COMMENTARY: Managed Futures Strategy Fund May 2017
WAVIX

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Commentary in PDF format.


HIGHLIGHTS

    Contributors
  • Equities: Long Nasdaq 100 E-Mini and Hang Seng indexes
  • Commodities: Short coffee (New York)
  • Currencies: Long Polish zloty against the U.S. dollar
  • Fixed income: No contributors
    Detractors
  • Equities: Long SPI 200 Index (Australia)
  • Commodities: Short cocoa (London and New York)
  • Currencies: Long Australian dollar against Canadian dollar
  • Fixed income: Short the eurodollar

Past Commentaries

April 2017

March 2017

Global equities bull market charges in May

Stocks hit new record highs, with broad participation spanning Europe, Asia and the United States. The fund returned +0.47% in April, as healthy gains in equities offset modest losses in other asset classes.

Performance (as of 5/31/2017)
*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 Longboard Managed Futures Strategy Fund – WAVIX received 4 stars out of 97 Managed Futures Funds for the 3-year period ending 3/31/17, based on risk-adjusted returns.

Technology stocks are leading the market higher

In the U.S., technology stocks are leading the market higher. Apple became the first U.S. company valued at $800 billion, while Amazon and Google-parent Alphabet recently crossed the key $1,000 mark. The fund’s equities exposure has grown in response to the broad-based global bull market, and this elevated equity exposure offset the lack of trends and reversals in other areas of the portfolio.

Despite the global stock market rally, other asset classes are sending mixed signals. For example, interest rates and commodities prices indicate a growing sense of investor caution, and a potential return to deflationary forces.

SHIFTING RISK TRENDS SENDING MIXED SIGNALS
November 1, 2016 – May 31, 2017

Source: Morningstar

The indices shown are for informational purposes only and are not reflective of any investment. As it is not possible to invest in indices, the data shown does not reflect or compare features of an actual investment, such as its objectives,costs and expenses, liquidity, safety, guarantees or insurance, fluctuation of principal or return, or tax features.

Long Term Treasuries: Represented by the Bloomberg Barclays US Treasury 7-20 Yr TR USD, an unmanaged index that measures the performance of US Treasury securities that have a remaining maturity of at least 7 years and less than 20 years.

S&P 500: A stock market index based on the market capitalization of 500 leading companies publicly traded in the U.S. stock market, as determined by Standard & Poor’s. In this presentation, the S&P 500 is presented as a total return index,which reflects the effects of dividend reinvestment.

Past performance is no guarantee of future results.


Even among equities, a growing divergence among certain sectors reflects the varying economic fortunes among geographic regions. European and Asian economies continue to outpace a slowing U.S. domestic economy. This is creating a wide performance gap between sectors with overseas exposure, like technology, versus more domestically-focused sectors, like financials and small caps.

DIVERGING SECTOR PERFORMANCE REFLECTS MIXED GLOBAL GROWTH PROSPECTS
January 1, 2017 – May 31, 2017

Source: Morningstar

XLE: The Energy Select Sector SPDR® Fund seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the Energy Select Sector Index (the “Index”).

XLF: The Financial Select Sector SPDR® Fund seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the Financial Select Sector Index (the “Index”).

XLK: The Technology Select Sector SPDR® Fund seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the Technology Select Sector Index (the “Index”).

The graph above is presented for informational purposes only and intended to represent general market and sector performance

Past performance is no guarantee of future results.


Commodities suggest market caution

A falling dollar is typically a tailwind for commodities prices. Thus, the recent declines in commodities prices – despite significant dollar weakness – is troublesome for the narrative that the real economy has turned the corner from deflation to inflation.

The only commodities poised to benefit from current trends appear to be precious metals — further indicating a sense of investor caution, rather than confidence in economic growth and reflation.

Euro surges past U.S. dollar

The U.S. dollar is another casualty of consensus “Trump Trades” that have entirely reversed their post-election price movements. Conversely, the Euro has surged nearly 10% year-to-date, going from nearly parity with the U.S. dollar to above 1.12 at the end of May.

Some traders expect to see an end to the European Central Bank’s easy monetary policies, and the potential for self-sustained Eurozone economic growth for the first time in years. The recent success of pro-Euro candidate Emmanuel Macron in the French presidential elections restored some credibility to European integration and mainstream political parties.


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.

Morningstar is an independent provider of financial information. Morningstar performance rankings are based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund’s monthly performance (including the effects of sales charges, loads and redemption fees), placing more emphasis on downward variation and rewarding consistent performance. The top 10%, the next 22.5%, 35%, 22.5% and bottom 10% receive 5, 4, 3, 2 or 1 star, respectively. The Overall Morningstar Rating for a fund is derived from a weighted average of the performance figures associated with its three-, five- and ten-year (if applicable) Morningstar Rating metrics.

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.


Index definitions
XLE:
The Energy Select Sector SPDR® Fund seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the Energy Select Sector Index (the "Index").
XLF:
The Financial Select Sector SPDR® Fund seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the Financial Select Sector Index (the "Index").
XLK:
The Technology Select Sector SPDR® Fund seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the Technology Select Sector Index (the "Index").
Long Term Treasuries: Represented by the Bloomberg Barclays US Treasury 7-20 Yr TR USD, an unmanaged index that measures the performance of US Treasury securities that have a remaining maturity of at least 7 years and less than 20 years.
S&P 500:
A stock market index based on the market capitalization of 500 leading companies publicly traded in the U.S. stock market, as determined by Standard & Poor’s. In this presentation, the S&P 500 is presented as a total return index, which reflects the effects of dividend reinvestment.
SG CTA Mutual Fund Index:
An index that tracks the performance of ‘40 Act mutual funds pursuing managed futures strategies. The Index includes the 10 largest single-manager CTA Mutual Funds, including funds employing both systematic and discretionary management styles. Index values are based on performance of the institutional share classes with dividends reinvested.
3434-NLD-6/14/2017