Annual Reports-Response to Andy
| HelpRegister |
Annual Reports-Response to Andy Andy: I have pasted below the response I provided in November to a similar question. I feel an annual report can be based on the data contained in the bivio reports, but should contain more analysis. I feel that it is my responsibility as treasurer to provide that analysis. Our club has found comparisons of year-over-year operations are helpful in managing the partnership business. I have read the responses that believe that each partner has an individual responsibility to view the reports on bivio. However, it should be remembered that we are running a legal partnership and need to have official business meeting minutes and financial records to fulfil legal requirements. My annual report also gives each member a copy to follow while I make a presentation at the January meeting. My previous response posted in November 2009: I prepare an annual report for the partners and distribute it each January. The report serves three purposes: 1) provides them with a longer view of the partnership's operations than is possible during the time allotted to the Treasurer's report at the monthly meeting; 2) re-enforces that we are a business partnership, and 3) provides every member with a copy of the broker's end-of-year statement. I am not comfortable posting a copy of the report publicly, but have pasted a copy of the table of contents below so you can see the areas covered in the report. Our club began its 21st year of operation in 2008, so the history portion included a brief history of partnership operations during the 20 years. It was meant to refresh the memory of current members of our heritage and encourage us to stick by our principles at a time of general market decline. It also provides prospective members with background information about the club. In the Summary of yearly Operations, I compare partnership club performance with several metrics (done easily with bivio) including prior year partnership performance, summarize changes in security holdings, membership changes, income and expenses, and end of year cash balances and securities market values. TABLE OF CONTENTS History of Grants Partners Summary of 2008 Operations Member Status Valuation Income and Expense Statement Capital Gain and Loss Statement Transaction History Member Roster as of 31 December 2008 Schwab Statement for December 2008 I hope this helps give you some ideas for your own annual report. Jack Ranby, Treasurer Grants Partners Investment Club Just so people don't think Andy isn't getting any responses, I wrote to him privately. I've written an annual report every year of my club's existence, and I sent him suggstions, as well. But like John, I don't think it's appropriate to post them publicly.
I don't know that it's the treasurer's job to provide a full analysis of the club's holdings, but I do agree that many club members don't understand how to decipher the reports. I think it's the combined efforts of several members that makes an annual report complete.
Lynn Ostrem
Crow River Investment Club
Join me at InvestEd 2010 This is an interesting thing to think about because I think one of the things that can keep a club motivated might be goals that they set for themselves for the year. In that case, an annual report would be the appropriate time to discuss how well you’ve met your goals.
I’m wondering if any clubs do set specific yearly goals. It would be interesting to hear from you if you do. One that comes to my mind would be to achieve a certain IRR on the pool of investments your club is managing. Or a goal to beat a certain benchmark by a certain amount.
These things would be very easy to assess and report on using the Performance Benchmark report.
You could have many types of goals from trying a certain methodology to pick your investments to making sure you have a certain number of educational presentations each year, to trying to recruit a certain number of new members to your club. How well you met any goals like this could all be discussed in an end of the year report.
The other thing I think it is important to report on yearly to your club is the state of your club finances. Putting this part of the report together is, of course, something the treasurer would probably do. Your end of year Valuation report is a snapshot of the value of your club assets. The Balance sheet and Income statements are an official accounting of the state of your club’s finances.
Verification that you have successfully completed a club audit would show that your club’s records are being kept correctly and assure all members that their accounts are accurate and that you are operating as you’ve agreed in your partnership agreement.
Finally, members might be interested in how their specific investment in the club is doing. This will depend on the specific dates and amounts they have contributed. They can see the performance of their individual investments on the Member Performance report.
These are some of the bivio reports that you have available to you to put a nice annual report together. The discussion of what you’d like to accomplish in the coming year would be something that all the members of the club should get involved with.
Laurie Frederiksen
Lynn Ostrem wrote: > > > I don't know that it's the treasurer's job to provide a full analysis of the club's holdings, but I do agree that many club members don't understand how to decipher the reports. Just to be clear, I agree that it is not the job of the treasurer to provide an analysis of each stock owned by the club in the annual report. As an example, however, I did provide a multi-year comparison of the number of trades (buys and sells) executed each year and the holding periods of the stocks we sold. When compared with our portfolio performance in those years, it presented interesting insights to how much "churning" we had been doing as a result of using "stop loss" orders and other factors that went into sell decisions. Another example is to compare amount of income received from capital gains versus dividends in determing total return. This insight is helpful indeciding types of stocks to buy. The specific content of the annual report needs to be tailored to needs of each partnership. But just like the annual reports of companies contain more than just financial information, the partners of our investment club believe so should the annual report of our investment club. Jack Ranby, Treasurer Grants Partners Investment Club Thank you all for the great suggestions. I really do feel like I want to do an annual report each year. Mostly just because I kind of enjoy analyzing our performance and compiling it all for our members. I know, maybe I am just a geek. Anyway, I also think it lends some professionalism to the club. Lynn, I didn't get the response you wrote about. I am not sure where you sent it but feel free to write me at my personal email address abutler911@gmail.com I would love to see your suggestions. Thanks again, everybody, for the great ideas. Andy Lynn Ostrem wrote: > Just so people don't think Andy isn't getting any responses, I wrote to him privately. I've written an annual report every year of my club's existence, and I sent him suggstions, as well. But like John, I don't think it's appropriate to post them publicly. > > > I don't know that it's the treasurer's job to provide a full analysis of the club's holdings, but I do agree that many club members don't understand how to decipher the reports. I think it's the combined efforts of several members that makes an annual report complete. > > > Lynn Ostrem > garbagecop@gmail.com > Crow River Investment Club > www.bivio.com/crowriver > Join me at InvestEd 2010August 6-8, Baltimore, MDwww.investor-education2010.org Nice post, John. It sounds like you provide a very nice annual report.
