FormulaFolios Hedged Growth ETF (FFHG)
FormulaFolios Smart Growth ETF (FFSG)
FormulaFolios Tactical Growth ETF (FFTG)
FormulaFolios Tactical Income ETF (FFTI)
 
 
 
 
 
 
 
 
 
 
Semi-Annual Report
November 30, 2021
 
 
 
 
 
 
1-888-562-8880
www.formulafoliofunds.com
 
 
 
 
 
 
This report and the financial statements contained herein are submitted for the general information of shareholders and are not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. Nothing herein contained is to be considered an offer of sale or solicitation of an offer to buy shares of the FormulaFolios ETFs. Such offering is made only by prospectus, which includes details as to offering price and other material information.
 
Distributed by Northern Lights Distributors, LLC.
Member FINRA
 
 
 
 
 
 
 
 
 
 

 

 

FormulaFolios Hedged Growth ETF
PORTFOLIO REVIEW (Unaudited)
November 30, 2021

 

Average Annual Total Return through November 30, 2021*, as compared to its benchmark:

 

  Six One Three Since
  Months Year Year Inception***
FormulaFolios Hedged Growth ETF - NAV 1.31% 26.42% 10.78% 9.53%
FormulaFolios Hedged Growth ETF - Market Price 1.31% 26.50% 10.92% 9.54%
Barclay Hedged Equity Long/Short Index** 0.60% 14.11% 8.04% 6.04%

 

* The Fund’s past performance does not guarantee future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The returns shown do not reflect the deduction of taxes a shareholder would pay on Fund distributions or the redemption of Fund shares. Current performance of the Fund may be lower or higher than the performance quoted. Returns are calculated using the traded net asset value or “NAV” on November 30, 2021. Performance data current to the most recent month end may be obtained by visiting www.FormulaFolioFunds.com or by calling 1-888-562-8880.

 

The Fund’s per share NAV is the value of one share of the Fund as calculated in accordance with the standard formula for valuing investment company shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively. The Fund’s total annual operating expenses are 1.14% per the most recent prospectus.

 

The Fund’s adviser has agreed to reduce its fees and/or absorb expenses of the Fund, until at least September 30, 2021, to ensure that total fund expenses after fee waiver and/or reimbursement (exclusive of any front-end or contingent deferred loads, taxes, brokerage fees and commissions, borrowing costs (such as interest and dividend expense on securities sold short), acquired fund fees and expenses, fees and expenses associated with investments in other collective investment vehicles or derivative instruments (including for example option and swap fees and expenses), or extraordinary expenses such as litigation) will not exceed 0.95% of the Fund’s net assets.

 

** Barclay Hedged Equity Long/Short Index’s directional strategy involves equity-oriented investing on both the long and short sides of the market. The objective is not to be market neutral. Managers have the ability to shift from value to growth, from small to medium to large capitalization stocks, and from a net long position to a net short position. Managers may use futures and options to hedge. The focus may be regional or sector specific. Investors cannot invest directly in an index.

 

*** As of the close of business on the day of commencement of trading on June 6, 2017.

 

The Fund’s top asset classes are as follows:

 

Asset Class   % of Net Assets  
Exchange Traded Funds-Equity Funds     73.8 %
Exchange Traded Funds-Fixed Income Funds     25.3 %
Other Assets in Excess of Liabilities     0.9 %
Total     100.0 %

 

Please refer to the Schedule of Investments in this Semi-Annual Report for a detailed listing of the Fund’s holdings.

 

 

FormulaFolios Smart Growth ETF
PORTFOLIO REVIEW (Unaudited)
November 30, 2021

 

Average Annual Total Return through November 30, 2021*, as compared to its benchmark:

 

  Six One Three Since
  Months Year Year Inception***
FormulaFolios Smart Growth ETF - NAV 1.45% 22.78% 14.20% 11.03%
FormulaFolios Smart Growth ETF - Market Price 1.45% 22.94% 14.20% 11.04%
Dow Jones Aggressive Portfolio Index** 1.22% 19.95% 15.68% 11.69%

 

* The Fund’s past performance does not guarantee future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The returns shown do not reflect the deduction of taxes a shareholder would pay on Fund distributions or the redemption of Fund shares. Current performance of the Fund may be lower or higher than the performance quoted. Returns are calculated using the traded net asset value or “NAV” on November 30, 2021. Performance data current to the most recent month end may be obtained by visiting www.FormulaFolioFunds.com or by calling 1-888-562-8880.

 

The Fund’s per share NAV is the value of one share of the Fund as calculated in accordance with the standard formula for valuing investment company shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively. The Fund’s total annual operating expenses are 0.69% per the most recent prospectus.

 

The Fund’s adviser has contractually agreed to reduce its fees and/or absorb expenses of the Fund, until at least September 30, 2021, to ensure that total annual fund operating expenses after fee waiver and/or reimbursement (exclusive of any front-end or contingent deferred loads, taxes, brokerage fees and commissions, borrowing costs (such as interest and dividend expense on securities sold short), acquired fund fees and expenses, fees and expenses associated with investments in other collective investment vehicles or derivative instruments (including for example option and swap fees and expenses), or extraordinary expenses such as litigation) will not exceed 0.60% of the Fund’s net assets.

 

** Dow Jones Aggressive Portfolio Index is a benchmark designed for asset allocation strategists who are willing to take 100% of the risk of the global securities market. It is a total returns index formed by equally weighing nine equity style indexes with monthly rebalancing. The nine equity style Indexes Include: Dow Jones U.S. Large Cap Value, Dow Jones U.S. Large Cap Growth, Dow Jones U.S. Mid Cap Value, Dow Jones U.S. Small Cap Value, Dow Jones U.S. Mid Cap Growth, Dow Jones U.S. Small Cap Growth, Dow Jones Emerging Markets LN, Dow Jones Europe/Canada, and Dow Jones Asia/Pacific. Investors cannot invest directly in an index.

 

*** As of the close of business on the day of commencement of trading on November 1, 2017.

 

The Fund’s top asset classes are as follows:

 

Asset Class   % of Net Assets  
Exchange Traded Funds-Equity Funds     99.1 %
Other Assets in Excess of Labilities     0.9 %
Total     100.0 %

 

Please refer to the Schedule of Investments in this Semi-Annual Report for a detailed listing of the Fund’s holdings.

 

 

FormulaFolios Tactical Growth ETF
PORTFOLIO REVIEW (Unaudited)
November 30, 2021

 

Average Annual Total Return through November 30, 2021*, as compared to its benchmark:

 

  Six One Three Since
  Months Year Year Inception***
FormulaFolios Tactical Growth ETF - NAV (4.56)% 8.88% 8.64% 5.62%
FormulaFolios Tactical Growth ETF - Market Price (4.88)% 8.52% 8.48% 5.52%
Barclay Hedge Global Macro Index** (2.34)% 9.77% 7.53% 4.32%

 

* The Fund’s past performance does not guarantee future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The returns shown do not reflect the deduction of taxes a shareholder would pay on Fund distributions or the redemption of Fund shares. Current performance of the Fund may be lower or higher than the performance quoted. Returns are calculated using the traded net asset value or “NAV” on November 30, 2021. Performance data current to the most recent month end may be obtained by visiting www.FormulaFolioFunds.com or by calling 1-888-562-8880.

 

The Fund’s per share NAV is the value of one share of the Fund as calculated in accordance with the standard formula for valuing investment company shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively. The Fund’s total annual operating expenses are 1.05% per the most recent prospectus.

 

The Fund’s adviser has contractually agreed to reduce its fees and/or absorb expenses of the Fund, until at least September 30, 2021, to ensure that total annual fund operating expenses after fee waiver and/or reimbursement (exclusive of any front-end or contingent deferred loads, taxes, brokerage fees and commissions, borrowing costs (such as interest and dividend expense on securities sold short), acquired fund fees and expenses, fees and expenses associated with investments in other collective investment vehicles or derivative instruments (including for example option and swap fees and expenses), or extraordinary expenses such as litigation) will not exceed 0.80% of the Fund’s net assets.

 

** Barclay Hedge Global Macro Index managers carry long and short positions in any of the world’s major capital or derivative markets. These positions reflect their views on overall market direction as influenced by major economic trends and or events. The portfolios of these funds can include stocks, bonds, currencies, and commodities in the form of cash or derivatives instruments. Most funds invest globally in both developed and emerging markets. Investors cannot invest directly in an index.

 

*** As of the close of business on the day of commencement of trading on November 1, 2017.

 

The Fund’s top asset classes are as follows:

 

Asset Class   % of Net Assets  
Exchange Traded Funds-Equity Funds     99.1 %
Money Market Fund     7.7 %
Liabilites in Excess of Other Assets     (6.8 )%
Total     100.0 %

 

* Percentage rounds to less than 0.1%

 

Please refer to the Schedule of Investments in this Semi-Annual Report for a detailed listing of the Fund’s holdings.

 

 

FormulaFolios Tactical Income ETF
PORTFOLIO REVIEW (Unaudited)
November 30, 2021

 

Average Annual Total Return through November 30, 2021*, as compared to its benchmark:

 

  Six One Three Since
  Months Year Year Inception***
FormulaFolios Tactical Income ETF - NAV 0.39% 0.67% 3.05% 1.74%
FormulaFolios Tactical Income ETF - Market Price 0.35% 0.63% 3.03% 1.74%
Bloomberg Barclays US Aggregate Bond Index** 1.02% (1.15)% 5.52% 3.43%

 

* The Fund’s past performance does not guarantee future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The returns shown do not reflect the deduction of taxes a shareholder would pay on Fund distributions or the redemption of Fund shares. Current performance of the Fund may be lower or higher than the performance quoted. Returns are calculated using the traded net asset value or “NAV” on November 30, 2021. Performance data current to the most recent month end may be obtained by visiting www.FormulaFolioFunds.com or by calling 1-888-562-8880.

