FOR PROFESSIONAL USE ONLY
THE CASE FOR GLOBAL INVESTING
A PORTFOLIO SHOULD… INVEST GLOBALLY The Waning Influence of US Geography on Stock Returns 2
A PORTFOLIO SHOULD BE… MULTI CURRENCY Trade Weighted US Dollar vs. Major Currencies 150 140 130 120 110 100 90 80 70 60 3
A PORTFOLIO SHOULD… PLAY DEFENSE In the last 82 years, there have been 26 years with negative returns, • amounting to 1 every 3.4 years. • The average annual decline equals 14%. 6 of the declines exceeded 20% • • Successfully avoiding just one of these declines would potentially increase long run returns substantially. S&P 500 Negative Returns (1926 – 2015) 4
THE PORTFOLIO -Replicable Process } -Global Stock Portfolio -True Currency Diversification Conductor Global -Macro-Economic Sensibilities Fund -Risk Management Capabilities Disclosure: There is no assurance that the Fund will achieve its investment objective. 5
PORTFOLIO PROCESS
THE PORTFOLIO: GENERAL OVERVIEW • Individual Equity Securities. Buy stocks on local exchanges. • Global Mid to Large Cap Value. • Long-only orientation in individual stocks. Ability to use liquid index hedges and cash to manage macro market risks, however. • Stronger focus on “Risk - Adjusted Return” through market cycles compared to a representative global mutual fund peer group. • “Bottoms - Up” stock -picking discipline combined with global macro valuation and economic analysis drives portfolio construction. • Diversification across sectors, regions, and currencies. • 50 to 100 positions. Disclosure Investments in foreign securities could subject the Fund to greater risks including, currency fluctuation, economic conditions, and different governmental and accounting standards. 7
THE PORTFOLIO: DEFENSE All three areas below must agree for a full hedged position to be implemented. 1. Valuation – Normalized 5-year P/E – Market Based Q-Ratio Domestic and International Valuations – – Both valuation measures must exceed a Z-score threshold to hedge 2. Economic – 6 Month annualized leading economic indicators – US: Conference Board LEI is used – EAFE: Internal LEI composite based upon OECD indicators Emerging: Internal LEI composite based upon OECD indicators – 3. Technical – Intermediate Price Momentum, Positive or Negative Disclosure Hedge may not protect full value of the portfolio at any given time and can be the cause of additional costs and risks to the fund 8
ANTHEM INC. (USA) • 1.64% of Portfolio (Sept 2015) • Have owned since the inception of the Conductor Global portfolio. • One of America’s largest health care benefits company; formerly known as WellPoint. At 12/31/2013: • • 3.8x EV/EBITDA vs. 11.9x for MSCI Health Care Index and 10.6x for MSCI World. • 1.1x Price to Book vs. 3.6x for Consumer Staples and 2.1x for the MSCI World. Disclosure: Holdings are subject to change and should not be considered investment advice. 9
KOITO MANUFACTURING (JAPAN) • 1.47% of Portfolio (Sept 2015) • Automotive component manufacturer. • Purchased May 2014. At purchase: • • 4.8x EV/EBITDA vs. 9.4x for MSCI Consumer Disc. Index and 10.3x for MSCI World. • 1.6x Price to Book vs. 2.8x for Consumer Disc. and 2.1x for the MSCI World. Disclosure: Holdings are subject to change and should not be considered investment advice. 10
YAMAZAKI BAKING (JAPAN) • 1.25% of Portfolio (Sept 2015) • Purchased February 2014. • Consumer Staples company that produces baked goods for distribution throughout Japan. At purchase: • • 5.3x EV/EBITDA vs. 11.2x for MSCI Consumer Staples Index and 10.4x for MSCI World. • 0.96x Price to Book vs. 3.4x for Consumer Staples and 2.1x for the MSCI World. Disclosure: Holdings are subject to change and should not be considered investment advice. 11
RISK MANAGEMENT EXAMPLE PACIFIC RUBIALES (CANADA) • Owned from July 2014 to October 2014. • Canada listed oil and gas exploration company; resource extraction primarily in Colombia. • At time of purchase, stock was trading at a significant valuation discount to energy peers and the overall MSCI World. PRE CN was hard hit in late 2014 with the rest of the energy sector, though. Conductor Global’s process initiated exit before major damage occurred. • The company lost over 60% of value after sale, in line with many other companies in the energy sector. 12
