HARD DOLLAR TRADES

This program is not a soft-dollar program. The commissions collected are standard “execution-only” commissions. By definition, execution-only rates are lower than soft-dollar rates because no portion of the commission is retained for the benefit of the customer. Accordingly, the rate charged on trades must be equal to or less than the rate currently paid by the money manager for execution-only trades. Commissions collected on execution-only trades are the property of Stone Securities Corporation not the money manager or the end customer. Stone has elected on its own to contribute 25% of commissions on certain trades to charity. Although Stone has offered to allow the money managers to suggest a charity, this does not connote ownership or control of those commissions by the money manager or the end customer. At its core, the program is no different from any broker-dealer that contributes to charity with the exception that the program may help Stone to contribute a greater percentage of its profits than many broker-dealers and that Stone is hoping to build relationships between charities and their customers. Stone receives full tax deduction credit for any contribution made because the commission proceeds of the trades are the property of Stone. Managers will do business with Stone because the firm has an eighteen (18) year track record of providing quality executions and because Stone provides this service at the same or lower cost than the manager’s current execution cost. The added charitable aspect adds value to the services provided by the firm, but is not the sole reason for doing business with Stone. The firm does not represent that money management companies should do business with Stone solely for the charitable program and understands that customers should monitor execution quality and determine if Stone continues to meet the best execution standards and merits continued business.