 

The Fund’s per share NAV is the value of one share of the Fund as calculated in accordance with the standard formula for valuing investment company shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively. The Fund’s total annual operating expenses are 0.93% per the most recent prospectus.

 

** The Bloomberg Barclays US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government-related and corporate securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS and CMBS (agency and non-agency). Investors cannot invest directly in an index.

 

*** As of the close of business on the day of commencement of trading on June 6, 2017.

 

The Fund’s top asset classes are as follows:

 

Asset Class   % of Net Assets  
Exchange Traded Funds-Fixed Income Funds     99.3 %
Money Market Fund     44.0 %
Liabilities in Excess of Other Assets     (43.3 )%
Total     100.0 %

 

Please refer to the Schedule of Investments in this Semi-Annual Report for a detailed listing of the Fund’s holdings.

 

 

FORMULAFOLIOS HEDGED GROWTH ETF
SCHEDULE OF INVESTMENTS (Unaudited)
November 30, 2021

 

Shares         Fair Value  
        EXCHANGE-TRADED FUNDS — 99.1%        
        EQUITY - 73.8%        
  11,310     iShares Core S&P 500 ETF   $ 5,175,795  
  38,198     iShares Core S&P Mid-Cap ETF     10,322,628  
  94,882     iShares Core S&P Small-Cap ETF     10,466,434  
  29,853     ProShares Ultra MidCap400     1,919,846  
  34,199     ProShares Ultra Russell2000     1,828,621  
  15,588     ProShares Ultra S&P500     2,097,833  
              31,811,157  
        FIXED INCOME - 25.3%        
  127,455     iShares 1-3 Year Treasury Bond ETF     10,934,364  
                 
        TOTAL EXCHANGE-TRADED FUNDS (Cost $31,736,474)     42,745,521  
                 
        TOTAL INVESTMENTS - 99.1% (Cost $31,736,474)   $ 42,745,521  
        OTHER ASSETS IN EXCESS OF LIABILITIES- 0.9%     403,819  
        NET ASSETS - 100.0%   $ 43,149,340  
                 
ETF - Exchange-Traded Fund

 

See accompanying notes which are an integral part of these financial statements.

 

 

FORMULAFOLIOS SMART GROWTH ETF
SCHEDULE OF INVESTMENTS (Unaudited)
November 30, 2021

 

Shares         Fair Value  
        EXCHANGE-TRADED FUNDS — 99.1%        
        EQUITY - 99.1%        
  83,418     iShares Core MSCI EAFE ETF   $ 6,087,846  
  68,574     iShares Core MSCI Emerging Markets ETF     4,122,669  
  27,682     iShares Core S&P 500 ETF     12,668,113  
  26,548     iShares Core S&P Mid-Cap ETF     7,174,331  
  64,452     iShares Core S&P Small-Cap ETF     7,109,700  
  38,883     iShares U.S. Real Estate ETF     4,167,869  
        TOTAL EXCHANGE-TRADED FUNDS (Cost $32,315,671)     41,330,528  
                 
        TOTAL INVESTMENTS - 99.1% (Cost $32,315,671)   $ 41,330,528  
        OTHER ASSETS IN EXCESS OF LIABILITIES- 0.9%     356,731  
        NET ASSETS - 100.0%   $ 41,687,259  
                 
EAFE - Europe, Australasia and Far East

 

ETF - Exchange-Traded Fund

 

MSCI - Morgan Stanley Capital International

 

See accompanying notes which are an integral part of these financial statements.

 

 

FORMULAFOLIOS TACTICAL GROWTH ETF
SCHEDULE OF INVESTMENTS (Unaudited)
November 30, 2021

 

Shares         Fair Value  
        EXCHANGE-TRADED FUNDS — 99.1%        
        EQUITY - 99.1%        
  219,659     iShares Core MSCI Total International Stock ETF   $ 15,343,181  
  70,507     iShares U.S. Real Estate ETF     7,557,645  
  73,917     Vanguard Real Estate ETF(a)     7,889,901  
  66,606     Vanguard Total Stock Market ETF     15,549,171  
        TOTAL EXCHANGE-TRADED FUNDS (Cost $40,780,720)     46,339,898  
                 
        SHORT-TERM INVESTMENTS — 7.7%        
        MONEY MARKET FUNDS - 7.7%        
  3,607,500     Fidelity Investments Money Market Government Portfolio, Institutional Class, 0.04% (Cost $3,607,500)(b)(c)     3,607,500  
                 
        TOTAL INVESTMENTS - 106.8% (Cost $44,388,220)   $ 49,947,398  
        LIABILITIES IN EXCESS OF OTHER ASSETS - (6.8)%     (3,188,599 )
        NET ASSETS - 100.0%   $ 46,758,799  
                 
ETF - Exchange-Traded Fund

 

MSCI - Morgan Stanley Capital International

 

(a) All or portion of the security is on loan. The Total fair value of the securities on loan as of November 30, 2021 was $3,536,000.

 

(b) Rate disclosed is the seven day effective yield as of November 30, 2021.

 

(c) Security was purchased with cash received as collateral for securities on loan at November 30, 2021. Total collateral had a value of $3,607,500 at November 30, 2021.

 

See accompanying notes which are an integral part of these financial statements.

 

 

FORMULAFOLIOS TACTICAL INCOME ETF
SCHEDULE OF INVESTMENTS (Unaudited)
November 30, 2021

 

Shares         Fair Value  
        EXCHANGE-TRADED FUNDS — 99.3%        
        FIXED INCOME - 99.3%        
  167,805     iShares Core U.S. Aggregate Bond ETF   $ 19,258,980  
  151,662     iShares iBoxx $ Investment Grade Corporate Bond ETF(a)     20,180,146  
  399,534     iShares iBoxx High Yield Corporate Bond ETF(a)     34,216,092  
  320,442     SPDR Bloomberg High Yield Bond ETF(a)     34,232,819  
  205,203     Vanguard Intermediate-Term Corporate Bond ETF     19,165,960  
  224,363     Vanguard Total Bond Market ETF     19,165,087  
  870,833     Xtrackers USD High Yield Corporate Bond ETF(a)     34,119,237  
        TOTAL EXCHANGE-TRADED FUNDS (Cost $177,875,458)     180,338,321  
                 
        SHORT-TERM INVESTMENTS — 44.0%        
        MONEY MARKET FUNDS - 44.0%        
  79,884,260     Fidelity Investments Money Market Government Portfolio, Institutional Class””, 0.04% (Cost $79,884,260)(b)(c)     79,884,260  
                 
        TOTAL INVESTMENTS - 143.3% (Cost $257,759,718)   $ 260,222,581  
        LIABILITIES IN EXCESS OF OTHER ASSETS - (43.3)%     (78,578,585 )
        NET ASSETS - 100.0%   $ 181,643,996  
                 
ETF - Exchange-Traded Fund

 

SPDR - Standard & Poor’s Depositary Receipt

 

(a) All or a portion of the security is on loan. The fair value of the securities on loan as of November 30, 2021 was $78,254,389.

 

(b) Rate disclosed is the seven day effective yield as of November 30, 2021.

 

(c) Security was purchased with cash received as collateral for securities on loan at November 30, 2021. Total collateral had a value of $79,884,260 at November 30, 2021

 

See accompanying notes which are an integral part of these financial statements.

 

 

FormulaFolios ETFs
STATEMENTS OF ASSETS AND LIABILITIES (Unaudited)
November 30, 2021

 

    FormulaFolios     FormulaFolios     FormulaFolios     FormulaFolios  
    Hedged Growth     Smart Growth     Tactical Growth     Tactical Income  
    ETF     ETF     ETF     ETF  
ASSETS                                
Investment securities:                                
At cost   $ 31,736,474     $ 32,315,671     $ 44,388,220     $ 257,759,718  
At value *   $ 42,745,521     $ 41,330,528     $ 49,947,398     $ 260,222,581  
Cash and cash equivalents     506,691       423,018       496,813       1,570,847  
Receivable for Investments sold                 2,257,021        
Prepaid expenses and other assets     2,066       2,441       1,980       126  
TOTAL ASSETS     43,254,278       41,755,987       52,703,212       261,793,554  
                                 
LIABILITIES                                
Security lending collateral (Note 6)                 3,607,500       79,884,260  
Investment advisory fees payable     23,260       9,441       19,469       93,542  
Payable for Fund shares redeemed     15,457             2,257,021       45,959  
Payable to related parties     19,336       18,863       19,478       52,410  
Accrued expenses and other liabilities     46,885       40,424       40,945       73,387  
TOTAL LIABILITIES     104,938       68,728       5,944,413       80,149,558  
NET ASSETS   $ 43,149,340     $ 41,687,259     $ 46,758,799     $ 181,643,996  
                                 
Composition of Net Assets:                                
Paid in capital ($0 par value, unlimited shares authorized)   $ 34,336,839     $ 30,895,035     $ 43,796,147     $ 197,991,921  
Accumulated gains (losses)     8,812,501       10,792,224       2,962,652       (16,347,925 )
NET ASSETS   $ 43,149,340     $ 41,687,259     $ 46,758,799     $ 181,643,996  
                                 
Net Asset Value Per Share:                                
Shares:                                
Net Assets   $ 43,149,340     $ 41,687,259     $ 46,758,799     $ 181,643,996  
Shares of beneficial interest outstanding     1,200,000       1,150,000       1,575,000       7,650,000  
                                 
Net asset value (Net Assets ÷ Shares Outstanding), offering and redemption price per share   $ 35.96     $ 36.25     $ 29.69     $ 23.74  
Market Price   $ 35.97     $ 36.26     $ 29.58     $ 23.74  

 

* Includes fair value of securities Loaned $0; $0; $3,607,500; $79,884,260

 

See accompanying notes to financial statements.

