Managed Futures Mutual Funds: Created Equal. Understanding the differences in structure is critical to investor success.

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1 Managed Futures Mutual Funds: Not All Are Created Equal Understanding the differences in structure is critical to investor success. The structure of managed futures mutual funds can have a significant impact on fund returns and transparency of fees. It s important for investors to understand these differences before accessing this important segment of the market. The Monte Chesapeake Macro Strategies Fund recently restructured in an effort to reduce over all fees and counterparty risk, and to provide investors clear information about the costs associated with the fund. Financial professional use only. Not for Public Distribution.

2 Monte Capital Group Lowers Total Fund Expenses Creating a more cost-effective structure Monte Capital Group, LLC recently restructured the Monte Chesapeake Macro Strategies Fund in an effort to improve transparency of fund expenses, reduce counterparty risk, and lower overall fund expenses. The firm switched from a structure utilizing a swap to a direct sub-advisory relationship with Chesapeake Capital Corporation, which allows the fund to offer exposure to managed futures trading programs offered by Chesapeake Capital in a much more cost effective manner. In November 2014, Monte Capital began accessing Chesapeake Capital as the Commodity Trading Advisor (CTA) to the fund. Through the first quarter of 2016, access to the strategies occurred via a swap structure and a small investment in a Chesapeake limited partnership (LP). During this period, Chesapeake charged management and incentive fees. These, in addition to swap fees, impacted fund performance. Additionally, these fees were not reflected in the fund s expense ratio. As of April 1, 2016, the fund is in the process of eliminating the swap arrangement. Rather, Chesapeake Capital, as a Registered Investment Advisor, has been appointed sub-advisor to the fund. As part of this conversion to a sub-advisory structure, the fund s fees and expense ratio have changed. Table 1 shows the original fees and revised fees. Table 1. Monte Chesapeake Macro Strategies Fund fees: April 1, 2015 vs. April 1, 2016 Original Revised (after April 1, 2016) Class A Class C Class I Class A Class C Class I Management Fees 0.96% 0.96% 0.96% 1.70% 1.70% 1.70% Distribute and 12b-1 Fees 0.25% 1.00% 0.00% 0.25% 1.00% 0.00% Other Expenses 8.01% 5.83% 3.39% 1.55% 1.55% 1.55% Acquired Fund Fees and Expenses Total Annual Fund Operating Expenses Fee Waiver and Expense Reimbursements Total Annual Fund Operating Expenses After Waiver and Reimbursements 0.13% 0.13% 0.13% 0.02% 0.02% 0.02% 9.35% 7.92% 4.48% 3.52% 4.27% 3.27% -7.22% -5.04% -2.60% -1.50% -1.50% -1.50% 2.13% 2.88% 1.88% 2.02% 2.77% 1.77% In summary, we believe this change will be very positive for our investors. Investments in Mutual Funds involve risk including possible loss of principal. There is no guarantee the fund will achieve its investment objective.

3 Managed futures mutual funds structures Managed futures mutual funds are liquid alternative investments that take both long and short positions in futures, government securities, and options on futures. Over the last 30 years, the managed futures industry has grown to manage more than $300 billion in capital due to investor demand. These strategies may offer portfolio diversification and enhanced returns in turbulent markets. Managed futures may provide tremendous benefit to a portfolio but they come with some added complexity largely due to the way the funds are structured. This complexity leads to higher costs to run them. There are several ways managed futures funds can be structured, and understanding their differences is very important. Advisor accesses strategy inside a commodity trading pool or through a controlled foreign corporation (CFC) via a swap Advisor accesses strategy through a CFC via a structured note Advisor is also a CTA and manages the strategy directly Advisor accesses strategy by appointing a sub-advisor to run the strategy directly Access Point Pro Con Swap LP investments are limited to a total of 25% of fund assets, so swap allows for greater concentration of investment Daily liquidity CFC / Commodity Pool Easy access to manager Cheap access to strategy Risk limited to size of investment Structured Note Easy access to manager Daily liquidity Direct Cheap access to strategy Fee transparency Sub-Advisor Fee transparency Access to wide range of strategies Daily liquidity Counterparty risk % additional cost CTA may charge incentive fee Fees not reflected in expense ratio Not always daily liquidity Fees not disclosed in detail Fund investment may not exceed 25% concentration Counterparty risk % additional cost CTA may charge incentive fee Fees not reflected in expense ratio Potential termination fees when unwinding prior to maturity date Strategies are limited to advisor s in-house expertise Risk of margin calls Risk of margin calls Transparency Managed futures funds have faced criticism in the past several years because of confusion over the full scope of fees being charged to investors. In the case of funds that invest in a pool or swap, the Securities and Exchange Commission (SEC) does not require the funds to disclose their acquired funds fees which show the operating expenses of underlying funds. The fund prospectus notes the existence of these costs in a footnote in the financial section, but the SEC does not require them to be part of the break-even table. Elimination of this information may impact the fund s reported expense ratio to the detriment of investors and confuse them about the total real cost for the investment. No amount of diversification can ensure profits or prevent losses.

