Lumbard & Kellner LLC

Fees and Compensation
    Lumbard & Kellner, LLC charges a percentage of assets under management for its services. Fees
    are deducted from the custodial account monthly; with fees being collected in arrears. Fees are
    calculated either based on the market value on the last day of the month, or, on the clients’
    average daily account balance. All fees paid to Lumbard & Kellner, LLC for investment
    advisory services are separate and distinct from the expenses charged by mutual funds to their
    shareholders. These fees and expenses are described in each fund’s prospectus and will
    generally include a management fee and other fund expenses. The firm, or its employees, is not
    compensated in any other forms (hourly fee, performance-based fees, or any compensation
    attributable to purchase/sale of a security). The firm pays the cost of custody as part of its
    service; the client is responsible for brokerage and transactional costs. The firm does not engage
    in soft dollar arrangements with any brokers.

    Fee Schedule*
                              First             $ 500,000           1.10%
                              Next             $ 1,000,000          0.80%
                              Above            $ 1,500,000          0.50%

    *Fees are generally not negotiable, but the firm has made special arrangements under certain
    circumstances and reserves the right to do so in the future.

ADV Part 2A – Firm Brochure                     Page 4                                       Lumbard & Kellner

Types of Clients
    The firm offers its services to high-net-worth individuals and other than high net worth
    individuals. From time to time, the firm may also offer its services to trusts, estates, charitable
    organizations, pensions, and profit-sharing plans. The firm requires a new account to be a
    minimum of $1.5 million in assets; this can be spread over multiple accounts.

      Methods of Analysis, Investment Strategies and Risk of Loss
    Investing in securities involves risk of total loss; thus clients should be prepared to bear this risk.
    Lumbard Investment Counseling uses a fundamental approach to valuing securities and making
    investment decisions. The firm uses many different methods of assessing the value of each
    security.

    Fundamental analysis of businesses involves analyzing its financial statements and health, its
    management and competitive advantages and its competitors and markets. Fundamental analysis
    is performed on historical and present data but with the goal of making financial forecasts. There
    are several possible objectives; to conduct a company stock valuation and predict its probable
    price evolution; to make a projection on its business performance; to evaluate its management
    and make internal business decisions and to calculate its credit risk. The risk assumed is that the
    market will fail to reach expectations of perceived value.

      Equity
    The firm looks at a company’s future earning potential and then applies what it feels is a
    reasonable multiple to those earnings in order to gauge the attractiveness of the current market
    price. The firm also takes into consideration the dividend and yield, and their relationship to the
    expected total return. The firm examines the quality of a company’s management and judges
    whether they have exercised prudence and good judgment. All this is viewed in the light of the
    current economic cycle and the firm’s economic forecast.

      Fixed Income
    The firm looks at fixed income securities as a source of income and potential appreciation. We
    typically do not buy fixed income securities with the intent to hold until maturity, as we are ever
    mindful of the eroding power of inflation. The firm considers many metrics when analyzing a
    fixed income security. These metrics include, but are not limited to, duration, credit quality, yield
    to maturity, and features such as putable/callable. These factors are all combined with the firm’s
    opinion of the economic forecast.

ADV Part 2A – Firm Brochure                        Page 5                                        Lumbard & Kellner

      Alternative Investments
    The firm frequently invests a modest percentage of client assets in exchange-traded funds (ETF)
    that offer the opportunity to hedge against a decline in the value of commodities, currencies,
    stocks, or bonds.

      General Risks
    The Advisor does not primarily recommend one particular type of security. However, with any
    investment you could lose all or part of your investments managed by the firm, and your
    account’s performance could trail that of other investments. Some of those risks are:

    Asset Class Risk
    Securities in your portfolio(s) or in underlying investments such as mutual funds may
    underperform in comparison to the general securities markets or other asset classes.

    Concentration Risk
    To the extent that the firm recommends portfolio allocations that are concentrated in a particular
    market, industry or asset class, your portfolio may be susceptible to loss due to adverse
    occurrences affecting that market, industry, or asset class.

    Equity Securities Risk
    Equity securities are subject to changes in value that may be attributable to market perception of
    a particular issuer or general stock market fluctuations that affect all issuers. Investments in
    equity securities may be more volatile than other types of investments.

    Growth Securities Risk
    Growth companies are companies whose earnings growth potential appears to be greater than the
    market, in general, and whose revenue growth is expected to continue over an extended period.
    Stocks of growth companies or “growth securities” have market values that may be more volatile
    than those of other types of investments. Growth securities typically do not pay a dividend,
    which may help cushion stock prices in market downturns and reduce potential losses.

    Issuer Risk
    Your account’s performance depends on the performance of individual securities in which your
    account invests. Any issuers may perform poorly, causing the value of its securities to decline.
    Poor performance may be caused by poor management decisions, competitive pressures, changes
    in technology, disruptions in supply, labor problems or shortages, corporate restructurings,
    fraudulent disclosures, or other factors. Changes to the financial condition or credit rating of an
    issuer of those securities may cause the value of the securities to decline.

    Management Risk
    The performance of your account is subject to the risk that our investment management strategy
    may not produce the intended results.

ADV Part 2A – Firm Brochure                      Page 6                                      Lumbard & Kellner

    Market Risk
    Your account could lose money over short periods due to short-term market movements and over
    longer periods during market downturns. The value of a security may decline due to general
    market conditions, economic trends, or events that are not specifically related to the issuer of the
    security or to factors that affect a particular industry or industries. During a general downturn in
    the securities markets, multiple asset classes may be negatively affected.

    Market Trading Risks
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