Capital Mortgage Management Inc

Item 5. Fees and Compensation

For serving as Manager and supervising the Fund’s activities, the Fund pays the Manager an annual fee
of 0.175% on the first $475 million of the Fund’s net assets and 0.10% on net assets over $475 million.
For providing discretionary investment advisory services, the Fund pays the Sub-Adviser an annual fee of
0.175% on the first $475 million of the Fund’s net assets and 0.25% on net assets over $475 million.

In addition to the fees above, the Fund pays all costs and expenses relating to its operations and
investment activities, including but not limited to portfolio transaction costs, legal, auditing, custodial,
administrative and accounting expenses, costs of preparing the Fund’s financial statements, tax returns,
DOL Form 5500, and IRS Forms K-1, expenses of meetings of the Advisory Board that provides general
advice and guidance to CMM regarding the Fund’s operations, taxes (if any), interest and extraordinary
expenses, such as litigation or reserves established for liabilities or expenses.

Item 7. Types of Clients

CCM currently provides management services solely to the Fund. The Fund’s interests are available only
to prospective institutional investors who satisfy certain eligibility criteria. At a minimum, a Member
must meet the requirements to be an “accredited investor,” as such term is defined in SEC Regulation D.
The Fund’s interests are not registered under the Securities Act of 1933 or applicable state laws, and the
Fund is not registered under the Investment Company Act of 1940, in reliance upon exemptions available
to issuers that offer securities on a private placement basis solely to accredited investors.

The minimum investment in the Fund is $1 million, although CMM may cause the Fund to accept lower
subscriptions in its discretion.

Item 8. Method of Analysis, Investment Strategies and Risk of Loss

Investment Strategies. The Fund typically invests in credit-enhanced mortgage-backed securities
secured by commercial multi-family projects.

Risk of Loss. An investment in the Fund is illiquid in that no present market exists for its interests and
none is expected to develop. An investment in the Fund involves investment risks and certain potential
material conflicts of interest as set forth in the Fund’s current Prospectus.

Prospective investors should carefully review the Fund’s current Prospectus, Operating Agreement and
Subscription Agreement prior to purchasing an interest in the Fund. The Fund’s interests are available
only to accredited investors as described in the current Prospectus.

As with any investment, the Fund’s returns will vary over time and investors could lose money.

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