WHV 11AR_Final_PressQuality_Crop&Bleed

A HigHer StAndArd

T W O T H O U S A N D E l E v E N A N N UA l R E P O R T 1

Dear Shareholders,As reflected on the cover of this annual report, Wentworth Hauser and Violich began 2012 with a name change. Going forward, the firm will be known as WHV Investment Management with the logo displayed on the front cover. We feel that the name change better describes the firm’s activities and will assist in the marketing and distribution of our products, which include fixed income and a number of equity asset classes - micro cap, small cap, large cap core, large cap growth, mid cap, international, global, and emerging markets.WHV investment Management is owned by the Laird norton family through its ownership of Laird norton investment Management (LniM). Since the date of acquisition in 1994 for $13.7 million, WHV has returned to the Laird norton family $28.1 million in dividends and other cash distributions. At year-end 2011, WHV had no debt and a cash balance of $24.3 million. KPMg international, the global accounting firm, is com-pleting its annual valuation of the firm. this will be available for the Laird norton family summit in June 2012.

Financial Resultsdespite a decline in assets under management (AUM) at year-end 2011 to $13.5 billion from $15.2 billion at the end of 2010, other measures of the financial performance of the firm improved. With regard to AUM, we were not immune to the sharp decline in the equity markets in the second half of 2011. As to the financial results, earnings before interest, taxes, depreciation, and amorti-zation (eBitdA) increased 19 percent in 2011 to $8.43 million from $7.06 million in 2010. net income increased 26 percent to $4.78 million from $3.80 million in 2010 while earnings per share rose 26 percent to $32.99 from $26.28.

accomplishmentsPerhaps the biggest accomplishment in 2011 was the establishment of Management by Objectives (MBOs) between the Board and the top three management members: Judith r. Stevens, Jef-frey S. romrell, and reiner M. triltsch. Working together, the Board and Management set forth specific goals for the firm’s performance in terms of AUM growth, asset class diversification, client risk mitigation, expense control, and net income. A corollary to the MBOs was the implementa-tion of salary and bonus remuneration tied to the

MBOs. each year in the future, Management and the Board will set MBOs for the ensuing year.

WHV hired a consulting firm, Casey Quirk, in 2010 to provide an independent review of WHV to identify our strengths and weaknesses. Many of the recommendations of Casey Quirk were implemented in 2011, including MBOs. We are confident that the strategic plan and road map for future growth will reward shareholders in the years ahead.

On investment offerings, WHV opened the WHV emerging Market Mutual Fund at the beginning of 2011. this fund is available through Charles Schwab, Fidelity, Wells Fargo Advisors, Credit Suisse, and rBC Wealth Management. this compliments our WHV international Mutual Fund which was launched in december 2008. Both are part of the FundAdvantage Family of mutual funds.

the outlookin 2011, the United States economy as mea-sured by gross domestic Product - the total output of goods and services within the country - grew at a tepid annual rate of 1.7 percent. the economy strengthened at year-end with annual-ized growth of 3.0 percent. For the ten quarters that the economy has expanded since the end of the recession in June 2009, the growth rate has been about half the rate that is the average of past economic recoveries of the same duration in the post-World War ii period. For 2012, the consensus forecast of the Blue Chip economic indicators is for growth to remain below average at 2.3 percent.

the reasons for the slow pace of economic growth are several fold. the housing market remains depressed as home prices are continu-ing to fall and banks have tightened their lend-

2 L A I R D N O R T O N I N V E S T M E N T M A N A G E M E N T, I N C .

ing standards. Consumers are deleveraging after several decades of debt accumulation. there has been a slow-down in the growth rate of several developing economies and europe has slid into a recession. the sovereign debt crisis in europe remains a risk to the global economy. Over the past decade the increase in regulations, as well as the numerous mandates and regulations handed down by various government agencies, have spawned incomprehensibly complex laws that have resulted in uncertainty, anxiety, and caution as to the future course of the economy. When uncertainty increases, the willingness of consum-ers to spend and companies to commit capital to long-term investment diminishes.

On a brighter note, U.S. corporate earnings of domestic-based companies are at a record level, propelled by productivity gains, exports, and earnings from foreign operations. Valuations for common stocks are at the lower end of their range of the past several decades.

manaGement anD BoaRD chanGes there were no significant management changes in 2011. reiner M. triltsch who joined the firm in 2009 as Chief investment Office (CiO) was elected to the Board of directors of WHV and LniM in May 2011. Sebastian V. Mickle became an Associate director in August 2011, replacing Scott C. Altonian from the Laird norton family. We thank Scott for his contribution and wisdom.

lookinG FoRwaRDthe firm has gained strength during the past year and is well focused on pursuing a growth path that will provide value to the shareholders. in this regard, i would like to thank our sharehold-ers for their continued support and partnership.

FRom the chieF inVestment oFFiceRreiner M. triltsch, CFA® Chief investment Officer, executive Vice President, Managing director

2011 turned out to be highly volatile and more entertaining than most investors had bargained for. For most of the world’s equity markets, a somewhat muted performance in the first half was followed by the traditional third quarter seasonal weakness, which culminated in a mini panic in September. Just as investors’ consensus opinion shifted to an excessively bearish stance, the U.S. stock market surprised with a double digit S&P 500 return for October and a positive result for the year. However, smaller capitaliza-tion U.S., international and emerging Markets (eM) stocks finished down for the year as the degree of their negative returns reflected the per-ceived risk of their respective asset class.

the equity markets around the world reflected the economic, social, and geopolitical events affecting the world economy. the disasters in Japan – tsunami and meltdown of a nuclear power plant – disrupted the global industrial supply chain and caused an untimely slowdown to the nascent rebound of the world economy. We observed a continued strengthening of oil prices primarily due to the persistence of high consumption growth in most eM countries and geopolitical surprises in the Middle east and north Africa, namely unrest, regime changes, revolutions, and civil war.

