Goodman Financial Corporation

 Goodman Financial Corporation FIRM BROCHURE – Form ADV Part 2A Th is Brochure provides information about the qualifications and business practices of Goodman Financial Corporation. If you h ave an y questions about th e contents of th is Brochure, please contact u s at 713 -599-1777. Th e information in th is Brochure h as n ot been approved or verified by th e United States Securities and Exchange Commission or by any state secu rities au th ority. Goodman Financial Corporation is a Registered Investment Adviser. Registration of an Investment Adviser does not imply any level of skill or training. The oral and written communications of an adviser provide you with information about which you can determine to hire or retain an adviser. the SEC’s website at Additional information about Goodman Financial Corporation is also available on www.adviserinfo.sec.gov. The searchable IARD/CRD number for Goodman Financial Corporation is 114637. Brochure prepared on April 24, 2026 Goodman Financial Corporation 5177 Richmond Avenue, Suite 700 * Houston, Texas 77056 Phone: (713) 599-1777 * Toll free: (877) 599-1778 * Fax: (713) 599-1811 www.goodmanfinancial.com  Item 2 - Material Changes Item 2 - Material Changes Since th e last annual amendment filed March 1 6, 2026, th e following are th e material changes made to th is Brochure: • In April 2026, Item 12 was u pdated to remove language related to rollover recommendations after th e DOL's Employee Ben efits Security Administration officially removed th e 2024 ru le from th e Code of Federal Regulations an d restored th e "five-part test" from 1975 to determine who is an investment advice fidu ciary . Our Brochure may be requested from our office at 713-599-1777 or info@goodmanfinancial.com. Our Brochure is also available on our website www.goodmanfinancial.com free of charge. information about Goodman Financial Corporation is also available via the SEC’s website Additional www.adviserinfo.sec.gov. The SEC’s website also provides information about any persons affiliated with Goodman Financial Corporation who are registered, or are required to be registered, as investment adviser representatives of Goodman Financial Corporation. Page 2 of 25  Item 3 - Table of Contents Item 3 – Table of Contents Item 1 - Cover Page ........................................................................................................... 1 Item 2 - Material Changes ................................................................................................. 2 Item 3 - Table of Contents…………………………………………………………………... 3 Item 4 - Advisory Business .............................................................................................. 4 Item 5 - Fees and Compensation ..................................................................................... 5 Item 6 - Performance-Based Fees and Side-By-Side Management ........................... 8 Item 7 - Types of Clients ................................................................................................... 9 Item 8 - Methods of Analysis, Investment Strategies and Risk of Loss..................10 Item 9 - Disciplinary Information ...................................................................................15 Item 10 - Other Financial Industry Activities and Affiliations ...................................16 Item 11 - Code of Ethics, Participation or Interest in Client Transactions and….. 17 Personal Trading Item 12 - Brokerage Practices ........................................................................................................18 Item 13 - Review of Accounts…………………………………………………………….. 20 Item 14 - Client Referrals and Other Compensation ..................................................21 Item 15 - Custody .............................................................................................................22 Item 16 - Investment Discretion…………………………………………………………...23 Item 17 - Voting Client Securities ..................................................................................24 Item 18 - Financial Information…………………………………………………………… 25 Page 3 of 25  Item 4 - Advisory Business Item 4 - Advisory Business Goodman Fin ancial Corporation (“Goodman Fin ancial,” “th e Firm,” “ou r,” or “we”) is an in dependent in vestment man agement firm that provides investment advice and portfolio management services on a continuing basis, including th e appropriate allocation of ma n aged assets among cash, bonds, stocks, exchange -traded funds, an d mutual funds an d th e selection of specific securities th at will provide diversification an d h elp meet th e client's stated investment objectives. Goodman Financial Corporation is a corporation controlled by Steve Goodman and has provided investment advice and portfolio management services since 1989. The primary shareholder of the Firm is Steve Goodman. Th ough Goodman Financial provides in vestment advice regarding all types of secu rities, ou r focus is on building client in vestment portfolios through th e pu rchase of in dividual bon ds an d equ ities in order to provide better tax efficiency an d avoid th e layering of fees. Clients can impose investment gu idelines or restrictions on investing in certain securities or types of securities, th us limiting th e scope of potential investments. Wh en selecting securities an d determin in g amou n ts to in vest, we observe th e i n vestmen t gu idelin es an d restriction s of th e clien t. In addition to in vestment advisory services, we also provide targeted financial advisory services on an as -needed basis. Th e financial advisory services include, bu t are n ot limited to, cash flow planning, retirement n eeds an alysis, tax-efficient distribution strategies, gift an d estate planning, employee ben efits plan ning, an nuity an d insurance (life, disability, an d long-term care) reviews, an d education planning. In very limited circumstances, th ese services may also be offered separately from ou r investment advisory services at th e discretion of Goodman Financial. In su ch cases, a separate agreemen t is execu ted wh ich docu men ts th e correspon din g provision s an d fees. As of December 31, 2025, we have $915,932,762 in assets under management. Of this amount, $912,532,031 are managed on a discretionary basis. Page 4 of 25  Item 5 - Fees and Compensation Item 5 - Fees and Compensation The specific manner in which fees are charged by Goodman Financial is established in a client’s written agreement. The annual fee for investment advisory services will be charged as a percentage of assets under management according to the breakpoint schedule