Dynamic Opportunity Fund Commentary

February 2018

November 2021

Stocks started out the month of November on a solid note, but peaked right before the week of Thanksgiving and embarked on a pretty steep pullback. This was a surprising turn of events for most investors, who had been accustomed to the week of Thanksgiving being a fairly benign environment for stocks. The sharp selloff in stocks seemed to catch many leaning the wrong way, which served to accelerate some of the declines.

To wit, while the Nasdaq Composite pulled back roughly 5% from its November peak into month end, many other parts of the market fared much worse. Cloud computing stocks (CLOU) were down -13% from their November highs, fintech stocks (FINX) declined -14%, biotechs (XBI) fell -16%, and the ARK Innovation Fund fell -18%. Those are really big declines at a time when the overall market is still in bull market mode and the major indexes were only down mid-single digits.


Given that many of our portfolio names are from some of these leading growth areas, we had more than a few stocks get hit by double digits. And although hedges were implemented via the hedge model, the declines in many individual stocks far outpaced that of the overall indexes. Its not often that you see so many stocks down that much more than the overall indexes, but the market has entered that stage of the bull market where the mega cap companies now make up a hugely disproportional percentage of the indexes.

In the S&P 500 Index, the top 5 companies (by market cap) comprise 23% of the index and the top 10 companies make up more than 30%. In the Nasdaq 100, the top 5 companies equal 41% of the index and the top 10 make up more than 53% of the index. Those numbers are quite surprising to us, and surpass the last time we saw the mega cap stocks make up a disproportionate percentage of the indexes – which was in the 1999-2000 time frame. This phenomenon is something that usually shows up in the late stages of a secular bull market, when more money flows into passive indexing strategies and has a self-fulfilling effect of buoying the largest components.

But these big divergences in the market, when the average stock is doing poorly but the major indexes are not far from their highs, are more often a sign that we are entering the late stages of a bull market, not the beginning. The
chart below shows that the breadth in the market is quite poor relative to the indexes which are being held up by the mega-cap stocks.


The ACM Dynamic Opportunity Fund (ADOIX) returned -3.47% in November, which lagged the HFRX Index that returned -1.20% last month. Leading contributors came mostly from tech and some industrials. But laggards far  outweighed the winners and came from areas such as fintech, materials, and financials – basically those areas of the market that are considered more cyclical in nature.

Our dynamic hedge model entered the month targeting 100% market exposure. But as large numbers of stocks began to break down, the Nasdaq and Russell 2000 started to deteriorate first. By the end of the month, the hedge model was targeting just 35% market exposure.

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.

6813-NLD-12/23/2021

November 2021 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.

PERFORMANCE As of 11/30/2021
1-mth 3-mth YTD 1 Yr* 3 Yr* 5 Yr* Since Inception*
ADOIX -3.47% -4.76% 2.39% 10.20% 5.38% 7.80% 6.32%
HFRX Eq Hedge -1.20% 0.41% 10.26% 17.74% 4.96% 4.90% 3.28%
Morningstar L/S Category -1.21% -1.73% 14.28% 16.26% 5.88% 6.35% 3.10%
S&P 500 -0.83% 0.98% 21.59% 28.09% 13.92% 14.72% 11.96%

*As of 9/30/21

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 11/30/2021


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

Dynamic Opportunity Fund
Stock Wtg
Apple, Inc. 3.09%
Amazon.com, Inc. 2.72%
Alphabet, Inc. 2.65%
Microsoft Corporation 2.47%
Academy Sports & Outdoors, Inc. 2.46%
CVS Health Corporation 2.29%
NVIDIA Corporation 2.14%
Meta Platforms, Inc. 2.12%
UnitedHealth Group, Inc. 1.87%
Shopify, Inc. 1.85%
Fund Characteristics *
# Holdings 48
Avg. Market Cap $74,955M
Avg. P/E 22.0
Avg. ROE 28.8%
Gross Long Exposure 69.1%
Gross Short Exposure -26.5%
Net Market Exposure 42.6%
Beta Adj. Exposure 58.2%
Yearly Returns 2015* 2016 2017 2018 2019 2020
ADOIX 5.73% -4.67% 17.86% -0.97% 2.36% 22.47%
HFRX Eq Hedge -1.61% 0.10% 9.98% -9.42% 10.71% 4.60%
Morningstar L/S Category -2.20% 2.34% 11.18% -6.73% 11.90% 7.89%
S&P 500 1.06% 9.54% 19.42% -6.24% 28.88% 16.26%

*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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