Apart from the persistent fear of an economic hard landing in China, the most notable effect on the world’s capital markets was the extended eurozone debt crisis, which has long since spread from greece to the core of the european com-munity. the astonishing lack of adequate policy responses to the developed world’s debt dynam-ics appeared to contribute more to the gloomy sentiment in the world’s capital markets than the underlying problem itself, which led to a flight to quality in the form of U.S. treasury securi-ties. As the eurozone debt crisis began to turn


into a liquidity and solvency crisis for euro-pean banks, Mario draghi, the new head of the european Central Bank (eCB), devised an almost genial solution to circumvent regu-lations prohibiting the eCB from purchas-ing sovereign debt directly. By lending almost 500 billion euros to european banks through a three-year repurchase agreement, the eCB appeared to have severed the link between sov-ereign debt issues and banking system liquidity.

Overall, 2011 was characterized by alternating attitudes of investors – from risk-on to risk-off and back again – leading to great frustrations with most investment results. WHV was not immune to this environment. With the excep-tion of our emerging Markets Adr and U.S. Micro Cap strategies, our investment products underperformed their respective benchmarks to varying degrees for the year. However, as of this writing, almost all of our equity strategies are outperforming their respective benchmarks (on a year-to-date basis) in the much more constructive equity markets environment of Q1/2012.

Over the last decade, asset growth in domes-tic equity strategies has been consistently challenged by persistent outflows. Continued diversification in international and eM equities as well as alternative investments, and more recently the flight to the safety of U.S. trea-sury securities played into this observed trend. Although we expect some normalization of asset flows in the future based on the increas-ing relative attractiveness of U.S. equities, WHV needs to adapt to the changing invest-ment landscape in order to continue to prosper in the future. With this in mind, we discontin-ued the WHV Socially responsible investment (Sri) strategy in the first half of 2011, as we felt that we were unable to develop this prod-uct to scale due to a highly constrained market place dominated by competitors who specialize in this asset class.

in a more constructive move, our eM invest-ment team conceived and developed an inter-national Small Cap strategy, which is consistent in philosophy with other WHV equity strate-gies. the international small cap asset class displays attractive investment characteristics: relative quality, growth, and valuation. it is also in high demand among institutional investors

and is significantly capacity constrained, since most successful offerings are currently closed to new investments. the WHV international Small Cap strategy is being implemented as of this writing. the initial funding was provided by an existing client in March 2012.

Additionally, under the leadership of Jeffrey S. romrell, Managing director of Business development, WHV completed the conversion of the institutional Business development team into a functional specialization structure with separate departments for sales, consultant relations, and client service. david A. Schwarzenberger leads the sales effort, while Brian Forth conducts and oversees client service functions. Jeff A. Stabler joined WHV as global Consultant relations Officer. With his extensive global experience, Jeff has already made significant contributions to our consultant relationship development effort. to round out our team WHV also welcomed Crystal Kwok, a well credentialed senior sales professional with vast experience in institutional sales, as Business development Officer.

in closing, we would like to highlight the posi-tive aspects of today’s investment environment. Although europe has slipped into a recession and the U.S. continues to suffer from weak economic growth, emerging market econo-mies appear to be reaccelerating as eM cen-tral banks have been able to contain inflation and are becoming more accommodative. We do anticipate further choppiness in the finan-cial markets; however, the valuations of equity securities are historically attractive on a global basis. given this outlook, we are very construc-tive for global equity market returns over the foreseeable future.

Under the strong leadership of our President and CeO, Judith Stevens, WHV’s business func-tions have been strengthened and streamlined, while maintaining WHV’s unique business cul-ture. WHV’s management team believes that we can successfully manage the firm to above industry benchmarks in terms of investment performance, sales growth, and operational excellence.

We thank you, the shareholders, for your con-tinued loyalty.

Strategy overview


Apple Computer

Freeport-McMoran Copper & Gold

National Oilwell Varco Inc.

Occidental Petroleum Corporation

CF Industries Holdings Inc.

Baker Hughes Inc.

EMC Corp.

Deere & Company

Philip Morris International

FedEx Corp.

RepResentatiVe holDinGs

inVestment oBJectiVethe objective of the WHV Large Cap Core equity strategy is to create a high-quality, focused, domestic large capitalization, gArP-oriented (growth-at-a-reasonable-Price) equity portfolio that is expected to outperform the Standard and Poor’s 500 index over a full market cycle.

inVestment stRateGYWHV utilizes a bottom-up/top-down overlay approach to construct a large cap core portfolio. emphasis is first placed on individual stock attributes using fundamental research and disciplined valuation techniques to identify portfolio candidates. WHV then assesses macroeconomic factors and economic sector exposure to ensure construction of a diversified, well-positioned portfolio.

DisclosuResthe computations of performance numbers are size weighted and include cash. As of december 31, 2011 the WHV Large Cap Core equity composite consisted of six tax-exempt accounts with $262 million in assets. net of fees performance is calculated using the highest annual fee for this product, 0.80%. Management fees are fully described in the firm’s AdV Part ii. results reflect reinvestment of income. Comparison of the composite to the S&P 500 is for illustrative purposes only and the volatility of each may be materially different due to varying degrees of diversification and/or other factors. the performance of actual client accounts may vary due to client restrictions, timing of initial investment, actual fees paid and/or other factors. Past performance does not guarantee future results.

annualiZeD peRFoRmance

the representative holdings are the ten largest positions held in a representative account and are subject to change without notice at WHV’s sole discretion.

All data is for the period ending december 31, 2011.

10 Years5 Years3 Years1 Year

-2.53

-3.31

2.11

14.26

13.36

14.11

0.76

-0.05 -0.25

3.02

2.20

2.92

WHV net of Fees WHV gross of Fees S&P 500

For the period ending december 31, 2011

Large Cap Core equity


Apple Computer

Google Inc.

AmBev

Oceaneering Int’l Inc.

Philip Morris International

Freeport-McMoran Copper & Gold

Qualcomm Inc.

Endo Pharmaceuticals Hldgs Inc.

Intercontinental Exchange Inc.

