Fortis Capital Management LLC (“Fortis”, “the firm,” “our company,” “we,” “our,” or “us”) is a Washington Limited Liability Company formed in 2014. Following the execution of agreements in April of 2019 that were effective for tax purposes January 1, 2019, Fortis is now wholly-owned by Fortis Holdings LLC, rather than by Glacier Peak Capital LLC (“Glacier Peak”). Fortis and Glacier Peak are now sister companies wholly-owned by Fortis Holdings, which also owns the related entities described in Item 10. The prior managers of Glacier Peak (Michael Boroughs, Paul Misleh, and James Rudolf) are now the elected managers of Fortis Holdings, as well as the elected managers of Fortis and Glacier Peak. Following the restructuring, there is still no natural person who owns more than 25% of Fortis, either directly or indirectly.

We provide wealth advisory and investment management services. We service private individuals, families, businesses, trusts, foundations and charities.
Investment Management
We build clients’ investment portfolios primarily with the common stock of domestic and foreign companies we believe are undervalued, or with low-cost exchange traded funds (“ETFs”) that meet our investment and allocation criteria. However, our investment recommendations are not limited only to common stocks and ETFs. We offer advice and make investment recommendations on a wide range of investments, including but not limited to bonds, private placements, options, and securities invested in real estate.

We utilize both active and passive investment management strategies. Our active strategy is typically implemented uniformly across the client base for those clients for whom it is suitable. We will, however, tailor the implementation of the strategy in light of a client’s specific needs and risk tolerance, where necessary. In certain circumstances, it may make sense for us to allocate a client’s assets across multiple strategies (from both active to passive). In this situation we typically set up separate brokerage accounts for the client representing each strategy employed. We think this provides greater transparency to the client and to the firm, especially with respect to performance reporting.

We utilize a passive investment management strategy when desired by the client and deemed appropriate by us. The passive strategy utilizes primarily low-cost ETFs to provide broad, diversified exposure. Each account in this strategy is customized to the individual client taking into consideration the age and risk tolerance of the client as well as market valuations, interest rate levels and fund costs. Generally these accounts are rebalanced quarterly as appropriate, however we reserve the right to rebalance them more frequently when, in our judgment, there are material moves in price or the underlying fundamentals.

While we maintain a small number of legacy non-discretionary accounts, all new accounts within the above strategies are managed on a discretionary basis.
Wealth Advisory
Services may vary, depending on client needs. Generally, as part of our wealth advisory services, we offer financial planning to assist individuals and families with planning for their financial future and building their wealth. Our planning services occasionally employ third-party software to provide account aggregation, scenario analysis and mobile friendly monitoring. As part of our financial planning process, if the client is in need of services we don’t offer that are elements of a healthy financial plan, then we will assist the client in engaging another professional who can provide those services. We prefer to take the lead in interacting with the other service providers (such as the estate planning attorney, insurance broker, mortgage broker, CPA, etc.) in order to ensure the client’s long-term objectives are being fulfilled and to minimize the workload on the client. As part of the financial planning process, we can also act as insurance producers for all types of life, disability and long-term care lines of insurance. Based upon a client’s individual needs and circumstances, we offer our financial planning, wealth advisory, and investment management services for a fee based on a client’s total net worth. Please refer to Item 5 for more detail.

Where our net worth-based fee model is appropriate, we include the additional component of advising you on all other aspects of your financial life. This may include, but is not limited to, analyzing potential investments you bring to us, guidance on real estate purchases or sales, prudent use of debt, advice relating to employer benefits, such as stock options, and philanthropic giving.

We do not participate in wrap fee programs. We receive no commissions from selling securities nor do we receive a portion of the transaction fees charged by the broker/dealer (see Item 12 regarding Brokerage practices).

As part of our advisory services, we will recommend life insurance products, where appropriate, for the client. If the client chooses to accept our recommendation and purchase insurance through us, we will receive usual and customary commissions on those transactions (see Item 5, below). We currently recommend life and disability products offered through MassMutual Life Insurance Company, which we believe are competitive with other products in the market place. Though other products are available through other carriers which may have better terms or at lower premiums, we choose to keep our offerings simple and recommend only MassMutual.

As an investment advisor we are a fiduciary to all of our clients. We are also deemed a “fiduciary” under ERISA and/or the Internal Revenue Code with respect to our investment advisory recommendations and discretionary asset management provided to Retirement Investors. “Retirement Investor” is defined as a participant or beneficiary of a retirement plan or a beneficial owner of an Individual Retirement Account (IRA). In recommending that any client roll over retirement plan assets to our management, we have a conflict of interest, to the extent the rollover will result in our managing additional assets subject to our management fee. Before making any such recommendation, we review your existing investment options, fees and expenses, and your overall investment objectives. We only make the recommendation once we’ve determined that doing so is in your best interest. As of December 31, 2018, we have approximately $25.3 million in discretionary assets and approximately $1.3 million in non-discretionary assets under management. please register to get more info

Our advisory fees are typically based on either a percentage of the assets under management or a percentage of total net worth. For the assets under management model, on the last business day of a quarter, the fair market value of all the holdings in a clients’ account is added to come up with the assets under management. Fees are typically charged on a quarterly basis in accordance with the annual fee schedule below: Asset-Based Fees Assets Under Mgmt Actively Managed Low-Cost Fund Allocation >$5,000,000 1.00% 0.75% $1,000,000-$5,000,000 1.25% 1.00% <$1,000,000 1.50% 1.25%

