March 2015 Newsletter to Clients

Enjoy this month’s edition that highlights the Lord Abbett Floating Rate Fund as a new addition to our income category investments and a few reminders for tax filing season.

Lord Abbett Floating Rate Fund (LFRAX): This fund seeks to deliver a high level of current income by investing primarily in a variety of floating or adjustable rate senior loans. LFRAX sports a 30-Day Standardized Yield of 4.21%. The $6.68-billion portfolio consists of 420 holdings with a below average expense ratio of .80%. The five-year return measures 5.04%.

We view Lord Abbett Floating Rate Fund as a conservative alternative to our BlackRock funds. It offers an opportunity from higher short term interest rates. However, it is not as volatile as the BlackRock funds because it cannot utilize leverage to enhance its yield. Nonetheless, the floating rate feature should pay off whenever interest rates increase, which we may see occur at any time the Federal Reserve Bank makes that decision.

The reason we own these income funds is to earn as much income as we can while minimizing the risk of loss of capital. Yields between five and six percent seem pretty respectable in times like this when a five-year certificate of deposit offers less than 2.5%. And, as was stated above, the return will rise when interest rates go back up.

Tax Preparation: With tax filing season upon us, we want to remind clients to be aware of tax fraud schemes circulating at this time of year. The Internal Revenue Service does not call or send emails to you about any potential problems with income taxes or filing status. You or your tax professional will instead receive a notice via postal mail.

If you receive a phone message from the IRS, it is likely a scam or phishing attempt. Do not give payment information, address, social security numbers, or any other personal information to the caller.

Also, on February 23, the following important tax documents for 2014 were mailed by:

• Management Fees Paid (Moneywatch Advisors)
• Realized Gains & Loss Report for taxable accounts (Moneywatch Advisors)
• 1099’s (TD Ameritrade)

If you did not receive a copy, please contact the Lexington office.

Thank you for your continuing confidence.

Past performance is no guarantee of future results. The opinions expressed are those of Moneywatch Advisors, Inc. and are no guarantee of the future performance of any particular fund. This information is for educational purposes only and is not intended as investment advice. Please consult your financial advisor for more detailed information or for advice regarding your individual situation.