ALTEGRIS FIXED INCOME LONG SHORT FUND. TRUSTED ALTERNATIVES. INTELLIGENT INVESTING.

Transcription

1 It s time to diversify interest rate risk. ALTEGRIS FIXED INCOME LONG SHORT FUND. TRUSTED ALTERNATIVES. INTELLIGENT INVESTING.

2 Altegris Fixed Income Long Short Fund A Fixed Income Alternative. Taking a multi-disciplined, non-traditional approach to fixed income investing, the Fund accesses premier alternative fixed income managers who seek to combine deep, fundamental analysis with effective duration management across various credit and interest rate environments all with moderate correlation to major fixed income indices. REASONS TO INVEST Exposure to the potential key benefits of the Fund includes: Interest Rate Agnostic Credit-Focused Returns Alternatives Experts Multi-Manager Approach Focus on opportunities independent of interest rate directionality, with the goal of preserving capital and potentially profiting in a rising interest rate environment Potential to generate returns during deteriorating and improving credit environments Experienced portfolio management team, with the ability to hire and fire managers Multi-manager approach derived from methodical manager selection, coupled with rigorous ongoing due diligence The Fund is subject to various risks including, but not limited to, capital raising risk, CDOs and CLOs risk, convertible bond risk, credit default swap risk, credit risk, derivatives risk, emerging markets risk, equity market risk, fixed income risk, foreign investment risk, governmentsponsored entities risk, high-yield or junk bond risk, issuer-specific risk, leverage risk, liquidity risk, management risk, market risk, mortgagebacked and asset backed securities risk, non-agency MBS risk, non-diversification risk, preferred stock risk, real estate risk, repurchase and reverse repurchase agreement risk, residential mortgage-backed securities risk, short selling and short position risk, small and medium company credit risk, sub-prime mortgage risk, and turnover risk. The fund also has a limited history of operations. There is no guarantee that any investment product will achieve its objectives, generate profits or avoid losses. Long is buying an asset/security that gives partial ownership to the buyer of the position. Long positions profit from an increase in price. Short means selling an asset/security that may have been borrowed from a third party with the intention of buying back at a later date. Short positions profit from a decline in price. If a short position increases in price, the potential loss on an uncovered short is unlimited. Correlation is a statistical measure of how two securities move in relation to each other altegris.com/mutualfunds

3 Portfolio Allocations The Altegris Fixed Income Long Short Fund aims to diversify investments among multiple sub-advisers employing various proprietary long/short fixed income strategies. FIXED INCOME LONG SHORT SUB-STRATEGY TARGET ALLOCATION As of October 15, 2013 Fundamental Long/Short Credit 50% RockView Management Fundamental Long/Short MBS 50% Premium Point Investments Fundamental Long/Short Credit RockView Management Fundamental Long/Short MBS Premium Point Investments Primary Focus Corporate credit migration Mortgage-backed securities (MBS) Investment Approach Long portfolio: primarily focuses on high yield corporate credit issuers believed to be undervalued which may provide price appreciation and yield. Short portfolio: primary goal to generate alpha by identifying global industries believed to be deteriorating, and those securities which are currently rated investment grade and poised for downgrades. Long portfolio: primarily focuses on agency and non-agency MBS bonds that are undervalued. Prices target assets through bottom-up property level analysis, using proprietary models, while maintianing a top-down macro view on housing fundamentals and regulation. Short portfolio: hedges exposure to real estate risk using liquid instruments correlated with the portfolio s long positions and seeks to generate alpha utilizing various interest rate hedging options. Portfolio Composition Long portfolio: primarily high yield and convertible bonds Short portfolio: cash bonds, credit default swaps, broad market hedges Long portfolio: primarily agency and non-agency MBS Short portfolio: interest rate hedges and credit derivatives Portfolio allocations, investment sub-strategies, and investment approaches are presented to illustrate examples of Fund allocations and the diversity of areas in which the Fund may invest, and may not be representative of the Fund s current or future investments. The portfolio composition is subject to change at any time in response to market conditions and/or viewpoints of the respective portfolio management teams and should not be considered investment advice. Portfolio allocations may be higher or lower, are subject to change and should not be considered investment advice. The Fund also holds cash and cash equivalents which are excluded from the allocation shown above. There is no guarantee that any investment product will achieve its objectives, generate profits or avoid losses. Sub-advisers shown in italics. Alpha measures the non-systematic return which cannot be attributed to the market. Diversification does not ensure profit or protect against loss in a declining market. Credit migration refers generally to the upgrading or worsening in an issuer s credit ranking and/or credit grade over time. TRUSTED ALTERNATIVES. INTELLIGENT INVESTING. 3