Net Worth-Based Fees

Client and Advisor will agree on Client’s net worth for purposes of calculating advisory fees and the related fees will be detailed in the Client’s advisory agreement. We define “net worth” as all assets owned or controlled by the Client for the Client’s benefit, less all outstanding liabilities and debts owed by the Client. In agreeing on net worth, we generally use the following sources and methods: Liquid and easy to value assets (such as publicly traded securities, cash, etc.) and liabilities (mortgages, car loans, etc.) will utilize a third party valuation, such as brokerage and bank statements, mortgage statements, etc. Valuations of assets/liabilities that are more illiquid and challenging to value (real estate, private businesses, etc.) will be based on a reasonable valuation, such as original cost, tax assessments (for real estate) issuer-provided valuations, or industry metrics for business valuation, Valuations for other real property, fixtures, furnishings etc. will be provided by the client and agreed between the firm and the client. In all cases, the values assigned will be explicitly identified and both the individuals values and agreed net worth will be agreed to by client. Fees are charged quarterly in arrears in accordance with the annual fee schedule below:

Total Net Worth Annual Fee % >$10,000,000 0.25% $5,000,000 - $9,999,999 0.30% $2,000,000 - $4,999,999 0.35% $1,000,000 - $1,999,999 0.40%

Clients with net worth below $1 million will be charged an annual fee minimum of $4,000.

General Fee Policies

Fees may be negotiated and we have the discretion to charge certain clients different fees as we think appropriate. Clients should note that lower fees for comparable services may be available from other sources. Clients may be charged more or less using the asset-based method than they would be charged using the net worth method.

Fees for our advisory services are typically charged on a quarterly basis in arrears. The fee is calculated by us and deducted from the client’s account after the quarter in which services have been rendered. For clients charged an asset-based fee, the fee will calculated based on the values of the client’s custodial account(s), as reported by the custodian. For client’s charged based on net worth, the fee is simply one quarter of the stated annual rate, multiplied by the agreed net worth. The fee in this case will not be based on the value of the custodial account(s) from which is deducted. When the fee is deducted it is then transferred to our account. The advisory fees will be reflected on the client statements prepared and provided by the custodian. Performance-Based Fees For clients who meet the definition of “qualified client” under SEC Rule 205-3, we also offer a performance-based fee arrangement, though we do not currently have any clients charged on a performance-fee basis. A “qualified client” is defined as any client having over $1 million of assets under management with us, or over $2.1 million of net worth, excluding the client’s primary residence and the related secured debt. Under this fee arrangement, Fortis is compensated in two ways for acting as the investment advisor:


• Base Fee: Fortis is paid a fixed percentage based on assets under management (1/4th of which is charged each quarter). The fee is calculated and charged the same way as the standard investment advisory fee as described above. Base fee amount is subject to our discretion and negotiation with the client.


• Performance Fee: Fortis is paid a percentage of the annualized account profit, subject to a high water mark. High water mark is defined as the highest peak in value at which an investment account has been charged a performance fee. Performance fees are charged on an annual basis if they exceed the return hurdle and high water mark.

Clients will incur brokerage fees and other transaction costs charged by the broker/dealer and custodian. Custodians may charge an annual fee for IRA accounts. Please see Item 12 that discusses brokerage.

Advisory fees are billed quarterly in arrears in accordance with the terms of the individual client’s advisory agreement.

From time to time, we will submit a write-up of an investment thesis to websites or blogs that could include but not be limited to Seeking Alpha, GuruFocus, SumZero and Value Investors Club. Occasionally we will submit these idea write-ups to investment idea contests where we could receive a monetary award. Our write-ups will not be tailored to individual subscribers or viewers. We disclose whether the firm or its client accounts are long or short the stock at the time we submit the write-up. Given the rules of the various sites we may post to, we are usually not allowed to subsequently post our write-ups to our own blog where they could be viewed by clients. However, any of our write-ups are available to clients at their specific request.

Clients should note that similar advisory services may (or may not) be available from other registered (or unregistered) investment advisers for similar or lower fees.

When we sell an insurance product to our clients, our insurance agency affiliate, Fortis Insurance Services LLC, and our insurance-licensed principal, Michael Boroughs, are paid customary commissions from the insurance company. We are typically paid a percentage of the first year premium and smaller trailing commissions as long as the policy is in force. This creates a conflict of interest because we have a financial incentive to recommend the insurance products based on the compensation we will receive rather than strictly on the client’s needs. We mitigate this conflict by disclosing it and by ensuring our advisors understand their fiduciary duty to act solely in the client’s best interest. In addition, clients are free to reject our insurance recommendations and are also free to implement our recommendations through other life insurance agents not affiliated with Fortis. A client agreement may be canceled at any time, by either party, for any reason upon receipt of written notice. Upon termination of an account billed in arrears, any earned but not yet paid fees will be deducted from the account based on the number of days we provided services prior to termination. In the event that we cannot deduct the fees from the account, we may bill the client separately for the fees we are due. All fees paid to Fortis for investment advisory services are separate and distinct from the fees and expenses charged by mutual funds and/or ETFs to their shareholders. These fees and expenses are described in each fund's prospectus. These fees will generally include a management fee, other fund expenses, and a possible distribution fee. If the fund also imposes sales charges, a client may pay an initial or deferred sales charge. We do not recommend funds with initial or deferred sales charges, or funds that pay 12b-1 fees (trails). Clients may have these funds in their accounts when transferring assets to Fortis; we typically recommend exchanging these funds for lower-cost share classes, if possible. In the event the positions are retained, because we determine it is in the client’s best interest, neither Fortis nor its representatives receives additional compensation.

