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tm MUTUAL FUND MANAGER Shareware Version 2.0 (C)Copyright DenverData, Inc. 1988 All Rights Reserved ____________________________________________________________ USER'S GUIDE ____________________________________________________________ The program on this disk is a shareware version of an integrated record-keeping and tracking system for managing your mutual fund portfolio. For a weekly investment of about five minutes of your time, MUTUAL FUND MANAGER will maintain a complete annual record of your fund transactions, generate three performance reports, record your money market fund transactions and calculate interest, and print all reports with a single keystroke. Your data source is your weekend newspaper. This version contains all the features of the full program. The only difference is that the shareware version will record and analyze only four weeks of performance data, adequate for your personal evaluation. The complete version will store and data analyze performance for an unlimited period. This software is distributed as shareware. Please feel free to use it yourself and you are encouraged to make copies to share with friends and associates. (However, this program is protected by U.S. copyright law; you may not use it or distribute it commercially, alter it, merge it with another program, or remove copyright notices without permission of the copyright holders). Use MUTUAL FUND MANAGER for a four-week trial period. If you find it as indispensable as we think you will, a registered copy of the complete version can be purchased directly from DenverData, Inc. (Data files compiled on the demonstration program can be transferred to the complete version). For your convenience, an order form appears on the final page of this document. ____________________________________________________________ ____________________________________________________________ - 2 - - INTRODUCTION - This User's Guide is organized in two sections: "Overview" and "Detailed Instructions". The authors suggest that all users begin by reading the "Overview" carefully. If you are familiar with the basic operation of your personal computer and also the mechanics of investing in mutual funds, you can next scan the "Detailed Instructions". Then make a working copy of the program and begin using it. You will find that the menus and prompts will move you through the program in logical and obvious steps. If you are either a first-time computer user or new to mutual fund investing, you will need to read the "Detailed Instructions" more carefully. Even so, this is an extremely "user friendly" program and the learning experience will be both short and pleasurable (and, we hope, profitable!). - OVERVIEW - (1) SYSTEM REQUIREMENTS First, for the record, the system requirements: The program is written in compiled Turbo Pascal 5.5, which means that it should run on any IBM PC or compatible equipped with at least 256K of memory and one floppy disk drive, and running with PC-DOS or MS-DOS (Version 2.0 or higher). A dot-matrix printer is a desirable addition to the system for fast print-outs of the performance reports generated by this program. (2) CAPABILITIES MUTUAL FUND MANAGER is designed to perform two important functions for the mutual fund investor: (a) maintaining a comprehensive record of your fund transactions, and (b) tracking the performance of your mutual funds. - 3 - The record-keeping function consists of three data- entry screens and a "Master Record" display: - The three data-entry screens correspond to the three types of transactions involved in mutual fund investing: investments (i.e., share purchases), redemptions, and distributions. - The Master Record does just what the name implies, recording the information received through the data- entry screens. Two display options are provided: "All Transactions" which displays the complete record, and a "Selected Fund" option which permits review of transactions for a single fund. Either display can be printed. The performance tracking sub-program generates and prints three different reports: - The first and most basic is the "Weekly Report". It requires the user to enter three elements of data from the financial section of either a Saturday or Sunday newspaper: the closing Standard & Poor's 500 Index for the week, the closing Dow Jones Industrial Average, and the "last bid price" for each mutual fund being tracked. The program then calculates and displays a summary report showing the weekly gain or loss for each fund, current net asset value (NAV), and percentage of change. Also shown are totals for the entire portfolio. - The "Fund Track and Performance Summary" is a powerful analytic tool which permits the user to examine moving averages and total return over any selected time period. This report also generates what we term "beta-predicted performance" data. Simply put, this function shows what a fund's performance should have been based upon its prior