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March 7, 2005 - ICLUB News
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ICLUB Insider March 7, 2005


Investing Support Subscribers:
Update Your NAIC Investor's Toolkit 5

Calling all Investing Support subscribers! An update to NAIC Investor's Toolkit 5 is now available. Among the many new features and enhancements available in NAIC Investor's Toolkit version 5.0.1 are:

  • No longer generates run-time errors during certain operations or if bad data has been entered
  • Properly exports *.SSG and *.ITK datafiles
  • Does not flag companies with locked data as needing an update
  • Properly updates PMG graph to use future earnings when selected in Options
  • Allows you to select a default printer if you have multiple or networked printers
  • Does not place a temp file on the desktop for certain users
  • And much more!

If you already have a valid subscription to NAIC Investing Software Support and Maintenance Agreement -- or, as we like to call it, Investing Support -- you should have received a special email with quick and simple instructions for downloading the update.

If you're not currently an Investing Support subscriber, as well as updates to any other NAIC investment software program made by ICLUBcentral Inc. In addition, Investing Support subscribers also receive the Complete Roster of Quality Companies, a monthly list of top-rated stock ideas for your portfolio; monthly Investment Comments from the Investor Advisory Service; and access to ICLUBcentral's customer support to resolve any issues you might experience with your software.

This update is only available to users of NAIC Investor's Toolkit 5. If you use NAIC Investor's Toolkit 4, you must purchase an upgrade to version 5 in order to take advantage of the powerful new features included in this edition. A special upgrade price is available for a limited time; visit the NAIC Investor's Toolkit 5 pages on for more information.

To learn more about NAIC Investor's Toolkit 5, NAIC's official software for completing the Stock Selection Guide and other NAIC tools, please visit

To subscribe to the NAIC Investing Software Support and Maintenance Agreement program, please visit

Time Is Running Out to File Your Club's Tax Returns!

April 15th is just around the corner, but your club still has time to prepare its 2004 tax returns! Remember, the IRS requires *all* investment clubs to file a Form 1065 information return each and every year, and does not consider valid any elections your club may have made in the past. Your investment club must provide each member with a Schedule K-1, as well, outlining the member's income, expenses, gains and losses incurred in the club. Many states require investment clubs to file a similar return as well.

Fortunately, the NAIC Club Tax Printers are available to help club treasurers quickly prepare the required filings for the IRS (as well as for eight states). There are three separate editions of the Tax Printer that are available:

The NAIC Club Federal Tax Printer for NOCA (NAIC Online Club Accounting) is the easiest way to prepare your club's taxes. If your club uses NOCA for its club accounting and operations, the Federal Club Tax Printer can be no further away than a click on the Taxes tab in the program. No downloading is required, and your club members can have their tax information available quickly and easily. Click the Taxes tab in your NOCA site to purchase the NOCA Federal Tax Printer.

The NAIC Club Federal Tax Printer for NCA (NAIC Club Accounting) is a Windows program that works with the desktop version of NAIC Club Accounting (or with an exported data file from NOCA). You can purchase the program on CD-ROM, or for even quicker access (and to save on shipping charges!) you can purchase the program and immediately download it from the web site.

The NAIC Club State Tax Printer is a Windows program that works both with the desktop version of NAIC Club Accounting and an exported data file from your NOCA club web site. You can purchase the State Tax Printer program on CD-ROM or download it from the web site.

Don't forget that NAIC members get a $20 discount off the regular price, but only if you enter a valid NAIC member number and see the discount applied at the time of purchase!

If you haven't ordered your 2004 Club Tax Printers yet, there's still time! Just visit

Using the PERT Report in NAIC Investor's Toolkit 5

The PERT (Portfolio Evaluation Review Technique) Report is one of the key tools in NAIC's portfolio management process. This form allows you to compare a company's recent results to your long- term projections for a company, and shine a spotlight on potential problem areas affecting the companies that you own.

