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AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES
AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES
AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES
AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES
AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES
AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES
AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES
AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES
AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES
AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES
AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES
AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES
AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES
AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES
AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES
AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES
AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES
AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES
AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES
AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES
AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES
AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES
AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES
AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES
AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES
AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES
AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES
AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES
AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES
AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES
AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES
AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES
AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES
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AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES

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  • 1. AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES SOUTH TEXAS MONEY MANAGEMENT, LTD. THIS AGREEMENT for investment management services (the “Agreement”) is made by and between _________________________________________________ (“Client”) and South Texas Money Management, Ltd., (“Manager”) whose principal office is located in the state of Texas and county of Bexar. Client has entered into this Agreement with Manager, a registered investment adviser under the Investment Advisers Act of 1940. Pursuant to the Agreement, Client has informed Manager of Client’s financial circumstances and investment objectives, and Manager has assisted Client in developing an investment policy statement and making an informed decision about the suitability of Manager for Client. Client has entered into a Custodial Services Agreement with the entity selected below (“Custodian”) to act as a custodian of Client’s assets. Frost Bank Charles Schwab Fidelity Investments TD Ameritrade Brokerage trading costs/custody fees may vary among the custodians listed above. Detailed information regarding such costs/fees is available upon request. In consideration of the premises contained herein, Client and Manager hereby agree as follows: 1. Retention as Manager. The following is applicable to all Accounts other than Employee Retirement Income Security Act of 1974 (“ERISA”) Accounts: Client hereby appoints and retains Manager to act as investment manager with respect to the assets placed from time to time under management of the Manager (individually and collectively, the “Account”) and Manager hereby accepts such appointment. The following is applicable to ERISA Accounts only: The Named Fiduciary hereby appoints and retains Manager to act as investment manager with respect to the Account and Manager hereby accepts such appointment and acknowledges that it is a fiduciary with respect to the ERISA account. 2. Management of Assets. Assets which from time to time comprise the Account are referred to herein as “Account Assets.” The Account shall be funded initially with the assets identified on Exhibit A. Manager shall have sole discretionary authority to invest and reinvest the securities, property, cash and other investments (“Assets”) in the Account at such time and in such a manner as Manager deems advisable in accordance with the Investment Strategy set forth in Exhibit C. Manager does not guarantee the investment performance of any of the Assets. A general investment objective for the Account shall be established upon consultation with Client. Manager shall then recommend to Client an initial investment program in terms of types of securities which will be used as a vehicle to accomplish such objective. Manager may from time to time recommend a revised program whenever deemed advisable by Manager. Manager shall use such investment program as an outline and guide and shall be free to make whatever purchases or sales it deems necessary in order to accomplish the general investment objective approved by Client. Page 1 of 13 STMM Agreement 3/10/2010
  • 2. AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES SOUTH TEXAS MONEY MANAGEMENT, LTD. Manager shall have sole discretionary authority to place funds in investable assets including, without limitation, stocks, bonds, convertibles, short-term income investments, money market funds, derivatives, options, futures, private placements, initial public offerings, commodities, publicly traded or private limited partnerships, publicly traded trusts, real estate investment trusts, mutual or common funds, ADR’s or nondollar denominated securities or currencies. Client acknowledges and understands that a portion of Client’s Account Assets will from time to time be invested in money market funds, which investment is neither insured nor guaranteed by the FDIC or any other government agency. It is possible to lose money by investing in money market funds as well as any other securities comprising the Account Assets. Client and/or Manager may, from time to time, enter into such additional agreements as may be necessary to fulfill the purpose of this Agreement. 3. Additions and Withdrawals. Client may at any time add assets or cash to the Account subject to acceptance by Manager. Client may also withdraw funds or assets at any time by giving Manager reasonable prior notice. Normal settlement for cash distributions is four (4) business days. Distributions may be paid directly to Client or Client’s account only. Client acknowledges the Account is established for the purpose of managing a long term investment portfolio and agrees to try to limit withdrawals to a maximum of twelve per year, including automatic distributions. 4. Execution Services. In the course of exercising its investment discretion over the Account, Manager shall effect transactions for the Account with such broker-dealers and at such prices and commission rates as Manager believes to be in or not opposed to the best interest of the Account. In circumstances where Client directs Manager to use a particular broker-dealer, either on a transaction-by-transaction basis or an account-wide basis, Manager will use such broker-dealer to execute Client’s transactions and will not seek better execution services or prices from other broker-dealers. Client’s direction of a particular broker-dealer may adversely affect Manager’s ability to achieve best execution for the Account. Any limitations Client wishes to impose on Manager’s ability to select broker-dealers to effect trades for the Account must be disclosed on attached Exhibit F, or pursuant to other written instruction. If the Account is custodied at a broker-dealer, such broker-dealer/custodian may impose charges on transactions executed away from the broker-dealer/custodian that make it economically infeasible for Manager to execute transactions through another broker-dealer. This may subject the Account to higher commissions, greater spreads and/or less favorable net prices than other clients of Manager. Manager generally will aggregate orders for the Account with orders for other managed accounts in order to obtain a favorable execution and favorable brokerage commission. Manager shall allocate such aggregated trades in accordance with Manager’s allocation policies, as described in Manager’s Form ADV as may be amended from time to time. If Client directs the use of a particular broker or dealer or if the Account is custodied at a broker-dealer, the Account may not be able to participate in aggregated transactions. Client understands that transactions effected on behalf of customers from whom Manager has been given full discretionary trading authority may be effected prior to the time when transactions in the same securities are effected for or recommended to customers who direct the use of a particular broker-dealer. Accounts that cannot participate in aggregated transactions may experience higher commissions, greater spreads and/or less favorable net prices than Manager’s other accounts. Page 2 of 13 STMM Agreement 3/10/2010
  • 3. AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES SOUTH TEXAS MONEY MANAGEMENT, LTD. All transaction costs shall be borne by the Account. Manager shall not be liable to Client for any act, conduct or omission of any broker or third party adviser. 5. Custodian Services. The Account Assets set forth in Exhibit A shall be held for safekeeping with Custodian. Manager shall not act as custodian for the Account Assets and shall not be liable to Client for any act, conduct or omission of Custodian. Manager is hereby authorized and empowered to issue instructions to Custodian. Custodian fees are separate from Manager fees and will be charged directly to Account by Custodian. 6. Confidential Relationship. All information and advice furnished by either party to the other shall be treated as confidential and shall not be disclosed to third parties except as provided by the Privacy Policy set forth in Exhibit E, as may be amended from time to time by Manager, and as allowed by law. 7. Proxies/Legal Proceedings. Manager is hereby appointed Client’s agent and attorney-in-fact to vote proxies in connection with the Account Assets. Manager may delegate this responsibility. Class action lawsuits and bankruptcy proceedings involving an issuer whose equity or debt securities are purchased by Manager for Client’s account will be Client’s responsibility. Correspondence with respect to such lawsuits will be mailed to Client directly. 8. Fees. Client hereby authorizes that Manager’s fees set forth in Exhibit D, be paid by Custodian directly from the Account based upon a statement sent by Manager to Custodian. Such fees shall be paid monthly in arrears, and shall be prorated for periods of less than 30 days. Client represents that the agreement with Custodian provides that Custodian will send to Client, at least quarterly, a statement showing all amounts disbursed from the Account, including Manager’s fees. In the event of termination of this Agreement, the pro-rated portion of the minimum annual fees will be charged. Fees may be adjusted upon the provision of thirty days written notice to Client. 9. Standard of Care. It is agreed that Manager shall discharge its duties under this Agreement with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims. Client recognizes that the opinions, recommendations, and actions of Manager will be based on advice and information deemed to be reliable, but not guaranteed by or to Manager. The relationship evidenced by this Agreement does not create or evidence a trust relationship. Nothing herein shall cause the Manager to owe the Client duties of a trustee under statutory or common law. Nothing herein shall in any way constitute a waiver or limitation of any rights which the undersigned may have under any applicable law which cannot be modified in advance by contract. 10. Services to Other Clients. Client acknowledges that Manager (and its affiliates) provide(s) investment management and other advisory services to various other clients. Client acknowledges and agrees that Manager (and its affiliates) may hold or deal in securities, property or other assets for other clients which may be the same or different from the securities, property or other assets recommended for sale, purchase or retention in the Account, and that Manager (and its affiliates) may give advice, and take action, with respect to any of those clients that may differ from the advice given, or the time or nature of action taken, with respect to the Account, so long as it is Manager’s policy, to the extent practical, to allocate investment opportunities to the Account over a period of time on a fair and equitable basis relative to other clients. Manager shall have no obligation to recommend for purchase Page 3 of 13 STMM Agreement 3/10/2010