long- term performance. Version 2.0 also includes two performance graphs. The first is a bar chart which provides a quick "snapshot" of your portfolio performance for any selected number of weeks or dates. The line graph is a powerful feature which permits display of fund performance singly or in any combination, also displays Dow Jones and S&P500 indexes, and generates moving average curves for any selected number of weeks. - 4 - - The "Portfolio Distribution Analysis" report will probably be used less often, but shows several useful elements of information: the percentage of net asset value represented by each fund in a portfolio and by type of fund (Aggressive Growth, Growth, Growth & Income, etc.). It also calculates a composite beta, or risk factor, for an entire portfolio (see below for an explanation of the beta concept). In addition, because many investors maintain one or more money market accounts as a "parking place" for uninvested cash, a final sub-program is provided to record money market transactions. This program will also calculate, display and print weekly interest earnings. MONEY MARKET MANAGER can perform these functions for any number of mutual funds and money market funds up to the capacity of your floppy disk or hard disk. The screens will display up to ten funds at a time. The program will record and save data up to the capacity of your storage device (diskette or hard disk). The Fund Track and Performance Summary will also analyze data beyond fifty-two weeks, if desired. However, we recommend permanent storage of your data by copying the files on your working disk to an archive disk at least once each year. This can be accomplished simply by copying the files on your working disk to an archive disk at some conveniently remembered interval, such as your tax year. (3) ADDITIONAL NOTES ON THE ANALYSIS FUNCTIONS The user should be aware of several points concerning the analytic functions built into MUTUAL FUND MANAGER: The authors wish to emphasize that MUTUAL FUND MANAGER contains no magic formulas or mathematical gimmicks for predicting future fund performance. Most investment advisers agree that past performance is the only reliable indicator of likely future performance, and MUTUAL FUND MANAGER has been designed with that principle in mind. The reports generated by this program will provide useful information and analysis for investment decisions, but will not substitute for the investor's individual judgment. The "Weekly Report" is a basic "scorecard" for weekly performance. It displays a current summary of your portfolio, with gains and losses shown in percentage as well as dollar amounts. - 5 - The "Fund Track and Performance Summary" provides three somewhat more sophisticated analytic tools. The first, the moving average, measures fund performance over time. The figures generated are essentially the same as those found in fund newsletters and similar sources, except that the program permits far more flexibility in choice of dates and time periods. It is especially useful for measuring aggregate performance of your own portfolio. The second function, "beta-predicted performance", requires more explanation for those not familiar with the beta concept. Investment advisory services calculate betas by comparing the performance of a fund against the Standard & Poor's 500 Index, usually for a period of one year. If, on average, a fund's net asset value rises and falls at the same rate as the S&P 500, it has a beta of 1.0; if another fund's NAV rises and falls at half the rate of the S&P 500, the beta is 0.5. Hence, formally defined, beta measures the volatility of a fund's performance as compared to the market as a whole. It is also used as a measure of risk. A fund with a beta of 0.5 or less is usually considered a conservative, low-risk investment, and a fund with a high beta - well above 1.0 - would be described as aggressive or high-risk. Lastly, beta can also be used as an indicator of expected performance based upon past performance. "Beta- predicted performance" is based upon this latter concept. The "Fund Track and Performance Summary" shows, in addition to actual performance for the selected time period, the results a fund should have achieved if its performance was consistent with its historic performance. An investor will find this feature an effective means of checking on the continuing performance of any fund and especially in spotting a pattern of lagging performance. The program also calculates actual and beta-predicted performance for the entire portfolio. This provides a measure of one's own performance as a portfolio manager. The third function shows total return for each fund plus portfolio total return for the selected time period. The "Portfolio Distribution Analysis" is intended to assist the prudent investor in assessing two important factors, diversification and risk. Diversification of one's portfolio is shown at a glance, both by individual funds and type of fund. This sub-program