MD Sass LLC

Fees and Compensation
The Firm generally receives a management fee based on assets under management and, for
certain Clients, may receive a performance fee for providing investment management services.
(Please see “Performance Based Fees and Side-by-Side Management” in this Brochure).
Management fees are generally payable quarterly and are payable for any period that is less than
a full quarterly period based on a pro-rated amount.

The standard percentage of net assets annual fee for accounts managed in the concentrated value
equity strategy (“CV”) is 0.90% on the first $10 million of assets under management, 0.80% on
the next $50 million and 0.75% thereafter. The standard percentage of net assets annual fee for
accounts managed in the fixed income strategy (“FI”) is 0.40% on the first $25 million of assets
under management, 0.35% on the next $25 million, 0.25% on the next $50 million, and
negotiable thereafter. Management fees are billed to the separately managed account.

All Clients will also incur brokerage and other transaction costs. Please review the section
entitled “Brokerage Practices” herein for more information.

M.D. Sass may, at its discretion, negotiate fees which vary from and may be lower than the
standard fee schedule rates for CV and FI accounts. For example, M.D. Sass is a sub-adviser to
the Saratoga Large Capitalization Value Portfolio and the Integrity Short Term Government
Fund; the investment advisers to these registered mutual funds pay M.D. Sass a fee that is lower
than M.D. Sass’s basic fee schedule. In addition, M.D. Sass may accept accounts below the
minimum standard account size of $5 million, in which case the percentage of net assets annual
fee is generally 1.00% for CV accounts and 0.50% for FI accounts, subject to negotiation at the
discretion of M.D. Sass.

Fees for balanced and other accounts are based on various factors, including the investment
strategy, and their size and asset allocation guidelines; accordingly, the fees are negotiable and
are not subject to any standard fee schedule.

For the Portable Alpha Fund, the net assets annual management fee is 0.40% on the first $50
million, 0.35% on the next $100 million, 0.30%. on the next $100 million, and 0.25% thereafter.
The management fee is deducted from the Portable Alpha Fund by the Firm. For the Income
Opportunity Fund, the net assets management fee is 0.65% if there is no incentive fee and 0.25%
if there is an incentive fee (which is equal to 5% of any new appreciation attributable to each
limited partner’s capital account). The management fee and incentive fee, if any, is deducted
from the Income Opportunity Fund by the Firm.

In addition, M.D. Sass, in its sole discretion, may waive, reduce or rebate all or a portion of the
management fee in respect of any investor. No such waiver, reduction or rebate for the benefit
of any investor will entitle any other investor to such waiver, reduction or rebate.

Detailed information regarding the fees charged to the Private Funds is provided in the Private
Funds’ respective offering documents. In addition to management fees, investors of the Private
Funds will bear indirectly the fees and expenses charged to the Private Funds. Those fees and
expenses will vary, but typically will include fees associated with making or selling portfolio
investments, legal and accounting fees, taxes, commissions and brokerage fees, registration
expenses, fees to government regulatory agencies, the cost of directors’ and officers’ liability

insurance and other expenses, such as litigation. M.D. Sass or its affiliates may enter into
agreements or side letters with investors in the Private Funds which reduce the fees that investors
pay.

In the case where a Client’s account is invested in money market funds that pay a management
fee to the adviser of the money market fund, the Client is in effect paying two management fees.
Clients indirectly pay an investment management fee to the money market fund manager which
is in addition to the investment management fee paid to M.D. Sass.

Either M.D. Sass or the Client may terminate an investment management agreement per the
terms negotiated therein. Notice of termination must be given to the other party in writing. Each
Client is responsible to pay for services rendered until the termination of its respective
investment management agreement. Management fees are generally payable in arrears; however,
for certain Clients management fees are payable in advance. Upon termination, the fees charged
for investment management services will be pro-rated, and a pro rata refund for any unearned
fees will be issued if any fees have been paid in advance.

Performance Based Fees and Side-by-Side Management
M.D. Sass may be compensated based on the performance of an account depending upon the
strategies employed and the specific needs of the Client. Performance based fees create an
incentive for the Firm to make investments that are riskier or more speculative than would be the
case in the absence of a performance fee/allocation. Further, advisers have an inherent conflict
of interest to favor accounts that pay more in fees, such as performance based fees. In order to
address this conflict, M.D. Sass’s allocation and aggregation policy provides that investment
allocations are to be made pro rata across Client accounts with similar investment strategies.
Notwithstanding the foregoing, because of the diversity of objectives, risk tolerances, fund or
account investor-imposed limitations, tax situations, differences in the timing of capital
contributions/withdrawals among various Clients, and other factors considered relevant by the
Firm, there may often be differences among the Clients in the weighting and cost basis of
particular positions and in the particular securities and other-instruments held. M.D. Sass, at
times, utilizes order management systems for assistance in determining whether a Client that
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Types of Clients
M.D. Sass provides investment advice to our Clients, which may include, without limitation,
corporate profit sharing and pension funds, partnerships, funds of funds, high net worth
individuals and other substantial investors (endowment funds, corporate cash reserves, insurance
companies, investment companies, trusts and estates and public sector employee benefit funds),
clients that are jointly trusteed, and union, pension, health, welfare, annuity and other funds
through separately managed accounts and other investment vehicles.

