STUDENT
INVESTMENT
MANAGEMENT
PROGRAM
2002 Annual Report
EXECUTIVE SUMMARY
Objectives
Overall, the OSU Student Investment Management Program (SIM) combines traditional
academic objectives with the practical demands of hands on investment management. The
program offers the university a unique opportunity to deliver high quality practical education
in an area of considerable interest to students and employers alike.
From an academic perspective, the Student Investment Management Program (SIM) focuses
on developing the students’ understanding of the institutional structure and fundamental
concepts of asset valuation in financial markets. To do so, analytical tools are developed to
study the valuation of different types of securities. Furthermore, theoretical material and real
world applications are balanced to give the students an understanding of investment theory
and portfolio development.
In the classroom, the students become active portfolio managers of the SIM Portfolio. The
students engage in a group decision-making process while gaining real world portfolio
management experience. For many students, this is their first exposure to real world portfolio
management and, consequently, lays the foundation for their future careers in this field.
Outside of the classroom, the Student Investment Management (SIM) Program concentrates
on establishing and maintaining ties with the business community, which in turn, creates
positive public relations for both the Fisher College of Business and The Ohio State
University. The program reaches deep into the financial community and gains access to
resources seldom seen in an academic environment. In addition, students often further benefit
by gaining a competitive advantage for elite internship and full-time employment
opportunities in a variety of financial arenas.
Fund Performance – Fiscal Year 2002
The SIM portfolio had an ending value on June 30, 2002 of $15,562,506.78, which included
$402,865.90 in a SSGA Government Money Market Fund. There were a total of 35 stocks
held at this time, with a weighted average beta of 0.8791.
The SIM Portfolio lost 18.85% from July 1, 2001 to June 30th, 2002 compared to a 19.16%
drop in the S&P 500 and a 32.28% drop in the NASDAQ Composite for the same time
period. This loss reduced the equity balance in the Student Investment Management Portfolio
from a beginning balance of $19,478,030.82 to an ending balance of $15,562,506.78. The
majority of the losses occurred in the 1st quarter (July – Sept. 2001) and 4th quarter (April –
June 2002) of the 2002 fiscal year with losses of 16.36% and 10.965, respectively. The
1
portfolio actually had gains in the 2nd and 3rd quarter of 2002 of 7.45% and 1.42%,
respectively. Our slight out-performance of the S&P 500 is mainly attributed to our sector
weighting. The SIM portfolio actually over-weighted five of the six sectors (Consumer
Discretionary, Consumer Staples, Energy, Financials, Health Care, Materials) that
performed better than the overall 19.16% decrease in the S&P 500. Furthermore, the portfolio
also under-weighted all four sectors (Industrials, Information Technology,
Telecommunications, Utilities).
Most Recent Performance (July 1, 2002 – present)
Even though this annual report is supposed to focus on fiscal performance ending June
30,2002, a look at the most recent performance (since July 1, 2002) of the portfolio allows us
to get a general grasp of the SIM performance for fiscal year 2003. Specifically, the portfolio
has experienced much volatility in the 1st (July 1, 2002-September 31,2002) and 2nd (October
1, 2002-present) quarters of the 2003 fiscal year.
During the 1st quarter, the SIM portfolio decreased 13.94% from $15,562,507 to
$13,392,940.22. In reality, though, this decrease was actually less than the fall in the S&P
500, 17.63%, for the same period. With the markets rebounding, the SIM portfolio has
actually gained 12.47% in the 2nd quarter as of November 29, 2002, increasing the portfolio
value from $13,392,940.22 to $15,062,960. Still, this increase fails to meet the gains of the
S&P 500 of 14.85% over the same period. The smaller decrease in the 1st quarter and smaller
increase in the 2nd quarter when compared to S&P 500 returns should be expected since we
have maintained a defensive beta over the past fiscal year of 0.8791.
Market & Future Outlook
Currently, the United States economy appears to be nearing the end of an economic recession.
Over the past couple of years, low (often negative) earnings, falling stock prices, and halted
growth have characterized the equity markets. Recent instances of white-collar crime,
terrorism, and a potential war threat from Iraq have further added uncertainty into the future
of the U.S. equity markets. Still, real GDP actually increased at an average annual rate of
3.1% in the first half of 2002 and is expected to grow slightly during the second half of the
year. Furthermore, the hawkish FED Chairman, Alan Greenspan, has actually kept inflation
levels below 2% for the past couple of years. The FED has been very accommodative by
continually reducing the federal funds rate to stimulate the economy. At the present time, the
federal funds rate is at one of its all time lows at 1.25% after a rate reduction of 50 basis
points in November. Greenspan is hoping the U.S. economic struggles are nearing an end.
