Harbour Investment Management LLC

Item 5 – Fees and Compensation
Investment Management
The fee calculation is based on the fair market value of the account(s) as of the end of each
quarter. Fees paid to us for management services are paid in arrears quarterly and not in
advance of services, and they are deducted directly from our client’s account(s) unless other
arrangements have been made. Our fee calculation is based on assets under management in
each client account. The Adviser calculates the advisory fee based on the prior quarter end
value, multiplied by the advisory fee divided by 365 and then multiplied by the actual
number of days in the quarter. The fee is deducted based on a separate written

ADV 2A – Firm Disclosure Brochure

authorization between the custodian and the Client.

A few accounts are charged a fixed dollar fee. Most clients authorize Harbour to directly
debit fees from client accounts but may elect to be billed directly for fees.

Fees may be negotiated for larger accounts or accounts affiliated with existing clients but
are generally charged in accordance with the following fee schedule:

                                          Fee Schedule
                 Assets Under Management                  Annual Fee (% of Assets)
                       First $1,000,000                             0.80%
                       Next $1,000,000                              0.70%
                       Next $3,000,000                              0.50%
                  Amount over $5,000,000                            0.25%
          Minimum Quarterly Fee per Account                          $250

   •    Fees may be negotiated based on account size and complexity of investments.

   •    Clients will receive quarterly statements from the Custodian that provides details of
        the advisory fees.

   •    The investment advisory fee in the first period of service is pro-rated from the
        inception date of the account[s] to the end of the first quarter.

   •    Asset management fees are exclusive of and in addition to, brokerage fees,
        transaction fees, and other related costs and expenses.

   •    The firm will not have the authority or responsibility to value portfolio securities.

Financial Planning
Financial planning services are included in the investment management fee.

For clients who are not investment management clients, a base rate of $1,500 will be
assessed on an annual basis for financial planning services. An additional hourly rate of
$200 per hour may be charged if there are multiple planning scenarios, further changes,
and/or supplemental meetings.

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If a financial planning client elects to sign up for investment management services, their
financial planning fee will be rebated upon commencement of investment management.

Mutual Fund Share Class Disclosures
Harbour Investment Management, LLC strives to select the lowest cost share class available;
however, certain mutual fund share classes charge a 12b-1 fee that generally amounts to an
additional .25% expense ratio or more. The purpose of 12b-1 fees, as approved by the
SEC, are to cover marketing expenses and shareholder services such as support services and
“other expenses” such as legal, accounting and the administrative functions of the
custodian. When selecting a mutual fund, Investment Advisor Representatives have a
fiduciary duty to choose the share class that helps manage the overall fee structure of the
account. The entire fee structure includes such fees as the asset management fee, the
expense ratio and ticket charges.

   •    Mutual funds typically offer multiple share classes, including lower-cost share
        classes that do not charge 12b-1 fees and are therefore usually less expensive.

   •    Investment Advisor Representatives will consider investing Client funds in 12b-1
        fee-paying share classes even when a lower-cost share class is available as
        appropriate to account for the overall fee structure and tax considerations as well as
        attributes of a fund not available for lesser fees.

Compensation for Sales of Securities
Harbour Investment Management, LLC does not receive commission compensation for
advisory services.

Other Fees and Expenses
Clients will incur transaction charges for trades executed in their accounts. These
transaction fees are separate from asset management fees. Clients will also pay the
following separately incurred expenses, which we do not receive any part of: charges
imposed directly by a mutual fund, index fund, or exchange traded fund which shall be
disclosed in the fund’s prospectus (i.e., fund management fees and other fund expenses).

If a Client’s assets are invested in mutual funds or other pooled investment products,
Clients should be aware that there will be two layers of advisory fees and expenses for
those assets. Client will pay an advisory fee to the fund manager and other expenses as a

ADV 2A – Firm Disclosure Brochure

shareholder of the fund. Client will also pay Advisor the advisory fee with respect to those
assets. Most of the mutual funds available in the program may be purchased directly.
Therefore, Clients could generally avoid the second layer of fees by not using the
management services of Harbour Investment Management, LLC and by making their own
investment decisions. Further information regarding fees assessed by a mutual fund is
available in the appropriate prospectus.

Fees for Serving as Investment Advisor on Certain Trusts
We may also serve as investment advisor on certain trusts requiring a corporate trustee.
Fees may differ from our fee schedule based on factors such as the size of account and the
corporate trustee selected to administer the trust.
Termination
A contract between Harbour Investment Management, LLC and a Client may be cancelled
with written notice by either the client or by Harbour, in which case prorata fees will apply
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Item 7 – Types of Clients
The advisory services offered by Harbour Investment Management, LLC are generally
provided to individuals, high net worth individuals, corporate pension and profit-sharing
plans, corporations and charitable organizations.

Our account minimum is $500,000 but smaller accounts may be accepted based on several
factors including the client relationship.

ADV 2A – Firm Disclosure Brochure