With the NAAiM OutlOOk2014 conference just weeks away, i would like to give

a shout out to the Agenda Committee under ted lundgren. it doesn’t take more than a look at the agenda to see they have done an outstanding job.

At the heart of the Committee’s work has been meeting priorities the NAAiM membership set in early May at our annual uncommon knowledge

conference in Ft. lauderdale, Fl. We closed the uk with the session Your Conference, Your Agenda, focusing on member input to shape and guide the organization. the number one priority the membership expressed was creating opportunities for peer-to-peer interaction. that in turn became the theme of Outlook 2014.

through this collaborative agenda, Outlook 2014 prom-ises to offer something to all members, whether it be listening to others share their knowledge and experiences or discussing your own thoughts on a variety of topics. As always, i am looking forward to seeing everyone and enjoying the speakers and opportunities for networking. At the uncommon knowl-edge conferences there is often so much going on that it is sometimes difficult to just sit down and get to know each other, particularly the new members. the smaller format of the Outlook conference is really conducive to the peer-to-peer exchange NAAiM has become known for in the adviser community, making it a treat to attend.

Agenda items include marketing and strategy develop-ment presentations, as well as a look at Investing in an Age of Transformation with John Mauldin, chairman of Mauldin economics. Outlook 2014 will also feature a Manager Show-case as a prelude to the NAAiM Shark tank at the 2015 uncommon knowledge conference. this is a good opportunity for managers to show off their strategies and step up their presentations prior to the Shark tank competition in May.

the NAAiM workshop “taking Your Asset Management Business to the Next level” held last month in Costa Mesa, CA, attracted more than 25 attendees, well over half of whom were non-members. Attendance was 100% and feedback was excellent, encouraging NAAiM to schedule three more work-shops on the west coast in the first quarter 2015, followed by workshops in other areas of the country in the third quarter. these sessions not only provide an opportunity for members to network, but are also a great way to introduce potential members to NAAiM, expand awareness of our active manage-ment expertise, and promote attendance at our conferences.

Trading STraTegieS

A Concise Guide to Hedging and Alternative Mutual Funds ....................9Market Commentary - October 17, 2014 ...............................................6

PracTice ManageMenT

The Market Gets a Mulligan ..................................................................4

naaiM newS

President’s Letter ...................................................................................1Peer-to-Peer Shapes NAAIM’s Outlook Conference .................................1First NAAIM Workshop a Success.........................................................12NAAIM Conferences Go Mobile!..........................................................13NAAIM Debuts New Events Video .......................................................13Active Management “Wizards of Wall Street” Book .............................13New Members ....................................................................................13Outlook 2014 Agenda.........................................................................14Sponsorship Matrix .............................................................................15

6732 W. Coal Mine Ave., #446 littleton, CO 80123 888-261-0787 info@naaim.org www.naaim.org

Bimonthly Journal of the National Association of Active Investment Managers Vol. 11 Issue 5, October 2014

Jason Wilder

President’s Letter

continued on page 12

National Sponsor

The views and opinions of the authors are not necessarily those of NAAIM, its officers or Board of Directors.

continued on page 2

Peer-to-Peer Shapes NAAIM’s 2nd Annual Outlook Conference

The BeSt ideAS, iNNOvAtiONS ANd SOlutiONS often come from the open forum dynamic that a peer-to-peer networking event can provide.

On November 10-11, you have the opportunity to be a part of this unique idea exchange at the NAAiM Outlook 2014 conference in dallas, Ft. Worth, tX. the second annual

November 10 & 11, 2014 • Westin Dallas Ft. Worth Airport Hotel 4545 W. John Carpenter Freeway, Irving, TX 75063

There is still time to join the 80+ registered attendees at Outlook 2014. Sign up online today at www.naaim.org!

2 October 2014

Outlook conference blends presentations and panel discus-sions with opportunities for attendees to shape the direction of the conversation to gain perspectives on topics shared by all investment advisory firms.

Featured speakers include a blend of NAAiM members and industry thought leaders, while topics range from opti-mizing trading strategies to effectively marketing an invest-ment approach. John Mauldin, Mauldin economics; author Joe Peta, Novus Partners; Michael Price, Price Capital Manage-ment; venk Reddy, Zeo Capital; Jerry Broussard, Broussard Financial Group, llC, and Steve Williamson, legacy invest-ment Group, offer their perspectives in feature presentations. Panel discussions bring a wide variety of NAAiM members to the front including Jason Wilder, CMG Capital Management; Jeff Pietsch, CONCeRt Capital Management; ken Graves, Capital Research Advisors, llC; Ryan Redfern, Shadowridge Asset Management, llC; and Paul Schatz, heritage Capital.

dave Walton (2014 Wagner Award 1st Place Winner) and and dave Witkin of Statistrade present a three-part series on System Pitfalls and Biases and how to overcome them and provide a more effective investment strategy.

Peer-to-Peer Shapes NAAIM’s 2nd Annual Outlook ConferencecOntInued frOm page 1

Thank You, Outlook 2014 Sponsors

the NAAiM Showcase offers a preview of the NAAiM Shark tank (returning to uncommon knowledge in 2015) with strategy presentations by individuals and firms inter-ested in providing strategy diversification as sub-advisers or research/signal providers.

throughout the two days, attendee input and opportuni-ties for networking add to the value content of the conference. the roundtable discussions on tuesday focus exclusively on topics raised by attendees, expanding on presentation topics and moving into uncharted territory.

As with all NAAiM events, the goal of Outlook 2014 is to build the success of each attendee’s business. if you walk away with at least one idea that makes your life better – NAAiM president Jason Wilder maintains he typically takes home pages of valuable ideas – Outlook 2014 will be successful. But it can’t happen unless you take the time to come and join the discussion.

