Hanseatic Management Services Inc

ITEM 5. FEES AND COMPENSATION

Hanseatic charges separately for investment management, model portfolios, investment
advice, and financial planning for transparency and objectivity purposes. Applicable New
Mexico Gross Receipts Tax (“NM GRT”) applies to all services for clients who are
residents of New Mexico. NM GRT is a tax responsibility of Hanseatic’s to the state of
New Mexico when we engage in business in New Mexico. It is Hanseatic’s business
practice to pass-on the tax liability to the client. Hanseatic separately states the amount
of NM GRT it collects from a client that is then paid to the State of New Mexico on its
invoice. Clients can request a copy of their invoice(s) as the NM GRT is not separately
shown on the custodial statement(s).

Hanseatic’s fee schedules for its services are outlined below.

Fees For Investment Management Services

Hanseatic’s standard investment management fee schedules for institutional and
individual clients are listed in the tables below. The actual fee schedule is negotiated on
a client-by-client basis and may differ from that stated. Applicable New Mexico Gross
Receipts Tax is added to the management fee.

Institutional Clients - Domestic Equity

                                                           Targeted
                                                         Risk/Dynamic
                 Large Cap          All Cap Growth           Cash         AC Tax Efficient
 1-5MM             1.00%                 1.00%              1.00%             1.00%
 5-10MM            0.60%                 0.65%              0.60%             0.85%
 10-25MM           0.55%                 0.60%              0.55%             0.80%
 25-50MM           0.50%                 0.55%              0.50%             0.75%
 >50MM             0.45%                 0.50%              0.45%             0.70%

The investment management fee, payment timing and other terms for fund to fund
accounts is determined by the agreement between the consultant and the client, then
set forth by the agreement engaging Hanseatic. The terms are not negotiable by
Hanseatic. Applicable New Mexico Gross Receipts Tax is added to the management
fee.

                                           ~6~

Individual Clients – All Products

Individual client fee schedule is per separately managed account, i.e. Hanseatic does not
aggregate accounts within the same household to determine tier level.

                     Sub-Advised
  All Products        Wrap Fee
      1.50%            1.95%

The investment management fee for separately managed accounts is payable monthly,
in arrears, at the beginning of each calendar month based on the average daily balance
of assets under management (“AUM”) multiplied by 1/12th of the annual management fee
indicated for the product outlined in schedule A of the written agreement. Applicable New
Mexico Gross Receipts Tax is added to the management fee. Hanseatic typically deducts
fees by the 15th of the month for the previous month’s billable AUM. Fees will be pro-
rated for the month in which the client first invests in the strategy or exits the product
according to the average daily balance. Asset value shall mean the total account net
asset value as computed by the custodian including cash, accrued interest, taxes and
accrued income from pending cash dividends, rights and warrants with the custodian.
Payment of the investment management fee is made in the following way: the client gives
prior authorization to the custodian that (a) authorizes Hanseatic to debit the account for
the investment management fee up to a client-specified maximum amount, based on the
account size and investment management fee to be charged, and (b) authorizes the
custodian to pay Hanseatic directly no sooner than five (5) business days after the
account statement is available at the custodian. The client is responsible for
understanding and verifying the amount debited through the client’s monthly custodian
statement.

Hanseatic’s investment management clients may also pay custodial fees, administrative
expenses, brokerage and other transaction costs. (See Section 12, “Brokerage
Practices”). Hanseatic does not accept payment of investment management fees in
advance.

Sub-advised account fees are paid to Hanseatic through the Manager.

Fees for Model Portfolio Services

Hanseatic’s standard model portfolio schedule for all products is listed in the table below.
The actual fee schedule is negotiated on a client-by-client basis and may differ from that
stated. Applicable New Mexico Gross Receipts Tax is added to the model portfolio fee.

                 All Products
 0-50 MM            0.50%
 50-150 MM          0.40%
 > 150 MM           0.30%

                                           ~7~

Fees for Investment Advice Services

Hanseatic’s standard investment advice schedule is listed in the table below. The actual
fee schedule is negotiated on a client-by-client basis and may differ from that stated.
Applicable New Mexico Gross Receipts Tax is added to the investment advice fee.

 0-2.5 MM         0.75%
 2.5-5 MM         0.65%
 > 5 MM           0.50%

Fees for Financial Planning Services

Hanseatic offers a complementary, initial consultation for financial planning services. The
consultation is a 30-60 minute session for potential clients to learn about Hanseatic and
its services, discuss financial goals or concerns, and determine if formal financial planning
is appropriate.

Hanseatic provides financial planning services only if mutually agreed upon. Prior to
commencement of financial planning services, Hanseatic requires a written agreement
that specifies the scope of the engagement, the duties of each party in the financial
planning process, and the fee quote for the financial planning services. Applicable New
Mexico Gross Receipts Tax is added to the financial planning fee.

Hanseatic offers a single issue planning option for those who need help or want a second
...

ITEM 7. TYPES OF CLIENTS

Hanseatic provides its services to institutional clients, including but not limited to,
insurance companies, investment consultants, large registered investment advisory firms,
and corporations. Some of these client relationships are established through an
Investment Manager/Sub-Advisor contract, where Hanseatic is the Sub-Advisor.
Hanseatic also provides its services to individuals, family offices, and small businesses.

Hanseatic’s minimum account size for investment management is $1,000,000 for
institutional clients and $100,000 for individual clients; however, on a client-by-client
basis, Hanseatic accepts smaller account sizes.

Hanseatic’s minimum account size for model portfolio services is $10,000,000; however,
on a client-by-client basis, Hanseatic accepts smaller account sizes.

Hanseatic has no minimum account size for investment advice services.

Hanseatic does not impose prerequisite requirements for financial planning services.

Regardless of client type or minimum account size, each client must execute a written
agreement that governs Hanseatic’s investment advisory relationship with the client.