AF Advisors Inc

Item 5: Fees & Compensation

We are required to describe our brokerage, custody, fees, and fund expenses so you will know how
much you are charged and by whom for our advisory services provided to you. Our fees are generally
not negotiable.

How We Are Compensated for Our Advisory Services

Comprehensive Portfolio Management:

        Assets Under Management                         Annual Percentage of Assets Charge
                 Any Assets                                             1.25%

Fees to be assessed will be outlined in the advisory agreement to be signed by the client. Our firm’s
fees are billed three months at a time on the first day of each calendar three-month period. The billing
is based on the client’s annual billing rate divided by four times the account balance as of the month
end that immediately proceeds the client’s billing period. (e.g. if the client’s billing period runs from
January 1st through March 31st, the client’s billing would be based on the account value as of
December 31st and would cover services provided for the client for the period of January 1 through
March 31st). Each successive three-month period is billed in a similar fashion. Clients are billed four
times per year depending on their monthly cycle with the first billing period for new clients starting
on the first day of the month immediately after the client contracts for services with our firm. Fees
will generally be automatically deducted from the clients managed account through a qualified
custodian. Our firm does not offer direct invoicing. Our firm bills on cash unless otherwise noted in
writing. As part of this process, the client understands and acknowledges the following:

    a) The client’s independent custodian sends statements at least quarterly showing the market
       values for each security included in the Assets and all account disbursements, including the
       amount of the advisory fees paid to our firm;
    b) Clients will provide authorization permitting our firm to be directly paid by these terms. Our
       firm will send an invoice directly to the custodian; and
    c) If our firm sends a copy of our invoice to the client, a legend urging the comparison of
       information provided in our statement with those from the qualified custodian will be
       included.

Pension Consulting:

        Assets Under Management                         Annual Percentage of Assets Charge
                 Any Assets                                             1.25%

Our firm’s fees are billed three months at a time on the first day of each calendar three-month period.
The billing is based on the client’s annual billing rate divided by four times the account balance as of
the month end that immediately proceeds the client’s billing period. (e.g. if the client’s billing period
runs from January 1st through March 31st, the client’s billing would be based on the account value as
of December 31st and would cover services provided for the client for the period of January 1 through
March 31st). Each successive three-month period is billed in a similar fashion. Clients are billed four
times per year depending on their monthly cycle with the first billing period for new clients starting
on the first day of the month immediately after the client contracts for services with our firm. The
fee-paying arrangements will be determined on a case-by-case basis and will be detailed in the signed
consulting agreement.

Other Types of Fees & Expenses

Clients will incur transaction fees for trades executed by their chosen custodian or via individual
transaction charges. These transaction fees are separate from our firm’s advisory fees and will be
disclosed by the chosen custodian. Charles Schwab & Co., Inc. does not charge transaction fees for
U.S. listed equities and exchange traded funds.

Clients may also pay holdings charges imposed by the chosen custodian for certain investments,
charges imposed directly by a mutual fund, index fund, or exchange traded fund, which shall be
disclosed in the fund’s prospectus (i.e., fund management fees, initial or deferred sales charges,
mutual fund sales loads, 12b-1 fees, surrender charges, variable annuity fees, IRA and qualified
retirement plan fees, and other fund expenses), mark-ups and mark-downs, spreads paid to market
makers, fees for trades executed away from custodian, wire transfer fees and other fees and taxes on
brokerage accounts and securities transactions. Our firm does not receive a portion of these fees.

Termination & Refunds

We charge our advisory fees quarterly in advance. In the event that you wish to terminate our
services, we will refund the unearned portion of our advisory fee to you. You need to contact us in
writing and state that you wish to terminate our services. Upon receipt of your letter of termination,
we will proceed to close out your account and process a pro-rata refund of unearned advisory fees.

Commissionable Securities Sales

We do not sell securities for a commission. In order to sell securities for a commission, we would
need to have our associated persons registered with a broker-dealer. We have chosen not to do so.

Item 7: Types of Clients & Account Requirements

We have the following types of clients:
   • Individuals and High Net Worth Individuals;
   • Trusts, Estates or Charitable Organizations;
   • Pension and Profit Sharing Plans;
   • Corporations, limited liability companies and/or other business types.

We do not require a minimum account balance for our comprehensive portfolio management service.