The Firm generally requires a minimum separately managed account size of $5 million. Lower
minimums generally apply in the case of limited partnerships or limited liability companies of
which an affiliate is a general partner or managing member, or other M.D. Sass affiliates. The
Firm also may accept lower minimum account sizes in its discretion.

The Private Funds each operates as a pooled investment vehicle intended to provide management
expertise and other advantages to its investors. The minimum initial capital contribution that is

generally required for an investor of the Private Funds is $5 million which may be waived in
accordance with terms of the offering documents.

Methods of Analysis, Investment Strategies and Risk of Loss
Methods of Analysis/Investment Strategies
Our investment philosophy is to invest where and when we believe that there is the potential to
add value and where the related risk can be measured and controlled. This approach is applied to
asset allocation decisions, as well as bond and equity selection. Our philosophy has remained
constant over the years and emphasizes rotating between sectors in order to be opportunistic and
achieve high returns with low risk.

Concentrated Value

M.D. Sass’s CV strategy is a relative value approach to investing in equities, which seeks to
outperform relevant equity market indices through positive buy/sell disciplines. M.D.
Sass searches for high-quality companies that it believes are misperceived or out of favor with
positive long- term earnings growth prospects. M.D. Sass looks to buy when the risk-adjusted
present value of estimated future earnings exceeds the market price by at least 25%.

The Firm utilizes a multi-step, fundamental research process, focused on out-of-favor and/or
misperceived companies that meet M.D. Sass’s minimum liquidity and quality standards.
Preliminary company screening includes diligence on historical growth, competitive strength,
free cash flow, debt leverage and trading liquidity. The Firm analyzes candidates to understand
reasons for price drops, how the market’s perception may lag reality and catalysts for potential
price rebound.

Fixed Income

The M.D. Sass FI strategy invests primarily in short to longer-term U.S. government agency
issued and/or guaranteed MBS, CMOs and similar high credit quality securities. Some of M.D.
Sass’s FI strategy Clients will also invest in higher-yielding U.S. government agency, agency
non-guaranteed and non-agency fixed income securities. M.D. Sass seeks to outperform fixed
income benchmarks of comparable term duration on a risk-adjusted basis. M.D. Sass’s
investment strategy is long-only. M.D. Sass currently does not borrow money to invest in
securities.

M.D. Sass invests primarily in U.S. Treasuries, U.S. Agency securities and MBSs and CMOs
issued by government sponsored enterprises (“GSEs”), (e.g., Ginnie Mae (Government National
Mortgage Association), Fannie Mae (Federal National Mortgage Association) and Freddie Mac
(Federal Home Loan Mortgage Corporation)), the payments of which are backed by GSEs. In
addition, U.S. agency non-guaranteed securities include GSE issued Credit Risk Transfer
securities (CRT), Agency Commercial Mortgage-Backed Securities (and similar subcategories)
and non-agency securities include Prime Residential A Mortgage-backed securities, Rated
Reperforming Loan Mortgage-backed securities, Single Family Rental (SFR) (and other similar
subcategories).

M.D. Sass relies on rigorous analytical testing and will target stable fixed income securities
which have relatively moderate degrees of cash flow uncertainty, with attractive yields relative
to similar duration securities. M.D. Sass’s fixed-income professionals focus on in-depth
fundamental research and utilize a variety of quantitative analyses to ascertain mortgage
prepayment/extension risk and credit risk.

Portable Alpha Fund

The Portable Alpha Fund seeks to outperform the S&P 500 (the “index”) in a risk-controlled
fashion by utilizing the Firm’s FI strategy to generate excess returns over the index. M.D. Sass
achieves notional exposure to the index through equity futures and/or swaps. M.D. Sass then
invests in U.S. government agency issued and/or guaranteed MBS, CMOs and similar high credit
quality securities aiming to provide incremental returns at low relative risk. M.D. Sass relies on
rigorous analytical testing and will target stable Agency MBS and Agency CMOs which have
relatively moderate degrees of cash flow uncertainty, with attractive yields relative to similar
duration securities. M.D. Sass’s fixed-income professionals focus on in-depth fundamental
research and utilize a variety of quantitative analyses to ascertain mortgage
prepayment/extension risk and credit risk. The Portable Alpha Fund will use modest leverage
and seeks to control interest rate risk by hedging the portfolio’s duration to approximately two
years.

Income Opportunity Fund

The Income Opportunity Fund seeks to generate income-driven, absolute returns by investing
in, under normal circumstances, at least 80% of its assets in a multi-sector portfolio of fixed
income securities, including debt securities and other similar instruments issued by various U.S.
and non-U.S. public or private-sector entities, while controlling for return volatility. The Income
Opportunity Fund will seek to maintain a high and consistent level of income. Fixed income
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