Model Club Agenda 9:30 Call to Order 9:30 Welcome Guests 9:35 Minutes of Previous Meeting 9:40 Treasurer’s Report 9:45 Old Business Registering with NAIC 10:00 New Business 10:10 Education Segment Investigating Red Flags 10:30 Stock Selection Guide review Dollar General Family Dollar 99 Cents Only Dollar Tree 11:25 Portfolio Review 11:25 Review investments for the month 11:30 Adjourn

INVESTIGATING RED FLAGS Education Segment Cincinnati Investment Model Club

The Problem (Red Flag) on the SSG Dollar General

The Red Flag in the Visual Analysis Section of the SSG is also reflected in Section 2A.

When this type of Red Flag appears Don’t ignore the issue! Don’t second guess or assume you know what happened! Do Investigate and find out what happened Do decide if it is a short term problem that can be fixed, or a long term problem which makes it a company that you want to avoid

Where do you go to find the information you need? The Management Discussion and Analysis section of the Annual Report or 10K should tell you what happened. This section is often referred to as the MD&A section.

Getting the information you need There are several places you may have to check to find out how management intends to fix the problem. Some places to look are: –The President’s letter to the Shareholders in the Annual Report –Press Releases –Call Investor Relations and ask them

Dollar General (from 2000 Annual Report)

Dollar General -President’s Message

Judgment In each case you must decide –How serious is the problem? –Is it a short term or long term problem? –Is management addressing the problem? –Will their solution fix the problem?

DOLLAR TREE The Problem

Dollar Tree What happened?

Dollar Tree (from the MD & A section)

The Solution- (from the MD & A Section)

Solutions - ( from the MD & A Section)

What the President had to say