Sectoral Asset Management Inc

Item 5 – Fees and Compensation

Separate Accounts - Basic Fee Schedule: The Adviser charges a fee consisting of a
percentage of assets under management. The Adviser’s basic fee schedule is equal, on
an annual basis, to 1% of assets under management. The basic fee schedule is
negotiable. In certain circumstances, the Adviser may negotiate a performance fee
arrangement, which will comply with the applicable requirements of Rule 205-3 under
the Investment Advisers Act of 1940 (the “Advisers Act”).

Fees are payable in arrears, on a monthly, quarterly, or semi-annual basis, based on
the average market value of assets under management for the given period.
Compensation is not payable before the services are provided.

Investors will normally incur fees related to custody and administration services,
which will be also disclosed in relevant prospectus. Additionally, investors will
normally incur brokerage and other transaction costs (refer to section 12).

Public Investment Funds: The fee schedule is defined in the prospectus of each fund.
The management fee may vary for each share class as determined in the pertinent
prospectus.

Investors will normally incur fees related to custody and administration services,
which will be also disclosed in relevant prospectus. Additionally, investors will
normally incur brokerage and other transaction costs (refer to section 12).

Venture Capital Funds: The Adviser acts as investment adviser to the venture capital
funds that are exempt from registration under the Investment Company Act. The
management fee structure is defined in the governing document of each fund, the
Limited Partnership Agreement (“LPA”).

For the New Emerging Medical Opportunities (“NEMO”) venture capital funds, the
Adviser receives management fee for the advisory services provided equal to, on a
quarterly basis, 0.5% (2.0% on an annual basis) of the aggregate committed capital
during the investment term, as defined in the LPA. After the expiration of the
investment term, the fee is equal to, on a quarterly basis, 0.3125% (1.25% on an
annual basis) of the aggregate committed capital until the end of the fund’s life.

For Medtech Ventures Fund, the Adviser receives management fee for the advisory
services provided equal to, on a quarterly basis, 0.625% (2.5% on an annual basis) of
the aggregate committed capital, plus any applicable sales tax, during the investment
term, as defined in the LPA. After the expiration of the investment term, the fee is
equal to, on a quarterly basis, 0.5% (2.0% on an annual basis) of the net invested

capital plus any applicable sales tax, as defined in the LPA, until the end of the fund’s
life.

The Adviser may enter into agreements that have the economic effect of waiving, in
whole or in part, the management fee borne by any Limited Partner. In addition, the
venture capital funds charge carried interest as defined in each fund’s governing
document. The Adviser is allocated a portion of the carried interest charged to the
Fund; the allocation percentage is determined at the discretion of the General
Partner of each fund.

The management and performance-based fees charged to each of the venture capital
fund are in addition to the other fees and expenses borne by such funds, including,
but not limited to, organizational expenses, investment expenses (i.e., expenses
related to the investment of the fund’s assets, including, without limitation,
brokerage commissions and interest expense), legal expenses, audit and tax
preparation expenses, taxes, fees and expenses of third-party administrators,
directors, depository banks, custodians, and other service providers, expenses
relating to the transfer of interests, and all other extraordinary expenses.

Item 7 – Types of Clients

Sectoral provides portfolio management services to investment companies (including
mutual funds) and venture capital funds.

Certain funds managed by Sectoral may not be available to U.S. investors, may limit
the number of U.S. investors they will accept, or may require that any U.S. investors
certify that they are “qualified purchasers” as defined in Section 2(a) (51) of the
Investment Company Act of 1940. These funds also may impose qualification
requirements with respect to non-U.S. investors. Investors in venture capital funds
managed by Sectoral generally are required to meet certain conditions, including a
minimum initial investment (typically $1 million), minimum subsequent investments
(typically $100,000), and other qualifications, such as net worth, investment
sophistication, and country of residence. The funds may waive the minimum
investment requirements at their discretion. Investors must submit a complete
subscription agreement. Shares in certain funds managed by Sectoral may not be
available to investors in certain markets.

In addition, certain of the funds managed by Sectoral limit the ability of investors to
withdraw capital or redeem or transfer their shares for a period of time after
investment. These withdrawals, redemption or transfer provisions may differ among
the different funds managed by Sectoral. A fund may waive or alter these
requirements.