Timed Stock Funds

Schultz Financial Mgmt Corp

Risk-Controlled Portfolios for Serious Investors

Timed Stock Funds

Folio Statistics

(As of 12-30-2005)

	Timed Stocks	S&P 500 Index
2005 Return	17.77%	4.90%
2004 Return	12.07%	10.71%
2003 Return	28.70%	28.30%
2002 Return	-5.98%	-7.87%
Volatility	13.98	11.19
Beta	0.84	1.00

*Since Inception Date: Aug. 20, 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.

Objective

Our research has demonstrated that within the global stock market, different segments of the market tend to rotate in and out of favor for periods of time lasting from a few weeks to a year or more.

In order to participate in the strongest performing segments of the global stock market while controlling downside risk, we have developed a trend following market timing strategy.

The objective of this strategy is to achieve above average returns in stocks by investing in the strongest performing segments of the global market using exchange trade funds ("ETFs") during up-trends. During down-trends we will preserve capital by switching to money market funds. The benchmark index for comparison is the S&P 500 Composite Index.

Investment Approach:

Our basic strategy is to invest in the three best performing segments of the market from our candidate list of exchange trade funds ("ETFs) below that are in an up-trend. Alternatively, we will invest in money market funds during down-trend. This strategy provides us with the opportunity to capture nice gains if a significant trend develops, and reduce our downside risk if the overall market turns down.

Our candidate list of ETFs include:

	Large Cap Value Stocks ( IVW )
	Large Cap Growth Stocks ( IVE )
	Mid Cap Value Stocks ( IJJ )
	Mid Cap Growth Stocks ( IJK )
	Small Cap Value Stocks ( IJS )
	Small Cap Growth Stocks ( IJT )
	Real Estate Sector Stocks ( IYR )

	Consumer Staple Sector Stocks (XLP)
	European Stocks ( IEV )
	Japanese Stocks ( EWJ )
	Latin America Stocks (ILF)
	Pacific Excl Japan (EPP)
	Gold Bullion (GLD)
	Money Market

Market Timing Back-Test

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

Year Timed S&P 500

1994 6.6% 1.3%

1995 22.2% 37.6%

1996 26.8% 23.0%

1997 27.5% 33.5%

1998 19.4% 28.6%

1999 75.2% 21.1%

2000 17.9% -9.1%

2001 12.1% -11.9%

2002 -3.4% -22.2%

Our back-test simulation used daily closing price data of exchange traded funds and mutual fund data from 1994 though 2002.

Since many exchange traded funds (ETFs) that we use did not exist prior to 2000, mutual funds that closely resembled those ETF indexes were substituted for the purpose of performing our simulated back-test.

The simulated back-test performance shown above does not include the cost of money management, trading costs, or potential costs associated with inefficient trade execution. Therefore actual returns could have been considerably less than those shown above.

We believe that the back-test simulation clearly demonstrates that our timing strategy does reduce downside risk associated with a prolonged "bear market".

© Schultz Financial Management 2002