We end the year with much to report to our valued clients and shareholders. As of this report the Nasdaq Index has declined 31.93%, the S&P500 Index 13.42% and the Dow Jones Index 8.44%. Our average account has declined 3.67% net of our management fee*. Considering the economic and political climate, we are proud of the level of safety we have provided our valued clients. There is no secret to our success, we have simply developed a thorough plan for risk management and capital preservation that still allows clients the opportunity for growth. One year ago we began communicating the “Five Keys to Investment Success”. In the spring we began a series of seminars to educate each client on the importance and relevance of these methods. We appreciate all who attended one of our five seminars.

We found that those attending our seminars and completing the Questionnaire and Investment Policy Statement had on average better returns and less risk than those that did not.

In addition, we incorporated the use of stop losses at the end of the year 2000. This reduced dramatically the risk of a repeat of that year. Below we have attached several articles that give our valued clients a sense of the damage this investment climate has done to investors who followed the brokerage firm and mutual fund research that is readily available. We continue to be concerned about the quality of the research being offered by Wall Street, Online & Discount brokers as well as the Mutual Fund companies. Our independent approach is gaining traction as an alternative to their inherent conflict of interest.

This past year many of you referred friends and family members who were looking for an advisor focused on providing a long-term plan. Your many referrals are greatly appreciated. If you know of others who could use our services, feel free to provide our telephone number. We promise to provide the same high level of service you have come to expect.

We look forward to a long and prosperous association.

Dennis H. Daugs
Jeffrey E. Flohr
Managing Directors

* Conservative accounts have performed better, aggressive accounts have declined more.
* They are 1) The Lakeside Capital Client Risk Questionnaire. 2) The Lakeside Capital Investment Policy Statement. 3) The Asset Allocation Report. 4) The broad use of Indexes over “stock picking” to reduce risk. 5) The Performance Report that illustrates exactly how you are doing every ninety days. These Five Keys are essential to our clients investment success.