united states
securities and exchange commission
washington, d.c. 20549

form n-csr

certified shareholder report of registered management
investment companies

Investment Company Act file number 811-23066

 

Northern Lights Fund Trust IV

(Exact name of registrant as specified in charter)

 

225 Pictoria Drive, Suite 450, Cincinnati, OH 45246

(Address of principal executive offices) (Zip code)

 

Wendy Wang, Gemini Fund Services, LLC.

4221 North 203rd Street, Suite 100, Elkhorn, NE 68022

(Name and address of agent for service)

 

Registrant's telephone number, including area code: 631-470-2612

 

Date of fiscal year end: 8/31

 

Date of reporting period: 2/29/20

 

Item 1. Reports to Stockholders.

 

 
 
(ANCHOR CAPITAL LOGO)
 
Anchor Risk Managed Credit Strategies Fund
(formerly the Anchor Tactical Credit Strategies Fund)
 
Institutional Class (ATCSX)
 
Anchor Risk Managed Equity Strategies Fund
(formerly the Anchor Tactical Equity Strategies Fund)
 
Institutional Class (ATESX)
 
Anchor Risk Managed Global Strategies Fund
(formerly the Anchor Tactical Global Strategies Fund)
 
Institutional Class (ATGSX)
 
Anchor Risk Managed Municipal Strategies Fund
(formerly the Anchor Tactical Municipal Strategies Fund)
 
Institutional Class (ATMSX)
 
 
 
Semi-Annual Report
February 29, 2020
 
1-844-594-1226
www.anchorcapitalfunds.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 Anchor Funds. 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
 

 

 

Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Funds’ shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Funds’ website www.funds.anchor-capital.com and you will be notified by mail each time a report is posted and provided with a website link to access the report.
 
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Funds electronically or to continue receiving paper copies of shareholder reports, which are available free of charge, by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by following the instructions included with paper Fund documents that have been mailed to you.

 

 

 

 

 

Anchor Risk Managed Credit Strategies Fund

Semi-Annual Shareholder Report

February 29, 2020

 

It is my pleasure to present the semi-annual report for the Anchor Risk Managed Credit Strategies Fund for the six- month period ended February 29, 2020. On behalf of the entire team at Anchor Capital, I would like to thank you for your investment in the Anchor Risk Managed Credit Strategies Fund.

Performance

The events of the past several weeks have been unprecedented. COVID-19 pandemic headlines are moving fast, and global markets are in a historic tailspin. The record-setting stock market decline has caught many investors unprepared, raising the level of fear not only for portfolios but also for the health and safety of our families. The good news is the Anchor Risk Managed Credit Strategies fund performed well in the sell-off by hedging risk and managing the downside volatility.

 

The Fund gained 0.53% for the six months ended February 29, 2020, underperforming the HFRX Absolute Return Index (the “Benchmark”) and the Morningstar Long-Short Credit Category. The HFRX Absolute Return Index returned 1.70%, and the Morningstar Long-Short Equity Category returned 2.10%.

Market and Fund Performance Commentary

Before the late February market crash, the S&P 500 made 13 all-time closing highs over the first 33 days of the year. High Yield Credit markets were at all-time highs, and few investors were prepared for a correction. The Fund was positioned in High Yield which was outperformed by US Aggregate Treasury Bonds. US Treasury Bonds continued to act as a global safe haven while risk assets were sold off into the month-end with continued uncertainty around COVID-19.

Market Outlook

Analysts, commentators, and managers are all taking turns making predictions about where financial markets will bottom. While modern markets have never faced a global health pandemic with the magnitude of COVID-19, history is filled with examples of unexpected headlines and “Black Swan” events that take analysts and investors by surprise. That’s how most Bear markets begin.

 

The global economy will eventually come back online. People will return to work, and society will reemerge from our stay at home orders. Until then, we will continue executing the Fund’s strategy, navigating volatility, and pursuing more consistently positive returns for our shareholders.

 

 

 

 

Eric Leake, CMT Garrett Waters

President, Anchor Capital CEO, Anchor Capital

 

 

 

 

 

15 ENTERPRISE, SUITE 450, ALISO VIEJO, CA 92656 800.290.8633 WWW.ANCHOR-CAPITAL.COM 3526-NLD-4/28/2020

1

 

 

 

 

Anchor Risk Managed Equity Strategies Fund

Semi-Annual Shareholder Report

February 29, 2020

 

It is my pleasure to present the semi-annual report for the Anchor Risk Managed Equity Strategies Fund for the six- month period ended February 29, 2020. On behalf of the entire team at Anchor Capital, I would like to thank you for your investment in the Anchor Risk Managed Equity Strategies Fund.

Performance

The events of the past several weeks have been unprecedented. COVID-19 pandemic headlines are moving fast, and global markets are in a historic tailspin. The record-setting stock market decline has caught many investors unprepared, raising the level of fear not only for portfolios but also for the health and safety of our families. The good news is the Anchor Risk Managed Equity Strategies fund performed well in the sell-off by hedging risk and managing the downside volatility.

