COMMENTARY: Managed Futures Strategy Fund July 2017
WAVIX

Digital Assets & Downloads

Commentary in PDF format.


HIGHLIGHTS

    Contributors
  • Equities: Long S&P CNX Nifty Index (SIMEX), MSCI Emerging Markets Index Mini, Hang Seng Index (China) and Nasdaq 100 Index E-Mini
  • Commodities: Long Crude Palm Oil, Copper and Palladium
  • Currencies: Short U.S. Dollar against Czech Koruna and Norwegian Krone; Long New Zealand Dollar, Australian Dollar and Polish Zloty against U.S. Dollar
  • Fixed income: Long 2-Year German Bond (Schatz) and Short 10-Year Canadian Bond
    Detractors
  • Equities: Long OMX Stockholm 30 Index
  • Commodities: Short WTI Crude Oil, Coffee (New York), Gasoline (New York RBOB) and Silver (New York)
  • Currencies: Long Swiss Franc against Japanese Yen and Australian Dollar against the Canadian Dollar
  • Fixed income: Short 30-year German Bond (Buxl) and 5-Year U.S. Treasury Notes

Past Commentaries

July 2017

June 2017

May 2017

April 2017

March 2017

THE GLOBAL EQUITY BULL MARKET CONTINUES

Stocks continued to be the lead story as the Longboard Managed Futures Strategy fund’s long exposure to equities supported the Fund’s +2.66% overall performance in July. Rising indices for emerging markets and several Asian stock markets contributed to profitability during the month. Major United States indices shrugged off repeated chaos in the White House and closed the month at or near all-time highs as a steady flow of positive news hit the tape.

In early July, the Department of Labor released a strong payroll number indicating that the U.S. created more than 200,000 new jobs. This was followed by a Federal Reserve two-day meeting on interest rates. As expected, the FOMC opted to leave U.S. interest rates unchanged even as the economic picture showed signs of improvement.

Along with a strong payroll number, household spending displayed steady growth. At the same time, inflation remains low. Meanwhile, U.S. corporate earnings reports were in full swing by month end. Aided by increased consumer spending and a weaker U.S. dollar, many major U.S. companies posted positive second quarter earnings.

Performance (as of 7/31/2017)
*INCEPTION DATE: 6/27/12 **INCEPTION DATE: 3/22/13
The Total Annual Fund Operating Expenses for the Longboard Managed Futures Strategy Fund class A and I are 3.12% and 2.87% respectively. The maximum sales charge for Class A (Max Load) shares is 5.75%. The performance data quoted here represents past performance. Current performance may be lower or higher than the performance data quoted above. Investment return and principal value will fluctuate, so that shares, when redeemed, may be worth more or less than their original cost. Past performance is no guarantee of future results. For performance information current to the most recent month-end, please call toll-free 855-294-7540 or visit our website, www.longboardmutualfunds.com. There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.

THE U.S. DOLLAR CONTINUES TO SLIDE

Global currency trades against the U.S. dollar contributed positively to performance as well. Short positions in the U.S. dollar against the Czech koruna, New Zealand dollar and Australian dollar were particularly profitable. The portfolio also benefitted from long positions in euro trades against both the U.S. dollar and Japanese yen. Consensus among economists that the European Central Bank may shift its policy stance towards a tightening bias lent support to Europe’s single currency.


ENERGY SECTOR RALLY GENERATES LOSSES

Although the equity and financial sectors contributed positively to the portfolio in July, commodities did not. The fund had several short energy positions at the beginning of the month. However, increased demand and smaller crude stockpiles resulted in an energy sector rally that also factored in our poor performance in that sector.

The fund also experienced net losses in the metals sector as New York silver and platinum rallied against our short positions during the month.


GLOSSARY
Commodity Market
A physical or virtual marketplace for buying, selling, and trading raw or primary product such as natural resources, agricultural products, and livestock.
Forward Contract
A non-standardized contract between two parties to buy or sell a specified asset of specified quantity with delivery and payment occurring on a specified date.
Futures Contract
A standardized contract between two parties to buy or sell a specified asset of standardized quantity and quality with delivery and payment occurring on a specified date.
Long
Buying an asset such as a stock, commodity or currency with the expectation that the asset will rise in value.
Risk Allocation
The estimated maximum equity a position could lose, divided by the estimated aggregate equity currently at risk of loss across all positions inthe portfolio.
Short
Selling an asset such as a stock, commodity or currency, with the expectation that the asset will decrease in value.
Long-Term
Holding periods averaging greater than one year.

PROSPECTUS OFFERING DISCLOSURE

Investors should carefully consider the investment objectives, risks, charges and expenses of the Longboard Managed Futures Strategy Fund. This and other important information about the Fund is contained in the prospectus, which can be obtained at http://www.longboardmutualfunds.com or by calling 855-294-7540. The prospectus should be read carefully before investing. The Longboard Managed Futures Strategy Fund is distributed by Northern Lights Distributors, LLC, a FINRA/SIPC member. Longboard Asset Management, LP, is not affiliated with Northern Lights Distributors, LLC.

MUTUAL FUND RISK DISCLOSURE

Mutual funds involve risk including possible loss of principal. The fund will invest a percentage of its assets in derivatives, such as commodities, futures and options contracts. The use of such derivatives and the resulting high portfolio turnover may expose the fund to additional risks that it would not be subject to, if it invested directly in the securities and commodities underlying those derivatives. The fund may experience losses that exceed those experienced by funds that do not use futures contracts, options and commodities. Changes in interest rates and the liquidity of certain investments could affect the fund’s overall performance. The fund is non-diversified and as a result, changes in the value of a single security may have significant effect on the fund’s value. Other risks include credit risks and investments in fixed income securities, structured notes, asset-backed securities and foreign investments. Furthermore, the use of short positions and leveraging can magnify the potential for gain or loss and amplify the effects of market volatility on the fund’s share price. The fund is subject to regulatory change and tax risks. Changes to current regulation or taxation rules could increase costs associated with an investment in the Fund.

3613-NLD-8/17/2017