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St. James INVESTMENT ADVISORSBALANCED PORTFOLIO

ST. JAMES INVESTMENT ADVISORS1VALUE investingThe beauty of value investing is the logical simplicity of two key principles: Determine an investment’s worth (intrinsic value) and don’t lose money (margin of safety). Introduced by Benjamin Graham in 1934, these straightforward concepts remain relevant today and serve as the cornerstones of our investment process.“Once you adopt a value-investment strategy, any other investment behavior starts to seem like gambling.”-Seth Klarman“Price is what you pay. Value is what you get.” - Warren BuffettPORTFOLIO objectivesThe St. James Balanced Portfolio seeks to provide both long-term capital appreciation and current income by investing in stocks, bonds and cash. The portfolio seeks to provide total return through a combination of growth, income, and preservation of capital in declining markets. The portfolio is primarily composed of dividend paying companies and fixed income securities.The portfolio will invest in Blue Chip companies from around the world, which we consider to be well-known, well-established and well-secured. Generally, a Blue Chip company may be resistant to economic downturns, which contributes to its qualities of a strong market position, seasoned management team, solid financial conditions, and above-average earnings growth and profitability.

ST. JAMES INVESTMENT ADVISORS2PORTFOLIO strategyThe St. James Balanced Portfolio seeks to provide total return through a combination of equities and fixed income. The equity portion of the portfolio places an emphasis onselecting companies with above-average dividends and trading at reasonable discounts from our assessment of intrinsic value. We will invest in companies with an established history ofpaying dividends. The fixed income portion of the portfolio provides long-term growth of income and a moderate level of current income.The portfolio will invest, under normal conditions, at least 25% in equity securities and at least 25% in f ixed income securities.The allocation of stocks and bonds varies depending on where we believe the best long-term opportunities can be found.

ST. JAMES INVESTMENT ADVISORS3INVESTMENT philosophyWe employ an absolute return mindset to long-term valueinvesting. Dividends are an important component used in evaluating the attractiveness of a company. Dividends provide a reflection of the activity of a company, its management and the value of its shares.We seek to identify good business models with an attractive current yield, a growing income stream and the opportunity for capital appreciation.WE ARE ABSOLUTE RETURN INVESTORS AND EACH INVESTMENT MUST MEET OUR STRICT FUNDAMENTAL RESEARCH AND MACROECONOMIC CRITERIA, NOT JUST OFFER OPPORTUNITY RELATIVE TO OTHER ALTERNATIVE INVESTMENTS.ABSOLUTE RETURN INVESTORS BUY ASSETS THAT ARE OUT OF FAVOR BECAUSE THEY ARE CHEAP. RELATIVE RETURN INVESTORS BUY ASSETS THAT ARE POPULAR, WHICH MEANS THAT THEY ARE ALREADY FULLY PRICED.TRYING TO KEEP PACE WITH THE MARKET IN ALL ENVIRONMENTS PROMOTES POORDECISIONS AND INCREASES THE CHANCES OF MAKING MISTAKES.FOCUS ON THE PROCESS AND DECISIONS – LET THE OUTCOMES TAKE CARE OF THEMSELVES.A VALUE INVESTOR WITH AN ABSOLUTE RETURN MINDSET MAY OUTPERFORM BY PROTECTING CAPITAL IN DOWN MARKETS AND PRODUCING POSITIVE RETURNS IN UP MARKETS.BE PATIENT (AND NOT AFRAID TO HOLD CASH).BE UNCONSTRAINED.INSIST UPON A MARGIN OF SAFETY.WE DO NOT FOLLOW THE CROWD. WE ARE INDEPENDENT IN OUR DECISION MAKING AND WE ARE OFTEN VIEWED AS CONTRARIAN IN OUR STRATEGY AND EXECUTION.PRINCIPLES OF INVESTMENTS

ST. JAMES INVESTMENT ADVISORS4We think "benchmark risk" is part of investment life. Ourfirm’s goal is to earn solid absolute investment returnsover long periods of time without exposing our clients’capital to undue risk. We do not think about any particular index when we make investment decisions. We also believe that cash is sometimes the most attractive investment.We know this approach causes headaches for some of ourfavorite consultants, but we think flexibility and common sense will continue to serve our clients well over the years.Lastly, we will discourage short-term speculators and market timers from joining us and will communicate with our investment partners as candidly as possible.INVESTMENT philosophy