Despite the some economic growth, low inflation, and low interest rates, the U.S. Department
of Labor still reported a relatively high unemployment rate of 5.6 % for September of 2002.
The uncertain market conditions can be reflected by the fact that many investors have lowered
their risk by moving to fixed income investments, such as bonds. Sticking with equities,
though, value stocks appear to be the favored investment. When the economy is faced with
much adversity, these stocks offer a little more confidence due to their size and established
spot in the market place. Consequently, this would bode well for our target market
capitalization of $5 billion. As the year ends, questions still remained as to the health of the
2
U.S. economy and whether or not the bottom of our economic slump has been reached. Still,
the stock market has seen a turnaround since October 10, 2002. In this turnaround, the most
impressive gains have been made by some of the market’s most troubled sectors of the past
year, such as telecommunications and information technology. Veteran investors say the
most beaten-down stocks often lead a rebound, replacing the stocks that served as refuges
during the market’s decline. Consequently, in the near future, we will likely increase these
under-weighted sectors, specifically telecommunications and information technology, to
market-weight or slightly over-weight to reap potential returns as these sectors rebound from
disastrous times.
FORMAT OF THE STUDENT INVESTMENT MANAGEMENT PROGRAM
Goals
•
To provide students with a unique and valuable learning experience
•
To preserve and maintain the real purchasing power of the principal value of the SIM
portfolio while still allowing for periodic distributions of income
•
To maintain a “well-diversified” portfolio and earn a total return in excess of our
market benchmark, the S&P 500 Index.
Investment Strategy
Our investment strategy focuses on obtaining high returns, while maintaining desired risk
levels. To generate these returns while minimizing our risk exposure, we generally select
companies that have the following characteristics:
•
Growth
o Established and increasingly strong and consistent earnings growth
o Growth in EPS over the past five years of 10% per year
o Expected growth in EPS over the next five years of 10% per year
•
High Quality
o Minimal risk in product lines with established products
•
Size
o Market capitalization of at least $5 billion
•
Strength
o Recent upward price momentum
3
Class Structure
•
Approximately 35 students partake in the class each quarter
•
The class is offered to the following groups of students:
Quarter
Autumn
Winter
Spring
Summer
•
Rank
Undergraduate
Graduate (MBAs)
Undergraduate
Graduate (MBAs) & Undergraduate
During the class, each student acts as a security analyst as follows:
o Each student is assigned one stock from the existing SIM portfolio; he/she is
responsible for the detailed monitoring of that stock throughout the quarter
o The class is further divided into market sector groups, which are responsible
for researching and analyzing that specific market sector; periodic reports are
delivered to the class outlining overall trends, recent developments and specific
stock recommendations.
o The student analysts give updates during each class meeting on the current
events and activities affecting their firm. The analyst interprets these events
and activities in order to make recommendations to the class regarding the
holding.
o Each member of the class is also responsible for researching a new stock that
may be added to the portfolio at the end of the quarter. The analyst prepares a
written report and makes an oral presentation to the class.
•
During each class session, the professor holds discussions including topics such as
portfolio management, capital market theories and specific analytical techniques.
Further discussions are then held based on the students’ stock and industry reports and
how they relate to recent and future portfolio performance.
•
For continuity, a graduate associate (MBA) is responsible for:
o Preparing reports for the Office of the Treasurer
o Monitoring computer labs and answering questions
o Making presentations to each new class on previous portfolios and strategies
•
To further add to continuity, each analyst submits executive summaries briefing the
reasons for specific buys/sells during the quarter to be passed on to the next SIM class.
4
Advisers
•
•
Professor Andrew Karolyi, Professor Cindy Collier, and Professor Kevin Spellman
currently administer the program
In addition, the program depends on the assistance received from the Treasurer’s
Office. Al Rodack, Jim Nichols, Tim Michel and Gary Leimbach have made
numerous presentations to the class, while other staff members of the Treasurer’s
Office and local brokerage firms have helped this program succeed.
Research Sources
The class has the ability to monitor current and past performance of stocks and the portfolio
using real-time online information systems. Bridge Information Systems has donated the use
of its financial information service. In addition, the library has several financial information
terminals, including Bloomberg, available. Students use these terminals to view market
information in and out of class. Furthermore, the SIM class has set its portfolio up on Yahoo!
Finance and can consequently easily monitor any recent news on the holdings in the portfolio.