Mark Outlook 2014 on your calendar and join NAAiM at the dallas Ft. Worth international Airport Westin for two days of peer-to-peer interaction and new ideas. For more informa-tion or to register, visit www.naaim.org.

John Mauldin – Mauldin Economics

Joe Peta – Novus Partners

Michael Price – Price Capital Management

Dave Walton - StatisTrade

Dave Witkin – StatisTrade

Jerry Broussard – Broussard Financial Group

naaIm is proud to recognize guggenheim as our 2014 national Sponsor and to salute our platinum Sponsors, ceros financial Services - advisors preferred,

Sierra mutual funds, Interactive Brokers and direxion Investments

See page 14 for Outlook Conference Agenda; page 16 for a registration form.

Call 800.258.4332 to ask us about how we and our Rydex products can help you in your business.

Read a fund’s prospectus and summary prospectus (if available) carefully before investing. It contains the fund’s investment objectives,risks, charges, expenses and other information, which should be considered carefully before investing. Obtain a prospectus and summary prospectus (if available) at guggenheiminvestments.com or call 800.258.4332.Inverse and leveraged funds are not suitable for all investors. •These funds should be utilized only by investors who (a) understand the risks associated with the use of leverage, (b) understand the consequences of seeking daily leveraged investment results, (c) understand the risk of shorting, and (d) intend to actively monitor and manage their investments. •The more a fund invests in leveraged instruments, the more the leverage will magnify any gains or losses on those investments. •Inverse funds involve certain risks, which include increased volatility due to the funds’ possible use of short sales of securities and derivatives, such as options and futures. •The funds’ use of derivatives, such as futures, options and swap agreements, may expose the funds’ shareholders to additional risks that they would not be subject to if they invested directly in the securities underlying those derivatives. •Short-selling involves increased risks and costs. You risk paying more for a security than you received from its sale. •Leveraged and inverse funds seek to provide investment results that match the performance of a specific benchmark, before fees and expenses, on a daily basis. Because the funds seek to track the performance of their benchmark on a daily basis, mathematical compounding,especially with respect to those funds that use leverage as part of their investment strategy, may prevent a fund from correlating with the monthly,quarterly, annual or other period performance of its benchmark. Due to the compounding of daily returns, leveraged and inverse funds’ returns over periods other than one day will likely differ in amount and possibly direction from the benchmark return for the same period. For those funds that consistently apply leverage, the value of the fund’s shares will tend to increase or decrease more than the value of any increase or decrease in its benchmark index. The funds rebalance their portfolios on a daily basis, increasing exposure in response to that day’s gains or reducing exposure in response to that day’s losses. Daily rebalancing will impair a fund’s performance if the benchmark experiences volatility. Investors should monitor their leveraged and inverse funds’ holdings consistent with their strategies, as frequently as daily. • For more on these and other risks,please read the prospectus.

ETFs may not be suitable for all investors. • Investment returns and principal value will fluctuate so that when shares are redeemed, they may be worth more or less than original cost. Most investors will also incur customary brokerage commissions when buying or selling shares of an ETF. • Investments in securities and derivatives, in general, are subject to market risks that may cause their prices to fluctuate over time. • ETF Shares may trade below their net asset value (“NAV”). The NAV of shares will fluctuate with changes in the market value of an ETF’s holdings. In addition, there can be no assurance that an active trading market for shares will develop or be maintained. • Tracking error risk refers to the risk that the advisor may not be able to cause the ETF’s performance to match or correlate to that of the ETF’s Underlying Index, either on a daily or aggregate basis. Tracking error risk may cause the ETF’s performance to be less than you expect

Shares of the funds are not deposits of, or guaranteed or endorsed by, any financial institution; are not insured by the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board, or any other agency; and involve risk, including the possible loss of the principal amount invested. Certain funds may be affected by risks that include those associated with sector concentration, international investing, investing in small and/or medium size companies, and/or the funds’ possible use of investment techniques and strategies such as leverage, derivatives and short sales of securities and alternative or nontraditional asset classes and strategies such as absolute return, long/short, commodities, currencies and managed futures. Please see the funds’ prospectus for more information.

Guggenheim Investments represents the investment management businesses of Guggenheim Partners, LLC (“Guggenheim”). Securities offered through Guggenheim Funds Distributors, LLC. Guggenheim Funds Distributors, LLC. is affiliated with Guggenheim Partners, LLC. #12982

Guggenheim’s Rydex FundsCommitted to Active Advisors

Your active management style can be a big differentiator now, as investors struggle to navigate challenging market conditions. As your investing partner, Guggenheim Investments is committed to supporting your firm through our Rydex funds and other benefits that deliver value to your clients:

▪ Breadth & Flexibility: Unlimited exchange privileges, with no holding periods and transaction fees, among equivalent share classes, of the 55 Rydex funds* (Certain share classes may impose sales charges on new purchases or for early redemptions). We also offer 12 funds that price twice daily through Guggenheim Investments and on select platforms.

▪ Innovation: A leader in providing benchmark replication products, as well as the industry’s first inverse and leveraged mutual funds.

▪ Thought Leadership: Scott Minerd, our Chief Investment Officer, guides Guggenheim Investments’ investment strategies and our views on global developments. In addition, we publish topical white papers and thought pieces that can be valuable in today’s market.

▪ Responsiveness: A team of dedicated sales professionals who understand and address the needs of active advisors.

4 October 2014

The Market Gets a MulliganmIke pOSey

HAviNG SPeNt MOSt OF MY CAReeR iN the insurance and investment industries, i have seen more than my fair share of reports, studies and analyses

seeking to explain investments and investor behavior. Most are mind-numbing in their complexity and are rarely worth an investor’s time. that’s why i prefer to explain financial con-cepts in common-sense terms, using everyday analogies where possible.

