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									The Raven Investment Fund
   2009 Annual Report

 Calvin Bryant, Alex Lavold, Matt Marsalka, Daniel Coppess and Dan Stichter with Eli Lilly and
  Company Chairman and CEO Dr. John C. Lechleiter at the Annual Meeting of Shareholders

             Created by
   BSNS 4160: Portfolio Management

                  Anderson University
                 Falls School of Business
                      April 27, 2009

                                                  TABLE OF CONTENTS

INTRODUCTION AND COURSE CONTENT ..................................................................... 3

    Risk and Return...................................................................................................................... 3
    Portfolio Management ........................................................................................................... 4
       Sharpe Ratio
       Treynor Ratio
       Jensen’s Alpha
    Redefining Investment Strategy Education: RISE IX ........................................................... 5

RAVEN INVESTMENT FUND ............................................................................................... 6

    Policies and Objectives .......................................................................................................... 6
        Investment Objective
        Fund Composition
        Social Responsibility
        Investment Decision Process

    Sample Investment Recommendation.................................................................................... 8
       Business Summary
       5-Year Stock Performance
       Social Responsibility
       Investment Recommendation
    Review of the 2008 Raven Investment Fund ......................................................................... 10
    Review of the 2009 Raven Investment Fund ......................................................................... 11

RECOMMENDATIONS .......................................................................................................... 13

    Follow Up on Previous Recommendations............................................................................ 13
        Socially Responsible Investing
        Trading Room
        Public Website
        Simulated Raven Investment Fund
    New Recommendations ......................................................................................................... 14
        Chicago Field Trip
        Additional Funding

  BSNS 4160 is a hands-on, application based course that allows students to manage the Raven
Investment Fund portfolio that has a current value in excess of $175,000. This course offers
students the opportunity to manage real dollar investments and earn academic credit. The BSNS
4160 course benefits the University through improved course offerings within the field of
finance where academic knowledge and practical experience are developed simultaneously.
MBA students enrolled in BSNS 6550: Accounting and Financial Management in the
International Economy will study this report and manage the investments that have been held for
longer than 8 months and make new investment decisions for the Raven Investment Fund.
Students enrolled in BSNS 4150: Investments in the fall of 2009 will study this report and the
decisions made by the BSNS 6550 course and manage a simulated portfolio. The cycle continues
when students enrolled in BSNS 4160 in the spring of 2010 again manage the Raven Investment


  When considering how to allocate the Raven Investment Fund, there are many types of
financial instruments from which to choose. Potential investments could be made in stocks,
bonds, and U.S. Treasury bills to name a few. Figure 1.1 shows the average returns for the period
between 1925 and 2005 for these types of financial instruments. As you can see, stocks have
provided a return for investors that is unmatched by other types of financial instruments.

  Based on the information above it would seem logical to compose this fund of mainly stocks
simply based on the high return. However, before making such decisions the question must be

answered: Why do stocks offer such a high return in comparison with other financial
instruments? Investors earn higher rewards for the amount of risk to which they expose
themselves. Stocks are considered to have much higher risk than government T-bills which are
considered to have little to no risk, and in turn stocks will generally have a higher return. Table
1.3 shows the average return an investor can receive from investing in stocks as compared to
bonds and T-bills. As shown, an investor buying U.S. Treasury bills is buying a risk-free note
that will earn an average return of 3.8%. As an investor moves up this list, the financial
instruments have higher risk and the investor is on average rewarded with a risk premium.
However, there is no guarantee that an investor in small company stocks will earn a return of
17.4%; the investor could lose the whole investment if the company goes bankrupt, or gain 100%
if the company’s stock price doubles. The chart below shows the historical average return of
various financial instruments in comparison to each other.

  Besides having a portfolio containing different financial instruments it is important for those
instruments to be well diversified. In 2007, the investors of the Raven Investment Fund chose to
invest in ten individual securities or exchange traded funds from different sectors. In 2008, the
investors of the Raven Investment Fund chose to invest in thirty-two individual securities or
exchange traded funds from different sectors. In 2009, the investors of the Raven Investment
Fund chose to invest in fifty-three individual securities or exchange traded funds from different
sectors. We predict that this diversification will reduce the risk of loss in the portfolio. The
current investors of the fund are learning from the investments made in previous years and are
working to better diversify the fund and produce a higher return. This year the amount invested
in the fund was increased by $100,000 from $67,656 to $167,656. This investment allowed us to
invest in more securities and different sectors. To help diversify we choose securities from
different sectors based upon market size and potential. Also, with more money available in the
fund we were able to invest into international and fixed income securities. Investing in different
sectors, different financial instruments, and negatively correlated securities will help to diversify
the risk of the portfolio.


