Dillon & Associates Inc

Item 5: Fees and Compensation

Our firm is paid a fee for advisory services. Fees are based on the assets under
management based on the following schedule:

       0.8% on the first $2,000,000
       0.7% on the next $2,000,000
       0.6% on all remaining assets
       Fees may be negotiated for accounts larger than $10,000,000

Fees are calculated at the end of each calendar quarter and charged ¼ of the annualized
rate. Invoices are sent to clients each quarter for payment after services are rendered.
Clients may choose to have payments deducted directly from the accounts managed, in
which case an invoice is also sent to the appropriate custodian.

In addition to our fees, clients will also pay transaction fees (brokerage commissions)
which vary by broker. Some clients may also pay an annual fee to custody assets at a
particular broker. Certain investments, such as mutual funds and exchange traded funds
(ETFs), will also charge fees. This structure creates two layers of expenses for clients.
Fees are paid directly to our firm for services and indirect management fees through
investment companies for the mutual fund or ETF. See Item 12 on page 5 for additional
brokerage information.

Our fees are charged for services rendered and are never required in advance.

We are a fee-only adviser, and therefore only make money from the fees clients pay us.
We do not receive any additional or indirect compensation, such as sales commissions or
service fees, beyond the schedule detailed above.

Item 7: Types of Clients

Our clients consist of individuals (personal and retirement accounts), trusts, non-profit
organizations, and plan sponsors for corporate retirement plans. Generally, we require an
account size of at least $250,000. We may manage smaller accounts depending on the
circumstances of the potential client.