The Magnolia Group LLC

Item 5 – Fees and Compensation

Compensation earned by The Magnolia Group for providing investment advisory services to the Capital
Fund (“Fund”) is generally comprised of an asset-based management fee (the “Management Fee”), as well
as, in certain circumstances, a performance-based fee. The Magnolia Group no longer receives advisory
fees for services provided to the Fund of One.

The Capital Fund

The Capital Fund pays to The Magnolia Group on the first day of each fiscal quarter a Management Fee
equal to 0.25% (1% annualized) of the beginning net asset value of each limited partner’s capital account.
In the event of termination of the advisory arrangement, any adjustments for unearned fees will be
determined by the offering documents. The Management Fee is non-negotiable, however, the Firm, in
its sole discretion, may elect to reduce, waive or calculate differently the Management Fee with respect
to any limited partner or reallocate any of its Management Fee to any limited partner; provided, however,
that no such reduction, waiver, or calculation shall increase the amount thereof to be borne by any other
limited partner. The Management Fee will be calculated by the third party administrator and deducted
directly from the Capital Fund.

The Firm will also be compensated through an incentive allocation of 10% (subject to a high-water mark).
For more details on the calculation of the performance fee, please refer to the amended Partnership
Agreement. Expenses of the Capital Fund will be paid by the Capital Fund and allocated among all limited
partners and the Capital Fund shall pay, or reimburse the Firm (or its affiliates), for all organizational
expenses and operating expenses.

Brokerage commissions and/or transaction ticket fees charged by the qualified custodian are billed
directly to the Capital Fund by the qualified custodian. The Magnolia Group does not receive any portion
of such commissions or fees from the Capital Fund or the qualified custodian. All fees paid to The
Magnolia Group for investment advisory services to the Capital Fund are separate and distinct from the
fees and expenses charged by third parties (including broker/custodians). These separate fees and
expenses include, but are not limited to, custodial fees, certain legal fees, administrator fees, or consultant
fees, transaction fees, brokerage fees and commissions, wire transfer and electronic fund fees, and other
fees and taxes on brokerage accounts and securities transactions.

For further information regarding brokerage arrangements, please refer to Item 12 – Brokerage Practices
of this Brochure.

The Capital Fund’s specific fee structure is set forth in the Partnership Agreement.

The Magnolia Group, LLC                            Page 5                                  Form ADV Part 2A

Fund of One

The Magnolia Group does not earn a management fee or performance-based fee from the Fund of One.
The Fund of One will incur additional costs related to the operation of the Special Purpose Vehicle “SPV”
including but not limited to accounting fees, legal fees, insurance and bonding costs, trading expenses
(including brokerage commissions), and custodial fees. These “operating expenses” and other
“extraordinary expenses” to be borne by the SPV are defined in the limited partnership agreement.

Item 7 – Types of Clients

The Magnolia Group provides investment advice to the pooled investment vehicle and a fund of one.

The original capital contribution by a limited partner in the Capital Fund will be not less than $2,000,000,
except to the extent that the Firm, in its sole discretion, permits an original capital contribution in a lesser
amount. Additional capital contributions shall be in a minimum amount of $100,000, unless otherwise so
agreed.

The Fund of One is a single investor entity with no minimum required capital contribution.

The Magnolia Group, LLC                             Page 6                                  Form ADV Part 2A