Wellesley Programs, Halbert Wealth Management, Gary D. Halbert, President

Wellesley Investment Advisors

Convertible Bond Program

Download More Complete Information

The Wellesley Limited Risk Investing Program is the only AdvisorLink offering to use individual securities rather than mutual funds. Wellesley founder, Greg Miller, specializes in portfolios of individual convertible bonds. His proprietary methodology is a four-step process employing fundamental analysis as a means to evaluate convertible bond issues. The ultimate goal is to produce absolute returns and minimize downside risk.

Wellesley uses convertible bonds as an investment medium because of their ability to be converted to corporate stock, and the presence of “put” dates prior to the maturities of many of the bonds. The conversion privilege allows Wellesley to participate in the upside potential if the underlying stock does well, while the “put” option provides a measure of potential downside protection should the stock price not advance as expected.

Historically, equities have provided a higher average annualized return than other types of securities, including most types of corporate bonds. However, along with this potential for greater return comes a higher degree of risk. The Wellesley Limited Risk Investing Program provides the potential to participate in stock market gains, and yet have a measure of downside protection along the way. Because of the nature of convertible bonds, an investment in the Limited Risk Investing Program should be considered a marathon and not a sprint. Each bond is typically sold with a conversion premium over the stock’s current market value, so it takes time for any increase in stock price to add value above and beyond the bond’s investment yield. Thus, investors should be prepared to maintain the investment for a period of at least five years.

Because Wellesley uses individual bonds and not mutual funds, a minimum investment of $200,000 is required in order to get appropriate diversification. The Limited Risk Investing Program is available to both IRA and taxable investors, as well as estates, trusts and institutional investors. All accounts are held in a TD Ameritrade brokerage account and investors receive monthly brokerage statements. However, Wellesley also provides its own detailed statements, along with a monthly newsletter discussing their analysis of the markets.

	Convertible Bond Program	S&P 500
1-year	34.71	26.46
3-year	7.46	(5.63)
5-year	6.35	0.42

Actual performance record (annualized) as of December 31, 2009. Performance numbers on the previous page include estimated performance for the current month and are therefore different than the numbers presented above.

IMPORTANT NOTES: Halbert Wealth Management, Inc. (HWM) and Wellesley Investment Advisors ("WIA") are Investment Advisors registered with the SEC and/or their respective states. This report does not constitute a solicitation to residents of any jurisdiction where the program mentioned may not be available. Information in this report is taken from sources believed to be reliable but its accuracy cannot be guaranteed. Any opinions stated are intended as general observations, not specific or personal advice. Please consult a competent professional and the appropriate disclosure documents before making any investment decisions. Investments mentioned involve risk, and not all investments mentioned herein are appropriate for all investors. HWM receives compensation from WIA in exchange for introducing client accounts. For more information on HWM or WIA, please consult the respective Form ADV II for the Advisor, available at no charge upon request. Officers, employees and affiliates of HWM may have investments managed by Advisors discussed herein and others.

This presentation reflects only the convertible bond portion of WIA's client accounts. Returns are based on all convertible bond positions held in accounts of all WIA clients during the periods reflected. Actual client accounts include positions other than convertible bond positions. Such other positions are not included in this performance presentation. Accordingly, the actual return of WIA client accounts is different, in some cases substantially, from the performance information presented in convertible bonds. During the periods reflected, WIA did not manage any other accounts that included only convertible bonds in their portfolios. Returns are net of a 1.75% annual management fee, which is the highest management fee charged by WIA during the period (minimum fee is $4,000/year, so smaller accounts may pay a higher fee). Actual management fee rates vary based on each client's assets under WIA's management. These performance numbers have not been verified by HWM, and therefore HWM is not responsible for their accuracy.

WIA's convertible returns have been calculated using the following methodology. The bond’s market value on the last day of the month is determined as is the weight of each bond holding in the portfolio. Each bond's return for the month is calculated. It was assumed that the bond entered the portfolio on the first day of the month in which it was first purchased. When a bond is completely sold out of a portfolio, the prior month-end value is adjusted to reflect the final sales price. Each bond's return for the month was weighted by the bond's weight in the portfolio. The bond’s weighted returns for the month were summed to get the portfolio's return for the month. These numbers were compounded to calculate the annual returns.

When reviewing past performance records, it is important to note that different accounts, even though they are traded pursuant to the same strategy, can have varying results. The reasons for this include: i) the period of time in which the accounts are active; ii) the timing of contributions and withdrawals; iii) the account size; iv) the minimum investment requirements and/or withdrawal restrictions; and v) the rate of brokerage commissions and transaction fees charged to an account. There can be no assurance that an account opened by any person will achieve performance returns similar to those provided herein for accounts traded pursuant to the Wellesley Limited Risk trading program.

In addition, you should be aware that (i) the Wellesley Limited Risk trading program involves risk; (ii) the Wellesley Limited Risk trading program’s performance may be volatile; (iii) an investor could lose all or a substantial amount of his or her investment in the program; (iv) Wellesley will have trading authority over an investor’s account and the use of a single advisor could mean lack of diversification and consequently higher risk; and (v) the Wellesley Limited Risk trading program’s fees and expenses (if any) will reduce an investor’s trading profits, or increase any trading losses.

Past performance is not indicative of future results. The performance presented may not be representative of investments held in any client account or performance realized in any one client's account. An investment in convertible bonds involves a risk of loss. The value of an investment in convertible bonds may decrease as well as increase. Performance does not reflect the effects of taxation, which results in lower returns to taxable investors. Consult your tax advisor. “Annualized” returns take into account compounding of earnings over the course of an investment’s track record. The investment strategy is to employ fundamental analysis as a means to evaluate convertible bond issues, with the ultimate goal to produce absolute returns and minimize downside risk.

As benchmarks for comparison, the Standard & Poor’s 500 Stock Index (which includes dividends) and the Merrill Lynch All Convertibles Index represent unmanaged, passive buy-and-hold approaches. The volatility and investment characteristics of the S&P 500 or the Merrill Lynch All Convertibles Index may differ materially (more or less) from that of the Wellesley Limited Risk program, and these Indexes cannot be invested in directly. The performance of the S & P 500 Stock Index and the Merrill Lynch All Convertibles Index is not meant to imply that investors should consider an investment in the actively managed Wellesley Limited Risk program as comparable to an investment in the “blue chip” stocks that comprise the S&P 500 Stock Index or the approximately 500 issues of convertible bonds and preferred stocks that comprise the Merrill Lynch All Convertibles Index. Statistics for "Worst Drawdown" are calculated at month end. Drawdowns within the month may have been greater. The returns reflect the reinvestment of interest income and dividend income. The results shown are for a limited time period and may not be representative of the results that would be achieved over a full market cycle or in different economic or market conditions.