A client could invest in a mutual fund directly, without our services. In that case, the client would not receive the services provided by our firm which are designed, among other things, to assist the client in determining which investments are most appropriate. Accordingly, the client should review both the fees charged by the funds and our firm’s fees to fully understand the total amount of fees to be paid by the client and to thereby evaluate the advisory services being provided. please register to get more info

As described above in Item 5, for clients who are “qualified” as defined in SEC Rule 205-3, we also offer a performance-based fee arrangement. A “qualified client” is defined as any client having over $1 million of assets under management with us, or over $2.1 million of net worth, excluding the client’s primary residence and the related secured debt. For this fee arrangement, Fortis is compensated in the following manner:


• Base Fee: Fortis is paid a fixed percentage based on assets under management (1/4th of which is charged each quarter in arrears). The fee is calculated and charged the same way as the standard investment advisory fee as described above. Base fee amount is subject to our discretion and negotiation with the client.


• Performance Fee: Fortis is paid a percentage of the annualized account profit, subject to a high water mark. High water mark is defined as the highest peak in value at which an investment account has been charged a performance fee. Performance fees are charged on an annual basis if they exceed the return hurdle and high water mark.

At this time, no clients of Fortis Capital Management have opted for the performance-based fee arrangement. Our affiliated adviser, Glacier Peak, manages a private fund (the “Fund” – see Item 10) that has the ability to charge performance-based fees, though it has waived its right to do so since March of 2017. We will notify Fortis clients if the Fund resumes performance fees. Should we on-board clients who elect the performance fee option, conflicts of interest will arise because we and our supervised persons would have an incentive to favor accounts for which we receive performance-based fees. We counter this conflict of interest by ensuring that, whenever possible, trades for client accounts are made as one group or block, where all clients are given the average price of the block transaction and each client is allocated his or her appropriate number of shares. Similarly, performance-based fees assessed by the Fund create a conflict of interest when managed side- by-side with Fortis’s separately-managed accounts that are not charged a performance fee. Generally, performance-based fees present the possibility of greater profit to the investment adviser. Accordingly, the adviser has a financial incentive to devote more time to performance-based accounts and may also take greater risks to potentially obtain greater returns. There could also be conflicts related to allocation of securities as we or Glacier Peak could have an incentive to allocate securities we expect to be particularly profitable to the Fund or to other performance-fee-based accounts. Because both Glacier Peak and Fortis could theoretically invest in the same securities, we could experience a conflict related to allocation between the Fund and individual accounts of Fortis clients. For the most part, both firms purchase liquid securities with market capitalization and trading volume adequate to meet anticipated needs of both firms. If, in the future, we buy the same securities for the Fund and Fortis clients, our intention is to execute block transactions and allocate securities pro-rata to both the Fund and Fortis client accounts. Based on custodian restrictions, however, most of our clients would not be able to participate in a single block because of custodian account size minimums. Any clients who can participate in a block with the Fund will do so. Otherwise, client trades will be aggregated and blocked at the custodian level to the extent we believe this will result in better executions. We will make our beest efforts to rotate the priority of transactions and the various custodians. In most cases, we would expect that both Fortis clients and the Fund would receive the original intended allocation; pro rata allocation in the event we are unable to purchase or sell the amount of securities expected assures that we treat all clients fairly. We will reserve the right to not allocate pro-rata to accounts that would receive less than a round lot or who otherwise have account restrictions in place that would preclude a lesser allocation. please register to get more info

Our firm provides investment advisory services to individuals, families, small businesses and charitable organizations, trusts and foundations. Some of these clients can or will be considered qualified clients, per SEC Rule 205-3, and will be eligible for the performance based fee arrangement as described in Item 6.

Our clients usually lack the time and specialized knowledge and skills to build and manage their portfolios. Because our investment time horizon for most purchases may be up to three or more years, our clients must be willing to look beyond short-term fluctuations to achieve long-term investment targets. Excluding those clients for whom the net worth model is appropriate, our minimum account size is $100,000, though we may waive this minimum at our discretion. Some of the reasons we may choose to waive the minimum are if we believe the client has substantial lifetime earnings power, a large potential referral network, or has multiple accounts or family accounts held on our platform that combined meet the minimum threshold. please register to get more info

For our actively managed strategies we aim to invest in businesses that have the following characteristics (i) high returns on invested capital and strong margins, (ii) strong balance sheets, (iii) reasonable valuations and (iv) quality management teams. Our research process is primarily focused on assessing whether historical financial results can be replicated in the future. In addition, we will assess whether results can improve based on cyclical and/or other factors. We also assess prospective capital needs for the business and how much of this can or should be reasonably expected to be returned to shareholders.

Generally our expectations for increases in stock prices will result from one or more of the following factors (i) growth of earnings/cash flow per share and/or (ii) an increase in the multiple assigned to a given security due to a change in market perception around the quality of the business or its financial prospects.

We constantly monitor the markets for opportunities to either add to the portfolio, replace existing positions or exit a position if its prospects have changed or it has met our sell guidelines. We are sector agnostic and will invest across all sectors based on the characteristics noted above. In addition, we are generally country agnostic as long as the above characteristics are met.

