Soft Dollar Services provided strictly within the guidlines of S.E.C. Section 28(e):

Soft Dollars Defined

The Commission has defined soft dollar practices as arrangements under which products or services other than execution of securities transactions are obtained by an adviser from or through a
broker-dealer in exchange for the direction by the adviser of client brokerage transactions to the
broker-dealer. An individual or firm must exercise "investment discretion" over an account, as
defined in Section 3(a)(35) of the Exchange Act, in order to use client commissions to obtain
research under Section 28(e) of the Exchange Act ("Section 28(e)").

Pre-1975 Practices

Soft dollar arrangements developed as a means by which brokers discounted commission rates that were fixed at artificially high levels by exchange rules. Prior to 1975, institutional advisers took advantage of competition among brokers and their willingness to accept compensation lower than the fixed rates in order to recapture portions of the commissions paid on institutional orders. Fixed commission rates that far exceeded the costs of executing trades provided the fuel to support an increasingly complex pattern of practices to recapture portions of these commissions by advisers, including "give-ups" and other "reciprocal practices".  Investment company managers directed give-ups to brokers that sold fund shares in order to motivate or reward such sales efforts. Fund managers also used give-ups as a reward for research ideas furnished by brokers to them in their capacity as investment advisers to funds.

Section 28(e)

In order to make the markets more competitive, the Commission abolished the system of fixed commissions and implemented the present system of negotiated rates, effective May 1, 1975.  Soon thereafter, Congress enacted Section 28(e) as part of the Securities Acts Amendments of 1975. Congress acted in response to concerns expressed by money managers and brokers that, under the new system of negotiated rates, if managers caused a client account to pay anything but the lowest commission rate available to obtain research ("paying up"), they would be held in breach of their fiduciary duty to their clients.  Section 28(e) provides that a person who exercises investment discretion with respect to an account shall not be deemed to have acted unlawfully or to have breached a fiduciary duty solely by reason of his having caused the account to pay more than the lowest available commission if such person determines in good faith that the amount of the commission is reasonable in relation to the value of the brokerage and research services provided.

Activities Outside of the Section 28(e) Safe Harbor

Because Section 28(e) is a safe harbor, it cannot be violated. An investment adviser that proposes to use client commissions outside of the safe harbor, for example to acquire products or services other than brokerage or research, would need to carefully consider its obligations pursuant to its fiduciary duties to its clients, and under the antifraud provisions of the federal securities laws. Indeed, the Commission has stated that "[c]onduct outside of the safe harbor of Section 28(e) may constitute a breach of fiduciary duty as well as a violation of specific provisions of the federal securities laws."

For further information on Soft Dollar Practices, please visit the SEC website

http://www.sec.gov/news/studies/softdolr.htm

Please contact our Chief Compliance Officer for further information regarding soft dollars

Stephen V. Murphy (802) 549-5409

Competitive Rates

Battenkill Capital can offer competitive soft dollar rates designed to a meet a clients needs.

T+1 Soft dollar balance information available via our secure website
Upon logging into our secure website you will find information on trading acitivity, account balances, vendors paid, pending payments, as well as payment history.