Valentine Ventures - How it Works

• Creation of Investment Policy Statement and Financial Plan.
• Accounts custodied at Charles Schwab & Co's Institutional arm.
• Flat fee applied to assets under management.
• Ongoing education and communication.

Investment Policy Statement and Financial Plan

Before accounts are managed at Valentine Ventures, an Investment Policy Statement is crafted.  It dictates the the nature and makeup of the investment portfolio.  In addition to an Investment Policy Statement, a comprehensive Financial Plan is crafted.Following is a sample IPS.

 Valentine Ventures, LLC

This Investment Policy Statement serves as the framework for the investment relationship between the clients, ____________________, and the investment manager, Valentine Ventures, LLC.  The Statement acknowledges the Objectives of the management relationship; discusses the Constraints and Guidelines that the investment manager will follow; covers the specific Action Plan that will be used; and describes the ongoing Evaluation, Modification, and Communication that will occur over the course of the relationship.

Objectives of the Investments

The management relationship (“portfolio”) shall consist of a 401(k) Company Retirement account, a taxable savings account, two Contributory IRA accounts, and two Roth IRA accounts.  The portfolios’ assets will be invested with primary objectives of conservative growth of assets and income generation.  A secondary consideration will be preservation of capital.   

Constraints and Investment Guidelines

It is assumed that money will not be withdrawn from the accounts for the foreseeable future and therefore, there needn’t be excessive attention paid to liquidity issues.  While there is no overriding preference for capital preservation at the expense of growth, a reasonable effort shall be made to limit the volatility of the portfolio.  Efforts will be made to prevent the total loss of any one investment.  The taxable assets will be managed to minimize tax consequences; however this constraint will be secondary to the objective of total return.  The time horizon is deemed to be long-term.  There are no other unusual constraints that affect investing guidelines.

Investment Allocation and Action Plan for Profile:  Moderate 35

                                                                    Target               Minimum           Maximum

Stocks:                           44%                     22%                  65%

Alternative Assets:        21%                       0%                  43%

Bonds:                            35%                     15%                  75%

Cash:                               0%                       0%                  40%

 The portfolio will seek to meet the objectives in a diversified manner.  Assets may be moved between asset classes as market, and client-related, circumstances dictate.  The stock and alternative assets parts of the portfolio are collectively known as the “growth portion” of the portfolio.  The growth portion will typically hold individual Exchange Traded Funds (“ETFs”).  Return from Stocks will be sought by strategically weighting the holdings based on the Equity Style Cycles, through Sector rotation, Global Market weighting, and investing in Special Situations. Alternative Assets include non-traditional assets such as currencies, commodities, put options, REITs, and emerging market debt.  Bonds used may include corporate, government agency, municipal or Treasury issues and will typically be individual bonds, but investment in bond ETFs may occur.  Cash will usually mean a money market fund or certificates of deposit. 

Evaluation, Modification and Communication

The accounts will be monitored daily.  The client or the investment manager, based on changes in objectives and/or circumstances, may modify this Statement and the investment strategy/action plan at any time upon mutual agreement.  The investment manager will ensure good communication in several ways: the client will receive trade confirmations as they happen; a monthly statement from the custodian; and quarterly and annual reports from the investment manager.

Success will be measured by the achievement of the goals and objectives, stated above.  The benchmarks for the portfolios’ performance will be the S&P 500 Index, the average return of The Lehman Aggregate Bond Index, and inflation (as measured by the Consumer Price Index).

Manager's Initials______________                                                             Client's Initials______________

Accounts custodied at national discount brokerage firm

All client accounts are custodied at, and traded through, Charles Schwab & Co.  Accounts become part of the Schwab Institutional of these firms by virtue of their association with VVLLC. Accordingly, clients are afforded privileges normally reserved for large institutions. Securities for multiple accounts are traded in "blocks" allowing for better pricing power. Trades are executed electronically with very low brokerage commissions. While VVLLC maintains trading discretion over its accounts, it may not hold or withdraw client funds.

Mutually beneficial, fee-based compensation

The fee charged is based on a flat rate schedule, applied to the assets under management. This arrangement avoids any "conflict of interest" questions arising from commission-based compensation and provides a mutual incentive for the success in growth of assets.

The investment management fee is inclusive of all services and charges related to the investment management during the client relationship (not including trading commissions charged by custodian). The fee is based on an annual percentage of the assets under management and is billed to the account on a quarterly basis.

The minimum account size necessary for forming a relationship with Valentine Ventures, LLC is $500,000.

FEE SCHEDULE

1.25% on the first $1MM in assets under management

1.0% of the assets over $1MM

(Price breaks afforded accounts funded with $1.5MM or more and $2.5MM or more.)

Ongoing education in personal finance and investments

Clients are offered the opportunity to advance their knowledge and understanding of personal finance and investments. The firm publishes a weekly investment column, and produces extensive quarterly Client Reviews.