Pinnacle Capital Management LLC

Item 5: Fees and Compensation

Compensation

PCM bases its fees on a percentage of assets under management. PCM manages
accounts for a variety of client types including separate accounts and investment
companies. These clients may invest in similar, if not the same, securities. Varying fee
schedules may create an incentive for PCM to place more profitable trades in higher fee
paying accounts over other accounts in the allocation of investment opportunities. PCM
has procedures designed and implemented to ensure that all clients are treated fairly and
equally, and to prevent this conflict from influencing the allocation of investment
opportunities among clients. PCM also provides 403(b) retirement plan services.

Compensation – Separate Accounts

The fee for PCM's Advisory Services will be calculated by multiplying an agreed upon
rate to the assets under management in the separate account, or by using some other
metric as may be negotiated with the client. The annual fee is mutually agreed upon by
PCM and the client. Criteria such as investment style, discretionary or non-discretionary,
account size, other accounts of the same client managed by PCM, specific investment

guidelines and/or restrictions, reporting requirements and frequency, business
relationship with the client, and other client-specific criteria are taken into consideration
when determining the annual fee. Clients should note that similar advisory services may
or may not be available from other registered investment advisers for similar or lower
fees.

PCM’s annual fee typically ranges between 0.20% and 1.00% and the minimum initial
account value required for a separately managed account is generally $100,000. All fees
and account minimums may be negotiated.

Fees payable by advisory clients are payable in advance. Fees will be invoiced at the
beginning of each calendar quarter based upon the value (market value or fair market
value in the absence of market value) of the Advisory account(s) at the end of the previous
quarter. The initial fee payable when an account is opened will be based on the initial
deposit made into the account. If a client terminates an advisory relationship with PCM
before the end of the calendar quarter, a pro-rated refund of advisory fees will be made
to the client.

Compensation – Sub-Advisory Services

PCM is compensated as a sub-advisor for providing portfolio management services.
Generally, PCM charges between 0.20% and 0.65% of assets under management for
sub-advisory services annually. In certain circumstances, PCM may charge at an
alternative amount based on a mutually agreed upon fee for a particular sub-advisory
agreement. This amount may be more or less than the annualized rate of 0.20% or
0.65%.

Compensation – Affiliated Mutual Funds

PCM provides portfolio management for the Pinnacle Capital Management Funds Trust
and its series portfolios (the “Funds”), which as of the date of this Brochure consists of
one series, the 1789 Growth and Income Fund (formerly the Pinnacle Capital
Management Balanced Fund). PCM may recommend the Fund, as suitable, to its
advisory clients. The fees that PCM receives for managing the Fund are separate from
fees paid to PCM for providing advisory services directly to a client, and the amount
invested in the Fund will not be subject to PCM’s advisory fee in addition to the Fund’s
fees. The fees PCM receives for managing the Fund are set forth in the prospectus of
the Fund, which may be obtained upon request.

Compensation – 403(b) Plans

The maximum annual asset fee charged will be 125 basis points for advisory services.
The IAR has the discretion to discount fees. Management fees are separate and distinct
from other fees that might apply, including transaction fees, underlying mutual fund fees

and expenses paid to the fund by shareholders of the fund as outlined in each fund’s
prospectus, and custodian fees. The Sub-TA fees and other forms of revenue sharing
Fees received by the plan’s administrator or qualified custodian from the fund companies
will be used to directly offset the plan’s administrative costs. Administrative costs that
remain after the application of the fees are paid by the plan in accordance with the
arrangement between the plan and the qualified custodian. Any fees remaining will be
credited to the plan in accordance with the arrangement between the plan and the plan’s
administrator. The IAR does not participate in the fees.

Fees are negotiable on a case by case basis and can be paid by either the employer or
the employee. IARs have the ability to discount fees. Management fees are separate
and distinct from other fees that might apply, including transaction fees, underlying mutual
fund fees and expenses paid to the fund by shareholders of the fund as outlined in each
fund’s prospectus, and custodian fees.

Fees are deducted on a monthly basis based upon a daily average balance formula. No
fees are deducted by CPI.

Other Fees and Expenses

In most cases, PCM’s advisory fees are exclusive of brokerage commissions, transaction
fees, and other related costs and expenses, which are paid by the client. Clients may
incur certain charges imposed by custodians, brokers, and other third parties such as
fees charged by managers, custodian fees, odd-lot differentials, transfer taxes, wire
transfer and electronic fund fees, and other fees and taxes on brokerage accounts and
securities transactions. Mutual funds (as discussed below) and exchange traded funds
also charge internal management fees, which are disclosed in a fund’s prospectus. Such
charges, fees and commissions are exclusive of and in addition to PCM’s fee, and PCM
shall not receive any portion of these commissions, fees and other costs. Private funds
also charge management fees and other costs and expenses.

