Capital Gains Inc

FEES AND COMPENSATION

Advisory fees are negotiable for both existing and prospective clients. Advisory fees, which may
include assumption of custodial costs, range generally from .14 of 1% to 1% (annually) of the
total assets in the client's portfolio. The advisory fee is calculated based on the portfolio's net
asset value on the last business day of (a) its fiscal year or (b) the previous billing period, as
negotiated by the client and adviser.

Fees are calculated and billed on a monthly or quarterly basis. For monthly billings, one twelfth
of the annual fee is charged to the client each month and payable on or before the last day of the

                                                                Capital Gains Incorporated
                                           Form ADV, Part 2A, Firm Brochure, January 16, 2026

month. For quarterly billings, one-fourth of the annual fee is charged to the client each quarter
and payable on or before the last day of the quarterly period. If an account is withdrawn prior to
the end of a month or a quarter, the advisory fee will be prorated and charged only for the days
during the period that the account was open. These fees cover the management of the client's
account and may be in addition to mutual fund advisory fees and expenses for those accounts in
which Capital Gains allocates a portion of the client's portfolio to registered investment
companies.

Capital Gains also may recommend that a portion of a client’s account be managed by a third
party investment adviser in situations in which investment in a mutual fund may not be suitable
for a client. The selection of an investment adviser is not limited to any particular investment
strategy . In all such cases, Capital Gains will not accept discretionary authority to determine
which third party investment adviser is to be retained for a client’s account. Clients will be
required to enter into an advisory agreement with such investment adviser, after receiving Part 2
of that adviser’s Form ADV (or equivalent) before the adviser may manage a portion of the
client’s account.

Capital Gains may charge an advisory fee with respect to any portion of a client’s account that is
managed by a third party investment adviser. However, in connection with a recommendation of
such an adviser, Capital Gains may be paid a referral fee by the adviser pursuant to Rule 206(4)-
1 under the Investment Advisers Act of 1940. In cases where a third party investment adviser
compensates Capital Gains with a referral fee, Capital Gains will not assess an advisory fee for
the portion of a client's assets that are managed by the third party investment adviser .

The referral fee will ordinarily consist of a percentage of the advisory fees that the third party
investment adviser receives from the client. The client’s fees to the third party investment
adviser should not increase as a result of the payment of the referral fee by the investment
adviser to Capital Gains. Capital Gains may have a conflict of interest between acting in the
client’s best interest and securing referral fees from such investment advisers. Clients should be
aware that Capital Gains would not receive any referral fees if a portion of a client’s account was
invested in a mutual fund.

Capital Gains does not receive commissions, 12b-1 fees, sales mark-ups or any other type of
compensation from brokerage firms, mutual fund companies, custodian institutions, insurance
companies or brokerage firms for trades or Wrap accounts .

PERFORMANCE-BASED FEES AND SIDE-BY-SIDE MANAGEMENT

Capital Gains does not charge performance based fees or participate in side-by-side management
of accounts.

TYPES OF CLIENTS

                                                                Capital Gains Incorporated
                                           Form ADV, Part 2A, Firm Brochure, January 16, 2026

Capital Gains’ minimum account size is $100,000.

Capital Gains specializes in providing investment advice t o municipalities, municipal
districts, pension funds, corporate pension plans, credit unions, banks, individuals, and other
public and non-profit entities. Capital Gains manages accounts on either a discretionary or
non-discretionary basis. The Company may also be retained by pension funds to provide
analysis of their portfolio holdings, develop investment strategy and make recommendations as
to specific securities.

Capital Gains also provides investment advisory services to municipalities themselves with
regard to their corporate or reserve funds and to corporate pension plans, credit unions,
banks, library districts, park districts, school districts, benevolent associations and other public
entities.

METHODS OF ANALYSIS, INVESTMENT STRATEGIES AND RISK OF LOSS

Capital Gains uses a combination of technical and fundamental analysis to identify investment
opportunities which have the greatest potential to enhance investment returns in your portfolio.
Our flexible investment strategy is designed to reach the optimum point on the efficient
frontier based upon the risk reward parameters of each individual client. Capital Gains strives
to achieve this objective by implementing strategic diversification over many asset classes;
diversified fixed income securities plus a variety of equity investments such as small-cap, mid-
cap, large-cap, international, emerging markets, inflation hedges, value, growth, etc.

Capital Gains will periodically adjust the asset allocation to each sector based upon changing
economic and market conditions. The net effect is to attempt to minimize risk, while striving to
maximize investment returns, in a safe and responsible manner.
Capital Gains investment philosophy is consistent for public entity portfolios; however, the
strategy is customized to match the investment parameters in their investment policy and
the risk profile specified by each client. Therefore, rates of return may vary from one ortfolio to
another. Also, past performance is not indicative of future returns.

Capital Gains utilizes research provided by Morningstar, Bond Edge, Albridge, Orion, Charles
Schwab & Bloomberg to evaluate separate account managers, mutual funds and exchange
traded funds (ETF’s). Capital Gains selects investment managers and mutual funds with a
discipline and performance record which demonstrates that the funds are consistent in their
approach.

Capital Gains will establish a strategic asset mix within the context of a client's risk
tolerance level. The broad asset classes are adjusted based upon changes in the fundamentals of
the asset class and changes in the macroeconomic environment. Changes in the asset
allocation of each portfolio are achieved by adjusting the weightings of various segments of
the capital markets. Capital Gains does not engage in broad market timing strategies between
cash, stocks or bonds.

                                                                 Capital Gains Incorporated
                                            Form ADV, Part 2A, Firm Brochure, January 16, 2026

This reallocation may be implemented through the use of mutual funds or exchange traded funds
(ETFs). Capital Gains cannot provide the client with an assurance that such strategies will
always be profitable.

RISK OF LOSS

All investment programs have certain risks that are borne by the investor. Our investment
approach constantly keeps the risk of loss in mind. Investors face the following investment risks:

   1) Interest-rate Risk: Fluctuations in interest rates may cause investment prices to fluctuate.
      For example, when interest rates rise, yields on existing bonds become less attractive,
      causing their market values to decline.

   2) Market Risk: The price of a security, bond, or mutual fund may drop in reaction to
      tangible and intangible events and conditions. This type of risk is caused by external
      factors independent of a security’s particular underlying circumstances. For example,
      political, economic and social conditions may trigger market events .

   3) Inflation Risk: When any type of inflation is present, a dollar today will not buy as much
      as a dollar next year, because purchasing power is eroding at the rate of inflation .

   4) Currency Risk: Overseas investments are subject to fluctuations in the value of the dollar
      against the currency of the investment’s originating country. This is also referred to as
      exchange rate risk.

   5) Reinvestment Risk: This is the risk that future proceeds from investments may have to be
      reinvested at a potentially lower rate of return (i.e. interest rate). This primarily relates to
      fixed income securities.

   6) Business Risk: These risks are associated with a particular industry or a particular
      company within an industry. For example, oil-drilling companies depend on finding oil
      and then refining it, a lengthy process, before they can generate a profit. They carry a
      higher risk of profitability than an electric company, which generates its income from a
      steady stream of customers who buy electricity no matter what the economic environment
      is like.

   7) Liquidity Risk: Liquidity is the ability to readily convert an investment into cash.
      Generally, assets are more liquid if many traders are interested in a standardized product.
      For example, Treasury Bills are highly liquid, while real estate properties are not .

   8) Financial Risk: Excessive borrowing to finance business operations increases the risk
      of profitability, because the company must meet the terms of its obligations in good times
...