Advantage Capital Management LLC

Item 5 – Fees and Compensation

All fees are subject to negotiation. Among other things, certain factors Advantage considers are the
size of the account, the type of assets managed and the nature of the services provided. Fees and
compensation may be comprised of investment advisory fees, base management fees, performance
or incentive fees and consulting fees. The manner in which fees are charged by Advantage are set
forth in each Client’s respective written Investment Management Agreement.

Advantage charges a base management fee (the “Base Fee”) for investment advice. Generally, Base
Fees range from 0.15% to 1.00% per year on the principal amount of the assets managed by
Advantage, paid monthly in arrears. Base Fees are invoiced directly to clients.

In addition to Base Fees, for certain clients that are exempt from the compensation prohibition of
section 205(a)(1) of the Investment Advisers Act of 1940, Advantage may charge performance fees
(“Incentive Fees”). Incentive Fees accrue on a Strategy-by-Strategy basis when returns on
investments expressed on a percentage basis (“Returns”) exceed an agreed upon hurdle rate for such
Strategy (the “Hurdle Rate”). Hurdle Rates will be individually negotiated with each client and are
expected to range from 4% to 9% per annum, depending on the Strategy. Incentive Fees are
generally paid to Advantage within 30 days after the end of each calendar year. Incentive Fees are
structured in accordance with Section 205(a) of the Investment Advisers Act of 1940 and the rules
and regulations promulgated thereunder. Fees, in general, may vary and in some cases may be
negotiable and may be payable more or less frequently depending upon the Client and the
arrangement.

Generally, Advantage does not require prepayment of fees unless otherwise permitted under the
Investment Management Agreement. If prepayment were provided for, Advantage would rebate a
proportionate amount of the prepaid fees to the client in the event of a termination of its management
services.

Expenses Charged to Investors

Advantage’s clients may pay, in addition to Base Fees and Incentive Fees, such other expenses as
are agreed between Advantage and the client in the Investment Management Agreement. Such
expenses may include, without limitation, fees, costs and expenses relating to the acquisition and

disposition of assets, investment-related expenses, indebtedness expenses, taxes, fees and other
governmental charges, auditing and tax preparation expenses, custodial expenses, professional fees,
data service fees, fees and expenses of accountants and counsel, litigation and indemnity costs and
other extraordinary expenses.

Although Advantage does not generally use the services of broker-dealers for the purpose of
executing investments on behalf of its clients, in the event that it or one of the sub-advisors chooses
to use a broker-dealer for limited purposes relating to an investment on behalf of a client, such client
will incur brokerage and other transactional costs.

Supervised persons of Registrant may receive consulting and/or similar one-time fees from third
parties. Conflicts of interest may arise relating to client investments in third parties who have paid
such consulting fees.

Item 7 – Types of Clients

Advantage, on its own and through sub-advisors, provides investment services for institutional third
party clients. Advantage’s client base includes seven (re)insurance companies and is expected to
include additional insurance companies and other institutional clients in the near future. Regardless
of client type, Advantage may seek a minimum dollar fee or a minimum mandate size in an amount
typically equal to $10,000,000.