  • 4. AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES SOUTH TEXAS MONEY MANAGEMENT, LTD. or sale by the Account, or to order transactions for the Account with respect to, any security, property or other asset recommended, purchased or sold by Manager, its officers, directors, partners, or employees, its affiliates or for clients of Manager or its affiliates. Client also acknowledges that Manager factors in tax consideration for various clients and may give advice and take action that may be the same or different, with respect to Account, and that the performance and/or risk may vary due to decisions made by Manager for tax reasons and client acknowledges that is appropriate. 11. Termination of Agreement. This Agreement shall continue in effect until terminated by either party. The Agreement may be terminated at any time by Client effective immediately upon receipt of written notice from Client to Manager, and this Agreement may be terminated at any time by Manager upon at least thirty (30) days’ written notice from Manager to Client. Such termination will not affect the liabilities or the obligations of the parties under this Agreement arising from transactions initiated prior to such termination. In the event of termination of this Agreement, Manager shall have no obligation whatsoever to recommend any action with respect to, or to liquidate, the securities, property or other assets in the Account. Additionally, in the event the Account is not fully funded or the Account is not managed by Manager within ninety (90) days of executing this Agreement, the Agreement shall become null and void upon written notice from Manager to Client. The Client may terminate immediately Manager’s services within five business (5) days of signing this agreement. 12. Incapacity or Death of Client. Upon the death or incapacity of Client, Client’s legal representative shall notify Manager in writing of such event. In such event, until Manager is instructed otherwise in writing by Client’s legal representative, Manager shall continue to manage the Account in accordance with this Agreement and the Investment Strategy set forth in Exhibit C, subject to any limitations imposed by the Custodian. The Client’s legal representative may terminate the relationship evidenced by this Agreement at any time in accordance with Section 11 hereof. Otherwise, as soon as practical after the Client’s death or incapacity, the Client’s legal representative may enter into a new Agreement for Investment Management Services with respect to the Account to replace and supersede this Agreement, which new agreement may provide for a revised Investment Strategy if appropriate. 13. Representations. Manager represents that it is registered as an investment advisor under the Investment Advisers Act of 1940 (“Advisers Act”) and that such registration is current and effective. Manager represents that it will render individualized investment advice with respect to the Account. If the Account is subject to ERISA, Manager acknowledges that (1) it is a fiduciary under ERISA with respect to the Account, and (2) Manager shall carry out its investment management responsibilities in accordance with all applicable provisions of ERISA including those set forth in Section 404(a) of ERISA. Client represents that no one except Client has any interest, directly or indirectly (except for the beneficial interest of the participants in a qualified plan or trust) in the Account Assets. The undersigned, on behalf of Client, represents that the execution of this Agreement by Client has been duly authorized by all appropriate action and represents a valid and binding obligation of Client, enforceable in accordance with its terms, and does not violate any regulations, agreements or instruments by which the Account is bound. 14. Assignability. Client may not assign this Agreement. No assignment, as that term is defined in the Investment Advisers Act of 1940, of this Agreement shall be made by Manager without the consent of Page 4 of 13 STMM Agreement 3/10/2010
  • 5. AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES SOUTH TEXAS MONEY MANAGEMENT, LTD. Client. Notwithstanding the foregoing, Manager may assign this Agreement by using a “negative consent” process. Under this process, Manager may notify Client in writing of an assignment and inform Client that the assignment will take place if Client does not object within thirty (30) days. Notwithstanding the foregoing, nothing contained herein shall limit any power or authority of Manager to delegate discretionary management of assets in the Client’s Account to a sub-advisor. Manager is controlled by its general partner and will notify Client of any change in the membership of its general partner. 15. Governing Law; Successors and Assigns. This Agreement shall be governed by and construed under the laws of the state in which the principal office of Manager is located, without giving effect to its principles of conflicts of law. This Agreement shall be binding upon the successors and assigns of the parties. 16. Severability. If any provision of this Agreement shall be held invalid by a statute, rule, regulation, decision of a tribunal or otherwise, the remainder of this Agreement shall not be affected, and, to such extent, the provisions of this Agreement shall be severable. 17. Accounting and Legal Services. It is understood and agreed by and between the parties to this Agreement that the Manager is not qualified to render any legal or accounting services or to prepare any accounting or legal documents for the implementation of the Client’s investment plan. The Client acknowledges that his or her personal attorney and/or personal accountant shall be solely responsible for rendering or preparing all legal advice, legal opinions, legal determinations, legal documents, tax returns, accounting statements, and documents. The Client is solely responsible for the cost of such legal or accounting services. 18. Appraisal Reports. Custodian will prepare and deliver to Client a quarterly appraisal report containing information on Client’s holdings and transactions. Manager will deliver to Client at least an annual performance measurement report on Account. Performance measurement reports on any time period are available upon request. 19. Acknowledgement of Receipt of Documents. Client acknowledges receipt of Manager’s Part II of Form ADV at or prior to the time Client enters into this Agreement. Client has the right to terminate this Agreement without penalty within five business days after entering into this Agreement. 20. Dispute Resolution Procedures. To the extent not inconsistent with applicable law, the parties agree to and understand that any dispute or disagreement arising out of or related to this Agreement, the terms or conditions of this Agreement, a breach of this Agreement, any of the accounting or evaluations to be made pursuant to this Agreement, or any other right of the parties shall be settled by arbitration. Any arbitration shall be conducted in San Antonio, Texas in accordance with the Commercial Rules then in effect of the American Arbitration Association. Arbitration must be commenced by service upon the other party of a written demand for arbitration or a written notice of intention to arbitrate. The award of the arbitrators, or a majority of them, shall be final and judgment upon the award may be rendered in any court having applicable jurisdiction. The parties expressly acknowledge the following: arbitration is final and binding on the parties; the parties are waiving their rights to seek remedies in court, including the right to a jury trial; pre-arbitration discovery is generally more limited than and different from court proceedings; the arbitrators Page 5 of 13 STMM Agreement 3/10/2010
  • 6. AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES SOUTH TEXAS MONEY MANAGEMENT, LTD. award is not required to include factual findings or legal reasoning and any party’s right to appeal or to seek modifications of ruling by the arbitrators is limited. 21. Entire Agreement. This Agreement constitutes the entire agreement between the parties and can be amended only by a written document signed by both parties. Page 6 of 13 STMM Agreement 3/10/2010
  • 7. AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES SOUTH TEXAS MONEY MANAGEMENT, LTD. Client’s Signature Spouse’s Signature (If applicable)** Client’s Printed Name Spouse’s Printed Name (If applicable) Client’s Tax Identification Number Client’s Tax Identification Number Client’s Address Primary E-mail Address* City, State, Zip Code Home Phone Number Date Business Phone Number Cell Phone Number Emergency Contact Number(s) *By providing your e-mail address, you hereby authorize STMM to communicate with you via e-mail. Please see attached Notice of Privacy Policy for information regarding the use of e-mail . **If this account is a joint account, there may be estate planning implications with respect to the type of joint ownership selected at the Custodian, and you are therefore encouraged to discuss such matters with your estate planning attorney. Account is effective once South Texas Money Management, Ltd. has executed agreement. FOR STMM USE ONLY: Agreed to effective as of this day of ____________________20 __ South Texas Money Management, Ltd. By: Baruch Management, L.L.C., its general partner by: _________________________________ _________________________________, its___________________________ 100 W. Olmos Drive, Suite 101, San Antonio, Texas 78212 Page 7 of 13 STMM Agreement 3/10/2010
  • 8. Exhibit “A” to AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES SOUTH TEXAS MONEY MANAGEMENT, LTD. LIST OF ASSETS TO BE DELIVERED TO CUSTODIAN Account Assets The Client’s assets being delivered to Custodian in order to fund Account with South Texas Money Management, Ltd. are listed below or on the attached statement. (Please provide a current custodial statement or other inventory of assets. It is acknowledged that the assets may change due to market value fluctuation, or liquidation into cash prior to delivery to Custodian.) Account will be funded from FOR STMM USE ONLY: Cash ______ Cash & Assets ______ Date Account Fully Funded: _____________ CLIENT’S INITIALS _______ Page 8 of 13 STMM Agreement 3/10/2010
  • 9. Exhibit “B” to AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES SOUTH TEXAS MONEY MANAGEMENT, LTD. RISK ASSESSMENT QUESTIONNAIRE 1) Do you feel financially secure? Very Somewhat No 2) What is your net worth (excluding residence)? ___$500,000 - $1.5M ___$1.5M - $3M ___$3M - $5M ____$5M - $10M ____ Above $10M 3) What is your expected federal income tax bracket? (Please answer even if we are managing a non- taxable account and notify STMM of any changes. See tax bracket table provided.) ___10% ___15% ___25% ___28% ___33% ___35% 4) I plan to begin withdrawing money from my investment account with STMM within: ___ Immediately ___3 years ___ 3 - 5 years ___6 - 10 years ___More than 10 years ___ No plans to withdraw 5) Have you ever owned stocks before? Yes No 6) Are you responsible for the financial security of others (spouse, children, parents, etc.)? Yes No 7) Will you depend on your investment returns for living expenses within the next 3 to 5 years? Yes No 8) Have you ever utilized a full discretion manager? Yes No 9) What percent of your financial assets will we be managing? 0%-25% 26%-50% 51%-75% 76%-100% 10) Other relevant information that could be helpful in assessing your risk tolerance? 11) Are you a control person or affiliate or an immediate family/household member of a control person or affiliate of a publicly traded company under SEC Rule 144 (such as a director, 10% shareholder, or policy-making officer)? ___ Yes ___ No If yes, please list names of companies and trading symbols:____________________________________________ 12) How were you referred to South Texas Money Management? Date of Birth: Spouse’s Date of Birth: CLIENT’S INITIALS _______ Page 9 of 13 STMM Agreement 3/10/2010
