Altegris Multi-Strategy Alternative Fund MULAX MULIX MULNX

MARKET + PORTFOLIO COMMENTARY Q3.2014 Altegris Multi-Strategy Alternative Fund MULAX MULIX MULNX Market Commentary Despite plenty of headline-grabbing news, global markets largely shrugged off a potentially major pandemic (Ebola), Scotland s attempt at secession, continued clashes between Russia and the Ukraine, and violence in the Middle East particularly the threat of ISIS/ISIL. These macro shocks were absorbed while investors attention focused on central bank action, as European Central Bank President Mario Draghi took decisive action to jumpstart languishing European growth by announcing an asset buying program along with cutting three key interest rates (one of which was already negative). In the US, Fed Chair Janet Yellen intimated that QE will finally end in the fourth quarter of this year and maintained her considerable period language. Investors largely ignored this statement and focused on more hawkish language in the Fed minutes, which showed a general consensus that rates do need to increase in the not-so-distant future given strong economic data. The increased likelihood of a rate increase ultimately caused the US Dollar to rally meaningfully (7.7% on the quarter), especially against the yen and the euro. The ECB announcement came as a surprise to most currency investors, which also increased foreign exchange (FX) market volatility. These real and divergent movements in the currency markets created more FX trading opportunities a welcome relief after several years of coordinated central bank action and highly correlated currency prices. Domestic economic data continued to be firm and the health of corporate America appeared quite sound over the period. Equity market valuations are higher than they were prior to 2008, with a forward P/E on the S&P 500 Index of 16.5 as of the end of September versus 15.0 in September of 2007. Despite a brief spike in rates in September, credit spreads remain near 10-year lows and the 10-year treasury yield ended slightly lower for the quarter. That said, risk assets exhibited more volatility over the quarter as investors started to rethink their portfolios given the imminent end to QE. While they performed well during the quarter, higherbeta equities also experienced a series of volatility spikes toward FUND RETURNS As of September 30, 2014 Year Since Q3 2014 to Date 1-Year 5-Year Inception * MULAX: Class A (NAV) 0.90% 2.23% 3.90% NA 1.93% MULAX: Class A (max load)** -4.90% -3.63% -2.11% NA -1.81% MULIX: Class I (NAV) 1.00% 2.53% 4.32% NA 2.25% MULNX: Class N (NAV) 1.00% 2.43% 4.13% NA 2.07% HFRI Fund of Funds Composite Index 0.55% 2.67% 6.44% NA 5.73% HFRX Global Hedge Fund Index -0.57% 1.18% 3.54% NA 3.41% S&P 500 TR Index 1.13% 8.34% 19.73% NA 20.57% * The inception date is 2/28/13. Past performance is not indicative of future results. Returns for periods longer than one year are annualized. ** The maximum sales charge (load) for Class A is 5.75%. Class A share investors may be eligible for a reduction in sales charges. The total annual fund operating expense ratio, gross of any fee waivers or expense reimbursements is 16.73% for Class A, 19.83% for Class I and 21.22% for Class N. The Fund s adviser has contractually agreed to reduce its fees and to reimburse expenses, at least until April 30, 2015, to ensure that total annual Fund operating expenses after fee waiver and/or reimbursement will not exceed 0.85%, 0.60%, and 0.85% 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 adviser. The performance data quoted here represents past performance which is no guarantee of future results. 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. Results shown reflect the waiver, without which the results would have been lower. A Fund s performance, especially for very short periods of time, should not be the sole factor in making your investment decisions. For performance information current to the most recent month end, please call (888) 524-9441. The referenced indices are shown for general market comparisons and are not meant to represent any particular Fund. 1[1]

quarter-end. The high yield market was also volatile, as the high yield index 1 sold off in a meaningful way in July, rebounded in August, only to sell off again in September. Some movement in commodity prices, a strong US dollar and rising volatility of other risk assets punctuated the end of the third quarter of 2014. Whether markets need to brace for more volatility remains to be seen, but the end of QE coupled with geopolitical risks make this scenario more and more likely. Fund Performance For Q3 2014, the Fund s Class A (at NAV), Class I and Class N shares returned 0.90%, 1.00% and 1.00%, respectively, while the HFRI Fund of Funds Composite Index, the HFRX Global Hedge Fund Index and the S&P 500 TR Index returned 0.55% (estimated), -0.57% and 1.13%, respectively. On a year-to-date basis, the Fund s Class A (at NAV), Class I and Class N shares returned 2.23%, 2.53% and 2.43%, respectively, while HFRI Fund of Funds Composite