not indicative of the
allocation or returns that an actual managed account in the future will achieve. Benchmark
indices chosen by us are believed to closely relate to the portfolio, however there may be other
benchmarks which may more closely relate. Investors cannot invest in an index and fees for
investing in unmanaged index funds may be significantly less than those fees paid for a
managed account. Presentation of portfolio returns since May 2004 are based upon returns of
the funds during the relevant period of time but do not reflect clients’ actual account returns
but which are not believed to be materially different than those presented. All performance is
net of the investment advisor’s fee, transaction costs and other material fees but does not
include deduction of custodial fees. Past performance is not indicative of future returns and
there is a risk of loss of principal as well as gain. Graphs and charts alone should not be the
basis of any investment decision. An investor should read the prospectus for any investment
prior to investing. A more detailed description of the investment advisor and its approach are
available in the advisor’s Form ADV Part II which is provided herewith (if this is the first
solicitation) or otherwise available by request by contacting Partnervest Advisory Services
LLC, Attn: Compliance Dept., 203 Chapala St., Suite A, Santa Barbara, CA 93101, (805) 966-
THE STRATEGY OF DIVERSIFICATION
Stocks Only Higher losses
Large, Mid, Small Cap
Stocks Plus Bonds
High Yield, Convertible, Corporate
Stocks, Bonds, Foreign Stocks,
Foreign Government and Corporate bonds
U.S. STOCKS, FOREIGN STOCKS, FOREIGN BONDS *SWEET SPOT*
EMERGING MARKET STOCKS , BONDS, COMMODITIES,
INFLATION INDEXED BONDS
HIGH YEILD BONDS, GOLD, SHORT POSITION, REAL ESTATE, U.S. BONDS
Short Term Treasuries, T-Bills, Money Market, Bank CD’s, Fixed Annuities Limited Losses
WHY USE AN ASSET MANAGER?
“A PERSON’S TOLERANCE TO RISK IS ONLY MEANINGFUL TO THE EXTENT
THEY UNDERSTAND WHAT RISK THEY ARE TAKING.”
Control Portfolio Risk and / or Volatility (Risk Drag)
Hedging Through Diversification
Opportunity Access to Global Markets
Allocation Balanced Allocation of Your Portfolio
Balance No Overweighting in One Asset Class
Income Wide variety of Income Investments used
Professional Maintenance of Portfolio
Process utilizing Strategic and Tactical Analysis
Great Minds Think Alike
“Investors cannot forgo asset management. They cannot put asset allocation
on autopilot; it should be based on thoughtful, well reasoned analysis. Asset
Allocation must be Managed.”
ROBERT ARNOTT, EDITOR FINANCIAL ANALYST JOURNAL
“Asset Allocation has many moving parts and requires ongoing management.
Asset Allocation is the Single Most Important Factor of a portfolio’s
performance, and can account for over 90% of a portfolio’s performance.”
BRINSON ASSOCIATES 1991 STUDY
“We feel a Manager’s Duty is to seek out investment opportunities Away From
the Typical Mix of Stocks and Bonds.”
ROBERT ARNOTT, EDITOR FINANCIAL ANALYST JOURNAL
“EVERYBODY has a plan…until they get HIT.”
MIKE TYSON, FORMER HEAVYWEIGHT CHAMPION