Capital Advisers Inc

Fees and Compensation
The client shall pay compensation to the Adviser for its investment management
quarterly in advance in accordance with the fee as determined by the Adviser and Client.
If the management of an account commences at any time other than the beginning of a
calendar quarter, the Adviser shall prorate that fee. The fee is a percentage of assets
under management.

All client accounts are subject to a minimum annual fee of one thousand and no/100
dollars ($1,000.00). We have not enforced this.

Fees are based upon the fair market value of the client portfolio assets as of the last
business day of each quarterly period. The initial fee is billed and based on the market
value of the client portfolio assets as of the first day the client’s custodian for the
relationship with the Adviser receives assets. The Adviser receives no fees based upon a
designated share of capital gains upon or capital appreciation of the portfolio assets or
any segmented portion of portfolio assets and receives no revenue other than the fees
described in this section.

Performance-Based Fees and Side-by-Side Management
The Adviser does not charge performance-based fees. The Adviser does not manage or
market proprietary offerings or engage in side-by-side management.

Types of Clients
The Adviser serves individuals and institutions or organizations. The Adviser may waive
account minimums but seeks to manage only accounts that are one hundred thousand
dollars ($100,000.00) or more upon inception of the relationship between the client and
the Adviser. The Adviser serves as a fiduciary in many contexts.

Methods of Analysis, Investment Strategies, and Risk of Loss
Summary: Independent, open architecture, objective, risk-aware, fiduciary-friendly
investment advisory firm creating and managing custom portfolios offering the entire
universe of traditional and alternative asset classes and strategies with no proprietary
products
       Capital Advisers is an independent, objective, open-architecture money
manager which continually researches, reviews, and monitors the complete investment
universe of no-load and load-waived mutual funds, exchange-traded funds, separate
account managers, and other investment vehicles to create portfolios of traditional and
alternative asset classes customized for each client’s risk tolerance and objectives.
       Ego, fear, greed, and other human foibles cause much investor failure. While we
acknowledge those limitations in ourselves, we seek to have systems and processes to
minimize those inhibitors and disruptors of success. One of our core processes is the

strategic, risk-aware rebalancing which occurs in all managed portfolios no less
frequently than quarterly.
        Investment advisers often neglect risk management and other fiduciary
standards. Both of Capital Advisers’ primary investment decision-makers are licensed
attorneys, and one of the firm principals is a former securities regulator for the State of
North Carolina. For the qualified marketplace, Capital Advisers’ President offers the
experience of having owned two (2) third-party administrators for qualified plans and
having practiced as an employee benefits and ERISA attorney.

Risk of Loss and Risk Management
Investing involves a risk of loss. Past performance is no guarantee of future results. We
seek only long-term investors as clients and manage portfolios accordingly. We do not
have the ability to liquidate, in whole or in part, client portfolios unless the client
requires this in writing or except upon the Adviser’s termination of a client relationship.

Capital Advisers, Inc., manages the following primary risks explicitly or implicitly:

Asset class [broadly meaning security type, capitalization, and style (value v.
growth) discipline]
We manage every comprehensive portfolio (i.e., the portfolio’s investment policy allows
equity and fixed income exposures) to include all broad asset classes and the well-
defined sub-asset classes. In other words, these portfolios will contain, within equities,
large, mid, and small capitalization equities and value and growth style discipline
exposures; and, within fixed income, corporate, government (including but not limited
to local and state issues), and securitized debt.
Industry sector
We refrain from industry sector rotation strategies. This constitutes market timing and
is quite susceptible to confirmation biases, anchoring, and other behavioral contributors
to investor failure. Through portfolio analytic software, we attempt to provide exposure
to all well-defined industry sectors while avoiding undue concentration in any industry
sector. This resulted in our exposure to financial services sector-related volatility being
minimal relative to other investment advisory firms and provided meaningful exposure to
commodities and natural resources during recent successful periods for that broad asset
class.
Geography
All comprehensive portfolios have US and non-US equity and fixed income
commitments. (Within non-US commitments, we will maintain appropriate emerging
market equity and fixed income exposure.)
Company-specific
Generally, our commitment to dedicated asset class exposures as opposed to simply
having a collection of so-called “core” (or generalist) managers minimizes security-
specific risk. In addition, however, we use a portfolio analytic software application that
helps, periodically, screen individual security overlap.
Cost
We seek lower-cost investment exposures that we believe will capture the desired risk
and return profile, this might mean, e.g., that the largest, most liquid, and most
informationally-efficient and price-efficient asset classes might be a passive exposure

with lower expense ratio. (Note that our compensation is entirely upon the value of
assets under management. We receive no revenue-sharing or other additives to our
revenue.)
Asset value decline
We rebalance unemotionally to capture and consolidate gains from outperforming asset
classes by selling positions in asset classes which have exceeded their initial allocation
percentages and placing those proceeds into those asset classes which have
underperformed and, temporarily, reflect less than their initial allocation percentages.
Liquidity
Unless our client’s explicit requirements (e.g., private equity, direct real estate, hedge,
and the like) require commitments with less liquidity, all holdings may be sold within
the same trading day as the need arises. (Then, the usual settlement period occurs.)
Interest rate, inflation, and currency
        For fixed income exposures, we do not make concentrated or “bulleted” bets on
interest rate movements or absolute levels. We diversify in interest rate exposures in the
same manner as we would diversify in other areas of risk.
        A broadly diversified exposure in equities, generally, and the liquid real return
assets (commodities, natural resources, and government-back inflation-protected
securities) will address many inflation concerns.
        The geographic diversity of our equity and fixed income portfolios will minimize
short-term volatility associated with currency.

We emphasize again that one of the largest contributors to risk management and return capture is that we
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