ST. JAMES INVESTMENT ADVISORS5 EQUITY INVESTMENT strategyThe portfolio takes a total return approach to dividend investing, seekingattractive current income and capital appreciation through an actively managed portfolio of dividend paying stocks. We pursue a value-oriented approach which invests primarily in companieswith above-average dividend yields and trading at reasonable discountsfrom our assessment of intrinsic value.We seek to identify good business models with an attractive current yield, a growing income stream over time and the opportunity for capitalappreciation. We believe dividends are important. Over the long term, the return from dividends has been a significant contributor to the totalreturns produced by equity securities. There is an abundance of empiricalevidence which suggests that portfolios consisting of high dividend yielding securities may produce attractive total returns over long measurement periods. We focus on companies that we believe are not efficiently priced by the market. To find these opportunities, we search for companies that: The equity portion of the portfolio will typically range from 18 to 24 holdings. Are market leaders Have a proven record of returned cash flow to shareholders Generate excess free cash flow Carry low debt and have strong balance sheets Have proven management

ST. JAMES INVESTMENT ADVISORS6EQUITY INVESTMENT processSTRICT SELL disciplineIs the business simple and understandable?Does it have a consistent operating history?Does it have favorable long-term prospects?Is the company's stock cheap? Is there a margin of safety?If you had to purchase abusiness and hold it for five years, what would it look like?BUY A BUSINESS,Not a Stock.If you had to hold a purchased business for five years, what would it look like?

ST. JAMES INVESTMENT ADVISORS7FIXED INCOME strategyThe fixed income portion of the portfolio seeks to provide an attractive return, while limiting interest rate risk and the possibility of permanent capital impairment. We seek fixed income holdings that we think will provide a reasonable risk-adjusted return. We examine potential opportunities until we find what we believe is the right investment at the right price.The portfolio is not subject to any maturity or duration restrictions for fixed income securities. It will vary its average dollar-weighted portfolio maturity and duration depending on the current interest rate environment. At times, we may overweight areas that we believe offer significant potential versus other areas of the market. High-quality fixed income has been shown to be the best diversifier of risk in periods of stock market weakness. The fixed income investment strategy is focused on the objectives of capital preservation and income production. We seek to maximizeportfolio income while minimizing credit, interest rate, and reinvestment risk. The strategy will invest in U.S. government bonds (including agencies), corporate bonds, sovereign bonds, cash, and cash equivalents. The portfolio’s fixed income-based securities will include exchange-traded funds and similar managed investment vehicles.

ST. JAMES INVESTMENT ADVISORS8DifferentiatorsAbsolute Return Mindset - Absolute return investors buy assets that are out of favor because they are cheap. Relative return investors buy assets that are popular, which means they are already fully priced. Further, trying to keep pace with the market in all environments promotes poor decisions and increases the chances of making mistakes. As one cannot spend relative performance, absolute returns are the only returns that matter.Independent Research - Original research is at the heart of each investment, forming a well-founded thesis that looks at least three years ahead. Because we have independently built the case for our ideas, we have the conf idence to invest in out-of-favor areas and to hold our ground when short-term sentiment runs the other way. In our experience, periods of great pessimism often generate the best investment bargains.Long-Term Orientation - Years of investing have taught us that investor perceptions of an investment fluctuate much more widely thanunderlying fundamentals. As a result, we are habitually focused onthe long-term and continually ask ourselves: “based on what weknow today, how would we invest an all-cash portfolio if we could not trade for three to five years?” This exercise forces us to re-evaluate our portfolio holdings within an ever-changing market environ-ment, and to reaff irm our rationale for long-term appreciation.

“We eat our own cooking." Some of our investment professionals have amajority of their families’ liquid net worth invested in our portfolios. This does not guarantee that the portfolios will go up, but it means that we win or lose together and that clients def initely have our attention.ST. JAMES INVESTMENT ADVISORS9DifferentiatorsPatienceis a key element of our philosophy. Various research studies have shown that the average investor significantly underperforms the overall market because they let their emotionsget in the way of rational decision making. These investors chase the latest fads with the typical results being that they miss the upswing and their gains are substantially less than what theywould have been if they had just stayed the course.

ST. JAMES INVESTMENT ADVISORS10St. James Investment Advisors is an independent, fee-only, U.S. Securitiesand Exchange Commission registered investment advisory firm,providing customized portfolio management services to individuals and their financial advisors.Our investment methodology blends a combination of fundamentalanalysis, discipline and patience with the goal of creating long-term returns based on the time-proven principles of value investing. We are professional portfolio managers Committed to Value Investingand our sole focus as a firm is to manage private investment accounts for individuals and their financial advisors throughout the United States.