For our low-cost index fund strategies, we will perform a suitability analysis of the client first and determine the proper allocation between equities, fixed income and other assets. We further will use the suitability analysis, as well as our understanding of economics, market cycles, and the client’s personal financial situation to determine proper duration of the fixed income portfolio and potential sector overweights within the equities portfolio. We try to minimize transaction costs with this strategy and rebalance when we deem it is necessary.
Investing in securities involves risk of loss that clients should be prepared to bear.
Investments in securities are subject to various risks. Clients may lose money on the investments. Some specific sources of risk include:

Market Risk: Stock prices fluctuate in response to many factors including the activities of individual companies and general market and economic conditions. Regardless of any one company’s particular prospects, a declining stock market may produce a decline in stock prices for all companies. Stock market declines may continue for an indefinite period of time, and clients should understand that from time to time during temporary or extended bear markets, the value of a client’s portfolio assets may decline. During such periods of decline, the Client may experience substantial losses.

Management Risk: There is no guarantee that investment decisions will produce the desired result, and they may cause the portfolio to underperform in comparison to the broad equity market or specific relevant equity benchmarks. Concentration Risk: Since we structure less diversified portfolios than the broad U.S. equity market, this can generate above average volatility and risk. How We Manage Risk As clients have no doubt experienced, the equity markets are volatile, sometimes very volatile. Many people associate this volatility with risk. We disagree; we believe risk is the potential for permanent loss of capital. Said another way, we believe risk is the chance that you permanently lose your money. Just because the price of the equity that you own changes, it does not mean that the value of the business changes. We always keep in the forefront of our mind that our equity investments are really purchases of businesses and the value of the business is the only thing that really matters. Emotions drive markets over the short-term, while the underlying business values drive markets over the long-term.

If the market wants to mark down the value of a security by 20%-30%, which is around the average swing in a given security in a year, we need to evaluate whether this is an opportunity presented by short-term emotions or a long-term change in the underlying business value. If we look at the business and rationally determine its value hasn’t changed, we will buy more and take advantage of cheaper prices.

That being said, there is significant risk when investing in equity markets and we cannot fully remove it through our decision making process. Human beings make mistakes, sometimes material ones and we need to account for this. Further, because we take a long view and are often willing to hold onto securities of good businesses despite market declines, cash flow and liquidity needs are critically important for us to understand with clients. If a client needs cash at a stock’s low point, the client will incur a realized loss upon sale. The following discussion covers how we will attempt to mitigate this risk of being wrong and materially impairing client capital.

While no system guarantees a profit or guarantees against loss, below are six specific ways in which we mitigate risk of permanent capital loss:

Circle of Competence – We only invest in companies and situations that are within our circle of competence. This means that we likely will pass on many potential opportunities because we can’t figure them out. Complicated high tech companies and biotech companies frequently fall into this bucket as we don’t understand the intricacies of what will make one successful or fail, what type of competitive advantages the company may have, what type of pricing power it may have over suppliers or customers, and whether its technology or formula is truly irreplaceable or not.

When we cannot reasonably predict future cash flows that will be generated, it is very challenging to accurately estimate the intrinsic value of a business. While there will be many “homeruns” that we miss out on as a result of this component of our strategy, there will also be many blow-ups that we avoid. The markets contain many risks that are out of our control, however, this is one we can control and do not want to lose money because we put client money to work in a company that we didn’t understand.

Margin of Safety – We want the opportunity of our investments to jump off the page and hit us in the face. The value of a company is an imperfect science so if we think that the long-term value is $100B, we want to purchase shares at a $50B valuation. This is referred to as the “margin of safety,” a protection mechanism against our own mistakes and against an irrational market. Even if we are wrong, and the business is worth say 30% less than we thought, we would still make 40% on the investment (as 50c on the dollar turns into 70c) as the price of the stock reflects the underlying value of the business over time. If we are very wrong and the business is worth say 50% less than we thought (which would be a massive misjudgement… which we have made before) we would still break even since we bought at only 50% of our estimate of its value. Holding Cash – Remember, a very important concept in our strategy is patience. A fair retort is that clients are not paying us to sit on cash and not invest, but at times that may be the best use of capital as valuations can get extreme. Given our size, we do not believe this should be an issue but if it does come to pass that we are having a hard time finding businesses we understand at fair prices, we will follow Warren Buffett’s advice that “there are no strikes called in investing”. What he means is that we can sit there and wait and wait and only swing at our pitch, which is right down the middle instead of trying to get that curveball that is low and away. We can wait for high probability opportunities and don’t have to gamble on stocks that may or may not work. Clients should be aware that we don’t typically hold cash as an asset class. We generally do have a good understanding of client cash-flow needs, and will keep some cash on hand to meet those, if applicable.

Being patient means that we will likely underperform when the market advances significantly (because many stocks become too expensive for us and don't offer great odds of big returns) but likely outperform when markets are down (because the stocks we own are already cheap and most of the people who want to sell have already done so). Given the way the math works, we would rather underperform on the upside than the downside: If you are down 25%, you have to make 33% to get back to even, and if you are down 50%, you have to make 100% to get back to even.

Stop-Loss Discipline – We live by the general rule that if an investment we own gets 10% cheaper we need to revisit our thesis and re-evaluate our analysis of the company to see if anything has changed. If we strongly believe that we are correct about the underlying value of the business, then we have an opportunity to buy more of the same company for 10% less than we did the first time (and so on with the market’s volatility), and therefore will increase our position size. If we feel that something has materially affected the value of the business in addition to the value of the security, we will sell and minimize our loss. There are no prizes for big egos in this business.