Index, the HFRX Global Hedge Fund Index and the S&P 500 TR Index returned 2.67% (estimated), 1.18% and 8.34%, respectively. Portfolio Review Entering the quarter the Fund was overweight alternative equity strategies, neutral alternative fixed income, and underweight macro strategies, and maintained this positioning through the end of Q3. The Fund generated absolute positive returns in Q3 (its fifth positive quarter in six full quarters since the Fund s inception in February 2013) and outperformed its strategy-specific benchmark during the quarter. The alternative equity strategy was responsible for more than half of the Fund s return in Q3, driven in large part by its long consumer, non-cyclical equity positions. The macro strategy also contributed significant attribution, driven largely by long fixed income futures and short foreign exchange positions, while the alternative fixed income strategy was essentially flat for the quarter. Performance Review Alternative Equity Strategy. The alternative equity strategy was comprised of 52.5% to long/short equity and 2.5% to long/short real estate. Long/short equity strategies generated positive performance on both long and short sides of the portfolio and outperformed both the S&P 500 TR Index and HFRI Equity Hedge Index for Q3 while only carrying an average net market exposure in the low- to mid-30% range; in other words, outperformed the broad equity market benchmark with roughly one-third of the overall market risk. While the overall market was up in Q3, significant sector and stock dispersion in the quarter allowed the strategy to capture gains across various sectors with both long and short sides of the portfolio posting contributions. We can get a simple idea of the divergence in returns within equities by looking at the performance of the primary S&P 500 sectors. The biggest divergence came from the Energy and Healthcare sectors, as Energy was down roughly -8.6% for the quarter while Healthcare was up roughly 5.5% 2. This sort of dispersion in returns coupled with increased volatility, particularly in September, allowed the strategy to capitalize as the underlying fund s sub-advisers displayed their ability to pick stocks both long and short. The portfolio generated gains from Consumer (cyclical and noncyclical), Communications and Industrials, while slight losses came from positions within Energy, Financials and Technology. Returns from the long/short real estate strategy were essentially flat for the quarter, as a difficult September for REITs and other real-estate related securities eliminated gains from the quarter s first two months. Alternative Fixed Income Strategy. Amid a difficult environment for both traditional fixed income and corporate credit, the strategy s performance was essentially flat in Q3. This quarter saw the Altegris Fixed Income Long Short Fund, the fund to which the strategy allocates, continue to outperform on down days for traditional fixed income. In addition, the underlying fund was able to help preserve capital during a difficult period for high yield corporate credit, as the high yield index was down -1.92% for the quarter. Gains for the quarter were driven primarily by long mortgage backed securities positions, which was the Fund s second largest attributor. Despite rates falling to their lowest level of the year in August, mortgage prepayments continued to stay very low as mortgage rates remain well above their early 2013 levels, offering little incentive for homeowners to refinance. Continued home 1 As measured by BofA Merrill Lynch US High Yield Master II Total Return Index Value. 2 Sector performance is based on the S&P 500 Energy Index and S&P 500 Health Care Index, respectively. This commentary reflects the views of the portfolio manager through September 30, 2014. The manager s views are subject to change as market and other conditions warrant. This commentary is provided for informational purposes only and should not be construed as investment advice. No forecasts are guaranteed. There is no guarantee that any investment will achieve its objectives, generate profits or avoid losses. 2[2]

price appreciation and improvement in borrower fundamentals also helped drive gains in these positions. Convertible bonds detracted from the strategy, as several of the underlying fund manager s idiosyncratic positions gave back a portion of gains from earlier in the year. High yield corporate credit faced a difficult environment this quarter, as the high yield market experienced record outflows in early August and credit spreads widened to their highest level of the year in September (high yield credit spreads began the quarter at 3.53%, peaked at 4.51% and finished at 4.40% 3 ). Although high yield positions incurred losses in Q3, they were able to meaningfully outperform the high yield benchmark 4 during a quarter which saw the end of ten straight months of positive performance for the index dating back to 2013. Macro Strategy. The macro strategy was composed of 10% trend following and 5% discretionary strategies, a 