Most investors know a lot more about what goes on in the world around them than they do about the latest market analysis, so if we can explain financial concepts in terms they understand, then it might stick with them a while longer. this article will attempt to address why so many investors who lost money in 2008 (and some in 2002) still cling to passive investment portfolios. here’s what i think.

i’m not much of a golfer, but the few times i have played taught me the need for a “mulligan.” According to my golfing buddies, a mulligan is essentially a do-over where your last shot doesn’t count against you. So how does this concept apply to investors who stubbornly hold on to passive invest-ment strategies? let me explain.

i was recently talking to a neighbor and, knowing i’m in the investment business, she began discussing her own portfolio. She was bragging about how well her large wire house broker had been doing over the past few years and how pleased she was with his guidance. So i asked about how her broker managed risks and if she had lost money in 2008, during the height of the bear market. She admitted that she had lost money big-time in ‘08, but justified it saying that everyone did poorly during that period of time.

in other words, her broker got a mulligan for poor perfor-mance during the financial crisis.

As we all know, in 2008, almost every asset class not only lost money, but lost big. Between October 2007 and March of 2009, the S&P 500 index lost more than 50% of its value. Since then, however, the index has rebounded over 100% and reached new highs thanks to a large dose of easy money from

the Federal Reserve Bank. the result? investors remember the recent upward trend and give the market a mulligan for 2008.

there’s only one big problem. As my friends soon found out about my skill on the links, a lousy golfer seldom needs just one mulligan. the same is true of passive invest-ment strategies. For proof, you need look no further back than the first decade of the new millennium, in which the major stock indexes needed two mulligans in less than 10 years. do you really think those will be all it needs going forward? i doubt it.

that’s why it’s important for investors to compare where they are in relation to their investment goals, including mulligans, and where they should be to be on track with their original investment plan. investors are often sidetracked by the financial media’s claims of “record highs” when all it really means is that they got back to breakeven. they should be paying more attention to risk management.

By focusing on the progress of an investment plan that includes actively managed strategies to reduce the effects of bear markets, investors can more clearly see how detrimental these do-overs can be.

After all, you won’t be able to get a mulligan if you miss retirement goals.

Mike Posey is Director of Marketing for Theta Research, Inc., a third-party performance tracking and publishing firm. You can contact Mike at (512) 628-5201 or by e-mail at Mike@ThetaResearch.com.

Rising volatility may be good news for a covered call writing strategy, as call option premiums have historically risen with market variance.The Horizons S&P 500® Covered Call ETF (HSPX) is the only ETF in the United States that writes out-of-the-money covered call options on all of the eligible underlying stocks of the S&P 500®*. *Source: ETF Database.

HSPX

An ETF That Embraces Volatility

Important Information Horizons ETFs is a member of Mirae Asset Global Investments. Commissions, trailing commissions, management fees and expenses all may be associated with an investment in exchange traded products advised by Horizons ETFs Management (USA) LLC and managed by Exchange Traded Concepts, LLC (the “Horizons Exchange Traded Products”). The Horizons Exchange Traded Products are not guaranteed, their values change frequently and past performance may not be repeated.

Before investing you should carefully consider the Fund’s investment objectives, risks, charges and expenses. This and other information is in the prospectus, a copy of which may be obtained by visiting the Fund’s website at HorizonsETFs.com/USA. Please read the prospectus carefully before you invest. Distributor: Foreside Fund Services, LLC.

There are risks involved with investing, including possible loss of principal. Concentration in a particular industry or sector will subject the Funds to loss due to adverse occurrences that may affect that industry or sector. The Funds risk not benefiting from potential increases in the value of underlying securities above the exercise prices of the written covered call options, and are subject to the risk of declines in the value of such securities. Each sector fund is subject to its own specific risk factors. See prospectus for specific risks regarding each Fund and sector.

Individual shares of the Horizons S&P 500® Covered Call ETF (“HSPX”) may be purchased or sold in the secondary market throughout the regular trading day on the New York Stock Exchange through a brokerage account. However, shares are not individually redeemable directly from HSPX. HSPX issues and redeems shares on a continuous basis, at NAV, only in blocks of at least 50,000 shares (“Creation Units”), principally in-kind for securities included in the relevant Index.

6 October 2014

Sierra Market Commentary - October 17, 2014daVId c. WrIght

WhAt A dRAMAtiC Week!For context, the dramatic action in the u.S. and global stock markets the week of October 13 –

and the flash-crash in treasuries at the open on Wednesday, October 15 – came well into the months-long deterioration in economic data from both europe and China, and ominous downtrends in oil and copper. Growing global worries have been reflected in a strong, months-long rise in the dollar and in treasury prices.

At Sierra, we’ve been expecting a major cyclical market top in the u.S. stock market for a long time – and we’ve been way too early, since the Fed has been so successful in heading off any normal cyclical decline.

Now, one visible sign of an important top is the record high in margin balances – significantly surpassing the multi-year buildups that presaged the cyclical tops in 2000 and 2007. (See graph.)

Most other global markets peaked months ago, and in the u.S. only complacency about Fed support has held up the large-cap indices, while the small-cap Russell 2000 has been in decline since July.

We are in the camp that believes that September 19 marked the final cyclical high in the dow and S&P, and that the major trend is now down.

the rising cycle in stock prices that began in March 2009 is now a record 67 months old. Significantly, the Fed launched massive Qe programs in response to the last two significant stock selloffs, successfully fending off a “normal” cyclical decline. Now, unless the Fed intervenes again with a massive new program, we think September’s high may stand for at least several years, and that stocks could have many months of downside ahead.