 

 

FormulaFolios ETFs
STATEMENTS OF OPERATIONS (Unaudited)
For the Six Months Ended November 30, 2021

 

    FormulaFolios     FormulaFolios     FormulaFolios     FormulaFolios  
    Hedged Growth     Smart Growth     Tactical Growth     Tactical Income  
    ETF     ETF     ETF     ETF  
INVESTMENT INCOME                                
Dividends   $ 274,029     $ 371,039     $ 406,226     $ 3,288,181  
Securities lending     1,632       118       1,326       321,869  
TOTAL INVESTMENT INCOME     275,661       371,157       407,552       3,610,050  
                                 
EXPENSES                                
Investment advisory fees     191,449       79,869       152,866       600,261  
Administrative services fees     31,798       31,553       31,844       72,531  
Custodian fees     8,681       7,498       7,453       14,515  
Professional fees     8,273       8,273       8,274       8,273  
Transfer agent fees     6,362       5,327       5,265       5,466  
Printing expenses     6,244       3,233       5,646       20,267  
Compliance officer fees     6,176       5,878       6,117       12,936  
Legal fees     6,018       4,335       5,138       5,581  
Trustees fees and expenses     4,966       5,325       4,975       5,817  
Insurance expense     727       747       866       9,536  
Other expenses     3,897       3,825       3,828       2,645  
TOTAL EXPENSES     274,591       155,863       232,272       757,828  
                                 
Less: Fees waived and/or expenses reimbursed by the Adviser     (47,346 )     (19,015 )     (28,590 )      
                                 
NET EXPENSES     227,245       136,848       203,682       757,828  
                                 
NET INVESTMENT INCOME     48,416       234,309       203,870       2,852,222  
                                 
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS                                
Net realized gain from investments     1,628,843       247,836       144,958        
Net realized gain from in-kind redemptions     2,341,543       1,414,179       812,574       1,872,402  
Net change in unrealized depreciation on investments     (3,333,664 )     (1,135,265 )     (3,538,479 )     (3,683,436 )
NET REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS     636,722       526,750       (2,580,947 )     (1,811,034 )
                                 
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS   $ 685,138     $ 761,059     $ (2,377,077 )   $ 1,041,188  

 

See accompanying notes to financial statements.

 

 

FormulaFolios ETFs
STATEMENTS OF CHANGES IN NET ASSETS
FormulaFolios Hedged Growth ETF

 

    For the Six Months Ended     For the Year Ended  
    November 30, 2021     May 31, 2021  
    (Unaudited)        
FROM OPERATIONS                
Net investment income   $ 48,416     $ 167,669  
Net realized gain from investments     1,628,843       2,942,561  
Net realized gain from in-kind redemptions     2,341,543       5,404,672  
Net change in unrealized appreciation (depreciation) on investments     (3,333,664 )     13,213,245  
Net increase in net assets resulting from operations     685,138       21,728,147  
                 
DISTRIBUTIONS TO SHAREHOLDERS                
Total distributions paid     (61,460 )     (138,410 )
Total distributions to shareholders     (61,460 )     (138,410 )
                 
FROM SHARES OF BENEFICIAL INTEREST                
Proceeds from shares sold     1,000       25,709,277  
Cost of shares redeemed     (7,229,312 )     (23,523,035 )
Net increase (decrease) in net assets from shares of beneficial interest     (7,228,312 )     2,186,242  
                 
TOTAL INCREASE (DECREASE) IN NET ASSETS     (6,604,634 )     23,775,979  
                 
NET ASSETS                
Beginning of Period     49,753,974       25,977,995  
End of Period   $ 43,149,340     $ 49,753,974  
                 
SHARE ACTIVITY                
Shares Sold           1,050,000  
Shares Redeemed     (200,000 )     (800,000 )
Net increase (decrease) in shares of beneficial interest outstanding     (200,000 )     250,000  

 

 

See accompanying notes to financial statements.

 

 

FormulaFolios ETFs
STATEMENTS OF CHANGES IN NET ASSETS
FormulaFolios Smart Growth ETF

 

    For the Six Months Ended     For the Year Ended  
    November 30, 2021     May 31, 2021  
    (Unaudited)        
FROM OPERATIONS                
Net investment income   $ 234,309     $ 406,435  
Net realized gain from investments     247,836       656,468  
Net realized gain from in-kind redemptions     1,414,179       2,934,907  
Net change in unrealized appreciation (depreciation) on investments     (1,135,265 )     12,339,575  
Net increase in net assets resulting from operations     761,059       16,337,385  
                 
DISTRIBUTIONS TO SHAREHOLDERS                
Total distributions paid     (235,690 )     (541,757 )
Total distributions to shareholders     (235,690 )     (541,757 )
                 
FROM SHARES OF BENEFICIAL INTEREST                
Proceeds from shares sold     3,282       24,025,677  
Cost of shares redeemed     (5,518,825 )     (19,694,598 )
Net increase (decrease) in net assets from shares of beneficial interest     (5,515,543 )     4,331,079  
                 
TOTAL INCREASE (DECREASE) IN NET ASSETS     (4,990,174 )     20,126,707  
                 
NET ASSETS                
Beginning of Period     46,677,433       26,550,726  
End of Period   $ 41,687,259     $ 46,677,433  
                 
SHARE ACTIVITY                
Shares Sold           900,000  
Shares Redeemed     (150,000 )     (675,000 )
Net increase (decrease) in shares of beneficial interest outstanding     (150,000 )     225,000  

 

 

See accompanying notes to financial statements.

 

 

FormulaFolios ETFs
STATEMENTS OF CHANGES IN NET ASSETS
FormulaFolios Tactical Growth ETF

 

    For the Six Months Ended     For the Year Ended  
    November 30, 2021     May 31, 2021  
    (Unaudited)        
FROM OPERATIONS                
Net investment income   $ 203,870     $ 243,628  
Net realized gain from investments - Unaffiliated     144,958       25,767  
Net realized gain from investments - Affiliated           612,134  
Net realized gain from in-kind redemptions     812,574       3,146,739  
Net change in unrealized appreciation (depreciation) on investments - Unaffiliated     (3,538,479 )     6,463,653  
Net change in unrealized depreciation on investments - Affiliated           (146,167 )
Net increase (decrease) in net assets resulting from operations     (2,377,077 )     10,345,754  
                 
DISTRIBUTIONS TO SHAREHOLDERS                
Distributions paid     (191,648 )     (471,285 )
Total distributions to shareholders     (191,648 )     (471,285 )
                 
FROM SHARES OF BENEFICIAL INTEREST                
Proceeds from shares sold     1,250       24,578,319  
Cost of shares redeemed     (4,520,220 )     (14,415,333 )
Net increase (decrease) in net assets from shares of beneficial interest     (4,518,970 )     10,162,986  
                 
TOTAL INCREASE (DECREASE) IN NET ASSETS     (7,087,695 )     20,037,455  
                 
NET ASSETS                
Beginning of Period     53,846,494       33,809,039  
End of Period   $ 46,758,799     $ 53,846,494  
                 
SHARE ACTIVITY                
Shares Sold           900,000  
Shares Redeemed     (150,000 )     (500,000 )
Net increase (decrease) in shares of beneficial interest outstanding     (150,000 )     400,000  

 

 

See accompanying notes to financial statements.

 

 

FormulaFolios ETFs
STATEMENTS OF CHANGES IN NET ASSETS
FormulaFolios Tactical Income ETF

 

    For the Six Months Ended     For the Year Ended  
    November 30, 2021     May 31, 2021  
    (Unaudited)        
FROM OPERATIONS                
Net investment income   $ 2,852,222     $ 5,282,610  
Net realized gain from investments           587,640  
Net realized gain from in-kind redemptions     1,872,402       11,373,388  
Net increase from payment made by affiliate (Note 2)           460,848  
Net change in unrealized depreciation on investments     (3,683,436 )     (8,775,464 )
Net increase in net assets resulting from operations     1,041,188       8,929,022  
                 
DISTRIBUTIONS TO SHAREHOLDERS                
Distributions paid     (2,871,545 )     (5,395,530 )
Total distributions to shareholders     (2,871,545 )     (5,395,530 )
                 
FROM SHARES OF BENEFICIAL INTEREST                
Proceeds from shares sold     1,204,639       36,036,995  
Cost of shares redeemed     (25,262,573 )     (146,926,958 )
Net decrease in net assets from shares of beneficial interest     (24,057,934 )     (110,889,963 )
                 
TOTAL DECREASE IN NET ASSETS     (25,888,291 )     (107,356,471 )
                 
NET ASSETS                
Beginning of Period     207,532,287       314,888,758  
End of Period   $ 181,643,996     $ 207,532,287  
                 
SHARE ACTIVITY                
Shares Sold     50,000       1,500,000  
Shares Redeemed     (1,050,000 )     (6,100,000 )
Net decrease in shares of beneficial interest outstanding     (1,000,000 )     (4,600,000 )

 

See accompanying notes to financial statements.

