MANAGED FUTURES STRATEGY FUND

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1 PERFORMANCE (Performance as of 12/31/2016) MANAGED FUTURES STRATEGY FUND Monthly Portfolio Update And Commentary December 2016 $ Assets as of December 31, ,303,475 HOW TO INVEST Visit longboardmutualfunds.com Call us at CLASS I (NAV)* A (NAV)** A (MAX LOAD)** 1M -1.15% -1.26% -6.93% 3M -5.66% -5.81% % 6M -5.40% -5.64% % 1Y 12/31/ % -7.77% % 2Y 12/31/ % 0.10% -2.83% 3Y 12/31/ % 4.71% 2.66% SINCE INCEP 12/31/ % 3.36% 1.75% *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 or visit our website, 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 103 Managed Futures funds for the 3-year period ending 12/31/16, based on risk-adjusted returns. The Longboard Managed Futures Strategy Fund WAVIX received 4 stars out of 103 Managed Futures funds for the 3-year period ending 12/31/16, based on risk-adjusted returns.

2 RECAP The fund returned -1.15% in December due to losses from fixed income and commodities that offset profits in currencies and equities. The post-election rally in global risk assets continued throughout December, but with less momentum and profit taking towards the end of the month. Fixed income came under further pressure, sending U.S. bonds into their first long-term downtrends since 2013 s Taper Tantrum. Commodities and currencies continued to diverge on different underlying fundamentals. The U.S. dollar was mixed, with losses against emerging market currencies and gains against the Japanese yen and the euro. We increased our long exposure to global equities throughout the month to now include long positions spanning the U.S., Europe and Asia. New short positions in U.S. government bonds increased our risk allocation to fixed income. December s portfolio changes increased portfolio risk towards equities and fixed income, but commodities and currencies still command more than half of total risk allocation. Going forward, our portfolio is positioned to benefit from greater growth, higher inflation and rising interest rates. OUTLOOK The fund entered 2016 with significant short exposure and a negative correlation to equities, but much has changed since that time. The early-year trends of deflationary commodity and volatile stock prices transitioned to reflating commodities, soaring stock prices and the first long-term downtrend in U.S. bonds in years. Stagnation and low growth gave way to rising inflation, higher growth prospects and rising interest rates. Many think the election of Donald Trump sparked this change in the macroeconomic landscape. However, many of these trends began to take shape in the summer, with interest rates bottoming in July and cyclical sectors trending higher months before Election Day. Going forward, we believe the current environment offers many opportunities for trend followers to capture uncorrelated, and potentially non-intuitive, price movements. In addition, the current portfolio mix offers the potential for meaningful diversification when compared to traditional, long-only U.S. stock and bond exposure. PERFORMANCE ATTRIBUTION BY ASSET CLASS December % -2.0% -1.5% -1.0% -0.5% 0.0% 0.5% 1.0% 1.5% EQUITIES FIXED INCOME CURRENCIES COMMODITIES Past results are not necessarily indicative of future results. There is no guarantee that any investment will achieve its goals and generate profits or avoid losses. The returns shown are presented as a percentage of overall fund performance attributed to the named asset class. Holdings are subject to change at any time and should not be considered investment advice.