4 Costs The Problem with Swaps In some of the aforementioned structures, fees may be a significant drag on returns. Many managed futures mutual funds access managed futures via a fund of funds approach or through a CFC that utilizes swaps. These foreign corporations and swaps can come at significant cost to investors. Next, some CTAs are compensated on an incentive fee basis, usually 15% to 30% of profits. Other CTAs charge a per trade cost whenever the account or fund trades. Most CTAs also charge a management fee per year, usually between 1% to 2% of the account size. None of these costs are required to be included in the break-even table, but rather can be simply footnoted in the financials. Again, this may be misleading to investors. Swaps are customized contracts that are traded in the over-the-counter (OTC) market between private parties, usually the mutual fund and another financial institution, such as a big bank or insurance company. The two institutions typically promise each other payments linked to the performance of a stock, bond, or index. Like any other fund holding, swaps can go up or down in price according to market conditions. However, there s another important layer of risk to consider: because swaps occur on the OTC market, there is always the risk of a counterparty defaulting on the swap. What is the ideal structure for investors wanting to access managed futures? We believe managed futures are an important part of a well-balanced portfolio because they provide important global diversification, the potential for profit in both bull and bear markets, and the potential for reduced portfolio volatility and risk, among other benefits. But with the expenses associated with some managed futures mutual funds, it s important for investors to do their research and invest in a fund that may provide the aforementioned benefits but won t suck up all their potential gains with fees they aren t even fully informed about. The lowest cost managed futures mutual funds structure is the type that the Monte Chesapeake Macro Strategies Fund recently adopted that in which the fund advisor appoints a registered investment advisor CTA to manage the fund s futures strategy via managed accounts. Through this structure, the CTA sub-advisor cannot charge a performance fee and is compensated 100% out of the fund s management fee. This creates full fee transparency. Additionally, since the CTA invests in managed futures through individual managed accounts instead of utilizing swaps or commodity futures trading pools, fees associated with these are eliminated. This all results in significantly lower total fees than the other types of managed futures mutual fund structures offered to investors today, which may include management fees, performance/incentive fees, trading commissions, administrative fees, swap fees, and CFC fees, among others. And again, all fees are clearly disclosed in the break-even analysis. The bottom line is that managed futures are important, but they re getting a bad rap because the expenses associated with some funds really do take away the potential benefit to investors. And, no investor should have much faith in fund that won t state up front what it s charging. The good news is that there are managed futures mutual funds available, like the Monte Chesapeake Macro Strategies Fund, that are in it for the investor. These fund managers are focused on helping investors grow their investments, not about hiding fees for themselves. But, investors need to do their homework and ask important questions about expenses before buying into managed futures funds.