 

 

FormulaFolios ETFs
FINANCIAL HIGHLIGHTS

 

Per Share Data and Ratios for a Share of Beneficial Interest Outstanding Throughout the Years/Periods Presented

 

    FormulaFolios Hedged Growth ETF  
                               
    For the Six Months Ended     For the Year Ended     For the Year Ended     For the Year Ended     For the Period Ended  
    November 30, 2021     May 31, 2021     May 31, 2020     May 31, 2019     May 31, 2018 (1)  
    (Unaudited)                          
Net asset value, beginning of year/period   $ 35.54     $ 22.59     $ 25.60     $ 28.03     $ 25.00  
Activity from investment operations:                                        
Net investment income (2)     0.04       0.10       0.23       0.12       0.12  
Net realized and unrealized gain (loss) on investments     0.42       12.93       (2.88 )     (1.98 )     3.06  
Total from investment operations     0.46       13.03       (2.65 )     (1.86 )     3.18  
Less distributions from:                                        
Net investment income     (0.04 )     (0.08 )     (0.20 )     (0.13 )     (0.15 )
Net realized gains                 (0.16 )     (0.44 )      
Total distributions     (0.04 )     (0.08 )     (0.36 )     (0.57 )     (0.15 )
Net asset value, end of year/period   $ 35.96     $ 35.54     $ 22.59     $ 25.60     $ 28.03  
Market price, end of year/period   $ 35.97     $ 35.55     $ 22.56     $ 25.62     $ 28.04  
Total return (3)     1.31 % (7)     57.77 %     (10.57 )%     (6.66 )%     13.03 % (7)
Net assets, at end of year/period (000s)   $ 43,149     $ 49,754     $ 25,978     $ 65,271     $ 63,063  
Ratio of gross expenses to average net assets (5)     1.15 % (8)     1.18 %     1.05 %     1.03 %     1.06 % (8)
Ratio of net expenses to average net assets (5)     0.95 % (8)     0.95 %     0.96 % (9)     0.98 % (9)     0.95 % (8)
Ratio of net investment income to average net assets(4)     0.20 % (8)     0.35 %     0.88 %     0.43 %     0.44 % (8)
Portfolio Turnover Rate (6)     29 % (7)     135 %     398 %     666 %     138 % (7)

 

(1) The FormulaFolios Hedged Growth ETF commenced operations on June 6, 2017.

 

(2) Per share amounts calculated using the average shares method.

 

(3) Total returns are historical in nature and assume changes in share price, reinvestment of all dividends and distributions, if any.

 

(4) Recognition of net investment income by the Fund is affected by the timing of the declaration of dividends by the underlying investment companies in which the Fund invests.

 

(5) Does not include the Fund’s share of the expenses of the underlying investment companies in which the Fund invests.

 

(6) Portfolio turnover rate excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. (See Note 5)

 

(7) Not Annualized

 

(8) Annualized

 

(9) Ratio includes 0.01% and 0.03% for the years ended May 31, 2020 and May 31, 2019 attributed to interest expense and fees.

 

See accompanying notes to financial statements.

 

 

FormulaFolios ETFs
FINANCIAL HIGHLIGHTS

 

Per Share Data and Ratios for a Share of Beneficial Interest Outstanding Throughout the Years/Periods Presented

 

    FormulaFolios Smart Growth ETF  
       
    For the Six Months Ended     For the Year Ended     For the Year Ended     For the Year Ended     For the Period Ended  
    November 30, 2021     May 31, 2021     May 31, 2020     May 31, 2019     May 31, 2018 (1)  
    (Unaudited)                          
Net asset value, beginning of year/period   $ 35.91     $ 24.70     $ 24.98     $ 26.10     $ 25.00  
Activity from investment operations:                                        
Net investment income (2)     0.19       0.28       0.49       0.35       0.12  
Net realized and unrealized gain (loss) on investments     0.33       11.29       (0.34 )     (1.10 )     1.17  
Total from investment operations     0.52       11.57       0.15       (0.75 )     1.29  
Less distributions from:                                        
Net investment income     (0.18 )     (0.36 )     (0.43 )     (0.37 )     (0.19 )
Total distributions     (0.18 )     (0.36 )     (0.43 )     (0.37 )     (0.19 )
Net asset value, end of year/period   $ 36.25     $ 35.91     $ 24.70     $ 24.98     $ 26.10  
Market price, end of year/period   $ 36.26     $ 35.92     $ 24.71     $ 24.96     $ 26.09  
Total return (3)     1.45 % (7)     47.14 %     0.48 %     (2.83 )%     5.21 % (7)
Net assets, at end of year/period (000s)   $ 41,687     $ 46,677     $ 26,551     $ 50,593     $ 22,834  
Ratio of gross expenses to average net assets (5)     0.68 % (8)     0.74 %     0.65 %     0.61 %     1.67 % (8)
Ratio of net expenses to average net assets (5)     0.60 % (8)     0.60 %     0.60 %     0.60 %     0.60 % (8)
Ratio of net investment income to average net assets(4)     1.03 % (8)     0.94 %     1.87 %     1.35 %     0.81 % (8)
Portfolio Turnover Rate (6)     6 % (7)     10 %     0 %     0 %     0 % (7)

 

(1) The FormulaFolios Smart Growth ETF commenced operations on November 1, 2017.

 

(2) Per share amounts calculated using the average shares method.

 

(3) Total returns are historical in nature and assume changes in share price, reinvestment of all dividends and distributions, if any.

 

(4) Recognition of net investment income by the Fund is affected by the timing of the declaration of dividends by the underlying investment companies in which the Fund invests.

 

(5) Does not include the Fund’s share of the expenses of the underlying investment companies in which the Fund invests.

 

(6) Portfolio turnover rate excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. (See Note 5)

 

(7) Not Annualized

 

(8) Annualized

 

See accompanying notes to financial statements.

 

 

FormulaFolios ETFs
FINANCIAL HIGHLIGHTS

 

Per Share Data and Ratios for a Share of Beneficial Interest Outstanding Throughout the Years/Periods Presented

 

    FormulaFolios Tactical Growth ETF  
       
    For the Six Months Ended     For the Year Ended     For the Year Ended     For the Year Ended     For the Period Ended  
    November 30, 2021     May 31, 2021     May 31, 2020     May 31, 2019     May 31, 2018 (1)  
    (Unaudited)                          
Net asset value, beginning of year/period   $ 31.22     $ 25.52     $ 23.78     $ 25.16     $ 25.00  
Activity from investment operations:                                        
Net investment income (2)     0.12       0.13       0.35       0.37       0.12  
Net realized and unrealized gain (loss) on investments     (1.54 )     5.82       1.72       (1.34 )     0.25  
Total from investment operations     (1.42 )     5.95       2.07       (0.97 )     0.37  
Less distributions from:                                        
Net investment income     (0.11 )     (0.25 )     (0.25 )     (0.41 )     (0.21 )
Net return of capital                 (0.08 )            
Total distributions     (0.11 )     (0.25 )     (0.33 )     (0.41 )     (0.21 )
Net asset value, end of year/period   $ 29.69     $ 31.22     $ 25.52     $ 23.78     $ 25.16  
Market price, end of year/period   $ 29.58     $ 31.21     $ 25.52     $ 23.79     $ 25.16  
Total return (3)     (4.56 )% (7)     23.44 %     8.69 %     (3.81 )%     1.35 % (7)
Net assets, at end of year/period (000s)   $ 46,759     $ 53,846     $ 33,809     $ 49,932     $ 30,821  
Ratio of gross expenses to average net assets (5)     0.91 % (8)     0.93 %     0.88 %     0.87 %     1.13 % (8)
Ratio of net expenses to average net assets (5)     0.80 % (8)     0.80 %     0.80 %     0.80 %     0.80 % (8)
Ratio of net investment income to average net assets(4)     0.80 % (8)     0.46 %     1.35 %     1.56 %     0.82 % (8)
Portfolio Turnover Rate (6)     51 % (7)     42 %     14 %     92 %     56 % (7)

 

(1) The FormulaFolios Tactical Growth ETF commenced operations on November 1, 2017.

 

(2) Per share amounts calculated using the average shares method.

 

(3) Total returns are historical in nature and assume changes in share price, reinvestment of all dividends and distributions, if any.

 

(4) Recognition of net investment income by the Fund is affected by the timing of the declaration of dividends by the underlying investment companies in which the Fund invests.

 

(5) Does not include the Fund’s share of the expenses of the underlying investment companies in which the Fund invests.

 

(6) Portfolio turnover rate excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. (See Note 5)

 

(7) Not Annualized

 

(8) Annualized

 

See accompanying notes to financial statements.

