HDI Capital LLC

Item 5. Fees and Compensation
Our standard advisory fee is based on the market value of the assets under management and is
calculated as follows:

The annual fees are negotiable, pro-rated and paid in arrears on a quarterly basis. The advisory fee
is a tiered fee and is calculated by assessing the percentage rates using the predefined levels of
assets as shown in the above chart and applying the fee to the account value as of the last day of the
previous quarter. No increase in the annual fee shall be effective without agreement from the Client
by signing a new agreement or amendment to their current advisory agreement.

We calculate period-end account values after all dividends settle in the account, therefore, the
account value used to calculate advisory fees may differ from that of the custodial account
statement. Our billing invoice will indicate the total account value used to calculate the advisory
fee.
Advisory fees are directly debited from Client accounts, or the Client may choose to pay by check.
Accounts initiated or terminated during a calendar quarter will be charged a pro-rated fee based on
the amount of time remaining in the billing period. An account may be terminated with written
notice at least 15 calendar days in advance. Since fees are paid in arrears, no refund will be needed
upon termination of the account.

Other Fees and Expenses

Our fees are exclusive of brokerage commissions, transaction fees, and other related costs and
expenses which may be incurred by the Client. Clients may incur certain charges imposed by
custodians, brokers, and other third parties such as custodial fees, deferred sales charges, odd- lot
differentials, transfer taxes, wire transfer, and electronic fund fees, and other fees and taxes on
brokerage accounts and securities transactions. Mutual fund and exchange-traded funds also charge
internal management fees, which are disclosed in a fund's prospectus. Such charges, fees, and
commissions are exclusive of and in addition to our fee, and we shall not receive any portion of
these commissions, fees, and costs.

Item 7. Types of Clients
We provide portfolio management services to individuals, high net-worth individuals, and
corporations or other businesses.

We do not have minimum account requirements.

  Item 8. Method of Analysis, Investment Strategies and Risk of Loss
  Methods of Analysis and Investment Strategy

Our primary methods of investment analysis are fundamental, technical, cyclical, and charting
analysis.

Fundamental analysis involves analyzing individual companies and their industry groups, such as
a company’s financial statements, details regarding the company’s product line, the experience, and
expertise of the company’s management, and the outlook for the company’s industry. The resulting
data is used to measure the true value of the company’s stock compared to the current market value.
The risk of fundamental analysis is that the information obtained may be incorrect and the analysis
may not provide an accurate estimate of earnings, which may be the basis for a stock’s value. If
securities prices adjust rapidly to new information, utilizing fundamental analysis may not result in
favorable performance.
Technical analysis involves using chart patterns, momentum, volume, and relative strength in an
effort to pick sectors that may outperform market indices. However, there is no assurance of
accurate forecasts or that trends will develop in the markets we follow. In the past, there have been
periods without discernible trends and similar periods will presumably occur in the future. Even
where major trends develop, outside factors like government intervention could potentially shorten
them.
Furthermore, one limitation of technical analysis is that it requires price movement data, which can
translate into price trends sufficient to dictate a market entry or exit decision. In a trendless or erratic
market, a technical method may fail to identify trends requiring action. In addition, technical
methods may overreact to minor price movements, establishing positions contrary to overall price
trends, which may result in losses. Finally, a technical trading method may underperform other
trading methods when fundamental factors dominate price moves within a given market.
Cyclical analysis is a type of technical analysis that involves evaluating recurring price patterns
and trends based upon business cycles. Economic/business cycles may not be predictable and may
have many fluctuations between long-term expansions and contractions. The lengths of economic
cycles may be difficult to predict with accuracy and therefore the risk of cyclical analysis is the
difficulty in predicting economic trends and consequently the changing value of securities that
would be affected by these changing trends.

Charting analysis involves the gathering and processing of price and volume information for a
particular security. This price and volume information is analyzed using mathematical equations.
The resulting data is then applied to graphing charts, which is used to predict future price
movements based on price patterns and trends. Charts may not accurately predict future price
movements. Current prices of securities may not reflect all information about the security and day-
to-day changes in market prices of securities may follow random patterns and may not be
predictable with any reliable degree of accuracy.

  Modern Portfolio Theory

The underlying principles of MPT are:

    a) Investors are risk averse. The only acceptable risk is that which is adequately compensated
       by an expected return. Risk and investment return are related and an increase in risk
       requires an increased expected return.
    b) Markets are efficient. The same market information is available to all investors at the same
       time. The market prices every security fairly based upon this equal availability of

       information.
    c) The design of the portfolio as a whole is more important than the selection of any particular
       security. The appropriate allocation of capital among asset classes will have far more
       influence on long-term portfolio performance than the selection of individual securities.
    d) Investing for the long-term (preferably longer than ten years) becomes critical to
       investment success because it allows the long-term characteristics of the asset classes to
       surface.
    e) Increasing diversification of the portfolio with lower correlated asset class positions can
       decrease portfolio risk. Correlation is the statistical term for the extent to which two asset
       classes move in tandem or opposition to one another.

Use of Outside Managers: We do not refer clients to outside managers.
  Material Risks
The material risks presented by the strategies and financial assets pursued by HDI are set forth
below. Investing involves risk of loss that an investor should be prepared to bear. Investments by
HDI involve significant risks.

Market Risk: Market risk involves the possibility that an investment’s current market value will
fall because of a general market decline, reducing the value of the investment regardless of the
operational success of the issuer’s operations or its financial condition.
Strategy Risk: The Adviser’s investment strategies and/or investment techniques may not work as
intended. The investment process relies on quantitative models, computer systems, and data
obtained from third-party and internal sources. Such models may be based on assumptions,
historical relationships, or statistical techniques that may not prove to be accurate or may fail to
perform as expected in changing market conditions. Errors in data inputs, incomplete or inaccurate
market data, or failures in data processing may lead to incorrect signals or investment decisions. In
addition, computer systems and automated processes used to generate, transmit, and execute trading
instructions may be subject to operational risks, including programming errors, software defects,
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