PORTFOLIO PERFORMANCE AND TRANSACTION DETAIL – FISCAL 2002
Dividend, Interest, & Management Fee History
Equities in the SIM portfolio returned $251,799.25 in dividends over the fiscal year (detail
pages 7-8). Between trades, the portfolio often has cash on hand. This cash is invested is
invested in a SSGA Government Money Market Fund, which earned approximately $7,996.05
the past year (detail page 9). As a result of our active trading, the SIM portfolio incurred a
management fee of approximately $83,373.65 by fiscal year end (detail page 9).
Transaction History
As active portfolio managers, the SIM class had 51 stock purchases totaling $16,525,577.68
(detail pages 10-11) and 49 equity sales totaling $16,816,177.46 (detail pages 11-12) for the
2002 fiscal year.
Sector Weighting
A detailed analysis of the SIM portfolio sector weighting versus its benchmark, the S&P 500,
is displayed on pages 13-14.
5
2002 Performance
The SIM portfolio quarterly returns for fiscal year 2002 are compared with the S&P quarterly
returns for the same period on page 15. In addition, the SIM portfolio’s 2002 annual returns
are measured against four major indices on page 15.
Recent Performance
The SIM 2002 Quarter 1 performance is measured against the S&P 500’s performance on
page 16. Furthermore, the SIM’s Quarter 2 performance, thus far, is also compared to the
S&P 500 on page 16.
Historic Performance
The SIM’s 3-year, 5-year, and 10-year annual return performances net of fees versus the S&P
500 are displayed on page 17. Additionally, the SIM portfolio’s 5-year annual return is also
measured against four major indices on page 17. Finally, the graph on page 18 compares the
returns an equal investment of $1,000 would have generated in both the SIM portfolio and the
S&P 500 since the SIM portfolio’s inception in February 1990.
6
Dividend History
Fiscal Year 2002
Firm
Philip Morris Companies, Inc.
Cardinal Health, Inc.
U.S. Bancorp
General Electric Co.
July Total
Pay Date
7/10/02
7/16/02
7/16/02
7/25/01
Amount
$13,250.00
$250.00
$5,625.00
$2,640.00
$21,765.00
Tyco International, Ltd.
Verizon Communications, Inc.
Lowe's Companies, Inc.
Merrill Lynch & Company, Inc.
Citigroup, Inc.
Alcoa, Inc.
August Total
8/1/02
8/1/02
8/3/02
8/22/02
8/24/02
8/27/02
$118.75
$3,850.00
$472.00
$1,920.00
$4,000.00
$2,700.00
$13,060.75
Pfizer, Inc.
American Electric Power Co.
Anheuser-Busch Companies, Inc.
United Technologies Corp.
Williams Companies, Inc.
Johnson & Johnson
Halliburton Co.
Cooper Tire & Rubber
Federal Home Loan Mortgage Corp.
September Total
9/6/02
9/10/02
9/10/02
9/10/02
9/10/02
9/11/02
9/27/02
9/28/02
9/28/02
$2,200.00
$9,000.00
$3,420.00
$2,250.00
$2,880.00
$3,600.00
$975.00
$5,617.50
$2,000.00
$31,942.50
Quarter 1 Total
$66,768.25
Goodrich (B.F.), Co.
Philip Morris Companies, Inc.
Cardinal Health, Inc.
U.S. Bancorp
General Electric Co.
October Total
10/1/02
10/10/02
10/15/02
10/15/02
10/25/02
$1,485.00
$9,164.00
$250.00
$5,625.00
$2,960.00
$19,484.00
SBC Communications, Inc.
Tyco International, Ltd.
Verizon Communications, Ltd.
Lowe's Companies, Inc.
Citigroup, Inc.
Merrill Lynch & Company, Inc.
Alcoa, Inc.
November Total
11/1/02
11/1/02
11/1/02
11/2/02
11/21/02
11/21/02
11/26/02
$3,023.75
$98.75
$3,850.00
$472.00
$3,584.00
$2,416.00
$1,950.00
$15,394.50
Pfizer, Inc.
American Electric Power Co.
Anheuser-Busch Companies, Inc.
Exxon Mobil Corp.
Johnson & Johnson
Duke Energy Corp.
Halliburton Co.
Cooper Tire & Rubber
December Total
12/6/02
12/10/02
12/10/02
12/10/02
12/11/02
12/17/02
12/20/02
12/28/02
$2,200.00
$4,860.00
$3,060.00
$2,806.00
$3,600.00
$2,612.50
$5,000.00
$5,617.50
$29,756.00
Quarter 2 Total
MBNA Corp.
$64,634.50
1/2/02
$2,700.00
7
Phillip Morris Companies, Inc.
Cardinal Health, Inc.
General Electric Co.
