Folger Nolan Fleming Douglas Capital Management Inc

Fees and Compensation

CMI generally requires a minimum of $500,000 in assets for new accounts. This minimum account size
may be waived under certain circumstances, based on an analysis of the relationship of the account to
other accounts managed by CMI, the potential for growth in the account, the nature and duration of other
business relationships between the client and CMI or FNFD, and other factors.

Clients compensate CMI based on a percentage of assets under management as set forth in their investment
advisory agreements. The currently offered fee schedule is as follows:

                           Assets Under Management                       Annual Rate

                             The First $2,000,000                            1%

                             The Next $3,000,000                             .75%

                             All Assets over $5,000,000                      .50%

Fees may be negotiable, and may be higher or lower than the standard schedule depending on the types of
assets under management, the size of the account, relationships with other accounts, the extent of
supplemental services to be provided to the account, and other factors.

Investment advisory fees are charged quarterly in advance and are based on the value of the assets under
management on the last business day of the previous quarter. Cash and cash equivalents are generally
included in the value of assets under management for purposes of calculating the advisory fee. The
quarterly fee is computed at one fourth the annual rate. Fees are generally deducted from the client’s
brokerage account upon the client’s authorization, or may be billed to the client, at the client’s option. Each
CMI client enters into an advisory agreement that continues in force and effect until either the client or
CMI gives notice to the other party of its intention to cancel it, in which event the contract terminates on
such date as is specified by the terminating party. When either party terminates the relationship, the
“unused” portion of the prepaid management fee is refunded by CMI. The “used” portion covers the period
from the beginning of the quarter in which the contract is cancelled through the specified termination date.

When CMI is acting as a sub-advisor for FNFD wrap fee client accounts, a portion of the overall fee
charged to the wrap fee client by FNFD is paid to CMI. FNFD’s clearing broker Pershing will make such
payments to CMI as directed by FNFD. FNFD wrap fee clients for whom CMI provides sub-advisory
services do not pay a separate fee to CMI. The fee paid to CMI as sub-advisor may be more or less than
fees paid to other sub-advisors for FNFD wrap fee programs.

In addition to CMI advisory fees, clients will incur brokerage commission costs. While CMI recommends
that clients use our broker-dealer affiliate FNFD as their broker-dealer, clients have the option to purchase
and sell securities recommended by CMI through other brokers or agents that are not affiliated with CMI.
Clients designate the broker-dealer to which CMI will direct their transactions, and most clients have
directed that FNFD act as broker in their transactions. In such cases, FNFD earns brokerage commissions
for security trades effected in CMI client accounts. FNFD transaction charges for security trades effected
in CMI client accounts are disclosed below in the section of this brochure entitled Brokerage Practices.

Trades executed by FNFD for CMI client accounts are cleared through Pershing. FNFD pays Pershing for
execution, clearance, and other services, and CMI receives research and other analysis from Pershing as a
result of this relationship.

For any client account that holds mutual funds or ETFs, the mutual fund or ETF will charge its own
investment management fee as disclosed in the prospectus for the mutual fund or ETF. This investment
management fee is separate from and in addition to the investment advisory fee charged by CMI. For
additional information on fees and payments associated with mutual funds held by CMI clients, please see
below.

FNFD makes available to clients of CMI who are FNFD customers cash management services in the form
of sweep arrangements. Clients may choose to utilize interest bearing deposit accounts available through
the Reich & Tang Deposit Solutions, LLC; with banks insured by the Federal Deposit Insurance
Corporation up to limits established by Congress; or money market mutual funds managed by Dreyfus
Corporation (“Dreyfus”). Dreyfus is a BNY Mellon Company and an affiliate of Pershing. The

sweep arrangement money market mutual funds are not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, unless disclosed otherwise in the prospectus for the
fund. FNFD does not receive payments for sweep arrangements with respect to CMI client managed
accounts.

CMI clients are free to direct that their cash balances be managed through investment in U.S. Treasury
securities. CMI clients may also make arrangements to have their cash managed by persons or entities
other than CMI or FNFD.

Mutual funds typically offer different share classes with different costs. Generally, share classes that cost
the holder more pay more to a financial intermediary, such as FNFD or its affiliates. Nonetheless, CMI
attempts to recommend or purchase the lowest cost share class available to a client provided to CMI by
Pershing, FNFD’s clearing broker, or another broker selected by the client. On occasion, this may not be
the case, for instance when mutual fund positions are acquired by the client before the management of the
account is transferred to CMI. In such cases, conversion to the lowest cost share class available to the
client through the appropriate clearing broker may not occur for up to ninety days after the legacy positions
are placed in the client’s advisory account at CMI. Share classes may not be converted at all if such
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Types of Clients

CMI provides investment advice to individuals, pensions and profit sharing plans, trusts, estates, charitable
organizations and other non-profit, corporate, and business entities.