below. Assets Under Management Annual Fee Up to $1,999,999 1.25% $2,000,000 – $2,999,999 1.15% $3,000,000 – $4,999,999 0.95% $5,000,000 – $9,999,999 0.85% $10,000,000 – $19,999,999 0.70% $20 million and over 0.65% Ou r fees are payable quarterly, in advance, within th irty (30) days following th e beginning of the quarter for which said fees will be incurred. Ou r clients authorize th e account custodian to debit th eir client account for th e amount of our in vestment advisory fee. At th e inception of the relationship an d each quarter th ereafter, we will n otify your custodian of th e amount of th e fee du e an d payable to u s based on ou r fee schedule an d contract. Th e cu stodian does not validate or ch eck ou r fee, its calculation, or th e asset value on which th e fee is based. They will deduct th e fee from you r account or, if you h ave more th an on e account, from th e account(s) you h ave designated to pay ou r advisory fees. In limited situ ations we may provide an alternate payment meth od wh ere fees are in voiced and processed th rough an unaffiliated th ird -party service. With such a service, clients set u p payment in structions with th e th ird- party ven dor directly so th at Goodman does n ot h ave access to th e ban k or account information , an d th us, does not h ave cu stody of th ose clien ts’ assets. We ch arge advisory fees based u pon the valuation of you r account(s) as determined by ou r in ternal portfolio man agement system, wh ich interfaces and is reconciled with th e cu stodian daily. Th e total portfolio value on which fees are based may vary from th e value on th e custodian statement (th e valuation may be h igher or lower) du e to su ch factors as th e timing and posting of dividends, settlement dates for trades, an d accrued in terest. (Th is may not be an all-inclusive list.) Th e value of you r account as of th e last bu siness day of th e previous quarter (as sh own in ou r in ternal portfolio man agement system on th e date billed) is u sed to determine th e fees ch arged. Clients are su bject to a min imu m qu arterly fee of $1,250 wh ich may resu lt in an an n u al rate in ex cess of 1.25%. Qu alified cu stodians are relied u pon to price th e securities in your account(s). Wh enever valuation in formation is n ot available from th e cu stodian, we will attempt to obtain an d docu ment price in formation from at least one in dependent sou rce su ch as a bro ker/dealer, ban k, or pricing service. If valu ation in formation is n ot available th rough th ese alternative sources, we will make a good faith determination of a secu rity's fair an d current market valu e based on th e in formation available. Page 5 of 25  Item 5 - Fees and Compensation Wh ile we typically on ly recommend u sing margin to fund a large withdrawal from th e account rath er th an to fund pu rchasing securities, to th e extent th at a client requests th e u se of margin, and margin is th ereafter employed in the man agement of th e client’s portfolio, we will ch arge fees based on total assets u nder man agement which may differ from th e n et-of-margin market value of th e client’s account. Thus, the u se of margin in an investment advisory account will likely in crease a client’s asset-based fee. If margin is u sed to pu rchase additional securities, th e total value of eligible account assets in creases, as does you r asset-based fee. For example, if you h ave an account value and assets u nder man agement of $1,000,000 an d th en u se margin to pu rchase $2 00,000 of securities, th en th e result is $1,200,000 of assets in th e account an d u nder management offset by a margin loan of $200,000 for a n et account market value of $1,000,000. In that situation, you would be billed based on th e $1,200,000 assets under management versus th e $1,000,000 account market value. Or, for example, if you h ave a $1,000,000 account value an d assets u n der management and decide to borrow $300,000 from th e account, th en the result is th at you still h ave $1,000,000 of assets in the account and under management, but it is offset by a margin loan of $300,000 for a n et account market value of $700,000. In th at situation, you would be billed based on $1,000,000 of assets under management versus th e $700,000 account market value. In addition, clients will be charged margin interest on the debit balance in their accou n t by th e cu stodian . Not less th an qu arterly, you will receive a statement directly from your cu stodian sh owing all transactions, positions, an d credits/debits into or ou t of your account; th e statement after th e qu arter -end will reflect th e advisory fee paid by you to u s. Advisory fees sh all be pro -rated for capital con tributions made du ring th e applicable calendar qu arter (with the exception of de min imis contributions). Accounts opened in mid -quarter will be assessed a pro -rated management fee. Existing clients as of April 10, 2025 may be ch arged under prior fee sch edules th at are different th an th at set out above. With regards to employee-related accounts an d certain oth er accounts, it is in ou r discretion to ch arge fees less th an th ose stated on th e fee sch edule depending u pon a n u mber of factors including portfolio size, length of employmen t, an d relation sh ip to th e employee. All fees are subject to negotiation. In our sole discretion, we may waive the minimum account size. We will not change our fees without thirty (30) days advance written notice. Additional Fees and Expenses Advisory fees payable to u s do n ot in clude all th e fees you will pay wh en we pu rchase or sell secu rities in your account(s). Th e following list of fees or expenses are what you pay directly to th ird parties whether a security is being pu rchased, sold, or h eld in your account(s) under our management. We do n ot receive, directly or in directly, any of th ese fees charged to you. Th ey are paid to you r broker, cu stodian or th e mu tual fund or oth er in vestment you hold. Th ese fees may in clude brokerage commissions, tran saction fees, exchange fees, SEC fees, advisory fees and administrative fees ch arged by mu tual funds (“MF”), exch ange -traded funds (“ETFs”), mon ey markets, or money market mutual funds, advisory fees charged by sub-advisers (if any are used for your a ccount), custodial fees, deferred sales charges (on MF or an nuities), early redemption fees (ch arged by MFs), tran sfer taxes, wire tran sfer and electronic fund processing fees, and commissions or mark -ups/mark-downs on security transactions. Please refer to Item 12 in th is broch u re for addition al in formation abou t ou r Brokerage