Dollar Tree Inc.


inVestment oBJectiVethe objective of the WHV Large Cap growth equity strategy is to create a portfolio of companies that offers long-term revenue, earnings growth and investment performance greater than the russell 1000® growth index.

inVestment stRateGYinvestments for the WHV Large Cap growth are made in accordance with the fundamental philosophy that revenue-driven earnings growth drives stock prices. We believe that the key to successful growth investing is determining which companies will have sustainable growth.

investments are selected for the strategy after undergoing rigorous fundamental and quantitative analysis by the firm’s investment professionals. Specific company characteristics sought include:

» Above average earnings and revenue growth » Sustainable growth driven primarily through internal development rather than by acquisition » Strong management » A strategic, dominant or proprietary position in their industry » Sound financial structure, high quality earnings, strong and/or improving returns on capital and

conservative accounting practices

DisclosuResthe computations of performance numbers are size weighted and include cash. As of december 31, 2011 the WHV Large Cap growth equity composite consisted of four accounts with $3 million in assets. net of fees performance is calculated using the highest annual fee for this product, 0.80%. Management fees are fully described in the firm’s AdV Part ii. results reflect reinvestment of income. Comparison of the composite to the russell 1000® growth index is for illustrative purposes only and the volatility of each may be materially different due to varying degrees of diversification and/or other factors. the performance of actual client accounts may vary due to client restrictions, timing of initial investment, actual fees paid and/or other factors. Past performance does not guarantee future results.1 russell 1000® growth index





-5.92

-6.68

2.64

17.82

16.89

18.02

6.94

6.09

9.45

3.52

2.70

2.50

WHV net of Fees WHV gross of Fees Benchmark1


Large Cap growth equity


Kirby Corp.

Rockwell Automation

PetSmart Inc.

GNC Holdings Inc.

Varian Medical Systems Inc

Chicago Bridge & Iron

Plantronics


Affiliated Managers Group

Ball Corp.


inVestment oBJectiVethe objective of the WHV MidCap equity, gArP-oriented (growth-at-a-reasonable-Price) strategy is to provide a highly diversified portfolio of Mid Cap companies that will outperform the S&P MidCap 400 index over a market cycle.

inVestment stRateGYthe firm’s investment professionals, through strong fundamental research and industry knowledge, seek to identify:

» Companies with strong growth in sales and earnings » Companies with high reinvestment rates » Companies that benefit from favorable economic and demographic trends

WHV emphasizes companies demonstrating: » growth through new and innovative products and services » improved manufacturing processes and/or distribution » Successful new marketing and/or sales strategies » increasing volume and/or improving pricing » Sustainable increases in profitability

DisclosuResthe computations of performance numbers are size weighted and include cash. As of december 31, 2011 the WHV MidCap equity composite consisted of eight accounts with $6 million in assets. net of fees performance is calculated using the highest annual fee for this product, 1.00%. Management fees are fully described in the firm’s AdV Part ii. results reflect reinvestment of income. Comparison of the composite to the S&P MidCap 400® index is for illustrative purposes only and the volatility of each may be materially different due to varying degrees of diversification and/or other factors. the performance of actual client accounts may vary due to client restrictions, timing of initial investment, actual fees paid and/or other factors. Past performance does not guarantee future results.





-5.79

-6.73

-1.73

21.07

19.88

19.57

3.14

2.11 3.32

9.71

8.62

9.74

WHV net of Fees WHV gross of Fees S&P MidCap 400


MidCap equity


Chart Industries Inc.

DRIL-QUIP

Atwood Oceanics Inc.

Bristow Group Inc.

Gulfmark Offshore Inc.

Lufkin Industries, Inc.

Knight Capital Group Inc.

Leap Wireless Int’l Inc.

Vishay Intertechnology

Conmed Corp.


inVestment oBJectiVethe objective of the WHV Small Cap equity strategy is to create a diversified portfolio of small capitalization companies that offers potentially higher investment returns than the russell 2000 index, measured over statistically significant periods of five years of more.

inVestment stRateGYthe firm seeks to identify small capitalization companies utilizing a bottom-up approach. Specifically, WHV targets companies demonstrating:

» Strong management » growth through introduction of innovative products and technology » An improvement in the manufacturing process » A successful new marketing or sales strategy » A sustainable increase in the profitability of their business

DisclosuResthe computations of performance numbers are size weighted and include cash. As of december 31, 2011 the WHV Small Cap equity composite consisted of 33 accounts with $1,174 million in assets. net of fees performance is calculated using the highest annual fee for this product, 1.00%. Management fees are fully described in the firm’s AdV Part ii. results reflect reinvestment of income. Comparison of the composite to the russell 2000® index is for illustrative purposes only and the volatility of each may be materially different due to varying degrees of diversification and/or other factors. the performance of actual client accounts may vary due to client restrictions, timing of initial investment, actual fees paid and/or other factors. Past performance does not guarantee future results.





-7.06

-7.99

-4.18

21.80

20.6115.63

2.88

1.860.15

8.60

7.525.62

WHV net of Fees WHV gross of Fees russell 2000®


SMaLL Cap equity


Southwest Bancorp Inc.

Limelight Networks

Cambrex Corp.

Flow Int’l Corp.

Skilled Healthcare Group

Banner Corp.

Digirad Corp.

Pixelworks Inc.

Columbia Banking

Network Engines Inc.

RepResentatiVe holDinGs peRFoRmance



3 Years2 Years1 Year

-11.29

-12.18 -11.33

11.79

10.697.40

44.54

43.14

19.14

WHV net of Fees WHV gross of Fees dJ Micro Cap


DisclosuResthe computations of performance numbers are size weighted and include cash. As of december 31, 2011 the WHV Micro Cap equity composite consisted of five accounts with $6 million in assets. net of fees performance is calculated using the highest annual fee for this product,1.00%. Management fees are fully described in the firm’s AdV Part ii. results reflect reinvestment of income. Comparison of the composite to the dow Jones U.S. Micro Cap total Stock Market indexsm is for illustrative purposes only and the volatility of each may be materially different due to varying degrees of diversification and/or other factors. the performance of actual client accounts may vary due to client restrictions, timing of initial investment, actual fees paid and/or other factors. Past performance does not guarantee future results.1 Composite and benchmark returns for the period ending december 31,

2008 is for a one-month period only.