Short term, we see today’s uptick as a relief rally that is likely to fizzle within a few days, followed by one more downleg before a stronger rally that may last more than a week.

But then, look out below! After any such second rally, we expect the larger downtrend to resume, with a strong selloff lasting several weeks, taking the major indices to levels near 20% off their highs – with further downlegs well into 2015.

Guesstimating downside targets is not our strength, but historically the stock market tends to overshoot in both direc-tions on its major cyclical moves, so it would not surprise us to see the P/e ratio fall below 10, as it did during most past secular bear markets.

David C. Wright is Managing Director, The Sierra Group of companies based in Santa Monica, CA.

S&P and margin debt at prior major cycle tops, both adjusted for inflation

the exceptional day-to-day volatility that began on October 8 was another indication that something unusual was brewing, and this week saw a massive spike in new 52-week lows on the NYSe, even while the dow and S&P 500 were still close to their all-time highs of September 19. (See graph.)

New 52-week lows of NYSE stocks

Successful portfolio management involves both profiting from sustained uptrends — the past three years have mostly been part of the current rising cycle — and limiting drawdown during

the adverse part of the cycle — which Sierra has also done very well for many years.

Performance Summary, cLaSS r SHareS (SSIrx)

SIerra STraTeGIc Income fund from IncePTIon 12/27/11 To 9/30/14

2008 2009 2010 2011 2012 2013 2014

As of 9/30/2014

Year-to-Date One Year Cumulative* Annualized Cumulative* Annualized

Sierra Strategic Income fund class r +6.61% +7.49% +8.88% +4.35% +17.30% +5.91%

Bond Index +4.10% +3.96% +2.21% +1.10% +7.08% +2.51%

Latest Two Years Since Inception 12/27/2011

The performance data quoted here represents past performance for Class R shares (symbol SSIRX), and are net of the total annual operating expenses of the Class R shares (see below). For performance numbers current to the most recent month end, please call toll-free 866-738-4363 or visit our website, SierraMutualFunds.com. Current performance may be lower or higher than the performance data quoted above. Past performance is no guarantee of future results. The investment return and principal value of an investment in the Fund will fluctuate, so that investors’ shares, when redeemed, may be worth more or less than their original cost. The total annual operating expenses, including expenses of the underlying funds (estimated at 0.56% per year) are 1.53% for Class R. Please review the Fund’s prospectus for more information regarding the Fund’s fees and expenses.

* “Cumulative” performance from inception is the total increase in value of an investment in the Class R shares assuming reinvestment of dividends and capital gain distributions.

“Bond Index” is the Barclays Capital Aggregate Bond Index, formerly called the “Lehman Aggregate Bond Index”, and is a broad-based index maintained by Barclays Capital that is often used to represent investment-grade bonds traded in the United States. Investors cannot directly invest in an index and unmanaged index returns do not reflect any fees, expenses or sales charges.

Underlying Funds may invest in foreign emerging market countries that may have relatively unstable governments, weaker economies, and less-developed legal systems, which do not protect investors. In general, the price of a fixed income security falls when interest rates rise. Any strategy that includes inverse securities could cause the Fund to suffer significant losses. Underlying Fund investments in lower-quality bonds, known as high-yield or junk bonds, present greater risk than bonds of higher quality. Municipal securities are subject to the risk that legislative changes and economic developments may adversely affect the value of the Fund’s investments. REIT risks include declines from deteriorating economic conditions, changes in property value, and defaults by borrower. Underlying Funds that own small and mid-capitalization companies may be more vulnerable than larger, more established organizations to adverse business or economic developments. In some instances it may be less expensive for an investor to invest in the Underlying Funds directly.

PMS 349 PMS 425

-115

-110

-105

-100

$115 -

$110 -

$105 -

$100 -

Sierra Strategic Income Fund

Barclays Capital Aggregate Bond Index

Invest wisely.

aSSeT aLLocaTIon aS of SePTemBer 30, 2014*

The top ten holdings of the Sierra Strategic Income Fund as of the date above is among the extensive information included in a four-page Fact Sheet, which is updated at least quarterly and can be viewed and printed from our website, SierraMutualFunds.com.

*NOTE: Holdings can change at any time without notice. **Money Market & ultra short bond funds.

The Sierra Strategic Income Fund pays a quarterly dividend. Shares are available through TD Ameritrade, Charles Schwab & Co. Inc., Fidelity, Pershing and directly from the Fund.

The Fund indirectly bears the investment management fees and expenses of the underlying funds in addition to the investment management fees and expenses of the Fund – all of which however are fully reflected in the above performance information. In some instances it may be less expensive for an investor to invest in the underlying funds directly. There is also a risk that investment advisers of those underlying funds may make investment decisions that are detrimental to the performance of the Fund. Investments in underlying funds that own small- and mid-capitalization companies may be more vulnerable than larger, more established organizations to adverse business or economic developments. Investments in underlying funds that invest in foreign equity and debt securities could subject the Fund to greater risks including, currency fluctuation, economic conditions, and different governmental and accounting standards.

Our investment strategies have been specifically developed for retirees, those approaching retirement, and other conservative investors. During these turbulent times, we invite you to ask us for more details about our performance in both good times and Bear Market periods. Investors should carefully consider the investment objectives, risks, charges, and expenses of the Sierra Strategic IncomeFund. This and other information about the Fund is contained in the prospectus and should be read carefully before investing. The prospectus can be obtained on our website, SierraMutualFunds.com, or by calling toll free 1-855-879-4075. The Sierra Strategic Income Fund is distributed by Northern Lights Distributors, LLC, Member FINRA/SIPC.

