VALUE

Objective

The goal of the Value strategy is to provide capital appreciation and current income from dividend-paying securities.

Investor Profile

The investor seeks security in companies paying a high payout of earnings through dividends. The investor seeks current income provided by the distribution of earnings. Long-term growth is achieved through the capital appreciation of individual stocks. Taxes are a concern and therefore the fund looks to minimize the impact of tax liabilities.

Fund Strategy

Investments are selected by choosing stocks with relatively high dividends, strong management and execution history, and relatively low valuation. The stocks are chosen by confirming demand from large institutions (pensions and mutual funds). 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

The fund follows a precise selection process. The process begins with screening for companies with dividend yield greater than the S&P 500. Dunn Warren then selects 25 stocks that have a return-on-assets (ROA) greater than the S&P 500, a demonstration of management effectiveness, and a price-to-book value (a valuation metric) less than the S&P 500.