MiCro Cap equity

inVestment oBJectiVethe objective of the Micro Cap equity strategy is to provide a diversified portfolio of micro cap companies that is expected to generate above-benchmark returns. the firm seeks to buy stocks that are selling at a meaningful discount to their perceived future value.

Most large, and even many small, capitalization companies tend to be widely followed by a number of Wall Street analysts. As a result, the fundamentals and consensus valuations of these companies are broadly disseminated throughout the market.

Micro cap securities on the other hand may have minimal to no sell side research coverage. therefore, the information available to the broad market is often limited and fragmented. WHV uses fundamental analysis in the search for undiscovered value in such companies and capitalize on the market’s relative inefficiency in their valuation. these investment opportunities that have yet to be efficiently priced by the marketplace can have the potential for significant appreciation.

inVestment stRateGYthe firm seeks to identify micro cap companies utilizing a bottom-up approach that places equal merit on valuation and growth potential. each company’s fundamentals and valuations are evaluated in the same manner in which a businessperson in that industry would. Specifically, WHV targets companies demonstrating:

» Unique goods or services that have not been realized by the market » A competitive advantage within their industry » Long term growth potential


BHP Billiton Ltd.

Nabors Industries Ltd.

Noble Corp.

Potash Corp. of Saskatchewan

Rio Tinto

Schlumberger Ltd.

Suncor Energy Inc.

Tenaris S.A.

Transocean Ltd.

Weatherford International Ltd.


inVestment oBJectiVethe objective of the WHV international equity strategy is to provide a portfolio of primarily large capitalization international equity growth stocks with the objective of generating long-term capital appreciation. the portfolio invests in American depository receipts (Adrs), U.S. dollar denominated equity securities and foreign equity securities.

inVestment stRateGYWHV utilizes a five-step, top-down investment process. First, the relative attractiveness of 10 global economic sectors is analyzed. Second, the potential of 67 industry groups is examined. third, the attractiveness of 51 countries is analyzed. Fourth, a universe of 1,500 foreign equity securities is researched. Lastly, a portfolio of 30 to 60 stocks is constructed representing economic sectors that have the potential for long-term earnings growth.

DisclosuResthe computations of performance numbers are size weighted and include cash. As of december 31, 2011 the WHV international equity composite consisted of 446 accounts with assets of $4,006 million. net of fees performance is calculated using the highest annual fee for this product,1.00%. Management fees are fully described in the firm’s AdV Part ii. results reflect reinvestment of income. Comparison of the composite to the MSCi eAFe (net) index is for illustrative purposes only and the volatility of each may be materially different due to varying degrees of diversification and/or other factors. the performance of actual client accounts may vary due to client restrictions, timing of initial investment, actual fees paid and/or other factors. Past performance does not guarantee future results.





-14.82

-15.68

-12.14

17.88

16.72

7.65 3.74

2.71

-4.72

12.43

11.334.67

WHV net of Fees WHV gross of Fees MSCi eAFe (net)


internationaL equity



Schlumberger Ltd.

Canadian National Railway Co.

Canadian Pacific Railway Ltd.

Noble Corp.

BHP Billiton Ltd.

Nestle S.A.

Potash Corp. of Saskatchewan Inc.

British American Tobacco

Diageo


inVestment oBJectiVethe investment objective of the WHV international equity Fund is to seek to achieve long-term capital appreciation by creating a portfolio of primarily large capitalization international equity growth stocks. the portfolio invests in American depository receipts (Adrs), U.S. dollar denominated equity securities and foreign equity securities.

inVestment stRateGYthe investment philosophy of the WHV international equity Fund is grounded in the belief that investing in the most attractive global economic sectors can generate superior investment performance. the mutual fund employs the same top-down sector allocation approach as the long-running WHV international equity strategy and is managed by Mr. richard K. Hirayama.

DisclosuResThe performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost and current performance may be lower or higher than the performance quoted. Sales charges would reduce performance of the Fund’s A shares.

For performance data current to the most recent month end, please call 888-948-4685.

the Maximum Sales Charge for the A Class of the fund is 5.75%. the fund charges a 2.0% redemption fee on shares redeemed within 60 days. it is possible to lose money by investing in the Fund.

the Fund invests in the securities of foreign and emerging markets which are subject to currency fluctuation, political instability, social and economic risks. emerging markets may be more volatile and less liquid than more developed markets and therefore may involve greater risks.

whVaXwhVaX

(w max load 5.75%) whViXmsci eaFe3

4Q11 10.91% 4.53% 11.07% 3.38%

1 Year -15.05% -19.94% -14.73% -11.73%

2 Year -0.69% -3.58% -0.40% -2.27%

Since inception (Annualized)

6.33% 3.75% 20.91%8.43%4/ 2.80%5

a shaRe i shaReClass retail institutional

ticker WHVAX WHViX

inception 7/31/2009 12/19/2008

gross expense ratio1 1.57% 1.32%

investor expense ratio2 1.50% 1.25%

Minimum investment $5,000 $500,000

the Fund is also subject to valuation risk where securities held by the Fund may not appreciate as anticipated.

You should carefully consider the investment objectives, risks, charges and expenses of the WHV International Equity Fund before investing. For a copy of the prospectus with this and other information about the funds, please call 888-948-4685. You should read the prospectus carefully before investing.1,2 WHV has agreed to contractually limit expenses to 1.50% (Class A) and

1.25% (Class i) through August 31, 2013.3 the benchmark referenced is as follows: MSCi eAFe index (europe,

Australasia, Far east) is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. and Canada. As of december 2011, the MSCi eAFe index consisted of the following twenty-one developed markets countries indices: Australia, Austria, Belgium, denmark, Finland, France, germany, greece, Hong Kong, ireland, italy, Japan, the netherlands, new Zealand, norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom. it is not possible to invest directly in an index.

inception: 4WHVAX - 07/31/09 | 5WHViX - 12/19/08

whV internationaL equity Fund


BHP Billiton Ltd.

