Soft Dollar Programs

A "soft dollar" program is an arrangement in which a portion of the commissions paid to a broker by an investment manager for securities transactions are set to pay allowable management expenses. Soft Dollars are utilized to pay for research and brokerage services. Soft dollar transactions are permitted under the authority of Section 28(e) of the Securities Exchange Act of 1934, which creates a safe harbor for individuals exercising investment discretion. In order for a soft dollar program to comply with Section 28(e) of the Securities Exchange Act of 1934, the research and brokerage services must be for an entity with investment discretion; the services rendered must constitute research and brokerage, and these items must be provided by the broker.