Smith W B & Co Inc

FEES AND COMPENSATION
Non-discretionary individual and institutional fixed income management is provided by W.B.
Smith & Company, Inc. based on the following fee schedule:

   Assets                                        Fee
First $ 1 million                              $5.00 per $1,000 (0.0050)
Next $ 4 million                               $4.00 per $1,000 (0.0040)
Next $ 5 million                               $3.00 per $1,000 (0.0030)
Next $15 million                               $2.50 per $1,000 (0.0025)
Next $25 million                               $2.00 per $1,000 (0.0020)
Amount exceeding $50 million                   $1.50 per $1000 (0.00150
Our minimum annual fee is $5,000
The market value of assets under management will, except as otherwise agreed with the Client,
be calculated on the basis of the market value of the portfolio on the last business day of the
calendar quarter for which the fee is being paid. In the event of termination during a quarterly
period, the fee would be prorated through the termination date and the portfolio valued as of the
termination date, except that if termination occurred within five days after the Client entered in
the advisory arrangement, no charge will be made.
W.B. Smith & Company does not have a started minimum account size, however it is
recommended that portfolio assets total one million dollars or more for diversification and
liquidity purposes.
Consulting services to fiduciary Clients is provided by W.B. Smith & Company, Inc. based on
the following fee schedule:
Fee (the greater of)    Assets      or Accounts
$18,000              $ 25,000,000          50
$24,000              $ 50,000,000          75
$36,000              $100,100,000         100
Where assets exceed $100,000,000 or the number of accounts is greater than 100, fees will be
negotiated.
In some instances, when the nature or scope of the investment work may differ from established
norms W.B. Smith & Company and the Client may agree upon a fee schedule different from that
set forth above based on time spent.
Fees are billed directly to Clients either monthly or quarterly in arrears.
Custody arrangements are solely the responsibility of the Client and are not included in the
services of W.B. Smith & Company.

PERFORMANCE BASED FEE AND SID BY SIDE MANAGEMENT
W.B. Smith & Company or its representatives receive no remuneration from broker dealers for
trades executed on behalf of Clients. W.B. Smith & Company does not accept performance
based fees.

TYPES OF CLIENTS
W.B. Smith & Company provides non-discretionary fixed income portfolio management services
to individuals, and institutions that include endowments, pension plans, and corporations.
Advisory services are also provided to fiduciary institutions that include trust departments and
investment counsel organizations.
W.B. Smith & Company provides advice exclusively on fixed income obligations. The following
outline serves as the basis for W.B. Smith & Company's investment process:
Bond Management Process
      Counseling
            Client objectives
                    Income
                    Liability matching
                    Performance (total return)
            Risk tolerance
                    Credit quality (tolerance for credit impairment or event risk)
                            Minimum acceptable rating
                    Price volatility (maturity preference)
                            Portfolio duration or maturity targets
                            Laddered maturity (even distribution or skewed to reflect market
                            Conditions)
                    Sector preference
                            Taxable or tax exempt account
                                    Tax bracket or the taxable entity
                            Maximum percentage in any specific sector
                            Client considerations-over riding factors that negate pure
                            Investment decisions.
                    Position size
                            Minimum holding size (five percent positions)
                            Mutual funds or individual holdings
            Research
                    Economy
                            Economic outlook
                            Interest rate outlook
                    Credit
                            Sectors
                            Specific companies
                    Market
                            Supply & demand for credit
                            Relative value

                                       Yield spread relationships relative to the yield curve
                                       Different structures between sectors
               Trading
                      Efficient execution
                              Block size
                              Trading information about the market and individual securities
                              Brokerage Relationships
                              Timely settlements
               Reporting
                      Client Communication