 As stated above, the return on an investment depends on the amount of risk the investor is
exposed to. For that reason, the raw return of a portfolio is not a good indicator of portfolio
performance. More sophisticated formulas must be used when making investment decisions to
account for risk. We chose to use three formulas in particular to evaluate individual securities
and our overall portfolio.

Sharpe Ratio = (Rp-Rf)/σp       The Sharpe ratio takes the raw return and adjusts it based on the
                                standard deviation of the portfolio which looks at the total risk of
                                the portfolio: the larger the number the better

Treynor Ratio = (Rp-Rf)/βp      The Treynor ratio takes the raw return and adjusts it based on the
                                beta of the portfolio which looks at the risk of the market: again
                                the larger the better.

Jensen's Alpha = Rp-{Rf+[E(RM)-Rf] βp} Jensen's Alpha uses beta to adjust for risk and
                                       compare a portfolio or individual security to the
                                       security market line. The larger the number the

 In addition to the ratios above, we also used valuation models. To do this, we used dividend
and free cash flow models to value prospective stocks. We then compared our valuation of
prospective securities to the fair value as rated by Morningstar and the S&P.


  Calvin Bryant, Garey Buck, Ben Hayhurst, Alex Lavold, and Dr. Saunders attended the
prestigious 9th annual RISE Global Student Investment Forum at the University of Dayton from
March 26th to the 28th. Included among the many world experts to speak were CEOs, CFOs,
Chairmen of the Board, and current and past presidents of Federal Reserve Banks—just to name
a few. Students and professionals from every populated continent and all 50 states were in
attendance. There were keynote speeches, panel discussions, and workshops in all areas of
investments. Below is a sampling of our classes’ favorites, who shared their insights in regard to
the United States economy and the changing global environment. Much was to be gained from
this experience, including knowledge that has helped our class in forming our investment

      Robert D. McTeer, Jr     Steve Liesman          John P. Surma         Richard W. Fisher
      Distinguished Fellow     Senior Reporter       Chairman and CEO       President and CEO
             NCPA                  CNBC              United States Steel   Fed. Res. Bank, Dallas

                 RAVEN INVESTMENT FUND

Investment Objective
   The primary goal of the Raven Investment Fund is capital appreciation. The fund will seek to
outperform the S&P 500 on a risk adjusted basis. Specifically, the fund should have a higher
Sharpe Ratio, Treynor Ratio and Jensen’s Alpha based on monthly returns.

Fund Composition
    In order to provide the highest level of risk adjusted performance and stay in compliance with
Anderson University Investment Policy, the fund will hold between 10%-to-30% of its assets in
fixed income investments and between 70%-to-90% in equity investments. To benefit from
diversification while considering transactions costs, the fund will seek to hold between 30 and 50
individual securities (e.g. individual stocks, bond funds, exchange traded funds) with the
stipulation that no more than 20% of the fund's assets will be invested in any one security and no
more than 30% of the fund's assets will be invested in any given sector of the S&P 500.

Social Responsibility
  The Raven Investment Fund has adopted a policy of investing only in socially responsible
companies whose corporate values fall in line with the Christian morals vital to Anderson
University. This policy goes beyond excluding the typical “sin stocks” (e.g. gaming, alcohol,
tobacco) and places great importance on choosing companies who are bringing positive change
to the world while providing stake holders a positive return on investment. To ensure the
companies selected by the Raven Investment Fund adhere to this policy each purchase proposal
will include a statement of social responsibility, highlighting values vital to the proposed
company and its corporate environment.

Investment Decision Process

  Our investment recommendation process begins with industry research. Prior to bringing an
investment recommendation to the class, student analysts review an entire industry, its current
status, potential for change, and its projected 12 month course. Once a firm grasp on a specific
industry is obtained, student analysts began researching companies within the given industry.

