Arrow Investment Management LLC

Item 5: Fees and Compensation

A. Investment Advisory Services Fee

The scope of work and fee for an investment advisory agreement is provided to the client in writing
prior to the start of the relationship. Fees are generally based on a percentage of assets under
management. Arrow’s investment advisory services fee will be negotiated with each client and
will depend on the type and size of the account and the specific investment strategy employed.
While fees will be individually negotiated, clients will generally pay investment advisory services

fees not to exceed an annual rate of 1.50%.

B. Additional Fees

When client assets are invested in Notes, they may incur fees and expenses charged by securities
underlying such Notes, which may include exchange-traded funds (“ETFs”), mutual funds, and
other investment pools (collectively, “Pooled Investment Funds”, with each, a “Pooled
Investment Fund”). The fees charged by Pooled Investment Funds are disclosed in their
prospectus or offering documents and are not included in Arrow’s investment advisory services
fee.

Client assets may also be invested in certificates of deposit (“CDs”). When client assets are
invested in CDs, they may incur fees and expenses charged against the assets of the CD, reducing
the return a client receives from the CD.

The investment advisory services fee charged by Arrow does not cover third-party expenses,
including, without limitation: custodial fees, transaction and/or brokerage fees for the purchase or
sale of securities, sub-advisory fees, margin interest, odd-lot differentials, IRA fees, transfer taxes,
exchange fees, wire transfers, non-sufficient funds, bank wires, postage, costs associated with
exchanging foreign currencies, and government fees, taxes, or other similar expenses.

A client may incur transaction charges and/or brokerage fees when securities are purchased or sold
for the client’s account. These charges and/or fees are typically imposed by the broker-dealer or
custodian through which the transactions are executed. For additional information with respect to
Arrow’s brokerage practices, see Item 12 below.

Custodians of client assets, especially in cases of accounts designated as retirement accounts (i.e.,
IRA, Roth IRA, 401k, etc.), may charge a fee to cover the cost associated with the additional tax
reporting these accounts require. Other fees may also be charged by the custodian in special
situations, such as for legal transfers, wire requests, check re-orders, insufficient funds, and other
service-related fees.

These fees are charged and collected by the custodian and are in addition to the fees charged by
Arrow. In addition, clients may choose to participate in a custodian’s sweep program, which may
offer commingled investment vehicles such as money market mutual funds.

C. Payment

Arrow’s investment advisory services fee will be charged in accordance with the investment
advisory agreement with the client. Arrow’s investment advisory services fee may be charged in
advance. When Arrow is engaged by individual clients with discretionary authority, Arrow will
generally deduct its fees from the client’s account. If an account is closed or transferred, Arrow
has the right to prorate fees for the period of time the assets were under management.

Item 7: Types of Clients

As discussed in Item 4 above, Arrow primarily offers its investment advisory services to Advisers,
but may take on other types of clients. The Advisers’ clients may include, without limitation,
individuals, high net worth individuals, and businesses.