This section is intended as an introduction and guide to those unfamiliar with our investment services and selection process. We will describe the process from beginning to end, also allowing you to determine whether our services would be of any benefit to your specific investment objectives.

Our investment service is for a large part intended for the US market and aimed towards the Small Cap sector, as represented by the Nasdaq and Russell 2000. There are, however, a number of international traded funds that would also benefit from our investment approach.



Timing Model

Signal:
FundSpectrum's Timing Model will either generate a "Buy" or "Sell" signal. This signal change will be generated a few hours after the close of the market. Subscribers will then also be notified by email of this change.
The Buy signal should be used to enter the market with either your own individual equity selection, or if you prefer, any of the funds ranked by FundSpectrum. The Sell signal should be used to either exit the market, going into cash (money market fund) or enter the market with a short position or inverse fund.

When to Trade:
If your investment vehicle is stocks, your order should preferably be placed before the market opens on the next trading day, the day after a signal change.
If your investment vehicle is mutual funds, your order should be placed before or during the trading hours of the day following the signal change. Because most mutual funds net asset values (NAV) are calculated at the end of each trading day, this will ensure that you will buy the mutual fund at the first available price, which is the NAV at the end of the trading day following the signal change. Be aware that most funds have "cut-off" times to place an order between 2:00 - 4:00 PM.

Positions:
Long and Cash: This is a conservative strategy. It keeps you invested only during the period when our model generates buy signals. When the model issues such a buy signal, you place an order to buy funds and/or stocks. Your position is said to be "Long". When the model issues a Sell signal, you liquidate all your long positions and keep the proceeds in cash or in a Money Market fund.

Long and Hedge: This strategy is similar to the above strategy, in the sense that you will now not liquidate your Long positions when a Sell signal is generated, but hedge those positions with a short position or inverse fund. By using this strategy, you will offset any potential loss from your long positions by the increase in value from your short or inverse fund positions. This strategy is particularly effective when investing in mutual funds, where sales fees apply and Early Redemption Fees (ERF) are imposed.

Long and Short: This strategy is designed to make you profit whether the market is going up or down. It captures the variations in market movements and keeps you invested during the various market fluctuations (both up and down). When our model issues a Buy signal, you liquidate your current short position (if any), and then purchase funds, stocks, or equivalent investment. When our model issues a Sell signal, you liquidate your current long positions, and then purchase those mutual funds that are "inverse" to the OTC and Russell 2000 index. With a brokerage margin account you will also be able to enter short positions with stocks, ishares or ETF's (short-selling means borrowing the equity from your broker in order to buy it later at a lower price, assuming that the price will decrease). Your position is said to be "Short".



What to Trade
Which mutual funds, index funds, stocks, ishares or ETF's should be selected in the portfolio? In the next section we will cover the selection and management methodology that FundSpectrum uses for funds. We typically invest in SmallCap Mutual Funds and Index Funds. As an alternative to these funds, you can invest in ishares or ETF's that track the Russell 2000 (IWM), or Nasdaq Composite (QQQQ). Other possible investment vehicles are stocks that correlate well with the Nasdaq or Russell 2000 index. However, for stock strategies, you will either need to make use of other "third-party" software packages or use your own selection methods, as we do not make individual stock recommendations. The next page will describe the integral part of our selection and investment strategy.