  Our investment strategy is based upon finding undervalued companies with socially
responsibly practices. Student analysts research the individual company using recent news
articles, information found on Yahoo! Finance, Morningstar, S&P Market Insight, and the
corporation’s website along with additional research from other news and media outlets. In
understanding the company’s structure and its business practices students are then able to
determine how the company would fit into the industry and better project what could be

  The next step in our evaluation is to calculate the intrinsic value of a company. Individual stock
valuations are conducted using dividend discount models and free-cash-flow (FCF) discounting
models. Historical data on revenue, FCF, dividends and earnings-per-share are gathered. The
cost of equity and the weighted-average-cost-of-capital are estimated. Assumptions are made
with respect to future growth rates and model valuations are compared with other analysts’
estimates. Additionally, recommendations include a correlation matrix showing the correlation
between the stock and the Raven Investment Fund as well as with the other stocks that are
currently included in the sector. This will help determine if the stock will further diversify and
reduce the risk of the portfolio.

  Students present their buy/sell/hold recommendations to the class in the form of a 2-page
investment recommendation. The 2-page recommendation contains six parts (company
description, 5-year stock performance, social responsibility, valuation, investment opinion, and
sources). An example of the report for the Kellogg company is provided below. After the
recommendation presentation, the class reviews the company, the student’s recommendation and
evaluation, and asks questions prior to voting to buy, sell or hold the investment.
   Buy/Sell/Hold decisions are determined by a class vote. The entire BSNS 4160/BSNS 6550
class is eligible to vote. Buy/Sell decisions require 70% approval of students in attendance as
long as at least 70% of the total class enrollment is present. All dividends received from fund
investments will be deposited into a money market account until they can be reinvested back into
the overall fund. Investments are restricted to transactions which can not cause a loss greater than
the dollar amount invested in each particular investment. For example, the use of margin, short
positions, and futures are prohibited.

Consumer Staples: Kellogg Company
Student Analyst: Garey Buck
March 8, 2009
Business Summary: Yahoo Finance
Kellogg Company, together with its                 Kellogg Company sells its products in North
subsidiaries, engages in the manufacture and       America, Europe, Latin America, and the
marketing of ready-to-eat cereal and               Asia Pacific. The company was founded in
convenience foods. Its principal products          1906 and is headquartered in Battle Creek,
include ready-to-eat cereals and convenience       Michigan.
foods, such as cookies, crackers, toaster
pastries, cereal bars, fruit snacks, frozen
waffles, and veggie foods. The company
sells its cereal products under the Kellogg
brand name principally to the grocery trade.
It also markets cookies, crackers, and other
convenience foods under Kellogg, Keebler,
Cheez-It, Murray, Austin, and Famous
Amos brands to supermarkets in the United
States through direct store-door delivery
system and other distribution methods.
5-year Stock Performance Relative to the S&P 500 and Sector: Yahoo Finance

Social Responsibility
“Every day, all around the world, we make thousands of choices that affect the future direction
of our company and the impacts we have on our stakeholders. To better understand those choices
and the risks and opportunities they pose for our company, we have begun to develop a
comprehensive and integrated global corporate responsibility strategy. Our approach to corporate
responsibility aims to ensure that we consider a range of options and impacts when we make
decisions, that we understand the short-and long-term ramifications, and that we make informed,
responsible choices” ( Additionally, Kellogg also makes a global impact
with their W.K. Kellogg foundation. This foundation makes an impact in global hunger by taking
steps to reduce global malnutrition. Their corporate governance quotient is higher than 79% of
the S&P 500 and 93% of food and beverage companies (Yahoo Finance). Morningstar rates
Kellogg with a B in stewardship.

Valuation: Data from Morningstar and S&P Market Insight
           Revenue        g          FCF         g        Dividends g        EPS     g                     PE     12.46
2008       12,822.00      8.9%       806         -21.8%   1.30      8.3%     2.98    8.0%                 Beta    0.46
2007       11,776.00      8.0%       1,031       7.7%     1.20      5.3%     2.76    10.0%            Tax Rate    29.7%
2006       10,907.00      7.2%       957         24.4%    1.14      7.5%     2.51    6.4%           Total Debt    6,612
2005       10,177.00      5.9%       769         -19.1%   1.06      5.0%     2.36    10.3%        Market Equity   145,764
2004       9,614.00       9.1%       950         2.8%     1.01      0.0%     2.14    11.5%                 Wd     4.3%
2003       8,812.00       6.1%       924         23.9%    1.01      0.0%     1.92    9.7%                 Wce     95.7%
2002       8,304.00       -6.2%      746         -12.9%   1.01      0.0%     1.75    48.3%                 Rrf    2.9%
2001       8,853.00       27.3%      856         31.7%    1.01      1.0%     1.18    -18.6%                Rm     12.0%
2000       6,955.00       -0.4%      650         22.9%    1.00      4.2%     1.45    74.7%                 Rd     5.5%
1999       6,984.00                  529                  0.96               0.83                  Rs (CAPM)      7.1%
                                                                                                        WACC      6.9%
Avg. Growth               7.3%                   6.6%              3.5%              17.8%         Shares Out.    3,923