 

The Fund gained 9.31% for the six months ended February 29, 2020, significantly outperforming the S&P 500 Total Return Index (the “Benchmark”) and the Morningstar Long-Short Equity Category. The S&P 500 Total Return Index returned 1.92%, and the Morningstar Long-Short Equity Category returned –1.49%.

Market and Fund Performance Commentary

Before the late February market crash, the S&P 500 made 13 all-time closing highs over the first 33 days of the year. Equity markets were at all-time highs, and few investors were prepared for a correction. This extreme

overbought condition in mid-February triggered our short term volatility models to flash warning signals to reduce long exposure, in attempt to hedge against an inevitable short term correction. Reduced exposure led to the significant fund outperformance over the peer group and preserved shareholders from the significant market declines of the broad U.S. equity market.

Market Outlook

Analysts, commentators, and managers are all taking turns making predictions about where financial markets will bottom. While modern markets have never faced a global health pandemic with the magnitude of COVID-19, history is filled with examples of unexpected headlines and “Black Swan” events that take analysts and investors by surprise. That’s how most Bear markets begin.

 

The global economy will eventually come back online. People will return to work, and society will reemerge from our stay at home orders. Until then, we will continue executing the Fund’s strategy, navigating volatility, and pursuing more consistently positive returns for our shareholders.

 

 

 

 

Eric Leake, CMT Garrett Waters

President, Anchor Capital CEO, Anchor Capital

 

 

 

 

15 ENTERPRISE, SUITE 450, ALISO VIEJO, CA 92656 800.290.8633 WWW.ANCHOR-CAPITAL.COM 3524-NLD-4/28/2020

2

 

 

 

 

Anchor Risk Managed Global Strategies Fund

Semi-Annual Shareholder Report

February 29, 2020

 

It is my pleasure to present the semi-annual report for the Anchor Risk Managed Global Strategies Fund for the six- month period ended February 29, 2020. On behalf of the entire team at Anchor Capital, I would like to thank you for your investment in the Anchor Risk Managed Global Strategies Fund.

Performance

The events of the past several weeks have been unprecedented. COVID-19 pandemic headlines are moving fast, and global markets are in a historic tailspin. The record-setting stock market decline has caught many investors unprepared, raising the level of fear not only for portfolios but also for the health and safety of our families. The good news is the Anchor Risk Managed Global Strategies fund performed well in the sell-off by hedging risk and managing the downside volatility.

 

The Fund gained 4.24% for the six months ended February 29, 2020, significantly outperforming the MSCI All World Index (the “Benchmark”) and the Morningstar Long-Short Equity Category. The MSCI All World Index returned 1.13%, and the Morningstar Long-Short Equity Category returned –1.49%.

Market and Fund Performance Commentary

Before the late February market crash, the S&P 500 made 13 all-time closing highs over the first 33 days of the year. Equity markets were at all-time highs, and few investors were prepared for a correction. This extreme

overbought condition in mid-February triggered our short term volatility models to flash warning signals to reduce long exposure, in attempt to hedge against an inevitable short term correction. Reduced exposure led to the significant fund outperformance over the peer group and preserved shareholders from the significant market declines of the broad U.S. and International equity markets.

Market Outlook

Analysts, commentators, and managers are all taking turns making predictions about where financial markets will bottom. While modern markets have never faced a global health pandemic with the magnitude of COVID-19, history is filled with examples of unexpected headlines and “Black Swan” events that take analysts and investors by surprise. That’s how most Bear markets begin.

 

The global economy will eventually come back online. People will return to work, and society will reemerge from our stay at home orders. Until then, we will continue executing the Fund’s strategy, navigating volatility, and pursuing more consistently positive returns for our shareholders.

 

 

 

 

Eric Leake, CMT Garrett Waters

President, Anchor Capital CEO, Anchor Capital

 

 

 

 

15 ENTERPRISE, SUITE 450, ALISO VIEJO, CA 92656 800.290.8633 WWW.ANCHOR-CAPITAL.COM 3525-NLD-4/28/2020

3

 

 

 

 

Anchor Risk Managed Municipal Strategies Fund

Semi-Annual Shareholder Report

February 29, 2020

 

It is my pleasure to present the semi-annual report for the Anchor Risk Managed Municipal Strategies Fund for the six-month period ended February 29, 2020. On behalf of the entire team at Anchor Capital, I would like to thank you for your investment in the Anchor Risk Managed Municipal Strategies Fund.

Performance

The events of the past several weeks have been unprecedented. COVID-19 pandemic headlines are moving fast, and global markets are in a historic tailspin. The record-setting stock market decline has caught many investors unprepared, raising the level of fear not only for portfolios but also for the health and safety of our families.