January Total
1/10/02
1/15/02
1/25/02
$14,964.00
$375.00
$3,330.00
$21,369.00
Lowe's Companies, Inc.
Tyco International, Ltd.
Verizon Communications, Inc.
Citigroup, Inc.
February Total
2/1/02
2/1/02
2/1/02
2/22/02
$472.00
$161.25
$9,240.00
$3,584.00
$13,457.25
Pfizer, Inc.
Anheuser-Busch Companies, Inc.
Johnson & Johnson
Duke Energy Corp.
Halliburton Co.
Cooper Tire & Rubber
March Total
3/7/02
3/11/02
3/12/02
3/15/02
3/21/02
3/28/02
$2,600.00
$3,060.00
$3,600.00
$3,987.50
$5,000.00
$5,617.50
$23,865.00
Quarter 3 Total
$58,691.25
MBNA Corp.
Philip Morris Companies, Inc.
Cardinal Health, Inc.
General Electric Co.
Dow Chemical Co.
April Total
4/1/02
4/10/02
4/15/02
4/25/02
4/30/02
$3,000.00
$7,714.00
$375.00
$3,330.00
$3,685.00
$18,104.00
Tyco International, Ltd.
Verizon Communications, Inc.
Lowe's Companies, Inc.
Masco Corp.
Citigroup, Inc.
Phillips Petroleum Co.
May Total
5/1/02
5/1/02
5/3/02
5/7/02
5/24/02
5/31/02
$228.75
$7,084.00
$596.00
$3,726.00
$5,022.00
$1,980.00
$18,636.75
Entergy Corp.
Pfizer, Inc.
IMS Health, Inc.
Anheuser-Busch Companies, Inc.
Conoco, Inc.
Callaway Golf Co.
Exxon Mobil Corp.
Johnson & Johnson
Du Pont (E.I.) De Nemours & Co.
Duke Energy Corp
Halliburton Co.
Amerada Hess Corp.
Cooper Tire & Rubber
June Total
6/3/02
6/6/02
6/7/02
6/10/02
6/10/02
6/10/02
6/10/02
6/11/02
6/12/02
6/17/02
6/27/02
6/28/02
6/28/02
$1,221.00
$2,821.00
$318.00
$2,592.00
$912.00
$1,575.00
$1,288.00
$4,100.00
$1,645.00
$3,987.50
$1,437.50
$600.00
$2,467.50
$24,964.50
Quarter 4 Total
$61,705.25
2002 Annual Total
$251,799.25
8
Interest History
Fiscal Year 2002
SSGA Gov't Fund Money Market
SSGA Gov't Fund Money Market
SSGA Gov't Fund Money Market
SSGA Gov't Fund Money Market
SSGA Gov't Fund Money Market
SSGA Gov't Fund Money Market
SSGA Gov't Fund Money Market
SSGA Gov't Fund Money Market
SSGA Gov't Fund Money Market
SSGA Gov't Fund Money Market
SSGA Gov't Fund Money Market
SSGA Gov't Fund Money Market
Pay Date
Amount
7/2/01
8/1/01
9/4/01
10/1/01
11/1/01
12/3/01
1/2/02
2/1/02
3/1/02
4/1/02
5/1/02
6/3/02
$ 353.29
$ 341.42
$ 311.09
$ 234.69
$ 226.11
$ 3,014.91
$ 752.36
$ 407.47
$ 365.89
$ 636.19
$ 371.89
$ 980.74
2002 Annual Interest Total
$ 7,996.05
2002 Management Fee Summary
Fee Date
9/30/01
12/31/01
3/31/02
6/30/02
2002 Fee Total
Amount
$20,279.23
$21,704.42
$21,937.00
$19,453.00
$83,373.65
9
Fiscal Year 2002 Buys
Stock
ALLTEL CORP
AMERADA HESS CORP
ALLTEL CORP
AMERISOURCEBERGEN CORP
BARRICK GOLD CORP
BELLSOUTH CORP
CALLAWAY GOLF CO
CALPINE CORP
CALPINE CORP
CARDINAL HEALTH INC
CITIGROUP INC
CONCORD EFS INC
CONCORD EFS INC
CONCORD EFS INC
CONOCO INC
DOW CHEM CO
DU PONT E I DE NEMOURS +
CO
DUKE ENERGY CO
DUKE ENERGY CO
ENTERGY CORP
EXXON MOBIL CORP
EXXON MOBIL CORP
EXXON MOBIL CORP
GENERAL ELEC CO