Morningstar FV            Constant Dividend                     Supernormal FCF               Supernormal Dividend
$59.00                    Growth     4.5%                          Growth    FCF                 Growth         Div.
                          Rs         7.1%                 2009     3.0%      830     2009        4.0%           1.35
S&P FV                    Price      $52.25               2010     10.0%     913     2010        6.0%           1.43
$50.00                                                    2011     10.0%     1,005   2011        5.0%           1.50
                                                          2012     9.0%      1,095   2012        5.0%           1.58
Yahoo 1-Yr Target             Constant FCF                2013     8.0%      1,183   2013        5.0%           1.66
$50.14                    Growth    6.5%                  Tg       6.5%      1,259   Tg          4.5%           1.73
                          WACC      6.9%                  WACC     6.9%              Rs          7.1%
Current Price             Price     $53.02                TV       314,846           TV          67
$37.16                                                    Price    $56.85            Price       $53.44
                     Correlation Matrix
              RIF     S&P 500 XLP          K      PG
  RIF         1.00      0.90      0.64    0.38    0.34
S&P 500                 1.00      0.80    0.46    0.50
 XLP                              1.00    0.58    0.81
   K                                      1.00    0.64
  PG                                              1.00

Investment Recommendation
I recommend that we purchase 120 shares of Kellogg Company. In a time of recession people
will seek foods that are affordable. This investment will give us balance and diversification
within the consumer staples sector. With this investment we will have a food producing company
that has been around for over 100 years. In terms of this providing diversification we will now
have a personal/household products distributor (PG), a retail store/pharmacy (WMT), pet foods
distributor (FEED), and a food distributor (K). Morningstar, S&P, Yahoo Finance, and I all value
Kellogg at $50 or more a share. Along with the idea of growth opportunities, Kellogg has
maintained a regular dividend. The dividend alone should provide for nearly a 3.7% return.
According to the analysts, 13 give Kellogg a buy recommendation while 5 rate it at a hold.
Finally, according to the graphs, Kellogg has been outperforming the S&P and Consumer Staples
sector. I believe that this will continue especially in the economic conditions that we face today!

Kellogg Company website:
S & P Market Insight:
Yahoo! Finance:

