Dynamic Opportunity Fund Commentary

February 2018

June 2022

The downtrend that has been in place for stocks since the beginning of the year resumed in earnest in June. There  was a litany of negative developments that exacerbated the weakness in markets and led to a risk-off environment  with investor sentiment reaching extreme bearishness. We started to get the first wave of negative preannouncements related to Q2 earnings season, in addition to weaker economic data, coupled with hawkish commentary out of the Fed (and other central banks).

Past performance does not guarantee future results

Some examples of the string of negative data points included:

  1. Target (TGT) cut its Q2 operating margin guidance, citing excess inventories (read: weaker demand)
  2. Intel (INTC) said the macro environment has weakened
  3. Micron (MU) lowered guidance amid weaker demand in smartphones and PCs
  4. Consumer sentiment for June hit its lowest level on record (dating back to 1978)
  5. Total CPI increased 8.6% yr/yr (highest since 1981), as crude oil hit $123
  6. Federal Reserve raised rates by 75 basis points to 1.50%-1.75%
  7. The Swiss National Bank made a surprise rate hike of 50 basis points (its first hike in 15 years)
  8. The ECB said it would end its asset purchase program (QE) on July 1st
  9. Several areas in Shanghai were back in lockdown over Covid concerns
  10. Crypto lender Celsius suspended customer withdrawals, which led to panicky selling

In addition to all the above, market participants are beginning to fear the possibility of a policy mistake on the part of the Fed, due to the fact that the Fed continues to get more hawkish about rate hikes as the economy continues to slow. This has some scratching their head as to how the Fed thinks they will be able to engineer the proverbial ‘soft landing’ in the economy. We think it’s more likely the Fed knows a hard landing is coming – which is likely needed in  order to kill rampant inflation – but they can’t admit that publicly for fear of fomenting panic.

Our Fund continued to adopt a very defensive posture in June, with a high amount of hedges on as well as a large cash position. With sentiment reaching bearish extremes, it is likely that we will see some sort of bear market rally in the near future. The question many will ask is “Is the bottom in?”. But most bear markets don’t end that easily. There are often rallies that fool the majority of investors to get back in, only to reverse back and make new lows again. So, we must remain vigilant in how we manage risk, adhere to our hedge models, maintain a flexible approach so as to not get wed to any particular market forecast.

Our risk management paid dividends last month. The ACM Dynamic Opportunity Fund (ADOIX) returned -0.78% inJune, which was less than 10% of the broader S&P 500 Index’s return which saw a decline of -8.39%. This also widened the YTD disparity with the S&P 500 Index down -20.58% so far and ADOIX down only -7.66%.

Our goal is to keep our declines manageable, such that when the market eventually turns, we will be able to recoup losses in in short order and quickly move back into positive territory.

Thank you for your continued support.

Sincerely,

Jordan L. Kahn, CFA
Chief Investment Officer

Sources: Standard & Poor’s, Stockcharts.com, Morningstar Briefing.com

Risk Disclosure:

Investors should carefully consider the investment objectives, risks, charges and expenses of the ACM Dynamic Opportunity Fund. This and other important information about the Fund is contained in the prospectus, which can be obtained by calling 1-844- 798-3833. The prospectus should be read carefully before investing. The ACM Dynamic Opportunity Fund is distributed by Northern Lights Distributors, LLC, member.”http://www.finra.org/” FINRA. “http://www.sipc.org/” SIPC. Northern Lights Distributors, LLC and Ascendant Capital Management, LLC are not affiliated.

Defined Terms: S&P 500 Index- The S&P 500 index is an unmanaged composite of large capitalization companies. This index is widely used by professional investors as a performance benchmark for large-cap stocks. HFRX Equity Hedge Index– tracks strategies that maintain positions both long and short in primarily equity and equity driven securities. Morningstar Long/Short Equity Category- A composite of returns produced by Morningstar which can be used to compare the returns of other mutual funds in the same category. Long– the holder of the position owns the security and will profit if the price of the security goes up. Short- Short selling is the sale of a security that is not owned by the seller, or that the seller has borrowed. Short selling is motivated by the belief that a security’s price will decline, enabling it to be bought back at a lower price to make a profit. Derivative hedge – transaction that limits investment risk with the use of derivatives such as option contracts.

Investors are not able to invest directly in the indices referenced and unmanaged index returns do not reflect any fees, expenses or sales charges. For current performance information, please visit our performance page: http://acm-funds.com/dynamic-fund-performance/

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

ETF’s are subject to specific risks, depending on the nature of the underlying strategy of the fund. These risks could include liquidity risk, sector risk, as well as risks associated with fixed income securities, real estate investments, and commodities, to name a few. Investments in foreign securities could subject the Fund to greater risks including, currency fluctuation, economic conditions, and different governmental and accounting standards.

6716-NLD-07/21/2022

June 2022 Fact Sheet

Fund Overview

We strive to help our investors participate in the gains available from financial markets, while mitigating the downside risk

The ACM Dynamic Opportunity Fund is designed as a core investment for investors seeking long term capital appreciation with a short-term focus on  capital preservation. The fund employs a dynamic strategy, which aims to actively participate during a rising market environment and mitigate downside  risk when markets experience downturns.

Annualized as of June 30, 2022*
1-mth 3-mth YTD 1 Yr* 3 Yr* 5 Yr* Since Inception*
ADOIX -0.78% -4.27% -7.66% -13.11% 4.09% 4.52% 4.36%
HFRX Eq Hedge -2.01% -4.44% -4.72% 0.93% 5.30% 3.51% 2.64%
Morningstar L/S Category -4.64% -7.10% -9.38% -5.85% 4.58% 4.45% -6.93%
S&P 500 -8.39% -16.45% -20.58% 11.92% 8.76% 9.32% 8.78%

*As of 6/30/22

Investments in mutual funds involve risks. Performance is historic and does not guarantee future results. Investment principal value will fluctuate 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 or the Fund’s prospectus please call the Fund at 1-844-798-3833. You can also obtain a prospectus at www.ACM-funds.com.

