The following are the year-end market results by market index:

We had a huge rally at the beginning of the year, a few bumps in the summer, and a sell off the last two weeks of the year. With all the rallying and wondering if it was temporary or real, the final numbers are in and it was real. As many of you know I always air on the side of conservatism, but with that in mind, I am pleased with this year's ending numbers. My moderately aggressive portfolio closed at 16.9%, and the seniors’ moderately conservative portfolio came in at 12.6%, both after fees. Both of these portfolios were tracked over a full year in the market place, and were 96% invested in the market. It should be noted that no two portfolios are identical due to individuals’ risk tolerance and time horizon. And to be compliant with the SEC, I will remind all readers this should not be viewed as an advertisement for past or future performance by the firm. It should be used as a benchmark for you to gauge your personal portfolio success.

This year’s market favored almost all sectors, especially our new buzz sector "Chindia". Matthews Funds, a long time favorite of mine, exceeded all index returns with their Pacific Tiger Fund at 22%, Asian Growth & Income - 19% and Asian Indian Fund - 34%, which I reported on early in the year.

I recently attended a seminar where the focus was international investing. The one component of this presentation that caught my attention was the focus on a shift in the investing mix internationally - 52% of all investment dollars are placed outside of the U.S. My immediate consideration was how would these international and global investments impact positions within my clients’ portfolios. Clearly, it would not make sense to switch over to 50% holdings in international markets, as many U.S. companies like Citigroup, Coke, and Merck have business operations overseas.

My sense is most portfolios hold at least 20% in foreign funds including Pacific Rim investments. As the year goes on I will expand that number to 25% - 30%, where appropriate, to take advantage of the activities in the global markets.

Effective January, Duke will spin off its natural gas business into a separate company - Spectra Energy Corporation, and it will list under the symbol SE. Duke shareholders will now own 2 companies. Stock ownership determination is as follows: for every 1 share of Duke owned you will receive ½ share of Spectra Energy. For example, if you own 100 shares of Duke you will receive 50 shares of Spectra.

Verizon spun off Idearc on November 20. Idearc represents the telephone directory business of Verizon. The purpose of the spin off was to focus on its’ online business. The split was based on 1 share of Idearc for every 20 shares of Verizon stock held as of November 1.

In a recent survey by Hewitt, a retirement plan administrator, auditors are putting more emphasis on employers becoming accountable for the fees their employees are charged in 401(k) programs. A 1% difference in plan fees adds up over time. It is estimated that a retirement account with a base of $49,000 could end up with $82,000 less in retirement dollars if expenses averaged 1.5% over 30 years instead of .5%.

Additionally, more employers are scrutinizing providers that limit their employees to poorly performing proprietary funds within their 401(k) selections. For example, if your 401(k) is managed by Ameriprise and the only options are Ameriprise small cap, mid cap, large cap, bond fund, international fund, and money market with no other fund company choices you have been restricted to proprietary brands. In some cases, the provider is not at fault. Your group account may be too small for other fund choices. As a rule of thumb, cumulative assets within a 401(k) plan should be valued at $500,000 to be offered a selection of funds. Additionally, there are a limited number of fund company selections for 410(k) plans with less than $100,00 worth of assets in the plan.

Lastly, whatever your situation the employer should never buy into a 401(k) program wrapped around an annuity. You will have a surrender fee for perpetuity, as well as a lock out dates for some products.

There are many model plans out there. Please contact me to discuss whether the fee-only 401(k) will work for your firm.

I was recently interviewed in the December edition of Investment Advisor www.inves tmentadvisor.com on the topic of socially responsible investing (SRI). My major point to the reporter was SRI does not mean the same things to all people. To me it means no nuclear weapons, tobacco, and gaming products. To others it may mean no animal testing, pro green forests, anti-gay rights or pro gay rights. We all have very different views on what socially responsible investing means, and as an advisor it is difficult to take clients on who use these criteria as their primary requirement for investing. For those of you who are interested in socially responsible decisions, whatever your criteria, I suggest you visit www.socialinvest. org to aid you in this process.

I will resume teaching in 2007. I will teach at Bryant University at Fidelity’s Marlborough campus beginning the end of January on Tuesday nights for the next 13 weeks. This should not impact appointments significantly.

Letters will be going this month to schedule our annual performance reviews. Please contact my office to schedule a time where we can review your asset allocations and discuss any changes that may effect future planning decisions.

I encourage all clients to use this newsletter to supplement their knowledge base, but also to take time to call me when questions arise. Please feel free to share this newsletter with a friend. You need not be a client to be a subscriber.

As always, if you have questions regarding the content of the newsletter, please call. I will attest to the fact that an educated client develops from a trusted relationship whose basis is formed from an open line of communication over a period of time. The relationships I have developed with my clients and colleagues are the cornerstone of my business. Their confidence in me is my primary source of new business. Your referrals are welcome and always appreciated. I thank you all for contributing to Coastal Financial Planning, Inc.’s success in 2006.