Lynn O. Hey Laurie,
...an annual report would be the appropriate time to discuss how well you've met your goals.
It's an excellent time. Every year, we set some new goals. And at every annual meeting, we review the goals from the previous year to see if we made them. In every annual report, I do a "letter to the members" in the same style as a CEO would do in a "letter to the shareholders." I review what happened in the news that year, the market return vs. our own, anything newsworthy in our club, the goals we set and whether we achieved them. It's a lot of fun going back and reading those older annual reports.
I'm wondering if any clubs do set specific yearly goals.
Sure. But we learned a long time ago not to aspire to a certain return. Sometimes, the market has other ideas and it's out of our control. Also, we don't want to take on additional risk JUST so we can make a target we set earlier in the year.
We find it's best to set goals that will set the tone for the type of success we seek and let it take its course. It's terrible to set a goal of 15%, only to be disappointed that we ONLY make 14.5% that year.
We include our income statement and balance sheet, our year-end valuation statement and our investment returns. We do a pie chart of our stocks and cash which shows us our diversification at year end. And sometimes we'll include small graphics of our stocks with information on them. We have a section that divulges our turnover ratio, too.
We also have a member page. We list a very brief bio on current members; new members; and departing members (how long they were in the club and why they left - kids, job transfer, moved, retired, etc.) And we include a member status report for year end.
Much of this work is done by the president and treasurer with help from the portfolio manager. But in the past, we've had cover contests where other members can contribute picture collages or graphics that we choose from. The more, the merrier.
Here are some of our goals from previous years:
Our goals for the first year were to: ยท Own 6 stocks by year's end--which we did;ยท Have 15 stocks on our Watch List--we ended the year with 9; ยท Have 10 members in the club--we made that goal, too; ยท Get a 10% return on our portfolio--Oops! No such luck! ยท Have everyone comfortable doing SSGs--I actually think we did quite well here; ยท Start a calendar for stock presentations--that was accomplished, as well; ยท And have two social functions, a June BBQ & Christmas dinner--which we did. Our goals for 2003 were: u 15 stocks on the Watch List--still not there. u 12 stocks in our portfolio--missed that one, too. u Complete 2-3 industry studies--we managed one, which was a great accomplishment. It wasn't easy. u Be comfortable with judgments on the SSG--I'm guessing that we still need to work on this one! u Get consistent with our Stock Watcher duties--we got focused, now we need some fine tuning! Our goals this year were to (1) make stock selection a group effort and (2) redefine our watch list philosophy. We made inroads by choosing to use the Prospector program to find quality stocks, and by using our education segment for group discussions. But I can't seem to pinpoint any clear-cut accomplishments.
I hope this helps to give others some ideas.
Lynn Ostrem Crow River Investment Club Thanks for sending this Lynn,
These are great ideas.
There’s something about articulating a goal that makes it more likely to happen and also makes people more comfortable about why they’re doing what they’re doing. It also defines some nice boundaries so everyone doesn’t stress about all the things you don’t have time to get to this year.
It’s interesting you mentioned making stock selection a group effort.
I’m part of a new model club and we’re experimenting with a “Group Think” process. I’ve set up a web form where everyone can enter the 5 SSG judgments for 4 stocks we’re looking at this month.
We’re compiling the entries anonymously in a spreadsheet and at our meeting we’ll have a good Group Think discussion about an SSG produced from a consensus of the submissions.
The idea is to allow everyone to try making the judgments. They’ll be presented anonymously so nobody will need to worry about being judged due to their lack of experience. Making judgments is what this is all about so we want our newbies to feel comfortable trying their hand at it. It should generate a good group discussion. It’s really interesting to look at the variety of ideas being submitted.
Laurie
Lynn said......
<<
We include our income
statement and balance sheet, our year-end valuation statement and our investment
returns.
>>
I am NOT throwing cold
water on the idea of annual reports for clubs, but I can't see what members will
learn from the income statement and balance sheet, both of which are prepared on
the cash basis, and can only be of meaning to nerds like me. [And I use them
only to see where the accounting has gone wrong]. I am a firm believer that
reports which don't make sense to the members should be
avoided.
One report that is not
included by any investment club software, but might be helpful is an income
statement based on the accrual method. This statement could show which stocks
contributed to the yearly income. I used to provide this to my clubs, but it
takes a spread sheet.
Rip West
Saint Paul, MN Hi Rip,
I include the income and balance sheet statements at the bottom of my letter to the members each year. It's a small graphic that shows our expenses for the year and our interest and dividends. I think it helps explain the K-1 a little better. But you are right, there's not much to that. Can we call it "plop factor?" <G>
Lynn O. Rip West wrote: > One report that is not > included by any investment club software, but might be helpful is an income > statement based on the accrual method. This statement could show which stocks > contributed to the yearly income. I used to provide this to my clubs, but it > takes a spread sheet. > > Rip West > Saint Paul, MN > Our broker, Schwab, now provides an "unrealized gains and loss" report on its website, which would be the data that would allow creating an Income and Expense Statement based on the accrual basis fairly easily. Other brokers may be doing the same. Thanks for the suggestion for a helpful report to include in the annual report. Jack Ranby, Treasurer Grants Partners |
|
||||||