 

 

FormulaFolios ETFs
FINANCIAL HIGHLIGHTS

 

Per Share Data and Ratios for a Share of Beneficial Interest Outstanding Throughout the Years/Periods Presented

 

    FormulaFolios Tactical Income ETF  
                               
    For the Six Months Ended     For the Year Ended     For the Year Ended     For the Year Ended     For the Period Ended  
    November 30, 2021     May 31, 2021     May 31, 2020     May 31, 2019     May 31, 2018 (1)  
    (Unaudited)                          
Net asset value, beginning of year/period   $ 23.99     $ 23.77     $ 24.13     $ 24.02     $ 25.00  
Activity from investment operations:                                        
Net investment income (2)     0.35       0.54       0.68       0.77       0.77  
Net realized and unrealized gain (loss) on investments     (0.25 )     0.24       (0.32 )     0.11       (1.00 )
Total from investment operations     0.10       0.78       0.36       0.88       (0.23 )
Less distributions from:                                        
Net investment income     (0.35 )     (0.56 )     (0.71 )     (0.77 )     (0.75 )
Net return of capital                 (0.01 )            
Total distributions     (0.35 )     (0.56 )     (0.72 )     (0.77 )     (0.75 )
Net asset value, end of year/period   $ 23.74     $ 23.99     $ 23.77     $ 24.13     $ 24.02  
Market price, end of year/period   $ 23.74     $ 24.00     $ 23.73     $ 24.15     $ 24.06  
Total return (3)     0.39 % (7)     3.29 % (9)     1.43 %     3.77 %     (1.02 )% (7)
Net assets, at end of year/period (000s)   $ 181,644     $ 207,532     $ 314,889     $ 231,634     $ 171,739  
Ratio of gross expenses to average net assets (5)     0.76 % (8)     0.74 %     0.71 %     0.74 %     0.75 % (8)
Ratio of net expenses to average net assets (5)     0.76 % (8)     0.74 %     0.71 %     0.74 %     0.75 % (8)
Ratio of net investment income to average net assets(4)     2.85 % (8)     2.24 %     2.79 %     3.24 %     3.19 % (8)
Portfolio Turnover Rate (6)     0 % (7)     143 %     78 %     135 %     48 % (7)

 

(1) The FormulaFolios Tactical Income ETF commenced operations on June 6, 2017.

 

(2) Per share amounts calculated using the average shares method.

 

(3) Total returns are historical in nature and assume changes in share price, reinvestment of all dividends and distributions, if any.

 

(4) Recognition of net investment income by the Fund is affected by the timing of the declaration of dividends by the underlying investment companies in which the Fund invests.

 

(5) Does not include the Fund’s share of the expenses of the underlying investment companies in which the Fund invests.

 

(6) Portfolio turnover rate excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. (See Note 5)

 

(7) Not Annualized

 

(8) Annualized

 

(9) In 2021, 0.22% of the Fund’s total return consists of a reimbursement by the Adviser for a realized investment loss due to a trade error. Excluding this item, total return would have been 3.07%.

 

See accompanying notes to financial statements.

 

 

FormulaFolios ETFs
NOTES TO FINANCIAL STATEMENTS (Unaudited)
November 30, 2021

 

1. ORGANIZATION

 

The FormulaFolios Hedged Growth ETF (“Hedged Growth ETF”), the FormulaFolios Smart Growth ETF (“Smart Growth ETF”), the FormulaFolios Tactical Growth ETF (“Tactical Growth ETF”), and the FormulaFolios Tactical Income ETF (“Tactical Income ETF”) (each a “Fund” and collectively the “Funds”) are each a diversified series of Northern Lights Fund Trust IV (the “Trust”), a statutory trust organized under the laws of the State of Delaware on June 2, 2015, and registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company.

 

The investment objective of the Hedged Growth ETF and Smart Growth ETF is to seek to provide capital growth. The Tactical Growth ETF seeks long-term total return. The Tactical Income ETF seeks to provide income. The Hedged Growth ETF and Tactical Income ETF commenced operations on June 5, 2017. The Smart Growth ETF and Tactical Growth ETF commenced operations on October 31, 2017.

 

2. SIGNIFICANT ACCOUNTING POLICIES

 

The following is a summary of significant accounting policies followed by the Funds in preparation of their financial statements. These policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. The Funds are investment companies and accordingly follow the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946 “Financial Services – Investment Companies.”

 

Securities Valuation – Securities listed on an exchange are valued at the last reported sale price at the close of the regular trading session of the exchange on the business day the value is being determined, or in the case of securities listed on NASDAQ at the NASDAQ Official Closing Price. In the absence of a sale, such securities shall be valued at the mean between the current bid and ask prices on the day of valuation.

 

Valuation of Underlying Funds – The Funds may invest in portfolios of open-end or closed-end investment companies (the “investment companies”). Investment companies are valued at their respective net asset values as reported by such investment companies. Mutual funds value securities in their portfolios for which market quotations are readily available at their market values (generally the last reported sale price) and all other securities and assets at their fair value to the methods established by the board of directors of the open-end funds. Exchange -traded funds (“ETFs”) are valued at the last reported price or official closing price. The shares of many closed-end investment companies and ETFs, after their initial public offering, frequently trade at a price per share, which is different than the net asset value per share. The difference represents a market premium or market discount of such shares. There can be no assurances that the market discount or market premium on shares of any closed-end investment company or ETF purchased by the Funds will not change.

 

 

FormulaFolios ETFs
NOTES TO FINANCIAL STATEMENTS (Unaudited)(Continued)
November 30, 2021

 

The Funds may hold securities, such as private investments, interests in commodity pools, other non-traded securities or temporarily illiquid securities, for which market quotations are not readily available or are determined to be unreliable. These securities will be valued using the “fair value” procedures approved by the Board of Trustees (“the Board”). The Board has delegated execution of these procedures to a fair value committee composed of one or more representatives from each of the (i) Trust, (ii) administrator, and (iii) adviser. The committee may also enlist third party consultants such as a valuation specialist at a public accounting firm, valuation consultant, or financial officer of a security issuer on an as-needed basis to assist in determining a security-specific fair value.

 

Fair Valuation Process – As noted above, the fair value committee is composed of one or more representatives from each of the (i) Trust, (ii) administrator, and (iii) adviser. The applicable investments are valued collectively via inputs from each of these groups. For example, fair value determinations are required for the following securities: (i) securities for which market quotations are insufficient or not readily available on a particular business day (including securities for which there is a short and temporary lapse in the provision of a price by the regular pricing source); (ii) securities for which, in the judgment of the adviser, the prices or values available do not represent the fair value of the instrument. Factors which may cause the adviser to make such a judgment include, but are not limited to, the following: only a bid price or an ask price is available; the spread between bid and ask prices is substantial; the frequency of sales; the thinness of the market; the size of reported trades; and actions of the securities markets, such as the suspension or limitation of trading; (iii) securities determined to be illiquid; (iv) securities with respect to which an event that will affect the value thereof has occurred (a “significant event”) since the closing prices were established on the principal exchange on which they are traded, but prior to a Fund’s calculation of its net asset value. Restricted or illiquid securities, such as private investments or non-traded securities are valued via inputs from the adviser based upon the current bid for the security from two or more independent dealers or other parties reasonably familiar with the facts and circumstances of the security (who should take into consideration all relevant factors as may be appropriate under the circumstances). If the adviser is unable to obtain a current bid from such independent dealers or other independent parties, the fair value committee shall determine the fair value of such security using the following factors: (i) the type of security; (ii) the cost at date of purchase; (iii) the size and nature of a Fund’s holdings; (iv) the discount from market value of unrestricted securities of the same class at the time of purchase and subsequent thereto; (v) information as to any transactions or offers with respect to the security; (vi) the nature and duration of restrictions on disposition of the security and the existence of any registration rights; (vii) how the yield of the security compares to similar securities of companies of similar or equal creditworthiness; (viii) the level of recent trades of similar or comparable securities; (ix) the liquidity characteristics of the security; (x) current market conditions; and (xi) the market value of any securities into which the security is convertible or exchangeable.

 

The Funds utilize various methods to measure the fair value of all of its investments on a recurring basis. GAAP establishes a hierarchy that prioritizes inputs to valuation methods. The three levels of input are:

 

Level 1 – Unadjusted quoted prices in active markets for identical assets and liabilities that the Funds have the ability to access.

 

 

FormulaFolios ETFs
NOTES TO FINANCIAL STATEMENTS (Unaudited)(Continued)
November 30, 2021

 

Level 2 – Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument in an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.

 

Level 3 – Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Funds’ own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available.

 

The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.

 

The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

 

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following tables summarize the inputs used as of November 30, 2021 for the Funds’ assets measured at fair value:

 

Hedged Growth ETF                        
                         
Assets *   Level 1     Level 2     Level 3     Total  
Exchange Traded Funds   $ 42,745,521     $     $     $ 42,745,521  
Total   $ 42,745,521     $     $     $ 42,745,521  
                                 
Smart Growth ETF                        
                         
Assets *   Level 1     Level 2     Level 3     Total  
Exchange Traded Funds   $ 41,330,528     $     $     $ 41,330,528  
Total   $ 41,330,528     $     $     $ 41,330,528  

 

 

FormulaFolios ETFs
NOTES TO FINANCIAL STATEMENTS (Unaudited)(Continued)
November 30, 2021

 

Tactical Growth ETF                        
                         
Assets *   Level 1     Level 2     Level 3     Total  
Exchange Traded Funds   $ 46,339,898     $     $     $ 46,339,898  
Short-Term Investments - Money Market Fund     3,607,500                   3,607,500  
Total   $ 49,947,398     $     $     $ 49,947,398  
                                 
Tactical Income ETF                        
                         
Assets *   Level 1     Level 2     Level 3     Total  
Exchange Traded Funds   $ 180,338,321     $     $     $ 180,338,321  
Short-Term Investments - Money Market Fund     79,884,260                   79,884,260  
Total   $ 260,222,581     $     $     $ 260,222,581  

 

The Funds did not hold any Level 3 securities during the year.

 

* See Schedules of Investments for industry classification.

 

Exchange Traded Funds – The Funds may invest in ETFs. ETFs are a type of fund bought and sold on a securities exchange. An ETF trades like common stock. An index ETF represents a portfolio of securities. The risks of owning an ETF generally reflect the risks of owning the underlying securities in which it invests, although the lack of liquidity on an ETF could result in it being more volatile. Additionally, ETFs have fees and expenses that reduce their value.

