Armstrong Fleming & Moore Inc

Fees and Compensation
Clients paying asset-based fees will be billed at the end of their specified quarterly schedule based
on the ending balance. Clients will be billed pro-rata for any partial calendar quarters. Payment
is due no later than 30 days after receipt of the portfolio report.
Payments of fees may be made directly by the Client, or by the custodian holding the Client’s
funds and securities. However, two criteria must be met when payment is made by the custodian:
(1) the Client provides written authorization permitting the fees to be paid directly from the
Client’s account held by the independent custodian; and (2) the custodian agrees to send to the
Client a statement, at least quarterly, indicating all amounts disbursed from the account including
the amount of advisory fees paid directly to AFM.
AFM’s standard fee schedule is as follows:
                     Assets under management                        Maximum Annual Fee
       First $5 Million                                                   1.00%
       Amounts in excess of $5 Million & up to $10 Million                0.60%
       Amounts in excess of $10 Million                                   0.40%

Portfolio management services provided to assets held in employer retirement plans are charged
an annual fee related to assets and complexity of the relationship up to 1.00%.

Note: The above-referenced fee schedule reflects the standard fees charged by AFM, however,
fees are negotiable at the discretion of AFM. We allow for the aggregation of assets among a
client’s “related” managed accounts for purposes of determining the value of AUM and the
applicable advisory fee to be paid by a client. We reserve the right to determine whether client
accounts are “related” for purposes of aggregating a client’s accounts together for a reduction in
the percentage fee amount.

All fees paid to AFM for portfolio management services are separate and distinct from the fees
and expenses charged by mutual funds 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
also pay an initial or deferred sales charge. A Client could invest in a mutual fund directly, without
the services of AFM. In that case, the Client would not pay an investment advisory fee to AFM.
However, the Client also would not receive the services provided by AFM, which are designed,
among other things, to assist the Client in determining which mutual fund or funds are most
appropriate to each Client’s financial condition and objectives. Accordingly, the Client should
review both the fees charged by the funds and the fees charged by AFM to fully understand the
total amount of fees to be paid by the Client in order to evaluate the advisory services being
received.
The fees charged by AFM will not be based on the capital gains or the capital appreciation of any
Client portfolio except as described above.
A Client’s Investment Advisory Agreement may be cancelled at any time, by either party, for any
reason upon receipt of written notice to the other party. Upon termination, any unpaid fees will be
due for an amount that is pro-rated based on the number of days that the account was managed.

In consideration of financial planning services provided by AFM, the Client shall agree to pay
AFM hourly fees as follows:
           Principals                                  Up to $900 per hour
           Financial Planners & Financial              $300 per hour
           Advisors
           Paraplanners                                $150 per hour

These hourly fees are negotiable at the discretion of AFM.
General Information on Fees
In substantially all cases, Commonwealth performs fee billing on our firm’s behalf. In most cases,
the annual account management fees are payable quarterly in arrears and are computed as one
quarter of the annual fee based on the account’s AUM on the last business day of the previous
calendar quarter.
To the extent you hold positions in your account where pricing data is not readily
available, Commonwealth receives quarter-end values from alternative investment issuers or other
service providers which are used when calculating billable AUM for our clients. Neither AFM
nor Commonwealth engages in an independent valuation of your account assets and relies on
valuations provided by the investment issuers or other service providers. We (via Commonwealth
and further via the account custodian) will provide periodic account statements which include the
market value of the alternative investment based on information received from the investment
issuer or other service provider. In providing these account statements, or any other valuation
information to you, (i) we rely on the valuation information provided by the manager of the
alternative investment or other service provider, (ii) the valuation information used to determine
the billing fee is based on estimates that may be outdated as of the dates of the account statements,
(iii) the products final valuations may be higher or lower than the values reflected in the periodic
account statements and (iv) while Commonwealth will adjust material estimated fee
billings on our behalf, neither we nor Commonwealth is under no obligation to provide notice or
compensation to you for differences in estimated alternative investment valuations.
*Account values in the Commonwealth reporting system will be used for our firm’s quarterly fee
calculations for advisory accounts custodied at National Financial Services (NFS”). Although
account holdings and asset valuations should generally match, month-end market values reflected
in Commonwealth's Practice 360 reporting system sometimes differ from those provided by NFS
on their month-end statements. The three most common reasons why these values may differ are
...