 

The Fund gained 1.16% for the six months ended February 29, 2020, underperforming the Barclays US Municipal Bond Index (the “Benchmark”) and the Morningstar Intermediate Term Municipal Bond Category. The Barclays US Municipal Bond Index returned 3.04%, and the Morningstar Intermediate Term Municipal Bond Category returned 2.70%.

Market and Fund Performance Commentary

Despite the heavy selloff in the equity markets, the municipal markets remained relatively unscathed and continued to act as a safe haven during times of uncertainty. The Fund took advantage of the continued flight to safety and search for yield by being positioned in the high yield municipal market for the six-month period. The high yield municipal market began to selloff into month-end as the uncertainty around COVID-19 and statewide stay-at-home orders creating unforeseeable damage to municipalities.

Market Outlook

Analysts, commentators, and managers are all taking turns making predictions about where financial markets will bottom. While modern markets have never faced a global health pandemic with the magnitude of COVID-19, history is filled with examples of unexpected headlines and “Black Swan” events that take analysts and investors by surprise. That’s how most Bear markets begin.

 

The global economy will eventually come back online. People will return to work, and society will reemerge from our stay at home orders. Until then, we will continue executing the Fund’s strategy, navigating volatility, and pursuing more consistently positive returns for our shareholders.

 

 

 

 

Eric Leake, CMT Garrett Waters

President, Anchor Capital CEO, Anchor Capital

 

 

 

 

 

15 ENTERPRISE, SUITE 450, ALISO VIEJO, CA 92656 800.290.8633 WWW.ANCHOR-CAPITAL.COM 3527-NLD-4/28/2020

4

 

Anchor Risk Managed Credit Strategies Fund
Portfolio Review (Unaudited)
February 29, 2020

 

The Fund’s Institutional Class performance figures for the periods ended February 29, 2020, compared to its benchmark:

 

    Six   One   Three   Since
    Months   Year   Years   Inception*
Anchor Risk Managed Credit Strategies Fund - Institutional Class   0.53%   3.29%   (0.15)%   0.94%
HFRX Absolute Return Index**   1.70%   2.91%   2.17%   1.81%

 

 
* The Fund commenced operations on September 29, 2015.

 

** The HFRX Absolute Return Index is designed to be representative of the overall composition of the Hedge Fund Universe. It is comprised of all eligible hedge fund strategies including, but not limited to, convertible arbitrage, distressed securities, equity hedge, equity market neutral, event driven, macro, merger arbitrage, and relative value arbitrage. As a component of the optimization process, the index selects constituents which characteristically exhibit lower volatilities and lower correlations to standard directional benchmarks of equity market and hedge fund industry performance. Hedge Fund Research, Inc. (HFR) utilizes a UCITSIII compliant methodology to construct the HFRX Hedge Fund Indices. The methodology is based on defined and predetermined rules and objective criteria to select and rebalance components to maximize representation of the Hedge Fund Universe. HFRX Indices utilize state-of-the-art quantitative techniques and analysis, multi-level screening, cluster analysis, Monte-Carlo simulations and optimization techniques to ensure that each index is a pure representation of its corresponding investment focus. Investors cannot invest directly in an index, and unlike the Fund, returns do not reflect any fees, expenses or sales charges.

 

Past performance is not predictive of future results. The investment return and principal value of an investment will fluctuate. An investor’s shares, when redeemed, may be worth more or less than the original cost. Total return is calculated assuming reinvestment of all dividends and distributions. The returns shown do not reflect the deduction of taxes that a shareholder would have to pay on Fund distributions or the redemption of Fund shares. The Adviser has contractually agreed to reduce its fees and/or absorb expenses of the Fund through December 31, 2020, (exclusive of any front-end or contingent deferred loads, brokerage fees and commissions, fees and expenses associated with investments in other collective investment vehicles or derivative instruments (including for example, options and swap fees and expenses), acquired fund fees and expenses, borrowing costs (such as interest and dividend expense on securities sold short), taxes and extraordinary expenses, such as litigation) to 2.25% of the Fund’s average daily net assets. For performance information current to the most recent month-end, please call 1-844-594-1226.

 

Per the fee table in the Fund’s December 30, 2019 prospectus, the Fund’s Annual Operating Expense Ratio is 4.16%. Updated information regarding the Fund’s expense ratio is available in the Financial Highlights.

 

PORTFOLIO COMPOSITION (Unaudited)  
   
    % of Net Assets  
Exchange Traded Fund     39.6 %
Mutual Fund     7.6 %
Exchange Traded Fund (Short)     (39.8 )%
Cash & Other Assets Less Liabilities     92.6 %
Total     100.0 %

 

Please refer to the Portfolio of Investments in this report for a detailed listing of the Fund’s holdings.