Practices. In addition, we do not have or employ any employee that receives, directly or indirectly, any compensation from the sale of securities or investments that are purchased or sold for your account or to which we provide consulting expertise/services. As a result, we are a fee-only investment adviser. We do not have any potential conflicts of interest present that relate to any additional (and undisclosed) compensation from you or your assets that we manage. Consulting Services. In rare instances, the Firm may be asked to provide services that are above and beyond the usual financial advisory services. Consulting services and fees will be mutually agreed to in advance. Fees for these consulting services will be billed on an hourly basis at rates ranging from $100/hour to $400/hour. Page 6 of 25  Item 5 - Fees and Compensation Term ination of Investm ent Management Services. A client may termin ate an agreement with u s at an y time upon 30 days written n otice. In th e event of a termination of ou r advisory services, th e u nearned portion of th e prepaid advisory fee will be refunded to th e client with in 30 days of th e date wh en all of th e client's assets h ave been tran sferred ou t of accounts u nder ou r man agement. Th e pro -ration will be calculated u sing th e actu al n umber of days from th e termin ation date u n til th e en d of th e prepaid billin g period. Term ination of Consulting Services. Consulting services may be immediately terminated upon written n otice by either party. Page 7 of 25  Item 6 - Perf ormance-Based Fees and Side-By-Side Management Item 6 - Performance-Based Fees and Side-By-Side Management We do not charge any performance-based fees (fees based on a share of capital gains on or capital appreciation of the assets of a client) or side-by-side management fees. Page 8 of 25  Item 7 - Types of Clients Item 7 - Types of Clients We provide ou r services to a n u mber of differen t types of clien ts. • In dividu als, in clu din g h igh n et worth in dividu als • Trusts and estates • En dowmen ts, fou n dation s, an d oth er ch aritable organ ization s • Corporation s an d oth er bu sin ess en tities • Pen sion an d profit-sh arin g plan s Th e minimum initial investment is $1,000,000 of total assets under management. Fees and investment minimums are su bject to negotiation and may differ based on a number of factors including the amount of assets, number of accounts, level of contributions/distributions, an d th e n umber and range of su pplemental advisory an d client -related services. Page 9 of 25  Item 8 - Methods of Analysis, Investment Strategies and Risk of Loss Item 8 - Methods of Analysis, Investment Strategies and Risk of Loss METHODS OF ANALYSIS Goodman Financial u nderstands th at in vesting in securities involves risk of loss th at clients sh ould be prepared to bear. At th e same time, we u tilize methods of security analysis which are attentive to risk factors th at may impact the valu e of a secu rity. Research information is generated both internally and obtained from external sources. We carefully study this information and evaluate it based on numerous quantitative and qualitative considerations. Our Chief Investment Officer manages the research and analysis function. Below is a partial listin g of extern al research sou rces we may u tilize: • Prospectuses and filings with the Securities and Exchange Commission including annual reports, 10Ks and 10Qs • Corporate ratin g services • Third-party data providers, including FactSet Research Systems • Research materials prepared by oth ers • Compan y earn in gs an n ou n cemen ts, n ews releases, an d websites • Fin an cial n ewspapers, magazin es, an d in du stry pu blication s • An alyst con feren ce calls • Govern men t an d econ omic reports We primarily use a bottom-up approach to investing which we supplement on a limited basis with top-down analysis. Subsequent to a comprehensive research and analysis process, securities are presented to our Investment Committee (“IC”), which meets as often as necessary. During these meetings, securities are subjected to further examination. The IC meetings include detailed discussions and presentations related to current economic, political, sector, industry, and company-specific issues. The IC determines the securities considered appropriate for inclusion in a client’s portfolio. Followin g is a description of fu n damen tal bottom-u p an alysis an d top-down an alysis. Fundamental Analysis Goodman Financial employs a comprehensive, fundamental approach to secu rity an alysis. Fu ndamental analysis in volves a bottom-up assessment of a company's potential for su ccess in light of many factors including its financial con dition, earn ings ou tlook, strategy, man agement, in dustry position, an d econ omic an d market con ditions. A decision to bu y, sell, or h old a particular security in a client’s portfolio is directly influenced by an equ ity's upside to ou r estimated price target an d ou r expectations of h ow fundamental factors are an ticipated to impact its long- term valu ation. Un der th is approach, we rou tinely examine a company’s fin ancial statements an d con currently con sider th e impact th at prevailing economic, political, an d in dustry circumstances may h ave on its fu ture value. After researching and analyzing relevant fundamental information, we develop a ju dgment of a security’s investment poten tial. Page 10 of 25  Item 8 - Methods of Analysis, Investment Strategies and Risk of Loss Top-Down Analysis Top-down an alysis en tails a broad an d comprehensive su rvey of th e domestic an d in ternational econ omic and financial landscapes, attempting to identify in vestment opportunities an d areas to avoid. We examine th e data to identify cu rrent an d emerging tren ds, an d then we u se th ose observations to identify specific companies to research fu rther for potential inclusion in our clients' portfolios. Top -down and bottom-up research are complementary methods of research in g, iden tifyin g, an d selectin g secu rities. INVESTMENT STRATEGIES Goodman Financial employs an in vestment ph ilosophy emphasizing portfolio management th at is cu stom tailored to th e n eeds of each client. We begin th e investment process by carefully listening to th e client and gaining a thorough u n derstanding of th e client’s unique goals, risk tolerance, time h orizon, an d oth er circumstances. We th en determine an appropriate investment strategy for the client based on that understanding. For most institutional clients, this would be memorialized in th eir investment policy s tatement. Further cu stomization of