Closed-End Fund Advisors Inc

Item 5: Fees and Compensation
CEFA charges an asset-based fee for its portfolio management services. CEFA charges its fee in
advance of any services rendered at the beginning of each calendar quarter. These fees are directly
deducted from the client’s account (see example below). The fee is calculated by using the account
value on the last day of the previous quarter. If an account is opened during a quarter, the quarter’s
fee is prorated based on the number of days CEFA will be actively managing the account. There are
no back-end fees or lock-up periods. If a client closes their account during a quarter, then CEFA will
return to the client any unearned fees on a pro-rata basis (see Account Termination section below).
Account closing requires 30 days’ written notice. For example, if the client pays their fee in advance
and closes their account exactly half-way into the quarter then CEFA will return 50% of the fee paid
up-front.

Fees are directly deducted from client accounts, though clients are welcome to choose which accounts
are debited for fees. For example, some clients prefer to pay IRA fees out of a taxable account.
Management fees are calculated by multiplying one-fourth by the appropriate fee schedule below:

                          Direct Client / Individual Investor Fee Schedule

          Regular Client Billing (Tiered)                       Small Account Billing (Tiered)
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   Assets Under Management            Fee Rate          Assets Under Management          Fee Rate
     $2,000,000 - $5,000,000           1.00%                   First $50,000              2.50%
     $5,000,001-$10,000,000            0.85%                   Next $50,000               2.25%
        Over $10,000,000               0.65%                $100,000 - $500,000           2.00%
                                                           $500,001 - $1,000,000          1.75%
                                                          $1,000,001-$1,999,999           1.25%

        Municipal Models Client Billing
     Assets Under Management         Fee Rate
  Accounts $3,500,000 to $5,000,000      0.50%
      Accounts over $5,000,000           0.39%
       Min quarterly Fee $2500

CEFA takes small accounts alongside other household or family assets. CEFA has a stated household
minimum investment value of $2,500,000. When an account managed by the Firm is valued less than
$2,500,000, the Firm has the option to charge the Small Account Billing Rate as long as the rate is
included in the client’s investment advisory contract.
Disclosure: Similar investment advisory services may be offered by other advisers at a lower rate.

                               Institutional / Sub-Advisor Fee Schedule
 Accounts that qualify for Institutional/Sub-Advisor Fee Schedule: CEFA is not the advisor in these
                       instances as is only acting as the Investment Manager.

          ❖ Other Registered Investment Advisory Firms
          ❖ Investment Companies as defined in The Investment Company Act of 1940
          ❖ Investment Adviser Representatives
          ❖ Hedge Funds (Limited Partnerships)

                                           Institutional Billing
                         Assets Under Management                   Fee Rate
                               First $2,500,000                     0.650%
                            $2,500,001-$5,000,000                    0.50%
                           $5,000,001 - $7,500,000                  0.400%
                           $7,500,001-$10,000,000                   0.350%
                              Over $10,000,000                      0.300%
                             Municipal Models                       0.250%

At CEFA, each client pays their pre-determined quarterly fee for our advisory services as well as
custodial and trading costs. In some cases, CEFA may elect to pay some or all transaction fees for a
client account. In those cases, Charles Schwab will not charge fees to the clients account, but will bill
CEFA directly for those costs on a periodic basis.

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Senior Management reserves the right to offer discounted fees or account minimums for clients. Fees may be
negotiable in certain circumstances. The maximum fee allowed is 2.50% annualized of the account’s present
value.

CEFA is compensated primarily from these professional fees paid by its clients. The Firm does not
receive any sales fees, referral fees or other forms of compensation from any third party on securities,
investment selections and/or allocations. Client accounts are not aggregated when determining the
breakpoints noted in the above fee schedule.

Research Retainer / Hourly Consulting:

The Firm can offer a consulting arrangement with institutional clients in need of a closed-end fund
expert on retainer. Current minimum institutional fees are $5,000 per quarter up to 20 hours and
individual investor fees are $1,750 per quarter for 6 hours of personalized consulting. We currently
limit this to a maximum of five relationships at a time. Our primary fiduciary responsibility is
always to our managed account clients, and we treat research clients second to them. However, we
will never recommend a closed-end fund to a research client we are selling or have recently sold in a
portfolio composite without written disclosure and documentation to our research clients.
Consulting fees can be waived or reduced by senior management. CEFA’s data manager is billed out
at $100 an hour, data analysts at $50 an hour and John Cole Scott is billed out at $500 an hour for
...

Item 7: Types of Clients
Typical Clients:

The Firm has traditionally dealt with individual high net worth (HNW) clients but has been
increasing its efforts to serve institutional clients, primarily independent financial advisors and
financial planners in need of an outsourced investment solution as well as small to medium-sized
foundations and endowments in need of CEFA’s services. The majority of our current client base is
comprised of individuals and couples and their related accounts. These relationships come both
“direct” to the Firm and from “third-party” relationships (servicing financial advisors or financial
planners).

Minimum Account Size:

The Firm expects clients to maintain accounts with $2,500,000 per household in assets for most
models and $4,500,000 for the municipal bond models. Senior management has the authority to
reduce this figure as it fits into the business goals of the Firm. Smaller accounts may be accepted if
the client also has a larger account, or a family relationship already maintained with CEFA. See Item
#5 for more detail on CEFA’s Fee Schedule. Maximum Quarterly Fee: 2.50% of the account’s value
annually.

Requirements to Open a Discretionary Account:

CEFA Requires That Each Client:

   ❖   Completes and Signs CEFA’s Suitability Questionnaire
   ❖   Selects a CEFA Portfolio Model for Each Account to Be Managed
   ❖   Completes the Required Custodial Paperwork to Open an Account
   ❖   Executes the Firm’s Investment Advisory Agreement
   ❖   Submits the Required ACAT/Transfer Paperwork or Sends a Check or Wire Transfer to the
       Custodian
   ❖   Receives a Copy of: Form ADV PART 2A & 2B, Form CRS, CEFA’s Privacy Statement, and
       Custodian Disclosures
   ❖   Sends CEFA a Copy of a government issued photo ID

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