Enclosed is Covington’s latest quarterly letter, which is on the subject of investment discipline, including our core belief of risk reduction through asset allocation and diversification. We believe this article addresses the most important concern for many of our clients—principal preservation. This issue is especially relevant in light of the equity market’s significant volatility during the first quarter of this year.

Stocks enjoyed a positive January, continuing the momentum of 2006. However, January’s strength gave way to weakness in February driven by the 9% decline in China’s stock market and concern over the possibility of a recession in the U.S. Domestic stocks recovered in March and ended the quarter with a small gain.

For 2007, we believe that equities will continue in a trading range environment with international issues continuing to outperform the U.S. market. We continue to recommend a short-intermediate bias in our fixed income positions, with an emphasis on higher quality issues.

Our firm continues to grow with assets under management now over $900 million. We are appreciative of the many prospects that have been referred to Covington by our clients and friends. This success in large measure is based on our commitment to providing a high level of personal service while achieving competitive investment returns.

We are pleased to announce that Amy Lange and Richard Azarloza both have become shareholders of Covington. They have been outstanding employees, and we want our professional staff, through ownership, to participate in the success of the firm.

Two additional new professionals have joined Covington as shareholders, Craig Burger and Jeff Glassman. We believe their unique skills will strengthen our firm, and we are excited to have them. You will be receiving formal announcements in the near future describing their educational background and career accomplishments.

  Investment Discipline