It's a great time to be with Smith Affiliated Capital! Our assets under management continue to grow to new records, we have expanded into many new, but very familiar, markets, and we have a number of new, active strategies in both fixed income and equity sectors that have had positive returns this year. As President and Chief Investment Officer, I'm excited about our future and glad you have been a part of the growing account base that believes in our client-centered approach built on 26 years of experience and process.

As you are well aware, the world has been hit with a terrible financial meltdown in 2008. The number of investment disasters seems to increase as time goes on. When events like these occur, without faltering, our on-call, seasoned portfolio managers and well-trained staff will be there to offer support, comfort, and help in every way possible. You never know when the next series of global financial events may occur, and we want to make sure all of our actively managed accounts are sufficiently protected.

Our clients' happiness with our services is our main concern. As such, we welcome your feedback and are appreciative of any ideas for improvement. Thank you for your suggestions throughout the past year and for your loyal patronage to SAC. As excellent clients, we look forward to your new ideas, referrals and suggestions for us in 2009!

- Matthew J. Smith, President and CIO

Matthew J. Smith
President
Chief Investment Officer Portfolio Manager,
Enhanced Fixed Investments