NAIC Investor's Toolkit 5 helps you to interpret the PERT Report by highlighting recent results that may indicate trouble spots. For instance, if a company's recently reported quarterly EPS or PTP results are below your EPS estimates on the SSG, those figures are shaded in pink on the PERT Report. The same goes for any recent Sales figures that are below your long-term projections. These are signs that a company may not be living up to your expectations.

The right side of the PERT Report is a guideline for assessing the fundamentals -- to see where a stock you own currently stands in terms of the potential reward you might reasonably expect from that stock. Here you can look at the current Price and [Projected] P/E, the [Projected] Relative Value, the P/E as a percent of Growth Rate, the Upside/Downside Ratio, and the Compounded Annual Rate of Return (same as "Total Return") to see the potential that the stock has at the moment.

(This is a good place to mention the columns labeled "CUR P/E" and "RV" (Relative Value). Although these figures are labeled as they are, they are actually Projected P/E and Projected Relative Value, respectively. Both are calculated using one year (12 months) projected earnings rather than trailing 12 month's earnings.)

Investor's Toolkit 5 also highlights in yellow any of the problematic value assessments on the right side of the PERT Report. If the Relative Value is too high or too low, or the Upside/Downside Ratio or Compounded Annual Rate of Return aren't meeting your objectives, those items are flagged to alert you that further investigation may be necessary. In the Price column, if a price is more than one week old, the date will appear in red.

When looking at the right side part of the PERT, remember: The worse a company performs, the better a value it will appear! If the Sales, Earnings, and Pre-tax Profits have declined significantly and the cause is long-term in nature, the stock may not actually be the bargain that it may appear to be on the PERT analysis. If a company's growth rate is slowing, its P/E Ratio is likely to decline, and the stock may seem at first glance to be selling at a bargain P/E compared to its past record. But this stock may never achieve the growth rates necessary to support its historical P/E Ratios, and you must factor this into your analysis.

NAIC Investor's Toolkit 5 also includes a feature that allows you to tweak the results of the PERT Report to provide you with more finely-tuned projections. The P/E Ratio and Relative Value on the PERT Report use projected EPS from the next 12 months, and Toolkit 5 determines this value based on the long-term growth rate you choose in Section 1 of the SSG. However, the program also gives you the option to enter your own estimated EPS to override the calculated values. This allows you to enter the EPS projections for the next 12 months that analysts have made for the company, for instance. Since analysts are typically more accurate in the short-term than in the long-term, these estimates can be useful in assessing the risk and reward you may see in the near-term if you continue to own a stock.

In order to change the estimated EPS in Column E of the PERT Report, you must first enable the feature in Toolkit 5's Preferences screen. Select Options > Preferences from the Toolkit 5 menu, then click the General tab and click "Enable Advanced PERT Estimates".

Then return to your portfolio and click on the Portfolio/PERT button on the Main Toolbar, and select a Portfolio. Click Open to display the PERT Report.

Then, select Options > Enter Estimated EPS from the Toolkit 5 menu. The "Override Calculated Estimates for EPS" screen will appear with a list of companies in the portfolio. Highlight a company, and at "Type Est." select "User" to place your estimate in the PERT. (You can later select "Calculated" to restore the "Est. EPS" calculated by the Toolkit.)

Enter the new one-year estimated EPS from analysts in the space provided. Although not required, you should also enter the date and source of your estimated EPS for future reference.

Click the Close button, and you'll see the original values in Column E struck out and your new EPS estimates appear. The figures in the P/E Ratio and Relative Value columns have now been recalculated using this new EPS estimate.

One final reminder: the PERT Report is an aid to sound decision- making, not as a mechanical decision-maker. When you find companies that appear to be performing below your expectations, the next step is to look at that company in the Portfolio Trend Report to give you the additional information you need to determine whether to sell or continue holding that stock.

For more information on NAIC Investor's Toolkit 5, please visit

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Copyright 2005 ICLUBcentral Inc. All rights reserved.

ICLUBcentral is licensed to use the investing methodologies and trademarked forms of the National Association of Investors Corp. (NAIC), a national nonprofit organization dedicated to investor education. NAIC assumes no liability or obligations with respect to the investment education information or other content presented in the ICLUB Insider. For more information on NAIC, please visit

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