5% relative underweight stance. Long fixed income futures positions led the way as the largest attributor to the macro strategy s performance for the quarter, with FX positions being the strategy s second largest attributor as greater dispersion in currency moves came more established trends. Short EUR and JPY currency trades generated solid returns for the strategy as the US Dollar strengthened against the two currencies over the period. The strategy was able to generate strong short side gains in grains. Discretionary macro managers were a primary driver behind this grains gain, while trend followers were unable to enjoy similar success in this sector. This highlights an important aspect of this strategy in that it can benefit from the variety of trading disciplines at different times across different sectors. Gains were also made in precious metals and softs futures while livestock and energy futures were essentially flat. In fact the only sector that had material losses was stock indices, which is unsurprising given the market pullback in September after several quarters of a strong upward trend in equities. On an aggregate basis over the quarter, what s interesting is that with the exception of long fixed income positioning, the remainder of the gains came from a diverse number of sectors and markets that were all positioned short including energy, grains, precious metals, and softs. This is the exact attribution profile this strategy strives to achieve the ability to make gains across multiple sectors both long and short in an environment where volatility is increasing and markets are beginning to move independently of each other. Portfolio Allocations Entering Q4 the Adviser has decided to make tactical shifts within the Fund, which are expected to be completed in October. These changes are driven primarily by the potential for increased volatility over the coming quarter, resulting in an increase to the macro strategy, comprised of strategies that have historically fared well when volatility increases across markets, and a decrease to the alternative equity strategy. However, these changes will put each strategy back to their neutral weights: Alternative Equity at 50%, Alternative Fixed Income at 30% and Macro at 20%. To shift each strategy back to its neutral weights, the Adviser expects to decrease the allocation to the Altegris Equity Long Short Fund, and increase allocations to both the Altegris Futures Evolution Strategy Fund and Altegris Macro Strategy Fund. Portfolio Positioning The long/short equity managers accessed by the Fund see an improvement in the overall environment for stock selection, both long and short. The consensus view is that stock dispersion has continued to pick-up significantly throughout 2014 and particularly through Q3. This coupled with a tick-up in volatility and an arguably fairly valued equity market provide the ingredients for a stock picking environment that has historically favored long and short stock pickers that can take advantage of price dislocations in single name equities on both sides of the portfolio. However, we remain cautious on the overall direction of the equity market. The S&P 500 TR Index is up roughly 202% (22% annualized) over the March 2009 through September 2014 timeframe with an annualized volatility of 13.6% (Sharpe ratio of 1.42, assuming a 2.5% risk-free rate). These staggering performance numbers have been driven predominately by history s absolute largest quantitative easing program which in October is coming to halt. The long/short fixed income managers accessed by the Fund continue to see the balance of opportunities on the long side of the portfolio and continue to emphasize that the preferred stance in the current environment is to take prudent credit risk as opposed to interest rate risk. The mortgage sector continues to offer solid opportunities when compared to other fixed income markets, as home price appreciation continues (although at a slower pace) and mortgage prepayments remain low. Our view on the high yield corporate opportunity set is similar, as corporate default 3 As measured by BofA Merrill Lynch US High Yield Master II Option-Adjusted Spread. 4 As measured by BofA Merrill Lynch US High Yield Master II Total Return Index Value. 3[3]

rates have remained low and as the long/short fixed income managers view the Q3 sell-off as a buying opportunity given the solid fundamental backdrop. While some risk aversion may be entering the market given this sell-off, it appears a sustained high yield spread widening is unlikely at this stage of the postrecession cycle. Opportunities in the macro strategy, which includes managed futures, may be increasing. As we wrote recently in Three Reasons for Managed Futures and Macro Now, we believe the end of tapering should happen at the end of October. We have already seen the decoupling of central bank policy and expect this to continue into the future, creating significantly improved trading opportunities for macro managers. Technicals also look better. Global volatility is rising, which has historically benefited macro strategies. 