CHICAGO, IL -- (Marketwire) -- 10/22/09 -- The Appleseed Fund (NASDAQ: APPLX), a no-load mutual fund that seeks to generate market-beating returns by investing in sustainable, undervalued companies, was once again ranked by Morningstar as the #1 returning U.S. midcap value fund among 401 funds for the 12 months ended September 30, 2009, and the #1 returning socially responsible (SRI) domestic equity fund for the same period out of 218 funds. The Fund also was ranked by Lipper as the #1 midcap value fund for the twelve months ended September 30, 2009 among 270 funds.
Appleseed returned +25.5% for the 12 months through September 30, 2009, as compared with a -6.9% return for the S&P 500 Index. Year-to-date as of September 30, Appleseed returned +46.6% as compared with a +19.3% return for the S&P 500 Index.
"The stock market sell-off in late-2008 and early-2009 offered significant opportunities for us to invest in what we considered to be high quality companies at exceptionally low prices," noted Bill Pekin, one of the Fund's portfolio managers. "With the market recovery throughout the late spring and summer, a number of our holdings appreciated considerably from our purchase price. While our recent performance has been gratifying, the true test is long-term performance. Since the Fund's inception in 2006, the Appleseed Fund has outperformed the S&P 500 Index by nearly 14% per year.
"We continue to seek out long-term value opportunities. However, we are seeing fewer and fewer stocks in the current market that meet our disciplined criteria for buying new investments. This phenomenon may indicate that the market is currently overbought. As value investors, we take a patient approach. We are happy to hold a larger-than-average cash position while we wait for opportunities to appear." At September 30, 2009, approximately 19% of the fund's holdings were in cash equivalents.
During the third quarter, the Fund took a new position in PetSmart, which the Fund's managers characterize as a well-managed company and a leader in the pet supplies retailing market. In addition, Pekin said that PetSmart has been successful in adding services with attractive margins such as pet grooming, medications and veterinary care, thereby finding mechanisms to differentiate itself from other mass retailers. The Appleseed Fund also initiated a position in Novartis, which Appleseed's managers feel is one of the best-managed pharmaceutical companies in the world.
"We believe the health care sector, which comprises a significant proportion of our equity holdings, has largely been left behind in the market rally because of concerns about healthcare reform," said Pekin. "We believe the impact on certain health care companies will be less than feared, and the reality is that people are living longer and expect to spend more on healthcare. In addition, we are pleased to be invested in what we consider to be high quality health care companies whose products or services are directed towards improving people's health and well-being."
The Fund also has a significant weighting in consumer discretionary and consumer staples equities. "While there has been softness in consumer spending, people need staples and appear to be making selective discretionary purchases as economic conditions gradually improve," explained Pekin. "However, we remain conservative in our valuation estimates, as we believe the U.S. economy will remain relatively weak while consumers repay the debt that was accumulated during the credit bubble."
Pekin concluded: "We maintain our sharp focus on identifying well-managed companies with pricing power, healthy free cash flow yields, strong, transparent balance sheets, and which are priced at a significant discount to our estimates of intrinsic value."
The Fund's past performance does not guarantee future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling 1-800-470-1029.
Information provided with respect to the Fund's portfolio holdings, sector weightings, number of holdings and expense ratios are as of September 30, 2009 and are subject to change at any time. The statements of Fund management represent their opinions as of the date of the release and may change. Nothing contained herein is a solicitation to buy or sell a particular security. Lipper Inc. -- A Reuters Company, is a nationally recognized organization that ranks the performance of mutual funds within a universe of funds that have similar investment objectives. Rankings are historical with capital gains and dividends reinvested. Appleseed's #1 Morningstar ranking for both the socially responsible domestic equity fund and mid cap value fund is based on its 1-year performance through 9/30/09 versus 218 other domestic equity SRI mutual fund classes and versus 401 other mid-cap value funds. Mid-cap investing involves greater risk not associated with investing in more established companies, such as greater price volatility, business risk, less liquidity and increased competitive threat. PetSmart represented 4.8% of the portfolio and Novartis represented 4.9% of the portfolio on September 30, 2009.
You should carefully consider the investment objectives, potential risks, management fees, and charges and expenses of the Fund before investing. The Fund's prospectus contains this and other information about the Fund, and should be read carefully before investing. You may obtain a current copy of the Fund's prospectus by calling 1-800-470-1029. The investment return and principal value of an investment in the Fund will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost.
Distributed by Unified Financial Securities, Inc., 2960 North Meridian Street, Suite 300, Indianapolis, IN 46208. (Member FINRA)
Capital Insight Partners
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