Clearwater Advisors LLC

Fees and Compensation

Fees
Clearwater is generally compensated for its investment advisory services by receiving a fee based on a percentage of the fair
market value of assets under management. Fees are negotiable based on the amount of assets under management, the nature
of the client accounts, and client’s specific investment guidelines and objectives. Management fees typically range between
0.1% and 0.40% of assets under management. Clients will not be responsible to Clearwater for any other fees, including
brokerage and other transaction costs. However, clients are responsible for separately arranging custody of their assets. Neither
Clearwater nor its employees accept compensation for the sale of securities or other investment products.
Clearwater receives a fixed fee from a small number of clients for services relating to liquidity and counterparty analysis.

Invoicing
Fees are generally invoiced in arrears on a monthly or quarterly basis depending on the client. Most invoices are set with a
payable date within 30 days of receipt of the day the client receives the invoice. For a small number of clients, Clearwater will
deduct the client’s advisory fees directly from the client’s custodian.

Clearwater Advisors Form ADV Part 2 Brochure            Updated: May 7, 2026                                           P a g e |3

A client’s fee invoice will also generally include the amount of fees being charged by Clearwater Analytics for various reporting
services provided to the client. Such fees are covered by Clearwater Advisors. Please see the Other Financial Industry Activities
and Affiliations section below for more information.

Performance-Based Fees and Side-By-Side Management
Clearwater does not use performance-based fees for any of its clients so there is no side-by-side management.

Types of Clients
Clearwater’s clients include:
       •   Corporate Cash Portfolios
       •   State and Local Governments
       •   School Districts
       •   Insurance Companies
       •   Endowments
       •   Foundations
       •   Trusts
       •   Family Offices
       •   Corporate Pension Plans
       •   Credit Unions
       •   High Net Worth Individuals

Clearwater assesses and accepts clients on a case-by-case basis, with no set minimum account size.

Methods of Analysis, Investment Strategies and Risk of Loss
Clearwater’s Investment Strategy Committee is responsible for the macro investment strategy decisions and includes the firm’s
principals, portfolio management and research staff. Specialized portfolio management and research staff make the individual
credit and security selection decisions.
The experience and abilities of Clearwater’s investment team span most securities traded in established markets. As a boutique
investment manager, Clearwater works with most major broker-dealers that trade in its clients’ investible universe.
Clearwater uses a top-down, relative value approach focused on identifying market opportunities within sectors, industries, and
credits. The firm is keenly focused on minimizing portfolio turnover, minimizing portfolio transaction costs, and maximizing
portfolio liquidity. Clearwater does not take large duration bets relative to the benchmark. Its methods of analysis, in order of
priority, are as follows:
  1)       Economic analysis
  2)       Sector decision
  3)       Credit research
  4)       Yield Curve Analysis
  5)       Security selection
  6)       Trading
  7)       Best Execution

Clearwater uses proprietary risk management tools to screen and analyze potential investments. These tools also give advisors
access to daily portfolio risk characteristics of relevance to Clearwater clients. The majority of credit research and modeling is
done internally using sources including Fitch, Moody’s, S&P, the Securities and Exchange Commission resources, news, and other
publicly accessible research.
Each member of the portfolio management group is responsible for monitoring industry-relevant news and analysis, processing
this news to develop viewpoints and insights, discussing it with the other portfolio managers, and delivering specifically-related
information to the client. This delivery takes many forms ranging from phone calls and emails to more formal monthly market

Clearwater Advisors Form ADV Part 2 Brochure           Updated: May 7, 2026                                           P a g e |4

commentaries and issue-specific white papers. The more formal white papers and monthly updates are emailed to clients and
made available on Clearwater’s website.
Material Risks

Below is a summary of the material risks associated with the strategies and methods of analysis used by Clearwater. Investing in
securities and other instruments and assets involves risk of loss that clients should be prepared to bear. Clients should be aware
that not all of the risks listed below will pertain to every client as certain risks may only apply to certain investment strategies.
Furthermore, the risks listed below are not intended to be a complete description of the risks associated with the strategies and
methods of analysis used by Clearwater. There can be no assurance that expected or targeted returns for any client will be
achieved.
Call Risk. A client that invests in fixed income securities will be subject to the risk that an issuer may exercise its right to redeem
the security earlier than expected (a call). Issuers may call outstanding securities prior to their maturity for a number of reasons
(e.g., declining interest rates, changes in credit spreads and improvements in the issuer’s credit quality). If an issuer calls a
security that a client as invested in, the client may not recoup the full amount of its initial investment or may not realize the full
anticipated earnings from the investment and may be forced to reinvest in lower-yielding securities, securities with greater credit
risks or securities with other, less favorable features.
Corporate Debt Securities Risk. Corporate debt securities include corporate bonds, debentures, notes and other similar corporate
debt instruments, including convertible securities. Corporate debt securities may be highly customized and as a result may be
subject to, among others, liquidity risk and pricing transparency risks. Corporate debt securities are also subject to the risk of the
issuer’s inability to meet principal and interest payments on the obligation and may also be subject to price volatility due to such
factors as interest rate sensitivity, market perception of the creditworthiness of the issuer and general market liquidity. Company
defaults can impact the level of returns generated by corporate debt securities. An unexpected default can reduce income and
the capital value of a corporate debt security. Furthermore, market expectations regarding economic conditions and the likely
number of corporate defaults may impact the value of corporate debt securities.
Credit Risk. A client could lose money if the issuer or guarantor of a security (including a security purchased with securities
lending collateral), the counterparty to a derivatives contract, repurchase agreement or a loan of portfolio securities, or the
issuer or guarantor of collateral, is unable or unwilling, or is perceived (whether by market participants, rating agencies, pricing
services or otherwise) as unable or unwilling, to honor its obligations. The downgrade of the credit of a security or of the issuer
of security held by a client may decrease its value. Securities are subject to varying degrees of credit risk, which are often
reflected in credit ratings.
Inflation and Deflation Risk. A client may be subject to inflation and deflation risk. Inflation risk is the risk that the present value
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