The fund’s maximum sales charges for Class “A” shares is 5.75%. Gross expense ratios are 2.07% for Class A shares and 1.82% for Class I Shares. The Adviser has contractually agreed to reduce its fees and reimburse expenses of the Fund, at least Until April 30, 2022, to ensure that the net annual fund operating expenses will not exceed 2.40% for Class A shares and 2.15% for Class I shares.

These fee waivers and expense reimbursements are subject to possible recoupment from each Fund within three years after the fees have been waived or reimbursed. You should be aware that the Fund’s past performance (before and after taxes) may not be an indication of how the Fund will perform in the future. Although Class A Shares would have similar returns to Class I shares because the classes are invested in the same portfolio of securities, the returns for Class A shares are different from Class I shares because Class A shares have different expenses than Class I shares. Updated performance information is available at no cost by visiting www.ACM-funds.com or by calling 1-8444-798-3833.  Actual Total Annual Operating Expenses of 1.95% for Class A and 1.70% for Class I from the prospectus.

Sector Weightings

As of 6/30/2022


There is no assurance that the Fund will achieve its investment objectives.

Dynamic Opportunity Fund
Stock Wtg
Alphabet, Inc. 2.36%
Amazon.com, Inc. 2.05%
UnitedHealth Group, Inc. 1.86%
Visa, Inc. 1.66%
Eli Lilly and Company 1.64%
Microsoft Corporation. 1.49%
Apple, Inc. 1.48%
Grocery Outlet Holding. 1.18%
FTI Consulting, Inc. 1.09%
Vertex Pharmaceuticals, Inc. 1.02%
Fund Characteristics *
# Holdings 21
Avg. Market Cap $145,681M
Avg. P/E 20.5
Avg. ROE 32.6%
Gross Long Exposure 26.3%
Gross Short Exposure -7.8%
Net Market Exposure 18.4%
Beta Adj. Exposure 17.8%
Yearly Returns 2015* 2016 2017 2018 2019 2020 2021
ADOIX 5.73% -4.67% 17.86% -0.97% 2.36% 22.47% 0.93%
HFRX Eq Hedge -1.61% 0.10% 9.98% -9.42% 10.71% 4.60% 12.14%
Morningstar L/S Category -2.20% 2.34% 11.18% -6.73% 11.90% 7.89% 18.05%
S&P 500 1.06% 9.54% 19.42% -6.24% 28.88% 16.26% 26.89%

*Inception Date 1/20/2015

Risk Disclosure:

Investors should carefully consider the investment objectives, risks, charges and expenses of the ACM Dynamic Opportunity Fund. This and other important information about the Fund is contained in the prospectus, which can be obtained by calling 1-844- 798-3833. The prospectus should be read carefully before investing. The ACM Dynamic Opportunity Fund is distributed by Northern Lights Distributors, LLC, member.”http://www.finra.org/” FINRA. “http://www.sipc.org/” SIPC. Northern Lights Distributors, LLC and Ascendant Capital Management, LLC are not affiliated.


Mutual Funds involve risk including possible loss of principal. Adverse changes in currency exchange rates may erode or reverse any potential gains from the Fund’s investments. ETF’s are subject to specific risks, depending on the nature of the underlying strategy of the fund. These risks could include liquidity risk, sector risk, as well as risks associated with fixed income securities, real estate investments, and commodities, to name a few. Investments in underlying funds that own small and mid-capitalization companies may be more vulnerable than larger, more established organizations. Derivative instruments involve risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments. Investments in foreign securities could subject the Fund to greater risks including currency fluctuation, economic conditions, and different governmental and accounting standards. In addition to the risks generally
associated with investing in securities of foreign companies, countries with emerging markets also may have relatively unstable governments, social and legal systems that do not protect shareholders, economies based on only a few industries, and securities markets that trade a small number of issues.

Investors bear the risk that the Fund may not be able to implement its investment strategies or attract sufficient assets. Purchased put options may decline in value or expire worthless and may have imperfect correlation to the value of the Fund’s portfolio securities. Written call and put options may limit the Fund’s participation in equity market gains and may amplify losses in market declines. The Fund’s losses are potentially large in a written put or call transaction. If unhedged, written calls expose the Fund to potentially unlimited losses. The Fund will incur a loss as a result of a short position if the price of the short position instrument increases in value between the date of the short position sale and the date on which an offsetting position is purchased. Short positions may be considered speculative transactions and involve special risks, including greater reliance on the ability to accurately anticipate the future value of a security or instrument. The Fund’s losses are potentially large in a short position transaction.

Price to Earnings (P/E) is a valuation ratio of a company’s current share price compared to its per share earnings. Gross Long and Short Exposure is the percentage in securities that are expected to rise and decline, respectively. Beta is a measure of systemic risk. Standard Deviation is a statistical measurement. It sheds light on the historical volatility of that investment. The greater the standard deviation of a security, the greater the variance between each price and the mean, indicating a larger price range. Treynor ratio – A performance metric for determining how much excess return was generated for each unit of risk taken on by a portfolio. HFRX Equity Hedge Index – tracks strategies that maintain positions both long and short in primarily equity and equity driven securities. S&P 500 Index – tracks 500 individual stocks chosen for market size, liquidity and industry grouping, among other factors.

Investors are not able to invest directly in the indices referenced in this illustration and unmanaged index returns do not reflect any fees, expenses or sales charges.

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