Investment & Tax Strategies Inc

Fees and Compensation
The QUAD-RIGA is NOT wrap-fee programs because trading costs are not included in the advisory fees and
are paid by the client. All fees are negotiable. Fees are calculated on an average daily balance method for
accounts held at Trust Company of America (explained in more detail below) and paid quarterly. At
Interactive Brokers, fees are debited from the account daily. Fees are charged in arrears. There are no
fees assessed by ITS for a client closing an account, and the client pays only for the days invested. Upon
entering advisory agreement, clients have 5 days in which to terminate agreement and no fees will
apply. Fees will not be assessed after agreement is terminated. Fees are directly withdrawn from client
accounts, and are calculated by the custodian, not ITS, but are verified by ITS and confirmed prior to being
deducted from the account.

ITS, thru its history, has acquired clientele from other advisors exiting the advisory business. Per
agreements with those advisors, ITS agrees to continue tan agreed upon fee structure of the exiting
advisor for 5 years. In these situations, the fee schedule listed below, MAY go into effect after the 5 year
period. Those situations, the actual fees are in the addendum of our advisory contract to be agreed upon
by each client

ALL FEES NEGOTIABLE.

QUAD-RIGA Managed Asset Program Maximum Fees

                                                        Portfolio Manager
            Fee Breakpoints             Total Fee                                                Advisor Portion
                                                             Portion
       <= $99,999 **                       2%                  .85%                                      1.15%
       $100,000 - $249,999                1.75%                 .7%                                       1.0%
       $249,999 - $500,000                1.5%                 .65%                                       .85%
       >$500,000-$1,000,000               1.3%                 .55%                                       .75%
       >$1,000,000                        1.05%                .45%                                        .6%

4th Dimension Portfolio Maximum Fees                     ** Fees will typically be less with other advisors, but this is a time demanding model.

                                                         Portfolio Manager
            Fee Breakpoints             Total Fee %                                               Advisor Portion
                                                              Portion
      <= $99,999 **                        3.0%                 1.1%                                        1.4%
      $100,000 - $499,999 **               2.5%                 .85%                                       1.15%
      $500,000 - $999,999                  2.0%                 .65%                                        .85%
      * $1,000,000 - $4,999,999            1.75%                 .6%                                         .4%
      * >$5,000,000                        1.50%                .55%                                        .25%

Fee schedule for the clientele of John Spaay.

                                                                  Portfolio
                                                                                  Advisor Portion
                  Fee Breakpoints               Total Fee         Manager

                                                                  Portion *
          <= $499,999                             1.5%              .85%               1.65%
          $500,000- $1,000,000                    1.35%             .75%               1.5%
          $1,000,000- $2,000,000                   1.25             .65%               1.35%
          $2,000,000-$3,000,000                   1.00%             .55%               .95%
          $> 3,000,000                            .75%               .5%               .75%

Householding. The fee % is charged at the account level, not the household total level. Household level fee
breakpoints may be possible and would need to be manually adjusted. To do so, contact your advisor.
However, 4th Dimension portfolios may never be householder with QUAD-RIGA accounts, and vice-versa to
achieve breakpoints.

Calculation of Fees - Interactive Brokers
By signing the new account application, Interactive Brokers calculates the advisory fees and removes the
advisory fees directly from the account on a daily basis, based on the daily Net Asset Value. Clients are
notified daily via email of the amount of the advisory fee. Interactive Brokers only applies fees on days the
market is open, which is 252 days. Example: A client with$ 145,000 account value would be debited for that
day $145,000 x .025 / 252 = $14.38. When signing the Interactive Broker Account Agreement, you are
entering a contract that allows them to calculate the fees and debit the account by the fee amount each
day.

Calculation of Fees - Trust Company of America (TCA)
 Trust Company of America applies the average daily quarterly balance of the accounts based on the fee
schedule above (QUAD-RIGA), and applies the fee on the last calendar day of the quarter. Trust Company of
America acts as an administrator for ITS, and calculates the fees based on the fee schedule we provide. TCA
calculates either a tiered approach or a stepped approach. In a tiered approach, the fees are applied at each
breakpoint. Example, 2% on first $50,000, , 1.75% on next $250,000, etc. A stepped approach means that
the entire account balance is applied to the breakkpoint achieved. EX. $150,000 account would be entirely
paid at the rate where the $150,000 balance falls on the fee schedule. Generally, ITS uses a stepped
method, unless the clients were acquired, and under contract we are to use the same method the previous
advisor used. The fee amount is shown on the quarterly account statement which Trust Company of
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Types of Clients
ITS currently provides services for the following client types: Individuals, joint accounts, non-profit
organizations, retirement plans, trusts, estates, minor accounts, and business entities.

