Provident Advisors LLC

Fees and Compensation
Description

         The manner in which fees are charged by Provident is described in greater detail
         in each private fund’s offering memorandum. Fees are generally not negotiable.
         Provident provides certain investment advisory and administrative services to
         the Master Fund, the PCM Provident Agency Fund LP and the PCM Provident
         Agency Fund Ltd. (collectively the “PCM Provident Agency Funds”). For its
         services, Provident receives a monthly management fee equal to 0.125% (1.5%
         per annum) of the gross asset value of each shareholder’s or limited partners’
         interest in a private fund client. The monthly management fee is paid in advance
         and is directly deducted from the Master Fund’s accounts as of the first day of each
         month. Requests for capital withdrawals or for terminations of accounts are only
         permitted with 90 days advance notice and are effected as of the last day of the
         corresponding quarter. All or a portion of the management fees received by
         Provident from the PCM Provident Agency Funds may be paid to any sub-advisor
         used by Provident to manage the Master Fund’s assets. Any portion of the
         management fee paid to a sub-advisor is determined by agreement between
         Provident and the sub-advisor.

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         At the end of each year, Provident and an affiliated entity of the Sub-Advisor share
         a performance fee allocation equal to 20% of the net profits allocable to each
         shareholder or limited partner account, subject to a high water mark. The
         performance fee allocation is calculated monthly and allocated annually to the
         general partner or Provident. Accounts terminated prior to year-end will be
         charged a prorated performance fee allocation. Any portion of the performance
         fee allocated to a sub-advisor is derived from the performance fee paid by a client
         to Provident and is determined by agreement between Provident and the sub-
         advisor.

         Although historically Provident has not reduced its investment advisory fees,
         Provident, in its sole discretion, may reduce its investment advisory fees based
         upon certain criteria (for example, historical relationship, type of assets,
         anticipated future earning capacity, anticipated future additional assets, dollar
         amounts of assets to be managed, related accounts, account composition,
         negotiations with clients, etc.).

         In addition, Provident is reimbursed monthly for the PCM Provident Agency
         Funds’ administrative costs, such as legal, audit, accounting, reporting and any
         service provider or transaction-related costs. Reimbursements are made to
         Provident from the Master Fund’s account. The PCM Provident Agency Funds do
         not bear any portion of the overhead of the General Partner or Provident.

Other Fees

         Provident’s 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, and other third parties
         such as custodial fees, deferred sales charges, odd-lot differentials, transfer taxes,
         wire transfer and electronic fund transfer fees, and other fees and taxes on
         brokerage accounts and securities transactions. As part of Provident’s cash
         management practices, client funds may be placed in money market funds that
         pay management fees to unaffiliated investment advisers. As such, client assets
         held in those money market funds will be subject to two layers of management
         fees.

         Underlying investors should refer to the offering memorandum for their private
         fund for information on their fund’s fees and expenses.

Types of Clients
Description

         Provident provides investment management services to private funds, as
         described above.

Account Minimums

         Provident requires a minimum size for client accounts of $1 million. Such
         minimums may be waived at Provident’s sole discretion.

Methods of Analysis, Investment Strategies and Risk of Loss
         We (or sub-advisors selected by us to manage portfolios) select specific
         investments for the investment portfolios we manage through the use of
         fundamental and technical analysis.

         Fundamental analysis is a method of evaluating an investment by attempting to
         measure its intrinsic value through examining related economic, financial and
         other qualitative and quantitative factors. This includes, for example, evaluating

                                  Provident Advisors LLC

a bond's value considering economic factors such as interest rates and the overall
state of the economy and by considering information about the bond’s issuer, such
as potential changes in credit ratings.

Technical analysis is a method of evaluating securities by analyzing statistics
associated with market activity, such as past prices and trading volume. Technical
analysts do not attempt to measure a security's intrinsic value, but instead use
charts and other tools to identify patterns that can suggest future performance.

Our investment strategies may include long-term and short-term purchases and
sales, and the use of options, margin, trading (selling securities shortly after
purchasing them) and short sales (selling securities we do not own). The offering
documents for each private fund client whose portfolio we manage may set forth
restrictions on the types of investments we can purchase or the investment
strategies we can employ, as well as risk factors relevant to the investment
strategy of the applicable client.

Although we manage each private fund client’s account in a manner consistent
with the specific risk tolerances and investment objectives of that private
investment fund, there can be no guarantee that our efforts will be successful.
General economic conditions, current interest rates, and any number of other
factors can affect investment performance.

The underlying investors of our private investment fund clients should be
prepared to bear the risk of loss. All investments present the risk of loss, including
(among other things) loss of principal, a reduction in earnings (including interest,
dividends and other distributions), and the loss of future earnings.

Our investment strategies focus on residential mortgage-backed securities,
commercial mortgage-backed securities, structured assets and mortgage-backed
securities derivatives collateralized by commercial mortgage loans. These types
of securities are influenced by the rate of delinquencies and defaults experienced
on real estate loans and the severity of the losses incurred as a result of such
defaults. The factors influencing delinquencies on real estate loans, defaults and
loss severity include:

          economic and real estate market conditions by industry sectors (for
           example, multifamily, retail, office, et cetera);
          the terms and structure of the mortgage loan; and
          any specific limits to legal and financial recourse upon a default under
           the terms of the mortgage loan.

Investments in mortgage-backed securities may be particularly sensitive to
changes in prevailing interest rates. The yield and payment characteristics of
mortgage-backed securities differ from traditional debt securities. Interest and

                          Provident Advisors LLC

           principal prepayments are made more frequently, usually monthly, over the life
           of the mortgage loans and principal generally may be prepaid at any time because
           the underlying mortgage loans generally may be prepaid at any time. Faster or
           slower prepayments than expected on underlying mortgage loans can
           dramatically alter the yield to maturity of a mortgage-backed security.

           We may make extensive use of various types of derivative instruments for our
           clients. These instruments typically involve highly leveraged exposure to the
           underlying assets from which their performance is derived. The use of derivatives
           involves a variety of material risks, including the possibility of counterparty non-
           performance as well as of deviations between the actual and the theoretical value
           of such derivatives. Derivatives are subject to a wide variety of contractual terms
           including a range of “early termination events” permitting the counterparty to
           liquidate the position prematurely. Derivatives may be extremely illiquid.