CONDUCTOR GLOBAL PERFORMANCE Share Class QTD YTD 1 Yr 3 Yr Since Inception Class A Class I Without Sales Charge Class I 2.43% 7.22% 3.64% - 6.58% - Class A 2.43% 7.12% 3.84% - - 3.62% With Sales Charge Class A: w/ 5.75% max sales charge -3.48% 0.96% -2.32% - 1.52% - Comparison Morningstar World Stock Median 0.51% 3.43% 0.60% 13.45% - - MSCI World Index Total Return 0.49% 2.95% 1.97% 14.90% 7.19% 5.94% Disclaimer: There is no assurance that the fund’s investment objective will be achieved or maintained. The MSCI World TR Index performance is not illustrative of the fund’s security performance. The Fund’s maximum sales charge for Class “A” shares is 5.75%. The performan ce data quoted here represents past performance. Current performance may be lower or higher than the performance data quoted above. Past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate so that investor’s shares, when red eemed, may be worth more or less than their original cost. The Fund’s investment adviser has contractually agreed to reduce its fees and/or absorb expens es of the Fund, at least until February 28, 2015, to ensure that the net annual fund operating expenses will not exceed 2.20%, 2.95%, and 1.95% attributable to Class A, Class C, and Class I shares, respectively, subject to possible recoupment from the Fund in future years. Without these waivers, the Fund’s total annual operating expenses would be 3.08%, 3.83%, and 2.83% to Class A, Class C, and Class I shares respectively. Please review the fund’s prospectus fo r more information regarding the fund’s fees and expenses. For performance information current to the most recent month -end, please call toll-free 844-467-2459 or by visiting http://www.conductorfunds.com. 13
DISCLOSURES The Adviser from time to time employs various hedging techniques. The success of the Fund’s hedging strategy will be subject to the Adviser’s ability to correctly assess the degree of correlation between the performance of the instruments used in the hedging strategy and the performance of the investments in the portfolio being hedged. The risk on a short sale is the risk of loss if the value of a security sold short increases prior to the delivery date, since the Fund must pay more for the security than it received from the purchaser in the short sale. Therefore, the risk of loss may be unlimited. Investors should carefully consider the investment objectives, risks, charges and expenses of the Conductor Funds. This and other information about the Funds is contained in the prospectus and should be read carefully before investing. The prospectus for both funds can be obtained by calling toll free 1-844-GO-RAILX or by clicking here. The Conductor Funds are distributed by Northern Lights Distributors, LLC., Member FINRA IronHorse Capital Management and Northern Lights Distributors, LLC are not affiliated. 15
DISCLOSURES Performance of the Conductor private accounts does not represent that past or future performance of the Conductor Global Fund and should not be considered indicative of future performance of any strategy account or the Fund. There is no assurance that any investment strategy will achieve its objectives, generate profits or avoid losses. Investing in the Fund carries certain risks. Adverse changes in currency exchange rates may erode or reverse any potential gains from the Fund’s investments. The risk of investing in emerging market securities, primarily increased foreign investment risk. Investments in foreign securities could subject the Fund to greater risks including, currency fluctuation, economic conditions, and different governmental and accounting standards. 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. Investments in lesser-known, small and medium capitalization companies may be more vulnerable than larger, more established organizations. There can be a higher portfolio turnover due to active and frequent trading that may result in higher transactional and brokerage costs. 4618-NLD-9/8/2015 16
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