Vela Investment Management LLC

Item 5: Fees and Compensation

A. Fee Schedule

Portfolio Management Fees

VELA’s annual investment management fee is 0.75% for the following Separately Managed
Accounts (SMAs) strategies: Small Cap and All Cap Concentrated. For the Large Cap SMA
strategy, the investment management fee is 0.50%. VELA uses the value of the account as of the
last business day of the billing period, after taking into account deposits and withdrawals plus or
minus 5% of the value of the account as of the previous end of day, for purposes of determining
the market value of the assets upon which the annual advisory fee is based. VELA also includes

cash, cash equivalents and money market funds in determining the market value of assets but
does not include a margin balance in determining the market value. The fees we charge for
investment advisory services are specified in the Investment Advisory Contract (IAC) between
VELA and each individual client.

VELA may also charge an account servicing fee. You will pay VELA an annual account servicing
fee which is documented in your IAC. Account servicing fees will be invoiced and billed directly
to you, payable by check, bank transfer, or debited from your custodial account(s), on either an
annual basis or quarterly basis, in arrears, as detailed in your IAC with VELA. The account
servicing fee will be waived if you are invested in a VELA strategy or mutual fund.

Mutual fund investments, including investments in the VELA Funds, pay an investment
management fee at the fund level. VELA does not charge an additional investment management
fee for mutual fund investments in accounts for which we provide investment management
services.

Some clients pay us a performance-based advisory fee. (Item 6 provides more information about

Item 7: Types of Clients

VELA generally provides advisory services to the following types of clients:

   ❖       Individuals
   ❖       High-Net-Worth Individuals
   ❖       Charitable Organizations
   ❖       Pension and Profit-Sharing Plans
   ❖       Corporations or Business Entities
   ❖       Endowments & Foundations
   ❖       Registered Investment Companies – VELA Funds

There is an account minimum of $1,000,000 for wealth management accounts which may be
waived at VELA’s discretion. For our SMAs we have also implemented account minimums: All
Cap Concentrated SMA - $2,000,000 Small Cap SMA - $5,000,000, and Large Cap SMA -
$1,000,000 all of which may also be waived by VELA at its discretion.