Dated December 31, 2023

Interfund Management Services, Inc.
Principal Office:
19106 E Sprague – Unit G4
Spokane Valley, WA 99016

Branch Office:
1008 SW 314th Place
Federal Way, WA 98023

Phone: 206-390-0097
E-mail: john@imsadvisor.com
Website: www.imsadvisor.com
CRD Number: 0116103

This brochure provides information about the qualifications and business practices of Interfund Management Services, Inc.  If you have questions about the contents of this brochure, please contact us at 206-390-0067 or john@imsincome.com.  The information in this brochure has not been approved or verified by the United States Securities and Exchange Commission or by any state securities authority.

Additional information about Interfund Management Services, Inc. is available on the SEC’s website at www.adviserinfo.sec.gov.

Interfund Management Services, Inc. (also IMS) registered as an investment advisor in the State of Washington during October of 1993.  This registration does not imply any certain level of skill or training.

Material Changes

IMS clients can select the percentage of account assets to commit to one or more of three IMS investment models:  1) IMS Five Funds, a model that holds five mutual funds invested in the stock market; 2) IMS Income, a model that holds high-yield mutual funds or is invested in the money market for defensive purposes; and 3) IMS Money Market, a model that holds one or more money market mutual funds.

Advisory Business

Interfund Management Services, Inc. was registered to provide investment advisory services in October of 1993.  IMS has no subsidiaries and is owned 100% by John H. Krehbiel.

IMS clients can select suitable combinations of the following three investment models for either a Custodial account, or for an IRA account.

The IMS Five Funds model

The IMS Income model

The IMS Money Market model

The firm does not offer any other type of service. The designated custodian for all IMS investment accounts is Equity Trust Company Brokerage (also, ETCB), 1 Equity Way, Westlake OH 44145.

IMS does not distribute the investment income associated with client accounts.  Investment income generated by portfolio investments is retained within each investor’s account.

The investment models are not tailored to the individual needs of clients.   The Investor is not allowed to impose restrictions on investing in certain securities or types of securities.

The IMS Five Funds model, IMS Income model and the IMS Money Market model are managed on a discretionary basis.  On December 31, 2023, the amount of assets held by the custodian Equity Trust Company Brokerage for all IMS client accounts totaled $12,186,009.

Branch Office

On August 5, 2018 an IMS branch office managed by Jamie Low was established at 1008 SW 314th Place, Federal Way, WA 98023 for the purpose of duplicating most of the operational functions of IMS.

Jamie Low currently performs most of the operational and trading responsibilities associated with the IMS investment strategies under the supervision of John Krehbiel.

The practical purpose of the branch office is to provide IMS clients a fully equipped location from which the IMS advisory functions can be performed. The principle office in Spokane Valley, managed by John Krehbiel as president, will continue as the primary base of IMS operations as long as Mr. Krehbiel, 78, continues to enjoy excellent health.

Model Selections and ON DEMAND

IMS offers three investment models to Custodial and IRA client accounts:  1) IMS Five Funds, a model that holds five mutual funds invested in the stock market; 2) IMS Income, a model that holds high-yield mutual funds or is invested in the money market for defensive purposes; and 3) IMS Money Market, a model that holds one or more money market mutual funds. 

Each IMS client selects the percentage of their Custodial account, or their IRA account, to be managed according to one or more of the models. Transfers of assets between the three models can be initiated by client e-mail request to IMS.

ON DEMAND transfers of assets between a client’s account(s) and their personal bank account are available through the custodian ETCB. Once established, ON DEMAND transfers are made by e-mail request to IMS and do not require additional paperwork.

Fees and Compensation

The IMS Five Funds Model:  0.40% per year. 

The IMS Income Model:        1.20% per year. 

IMS Money Market Model:    0.25% per year.

Management fees are deducted monthly from each client’s account.  In all instances, the Adviser will send the client a written fee disclosure including the fee, the formula used to calculate the fee, the fee calculation itself, the time covered by the fee, and the amount of assets under management on which the fee was based. Also, the Advisor will include the name of the custodian on the fee invoice. The Adviser will provide these to the client concurrent with the request for payment or payment of the Adviser’s advisory fees. We urge clients to compare this information with the fees listed in the quarterly custodial account statements.

