Investment Challenge Program December 2002, Volume III, Issue 11 Website of the Month: Investors, Quote of the Month: ICP Risk Return for 3-Years Ending September 30, 2002 The chart above graphs total return and standard deviation of individual ICP universities against the S&P 500 for the three-year-period ended September 30, The graph provides a visual representation of how the ICP universities are performing based on the amount of risk they are taking. Those universities falling in the upper left quadrant have both lower risk and higher returns than the S&P 500, while those universities falling in the lower right quadrant have both higher risk and lower returns than the S&P 500. Ideally, a university would want to fall in the upper left quadrant. Those universities in the upper right hand quadrant, though outperforming the index, have taken on more risk than the S&P 500. The editors of CNN and Money magazine have an extremely useful website, which offers current information on different investment vehicles, as well as information on upcoming earnings releases. The site also offers an IPO center and an investor research center “When you do the common things in life in an uncommon way, you will command the attention of the world.” -George Washington Carver Important Announcements… Hello again. This semester has flown by and it is almost time for the holiday break. I hope all of you have enjoyed being a part of the Investment Challenge Program this semester and I hope many of you will be joining us again in the Spring. For those of you “graduating” from the program, good luck with all you do and keep in touch! Brand new guidelines were sent out during November and we want to make everyone aware of the changes. The new guidelines will go into effect January 1 st, Listed below are highlights from the changes: The new maximum allocation to any sector may not exceed the sector weight of the selected index plus 10%. The maximum allocation to any one sector may not exceed 40% unless the sector’s weight exceeds 40% of a particular index, in which case the portfolio is allowed a maximum weight of 110% of the particular sector’s weight. At the time of purchase, no single issue should exceed 5% (at market value) of the portfolio for portfolios in excess of $150,000 and 8% (at market value) of the portfolio for portfolios equal to or less than $150,000. Positions will be allowed to appreciate to 8% (at market value) of the portfolio for portfolios in excess of $150,000 and 10% (at market value) of the portfolio for portfolios equal to or less than $150,000. All portfolios in excess of $150,000 are expected to have a minimum of 20 stocks. All portfolios that are equal to or less than $150,000 are expected to have a minimum of 15 stocks. Individual portfolios will now be allowed to invest in Real Estate Investment Trusts (REITS) to a maximum allocation of 5% of the total portfolio. The average market-cap of the portfolio is expected to be above $10 billion. All companies must have a market-cap of at least $250 million at the time of purchase. Universities will be allowed 30 days to fix any violation of the above guidelines. If you need information on a particular index, the BARRA website, at is a great place to start your search. It includes specific information on the indices, such as fundamentals and sector allocation.