FOR INVESTMENT PROFESSIONAL USE ONLY

RM2: An Alternative View of Risk ManagementHow to Minimize Risk and Maximize Returns With Alts

Agenda

I. The Risk Management ParadigmII. Are We Looking at Risk the Right Way?III. The Alternative R&RIV. Putting Alts to Work

2

The Risk Management Paradigm

3

The essence of investment management

is the management of risks,

not the management of returns.

-Benjamin Graham

“”

The Risk Management Paradigm

4

The essence of investment management

is the management of risks,

not the management of returns.

“”

So…How About those Returns?!?

5

Total Return

YTD 1 Year 3 Year

MSCI World Index 16.01 18.17 7.69

Russell 3000 Growth Index 20.43 21.87 12.65

NASDAQ 100 Index 23.99 24.08 15.26

Dow Jones Industrial Average Index 15.45 25.45 12.35

S&P 500 Index 14.24 18.61 10.81

Russell 2000 Index 10.94 20.74 12.18

MSCI EAFE Index 19.96 19.10 5.04

Russell Developed Europe Index LC 23.87 23.00 5.45

Russell Emerging Markets Index 26.92 21.64 5.33

Russell Emerging Europe Index SC 33.14 32.73 6.05

EURO STOXX 50 Index USD 25.23 29.21 4.15

As of September 30, 2017. Past performance is no guarantee of future results.

Lofty Valuations by Historical Standards

As of October 23, 2017

Shiller Cyclically Adjusted P/E Ratio

16.80

Long-Term Avg.

6

Risk Appetites are Up, Too

7

Because… Right?

8

Abnormally good or abnormally bad conditions do not last forever.

-Benjamin Graham

“ ”

An interest rate hike as low as 0.5% can take years of income from a client’s portfolio.

And…Interest Rates are Likely to Rise as Well

The above chart shows the effect of rising interest rates on a hypothetical $10,000 portfolio and how many years it may take to make up the loss.9

(Meaning Bonds May Not be a Safe Haven)

Source: Sukanto Chanda. Bloomberg Finance LP. DB Global Markets Research.10

The $8 Trillion Bubble17% of all Bonds Outstanding – roughly $8T out of $48T Trade at Negative Interest Rates

Global Debt Outstanding (Sovereign and Credit)

Bonds trading at negative interest rateBonds trading at positive interest rate

USDTrillion

USDTrillion

The Diminishing Real Return to CashThree-month T-Bill less inflation

Don’t Let Them Run to Cash Either

Source: Morningstar. Data from 7/31/1982 – 12/31/2016

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

1985 1990 1995 2000 2005 2010 2015

5-year trailing returns

3-year trailing returns

11

Are We There Yet?

12

What Lies Ahead…

13

Are We Looking at Risk the Right Way?

Question:

What is risk anyway?

15

Answer:

16

To clients, VOLATILITY feels like risk

But actually, the real risk is…

UN-anticipated LOSS

UN-protected LOSS

UN-recoverable LOSS

17

Because… Right?

18

The most fundamental constraint

is limited time.

-Gary Becker, economist

“ ”

Because… Right?

19

The most fundamental constraint

is limited time.“ ”

Reality Check?

20

11% Annually2 ½ Years 7% Annually

3 ½ Years

-20%

$300,000

$350,000

$400,000

$450,000

$500,000

$550,000

Peak 0 1 2 3 4 5 6 7 8Number of Years to Recover

A $500,000 Portfolio’s Recovery From 20% DeclineThose nearing retirement may not have time to rebound from significant losses.

Time = Money

The annual returns of 3%, 7% and 11% are hypothetical and used to demonstrate how long it may take to recover losses over time. The returns do not represent or predict the performance of any fund.

3% Annually8 Years

21

AKA: Why we do everything possible to limit losses

The Gain Required to Recover from a Loss

-1% -5% -10%-20%

-30%-40%

-50%-60%

1% 5% 11%2…

43%

67%

100%

150%

-100%

-50%

0%

50%

100%

150%

200%

Gain RequiredLoss Experienced

22

The Importance of Upside and Downside CaptureMinimizing the impact of market losses is equally as important, if not more, than capturing 100% of market gains

Past performance is not indicative of future results.