5

 

Anchor Risk Managed Equity Strategies Fund
Portfolio Review (Unaudited)
February 29, 2020

 

The Fund’s Institutional Class performance figures for the period ended February 29, 2020, compared to its benchmark:

 

    Six   One   Three   Since
    Months   Year   Years   Inception*
Anchor Risk Managed Equity Strategies Fund - Institutional Class   9.31%   21.05%   12.21%   12.74%
S&P 500 Total Return Index**   1.92%   8.19%   9.87%   11.24%

 

 
* The Fund commenced operations on September 6, 2016.

 

** The S&P 500 Total Return Index is an unmanaged market capitalization-weighted index which is comprised of 500 of the largest U.S. domiciled companies and includes the reinvestment of all dividends. Investors cannot invest directly in an index or benchmark.

 

Past performance is not predictive of future results. The investment return and principal value of an investment will fluctuate. An investor’s shares, when redeemed, may be worth more or less than the original cost. Total return is calculated assuming reinvestment of all dividends and distributions. The returns shown do not reflect the deduction of taxes that a shareholder would have to pay on Fund distributions or the redemption of the Fund shares. The Adviser has contractually agreed to reduce its fees and/or absorb expenses of the Fund through December 31, 2020 (exclusive of any front-end or contingent deferred loads, brokerage fees and commissions, fees and expenses associated with investments in other collective investment vehicles or derivative instruments (including for example, options and swap fees and expenses), acquired fund fees and expenses, borrowing costs (such as interest and dividend expense on securities sold short), taxes and extraordinary expenses, such as litigation) to 2.25% of the Fund’s average daily net assets. For performance information current to the most recent month-end, please call 1-844-594-1226.

 

Per the fee table in the Fund’s December 30, 2019 prospectus, the Fund’s Total Annual Operating Expense Ratio is 2.30%. Updated information regarding the Fund’s expense ratio is available in the Financial Highlights.

 

PORTFOLIO COMPOSITION (Unaudited)  
   
    % of Net Assets  
Exchange Traded Funds     79.9 %
Cash & Other Assets Less Liabilities     20.1 %
Total     100.0 %

 

Please refer to the Portfolio of Investments in this report for a detailed listing of the Fund’s holdings.

6

 

Anchor Risk Managed Global Strategies Fund
Portfolio Review (Unaudited)
February 29, 2020

 

The Fund’s Institutional Class performance figures for the period ended February 29, 2020, compared to its benchmark:

 

    Six   One   Since
    Months   Year   Inception*
Anchor Risk Managed Global Strategies Fund - Institutional Class   4.24%   13.02%   13.63%
MSCI All Country World Index **   1.13%   3.89%   9.22%

 

 
* The Fund commenced operations on January 15, 2019.

 

** The MSCI All Country World Index is composed of large and mid-capitalization developed and emerging market equities. Investors cannot invest directly in an index or benchmark.

 

Past performance is not predictive of future results. The investment return and principal value of an investment will fluctuate. An investor’s shares, when redeemed, may be worth more or less than the original cost. Total return is calculated assuming reinvestment of all dividends and distributions. The returns shown do not reflect the deduction of taxes that a shareholder would have to pay on Fund distributions or the redemption of the Fund shares. The Adviser has contractually agreed to reduce its fees and/or absorb expenses of the Fund through December 31, 2020, (exclusive of any front-end or contingent deferred loads, brokerage fees and commissions, fees and expenses associated with investments in other collective investment vehicles or derivative instruments (including for example, options and swap fees and expenses), acquired fund fees and expenses, borrowing costs (such as interest and dividend expense on securities sold short), taxes and extraordinary expenses, such as litigation) to 2.25% of the Fund’s average daily net assets. For performance information current to the most recent month-end, please call 1-844-594-1226.

 

Per the fee table in the Fund’s December 30, 2019 prospectus, the Fund’s Total Annual Operating Expense Ratio is 5.02%. Updated information regarding the Fund’s expense ratio is available in the Financial Highlights.

 

PORTFOLIO COMPOSITION (Unaudited)  
   
    % of Net Assets  
Exchange Traded Funds (Long)     60.6 %
Exchange Traded Fund (Short)     (42.1 )%
Cash & Other Assets Less Liabilities     81.5 %
Total     100.0 %

 

Please refer to the Portfolio of Investments in this report for a detailed listing of the Fund’s holdings.

7

 

Anchor Risk Managed Municipal Strategies Fund
Portfolio Review (Unaudited)
February 29, 2020

 

The Fund’s Institutional Class performance figures for the period ended February 29, 2020, compared to its benchmark:

 

    Six   One   Three   Since
    Months   Year   Year   Inception*
Anchor Risk Managed Municipal Strategies Fund - Institutional Class   1.16%   11.80%   5.14%   3.29%
Bloomberg Barclays Municipal Bond Index**   3.04%   9.46%   5.32%   3.76%

 

 
* The Fund commenced operations on September 6, 2016.