All fees paid to PCM for investment advisory services are separate and distinct from the
fees and expenses charged by mutual funds to their shareholders, including mutual funds
...

Item 7: Types of Clients

PCM provides portfolio management services to clients including but not limited to:

   -   individuals,
   -   investment companies,
   -   pension and profit sharing plans,
   -   trusts and estates,
   -   charitable and not-for-profit organizations,
   -   corporations, insurance companies and other business entities
   -   emergency-service organization Length of Service Award Programs or Benevolent
       Associations.

Item 8: Method of Analysis, Investment Strategies and Risk of Loss

Method of Analysis

PCM may use a fundamental and technical approach in its security analysis. It may also
utilize charting and cyclical analyses.

PCM uses the following main sources of information: financial publications, research
materials prepared by others, corporate rating services, annual reports, prospectuses,
filings with the SEC, and company press releases.

Investment Strategies

The investment strategy for a specific client is based upon the objectives stated by the
client during consultations. The client may change these objectives at any time.

PCM utilizes a disciplined portfolio construction process designed to be broad enough to
provide proper diversification so as to reduce unique risks while individual positions are
sufficient enough to have a meaningful impact on the overall return of the portfolio.
Typically, the equity portion of a portfolio will consist of stocks of 25-30 different issuers
but may consist of fewer or more depending on the strategy and investment opportunities.
The fixed-income portion will vary based on the criteria below.

The overall allocation between equity and fixed income is determined by matching a
particular client’s investment objectives to one of PCM’s portfolios, which include: (i)
Aggressive Growth; (ii) Growth; (iii) Balanced; (iv) Moderate; and (v) Conservative.
Additionally, PCM offers clients Mutual Fund or ETF portfolios for those clients who wish
their portfolio to be managed according to an asset allocation strategy using multiple
asset classes. PCM also offers a Dividend Income Growth (DIG) portfolio which focuses
on equities with high or growing dividend payments.

When selecting equity securities, PCM typically uses a selection process based upon a
model that applies three core strategies to the universe of stocks in order to identify a
smaller number of potential buy candidates. These strategies are intended to identify
individual securities that will minimize individual downsize risk – thereby preserving
capital – and enhancing upside potential – thereby achieving long-term capital
appreciation. The strategies are: (i) “sustained growth strategy,” which identifies
companies with characteristics that enable them to experience continued growth; (ii)
“supply-demand strategy,” which identifies cyclical companies whose profits fluctuate
significantly during an economic cycle due to rising and falling demand of its product; and
(iii) “turn around strategy,” which identifies companies that compete in viable industries
that have experienced a substantial reduction in profitability compared to their peers.
Once PCM applies these strategies, it establishes price targets to ensure it purchases
and sells the stocks at appropriate prices.

When selecting fixed-income securities, PCM considers, among other things, duration,
yield, credit quality, maturity, current economic environment and trading environment.

Risk of Loss

Investing in securities involves risk of loss that clients should be prepared to bear. All
investment programs have certain risks that are borne by the investor. Investors face the
following types of risks:

Market Risk

The price of a security, bond, or mutual fund may drop (or rise in the case of shorted
investments) in reaction to tangible and intangible events and conditions. This type of
risk is caused by external factors independent of a security’s particular underlying
circumstances. For example, political, economic and social conditions may trigger market
events

Interest Rate Risk

Fluctuations in interest rates my cause investment prices to fluctuate. For example, when
interest rates rise, yields on existing bonds become less attractive, causing their market
values to decline.

Investment Advisor Risk

PCM’s ability to choose suitable investments has a significant impact on the ability of the
Strategies to meet their investment objectives.

Asset Allocation Risk

PCM’s allocations between equity and debt securities could cause accounts to
underperform relative to benchmarks and other accounts with similar investment
objectives.

Inflation Risk

When any type of inflation is present, a dollar today will not buy as much as a dollar next
year, because purchasing power is eroding at the rate of inflation.

Currency Risk

Overseas investments are subject to fluctuations in the value of the dollar against the
currency of the investment’s originating country. This is also referred to as exchange rate
risk.

Business Risk

These risks are associated with a particular industry or a particular company within an
industry. For example, oil-drilling companies depend on finding oil and then refining it, a
lengthy process, before they can generate a profit. They carry a higher risk of profitability

than an electric company, which generates income from a steady stream of customers
who buy electricity no matter what the economic environment is like.

Financial Risk

Excessive borrowing to finance a business’ operations increases the risk to profitability,
because the company must then meet the terms of its obligations in good times and bad.
During periods of financial stress, the inability to meet loan obligations may result in
bankruptcy and/or a declining market value.