th e portfolio takes into consideration in dividual client preferences su ch as social investing, concentrated positions, existing h oldings, taxes, an d other con sideration s. Th e in vestment strategy provides a framework for determining th e asset allocation th at properly balances risk and reward over a long-term time horizon. Asset allocation is the relative mix of cash, fixed income, an d equity securities su itable for a client’s investment portfolio. Goodman Financial believes in vestment risk is lessened wh en a portfolio is diversified. Diversification is a disciplined long -term investment strategy that helps prevent under or over -exposure to sectors or specific securities. We c ombine asset allocation with diversification to en sure a client’s portfolio will be man aged in a pru dent man ner. We th en implement th e strategy to ach ieve th e client’s in vestment objectives. Alth ough strategies can be ch anged if n ecessary, adh ering to th e asset allocation over th e pre -determined time h orizon seeks to provide en h an ced portfolio retu rn s with redu ced volatility. We use a dynamic and disciplined investment approach in selecting individual equity and fixed income securities. This approach allows for greater flexibility, greater tax efficiencies, and lower expenses. With limited exceptions, Goodman Financial does not utilize mutual funds thereby avoiding inefficiencies and additional layers of fees. Ou r secu rity selection process seeks to provide long-term growth while remaining within th e risk tolerance level of each client. Capital preservation, h owever, is also an important con sideration of ou r in vestment ph ilosophy. We believe it is in appropriate to take u n warranted risk in eith er portfolio stru cture or in dividual securities. Portfolio tu rn over is limited; h owever, we con tinuously review in vestment alternatives an d implement ch anges wh en more appealin g an d su itable opportu n ities become available to poten tially in crease total retu rn . As appropriate, we will invest in public companies th at are expected to ben efit from movements in commodity prices without exposing a portfolio to th e volatility of derivatives th at is inherent with fu tures and options contracts. We will also in vest in real estate via pu blicly traded real estate in vestment tru sts (“REITs”), if appropriate. We believe these n on-traditional asset classes fu rther diversify th e portfolio and reduce risk. In both cases, we select liquid publicly- traded in vestmen ts. Page 11 of 25  Item 8 - Methods of Analysis, Investment Strategies and Risk of Loss Description of Principal Security Types Equ ity securities represent an ownership interest, or th e right to acquire an ownership interest, in an issuer. Different types of equity securities provide different voting an d dividend rights and priority in th e event of th e bankruptcy of the issuer. Equity securities include common stocks, preferred stocks, REIT u nits, convertible securities, an d warrants. Equ ity in vestmen ts in clien t portfolios are su bstan tially in common stocks. Fixed in come (debt) securities are u sed by issuers to borrow mon ey. Th e issuer u sually pays a fixed, variable, or floating rate of in terest, an d mu st repay th e amount borrowed, u sually at th e matu rity of th e security. Some debt securities, su ch as zero-coupon bonds, do n ot pay cu rrent interest bu t are sold at a discount from th eir face values. Fixed in come securities include corporate bonds, government securities, agency securities, an d mortgage and other asset-backed secu rities. Equity - Principal Investment Strategy Client assets allocated to equ ities are primarily invested in a diversified portfolio of pu blicly -traded common stocks. We primarily invest in U.S. domestic companies and achieve in ternational an d global diversification th rough direct in vestment in foreign-based companies using American Depositary Receipts (ADRs), by investing in U.S. corporations with an international scope, and by in vesting in non-U.S. international equity ETFs. We will also invest in publicly- traded REITs an d exchange-traded funds (ETFs) if we feel th ose types of in vestments are appropriate for th e clien t. In vestments in equity portfolios are in tended to be lon g-term with an emphasis on capital appreciation and dividend in come as a secondary consideration. We are n ot con strained by any particular in vestment style. Th is means we can in vest in large, mid, or small cap stocks h avin g valu e, blen d, or growth qu alities. Fixed Income – Principal Investment Strategy Client assets allocated to fixed income securities are primarily in vested in a diversified portfolio of pu blicly -traded corporate bonds, government securities, agency securities, municipal bonds, CDs or ETFs investing in th ose types of fixed income securities. Fixed income investments are man aged to gen erate income as well as add stability to our clients’ portfolios with th e key focus being safety. A su bstantial majority of fixed income investments are in domestic corporate securities rated in vestment-grade or better at th e time of pu rchase by Stan dard an d Poor’s or Moody’s. In vestment-grade securities include all types of fixed income debt instruments th at are considered to be of medium or h igher quality. Diversification is en hanced by in vesting in a variet y of issuers, in different sectors, and in different in dustries. To lessen the impact of changing interest rates and inflation, portfolios are comprised of holdings having assorted maturity dates usually ranging from 1 to 10 years. We plan to h old bonds un til maturity, which results in lower tu rnover an d costs to ou r clients an d a more predictable in come stream. We con tinually monitor ou r fixed income h oldings, in terest rates, an d market con ditions for circumstances wh ich may requ ire an action prior to a bo nd’s matu rity. RISK OF LOSS In vesting in securities involves risk of loss th at clients should be prepared to bear. Security markets, especially foreign markets, are volatile an d can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments. When securities are sold th ey may be worth more or less th an what th ey were purchased for, wh ich mean s th at you cou ld lose mon ey. In th e n ormal cou rse of man agin g clien t equ ity an d fixed in come portfolios, Goodman Fin an cial does n ot: 1. buy or sell futures or options contracts, 2. conduct short-selling trading activities, 3. u tilize market timin g strategies, 4. directly own commodities, preciou s metals or n atu ral resou rces, or 5. u se an y leveragin g meth ods (u n less margin is