GENERAL ELEC CO
GOODRICH CORP
HALLIBURTON CO
IMS HEALTH INC
INTERNATIONAL BUSINESS
MACHS
LEHMAN BROTHERS HLDGS
INC
LOWES COS INC
MBNA CORP
MBNA CORP
MASCO CORP
MERRILL LYNCH + CO INC
MICROSOFT CORP
MICROSOFT CORP
ORACLE CORP
PFIZER INC
PFIZER INC
PHILIP MORRIS COS INC
PHILLIPS PETE CO
PROCTER + GAMBLE CO
SBC COMMUNICATIONS INC
Number
of
Shares
6,600.00
2,000.00
11,100.00
2,100.00
6,300.00
3,800.00
22,500.00
18,000.00
7,500.00
5,000.00
5,500.00
10,700.00
11,000.00
8,600.00
4,800.00
11,000.00
4,700.00
Avg Price
per
share
Total Costs
$50.79
$335,639.70
$79.43
$158,980.00
$63.92
$710,057.01
$80.94
$170,093.07
$19.95
$126,063.00
$32.40
$123,348.00
$17.43
$393,475.50
$24.11
$434,980.80
$22.61
$169,950.00
$67.77
$339,100.00
$49.30
$271,425.00
$57.20
$612,040.00
$29.76
$327,360.00
$28.18
$242,348.00
$28.84
$138,709.92
$30.61
$337,364.50
$47.23
$222,247.96
Commission
& SEC Fee
$396.00
$120.00
$555.00
$126.00
$378.00
$228.00
$1,350.00
$1,080.00
$375.00
$250.00
$275.00
$0.00
$0.00
$0.00
$288.00
$660.00
$282.00
Trade
Date
11-Jun-02
6-Jun-02
11-Jun-02
11-Jun-02
11-Jun-02
11-Jun-02
26-Feb-02
26-Nov-01
29-Nov-01
29-Nov-01
22-Mar-02
27-Aug-01
29-Nov-01
26-Nov-01
27-Mar-02
26-Feb-02
26-Feb-02
Settlement
Date
14-Jun-02
11-Jun-02
14-Jun-02
14-Jun-02
14-Jun-02
14-Jun-02
30-Aug-01
29-Nov-01
27-Mar-02
30-Aug-01
9,500.00
5,000.00
3,700.00
12,200.00
5,600.00
2,500.00
2,000.00
11,200.00
5,400.00
32,200.00
15,900.00
2,400.00
$39.13
$36.38
$40.57
$41.60
$43.29
$39.12
$41.89
$29.84
$34.21
$23.46
$21.81
$77.41
$372,305.00
$182,150.00
$150,312.87
$508,097.06
$242,743.76
$97,945.00
$83,900.00
$334,880.00
$185,067.18
$757,186.22
$347,513.58
$185,928.00
$570.00
$250.00
$222.00
$610.00
$336.00
$150.00
$120.00
$672.00
$324.00
$1,932.00
$795.00
$144.00
27-Aug-01
29-Nov-01
22-Feb-02
27-Aug-01
22-Mar-02
6-Jun-02
30-Aug-01
11-Jun-02
30-Aug-01
9-Nov-01
22-Mar-02
11-Jun-02
15-Nov-01
27-Mar-02
14-Jun-02
3,200.00
$58.54
$187,501.76
$160.00
4-Jun-02
7-Jun-02
6,200.00
30,000.00
5,800.00
27,600.00
3,100.00
2,500.00
4,000.00
38,000.00
1,700.00
13,100.00
10,000.00
5,500.00
3,300.00
11,800.00
$46.14
$33.90
$38.25
$25.86
$53.95
$64.67
$60.99
$15.67
$40.27
$34.69
$46.58
$62.17
$89.88
$42.50
$286,440.00
$1,018,500.00
$222,140.00
$715,220.88
$167,431.00
$161,675.00
$244,200.00
$595,460.00
$68,561.00
$455,225.00
$466,301.00
$342,277.10
$296,782.86
$502,208.00
$372.00
$1,500.00
$290.00
$1,380.00
$186.00
$0.00
$240.00
$0.00
$102.00
$786.00
$500.00
$330.00
$165.00
$708.00
26-Feb-02
26-Nov-01
22-Mar-02
27-Mar-02
27-Aug-01
8-Nov-01
22-Mar-02
14-Nov-01
22-Mar-02
11-Jun-02
29-Nov-01
22-Mar-02
11-Jun-02
27-Aug-01
10
30-Aug-01
27-Mar-02
11-Jun-02
14-Jun-02
29-Nov-01
27-Mar-02
30-Aug-01
14-Nov-01
27-Mar-02
27-Mar-02
14-Jun-02
27-Mar-02
14-Jun-02
30-Aug-01