Municipal Bonds20%

Low-Volatility Funds10%

Intermediate-Term Bonds

8%

High Grade U.S.Bonds

7%

Multi-SectorBond Funds

17%

Equities19%

InternationalBonds

7%

Temporary Havens**

12%

2413-NLD-10/9/2014

Year Q1 Q2 Q3 Q4 CalendarYear

Bond Index

2012 +2.94% +0.79% +3.67% +1.75% +9.44% +4.21%

2013 +1.41% -1.24% -0.60% +0.83% +0.38% -2.02%

2014 +3.25% +3.41% -0.15%

Performance By QuarTer (SSIrx)

www.naaim.org 9

A Concise Guide to Hedging and Alternative Mutual FundsandreW rOgerS

DeSPite All the tAlk ABOut hedGiNG, MOSt investors still do not know what it is, or that many alternative mutual funds incorporate hedging into

their strategies primarily to mitigate downside risk.Although there has been a great deal of discussion in the

financial markets about hedging, many investors do not fully understand this concept or how an effective hedging strategy can potentially enhance their portfolios.

A “hedge” usually involves investing in a security related to another investment in order to mitigate the risk of negative price movements. For example, if an investor finds technology stocks attractive, but is concerned about the market dropping, he or she could attempt to avoid the negative effects of market turmoil through a short position in a futures contract tracking the broad stock market. the investor still profits if technology stocks outperform while being hedged from a broader decline.

in recent years, mutual fund managers have responded to investors’ widespread fear of another significant market down-turn (and their concerns related to market volatility in general) by offering investors the opportunity to benefit from hedging through alternative-strategy mutual funds.

Steady Growth of Asset Class, But Still a Long Way to GoAs investors and advisors continue to search for higher

returns in a low-yield environment and fund managers seek out alternatives to traditional portfolio management and asset allocation, alternative mutual funds have increased in popu-larity in the u.S. market. According to Morningstar, u.S. alter-native mutual funds received a record $40.2 billion in inflows (representing organic growth of 43.9%) during 2013.

however, a single alternative mutual fund accounted for one-third of those inflows, and Morningstar reports that only 27 u.S. alternative mutual funds contained more than $1 billion in assets at year-end 2013. Furthermore, the majority of u.S. mutual fund investors still have not warmed to alter-native strategies, since the $132 billion that u.S. alternative funds managed at the end of 2013 pales in comparison to the $10.9 trillion in total u.S. long-term mutual fund assets.

One reason most u.S. investors are wary of alternative mutual funds is because, since so many were launched after 2008, they have short performance histories. this is where due diligence comes in—a thorough investigation of a fund manager and its partners in bringing alternative investment vehicles to market can help investors and advisors make knowledgeable decisions about potential alternative investments.

Hedged Mutual Fundsthere are three types of alternative strategies that can

help investors obtain more diversification and better manage

downside risk—hedged, tactical and strategically allocated funds. An alternative mutual fund may utilize any of these three strategies, and depending on investors’ goals and outlooks, they may obtain greater diversification and higher risk-adjusted returns by investing in a combination of alterna-tive mutual funds.

hedged mutual funds generally utilize derivatives like futures or options to manage downside risk. this type of hedging tool within a portfolio may reduce volatility and create a smoother ride for investors because the risk mitigation tools are constant and the manager is not timing the market.

On the other hand, hedged mutual fund strategies can be expensive, and a hedged mutual fund will generally trail its benchmark in a directionally up market. Furthermore, the expertise required to properly manage these funds is complex and manager error may yield unintended results.

Tactical Mutual FundsNumerous white papers and financial services industry

organizations endorse the tactical model of exiting the market when investors and fund managers perceive risk. indeed, one benefit of these mutual funds is that they are designed to move to cash, u.S. treasuries, or other safe harbor assets when the manager believes there is the potential for downside volatility in the market. Many tactical fund managers use complex quantitative models to determine market trends, or rely on economic data to identify periods of greatest historical risk and figure out when it is necessary to exit the market. there has also been an influx of go-anywhere mutual funds in which the manager chooses asset classes based on his or her research and decisions.

the risks involved in tactical models include the possi-bilities of leaving the market too soon or re-entering too late. however, they can also provide managers and investors with the flexibility to shield portfolios from the effects of market downturns.

Strategically Allocated Mutual Fundsthe concept of strategic allocation is threaded throughout

the mutual fund industry, since investment activity usually changes in response to global economic developments and trends. As such, allocations between fixed income and equity assets tend to fluctuate in periods of higher risk or based on the age and risk tolerance of individual investors.

however, possibilities for strategic allocation have expanded with the introduction of alternative funds, and now include investments in commodities (especially precious metals) and other alternative asset classes.

continued next page

10 October 2014

At the fund level, some of the risks associated with strategi-cally allocated funds are that a manager could select the wrong asset classes and trail his or her fund’s benchmark, and that individual investors could pursue certain funds or asset classes simply because they are considered “hot” in the marketplace. On the other hand, these types of funds may provide inves-tors with additional portfolio investment choices and allocation combinations, and hence, lead to greater diversification.

Invest, But Choose Carefullyhedging can be an effective tool for helping investors

manage risk, and in today’s continually challenging market environment, mutual funds that incorporate this mechanism are an important addition to the financial services market-place. By providing diversification and flexibility, hedged mutual funds and other alternative strategies can potentially

help mutual fund investors protect and generate capital in all market cycles, and may arm investors who are concerned about another financial crisis with the reassurance they need to re-enter the stock and bond markets. however, inves-tors need to understand the nuances of each type of mutual fund strategy that utilizes hedging in order to make the most informed decision about which one is right for them.

