McRae Capital Management Inc

Item 5 Fees and Compensation
Compensation is calculated and payable on a quarterly basis. Fees are generally billed quarterly in
advance and are often debited directly to the client’s custody account in line with standing
instructions from the client. Some clients receive an invoice for fees, rather than the fee being
directly debited from their account. At the request of a client, MCM may directly debit or invoice a
client for fees. Contracts do not have an expiration date but may be cancelled by either party at any
time. In any partial calendar quarter, the advisory fee will be pro-rated based upon the number of
days that the account was open during the quarter. If an account is closed mid quarter, MCM will
refund the client any pre-paid fees based on the number of days that the account was open during
the quarter.

In the rare instances that a minor portion of a client’s assets are invested in mutual funds, the
client pays the fee designated by the fund as well as Registrant’s advisory fee. Clients will incur
brokerage and transaction costs, including commissions charged by the broker-dealer where the
account is held. Please see the Brokerages Practices section starting on Page 6 for a discussion
of our brokerage practices.

Registrant has a flexible fee schedule reflecting the differences in the size and composition of
various accounts. Registrant’s current fee schedule is 1% per annum on the first $3,000,000;
.75% on amounts between $3,000,000 and $5,000,000; and .5% over $5,000,000. This schedule
has changed from time to time and may change in the future in light of general economic and
industry conditions. MCM has, under some circumstances, negotiated different fee terms with
certain clients which include a waiver of fees or reduction in fees. Clients are advised that lower
fees for comparable services may be available from other sources.

The Registrant generally utilizes prices provided by our third-party portfolio management
software company, Black Diamond. Custodians may use a different pricing service, and there is a
chance there can be a slight discrepancy. MCM will use the price that it believes to be most
representative of the amount at which the security could be acquired or sold in a current
transaction between willing parties in which the parties each acted knowledgeably and without
compulsion.

The advisory fee for client accounts shall be charged on the asset value maintained in Black
Diamond as of the applicable billing date. In certain cases, the actual assets under management
may differ from the amount shown in Black Diamond due to, among other things, interest earned
on money market funds, amounts deposited, and amounts withdrawn.

Item 7 Types of Clients
MCM primarily provides customized investment management services to individuals as well as
pension and profit-sharing plans, trusts, estates, charitable organizations, and corporations or
other business entities.