SBC COMMUNICATIONS INC
TJX COS INC NEW
TIMBERLAND CO
TYCO INTL LTD
TYCO INTL LTD
VERIZON COMMUNICATIONS
WORTHINGTON INDS IN
Total
1,200.00
33,500.00
6,000.00
5,000.00
5,400.00
14,000.00
10,300.00
$32.48
$20.90
$33.36
$49.98
$33.40
$50.38
$15.06
$39,042.00
$702,160.00
$200,539.20
$250,150.00
$180,630.00
$706,160.00
$155,761.75
$72.00
$2,010.00
$360.00
$250.00
$270.00
$840.00
$618.00
$16,525,577.68
$23,627.00
11-Jun-02
11-Jun-02
27-Aug-01
1-Nov-01
22-Mar-02
15-Nov-01
11-Jun-02
14-Jun-02
30-Aug-01
6-Nov-01
27-Mar-02
14-Jun-02
Fiscal Year 2002 Sells
Stock
ALCOA INC
ALCOA INC
AMERICAN ELEC PWR INC
AMERICAN ELEC PWR INC
ANHEUSER BUSCH COS INC
ANHEUSER BUSCH COS INC
ANHEUSER BUSCH COS INC
CALPINE CORP
CARDINAL HEALTH INC
CITIGROUP INC
CITIGROUP INC
CONCORD EFS INC
COOPER TIRE + RUBR CO
COOPER TIRE + RUBR CO
COOPER TIRE + RUBR CO
COOPER TIRE + RUBR CO
CREE INC
DOW CHEM CO
DU PONT E I DE NEMOURS +
CO
Number
of
Shares
5,000.00
13,000.00
6,900.00
8,100.00
2,000.00
2,600.00
2,800.00
25,500.00
1,800.00
2,600.00
400
25,100.00
6,500.00
30,000.00
3,400.00
20,100.00
30,000.00
5,300.00
4,700.00
Avg Price
per
Total
share
Proceeds
$39.06
$195,009.48
$32.75
$425,085.80
$45.80
$315,595.46
$42.15
$340,917.61
$44.22
$88,317.05
$49.80
$129,322.05
$52.01
$145,483.61
$7.55
$190,992.11
$65.11
$117,086.47
$48.33
$125,493.91
$41.69
$16,655.49
$32.44
$814,107.76
$17.10
$110,756.29
$25.40
$760,177.06
$20.00
$67,824.89
$20.57
$412,232.52
$21.68
$650,378.32
$32.40
$171,396.83
$43.87
$205,877.76
11
Commission
& SEC Fee
$300.00
$650.00
$414.00
$486.00
$120.00
$156.00
$140.00
$1,530.00
$108.00
$156.00
$20.00
$0.00
$390.00
$1,800.00
$170.00
$1,206.00
$0.00
$318.00
$282.00
Trade Date
27-Aug-01
1-Nov-01
30-Aug-01
26-Nov-01
30-Aug-01
26-Feb-02
11-Jun-02
22-Feb-02
11-Jun-02
27-Aug-01
11-Jun-02
27-Mar-02
27-Aug-01
8-May-02
4-Jun-02
6-Jun-02
14-Nov-01
11-Jun-02
11-Jun-02
Settlement
Date
30-Aug-01
6-Nov-01
29-Nov-01
14-Jun-02
14-Jun-02
30-Aug-01
14-Jun-02
30-Aug-01
13-May-02
7-Jun-02
11-Jun-02
14-Jun-02
14-Jun-02
DUKE ENERGY CO
E M C CORP MASS
ENTERGY CORP
EXXON MOBIL CORP
FEDERAL HOME LN MTG
CORP
GENERAL ELEC CO
GOODRICH CORP
HALLIBURTON CO
HALLIBURTON CO
IMS HEALTH INC
JOHNSON + JOHNSON
LOWES COS INC
MBNA CORP
MERRILL LYNCH + CO INC
MICROSOFT CORP
ORACLE CORP
ORACLE CORP
PHILIP MORRIS COS INC
PHILIP MORRIS COS INC
PHILIP MORRIS COS INC
SBC COMMUNICATIONS INC
SOUTHWEST AIRLS CO
TIMBERLAND CO
TYCO INTL LTD NEW
US BANCORP DEL
UNITED TECHNOLOGIES
CORP
VERIZON COMMUNICATIONS
VERIZON COMMUNICATIONS
WILLIAMS COS INC
WILLIAMS COS INC
Total
2,600.00
34,000.00
800
12,200.00
10,000.00
$29.27
$15.05
$42.50
$40.14
$69.83
$75,969.70
$509,982.94
$33,960.97
$488,959.67
$697,740.72
$130.00
$1,700.00
$40.00
$732.00
$500.00
11-Jun-02
8-Nov-01
11-Jun-02
9-Nov-01
