October 3, 1997
Dear Client
Portfolio investment returns for the third quarter were again very satisfying. The continuing moderate expansion of the economy coupled with good corporate earnings and a lack of inflationary pressures contributed to an economy that pleased financial investors. As mentioned in last quarter’s letter, the very elements that have provided market thrust for the past dozen years remain intact
The long anticipated federal tax reduction on long-term capital gains for a maximum 28% to 20% became effective during the quarter. This tax change should have a long-term positive impact on equity markets by making long-term capital gains more attractive to ordinary income. As always, taxable accounts under our management will be carefully monitor with emphasis n providing long-term capital gains rather than ordinary income to minimize taxes.
Several minor adjustments have or will be made to equity portfolios to redirect investments toward small-cap stocks as well as the value management style. It is our belief that any near-term upward movement in the equity markets will come in these areas rather than the fully priced large-cap “blue-chip” growth stocks. After making some planned adjustment, we feel your portfolio will be well positioned for the upcoming quarter.
Enclosed please find your third-quarter and one-year Portfolio Performance Summary, Portfolio Holdings statement as of September 30th and quarterly Account Management Fee Statement.
If year-to-date realized capital gains reports for non-qualified portfolios will assist you to prepare your estimated income tax payments, please contact our office. Also please feel free to contact us with any investment question or to advise us of your investment objectives have changed.
My best regards,
Allan C. Topp, CPA
President