2004, A Pleasant Surprise

Following on the heels of a super 2003, this year also surprised on the upside…We accomplished this … with a significant element of fixed income securities and while deploying covered call options to further minimize risk.

Looking to 2005, we see a relatively stable and growing economy, but a stock market that is probably fully priced. Gains in corporate profits may allow some room for appreciation while rising interest rates will provide a negative for fixed income investing and a damper on housing growth which has been a major factor in this expansion. We expect to continue to lean heavily on our call-writing program to provide a base for our returns to investors. Add in dividends, interest and selective equity opportunities, and we can have a desirable total return if markets cooperate.

Our investments in place will generate an unusual amount of cash in January and February, which we will redeploy gradually hoping to find a few bargains in the early part of the year.

Tom and I are going to Lyon, France, at the end of February for a long weekend to investigate possible real estate investments there. Properties we have scheduled to view include manor houses, ancient farms and even small castles. Despite the strong Euro, these properties seem to offer very good value, and we are considering offering shares or units in any such investment to our clientele. Shares would provide full ownership rights such as appreciation and a pro-rata use of the facilities.

Units would be no less than $25,000 and might be greater depending on the property selected and whether or not we use financing. We will get into the nitty-gritty if and when we find a viable pro perty, but invite you to indicate any interest you might have on a non-committal basis.

Tax filing season is around the corner. We have reviewed all accounts and took capital gains and losses where appropriate to minimize your tax bill. A new tax provision prompts us to ask for the amount of sales tax paid on autos purchased in 2004. Please send tax work no later than March 31.

Sincerely,

Michael F. Cantlon