Behavioral Assessment – There are many times in the market where short-term fear reigns supreme over rational decision making. In these situations, the risk of aggressive downside moves in securities prices is higher, as participants have heightened fear of losing money. In any individual security, this often happens when the stock is at a new multi-year low in price. At this point, almost every single holder of the security is holding it at a loss and believes their own career risk, reputational risk and financial risk has been elevated. This can lead to quick selling on any rallies as holders get back to even and simply want to step aside. It can also lead to irrational decision making as the stock price goes lower and participants want to end their emotional pain by selling the security, regardless of what the intrinsic value or price may be, creating “wash-outs” at prices lower than any rational analyst thought possible. While these types of situations can present incredible buying opportunities because irrationality is greatest at these moments, it can also present significant mark to market losses in a short period of time as holders sell at any price. Therefore, before buying a position we look at the chart and evaluate the behavioral environment of the security to help us assess the mark-to-market risk of irrationality. If we deem this risk as very high, we will take smaller starting positions and layer into a position as the stock heads lower. Or we may determine we should simply wait until some amount of fear and irrationality has subsided. While we expect that waiting will usually result in us missing the bottom, we also expect that we can still buy the security for the same or better price without having to suffer through the drawdown and subject ourselves to the opportunity of making the wrong decision of selling at loss. Position Sizing – While we believe in constructing concentrated portfolios of high conviction ideas, position sizing is still an important consideration for risk management. The reason is because of the behavioral biases we have towards avoiding pain and losses which could cause us to sell a position after a material decline simply because the loss has become too large and too painful. While we strive to make decisions based on rational economic assessments of intrinsic value, the larger a position is, the more emotions can override rationality when the security turns into a loss position. Therefore, we consistently evaluate and re-evaluate our position sizing to ensure that our positions are not so big they would cause us to throw rationality out the window during a material drawdown in the stock price. For our low-cost index fund strategies, we will perform a suitability analysis of the client first and determine the proper allocation between equities, fixed income and other assets. We further will use the suitability analysis, as well as our understanding of economics and market cycles, to determine proper duration of the fixed income portfolio and potential sector overweights within the equities portfolio. We try to minimize transaction costs with this strategy and rebalance when we deem it is necessary. please register to get more info

There are no legal or disciplinary events that are material to a client’s or prospective client’s evaluation of our advisory business or the integrity of our management. please register to get more info

No management persons are registered, or have an application pending to register, as a futures commission merchant, commodity pool operator, a commodity trading advisor, or an associated person of the foregoing entities.

As disclosed above, Fortis is a wholly-owned subsidiary of Fortis Holdings LLC, and a sister company of Glacier Peak. Glacier Peak’s advisory services have been limited to serving as an adviser to affiliated private funds, though Glacier Peak could begin to provide more comprehensive advisory services as it adopts and integrates the services currently offered through Fortis. Glacier Peak advises one private fund, Glacier Peak U.S. Value Fund, L.P. (“the Fund”). Paul Misleh and Michael Boroughs, who provide advice to Fortis clients, are also control persons of Glacier Peak. James Rudolf was an existing Manager of Glacier Peak, and remains a Manager of Fortis Holdings. The Managers of Fortis Holdings oversee both Fortis and Glacier Peak. Managing two investment advisors presents conflicts of interest; we have identified the following key conflicts below:


• The Managers run two investment advisers, as well as the holding company that owns the advisers and the related insurance agency and accounting company. This creates additional time burden on the Managers, though we believe we can effectively address the needs of the two firms by efficiently leveraging existing staff and systems. We also assume that most of the additional time required will occur early on and will lessen as the two firm’s activities are integrated.
• Because both Glacier Peak and Fortis could theoretically invest in the same securities, we could experience a conflict related to allocation between the Fund and individual accounts of Fortis clients. For the most part, both firms purchase liquid securities with market capitalization and trading volume adequate to meet anticipated needs of both firms. If, in the future, we buy the same securities for the Fund and Fortis clients, our intention is to execute block transactions and allocate securities pro-rata to both the Fund and Fortis client accounts. Based on custodian restrictions, however, most of our clients would not be able to participate in a single block because of custodian account size minimums. Any clients who can participate in a block with the Fund will do so. Otherwise, client trades will be aggregated and blocked at the custodian level to the extent we believe this will result in better executions. We will make our beest efforts to rotate the priority of transactions and the various custodians. We will reserve the right to not allocate pro-rata to accounts that would receive less than a round lot or who otherwise have account restrictions in place that would preclude a lesser allocation.
• Recommending the Fund to Fortis clients presents a conflict of interest and we do not intend to do so in the immediate future. If at some point we do recommend the Fund, we will provide at that time all current Fund offering documents, and updated ADV 2A brochure(s) disclosing applicable fees and conflicts of interest. We will not have discretionary authority to invest clients’ assets into the Fund; clients would be required to complete subscription documents and affirmatively consent to the investment.
• The Fund has the ability to charge performance-based fees, though it has waived its right to do so since March of 2017. Generally, performance-based fees present the possibility of greater profit to the investment adviser. Accordingly, the adviser has a financial incentive to devote more time to performance-based accounts and may also take greater risks to potentially obtain greater returns.