 

Security transactions and related income – Security transactions are accounted for on the trade date. Interest income is recognized on an accrual basis and includes amortization and accretion, which is recorded using the effective yield method. Dividend income is recorded on the ex-dividend date. Realized gains or losses from sales of securities are determined by comparing the identified cost of the security lot sold with the net sales proceeds.

 

Distributions to shareholders – Dividends from net investment income, if any, are declared and paid quarterly for Hedged Growth ETF, Smart Growth ETF, and Tactical Growth ETF and monthly for Tactical Income ETF. Distributable net realized capital gains, if any, are declared and distributed annually. Dividends from net investment income and distributions from net realized gains are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either temporary (e.g., deferred losses) or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the composition of net assets based on their federal tax-basis treatment; temporary differences do not require reclassification. Dividends and distributions to shareholders are recorded on the ex-dividend date.

 

Cash and Cash Equivalents – Idle cash may be swept into various overnight demand deposits and is classified as cash and cash equivalents on the Statements of Assets and Liabilities. The Funds maintain cash in bank deposit accounts which, at times, may exceed United States federally insured limits. Amounts swept overnight are available on the next business day.

 

 

FormulaFolios ETFs
NOTES TO FINANCIAL STATEMENTS (Unaudited)(Continued)
November 30, 2021

 

Federal Income Taxes – The Funds comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of their taxable income to their shareholders. Therefore, no provision for federal income tax is required. The Funds recognize the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. The Funds identify their major tax jurisdictions as U.S. federal, Ohio and foreign jurisdictions where the Funds make significant investments. Management has analyzed the Funds’ tax positions and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions for the year ended May 31, 2020- 2021, or expected to be taken in the Funds’ May 31, 2022 year-end tax returns. The Funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statements of Operations. During the year, the Funds did not incur any interest or penalties.

 

Expenses – Expenses of the Trust that are directly identifiable to a specific Fund are charged to that Fund. Expenses, which are not readily identifiable to a specific Fund, are allocated in such a manner as deemed equitable (as determined by the Board), taking into consideration the nature and type of expense and the relative sizes of the Funds in the Trust.

 

Indemnification – The Trust indemnifies its officers and Trustees for certain liabilities that may arise from the performance of their duties to the Trust. Additionally, in the normal course of business, the Funds enter into contracts that contain a variety of representations and warranties and which provide general indemnities. The Funds’ maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Funds that have not yet occurred. However, based on experience, the risk of loss due to these warranties and indemnities appears to be remote.

 

Securities Lending Risk – The Fund may lend portfolio securities to institutions, such as banks and certain broker-dealers. The Fund may experience a loss for delay in the recovery of its securities if the borrowing institution breaches its agreement with the Fund (see additional information at Note 6).

 

3. INVESTMENT TRANSACTIONS

 

For the six months ended November 30, 2021, cost of purchases and proceeds from sales of portfolio securities (excluding in-kind transactions and short-term investments), amounted to:

 

Fund   Purchases     Sales  
Hedged Growth ETF   $ 13,821,781     $ 13,733,144  
Smart Growth ETF     2,468,366       3,399,067  
Tactical Growth ETF     25,729,067       25,772,467  
Tactical Income ETF            

 

 

FormulaFolios ETFs
NOTES TO FINANCIAL STATEMENTS (Unaudited)(Continued)
November 30, 2021

 

For six months ended November 30, 2021, cost of purchases and proceeds from sales of portfolio securities for in-kind transactions, amounted to:

 

Fund   Purchases     Sales  
Hedged Growth ETF   $     $ 7,143,593  
Smart Growth ETF     4,568,906       1,414,179  
Tactical Growth ETF     4,475,174       812,574  
Tactical Income ETF     1,185,154       25,001,603  

 

4. INVESTMENT ADVISORY AGREEMENT AND TRANSACTIONS WITH RELATED PARTIES

 

FormulaFolio Investments LLC serves as the Funds’ investment adviser (the “Adviser”) pursuant to an investment advisory agreement with the Trust (the “Advisory Agreement”). Pursuant to the Advisory Agreement, the Adviser, under the oversight of the Board, directs the daily operations of the Funds and supervises the performance of administrative and professional services provided by others. As compensation for its services and the related expenses borne by the Adviser, the Funds pay the Adviser a fee, computed and accrued daily and paid monthly, at an annual rate of 0.80%, 0.35%, 0.60%, and 0.60% of average daily net assets of Hedged Growth ETF, Smart Growth ETF, Tactical Growth ETF, and Tactical Income ETF, respectively. During six months ended November 30, 2021, the Adviser earned the following fees:

 

Fund   Advisory Fee  
Hedged Growth ETF   $ 191,449  
Smart Growth ETF     79,869  
Tactical Growth ETF     152,866  
Tactical Income ETF     600,261  

 

Pursuant to a written agreement (the “Waiver Agreement”), the Adviser has contractually agreed, until at least September 30, 2022, to ensure that total annual fund operating expenses after fee waiver and/or reimbursement (exclusive of any front-end or contingent deferred loads, taxes, brokerage fees and commissions, borrowing costs (such as interest and dividend expense on securities sold short), acquired fund fees and expenses, fees and expenses associated with investments in other collective investment vehicles or derivative instruments (including for example option and swap fees and expenses), or extraordinary expenses such as litigation) will not exceed 0.95%, 0.60%, 0.80%, and 0.80% of average daily net assets of Hedged Growth ETF, Smart Growth ETF, Tactical Growth ETF, and Tactical Income ETF, respectively; subject to possible recoupment from the Funds in future years within the three years from the date the fees have been waived or reimbursed if such recoupment can be achieved within the lesser of the foregoing expense limits or the expense limits in place at the time of the recoupment. Fee waiver and reimbursement arrangements can decrease the Funds’ expenses and boost its performance. If the Adviser waives any fee or reimburses any expense pursuant to the Waiver Agreement, and the operating expenses attributable to the Funds are subsequently less than the Expense Limitation, the Adviser shall be entitled to reimbursement by the applicable Fund for such waived fees or reimbursed expenses provided that such reimbursement does not cause the expenses to exceed the Expense

 

 

FormulaFolios ETFs
NOTES TO FINANCIAL STATEMENTS (Unaudited)(Continued)
November 30, 2021

 

Limitation. If the Funds’ operating expenses subsequently exceed the Expense Limitation, the reimbursements shall be suspended.

 

During the six months ended November 30, 2021, the Adviser waived fees and/or reimbursed expenses, pursuant to the Waiver Agreement, in the amounts of:

 

    Fees waived  
    (reimbursed) by the  
Fund   Adviser  
Hedged Growth ETF   $ 47,346  
Smart Growth ETF     19,015  
Tactical Growth ETF     28,590  

 

The table below contains the amounts of fee waivers and expense reimbursements subject to recapture by the Adviser through May 31 of the year indicated.

 

Fund   2022     2023     2024  
Hedged Growth ETF   $ 35,307     $ 52,380     $ 111,207  
Smart Growth ETF     5,227       21,902       59,474  
Tactical Growth ETF     30,595       40,751       69,470  

 

Distributor – The distributor of the Funds is Northern Lights Distributors, LLC (the “Distributor” or “NLD”). The Board has adopted, on behalf of the Funds, the Trust’s Master Distribution and Shareholder Servicing Plan as amended (the “Plan”), pursuant to Rule 12b-1 under the 1940 Act, to pay for certain distribution activities and shareholder services related to Fund shares. Under the Plan, the Funds may pay 0.25% per year of the average daily net assets of Fund shares for such distribution and shareholder service activities. As of November 30, 2021 the Plan has not been activated. For the six months ended November 30, 2021, the Funds did not incur any distribution fees.

 

The Distributor acts as the Funds’ principal underwriter in a continuous public offering of the Funds’ shares and is an affiliate of Gemini Fund Services, LLC. For the six months ended November 30, 2021, there were no underwriting commissions.

 

In addition, certain affiliates of the Distributor provide services to the Funds as follows:

 

Ultimus Fund Solutions, LLC (“UFS”) – UFS, an affiliate of the Distributor, provides administration and fund accounting services to the Trust. Pursuant to separate servicing agreements with UFS, the Funds pay UFS customary fees for providing administration and fund accounting services to the Funds, which are included in administrative service fees in the Statements of Operations. Certain officers of the Trust are also officers of UFS, and are not paid any fees directly by the Funds for serving in such capacities.

 

Northern Lights Compliance Services, LLC (“NLCS”) – NLCS, an affiliate of UFS and the Distributor, provides a Chief Compliance Officer to the Trust, as well as related compliance services, pursuant to a consulting agreement between NLCS and the Trust. Under the terms of such agreement, NLCS receives

 

 

FormulaFolios ETFs
NOTES TO FINANCIAL STATEMENTS (Unaudited)(Continued)
November 30, 2021

 

customary fees from each Fund, which are included in compliance officer fees in the Statements of Operations.

 

Blu Giant, LLC (“Blu Giant”) – Blu Giant, an affiliate of UFS and the Distributor, provides EDGAR conversion and filing services as well as print management services for the Funds on an ad-hoc basis. For the provision of these services, Blu Giant receives customary fees from the Funds, which are included in printing expenses in the Statements of Operations.