  • 10. Exhibit “C” to AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES SOUTH TEXAS MONEY MANAGEMENT, LTD. INVESTMENT STRATEGY / ASSET ALLOCATION Please select and initial only one of the following Account investment objectives (Target Asset Allocation for each strategy is set forth in parenthesis below): Equities Only (99% Equities; 1% Cash)*** Client’s Initials Asset Allocation Mix – Permissible Range** Cash 0% to 20% Bonds 0% to 10% Equities* 80% to 100% Balanced Long-Term Growth (60% Equities; 40% Bonds/Cash)*** Client’s Initials Asset Allocation Mix – Permissible Range** Cash 0% to 20% Bonds 30% to 50% Equities* 50% to 80% Conservative (30% Equities; 70% Bonds/Cash)*** Client’s Initials Asset Allocation Mix – Permissible Range** Cash 0% to 20% Bonds 50% to 100% Equities* 15% to 40% Fixed Income Oriented (99% Bonds; 1% Cash)*** Client’s Initials Asset Allocation Mix – Permissible Range** Cash 0% to 20% Bonds 75% to 100% Equities* 0% to 10% *Options may be utilized. **Asset allocation may fluctuate within the permissible range (and may temporarily be outside the permissible range at times) based on a variety of factors such contributions/distributions, tax considerations, account restrictions, new account transitioning, investment objective changes, market conditions and investment management decisions. STMM’s goal is for accounts to remain as fully invested as possible to the target asset allocation at all times regardless of current or anticipated market conditions, and STMM therefore does not attempt to time the market in managing accounts. ***STMM may adjust the target asset allocation in its discretion provided the revised target is within the applicable permissible range. South Texas Money Management, Ltd. will work toward the target asset allocation. It may take up to 6 months to achieve the target asset allocation. If the objective is changed, it may take up to 6 months to achieve the revised target. All revisions to the Account’s objective must be documented by a signed revision to this form. For bond allocation, if applicable, please select only one of the following by initialing**: _________ Taxable Bonds/Bond Funds _________ Tax-Exempt Bonds/Bond Funds ** NOTE: Selection generally depends on applicable tax rate. “Taxable” is generally appropriate for accounts not subject to taxes (e.g. IRAs, 401(k)s, charitable foundations/trusts, etc.) or accounts in low tax brackets. “Tax-Exempt” is generally appropriate for accounts in higher tax brackets. Please confirm selection with your tax professional and notify STMM of any changes. Regardless of selection, STMM may determine in its discretion that a combination of taxable and tax-exempt fixed income securities is appropriate, subject to any special instructions you may provide in the following space: ___________________________________________________________________________________________ CLIENT’S INITIALS _______ Page 10 of 13 STMM Agreement 3/10/2010
  • 11. Exhibit “D” to AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES SOUTH TEXAS MONEY MANAGEMENT, LTD. INVESTMENT MANAGEMENT SERVICES - Investment management - Asset allocation management - Open communication - Quarterly performance & strategy summary reports - Annual investment presentation - Annual written analysis of account holdings and performance (upon request) -Quarterly webcast -Financial Planning Services (upon request) FEE SCHEDULE Account Market Value Annual Fee as a Percent of Market Value First $0 - $2 million 1.00% (.01) Next $8 million 0.50% (.005) Above $10 million 0.35% (.0035) STMM fees are payable and assessed monthly in arrears. Fees are calculated by multiplying the total month-end market value of the account inclusive of stocks, bonds, cash equivalents, mutual funds and all other assets, by the relevant percentage and dividing such product by twelve (12). The reduction in percentage fee occurs only on the market value above the breakpoint. Related accounts may be aggregated for the purposes of the fee calculation to make an “Account Relationship,” upon written approval by South Texas Money Management, Ltd. (as per initial below). Individual related Accounts above $100,000 may be aggregated for purposes of the fee calculation. Individual related Accounts below $100,000 will not be aggregated. The minimum Account Relationship market value is $500,000. There is a minimum annual Account Relationship fee of $5,000. The $5,000 minimum annual Account Relationship fee may be aggregated from all accounts in the Account Relationship (as per initial below). If an Account Relationship does not meet the minimum annual Account Relationship fee of $5,000 after applying the above fee schedule, the short-fall will be charged on the Account anniversary date. In the event of termination of this agreement, the pro-rated portion of the minimum annual fees will be charged. STMM Approval of Aggregation for Account Relationship _____________ South Texas Money Management, Ltd. fees do not include custodial charges, which may vary. All custody of assets will be handled by a third party. Those expenses will be charged separately. Minimum custodial fees and additional custodial charges may be significant for smaller Accounts. Fees and expenses charged by mutual funds, exchange traded funds, other funds and investment companies which the account may invest in are additional to STMM management fees. Commission costs for trades will be reflected on the net cost of the security and may vary by custodian. STMM may use accumulative commissions for research expenses. STMM may charge an additional agreed upon fee for services outside the scope of this agreement only upon pre-approval by the client. Third party financial consultants who are registered and refer and manage the client relationship may qualify for part of the management fee upon client’s direction and South Texas Money Management, Ltd. approval. There is no guarantee that the advisory services offered will result in the clients’ goals and objectives being met. Nor is there any guarantee of profit or protection from loss. CLIENT’S INITIALS _______ Page 11 of 13 STMM Agreement 3/10/2010
  • 12. Exhibit “E” to AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES SOUTH TEXAS MONEY MANAGEMENT, LTD. Notice of Privacy Policy South Texas Money Management, Ltd., (“STMM”) is committed to maintaining the confidentiality, integrity and security of the nonpublic personal information of our potential, current and former clients. STMM values our client relationships and recognizes that an essential element of those relationships is the trust and confidence that nonpublic personal information is treated as private and confidential. As a member of the financial services industry, STMM is providing you with this Notice of Privacy Policy for informational purposes and will update and distribute it as required by law. It is also available upon request. Client Information As part of STMM’s investment management services, STMM obtains nonpublic personal information about you. STMM may collect public and nonpublic personal information about you, through: Information we receive from you or your representative in meetings and conferences, on applications, other forms, contracts, or documents and correspondence; and Information about your transactions with us, or others. Protecting Your Nonpublic Personal Information STMM employs procedures to safeguard your nonpublic personal information. Controlled access to your nonpublic personal information is limited to our employees and agents. We maintain physical, electronic and procedural safeguards to protect your nonpublic personal information. Disclosure Policy STMM does NOT provide your nonpublic personal information to mailing list vendors, marketing companies, or solicitors for any purpose. STMM only shares your nonpublic personal information with third parties in certain limited circumstances as we believe are allowed or required by law, including where: Disclosure is necessary to process and service transactions which you have requested or authorized, or is necessary to service your account; Disclosure is to a third party which performs services on behalf of STMM in the normal course of business. STMM requires these providers to agree to safeguard the information and keep it confidential, to use the information only for the intended purpose, and to abide by applicable law; and Disclosure is to governmental agencies or other regulatory bodies and law enforcement officials. Maintaining Accurate Information STMM’s goal is to maintain accurate, up-to-date records in accordance with industry standards. We have procedures in place to keep information current and complete, including timely correction of inaccurate information. E-Mail E-mail correspondence does not provide a means for completely secure and private communications. However, we value the efficiency of email and encourage our clients to utilize email with discretion. CLIENT’S INITIALS _______ Page 12 of 13 STMM Agreement 3/10/2010
  • 13. Exhibit “F” to AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES SOUTH TEXAS MONEY MANAGEMENT, LTD. Instructions on Brokerage Placement Practices/Custody Arrangements □ Client directs that trades for the Account be executed by or through the following broker- dealer(s). □ Client directs that the Account be custodied at the following broker-dealer/financial institution. CLIENT’S INITIALS _______ Page 13 of 13 STMM Agreement 3/10/2010
  • 14. South Texas Money Management, Ltd. Form ADV: Part II Uniform Application for Investment Advisor Registration
  • 15. FORM ADV Uniform Application for Investment Adviser Registration Part II - Page 1 Name of Investment Adviser: South Texas Money Management, LTD. Address: (Number and Street) (City) (State) (Zip Code) Area Code: Telephone number: 100 W. Olmos Drive, Suite 101 San Antonio Texas 78212 (210) 824-8916 This part of Form ADV gives information about the investment adviser and its business for the use of clients. The information has not been approved or verified by any governmental authority. Table of Contents Item Number Item Page 1 Advisory Services and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2 Types of Clients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 3 Types of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 4 Methods of Analysis, Sources of Information and Investment Strategies . . . . . . . . . 3 5 Education and Business Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 6 Education and Business Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 7 Other Business Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 8 Other Financial Industry Activities or Affiliations . . . . . . . . . . . . . . . . . . . . . . . . . . 4 9 Participation or Interest in Client Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 10 Conditions for Managing Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 11 Review of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 12 Investment or Brokerage Discretion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 13 Additional Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 14 Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Continuation Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schedule F Balance Sheet, if required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schedule G (Schedules A, B, C, D, and E are included with Part I of this Form, for the use of regulatory bodies, and are not distributed to clients.)