1-Nov-01
14-Jun-02
14-Nov-01
14-Jun-02
15-Nov-01
6-Nov-01
18,500.00
5,400.00
15,200.00
28,500.00
15,900.00
7,400.00
7,200.00
5,600.00
15,100.00
1,300.00
25,500.00
9,700.00
9,200.00
12,500.00
2,800.00
11,800.00
34,125.00
18,000.00
1,600.00
30,000.00
10,000.00
$37.58
$20.42
$31.58
$15.74
$21.31
$58.08
$46.38
$34.36
$51.00
$53.51
$13.34
$8.17
$47.65
$53.62
$56.65
$38.16
$18.33
$34.89
$53.64
$18.27
$53.75
$694,294.57
$109,982.44
$479,214.16
$446,833.37
$337,864.80
$429,335.06
$333,493.94
$192,134.12
$769,110.95
$69,482.90
$338,685.89
$78,704.38
$437,813.38
$669,478.69
$158,475.22
$449,564.99
$623,644.24
$626,916.17
$85,725.13
$546,566.73
$536,982.08
$925.00
$270.00
$760.00
$1,710.00
$954.00
$444.00
$432.00
$280.00
$906.00
$78.00
$1,530.00
$582.00
$552.00
$750.00
$140.00
$708.00
$1,706.25
$1,080.00
$96.00
$1,500.00
$500.00
22-Mar-02
24-Oct-01
27-Aug-01
22-Mar-02
14-Jun-02
11-Jun-02
6-Jun-02
11-Jun-02
14-Nov-01
11-Jun-02
22-Mar-02
11-Jun-02
30-Aug-01
26-Feb-02
11-Jun-02
15-Nov-01
27-Aug-01
26-Feb-02
27-Aug-01
26-Nov-01
1-Nov-01
27-Mar-02
29-Oct-01
30-Aug-01
27-Mar-02
5,600.00
14,400.00
4,500.00
11,500.00
$46.75
$40.72
$33.10
$27.62
$261,460.07
$585,483.47
$148,676.83
$316,929.41
$336.00
$864.00
$270.00
$690.00
22-Mar-02
11-Jun-02
30-Aug-01
26-Nov-01
$16,816,177.46
$29,411.25
12
14-Jun-02
11-Jun-02
14-Jun-02
19-Nov-01
14-Jun-02
27-Mar-02
14-Jun-02
14-Jun-02
30-Aug-01
30-Aug-01
29-Nov-01
6-Nov-01
27-Mar-02
14-Jun-02
29-Nov-01
SIM Sector Weighting vs. S&P 500 Sector Weighting as of June 30, 2002
S&P
S&P
Weight Sector Returns Ticker
13.60%
-15.82%
ELY
LOW
MAS
TJX
SIM
SIM
Amount
Weight OVER/UNDER
18.3900%
OVER
$ 356,400 2.3500%
$1,026,040 6.7700%
$ 748,236 4.9400%
$ 656,935 4.3300%
Consumer Staples
Anheuser Busch
Philip Morris
Procter & Gamble Co.
9.80%
BUD
MO
PG
8.8000%
$ 580,000 3.8300%
$ 458,640 3.0300%
$ 294,690 1.9400%
Energy
Amerada Hess Corp.
Conoco
Duke Energy
Exxon-Mobile
Haliburton
Phillips Petroleum
5.80%
$
$
$
$
$
$
165,000
133,440
370,090
331,452
183,310
323,840
9.9500%
1.0900%
0.8800%
2.4400%
2.1900%
1.2100%
2.1400%
OVER
AHC
COC
DUK
XOM
HAL
P
Financials
American International Group
Citigroup
Concord EFS
Lehman Brothers Holdings
MBNA
20.70%
$ 757,353
$1,065,625
$ 479,226
$ 200,064
$ 998,716
23.100%
5.000%
7.030%
3.160%
1.320%
6.590%
OVER
AIG
C
CEFT
LEH
KRB
Health Care
Amerisourcebergen Group
Cardinal Health
Johnson & Johnson
Pfizer Inc.
14.90%
OVER
$ 159,600
$ 810,612
$ 658,476
$1,218,000
18.770%
1.050%
5.350%
4.340%
8.030%
Industrials
General Electric
Tyco
11.30%
UNDER
$ 325,360
$ 247,233
3.780%
2.150%
1.630%
Information Technology
International Business Machine
Microsoft
Oracle
14.30%
8.960%
1.140%
4.400%
3.420%
UNDER
IBM $ 172,800
MSFT $ 667,340
ORCL $ 518,956
Materials
Barrick Gold Corp.
