December 2003 Newsletter

The Deluge of Paper

Is anyone out there old enough to remember the promise of 5 or 10 years ago that we would soon become a "paperless society?" We don't know about you, but it ain't happening for us at Silver Oak. Especially at this time of year, our mail delivery seems heavier than ever. Investing seems to be impossible to separate from paper, but some of it is less important than the rest. As our holiday gift to you, here is our advice on what to keep and what to throw away.

Brokerage Monthly Statements: Check these for activity, especially if you write checks against your account. Keep the statements for maybe the past year; if you need something back further, you can always get a copy from us.

Trade Confirmations: Keep these if you have a taxable account (non- retirement). Match purchases and sales for the year to give to your tax preparer to supplement our year-end report.

Fund Prospectus: You receive one of these whenever we purchase shares in a mutual fund in your account, or if the fund company makes a significant change in their investment policy or practices. While we can't tell you not to read them (because you really should), we can tell you that you don't need to save them. Some prospectuses are more readable than others; we especially like the ones from Vanguard, which include "plain talk" sections about important things such as expenses and risk. The really boring ones are the fund prospectuses on money market mutual funds, and it seems like those come in the mail every week. Since most brokerage firms do not offer investors a wide choice of money market funds, these are prospectuses you can quickly skim before recycling. Remember that you can always call us if you have a particular question about a fund or prospectus, because we get copies, too.

Semiannual and Annual Reports (mutual funds): These provide performance information on the fund and the fund manager's outlook. There is also a complete listing of investments the fund owns, which can be interesting. Since you are long term investors and not concerned with the rate of return of the last six or twelve months, however, most of you can send these to recycling without reading them.

Annual Reports (individual stocks): If you invest in individual stocks, you will receive glossy annual reports from each company, full of information about their business successes and endeavors. Treat these as advertisements for the company, and they can be entertaining reading. There is also financial information, where we recommend that you especially read the footnotes. Serious stock investors would benefit from taking a class on how to read financial statements and interpret historical data found in such services as Value Line.

Proxy Voting: At least once a year you will receive a computerized card with a notice of the annual meeting for that company or mutual fund. You are usually asked to approve the election of some or all of the Board of Directors, the renewal of the contract with the firm's accounting firm, and other routine matters. Occasionally there is a call for a vote on a more substantive issue, such as a change in the fund's investment policy or expenses. We encourage all clients to vote their proxies (because only a small number of investors actually do). It is also very educational to attend an actual annual meeting, if there is one in your area or in a fun destination.

Schwab Clients: You can stop receiving some investment paperwork by submitting an Issuer Communications Form for each account you have at Schwab. You can also request that trade confirmations be sent to you only by e-mail rather than in paper form. Let Paul know if you are interested in this option.

Bidwell Clients: You can go online and choose to receive statements and/or confirmations only by e-mail. You can also get proxy material and annual reports on-line by enrolling in their E- Proxy Service. There is a link on the Bidwell website for this. Call Paul if you need help.

Investment Boot Camp 2004

Due to popular demand, we are sticking with Saturday mornings for our boot camp workshops. Here are the dates set for 2004:

February 21, 2004 9:30 am to 11:30 am
April 17, 2004 9:30 am to 11:30 am
June 5, 2004 9:30 am to 11:30 am

Call or e-mail if you or a friend wants to sign up for this program.

Gift Giving

A small reminder to those of you who are making cash gifts to children or grandchildren: If you have funded a 529 plan (tax-free college savings account) with the maximum $11,000 sometime this year, remember that you cannot give any other significant cash gift to that person until 2004. Even though the money in a 529 plan does not go directly to the child, if the child is the named beneficiary on the account it is considered a gift to that person. Similarly, remember if you pre-funded a 529 by accelerating five years of gifts at once ($55,000 per child or $110,000 for gifts from a married couple), you have used up your tax-free annual exclusion amount for the next five years. Not affected by the annual limitation on gifts are direct payments of medical or educational expenses.

Year End Tax Planning

We are doing our year-end review of client portfolios for tax planning, and need to know if you have any significant realized gains or losses in taxable accounts that Silver Oak does not manage. Please contact Deborah, Steve or Paul with this information as soon as possible.

Happy Holidays!

This year our charitable contributions went to Oregon Food Bank and Habitat for Humanity, as well as several smaller donations in honor of clients and friends who died in 2003, and cancer fundraisers. The office will be closed from December 22 through January 2nd to allow employees to spend the holidays with their families. We will be checking in for messages, however, if you have an emergency during that time.

See you in 2004!

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