added to an accou n t at th e requ est of th e clien t). Page 12 of 25  Item 8 - Methods of Analysis, Investment Strategies and Risk of Loss Principal Investment Risks Man y factors affect portfolio performance. Portfolio values ch ange daily based on changes in market conditions and in terest rates and in response to oth er economic, political, or financial developments. A portfolio’s reaction to these events will be in fluenced by th e types of securities it h olds, th e issuer’s underlying financial condition, in dustry and economic sector matters along with th e geographic location of an issuer, an d th e relative level of an investment in the secu rities. Th e followin g factors ca n sign ifican tly affect a portfolio’s performan ce. Market Volatility: Th e value of equity and fixed income securities fluctuate in response to issuer, political, market, and economic developments. Fluctuations can be acute over th e short as well as long term. Several parts of th e market an d different types of securities can react differently to th ese developments. For example, large cap stocks can react differently from small cap stocks, an d "growth" stocks can react differently from "value" stocks. Events can affect a sin gle issuer, issuers within an in du stry or economic sector or geographic region, or th e market as a wh ole. The financial condition of a sin gle issuer can impact th e market as a wh ole. Terrorism an d related geo -political risks have led, an d may in th e future lead, to in creased short-term market volatility an d may h ave adverse long -term effects on world econ omies an d markets gen erally. Interest Rate Changes: Fixed income (debt) securities have varying levels of sensitivity to changes in interest rates. In general, the price of a debt security can fall when interest rates rise and can rise when interest rates fall. Securities with longer maturities and mortgage securities can be more sensitive to interest rate changes. Foreign Exposure: Foreign secu rities, foreign cu rrencies, an d secu rities issu ed by U.S. en tities with su bstantial foreign operations can in volve additional risks relating to political, econ omic, or regu latory con ditions in foreign cou ntries. Th ese risks in clude fluctuations in foreign cu rrencies; withholding or oth er taxes; trading, settlement, cu stodial, and other operational risks; and less stringent investor protection and disclosure standards of some foreign markets. All of th ese factors can make foreign investments, especially th ose in emerging markets, more volatile and poten tially less liquid th an U.S. in vestments. In addition, foreign markets can perform differently from th e U.S. market. Issuer-Specific Change: Changes in th e financial condition of an issuer, ch anges in specific economic or political con ditions th at affect a particular type of security or issuer, and ch anges in gen eral economic or political conditions can increase th e risk of default by an issuer, which can affect a security's or in strument's credit quality or value. The value of securities of smaller, less well-known issuers can be more volatile th an th at of larger issuers. Lower-quality debt secu rities (th ose of less th an in vestment-grade qu ality) an d certain types of oth er secu rities ten d to be particu larly sen sitive to th ese ch an ges. Other Risks Management risk: Th e risk th at th e investment techniques and risk analyses applied by th e Firm may n ot produce th e desired resu lts an d th at legislative, regulatory, or tax developments, affect th e in vestment techniques available to Goodman Fin an cial. Th ere is n o gu aran tee th at a clien t’s in vestmen t objectives will be ach ieved. Cybersecurity risk: Th e risk related to u n authorized access to th e systems an d n etworks of th e Firm an d its service providers. Th e computer systems, networks and devices used by the Firm and service providers to u s and our clients to carry ou t rou tine bu siness operations emplo y a variety of protections designed to prevent damage or in terruption from computer viru ses, n etwork failures, compu ter an d telecommunication failures, in filtration by u n authorized persons and security breaches. Despite th e various pro tections u tilized, systems, n etworks or devices potentially can be breached. A client could be negatively impacted as a result of a cybersecurity breach. Cybersecurity breaches can include unauthorized access to systems, n etworks or devices; infection from computer viruses or other malicious software code; an d attacks th at sh u t down, disable, slow or oth erwise disrupt operations, bu siness processes or website access or functionality. Cybersecurity breaches cau se disruptions an d impact bu siness operations, poten tially resulting in financial losses to a client; impediments to trading; th e in ability by u s an d oth er service providers to tran sact bu siness; violations of applicable privacy an d oth er laws; regu latory fines, pen alties, repu tational damage, reimburse ment or oth er compensation costs, or oth er compliance costs; as well as the in advertent release of confidential in formation . Similar adverse con sequ en ces cou ld resu lt from cybersecu rity Page 13 of 25  Item 8 - Methods of Analysis, Investment Strategies and Risk of Loss breaches affecting issues of securities in wh ich a client in vests; governmental an d oth er regulatory au thorities; exch ange an d oth er financial market operators, banks, brokers, dealers an d oth er financial in stitutions; an d other parties. In addition, substantial costs may be incurred by th ose entities in order to prevent any cybersecurity breaches in th e fu tu re. Clients are advised th at th ey sh ould on ly commit assets for management th at can be in vested for th e long term, that volatility from investing can occur, an d th at all investing is su bject to risk. Goodman Financial does n ot guarantee th e fu ture performance of a client’s portfolio, as investing in securities involves th e risk of loss th at clients should be prepared to bear. Past performan ce of a secu rity or a fu n d is n ot n ecessarily in dicative of fu tu re performan ce or risk of loss. Page 14 of 25  Item 9 - Disciplinary Inf ormation Item 9 - Disciplinary Information Registered investment advisers are requ ired to disclose all material facts regarding an y legal or disciplinary events th at would be material to a client’s evaluation of the adviser and th e integrity of the adviser’s management. Goodman h as n o in formation applicable to th is Item. Page 15 of 25  Item 10 - Other Financial Industry Activities and Af f iliations Item 10 - Other Financial