TOTAL VALUE

Objective

The goal of the Total Value strategy is for long-term growth. Dunn Warren strives to reach its goal by investing in those stocks that exhibit a high degree of management efficiency and are selling at a discount.

Investor Profile

The Total Value strategy is appropriate for those investors that have a long-term time horizon. The strategy is always fully invested. The strategy is expected to exhibit volatility that is equivalent with the overall market (S&P 500).

Fund Strategy

The portfolio is rebalanced once a year by choosing 25 stocks that meet two criteria. The criteria are expected to reflect investments that are currently trading below their potential market value. While Dunn Warren strives to hold all stocks for at least twelve months to minimize short-term tax consequences, this is not always in the best interest of our investors. Therefore, the investment decision is based on a monthly review of the portfolio unless global and/or portfolio specific events require more frequent review.

Dunn Warren will "hedge" or reduce market exposure when the reward presented by the market is unfavorable based on the risk seen in the valuation and the economic growth in the economy. Valuations based on price to earnings and/or present value of cash flow, are combined with our risk/reward matrix to drive decisions on reducing market risk. Specific strategies for hedging the market include purchasing exchange traded funds that increase (decrease) in value when the underlying index (S&P 500, NASDAQ 100 or Russell 2000) declines (increases) in value. Dunn Warren may also choose to use leveraged inverse funds. These funds' objective is to move in the opposite direction of the market by twice the amount of the market. We will limit the use of these funds to 50% of the account value at the time of investment.

Selection Process

Investments are selected if they meet the following two criteria:

• Return on Invested Capital: A reflection of management efficiency, Return on Invested Capital measures how well managers are utilizing resources and create value for shareholders.
• Earnings Yield: A measure of value, earnings yield compares the earnings income a stock generates to the current stock price.