 

** The Bloomberg Barclays Municipal Bond Index covers the USD-denominated long-term tax exempt bond market. Investors cannot invest directly in an index or benchmark. The index has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds and prerefunded bonds.

 

Past performance is not predictive of future results. The investment return and principal value of an investment will fluctuate. An investor’s shares, when redeemed, may be worth more or less than the original cost. Total return is calculated assuming reinvestment of all dividends and distributions. The returns shown do not reflect the deduction of taxes that a shareholder would have to pay on Fund distributions or the redemption of the Fund shares. The Adviser has contractually agreed to reduce its fees and/or absorb expenses of the Fund through December 31, 2020, (exclusive of any front-end or contingent deferred loads, brokerage fees and commissions, fees and expenses associated with investments in other collective investment vehicles or derivative instruments (including for example, options and swap fees and expenses), acquired fund fees and expenses, borrowing costs (such as interest and dividend expense on securities sold short), taxes and extraordinary expenses, such as litigation) to 2.25% of the Fund’s average daily net assets. For performance information current to the most recent month-end, please call 1-844-594-1226.

 

Per the fee table in the Fund’s December 30, 2019 prospectus, the Fund’s Total Annual Operating Expense Ratio is 3.75%. Updated information regarding the Fund’s expense ratio is available in the Financial Highlights.

 

PORTFOLIO COMPOSITION (Unaudited)  
       
    % of Net Assets  
Closed-End Funds     77.5 %
Mutual Funds     17.8 %
Cash & Other Assets Less Liabilities     4.7 %
Total     100.0 %

 

Please refer to the Portfolio of Investments in this report for a detailed listing of the Fund’s holdings.

8

 

Anchor Risk Managed Credit Strategies Fund
PORTFOLIO OF INVESTMENTS (Unaudited)
February 29, 2020

 

Shares         Value  
        EXCHANGE TRADED FUND - 39.6%        
        DEBT FUND - 39.6%        
  120,000     iShares iBoxx High Yield Corporate Bond ETF   $ 10,324,800  
        TOTAL EXCHANGE TRADED FUND (Cost - $10,543,200)        
                 
        MUTUAL FUND - 7.6%        
        DEBT FUND - 7.6%        
  215,812     American Century High Income Fund - Investor Class     1,989,788  
        TOTAL MUTUAL FUND (Cost - $2,015,822)        
                 
        TOTAL INVESTMENTS (Cost - $12,559,022) - 47.2%   $ 12,314,588  
        SECURITIES SOLD SHORT (Proceeds - $10,477,698) - (39.8)%     (10,376,090 )
        CASH & OTHER ASSETS LESS LIABILITIES - 92.6%     24,128,199  
        NET ASSETS - 100.0%   $ 26,066,697  
                 
        SECURITIES SOLD SHORT - (39.8)%        
        EXCHANGE TRADED FUND - (39.8)%        
        DEBT FUND - (39.8)%        
  (97,000 )   SPDR Bloomberg Barclays High Yield Bond ETF   $ (10,376,090 )
        TOTAL SECURITIES SOLD SHORT (Proceeds - $10,477,698)        

 

ETF - Exchange Traded Fund

 

See accompanying notes to financial statements.

9

 

Anchor Risk Managed Equity Strategies Fund
PORTFOLIO OF INVESTMENTS (Unaudited)
February 29, 2020

 

Shares         Value  
        EXCHANGE TRADED FUNDS - 79.9%        
        EQUITY FUNDS - 79.9%        
  450,000     Invesco QQQ Trust Series 1   $ 92,610,000  
  100,000     SPDR S&P 500 ETF Trust     29,626,000  
        TOTAL EXCHANGE TRADED FUNDS (Cost - $117,681,234)     122,236,000  
                 
        TOTAL INVESTMENTS (Cost - $117,681,234) - 79.9%   $ 122,236,000  
        CASH & OTHER ASSETS LESS LIABILITIES - 20.1%     30,801,255  
        NET ASSETS - 100.0%   $ 153,037,255  

 

ETF - Exchange Traded Fund

 

OPEN FUTURES CONTRACTS        
Number of                          
Contracts   Open Short Future Contracts   Expiration   Notional Value at February 29,2020     Value     Unrealized Appreciation  
254   Nasdaq 100 E Mini   March 2020   $ 42,946,320     $ 630,262     $ 630,262  
300   Russell 2000 E-Mini   March 2020     22,123,500       916,675       916,675  
200   S&P 500 E-Mini   March 2020     29,511,000       3,727,670       3,727,670  
                            $ 5,274,607  

 

See accompanying notes to financial statements.

