Boston Research and Management Inc

ITEM 5: FEES AND COMPENSATION

A. MANAGEMENT FEES
BRM is compensated almost exclusively through fees based on a percentage of assets under management
according to the following fee schedule:

                  Assets Under Management                         Annual Fee (%)
                  $1,000,000 to $4,999,999                            1.00
                  $5,000,000 to $9,999,999                            0.85
                  $10,000,000 to $24,999,999                          0.75
                  $25,000,000 to $49,999,999                          0.60
                  $50,000,000 to $99,999,999                          0.50
                  $100,000,000 and above                            negotiable

We may, in our sole discretion, charge a lesser investment management fee based upon certain criteria, including,
but not limited to, anticipated future assets or earning capacity, related accounts, account composition and
negotiations with the client.

A minimum annual fee of $10,000 is generally applied to accounts less than $1,000,000. Please note, if you
determine to engage BRM with less than $1,000,000 of assets under management and are subject to the $10,000
minimum annual fee, you will pay a higher percentage annual fee than if you maintained $1,000,000 under
BRM’s management.

The fee in the first quarter of service is prorated from the inception date of the account(s) to the end of the first
quarter. The client’s fees will take into consideration the aggregate assets under management by BRM. All
securities held in accounts managed by BRM will be independently valued by the custodian. BRM will not have
the authority or responsibility to value portfolio securities.

B. FEE BILLING
Management fees are billed to each client in arrears at the beginning of each calendar quarter based upon the
market value of the client’s account at the end of the previous quarter. Management fees are calculated by BRM
and deducted from the client’s account at the custodian, as disclosed in our written advisory agreement. If so
desired, a client may elect to be billed directly instead.

At least quarterly, clients will be provided with a statement from the qualified custodian holding their assets
reflecting deduction of our management fees. In addition, billing statements detailing how our fees are calculated
are included in the quarterly reports we send to clients. We encourage clients to reconcile these billing statements
with the statements sent by the custodian and to contact us with any questions or notify us of any discrepancies.

Boston Research and Management, Inc.                                                                              7

C. OTHER FEES AND EXPENSES
BRM also receives minimal compensation for occasional Portfolio Reviews offered at a negotiated hourly rate to
fiduciaries responsible for investment management where BRM has no management responsibilities. Portfolio
Review fees are billed directly, upon completion and delivery of the Review.

All fees paid to BRM for investment advisory services are separate and distinct from brokerage commissions,
transaction fees, and other related costs and expenses. Clients may incur certain charges imposed by custodians,
brokers and other third parties, such as fees charged by managers, custodial fees, deferred sales charges, odd-lot
differentials, transfer taxes, wire transfer and electronic fund fees, and other fees and taxes on brokerage accounts
and securities transactions.

Relative to its discretionary investment management services, when beneficial to the client, individual fixed
income transactions may be executed through broker-dealers other than the account custodian, in which event the
client generally will incur both the fee (commission, mark-up/mark-down) charged by the executing broker-dealer
and a separate “trade away” and/or prime broker fee charged by the account custodian. Please refer to ITEM 12:
BROKERAGE PRACTICES for information regarding the factors we consider in selecting or recommending broker-
dealers for client transactions and determining the reasonableness of their compensation.

Mutual funds and exchange traded funds also charge internal management fees, which are disclosed in a fund’s
prospectus. Such charges, fees and commissions are exclusive of and in addition to our advisory fee, and we do
not receive any portion of these commissions, fees and costs. Clients could invest in a mutual fund directly, in
which case they would not receive the services we provide, which are designed, among other things, to assist
clients in determining which mutual funds are most appropriate to their financial condition and objectives.
Accordingly, clients should review both the fees charged by the funds and the fees charged by BRM to fully
understand the total amount of fees to be paid, and to thereby evaluate the advisory services being provided.

D. ADVANCE PAYMENT OF FEES AND TERMINATION
Management fees are generally billed quarterly in arrears, however a client may, upon request, pay fees in
advance. Upon termination of an account, any prepaid, unearned fees will be promptly refunded, and any earned,
unpaid fees will be due and payable, prorated to the date of termination. An advisory agreement may be canceled
by either party, for any reason, upon receipt of written notice. The client has the right to terminate an agreement
without penalty within five business days. After the five-day period, the client will incur charges for bona fide
advisory services rendered to the point of termination and such fees will be due and payable by the client. The
advisory agreement is non-transferable without the client’s prior consent.

E. ADDITIONAL COMPENSATION
BRM does not buy or sell securities to generate commissions or transaction costs for any client accounts. The
management fees and Portfolio Review fees described above are the only fees that we charge our clients and the
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ITEM 7: TYPES OF CLIENTS

BRM provides investment advisory services to individuals, high net-worth individuals, trusts, estates, retirement
plans, charitable organizations and other business entities. We generally require a minimum relationship size of
$1,000,000 to open an account but reserve the right to accept relationships with lesser amounts at our own
discretion.