Capital Resource Management Inc

Item 5     Fees and Compensation

Clients compensate CRM for its advisory services by paying either an asset-based fee or
a flat fee.

Asset-based fee: The amount of the fee is based on a percentage of the assets under
the Firm’s management, and the size and type of account. The general fee schedule is
as follows:

                                                                  FEES
         ACCOUNT SIZE            STYLE
$5.0 million to $10.0 million    Equity                           50 basis points

Greater than $10.0 million       Equity                           30 basis points

$5.0 million to $10.0 million    Fixed Income                     35 basis points

Greater than $10.0 million       Fixed Income                     25 basis points

$5.0 million to $10.0 million    Balanced – Equity/Fixed          50 basis points
                                 Income

Greater than $10.0 million       Balanced – Equity/Fixed          30 basis points
                                 Income

Asset-based fees are calculated based on the fair market value of assets under
management at month end, averaged based on each month end in the quarter, and are
distributed quarterly in arrears by the custodian, to CRM. The methodology for calculating
the value of assets under management for purposes of the fee calculation may be
different than the methodology used to calculate Regulatory Assets Under Management.
For portfolios invested only in mutual funds (“mutual fund-only clients”), CRM generally
does not charge its advisory fees on client assets allocated to cash or cash equivalent
investments; clients should be aware, however, that assets allocated to a manager, and

then re allocated by the manager to cash or cash equivalent investments, generally will
remain subject to CRM’s advisory fee.

Securities in clients’ accounts generally will be valued by the custodian, broker-dealer or
mutual fund holding the assets. Any other security or asset will be valued in a manner
determined in good faith by CRM to reflect its fair market value. Securities not otherwise
valued and for which there is no readily available market will generally be valued at cost,
unless CRM has obtained reliable information regarding recent transactions in such
securities or other reliable data affecting valuation.

In the event that the amount of CRM’s standard fees do not exceed $24,000 per year,
CRM’s annual fee will be the greater of $24,000 or the amount agreed to by the client.1

Flat fee: The amount of the fee is negotiable, subject to CRM's minimum fee of $24,000
per year. The flat fee is billed quarterly, in arrears.

General: All fees are negotiable at CRM’s sole discretion, based on type of account and
services provided, whether asset-based or flat-fee arrangement. In addition, CRM
reserves the right, in its discretion, to "household", or group, certain clients' assets for
purposes of determining the fee to be charged. As a result, any client could pay fees that
are higher or lower than the fees charged to other clients based upon the market value of
their assets, the complexity of the engagement, and the level and scope of the overall
services to be rendered.

CRM prefers to accept accounts with at least $5.0 million of investable assets (see Item
7). However, CRM may agree to accept accounts with less than this amount, in which
case CRM’s fee is generally greater than 50 basis points.

In addition to CRM’s fee, clients will also incur custodial fees, brokerage commissions,
money manager fees, transaction fees, mutual fund fees and other third-party fees. In
some instances, a manager causes client assets to be invested in a mutual fund. While
CRM attempts to ensure, through its reviews of managers’ performance, that client assets
are invested in "no-load" mutual funds and in the lowest price share classes available,
CRM does not control the third-party money managers and is not responsible for their
share class selections. Item 12 and Item 15 below discuss brokerage, and custody,
respectively.

Mutual funds pay management fees to their investment advisers, which reduces the net
asset value of the funds’ shares. Because of the layering of fees, clients could pay more
in fees by allocating assets to mutual funds through CRM, as compared to investing
directly with the funds. Clients also may pay more or less in fees where client assets are
invested in a separate account managed by a manager, compared to a mutual fund to
which the manager is an adviser or sub-adviser.

  Some legacy clients have been exempted from the minimum fee requirement. It is applicable to all new
clients.

US Bank, which serves as custodian for most CRM clients’ accounts, charges an asset-
based fee of 0.05% (with a minimum of $500 per account) per year, plus $150 per account
per year for performance calculations, plus $250 per tax identification number per year
for tax reporting. All of these fees are charged to the clients. US Bank does not charge
CRM clients for transactions, wires, or other services.

CRM does not receive any portion of these third-party fees and CRM does not reduce its
advisory fees to offset any third-party charges.

Item 7   Types of Clients

The Firm provides investment advice to individuals, qualified retirement plans,
corporations, partnerships, not-for-profit entities, trusts and estates. CRM prefers to
accept accounts with at least $5 million of investable assets. An exception to this
minimum account size may be allowed, as described further in Item 5.