The Hogan-Knotts Financial Group Inc

Item 5 – Fees and Compensation

All fees are subject to negotiation.

The annual fee charged for investment supervisory services will range from 1.25% to
0.00% (one and one-quarter percent to zero percent) of assets under management. The
specific way fees are charged by The Hogan-Knotts Financial Group, Inc. are established in
each individual client’s written agreement with The Hogan-Knotts Financial Group, Inc.
Discounts are offered to family members of employees, related professionals, and long-
term (10 years or greater) clients who meet certain wealth accumulation criteria.

The Hogan-Knotts Financial Group, Inc. will generally bill its fees on a quarterly basis.
Clients are billed in arrears each calendar quarter. The Hogan-Knotts Financial Group, Inc.
directly debits fees on a quarterly basis from client accounts, which they must authorize at
the beginning of the relationship and the establishment of the account. Fees billed, once
collected, are generally non-refundable. Clients may terminate the relationship at any time
by written notice. No more fees will be billed after the calendar quarter ends after receipt
of termination notification.

Management fees are prorated for each capital contribution and withdrawal made during
the applicable calendar quarter (except for de minimis contributions and withdrawals).
Accounts initiated or terminated during a calendar quarter will be charged a prorated fee
as well. Upon termination of any account, any prepaid, unearned fees will be promptly
refunded, and any earned, unpaid fees will be due and payable. If the account that the fee
was to be debited against has been closed, liquidated, or transferred then the fee will be
paid by a separate check from the client.

The Hogan-Knotts Financial Group, Inc.’s fees are exclusive of brokerage commissions,
transaction fees, and other related costs and expenses which shall be incurred by the client.
Clients may incur certain charges imposed by custodians, brokers, third party investment
and other third parties such as fees charged by managers, custodial fees, deferred sales
charges, odd-lot differentials, transfer taxes, wire transfer, margin interest and electronic
fund fees, and other fees and taxes on brokerage accounts and securities transactions.
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 The Hogan-Knotts
Financial Group, Inc.’s fee, and The Hogan-Knotts Financial Group, Inc. shall not receive any
portion of these commissions, fees, and costs.

The basic fee schedule for financial planning and analysis is non-negotiable and is based on
the amount of time to complete the work and the hourly rate of the staff completing the
work. The hourly rate for each staff member is as follows:

Planner: $225

Paraplanner: $100

Fees are generally not refundable and are paid in arrears. Clients may terminate the
relationship at any time and will be billed for any time and charges not yet paid. Fees are
billed after work is completed. Meticulous time records are maintained for the work that
has been performed, and the time spent by each staff member working on a client’s
financial plan. A detailed listing of time and charges are sent, with an invoice for payment,
to clients monthly.

When choosing individual mutual funds for client portfolios The Hogan-Knotts Financial
Group, Inc. generally uses only no-load/no commission, low expense ratio open-end mutual
funds, closed-end mutual funds or exchange traded funds (ETFs). In using open-ended
mutual funds, The Hogan-Knotts Financial Group, Inc. has discretion in what funds to use.
Generally, we choose the no-transaction-fee funds that are available for custody on the
Schwab Institutional trading platform, always keeping in mind the fact that no sales of
these funds, for any reason, can be made within 90 days of purchase or a transaction fee
will be applied (transaction fees are paid to the custodian – Schwab in this example – and
never to The Hogan-Knotts Financial Group, Inc.).

We generally use Schwab Institutional’ s "no transaction fee" (NTF) funds over those with a
transaction fee, although with the transaction fee fund, we may be able to get lower,
institutional expense ratio pricing by simply using a different share class of the same fund.
This is since we generally “dollar-cost-average” client’s cash into or out of the investment
markets, over many months, and a transaction fee would be due every month for those
purchase or sale transactions. In addition, we generally rebalance all client portfolios every
quarter, and these sometimes “small” rebalancing transactions would also incur a
transaction fee.

When, since no other "approved" mutual fund is available, for diversification reasons, or
the portfolio is large enough to absorb the transaction costs (which have a cap) without
unduly affecting performance, a transaction fee mutual fund may be used at our discretion.

However, when using a transaction fee mutual fund, no purchases or sales will generally be
executed unless the transaction fee (as a percentage of the purchase or sale) is less than
1.5% and it seems prudent to do so in the context of managing the portfolio at the time of
the transaction.

We consider Cash and Cash Equivalents (fixed income maturities of less than two years) to
be an asset class, and these assets are included in our fee calculation. At times the fee
calculated on these assets will exceed the money market or cash yield on these assets. Cash
is usually held in a portfolio for strategic reasons (for rebalancing the portfolio, for taking
advantage of other assets classes in declining markets), and for emerging liability reasons
(cash flow needs of the portfolio.

Item 12 further describes the factors that The Hogan-Knotts Financial Group, Inc. considers
...

Item 7 – Types of Clients

The Hogan-Knotts Financial Group, Inc. provides financial planning and portfolio
management services to individuals, high net worth individuals, businesses, pension and
profit-sharing plans, charitable institutions, foundations, endowments, estates & trusts.

Generally, we require a minimum of $500,000 in manageable assets to establish a
relationship with this office. There are, however, exceptions made. These exceptions are
primarily for the children, grandchildren and other family members related to our already
established client relationships.

An exception could also be granted for a relationship that starts out with less than the
$500,000 minimum, but there is a reasonable expectation that the assets under
management, due to contributions, will be above the minimum in a reasonable amount of
time. Exceptions are granted at the total discretion of The Hogan-Knotts Financial Group,
Inc.