Avalon Capital Management

Item 5 Fees and Compensation
Investment Management Services

The compensation for Avalon's investment management services is based on a percentage of the
market value of assets under management at the end of the preceding calendar quarter. Fee
schedules will vary depending on the type of investment management service.

The fee schedule for Avalon's investment management services are as follows:

1.00% of the first $5,000,000
0.75% of the next $5,000,000
0.50% of the next $10,000,000
Fees are negotiable for amounts exceeding $20,000,000.

The fees for Avalon's cash management investment services are as follows:

0.25% of the first $25,000,000
Fees are negotiable for amounts exceeding $25,000,000.

The fee schedule for Avalon's fixed income investment services are as follows:

0.5% for the first $25,000,000
Fees are negotiable for amounts exceeding $25,000,000.

Investing in Mutual Funds, ETFs and ETNs

As part of the comprehensive strategy used by Avalon, client assets are sometimes invested in mutual
funds, exchange traded funds (ETFs) and exchange traded notes (ETNs). When Avalon invests client
assets in these investment products, clients pay their portion of the advisory fees and other expenses
charged for these investment products, in addition to the investment management fees charged by
Avalon.

How Fees Are Paid:

One-fourth of the annual management fee is payable in advance for each calendar quarter, based on
the net asset value of the portfolio on the last day of the prior quarter. Fees are generally charged to
the client approximately 1-4 weeks after the start of the quarter.

Most clients (through their investment management contracts and custodian agreements) authorize
Avalon to deduct their management fees directly from the corresponding client account.

Contracts for Investment Advisory Services may be terminated by either party by giving written notice
of termination to the other party. Avalon will provide 30 days' written notice of termination to its clients.
Fees paid in advance will be prorated to the date of termination specified, and any unearned portion
will be refunded or credited against amounts due. Fees for services rendered by Avalon and not yet
paid, will be billed upon termination of the contract.

Item 7 Types of Clients
Avalon's primary client base is composed of individual clients and families, the majority of whom are
"high net worth individuals." For some of these clients Avalon manages investments contained in
individual or joint accounts, personal trust accounts and partnerships. Avalon also manages retirement
accounts for its clients, including IRAs, 401k and Pension and Profit-Sharing accounts. Finally, some
clients have investment accounts (that Avalon manages) for their charitable foundations.