AlphaProfit Sector Investors' Newsletter: March Indicator Update

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AlphaProfit Newsletter: March Indicator Update
March 1, 2007

Dear Valued Subscriber,

The AlphaProfit™ model portfolio returns as of February 28, 2007 are as follows:

	Feb. 2007	1H2007*	1 Year	3 Year	Sep. 2003 Inception
AlphaProfit Focus™ Model Portfolio	-1.1%	1.9%	9.2%	59.5%	116.6%
AlphaProfit Core™ Model Portfolio	-1.5%	0.3%	10.9%	37.7%	73.8%
DJ Wilshire 5000® Total Market Index	-1.6%	0.4%	12.4%	34.3%	56.6%

^* Dec. 31, 2006 to Feb. 28, 2007

Investors were ebullient through most of February as strong M&A activity helped perk up spirits. Take-over interest from private equity firms was notably strong with electric utility TXU Corp. receiving a $45 billion buyout offer. The ending days of the month however brought a change in investor sentiment as concerns of global economic weakness undermined optimism.

Overseas equity markets, particularly those in emerging nations, declined precipitously. Over $1 trillion in global equity market value was wiped out on February 27 and 28. The Dow Jones Industrial Average itself plunged 416 points or 3.3% on February 27 to lose all of the year's gains and then some.

The industry group funds included in the AlphaProfit model portfolios found themselves at either end of the performance spectrum. Fidelity Select Paper & Forest Products (FSPFX) and Fidelity Select Gold (FSAGX) fared relatively well while Fidelity Select Computers (FDCPX) and Fidelity Select Software & Computer Services (FSCSX) lagged.

In paper and forest products, Longview Fibre received a $1.6 billion buyout offer from Canada’s Brookfield Asset Management while Temple-Inland announced that it will spin off its real estate and banking units and unlock value. Gold mining shares benefited from the $15 per ounce rally in gold even though the February 27 sell-off took a good chunk of the gains away.

In the computer hardware and software universe, Hewlett-Packard reported robust results. Investors were however less than enthused by HP’s forecast. Google’s numbers fell short of being spectacular.

Small-cap and mid-cap stocks fared better than large-cap stocks. The Spartan 500 Index fund included in the Core model portfolio serves to track the large-cap Standard & Poor's 500 index. The lack of exposure to small-cap stocks along with weakness in the financial sector caused this fund to lag the DJ Wilshire 5000 model portfolio benchmark.

The investment thesis for the model portfolio funds remains intact. The funds included in the model portfolios are equally attractive and none of the funds carries a Favored Buy rating.

Maintaining the AlphaProfit Sector Portfolio Indicator at 'Buy on Dips'.

Equity prices have likely not yet bottomed for this down-leg. In the days ahead, volatility in equity prices will likely be higher than the abnormally low levels seen in recent months. This is likely to dampen investors' risk-appetite. Looking farther out, equity prices are likely to work themselves into a fairly wide trading range as M&A activity provides support.

Given this outlook, we maintain the AlphaProfit Sector Portfolio Indicator at 'Buy on Dips', the mid-point of the three-point scale. Subscribers getting started in tracking the AlphaProfit model portfolios or adding capital to their investment accounts to work their way towards the targeted asset allocation may want to invest cash during periods of weakness rather than periods of strength. The model portfolio compositions are available in the Subscriber Login area of the web site.

We welcome your comments.

Best regards,
Sam Subramanian
AlphaProfit Investments, LLC
Ideas. Insights. Results.
http://www.alphaprofit.com

Notes: The AlphaProfit Sector Investors' Newsletter™ is for information purposes only. AlphaProfit Investments, LLC is not soliciting any subscriber to buy or sell any security. Nothing herein should be construed as an offer to buy or sell securities or to give individual investment advice. Before buying any mutual fund, read its prospectus carefully. AlphaProfit Investments, LLC cannot and does not give any assurance that the present or future model portfolio changes will be profitable. Past performance is not a guarantee for future results. Factual material is obtained from sources believed to be reliable and is provided without warranties of any kind. AlphaProfit Investments, LLC is not responsible for any errors or omissions. AlphaProfit Investments, LLC neither is affiliated with nor receives any compensation from Fidelity Investments. Please review our Terms and Conditions of Use and Subscriber Agreement which is available on our website at www.alphaprofit.com; they govern your relationship with AlphaProfit Investments, LLC, including, but not by way of limitation, use of this newsletter. No part of the AlphaProfit Information may be reproduced or re-transmitted in any manner without written permission of AlphaProfit Investments, LLC.