Victoria Capital Management Inc

Fees and Compensation
Investment advisory services are provided on an ongoing basis in accordance with each
client’s specific circumstances, goals, and objectives. VCM fees are based on a percentage of
the total market value of assets in the investment account at the end of each calendar quarter.
Currently, the maximum fee is 1% for all assets under management. For clients with more
than $5 million in assets under management, fees are negotiable. Fees may be negotiated on a
basis that differs from this schedule if circumstances warrant.

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Fees for advisory services will be calculated based upon the aggregate market value of all
assets under management within the client’s account, including allocations to cash. If a client
restricts some or all an account, no fees may be charged for holding those securities. In the
event of a margin balance, clients will be charged the appropriate management fee based on
the value of securities under management. The quarterly management fee is calculated as
one-fourth of the annual fee, based on the account's ending quarterly market value. If a new
account is activated during a quarter, the fee for that quarter will be prorated based on the
number of days the account was managed during that quarter. Quarterly fees will also be
prorated for any large withdrawals during the quarter. VCM may group a client's accounts for
fee calculations. In the event of termination during a quarterly period, advisory fees are
adjusted as appropriate.

Investment advisory agreements between VCM and its clients can be terminated at any time
by the client. VCM may terminate the relationship by a written 30-day advance notice to the
client. There are no termination fees.

When VCM acts as a sub-advisor, fees will be determined by the primary advisor for each
client. The primary advisor can accept VCM's fee structure or substitute a different fee,
subject to an estimate of the advisor’s costs for providing additional financial services. In
circumstances where VCM does not have investment discretion and instead provides model
recommendations, an asset monitoring advisory fee will be charged based on the advisor’s
assets managed under the VCM models.

Types of Clients
VCM provides investment advisory services to other registered investment advisors,
individuals, trusts, foundations, other tax-exempt portfolios, and pension and profit-sharing
plans such as 401(k), defined benefit, IRA, Roth IRA, SEP IRA, and SIMPLE IRAs.

Methods of Analysis and Investment Strategies
The Growth Equity Investment Philosophy reflects the belief that active equity management
can produce reasonable investment returns for clients over time. Our approach is based on
the analysis of fundamental and technical characteristics, as well as general financial market
conditions. Investment decisions and forecasts are based on our team’s assessment of current
fiscal and monetary policy, as well as other economic variables. The psychological aspect of
each investment (business philosophy, strategy, attitude, track record, and background of top
management, for example) can also be as much of a factor as fundamental analysis. Since
each account is individually managed, the firm’s professionals may give advice and/or act for
some clients that may differ from the advice given or the timing or nature of action taken for
others.

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The Growth and Income Investment Philosophy reflects the belief that an actively managed
portfolio of both fixed-income and equity securities can provide a reasonable total return.
Portfolio decisions are based on conclusions regarding monetary policy, interest rates, and
inflation, as well as the credit characteristics of non-government debt instruments. Securities
are managed based on their current yield, yield to maturity, and duration, with particular
attention to any call features that could affect future income from each investment. Portfolios
are diversified by coupon, maturity, and quality based upon expectations for achieving
individual client objectives. These characteristics are incorporated into a selection of fixed-
income exchange-traded funds. The ability to increase income while maintaining principal
will depend on both the direction and level of interest rates over time.

The Target Return Investment Philosophy reflects the belief that diversified portfolios of
exchange-traded funds can provide an array of investment returns consistent with a client’s
risk/reward profile. Portfolios are constructed based on an analysis of general financial
market conditions, historical returns for various asset classes, and the selection of indexed
exchange-traded funds to achieve different risk/reward characteristics. Portfolios are
periodically constructed to align with expectations for the economy and financial markets.
There are four asset allocation models. Over time, recommendations for one portfolio model
or another will be made depending on changing client financial circumstances. Indexed
exchange-traded funds are selected based on asset class, historical, risk-adjusted
performance, total expense ratio, and other fund characteristics.

VCM evaluates each client’s financial circumstances, tolerance for volatility risk, and
income expectations. Using an Investment Profile Questionnaire (IPQ), VCM evaluates the
investment alternatives that should make the most sense for each client. Client circumstances
are periodically evaluated to ensure the investment strategy used for portfolio management
remains appropriate. The firm also evaluates shortfall risk, the risk of not achieving long-
term investment objectives.

Performance of accounts, i.e., the increase in value over time, can vary depending on several
factors, such as the services utilized, brokerage firm selection, client-imposed restrictions,
and account size. All accounts are managed in accordance with clients’ specific goals,
objectives, and risk profiles. Annually, the firm sends clients a risk profile update to assess
whether their risk tolerance has changed and to ensure they are invested appropriately.

Risk of Loss
Investing in securities involves risk. Investment performance and principal value can
fluctuate because of financial market volatility. While there is risk in all investments, some
carry more risk or higher costs than other investments. There is no guarantee that a
recommended investment strategy will meet the client’s goals, nor is there any guarantee of
profit or protection against loss. There can be no guarantee of investment performance given
the inherent characteristics of financial securities. Among individual securities, there are
different types of risk that are enumerated as follows:

Bonds, generally government and corporate, have various types of risk. While government
bonds are considered the safest among bonds, there is a risk that when interest rates rise or
fall, bond prices can move inversely. Even though investors can expect to receive their

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principal back when a bond matures, there is no guarantee of a favorable return if the interest
received is reinvested in the bond market. Bond exchange-traded funds offer diversification
and the potential to benefit from rising income distributions in an environment of rising
interest rates.

High-yield bonds have higher business and default risk than higher-rated bonds. These bonds
also have higher yields and may exhibit greater market volatility due to the risk of missed
interest payments or, in the worst case, a default on both interest and principal. Generally,
fixed-income securities can fluctuate in price due to changes in inflation expectations,
monetary policy, the business cycle, and the bond market's ability to absorb the sale of many
securities. Interest income and the return of principal are only guaranteed by the issuing
entity. If that entity fails to pay income or principal, its existence may be questionable, and
little, if any, investment may be recovered. High-yield bond exchange-traded funds offer
greater protection against business risk by holding a diversified portfolio of high-yield bonds.

Common stocks represent ownership in individual companies and can be good long-term
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