 

5. CAPITAL SHARE TRANSACTIONS

 

Shares are not individually redeemable and may be redeemed by the Funds at NAV only in large blocks known as “Creation Units.” Shares are created and redeemed by the Funds only in Creation Unit size aggregations of 25,000 for Smart Growth ETF and Tactical Growth ETF. Shares are created and redeemed by the Funds only in Creation Unit size aggregations of 50,000 shares for Hedged Growth ETF and Tactical Income ETF. Only Authorized Participants or transactions done through an Authorized Participant are permitted to purchase or redeem Creation Units from the Funds. An Authorized Participant is either (i) a broker-dealer or other participant in the clearing process through the Continuous Net Settlement System of the National Securities Clearing Corporation or (ii) a DTC participant and, in each case, must have executed a Participant Agreement with the Distributor. Such transactions are generally permitted on an in-kind basis, with a balancing cash component to equate the transaction to the NAV per share of the Fund on the transaction date.

 

Cash may be substituted equivalent to the value of certain securities generally when they are not available in sufficient quantity for delivery, not eligible for trading by the Authorized Participant or as a result of other market circumstances. In addition, the Funds may impose transaction fees on purchases and redemptions of Fund shares to cover the custodial and other costs incurred by the Funds in effecting trades. A fixed fee payable to the Custodian may be imposed on each creation and redemption transaction regardless of the number of Creation Units involved in the transaction (“Fixed Fee”). Purchases and redemptions of Creation Units for cash or involving cash-in-lieu are required to pay an additional variable charge to compensate the Funds and its ongoing shareholders for brokerage and market impact expenses relating to Creation Unit transactions (“Variable Charge,” and together with the Fixed Fee, the “Transaction Fees”). Transactions in capital shares for the Funds are disclosed in the Statements of Changes in Net Assets. For the six months ended November 30, 2021, Hedged Growth ETF received $1,000 in fixed fees and $0 in variable fees, Smart Growth ETF received $1,500 in fixed fees and $1,782 in variable fees, Tactical Growth ETF received $1,250 in fixed fees and $0 in variable fees and Tactical Income ETF received $4,750 in fixed fees and $0 in variable fees, respectively.

 

The Transaction Fees for the Funds are listed in the table below:

 

  Fee for in-Kind and Cash     Maximum Additional Variable  
  Purchases     Charge for Cash Purchases*  
  $250     2.00%*  

 

* The maximum Transaction Fee may be up to 2.00% of the amount invested.

 

 

FormulaFolios ETFs
NOTES TO FINANCIAL STATEMENTS (Unaudited)(Continued)
November 30, 2021

 

6. SECURITIES LENDING

 

Under an agreement (the “Securities Lending Agreement”) with the Securities Finance Trust Company (“SFTC”), the Funds can lend their portfolio securities to brokers, dealers and other financial institutions approved by the Board to earn additional income. For each securities loan, the borrower shall transfer collateral in an amount determined by applying the margin to the market value of the loaned available securities (102% for same currency and 105% for cross currency). Collateral is invested in highly liquid, short-term instruments such as money market funds in accordance with the Funds’ security lending procedures. The Funds continue to receive interest or dividends on the securities loaned. The Funds have the right under the Securities Lending Agency Agreement to recover the securities from the borrower on demand; if the borrower fails to deliver the securities on a timely basis, the Funds could experience delays or losses on recovery. Additionally, the Funds are subject to the risk of loss from investments made with the cash received as collateral. The Funds manage credit exposure arising from these lending transactions by, in appropriate circumstances, entering into master netting agreements and collateral agreements with third party borrowers that provide in the event of default (such as bankruptcy or a borrower’s failure to pay or perform), the right to net a third-party borrower’s rights and obligations under such agreement and liquidate and set off collateral against the net amount owed by the counterparty.

 

The following table breaks out the Funds’ securities lending transactions accounted for as secured borrowings with cash collateral of overnight and continuous maturities as of November 30, 2021:

 

Tactical Growth ETF  
    Overnight                          
    and           Between 30              
Securities Lending Transactions   Continuous     < 30 days     & 90 days     > 90 days     Total  
Fidelity Investments Money Market Government Portfolio - Institutional Class   $ 3,607,500     $     $     $     $ 3,607,500  
Total Borrowings   $ 3,607,500     $     $     $     $ 3,607,500  
                                         
Tactical Income ETF  
    Overnight and           Between 30              
Securities Lending Transactions   Continuous     < 30 days     & 90 days     > 90 days     Total  
Fidelity Investments Money Market Government Portfolio - Institutional Class   $ 79,884,260     $     $     $     $ 79,884,260  
Total Borrowings   $ 79,884,260     $     $     $     $ 79,884,260  

 

At November 30, 2021, the Funds had loaned securities and received cash collateral for the loan. This cash was invested in the Fidelity Investments Money Market Government Portfolio-Institutional Class (“Money Market Fund”) as shown in the Portfolio of Investments. The Funds receive compensation relating to the lending of the Fund’s securities as reflected in the Statements of Operations. The fair value of the securities loaned for the Hedged Growth ETF, Smart Growth ETF, Tactical Growth ETF, and Tactical Income ETF totaled $0, $0, $3,607,500, and $79,884,260, respectively at November 30, 2021.

 

 

FormulaFolios ETFs
NOTES TO FINANCIAL STATEMENTS (Unaudited)(Continued)
November 30, 2021

 

The securities loaned are noted in the Portfolio of Investments. The fair value of the “Collateral for Securities Loaned” on the Portfolio of Investments includes only cash collateral received and reinvested that totaled $0, $0, $3,607,500, and $79,884,260, respectively for each Fund at November 30, 2021. These amounts are offset by a liability recorded as “Security lending collateral” as shown on the Statements of Assets and Liabilities.

 

8. UNDERLYING FUND RISK

 

Other investment companies including ETFs and closed-end funds (“Underlying Funds”) in which the Funds invest are subject to investment advisory and other expenses, which will be indirectly paid by the Funds. As a result, the cost of investing in the Funds will be higher than the cost of investing directly in the Underlying Funds and may be higher than other ETFs that invest directly in stocks and bonds. Each of the Underlying Funds is subject to its own specific risks, but the Adviser expects the principal investment risks of such Underlying Funds will be similar to the risks of investing in the corresponding Funds. Closed-end funds and ETFs may also trade at a discount or premium to their NAV and may trade at a larger discount or smaller premium subsequent to purchase by the Funds.

 

9. UNDERLYING INVESTMENT IN OTHER INVESTMENT COMPANIES

 

The Hedged Growth ETF, Smart Growth ETF, and Tactical Growth ETF currently seek to achieve their investment objective by investing a portion of their assets in the iShares 1-3 Year Treasury Bond ETF, iShares Core S&P 500 ETF, iShares Core MSCI Total International Stock ETF, and Vanguard Total Stock Market ETF (the “Securities”). The Hedged Growth ETF, Smart Growth ETF and Tactical Growth ETF may redeem the Securities at any time if the Adviser determines that it is in the best interest of the Hedged Growth ETF, Smart Growth ETF and Tactical Growth ETF and its shareholders to do so.

 

The performance of the Hedged Growth, Smart Growth ETF, and Tactical Growth ETF will be directly affected by the performance of the Securities. The semi -annual report of the Securities, along with the report of the independent registered public accounting firm is included in the applicable Security’s N-CSRs available at www.sec.gov. As of November 30, 2021, the percentage of the Hedged Growth ETF’s net assets invested in iShares 1-3 Year Treasury Bond ETF was 25.3%. The percentage of the Smart Growth ETF’s net assets invested in iShares Core S&P 500 ETF was 30.4%. The percentage of the Tactical Growth ETF’s net assets invested in iShares Core MSCI Total International Stock ETF and Vanguard Total Stock Market ETF were 32.8% and 33.3%, respectively.

 

 

FormulaFolios ETFs
NOTES TO FINANCIAL STATEMENTS (Unaudited)(Continued)
November 30, 2021

 

10. AGGREGATE UNREALIZED APPRECIATION AND DEPRECATION-TAX BASIS

 

The identified cost of investments in securities owned by each Fund for federal income tax purposes, and their respective gross unrealized appreciation and depreciation at November 30, 2021, were as follows:

 

    Cost for                 Tax Net  
    Federal Tax     Unrealized     Unrealized     Unrealized  
    purposes     Appreciation     Depreciation     App/Dep  
Hedged Growth ETF   $ 31,736,474     $ 11,065,127     $ (56,080 )   $ 11,009,047  
Smart Growth ETF     32,315,671       9,014,857             9,014,857  
Tactical Growth ETF     45,377,421       5,029,777       (459,800 )     4,569,977  
Tactical Income ETF     262,622,545       3,823,594       (6,223,558 )     (2,399,964 )

 

11. DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF CAPITAL

 

The tax character of distributions for the fiscal year ended May 31, 2021 and May 31, 2020 was as follows:

 

    For the year ended May 31, 2021  
    Ordinary     Long-term     Return of     Tax-Exempt        
Fund   Income     Capital Gains     Capital     Income     Total  
Hedged Growth ETF   $ 138,410     $     $     $     $ 138,410  
Smart Growth ETF*     558,293                         558,293  
Tactical Growth ETF*     497,117                         497,117  
Tactical Income ETF     5,395,530                         5,395,530  

 

    For the year ended May 31, 2020  
    Ordinary     Long-Term     Return of     Tax-Exempt        
Fund   Income     Capital Gains     Capital     Income     Total  
Hedged Growth ETF   $ 876,745     $     $     $     $ 876,745  
Smart Growth ETF     888,020                         888,020  
Tactical Growth ETF     620,696             151,592             772,288  
Tactical Income ETF     6,786,442             78,510       383,848       7,248,800  

 

* The difference between ordinary distributions paid from book and ordinary distributions paid from tax relates to allowable foreign tax credits of $16,535 and $25,832 for fiscal year ended May 31, 2021 for the Smart Growth ETF and Tactical Growth ETF respectively, which have been passed through to the Funds’ underlying shareholders and are deemed dividends for tax purposes.