also calculates a composite beta figure for an entire portfolio, indicating overall risk. (The composite beta calculated by MUTUAL FUND MANAGER is a weighted average proportionate to holdings in each fund). - 6 - - DETAILED INSTRUCTIONS - (1) GETTING STARTED As with any computer program, your first step should be to copy the program file MUTUAL.EXE to a formatted working disk or hard disk. The distribution disk which you purchased should then be saved as a master copy and stored in a safe place. Another preliminary note: as you begin entering data, DON'T PANIC if you make a mistake. Before you can exit any data entry screen, a prompt will appear at the bottom of the screen asking you to verify your data. Simply strike the Return (or Enter) key several times to move the cursor to the bottom of the screen and answer the prompt with a (N)o response; all data are erased and you can begin anew. And, even if you do complete and enter an entire transaction with incorrect data, a Correction facility is provided which will enable you to change the Master Record. This feature works like a spreadsheet - correcting one error will correct all subsequent entries. To START THE PROGRAM, insert the working disk in a disk drive (or activate your hard disk). At the prompt, enter the filename MUTUAL. The program title screen will appear on your monitor. Press any key to proceed. The next step is to INITIALIZE THE DATABASE. This step requires some care to be done correctly - but it needs to be done only once. A screen will appear asking you to enter the current date and this week's Standard & Poor's 500 Index and Dow Jones Industrial Average. In normal use, this would be the week's closing figures as listed in your Saturday or Sunday newspaper. After completing this screen, an instruction screen appears. Read and note, then press any key to continue. The next screen which will appear is the "Investments" data entry screen. At this point, you will immediately see that you must compile some information concerning your portfolio: - First, you need to determine the number of shares you own in each of your funds. Check your latest fund statements or call your funds' 800 numbers to determine this figure. - 7 - - Determine the type for each of your funds, i.e., Aggressive Growth, Growth, Growth and Income, etc. If you do not already have this information, check prospectuses, investment company literature, or the references listed below. If all else fails, call your fund's 800 number and ask. - Then, check the current per share NAV (net asset value) from the mutual fund listings in your newspaper (or obtain this figure also when you call your fund). IMPORTANT: If you are entering a fund with a sales charge (i.e., a load fund), be sure to enter the NAV figure and NOT the buy price (NAV plus sales charge). - Determine the beta for each of your funds. This step may require some effort on your part if you do not subscribe to a newsletter or other advisory service which can provide these figures. However, it is an option and not essential to operating the program. Your best source is probably your local public library. Three publications which list betas are: MUTUAL FUND SOURCEBOOK: A QUARTERLY SURVEY OF MUTUAL FUNDS (Morningstar, Inc., 53 West Jackson, Suite 352, Chicago, IL 60604) DONAGHUE'S MUTUAL FUND ALMANAC (Box 540, Holliston, MA 01746) THE HANDBOOK FOR NO-LOAD FUND INVESTORS (The No- Load Fund Investor, Inc., P.O. Box 283, Hastings- on-Hudson, NY 10706) (A technical note: You may find that betas for some of your funds are not listed. This will be true of any new fund. If you cannot obtain a beta figure, make no entry on the Investments screen but by-pass it with the Return or Enter key. But bear in mind that the program will calculate "beta-predicted performance" only for those funds for which a beta is entered. Also, the composite beta will be calculated on the same basis. Report screens will make this apparent). - Finally, if you invest in load funds, you will need the sales charge percentage; this should be easily obtained from the fund prospectus. - 8 - Now, following the screen prompts, enter the relevant information for each fund. (Complete entries by pressing the Return or Enter key). Some suggested abbreviations for fund types are listed at the bottom of the screen. In fact, the program will accept any two-letter combination, so that you can invent your own abbreviations (this might be useful for separately labelling sector funds). A screen prompt at the end of each transaction entry permits you to continue this function. When all your funds have been entered, a prompt will return you to the Transactions Data Entry menu. Now, PLEASE NOTE CAREFULLY, because this step is NOT automatically prompted: If you have any money market funds, select the (M)oney Market Fund Deposits and Withdrawals option. Then enter the names and current balances of your money market funds as shown on the screen. The program will provide you with a summary report before