INDEPENDENT AUDITORS REPORT
The Board of Directors
Avalon Capital, Inc.
In planning and performing our audit of the financial statements of Avalon
Capital, Inc. (the Fund) for the year ended August 31, 2000 (on which we have
issued our report dated October 6, 2000), we considered its internal control,
including control activities for safeguarding securities, in order to
determine our auditing procedures for the purpose of expressing our opinion
on the financial statements and to comply with the requirements of Form
N-SAR, and not to provide assurance on the Fund's internal control.
The management of the Fund is responsible for establishing and maintaining
internal control. In fulfilling this responsibility, estimates and judgments
by management are required to assess the expected benefits and related costs
of controls. Generally, controls that are relevant to an audit pertain to
the entity's objective of preparing financial statements for external
purposes that are fairly presented in conformity with accounting principles
generally accepted in the United States of America. Those controls include
the safeguarding of assets against unauthorized acquisition, use, or
disposition.
Because of inherent limitations in any internal control, misstatements due
to error or fraud may occur and not be detected. Also, projections of any
evaluation of internal control to future periods are subject to the risk
that the internal control may become inadequate because of changes in
conditions or that the degree of compliance with policies or procedures may
deteriorate.
Our consideration of the Fund's internal control would not necessarily
disclose all matters in the internal control that might be material
weaknesses under standards established by the American Institute of Certified
Public Accountants. A material weakness is a condition in which the design
or operation of one or more of the internal control components does not
reduce to a relatively low level the risk that misstatments caused by
erroror fraud in amounts that would be material in relation to the financial
statements being audited may occur and not be detected within a timely period
by employees in the normal course of performing their assigned functions.
However, we noted no matters involving the Fund's internal control and its
operation, including controls for safeguarding securities, that we consider
to be material weaknesses as defined above as of August 31, 2000.
This report is intended solely for the information and use of management of
Avalon Capital, Inc. and the Securities and Exchange Commission and is not
intended to be and should not be used by anyone other than these specified
parties.
October 6, 2000
