Dover Investment Advisory Corporation

Fees and Compensation
DIAC’s only source of income is the fee charged to its clients. DIAC does not receive any commission
income, 12b-1 fees, or payments of any sort from any of the funds used to construct client portfolios or by
the custodians who hold client assets.

DIAC invoices clients in advance, each calendar quarter. Q1 fees are invoiced in January. Q2 fees are
invoiced in April. Q3 fees are invoiced in July. Q4 fees are invoiced in October. The quarterly fee is
calculated by applying the fee schedule listed below to the assets under management at the beginning of the
calendar quarter and taking 25% of that result. Client portfolios often consist of one or more IRAs, taxable
brokerage accounts, trust accounts, active 401k and/or 403b accounts. When available, client fees will be

deducted directly from one or more of the accounts that comprise the client portfolio. Under these
circumstances, clients will receive an invoice detailing the amount of the fee deducted at approximately the
same time the custodian pays the fee to DIAC. In addition, the custodian will provide quarterly statements
to both DIAC and the client showing all disbursements from the client's custodial account. If the deduction
of advisory fees directly from the client's account is not available, the client will be invoiced directly each
quarter. Fees are due upon receipt of the invoice.

                                           DIAC Fee Schedule
                        0.50% on the first $3 million in assets under management
             0.375% on the assets under management over $3 million, but less than $5 million
                         0.25% on all assets under management over $5 million
                                         fees are not negotiable

If a client terminates the relationship with DIAC in the middle of the quarter, giving the required 30-day
notice, the client may request a refund for the period following the effective date of the termination (30
days after notice is given) to the end of the quarter. The amount of the refund will be determined on a
prorated basis. For example, if the client gives written termination notice to DIAC on January 10 th, the
effective termination date would be February 9th. If the Q1 fee was $625, the client would be eligible to
receive a refund of $347.22 ($625 x 50/90).

If a termination notice is given within the first two years of the relationship, the client may be subject to a
minimum fee. The minimum fee is equal to the lesser of 1% of assets under management, or $5,000.
DIAC puts considerable effort into understanding client needs and risk tolerances, consolidating client
assets, analyzing existing investments, and restructuring client portfolios. DIAC does not charge a start-up
fee in recognition of these efforts. Instead, DIAC expects to be compensated for this effort over time. This
approach, combined with what DIAC believes is a modest advisory fee (maximum of 0.125% / quarter)
may result in a minimum fee charge equivalent to the lesser of $5,000 or 1% of assets under management at
the time of termination. The minimum fee at termination will be calculated by subtracting all fees paid to
DIAC from the lesser of $5,000, or 1% of the assets under management at the month-end just prior to
termination notice being given.

In addition to the fee payable to DIAC, clients will also pay the fees associated with the funds that
comprise the portfolio. These fees are deducted by the mutual fund company or exchange traded fund
sponsor directly from each fund. The client will also pay any transaction fee imposed by either the fund
company or the custodian where the client assets are held.

Many of the investments DIAC uses in client portfolios are available to the public through a variety of
brokers not affiliated with DIAC, while some of the funds are only available to advisors. Some of the
available funds charge a front-end load or sales commission when purchased by individuals. Often, these
fees are waived for DIAC and other advisors. While clients can purchase these funds, they may be subject
to the sales charge, while DIAC clients may not.

Performance-Based Fees and Side-By-Side Management
DIAC does not charge any performance-based fees or manage any other accounts that have a different fee
arrangement than that described in the Fees and Compensation section above.

Types of Clients
DIAC provides its investment services to individuals, trusts and corporations. While not currently doing
so, DIAC would also provide its services to endowments, foundations and partnerships.

Methods of Analysis, Investment Strategies and Risk of Loss
DIAC’s investment philosophy leads us to seek broadly diversified portfolios constructed with low cost
funds. Index funds are used in many asset classes. To identify and monitor these funds, DIAC utilizes
Morningstar’s robust database of mutual funds and exchange traded funds. To keep apprised of domestic
and global economic developments, DIAC relies on the Wall Street Journal, CNBC, The Economist,
industry conferences, the CFA Society Boston and a host industry contacts and web sites for information.

DIAC does not believe anyone can consistently outperform the market, so our strategy does not try to do
that. We want to participate in the capital markets of the world in a way that is rational and cost effective.
We do recognize that markets can get significantly overvalued and undervalued from time to time. While
we generally stay invested at our asset allocation targets, we will move away from assets we perceive to be
significantly overvalued and toward those that we perceive to be significantly undervalued.

DIAC believes that one of the greatest risks investors face is purchasing power risk. This is the risk that the
purchasing power of accumulated assets will erode over time. In order to combat this long term risk,
portfolios must have a significant allocation to asset classes that are more likely to outperform inflation
over the long term. These asset classes include equities, commodities and real estate. While they are more
likely to outperform inflation over the long term, they are very likely to experience significant price
volatility in the short and intermediate terms (1 minute to several years). This means that it is likely that at
some point during a client’s multi-year investment time horizon some of the assets will be at a loss.
Because DIAC invests in 25 to 35 diversified funds, the likelihood of all of them going to zero is extremely
small. That does not mean that they cannot lose value. They can, will and have. History has shown us that
asset classes that tend to outperform inflation over the long term are inherently volatile in the short and
intermediate terms. So, in order to avoid the long term erosion of purchasing power, investors must take
short and intermediate term risk. The management of this process is what DIAC does for clients.