Capital Investment Advisors LLC

Item 5 - Fees and Compensation

                                 Portfolio Management Services

In limited instances and in CIA’s sole discretion, our portfolio management fees may be
negotiable. Fees are not based on a share of capital gains upon or capital appreciation of the
funds or any portion of the funds. However, holdings in investments sponsored or managed by
one of our affiliates often do have a performance fee component. Please see Item 6 –
Performance Based Fees and Side by Side Management for more information.

We charge portfolio management fees quarterly in arrears, unless otherwise negotiated and
agreed to with the client. Your management fee is calculated based on the market value of all
billable, managed assets (rounded up or down to the nearest dollar) in your managed portfolio,
including cash, at the close of the last business day of each calendar quarter, unless otherwise
negotiated and agreed to. Unless otherwise agreed, fees are withdrawn from each account
based on the account’s individual value. Fees are generally rounded to the nearest dollar,
unless otherwise agreed. This means that you could pay slightly more or less in any given
quarter than you would if fees were calculated on the absolute value of accounts. Any such
differences are de minimis amounts.

If we select or recommend third-party Outside Managers to manage part of your portfolio, the
Outside Manager(s) may calculate and process their fees differently. For example, some
Managers assess their fees quarterly in advance. You will be apprised of this at the inception of
those engagements.

While CIA does not usually utilize margin as an investment strategy, in some cases we have
approved a Third-Party Outside Manager that uses a margin strategy. In addition, some clients
choose to maintain margin balances. Anytime a client account utilizes margin, CIA’s fee is
calculated based on the net value of the account. Therefore, the value on which the fee is
calculated is reduced by the amount of margin in the account on the last day of the quarter.

No fee adjustments will be issued for additional deposits to the account or partial withdrawals
from the account occurring during a calendar quarter, unless otherwise agreed.

                           New Accounts or Terminated Relationships

In the event a new account is established on a day other than the first day of a calendar quarter,
your fee will be prorated for the quarter. The initial fee is prorated based on the billable value of
the account on the last day of the quarter and prorated for the number of business days from
the date of the first deposit into the account to the last day of the quarter.

In the event the relationship terminates, you will be charged a prorated portion of the advisory
fee for the number of days that services were provided during the final period, including the

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date of termination notification based on the billable value of each account on the date of
termination.

Please note that transactions in your account, such as account reallocations and rebalancing,
may trigger a taxable event, with the exception of certain IRA accounts, 401(k) / 403(b)
accounts and other qualified retirement accounts. Your account will also pay any applicable
transaction fees assessed by the account’s custodian. These fees do not flow through to CIA.
When considering mutual funds for inclusion in an account, we generally select the share class
with the lowest expense ratio available (usually the Institutional share class). Purchases and
sales of such share classes often means you will pay transaction fees.

As previously outlined, account values for fee calculations are rounded to the nearest whole
dollar, as are fee amounts. The same method applies to fees for new or terminated accounts.

      Household Account Size                                   Annual Fee
      First $5,000,000                                         1.00%
      Next $5,000,000                                          0.75%
      Assets over $10,000,000                                  0.50%

This is a blended or progressive fee schedule. Please see below for a sample calculation.

For example, a client with four billable accounts valued at the end of a quarter at
$5,563,247.20, $788,953.25, $1,478,899.25, and $3,982,978.30 with a total quarterly
household account value of $11,814,078.00 would be charged for the full quarter as follows:

              $5,000,000 x 1.00%       = $50,000
              $5,000,000 x 0.75%       = $37,500
              $1,814,078 x 0.50%       = $ 9,070
                                         $96,570 / 4 = $24,142.60. Rounded to the nearest
                                         dollar, Client’s quarterly fee is $24,143.

Therefore, the blended rate in this example is 0.82% per year. As noted above, unless otherwise
agreed, fees are withdrawn from each account based on the account’s individual value.

                                   Additional Fee Information

In addition to the advisory fees above, you will pay:
     • transaction fees for securities transactions executed in your account in accordance
          with the custodian’s transaction fee schedule. Please see Item 12 – Brokerage Practices
          for additional information.
     • for any amount invested in mutual funds, a proportionate share of each fund’s
          management and administrative fees and sales charges as well as each mutual fund
          adviser’s fee. Such advisory fees are not shared with CIA and are compensation to the
          fund manager.

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     •   trade away and transfer fees if securities such as individual bonds and other thinly
         traded securities are purchased or sold through a broker outside of your account
...

Item 7 - Types of Clients

CIA serves families with investment portfolios of all sizes, as well as pension and profit-sharing
plans, trusts, estates, charitable organizations, and corporations or other business entities. We
do not impose a minimum portfolio size or minimum annual fee. We have service options
available for families and organizations of all sizes.

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