Fortis Holdings owns an accounting firm, Fortis Accounting Solutions LLC (“FAS”) that provides financial analysis, bookkeeping, and consulting services for business owners. This is not a CPA firm and does not provide audit or attestation services. If Fortis clients engage FAS, they will enter into a separate agreement and pay related fees directly to FAS. Fortis clients are not under any obligation to use FAS’ services.

Fortis Holdings own an insurance agency, Fortis Insurance Services LLC (“Fortis Insurance”). When clients purchase insurance policies recommended by Michael Boroughs, Fortis Insurance receives additional compensation. See Item 5 for additional information.

As disclosed in Item 4 and Item 5, Michael Boroughs and Fortis Insurance receive compensation for selling life, disability and long-term care insurance products through MassMutual. We typically receive commissions based on the first year premium and then subsequent trailing annual commission payments. please register to get more info

Personal Trading

A copy of our Code of Ethics is available to any client or prospective client upon request.

Our Code of Ethics is designed to assure that the personal securities transactions, activities and interests of our employees will not interfere with (i) making decisions in the best interest of advisory clients and (ii) implementing such decisions while, at the same time, allowing employees to invest for their own accounts. Our firm and/or individuals associated with our firm may buy or sell for their personal accounts at or about the same time securities identical to or different from those recommended to our clients. In addition, any related person may have an interest or position in certain securities, and buy or sell those securities at or about the same time in which they may also be recommended to a client. This presents a conflict of interest as it incentivizes us to favor our personal accounts (or those of our related persons) in securities transactions. We address this conflict by, whenever possible, buying or selling blocks of each security for all accounts for which we want to make the transaction (both client and personal / related accounts) so as to achieve the same average price for all accounts involved. It is the expressed policy of our firm that no person employed by us may purchase or sell any security immediately prior to a transaction being implemented for an advisory account, thereby preventing such employee(s) from benefiting from transactions placed on behalf of advisory accounts. Fortis has adopted the following principles governing personal investment activities by Fortis’ supervised persons:
• The interests of client accounts will at all times be placed first, although personal account orders can be aggregated with clients;
• All personal securities transactions will be conducted in such manner as to avoid any actual, potential or perceived conflict of interest or any abuse of an individual’s position of trust and responsibility; and
• Supervised persons must not take inappropriate advantage of their positions.

Pre-Approval of Certain Investments Any member who wishes to participate in an initial public offering or limited offering needs to obtain pre- approval from Fortis management prior to entering into such a transaction, unless it is part of a block trade with client accounts. Fortis intends to ensure that client interests are prioritized and protected and that any investment in this manner has been first considered for client accounts.

Timing of Member/Affiliated Trades No member shall purchase or sell, directly or indirectly, any illiquid security on the same day and prior to any pending client order in that same security unless the affiliate purchase or sell is executed within the block trade on the same day at the same price as a client account. If the affiliate did not participate in the block trade, the affiliate must wait until the client order was completed before placing an order. Due to the unpredictability of markets, there is a possibility the affiliate may receive a better price than a client.

Please realize that as a professional investment adviser, we follow our own advice, and as a result, we purchase or sell the same securities recommended to clients, and purchased or sold for client accounts. In addition, we may take more or less risk through the purchase or sale of a security that may or may not be purchased, sold or recommended to you. please register to get more info

As described above in Item 5, we have discretionary authority over client accounts and therefore also have discretion to direct brokerage (the ability to select brokers and negotiate commissions on a transaction by transaction basis).

Our firm currently recommends three broker-dealer custodians: Charles Schwab & Co., Inc., (“Schwab”), Interactive Brokers LLC, and Shareholders Service Group, Inc. (“SSG”), which clears through Pershing LLC. We are not affiliated with any of these firms. Brokers do not supervise us, our agents, employees or affiliates. Factors in Our Recommendations; Research and Other Soft Dollar Benefits We consider several factors in recommending broker-dealer custodians for client account setup. We do not have any formal “soft dollar arrangements” in place, in which we agree to direct a certain level of trading to a broker in exchange for specified benefits. We do, however, receive benefits from the custodians we recommend, which creates a conflict of interest. These benefits are generally available to all advisors who use the broker/custodian’s platform. We have evaluated the services of each broker/custodian and determined that the following items are of value to both Fortis and our clients when compared to other brokers or custodians: ▪ Mix of brokerage execution services ▪ Reasonableness of compensation (low negotiated commissions and other charges) ▪ Variety of securities that can be purchased or sold (including at Schwab a large number of mutual funds on a load waived or no-load basis, with many also on a no-transaction fee basis) ▪ Access to mutual funds or other vehicles that are otherwise generally available only to institutional investors, or would require a significantly higher minimum investment

The custodians we recommend provide us with access to tools and services, such as: ▪ Software and other technology that provides access to client account data (all custodians) ▪ Facilitation of trade execution (all custodians) ▪ Allocation of blocked orders for multiple accounts (Schwab and IB) ▪ Research, pricing and other market data (Schwab and IB) ▪ The payment of our fees directly from your account, if authorized in your advisory agreement (all custodians) ▪ Assistance with back-office functions, recordkeeping and client reporting (Schwab and SSG) ▪ Services related to the management and development of our business, such as compliance, legal, and business consulting (Schwab and SSG) ▪ Educational events or occasional business entertainment of our employees (Schwab and SSG) The software, technology, and account access the brokers/custodians provide create an operational and compliance benefit for us that does not necessarily translate directly into a client benefit. We are using client commissions to obtain these benefits, which means we don’t have to independently produce or pay for the services. While we believe that the custodians we recommend are competitive and provide good value to our clients overall, the efficiencies provided to us create an incentive for us to recommend them over other custodians. In some cases, this means that clients could pay more for custody and execution through the custodian we recommend than through others. We review the capacities and costs of our custodians regularly to ensure that our clients are receiving quality executions and competitive pricing, as well as more intangible service benefits.

