Carrington Capital Management LLC

Item 5. Fees and Compensation

Compensation received by Carrington for its investment advisory services is comprised of
one or more of the following, each as agreed to with the client at the outset of an advisory
relationship or prior to the initiation of a new investment strategy and as set forth in the
governing documents or other client agreements: (i) management fees calculated based on
assets under management, (ii) performance based fees, (iii) fees earned for re-delivering
eligible mortgage loans into new Ginnie Mae mortgage-backed securities and (iv) certain
other fees as further described below. Depending on the investment structure, Carrington
is either paid directly from the related client’s investment vehicle or account, or from CMS
pursuant to one or more intercompany master services agreements from amounts earned
by CMS under the related transaction documents.

Management Fees

Carrington earns a management fee in an annual amount ranging from 0.25% to 1.2% of
invested capital or based on the unpaid principal balance of the related investments.

Performance Fees

Carrington may also be entitled to a “back-end” performance-based fee, ranging between
12% - 20% of net realized profits in excess of the related return hurdle (generally ranging
between 5.0% and 10.0%). This means that Carrington must return 100% of the client’s
original capital investment (which includes capitalized transaction fees for certain clients)
plus a specified return hurdle prior to Carrington earning and receiving any performance-
based fee. In certain instances, in lieu of receiving a performance fee as described above,
Carrington is entitled to a percentage of the performance fee earned by its client based on
the investment performance of the assets for which Carrington provides investment
advisory services.

Repool Fees
As described in Item 4 above, for certain of its clients, Carrington facilitates the acquisition
of Ginnie Mae early buyout mortgage loans. For those mortgage loans that are subsequently
re-delivered by CMS into new Ginnie Mae mortgage-backed securities, Carrington earns a
repooling fee, calculated as a percentage of the gain on sale into the new security or of the
unpaid principal balance of the repooled mortgage loan.
Additional Fees

Carrington charges clients an upfront fee for maintaining and monitoring asset performance
data via is proprietary database throughout the life of the related investment. Also, from
time to time, clients may request that Carrington execute on a securitization transaction for
the purpose of employing leverage on the client’s investments. In such instance, Carrington
may charge the client an agreed-upon fixed transaction fee related to assisting the client in
executing on a securitization transaction. In addition, for certain clients, Carrington charges
an agreed-upon per-asset due diligence fee whenever an asset is acquired or sold, which is
invoiced to the client (or otherwise identified in settlement statements) at the time of the

related transaction.As it relates to the MSR/ESR Strategy, CMS retains interest income
from amounts on deposit in the related servicing collection accounts (generally known as
“float”) pursuant to the related servicing agreements and client disclosures.

Affiliate Fees

As described in Item 4 above, Carrington utilizes the services of various affiliated service
providers (in addition to CMS) as a means of managing the quality of execution and
delivery of ongoing asset management services, all in an effort to enhance its clients’ return
on investment. Carrington and its affiliates will make determination of fees and expenses
reimbursements based on a number of factors, which are generally expected to include
Carrington and its affiliates experience with comparable services or services provided to
other parties. While Carrington generally intends to obtain, where reasonable obtainable,
market data regarding the rates and expenses charged or quoted in the market for similar
services, relevant market comparisons are not always available for a number of reasons,
including, without limitation, as a result of a lack of a substantial market of providers or
users of such services or the confidential and/or bespoke nature of such services. Therefore,
any available market comparisons cannot always result in precise market terms for
comparable services. Where such rates or terms include hourly components or flat fees,
Carrington reserves the right to rely on approximations or estimates of time spent for
purposes of allocating or charging for services. There can be no assurance that the amount
of compensation paid in a particular year or other applicable period will be proportional to
the number of hours worked or the amount of written work product generated. Any
methodology, or choice among methodologies, involves potential conflicts of interest. A
schedule of affiliated providers and their respective rates is delivered to each new client
prior to consummating any advisory relationship. Carrington will provide updated fee
schedules to clients as fees may change from time to time. Additional disclosure of these
services and the potential conflicts of interest can be found in Item 10.

Expense Allocation

Carrington limits the expenses that may be charged to clients to conform, first, to each
client’s governing agreements and second, absent client-specific provisions, with
Carrington’s internal policy. Allocable expenses generally include, but are not limited to,
operating expenses, including investment and transaction-related expenses (e.g., brokerage
fees, custodial fees, bank service fees, due diligence expenses and expenses related to a
proposed investment that was not consummated), legal, accounting, insurance and
administrative expenses; professional fees relating to investments; and entity-level taxes
(including any accrued incremental tax liabilities relating to the ownership of mortgage
...

Item 7. Types of Clients

Carrington currently provides investment advisory services exclusively to other S.E.C.
registered investment advisers that are “accredited investors” and “qualified purchasers,”
within the meaning of the Securities Act of 1933 and the Investment Company Act of 1940,
as applicable.

Funds-of-One and Direct Client Investments are established at the direction of the related
client and typically do not contain specified minimum investment amounts. As noted
above, clients may impose various investment parameters and restrictions on investments,
including investment size.