BTS Tactical Fixed Income Fund Semi-Annual …

1 BTS Tactical Fixed Income fund Semi-Annual report June 30, 2017 1- 877-BTS-9820 (1-877-287-9820) This report and the financial statements contained herein are submitted for the general information of shareholders and are not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. Nothing herein contained is to be considered an offer of sale or solicitation of an offer to buy shares of the BTS Funds. Such offering is made only by prospectus, which includes details as to offering price and other material information. Distributed by Northern Lights Distributors, LLC Member FINRA Dear Valued Shareholder, As CEO of BTS Asset Management ( BTS ), I would like to thank you for investing with the BTS Tactical Fixed Income fund (the fund ) and take a moment to review developments related to the fund , including strategies we ve employed, recent returns and our vision for the remainder 2017.

2 In my last letter I shared with great enthusiasm the fact that the fund had grown to just over $569 million through December 30, 2016. Keeping with this theme, I am happy to announce that we saw continued growth through the close of the half way point, with the fund reaching almost $800 million as of June 30, 2017. We believe that as the fund continues to grow, this may benefit you as a shareholder by potentially lowering fund expenses through economies of scale and creating operational efficiencies. In the end, however, we strongly believe that this growth demonstrates a level of trust you have placed in us as fund manager and we sincerely look forward to working together toward greater prosperity in the months and years to come. The fund remained invested in high yield bonds for the entirety of the first half of 2017. Despite periods of consolidation and some loss of momentum in the high yield space, the fund outperformed its benchmark, the Bloomberg Barclays Aggregate Bond Index through the first half of the year, with the fund Class A (NAV) returning and the benchmark returning just as of June 30, 2017.

3 The fund outperformed its benchmark, in part, because the demand for yield that pushed prices higher in 2016 largely remained intact in the first half of 2017. In addition, while we have seen some volatility as a result of certain market stimuli, several factors allowed the fund to remain invested in high yields and to outpace the larger bond market. Specifically, at times the high yield trend found support as stocks reached new highs. High yield bonds also benefited from loosening of monetary policy, where the dollar came down nearly 4% at one point from its post-election peak and the 10-year note moved down from its high of to around While the relief was not permanent, the weaker dollar and lower rates helped high yields at that time and in turn helped the fund outperform the larger bond market. Lastly, while the risk of a rise in Treasury yields loomed, government bond rallies, particularly those that occurred in March, helped prevent the yield spread from being pressured by a sharp rise in Treasury yields.

4 A rise in yields could have pressured high yield bond prices despite their lower duration, but this was avoided due to the government rally. As to outlook, BTS sees a possible consolidation in high yield bonds on the horizon. As we review the landscape, we highlight a recent key development, namely the spike in interest rates. As of the date of this letter, the 10-year Treasury note is now yielding about , which is off its lows. As noted above, 1a return to the level on the 10-year could put pressure on high yield bond prices since the yield spread (yield over the 10-year note) is relatively tight, and higher yields on Treasuries tend to pressure other Fixed Income assets. To navigate this environment now and in the long-term, BTS thinks that employing BTS Indicators in a weighted investment model may help us achieve the fund s goals, potentially more so than a passive approach that can lead to magnified losses.

5 We continue to believe at our core that an unconstrained approach , wherein BTS can go to cash to preserve capital and take a limited short position in an attempt to enhance returns continues to make sense during periods of volatility. A short position involves the sale of a borrowed security, commodity or currency with the expectation that the asset will fall in value. BTS fluid model approach is designed to be cognizant of periods of volatility and to invest on confirmation of strong price trends. Consequently, our indicators place investor assets upon confirmation of stronger underpinnings, and move defensively during volatility in the financial markets and bond sectors. Whenever trading and investing systems seek preservation of capital there may be times of defense investing wherein returns are missed in preference for safety of assets.

6 In the long run, over 35 years of investing with this type of strategy with BTS Indicators, our investment team has created competitive returns through an unconstrained approach rather than passive investing. Of course, there is no guarantee that any investment strategy will achieve its objectives, generate profits or avoid losses. Thank you for choosing the BTS Funds and good luck in 2017! Sincerely, Matthew Pasts CMT Vilis Pasts CEO, BTS Asset Management Founder & Director of Research The Bloomberg Barclays Capital Aggregate Bond Index is comprised of government securities, mortgage-backed securities, asset-backed securities and corporate securities with maturities of one year or more to simulate the universe of bonds in the market. Investors cannot directly invest in an index; unmanaged index returns do not reflect any fees, expenses or sales charges.