Source: Morningstar. Data from 7/1997-6/2017. Volatility as measured by standard deviation.

Introduce upside-down(side) thinking

23

The “Alternative” R&R

25

When advisors aren’t afraid to talk about

risk, investors aren’t afraid to make the

right decisions.- Riskalyze

“”

Alternatives Defined

26

Alternatives seek risk management

and rewards in a different way

than traditional stocks, bonds and cash.

Alternative investments are not just different to be different. They’re different to deliver diversification and give investors a real rate of return.

Alternative Investments

Trad

ition

al S

trat

egie

s

• Real Estate• Commodities (e.g., Gold)• Private Equity

• Stocks• Bonds• Currency

Trad

ition

al S

trat

egie

s

Traditional Investments

Alternative Investments

Alte

rnat

ive

Stra

tegi

es

• Managed Futures• Options Strategies

• Long/Short Equity• Long/Short Credit• Global Macro• Market Neutral

Traditional Investments

Alte

rnat

ive

Stra

tegi

es

27

Alternatives = Stocks, Bonds, Commodities and Currencies Managed or Packaged Differently

28

Three Things you can Potentially do with Alts

1. Offer New (Un-Correlated) Sources of Return

2. Help Stress-Proof Portfolios

3. Create a Smoother Investor Experience

Alternatives can Provide a Valuable Source of Additional ReturnSince 1994, alternatives have outperformed at least one element of an investor’s core* portfolio 74% of the time.

1 38 23 33 29 23 12 8 10 29 11 8 16 13 5 26 15 8 16 32 14 1 12

-3 22 22 26 9 21 5 4 3 15 10 5 14 7 -19 19 11 2 8 10 6 1 3

-4 18 4 10 0 -1 -9 -12 -22 4 4 2 4 5 -37 6 7 -3 4 -2 4 -1 1

’94 ’95 ’96 ’97 ’98 ‘99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ‘16

AlternativesStocksBonds

Annu

al R

etur

n (%

)1. Offer New (Un-Correlated) Opportunities for Returns

Past performance is not indicative of future results.

*Investor’s core is represented by stocks and bonds. Stocks are represented by the S&P 500 Index, Bonds by the Barclays Aggregate Bond Index and Alternatives by the Credit Suisse Hedge Fund Index. It is not possible to invest directly in an index.29

Average Alternative Outperformance During Challenging Periods for Stocks and BondsAlternatives can offer differentiated returns and an opportunity to outperform traditional assets when investors need it most.

2. Help Stress-Proof Portfolios

Past performance is not indicative of future results.

Source: Morningstar. Data from 12/31/1996-12/31/2016. Challenging periods for stocks and bonds are defined as equity bear markets and rising rate periods. Rising rate periods are the three largest during this time period and bear markets are the two largest during this time period. Alternatives are represented by the Credit Suisse Hedge Fund Index, stocks by the S&P 500 Index, and bonds by the Barclays Aggregate Bond Index. Data reflects average annualized outperformance of alternatives versus bonds during rising rate periods and stocks during bear markets. It is not possible to invest directly in an index.

15%

28%

0%

5%

10%

15%

20%

25%

30%

vs. Bonds During Rising Rates vs. Stocks During Bear Markets

30

Diversifying Sources of ReturnAlternatives have historically delivered more stability to investors over various market cycles.

$753,018

$556,860

$333,970

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Gro

wth

of $

100,

000

StocksBondsAlternatives

3. Create a Smoother Investor Experience

Past performance is not indicative of future results.

