What the Catalyst/Millburn Hedge Strategy Fund (MBXIX) Has in Common with Roger Federer’s Tennis Success

With the Wimbledon & U.S. Open Tennis tournaments generating buzz this summer, we at Catalyst thought, wouldn’t it be great if you had an investment approach that could produce with the efficiency of a tennis superstar like Roger Federer? While Federer has won approximately 80% of his career matches, he noted in a recent commencement address that he won only 54% of his career points. Federer is arguably the greatest tennis player of all time, yet being among the best doesn’t have to mean winning every serve. It’s about winning the points that matter most.

At Catalyst Funds, we believe Federer’s successful path can be applied to investing. Funds don’t need to beat the market every month. There will be ups, and there will be downs. But outperformance over the long-term, which in our mind is most important, can come from a series of wins during the right times. When the market falters, does your portfolio fall with it? Or do you have the potential to pick up small victories and limit downsides?

We’d like to offer the Catalyst/Millburn Hedge Strategy Fund (MBXIX) as an example of this approach – which aims to protect investors when the market slides, picking up points as other investments in your portfolio may falter. Taking a long-term view, MBXIX has outperformed the S&P 500 TR Index since its inception in 1997 despite having a slightly less positive monthly return frequency, as shown below:

Source: Bloomberg LP and Catalyst Capital Advisors LLC. Monthly return data from 01/01/1997 to 06/30/2024. Past performance does not guarantee future results and there is no assurance that the Fund will achieve its investment objective.

The Fund has had positive one-year periods 85% of the time compared to only 78% for the S&P 500. But on a monthly basis, MBXIX has only been positive 61% of the time. The lesson here, from our view, is that investors who rode out the bumps and stayed allocated to the Fund benefited through taking the long-view and trusting the process that Millburn has worked to improve for decades.

Source: Bloomberg LP and Catalyst Capital Advisors LLC. Monthly return data from 01/01/1997 to 06/30/2024. Past performance does not guarantee future results and there is no assurance that the Fund will achieve its investment objective.

HOW MBXIX HAS OUTPERFORMED OVER THE LONG-TERM

MBXIX combines a passive equity portfolio with a managed futures portfolio. The Fund’s equity component is designed to provide beta exposure to equities for normal, upward-trending market environments via a combination of ETFs that are diversified across market capitalization.

MBXIX’s managed futures strategy is intended to offer an effective hedge during market uncertainty by leveraging the alternative asset classes’ uncorrelated nature for incremental returns. The sub-advisor of the Fund, the Millburn Ridgefield Corporation, utilizes machine learning technology and artificial intelligence to continuously improve the managed futures portfolio. MBXIX’s hybrid equity/managed futures strategy has led to tangible results in multiple market environments.

Source: Catalyst Capital Advisors LLC. Data from 01/01/1997 to 06/30/2024.

Volatility, interest rate changes, bear markets, etc., will continue to affect investors so long as they stay allocated to markets. MBXIX’s managed futures component has been able to help mitigate the impact of these events by offsetting equity losses. The Fund was positive during the structural bear markets of 2000-2002, 2008, & 2022, and its own worst drawdown, occurring at the onset of the COVID-19 pandemic, is less than half that of the S&P 500’s worst drawdown since 1997.

IN SUMMARY:

• MBXIX has seen long-term success due to its consistency over many different market While the Fund has a lower positive monthly frequency than the S&P 500, MBXIX has had positive years 85% of the time compared to 78% for the market.
• MBXIX uses a hybrid passive equity/active futures strategy to achieve its investment objective of long-term capital appreciation. The Fund’s approach is 100% systematic and has the potential to invest in over 125 different global markets.
• Like Roger Federer, who understood that winning matches wasn’t decided by every single point, investors should remember that winning in the right moments can be the key to long-term

Data as of quarter end: 2024-06-30T00:00:00

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. Total operating expenses for the A, C, and I share classes are 2.24%, 2.99%, and 1.99%, respectively.

There is no assurance that the Fund will achieve its investment objective. You cannot invest directly in an index and unman- aged 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 2.24%, 2.99%, and 1.99%, 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 se- curities. 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.

The adviser’s judgments about the growth, value or potential appreciation of an investment may prove to be incorrect or fail to have the intended results, which could adversely impact the Fund’s performance and cause it to underperform relative to other funds with similar investment goals or relative to its benchmark, or not to achieve its investment goal.

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 in- vestment guidelines and restrictions of the Fund. From its inception through December 28, 2015, the Predeces- sor 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 perfor- mance. Performance of the predecessor fund is not an indicator of future results.

Investors cannot directly invest in an index and unmanaged index returns do not reflect any fees, expenses or sales charges.

There is no guarantee that any investment strategy will achieve its objectives, generate profits or avoid losses.

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