All of us at Lakeside Capital wish a healthy, happy and prosperous 2005 to each of you!

We are excited about the opportunities that have become available to our clients and optimistic about the financial success of our clients as their plans come to fruition.

This past year brought us a successful stock and bond market environment. Investments in our major market indices, telephone index, utility index, and bond index all performed well. We cautiously steered clear of technology areas such as software and semiconductors while holding large cash positions as the Federal Reserve raised short- term interest rates.

Through our real estate relationships, there evolved a few investment opportunities for those clients looking for that asset class and stream of income. These groups are well known to the Northwest including The Hotel Group and UNICO Properties. The year also brought about the grand opening of our Welch Apartment Complex with Lorig and Associates in March and to our surprise an early successful return of investment with the sale of the Knoxville Tennessee Hilton for a substantial gain in December. For our income producing investments, we saw solid streams of income in office buildings, assisted living centers and hotels throughout the year.

Last July, we made a decision to invest in First Sound Bank, a local bank based in downtown Seattle. It produced a 35% gain and the beginning of a new relationship for our clients. As founding shareholders, these clients have the ability to attain a life long “no fee” account, loan packages, and other banking services that are lacking at the larger banking institutions.

We look forward to 2005 and the years to come with unique investment strategies tailored to each of you. Our risk management process across all asset classes includes due diligence, proper investment allocation, and managed stop losses in the stock and bond markets

We look forward to meeting with all of you to discuss whether you are doing all you can to increase your net worth.
Feel free to call or email if you have any questions or would like to schedule a year-end review.

Best Regards,

Dennis H Daugs Jr.
Jeffrey E. Flohr
A. Douglas Johnson
Ana B. Gonzalez