2.60%
3.310%
0.790%
OVER
Sectors
Consumer Discretionary
Calloway
Lowe's Company, Inc.
Masco
TJX Companies Inc.
11.82%
-3.40%
-10.56%
-13.22%
ABC
CAH
JNJ
PFE
-19.73%
GE
TYC
-39.03%
7.56%
ABX
13
$ 119,637
UNDER
Dow Chemical
Worthington Industries
Telecommunication Services
Alltel Corp.
BellSouth Corp.
SBC Communications
Verizon Communications
4.40%
Utilities
Entergy
2.60%
DOW $ 195,966
WOR $ 186,430
1.290%
1.230%
$ 310,200
$ 119,700
$ 36,600
$ 160,600
4.140%
2.050%
0.790%
0.240%
1.060%
UNDER
AT
BLS
SBC
VZ
$ 123,076
0.810%
0.810%
UNDER
ETR
-41.66%
-31.82%
*S&P 500 Annual Return (7/1/01-6/30/02) = -19.16%
SIM vs. S&P Sector Weights
As of June 30, 2002
Percent of Portfolio
25%
20%
15%
10%
5%
Ca
sh
Co
ns
um
er
Di
s
Co cre t
io
ns
na
um
ry
er
St
ap
le
s
En
er
gy
Fi
na
nc
ia
H
ls
ea
lth
In
Ca
fo
re
rm
In
du
at
st
io
ria
n
Te
ls
Te
ch
le
n
ol
co
og
m
m
y
M
un
at
ica
er
tio
ia
ls
n
Se
rv
ice
s
Ut
ili
tie
s
0%
Sector
14
SIM
S&P
Student Investment Management Portfolio
Quarterly Returns
Fiscal Year 2001-2002
Date
30-Jun-01
SIM Value
Income
SIM Returns
$19,478,031
S&P Value
S&P Returns
1,224.38
30-Sep-01
$16,223,381
$
67,774
-16.36%
1,040.94
-14.98%
31-Dec-01
$17,363,533
$
68,110
7.45%
1,148.08
10.29%
31-Mar-02
$17,549,259
$
60,217
1.42%
1,147.39
-0.06%
30-Jun-02
$15,562,507
$
63,694
-10.96%
989.82
-13.73%
SIM
S&P
Annual Return:
-18.85%
-19.16%
Annual Return Net of Fees:
-19.25%
Relative Performance
Index Comparison
Fiscal 2002
07/01/01 to
06/30/02
-18.85%
-12.01%
-19.16%
-18.89%
-32.28%
SIM Portfolio
Dow Jones Industrial Avg
S&P 500 Index
Valueline Index
NASDAQ Composite
15
INDEX COMPARISON
FISCAL YEAR 2002
SIM Portfolio
Dow Jones Industrial
Avg
S&P 500 Index
Valueline Index
NASDAQ Composite
0.00%
Annual Return (% )
-5.00%
-10.00%
-15.00%
-20.00%
-25.00%
-30.00%
-35.00%
Portfolio / Index
RECENT PERFORMANCE
SIM Portfolio Returns
6/30/02 - 11/29/02
SIM
2003 Q1 Return
S&P 500
-13.94%
-17.63%
12.47%
14.85%
(7/1/02-9/31/02)
2003 Q2 Return
(thus far: 10/1/02-11/29/02)
*SIM return doesn't include fees, interest or dividends
16
SUMMARY
SIM Portfolio Returns (annualized)
NET OF FEES
as of 6/30/02
SIM
S&P 500
3 Year Return
-5.6%
-10.0%
5 Year Return
4.3%
3.1%
10 Year Return
8.5%
11.1%
INDEX COMPARISON
FIVE YEAR ANNUALIZED RETURN
6.00%
Annual Return (%)
4.00%
2.00%
0.00%
SIM Portfolio
Dow Jones
Industrial Avg
S&P 500 Index
-2.00%
-4.00%
-6.00%
Portfolio / Index
17
Valueline Index
NASDAQ
Composite
M
ar
-9
0
M
ar
-9
1
M
ar
-9
2
M
ar
-9
3
M
ar
-9
4
M
ar
-9
5
M
ar
-9
6
M
ar
-9
7
M
ar
-9
8
M
ar
-9
9
M
ar
-0
0
M
ar
-0
1
M
ar
-0
2
AMOUNT ($)
GROWTH OF $1,000
$6,000
$5,000
$4,000
$3,000
SIM
S&P
$2,000
$1,000
$0
18