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  1. 1. D I V E R S I F I E D M A N A G E D A L L O C A T I O N S
  3. 3. Diversified Managed Allocations At Wachovia Securities, we understand that it may be easier to reach your lifetime investment goals when you have a team working for you. Wachovia Securities makes available, through the Diversified Managed Allocations program, a combination of high-quality professional investment-management firms, a disci- plined process and a choice of investment styles — in a single investment account. Diversified Managed Allocations (DMA), an innovative program designed for the affluent investor, offers separately managed portfolios featuring asset allocation, diversification and risk-based portfolio management to investors with a minimum investment of $150,000. Using our due diligence process, our Manager Strategy Group has assembled a roster of select investment- management firms representing a broad array of invest- ment classes and styles. You and your Financial Advisor a risk-based portfolio constructed with diversified but will use a disciplined investment process to create an complementary investment managers from the DMA asset-allocation strategy and select two or more invest- roster of managers — or you and your Financial Advisor ment managers to handle the day-to-day management may assemble a portfolio of managers to meet your of your account. You may choose an Optimal Blend — specific needs. 1
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  5. 5. How Can DMA Help Guide Me to My Lifetime Goals? Asset Allocation. DMA allows you to tailor an invest- Investment Style Cycles 1996 – 2006 ment plan to your unique needs. Your strategy will be Highest Returns Lowest Returns based on the principles of asset allocation — the way your money is divided among stocks, bonds and money- 1996 Large-Cap Stocks Bonds market instruments. A study of large pension funds 1997 Large-Cap Stocks International Stocks indicated that this single factor — asset allocation — 1998 Large-Cap Stocks Small-Cap Stocks accounted for over 90 percent of the eventual outcome 1999 International Stocks Bonds of an investment program.* 2000 Bonds International Stocks 2001 Bonds International Stocks Diversification by Style. The following chart demon- 2002 Bonds Small-Cap Stocks strates the importance of exposing your portfolio to various investments in many different markets. This 2003 Small-Cap Stocks Bonds diversification allows you to reduce the volatility 2004 Mid-Cap Stocks Bonds associated with investments in just one investment 2005 International Stocks Bonds category. “Don’t put all your eggs in one basket” is one 2006 International Stocks Bonds of the oldest investment adages. Indeed, at Wachovia Securities, we believe that proper diversification lies at Indexes used to represent these markets are as follows: for Bonds, the Lehman the heart of successful investing. As illustrated, you Intermediate Govt./Credit Index; for Large-Cap Stocks, the S&P 500 Index; for Mid-Cap Stocks, the Russell Mid-Cap Index; for Small-Cap Stocks, the can see that this year’s worst-performing asset class Russell 2000 Index; and for International Stocks, the Morgan Stanley EAFE Index. just may be next year’s darling. Indexes are used for illustrative purposes only. An investor cannot invest directly in an index. Past performance is no guarantee of future results. The lesson in the diversification story is a simple one: Stocks of small companies are typically more volatile than stocks of larger No one asset class consistently outperforms all others, companies. They often involve higher risks because they may lack the manage- ment expertise, financial resources, product diversification, and competitive and there is no way to foresee which investment style strengths to endure adverse economic conditions. will surpass others in any given year. * Financial Analyst’s Journal, May/June 1991. Spreading your assets among different investment styles can increase the chance that if one investment style decreases in value, another may increase, poten- tially providing a buffer for your portfolio during down markets. By implementing your investment plan in a DMA account, you can diversify your assets across a variety of investment styles. 1 3
  6. 6. Disciplined Investment Process The Manager Strategy Group of Wachovia Securities roster of meticulously screened investment managers works with your Financial Advisor using a time-tested for the DMA program. Selecting investment managers process to help you create and implement a personal- is a very serious task, and guiding you through this ized investment strategy. Our approach uses the same process is one of the most important services the concepts embraced by the fiduciaries of retirement Manager Strategy Group and your Financial Advisor plans, foundations and charitable organizations. We provide. We also monitor the managers you select adhere to these methods to assist our clients in following to ensure that they adhere to their stated investment a particular path for investing and achieving lifetime styles within your DMA account. goals. In a single account, DMA offers a disciplined The Manager Strategy Group created Optimal Blends process to managing your wealth: using the DMA roster of investment managers based • Develop an investment strategy. Your Financial on specific risk. Optimal Blends provide potential Advisor will thoroughly examine your investment solutions for investors with Conservative, Moderate needs, including financial requirements, time hori- and Long-Term risk tolerance for each of our three zon, liquidity concerns and risk tolerance. Based on investment objectives (Income, Growth and Growth this analysis, you and your Financial Advisor will & Income). We believe each combination represents determine whether your DMA portfolio should be an optimal blend of investment classes and styles invested in stocks, bonds or a combination of both. using some of the nation’s most exclusive investment Your Financial Advisor can then guide you in develop- managers. You