Dear Friends Family,

Let’s begin this month with a reflection on the topic: “The Conflict of Interest.”
In our research, we first use our quantitative model: we crunch the numbers. Then, we review each remaining company for problems and advantages. The issue that most often disqualifies a company is its conflicts of interest.

This problem was highlighted last month when Jones Apparel (Jones of New York) put itself up for sale. Jones continually appeared as a possibility in our screening process, but we rejected the company due to two main concerns: their 1,000-plus outlets and retail stores, and their acquisitions of multiple companies.

We find that the outlet and retail store concept presents a clear conflict with the department stores that are Jones’s main customers. The risk of retaliation by department stores — such as reducing Jones’s floor space or switching to private labels —remains significant.

The issues related to multiple company ownership affect many types of businesses. Jones owns 9 West, Barney’s, Gloria Vanderbilt, and several other brands. These subsidiaries often have conflicting needs for corporate resources like research, marketing, and plant expansion. An even greater concern is the diversion of Jones’s best talent to the most exciting, rather than the most essential, subsidiary.

Jones Apparel’s stock price remains below its 1998 level, even after a 13% increase following the sale announcement. Tommy Hilfiger, which faced many of the same issues, was recently sold. Clearly, conflicts of interest matter.

We would also like to address a service improvement. Many of you may have received a letter requesting that you complete an Asset Movement Authorization Form. If you’ve already signed and returned this form, thank you! Fidelity Investments has streamlined the process for check requests and wire transfers through this new cashiering procedure. Our best recommendation is to obtain a checkbook so that you can write checks whenever it is convenient. The second option is to complete the Asset Movement Authorization Form. Please contact us so that we can assist you with these time — saving service enhancements.

Our next monthly seminars are scheduled in Bethesda on May 10, 2006, and in Issaquah on May 18th. Lunch and dinner seminar slots are available.

Sincerely,

Katz Family Financial