4 Fixed Income Long Short Managers The Altegris Fixed Income Long Short Fund provides access to what we believe are premier long/short alternative fixed income managers who focus on opportunities independent of interest rate directionality and have the potential to generate returns across various credit and interest rate environments. RockView Management Founded in 2004, currently manages $109 million in assets* Fundamental long/short manager focused on corporate credit migration opportunities Experience trading long and short across multiple credit cycles Seeks alpha generation through both long and short positions Employs a bottom-up approach to identify trading opportunities with a top-down risk management framework Kevin Schweitzer, Chief Investment Officer, Portfolio Manager Over 20 years of credit investing experience Former Portfolio Manager at Paloma Partners and Jemmco Previously helped launch a long/short credit hedge fund at Stanfield Capital Bachelor of Arts in Finance and Accounting from Lehigh University Premium Point Investments Founded in 2008, currently manages over $2.0 billion in assets* Focused approach on the residential mortgage sector In-depth, fundamental research focused on residential property values and borrower behavior Employs a robust top-down/bottom-up risk management approach based on a deep understanding of the mortgage markets Anilesh Neil Ahuja, Co-Founder, Chief Investment Officer, and Chief Executive Officer Over 23 years of experience overseeing and managing MBS origination and trading business Former Head of Deutsche Bank s RMBS business Previously Head of agency and non-agency MBS at Greenwich Capital B.A. in Economics from the University of Pennsylvania *Sub-adviser AUM as of June The Fund may pursue its fixed income long short strategy through multiple sub-advisers, including those described above altegris.com/mutualfunds

5 Altegris Fixed Income Long Short Fund Facts OBJECTIVE The Fund seeks to achieve total return and to achieve this objective through a combination of current income and capital appreciation. FUND ADVISER Altegris Advisors, LLC FUND SUB-ADVISERS RockView Management, LLC Premium Point Investments LP SYMBOL & CUSIP Class A: FXDAX-66537Y199 Class I: FXDIX-66537Y140 Class N: FXDNX-66537Y132 MINIMUM INITIAL/SUBSEQUENT INVESTMENT Class A: $2,500 / $250 Class I: $1,000,000 / $250 Class N: $2,500 / $250 ANNUAL FUND OPERATING EXPENSES Expenses that you pay each year as a percentage of the value of your investment Class A* Class I Class N Management Fees 1.75% 1.75% 1.75% Distribution and/or Service (12b-1) Fees 0.25% 0.00% 0.25% Other Expenses (1) 0.44% 0.44% 0.44% Interest and Dividends on Securities Sold Short 0.10% 0.10% 0.10% Remaining Other Expenses 0.34% 0.34% 0.34% Total Annual Fund Operating Expenses 2.44% 2.19% 2.44% Fee Waiver (2) (0.10)% (0.10)% (0.10)% INCEPTION DATE February 28, 2013 Total Annual Fund Operating Expenses After Fee Waiver 2.34% 2.09% 2.34% INCOME DISTRIBUTION Quarterly Expense Cap 2.24% 1.99% 2.24% *The maximum sales charge (load) for Class A is 5.75%. Class A share investors may be eligible for a reduction in sales charges. (1) Based on estimated amounts for the current fiscal year. (2) The Fund s adviser has contractually agreed to reduce its fees and to reimburse expenses, at least until September 30, 2014, to ensure that total annual Fund operating expenses after fee waiver and/or reimbursement will not exceed 2.24%, 1.99% and 2.24% of average daily net assets attributable to Class A, Class I, and Class N shares, respectively, subject to possible recoupment in future years. This agreement may be terminated only by the Fund s Board of Trustees on 60 days written notice to the Fund s adviser. TRUSTED ALTERNATIVES. INTELLIGENT INVESTING. 5