can choose from one of these Optimal ing a clearly defined plan for pursuing your financial Blends, or create your own portfolio based on your objectives. Your strategy helps guide the selection of specific needs. professional investment managers and serves as the • Monitor, evaluate and report your progress. Your benchmark against which you, your Financial Advisor, Wachovia Securities Financial Advisor closely tracks and Wachovia Securities’ Manager Strategy Group will the progress of your DMA account toward your goals. measure your DMA account’s performance. You will receive a single comprehensive quarterly • Customize your asset allocation and manager report detailing your portfolio’s activity and overall implementation. After establishing a strategy, your performance. Financial Advisor will identify investment managers whose philosophies, performance and risk character- istics best suit that strategy. The Manager Strategy Group’s rigorous due-diligence process results in a 4
  7. 7. Professional Investment Management Wachovia Securities recommends maintaining a personalized portfolio using professional investment managers for several reasons. DMA provides you with access to investment managers who assume discre- tionary responsibility for your portfolio. Successful investing requires a significant commitment of time, energy and attention. While most investors manage their investments part-time, professional investment managers focus their entire careers on managing assets. Tax Planning A professionally managed portfolio offers you the opportunity to manage investment tax liabilities — a feature not typically available in many other profession- ally managed investment vehicles. Your cost basis is established at the initial investment in each security, as you own all securities in your account. DMA allows you to manage your taxes by taking gains and losses as dictated by your specific tax needs.2 5
  8. 8. What Differentiates DMA? Objectivity. Our investment manager recommendations performance of your total portfolio is consistent are based on a unique due-diligence approach. The with your long-term investment goals, as DMA offers Manager Strategy Group evaluates a broad range of comprehensive performance monitoring in a single asset classes and investment styles and identifies classes report on your total portfolio. We also offer periodic or styles that have historically performed differently rebalancing to ensure that you are within your personal under varying market conditions. The Manager Strategy asset-allocation target ranges. You pay no commissions, Group then uses quantitative and qualitative measures but rather a simple quarterly fee that covers all the to select what we believe are the “best of breed” invest- services provided through DMA. ment managers for these classes and styles. Customization. DMA allows you and your Financial The DMA research process focuses both on the merits Advisor to tailor your portfolio’s asset-allocation and of the individual investment managers and on how the investment options, based on your risk tolerance and various investment managers on our roster may com- investment objectives, using some of the nation’s most plement one another. Through this process, we have exclusive investment managers. Your portfolio may be developed what we believe to be a continuum of customized based on your specific needs. In addition, diversified strategies for investors, based on specific you own each of the securities in your portfolio. You risk tolerances and financial situations, called Optimal have the freedom to constrain or restrict specific Blends. You can select one of the Optimal Blends, or securities or industries. you and your Financial Advisor can construct your own Lower investment minimum.3 DMA allows you to strategy using our DMA roster of investment managers. diversify among multiple investment styles for a lower Simplicity. DMA is sophisticated, yet simple. In one minimum than is required in many separate account DMA account, our technology allows you to achieve programs. diversification by allocating your portfolio among professional investment managers, who each manage a portion of your account in the investment style of their expertise. Since your investments will be held in a single account, you can easily determine whether the 6
  9. 9. How Can I Access DMA? For more information about diversifying your assets among investment styles with professional portfolio management in one investment account, contact your Wachovia Securities Financial Advisor and ask about DMA. 1 Asset allocation/diversification cannot eliminate the risk of fluctuating prices and uncertain returns. 2 Wachovia Securities does not provide legal or tax advice, but your Financial Advisor will be happy to work with your chosen legal and tax advisors to help you achieve your financial goals. 3 Subject to manager minimum — DMA offers the ability to invest with two investment managers for an investment of $150,000. The fees for the Diversified Managed Allocations (DMA) program are assessed quarterly in advance. The fees include advisory services, performance mea- surement, transaction costs, custody services and trading. The fees do not cover the fees and expenses of any underlying mutual funds in the portfolio. The fee schedule, which is negotiable, is based on account size and an assumed active equity portfolio. There is a minimum client fee requirement of $500 per calendar quarter to maintain this type of account. Fee-based programs are not designed for excessively traded or inactive accounts and may not be suitable for all investors. Please carefully review the Wachovia Securities advisory disclosure document for a full description of our services, including fees and expenses. The minimum account size for this program is $150,000. Wachovia Securities is the trade name used by two separate registered broker-dealers: Wachovia Securities, LLC, and Wachovia Securities Financial Network, LLC, Members SIPC, non-bank affiliates of Wells Fargo & Company. 7
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