PORTFOLIO CONSTRUCTION

In our opinion, investors spend far more time devoted to chasing yesterday's top performing stock, sector, fund or manager than developing a sound strategic course based on their personal objectives.

Our dynamic process dictates that there are two primary choices to be made in any investment management program:

Strategic Decisions
Related to the asset allocation of the portfolio and based upon each individual's specific investment objectives.

Tactical Implementation
The strategic decision applied through the use of various investment vehicles: Individual stocks versus mutual funds, indexed product (passive strategy) versus active investment management, hedge funds.

Draughn Partners utilizes a variety of investment vehicles including but not limited to individual stocks, bonds, mutual funds, external investment advisory organizations, commingled investment vehicles, common trust funds or exchange traded funds (ETFs). Draughn Partners maintains complete discretion over the funds and is subject to maintaining the fiduciary standards applicable to each account. Our goal is to effectively and efficiently implement the investment strategy.

We diversify our clients' investments by both broad asset class (e.g. common stocks and fixed income securities) and sub-classes (e.g. within common stocks by economic sector, geographic area, industry, quality and size). Our purpose for 'true diversification' is to provide reasonable assurance that no single security, class of securities or investment may have a disproportionate impact on the aggregate results.

Draughn Partners has developed three disciplines that allow our clients to better understand our application of "mean/variance optimization". Through the use of pre-identified conservative, moderate and growth portfolios we are able to execute client investment strategies in an efficient manner.

Our approach examines three variables for each investment selection:

Expected return
Standard deviation
Correlation

Distinguishing Draughn Partners from our competition is our discipline based on projected estimates of return, time weighted historical measures of risk, the correlation of returns for each asset class, and active rebalancing. Asset allocation is dynamic at Draughn Partners and rebalancing is driven by market opportunity.

To ensure that our investment ship maintains its direction, we run and reallocate our clients' assets no less than quarterly.