6 Mutual Fund Risks Investors should carefully consider the investment objectives, risks, charges and expenses of the Altegris Fixed Income Long Short Fund. This and other important information about a Fund is contained in the Fund s Prospectus which can be obtained by calling (888) The Prospectus should be read carefully before investing. Funds are distributed by Northern Lights Distributors, LLC, member FINRA. Altegris Advisors and Northern Lights Distributors are not affiliated. MUTUAL FUNDS INVOLVE RISK INCLUDING POSSIBLE LOSS OF PRINCIPAL. The Fund s investment in fixed income securities, loan obligations and derivatives subjects it to various risks including, but not limited to, market risk and volatility, credit risk, collateral risk; foreign investment risk, currency risk, prepayment risk, mortgage and real-estate sector concentration risk, liquidity risk, and interest rate risk; when interest rates rise, the value of fixed income securities typically fall. Credit risk is the possibility that an issuer will fail to pay interest and principal when due. The credit risk and potential for default is heightened for lower quality high yield or junk bond securities. The Fund will engage in short selling and short position derivative activities, which are considered speculative and involve significant financial risk. Short positions profit from a decline in price so the Fund may incur a loss on a short position if the price increases. The potential loss on an uncovered short is unlimited. Shorting strategies may also result in higher taxes and transaction costs, which reduce return. The use of derivatives such as futures, options, credit default swaps, and repurchase agreements involves leverage risk, tracking risk, potential for issuer or counterparty default, and higher transaction costs. Long options may expire worthless. Leverage can magnify the fund s potential for gain or loss. Foreign investments may involve heightened risk due to currency fluctuations, economic and political instability, less liquidity, and differing auditing and legal standards. These risks are magnified for emerging markets. The Fund is new with a limited history of operations. The manager or sub-adviser s judgments about the attractiveness and value of a particular security may prove to be inaccurate and may not produce the desired results. The fund is non-diversified for purposes of the Investment Company Act of 1940, and may invest in fewer fixed income securities or smaller companies. Performance may be more sensitive to any single market, economic, or regulatory occurrence than a more diversified fund. There is no guarantee that adequate capital will be raised or that the Fund will achieve its investment objective altegris.com/mutualfunds

7 Risks and Important Considerations Investing in fixed income instruments involves interest rate risk, credit risk, and market risk or the risk of loss due to adverse market conditions, industry news or a general economic decline. Short selling is considered leverage and positions in shorted securities are speculative and more risky than long positions. Leverage may magnify gains or losses. The use of long and short positions does not limit the exposure to market volatility and other risks. The risk of volatility may be heightened for alternative or complex investment strategies. There can be no assurance that any investment strategy will be successful. Altegris Advisors Altegris Advisors LLC is a CFTC-registered commodity pool operator, commodity trading advisor, NFA member, and SEC-registered investment adviser that advises alternative strategy mutual funds that may pursue investment returns through a combination of managed futures, global macro, long/short equity, long/short fixed income and/or other investment strategies. About Altegris Altegris searches the world to find what we believe are the best alternative investments. Our suite of alternative investment solutions are designed for financial professionals and individuals seeking to improve portfolio diversification. With one of the leading research and investment groups focused solely on alternatives, Altegris follows a disciplined process for identifying, evaluating, selecting and monitoring investment talent across a spectrum of alternative strategies including managed futures, global macro, long/short equity, event-driven and others. Veteran experts in the art and science of alternatives, Altegris guides investors through the complex and often opaque universe of alternative investing. Alternatives are in our DNA. Our very name, Altegris, highlights our singular focus on alternatives, the highest standards of integrity, and a process that constantly seeks to minimize investor risk while maximizing potential returns. The Altegris group of affiliated companies is wholly-owned and controlled by (i) private equity funds managed by Aquiline Capital Partners LLC and its affiliates ( Aquiline ), and by Genstar Capital Management, LLC and its affiliates ( Genstar ), and (ii) certain senior management of Altegris and other affiliates. Established in 2005, Aquiline focuses its investments exclusively in the financial services industry. Established in 1988, Genstar focuses its investment efforts across a variety of industries and sectors, including financial services. The Altegris companies include Altegris Investments, Altegris Advisors, Altegris Funds, and Altegris Clearing Solutions. As of September 30, 2013, Altegris had $2.68 billion in client assets, and provided clearing services to $671 million in institutional assets. TRUSTED ALTERNATIVES. INTELLIGENT INVESTING. 7

8 ALTEGRIS ADVISORS _ NLD-10/15/2013