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This year marks the 25th anniversary of Indiana Trust Company, your experts in MANAGING WEALTH AND CREATING LEGACIES. For 25 years, Indiana Trust Company has been dedicated to providing independent, unbiased wealth management for our clients. We specialize in transforming assets into legacies – for your future and beyond; and will continue with the same focus and determination as we have for the past quarter century.

In celebration of its 25th anniversary, Indiana Trust Company will pay tribute to our clients and communities throughout the year by implementing 25 enhancements which either enrich the client experience or further engage us in the communities which we serve. A listing of these enhancements will be posted on our website www.indtrust.com and in our quarterly Advisor Newsletter. The first few are included here:

Thank you for allowing us to be your Trusted Advisor.

  1. ENHANCED ADVISOR NEWSLETTER  – We will now be featuring articles with broader topics including estate planning and financial planning advice as well as features on our staff so that you will get to know them better.
  2. QUARTERLY BRIEFING FORMAT  – We have changed our quarterly briefing format to an afternoon gathering that is more casual. In addition to the quarterly investment summary, you will enjoy food, beverages and socializing.
  3. WNIT SPONSORSHIP  – We are now featured on Public Television WNIT on Sunday’s Downton Abbey in the Michiana Area.
  4. UPGRADES TO TRUSTREPORTER/CLIENT INTERNET ACCESS (CIA)  – Interactive pie charts have been added with drill down capabilities to help our clients more easily understand their portfolio composition.
  5. ITC HOOPS  – A favorite in the Muncie office, is an informal networking event that offers an opportunity to show our appreciation to the Muncie community.

In late May and into June, stock and bond markets witnessed increased volatility. The trepidation in the market was mainly centered on comments made by Fed Chairman Ben Bernanke raising the possibility of an earlier-than expected tapering of the Fed’s bond buying program, known as Quantitative Easing. These monetary policy concerns were partially allayed early in the 3rd quarter, as the chairman reiterated the Fed’s desire to keep short term interest rates near zero. Any remaining worries in the market about Fed tapering were further relieved in September when the Fed announced it would delay any potential tapering of bond purchases until later in 2013 or possibly into 2014. Investor sentiment was further buoyed by optimism for the global economy. Europe appeared to be coming out of its recession. Geopolitical risks which had weighed on the market became less urgent, as the potential for a wider Syrian conflict in the Middle East became less likely. As a result of these dynamics, most equity asset class returns rose dramatically in the quarter as seen below. Stocks continued the trend through October with U.S. large cap stocks up 4.6% and international developed market stocks up 3.3% for the month.

U.S. large cap stocks ended the third quarter up 19.8% for the nine month period while small cap stocks were up a remarkable 27.7%. On an operating basis, large U.S. corporations are on track for the most profitable first three quarters in the 56 year history of the S&P 500 Index. Sales growth, which has been in the low single digits in 2013, margin expansion, and additional share buy-backs have been catalysts for the rise in earnings per share, leading to price appreciation in the U.S. equity market. Small cap stocks, which are typically more volatile than large cap stocks, have seen strong returns due to these factors as well. Even with the strong returns, valuation metrics on U.S. equities continue to indicate stocks are in a fairly-valued range.

International developed market and emerging market stocks trailed U.S. markets by a wide margin through the first half of 2013 – much like in 2012. Also similar to 2012, the second half of 2013 has seen a reversal of leadership, with international developed markets leading the U.S. in the third quarter by over 6%. European markets rallied 13% in the third quarter on signs that their seemingly endless recession actually ended over the summer. Major markets in Europe as well as the “peripheral” markets of Greece, Spain, and Italy performed well. In Asia, Japan’s equity market had a strong quarter and is up over 24% year-to-date. Another positive tailwind for international stock returns was the strength of foreign currencies versus the U.S. Dollar (a result of the Fed’s decision to continue Quantitative Easing). Local currency strength made a positive impact on emerging markets returns.

