Investment Style
The fund invests in a diversified portfolio of common stocks, with a small percentage of assets in money market mutual funds (cash) awaiting reinvestment. After an initial start-up phase during 2003-04, the fund will be fully invested in common stocks at all times. The fund intends to hold at least 30 stocks in the portfolio.
The SIF follows a small- to mid-cap value investment style. The fund's objective is to select stocks that are selling at a discount to their intrinsic value. The fund maintains a weighted-average price-to-book ratio below that of the Russell 2500 Index, and does not purchase securities with market capitalizations in excess of $5 billion. The fund is managed with the intention of obtaining the highest possible total return consistent with maintaining prudent risk.
Eligible Securities
Eligible securities for purchase include stocks trading on the New York Stock Exchange (NYSE), American Stock Exchange (AMEX), and National Association of Securities Dealers Automated Quotation system (NASDAQ). Listed Level II and III American Depository Receipts (ADRs) are eligible for purchase.
If a portfolio holding is delisted from a major exchange, it need not be sold immediately, but no new shares of that security are purchased. No explicit “social investment” screens restrict purchase of any security.
The fund may not short sell any security, purchase any security with borrowed money (on margin), nor purchase or sell any option or futures contract.
Diversification
The fund limits purchases of individual equity securities, so the position does not exceed 10 percent of the total market value of the portfolio. If due to relative price appreciation, an equity security position exceeds 10 percent of the portfolio, there is no requirement to reduce the position to less than 10 percent, but no new shares may be purchased.
Ideally, no more than 5 percent is allocated to any one stock. The fund may invest more than 10 percent of assets in broadly based exchange-traded funds (ETFs), such as the iShares S&P MidCap 400/BARRA Value Index Fund®, but may not invest in industry sector or international ETFs.