Canadian Pacific Railway Ltd.

Nabors Industries Ltd.

Nestle S.A.

Noble Corp.


Schlumberger Ltd.

Suncor Energy Inc.

Tenaris S.A.




All data is for period ending december 31, 2011.

inVestment oBJectiVethe objective of the WHV global equity strategy is to provide a portfolio of primarily large capitalization global equity growth stocks that is expected to generate long-term capital appreciation.

inVestment stRateGYWHV utilizes a top-down sector allocation strategy to generate superior performance. First, the relative attractiveness of 10 global economic sectors is analyzed. Second, the potential of 67 industry groups is examined. third, the attractiveness of 52 countries is analyzed. Fourth, our universe of 2,500 global equity securities is researched. Finally, a portfolio of 30 to 60 stocks is constructed, representing primarily economic sectors that have the potential to deliver superior long-term earnings growth.

DisclosuResthe computations of performance numbers are size weighted and include cash. As of december 31, 2011 the WHV global equity composite consisted of 102 accounts with assets of $553 million. net of fees performance is calculated using the highest annual fee for this product,1.00%. Management fees are fully described in the firm’s AdV Part ii. results reflect reinvestment of income. Comparison of the composite to the MSCi World (net) index is for illustrative purposes only and the volatility of each may be materially different due to varying degrees of diversification and/or other factors. the performance of actual client accounts may vary due to client restrictions, timing of initial investment, actual fees paid and/or other factors. Past performance does not guarantee future results.

peRFoRmance


-15.22

-16.08

-5.54

17.67

16.5111.13

4.09

3.05

-2.37

7.07

6.00 1.06

WHV net of Fees WHV gross of Fees MSCi World (net)


gLobaL equity


Eurocash S.A.

Tenaris S.A.

SOQUIMICH

Itau Unibanco Holding

Credicorp Ltd.

BIM Birlesik Magazalar A.S.

Kazakhmys

Eurasia Drilling

Bancolombia S.A.

China Oilfield Services Ltd.



All data is for period ending december 31, 2011.

inVestment oBJectiVethe objective of the WHV emerging Markets equity strategy is to provide a portfolio of primarily large capitalization equity growth stocks primarily domiciled in emerging Markets. the portfolio invests in foreign equity securities, U.S. dollar denominated equity securities, global depositary receipts and American depositary receipts.

inVestment stRateGYWHV utilizes a top-down country allocation process utilizing a multi-factor scoring model to identify the relative attractiveness of various emerging markets. Subsequently, emphasis is placed on individual stock attributes using fundamental research and disciplined valuation techniques to identify portfolio candidates. WHV then assesses macroeconomic factors and economic sector exposure to ensure construction of a diversified, well-positioned portfolio. the stock selection process itself is three dimensional and constitutes a search for strong fundamentals, compelling valuations, and identifiable growth catalysts.

DisclosuResthe computations of performance numbers are size weighted and include cash. As of december 31, 2011 the WHV emerging Markets equity composite consisted of two accounts with assets of $9 million. net of fees performance is calculated using the highest annual fee for this product,1.00%. Management fees are fully described in the firm’s AdV Part ii. results reflect reinvestment of income. Comparison of the composite to the MSCi emerging Markets (net) index is for illustrative purposes only and the volatility of each may be materially different due to varying degrees of diversification and/or other factors. the performance of actual client accounts may vary due to client restrictions, timing of initial investment, actual fees paid and/or other factors. Past performance does not guarantee future results.1 inception is June 1, 20092 MSCi emerging Markets (net) index

peRFoRmance

4Q11201120102009*

29.90

29.27

31.24

19.74

18.56

18.88

-18.76

-19.59 -18.42

7.25

6.984.42



eMerging MarketS equity


SOQUIMICH

Tenaris S.A.

Credicorp Ltd.

AmBev

Itau Unibanco Holding S.A.

Coca-Cola FEMSA

TSM Co. Ltd.

Ecopetrol S.A.

CNOOC Ltd.

Arcos Dorados Holdings Inc.


inVestment oBJectiVethe investment objective of the WHV emerging Markets equity Fund is to seek to achieve long-term capital appreciation by creating a portfolio of primarily large capitalization equity growth stocks mainly domiciled in emerging Markets. the Fund’s holdings can be comprised of the following: foreign equity securities, U.S. dollar-denominated equity securities, global depositary receipts and American depositary receipts.

inVestment stRateGYthe investment philosophy is grounded in the conviction that superior investment performance results are obtainable by identifying attractively valued companies that can grow their earnings faster than the overall market.

DisclosuResThe performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost and current performance may be lower or higher than the performance quoted. Performance would have been lower without expense limitations in effect.

For performance data current to the most recent month end, please call 888-948-4685.

the Maximum Sales Charge for the A Class of the fund is 5.75%. the fund charges a 2.0% redemption fee on shares redeemed within 60 days. it is possible to lose money by investing in the Fund.

the Fund invests in the securities of foreign and emerging markets which are subject to currency fluctuation, political instability, social and economic risks. emerging markets may be more volatile and less liquid than more developed markets and therefore may involve greater risks.

wheaXwheaX

(w max load 5.75%) wheiXmsci em2

4Q11 8.21% 2.04% 8.36% 4.44%

1 Year -19.49% -24.12% -19.38% -18.41%

Since inception3 -19.49% -24.12% -19.38% -18.41%

a shaRe i shaReClass retail institutional

ticker WHeAX WHeiX

inception 12/31/2010 12/31/2010

gross expense ratio1 113.39% 104.44%

investor expense ratio1 1.75% 1.50%

Minimum investment $5,000 $500,000

the Fund is also subject to valuation risk where securities held by the Fund may not appreciate as anticipated.

