Timed Growth Stocks

Schultz Financial Mgmt Corp

Risk-Controlled Portfolios for Serious Investors

Timed Large Growth Stocks

Folio Statistics

(As of 12-30-2005)

	Timed Gr Stks	S&P 500 Index
2005 Return	-0.84%	4.90%
2004 Return	21.07%	10.71%
2003 Return*	8.74%	8.40%
Volatility	15.80	11.19
Beta	1.29	1.00

*Since Inception Date: October 3, 2003

Investment performance figures starting with the 2nd quarter of 2004 are based on actual results of a representative client. Prior to the 2nd quarter of 2004, performance figures are based on our model account since its inception. These figures do not include investment management fees.

Objective

Our research has demonstrated that within each stock sector, some leading stocks may experience above average price momentum for several weeks to a year or longer. The upward momentum in these leading stocks will often continue to prevail even as the sector average begins a downward trend.

In order to participate in these stronger momentum stocks, we utilize a trend following strategy to buy and sell individual stocks.

The objective of this strategy is to achieve above average returns in stocks by investing in top performing growth stocks in 5 different sectors during up-trends and preserve capital by switching out of the various stocks to money market funds when it's sector is weak. The benchmark index for comparison is the S&P 500 Composite Index.

Investment Approach:

We monitor the trends of each of the following 5 growth oriented sectors on a daily basis.

	Health Care / Medical
	Financial
	Retail
	Services
	Technology

For each of the 5 sectors, we will hold one stock in each sector as long as the sector remains in an up-trend or the individual stock that we own in the sector remains in an up-trend.

If the stock that we own in a sector begins a down-trend then we will sell the stock. If it's sector is also in a down-trend, we will invest the proceeds in a money market fund. If it's sector is in an up-trend, we will invest the proceeds in another leading stock in the sector. The leading stock is selected from a current candidate list of leading stocks (see right column).

To be able to determine changes in trend we use a proprietary trending indicator based on the rate of change in price. It is designed to respond quickly to trend changes without overreacting to volatility.

Timed Growth Stock Strategy/main.swf

Candidate Stocks

The candidate stocks considered for selection in the Timed Large Growth Stock strategy is a dynamic list of companies that is updated each time we need to buy a stock.

These companies are selected using a computer-generated ranking of leading companies with market capitalization exceeding 5 billion.

The computer rankings provided by Investors Business Daily ("IBD"), are based on a combination of each company's recent record of profit growth; IBD's Composite Rating (which includes key measures such as return on equity, sales growth and profit margins); and relative price performance over the last 12 months.

By selecting those ranked in the top 10%, we reduce the candidate list to 5-20 stocks per sector. These remaining candidate stocks are then narrowed further by removing those with high volatility relative to the group, as well as those stocks that have advanced too quickly in price according to our systems. This is to prevent up from buying stocks that could give us false sell signals.

A final selection will be made with consideration given to both fundamental and technical date including a stock chart.

© Schultz Financial Management 2002