Ferro Investment Management LLC

Item 5 – Fees and Compensation

A.     Fee Schedule
The fees and compensation payable to FIM are negotiable and vary among its Clients.
However, the range of compensation is generally as follows:
       1.      Management Fee
From the HedgeCoVest Sub-adviser relationship, FIM receives a monthly asset-based
management fee calculated as a percentage of each Investor’s capital account, payable
monthly in arrears. The management fee is generally 1.5% (0.125% per calendar month).
With respect to the Mutual Fund to which FIM acts as a sub-adviser, FIM receives a monthly
asset-based management fee calculated as a percentage of the Mutual Fund’s capital account.
The management fee is generally 0.95% (approximately 0.079% per calendar month).

       2.      Incentive Allocation
From the Ferro First Loss Fund, FIM generally receives an incentive allocation equal to a
percentage of the net income allocated for the year to each Investor but only to the extent
net income allocated to that Investor or capital account exceeds any cumulative losses that
were allocated to that Investor for earlier periods and that have not been recovered (a “high
water mark”). This incentive allocation is generally 20% and is typically made at the end of
each calendar month.
The incentive allocation will only be charged to accounts of those Investors or Clients who
are “qualified clients” as defined in Rule 205-3 of the Investment Advisers Act of 1940, as
amended (the “Advisers Act”).
From Separate Accounts, FIM generally receives inventive allocations comparable to those
paid by the Fund; however, fee structures are subject to negotiation and may vary from those
paid by the Fund. Specifically, the incentive allocations applicable to the Separate Accounts
may be made at the end of the month or year, as negotiated, and generally range from 5%-
50%.
       3.      Fee Comparison
The expenses of the Client, including the management fee and incentive allocation, may
constitute a higher percentage of average net assets than would be found in other investment
vehicles.
B.     Payment of Fees
Management fees, incentive allocations, and third-party fees (discussed below) are generally
deducted from Client assets. Management fees, which are paid in arrears, are withdrawn at
the end of the month. Incentive allocations are allocated as of the last business day of the
calendar year or calendar month, as applicable, and as of any date on which an Investor makes
a withdrawal or receives a distribution from such Investor’s capital account(s).
Arrangements with the Mutual Fund and Separate Accounts may vary.

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                                                     Ferro Investment Management, LLC Brochure

C.      Third-Party Fees
The Clients generally shall pay such costs and expenses as FIM shall reasonably determine to
be necessary, appropriate, advisable or convenient to carry on its business and realize its
objective, including but not limited to: (i) management fees; (ii) all general investment
expenses (i.e., expenses which FIM reasonably determines to be directly related to the
investment of the Client’s assets); (iii) all administrative, legal, accounting, auditing, record-
keeping, tax form preparation, compliance and consulting costs and expenses; (iv) fees, costs
and expenses of third-party service providers that provide such services; and, (v) any
extraordinary expenses, among other expenses. Investors should refer to the Client’s
Constituent Documents for a full disclosure of costs and expenses that may be borne by the
Client.
The Mutual Fund to which FIM acts as a sub-adviser generally pays interest expense, taxes,
custodian fees and charges, professional fees, and administrative service fees incurred in
connection with the operation of its account. In addition, the Mutual Fund pays other fees and
expenses, including, but not limited to, distribution fees, transfer agent fees, registration fees,
fees related to the preparation of shareholder reports, fees of the independent trustees, and
insurance expenses. These fees are borne by Mutual Fund shareholders. Information
regarding these fees and expenses is included in the applicable Mutual Fund prospectus and
statement of additional information.
FIM’s fees are exclusive of brokerage commissions, transaction fees, and other related costs
and expenses which shall be incurred by the Clients. Such charges, fees and commissions are
exclusive of and in addition to FIM’s management fee, and FIM shall not receive any portion
of these commissions, fees, and costs.
Please see Item 12 of this Brochure regarding brokerage.
D.      Proration of Fees
FIM will generally pro-rate the management fee for Interests held for less than a full month.
Arrangements with the Mutual Fund or Separate Accounts may vary.
E.      Outside Compensation for the Sale of Securities
Neither FIM nor its supervised persons accept compensation for the sale of securities or other
investment products outside of its association with FIM.
The foregoing discussion in Item 5 represents FIM’s basic compensation
arrangements. The management fees and incentive allocations described above are
structured to comply with Rule 205-3 under the Advisers Act and applicable state laws.
Fees and other compensation are negotiable in certain circumstances and
arrangements with any particular investor may vary. Although FIM believes its fees
are competitive, lower fees for comparable services may be available from other
investment                                                                   advisers.

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                                                   Ferro Investment Management, LLC Brochure

Item 7 – Types of Clients

FIM provides investment advice and management to a private investment fund that it
sponsors, a mutual fund, a strategy replication platform, and to separately managed
accounts for pooled investment vehicles and high net worth individuals.
FIM may in the future provide the same or similar services to other investment funds and/or
separately managed accounts.
In the case of the Fund, FIM intends to restrict the number of Investors and will offer interests
only through non-public transactions in order to maintain the Fund’s exclusion from
“investment company” status under the Investment Company Act of 1940, as amended (the
“Investment Company Act”).
Prospective Investors in the Fund must meet eligibility criteria, and are subject to certain
withdrawal requirements and limitations.         Prospective Investors are encouraged to
thoroughly review the Fund’s Constituent Documents, which set forth all of the terms in
detail. Each Investor generally must be an “accredited investor” (as defined in Regulation D
under the Securities Act of 1933), a “qualified client” (as defined in Rule 205-3 under the
Investment Advisers Act of 1940, as amended), and must meet other criteria as specified in
the Constituent Documents. The minimum initial investment is $250,000, subject to waiver
at the discretion of FIM.
Generally, similar terms will apply to Separate Accounts, though such Separate Accounts may
have terms that differ or are more favorable than those for the Fund.

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                                                    Ferro Investment Management, LLC Brochure

The Mutual Fund with respect to which FIM acts as a sub-adviser generally requires a
minimum initial investment of $1,500, although minimum investments may vary by share
class.