Investment Criteria |
The portfolio will seek long-term capital appreciation by investing primarily in equity securities approved by voting members of the committee. Securities will be selected on the basis of traditional research techniques based investment data provided by proven sources (e.g. Value-Line, Morningstars, Standard and Poor's, published resources from major brokerages, etc.) In speculative issues the committee may use research or ideas from other sources. In selecting securities the committee will evaluate factors believed to affect capital appreciation such as, the background of the issuer, industry position, historical returns on equity, and experience and qualifications of the management team. Shares purchased must be traded on registered exchanges or on over-the-counter markets based predominantly in the United States. Portfolio holdings will include common stocks of companies having varying capitalization amounts, and the committee may invest in securities of small companies with high growth, and where the committee expects earnings and price to grow at an above average rate.
The committee may invest in preferred stock, convertible stock, corporate bonds, governmental bonds, warrants, and options, although the majority of assets will be invested in common stock. The lowest rated debt obligations in the portfolio will be rated BAA or better by Morningstars, Inc. or BBB or better by Standard and Poor Rating Group.
The committee seeks to invest in companies that offer above-average growth prospects in their particular sector of the economy, without regard to the company size. Companies in the portfolio will range from small, rapidly growing companies to larger, well-established firms. The securities of small to medium-sized companies often trade less frequently and in more limited volume, and may be subject to more abrupt or erratic price movements, than securities of larger, more established companies.
The committee will normally emphasize investments in particular economic sectors. However, the committee will not invest more than 30 percent of its assets in any one industry. Furthermore, the committee will not invest more than 15 percent of its assets in any one company. Further investment criteria are as follows:* Speculative rating is when the stock is believed to have well-above-average risks in terms of the likelihood for sharp price volatility, the possibility for business failure, or the potential for significant capital loss on the investment; or if the stock sells at less than $7/share.
- The committee will invest in a minimum of 4 unrelated industries.
- The committee will not invest more than 15 percent of assets in speculative companies. *
- Of the 15 percent speculative allowance, the committee will invest no more than 50 percent (or 7.5 percent of total assets) in the use of options (other than covered call writing).
- The committee will not invest more than 10 percent of total assets in companies that have been in operation less than two years (excluding the United States government).
- The committee will not exceed 5 percent investment in short selling.
- The committee may invest in foreign securities purchasable through ADR, on the NASDAQ exchange.
- The committee will not exceed 15 percent investment in foreign securities.
- The committee may invest in closed-end mutual funds.
At times the committee may judge that conditions in the securities markets make pursuing the basic investment objective of the portfolio inconsistent with the best interests of its members. At such times the members of the Blue Blazer Investment Committee may temporarily use alternative strategies, primarily designed to reduce fluctuations in the value of the portfolio. In implementing these defensive strategies, the portfolio may invest without limit in debt securities or preferred stocks of companies in any sector of the economy, engage in options transactions, increase the portion of its assets held in cash or money market instruments, or invest in any other securities the committee considers consistent with such defensive strategies. It is impossible to predict when or for how long, the committee will use such alternative strategies.