The fees are assessed in arrears, not in advance, and IMS clients have the right to terminate their management agreements at any time without penalty.  The IMS Five Funds model and the IMS Income model management fees are non-negotiable.  Fees can be adjusted by IMS based on certain circumstances, including the ownership of more than one investment account, a family related account, the age of the account, or total client assets managed by IMS.

At the discretion of IMS, the fee for one or more months may be reduced or set at zero.  The normal fee for any skipped month can never be assessed in the future.  The most Common reason for a reduced or zero fee is to offset trading fees or other anomalies.

Transaction fees (also discussed under Brokerage Practices below) and any incidental fees, such as custodial fees or wire charges, are assessed by the designated custodian and paid to the custodian from the custodial account.  There are no brokerage or custodial expenses associated with the no-load mutual funds selected by IMS for the client accounts.

IMS clients have the option to purchase many of the no-load mutual funds selected by IMS for their accounts through other brokers, custodians or agents that are not affiliated with IMS.

This Brochure is required to be delivered to an advisory client, or prospective advisory client, not less than 48 hours prior to entering an investment advisory contract or at the time of entering such a contract.

Performance-Based Fees

IMS does not charge performance based fees.

Types of Clients

IMS manages Custodial accounts and IRA accounts.  The minimum account size is $100,000.  The minimum is lowered for clients who have more than one account, such as a Custodial account owned by a client for whom IMS also manages their IRA account. 

Methods of Analysis, Portfolio Strategies and Risk of Loss

General Information concerning Methods, Strategies, and Risk.

The method of analysis to determine which mutual funds are selected for IMS model accounts is based on three factors.  The first factor is the frequency the mutual fund can be traded without conflict with the management of the mutual fund.  Second is the relative performance of the qualifying mutual fund compared to other qualifying mutual funds.  Third is the performance of all qualifying mutual funds relative to the money market.  In addition, IMS subscribes to services that rank or evaluate relative mutual fund performance based on other criteria.

Mutual fund buy and sell decisions made by IMS for the IMS Five Funds model and the IMS Income model are based on the resources listed in this section.  Final decisions are made after viewing the graphic performance of mutual fund candidate investments that qualify for inclusion in the applicable investment model.

Qualifying mutual funds must be included in the FastTrack mutual fund database. IMS selection criteria interface with a variety of FastTrack’s ranking lists to help determine which funds are selected by IMS for an investment model. In addition, the software program Trade interfaces with the FastTrack database and with IMS parameters to assist in determining general buy and sell signals for the IMS Income model.

Frequent trading causes net gains to be taxed at the client’s highest marginal tax rate for non-IRA or other non-qualified accounts.  The tax advantage of long-term capital gains is seldom realized by accounts invested according to the IMS Income model.

The three IMS investment models can be characterized as follows.

The IMS Five Funds model is invested in five equity mutual funds.

The five mutual funds are selected from among over 6,000 mutual funds and correlated to match the following stock market sectors or objectives:

 15%  Nasdaq/OTC

 15%  International or Small Cap

 40%  The S&P 500 Stock Average

 15%  Mid-Cap Growth

 15%  Dividend Growth

The IMS Income model is invested in several diversified high-yield mutual funds with the money market as an occasional alternative for all investment positions.  The money market position may occur one or more times per year and is characteristically determined by buy and sell signals generated by the software program Trade as modified by established IMS trading guidelines.

The IMS Money Market model is invested in one or more money market mutual funds that have assets exceeding one billion dollars.

Risks associated with equity mutual funds:

IMS selects five equity no-load mutual funds for the IMS Five Funds model.  The model has a substantial level of risk nearly identical to that of the US stock market.

PRIMARY RISK.  The diversity of equity mutual fund stock portfolios is generally considered to allow equity mutual funds to have less risk than an investment in a small number of stocks.

