Our Governance and Conflict of Interest Policies

The relationship between Martinelli Portfolio Management, Inc., and its clients is a fiduciary relationship. A fiduciary relationship involves an obligation on our part to be honest, loyal and forthright, to make full and fair disclosure to our clients of material facts involving our business and our relationship with clients and to act in the best interest of our clients.

Martinelli Portfolio Management, Inc. has adopted a Code of Ethics and Insider Trading Policy and a Personal Trading Policy. We will provide a copy of our policies to any client or prospective client upon request.

We, as a firm, and our principal and employees may buy or sell for ourselves securities which we recommend to clients. To avoid conflicts of interest in this regard, it is our policy that neither the firm, nor any principal or employee may effect for itself, himself or herself or for his of her immediate family (i.e., spouse, minor children) (collectively “Covered Persons”) any transactions in a security which is being actively purchased or sole, or is being considered for purchase or sale, on behalf of our clients, unless or until purchases or sales have first or contemporaneously been completed for clients or a decision has been made not to purchase or sell the security on behalf of the clients.

This procedure is subject to the following exceptions:

1. It is recognized that some securities being considered for purchase and sale on behalf of clients trade in sufficiently broad markets to permit transactions to be completed without any appreciable impact on the markets for the securities. Under these circumstances, exceptions may be made to the policies stated above. Records of these trades, including the reasons for the exceptions, will be maintained with our records in the manner set forth above; and

2. Open-end mutual funds and/or the investment subdivision which may comprise a variable insurance product are purchased or redeemed at a fixed net asset value price per share specific to the date of purchase or redemption. As such, transactions, in mutual funds and/or variable insurance products by Covered Persons are not likely to have an impact on the prices of the funds shares in which clients invest, and are not likely to have an impact on the prices of the fund shares in which clients invest, and are therefore not prohibited by our policy.

In accordance with Section 204A of the Investment Advisers Act of 1940, we also maintain and enforce written policies reasonably designed to prevent the misuse of material non-public information by our firm or any person associated with us.

Our Relationship with Charles Schwab

Martinelli Portfolio Management, Inc. is an independent firm owned and operated by Gary E. Martinelli. Rather than maintaining physical possession of client securities, we recommend that our clients establish securities accounts at Charles Schwab & Co., Inc., (“Schwab”), a large brokerage firm with which we maintain a computer interface. Schwab makes available a wide variety of “no- load” mutual funds through its Mutual Fund One Source (although certain no-load funds acquired through Schwab, i.e., Vanguard funds, involve “transaction fees”). We do not obtain a significant amount of “research” from Schwab and do not pay commissions higher than those otherwise attainable in return for research.

In general, Schwab does not charge our client accounts a commission or transaction fee on trades of equity securities which are effected electronically (i.e., online). Martinelli Portfolio Management, Inc. attempts to effect transactions on behalf of clients electronically, thereby avoiding or minimizing transaction fees. Exceptions arise when broker-assistance is required because of complexities of the transaction in which case a modest commission is charged the client account based upon the size of the transaction. For certain securities, if a client has an open short position, whether established through short selling, option exercise, account transfer or otherwise, Schwab may charge a “stock borrow fee” (which is subject to change on a daily basis and which will include interest based upon the rate charged for a particular security in the securities lending market). Trades in no-load mutual funds are available with no transaction fee unless the order is placed through a broker in which case there may be a $25 transaction fee.

For fixed income investments, Schwab reserves the right to act as a principal. In this case, the bond price will include a transaction fee plus a mark-up that reflects the bid-ask spread. When trading as a principal, Schwab may also have been holding the security in its own account prior to selling it to go in which case Schwab may make or lose money depending on whether the price of the security has risen of fallen.

Schwab also passes through to client accounts fees imposed upon it by national securities and self- regulatory organizations including the Securities and Exchange Commission.

For additional information concerning fees, please view the Table of Fees for Services annexed here to as Exhibit 1 or call us for a complete copy of the Charles Schwab Pricing Guide.

We recommend Schwab because of (a) its Mutual Fund One Source service, (b) its discounted commissions, (c) its overall financial strength, (d) its ability to execute a broad range of transactions in the bond, stock and mutual fund markets, (e) its capacity to make information concerning client accounts electronically available to us, and (f) its capacity through Schwab Institutional to offer support services to independent investment advisory firms such as ours. We do not receive and “soft dollar” benefits from Schwab.

Custody

Under both federal and Massachusetts securities regulations “custody” is defined as “holding, directly or indirectly, client funds or securities, or having any authority to obtain possession of them.”