  • 16. FORM ADV Applicant: SEC File Number: Date: Part II - Page 2 South Texas Money Management, LTD 801-58167 January 4, 2010 1. A. Advisory Services and Fees. (check the applicable boxes) For each type of service provided, state the approximate % of total advisory billings from that service. (See instructions below.) Applicant: (1) Provides investment supervisory services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 % (2) Manages investment advisory accounts not involving investment supervisory services . . . . . . . . . . . . . . % (3) Furnishes investment advice through consultations not included in either service described above . . . . . . % (4) Issues periodicals about securities by subscription . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . % (5) Issues special reports about securities not included in any service described above . . . . . . . . . . . . . . . . . . . % (6) Issues, not as part of any service described above, any charts, graphs, formulas, or other devices which clients % may use to evaluate securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . % (7) On more than an occasional basis, furnishes advice to clients on matters not involving securities . . . . . . . . % (8) Provides a timing service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . % (9) Furnishes advice about securities in any manner not described above . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . % (Percentages should be based on applicant's last fiscal year. If applicant has not completed its first fiscal year, provide estimates of advisory billings for that year and state that the percentages are estimates.) Yes No B. Does applicant call any of the services it checked above financial planning or some similar term? . . . . . . . . . . . . C. Applicant offers investment advisory services for: (check all that apply) (1) A percentage of assets under management (4) Subscription fees (2) Hourly charges (5) Commissions (3) Fixed Fees (not including subscription fees) (6) Other D. For each checked box in A above, describe on Schedule F: • the services provided, including the name of any publication or report issued by the adviser on a subscription basis or for a fee • applicant's basic fee schedule, how fees are charged and whether its fees are negotiable • when compensation is payable, and if compensation is payable before service is provided, how a client may get a refund or may terminate an investment advisory contract before its expiration date 2. Types of clients - Applicant generally provides investment advice to: (check those that apply) A. Individuals E. Trusts, estates, or charitable organizations B. Banks or thrift institutions F. Corporations or business entities other than those listed above C. Investment companies G. Other (describe on Schedule F) D. Pension and profit sharing plans
  • 17. FORM ADV Applicant: SEC File Number: Date: Part II - Page 3 South Texas Money Management, LTD 801-58167 1/4/2010 3. Types of Investments. Applicant offers advice on the following: (check those that apply) A. Equity securities H. United States government securities (1) exchange-listed securities I. Options contracts on: (2) securities traded over-the-counter (3) foreign issuers (1) securities (2) commodities B. Warrants J. Futures contracts on: C. Corporate debt securities (other than commercial paper) (1) tangibles (2) intangibles D. Commercial paper E. Certificates of deposit K. Interests in partnerships investing in: F. Municipal securities (1) real estate (2) oil and gas interests G. Investment company securities: (3) other (explain on Schedule F) (1) variable life insurance (2) variable annuities L. Other (explain on Schedule F) (3) mutual fund shares 4. Methods of Analysis, Sources of Information, and Investment Strategies. A. Applicant's security analysis methods include: (check those that apply) (1) Charting (4) Cyclical (2) Fundamental (5) Other (explain on Schedule F) (3) Technical B. The main sources of information applicant uses include: (check those that apply) (1) Financial newspapers and magazines (5) Timing services (2) Inspections of corporate activities (6) Annual reports, prospectuses, filings with the Securities and Exchange Commission (3) Research materials prepared by others (7) Company press releases (4) Corporate rating services (8) Other (explain on Schedule F) C. The investment strategies used to implement any investment advice given to clients include: (check those that apply) (1) Long term purchases (5) Margin transactions (securities held at least a year) (2) Short term purchases (6) Option writing, including covered options, uncovered (securities sold within a year) options or spreading strategies (3) Trading (securities sold within 30 days) (7) Other (explain on Schedule F) (4) Short sales
  • 18. FORM ADV Applicant: SEC File Number: Date: Part II - Page 4 South Texas Money Management, LTD 801-58167 1/4/2010 5. Education and Business Standards. Are there any general standards of education or business experience that applicant requires of those involved in determining Yes No or giving investment advice to clients? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (If yes, describe these standards on Schedule F.) 6. Education and Business Background For: • each member of the investment committee or group that determines general investment advice to be given to clients, or • if the applicant has no investment committee or group, each individual who determines general investment advice given to clients (if more than five, respond only for their supervisors) • each principal executive officer of applicant or each person with similar status or performing similar functions. On Schedule F, give the: • name • formal education after high school • year of birth • business background for the preceding five years 7. Other Business Activities. (check those that apply) A. Applicant is actively engaged in a business other than giving investment advice. B. Applicant sells products or services other than investment advice to clients. C. The principal business of applicant or its principal executive officers involves something other than providing investment advice. (For each checked box describe the other activities, including the time spent on them, on Schedule F.) 8. Other Financial Industry Activities or Affiliations. (check those that apply) A. Applicant is registered (or has an application pending) as a securities broker-dealer. B. Applicant is registered (or has an application pending) as a futures commission merchant, commodity pool operator or commodity trading adviser. C. Applicant has arrangements that are material to its advisory business or its clients with a related person who is a: (1) broker-dealer (7) accounting firm (2) investment company (8) law firm (3) other investment adviser (9) insurance company or agency (4) financial planning firm (10) pension consultant (5) commodity pool operator, commodity trading (11) real estate broker or dealer advisor or futures commission merchant (6) banking or thrift institution (12) entity that creates or packages limited partnerships (For each checked in box in C, on Schedule F identify the related person and describe the relationship and the arrangements.) Yes No D. Is applicant or a related person a general partner in any partnership in which clients are solicited to invest? . . . . . . . . . . . . . . (If yes, describe on Schedule F the partnerships and what they invest in.)
  • 19. FORM ADV Applicant: SEC File Number: Date: Part II - Page 5 South Texas Money Management, LTD 801-58167 1/4/2010 9. Participation or Interest in Client Transactions. Applicant or a related person: (check those that apply) A. As principal, buys securities for itself from or sells securities it owns to any client. B. As broker or agent effects securities transactions for compensation for any client. C. As broker or agent for any person other than a client effects transactions in which client securities are sold to or bought from a brokerage customer. D. Recommends to clients that they buy or sell securities or investment products in which the applicant or a related person has some financial interest. E. Buys or sells for itself securities that it also recommends to clients. (For each box checked, describe on Schedule F when the applicant or a related person engages in these transactions and what restrictions, internal procedures, or disclosures are used for conflicts of interest in those transactions.) 10. Conditions for Managing Accounts. Does the applicant provide investment supervisory services, manage investment advisory accounts or hold itself out as providing financial planning or some similarly termed services and impose a minimum dollar value of Yes No assets or other conditions for starting or maintaining an account? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (If yes, describe on Schedule F) 11. Review of Accounts. If applicant provides investment supervisory services, manages investment advisory accounts, or holds itself out as providing financial planning or some similarly termed services: A. Describe below the reviews and reviewers of the accounts. For reviews, include their frequency, different levels, and triggering factors. For reviewers, include the number of reviewers, their titles and functions, instructions they receive from applicant on performing reviews, and number of accounts assigned each. Frequency of Review: Securities are reviewed daily, accounts are generally reviewed quarterly, or in some cases more often. Level of Review: The level of such review is determined by client need, and STMM’s discretion. Factors which Trigger a Review: Various factors trigger an account review, including but not limited to preparation of quarterly performance, client communication, financial conditions and specific securities holdings. Reviewers include: Jeanie Wyatt, Chief Executive Officer and Chief Investment Officer, Michelle Romero, Chief Operating Officer, Fred Labatt, James Genteman, Tobin Calvert, Elizabeth Hickman, Mark Johnson, Richard “Cardo” Kleberg, Lance Lahourcade, Madelon Leone, Pamela Krueger, Lisa Fox, Holly Moore, Walter Hayne, Barbara Dickson, Pat Rutland, Hutch Bryan, Christina Kahn and Jeff Ready. Accounts are reviewed for accuracy, completeness, suitability/investment objective and restrictions. B. Describe below the nature and frequency of regular reports to clients on their accounts. STMM sends quarterly statements to clients containing account holdings, performance, transactions and gain/loss information. STMM also communicates with clients through telephone calls, e-mail, letters, client meetings and webcasts. The frequency and type of communication varies from client to client, depending on each client’s needs. In addition, clients also receive monthly/quarterly statements for each account from the custodian holding their assets. These reports disclose the amount of funds and each security in the account at the end of the reporting period and a list of all transactions in the account during the period.