You should carefully consider the investment objectives, risks, charges and expenses of the WHV Emerging Markets Equity Fund before investing. For a copy of the prospectus with this and other information about the funds, please call 888-948-4685. You should read the prospectus carefully before investing.1 WHV has agreed to contractually limit expenses to 1.75% (Class A) and

1.50% (Class i) through december 31, 2013.2 the benchmark referenced is as follows: MSCi emerging Markets index is

a free float-adjusted market capitalization index that is designed to measure the equity market performance of emerging markets. As of december 2011, the MSCi emerging Markets index consisted of the following twenty-one emerging Markets countries indices: Brazil, Chile, China, Colombia, Czech republic, egypt, Hungary, india, indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, russia, South Africa, taiwan, thailand, and turkey. it is not possible to invest directly in an index.

3 inception: the Fund began operations on 12/31/10.

whV eMerging MarketS equity Fund


Apple Computer

Pfizer Inc.

Texas Capital Bancshares Inc.

Gilead Sciences Inc.

Google Inc.


Nestle S.A. ADS

Danaher Corp.


PVH Corp.


inVestment oBJectiVethe objective of WHV’s Select World equity strategy is to provide clients with an investment portfolio that encompasses multiple distinct equity strategies in a single portfolio. the portfolio currently consists of what we believe to be WHV’s “best ideas” within each of five strategies:

» Large Capitalization Core equity » Mid Capitalization equity » Small Capitalization equity

» international equity » emerging Markets equity

inVestment stRateGYthe investment philosophy of this strategy mirrors the firm’s large cap core characteristics insofar as gArP (growth-at-reasonable-Price) valuation is employed with a bottom-up emphasis on stock selection. However, a top-down overview is incorporated to ensure that individual stock selection is suitable to the current, broad economic perspective.

annualiZeD peRFoRmance1



DisclosuResthe computations of performance numbers are size weighted and include cash. As of december 31, 2011 the WHV Select World equity composite consisted of 11 accounts with assets of $18 million. net of fees performance is calculated using the highest annual fee for this product, 1.00%. Management fees are fully described in the firm’s AdV Part ii. results reflect reinvestment of income. Comparison of the composite to the blended benchmark index is for illustrative purposes only and the volatility of each may be materially different due to varying degrees of diversification and/or


-4.66

-5.62

-1.20

4.88

3.84

7.95

15.95

14.80

14.73

1.95

0.930.11



other factors. the performance of actual client accounts may vary due to client restrictions, timing of initial investment, actual fees paid and/or other factors. Past performance does not guarantee future results.1 returns reported are for the strategy before the addition of emerging

markets, which was added in January 2012. 2 the portfolio combines 55% large cap core, 20% mid cap, 12.5%

small cap, and 12.5% international equities and is benchmarked against corresponding percentages of the S&P 500, S&P 400, russell 2000, and MSCi eAFe indices. Comparison of the WHV Select World equity composite to the blended benchmark is for illustrative purposes only and the volatility of each may be materially different due to varying degrees of diversification and/or other factors.

SeLeCt worLd equity


Coupon Maturity

FNMA 2.625% Due 11-20-14

FNMA 4.750% Due 11-19-12

FHLMC 4.625% Due 10-25-12

FHLMC 4.125% Due 12-21-12

FNMA 2.125% Due 02-17-17

JP Morgan 4.650% Due 06-01-14 Chase & Co.

Wells Fargo Co. 3.750% Due 10-01-14

FNMA 4.000% Due 03-27-13

FNMA 4.000% Due 04-08-13

FHLMC 5.500% Due 08-20-12


inVestment oBJectiVethe objective of the WHV Short-to-intermediate term Fixed income strategy is to achieve a stable rate of return with minimum risk of loss of capital. the fixed income team accomplishes this by positioning the portfolio towards those sectors and areas of yield curve perceived to be most attractive and maintaining a relatively high level of coupon income to provide stability of returns over time.

inVestment stRateGYemphasis in the Short-to-intermediate term Fixed product is in the one-to-five year area of the yield curve, using sector rotation to take advantage of better relative values. the portfolio is normally laddered with incremental returns derived primarily from sector selection. When a cyclical decline in interest rates is anticipated, maturities between five and seven years may be purchased.

DisclosuResthe computations of performance numbers are size weighted and include cash. As of december 31, 2011 the WHV Short-to-intermediate Fixed income composite consisted of two accounts with assets of $35 million. net of fees performance is calculated using the highest annual fee for this product, 0.375%. Management fees are fully described in the firm’s AdV Part ii. results reflect reinvestment of income. Comparison of the composite to the Merrill Lynch government Corporate 1-5 Year index is for illustrative purposes only and the volatility of each may be materially different due to varying degrees of diversification and/or other factors. the performance of actual client accounts may vary due to client restrictions, timing of initial investment, actual fees paid and/or other factors. Past performance does not guarantee future results.1 Merrill Lynch U.S. Corporate & government 1-5 Years index




10 Year5 Year3 Year1 Year

1.87

1.49

3.10 3.27

2.89

4.05

5.06

4.66

4.814.52

4.13

4.26



Short-to-interMediate terM Fixed inCoMe


Coupon Maturity

Bottling Group 5.125% Due 01-15-19 (Pepsi)

FHLB 2.000% Due 07-12-16

FFCB 3.300% Due 06-14-19

FNMA 1.500% Due 03-30-17

FNMA 3.000% Due 10-20-17

FNMA 3.000% Due 12-06-18

Freddie MAC 4.500% Due 01-15-15

FNMA 5.000% Due 03-15-16

FHLMC 5.000% Due 07-15-14

FHLB 5.250% Due 06-18-14




inVestment oBJectiVethe objective of the intermediate term Fixed income strategy is to provide a high relative rate of return while reducing portfolio volatility over the credit cycle.

inVestment stRateGYthis strategy adds value primarily through yield curve and fixed income sector positioning. Maturities are generally limited to one-to-ten years and portfolio duration will remain within one year shorter or two years longer than that of the Barclays Capital government/Credit - intermediate Bond index. Securities at the time of purchase are of investment grade (A/BBB) or better.

