Timed Bond Fund

Schultz Financial Mgmt Corp

Risk-Controlled Portfolios for Serious Investors

Timed Bond Fund

Folio Statistics

(As of 12-30-2005)

	Timed Bond	LB Aggr Index
2005 Return	3.93%	2.47%
2004 Return	5.59%	4.34%
2003 Return	29.27%	4.10%
2002 Return*	3.99%	3.64%
Volatility	4.58	4.95

*Since Inception Date: Aug. 2, 2002

Investment performance figures from 2003 are based on actual results of a representative client. Results prior to 2003 are those of our model folio account since its inception. These figures do not include our investment management fees.

Research and Strategy

Historical data shows that unlike U.S. treasury bonds, high yield corporate bonds have a high correlation to stocks, particularly during bear markets.

In order to participate in the strongest performing segments of the bond market while controlling downside risk, we have developed a trend following market timing strategy. This strategy is meant to compliment core long term holdings in high quality bonds. This approach enables investors to participate in the best performing bonds in a risk controlled manner.

Objective:

The objective of this strategy is to achieve above average returns with moderate risk. The bond timing strategy manages downside risk by switching to money market funds during overall bond market weakness.

Investment Approach:

This bond timing strategy may invest in bond ETFs, closed-end bond funds, or traditional bond mutual funds. The objective of this strategy is to invest in high yield corporate bonds when they are trending up. If high yield bonds are not in an uptrend, the folio may invest in an intermediate government bond fund or an international high quality bond fund. If no bond sectors are in an uptrend, then the strategy will invest in a money market fund.

Bond Timing Back-Test

We performed a simulated "back-test" to validate the effectiveness of our proprietary market timing strategy for bonds. The test results are shown below:

Year Timed LB Index

1997 24.2% 9.6%

1998 13.3% 8.7%

1999 3.2% -0.9%

2000 6.0% 11.6%

2001 8.6% 8.5%

2002 12.4% 10.3%

Our back-test simulation used daily closing price data of mutual fund data from 1997 though 2002 compared with the LB Aggregate Bond Index.

The simulated back-test performance shown above does not include money management fees.

Closed-End Bond Funds

When closed-end funds can be bought at a discount to net asset value, investors are buying a dollar's worth of assets for less than a dollar. This can be attractive for two reasons:

1. For income-oriented funds, the yield will be higher when calculated on actual dollars invested at a discount, compared to the net asset value.

2. As the discount of your closed-end fund narrows, the reduction in the discount gives a boost to the fund's performance when you sell the shares.