ITEM 7 - TYPES OF CLIENTS
WGI DM provides portfolio management services to high-net-worth individuals,
investment companies, corporate pension and profit-sharing plans, pooled investment
vehicles, charitable institutions, foundations, endowments, municipalities, corporations,
and other U.S. and international institutions.
The minimum investment for a separate account is $50 million and the minimum
investment into a commingled account is $10 million. WGI DM may, in its sole and absolute
discretion, waive or alter such minimum investment amounts at any time.
WGI DM, LLC – ONE FINANCIAL CENTER, SUITE 1620 – BOSTON, MA 02111
ITEM 8 - METHOD OF ANALYSIS, INVESTMENT STRATEGIES AND RISK OF LOSS
WGI DM principally invests in equity securities of companies operating in developed world
markets. We define developed markets as those countries operating outside the U.S. and
particularly within Europe, Australia, the Far East and Canada, or those countries included
in the MSCI EAFE Index.
WGI DM will invest, hold, sell, and otherwise deal in securities and tangible investment
instruments including, among others, equities, bonds, warrants, rights, futures contracts,
foreign currency contracts, and other securities and instruments that are traded in public
markets.
WGI DM believes that there are significant investment opportunities in global markets that
provide attractive long-term absolute returns. WGI DM uses a bottom-up approach to
identify opportunities in developed markets. In the case of the WGI Global Ex-U.S. Fund,
both WGI DM and Westwood use a bottom-up approach in developed and developing
world markets. This bottom-up approach is driven by management contact, financial
statement analysis, and a focus on valuations relative to cash flow and earnings growth.
Key criteria are cash flow, earnings growth, balance sheet strength, and returns on capital.
We believe that the cost of liquidity is real, but we will invest in companies of all sizes if the
return expected is appropriate.
Risk of Loss:
Investing in securities involves risk of loss that clients should be prepared to bear. In
addition, investing with WGI DM may involve the following material risks.
Financial Market Fluctuations
General fluctuations in the market prices of securities affects the value of the
investments held by WGI DM. Instability in the securities markets may also increase the
risks inherent in WGI DM’s investments.
Equity Risk
The market price of securities managed by WGI DM may go up or down, sometimes rapidly
or unpredictably. A risk of investing in with WGI DM is that the equity securities included
in WGI DM’s strategy will decline in value due to factors affecting equity securities markets
generally or particular industries represented in those markets. The value of equity
securities may decline due to general market conditions that are not specifically related to
a particular company, such as real or perceived adverse economic conditions, changes in
WGI DM, LLC – ONE FINANCIAL CENTER, SUITE 1620 – BOSTON, MA 02111
ITEM 8 - METHOD OF ANALYSIS, INVESTMENT STRATEGIES AND RISK OF LOSS
the general outlook for corporate earnings, changes in interest or currency rates. They may
also decline due to factors which affect a particular industry or industries, such as labor
shortages or increased production costs and competitive conditions within an industry.
Non-U.S. Investments
WGI DM generally invests in non-U.S. companies. These investments involve special risks
not usually associated with investing in securities of U.S. companies or the U.S. government,
including political and economic considerations, such as greater risks of expropriation and
nationalization, confiscatory taxation, the potential difficulty of repatriating funds, general
social, political and economic instability and adverse diplomatic developments; the
possibility of imposition of withholding or other taxes on dividends, interest, capital gain or
other income; the small size of the securities markets in such countries and the low volume
of trading, resulting in potential lack of liquidity and in price volatility; fluctuations in the
rate of exchange between currencies and costs associated with currency conversion; and
certain government policies that may restrict WGI DM’s investment opportunities. In
addition, because non-U.S. entities are not subject to uniform accounting, auditing, and
financial reporting standards, practices and requirements comparable with those
applicable to U.S. companies, there are different types of, and possibly lower quality,
information available about a non-U.S. company than a U.S. company. There is also less
regulation, generally, of the securities markets in foreign countries, than there is in the U.S.,
and such markets may not provide the same protections available in the U.S. With respect
to certain countries, there is the possibility of political, economic or social instability, the
imposition of trading controls, import duties or other protectionist measures, various laws
enacted for the protection of creditors, and greater risks of nationalization or diplomatic
developments which could adversely affect WGI DM’s investments in those
countries. Furthermore, individual economies can differ favorably or unfavorably from the
U.S. economy in such respects as growth of gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency, and balance of payments position.
Developed Countries Risk
WGI DM will invest in securities of companies based in developed countries. In addition to
the risks described in the Non-U.S. Investment paragraph above, investments in developed
country issuers are subject to regulatory, political, currency, security, and economic risk
specific to developed countries. Developed countries generally tend to rely on services
sectors (e.g., the financial services sector) as the primary means of economic growth. A
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