COUNTERPOINT TACTICAL EQUITY FUND

The Counterpoint Tactical Equity Fund seeks to provide capital appreciation while managing downside risk. The Fund invests in individual stocks that have exposure to multiple market anomalies, while using a tactical model to dynamically adjust portfolio risk.

Stock Selection

The Fund selects the particular stocks on which to go long and short based on quantitative models. The models are based on proprietary research related to economic indicators found in peer-reviewed academic journals. The target portfolio typically holds:

  • More than 600 individual securities
  • Invests in both US and International developed-market stocks
  • Targets sector and currency neutrality.

The Fund’s ranking model is based on research of investment anomalies found in peer-reviewed academic journals, and uses machine-learning techniques to most optimally score the universe of input stocks. The Fund seeks to target the best performing, recent, and persistent anomalies. The Fund’s strategy is multi-factor, and seeks to capitalize on many market anomalies at any one time.

Tactical Risk Management

Using a disciplined tactical market model based on trend-following methodologies, the Fund seeks to avoid downside risk by alternating between “Risk On” (0.80 to 0.85 beta to S&P 500) and Defensive (zero beta to S&P 500, plus 30% treasuries) target asset allocations.

Historical analysis suggests that when the model signaled to reduce equity risk, the following month’s realized market volatility in avoided equities was on average 96% higher versus when the model signaled to hold equities.

Portfolio Managers

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Joseph Engelberg, Ph.D

Ph.D. in Finance, Northwestern University

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Michael Krause, CFA

MBA, University of California San Diego

Performance of the fund may be found on the Tactical Equity Performance and Holdings Page.

FUND FACTS

TickerCPAEXCPCEXCPIEX
CUSIP66538G42966538G41166538G395
Share ClassClass AClass CInstitutional
Minimum Investment$5,000$5,000$100,000
Minimum IRA Investment$1,000$1,000$100,000
Management Fee1.25%1.25%1.25%
Other Fund Expenses (Maximum Net of Waiver)1.35% (0.50%)1.35% (0.50%)1.35% (0.50%)
Interest/Dividend Expense on Securities Sold Short and Acquired Fund Fees and Expenses1.33%1.33%1.33%
12b-1 Distribution & Marketing0.25%1.00%None
Total Annual Operating Fees4.21%4.96%3.96%
Net Expense Ratio Exclusive of Acquired Fund Fees and Interest/Dividends on Short Sales2.00%2.75%1.75%
Fund Inception DateNovember 30, 2015
Fund Overview Sheet
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Quarterly Fact Sheet
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Prospectus
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The Fund’s investment adviser has contractually agreed to reduce its fees and/or absorb expenses of the Fund, at least until January 31, 2019 to ensure that the net annual fund operating expenses exclusive of Acquired Fund Fees and Interest/Dividends on Short Sales will not exceed 2.00%, 2.75%, and 1.75% attributable to Class A, Class C, and Class I shares, subject to possible recoupment from the Fund in future years.  Without these waivers and expense exclusions, the Fund’s total annual operating expenses would be 2.19%, 2.94%, and 1.94% attributable to Class A, Class C, and Class I shares.

DISCLOSURES

Mutual Funds involve risk including the possible loss of principal. The Fund is a new mutual fund as has a limited history of operations for investors to evaluate. The use of leverage by the Fund or an Underlying Fund, such as borrowing money to purchase securities or the use of derivatives, will indirectly cause the Fund to incur additional expenses and magnify the Fund’s gains or losses. A higher portfolio turnover will result in higher transactional and brokerage costs. Derivative instruments involve risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments.

Overall equity and fixed income market risk, including volatility, may affect the value of individual instruments in which the Fund invests. The net asset value of the Fund will fluctuate based on changes in the value of the U.S. and/or foreign equity securities held by the Fund. Fixed income risk factors include credit risk and prepayment risk. When the Fund invests in other investment companies, it will bear additional expenses based on its pro rata share of the other investment company’s operating expenses, including the potential duplication of management fees.

The fund may invest in options which hold an underlying risk greater than securities. The Fund’s losses are potentially large in a written put transaction and potentially unlimited in an unhedged written call transaction. The earnings and prospects of small and medium sized companies are more volatile than larger companies and may experience higher failure rates than larger companies. The Fund may use swaps to enhance returns and manage risk, which involves risks possibly greater than, the risks associated with investing directly in securities and other traditional investments.

The Adviser’s reliance on its strategy and its judgments about the value and potential appreciation securities in which the Fund invests may prove to be incorrect, including the Adviser’s tactical allocation of the Fund’s portfolio among its investments. The adviser’s investment model carries a risk that the mathematical model used might be based on one or more incorrect assumptions.

Long positions entail purchasing securities with the intention of holding them in anticipation of a price increase. Short positions entail borrowing securities with the intention of holding them in anticipation of a price decrease.


Investors should carefully consider the investment objectives, risks, charges and expenses of the Counterpoint Tactical Equity Fund. This and other important information about the Fund is contained in the prospectus, which can be obtained at counterpointmutualfunds.com or by calling 844-273-8637. The prospectus should be read carefully before investing. The Counterpoint Tactical Equity Fund is distributed by Northern Lights Distributors, LLC member FINRA/SIPC.
4786-NLD-11/6/2015
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