Andrew Rogers is the CEO of Gemini Fund Services, LLC. Gemini provides comprehensive, pooled investment solutions as an engaged partner to independent advisors. Gemini serves as a resource, providing administration and accounting to advisors bringing their own, unique investment vehicles to market, including mutual funds, exchange-traded funds, funds on insurance platforms and more.

annuityprices.com

Powerful market knowledge.

y o u r s o u r c e f o r a n n u i t y p r i c i n g d ata

Download our free 30-day trial

Questions? Call: 248-642-3509

• Over 60,000 Variable Universal Life and Variable Life Annuity subaccounts priced daily

• Customize data searches based on investment objectives

• Transfer data to preferred software platform

• Download previous night’s market closing prices by the afternoon of the next business day

A “hedge” usually involves investing in a security related to another investment in order to mitigate the risk of negative price movements.

A Concise Guide to Hedging and Alternative Mutual FundscOntInued

Introducing Our High Yield+ Strategy!

Signal Research Group, LLC. ● www.signalrg.com ● 1-855-644-4401 ● info@signalrg.com

For years, we have used money markets as a safe haven when our High Yield model was in a Sell mode. Historically, our model has kept client accounts in money markets approximately 30% of the time. But with

returns from money markets at historic lows, we decided to look for a suitable alternative. Our search led us to another fixed-income instrument. We back tested it with a modified version of our High Yield model over a 15-year period, from 1998 to the present. When we substituted this particular security for money markets, our findings suggest we could have seen an average gain in total return of more than 3% per year. This represents an appreciable increase over the returns we’ve been able to generate from high yields

alone. We believe the opportunity for added returns more than compensates for the additional risk.

Why settle for current money market rates? Let us show you an alternative to these historically low rates.

We invite you to request a copy of our complete report. We can manage your client accounts, or supply you with the signals.

J. Paul Cunningham Matthew E. Spangler President Portfolio Manager Please note. Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results shown may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown above. Returns from our High Yield PLUS Strategy are not bank guaranteed, not FDIC insured and may lose money. SRG is a registered investment advisor with the state of Oklahoma and transacts business only in states where it is properly registered, or is excluded or exempted from registration requirements. Registration as an investment advisor does not constitute an endorsement of the firm by securities regulators, nor does it indicate the advisor has attained a particular level of skill or ability.

12 October 2014

in addition to a greater emphasis on peer-to-peer interac-tions, we have realigned our relationship with the NAAiM sponsors bringing them more to the front. Our goal is to give the sponsor firms more creative and constructive input into NAAiM events and year-round exposure to the membership. the attached Sponsorship Matrix shows opportunities and benefits of being a NAAiM sponsor in 2015. if this is an area of interest to your firm, please take a moment to review it and call Susan truesdale if you have any questions.

As always, i would like to extend my appreciation to the many individuals who make our conferences possible, from our sponsors to NAAiM’s Administrator, Susan truesdale, and Marketing director, Susan Baber, as well as the previously mentioned Agenda Committee, the presenters and the NAAiM membership.

Before i sign off, i would encourage the NAAiM members to realize that as the market wobbles, we have an opportunity to get the active management story and our firms out in front

President’s LettercOntInued frOm page 1

First NAAIM Workshop a Success!

The FiRSt OF A SeRieS OF PlANNed WORkShOPS - “taking Your Asset Management Business to the Next level” – received excellent reviews from the more

than 25 advisers in attendance. With more than half of the attendees at the Costa Mesa (Orange County), CA. workshop being non-members, NAAiM is proving its ability to bring value to advisors interested in learning more about the active management space. Following up on that success, NAAiM is planning additional workshops on the West Coast during the first quarter of 2015 to take advantage of the warm weather and encourage participation at the 2015 NAAiM uncommon knowledge Conference in Newport Beach, CA. Additional workshops will be held throughout the country in the third quarter of 2015.

the workshop kicked off with ted lundgren of hg Capital Advisors, llC and NAAiM vice President, discussing the value of adding active investment management to your

practice and how to get started, either by doing it yourself, outsourcing to another manager, or partnering with other advisors. dave Walton, the 2014 1st Place Wagner Award winner, presented why back-testing and system bias are important concepts to understand when developing your strategy. ted returned to the podium giving tips on preparing for the due diligence process and discussing how to promote a strategy with no track record. Carl Resnick, head of Rydex Funds distribution, Guggenheim (and workshop sponsor) followed up the NAAiM presentation with a Ce Credit course on “A Practical Guide to implementing Alternatives”.

As always with a NAAiM event, it was truly the interac-tion and networking among the advisors that make for a must-attend event. Workshop attendees not only joined the session discussion, but spent time during breaks and at lunch exchanging ideas and business cards.

Mark Your Calendars! May 3 - 6, 2015

Uncommon Knowledge 2015Newport Beach Marriott Resort & Spa

Newport Beach, CA

of potential clients. You need to be prepared for opportunity and for growing your firm. this can be everything from your webpage and marketing message to back office operations. how is your technology footprint? Are you positioned to take on substantial new assets?

At CMG, we are spending a lot of time looking at our offerings and asking ourselves if we are positioned correctly from a management and fee perspective. have we made ourselves too complicated? do investors really understand the benefits of working with our firm or are we letting termi-nology take over the message?

Genuine apprehension in the market creates opportunity for active managers. We need to be positioned to take advan-tage of that opportunity. if you are not sure how to step your firm up to the next level, it’s time for peer-to-peer interaction. NAAiM is an incredible resource. the more involved you are, the more you will benefit from your membership. there’s an opportunity for every level of participation from attending NAAiM events to participating on committees and becoming a member of the board of directors. Yes, it takes time, but i think you will be amazed at how much you gain by taking your membership to a higher level.