  • 20. FORM ADV Applicant: SEC File Number: Date: Part II - Page 6 South Texas Money Management, LTD 801-58167 1/4/2010 12. Investment or Brokerage Discretion. A. Does applicant or any related person have authority to determine, without obtaining specific client consent, the: Yes No (1) securities to be bought or sold? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No (2) amount of the securities to be bought or sold? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No (3) broker or dealer to be used? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . Yes No (4) commission rates paid? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No B. Does applicant or a related person suggest brokers to clients? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . For each yes answer to A describe on Schedule F any limitations on the authority. For each yes to A(3), A(4) or B, describe on Schedule F the factors considered in selecting brokers and determining the reasonableness of their commissions. If the value of products, research and services given to the applicant or a related person is a factor, describe: • the products, research and services • whether clients may pay commissions higher than those obtainable from other brokers in return for those products and Services • whether research is used to service all of applicant's accounts or just those accounts paying for it; and • any procedures the applicant used during the last fiscal year to direct client transactions to a particular broker in return for product and research services received. 13. Additional Compensation. Does the applicant or a related person have any arrangements, oral or in writing, where it: A. is paid cash by or receives some economic benefit (including commissions, equipment or non-research services) Yes No from a non-client in connection with giving advice to clients? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No B. directly or indirectly compensates any person for client referrals? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (For each yes, describe the arrangements on Schedule F.) 14. Balance Sheet. Applicant must provide a balance sheet for the most recent fiscal year on Schedule G if applicant: • has custody of client funds or securities; or • requires prepayment of more than $500 in fees per client and 6 or more months in advance Yes No Has applicant provided a Schedule G balance sheet? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  • 21. Schedule F of Applicant: SEC File Number: Date: Form ADV South Texas Money Management, LTD 801-58167 1/4/2010 Continuation Sheet for Form ADV Part II (Do not use this Schedule as a continuation sheet for Form ADV Part I or any other schedules.) 1. Full name of applicant exactly as stated in Item 1A of Part I of Form ADV: IRS Empl. Ident. No.: South Texas Money Management, LTD Part II Page Advisory Services and Fees. 2, Item 1D South Texas Money Management, Ltd. (“STMM”) provides investment advice and investment supervisory services, including certain limited scope financial planning services (available upon request at no additional cost to clients), by advising on equities, options, debt instruments, government securities and/or mutual funds. Our goal is to provide proper diversification and to meet the client's stated investment objectives.. We provide our services to individuals, trusts, estates, retirement plans, charitable organizations and corporations. Services include the following: Investment management Asset allocation management Annual investment presentation (upon request) Quarterly performance and strategy summary reports Annual written analysis of account holdings and performance Open communication Limited scope financial planning (upon request) Standard Fee Schedule and Policy (effective for accounts established on or after May 2, 2007): Account Market Value Fee as a % of Market Value First $0 - $2 million 1.00% Next $8 million 0.50% Above $10 million 0.35% STMM fees are payable and assessed monthly in arrears. Fees are calculated by multiplying the total month-end market value of the account inclusive of stocks, bonds, cash equivalents, mutual funds and all other assets, by the relevant percentage and dividing such product by twelve (12). The reduction in percentage fee occurs only on the market value above the breakpoint. Individual related Accounts above $100,000 may be aggregated for purposes of the fee calculation upon written approval by STMM. Individual related Accounts below $100,000 will not be aggregated. The minimum Account Relationship market value is $500,000. There is a minimum annual Account Relationship fee of $5,000. The $5,000 minimum annual Account Relationship fee may be aggregated from all accounts in the Account Relationship with the written approval of STMM. If an Account Relationship does not meet the minimum annual Account Relationship fee of $5,000 after applying the above fee schedule, the short-fall may be charged on the Account anniversary date. In the event of termination of an advisory agreement, the pro-rated portion of the minimum annual fees may be charged for the period of time the agreement was in place. All custody of assets will be handled by a third party. STMM fees do not include custodial charges, which are typically charged separately and vary by custodian. Minimum custodial fees and additional custodial charges may be significant for smaller accounts. Fees and expenses charged by mutual funds, exchange traded funds, other funds and investment companies in which the account may invest are in addition to STMM management fees. Commission costs for trades will be reflected in the net cost of the security and may vary by custodian/executing broker. Effective February 1, 2009, STMM’s Standard Fee Schedule set forth above applies to clients referred by Charles Schwab & Co., Inc. through STMM’s participation in the Schwab Advisor
  • 22. Schedule F of Applicant: SEC File Number: Date: Form ADV South Texas Money Management, LTD 801-58167 1/4/2010 Continuation Sheet for Form ADV Part II (Do not use this Schedule as a continuation sheet for Form ADV Part I or any other schedules.) 1. Full name of applicant exactly as stated in Item 1A of Part I of Form ADV: IRS Empl. Ident. No.: South Texas Money Management, LTD Network (SAN). For referrals under the TD AMERITRADE AdvisorDirect program, there is a minimum account size of $300,000, and a minimum annual account fee of $3,000. Part II Page 2, Item 1D STMM has entered into agreements with various independent and unaffiliated investment advisers and financial institutions such as banks and broker-dealers, including wrap arrangements with wrap Continued program sponsors. These advisers and financial institutions refer clients to STMM and/or engage STMM as a sub-adviser. The total fees and charges (and the timing of payments for such fees and charges) that clients pay with respect to such arrangements may vary depending upon the arrangement between the client and their adviser/consultant and/or the arrangement between such advisers/financial institutions and STMM and such fees may be higher or lower than those paid by STMM clients who are not in such arrangements. The following fee schedule applies to fixed income oriented accounts with a market value of at least $10 million (effective for eligible accounts established on or after September 7, 2007): Account Market Value Fee as a % of Market Value First $0 - $2 million 0.50% Next $8 million 0.25% Above $10 million 0.15% With respect to the above fixed income fee schedule, there is a minimum annual account fee of $30,000, which represents an annual fee as a percent of market value of 0.30% (.0030) on a $10,000,000 account. Accounts on this special fixed income fee schedule may not be aggregated with related accounts for purposes of the fee calculation. The following fee schedule applies to eligible fixed income only accounts with a market value of at least $1 million that are referred to STMM by Charles Schwab through the SAN program, TD AMERITRADE through the AdvisorDirect program or Fidelity Brokerage Services LLC through Fidelity Wealth Advisor Solutions (effective for eligible accounts established on or after February 1, 2009): Account Market Value Fee as a % of Market Value First $10 million 0.50% Above $10 million 0.25% Referred accounts on the above fixed income only fee schedule may not be aggregated with related accounts for purposes of the fee calculation. STMM may, at its discretion, negotiate fee schedules, minimum fees and account minimums that vary from those discussed above. Proxy Voting STMM has adopted policies and procedures reasonably designed to ensure that proxies are voted in the best interest of clients. STMM’s procedures indicate that in most instances, STMM will follow the voting recommendation of RiskMetrics Group (formerly Institutional Shareholder Services, Inc.), a third-party proxy voting firm. STMM has conducted a review of RiskMetrics’ conflict procedures and the effectiveness of their implementation. Clients may contact STMM for a copy of STMM’s proxy voting policies and procedures and for information as to how proxies were voted.
  • 23. Schedule F of Applicant: SEC File Number: Date: Form ADV South Texas Money Management, LTD 801-58167 1/4/2010 Continuation Sheet for Form ADV Part II (Do not use this Schedule as a continuation sheet for Form ADV Part I or any other schedules.) 1. Full name of applicant exactly as stated in Item 1A of Part I of Form ADV: IRS Empl. Ident. No.: South Texas Money Management, LTD Legal Matters STMM will have no responsibility to notify clients or take action on their behalf as to legal matters, including securities class actions and bankruptcy proceedings, with respect to securities or other investments held in client accounts. Termination A client may terminate STMM’s services at any time and for any reason upon written notice from the client to STMM and STMM may terminate its services at any time upon thirty (30) days’ written notice to the client. In the event of termination of the agreement, the pro-rated portion of the minimum annual fees may be charged for the period of time the agreement was in place. Upon notice of termination, STMM will await further instructions from the client. Part II Page Methods of Analysis, Sources of Investment Strategies 3, Item 4 As a main source of information, STMM may utilize third-party databases including a database containing historical market information. Part II Page Education and Business Standards 4, Item 5 STMM requires that those involved in determining or giving investment advice to clients hold appropriate securities licenses and/or professional credentials that STMM deems substantive. Additionally, STMM requires a minimum of three years investment-related experience and/or a college degree.