5 Trends in sectors other than equities and fixed income are beginning to show some persistence, also creating opportunities for macro managers, particularly for trend followers. Lastly, we are seeing some signs of a return to fundamentals in commodity markets a very positive sign for increased trends in commodity contracts. The ability to participate in commodity trends, both long and short, is a unique strength of most macro strategies. We believe that genuine trading opportunities in commodities will again feature prominently in manager attribution and this development will only be assisted by upside surprises in the inflation data. We aren t calling for a crisis, which is sometimes a catalyst for massive outperformance in these strategies. But we are looking for the beginning of a Fed tightening cycle along with supportive technical factors and expanding opportunity sets in commodities to be the sparks that may ignite a fire under the status quo of investor complacency. 5 Is the Trend Your Friend White Paper, Altegris. Fund Objective The Fund seeks long-term capital appreciation and absolute returns. Target Alternative Strategy Allocation 1 Alternative Equity Alternative Fixed Income Macro Allocation 2 55% 30% 15% Alternative Equity is comprised of long/short equity and long/short real estate strategies; Alternative Fixed Income is comprised of long/short fixed income strategies; Macro is comprised of global macro and managed futures strategies. 1. The target allocations are subject to change at any time, and may not be representative of the Fund s past or future access and exposure to alternative investment strategies or programs. It should not be considered a recommendation or investment advice. 2. As a percentage of the Fund s alternative investment strategy allocation. 4[4]

Index Descriptions An investor cannot invest directly in an index. Moreover, indices do not reflect commissions or fees that may be charged to an investment product based on the index, which may materially affect the performance date presented. HFRI Fund of Funds Composite Index. The HFRI Fund of Funds Composite Index tracks fund of funds that invest with multiple managers through funds or managed accounts. The strategy designs a diversified portfolio of managers with the objective of significantly lower the risk of investing with an individual manager. Fund of funds managers have discretion in choosing which strategies to invest in for the portfolio and may allocate funds to numerous managers within a single strategy, or with numerous managers in multiple strategies. The HFRI Fund of Funds Composite Index is an equal weighted index and reflects monthly returns, net of all fees, of funds that have at least $50 million under management or have been actively trading for at least twelve months. HFRX Global Hedge Fund Index. The HFRX Global Hedge Fund Index is designed to be representative of the overall composition of the hedge fund universe, and is comprised of all eligible hedge fund strategies. The strategies are asset weighted based on the distribution of assets in the hedge fund industry. The index includes funds that have at least $50 million under management and a 24-month track record (typical). S&P 500 Total Return Index. The S&P 500 Total Return Index is the total return version of S&P 500 index. The S&P 500 index is unmanaged and is generally representative of certain portions of the U.S. equity markets. For the S&P 500 Total Return Index, dividends are reinvested on a daily basis and the base date for the index is January 4, 1988. All regular cash dividends are assumed reinvested in the S&P 500 index on the ex-date. Special cash dividends trigger a price adjustment in the price return index. Representative Index Characteristics Key Risks Multi-Strategy HFRI Fund of Funds Composite Index Tracks fund of funds that invests with multiple managers Market risk. Prices may decline. Leverage risk. Volatility and risk of loss may magnify with use of leverage. Country / regional risk. World events may adversely affect values. Multi-Strategy HFRX Global Hedge Fund Index Comprised of all eligible hedge fund strategies Market risk. Prices may decline. Leverage risk. Volatility and risk of loss may magnify with use of leverage. Country / regional risk. World events may adversely affect values. US Stocks S&P 500 Total Return (TR) Index 500 US stocks; Weighted towards large capitalizations Stock market risk. Stock prices may decline in price. Country / regional risk. World events may adversely affect values. 5[5]

