Meritage Portfolio Management Inc

Fees and Compensation
   Description
       Meritage bases its fees solely on a percentage of assets under management.
       Please refer to the “Fee Schedule” section included under “Types of Agreements”
       above for further detailed discussion.

   Fee Billing
       Investment management fees are typically billed quarterly, in advance, meaning that
       we invoice clients at the beginning of the three-month billing period. Payment in full
       is expected upon invoice presentation. Fees are usually deducted from the client
       account. Clients must consent in advance to direct debiting of their investment
       account. The client can also direct that the invoice be presented to a different
       account than the one under management for deduction, or request that the invoice
       be sent for direct payment by the client. A copy of the fee billing is provided by
       Meritage directly to the client.

   Other Fees
       The fees charged by Meritage do not include custodial fees or trading costs incurred
       in buying and selling securities. Custodians may charge transaction fees, over which
       Meritage has no control, on the settlement of purchases or sales of stocks, bonds,
       exchange traded funds and other securities. Instead of transaction fees, some
       custodians charge a monthly or quarterly fee based on the market value of the
       assets held in the account.

   Expense Ratios
       Meritage is a subadvisor to collective trusts sponsored by Benefit Trust Company
       and to common trust funds sponsored by Midwest Trust Company. Meritage is

       compensated directly by the sponsoring entity of each of the funds. These funds are
       available to clients of Meritage if assets are custodied at either of these trust
       companies. Meritage receives an annual rate of .60% of the total .95% annual fee
       for management for equity funds, and a .30% annual rate from a total of .40% for
       fixed income funds. Assets invested in the collective trusts of Benefit Trust Company
       and in the common trust funds of Midwest Trust Company are not subject to
       additional management fees from Meritage.
       Exchange Traded Funds (ETFs) generally charge a management fee for their
       services as investment managers and are used on occasion by Meritage for a certain
       segment of the market or for small accounts which cannot be efficiently managed
       with individual securities. The management fee is called an expense ratio. For
       example, an expense ratio of 0.10 means that the investment company charges
       0.1% for their services. These fees are in addition to the fees paid by the client to
       Meritage. Meritage does not receive any part of this expense ratio. The
       management fee for ETF funds is subtracted from the net return generated by the
       fund.

   Past Due Accounts and Termination of Agreement
       Meritage reserves the right to stop work on any account that is more than 120 days
       overdue. Any unused portion of fees collected in advance will be refunded within 10
       days in the event of termination of the management advisory agreement.

Types of Clients
   Description
       Meritage provides investment advice to individuals and their family members, trust
       companies, pension and profit-sharing plans, Taft-Hartley plans, trusts, estates,
       charitable organizations and foundations, corporations and other business entities
       and investment companies. Meritage also offers advisory services for corporate
       retirement plans including pension, profit sharing and participant directed, individual
       account plans like 401(k) plans.
       Client relationships vary widely in terms of scope, size and length of service.

   Account Minimums
       The minimum relationship size is $2,000,000 of assets under management, which
       equates to an annual fee of $20,000 based on our standard fee schedule.

       Should a relationship fall below $2,000,000 in value, there is no minimum annual fee
       charged.
       Meritage has the discretion to waive the account minimum. Relationships of less
       than $2,000,000 may be set up when the client and the advisor anticipate the client
       will add additional funds to the accounts bringing the total to $2,000,000 within a
       reasonable time. Other exceptions will apply to wrap program accounts, including
       Schwab Advisor Network referral program, employees of Meritage and their
       relatives, or relatives of existing clients.

Methods of Analysis, Investment Strategies and Risk of Loss