Industry Activities and Affiliations Goodman Financial is n ot engaged in any other financial industry activities other than giving investment and financial advisory advice. Goodman Financial does n ot sell products or services oth er th an investment and financial advisory advice to its clients. Goodman Financial does n ot h ave an y arrangements th at are material to its advisory business or its clients with a related person wh o is a broker-dealer, in vestment company, oth er investment adviser, financial planning firm, fu tures commission merchant, c ommodity pool operator, commodity trading adviser, ban k or th rift in stitution, accounting firm, law firm, insurance company or agen cy, pension consultant, real estate broker or dealer or an en tity th at creates or packages limited partn ersh ips. Page 16 of 25  Item 11 - Code of Ethics, Participation or Interest in Client Transactions and Personal Trading Item 11 - Code of Ethics, Participation or Interest in Client Transactions and Personal Trading Goodman Fin ancial has adopted a Code of Eth ics for all employees of th e Firm describing its h igh stan dard of bu siness conduct and fiduciary duty to its clients. The Code of Ethics includes provisions relating to the confidentiality of client in formation, a proh ibition on in sider trading, restrictions on th e acceptance of significant gifts an d the reporting of certain gifts and business entertainment items, an d personal securities trading procedures among other th ings. All employees at Goodman Fin ancial mu s t acknowledge th e terms of th e Code of Eth ics an nually, or as amen ded. Goodman Financial anticipates th at in appropriate circumstances consistent with clients’ investment objectives, it will cau se accounts over wh ich Goodman Fin ancial h as man agement au thority to effect an d may recommend to in vestment advisory clients or prosp ective clients, th e pu rchase or sale of securities in wh ich Goodman Financial, its affiliates an d/or clients, directly or in directly, may h ave a position of in terest. Goodman Financial’s employees and persons associated with Goodman Financial are required to follow the Firm’s Code of Ethics. Subject to satisfying this policy an d applicable laws, officers, directors and employees of Goodman Financial and its affiliates are allowed to trade for th eir own accounts in securities wh ich are recommended to an d/or pu rchased for th e Firm’s clients. The Code of Ethics is designed to assure that the personal securities transactions, activities and interests of the employees of Goodman Financial will n ot in terfere with (i) making decisions in th e best in terest of adviso ry clients an d (ii) implementing su ch decisions while, at th e same time, allowing employees to in vest for th eir own accounts. Under the Code certain classes of securities h ave been designated as exempt transactions, based u pon a determination that th ese would n ot materially in terfere with th e best in terest of Goodman Financial’s clients. In addition, th e Code requ ires pre-clearance of many transactions and places restrictions on certain employee trading activity. Nonetheless, because th e Code of Ethics in some circumstances would permit employees to invest in th e same securities as clients, th ere is a possibility th at employees might benefit from market activity by a client in a secu rity h eld by an employee. Employee trading is continually monitored under th e Code of Ethics to reasonably prevent conflicts of interest between Goodman Fin an cial an d its clien ts. Certain affiliated accounts may trade in th e same securities with client accounts on an aggregated basis when con sistent with Goodman Financial's obligation of best execution. Goodman Financial will retain records of the trade order (specifying each participating account) an d its allocation, wh ich will be completed prior to th e en try of the aggregated order. Completed orders will be allocated as specified in th e initial trade order. Partially -filled orders will be allocated fu lly to accounts by assignment b ased u pon a ran dom n u mber gen erator. An y exceptions will be docu men ted. It is Goodman Financial’s policy th at th e Firm will n ot affect an y principal transactions for client accounts. Goodman Fin ancial will also n ot cross trade between client accounts if any employee or other affiliate of th e Company receives compensation from an y sou rce for acting as broker. Principal tran sactions are gen erally defined as tran sactions wh ere an adviser, acting as prin cipal for its own account or th e account of an affiliated broker -dealer, bu ys from or sells an y secu rity to an y advisory clien t. Goodman Financial’s clients or prospective clients may request a copy of the Firm's Code of Ethics by contacting the Firm. Page 17 of 25  Item 12 - Brokerage Practices Item 12 - Brokerage Practices We will su pervise and direct th e investments in th e client accounts subject to su ch limitations as th e client imposes in writing, if any. Goodman Financial Corporation, with respect to th e client’s account and without prior consultation with th e client, wi ll (a) direct th e pu rchase, sale, exchange, conversion, an d oth erwise trade in stocks, bonds and other securities including money market instruments, (b) direct th e amount of securities purchased, sold, exchanged, and oth erwise traded; an d (c) place orders for th e execu tion of su ch secu rities tran saction s. All client assets are held by third-party custodians. We do not maintain custody of client assets (although, as described more fully in Item 15 - Custody, we may be deemed to have custody of client assets if they give us standing authority to transfer assets from their account to a third party). Client assets must be maintained in an account at a "qualified custodian." Goodman Financial may recommend that clients use Charles Schwab & Co., Inc. (“Schwab”) or Fidelity Investments (“Fidelity”) as their qualified custodian. As detailed below, each qualified custodian provides certain services that may create an incentive for Goodman Financial to continue to use or expand the use of each custodian’s services. Schwab provides our clients and us with access to its institutional brokerage services—trading, custody, reporting, and related services—many of which are not typically available to Schwab retail customers. Schwab also makes available various support services and discounts for certain vendors. Some of those services help us manage or administer our clients’ accounts, while others help us manage and grow our business. In addition, Schwab makes available investmen t research, both the