DisclosuResthe computations of performance numbers are size weighted and include cash. As of december 31, 2011 the WHV intermediate term Fixed income composite consisted of three accounts with assets of $4 million. net of fees performance is calculated using the highest annual fee for this product, 0.375%. Management fees are fully described in the firm’s AdV Part ii. results reflect reinvestment of income. Comparison of the composite to the Barclays Capital U.S. government/Credit intermediate Bond index is for illustrative purposes only and the volatility of each may be materially different due to varying degrees of diversification and/or other factors. the performance of actual client accounts may vary due to client restrictions, timing of initial investment, actual fees paid and/or other factors. Past performance does not guarantee future results.1 Barclays Capital U.S. government/Credit intermediate Bond index


10 Year5 Year3 Year1 Year

3.20

2.81

5.80

3.38

2.99

5.65

4.65

4.26

5.88

4.59

4.20

5.20



interMediate terM Fixed inCoMe



inVestment oBJectiVethe objective of the WHV Fixed income Plus Preferred Stock strategy is to achieve significantly enhanced income characteristics while striving for only a moderate increase in portfolio volatility. the fixed income team accomplishes this by positioning the portfolio towards those sectors and areas of the yield curve perceived to be the most rewarding going forward.

inVestment stRateGYthe WHV Fixed income Plus Preferred Stock strategy utilizes the firm’s short-to-intermediate fixed income strategy as well as a preferred stock component. the firm’s fixed income discipline is utilized in order to determine issues relating to relative value and appropriate entry/exit points. the skills of the firm’s fundamental equity analysts are utilized in order to determine attractive preferred equity positions for inclusion in the portfolio.

DisclosuResthe computations of performance numbers are size weighted and include cash. As of december 31, 2011 the WHV Fixed income Plus Preferred Stock composite consisted of five accounts with assets of $7 million. net of fees performance is calculated using the highest annual fee for this product, 0.375%. Management fees are fully described in the firm’s AdV Part ii. results reflect reinvestment of income. Comparison of the composite to the blended benchmark is for illustrative purposes only and the volatility of each may be materially different due to varying degrees of diversification and/or other factors. the performance of actual client accounts may vary due to client restrictions, timing of initial investment, actual fees paid and/or other factors. Past performance does not guarantee future results.1 inception date is September 30, 20072 67% Merrill Lynch U.S. Corporate & government 1-5 Year/33% Merrill

Lynch U.S. Preferred Stock Fixed rate index

peRFoRmance

the representative holdings are the seven largest positions held in a representative account and are subject to change without notice at WHV’s sole discretion.



3.79

3.40

3.46

4.67

4.28

5.34 5.30

4.90

7.24

4.67

4.284.07

WHV net of Fees WHV gross of Fees

Benchmark2

For the period ending december 31, 2011Preferred Stock Coupon Maturity

G E Capital 6.10% 11/15/32

G E Capital 6.00% 04/24/47

Viacom Inc. 6.85% 12/15/55

Bank of 6.00% 08/15/34 America Corp.

Georgia 6.375% 07/15/47Power Co.

Wells Fargo 6.25% 6/15/67 Capital

AT&T 6.375% 2/15/56

Fixed inCoMe pLuS preFerred StoCk

ConSolidated FinanCial

StatementS


LAird nOrtOn inVeStMent MAnAgeMent, inC. And SUBSidiArY

CONSOLIDATED BALANCE SHEETSas of December 31, 2011 and 2010

ASSETS

CURRENT ASSETS 2011 2010

Cash and cash equivalents $24,281,313 $22,328,706

Fees receivable - billed 594,693 798,480

Fees receivable - unbilled 12,667,590 13,507,043

Other receivables 502,980 538,564

Prepaid expenses 930,132 1,021,631

Deferred income taxes 3,303,512 3,153,543

Income taxes receivable 1,065,103 —

Investment in securities 2,777,963 3,095,835

total current assets 46,123,286 44,443,802

FIXED ASSETS - AT COSTFurniture and equipment 1,397,390 1,327,614

Computer equipment and software 2,193,054 1,735,495

Leasehold improvements 4,079,280 4,095,144

Total fixed assets - at cost 7,669,724 7,158,253

Less accumulated depreciation (4,118,998) (3,331,639)

Net fixed assets 3,550,726 3,826,614

OTHER ASSETSLong-term investment in affiliated entity 50,000 50,000

Goodwill 8,656,655 8,656,655

Other 1,043,078 985,680

total other assets 9,749,733 9,692,335

TOTAL $59,423,745 $57,962,751

Audited financial statements and their accompanying footnotes will be provided upon request when available.



CONSOLIDATED BALANCE SHEETSas of December 31, 2011 and 2010

LIABILITIES AND SHAREHOLDERS’ INVESTMENT

CURRENT LIABILITIES 2011 2010

Accounts payable and accrued expenses $23,829,740 $23,591,937

Current maturities of deferred compensation 148,427 144,743

Income taxes payable — 1,153,331

Deferred rent 212,073 205,883

total current liabilities 24,190,240 25,095,894

NONCURRENT LIABILITIESDeferred compensation - net of current maturities 1,122,882 1,231,708

Deferred income taxes 3,645,406 3,152,012

Deferred rent 1,107,172 1,319,245

total noncurrent liabilities 5,875,460 5,702,965

SHAREHOLDERS’ INVESTMENTCommon stock – $10 par. Authorized 200,000 shares; outstanding

144,852 shares and 144,414 shares, respectively 1,448,520 1,444,140

Additional paid-in capital 2,375,232 2,201,462

Retained earnings 25,379,502 22,802,309

Accumulated other comprehensive income, net of tax effect of $99,632 and $462,200, respectively 154,791 715,981