  • 24. Schedule F of Applicant: SEC File Number: Date: Form ADV South Texas Money Management, LTD 801-58167 1/4/2010 Continuation Sheet for Form ADV Part II (Do not use this Schedule as a continuation sheet for Form ADV Part I or any other schedules.) 1. Full name of applicant exactly as stated in Item 1A of Part I of Form ADV: IRS Empl. Ident. No.: South Texas Money Management, LTD Part II Page Education and Business Background: 4, Item 6 JEANIE WYATT, CFA, CEO and Chief Investment Officer Date of Birth: 08/09/1953 Education: University of Texas B.A./Actuarial Science Austin, TX 1981 CFA 1984 University of Texas at San Antonio, MBA San Antonio, TX 1986 Employment: South Texas Money Management, Ltd. CEO/CIO 2000 – Present Frost Bank Executive VP 1981 – 2000 MICHELLE VILLASEÑOR ROMERO, Chief Operating Officer Date of Birth: 11/16/1975 Education: St. Mary’s University, BBA Finance / Financial Services & Risk Management San Antonio, Texas 1998 Work History: South Texas Money Management, Ltd. Chief Operating Officer June 2006 – Present Dir. of Equity Research 2000 – June 2006 Frost National Bank Assistant Vice President 1998 – 2000 CHRISTIAN G. HERFF, Chief Compliance Officer Date of Birth: 5/18/1971 Education: Vanderbilt University, B.A. Economics 1993 St. Mary’s University School of Law, J.D. 1998 Employment: South Texas Money Management, Ltd. Chief Compliance Officer June 2006 – Present Fulbright & Jaworski L.L.P. Corporate Attorney 1998 – 2006 RONALD B. WEISS, Chief Financial Officer Date of Birth: 7/22/1971 Education: Rhodes College, B.A. Business Admin. 1993 Rhodes College, M.S. Accounting 1994 Employment: South Texas Money Management, Ltd. Chief Financial Officer Nov. 2009 – Present Thompson Dunavant PLC Tax Partner 2008 – Nov. 2009 Thompson Dunavant PLC Tax Manager 2001– 2007
  • 25. Schedule F of Applicant: SEC File Number: Date: Form ADV South Texas Money Management, LTD 801-58167 1/4/2010 Continuation Sheet for Form ADV Part II (Do not use this Schedule as a continuation sheet for Form ADV Part I or any other schedules.) 1. Full name of applicant exactly as stated in Item 1A of Part I of Form ADV: IRS Empl. Ident. No.: South Texas Money Management, LTD Part II Page TOBIN CALVERT, Managing Director 4, Item 6 Date of Birth: 04/29/1961 Continued Education: University if Texas at Austin B.S./Natural Sciences 1985 University of Texas at Austin, MBA 1992 Employment: South Texas Money Management, Ltd. Managing Director Sept. 2009 – Present Sr. Investment Adviser 2003 – Sept. 2009 Austin, Calvert & Flavin Portfolio Manager 1996 – 2003 Davis, Skaggs Investment Advisors Portfolio Manager 1994 – 1996 MARK JOHNSON JR., Managing Director Date of Birth: 09/21/1971 Education: Texas Tech University at Lubbock B.A./Political Science 1994 Employment: South Texas Money Management, Ltd. Managing Director Sept. 2009 – Present Sr. Investment Adviser 2003 – Sept. 2009 Austin Calvert & Flavin Inc. Investment Adviser 1999 – 2003 Salomon Smith Barney Inc. Registered Representative 1995 – 1999 JOHN LANCE LAHOURCADE, Senior Investment Adviser Date of Birth: 08/19/1952 Education: Trinity University, BBA/Economics San Antonio, TX 1975 Employment: South Texas Money Management, Ltd. Sr. Investment Adviser 2004 – Present Inverness Counsel, Inc. Sr. Managing Director 2000 – 2004 Asset Advisory Group, Inc. President 1993 – 2000 Presidio Financial Services, Inc. Reg. Rep. 1999 – 2000 Duncan Smith Securities, Inc. President/Reg. Rep. 1982 – 1999 FRED LABATT, CFA, Director of Equity Research Date of Birth: 12/27/1963 Education: Vanderbilt University, B.A./History Nashville, TN 1986 University of Texas at Austin, MBA Austin, TX 1990 CFA 1993
  • 26. Schedule F of Applicant: SEC File Number: Date: Form ADV South Texas Money Management, LTD 801-58167 1/4/2010 Continuation Sheet for Form ADV Part II (Do not use this Schedule as a continuation sheet for Form ADV Part I or any other schedules.) 1. Full name of applicant exactly as stated in Item 1A of Part I of Form ADV: IRS Empl. Ident. No.: South Texas Money Management, LTD Employment: South Texas Money Management, Ltd. Director of Eq. Research June 2007 – Present Glass Management Company Executive V.P. 2001 – 2007 Hester Capital Management Sr. Vice President 1999 – 2001 Austin, Calvert & Flavin, Inc. Portfolio Manager 1996 – 1999 Frost National Bank Portfolio Manager 1990 – 1996 JAMES GENTEMAN, Co-Director of Fixed Income Date of Birth: 3/25/1970 Education: University of Texas at San Antonio, BBA/Finance San Antonio, TX 1995 Employment: South Texas Money Management, Ltd. Co-Director of Fixed Income Aug. 2009 – Present Director of Fixed Income June 2007 – Aug. 2009 Frost National Bank Fixed Income Portfolio Manager 1996 – 2007 J. HUTCHISON (HUTCH) BRYAN, JR., CFA, Co-Director of Fixed Income Date of Birth: 2/1/1963 Education: Southern Methodist University, B.B.A./B.A. (Ibero-American Studies) Dallas, TX 1985 Texas A&M University, MBA College Station, TX 1990 CFA 1995 Employment: South Texas Money Management, Ltd. Co-Director of Fixed Income Aug. 2009 – Present AIG Investments Vice President-Municipal Bond Group 2001 – Aug. 2009 Participation or Interest in Client Transactions - Buys or Sells for Itself Securities that it Also Recommends to Clients. STMM’s related persons may buy or sell securities for themselves that STMM also recommends to clients. STMM has adopted a Code of Ethics and related procedures to ensure that the investment decisions it makes for clients are in the client’s best interests and are independent from the securities holdings of the firm’s related persons. STMM’s Code of Ethics, which has been structured to comply with Rule 204A-1 under the Part II Page Investment Advisers Act of 1940, describes certain standards of conduct required of the firm’s 5, Item 9E supervised persons, including standards applicable to personal trading, to ensure that such trading is consistent with STMM’s fiduciary duty to its clients and standards of business conduct as well
  • 27. Schedule F of Applicant: SEC File Number: Date: Form ADV South Texas Money Management, LTD 801-58167 1/4/2010 Continuation Sheet for Form ADV Part II (Do not use this Schedule as a continuation sheet for Form ADV Part I or any other schedules.) 1. Full name of applicant exactly as stated in Item 1A of Part I of Form ADV: IRS Empl. Ident. No.: South Texas Money Management, LTD as with applicable laws and regulations. Among other things, the Code states: 1) that supervised persons must obtain prior approval for personal securities transactions in initial public offerings and private placements; and 2) that supervised persons must submit to STMM quarterly and annual reports of certain personal securities transactions. A written copy of STMM’s Code of Ethics is available upon request. STMM has investment responsibilities to, renders investment advice to, and performs other investment advisory services for a variety of different types of clients. There can be no assurance that all of STMM’s clients will participate in investment opportunities identified by STMM or will do so on any particular basis. STMM will not necessarily acquire for any particular client a position in any investment that any other account may acquire. The nature of transactions, portfolio holdings, timing and strategy employed for a given client account may differ from those actions taken, or strategies employed, for other clients, portfolios or accounts of STMM. Each client account will be managed independently from all other accounts. With respect to portfolio transactions, STMM will allocate, within its reasonable discretion, investment opportunities to the client account over a period of time on a fair and equitable basis relative to the other accounts. STMM, in its sole discretion, may allocate investment opportunities to one or more client accounts, and not to others. Portfolio transactions may or may not be executed simultaneously for all client accounts. Part II Page Condition for Managing Accounts 5, Item 10 As discussed in 1.D. above, STMM requires a minimum Account Relationship market value of $500,000 and, for clients referred through the TD Ameritrade AdvisorDirect program, a minimum account market value of $300,000, and imposes minimum annual fees unless an alternative arrangement is negotiated. Part II Page Investment or Brokerage Discretion. 6, Item 12 STMM generally is authorized to invest and reinvest Clients’ securities, property, cash and other investments (“Assets”) at such time and in such manner as STMM deems advisable without specific client consent. STMM generally is authorized to select the brokers and dealers who effect securities transactions for client accounts, and to negotiate the commissions charged for such transactions. STMM endeavors to obtain “best execution” in selecting broker-dealers to effect client trades, which may be defined as effecting trades in such a way as to maximize the value of client assets. Among the factors STMM considers in selecting broker-dealers are: • Value of research offered in relation to STMM’s investment process; • Applicable commission rates and other transaction costs; Part II Page • Timeliness of trade executions; 6, Item 12 • Efficiency and accuracy of clearance and settlement process; Continued • Ability to provide data on securities executions; • The overall responsiveness of broker-dealers, i.e., how well the broker-dealer serves the adviser and its clients. STMM may execute transactions through broker-dealers that refer clients to STMM, to the extent consistent with the above policies. Additionally, STMM has policies and procedures in place to review and/or evaluate the qualities described above. In circumstances where a client directs STMM to use a particular broker-dealer, either on a
  • 28. Schedule F of Applicant: SEC File Number: Date: Form ADV South Texas Money Management, LTD 801-58167 1/4/2010 Continuation Sheet for Form ADV Part II (Do not use this Schedule as a continuation sheet for Form ADV Part I or any other schedules.) 1. Full name of applicant exactly as stated in Item 1A of Part I of Form ADV: IRS Empl. Ident. No.: South Texas Money Management, LTD transaction-by-transaction basis or on an account-wide basis, STMM will use such broker-dealer to execute the client’s transactions and will not seek better execution services or prices from other brokers or dealers. In circumstances where a client’s account is custodied at a broker-dealer, such broker-dealer/custodian may impose charges on transactions executed away from the broker- dealer/custodian that make it economically infeasible for STMM to execute transactions through another broker-dealer. As a result of the situations described above, the client’s transactions may not be able to participate in aggregated or block transactions and may be subject to higher commissions, greater spreads and/or less favorable net prices than other clients of STMM. Not all clients pay the same per share commission rates for equity trades. Trade Allocation for Fixed Income Securities Bonds purchased for client accounts are allocated pursuant to the firm’s fixed income trading allocation policy, which is designed on the basis of fairness and objectivity. Generally, the policy gives priority to client accounts furthest away from their target fixed income allocation. Reasons for exceptions to the policy may include specific account restrictions and/or directives from the client or his or her STMM adviser; or circumstances in which an account is in the new account review process. AGGREGATED TRANSACTIONS STMM may purchase or sell securities across client accounts in an aggregated transaction, also known as a block trade or bunched trade. Each client that participates in the order must do so at the average price for all transactions, must share transaction costs on a pro rata basis based on participation in the transaction, and will be charged the applicable negotiated commission rate, if any. If an order cannot be executed in full in a single day, the securities actually purchased or sold by the close of each business day are allocated pro rata (or according to some other objective method) to each participating account. If the order will be allocated in a manner other than that stated in the initial statement of allocation, a written explanation of the change must be provided to and approved by the CEO, COO and the Chief Compliance Officer no later than the morning following the execution of the trade. Transactions for a client’s account will not be aggregated for execution if the practice is prohibited by, or inconsistent with, a client’s investment advisory agreement or other instructions to STMM. In addition, transactions for a client that has directed the use of a particular broker or dealer, transactions for accounts custodied at a broker-dealer or transactions for accounts over which STMM does not have discretionary trading authority may not be aggregated or “bunched” for execution, except to the extent that the executing broker or dealer is willing to “step out” such transactions to the client’s designated broker or dealer. Part II Page Accounts with a limitation on aggregating orders may be placed at the end of bunched trading 6, Item 12 activity and may experience different transaction results than accounts that participate in aggregated Continued transactions. For example, non-aggregated transactions may be subject to price movements, particularly in volatile markets, that may result in the client receiving a price that is less favorable than the price obtained for a “bunched” order. In addition, STMM may not be able to negotiate a commission rate or spread equal or similar to the level it is obtaining for the aggregated order. Also, the price may not be the same as the average price achieved with the aggregated order. As a result, it is possible for an account that is restricted or limited from participating in aggregated orders to experience higher commissions, greater spreads, and/or less favorable net prices than would be the case if STMM were not so restricted or limited from including transactions in that client’s account in aggregate orders.