custodians’ own and that of third parties. Fidelity provides us with Fidelity’s “platform services”. The platform services include, among others, brokerage, custodial, administrative support, record keeping and related services that are intended to support us in conducting business and in serving the best interests of our clients. We are independently owned and operated and not affiliated with any of these custodians. We do not open accounts for clients. Rather, the client opens the account with the qualified custodian by entering into an account agreemen t directly with them. The custodians provide us with various services as described above. These services generally are available to independent investment advisors. Prospective clients are hereby advised that lower brokerage fees for comparable services may be available from other sources. We have a duty to get best execution for our clients. In seeking best execution, the determinative factor is not the lowest possible cost, but whether the transaction represen ts the best qualitative execution, taking into consideration the full range of a broker-dealer’s services as described above. Allocation of Investment Opportunities and Orders We h ave adopted the following policies and procedures related to the fair allocation of investment opportunities. These policies are designed to h elp ensure th at each client receives fair an d equitable treatment in th e investment process. • Investment ideas are equally disseminated among all appropriate investment professionals responsible for selecting investments. • Tran sactions in th e same security on behalf of more th an on e client are aggregated, wh en possible, to facilitate best execution. Th is results in all clients within th e aggregate receiving th e same average share price on th e tran saction . • Wh en orders cannot be aggregated, we employ a trading process th at is fair among all clients, regardless of size. • IPOs are only allocated to accounts when the issuer meets the investment objectives of participating accounts as well as a review process for allocations. • We do not short sell securities. • Accounts in which our employees or affiliates have a beneficial interest, or in which Goodman Financial Corporation has a conflict of interest, do not receive preferential treatment. Page 18 of 25  Item 12 - Brokerage Practices • All clients receive fair and equitable treatment for investment opportunities that are too limited to be effectively allocated among all accounts. Wh en orders are generated, th e decision on which accounts sh ould participate, and in what amount, is based on the type of secu rity or oth er asset, th e present or desired stru cture of th e various portfolios an d th e n ature of the account’s goals. Oth er facto rs in clude risk tolerance, tax statu s, permitted in vestment tech niques an d, for fixed- in come accounts, th e size of th e account and other practical considerations. As a resu lt, we may h ave different price limits for bu ying or selling a security in different accounts. Portfolio information systems, portfolio reports an d quality con trol reports permit u s to con sider th ese factors as appropriate. Wh en ou r investment professionals decide to sell a security regardless of tax con siderations, both taxable an d tax - deferred accounts are eligible for sale simultaneously. In situations where capital gains influence the sale, securities in th e tax-deferred accounts may be placed for sale first, as additional time is needed to consider th e tax implications for each taxable account. Conversely, wh en capital losses influence the sale, Goodman Financial Corporation may prioritize taxable clients first, as th e l oss has a specific impact in a given year. In any event, the prioritization process is applied con sisten tly over time. Research Services/Soft Dollars The custodians provide access to research and trade execution services to other investment advisors. However, this access is not predicated on the execution of client securities transactions. Goodman Financial Corporation has not entered into any formal “soft dollar” arrangements with any custodian. Directed Brokerage With regard to client-directed brokerage, we are requ ired to disclose that we may be u n able to n egotiate commissions, block or batch client orders or oth erwise ach ieve th e ben efits described above, in cluding best execution, if you limit ou r brokerage discretion. Directed brokerage commission rates may be h igher th an th e rates you might pay for transactions in n on-directed accounts. Also, clients th at restrict our brokerage discretion may be disadvantaged in obtaining allocations of n ew issues of securities that we purchase or recommend for purchase in oth er clients’ accounts. It is ou r policy th at su ch accounts n ot participate in allocations of n ew issues of securities obtained th rough brokers an d dealers oth er th an th ose designated by th e client. As a gen er al ru le, we en courage each client to compare th e possible costs or disadvantages of directed brokerage against th e value of th e cu stodial or oth er services provided by th e broker to th e clien t in exch an ge for th e directed broker design ation . Step-Out Relationships Occasionally th e Company will work with other broker-dealers if it believes th at it will lead to a better execution than wh at can be ach ieved th rough its primary cu stodian. Wh en an ou tside broker -dealer is u sed, th e commission rate is a fu nction of th e size of th e order, th e price of th e security, th e Company's tran saction volume with th at broker, and wh ether th e receipt of produ cts or services is in volved. Th e Company's policy, h owever, is to realize th e most favorable resu lts for clien ts regardless of th e produ cts or services received, if an y. Page 19 of 25  Item 13 - Review of Accounts Item 13 - Review of Accounts We regu larly review client accounts. Wh ile th e n ature an d frequency of th e review is different for different components of th e review, th ey are pu rposefully designed to en sure each account is maintained in accordance with a client’s goals and objectives or in vestment policy. Th ese reviews effectively identify an y issues th at may require atten tion. Appropriate actions are taken when n ecessary. Accounts are reviewed by staff under th e direction and oversigh t of th ose servin g in th e capacity of Sen ior Fin an cia l Advisors. Mu ltiple employees review an d mon itor cu stodial alerts for items including, bu t not limited to, deposits, distributions, n ew accounts, ch anges of address, and certain trading activity and corporate actions. Further