Source: Morningstar. Data from 1/1/1994-12/31/2016. Stocks are represented by the S&P 500 Index, Bonds by the Barclays Aggregate Bond Index and Alternatives by the Credit Suisse Hedge Fund Index. It is not possible to invest directly in an index.31

Source: WealthManagement.com Survey, 2016

22%

30%

42%30%

37%

47%

0%

10%

20%

30%

40%

50%

WirehouseAdvisor

IBD Advisor RIAs

10%

13% 13%13%

17% 17%

0%

5%

10%

15%

20%

WirehouseAdvisor

IBD Advisor RIAs

Advisors are planning to increase allocations to alts in client portfolios from an average of 13% today to nearly 17% in 2018.

Average % of clients with exposure to alts Average allocation to alts

Advisors Continue to Allocate to Alts

32

33

So What Could Go Wrong?

Investors Tend to Ditch Alts in Up Markets

Past performance is not indicative of future results.

Source: Morningstar. Data from 7/31/2008-12/31/2016. Stocks are represented by the S&P 500 Index, Bonds by the Barclays Aggregate Bond Index and Alternatives by the Credit Suisse Hedge Fund Index. Flows into Alternatives represents monthly flows into the Morningstar Long/Short Equity, Managed Futures, Market Neutral and Multialternative categories. It is not possible to invest directly in an index.

-$4

-$3

-$2

-$1

$0

$1

$2

$3

$4

$5

$6

$7

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

2008 2009 2010 2011 2012 2013 2014 2015 2016

Net Monthly Flows (billions)

Grow

th o

f $10

0,000

Stocks

BondsAlternativesFlows into Alternatives

34

Help Clients Manage Emotions, Before They Take A TollInvestors who stayed the course may have been better off than those trying to time the market.

60/40 Portfolio

Portfolio with Alternatives

Monthly Net Flows (Morningstar Moderate Portfolio)

$164,846

$189,766

-12

-8

-4

0

4

8

12

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

$180,000

$200,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Monthly N

et Flows ($ billions)

Gro

wth

of $

100,

000

“It’s off to the races!”

“Are we at the bottom yet? I’m going to cash.”

“I’ve missed out enough. I need to get back in the market.”

“U.S. Debt was downgraded by S&P? I can’t take another big loss. I’m out.”

“Looks like the market may continue to move higher. I’m getting back in.”

“The equity market just keeps going up. I don’t want to miss out. What could possibly happen?”

Don’t Let them Leave!

Past performance is not indicative of future results.

Hypothetical example is for illustrative purposes only. It is not possible to invest directly in an index. Source: Morningstar. Data from 6/30/2006-12/31/2016. The 60/40 Portfolio is represented by 60% S&P 500 Index and 40% Barclays Aggregate Bond Index. The Portfolio with Alternatives is represented by 37.5% S&P 500 Index, 32.5% Barclays Aggregate Bond Index, 15% Credit Suisse Long/Short Index and 15% Credit Suisse Multi-Strategy Index. The Morningstar Moderate Portfolio includes portfolios with 50-70% equity. The investor who allowed emotions to influence decision making moves to cash on 9/30/08 and back to 60/40 on 4/30/10 and again (to cash) on 7/31/11 and back to 60/40 on 1/31/13.

35

Putting Alts to Work

Real Return Forecasts

37

Capital Market Assumptions Summary

Provider As of Forecast Time Frame

US Equity

US LC Equity

US SC Equity

Intl Equity

EMEquity

Commod-ities

High Yield

Bank Loans

US Inv. Grade Debt

Intl Inv. GradeDebt

EM Debt

TIPS Cash Inflat-ion

GMO 7/31/17 7 yrs. -4.2% -2.8% -0.4% 2.7% -1.0% -2.7% 0.6% 0.1% 0.0%

Research Affiliates 7/31/17 10 yrs. 0.5% 0.3% 4.8% 6.6% 1.9% 1.3% 1.3% 0.4% 0.2% 2.0% 1.0% -0.5%

BlackRock 8/31/17 5 yrs. 1.9% 1.8% 3.1% 4.6% 0.5% 0.5% 1.3% -0.6% -0.8% 0.7% -0.1% -0.5% 2.25%

JPMorgan 1/31/17 10 yrs. 4.0% 4.8% 4.5% 7.0% 1.5% 3.5% 2.8% 0.8% -0.3% 3.3% 1.3% -0.3% 2.25%