10

 

Anchor Risk Managed Global Strategies Fund
PORTFOLIO OF INVESTMENTS (Unaudited)
February 29, 2020

 

Shares         Value  
        EXCHANGE TRADED FUNDS - 60.6%        
        EQUITY FUNDS - 60.6%        
  30,000     Invesco QQQ Trust Series 1   $ 6,174,000  
  10,000     SPDR S&P 500 ETF Trust     2,962,600  
        TOTAL EXCHANGE TRADED FUNDS (Cost - $9,072,228)     9,136,600  
                 
        TOTAL INVESTMENTS (Cost - $9,072,228) - 60.6%   $ 9,136,600  
        SECURITIES SOLD SHORT (Proceeds - $6,977,946) - (42.1)%     (6,348,480 )
        CASH & OTHER ASSETS LESS LIABILITIES - 81.5%     12,284,842  
        NET ASSETS - 100.0%   $ 15,072,962  
                 
        SECURITIES SOLD SHORT - (42.1)%        
        EXCHANGE-TRADED FUND - (42.1)%        
        EQUITY FUND - (42.1)%        
  (102,000 )   iShares MSCI EAFE ETF   $ (6,348,480 )
        TOTAL SECURITIES SOLD SHORT (Proceeds - $6,977,946)        

 

ETF - Exchange Traded Fund

 

See accompanying notes to financial statements.

11

 

Anchor Risk Managed Municipal Strategies Fund
PORTFOLIO OF INVESTMENTS (Unaudited)
February 29, 2020

 

Shares         Value  
        CLOSED-END FUNDS - 77.5%        
        DEBT FUNDS - 77.5%        
  78,422     BlackRock California Municipal Income Trust   $ 1,112,024  
  75,640     BlackRock MuniHoldings California Quality Fund, Inc.     1,085,434  
  74,846     BlackRock MuniYield California Fund, Inc.     1,090,506  
  74,209     BlackRock MuniYield California Quality Fund, Inc.     1,074,546  
  77,118     Invesco California Value Municipal Income Trust     971,687  
  90,753     Nuveen AMT-Free Municipal Credit Income Fund     1,511,945  
  150,288     Nuveen AMT-Free Quality Municipal Income Fund     2,204,725  
  147,492     Nuveen California AMT-Free Quality Municipal Income Fund     2,290,551  
  195,678     Nuveen California Quality Municipal Income Fund     2,952,781  
  135,000     Nuveen Municipal High Income Opportunity Fund     1,926,450  
  119,404     Nuveen Quality Municipal Income Fund     1,774,343  
  26,451     PIMCO California Municipal Income Fund     497,808  
  53,958     PIMCO California Municipal Income Fund II     534,184  
  35,994     PIMCO California Municipal Income Fund III     400,973  
        TOTAL CLOSED-END FUNDS (Cost - $17,908,009)     19,427,957  
                 
        MUTUAL FUNDS - 17.8%        
        DEBT FUNDS - 17.8%        
  338,958     Nuveen California High Yield Municipal Bond Fund - Class R     3,596,344  
  46,415     Nuveen High Yield Municipal Bond Fund - Class I     873,074  
        TOTAL MUTUAL FUNDS (Cost - $4,065,202)     4,469,418  
                 
        TOTAL INVESTMENTS (Cost - $21,973,211) - 95.3%   $ 23,897,375  
        CASH & OTHER ASSETS LESS LIABILITIES - 4.7%     1,185,719  
        NET ASSETS - 100.0%   $ 25,083,094  

 

See accompanying notes to financial statements.

12

 

Anchor Funds
STATEMENTS OF ASSETS AND LIABILITIES (Unaudited)
February 29, 2020

 

    Anchor Risk Managed     Anchor Risk     Anchor Risk     Anchor Risk Managed  
    Credit Strategies     Managed Equity     Managed Global     Municipal Strategies  
    Fund     Strategies Fund     Strategies Fund     Fund  
                         
ASSETS                                
Investment securities:                                
At cost   $ 12,559,022     $ 117,681,234     $ 9,072,228     $ 21,973,211  
At value   $ 12,314,588     $ 122,236,000     $ 9,136,600     $ 23,897,375  
Cash     12,303,640       9,734,954       4,027,319       921,016  
Deposits with broker - cash     1,300,818       15,609,739       —       —  
Deposits with broker for future margin     —       484,418       —       —  
Deposits with broker for margin     —       —       —       —  
Deposits with broker for securities sold short     10,322,873       —       8,146,611       —  
Receivable for Fund shares sold     308,283       385,516       119,676       286,247  
Dividends and interest receivable     9,663       4,226       2,643       78,767  
Prepaid expenses     12,048       13,165       31,007       16,504  
Unrealized appreciation for future contracts     —       5,274,607       —       —  
TOTAL ASSETS     36,571,913       153,742,625       21,463,856       25,199,909  
                                 
LIABILITIES                                
Securities sold short (Premiums received of $ 10,477,698 , $ - , $ 6,977,946 , and $-, respectively)     10,376,090       —       6,348,480       —  
Payable for Fund shares redeemed     45,221       442,254       2,308       56,173  
Investment advisory fees payable     34,668       193,948       19,522       39,705  
Distribution (12b-1) fees payable     4,810       30,352       2,945       4,947  
Payable to related parties     141       21,031       1,765       —  
Accrued expenses and other liabilities     44,286       17,785       15,874       15,990  
TOTAL LIABILITIES     10,505,216       705,370       6,390,894       116,815  
NET ASSETS   $ 26,066,697     $ 153,037,255     $ 15,072,962     $ 25,083,094  
                                 