investigation into these alerts an d/or action will be taken if n ecessary. The Company uses its trade order management software, RedBlack, to monitor actual -to-target variances that are outside the usual rebalancing parameters for asset allocation and security weighting, as well as cash levels. Asset allocation and security drift is evaluated on an ongoing basis. On a quarterly basis, a client's performance is evaluated versus aggregate client performance and against relevant benchmarks. Material deviations (positive or negative) are investigated, and, as appropriate, portfolio ch anges are implemented when necessary. Reports: Reports are furnished to ou r clients on a qu arterly basis by Goodman Financial. Th ese reports include performance for th e most recent quarter, YTD, trailing 12 months, 3 year, 5 year and since inception periods (as applicable). For comparison pu rposes, performance is reported along with relevant an d appropriate ben chmarks. Additionally, the reports include cu rrent data regarding client accounts as of th e report date – asset allocation, diversification metrics, fixed income ratings, asset balances per account and in the aggregate, and aggregate quarterly account activity. In addition to the quarterly report received from Goodman Financial, all clients receive separate monthly and/or quarterly statements from th eir portfolio custodian detailing all cash and as set tran sactions and activity as well as th e asset balan ces for each secu rity as of th e report date. Page 20 of 25  Item 14 - Client Ref errals and Other Compensation Item 14 - Client Referrals and Other Compensation From 2003 th rough 2006 we participated in a fee sh aring arrangement wh ere ou r Firm compensated TD Ameritrade AdvisorDirect for clients th at were referred to u s. Th is was for a small number of our clients. With Schwab’s purchase of TD Ameritrade, Schwab will n ow receive th e trailing referral fee as long as th e clients referred by th at program remain with Goodman Fin an cial. Su pervised persons are eligible to receive compensation via a bon us stru cture based on a percentage of fees gen erated on assets u nder man agement added by n ew clients obtained by th e firm an d in some cases existing clients. In addition, su pervised persons a re eligible for a bon us based on th e firm’s financial performance an d a merit-based bonus. Th ese bonuses create a con flict of in terest since th e su pervised person h as an in centive to en cou rage you to tran sfer you r assets to th e firm. Certain supervised persons responsible for investment selection are eligible to receive a bonus based on investment performance relative to ben chmarks. Th is bonus creates a con flict of interest since th e su pervised person has an in cen tive to recommen d in vestmen ts to th e firm th at may h ave a h igh er risk profile. Page 21 of 25  Item 15 - Custody Item 15 - Custody Account Custodian We do n ot serve, and h ave n o intention to serve, as cu stodian of client accounts. Each client mu st select a cu stodian an d will be required to pay any related custodian fees. Also, clients will incur brokerage and other transaction costs in th e cou rse of ou r man agement of th eir accounts. Clients sh ould receive at least qu arterly statements from the broker dealer, bank or oth er qualified custodian th at h olds and maintains th e client’s investment assets. We u rge you to carefully review such statements and comp are su ch official custodial records to th e account statements that we provide to you. Th e account values on ou r statements may vary from th e values sh own on custodial statements due to su ch factors as th e timing and posting of dividends, settlement dates f or trades, an d accrued interest. (Th is may n ot be an all-inclusive list.) For example, in accounts which contain individual bonds, we would expect th e value on ou r statement to be h igher due to accru ed in terest on in dividual bonds being sh own on our statem ents bu t n ot on cu stodian statemen ts. Page 22 of 25  Item 16 - Investment Discretion Item 16 - Investment Discretion Discretionary Management We receive discretionary au thority from th e client at th e ou tset of an advisory relationship to select th e identity and amount of securities to be bou ght or sold. Su ch authority is provided in our contract with each client. In all cases, h owever, su ch discretion is to be exercised in a man ner con sistent with th e stated in vestment objectives for the particular client account. Clients can impose investment gu idelines or restrictions on investing in certain securities or types of securities, th us limiting th e scope of potential investments. Wh en selecting securities an d determining amou n ts to in vest, we observe th e in vestmen t gu idelin es an d restriction s of th e clien t. Wrap Account Management We do n ot participate in wrap accou n t man agemen t programs. Page 23 of 25  Item 17 - Voting Client Securities Item 17 - Voting Client Securities Goodman Financial votes proxies on behalf of ou r clients who h ave provided u s with written au thorization to do so. Clients may, h owever, ch oose to retain proxy voting respon sibility an d will receive proxies from th eir cu stodian . Goodman Financial h as adopted proxy voting policies, procedures and gu idelines designed to vote proxies efficiently an d in th e best interest of its clients. We seek to identify any material conflicts of interest and to en sure that any such con flicts do n ot interfere with voting in clients’ best in terests. Goodman Financial h as retained a th ird-party service provider, Broadridge In vestor Communication Solutions, In c. (“Broadridge”), to provide access to proxy vote recommendations based on the Glass Lewis guidelines and assist with the voting and record -keeping of clients’ proxy ballots th rough th e Broadridge ProxyEdge® platform. It is ou r policy to vote proxies in accordance with Glass Lewis recommendations except in th ose cases where we believe a different vote would be in th e best interest of ou r clients. Clients may obtain a copy of Goodman Financial’s proxy voting policies and information about h ow Goodman Financial voted a clien t’s proxies by con tactin g u s. Page 24 of 25  Item 18 - Financial Inf ormation Item 18 - Financial Information Goodman Financial Corporation does not have any financial commitment that impairs its ability to meet contractual and fiduciary commitments to clients and has not been the subject of a bankruptcy proceeding. In addition, we do not require or solicit pre-payment of advisory fees for more than $1,200 per client, six months or more in advance. Page 25 of 25