Disclosure Statement

This statement is provided pursuant to Section 204-3 of the Investment Advisors Act of 1940.

1. Advisory services and fees: Financial planning advice is provided to each client to define his or her short term and long term financial goals. Analysis and recommendations are made in the following areas: investment strategies, retirement planning, educational funding, risk management, estate planning, income tax planning, insurance, and diversification. This service is provided for a fixed fee negotiated with the client before signing the engagement letter. Fees are refundable to the extent that services have not been provided. Lower fees for comparable services may be available from other sources. In addition to the Advisor fee, the client will pay to the broker and/or mutual fund such management fees, commissions and operating expenses proportionate to their holdings or purchases.

2. Types of clients: Service is provided for individuals, IRA, pension and profit sharing plans, trusts, estates or charitable organizations, partnerships and corporations.

3. Types of investments: Advice may be given about insurance, equity securities, warrants, corporate debt securities, investment securities, United States government securities, options and futures contracts, and interests in partnerships.

4. Methods of analysis, sources of information, and investment strategies: All recommendations are based on analysis of available investments matched to the client's position and need. The investment strategy developed is based on cyclical economic analysis, fundamental and technical analysis as well as analysis of charts of economic data for trends and trend changes.

Sources of information used in evaluating an investment strategy include insurance and financial data reporting services, corporate rating services, SEC reports and filings, research material prepared in house and by outside sources, annual reports and prospectuses, published information in financial periodicals, timing services, and a wide range of privately circulated financial newsletters.

Strategies used to accomplish client goals vary by client. Normally the strategy is based on building financial security through long-term purchases emphasizing time-valued rate of return over various economic cycles. For some clients short-term purchases are recommended such as margin purchases. Timing for purchase and sale of various investments is recommended to clients. Investments in non-liquid assets including real estate and limited partnerships are advised only when adequate protection of earnings and other assets is in place, cash and liquidity requirements have been met, and a prudent ratio exits between debt and net worth.

5. Education and business background: Charles W. Hayes, CPA/PFS, CFP is responsible for determining what investment advice shall be recommended to each client. Born in 1944, he is a graduate of San Jose State College with a bachelor degree in accounting and finance. Drafted in the Army in 1967, he received The Army Commendation Medal and Division Commendation Medal for service as a systems analyst in debugging and cataloging computer programs introduced into the European Command.

In 1969, Hayes was employed by a large local San Jose accounting firm until opening his own office in 1974. While a full time certified public accountant, he also owned and operated a restaurant, real estate holdings, investments in small companies, and investments in the stock market. Having sold his San Jose practice in 1983, he moved to San Diego in 1985 to continue in public accounting as the sole owner of Hayes & Associates Accountancy Corporation.

Hayes is also an active lecturer and writer of professional articles and seminar programs. He holds the professional designations of CPA, CFP, and PFS. He is a member of the American Institute of Certified Public Accountants, California Society of Certified Public Accountants, Personal Financial Specialist division of the AICPA, and member of the International Board of Standards and Practices for Certified Financial Planners, and a member of NAPFA. He is a past president of the Coronado Chamber of Commerce, and past treasurer of the Rotary Club of Coronado. He currently serves on the Endowment Committee for the Friends of Coronado Library and treasurer for Coronado Hospital Foundation, and treasurer for the Coronado Cays Yacht Club.

6. Other business activities, financial industry activities or affiliations, participation or interest in client transactions: Hayes & Associates and Charles W. Hayes are not sponsors, offerors or broker-dealers for any of the product types or specific products recommended. They receive no fees, commissions or compensation from any sponsor offering or selling any of the products recommended, and thus are not motivated to recommend products that have sales commissions instead of suitable "no-load" alternatives. They have no affiliations with any brokers, dealers, or investments companies.

7. Your privacy: If you are like most Americans, privacy is a big concern to you. We want you to know that we share this concern. During the preparation of your tax return, financial plan, or investment program, you share personal information on applications, worksheets, tax organizers or other documents we use in performing our services. It may also include information we receive directly from third parties such as brokerage houses and banks, regarding your accounts with them and information about your transactions with us. We value your trust and make every effort to continue to deserve your confidence.

Protecting your privacy is important to us and your personal information is only shared with those employees with whom it is necessary to perform the services you have hired us to do. State and federal laws, and the standards of the CPA profession pledge us to keep your information confidential unless we are required by a legal authority to divulge the information.

Otherwise, we do not share your information with anyone. Period.

Your personal information is stored in secured space and on a secured computer. We take our obligation to you very seriously and value your trust. If you ever discontinue your client relationship with us, we will be happy to furnish you with a copy of the information in our files and will continue to protect and treat the information that you have trusted us with as confidential. When your information is no longer needed, it is shredded, erased or destroyed before being recycled.

8. Broker accounts: Clients wishing to implement our advice are free to select any broker they wish. Those wishing a recommendation will receive one based on the broker’s cost, skills, reputation, dependability, and compatibility with the client, and never upon a financial arrangement between us and the recommended broker.