Reynolds Capital Management LLC

Item 5

3    FEES AND COMPENSATION

Fee's for RCM's separately managed accounts are calculated on the basis of the total market value of the
client's assets placed under its supervision, determined as of the close of business on the last business day
preceding the effective date of management of the client's portfolio(s), and thereafter are recalculated on
the basis of the total market value of these assets as determined as of the close of the business on the
business day preceding the beginning of each successive six-month period (January 1 through June 30
and July 1 through December 31). This fee is calculated on the basis of the annual rate, listed below, and a
pro rata portion of this fee is calculated based on the effective date. After this, the semi-annual fee is
recalculated as of the last business day preceding each successive six-month period.

RCM's fee structure is as follows unless a different fee structure has been negotiated with the client:

    (1) 1.50% of total assets for portfolios up to and including $500,000.

    (2) 1.25% of total assets for portfolios between $500,000 and including $2,000,000.

    (3) 1.00% of total assets for portfolios between $2,000,000 and including $4,000,000.

    (4) .75% of total assets for portfolios above $4,000,000.

If the agreement is terminated prior to the end of a six month period, the client will receive a pro rata refund
of the management fee to the date of termination if the client terminates its relationship with RCM.
Separately managed clients may elect to either have management fees deducted from their investment
portfolio or to be billed for fees incurred. Fees are generally billed in arrears. In addition to these
management fees, separately managed accounts and the Reynolds Blue Chip Growth Fund will pay
brokerage fees (see #10 in this brochure) whenever a stock or bond is purchased or sold.

Information regarding the Blue Chip Fund including a description of the services provided and applicable
fees is contained in the Fund's prospectus and latest report to shareholders which can be found at
www.reynoldsfunds.com. The Blue Chip Fund's expenses are deducted directly from the assets of the
Fund. Separately managed clients of RCM may invest in shares of the Reynolds Blue Chip Growth Fund
(RBCGX). Separately managed clients are not charged a separate management fee for any investments
they may have in the Blue Chip Fund. RCM does not accept compensation for the sale of securities or
other investment products.

Types of Clients

5   TYPES OF CLIENTS

RCM generally provides investment advice to individuals, retirement plans, trusts and to an investment
company. The minimum initial investment for a separately managed account is generally $300,000. The
minimum initial investment for the Reynolds Blue Chip Growth Fund (RBCGX) is $1,000 ($100 for additional
investment). These minimums are for either taxable accounts or retirement plans.