SSG is a broker-dealer that does not itself provide custodial services. Instead, it introduces its brokerage business and custodies client assets with Pershing LLC, a large custodian whose services are not generally available to smaller investment advisors. By recommending that our clients use SSG as broker, we gain access to Pershing’s custodial services. SSG specializes in helping advisors get their businesses up and running; they provide access to a technology platform for trading, billing and client reporting and other key aspects of our business. They also provide daily operations support. SSG is compensated by transaction charges (commissions) and must also pay Pershing ticket charges. Accordingly, when clients select SSG/Pershing as broker/custodian, they pay higher commissions than they would at IB or Schwab. SSG does, however, provide a more user-friendly experience for clients than IB and we believe the additional cost has been reasonable for some clients. We only recommend that clients in our passive strategies use SSG; our passive strategies trade much less frequently than our active on, so the higher ticket charge has little impact. Going forward, we will likely recommend Schwab, not SSG or IB, because it provides the best mix of client services and operational support at a low overall price. We receive similar technological, execution, and research benefits from IB that we receive from Schwab. IB does not, however, provide management and business consulting, or cover our costs for educational events. We don’t make much use of the additional Schwab and SSG services or benefits and don’t consider them a material factor in our decision to recommend a custodian. As noted above, our intention is to begin recommending Schwab, not SSG, as we integrate our services with Glacier Peak’s.

Commissions & Other Custodian Compensation Your custodian typically receives compensation through account holder commissions and other transaction-related fees for securities trades executed by them or settled into your accounts.

We generally do not negotiate the commissions you pay on a transaction-by-transaction basis. As a result, the accounts we establish on your behalf with Schwab or Interactive Brokers will be assessed the stated transaction charges. We may negotiate per-share or per-transaction commissions with a custodian, in certain unique circumstances and on an exception basis.

Commissions you pay to the custodian or SSG, if any, are disclosed on the confirmation of each security transaction we place on your behalf. These confirmations are sent directly to you by the custodian and we receive a copy of them.

In some cases the mutual funds or ETFs we purchase or sell for your accounts are made available by the custodian on a no-load or load-waived basis. In addition, certain mutual funds and ETFs are made available for no transaction fee; as a result the confirmation may show “no commission” for a particular transaction. Typically the custodian (but not Fortis) earns additional remuneration from such services as recordkeeping, administration, and platform fees, for the funds and ETFs on their no-transaction fee lists. This additional revenue to the custodian will tend to increase the internal expenses of the fund or ETF. We select investments based on our assessment of a number of factors, including liquidity, asset exposure, reasonable fees, effective management, and low execution cost. Where we choose a no- transaction fee fund or ETF, it is because it has met our criteria in all applicable categories. In other words, we select the fund or ETF despite the remuneration to the custodian, not because of it.

Directed Brokerage Because we execute your investment transactions through the custodian holding your assets (i.e., if your account is held at IB, we will execute trades only through IB), we are effectively requiring that you “direct” your brokerage to your custodian, absent other specific instructions as discussed below. Because we are not choosing brokers on a trade-by-trade basis, we may not be able to achieve the most favorable executions for clients and this may ultimately cost clients more money. Not all investment advisers require directed brokerage. We do not use, recommend, or direct activity to brokers in exchange for client referrals. Although not a normal business practice for Fortis, we may permit clients to direct us to use brokers other than the custodian. If we agree to accommodate your request to do this, we will likely have little or no ability to negotiate commissions or influence execution price, and you will also not benefit from any trade aggregation we may implement for other clients. This may result in greater costs to you. If we use brokers other than the custodian or SSG in the future, we will endeavor to select those brokers or dealers that will provide the best overall execution. The reasonableness of commissions is based on the broker’s stability, reputation, ability to provide professional services, competitive commission rates and prices, research, trading platform, and other services which will help Fortis in providing investment management services to clients. We may, therefore recommend (or use) a broker who provides useful research and securities transaction services even though a lower commission may be charged by a broker who offers no research services and minimal securities transaction assistance. Research services may be useful in servicing all of our clients, and not all of such research may be useful for the account for which the particular transaction was effected. Aggregated or Block Transactions For our active strategies, we routinely aggregate client transactions with those of other client accounts at the same custodian. This results in client trades being executed and billed at the same price. SSG does not provide a platform for aggregation, so for clients with accounts custodied at SSG, we do not aggregate. As discussed elsewhere, however, client accounts custodied with SSG are generally traded infrequently. With Schwab, each client account is charged the applicable ticket charge. IB assesses a per- share commission, so the charge to clients allocated a larger position will be higher than for those clients allocated a smaller position.

As described above, all transactions for the accounts we manage are required to be executed through the custodian for the account. Therefore, all accounts held at IB transact through IB and all accounts held at SSG or Schwab transact through SSG or Schwab. We strive to keep all accounts with the same active management strategy on the same platform in order to be able to execute block trades for each strategy and avoid priority of transaction conflicts.