AQR 1/31/17 7 yrs. 4.2% 4.6% 5.4% 3.0% 2.1% 0.7% -0.1% 0.0%

361 Capital 4/31/17 5 yrs. 3.7% 4.6% 6.8% 0.5% 0.9% 1.7% 0.3% -1.6% 2.3% 0.1% -0.1% 2.34%

Averages 3.9% 0.5% 1.0% 3.5% 5.5% 1.5% 1.6% 1.7% 0.1% -0.9% 1.8% 0.5% -0.2%

Source: GMO, Research Affiliates, BlackRock, JPMorgan, AQR, 361 Capital.

Managing Risk without Sacrificing Returns

38

Efficient Frontier 5-year forward-looking estimates

0

1

2

3

4

5

6

7

8

9

0 2 4 6 8 10 12 14 16 18

Expe

cted

Ret

urn

(%)

Expected Volatility (Standard Deviation %)

Aggressive

Moderate

Conservative

60/40

86% Equities0% Bonds0% Cash14% Alternatives49% Equities

11% Bonds2% Cash38% Alternatives

18% Equities24% Bonds22% Cash36% Alternatives

60% Equities40% Bonds

Returns Standard Deviation Average Worst Case Scenario

Aggressive Portfolio 8.5% 16.5% 24.3%Moderate Portfolio 7.2% 10.8% 14.6%Conservative Portfolio 5.2% 5.4% 5.7%60/40 Portfolio 5.3% 9.3% 13.6%

Allocations for Sample Portfolios on The Efficient Frontier

39

Name US EquityIntl Dev Equity EM Equity Commodities High Yield Bank Loans US IG Debt TIPS Intl IG Debt EM Debt Cash

Long/Short Equity

Long/Short Credit

Global Macro

Managed Futures (Trend + CounterTrend)

Equity Market Neutral Total

Aggressive 12.9 56.3 16.8 2.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.6 0.0 1.6 8.1 0.0 100.0Moderate 13.0 22.2 14.3 1.8 0.0 6.5 2.0 0.0 0.0 2.8 1.6 8.7 0.0 7.2 20.0 0.0 100.0Conservative 3.8 3.9 10.3 0.0 0.0 6.9 16.1 0.0 0.0 1.2 21.6 9.0 0.0 7.4 19.8 0.0 100.060/40 60.0 0.0 0.0 0.0 0.0 0.0 40.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 100.0

361 Global Managed Futures Strategy Fund361 Global Long/Short Equity Fund

Portfolio Diversifier

Managed Futures funds often invest across multiple asset classes and have the ability to go long and short, which can produce low correlations to equities and can reduce overall portfolio risk.

361 Global Managed Futures Strategy Fund (AGFZX)

• Positive ReturnsReturned 7.74% over rolling 12-months with annualized return of 4.33% since inception (vs. -5.59% and 0.73% for the Managed Futures category respectively) with avg. net market exposure of 26% over that time frame.

• Portfolio DiversificationFund’s correlation to global equities, as measured by MSCI World Index has been 0.13 from the first full month of operation following the Fund’s inception.

• Positive Alpha GenerationFund has generated alpha of 3.18% since the Fund’s inception based on monthly returns.

3Q17 YTD 1 Year 3 Year Since Inception (2/12/14)

AGFZX – Class I 3.06% 6.81% 7.74% 5.02% 4.50%

Citigroup 3 Mo T-Bill Index 0.26% 0.56% 0.64% 0.29% 0.24%

Morningstar Managed Futures Category 0.62% -2.01% -5.33% -0.30% 1.29%

Annual Expense Ratio: AGFZX: Net 1.87% / Gross 2.27%

Includes dividend and interest expense on short sales, acquired fund fees and expenses. When excluded, the net with limitation expense ratio is: AGFZX 1.99%†Returns shown over one year are annualized. Returns include the reinvestment of dividends and income. † Reflects a contractual expense limitation in place. The Adviser has contractually agreed to maintain the total annual fund operating expenses at stated levels, exclusive of certain expenses such as acquired fund expenses and dividend and interest expenses on short sales until 2/28/2018. See Prospectus for additional details.

