Downey Capital Management Inc

Item 5.       Fees and Compensation

 A.    Management Fees

       The Adviser may charge fees for its investment management services based upon a
       percentage of assets under management. Standard fee schedules based upon a percentage
       of assets under management are set forth below.

              1.0% on the first $10 million
              0.75% on the next $10 million
              Over $20 million negotiable

       The above fees are subject to negotiation, and the Adviser may also negotiate fixed fees for
       certain accounts.

       Except as otherwise provided in the Adviser’s advisory agreements with clients, clients may
       generally terminate the agreements upon written notice to the Adviser, normally thirty days
       prior to the effective date of such termination. If a client has paid a fee in advance to the
       Adviser, a pro-rata refund will be made in the event of early cancellation by either the
       Adviser or the client.

B.     Billing of Management Fees

       Fees are generally billed quarterly in arrears based on the average asset balance of the
       portfolio during such quarter. Under certain circumstances, fees may be payable in advance
       (but in any event no more than $500 per client and no more than six months in advance).

C.     Other Fees

       In addition to the fees described in Item 5.A above, the Adviser’s clients’ accounts may
       incur the cost of custodial services and brokerage commissions relating to investments (as
       further discussed in Item 12 below).

D.     Fees Payable and Fee Refunds

       Fees are generally billed quarterly in arrears based on the average asset balance of the
       portfolio during such quarter. Under certain circumstances, fees may be payable in advance
       (but in any event no more than $500 per client and no more than six months in advance).

       Except as otherwise provided in the Adviser’s advisory agreements with clients, clients may
       generally terminate the agreements upon written notice to the Adviser, normally thirty days
       prior to the effective date of such termination. If a client has paid a fee in advance to the
       Adviser, a pro-rata refund will be made in the event of early cancellation by either the
       Adviser or the client.

E.     Compensation for the Sale of Securities

       Neither the Adviser nor its supervised persons accepts any compensation for the sale of
       securities or other investment products.

Item 7.        Types of Clients

The Adviser’s clients include individuals, trusts, estates, charitable organizations, corporations, or
other business entities. The Adviser will generally accept only clients with management assets
sufficient to benefit from the advice and management it provides. Generally, this results in a
minimum requirement of $50,000 of manageable assets. Accounts under $100,000 are generally
encouraged to use an exchange-traded fund portfolio.