  • 29. Schedule F of Applicant: SEC File Number: Date: Form ADV South Texas Money Management, LTD 801-58167 1/4/2010 Continuation Sheet for Form ADV Part II (Do not use this Schedule as a continuation sheet for Form ADV Part I or any other schedules.) 1. Full name of applicant exactly as stated in Item 1A of Part I of Form ADV: IRS Empl. Ident. No.: South Texas Money Management, LTD Orders for accounts which do not participate in the block trades as described above (e.g. because the client has selected to custody assets at a broker-dealer) are placed after the block trades according to a random rotation policy. The spouse of STMM’s Chief Executive Officer is a registered representative of an unaffiliated broker-dealer. Although STMM may execute client trades through this unaffiliated broker-dealer, the CEO’s spouse does not receive any compensation with respect to such trades. STMM and the CEO’s spouse may recommend transactions in the same securities to the accounts of their respective clients, and clients of STMM may hold positions in the same securities in which the CEO’s spouse and/or brokerage clients of the CEO’s spouse hold positions. Moreover, the manager of a mutual fund in which STMM clients may hold positions may effect trades for its managed accounts through the CEO’s spouse’s employing broker-dealer. All recommendations to STMM clients are made independently of the recommendations made to, and securities positions held by, clients of the CEO’s spouse. STMM does not participate in Initial Public Offerings (IPOs). If in the future, STMM should choose to participate in an IPO, STMM must always place clients’ interests first and foremost, and treat all clients fairly and equally. Soft Dollar Services Section 28(e) of the Securities Exchange Act of 1934, provides a safe harbor for persons who exercise investment and brokerage discretion over advisory accounts to pay for research and brokerage services with commission dollars generated by account transactions. Such arrangements are sometimes referred to as “soft dollar arrangements.” STMM receives brokerage and research services under the Section 28(e) safe harbor from broker- dealers who execute trades for STMM’s clients’ accounts. In doing so, STMM may cause its clients to pay commissions higher than those obtainable from other broker-dealers in order to obtain valuable research to use in the investment-decision making process. These products and services may be used to service all of STMM’s accounts, not just the accounts that pay for the services. Such services include, but are not limited to, the following: Financial Information Network, Bloomberg, Call Street, Factset Data Systems, BCA Research, Value Line, Creditsights, Crandall Pierce, themarkets.com, Omgeo and S&P Research Insight. STMM reviews its soft dollar arrangements on at least an annual basis. A detailed description of all purchased research services is maintained by STMM and is available to clients upon request. On occasion, STMM obtains third party products and services from broker-dealers which are “mixed-use,” that is, which are useful both in making investment decisions for client accounts and in performing administrative or other non-research functions. In these instances, STMM’s trading Part II Page oversight committee makes a good faith allocation so that the portion or specific component of a 6, Item 12 product or service which assists STMM in the investment-decision making process is obtained Continued through client commissions and the portion or specific component which provides non-research assistance is paid for by STMM with its own funds. Although STMM strives to make this allocation on a fair and reasonable basis, the allocation may present an inherent conflict of interest. STMM has established policies and procedures covering the use of soft dollars, including the following: • STMM’s trading oversight committee creates a list of soft dollar arrangements and reviews the arrangements on a periodic basis. • The trading oversight committee documents allocation of costs associated with third party
  • 30. Schedule F of Applicant: SEC File Number: Date: Form ADV South Texas Money Management, LTD 801-58167 1/4/2010 Continuation Sheet for Form ADV Part II (Do not use this Schedule as a continuation sheet for Form ADV Part I or any other schedules.) 1. Full name of applicant exactly as stated in Item 1A of Part I of Form ADV: IRS Empl. Ident. No.: South Texas Money Management, LTD mixed-use products and/or services. Furthermore, with respect to third party products that are considered “mixed-use” because they have the capacity to be used for both the investment decision-making process and in the management of the advisory firm, the former is paid using soft dollars while the latter is paid with hard dollars. • The trading oversight committee prepares periodic reports to document and review soft dollar activities. In cases where STMM is acting as a sub-adviser, brokerage commissions and costs and soft-dollar arrangements may not be negotiated by STMM. The company for which STMM is acting as a sub- adviser may negotiate brokerage commissions and costs and soft-dollar arrangements for those sub- advisory accounts. Such broker commissions and costs may be higher or lower than those negotiated directly by STMM. In addition to the soft dollar arrangements described above, STMM participates in institutional programs sponsored by custodians and brokers. These programs allow STMM’s clients (through STMM) access to institutional trading desks and institutional-only fund offerings, make certain load mutual funds available at net asset value and provide other accommodations typically not available to retail investors. STMM also receives products and services that assist with the management and administration of client accounts. These products and services include software that facilitates trade execution, clearance, settlement and custody; research, pricing information and other market data; as well as software that assists with back-office support, recordkeeping and client reporting. Sponsors of such institutional programs also make available to STMM other services intended to help STMM manage and further develop its business enterprise. These services may include consulting, publications and conferences on practice management, information technology, business succession, regulatory compliance and marketing. In addition, the sponsors may make available, arrange and/or pay for these types of services rendered to STMM by independent third parties. The sponsors may discount or waive fees it would otherwise charge for some of these services or pay all or part of the fees of a third-party providing these services to STMM. The benefits received by STMM do not depend on the amount of brokerage transactions directed to such brokers or the number of STMM managed accounts custodied at such custodians and the cost of such benefits is not disclosed to STMM. Accordingly, no mixed-use allocation is performed with respect to these services. Although the commissions charged to STMM’s clients with respect to such programs may be higher than the lowest commissions available, STMM has determined that these commissions are reasonable, in view of the execution abilities of the sponsors, the level of services provided to STMM’s clients, and the ancillary services provided to STMM. The institutional programs in which STMM participates include programs sponsored by Charles Schwab & Co. Inc., an SEC registered broker-dealer not affiliated with STMM, TD Ameritrade Institutional and Fidelity Brokerage Services LLC/National Financial Services LLC. TD AMERITRADE Institutional is a division of TD AMERITRADE, Inc. (“TD AMERITRADE”) member FINRA/SIPC. TD AMERITRADE is an independent and unaffiliated SEC-registered broker-dealer and FINRA member. TD AMERITRADE offers to independent investment advisors services which include custody of securities, trade execution, clearance and settlement of transactions. STMM receives some benefits from TD AMERITRADE through its participation in the program. (Please see the disclosure under Item 13.A. below.) Fidelity Brokerage Services LLC and National Financial Services LLC are SEC registered broker- dealers and members of FINRA/SIPC and are not affiliated with STMM.
