Kerns Capital Management Inc

Item 5 – Fees & Compensation

    1. Management Fees

Generally, KCM charges fees based on a percentage of assets under management.

        Individual Clients

Client advisory fees are based on the value of the account on the last day of the month and are billed
either monthly or quarterly, in arrears, as set forth in the Investment Advisory Agreement. Fees are
deducted from the client’s account when possible. KCM’s annual investment management fee is
negotiable and ranges from .5 to 2.0%, with a minimum annual fee of $2,500.

Cash Positions. At any time and for a substantial length of time KCM may hold a significant portion of a
client’s assets in cash or cash equivalents. Investments in these assets may cause a client to miss positive
performance in the markets. Unless KCM agrees otherwise in writing, account assets consisting of cash
and cash equivalents are included in the value of an account’s assets for purposes of calculating its
advisory fee. A client can advise KCM not to maintain (or to limit the amount of) cash holdings in the
client’s account.

Fee Differentials. Fees are negotiable and may vary by client depending upon various objective and
subjective factors, including but not limited to the representative assigned to the account, the amount of
assets to be invested, the complexity of the engagement, the anticipated number of meetings and

servicing needs, related accounts, future earning capacity, anticipated future additional assets, and
negotiations with the client. Thus, similar clients could pay different fees, which will correspondingly
impact a client’s net account performance. Moreover, the services provided by KCM might be available
from other advisors at lower fees. All clients and prospective clients should be guided accordingly.

    2. Other Fees.

KCM’s advisory fees are exclusive of brokerage commissions, transaction fees, and other related costs and
expenses which shall be incurred by the client. Clients may incur certain charges imposed by custodians,
brokers, third-party investment and other third parties such as fees charged by managers, custodial fees,
deferred sales charges, odd-lot differentials, transfer taxes, wire transfer and electronic fund fees, and
other fees and taxes on brokerage accounts and securities transactions. Mutual funds and exchange
traded funds also charge internal fees, which are disclosed in a fund’s prospectus. These charges, fees
and commissions are exclusive of and in addition to KCM’s fee, and KCM shall not receive any portion of
those commissions, fees, and costs, unless otherwise disclosed.

    3. Termination.

Accounts initiated or terminated during the billing period will be charged a prorated fee. Upon
termination of any account, any prepaid, unearned fees will be promptly refunded, and any earned,
unpaid fees will be due and payable. Individual clients have the right to terminate the Investment Advisory
Agreement without penalty within five business days after entering into the agreement.

Item 7 – Types of Clients

KCM provides services to individuals, their trusts and estates, and a mutual fund.

To open an account with us for individual portfolio management services, we typically require a minimum
account size of $500,000. We aggregate client accounts for purposes of this requirement.

Investors in a Fund must meet a minimum initial investment requirement contained in the prospectus or
offering memorandum.

Retirement Rollovers: A client or prospective client leaving an employer typically has four options
regarding an existing retirement plan (and may engage in a combination of these options): (i) leave the
money in the former employer’s plan, if permitted, (ii) roll over the assets to the new employer’s plan, if
one is available and rollovers are permitted, (iii) roll over to an Individual Retirement Account (“IRA”), or
(iv) cash out the account value (which could, depending upon the client’s age, result in adverse tax
consequences). If KCM recommends that a client roll over their retirement plan assets into an account to
be managed by KCM, such a recommendation creates a conflict of interest if KCM will earn an advisory
fee on the rolled over assets. No client is under any obligation to roll over retirement plan assets to an
account managed by KCM. KCM’s Chief Compliance Officer, Marty Kerns, remains available to address any

questions that a client or prospective client may have regarding the conflict of interest presented by a
rollover recommendation.