Covington & Associates Inc

Item 5: Fees and Compensation

   As a boutique investment advisory firm providing custom-tailored portfolios, Covington does not
act as a broker dealer. The Firm maintains a fee-based relationship reflecting assets under
management. Covington provides investment advisory services for a fee that ranges from 0.5% to
1% of assets under management, depending on the client’s individual situation and investment
strategy.

   Investment advisory fees are charged at the end of each quarter of service (March 31, June 30,
September 30, December 31) by multiplying the client’s ending portfolio balance by the appropriate
percentage (.125% - .25%). No fees are charged in advance. There are no fixed-term contracts at the
Firm. Either party may cancel investment advisory agreements in writing at any time.

  Covington elects not to earn any commission dollars, or relationship dollars, as the Firm does not
wish to have financial interests other than the growth of the clients’ portfolios. The Firm is not an
asset custodian or broker-dealer and does not have financial or soft-dollar relationships with any
custodians or broker-dealers.

   Client portfolio assets are held by an external qualified custodian and/or broker-dealer that the
client may help to select. Covington is happy to use the client’s recommended custodian if the Firm
is satisfied with the custodian’s skill level. To ensure investment focus, Covington does not provide

securities warehousing or back-office services. It works with the custodian to secure those services
as needed.

  The broker-dealer may earn trading commissions, and there may be fees associated with
maintaining an account at a brokerage firm. Mutual fund companies may also have fees associated
with investing in their funds. These fees and expenses are described in each fund's prospectus. We
do not collect any commissions, and we do not share in any of the account fees.

Item 7: Types of Clients

   Covington manages portfolios for individuals, corporations, corporate pension plans,
foundations, and trusts as described in Item 4.