Net Assets Consist Of:                                
Paid in capital     29,304,089       142,548,822       14,544,828       26,476,878  
Accumulated earnings (loss)     (3,237,392 )     10,488,433       528,134       (1,393,784 )
NET ASSETS   $ 26,066,697     $ 153,037,255     $ 15,072,962     $ 25,083,094  
Institutional Class                                
Net Assets   $ 26,066,697     $ 153,037,255     $ 15,072,962     $ 25,083,094  
Shares of beneficial interest outstanding ($0 par value, unlimited shares authorized)     2,730,381       12,985,446       1,399,512       2,341,459  
Net asset value, offering and redemption price per share (Net assets/Shares of Beneficial Interest)   $ 9.55     $ 11.79     $ 10.77     $ 10.71  

 

See accompanying notes to financial statements.

13

 

Anchor Funds
STATEMENTS OF OPERATIONS (Unaudited)
For the Six Months Ended February 29, 2020

 

          Anchor Risk Managed     Anchor Risk     Anchor Risk Managed  
    Anchor Risk Managed     Equity Strategies     Managed Global     Municipal Strategies  
    Credit Strategies Fund     Fund     Strategies Fund     Fund  
INVESTMENT INCOME                                
Dividends   $ 475,523     $ 731,638     $ 114,604     $ 484,975  
Interest     12,490       103,006       21,859       5,887  
TOTAL INVESTMENT INCOME     488,013       834,644       136,463       490,862  
                                 
EXPENSES                                
Investment advisory fees     202,779       1,099,109       99,615       190,155  
Dividend expense on securities sold short     96,547       137,229       —       —  
Distribution (12b-1) fees     31,684       171,736       15,565       29,712  
Registration fees     17,452       20,446       16,455       14,858  
Custodian fees     14,733       12,212       6,264       1,800  
Administrative services fees     12,227       73,892       147       5,488  
Accounting services fees     9,630       14,731       10,347       10,055  
Audit fees     8,183       7,883       11,872       7,883  
Trustees’ fees and expenses     7,615       7,636       7,482       8,838  
Legal fees     4,987       9,035       1,999       2,403  
Compliance officer fees     3,573       9,629       5,256       1,829  
Transfer agent fees     2,488       6,952       3,800       3,480  
Third party administrative services fees     2,128       2,926       3,115       2,737  
Interest expense on securities sold short     1,085       —       —       —  
Insurance expense     32       7,398       36       24  
Printing and postage expenses     8       12,797       407       190  
Miscellaneous expense     447       892       1,306       1,391  
TOTAL EXPENSES     415,598       1,594,503       183,666       280,843  
Less: Fees waived/expenses reimbursed by the Adviser     (32,648 )     —       (43,282 )     (13,042 )
NET EXPENSES     382,950       1,594,503       140,384       267,801  
NET INVESTMENT INCOME (LOSS)     105,063       (759,859 )     (3,921 )     223,061  
                                 
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES CONTRACTS                                
Net realized gain (loss) from:                                
Investments     514,604       2,584,756       248,633       21,554  
Futures contracts     299,820       2,994,989       128,711       —  
Securities sold short     (468,001 )     (1,733,256 )     (381,398 )     —  
Net change in unrealized appreciation (depreciation) on:                                
Investments     (432,509 )     4,027,881       57,520       151,250  
Futures contracts     —       5,274,607       —       —  
Securities sold short     101,608       —       497,801       —  
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND FUTURES CONTRACTS     15,522       13,148,977       551,267       172,804  
                                 
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS   $ 120,585     $ 12,389,118     $ 547,346     $ 395,865  

 

See accompanying notes to financial statements.

14

 

Anchor Funds
STATEMENTS OF CHANGES IN NET ASSETS

 

    Anchor Risk Managed     Anchor Risk Managed  
    Credit Strategies Fund     Equity Strategies Fund  
    For the     For the     For the     For the  
    Six Months Ended     Year Ended     Six Months Ended     Year Ended  
    February 29, 2020     August 31, 2019     February 29, 2020     August 31, 2019  
    (Unaudited)           (Unaudited)        
FROM OPERATIONS:                                
Net investment gain (loss)   $ 105,063     $ (3,420 )   $ (759,859 )   $ (1,200,936 )
Net realized gain (loss) from investments and futures contracts     346,423       (233,563 )     3,846,489       13,769,414  
Distributions of capital gains from underlying investment companies     —       —       —       16,470  
Net change in unrealized appreciation (depreciation) on investments and futures contracts     (330,901 )     (63,974 )     9,302,488       (4,232,080 )
Net increase (decrease) in net assets resulting from operations     120,585       (300,957 )     12,389,118       8,352,868  
                                 