 At the beginning of 2008 the Raven Investment Fund was granted an additional $100,000, this
gave the fund a total of $110,000. The additional $100,000 was invested in 32 different
securities. To ensure diversification each sector was assigned a target weight based largely on
weight in the S&P 500 and expected growth.
  In 2008 stocks markets around the world suffered significant losses. In 2008 the Raven
Investment Fund slightly outperformed the S&P 500 by 0.6%. However, despite outperforming
the S&P the Raven Investment Fund still lost -36.4% (see the table below). The top two
performing stocks were Johnson & Johnson which incurred a 6% loss and Well Point which lost
9%. Investments that experienced the greatest losses in 2008 were Lehman Brothers which lost
100% and AIG which lost 97%. These stocks were considered by many to be solid investments
at the time, however they were two of the most adversely affected companies during the financial
crisis of 2008.
                                           Monthly Monthly* Yearly Yearly* Quarterly Quarterly*
     Date        RIF Value      S&P 500    RIF % S&P % RIF % S&P %            RIF %      S&P %
 12/31/2008     $169,927.10      903.25    2.43%    1.1% -36.4% -37.0%       -22.4%      -22.1%
 11/30/2008      $68,265.62      896.24     -9.5%   -7.2%
 10/31/2008      $75,425.11      968.75    -16.3% -16.8%
  9/30/2008      $90,100.43     1,164.74   -13.1% -8.9%                      -14.2%       -8.6%
  8/31/2008     $103,629.49     1,282.83     0.8%   1.5%
  7/31/2008     $102,786.96     1,267.38    -2.1%   -0.8%
  6/30/2008     $104,962.06     1,280.00   -11.5% -8.4%                       -6.3%       -2.9%
  5/31/2008     $118,610.23     1,400.38     0.7%   1.3%
  4/30/2008     $117,744.77     1,385.59     5.1%   4.9%
  3/30/2008     $112,016.82     1,322.70     1.7%   -0.4%                      1.8%       -9.5%
  2/29/2008     $110,120.72     1,330.63     0.1%   -3.3%
  1/31/2008     $110,000.00     1,378.55     0.0%   -6.0%                 * Adjusted for dividends
 As the table below shows, the worst performing sector in 2008 was the financial sector. This
was relatively unavoidable as the sector benchmark fell 56.7%. Healthcare was the top
performing sector for the Raven Investment Fund with a loss of 13.8%. The Raven Investment
Fund’s Jensen’s Alpha indicates the fund outperformed the S&P 500 by 5.3% in 2008 on a risk
adjusted basis. Much of the losses incurred in 2008 were due to the systemic risk of a poor
overall economy and could not have been avoided by diversification.
                    RIF %    Benchmark % Benchmark                                     RIF      S&P
   Cons. Disc.      -29.0%       -34.0%         XLY                  Monthly Average -3.5%     -3.6%
  Technology        -37.2%       -42.2%         XLK
                                                          Monthly Standard Deviation 7.1%      6.1%
   Healthcare       -13.8%       -24.8%         XLV
    Finance         -65.3%       -56.7%          XLF              Annualized Average -41.5%   -43.2%
   Industrials      -34.6%       -40.2%          XLI    Annualized Standard Deviation 24.6%   21.0%
    Materials       -58.5%       -45.5%          XLB                             Beta 1.08      1.00
     Energy         -44.8%       -39.8%          XLE                          R-Sqrd 0.85       1.00
    Utilities         ---        -31.4%         XLU                      Sharpe Ratio -1.85    -2.24
Consumer Staples -46.6%          -17.1%          XLP
 Fixed Income*      -17.8%        5.8%          AGG                     Treynor Ratio -0.42    -0.47
      RIF          -36.43%      -37.00%        S&P 500                 Jensen's Alpha 5.3%     0.0%
*Does not include NORXX (interest, dividends, expenses)      Assumed Risk Free Rate 4.0%


   We began the semester with $169,927.10 in cash and equity positions. As of March 31st, the
S&P 500 was down 11.3% whereas the Raven Investment Fund has seen only a 1.2% loss.
Although the fund decreased in value, we outperformed the market by 10.1% before adjusting
for risk. The chart below shows our monthly performance relative to the S&P 500 for first
quarter of 2009.

                                             Monthly Monthly* Yearly Yearly* Quarterly Quarterly*
    Date          RIF Value       S&P 500    RIF % S&P % RIF % S&P %           RIF %      S&P %
 3/31/2009       $167,829.37       797.87      6.0%   8.8%                     -1.2%      -11.3%
 2/28/2009       $158,391.68       735.09     -4.4% -10.7%
 1/31/2009       $165,707.84       825.88     -2.5%   -8.4%                 *Adjusted for dividends

  The table below shows that all but one of the sectors in the Raven Investment Fund
outperformed its benchmark for the first quarter. Consumer Discretionary was the top
performing sector for the Raven Investment Fund with a first quarter return of 19.8% compared
to a loss of 8.9% for its benchmark. The Raven Investment Fund’s Jensen’s Alpha indicates the
fund outperformed the S&P 500 by an annualized 15.7% in the first quarter on a risk adjusted

                        RIF           Benchmark                                             2009, Q1
    Cons. Disc.       19.8%       -8.9%        XLY                                       RIF        S&P
    Technology         9.3%        1.4%        XLK                   Monthly Average    -0.3%      -3.4%
    Healthcare        -2.5%       -8.8%        XLV        Monthly Standard Deviation    5.5%       10.6%
      Finance        -11.1%      -29.6%        XLF                Annualized Average    -3.8%     -41.3%
    Industrials      -14.9%      -21.3%         XLI     Annualized Standard Deviation   19.1%      36.8%
     Materials        12.4%       -2.3%        XLB                               Beta    0.52       1.00
      Energy         -24.1%      -11.1%        XLE
      Utilities        1.0%      -12.0%        XLU                            R-Sqrd     0.99       1.00
 Consumer Staples     -0.3%      -11.6%        XLP                       Sharpe Ratio   -0.41      -1.23
  Fixed Income*       -0.4%       -2.6%        AGG                      Treynor Ratio   -0.15      -0.45
        RIF          -1.23%      -11.7%        $INX                    Jensen's Alpha   15.7%      0.0%
*Does not include NORXX (interest, dividends, expenses)      Assumed Risk Free Rate     4.0%