7 Volatility is defined as drawdown and risk of loss of principal. Duration refers to interest rate sensitivity. High yield bonds have lower duration and so less sensitivity to rise in long term rates and so decline in bonds. 8188-NLD-8/25/2017 2 The fund 's performance figures* for the periods ending June 30, 2017, compared to its benchmark:Six MonthsOne YearFive YearTen YearSinceInception (a)SinceInception (b)SinceInception (c)SinceInception (d)BTS Tactical Fixed Income fund Class Tactical Fixed Income fund Class A (with load)( )% Tactical Fixed Income fund Class Tactical Fixed Income fund Class Tactical Fixed Income fund Class Barclays Capital Aggregate Bond Index ** ( )% By Asset Type% of Net AssetsExchange Traded Funds - Market in excess of other assets( )% refer to the Portfolio of Investments in this Semi-Annual report for a detailed analysis of the fund 's Composition as of June 30, 2017(d) Inception date for Class R is May 5, Tactical Fixed Income FundPORTFOLIO REVIEW (Unaudited)June 30, 2017(c) Inception date for Class I is May 27, 2015.

8 (b) Inception date for Class C is May 31, 2013.* Theperformancedataquotedis noguarantee offutureresults. Currentperformancemaybehigher orlowerthan investmentreturnofaninvestmentwillfluctu atesothatyourshares,whenredeemed,maybewo rth more orlessthantheir originalcost. Thereturnsshowndonotreflectthedeductiono ftaxesthata shareholderwouldpayon Funddistributionsoron theredemptionsof year are 'stotaloperatingexpenses, asstatedin thefeetablesof theFund'sMay1, 2017 prospectusis , , ,ClassC,ClassI andClassR shares, shares are subjecttoa maximumsales maximumdeferred sales redeemedwithin18months ofpurchase(iftheinitialsales chargeis waived).Allshareclasses are subjecttoa mostrecentmonth-end,please call 1-877-287-9820.** TheBloombergBarclays AggregateBond Index (the"Index)is an ,fixedratebondmarket securities,includinggovernment, governmentagency,corporateandmortgage-ba cked securities betweenone investinthe Indexdirectly.

9 UnliketheFund's returns,the Index does notreflectanyfeesorexpenses.(a)Inception dateforClassA is January1, does not haveperformance asa mutualfundpriortoMay31, aboveis for theFund'spredecessorlimited liabilitycompany(BTST acticalFixedIncome FundLLC,formerlyknownasBTSA ssetAllocation/High YieldFundLLC).Thepriorperformanceis net ofmanagement feesand liabilitycompany hadbeenmanagedinthesamestyleandbythesame portfoliomanagersincethepredecessorlimit ed liabilitycompany'sinceptiononJanuary1, 'sinvestmentgoals, policies, guidelinesandrestrictionsare,in allmaterialrespects, equivalenttothepredecessorlimited liabilitycompany's investmentgoals, policies, shows thepredecessorlimited liabilitycompany's annualreturnsandlong-termperformance reflectingtheactual feesandexpensesthatwere chargedwhen the Fundwasa limited liabilitycompany. Fromits inceptiononJanuary1, 2000 throughMay31, 2013,thepredecessorlimited liabilitycompanywasnotsubjecttocertainin vestmentrestrictions, diversificationrequirementsand otherrestrictionsof the1940 Act,which ifthey hadbeen applicable,mighthaveadversely ,thepredecessorlimited liabilitycompanywasnotsubjecttosalesload sthatwouldhaveadversely affected liabilitycompany spast performanceis notnecessarily anindicationof how theBTST acticalFixed Income fund will perform in the accompanying notes to financial TRADED FUNDS - %DEBT FUNDS - %78,409 Deutsche X-Trackers USD High Yield Corporate Bond4,014,541$ 4,028,227 iShares iBoxx $ High Yield Corporate Bond ETF356,054,985 9,297,405 SPDR Bloomberg Barclays High Yield Bond ETF345,863,466 2,786,373 SPDR Bloomberg Barclays Short-Term High Yield Bond ETF77,934.

10 853 TOTAL EXCHANGE TRADED FUNDS (Cost $767,287,480)783,867,845 SHORT-TERM INVESTMENTS - %MONEY MARKET fund - %37,989,262 Union Bank Institutional Trust Deposit ACC - IV, *37,989,262 TOTAL MONEY MARKET FUNDS (Cost $37,989,262)TOTAL INVESTMENTS - % (Cost $805,276,742) (a)821,857,107$ LIABILITIES IN EXCESS OF OTHER ASSETS - ( ) %(24,349,331) NET ASSETS - %797,507,776$ ETF - Exchange Traded FundSPDR - Standard & Poor's Depositary Receipt*Money market fund ; interest rate reflects seven-day effective yield on June 30, 2017.(a)Represents cost for financial reporting purposes. Aggregate cost for Federal tax purposes is $805,856,970and differs from fair value by net unrealized appreciation (depreciation) of securities as follows:Unrealized appreciation 16,580,365$ Unrealized depreciation(580,228) Net unrealized appreciation 16,000,137$ BTS Tactical Fixed Income FundJune 30, 2017 PORTFOLIO OF INVESTMENTS (Unaudited)4 See accompanying notes to financial securities.