Valley View Consulting LLC

Fees and Compensation
Investment supervisory fees can be a percentage of assets under management, hourly rates, fixed fees, or
a combination of these. All fees are negotiable, and direct-billed and payable in arrears. Fees structures
generally range from 0.01% to 0.10%, annually, based on the book value of assets under management;
$100.00 to $750.00 per hour; $250 to $25,000 per project; $150.00 to $500.00 per month; or other fees as
negotiated at the time of contract. In some cases, a minimum or maximum annual fee may apply.
Contracts are cancelable without cause with 30 days’ notice. Clients maintain their own safekeeping
agent/custodian relationships and are responsible for any related fees. Local government investment pools
and mutual funds are subject to their own fee schedules. Recommended mutual funds have been, and are
anticipated to be, no-load money market funds. Valley View assists each client in minimizing
transactional expenses or any other normal business expenses that might be incurred in the management
of its funds.

Should a guaranteed investment contract, flexible repurchase agreement or other structured investment
option be utilized, Valley View may receive a normal and customary fee (usually paid by the counterparty)
within the guidelines of the Internal Revenue Service, in lieu of the fee prescribed in the advisor
agreement.

Although no other forms of compensation are anticipated, if any additional compensation is received, the
amount and source will be disclosed to the client.

                      Performance-Based Fees and Side-By-Side Management
Valley View does not charge any performance-based fees nor participate in side-by-side management.

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Types of Clients
Valley View generally provides investment advice to “government entity” investors, including, but not
limited to state agencies, cities, counties, school districts, special districts, colleges and universities, and
special authorities. Additionally, Valley View provides advice to clients on matters not directly involving
investing.

Valley View does not impose a minimum dollar value of assets for starting or maintaining a relationship.

                      Methods of Analysis, Investment Strategies and Risk of Loss
Each client’s investment policy governs investment strategy selection and implementation, with most
client investment objectives focused on preservation of principal and maintenance of adequate liquidity
to fund ongoing operations. Investing in securities involves risk of loss that clients should be prepared to
bear. Selecting investments with limited credit risk and matching short and long-term maturity purchases
to client-based cash needs primarily manages the risk of realized loss. Most investments are cash
equivalent or fixed income/fixed maturity that are held to maturity.

Depending upon investment and strategy selection, each client may risk loss of principal or anticipated
earnings due to issuer default or adverse market movement.

Valley View most often offers advice on money market instruments, certificates of deposit and other
financial institution deposits, municipal bonds, mutual fund shares, United States government securities,
repurchase agreements, and local government investment pools. Valley View’s analysis includes
fundamental, cyclical, and client-based cash flow requirements. Information sources include financial
newspapers and magazines, research material prepared by others, corporate rating services, annual reports,
prospectuses, regulatory filings, and other financial information sources.

Credit Risk – Most government entities specifically manage and limit exposure to credit risk. Assuming
large amounts of credit risk is inconsistent with the main objectives to “primarily emphasize safety of
principal and liquidity.” All issuers contain incremental credit risk, although the markets believe certain
ones have reduced credit risk (e.g., U.S. government securities). Generally, legislation does allow specific
issuer-types with credit risk but restricts that risk based on measurements of nationally recognized credit
rating agencies or other criteria.

Credit risk considerations extend beyond the investments that are selected to be included in the entity’s
portfolio. Properly collateralized deposits or repurchase agreements, secured in accordance with the
investment policy and federal banking regulations, essentially reduce the inherent credit risk of the
financial institution or counterparty. Each client retains control and responsibility for collateral fair value
monitoring. Valley View may periodically review collateral values and financial institution strength.

Prior to investment, accurate identification of the individual issuer’s risk profile or the local government
investment pool/mutual fund’s investment criteria, and analysis of the historical risk/return relationship
determines if the client will potentially receive adequate return for any increased risk. Although minimum
credit rating requirements may apply, the investment policies and strategies of available pools/funds are
reviewed to ensure that their policies are congruent with those of the client.

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Market/Opportunity Risk – The restriction of most credit risks focuses portfolio management on
controlling market risk and opportunity risk. Working with the yield curve, issuer yield spreads, and cash
flow requirements addresses these two risks.

Appropriate yield curve positioning, with limited interest rate cycle timing, provides most yield
enhancement. Our services include the research and analysis necessary for formulating strategy
recommendations. Cash flow predictability creates the baseline for investment strategy development.
Keeping current-use funds in expenditure-related maturities or cash-equivalent alternatives, while
positioning stable and longer-range funds further out the yield curve, generally provides overall portfolio
enhancement.

For government entities, the higher yield-advantage of extended maturities most safely manifests itself in
increased interest earnings (not speculative gains). Therefore, a hold-to-maturity strategy is primarily
utilized.