L C Bhandari & Co

Fees and Compensation
LCBC generally charges a fixed annual fee and a variable annual fee as a percentage of
assets under management. However, further refinements such as break points for the
variable fee, can be negotiated. LCBC does not have a standard advisory fee schedule.
The actual rates vary based on the scope and complexity of the assignment and are
negotiable. The fixed annual fee can range up to $50,000 and the variable annual fee can
range up to 0.50% of assets under management. For an assignment to manage the
allocation of more than $10 million in assets within a variable life insurance policy, a
fixed annual fee of $25,000 and a variable annual fee of 0.25% would be typical.

These fees are billed quarterly, at 25% of the annual rates, no more than 3 months in
advance, and based on market value of assets at the beginning of the quarter.
Adjustments for any significant additions or withdrawals during the quarter, other than
due to variation in market values, will be made and billed after the end of the quarter in
proportion to the number of days impacted. For example, if assets increased by $1

million, one and a half month into the quarter, due to a premium payment, the variable
component of the fee would apply to this increment for half a quarter. Similarly, a rebate
will be provided if assets decreased due to withdrawal. Exact details of when and how
such adjustments will be made can be negotiated.

At client’s request, LCBC may sometimes provide additional economic/financial analysis
or modeling, which is not part of the ongoing investment management agreement. Client
may request such analysis/modeling, for example, to better understand the probability
and/or consequences of various investment outcomes. The fee for providing such
analysis will be negotiated between LCBC and the client, and will be billed as mutually
agreed.

Either the client or the Advisor may terminate their advisory agreement by giving 30
day’s advance written notice to the other without penalty. On termination, the applicable
fees will be charged and billed only until the day before the effective termination date.
Both fixed and variable components of the fee will be prorated to that day. Any excess
paid previously will be refunded promptly by LCBC.

Clients may incur fees and costs in addition to the advisory fee paid to LCBC as
described above. These fees/costs can include:
    1. insurance company charges such as mortality & expenses (“M&E”) charges,
    2. mutual fund expenses such as management fees, administrative costs, distribution
    and/or service (12b-1) fees, and acquired fund fees,
    3. transaction fees such as sales charges (loads), redemption fees, and exchange fees,
    and
    4. brokerage commissions and custodian fees.
The above is not an exhaustive list of other fees and costs the clients may incur. Clients
should obtain and read the relevant prospectuses, private placement memorandums,
insurance policies, and similar documents to get complete information about fees that
may apply to them. LCBC does not receive any portion of these other fees. Only
compensation received by LCBC is the advisory fee it bills to the client and gets paid
directly by the client. Please refer to Brokerage Practices on pages 6 for additional
information.

Performance-Based Fees and Side-By-Side Management
LCBC may accept performance-based fees from clients who specifically request it if
appropriate. Managing accounts that are charged a performance-based fee and accounts
that are not charged such fee can present certain conflicts of interest in managing these
accounts at the same time. A major source of such conflicts is an incentive to favor
performance-based fee accounts in trade allocations. LCBC does not do trade
aggregation or trade allocation and therefore avoids this major source of conflict of
interest. Since LCBC only allocates to mutual funds and similar instruments that are only
priced daily, and since the buy or sell order for these instruments must be given before
the time they are priced, this conflict of interest is further minimized.

Types of Clients
LCBC provides advisory services to institutions such as corporations, limited liability
companies and partnerships, and does not have minimum account size requirements.

Methods of Analysis, Investment Strategies and Risk of Loss
LCBC uses publicly available macro-economic, political, and market performance data to
form judgment about future prospects of various market sectors. LCBC does proprietary
analysis of historical performance of individual investment options--mutual funds or
comparable instruments--to determine their attractiveness as investment vehicles within
their market sectors, taking into account changes in investment managers.

Investment strategy and portfolio allocation decisions are guided by:
    1. the investment objectives, benchmark allocations, and any other
        restrictions/requirements specified by the client,
    2. the Advisor’s judgment about the future prospects of various market sectors, and
    3. the relative attractiveness, as determine by the Advisor, of various investment
        options available to and/or specified by the client.
At client’s request, these allocations can be reviewed with them and modified before
implementation.

Investing in securities, even through mutual funds or comparable instruments, involves
risk of loss that clients should be prepared to bear. The specific risks involved will vary
with the market sectors and specific investment options used. Since the Advisor covers a
wide variety of market sectors, these risks may include asset allocation risk, credit risk,
currency risk, interest rate risk, inflation/deflation risk, liquidity risk, market risk, non-
diversification risk, and political risk, among others. Further information on these and
other risks can be found in the prospectuses, private offering memorandums or similar
documents for the investment options available in each case.