Clearwater Capital Management LLC

Item 5 - Fees and Compensation

CCM charges an advisory fee that is based on the market value of the portfolio assets at a
cumulative annual rate as follows:

               Assets Under Management       Annual Fee
               First $3 million              75 basis points
               Next $7 million               60 basis points
               Over $10 million              50 basis points

The market value of a client’s portfolio is determined by the client’s custodian. Advisory fees
are generally not negotiable; however, for non-discretionary accounts, fees may be negotiated.
All advisory fees are payable quarterly in arrears and exclude brokerage charges, custodial fees
and any taxes or other costs incidental to the purchase and sale of securities. With the client’s
permission, CCM deducts fees directly from the client’s custodial account on a quarterly basis.

Investment management agreements may be terminated upon 30 days written notice. Upon
termination of an advisory agreement with CCM, the termination date will be used as the basis
for determining the final charge for investment services rendered. Fees will be prorated on a
daily basis to the termination date and any earned but unpaid fees will be promptly billed to the
client.

Item 7 - Types of Clients

CCM primarily provides discretionary investment management services to separately managed
accounts. Its clients consist of individuals and high net worth individuals. The clients have both
taxable and tax deferred (primarily IRAs) portfolios.

The minimum account size for all portfolios is $1,000,000, but the minimum may be waived
under certain circumstances.