5 About the Monte Chesapeake Macro Strategies Fund The Monte Chesapeake Macro Strategies Fund seeks absolute return and long-term capital appreciation through utilization of a multi-asset, long/short global macro approach. This strategy allows the fund to invest globally across a wide range of asset classes, including equities, fixed income, currencies, and commodities, utilizing a portfolio of Futures Interest Contracts and single stock futures. The fund also uses a fixed-income strategy, primarily to seek capital preservation and for efficient cash management. The fund s approach allows managers to shift the fund s allocation globally across markets, asset classes, and financial instruments. Managers have the flexibility to use forecasts and analysis about changes in global interest rates, inflation, economics, government policies, and political environments to attempt to make opportunistic investment decisions that strategically capitalize on shifts in global macroeconomic trends. Managers can seek opportunities in approximately 200 different markets worldwide in order to find those that are trending or behaving in a way that seeks to maximize the benefits of the fund s strategy. The fund typically invests up to 30% of its assets in foreign markets, but reserves the right to invest in foreign markets without limitation. What sets the Monte Chesapeake Macro Strategies Fund apart from other alternative strategies is that it s not biased toward long or short positions. Therefore, it offers the potential to profit in both rising and falling market environments. About Monte Capital Group The Monte Capital Group team has extensive experience in managing traditional equities and bonds, derivatives, and futures. We research and select only what we determine to be the best managers for liquid alternative investments. While high quality managers typically provide access to their strategies via private placements with high minimum investments, minimum net worth restrictions, and limited liquidity, Monte Capital Group seeks to provide that same quality to all types of investors through the Monte Chesapeake Macro Strategies Fund. Our fiduciary responsibility to our investors is our first priority. Our manager selection process is robust and considers multiple criteria, such as the manager s commercial stability, strategy, volatility, length of track record, diversification of investment portfolio, and risk management expertise. Our manager selection process is just the first step in managing the fund. The team also continually actively measures and identifies risks, evaluates their impact, and seeks to mitigate their outcomes. Through our proactive approach, we may be able to reduce the probability of having to react to a negative event, which allows us to maintain the integrity of our standards. About Chesapeake Capital Corporation The Monte Chesapeake Macro Strategies Fund offers exposure to managed futures trading programs offered by Chesapeake Capital Corporation, a commodity trading advisor ( CTA ) formed in 1988 by Jerry Parker, who is regarded as one of the most successful of the original Turtle Traders - a group of 23 traders trained in the early 1980s by legendary Chicago futures trader Richard Dennis.

6 Investments in Mutual Funds involve risk including possible loss of principal. There is no guarantee the fund will achieve its investment objective. Investing in the commodities markets (directly or indirectly) may subject the Fund to greater volatility than investments in traditional securities. Commodity prices may be influenced by unfavorable weather, animal and plant disease, geologic and environmental factors as well as changes in government regulation such as tariffs, embargoes or burdensome production rules and restrictions. There is a risk that issuers and counterparties will not make payments on securities and other investments held by the Fund, resulting in losses to the Fund. Derivative instruments involve risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments. Fixed income securities are subject to the risk that securities could lose value because of interest rate changes. A higher portfolio turnover due to active and frequent trading will result in higher transactional and brokerage costs. Foreign common stocks and currency strategies will subject the Fund to currency trading risks that include market risk, credit risk and country risk. Investments in foreign securities could subject the Fund to greater risks including, currency fluctuation, economic conditions, and different governmental and accounting standards. Using derivatives to increase the Fund s combined long and short exposure creates leverage, which can magnify the Fund s potential for gain or loss and therefore amplify the effects of market volatility on the Fund s share price. While the Fund will not take short positions, the Underlying Funds may. As a result, the Underlying Funds (and indirectly the Fund) will incur a loss as a result of a short position if the prices of the short position instrument increases in value between the date of the short position sale and the date of which an offsetting position is purchased. Liquidity risk exists when particular investments of the Fund would be difficult to purchase or sell, possibly preventing the Fund from selling such illiquid securities at an advantageous time or price. The risk that investment strategies employed by the Advisor in selecting investments and asset allocations for the Fund may not result in an increase in the value of your investment or in overall performance equal to other investments. The Fund has filed with the National Futures Associations claiming exclusion from the definition of the term commodity pool operator. Any changes to this regulation could potentially limit or restrict the ability of the Fund to pursue it investment strategy and /or increase the costs of implementing it strategy. Underlying Pools are subject to investment advisory and other expenses, which will be indirectly paid by the Fund. As a result, the cost of investing in the Fund will be higher than the cost of investing directly in an Underlying Pool. Investors should carefully consider the investment objectives, risks, charges and expenses of the Monte Chesapeake Macro Strategies Fund. This and other important information about the Fund is contained in the prospectus, which can be obtained by calling The prospectus should be read carefully before investing. The Monte Chesapeake Macro Strategies Fund is distributed by Northern Lights Distributors, LLC, Member FINRA/SIPC. Monte Capital Group, LLC is not affiliated with Northern Lights Distributors, LLC NLD-05/23/2016 Monte Capital Group 11 Broadway Suite 766 New York, NY montechesapeakefunds.com