Past returns shown do not guarantee future results. Current performance may be lower or higher. Call 888-736-1227 for latest month-end returns. Return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than original cost.41

Risk Reducer

Long/Short Equity funds have the flexibility to not only buy stocks that they believe will appreciate, but to short stocks that they believe will decline in value, which increases the potential sources of alpha and reduces downside risk.

361 Global Long/Short Equity Fund (AGAZX)

• Growth while Managing Downside RiskHas returned 115% of the MSCI World Index with 71% of the volatility, while only capturing 35% of the drawdown*

• Top Quartile RankingRanked 13th of 221 funds in the Morningstar Long/Short Equity category surpassing 94% of its peers**

• Positive Alpha GenerationHas had 65% of the return comprised of alpha**

3Q17 YTD 1 Year 3 Year Since Inception (2/12/14)

AGAZX – Class I 4.74% 12.38% 11.72% 8.86% 8.74%

MSCI World Index 4.84% 16.01% 18.17% 7.69% 7.57%

Morningstar Long/Short Equity Category 2.55% 6.97% 8.68% 2.64% 2.66%

Annual Expense Ratio: AGAZX: Net 2.27% / Gross 2.22%Includes dividend and interest expense on short sales, acquired fund fees and expenses. When excluded, the net with limitation expense ratio is: AGAZX 1.69%† Returns shown over one year are annualized.

† Reflects a contractual expense limitation in place. The Adviser has contractually agreed to maintain the total annual fund operating expenses at stated levels, exclusive of certain expenses such as acquired fund expenses and dividend and interest expenses on short sales until 2/28/2018. See Prospectus for additional details.

*Data is from 2/1/2014 to 9/30/2017 which represents the Fund’s first full month of operation. The Fund's inception date is 1/6/2014. Statistics calculated using monthly return data relative to the MSCI World Index.**Morningstar quartile rankings from 1/1/2015 to 9/30/2017 due to Morningstar not recognizing the predecessor account.

Past returns shown do not guarantee future results. Current performance may be lower or higher. Call 888-736-1227 for latest month-end returns. Return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than original cost.42

Disclosure

43

Alternative investing – Special Considerations

Investors considering investing in alternatives (“alts”) should be aware of the unique characteristics and risks of these investments. Alternative mutual funds may hold non-traditional investments and employ more complex trading strategies than traditional mutual funds.

Alternative funds might invest in assets such as foreign securities, commodities, futures, small-cap companies, high yield bonds (also known as junk bonds), exchange-traded products and other non-traditional type products as compared to traditional stocks, bonds and cash. Funds that invest in these types of assets may be subject to higher risks, more volatility and less liquidity.

These funds also may employ complex strategies, including hedging and leveraging through derivatives and short selling including but not limited to:

Short selling Risk - The potential loss from a short sale is theoretically unlimited since the appreciation of the underlying asset also is theoretically unlimited.

Derivative Risk - Derivatives include instruments and contracts that are based on and valued in relation to one or more underlying securities, financial benchmarks, indices, or other reference obligations or measures of value. Major types of derivatives include futures, options, swaps and forward contracts. Depending on how the Fund uses derivatives and the relationship between the market value of the derivative and the underlying instrument, the use of derivatives could increase or decrease the Fund’s exposure to the risks of the underlying instrument. Using derivatives can have a leveraging effect and increase fund volatility.

Leveraging Risk - Certain Fund transactions, including entering into futures contracts and taking short positions in financial instruments, may give rise to a form of leverage. Leverage can magnify the effects of changes in the value of the Fund’s investments and make the Fund more volatile

Investors should fully understand the strategies and be able to bear the risks of any alternative mutual fund they are considering and how it might fit into their overall portfolio before investing. Further information can be found in the Fund’s prospectus.

All investing involves risk including the possible loss of principal.