Blocking of trades permits the trading of aggregate blocks of securities composed of assets from multiple client accounts. Block trading allows us to execute equity trades in a timelier, more equitable manner, at an average share price. We will typically aggregate trades among clients whose accounts can be traded at a given broker, where we believe that the order aggregation will benefit, and will enable Fortis to seek best execution for each client participating in the aggregated order. This requires a good faith judgment at the time the order is placed for the execution. It does not mean that the determination made in advance of the transaction must always prove to have been correct in the light of a “20-20 hindsight” perspective. No client or account will be favored over another in allocating pro-rata, though we reserve the right not to allocate less than the original amount intended where pro-rata allocation would result in less than a whole unit of trading (an odd-lot) or would otherwise be inconsistent with the account’s objectives. please register to get more info

While the underlying securities in our separately managed accounts are continually monitored, these accounts are reviewed at least monthly for actively managed accounts and quarterly for passively managed accounts. More frequent reviews may be triggered by material changes in variables such as the client’s individual circumstances, the market, or the political or economic environment. As part of the review, the portfolio holdings are reviewed to see if any of the positions should be reduced or sold in full and replaced with new investments. Tax considerations are also taken into account. Accounts are reviewed by Paul Misleh or Michael Boroughs. Client accounts are also frequently reviewed in the context of risk vs. reward opportunities of new positions in relation to positions held by the client accounts. If we determine that the overall risk/reward characteristics are more favorable for client portfolios with a new stock or new allocation of stocks (some may be new while others may be increased or decreased in size or disposed of), we will review the accounts and transact in the necessary securities to reallocate the portfolio to our optimal conviction weightings. Clients receive quarterly account statements directly from the qualified custodian holding the account assets. These reports provide various details such as current holdings, net account value, trades, unrealized and realized gains/losses, dividends/interest received and investment management fees. Separately, we typically provide a quarterly letter to our clients discussing key positions and market conditions. please register to get more info

There is no one outside of our firm providing an economic benefit to our firm for providing investment advice or other advisory services to our clients.

Although we have no referral arrangements in place at this time, we may in the future compensate others for referring potential clients to our firm. These referral sources are referred to as “solicitors.” It is our policy that any referral arrangement be disclosed, including the compensation paid to the solicitor. We require that all solicitors be properly registered as investment advisors or exempt from registration in the states where they operate.

We do receive compensation for selling life, disability and long-term care insurance products through MassMutual (see Item 4 and Item 5, above). We typically receive commissions based on the first year premium and then subsequent trailing annual commission payments.

We do not receive compensation from our custodians other than as described above in Item 12. please register to get more info

All client funds and securities are maintained with a qualified custodian (Schwab, Shareholders Service Group or Interactive Brokers); we don’t take physical possession of client assets. Our clients will receive account statements and transaction confirmation notices directly from the custodian at least quarterly, which they should carefully review. We urge clients to carefully compare the custodian’s account statements with the periodic statements and reports they receive from us and to notify us promptly of any discrepancies.

We have the ability to deduct our advisory fees directly from client accounts based on the client’s written authorization to do so, and this ability is technically considered “custody” but doesn’t require separate reporting or surprise audits. In addition, in some cases we obtain standing letters of authorization (“SLOAs”) from clients. These are written directives from the client authorizing us to initiate payments from their custodial accounts to specified third parties. This authority is considered “custody” under SEC guidance and requires us to report that we have custody over these account assets on our ADV 1A. To the extent the SLOAs comply with certain conditions, however, including that clients have the right to terminate the SLOA, and that the qualified custodian will confirm the status of the SLOA annually directly with the client, we are not subject to a surprise custody audit. please register to get more info

Our firm manages investment advisory accounts on a discretionary authority basis, which means that clients provide us with the authority to determine which securities are bought or sold, how much of any security is bought or sold, and all other investment and portfolio management decisions to be made regarding the client’s account. Clients give us discretionary authority when signing our investment advisory agreement. If a client wishes to limit this authority, the client must specify the limitations in writing. Clients may amend these restrictions at any time. please register to get more info

We vote proxies for all client accounts, as long as clients have provided the necessary authorizations to allow us to receive proxies when executing their custodial paperwork. That said, clients always have the right to vote proxies themselves. Clients can exercise this right by instructing us in writing to not vote proxies in their account. Clients may obtain information about how we voted their securities, as well as receive a copy of our proxy voting policies, by calling or emailing our office.

We will vote proxies in the best interests of our clients and in accordance with our established policies and procedures. If our firm has a conflict of interest in voting a particular action, we will notify the client of the conflict and retain an independent third-party to cast a vote.

We may choose not to vote client proxies if we determine that either outcome of the vote will have a minimal effect on security values and/or our vote will be inconsequential given the size of our firm relative to the company’s market capitalization.

With respect to ERISA accounts, we will vote proxies in the same manner as described above unless the plan documents specifically reserve the plan sponsor's right to vote proxies.

We may advise or act on behalf of the client in legal proceedings involving companies whose securities are held in the client’s account(s), including, but not limited to, the filing of “Proofs of Claim” in class action settlements. If desired, clients may direct us to transmit copies of class action notices to the client or a third party. Upon such direction, we will make reasonable efforts to forward such notices in a timely manner. please register to get more info

Our firm does not require or solicit prepayment of more than $500 in fees per client, six months or more in advance. Our firm does not foresee any financial condition that is reasonably likely to impair our ability to meet contractual commitments to clients. Our firm has not been subject of a bankruptcy petition at any time during the past ten years. please register to get more info