Types of Clients
AFM provides financial planning and portfolio management services. These services are designed
to be most beneficial to high income, high net worth individuals. The typical financial planning
Client who benefits most from the comprehensive financial planning services the advisory
personnel provide is an individual or family whose net worth is in excess of $3,000,000.
A minimum of $1,000,000 under management is recommended for portfolio management services.
In certain unusual circumstances, fees and account minimums may be negotiable at the sole
discretion of AFM.

Methods of Analysis, Investment Strategies and Risk of Loss
Investing in securities involves risk of loss that investors should be sure they understand and
should be prepared to bear.

AFM’s principals and paraplanners work together to conduct fundamental analysis on all securities
recommended for Client accounts. It is important to note that there is no investment strategy that
will guarantee a profit or prevent loss. This analysis varies depending on the security in question.

For stocks and bonds the analysis generally includes a review of:
    The issuer’s management;
    The amount and volatility of past profits or losses;
    The issuer’s assets and liabilities, as well as any material changes from historical norms;
    Prospects for the issuer’s industry, as well as the issuer’s competitive position within that
       industry; and
    Any other factors considered relevant.

For mutual funds and the analysis generally includes a review of:
    The fund’s management team;
    The fund’s historical risk and return characteristics;
    The fund’s exposure to sectors and individual issuers;
    The fund’s fee structure; and
    Any other factors considered relevant.

AFM’s Investment Committee is led by its principals. The Investment Committee generally
meets monthly to discuss existing and prospective investments. Investments are evaluated
independently, as well as in the context of clients’ existing holdings and sector exposures.

AFM primarily invests for relatively long time horizons, often for several years or more. However,
market developments could cause AFM to sell securities more quickly.

Risk of Loss – General
All investing involves a risk of loss and the investment strategy offered by AFM could lose money
over short or long periods. Performance could be negatively impacted by a number of different
market risks including, but not limited to, portfolio management techniques used by AFM may not
produce the desired results. This could cause accounts to decline in value. In addition, AFM may
rely on information that turns out to be wrong. AFM selects investments based, in part, on
information provided by issuers to regulators or made directly available to AFM by the issuers or
other sources. AFM is not always able to confirm the completeness or accuracy of such
information, and in some cases, complete and accurate information is not available. Incorrect or
incomplete information increases risk and can result in losses.

Market Risk - The prices of, and the income generated by, the common stocks, bonds, and other
securities you own may decline in response to certain events taking place around the world,
including those directly involving the issuers; conditions affecting the general economy; overall
market changes; local, regional, or global political, social, or economic instability; governmental
or governmental agency responses to economic conditions; and currency, interest rate, and
commodity price fluctuations.

Stock Market Risk - Stock market risk is the possibility that stock prices overall will decline over
short or extended periods. Markets tend to move in cycles, with periods of rising prices and periods
of falling prices.

Investing in small- and medium-sized companies involves greater risk than is customarily
associated with more established companies. Stocks of such companies may be subject to more
volatility in price than larger company securities.

Foreign Securities Risk - Foreign securities are subject to the same market risks as U.S. securities,
such as general economic conditions and company and industry prospects. However, foreign
securities involve the additional risk of loss due to political, economic, legal, regulatory, and
operational uncertainties; differing accounting and financial reporting standards; limited
availability of information; currency conversion; and pricing factors affecting investment in the
securities of foreign businesses or governments.

Interest Rate Risk - Bonds also experience market risk as a result of changes in interest rates. The
general rule is that if interest rates rise, bond prices will fall. The reverse is also true: if interest
rates fall, bond prices will generally rise. A bond with a longer maturity (or a bond fund with a
longer average maturity) will typically fluctuate more in price than a shorter term bond. Because
of their very short-term nature, money market instruments carry less interest rate risk. The prices
of, and the income generated by, most debt and equity securities will most likely be affected by

changing interest rates and by changes in the effective maturities and credit ratings of these
securities. For example, the prices of debt securities generally decline when interest rates rise and
increase when interest rates fall. In addition, falling interest rates may cause an issuer to redeem,
“call,” or refinance a security before its stated maturity date, which would typically result in having
to reinvest the proceeds in lower-yielding securities.

Credit Risk - Bonds and bond mutual funds are also exposed to credit risk, which is the possibility
that the issuer of a bond will default on its obligation to pay interest and/or principal. U.S. Treasury
securities, which are backed by the full faith and credit of the U.S. Government, have limited credit
...