  • 31. Schedule F of Applicant: SEC File Number: Date: Form ADV South Texas Money Management, LTD 801-58167 1/4/2010 Continuation Sheet for Form ADV Part II (Do not use this Schedule as a continuation sheet for Form ADV Part I or any other schedules.) 1. Full name of applicant exactly as stated in Item 1A of Part I of Form ADV: IRS Empl. Ident. No.: South Texas Money Management, LTD Part II Page Additional Compensation. 6, Items 13A and B STMM has entered into agreements with various independent and unaffiliated investment advisers and consultants. Those advisers and consultants refer clients to STMM or engage STMM as a sub- adviser and may be paid a referral fee by STMM. Except as otherwise disclosed in this Form ADV, STMM will not charge clients introduced by third-party advisers and consultants management fees or costs greater than those charged to clients not referred by third-party advisers and consultants for similarly sized portfolios. Total fees and charges that clients pay to third-party advisers and consultants are negotiated between those clients and their advisers/consultants. Additionally, broker commissions paid by clients with third party advisers and consultants may be negotiated by those third-party advisers. Such broker commissions and costs may be higher than those negotiated directly by STMM. As explained in response to Item 12 above, STMM receives certain products, services and other benefits from brokers and custodians through institutional programs in which STMM participates, including the programs sponsored by TD AMERITRADE, Charles Schwab & Co, Inc., and Fidelity Brokerage Services/National Financial Services LLC, and may recommend such program sponsors to clients. There is no direct link between STMM’s participation in these programs and the investment advice STMM gives to its clients, although STMM receives economic benefits through its participation in these programs that are typically not available to the program sponsors’ retail Part II Page investors. Such benefits may include the following products and services (provided without cost or 6, Item 13B at a discount): receipt of duplicate client statements and confirmations; research related products Continued and tools; consulting services; access to a trading desk; access to block trading; the ability to have advisory fees deducted directly from client accounts; access to an electronic communications network for client order entry and account information; access to mutual funds with no transaction fees and to certain institutional money managers; and discounts on compliance, marketing, research, technology, and practice management products or services provided by third party vendors. Institutional program sponsors may also have paid for business consulting and professional services received by STMM’s related persons and may also pay or reimburse expenses (including travel, lodging, meals and entertainment expenses) for STMM’s personnel to attend conferences or meetings relating to the programs or to the sponsors’ advisor custody and brokerage services generally. These products or services may assist STMM in managing and administering client accounts, including accounts not maintained at institutional program sponsors. While some of these services could be deemed brokerage and research services, certain components of these services assist STMM with account administration tasks (such as recordkeeping, marketing and client reporting) as well. Some of the products and services made available through institutional programs may benefit STMM but may not benefit its clients. The benefits received by STMM or its personnel through participation in these institutional programs do not depend on the amount of brokerage transactions directed to the sponsors. STMM may recommend or suggest certain custodians, including sponsors of institutional programs in which STMM participates, to advisory clients. STMM endeavors at all times to put the interests of its clients first. Clients should be aware, however, that the receipt of economic benefits by STMM or its related persons in and of itself creates a potential conflict of interest. In addition to the benefits described above, STMM receives client referrals from Charles Schwab & Co. Inc (“Schwab”) through STMM’s participation in the Schwab Advisor Network (the “Service”). The Service is designed to help investors find an independent investment advisor. Schwab is a broker-dealer independent of and unaffiliated with STMM. Schwab does not supervise STMM and has no responsibility for STMM’s management of clients’ portfolios or STMM’s other advice or services. STMM pays Schwab fees to receive client referrals through the Service. STMM’s participation in the Service may raise potential conflicts of interest described below.
  • 32. Schedule F of Applicant: SEC File Number: Date: Form ADV South Texas Money Management, LTD 801-58167 1/4/2010 Continuation Sheet for Form ADV Part II (Do not use this Schedule as a continuation sheet for Form ADV Part I or any other schedules.) 1. Full name of applicant exactly as stated in Item 1A of Part I of Form ADV: IRS Empl. Ident. No.: South Texas Money Management, LTD STMM pays Schwab a Participation Fee on all referred clients’ accounts that are maintained in custody at Schwab and a Non-Schwab Custody Fee on all referred accounts that are maintained at, or transferred to, another custodian. The Participation Fee paid by STMM is a percentage of the fees the client owes to STMM or a percentage of the value of the assets in the client’s account, subject to a minimum Participation Fee in certain circumstances. STMM pays Schwab the Participation Fee for so long as the referred client’s account remains in custody at Schwab. The Participation Fee is billed to STMM quarterly and may be increased, decreased or waived by Schwab from time to time. The Participation Fee is paid by STMM and not by the client. STMM generally pays Schwab a Non-Schwab Custody Fee if custody of a referred client’s account is not maintained by, or assets in the account are transferred from Schwab. The Non-Schwab Custody Fee is a one-time payment equal to a percentage of the assets placed with a custodian other than Schwab. The Non-Schwab Custody Fee is higher than the Participation Fees STMM generally would pay in a single year. Thus, STMM will have an incentive to recommend that client accounts be held in custody at Schwab. The Participation and Non-Schwab Custody Fees will be based on assets in accounts of STMM clients who were referred by Schwab and those referred clients’ family members living in the same household. Thus, STMM will have incentives to encourage household members of clients referred through the Service to maintain custody of their accounts and execute transactions at Schwab and to instruct Schwab to debit STMM fees directly from the accounts. For accounts of STMM clients maintained in custody at Schwab, Schwab will not charge the client separately for custody but will receive compensation from STMM clients in the form of commissions or other transaction-related compensation on securities trades executed through Schwab. Schwab also will receive a fee (generally lower than the applicable commission on trades it executes) for clearance and settlement of trades executed through broker-dealers other than Schwab. Schwab’s fees for trades executed at other broker-dealers are in addition to the other broker–dealer’s fees and are charged to the client’s account. Thus, STMM may have an incentive to cause trades to be executed through Schwab rather than another broker-dealer. STMM nevertheless, acknowledges and will fully comply with its duty to seek best execution of trades for client accounts, except as may otherwise be provided in this Form ADV. Trades for client accounts held in custody at Schwab may be executed through a different broker-dealer than trades for STMM’s other clients. Thus, trades for accounts custodied at Schwab may be executed at different times and at different prices than trades for other accounts that are executed at other broker-dealers. STMM may receive client referrals from TD AMERITRADE through its participation in TD AMERITRADE AdvisorDirect (the “referral program”). In addition to meeting the minimum eligibility criteria for participation in AdvisorDirect, STMM may have been selected to participate in AdvisorDirect based on the amount and profitability to TD AMERITRADE of the assets in, and trades placed for, client accounts maintained with TD AMERITRADE. TD AMERITRADE is a discount broker-dealer independent of and unaffiliated with STMM and there is no employee or agency relationship between them. TD AMERITRADE has established the referral program as a means of referring its brokerage customers and other investors seeking fee-based personal investment management services or financial planning services to independent investment advisors. TD AMERITRADE does not supervise STMM and has no responsibility for STMM’s management of client portfolios or STMM’s other advice or services. STMM pays TD AMERITRADE an on- going fee for each successful client referral. This fee is usually a percentage (not to exceed 15%) of the advisory fee that the client pays to STMM (“Solicitation Fee”). STMM will also pay TD AMERITRADE the Solicitation Fee on any advisory fees received by STMM from any of a referred client’s family members, including a spouse, child or any other family member who resides with the
  • 33. Schedule F of Applicant: SEC File Number: Date: Form ADV South Texas Money Management, LTD 801-58167 1/4/2010 Continuation Sheet for Form ADV Part II (Do not use this Schedule as a continuation sheet for Form ADV Part I or any other schedules.) 1. Full name of applicant exactly as stated in Item 1A of Part I of Form ADV: IRS Empl. Ident. No.: South Texas Money Management, LTD referred client and hired STMM on the recommendation of such referred client. In addition, STMM has agreed not to solicit clients referred to it through AdvisorDirect to transfer their accounts from TD AMERITRADE or to establish brokerage or custody accounts at other custodians, except when its fiduciary duties require doing so. STMM will not charge clients referred through AdvisorDirect any fees or costs higher than its standard fee schedule offered to its clients or otherwise pass Solicitation Fees paid to TD AMERITRADE to its clients. For information regarding additional or other fees paid directly or indirectly to TD AMERITRADE, please refer to the TD AMERITRADE AdvisorDirect Disclosure and Acknowledgement Form. STMM also may receive client referrals through its participation in Fidelity Wealth Advisor Solutions, sponsored by Fidelity Brokerage Services LLC and National Financial Services LLC. STMM’s participation in AdvisorDirect, Fidelity Wealth Advisor Solutions and referral programs offered by other broker-dealer sponsors (“Referral Programs”) raises potential conflicts of interest. Sponsors of Referral Programs (collectively, “Program Sponsors”) will most likely refer clients through their respective referral programs to investment advisors that encourage their clients to custody their assets at the referring Program Sponsor and whose client accounts are profitable to the referring Program Sponsor. Consequently, in order to obtain client referrals from a Program Sponsor, STMM may have an incentive to recommend to clients that the assets under management by STMM be held in custody with such Program Sponsor and to place transactions for client accounts with such Program Sponsor. Except as may otherwise be provided in this Form ADV, STMM’s participation in Referral Programs does not diminish its duty to seek best execution of trades for client accounts. Trades for client accounts held in custody at Program Sponsors may be executed through a different broker-dealer than trades for STMM’s other clients. Thus, trades for accounts custodied at Program Sponsors may be executed at different times and at different prices than trades for other accounts that are executed at other broker-dealers.

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