Nevertheless, the risk of owning equity mutual funds is substantial.

Risks associated with high-yield mutual funds:

IMS selects high-yield no-load mutual funds for the IMS Income model, or, in the alternative, invests in the money market for defensive purposes.

PRIMARY RISK.  High-yield mutual funds have considerable risk.  They invest in bonds that have been issued low ratings by such major rating agencies as Standard & Poor’s and Moody’s.  The ratings are low because it is questionable that the companies that issue the bonds will be able to pay the interest due to bondholders, or to repay the principle when due, or to ever repay the principle.  For these reasons they are often referred to as junk bonds.

The high-yield bond mutual funds selected by IMS for client portfolios are likely to own bond positions that default on their interest payments or on the repayment of principle.  Periods of economic recession or depression are likely to increase the number of bonds held by high-yield mutual funds that default on interest or principal payments.

SECONDARY RISK.  A secondary risk of the IMS Income model is associated with the attempt of the IMS Income model to mitigate the risk inherent in the high-yield bond mutual funds by trading to the money market position from time to time for defensive purposes.  The IMS Income model sells the high-yield bond positions and invests in the money market according to the ranking parameters discussed above.  The secondary risk is that the performance of an IMS Income client account can be adversely impacted by trading out, and then later back into, the high-yield mutual funds.  The IMS practice of the short-term trading of high-yield mutual funds can result in losses that might not occur had the funds been held for the long-term, or in losses of opportunity that might occur had the funds been held for the long-term.  On average, the IMS Income model trades out and back into the high-yield mutual funds two to three times a year.

Risks associated with the Money Market account:

IMS selects money market mutual funds that are considered to have minimal risk.

SECONDARY RISK.  Secondary risks include catastrophic events and the partial or total collapse of the financial system.

Additional Disclosures and IMS Policies

Clients are expected to comply with the regulation that requires a periodic determination that the IMS Five Funds model and/or the IMS Income model are suitable for the client’s current circumstances.

IMS management fees are assessed monthly in arrears.  Advisor is not compensated by a performance-based fee.

Advisor does not accept the authority to vote client securities with respect to either the IMS Income model or the IMS Five Funds model.

Clients may receive electronic communications from Advisor and/or the custodian ETCB sent to the e-mail address provided by the client to the Advisor or to ETCB.

IMS clients are not to mail checks to Advisor for any reason.  Checks received by Advisor will be returned to the client together with instructions for forwarding to ETCB, if applicable.

IMS clients acknowledge that they have received the Advisors current IMS Brochure (also Form ADV Part 2A) at the time they sign an advisory contract.  Since these clients have not received the IMS Brochure at least 48 hours prior to entering the contract they have the right of cancellation for five days without penalty.

Financial Information

IMS does not require or solicit the prepayment of fees and is therefore not required to provide financial information.

Requirements for State-Registered Advisors

IMS is registered as an investment advisor in the state of Washington. Investment Advisor Representatives associated with IMS as of the date of this brochure are listed below.

John Krehbiel has been employed as the President of IMS since 1993.  John graduated with a BA degree from Seattle Pacific University in 1965.  He has managed mutual funds for client portfolios since 1969, except during the years 1990 through 1992, when he financed a real-estate construction business.  John is a registered investment advisor representative, CRD number 0275298.

Jamie Low serves IMS as Branch Manager, web designer, back-up mutual fund securities trader, and is responsible for the daily operation of the firm’s investment model systems. Jamie’s business background is in computer programming and web development. She graduated with a B.S. in Computer Science from Seattle Pacific University in 1987. Jamie is a registered investment advisor representative, CRD number 5481400. She lives in Federal Way, Washington and is supervised from the IMS home office in Spokane Valley, Washington.

Mark Adams (DOB 11/29/1960) became an investment advisor representative of IMS in November of 2014.  Mark graduated with a BA in business administration from Seattle University in 1984.  He recently retired after serving as sales manager or general manager for distribution firms associated with the paper and food industries since 1995.