Total shareholders' investment 29,358,045 27,163,892

TOTAL $59,423,745 $57,962,751




CONSOLIDATED STATEMENTS OF INCOMEYears ended December 31, 2011 and 2010

OPERATING INCOME 2011 2010

Investment management fees:

Advisory fees earned from clients $83,656,863 $71,743,394

Subadvisor fees earned from affiliated entity 717,282 826,297

Subadvisor fees paid to affiliated entity (42,221,588) (34,105,609)

Total investment management fees, net of subadvisor fees paid 42,152,557 38,464,082

Interest income 19,296 9,261

Total operating income 42,171,853 38,473,343

OPERATING EXPENSESCompensation, benefits and related taxes 25,841,401 24,167,214

Occupancy 607,392 603,297

Travel and entertainment 1,046,026 947,246

Data processing 1,124,560 1,050,469

Depreciation and amortization 787,359 757,297

Professional services 1,193,319 1,206,678

Investment advisory 1,962,179 1,709,278

Marketing 146,060 117,319

Other 2,376,407 2,070,940

Total operating expenses 35,084,703 32,629,738

Net operating income 7,087,150 5,843,605

OTHER (EXPENSE) INCOMEInterest expense (12,598) (25,740)

Other expense, net (3,812) (5,296)

Realized gain on sale of investments, net 563,853 465,814

Total other income (expense) 547,443 434,778

Income before provision for income taxes 7,634,593 6,278,383

Provision for income taxes 2,855,964 2,483,060

NET INCOME $4,778,629 $3,795,323




CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMEYears ended December 31, 2011 and 2010

2011 2010

NET INCOME $4,778,629 $3,795,323

OTHER COMPREHENSIVE INCOMEChange in unrealized gain on investment securities, net of tax effect of $99,632 and $462,200, respectively (561,190) 279,337

COMPREHENSIVE INCOME $4,217,439 $4,074,660


CONSOLIDATED STATEMENT OF SHAREHOLDERS’ INVESTMENTYear ended December 31, 2011

AccumulatedAdditional Other

Common Stock Paid-in Retained ComprehensiveShares Amount Capital Earnings Income Total

BALANCE - December 31, 2010 $144,414 $1,444,140 $2,201,462 $22,802,309 $715,981 $27,163,892

Net income — — — 4,778,629 — 4,778,629

Dividends declared and paid — — — (2,201,438) — (2,201,438)

Stock-based compensation — — 224,386 — — 224,386

Stock options exercised 2,970 29,700 1,078,388 — — 1,108,088

Redemption of common stock (2,532) (25,320) (1,189,508) — — (1,214,828)

Excess tax benefits from stock-based compensation arrangements — — 60,504 — — 60,504

Decrease in unrealized gain on investment securities, net of tax effect of $99,632 — — — — (561,190) (561,190)

BALANCE - December 31, 2011 $144,852 $1,448,520 $2,375,232 $25,379,500 $154,791 $29,358,043




CONSOLIDATED STATEMENTS OF CASH FLOWSYears ended December 31, 2011 and 2010

CASH FLOWS FROM OPERATING ACTIVITIES 2011 2010

Net income $4,778,629 $3,795,323

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 787,359 757,297

Stock-based compensation expense 224,386 263,827

Accretion of deferred compensation expense 7,477 19,611

Deferred income taxes 705,993 (1,447,378)

Deferred compensation (112,619) (52,850)

Deferred rent (205,883) (186,673)

Realized gain on sale of investments, net (563,852) (465,814)

Excess tax benefits from stock-based compensation arrangements 27,161 136,175

(Increase) decrease in:

Fees and other receivable 1,078,824 (2,120,828)

Prepaid expenses 91,499 (86,134)

Other assets (57,398) (97,098)

Income taxes receivable/payable (2,218,434) 1,361,681

Accounts payable and accrued expenses 237,803 5,544,148

Net cash provided by operating activities 4,780,945 7,421,287

CASH FLOWS FROM INVESTING ACTIVITIESPurchases of fixed assets (511,471) (203,470)

Purchases of investments (3,782,030) (1,582,191)

Proceeds from sales of investments 3,739,996 1,512,295

Net cash used in investing activities (553,505) (273,366)

CASH FLOWS FROM FINANCING ACTIVITIESProceeds from exercised stock options 1,108,088 125,305

Redemption of common stock (1,214,828) (260,950)

Settlement of stock award — (215,919)

Dividends paid on common stock (2,201,436) (1,110,193)

Excess tax benefits (deficiencies) from stock-based compensation arrangements 33,343 (10,283)

Net cash used in financing activities (2,274,833) (1,472,040)

Increase in cash and cash equivalents 1,952,607 5,675,881

CASH AND CASH EQUIVALENTS - beginning of year 22,328,706 16,652,825

CASH AND CASH EQUIVALENTS - end of year $24,281,313 $22,328,706


W. Kurt Hauser Chairman

gary r. Severson Sebastian V. Mickle (Associate director)

Steven K. Buster

theodore H. Smyth, Jr.

dr. C. Budd Colby

Judith r. Stevens

richard J. Forster Jeffrey K. romrell

Jeffery S. Vincent

manaGement team

Judith r. Stevens - President and Chief executive Office, Chair

reiner M. triltsch - executive Vice President, Chief investment Officer

Jeffrey K. romrell - executive Vice President, Managing director, Business development

deirdre J. g. Porter - executive Vice President, Managing director

John A. gagliano - Senior Vice President, Managing director, Broker-Sponsored Programs

Pavita Fleischer - Vice President, Chief Compliance Officer

Heather L. Hall - Vice President, Managing director, Finance and Human resources, Corporate Secretary

Kenneth e. Piper - Vice President, Managing director, Operations

BoaRD oF DiRectoRs

801 Second avenue, Suite 1210Seattle, wa 98104-1576tel: (800) 258-1388Fax: (206) 219-2479

301 Battery Street, Suite 400San Francisco, CA 94111-3203tel: (800) 204-2650Fax: (415) 288-6153

whv.com

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