you exit this section of the program. The hard work is now over! You might wish to select the (M)aster Record option to verify all your entries, and also check the (P)ortfolio Distribution Analysis, which is now operative. Otherwise, exit the program with the (Q)uit option on the Main Menu and wait a week. (2) WEEKLY ANALYSIS Unless you have a very large portfolio, a weekly analysis should take ten minutes or less. To begin, boot the program and, when you reach the Main Menu, select the (W)eekly Updates and Reports option. On the next menu, select the (W)eekly Report option. Now turn to the stock market reports in your Saturday or Sunday newspaper and find that week's closing S&P 500 and DJIA averages. Then turn to the weekly NASD mutual funds report and find the closing NAV for each of the funds you own. (Be sure you note the NAV - net asset value - figure, NOT the "buy" price). Check any fund distributions for the week (marked by an "x"). Enter data as the screens prompt you. After you have entered the last NAV, a report is generated and displayed which you may print by pressing "P". The program next advances to the (M)oney Market Fund Performance screen. If you have any money market accounts, enter the 7-day average interest for each fund. These should also be listed in your Saturday or Sunday paper. A printable report will be displayed before this subprogram exits to the "Weekly Updates and Reports" menu. - 9 - You may now select either the (P)ortfolio Distribution Analysis or the (F)und Track and Performance Summary. If you select the latter, the opening screen will ask you either for a number of weeks or a range of dates. Enter your choice. (Please note that, after initializing your database, you can request a report for a beginning date no earlier than the date you initialized your database. Obviously, the program does not have the data with which to calculate back any farther. As the weeks progress, you can run analyses for longer and longer periods. If you do request more weeks or an earlier date than the database contains, an error message will appear.) Users of Version 2.0 (with performance graphs) will also have a choice of options: (C)hart will generate and consecutively display a bar graph and a line graph. (L)ist will display data in tabular form, which may be printed at the appropriate prompt. The (B)oth option performs both functions. If you select the (B)oth option, a bar graph will be displayed after the tabular data. After viewing, press any key to move to the line graph program. This is a very flexible program which permits display of numerous combinations of data for comparative analysis. The command lines may be initially confusing but should work easily after a few minutes of experi- mentation - just don't press the (Q)uit command unless you really want to leave the graph program! As the line graph appears, a command line at the top will present three options, (N)ext, (Q)uit, and (C)hart DJI. We suggest you start by selecting (C)hart DJI. A new command line request the desired a moving average. Entering "1" will produce actual weekly performance; any higher number will produce a moving average curve. Pressing (N)ext will cycle through the S&P500 and each fund. An additional option, (R)efresh erases all performance curves presently displayed. You may then call up other data, as desired. (For those not familiar with moving averages and how some analysts use them for detecting trends, generating buy and sell signals and other purposes, we recommend that you consult any investment textbook or one of the standard references on mutual funds). One additional note: If you have conducted any transactions on a Friday, you may enter these either before or after running the Weekly Report. This will not affect the performance figures which the program generates for the week. The program works the same way as your mutual fund; fund managers do not execute and post transactions until the close of the trading day and at the closing share price. - 10 - (3) ENTERING LATER TRANSACTIONS Fund transactions can be entered anytime by making the appropriate selections on the Transactions Data Entry screen. The screen prompts are virtually self-explanatory and only a few notes are necessary: (A) Investments: You have already learned to use the Investments screen when initializing your database. Note the instruction line; the down-arrow enables you to scan through your database by individual fund. This feature eliminates the need to manually enter the fund name each time you use this function. Fund type and beta will be shown automatically when making additional purchases in a fund you already own. However, this information will be needed if you invest in a new fund. (B) Redemptions: The screen prompts are self-explanatory. The only additional information you may need is, in the case of any "back-load" fund, the percentage amount of the redemption fee. This will be specified in the fund prospectus. (Relatively few funds have