Longboard

COMMENTARY: Managed Futures Strategy Fund August 2017
WAVIX

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Commentary in PDF format.


HIGHLIGHTS

    Contributors
  • Equities: Long Hang Seng China Enterprises Index (H-Shares) and MSCI Taiwan Index
  • Commodities: Short WTI Crude Oil and New York Coffee
  • Currencies: Long Russian ruble against the U.S. dollar
  • Fixed income: Long 2-Year German Bond (Schatz)
    Detractors
  • Equities: Long S&P CNX Nifty Index-(SIMEX) and S&P 400 Midcap Index
  • Commodities: Long Minneapolis Wheat and short Natural Gas
  • Currencies: Long New Zealand and Australian dollars against U.S. dollar
  • Fixed income: Short 10-Year Canadian Bond

Past Commentaries

August 2017

July 2017

June 2017

May 2017

April 2017

March 2017

RECAP

The fund returned +1.48% in August. Gains from commodities and equities offset modest losses in currencies and fixed income.

Cracks emerged in the foundation of the global equities bull market. After hitting record lows in July, volatility surged in early August. Tensions on the Korean Peninsula caused the spike in volatility, but global risk assets soon rebounded. However, warning signs indicated a persistent risk-off mood. These signals included deterioration in U.S. small caps, transportation stocks and high-yield bonds. Also, strength in precious metals and U.S. government bonds suggested robust demand for haven assets, even with stock markets near record highs.

Powerful trends prompted the fund to redeploy capital into commodities and currencies, while shifting risk exposure away from equities. The big themes that developed in commodities include rising metals prices, both industrial and precious, and falling agricultural prices. Oversupply fueled agricultural deflation across the grain complex and in soft commodities. Conversely, supply deficits and rising demand fueled new uptrends in various metals markets. Weakness in the United States created profitable trends in currencies, while fixed income markets remain largely devoid of long-term trend opportunities.

Performance (as of 8/31/2017)
*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.

OUTLOOK

Global markets face some crosscurrents heading into fall. Resurgent corporate profits and stable economic growth offer a healthy tailwind to global risk assets. Yet, a number of potential catalysts could spur volatility. These include the threat of military escalation with North Korea, plus an expected political fight over the U.S. budget and debt ceiling negotiations. Longer term, the wind down of European Central Bank (ECB) asset purchases plus tightening from the U.S. Federal Reserve mean markets could lose a powerful tailwind for economic stimulus and asset price inflation.

Our portfolio changes in August caused our commodities’ risk allocation to surpass equities for the first time this year. This rebalanced posture should make the fund’s performance less correlated with global stock markets going forward.


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.

3658-NLD-9/18/2017