    Overall, the portfolio has performed very well over the course of the semester and has
continued to climb in the second quarter. As of the market open on April 27th the portfolio value
has increased to $183,250.92 which is a 7.84% return for 2009 compared to a 4.1% loss for the
S&P 500. The table on the next page summarizes the portfolio holdings as of the market open on
April 27th. Included in the table are sector weights compared to the sector target weights, the
individual investments within each sector, the holdings value, the 2009 dollar difference, the
student analyst, the dividend yield and the 2009 capital gain for each individual investment.
Some of our best investments in 2009 include Whirlpool (WHR) with a 84.7% gain, Apple
(AAPL) with a 47.7% gain, PNC Financial Services Group (PNC) with a 51.3% gain, and
UnitedHealth Group (UNH) with a 41.4% gain. As of April 27th all but one sector is out
performing their benchmark with six of ten sectors beating their benchmarks by more than 10%.
It is also noteworthy that the purchases made in this year (absent the preexisting holdings) are
cumulatively up by 12.6%.

                                            Raven Investment Fund Portfolio: 4/27/2009

 Target Actual                           4/27/09        2009    Student Dividend    2009                         RIF*          Benchmark*
 Weight Weight        RIF      Shares     Value      Difference Analyst  Yield   Cap. Gain     Cons. Disc.      43.5%         5.7%     XLY     Outperform
  10%      12%       YUM        100      3,487.00      337.00     Dan     2.2%     10.7%       Technology       24.6%        11.0%     XLK     Outperform
   Cons. Disc.        BBY        75      2,945.25      837.00     Dan     1.4%     39.7%       Healthcare       -2.0%        -10.5%    XLV     Outperform
                      AEO       180      2,808.00    1,123.20     Dan     2.6%     66.7%         Finance         6.6%        -12.6%    XLF     Outperform
                     DLTR        30      1,277.40      213.90     Dan     0.0%     20.1%        Industrials      1.8%         -7.5%     XLI    Outperform
                     LOW        300      6,327.00    1,738.20     Dan     1.6%     37.9%         Materials      20.6%        10.4%     XLB     Outperform
                     WHR        120      4,887.60    2,241.12     Dan     4.2%     84.7%          Energy        -5.7%         -3.6%    XLE     -
  15%        16%      VIP        90       955.80       311.40    Marc     4.4%     48.3%         Utilities      -1.9%        -12.6%    XLU     Outperform
   Technology        AAPL        25      3,097.50      963.75    Marc     0.0%     45.2%      Cons. Staples      1.2%         -9.9%    XLP     Outperform
                     AAPL        30      3,717.00    1,200.90    Marc     0.0%     47.7%     Fixed Income**      1.2%         -2.6%    AGG     Outperform
                     CSCO       140      2,578.80      296.80    Marc     0.0%     13.0%           RIF          7.84%         -4.1%    $INX    Outperform
                     GOOG        10      3,894.90      818.40    Marc     0.0%     26.6%
                     GOOG        20      7,789.80    1,127.20    Marc     0.0%     16.9%                    2009 Buys*
                     ORCL       170      3,364.30      350.20    Marc     0.3%     11.6%       Investment     $ Change      % Change
                     EMC        150      1,794.00      223.50    Marc     0.0%     14.2%       104,309.24     13,137.52      12.6%
                     CMTL        50      1,699.00      403.50   Victor    0.0%     31.1%
  15%        14%      JNJ        55      2,800.60     -490.05     AJ      3.6%    -14.9%     * Does not include dividends
    Healthcare       MRK         85      1,993.25     -590.75     AJ      6.5%    -22.9%     **Does not include NORXX (interest, dividends, expenses)
                      WLP        70      2,865.80      -83.30     AJ      0.0%     -2.8%
                      LLY        60      1,980.60     -435.60     AJ      5.9%    -18.0%     Quote Add Inn Link:
                      AET       170      4,073.20     -554.20     AJ      0.2%    -12.0%
                     UNH        280      6,456.80    1,890.00     AJ      0.1%     41.4%
                      STJ       138      4,791.36     -249.50     AJ      0.0%     -4.9%
   7%         8%      AIB        85       202.30      -196.35    Matt     0.0%    -49.3%
     Finance            C       150       478.50      -528.00    Matt     1.3%    -52.5%
                       V         50      3,019.00      396.50    Matt     0.7%     15.1%