Minimum account sizes are not specific to client type, but per program. Currently, the minimum account
size is $25,000 for 4th Dimension Portfolio's and $5,000 for the QUAD-RIGA program. ITS does not charge
performance fees.

Methods of Analysis, Investment Strategies and Risk of Loss
ITS uses a multi-strategy approach to managing portfolios. Each strategy of the QUAD-RIGA has different
methodologies and risks.

Buy & Hold Strategy: Analysis methods and risks.
The buy and hold strategy uses a mathematical calculation called 'correlation co-efficient' to design a
portfolio of ETF's that have a high degree of mathematical diversification. An example may be: emerging
markets, biotech, precious metals, utilities, tech, bonds, and real estate. Small cap, large cap, and tech are
highly correlated, and while they may be promising areas, they as a whole, do not provide adequate
diversification. This model strives for a correlation of 0 -.4, but that is a target and cannot always be
achieved.

The risks in a buy and hold strategy are straightforward. No matter how well diversified a portfolio is, a
severe bear market tends to spare few asset classes.

Value & Income Strategy: Analysis methods and risks.
This strategy has two parts, the value, and the income. The value strategy uses a unique method which
"defines" the word "value". This strategy analyzes 15 sectors (tech, small cap, energy, etc.) over very long

periods, and finds the average 5 year rate of growth of each sector. Next, the current 5 year growth is
compared to the average 5 year growth and "X" number of deviations from the average is calculated. All
the sectors are then compared, and the 4 with the lowest standard deviation are bought. They are typically
held for one year with an 8% trailing stop-loss placed for protection.

The risks to this strategy are two-fold. First, like the buy and hold strategy, no matter how undervalued
something is, it can still go lower. Second, because we have a stop-loss, the risk of a stop-out are always
there. A stop-out is when the price of the stock moves just low enough to trigger a sell, and then the price
moves quickly higher after the position was sold.

Active Trading Strategy: Analysis methods and risks.
Our active strategy attempts to be 100% long in strong up-trends, and 50-100% in bonds or cash in strong
bearish trends. In weaker trends, the strategy is usually 50% allocated long and short with the other 50% in
cash. The strategy uses a system of several technical indicators top determine stocks or sectors that appear
to be diverging from the underlying market trend. We use a simple logic., “ A rising tide raises all ships” and
vice versa. Our technical indicators of volatility, relative rate of change, valuation, treasury yields, and
volatility pick stocks from over 1000 we follow. Those that are acting more favorably than the underlying
market are further investigated as trading prospects. When it stops acting favorably it is replaced. If
suitable replacement aren’t there, such as in a severely poor market, we will go to cash or bonds.

 The holding period can vary widely. Some stocks very quickly stop “acting favorably” for any number of
reasons, and they may be sold within days. Others can be held for 6 months or more.

Non-traditional Strategy: Analysis methods and risks.
Non-traditional assets such as managed futures and non-traded REIT's have the ability to make money even
in poor markets because they can be actively managed and are not typically highly correlated to the broad
stock market. Analysis of these investments involves examination of the past performance of the sponsors
and liquidity analysis of their balance sheets.

The risks in these types of strategies can vary widely. Poor execution of the strategy, poor timing of the
sponsors, sponsor malfeasance, and incorrect investment thesis are a few of the risks involved. The most
direct risk for our clients is lack of liquidity. Many of these programs have limited, or no liquidity, for long
periods of time. Due to the unique and varied risks, these programs are usually allowed only for accredited
or knowledgeable investors.

4th Dimension (Volatility Pairs") Strategy: Analysis methods and risks.
The 4th Dimension Portfolio's use a variety of unique methods to capture volatility in the market place. The
strategy uses correlation and standard deviation analysis to find "volatility pairs" to exploit. Here is a classic
example using the highly correlated pair of gold and gold mining stocks. The two are highly correlated, but
gold mining stocks tend to have significantly higher volatility. When the two "pull apart 3 deviations" in
under a 30 day period, it presents an opportunity to make a trade. In this particular pair, 3 deviations is
about 12%. So, if in 30 days, gold mining stocks under-performed gold by 12%, we'd buy gold mining stocks
(the GDX ETF), and sell short gold (typically the GLD ETF). When/if gold mining stocks move upward, the
premise of the strategy is that GDX , because it has higher volatility, will move a higher % than GLD. Thus we
captured the volatility difference between GLD and GDX, while having a low systematic risk because we had
half our investment "long " and the other half "short" in the gold arena. In 2009, the SEC and FINRA started
to strongly enforce rules against "naked" short selling, which was the practice of brokers allowing clients to
sell short stock without first identifying that the shares were available. The strategy also exploits
imperfections in leveraged and commodity based ETF's, and captures those imperfections with short-

positions. The short position is always offset (or at least attempted to be offset), with a long position, which
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