Finance: Automated Structured Analysis from SEC filings

Item 8 – Methods of Analysis, Investment Strategies and Risk of Loss
Salem Investment Counselors designs portfolios to meet the client’s return objective and risk
tolerance. Salem believes that equities should be the foundation of most investment portfolios.
Salem does not believe that "timing" the stock market through anticipating periods of rising and
falling stock prices can successfully be done on a consistent basis. Salem selects equities for
client investment which have one or more of the following characteristics:
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Established companies with above average prospects for growth. These companies will
have strong performance records, solid market positions, high margins and return on
equity and reasonable financial strength.
Small and medium-sized companies that may be out of favor or not closely followed by
investors and are selling at prices which do not adequately reflect their long-term
business potential.
Companies in industries which are undergoing consolidation, where the likelihood of
acquisition is above average.

Salem’s investment philosophy with respect to both taxable and tax-exempt fixed income
securities is to minimize risk for clients. Salem considers primarily high-quality issues in the
short-to-intermediate maturity range that Salem is confident will meet the scheduled interest and
principal payments.
In addition to the core equity and fixed income investing, Salem may utilize a broad range of
investment vehicles to meet a client’s investment goals including: exchange-traded funds, mutual
funds, real estate investment trusts, master limited partnerships and private equity. These assets
are complimentary to the core investment approach and may be used to augment Salem’s core
investment strategy or to meet a specific need of a client.
Salem may also use technical analysis (price movement analysis) to aid in determining prices
that offer beneficial entry and exit transactions for securities in client accounts.
From time to time, Salem will receive shares in initial public offerings and secondary offerings
from various brokers with whom the company does business. These shares are generally very
limited in number and may or may not represent “hot issues.” The shares will be allocated in a
fair and equitable manner among the advisors requesting the shares on behalf of clients. The
individual advisor will then distribute those shares in a fair and equitable manner to those clients
for whom such investments are suitable according to the firm’s IPO/Secondary policy.

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Investing in any security involves a risk of loss that clients should be prepared to bear. The price
of a company’s stock may fall for several reasons including, but not limited to, problems with the
company and general market/economic/political conditions. Movements in interest rates and
general market/economic/political conditions may affect the day-to-day valuation of our fixed
income investments resulting in a loss of value.

Item 9 – Disciplinary Information
Registered Investment Advisors are required to disclose all material facts regarding any legal or
disciplinary events that would be material to a client’s evaluation of Salem or the integrity of
Salem’s management. Salem has no information applicable to this item.

Item 10 – Other Financial Industry Activities and Affiliations
All of the employees of Salem may participate in outside activities. None of these activities may
present a conflict or distraction to their employment at Salem. Currently, none of the employees
at Salem participate in other financial activities.

Item 11 – Code of Ethics
Salem has adopted a Code of Ethics for all supervised persons of the firm describing its high
standard of business conduct and fiduciary duty to clients. The Code of Ethics includes, among
other things, provisions relating to the confidentiality of client information, a prohibition on
insider trading, restrictions on the acceptance of significant gifts and the reporting of certain gifts
and business entertainment items, and personal securities trading procedures. All supervised
persons at Salem review and acknowledge the terms of the Code of Ethics annually. This Code
is available to any client/prospective client at any time upon request. Salem has also adopted a
Compliance Manual, containing all of its policies. A copy of the manual is available upon
request.

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For investment accounts that have margin enabled, Salem will only bill on the net amount of the
account (i.e., the balance of the account after subtracting the amount outstanding on the margin
loan).
Item 12 further describes the factors that Salem considers in selecting or recommending brokerdealers for client transactions and determining the reasonableness of their compensation.

Item 6 – Performance-Based Fees and Side-By-Side Management
Salem Investment Counselors does not charge any performance-based fees (fees based on a share
of capital gains or capital appreciation of the assets of a client).

Item 7 – Types of Clients
Salem Investment Counselors provides portfolio management services to individuals,
corporations, corporate retirement and profit-sharing plans, charitable institutions, foundations
and trusts.