3 COMMENTARY» EQUITIES 1.34% The rally in global stock markets accelerated throughout December. The upward momentum included new longterm uptrends across Asian and European stock markets. We meaningfully increased our long equities exposure by adding new positions in several European and Asian stock markets. Whereas U.S. stocks outperformed their global counterparts in the immediate post-election rally, we ve recently seen outperformance among a variety of international markets. Given the wide spread in valuations among various global equity regions, there is significant diversification potential between these fundamentally different regions. We opened new long positions in the French CAC-40, German DAX, Amsterdam AEX, Stockholm OMX 30 and MSCI Singapore indexes. These new long positions increased equities risk exposure, and the fund now holds diversified long exposure across most major developed economic regions, with the exception of Japan.» FIXED INCOME -0.66% Interest rates rose across the U.S. yield curve in December. In recent months, several factors combined to pressure U.S. government bonds, including the Federal Reserve s December interest rate increase and more hawkish forward guidance. Further, most experts expect higher inflation, greater deficits and more debt supply coming to market under a Trump administration. Finally, economic distress in China is causing America s largest foreign lender to liquidate substantial portions of its U.S treasury stockpile. We opened new short positions across the yield curve in the U.S., including 2-, 5-, 10- and 30-year U.S. government bonds. We also hold short exposure to Australian government bonds, but we remain long the upward trending German government bonds. For the first time in years, the fund currently holds significant short exposure to fixed income markets.» CURRENCIES 0.33% Similar to the other asset classes, the fund s currency portfolio has almost completely inverted from its early 2016 posture. We now hold meaningful long exposure to emerging market currencies, including the Russian ruble, Brazilian real and South African rand. Conversely, we re short all major European currencies including the euro, British pound and Swiss franc. This exposure created profits in December as emerging market currencies outperformed and European currencies remained under pressure. The spread between high-yielding emerging market currencies and negative-yielding European currencies is creating profit opportunities even when spot prices remain unchanged. We closed long positions in the Australian dollar against the U.S. and Canadian dollars, and closed a short position in the Swiss franc against the Japanese yen. Going forward, the fund s exposure is nearly neutral with respect to the U.S. dollar and Japanese yen, with net risk concentrated among emerging market and European currencies.» COMMODITIES -2.14% Commodities incurred a number of trend reversals in December. Unlike previous periods of collective risk-on/risk-off price movements, we continue to see commodities move on their own specific supply/demand fundamentals. Cattle prices staged a significant rally against an historic downtrend, with prices rising from multi-year lows that fell below the cost of production late last year. Conversely, precious and industrial metals fell against their former uptrends in December, causing losses from our long positions in silver, nickel, copper and lead. A number of failed trends caused the fund to exit positions and pare back risk to commodities in December. We closed long positions in coffee and silver, and closed short positions in Japanese platinum. We opened new short positions in London cocoa and in gasoline. December s changes lowered the portfolio s risk allocation in commodities to second place, behind equities.

4 PORTFOLIO Risk Allocation By Asset Class as of December 2016 EQUITIES FIXED INCOME 12.70% 33.04% 28.85% 25.41% COMMODITIES CURRENCIES» EQUITIES 33.04% LARGEST HOLDINGS POSITION % OF RISK 1 S&P TSX 60 Index Long 2.77% AEX Index (Amsterdam) Long 2.76% CBOE Volatility Index Short 2.58%» FIXED INCOME 12.70% LARGEST HOLDINGS POSITION % OF RISK 11 Ultra U.S. Treasury Short 1.54% Bond Futures 3-Year Australian Short 1.52% Government Bond 5-Year German Long 1.45% Bond (Bobl)» CURRENCIES 25.41% LARGEST HOLDINGS POSITION % OF RISK 1 Euro / U.S. Dollar Short 2.55% U.S. Dollar / Czech Koruna Long 2.54% Brazilian Real / U.S. Dollar Long 2.35%» COMMODITIES 28.85% LARGEST HOLDINGS POSITION % OF RISK 1 Wheat (Kansas City) Short 2.70% London Cocoa Short 2.56% Wheat (Chicago) Short 1.85% 1 The % of Risk is the estimated maximum equity a position could lose, divided by the estimated aggregate equity currently at risk of loss across all positions in the portfolio. Portfolio holdings are subject to change at any time and should not be considered investment advice. There is no assurance that the identified level of risk will occur or be maintained as risk cannot be predicted with certainty.

5 HIGHLIGHTS Contributors» Equities: Long the Australian SPI 200 and Russell 2000 indexes» Commodities: Long coffee and short cocoa» Currencies: Long the Russian ruble and Brazilian real against the U.S. dollar Detractors» Equities: Long the New Zealand and Australian dollars» Commodities: Long nickel and soybean oil» Currencies: Long New Zealand and Australian dollars» Fixed income: Short 5-year U.S. government bonds» Fixed income: Long 2- and 5-year German government bonds 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 in the 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.

6 Managed Futures Mutual Fund Index Member 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 or by calling 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. 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 NLD-1/11/2017