Trusting the System: How MBXIX’s Machine Learning Approach Has Led to Long-Term Outperformance

Learn About the Catalyst/Millburn Hedge Strategy Fund’s (MBXIX) Systematic Method and Why Investors Have Historically Seen a Smooth Ride

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Volatility events, interest rate changes, and bull and bear markets will continue to come and go – but if you’re like most investors, you don’t have time to keep up and trade individual stocks according to the trends of the day. We believe the Catalyst/Millburn Hedge Strategy Fund’s (MBXIX) approach to investing and impressive long-term track record present a compelling opportunity for those looking to invest without the day-to-day worry.

MBXIX, sub-advised by Millburn Ridgefield Corporation, uses machine learning to adapt to changing environments based on the systematic observation and analysis of historical market cycles. The result has been a track record of providing investors with a smoother path to positive returns than if one were to invest in an index fund, and a much higher rate of positive return periods (as seen below):

Consistent Track Record of Outperformance and Positive Returns

Source: Bloomberg LP and Catalyst Capital Advisors LLC. Monthly return data from 01/01/1997 to 06/30/2023. Past performance does not guarantee future results and there is no assurance that the Fund will achieve its investment objective.

The Fund boasts a 5-Star Morningstar Rating* (as of 7/31/23) with positive returns during structural bear market years such as 2008 and 2022, outperforming the benchmark during periods of rising interest rates in 2018 and 2022, and a +164% return during the “lost decade” of 2000 – 2009 vs. the S&P 500’s return of -9%.

MBXIX was formed with the goal of providing long-term capital appreciation and aims to do so by investing in a diversified portfolio designed with both active and passive exposure to global markets.

MBXIX’s Diverse Investment Universe That Plays Offense and Defense

Why Hold MBXIX Long-Term? The Results Speak for Themselves

The indices shown are for informational purposes only and are not reflective of any investment. As it is not possible to invest in the indices, the data shown does not reflect or compare features of an actual investment, such as its objectives, costs and expenses, liquidity, safety, guarantees or insurance, fluctuation of principal or return, or tax features. Past performance is no guarantee of future results.

There is no assurance that any investment strategy will generate profits or avoid losses.

CONCLUSION

We believe the key to incorporating MBXIX into a portfolio that is seeking superior risk-adjusted returns is holding the strategy for the long-term. Historically, there have only been six unprofitable rolling 3-year periods, compared to 59 for the S&P 500. Moreover, if an investor stayed invested for a rolling five or ten-year period, they would have never had a negative return no matter when they invested historically at month end. On a rolling 10-year basis, the Fund’s worst annualized return was 4.94% (net of fees).

Performance (%): Ending June 30, 2023
Annualized if greater than a year

Share Class/Benchmark	1 Year	3 Years	5 Years	10 Years	Since Inception*
Class I	2.77	12.88	6.79	9.10	10.33
S&P 500 TR Index	19.59	14.60	12.31	12.86	9.00
ML 3 Month T-Bill Index	3.62	1.28	1.56	0.99	2.08
Class A	2.55	12.60	6.52	n/a	8.12
Class C	1.77	11.76	5.73	n/a	7.31
S&P 500 TR Index	19.59	14.60	12.31	n/a	12.90
ML 3 Month T-Bill Index	3.62	1.28	1.56	n/a	1.30
Class A w/Sales Charge	-3.36	10.40	5.27	n/a	7.27

The Fund’s maximum sales charge for Class “A” shares is 5.75%. Investments in mutual funds involve risks. Performance is historic and does not guarantee future results. Investment return and principal value will fluctuate with changing market conditions so that when redeemed, shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain the most recent month end performance information, please call the fund, toll free at 1-866-447-4228.

There is no assurance that the Fund will achieve its investment objective. You cannot invest directly in an index and unmanaged index returns do not reflect any fees, expenses or sales charges. Performance shown before December 28, 2015 is for the Fund’s Predecessor Fund (Millburn Hedge Fund, L.P.). Gross expense ratios for share classes A, C, and I are 2.27%, 3.02%, and 2.02%, respectively.

Past performance is not a guarantee of future results.

Investors should carefully consider the investment objectives, risks, charges and expenses of the Catalyst Funds. This and other important information about the Fund can be obtained by calling 866-447-4228. The Catalyst Funds are distributed by Northern Lights Distributors, LLC, member FINRA/SIPC. Catalyst Capital Advisors, LLC is not affiliated with Northern Lights Distributors, LLC.

Risk Considerations:
Investing in the Fund carries certain risks. The Fund will invest a percentage of its assets in derivatives, such as futures and options contracts. The use of such derivatives and the resulting high portfolio turn-over may expose the Fund to additional risks that it would not be subject to if it invested directly in the securities and commodities underlying those derivatives. The Fund may experience losses that exceed those experienced by funds that do not use futures contracts, options and hedging strategies. Investing in commodities markets may subject the Fund to greater volatility than investments in traditional securities. Currency trading risks include market risk, credit risk and country risk. Foreign investing involves risks not typically associated with U.S. investments. Changes in interest rates and the liquidity of certain investments could affect the Fund’s overall performance. The Fund is non-diversified and as a result, changes in the value of a single security may have significant effect on the Fund’s value. Other risks include U.S. Government securities risks and investments in fixed income securities. Typically, a rise in interest rates causes a decline in the value of fixed income securities or derivatives owned by the Fund. Furthermore, the use of leveraging can magnify the potential for gain or loss and amplify the effects of market volatility on the Fund’s share price. The Fund is subject to regulatory change and tax risks; changes to current rules could increase costs associated with an investment in the Fund. These factors may affect the value of your investment.
Performance shown before December 28, 2015 is for the Fund’s Predecessor Fund (Millburn Hedge Fund, L.P.). The prior performance is net of management fees and other expenses including the effect of the performance fee. The Predecessor Fund had an investment objective and strategies that were, in all material respects, the same as those of the Fund, and was managed in a manner that, in all material respects, complied with the investment guidelines and restrictions of the Fund. From its inception through December 28, 2015, the Predecessor Fund was not subject to certain investment restrictions, diversification requirements and other restrictions of the 1940 Act or the Code, which if they had been applicable, might have adversely affected its performance. In addition, the Predecessor Fund was not subject to sales loads that would have adversely affected performance. Performance of the predecessor fund is not an indicator of future results.

MBXIX also rated 5-stars by Morningstar for the period ending 7/31/2023, based on 5-year risk-adjusted returns, out of 60 funds in the Macro Trading category. The overall Morningstar rating for the Fund is 5-stars out of 67 funds in the Macro Trading category. © 2023 Morningstar. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

The Morningstar RatingTM for funds, or “star rating”, is calculated for managed products (including mutual funds, variable annuity and variable life sub-accounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchangetraded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product’s monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The Morningstar Rating does not include any adjustment for sales loads. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and ten-year (if applicable) Morningstar Rating metrics.

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