Methods of Analysis, Investment Strategies and Risk of Loss

CMI uses fundamental methods of analysis in determining the securities to be purchased or sold. The main
sources of information include research reports prepared by others, financial and other publications,
corporate rating services, and company press releases, annual reports, prospectuses, and filings with the
Securities and Exchange Commission.

As indicated, CMI uses a long-term buy and hold strategy focused on individualized account management
with investments generally in large-cap equity securities and fixed income securities. ETFs are used to
gain exposure to small- and mid-cap equity securities, specific equity market sectors, international stocks or
fixed income. ETFs are either mutual funds or unit investment trusts that hold portfolios of common stocks
or bonds and are designed generally to correspond to the price and yield performance of their underlying
indexes, representing either the broad stock market, market sectors at different capitalization levels,
industry sectors, international stocks, or U.S. or international fixed income securities.

The CMI IPC maintains a Buy List of securities deemed suitable for investment on behalf of clients. The
committee meets from time to time to consider whether to add or delete securities to or from the list and
acts by consent between meetings.

Any investment in securities involves the risk of loss of principal. The success of CMI’s investment
activities for client accounts may be affected by general economic and market conditions, such as economic
growth or lack thereof, and such factors as interest rates, availability of credit, inflation rates, economic
uncertainty, changes in laws, and national and international political circumstances. These factors may
affect the level and volatility of securities prices and the liquidity of investments made by CMI.
Unexpected volatility or illiquidity could impair profitability of investments or result in losses. There is no
guarantee that CMI will be able to deliver positive investment returns when implementing its
investment strategies.

Account values may fluctuate over short periods of time as a result of short-term market movements and
over longer periods during market downturns. Individual securities in client accounts may face trading
risks, including the potential lack of an active trading market and the resulting inability to sell the security
or sell at favorable times or prices. The value of individual securities in client accounts may be adversely
affected and decline as a result of changes to the issuer’s financial condition, credit rating, business
prospects, or other circumstances.

Specific types of securities each have attendant risks:

The equity market sector will generally present the greatest degree of risk of loss for client portfolios. The
value of equity securities may fluctuate in response to company specific factors, industry market conditions
or the general economic environment. Common shares generally are the most junior securities in a
company’s capital structure and are thus in the first-loss position and the most susceptible to fluctuations in
value. While CMI expects to invest substantially in securities with large market capitalizations, it may
invest in small- or mid-capitalization securities as well. The securities of smaller companies may involve
greater risk. These securities may be subject to greater volatility and may be less liquid than those of larger
companies.

International equity investments involve additional risks, including the risk of capital loss from unfavorable
fluctuations in currency values, differences in accounting treatment, or economic or political instability in
other nations. In addition, the application of foreign tax laws (e.g. the imposition of withholding taxes on
dividends or interest payments) or confiscatory taxation may affect investments in foreign securities.

The value of fixed income securities may change due to market volatility and interest rate fluctuation.
When interest rates decline, the value of fixed income securities can be expected to rise. Conversely, when
interest rates rise, the value of fixed income securities can be expected to decline. The market value of

fixed income securities also varies according to the financial condition of the issuer or the performance of
the fixed income sector of which the issuer is a part.

Although ETFs are designed to provide investment results that generally correspond to the price and yield
performance of their respective underlying indexes, ETFs may not be able to replicate exactly the
performance of the indexes because of their expenses, tracking error (discrepancy between the composition
of the underlying index and the composition of the ETF), and other factors. An exchange traded sector
fund may be adversely affected by the performance of the specific sector or group of industries or
companies on which it is based.

CMI maintains a Buy List of securities deemed suitable for investment on behalf of clients. Investing only
in securities on the Buy List carries with it specific risks that predominately large market capitalization
equities may underperform in comparison to the general securities markets or other asset classes. Investing
only in securities on the Buy List may create concentrations in an individual security, industry, or asset
class. Such a strategy may involve a greater risk of loss of principal or underperformance due to potential
adverse occurrences affecting Buy List securities.

Risk in the Use of Margin or Other Securities-Based Lending

For clients who may borrow against the value of the assets in their accounts, interest is charged as
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