redemption fees). (C) Distributions: You will know when a fund has had a distribution when an "x" appears next to that fund's listing in the weekend NASD report (but a distribution may not always be listed - see our note below). However, you cannot accurately calculate the amount of the distribution from the weekly report. The only reliable way of obtaining the necessary information is to call your fund's 800 number and request the following: (1) the DATE of the distribution, (2) the PER SHARE AMOUNT of the distribution, (3) the NAV PER SHARE for the end of that day, and (4) the type of distribution, whether a Dividend or Capital Gain distribution. Enter at the appropriate prompts. Note also that you can enter either the per share amount or the total dollar amount of the transaction. This feature has been added because some users prefer to update from state- ments, and some funds report only the transaction amount, and not the per share amount. - 11 - (D) Money Market Deposits and Withdrawals: Here, too, the screen prompts are self-explanatory. (4) MASTER RECORD AND CORRECTION UTILITIES The (M)aster Record/Corrections option displays and prints records of all fund transactions and also permits correction or deletion of any entries. Select this option on the Main Menu. Then, as prompted, select either ALL funds or use the down-arrow to select an individual fund. Next, select the desired time period by enter the FROM and TO dates. Note that the earliest and latest dates of transactions in the database are automatically displayed; these may be selected simply by pressing your <Return> or <Enter> key, or you may overtype dates of your own selection. Data screens will now be displayed together with instructions for scanning, selecting entries and entering changes or deletions. (5) CORRECTING MONEY MARKET FUND TOTALS Due to the difference between daily yields posted by funds and the weekly averages yields published in your weekend paper, you will find minor discrepancies between the figures calculated by MUTUAL FUND MANAGER and those appearing on your statements. Our own tests on several money market funds showed a worst-case cumulative error of only about 0.2%. We therefore suggest that a correction once a year should be adequate for most investors. To make this correction, check the total shown on your statement against the update entry for the same date in your database (access through the Correction Utilities) and note the difference. Then adjust the total by making either a deposit or withdrawal to that fund, using the Money Market Deposit or Withdrawal screen. (6) RAMdisk OPERATION If your computer is equipped only with floppy-disk drives, you may find that the running time of the program will become annoying slow after two or three months of use. This is due to the time required for your computer to physically search for data files on the program diskette. If your computer has sufficient memory (512K or more), the authors strongly recommend that you to set up the program for RAM-disk operation. This is a powerful DOS feature which in effect converts a portion of your computer's - 12 - resident memory (RAM) into an artificial disk drive. The advantage is that all data search and calculation functions are performed electronically and hence almost instantaneously. Check your DOS manual for instructions. The RAM-disk driver file will be listed either as MDISK.DVD, VDISK.SYS, or RAMDRIVE.SYS depending upon your DOS version. (7) FINAL NOTES - One limitation of MUTUAL FUND MANAGER that should be clearly understood is that, for technical and other reasons, 100% ACCURACY CANNOT BE GUARANTEED. One reason for this is that minor errors may be introduced when shares are purchased or redeemed in the middle of the week, whereas the program is designed to operate from weekly closing values. Another reason is variation in accounting methods and policies among investment firms. And, although the authors have made every reasonable effort to test the program with several model and actual portfolios, errors or "bugs" may be present in this program, just as in any other computer program. While it is expected that errors will be minor, the only sure checks on accuracy are the periodic statements you receive from the investment firms who manage your funds. - One pitfall when using MUTUAL FUND MANAGER that the authors have noted is the fact that distributions are sometimes not reported in the weekly NASD mutual fund report (i.e., the "x" marking a distribution is omitted). The usual tip-off is a noticeable drop in NAV per share which is not consistent with the overall movement of the market and other funds. The only sure check is a call to that fund's 800 number. - When the program is first run, it will create two hidden files for the database. These are labelled FUNDFILE.MFM and CODEFILE.MFM. You will never see these files, but they will appear on any file listing you may run with the DIRectory command. As with any database, it is recommended