August, 2010

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• Research-driven investment philosophy.• Focus on intrinsic business value.• Multiple approaches to valuation.• Bottom-up portfolio construction.• Disciplined decision process.

Independent thinking can lead to better investment performance.

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Investment Philosophy

Three key attributes:1. High-quality businesses trading at a discount to

intrinsic value.2. Businesses whose value will grow over time.3. Honest, capable management teams that think

and act like owners.

Would you want to own the whole business? If not, don’t buy the stock.

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Price and Value Converge Over Time

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Value VALUE PRICE

Identify stock at a discount to value.

Value grows over time.

Stock rises as price/value gap closes.

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Example: Accenture (ACN)Information as of 7/31/10. Not intended as a recommendation.

• High returns on capital.• Strong free cash flow due to low capital needs.• Consulting business attracts “best and brightest.”• Outsourcing business has global workforce, low

cost structure.• Buying back 15-20% of stock over 5 year period.• $4b in cash, virtually no debt.

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Portfolio Management

• Avoid over-diversification by holding 20-30 securities.

• Full range of market capitalization, no artificial limits.

• Weightings reflect risk, confidence in outcomes.• Long-term time horizon reduces turnover.• Asset allocation based on needs of client.• Conservative bond portfolio reduces credit and

interest rate risks.

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Representative Equity Portfolio

Industry holdings are based on clients portfolios as of 7/31/10. Holdings are subject to change and are not intended as recommendations.

Industry holdings are based on clients portfolios as of 7/31/10. Holdings are subject to change and are not intended as recommendations.

Financial Planning

Investments Insurance

Employee Benefits Retirement Planning

Estate Planning Education Planning

Jacobs Investment Management provides advice in all areas above but does not sell insurance or provide service in any area other than investment management. Financial planning fees are based on an hourly rate, but there is no fee for investment clients.

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