Sincerely,

Jason Wilder 2014-2015 NAAiM President

www.naaim.org 13

NAAIM Conferences Go Mobile!

Finally a use for that smart phone or tablet that you’ve been carrying around! NAAiM is set to introduce a mobile

conference app that will enable attendees to access much of the conference information on their phone. Conference attendees will be able to view the agenda, select the sessions they want to attend for their own schedule, browse sponsor information and connect with other attendees.

We believe this mobile conference app will be a great benefit to our conference attendees and just another reason to attend the next NAAiM Conference (that would be Outlook 2014, coming up November 10 and 11, 2014.).

New Members:Jonathan WallentineActuarial Management Company LLC30011 Ivy Glenn Dr., Ste. 204Laguna Niguel, CA 92677800-737-4260

Davin Gibbins120 Lois LaneState College, PA 16801814-441-6401

Daria Russell DoeringDow Theory LettersP.O. Box 1759La Jolla, CA 92038858-454-0481

Robert BarnesETF Mosaic81652 Camino VallecitaIndo, CA 92203949-939-4121

Stan LinsenbardtFour Seasons Capital Growth3908 Carmel Dr.Jefferson City, MO 65109573-893-5094

Steve BlochMHB Financial Group, LLC1712-B Clark LaneRedondo Beach, CA 90278310-798-0251

Mark KramerNorthwest Asset Management7900 SE 28th St., Ste. 412Mercer Island, WA 98040206-838-3680

Ben WarwickQuantitative Equity Strategies, LLC8822 Ridgeline Blvd., Ste. 220Highlands Ranch, CO 80129303-471-0244

Don BarrereSagePoint Financial900 Rockmead Rd., Ste. 210Kingwood, TX 77339281-312-4241

Welcome Back – Returning Members:Paul McCreadyCounsel Wealth Management6 Pine Tree Dr., Ste. 100Arden Hills, MN 55112651-639-8707

Rich PaulPotomac Advisors7215 Trail Creek GlenLakewood Ranch, FL 34202941-870-3426

William BarnettSecurity Asset Management5212 Village Parkway #10Rogers, AR 72758479-936-8650

Another Opportunity for Visibility

Long-time NAAiM Member Bob vance is continuing to work on his idea for a book about the Active investment

Management world, modeled after the famous “Wizards of Wall Street” books.

But he still needs your help. he currently has about 26 Active Managers that have submitted information or offered their assistance. however, Bob would like to have twice that many! Altogether, he would like to have closer to 50 managers to pool ideas and generate content for this great idea.

if you haven’t already done so, please contact Bob vance via email to offer your assistance at bobvance.vcm@gmail.com.

NAAIM Debuts New Events Video

We love our conferences here at NAAiM and this video is just one more reason to celebrate them. take a look

and see if you can spot any familiar faces!

www.youtube.com/watch?v=ilSs7edyNtw&feature=youtu.be

OUTLOOK 2014: Fostering Peer-to-Peer Collaboration

AGENDA Monday, November 10 8:30 AM Registration 9:00 Welcome – Jason Wilder, NAAIM President 9:15 – 9:45 The Value of Peer Input: Building a Successful Hedge Fund – Michael Price,

Price Capital Management 9:45 Break 10:00 – 11:00 Concurrent marketing and system design sessions:

A) Overview of System Pitfalls and Biases – Dave Walton and Dave Witkin, StatisTrade (Dave Walton is 2014 Wagner Award 1st Place Winner)

B) The Dinner Seminar is Back…and Working (A Case Study) – Steve Williamson, Legacy Investment Group

11:00 – 12:00 PM Peer-to-Peer Round Table Discussions – Various topics from attendee survey 12:00 – 1:00 Lunch – Sponsor Introductions 1:00 – 2:00 Due Diligence Panel Discussion: Know the do’s and don’ts of presenting

your strategy for distribution – Carl Resnick, Guggenheim – Moderator; Jason Wilder, CMG Capital Management; Jeff Pietsch, Concert Capital Management; Ted Lundgren, Hg Capital Advisors, LLC

2:00—2:15 Refreshment Break 2:15 – 4:15 PM NAAIM Manager Showcase – Shark Tank Preliminary Presentations – 3

concurrent sessions 4:15 – 5:15 PM Investing in an Age of Transformation -- John Mauldin, Chairman, Mauldin

Economics 5:30 – 6:30 PM Cocktail Reception Tuesday, November 11 8:30 AM Breakfast – Sponsor area 9:00 – 10:00 The Irony of Moneyball: Why is Baseball Better at Using its Data to Allocate

Capital and Manage Risk than the Financial Industry? - Joe Peta, Author

10:00 – 11:00 Concurrent marketing and system design sessions: A) Impact of Biases on Trading System Performance – Dave Walton and

Dave Witkin, StatisTrade (Dave Walton is 2014 Wagner Award 1st Place Winner)

B) Building a Thoughtful Relationship Between Manager and Investor – Venk Reddy, Zeo Capital Advisors

11:00 – 12:00 PM Your Conference, Your Agenda: Round Table Discussions – Audience Participation

12:00 – 1:30 Lunch 1:30 – 2:30 Concurrent marketing and system design sessions:

A) Avoiding Biases through an Effective System Development Process – Dave Walton and Dave Witkin, StatisTrade (Dave Walton is 2014 Wagner Award 1st Place Winner)

B) Improve your Social Media Marketing in 3 Easy Steps – Jerry Broussard, Broussard Financial Group, LLC

2:30 – 3:15 Trading and Refreshment Break 3:15 – 4:30 PM The Marketing Machine from Product to Consumer- Member Panel – Ken

Graves, Capital Research Advisors, LLC; Ryan Redfern, Shadowridge Asset Management, LLC; and Paul Schatz, Heritage Capital