                       V         26      1,569.88      143.78    Matt     0.7%     10.1%
                      AIG        75       109.50        -8.25    Matt     0.0%     -7.0%
                      USB       100      1,897.00     -604.00    Matt     9.0%    -24.2%
                    LEHMQ        80        3.29          1.01    Matt     0.0%     44.2%
                      PNC        75      3,241.50    1,098.75    Matt     6.1%     51.3%
                      ACE        80      3,520.00      571.20    Matt     2.3%     19.4%
   8%         8%      FDX        35      1,962.10     -283.15   Calvin    0.8%    -12.6%
    Industrials       TRN       100      1,300.00     -276.00   Calvin    2.5%    -17.5%
                       BA        45      1,742.40     -177.75   Calvin    4.3%     -9.3%
                     MMM         35      1,995.00      -18.90   Calvin    3.6%     -0.9%
                      TM         30      2,427.60      464.40   Calvin    0.0%     23.7%
                      NSC       100      3,779.00      474.00   Calvin    3.6%     14.3%
                    NWPX         50      1,664.00       80.00   Calvin    0.0%      5.1%
   3%         5%      POT        20      1,680.20      215.80   Daniel    0.5%     14.7%
     Materials        ECL       150      5,686.50    1,079.10   Victor    1.5%     23.4%
                       X         80      2,322.40      363.20   Daniel    4.1%     18.5%
  14%        10%       GE       150      1,816.50     -613.50    Adam    10.2%    -25.2%
      Energy          VLO        65      1,409.20        2.60    Adam     2.8%      0.2%
                      SUN        60      1,674.60     -933.00    Adam     4.3%    -35.8%
                       SD       550      4,444.00      354.20    Adam     0.0%      8.7%
                      MEE       200      2,728.00      -55.20    Adam     1.8%     -2.0%
                      EQT        50      1,726.00      -89.50    Adam     2.5%     -4.9%
                      XLE       115      5,298.05      172.61    Alex     2.0%      3.4%
   3%         1%     DUK        100      1,375.00      -61.00    Alex     6.7%     -4.2%
     Utilities        EXC        25      1,118.00       12.25    Alex     4.7%      1.1%
  15%        14%       PG        50      2,475.50     -615.50    Garey    3.2%    -19.9%
  Cons. Staples        PG        60      2,970.60     -199.80    Garey    3.2%     -6.3%
                     FEED       250       977.50       575.00    Garey    0.0%    142.9%
                     WMT        125      5,983.75      -17.25    Garey    2.3%     -0.3%
                        K       120      4,672.80      276.48    Garey    3.5%      6.3%
                       UL       435      8,186.70      283.62   Victor    5.3%      3.6%
  10%        12% NORXX          ***      7,149.67        ***      ***      ***       ***
  Fixed Income      BHYSX 956.02         5,210.33      210.32     Ben    10.0%      4.2%
                      LAG      180.00    9,849.60        9.76     Ben     0.4%      0.1%
*** This quote does not update          183,250.92


Socially Responsible Investing

  Socially responsible investing can be conducted in the form of screening, shareholder
advocacy, and community investing. This year we have implemented the recommendations from
last year’s class in terms of shareholder advocacy. By the end of the semester we will have voted
the proxies for 17 companies including Google, Visa, and Johnson & Johnson. Additionally,
Calvin Bryant, Daniel Coppess, Alex Lavold, Matt Marsalka, Dan Stichter, and Dr. Saunders
were able to attend the annual shareholder meeting for Eli Lilly and Company in Indianapolis on
April 20th. As active shareholders we are able to monitor corporate activity. Ideally, we will be
able to support and endorse practices we deem socially responsible and oppose and change the
practices that are not socially responsible within the companies held by the Raven Investment

Trading Room

  In 2008 the BSNS 4160 course recommended that the Falls School of Business create a room
that could be used as a computer lab, classroom, and trading room for the Raven Investment
Fund. Along with a scrolling stock ticker, the students felt that this addition to the Falls School
of Business would benefit the business students by providing them with a high tech classroom,
create an increased sense of professionalism, and serve as an asset in recruiting future students
wishing to pursue a major within the Falls School of Business. The creation of a trading room is
in the final stages of planning and should be available for classroom use this fall.