 

 

FormulaFolios ETFs
NOTES TO FINANCIAL STATEMENTS (Unaudited)(Continued)
November 30, 2021

 

As of May 31, 2021, the components of accumulated earnings/ (deficit) on a tax basis were as follows:

 

    Undistributed     Undistributed     Undistributed     Post October Loss     Capital Loss     Other     Unrealized     Total  
    Ordinary     Ordinary     Long-Term     and     Carry     Book/Tax     Appreciation/     Accumulated  
Fund   Tax-Exempt Income     Income     Capital Gains     Late Year Loss     Forwards     Differences     (Depreciation)     Earnings/(Deficits)  
Hedged Growth ETF   $     $ 46,284     $     $     $ (6,200,172 )   $     $ 14,342,711     $ 8,188,823  
Smart Growth ETF           116,733                               10,150,122       10,266,855  
Tactical Growth ETF                       (124,483 )     (2,452,596 )           8,108,456       5,531,377  
Tactical Income ETF                             (15,801,040 )           1,283,472       (14,517,568 )

 

The difference between book basis and tax basis undistributed accumulated net realized gain, and unrealized appreciation from investments is primarily attributable to tax adjustments related to partnerships and the tax deferral of losses on wash sales.

 

Late year losses incurred after December 31 within the fiscal year are deemed to arise on the first business day of the following fiscal year for tax purposes. The Funds incurred and elected to defer such late year losses as follows:

 

    Late Year  
Fund   Losses  
Tactical Growth ETF   $ 124,483  

 

At May 31, 2021, the Funds had capital loss carry forwards for federal income tax purposes available to offset future capital gains, as follows:

 

    Non-Expiring              
Fund   Short-Term     Long-Term     Total     CLCF Utilized  
Hedged Growth ETF   $     $ 6,200,172     $ 6,200,172     $  
Smart Growth ETF                        
Tactical Growth ETF     1,923,928       528,668       2,452,596       974,050  
Tactical Income ETF     11,656,950       4,144,090       15,801,040        

 

Permanent book and tax differences, primarily attributable to the book/tax basis treatment of non-deductible expenses, distributions in excess, and adjustments related to transfers in kind, resulted in reclassifications for the Funds for the fiscal year ended May 31, 2021 as follows:

 

    Paid        
    In     Accumulated  
Fund   Capital     Earnings (Losses)  
Hedged Growth ETF   $ 4,741,957     $ (4,741,957 )
Smart Growth ETF     2,934,907       (2,934,907 )
Tactical Growth ETF     1,687,564       (1,687,564 )
Tactical Income ETF     7,492,953       (7,492,953 )

 

 

FormulaFolios ETFs
NOTES TO FINANCIAL STATEMENTS (Unaudited)(Continued)
November 30, 2021

 

12. SUBSEQUENT EVENTS

 

Subsequent events after the date of the Statements of Assets and Liabilities have been evaluated through the date the financial statements were issued.

 

Distributions: The Fund’s Board of Trustees declared the following distributions:

 

Fund   Dividend Per Share     Record Date   Ex-Date   Payable Date
Hedged Growth   $ 0.0390     12/16/2021   12/15/2021   12/21/2021
Smart Growth   $ 0.4225     12/16/2021   12/15/2021   12/21/2021
Tactical Growth   $ 0.1472     12/16/2021   12/15/2021   12/21/2021
Tactical Income   $ 0.1238     12/16/2021   12/15/2021   12/21/2021

 

Management has determined that no events or transactions occurred requiring adjustment or disclosure in the financial statements other than the discussed above.

 

 

FormulaFolios ETFs
EXPENSE EXAMPLES (Unaudited)
November 30, 2021

 

Example

 

All exchange traded funds have operating expenses. As a shareholder of the Funds, you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; (2) ongoing costs, including management fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds. A shareholder may incur brokerage commissions on their purchase and sales of Fund shares, which are not reflected in the examples below.

 

The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from June 1, 2021 through November 30, 2021.

 

Actual Expenses

 

The “Actual” columns in the table below provide information about actual account values and actual expenses. You may use the information below, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $ 1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

 

Hypothetical Example for Comparison Purposes

 

The “Hypothetical” columns in the table below provide information about hypothetical account values and hypothetical expenses based on the Funds’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Funds’ actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balances or expenses you paid for the period. You may use this information to compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.

 

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions paid. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

 

                    Hypothetical  
            Actual   (5% return before expenses)  
    Net   Beginning   Ending   Expenses   Ending   Expenses  
    Expense   Account Value   Account Value   Paid During   Account Value   Paid During  
    Ratio   6/1/21   11/30/21   Period *   11/30/21   Period*  
                           
FormulaFolios Hedged Growth ETF   0.95%   $1,000.00   $1,013.10   $4.79   $1,020.31   $4.81  
FormulaFolios Smart Growth ETF   0.60%   $1,000.00   $1,014.50   $3.03   $1,022.06   $3.04  
FormulaFolios Tactical Growth ETF   0.80%   $1,000.00   $954.40   $3.92   $1,021.06   $4.05  
FormulaFolios Tactical Income ETF   0.76%   $1,000.00   $1,003.90   $3.82   $1,021.26   $3.85  

 

* Expense information for each Fund is presented on the basis of the full one-half year period to enable comparison to other funds. It is based on assuming the same net expense ratio and average account value over the period, but it is multiplied by 183/365 (to reflect the full half-year period).

 

For more information about current performance, holdings, or historical premiums/discounts, please visit the Funds’ website at www.formulafoliofunds.com.

 

 

PRIVACY NOTICE

 

Northern Lights Fund Trust IV

 

Rev. August 2015

 

FACTS WHAT DOES NORTHERN LIGHTS FUND TRUST IV DO WITH YOUR PERSONAL INFORMATION?

 

Why? Financial companies choose how they share your personal information.  Federal law gives consumers the right to limit some, but not all sharing.  Federal law also requires us to tell you how we collect, share, and protect your personal information.  Please read this notice carefully to understand what we do.

 

What?

The types of personal information we collect and share depends on the product or service that you have with us. This information can include:

 

●         Social Security number and wire transfer instructions

 

●         account transactions and transaction history

 

●         investment experience and purchase history

 

When you are no longer our customer, we continue to share your information as described in this notice.

 

How? All financial companies need to share customers’ personal information to run their everyday business.  In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons Northern Lights Fund Trust IV chooses to share; and whether you can limit this sharing.

 

Reasons we can share
your personal
information:
Does Northern Lights Fund
Trust IV share information?
Can you limit this sharing?
For our everyday business purposes - such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus. YES NO
For our marketing purposes - to offer our products and services to you. NO We don’t share
For joint marketing with other financial companies. NO We don’t share
For our affiliates’ everyday business purposes - information about your transactions and records. NO We don’t share
For our affiliates’ everyday business purposes - information about your credit worthiness. NO We don’t share
For nonaffiliates to market to you NO We don’t share

 

QUESTIONS?   Call 1-866-270-0300

 

 

PRIVACY NOTICE

 

Northern Lights Fund Trust IV

 

Page 2  

 

What we do:

 

How does Northern Lights Fund Trust IV protect my personal information?

To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings.

 

Our service providers are held accountable for adhering to strict policies and procedures to prevent any misuse of your nonpublic personal information.

 

How does Northern Lights Fund Trust IV collect my personal information?

We collect your personal information, for example, when you

●     open an account or deposit money

 

●     direct us to buy securities or direct us to sell your securities

 

●     seek advice about your investments

 

We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.

 

Why can’t I limit all sharing?

Federal law gives you the right to limit only:

●     sharing for affiliates’ everyday business purposes – information about your creditworthiness.

 

●     affiliates from using your information to market to you.

 

●     sharing for nonaffiliates to market to you.

 

State laws and individual companies may give you additional rights to limit sharing.

 

Definitions
Affiliates

Companies related by common ownership or control. They can be financial and nonfinancial companies.

 

●     Northern Lights Fund Trust IV has no affiliates.

Nonaffiliates

Companies not related by common ownership or control. They can be financial and nonfinancial companies.

 

●     Northern Lights Fund Trust IV does not share with nonaffiliates so they can market to you.

Joint marketing

A formal agreement between nonaffiliated financial companies that together market financial products or services to you.

 

●     Northern Lights Fund Trust IV does not jointly market.

 

 

PROXY VOTING POLICY

 

Information regarding how the Funds voted proxies relating to portfolio securities for the most recent twelve month period ended June 30 as well as a description of the policies and procedures that the Funds use to determine how to vote proxies is available without charge, upon request, by calling 1-855-907-3233 or by referring to the Securities and Exchange Commission’s (“SEC”) website at http://www.sec.gov.

 

PORTFOLIO HOLDINGS

 

Each Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT. Form N-PORT is available on the SEC’s website at http://www.sec.gov. The information on Form N-PORT is available without charge, upon request, by calling 1-855-733-3863.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INVESTMENT ADVISER
FormulaFolio Investments LLC
89 Ionia SW, Suite 600
Grand Rapids, MI 49503
 
ADMINISTRATOR
Ultimus Fund Solutions, LLC
225 Pictoria Drive, Suite 450
Cincinnati, OH 45246
 
 
 
 
 
FFI ETF-SA21