The primary custodian for the securities accounts which we manage for clients is Charles Schwab & Co., Inc., a broker-dealer registered with the federal Securities and Exchange Commission.

Under both federal and Massachusetts regulations, investment advisers such as our firm are “deemed” to have custody of a client’s securities under certain circumstances. One of such circumstances arises when an adviser has authority directly to withdraw its fees from a client’s account. Our clients grant this authority to us under Section 6 of the Investment Supervisory Agreement the client enters into with us at the time of account opening and under the Schwab One Account Application the client submits to Schwab at the time the client brokerage account is opened.

To protect client assets from misuse or misappropriation by persons with custody, securities regulations call for an “independent verification” of client assets pursuant to an annual “surprise” accountant’s examination. An investment adviser, however, will be exempt from the “independent verification” requirement in cases where the adviser is authorized by the client in writing to give the client’s broker-dealer/custodian instructions to deduct the investment adviser fee directly from the client account provided that the adviser sends an invoice to the custodian showing the amount of the fee due, and a statement to the client showing the amount of the fee, the net asset value of the account on which the fee is based and how the fee was calculated.

Based upon these regulations, we are considered to have “custody” of our clients’ accounts. Having been authorized by the client to deduct fees, however, and otherwise complying with the above exemption from “independent verification,” we are not subject to the annual surprise audit.

How We are Compensated

Martinelli Portfolio Management, Inc. is a “fee only” investment adviser. We do not sell any financial service products or services (other than investment management services).

As compensation for our investment management services, we generally charge an annual fee equal to 0.9% of the net asset value of each client’s account. Billing is done quarterly at the rate of 0.225% of the net asset value of each client’s account (the “Quarterly Fee”) at the end of each calendar quarter (with pro rata adjustments for periods of less than three months). In the case of substantial additions or withdrawals of capital during a billing period, we may, with the consent of the client, increase or reduce the Quarterly Fee. Our fees are negotiable. See Exhibit 1 attached here to our Table of Fees for Services.

In accordance with the investment management agreement we enter into with clients at the outset of our relationship, fees are deducted from client accounts shortly after the end of each calendar quarter.

Since compensation is payable after our services have been rendered, there is no procedure for client refunds. Either the client or we, as the investment manager, may terminate an investment management agreement by giving written notice to the other party. In case of termination, our fee will be pro-rated to the date of termination.

To the extent that mutual fund securities are included in a client portfolio, a client, in effect, pays two management fees. The first is paid directly to us for our ongoing investment management services. The second is paid indirectly in that each mutual fund pays its own investment adviser for the management of the portfolio of securities held by the mutual fund. We receive no so-called “12b-1 fees” from mutual funds and no portion of any fee paid by a mutual fund to its advisers. In selecting mutual fund shares to be included in client portfolios, we seek funds with expense ratios that are lower than industry averages.

For a discussion of brokerage and other transaction costs associated with client accounts, please see “Our Relationship with Charles Schwab & Co., Inc.” above.

When purchasing or selling securities for clients accounts, we will often “bunch” or “aggregate” transactions, meaning we buy or sell the same security for multiple client accounts in a coordinated manner and at the same time. Although this practice does not result in any cost-savings upon the execution of a trade, it permits execution in a timely and equitable manner, i.e., multiple clients buy or sell at the same price or approximately the same price per share. Our purpose in aggregating is to assure that no client or account is favored over another.

As custodian for our client’s securities, Schwab furnishes each client with a monthly account statement shortly after the end of each calendar month. Along with our quarterly letter, we furnish clients with a printed portfolio statement, portfolio performance summaries for the quarter and year- to-date, quarterly and year-to-date position performance summaries and quarterly transaction ledger reports (collectively “Portfolio Data”). The Portfolio Data is based upon data furnished by Charles Schwab & Co., Inc., to Envestnet Tamarac, a division of Envestnet which is a leading provider of web-based portfolio performance reporting software for independent investment advisers such as our firm. In turn, Envestnet software is used to customize the Portfolio Data presentation for our clients’ data and Envestnet downloads the customized data to us on a daily basis. In preparing Portfolio Data reports for distribution to our clients, we print out and review the formatted data furnished to us by Schwab via Envestnet.

At the time of an account opening, clients enter into an investment supervisory agreement with us authorizing us to make investment direction and to direct transactions on their behalf. This grant of authority is confirmed in the documentation opening a client brokerage account subject to our direction at Schwab.