practice to make a back-up of these two files after each weekly update. - As an alternative to using beta figures to calculate risk factors, you can adapt risk ratings such as those published in the annual FORBES MAGAZINE mutual fund issue (which appears in August) or the STANDARD & POOR'S/LIPPER MUTUAL FUND PROFILES. Simply convert the risk categories to a point scale. For example, count a High Risk fund as 1, a Moderate Risk as 2, etc. You will probably end up with a 4- or 5-point scale. Since the arithmetic is the same for a beta calculation, the program will calculate a correct weighted average. - 13 - - Although most investors will use MUTUAL FUND MANAGER only once a week, it is possible to use the program for daily tracking and analysis of mutual funds, since the calculations are the same. However, daily tracking of money market funds is not possible because daily interest rate changes are not published. - One user has suggested that one can use the program in a "what if" mode, tracking hypothetical portfolios. We suggest preparing a separate program disk for this application. - Another user has suggested that Certificates of Deposit can be listed together with money market accounts. Enter a CD listing in the same manner as setting up a money market account on the (M)oney Market Deposits and Withdrawals option. The only difference is that you will not enter a 7-day average interest when performing weekly updates; skip past this entry with the <Return> or <Enter> key. - MUTUAL FUND MANAGER has been carefully tested, but - as with any computer program - the program may contain hidden bugs. The authors would greatly appreciate receiving any reports of bugs at our corporate address shown below. Please indicate the make and model of your PC and the version of DOS your are using, as well as a description of the problem that is as specific as possible. We will make every reasonable attempt to correct the problem and supply you with a corrected version. - 14 - DISCLAIMER STATEMENT (a) THIS SOFTWARE AND MANUAL ARE SOLD AND DISTRIBUTED "AS IS" AND WITHOUT WARRANTIES AS TO PERFORMANCE OR MERCHANTIBILITY. THE SELLER'S SALESPERSONS MAY HAVE MADE STATEMENTS ABOUT THIS SOFTWARE. ANY SUCH STATEMENTS DO NOT CONSTITUTE WARRANTIES AND SHALL NOT BE RELIED ON BY THE BUYER IN DECIDING WHETHER TO PURCHASE THIS PROGRAM. THIS PROGRAM IS SOLD WITHOUT ANY EXPRESS OR IMPLIED WARRANTIES WHATSOEVER. BECAUSE OF THE DIVERSITY OF CONDITIONS AND HARDWARE UNDER WHICH THIS PROGRAM MAY ABE USED, NO WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE IS OFFERED. THE USER IS ADVISED TO TEST THE PROGRAM THOROUGHLY BEFORE RELYING ON IT. THE USER MUST ASSUME THE ENTIRE RISK OF USING THE PROGRAM. ANY LIABILITY OF SELLER OR MANUFACTURER WILL BE LIMITED EXCLUSIVELY TO PRODUCT REPLACEMENT OR REFUND OF THE PURCHASE PRICE. (b) NEITHER THE AUTHORS OF THIS PROGRAM, NOR DenverData, Inc., NOR ANY OF ITS ITS OFFICERS OR EMPLOYEES ARE TO BE HELD RESPONSIBLE FOR ANY INVESTMENT LOSSES OR ANY OTHER FINANCIAL DAMAGES RESULTING FROM USE OF THIS PROGRAM. AS EXPLAINED ABOVE, THE PURPOSE OF THIS PROGRAM IS TO PROVIDE A CONVENIENT MEANS OF RECORDING MUTUAL FUND TRANSACTIONS AND CALCULATING CERTAIN USEFUL PERFORMANCE INFORMATION. NO CLAIMS ARE MADE THAT THIS INFORMATION WILL PREVENT INVESTMENT LOSSES OR GUARANTEE SUCCESSFUL INVESTMENT RESULTS. INTERPRETATION AND USE OF THIS INFORMATION IS WHOLLY AT THE DISCRETION OF THE USER, AND ANY AND ALL INVESTMENT DECISIONS ARE SOLELY THE RESPONSIBILITY OF THE USER. (c) AS EXPLAINED ABOVE, THE ACCURACY OF THIS PROGRAM CANNOT BE GUARANTEED. (C)Copyright 1988 All Rights Reserved DenverData, Inc. Meridian One, Suite G-128 9785 Maroon Circle Englewood, CO 80112 ____________________________________________________________ ORDER FORM ____________________________________________________________ MUTUAL FUND MANAGER is available in two versions; please indicate your choice: _____ Version 2.0 - WITH performance graphs, @ $49.00 _____ Version 1.5 - NO performance graphs, @ $35.00 _____ Check or money order enclosed. Charge: ____ VISA ____ Mastercard #______________________ Exp. date:____/____ NAME___________________________________________ ADDRESS________________________________________ CITY,STATE,ZIP_________________________________ TELEPHONE (w/Area Code)________________________ WHAT MAKE/MODEL COMPUTER DO YOU USE?___________ _______________________________________________ HOW DID YOU OBTAIN THIS A COPY OF THIS DEMONSTRATION VERSION? _______________________________________________ Please mail your order for each copy of MUTUAL FUND MANAGER to: DenverData, Inc. Meridian One, Suite G-128 9785 Maroon Circle Englewood, CO 80112 PRICE INCLUDES SHIPPING AND HANDLING (Colorado residents please add 3% sales tax). For faster service, call with your Mastercard or VISA number during normal business hours (Mountain time). Our number is (303)790-7327. WE WILL REBATE $2.00 ON ANY TELEPHONE ORDER FROM OUTSIDE THE DENVER METRO AREA TO COVER YOUR LONG DISTANCE CHARGE.