Hedges Asset Management LLC

Item 5 Fees and Compensation

ADVISORY FEES

The following information describes how Hedges Asset Management is compensated for the
services we provide to our clients. The specific manner in which fees are charged and the
compensation we receive may differ between clients depending upon the individual Investment
Management Agreement with each client. We may charge higher or lower fees than are available
from other Firms for comparable services. Fees may be subject to negotiation under certain
circumstances as agreed on by the Firm and the client.

Investment Management Fees. In consideration for providing investment management services
and pursuant to the terms of the Investment Management Agreement with the client, Hedges Asset
Management charges clients an annualized asset-based fee based on the client’s assets under
management (“AUM”), taken quarterly in advance according to the following fee schedule:

                                         Fee Breakdown

                             Assets Under Management                Fee %

                                  First $100,000,000                 0.75

Hedges Asset Management LLC
Form ADV Part 2A                                                                                  5

                                  Next $100,000,000                    0.5
                                  Above $500,000,000                   0.4

Clients must authorize the deduction of advisory fees from their managed accounts by the qualified
custodian. Hedges Asset Management does not withdraw fees directly from client’s accounts. All
fees will be supported by an invoice to the client itemizing the fee.

Additional Fees and Expenses. Clients will incur transaction charges and/or brokerage fees when
purchasing or selling securities. These charges and fees are typically imposed by the broker-dealer
through which account transactions are executed. For more information on our brokerage
practices, please refer to Item 12 - Brokerage Practices of this Brochure.

The fees that clients pay to our Firm for investment advisory services are separate and distinct
from the fees and expenses charged by mutual funds and/or exchange traded funds (described in
each fund’s prospectus) to their shareholders. The fees charged directly by mutual funds and
exchange traded funds will typically include a management fee and other fund expenses. Hedges
Asset Management does not receive any portion of the fees and expenses charged by mutual funds
and/or exchange traded funds.

To fully understand the total costs associated with their investment portfolio, clients should review
all the fees charged by their custodian, our Firm, broker/dealers, mutual funds, exchange traded
funds, private funds, and others, and the tax implications of any investment strategy.

Termination. Investment Management Agreements with our clients may generally be terminated
by either party upon thirty (30) days’ written notice. Upon termination of our status as the client’s
investment adviser, Hedges Asset Management will not take any further action with respect to the
client’s account(s). Clients will be responsible for instructing their custodian and monitoring their
account for the final disposition of assets.

Hedges Asset Management bills clients quarterly in advance. Terminating clients receive a refund
for unearned fees. The Firm determines the amount to be refunded to the client, if any, by
subtracting its fees earned as of the time of termination from any amounts collected in advance as
of the time of termination.

Brokerage Commissions. Hedges Asset Management does not receive brokerage commissions
from the sale of securities or other investment products. Our compensation for recommending
securities and investment products is limited to the advisory fees described above.

ERISA Accounts: Hedges Asset Management is deemed to be a fiduciary to any advisory clients
that have individual retirement accounts (IRAs) pursuant to the Employee Retirement Income and
Securities Act ("ERISA"), and regulations under the Internal Revenue Code of 1986 (the "Code").
As such, our Firm is subject to specific duties and obligations under ERISA and the Internal
Revenue Code that include, among other things, restrictions concerning certain forms of
compensation. To avoid engaging in prohibited transactions, our Firm may only charge fees for
investment advice about products for which our Firm and/or our related persons do not receive any
Hedges Asset Management LLC
Form ADV Part 2A                                                                                6

commissions or 12b-1 fees, or conversely, investment advice about products for which our Firm
and/or our related persons receive commissions or 12b-1 fees, however, only when such fees are
used to offset our Firm’s advisory fees.

Any material conflicts of interest between clients and Hedges Asset Management or our employees
are disclosed in this Brochure. If at any time, additional material conflicts of interest develop,
Hedges Asset Management will provide our clients with written notification of those material
conflicts of interest or an updated Brochure.

TYPES OF CLIENTS

Hedges Asset Management offers investment advisory services to high net worth individuals and
limited partnerships. Client relationships may vary in scope and length of service.

ACCOUNT REQUIREMENTS

Hedges Asset Management requires a minimum account balance of $25,000. Hedges Asset
Management will aggregate accounts that originate from the same household when assessing the
minimum account balance. However, Hedges Asset Management, in its sole discretion may waive
or lower our base fee based on various criteria (i.e., anticipated future additional assets to be
managed, related accounts, account composition, negotiations with the client, etc.).