4:30 PM Conference Adjourned

14 October 2014

N A A I M

6732 W. Coal Mine Avenue, Suite 446 | Littleton, CO 80123

T: 888.261.0787 | F: 303.979.2192 | Contact Person: Susan Truesdale

www.naaim.org | info@naaim.org

NAAIM Outlook 2014

Fostering Peer-to-Peer Collaboration

November 10 & 11, 2014

Westin Dallas Ft. Worth Airport 4545 W. John Carpenter Freeway

Irving, TX 75063

FIRST & LAST NAME (PLEASE PRINT)

1)__________________________________

2)__________________________________

3)__________________________________

Attendee Registration Fee: Circle Choice

NAAIM Member -- $400

Member w/AUM $10,000,000 or less -- $200

Non Member -- $600

EMAIL ADDRESS:

1)__________________________________

2)__________________________________

3)__________________________________

Method of Payment: Check Enclosed (payable to NAAIM) MasterCard Visa Amex DiscoverCard

NAAIM prefers payment by check

COMPANY: ____________________________________

Credit card billing address if different from company address: ______________________________________

______________________________________

ADDRESS: ______________________________

_______________________________________

_______________________________________

___________________________________ CREDIT CARD # EXP. DATE

PHONE NUMBER: _______________________________________

__________________________________ NAME AS IT APPEARS ON CARD

NAAIM has negotiated a group rate of $139 single/double at the Westin Dallas Ft. Worth Airport. To make reservations call 1-888-627-8617. The deadline to receive the NAAIM group rate is October 17, 2014.

NAAIM 2015 Sponsorship Offerings National $50,000 Platinum $20,000 Gold $10,000 Silver $6,000 Innovation $1,000Number of sponsorships available: 1 4 6 Unlimited UnlimitedAssociate Membership Dues included: Covers up to five firm employees

Annual (Year-Long) Sponsor BenefitsNAAIM home page logo, link, sponsor recognition (Continuous Exposure to Website Visitors)Webinar Presentation. Promoted via email by NAAIM to 5000+ contacts 2 / year 1 / year Additional Cost Additional CostYear-round access to NAAIM membership listNAAIM Website: Up to 200-word Sponsor Profile with Logo and Website LinkAccess to NAAIM Community: Exclusive access to Members-Only and Online ContentGuest Blog posts on NAAIM Speaks 4 / year 2 / year Additional CostSponsored Content Post with Logo and Website Link on NAAIM News 4 / year 2 / year Additional CostFirst Right of Refusal for new Sponsor Opportunities ExclusiveNAAIM Board Of Directors Meeting Participation ExclusiveChair of Sponsorship Advisory Committee ExclusiveActive Manager Newsletter Advertising 6 Issues: 1-Page Ad 3 Issues: 1-page Ad Pre-conference Issue Additional Cost Additional CostLogo displayed in Bi-Weekly NAAIM News E-Digest Exclusive RotatingWagner Award – 1st place sponsor ExclusiveWagner Award – 2nd or 3rd place sponsor Shared with Platinums

Uncommon Knowledge Conference BenefitsExhibit Space - 6’ Exhibit Tables with Draping Included 2 Tables + Preferred Booth Placement 1 Table + Preferred Booth Placement 1 Table 1 Table Tuesday onlyConference registrations 4 2 2 2 1Guest passes for non-member RIAs 5 ($3,000 Value) 2 ($1,200 Value) 1 ($600 Value)Keynote speaker * Exclusive Additional CostBreakout sessionWelcome Reception Sponsorship Shared with PlatinumsMonday Dinner Event ExclusiveTuesday Party Sponsorship Shared with PlatinumsBreakfast and Break Sponsorship Co-SponsorNAAIM Showcase Sponsorship (formerly NAAIM Shark Tank) Additional Cost Additional CostVendor directory ad 2 Pages 1 Page Listing Only Listing Only Listing OnlyVendor profile in Print Conference Guide 2 Pages 1 Page Additional Cost Additional Cost Additional CostOn-site Signage with Logo Conference Banner plus Sponsored Events Sponsored Events Sponsored EventsGolf Classic Foursome 2 Foursomes 1 Fishing or Golf Additional Cost ($1,500) Additional Cost ($1,500)Golf Classic Signage Lead Recognition Event Recognition Additional Cost Additional CostFishing Sponsor (up to 3 Sponsors) Additional Cost 1 Fishing or Golf Additional Cost ($1,500) Additional Cost ($1,500)Pre-conference recognition - Active Manager, NAAIM News, Conference brochure, emails Active Manager newsletter plus conference emailsIntroduction to full conference audienceAccess to attendee list (One Pre-conference and Post-conference mailing; no emails)Mobile Conference App (2015) TBD TBD TBD TBD TBD

Outlook Conference BenefitsExhibit Space 1 Table + Preferred Placement 1 Table + Preferred Booth PlacementConference Speaker (Limited to 1 Sponsor) Free slot/Additional Cost depending on speaker Additional CostConference Registrations 4 2Guest Passes for non-member RIAs 3 ($1,200 value) 2 ($800 value)Lunch Signage ExclusiveBreakfast and Break sponsorship signage Shared with PlatinumsVendor directory ad 2 Pages 1 PageVendor profile in Print Conference Guide 2 Pages 1 PagePre-conference recognition - Active Manager, NAAIM News, Conference brochure, emailsIntroduction to full conference audienceAccess to attendee list (One Pre-conference and Post-conference mailing; no emails)On-site Signage with Logo Conference Banner plus Sponsored Events Sponsored Events

sponsorship brochure 8-20.indd 1 9/4/2014 3:48:09 PM