Ocober 7, 2023

 

REPORT FOR SEPTEMBER 30, 2023

 

IMS Income: The IMS Income Tracking Account gained 0.2% during the third quarter. The gain compares to a 0.6% decline for the FastTrack All High-Yield average. IMS Income was invested 100% in the defensive money market position on September 30. The money market fund is Fidelity Government Reserves (FDRXX).

 

The money market current rate is 5.1%. This is a welcome return following a decade of money market returns of less than 1%. During the current period of high-yield bond market turbulence the improved rates have helped to mitigate the recent volatility in the high-yield markets.

 

IMS FIVE FUNDS: IMS Five Funds declined 3.5% during the third quarter as measured by the Tracking Account. This relates to a decline of 3.6% for the S&P 500 Stock Market Index. The gain since the inception of the IMS Five Funds Tracking Account on December 31, 2022 is 12.0%. This compares to an 11.7% gain for the S&P 500 Stock Index.

 

MARKET COMMENTS: During 2023 investor optimism has overshadowed the fear of recession and the economic impact of rising interest rates. The S&P 500 Index has recovered over half of a decline of 24.8% that occurred early in 2022.

 

Recession speculation and rising interest rates have brought about a long period of malaise in the high-yield markets. IMS Income avoided a significant high yield market decline in 2022 and is in a good position when interest rates normalize.

 

IN REMEMBERANCE: The enclosed Seattle Times obituary for Jerry Herman includes the words “wonderful spirit” and “will be greatly missed”. There could be much more. Jerry became a client of IMS in the mid-1990s. It was at Jerrys request the conservative IMS Income program was developed for his mother Evelyn in 1997.

 

Over the years Jerry and I developed a friendship that included attendance at many of his poker games, the support of numerous Kiwanis fundraisers, and overnights as a guest at his homes while visiting Seattle and then Bellevue. IMS clients are familiar with the performance of the Initial Account. This was Evelyn’s account and then Jerry’s after inherited. Performance representations will continue as Tracking Accounts. The Tracking Accounts are based on selected extended IMS family accounts, one for IMS Income and one for IMS Five Funds.

 

 

The IMS Brochure dated December 31, 2022, IMS Privacy Policy, IMS Cybersecurity Policy, IMS Code of Ethics and IMS Program Suitability information can be found at the Client Center tab of the IMS website www.imsadvisor.com. If you request any of these documents, it will be mailed to you at no charge. Required disclosures are on the reverse side of this page.

 

OBJECTIVES

A primary objective of the IMS Income program is to substantially lower the market risk inherent in high-yield securities. Investments are periodically invested defensively in a money market mutual fund or in custodial cash reserves.

A primary objective of the IMS Five Funds program is to provide a low fee investment program that represents the broader stock market.

 

TRACKING ACCOUNT DISCLOSURE

It should not be assumed that performance in the future will be profitable or will equal the performance of the IMS Income Tracking Account or the IMS Five Funds Tracking Account.

 

Both Tracking Accounts are based on the investment assets of the largest extended Krehbiel family accounts as of December 31, 2022. The accounts have been unitized (similar to a share value) to account for additions and withdrawals from the accounts. IMS clients are encouraged to compare the performance of their accounts with that of the Tracking Accounts and to question any significant discrepancies.

 

INDEX DISCLOSURES

Investors FastTrack (FastTrack) is a company that maintains an extensive database of nearly all mutual funds and exchange traded funds.

 

FastTrack High Yield Bond is FastTrack’s composite performance of all high yield bond mutual funds and high yield ETFs (Exchange Traded Funds) in their database.

 

(NOTE: The FastTrack Index is favorably biased due to its practice of deleting high-yield mutual funds that go out of business or have been absorbed by other funds.)

 

The S&P 500 Stock Index is the Standard & Poor’s composite index of 500 stocks, a widely recognized unmanaged index of common stock prices. The Index does not include dividends paid by the companies that comprise the Index.

 

ANNOUNCEMENT

Most IMS clients review their quarterly Equity Trust Company custodial reports or recent account activity online at the client portal. (Contact IMS should you need assistance to access your detailed account activity at the portal).

 

A primary reason for past IMS monthly statements has been to provide the detailed fee disclosures required by the Washington State securities regulations. You can notice how detailed these disclosures are by reviewing the last three lines of each IMS monthly report.

 

The monthly IMS statements will be discontinued beginning in 2024.

 

The three detailed monthly fee disclosures in future IMS quarterly mailings will be detailed on the reverse side of each report to fulfill the state disclosure requirements.