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Annual Report ANNUAL REPORT Catalyst Insider Income Fund (IIXAX, IIXCX, IIXIX) Catalyst Enhanced Income Strategy Fund (EIXAX, EIXCX, EIXIX) Catalyst/MAP Global Balanced Fund (TRXAX, TRXCX, TRXIX) Catalyst/CIFC Floating Rate Income Fund (CFRAX, CFRCX, CFRIX) Catalyst/SMH High Income Fund (HIIFX, HIICX, HIIIX) Catalyst/SMH Total Return Income Fund (TRIFX, TRICX, TRIIX) Catalyst/Stone Beach Income Opportunity Fund (IOXAX, IOXCX, IOXIX) Annual June 30, 2021 Mutual Fund Series Trust CATALYST FUNDS ANNUAL REPORT TABLE OF CONTENTS Investment Review ........................................................................................... Page 1 Schedules of Investments ................................................................................. Page 35 Statements of Assets and Liabilities ................................................................. Page 78 Statements of Operations ................................................................................ Page 79 Statements of Changes in Net Assets ............................................................... Page 80 Financial Highlights .......................................................................................... Page 83 Notes to Financial Statements .......................................................................... Page 97 Auditors Opinion…………………………………………………………………………………………….. Page 113 Supplemental Information ............................................................................... Page 115 Trustees Table…………………………………………………………………………………………… ..... Page 128 Expense Example……………………………………………………………………………………………. Page 131 Privacy Notice .................................................................................................. Page 132 June 30, 2021 Catalyst Insider Income Fund (IIXAX, IIXCX, IIXIX) (unaudited) Dear Shareholders, The Catalyst Insider Income Fund (the “Fund”) holds a portfolio of short-term bonds issued by corporations whose executives are purchasing shares of the company’s common stock. Our historical research indicates that companies where insiders are buying the company’s common stock experience substantially lower default rates and bankruptcy rates. The intuition is that corporate insiders would not take an equity stake if the company were in jeopardy of bankruptcy. During times of economic uncertainty, we think it is even more important to look at the insider buying actions of corporate executives as they are the people who understand their company’s credit situation the best. During 2020 and throughout 2021, we witnessed a substantial spike in corporate insider buying activity as well- informed executives took advantage of stock price declines following the dramatic market sell-off. As inflationary pressures increase amid pandemic-created imbalances, companies became anxious to tap credit markets as rates reached historic lows. With corporate bond issuances robust throughout 2021, strong corporate bond supply in the U.S. continues to be absorbed by strong corporate bond demand. The insatiable demand for corporate debt, accompanied by increased bond issuances, is good for corporations in general because it allows them to recapitalize their balance sheets with longer-dated maturities at lower rates. Thus, the Fund remains well positioned amid stronger- than-historic-average growth coupled with improving balance sheet fundamentals. The Covid-19 outbreak has created a compelling opportunity for the Fund, and we are very optimistic for the year ahead. We are happy to report that as of June 30, 2021, the Catalyst Insider Income Fund (IIXIX) has returned +7.45% over the trailing year. The continued relative outperformance during the trailing three-year period has allowed the Fund to maintain its Morningstar 5-star rating on the three-year performance, out of 525 funds in the Morningstar Short-Term Bond category, for the period ended June 30, 2021, based on risk-adjusted returns. For the three-year period, IIXIX generated annualized returns of +4.93%, significantly outpacing the Morningstar Short-Term Bond category returns of +3.38% and Bloomberg Barclays 1-3 Yr US Govt/Credit Index1 returns of +2.96%. During the past year, the Fund held a number of positions in what we consider ideal bonds: bonds that are short duration, where the executives are purchasing the firm’s common stock, and the company has what we believe to be very high-quality credit fundamentals. By using the insider buying signal as the first step in our credit evaluation process, we have identified a number of bonds that we believe have been overlooked by the market and possess superior yields to bonds of comparable credit fundamentals. We believe that the market has a general overreliance on the credit rating agencies when it comes to evaluating the riskiness of corporate debt. Events that impact a company’s creditworthiness happen in real-time whereas credit updates from the credit ratings agencies happen sporadically at best. We believe this provides us with opportunities to identify undervalued bonds of companies with very high- quality credit fundamentals before the market does. One success story we have had in the portfolio employing our core strategy is with Arbor Realty Trust, where multiple insiders took advantage of stock price declines and bought shares in March 2020. During March and April of 2020, the market indiscriminately sold anything related to mortgage REITs, including the equity and debt of Arbor Realty Trust. However, this indiscriminate selling provided a very compelling investment opportunity for the active manager who understands Arbor’s business model. Their capital allocation is largely concentrated in the multifamily rental space (including bridge loans, which have safer credit backdrops), comprising over 80% of their investment portfolio. Historically, multifamily housing has been a noncyclical/recession-proof area of mortgage REITs with consistent supply, steadily increasing demand, and a manageable long-term vacancy rate of 5.1%. The multi-family space has continued to remain resilient throughout the pandemic and into 2021, resulting in one of the best years of performance in the company’s history. This success allowed Arbor to raise their dividend three times in 2020; achieve an industry- leading return on equity of 19%; and continue to grow their business through quality and diverse income streams; all while maintaining a strong balance sheet with ample liquidity. Arbor also remains well positioned to weather the storm 1 of a tapering event that can have a material impact on mortgage REITs as the company remains more exposed to commercial housing prices and consumer spending priorities. The Fund’s total returns for the fiscal year through 06/30/21 and since inception through 06/30/21 as compared to the Barclays 1-3 Yr US Govt/Credit Index were as follows (unaudited): Fiscal Year Since Inception (07/29/14) 2 (06/30/21) Class A 7.15% 2.22% Class C 6.48% 1.51% Class I 7.45% 2.50% Bloomberg Barclays 1-3 Yr US 0.44% 1.73% Govt/Credit Index (1) Class A with Sales Charge 2.10% 1.50% The Fund’s maximum sales charge for Class “A” shares is 4.75%. 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 or the Fund’s prospectus please call the Fund, toll free at 1-866-447-4228. You can also obtain a prospectus at wwwCatalystMF.com. Outlook and Summary After an extremely turbulent first half of 2020 and quantitative easing’s delayed effects on the bond market, corporate bonds have largely stabilized with economic policy implementation eagerly anticipated. A robust corporate bond supply, increasing inflationary fears (illustrated by two of the 10 largest increases in the Consumer Price Index having occurred in Q3 2020 with a 133% increase and an 86% increase in Q1 2021), a mature bear steepening environment, and the potential for rising rates, all point to the benefits of a short-term corporate bond strategy to reduce inflation risk, minimize duration risk, and defend against post-Covid 19 credit risk. The Fund remains well positioned from a credit and sector specific standpoint, minimizing idiosyncratic risk and maximizing mispriced bonds that capture yield in a low-yield ecosystem. The Fund also remains well positioned to weather the current unofficial guidance of the Federal Reserve (Fed) personnel highlighting some expectations of a tapering event, where the Fed reduces quantitative easing as the economic recovery continues. Some fears of another “taper tantrum” like 2013 seem overdrawn as the current Fed has communicated relatively well and remains steadfast on not creating an adverse market reaction. Though tapering guidance remains unclear, it is normal and likely, based on historical occurrences, that tapering will occur as it is a natural implementation after an economic recovery (though not likely to start until late 2022). Therefore, our narrative does not change as short-term bonds reduce the interest rate risk associated with a bear steepening of the yield curve. One of the positive byproducts of a steepening of the yield curve is an increase in corporate bond yields, which creates opportunities for investors to reinvest at more attractive yields. We remain encouraged by the resiliency
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