Peterson Investment Management Inc

Item 5    Fees and Compensation      Page 5

     A. Advisory Service Compensation: I am compensated by a fee based on assets under management according
        to the schedule below. Fees are not negotiable and are calculated on portfolio value. Multiple accounts for
        the same household shall be aggregated to determine the lowest possible fee and that fee shall be
        apportioned such that all accounts pay the same rate per dollar under management. 501(c)(3) charitable
        organizations receive a 30% discount from the schedule below.

            Amount under Supervision       Annual Fee
            First $500,000                 1.000%
            Next $1,000,000                0.750%
            Next $1,000,000                0.500%
            Over $2,500,000                0.375%

           Examples of Annual Fee Calculation:

            Example     Portfolio        Calculation                         $ Annual         Annual Fee %
                        Value                                                Fee
            Client #1   $500,000         $500,000 x 0.01                     $5,000           1.000%
            Client #2   $1,000,000       ($500,000 x 0.01) + ($500,000 x     $8,750           0.875%
                                         0.0075)
            Client #3   $500,000                                             $3,750           0.750%
                        $1,500,000                                           $11,250          0.750%
                        $2,000,000     ($500,000 x 0.01) +                   $15,000          0.750%
                                       ($1,000,000 x 0.0075) +
                                       ($500,000 x 0.005)
     B.   Fee Payment: Fees are paid quarterly, in advance, and deducted from the client’s account. New clients,
          who commence management during a quarter, will have their management fee prorated based on the
          quarter’s remaining term and that fee will be paid in arrears with the following quarter’s fee billing.

          As per WAC 460-24A-106, “In all instances, the Adviser will send the client a written invoice, including the
          fee, the formula used to calculate the fee, the fee calculation itself, the time period covered by the fee,
          and, if applicable, the amount of assets under management on which the fee was based and the name of
          the custodian(s) on your fee invoice. The Adviser will send these to the client concurrent with the request
          for payment or payment of the Adviser’s advisory fees. We urge the client to compare this information
          with the fees listed in the account statement.”

     C.   Example of quarterly fee billing for a current client: Client has a portfolio worth $500,000 on December
          31. On January 2, I bill the client’s portfolio custodian one quarter of the $5,000 annual fee for the first
          quarter. The custodian deducts $1,250 from the portfolio’s money market fund and journals it to
          Peterson Investment Management, Inc.

          Example of quarterly billing for a new client: Client commences management with a portfolio worth
          $450,000 on November 30. There is no fee billed in advance because the client commenced management
          during a quarter. On December 31, the portfolio is worth $500,000. I bill a fee in arrears of $382.19 for
          the 31-day period from November 30 to December 31. The fee is calculated as: $450,000 (portfolio value)
          x 0.01 (annual rate) x (31/365) (fraction of year). Additionally, I bill a fee in advance of $1,250.00 for the
          first quarter fee. The fee is calculated as $500,000 (portfolio value) x 0.01 (annual rate) x 0.25 (reducing
          annual rate to one quarter).

D. Other Fees or Expenses Paid:
        a. Portfolio Management Interface License: Peterson Investment Management, Inc. pays for the
             portfolio management software license to connect to Charles Schwab & Co., Inc. Clients are free
             to select the custodian of their choice, but we reserve the right to charge their portfolio for the
             cost of the interface license for a custodian other than Charles Schwab & Co.
        b. Commissions: The custodian for the client’s portfolio of securities may receive payment from the
             client’s portfolio for transactions. Purchases and sales of stocks may incur commissions
             according to the custodian’s fee schedule. The commission rate is influenced by many factors,
             including portfolio size, total assets that the client has with the custodian, quantity of shares
             purchased, client’s election to receive portfolio statements and trade confirmations via
             electronic delivery and promotional rates for new accounts.
        c. Markups and Markdowns: The custodian will increase the purchase price or reduce the sales
             price of a security transaction when the custodian is buying for its own account as a principal,
             rather than acting as an agent for buyer or seller. The markup or markdown is in lieu of a
             commission.
        d. Transaction Fees: The custodian may charge an extra fee or higher commission for transactions
             on foreign exchanges.
        e. Foreign Tax: The custodian may be required to withhold foreign tax on dividend payments by
             foreign companies.
        f. Fund Management Fees: investments made in mutual funds, exchange traded funds and any
             other type of managed investment may incur management fees in addition to those levied by
             Peterson Investment Management, Inc.
E. Fee Billing and Advisory Contract Termination: As covered in Item 5.B., management fees must be paid in
   advance. Should a client terminate advisory services, we will issue a prorated refund for the prepaid
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Item 7   Types of Clients   Page 8

 Peterson Investment Management, Inc. provides investment advisory services to the following account types:
     A. Individuals:
              a. Community Property accounts
              b. Custodial accounts
              c. Designated Beneficiary Plans accounts
              d. Estate accounts
              e. Individual accounts
              f. Individual Retirement Accounts
                        i. Contributory IRAs
                       ii. Inherited IRAs
                     iii. Rollover IRAs
                      iv. Roth IRAs
                       v. SEP-IRAs
                      vi. Spousal IRAs
              g. Joint Tenant accounts
              h. Trust accounts
                        i. Generation Skipping Trusts
                       ii. Irrevocable Living Trusts
                     iii. Revocable Living Trusts
                      iv. Survivor Trusts
                       v. Testamentary Trusts
     B. Businesses: Corporate

 Peterson Investment Management, Inc. requires $1,000,000 in managed assets for new clients. The minimum
 may be met at the household level with multiple accounts. The adviser may, at its discretion, waive the new
 client minimum for those referred by existing clients. There is no minimum for maintaining accounts.

 Adviser reserves the right to reject prospective clients whom the adviser believes have unreasonable risk or
 return expectations or appear unlikely to reach and maintain financial security. The adviser’s ability to accept
 new clients also depends on the complexity of onboarding a prospective client and whether the time to
 onboard a new client would adversely affect the adviser’s existing client and firm responsibilities.