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Item 4 – Advisory Business
Founded in 1979, Salem is a federally registered Investment Advisor that provides financial
management expertise to individuals, foundations, corporations and professional organizations
throughout the United States. As of December 31st, 2022, Salem had assets under management
of $2,995,104,156. All public, marketable securities are managed subject to Salem’s discretion.
Salem also assists clients with the management of private investments (such as limited
partnerships) on a non-discretionary basis.
Salem offers investment management services, including financial planning and asset
management. Salem believes that investment advice is only effective if all aspects of the client’s
needs and circumstances are considered. This includes understanding the client’s short- and
long-term investment and financial goals, ascertaining the client’s risk tolerance and analyzing
the client’s financial situation with regard to taxation, insurance and investment allocation issues.
After partnering with clients to understand their investment needs, Salem constructs and
manages the client’s investment portfolio. Salem utilizes a broad range of investment vehicles to
meet a client’s investment goals, including: individual equities, fixed-income securities,
exchange-traded funds, mutual funds, real estate investment trusts, master limited partnerships
and private equity funds. Client assets are invested in one or more of the above categories
according to the asset allocation agreed upon with the client.
Salem will respect and incorporate any client restrictions that the client imposes upon the
investment account.
Salem is wholly owned by its partners. The equal-share principal owners of Salem Investment
Counselors include Dale M. Brown, David B. Rea, Kenneth S. Jones, Mark Thompson and
Joseph McCaffrey.

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Salem and its employees may, for their personal accounts, buy or sell securities identical to those
recommended to clients. Additionally, any employee may have an interest or position in a
certain security(ies) which may also be recommended to a client. Employees may also
participate in private equity offerings that are also recommended to clients for whom such
investments are suitable. These offerings are generally managed by third party advisors and are
not under the control of Salem or any of its employees. As these situations may represent a
potential conflict of interest, Salem has established strict policies governing personal securities
transactions in order to protect the interest of its clients.
The Code of Ethics is designed to assure that the personal securities transactions, activities and
interests of the employees of Salem 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. Under the Code, certain classes of
securities have been designated as exempt transactions, based upon a determination that these
would materially not interfere with the best interest of Salem’s clients. In addition, the Code
requires pre-clearance of many transactions, and restricts trading in close proximity to client
trading activity. Nonetheless, because the Code of Ethics permits employees to invest in the
same securities as clients, there is a possibility that employees might benefit from market activity
by a client in a security held by an employee. Employee trading is continually monitored under
the Code of Ethics to reasonably prevent conflicts of interest between Salem and its clients. All
personal securities transactions and holdings are reported to the Chief Compliance Officer for
review.
It is Salem’s policy that the firm will not affect any principal securities transactions for client
accounts. Salem will also not cross equity trades between client accounts. Salem may cross
fixed income securities between client accounts according to the following parameters: 1) the
clients must be unrelated 2) a third-party broker, typically the clients’ custodian, independently
sets the pricing levels for both the buyer and seller based on current market prices and 3) the
prices paid by both the buyer and seller are better than the open market pricing.
Principal transactions are generally defined as transactions where an advisor, acting as principal
for its own account or the account of an affiliated broker-dealer, buys from or sells any security
to any advisory client. An agency cross transaction is defined as a transaction where a person
acts as an investment advisor in relation to a transaction in which the investment advisor, or any
person controlled by or under common control with the investment advisor, acts as broker for
both the advisory client and for another person on the other side of the transaction.

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[1] https://files.adviserinfo.sec.gov/IAPD/Content/Common/crd_iapd_Brochure.aspx?BRCHR_VRSN_ID=838660#page=9
[2] https://files.adviserinfo.sec.gov/IAPD/Content/Common/crd_iapd_Brochure.aspx?BRCHR_VRSN_ID=838660#page=10
[3] https://files.adviserinfo.sec.gov/IAPD/Content/Common/crd_iapd_Brochure.aspx?BRCHR_VRSN_ID=838660#page=8
[4] https://files.adviserinfo.sec.gov/IAPD/Content/Common/crd_iapd_Brochure.aspx?BRCHR_VRSN_ID=838660#page=6
[5] https://files.adviserinfo.sec.gov/IAPD/Content/Common/crd_iapd_Brochure.aspx?BRCHR_VRSN_ID=838660#page=11