Risks and Important Considerations Investors should carefully consider the investment objectives, risks, charges and expenses of the Altegris Multi-Strategy Alternative Fund. This and other important information about a fund is contained in the Fund s Prospectus and the Summary Prospectus, which can be obtained by calling (888) 524-9441. Read the Prospectus carefully before investing. Funds are distributed by Northern Lights Distributors, LLC, member FINRA. Altegris Advisors and Northern Lights Distributors, LLC are not affiliated. MUTUAL FUNDS INVOLVE RISK INCLUDING POSSIBLE LOSS OF PRINCIPAL. Alternative Strategies pursued by the Fund may be subject to a number of risks either directly or indirectly through its investments in other Investment Companies, the Subsidiary, securities issued by Underlying Pools, and other derivative and investment instruments. Investing in commodity futures markets subjects the Fund to volatility as commodity futures prices are influenced by unfavorable weather, geologic and environmental factors, regulatory changes and restrictions. Foreign investments involves risks not typically associated with U.S. investments, including fluctuations in foreign currency values, adverse social and economic developments, less liquidity, greater volatility, less developed or inefficient trading markets, political instability and differing auditing and legal standards. These risks are magnified in emerging markets. The use of credit default swaps ( CDS ) to transfer credit risk involves potentially heightened counterparty, concentration and exposure risks that may result in losses to the Fund. The use of swaps, options, structured notes or other derivative instruments, directly or indirectly, subjects the Fund to leverage risk, tracking risk and counterparty default risk. Option positions held may expire worthless exposing the Fund to potentially significant losses. The use of leverage by the Fund, such as borrowing money to purchase securities or the use of options will cause the Fund to incur additional expenses. In addition, leverage can increase share price volatility and magnify the Fund s gains or losses. An investment in common and preferred stocks is susceptible to market risk or the risk of loss due to industry or company news or general economic decline. Preferred stocks and other fixed income securities such as mortgage-or asset-backed bonds, corporate and government bonds, and convertible securities are also subject to interest rate risk. As interest rates rise, the value of fixed income securities will typically fall. In addition, mortgage and real-estate related securities may be more sensitive to overall economic conditions and are susceptible to prepayment risk and higher default rates. Other fixed income securities and derivatives risks include credit risk, which is the possibility that an issuer will fail to make principal or dividend payments when due. The credit risk, liquidity risk, and potential for default is heightened for lower-quality debt securities, also known as high-yield or junk bonds. The value of equity and debt securities of smaller issuers or small and mid-sized companies can be more volatile than those of larger companies due to limited product lines, markets or financial resources. An ETF may represent a portfolio of securities, or may use derivatives and therefore, reflects the risks and additional expenses of owning the underlying securities. ETNs are subject to the risk that the value of the index may decline sharply or unpredictably, as well as default and liquidity risks. As a non-diversified fund, the Fund may invest more than 5% of its total assets in the securities of one or more issuers and therefore, performance may be more sensitive to any single economic, business, political or regulatory occurrence than the value of shares of a diversified investment company. The Other Investment Companies and Underlying Pools may engage in short-selling and short position derivative activities which is considered speculative and involves significant financial risk. Short positions profit from a decline in price so the Fund will incur a loss on a short position if the price increases. The potential for loss in a short position transaction is unlimited. The Fund also involves taxation risk and regulatory risk by investing in commodities through the Subsidiary, which is a controlled foreign corporation. As such, any income received from its commodities-related investments will be passed through to the Fund as ordinary income, which may be taxed at less favorable rates than capital gains. The Subsidiary will not be registered under the 1940 Act. Changes in applicable foreign and domestic laws could result in the inability of the Fund and/or Subsidiary to operate. Underlying Funds/Pools in which the Subsidiary invests will pay management fees, brokerage commissions, operating expenses and performance based fees to each manager it retains. As a result, the cost of investing in the Fund may be higher than other mutual funds that invest directly in stocks and bonds. There is no guarantee that any of the trading strategies used by the managers retained by an Underlying Fund/Pool will be profitable or avoid losses. The Fund is new and has a limited history of operations. There can be no guarantee that adequate capital will be raised in a timely fashion in order for the Fund to become fully invested or achieve the objectives. 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. 696568_101614 1357-NLD-10/16/2014 6[6]