Public Website

  The performance the individual securities held in the Raven Investment Fund portfolio are
actively tracked and available in an MS-Excel file on the course homepage
( Right now, there is also a link to view
the portfolio holdings on Yahoo! Finance. The new Falls School of Business website will have a
page devoted to the Raven Investment Fund. The website is still in the construction process and
the content is not solidified, but the page should contain information on the Raven Investment
Fund mission, objective and policies as wells as information on some of the individual
investments and yearly performance. A link to a spreadsheet with held investments and returns
may also be added to the page. The content of this page should be revisited by next year’s class.

Simulated Raven Investment Fund

 Last year there was a recommendation to have students manage a simulated portfolio in an
effort to better prepare them for this class. This idea was addressed in two ways. First, students
enrolled in BSNS 4150 in the fall managed a $100,000 portfolio using the StockTrak simulation.
Second, this spring we established a University wide “FSB Stock Market Challenge” using The FSB Stock Market Challenge was sponsored by the Falls School of Business

and we received $250 to award as prize money. We were able to promote this contest as well as
the Raven Investment Fund by leading a chapel that included three main ideas. The main ideas
were to keep students informed of financial markets and why they should care, inform students
of special tax breaks or credits due that are available to them, and promote the FSB Stock Market
Challenge and the Raven Investment Fund. The contest was a success as there were 46 students
and faculty registered by the end of the contest.


Chicago Trip

  It would be beneficial for the students in BSNS 4150 this fall to visit Chicago for an
investments related field trip. A day-trip has been planned for October 15th or 16th of 2009.
Transportation will be provided via a school van and the student cost will be minimal. During
this trip students will have the opportunity to visit and tour both the Chicago Mercantile
Exchange and the Chicago Board of Trade. Because this will be an academic tour the students
will have full access to all portions of the tour. Following a morning visit to the exchanges the
students will have the opportunity to visit Chicago’s Regional SEC office. During this visit the
students will be able to learn first hand from an SEC representative what they do.


 Anderson University’s investment policy currently allows for the use of “fully collateralized
anticipating hedges.” It is in our professional opinion that the use of covered call options is a
valuable investment tool. For example, writing covered calls can generate income and lock in
profit with no risk of loss if we own 100 shares of the underlying stock. However, since the
Raven Investment Fund account uses Indiana Trust as the broker we are unable to conduct any
options transactions.

  In order to conduct options transactions and also minimize transactions cost, the best choice for
the class would be to move our existing account to a different brokerage or at least place a
portion of the account into a brokerage that allows options transactions. After researching the top
four online brokerage houses (TD Ameritrade, E-Trade, Scottrade, and Fidelity) we found that
TD Ameritrade would be the most cost effective choice for managing our fund with the potential
for conducting options transactions. A representative from the company indicated that the
standard commission schedule is $9.99 to buy and to sell stock online, regardless of the number
of shares and options bought and sold online are $9.99 + $0.75 per contract, with a $19.99
exercise or assignment fee.

 Opening an account with TD Ameritrade would provide the class with the very important
opportunity to experience options trading. TD Ameritrade does not allow any naked calls or puts.
Therefore, we would like to request that we move the Raven Investment Fund account balance or
some portion thereof into a TD Ameritrade account.

Additional Funding

  In the past three years BSNS 4160 and the Raven Investment Fund has moved from a concept
to a fully managed reality. Students have proven that they can conduct professional level
research and create a broadly diversified portfolio of investments. BSNS 4160 and the entire
business curriculum have benefited from the growth of the student managed Raven Investment
Fund. The recommendations in this report were based on total invested capital of $210,000
which includes a $100,000 increase at the start of 2009. The size of the portfolio allowed
transactions costs to be a much smaller proportion of the amount invested and increased the
degree of diversification that could be obtained relative to 2007 and 2008.

  For 2010, we would like to continue toward the long term goal of managing one million dollars
of invested capital. We would like to continue the procedure of increasing the size of the
portfolio by $100,000. Therefore, we humbly request that the BSNS 4160 course have the
opportunity to manage the existing portfolio along with an additional $100,000. The additional
$100,000 will allow next year’s class to make better investment decisions by giving them the
option, not requirement, to sell any of the current Raven Investment Fund investments in order to
buy additional securities. Also, as explained in the section on options above, we would prefer
that either the total portfolio or at least the additional $100,000 be transferred to a TD
Ameritrade account. Thank you for your consideration.

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