Bond markets struggled for most of the 3rd quarter. The 10 year U.S. Treasury Note, an indicator of broad market interest rates, briefly moved above 3%. The struggle ended when the Fed announced in September that it would maintain Quantitative Easing, continuing its monthly pace of buying $45 billion in U.S. Treasury Notes and $40 billion in agency mortgage-backed securities. The announcement triggered a rally in the bond market, pushing yields lower and bond prices higher. The Barclays Capital U.S. Aggregate Bond Index ended up 0.6% for the quarter, but the index remains in negative territory for the year (-1.9%). Sectors of the bond market with more exposure to credit, such as high yield bonds (up 2.3%), have led the way during the quarter and throughout the year.

On October 15, 2013, the staff of Indiana Trust & Investment Management Company celebrated the company’s 25th anniversary with clients and friends at the newly renovated Morris Inn on the campus of Notre Dame. Time is set aside each year to thank our clients for their continued support and confidence in our company. Wonderful food, drink and live music always abounds at the annual festivities – and this year was no exception. John Seidl took time to recognize the staff for their contributions and, as in past years, announced that donations were made to the Food Bank of Northern Indiana and Second Harvest Food Bank of East Central Indiana by Indiana Trust & Investment Management Company. We would like to thank those who were able to attend, and we look forward to next year’s event.

The Muncie Chapter of Altrusa International, Inc. hosts an annual fall style show as its primary fundraiser each year. The event also helps ensure community awareness and generates support for various service projects, scholarships and grants which benefit the Muncie area. 2013 marked the 17th year of hosting the fall style show.

This year’s theme was “Through the Decades” and featured American culture through music, decorations and fashions from 1940 through present day. The lunch and dinner shows hosted over 440 guests from the community. The club received support from many local businesses, individuals and other philanthropic organizations.

Indiana Trust & Investment Management Company has supported this event for several years. This year, the company became a primary “presenting sponsor” for the event. Lavone Whitmer, an Investment Officer with Indiana Trust Company, chaired the Steering Committee, overseeing eight months of coordinating, planning and preparation. The event raised several thousand dollars for the Muncie Chapter, 100% of which will go back into the local communities. Indiana Trust & Investment Management Company continues to be a proud supporter and member of these communities.

Founded in 1925, the Muncie Chapter of Altrusa International, Inc. has been a leader among Altrusa chapters both nationally and internationally. Membership is comprised primarily of professional and retired women who have a passion for giving and serving the local community. The organization serves local residents in Muncie and Delaware County through projects including literacy awareness, youth development and family support.

If gifting is on your horizon between now and the end of the year, the IRA charitable rollover can help manage the tax impact resulting from Required Minimum Distributions. The American Taxpayer Relief Act of 2012 (ATRA) extended the IRA charitable rollover through December 31, 2013. The provision permits IRA owners who are age 70ó or older to make a tax-free distribution to a qualified charity of up to $100,000 per taxpayer, per taxable year. A distribution made directly to a qualified charity any time prior to December 31, 2013 can be treated as a qualified charitable distribution for the 2013 tax year and will be excluded from the taxpayer’s adjusted gross income.

The provision mainly benefits donors who itemize deductions and whose charitable contributions are reduced by the percentage of income limitation. Usually when individuals receive distributions (such as Required Minimum Distributions) from their IRAs and make corresponding charitable contributions, they must count the distribution as income and then take the charitable deduction for any amounts given to charity. For higher income taxpayers, the charitable contribution deduction they receive may not totally offset the taxes they must pay for receiving the IRA distribution. This is where the IRA charitable rollover provides greater tax relief.

Most contributions to public charities are qualified. Because donors exclude this contribution from their gross income, they cannot take a charitable contribution deduction for the contribution; to do so would result in a double benefit for donors and is prohibited.

To make an IRA charitable rollover, contact your Trust Administrator at Indiana Trust. As always, if you have more detailed questions on the tax implications of any strategy, consult with your tax adviser for additional information.

Additionally, as a reminder, the annual gift tax exclusion for 2013 is $14,000 per individual.