Bull/Bear Allocation Portfolio

The Bull/Bear Portfolio (“B/B”) is a unique portfolio designed to protect investor’s wealth through a balanced allocation in four primary asset classes: equities, commodities and hard assets, long-term bonds and a Treasury-bill/currency component.

However, this is not a long only, passive allocation model. By employing the unique Grail Trend and Timing Indicator (“The Grail”), this portfolio follows the major trend for each targeted asset class. SFMI may be either long or short in each asset class, and will hold that position as long as the major trend, Bull or Bear, remains in force. The portfolio will then reverse position, once a change in the major trend has been confirmed. The base allocation is anticipated to be: 30% Equities; 30% Commodities/Gold; 20% Long-term Bonds; 20% Treasury-bill/Currency. At the discretion of the manager, theses percentages may be revised at any time.

For the Equity asset class, SFMI will select among the major market indices (which may include international indexes) that demonstrate the strongest correlation to the direction of the macro-trend identified by The Grail.

For the Hard Asset class, the portfolio will be apportioned between gold Exchange Traded Funds (“ETFs”), individual commodity funds and/or a general commodity index in a ratio representing the greatest potential over the intermediate to longer term time frames.

For the Long-term Bond allocation, SFMI will be either long bonds, employing (for example) the TLT (iShare Barclay 20+ Year Treasury Bond) ETF, or short bonds by using the TBT (Ultra Short 20 + Year Treasury ) ETF or other bond indices that demonstrate the strongest correlation to the direction of the macro-trend identified by The Grail.

For the currency allocation, the Bull/Bear Allocation Portfolio will either have an anchor position in a U.S. Treasury-Bill Money Fund and/or ETF; or, at those times when we identify an intermediate to long-term downward trend in the U.S. dollar, we will have this portion of the portfolio in the Merk Hard Currency Fund, or another vehicle that SFMI judges to be a superior alternative.

Risk Factors: Please note that past performance is not necessarily an indication of future performance. All investments are subject to changes in the current market conditions and therefore your investment return and principal value will fluctuate, and there could be a gain or loss when your positions are sold.  SFMI will use its proprietary timing indicators (The Grail) to attempt to be long during bullish periods and short during bearish periods in the chosen sectors in which it trades. There is no guarantee that this timing methodology will be successful.

Total Return Portfolio

The SFMI Total Return Portfolio (“TR”) is structured to provide investors with a growing stream of income to the extent compatible with a steady increase in portfolio value.

The core of this portfolio is comprised of individual domestic and international income stocks, and select ETFs whose flow-through yields meet our criteria. In addition, SFMI may add growth-oriented vehicles that track major trends within the overall markets. During equity or bond market bear phases, these may include hedges, as well as positions to manage the impact of the dollar’s declining purchasing power on the portfolio’s income stream.

Risk Factors: Please note that past performance is not necessarily an indication of future performance. All investments are subject to changes in the current market conditions and therefore your investment return and principal value will fluctuate, and there could be a gain or loss when your positions are sold.  SFMI will use its proprietary timing indicators (The Grail) to attempt to be long during bullish periods and short during bearish periods in the chosen sectors in which it trades. There is no guarantee that this timing methodology will be successful. The Total Return Fund utilizes individual dividend-paying stocks in its portfolio, which can be more volatile than ETFs or Mutual Funds. Each of these individual securities could be adversely affected by its own financial characteristics as well as market conditions.

Precious Metals and Natural Resources

This portfolio is the most aggressive of the SFMI investment models.

The SFMI Precious Metals and Natural Resources (“PMNR”) portfolio seeks to obtain substantial capital gains exclusively in the precious metals, energy and diversified natural resources sectors of the market. The portfolio is built upon a core of undervalued opportunities and those we feel have extraordinary potential for major resource discoveries. Special attention is devoted to opportunities in “junior” companies throughout the mining and conventional, as well as the alternative energy sectors. For stock selection, we rely on a variety of outside research sources combined with our own in-house research specialists in these sectors.

In an effort to maximize portfolio returns, SFMI will actively trade gold, silver, and select natural resource ETFs or Ultra-ETFs (2×1 leverage), as well as inverse ETFs to (at times) hedge the portfolio’s core holdings. We will also make trading calls on large cap equities within these sectors.  The PMNR is appropriate for aggressive investors willing to take on high levels of risk in order to obtain high potential rewards. The portfolio is committed to capturing a portion of the substantial potential gains from the secular bull markets currently under way in the gold and natural resources sectors.

Risk Factors: Please note that past performance is not necessarily an indication of future performance. Changes in the market can substantially affect the returns in this portfolio. Your investment return and principal value will fluctuate, and there could be a gain or loss when your positions are sold.  SFMI will use its proprietary timing indicators (The Grail) to attempt to be long during bullish periods and hedged or short during bearish periods in the chosen sectors in which it trades. There is no guarantee that this timing methodology will be successful as market conditions may change. The industry sectors in which PMNR trades can be extremely volatile. The oil & gas and precious metals sectors are cyclical in nature and can be subject to “boom-bust” periods. During a bust period, despite SFMI’s best efforts to hedge against loss, your account may experience a steep decline in value.

Individually Managed Accounts Advisory Programs

After thorough consultation with high-net worth clients, SFMI may agree to customize an account tailored to a client’s specific goals, objectives and financial circumstances. SFMI thereafter will exercise full discretion over investment decisions in the portfolio, while maintaining regular contact with the account owner to monitor any changes in the investor’s circumstances or investment objectives. This service may be appropriate if a client has an existing portfolio of long-held securities in which tax-management of the assets makes an immediate conversion into a SFMI managed portfolio ill advised.