DISTRIBUTIONS TO SHAREHOLDERS:                                
Total distributions ($0.20 , $ 0.01, $1.35, and $0.82 per share, respectively)     (561,593 )     (29,495 )     (14,948,387 )     (11,346,512 )
From return of capital ($- , $ 0.02, $-, and $- per share, respectively)     —       (69,686 )     —       —  
Net decrease in net assets from distributions to shareholders     (561,593 )     (99,181 )     (14,948,387 )     (11,346,512 )
                                 
FROM SHARES OF BENEFICIAL INTEREST:                                
Proceeds from shares sold     11,083,872       16,538,018       68,818,590       101,121,897  
Reinvestment of dividends     555,158       99,104       14,642,216       11,002,191  
Payments for shares redeemed     (8,217,300 )     (33,236,705 )     (52,225,536 )     (145,029,547 )
Net increase (decrease) in net assets from shares of beneficial interest     3,421,730       (16,599,583 )     31,235,270       (32,905,459 )
                                 
TOTAL INCREASE (DECREASE) IN NET ASSETS     2,980,722       (16,999,721 )     28,676,001       (35,899,103 )
                                 
NET ASSETS                                
Beginning of Period     23,085,975       40,085,696       124,361,254       160,260,357  
End of Period   $ 26,066,697     $ 23,085,975     $ 153,037,255     $ 124,361,254  
                                 
SHARE ACTIVITY                                
Institutional Class:                                
Shares sold     1,140,227       1,724,388       5,730,792       8,648,194  
Shares reinvested     57,377       10,554       1,277,679       1,031,133  
Shares redeemed     (846,200 )     (3,474,907 )     (4,338,225 )     (12,574,137 )
Net increase (decrease) in shares of beneficial interest outstanding     351,404       (1,739,965 )     2,670,246     $ (2,894,810 )

 

See accompanying notes to financial statements.

15

 

Anchor Funds
STATEMENTS OF CHANGES IN NET ASSETS (Continued)

 

    Anchor Risk Managed     Anchor Risk Managed  
    Global Strategies Fund*     Municipal Strategies Fund  
    For the     For the     For the     For the  
    Six Months Ended     Period Ended     Six Months Ended     Year Ended  
    February 29, 2020     August 31, 2019*     February 29, 2020     August 31, 2019  
    (Unaudited)           (Unaudited)        
FROM OPERATIONS:                                
Net investment income (loss)   $ (3,921 )   $ (137,399 )   $ 223,061     $ 319,535  
Net realized gain (loss) from investments and futures contracts     (4,054 )     911,406       21,554       (229,419 )
Distributions of capital gains from underlying investment companies     —       —       —       27,648  
Net change in unrealized appreciation on investments and futures contracts     555,321       138,517       151,250       1,809,172  
Net increase in net assets resulting from operations     547,346       912,524       395,865       1,926,936  
                                 
DISTRIBUTIONS TO SHAREHOLDERS:                                
Total distributions ($0.77, $ - , $ 0.08 and $ 0.16 per share, respectively)     (942,628 )     —       (185,217 )     (320,544 )
Net decrease in net assets from distributions to shareholders     (942,628 )     —       (185,217 )     (320,544 )
                                 
FROM SHARES OF BENEFICIAL INTEREST:                                
Proceeds from shares sold     7,790,900       11,745,262       15,391,854       20,849,614  
Reinvestment of dividends     874,981       —       184,151       319,959  
Payments for shares redeemed     (3,158,236 )     (2,697,187 )     (9,128,694 )     (26,039,782 )
Net increase (decrease) in net assets from shares of beneficial interest     5,507,645       9,048,075       6,447,311       (4,870,209 )
                                 
TOTAL INCREASE (DECREASE) IN NET ASSETS     5,112,363       9,960,599       6,657,959       (3,263,817 )
                                 
NET ASSETS                                
Beginning of Period     9,960,599       —       18,425,135       21,688,952  
End of Period   $ 15,072,962     $ 9,960,599     $ 25,083,094     $ 18,425,135  
                                 
* The Fund commenced operations on January 15, 2019.                                
                                 
SHARE ACTIVITY                                
Institutional Class:                                
Shares sold     703,236       1,153,342       1,464,217       2,120,631  
Shares reinvested     81,698       —       17,488       32,556  
Shares redeemed     (285,386 )     (253,378 )     (867,179 )     (2,666,116 )
Net increase (decrease) in shares of beneficial interest outstanding     499,548       899,964       614,526     $ (512,929 )

 

See accompanying notes to financial statements.

16

 

Anchor Risk Managed Credit Strategies Fund
FINANCIAL HIGHLIGHTS
 
Per Share Data and Ratios for a Share of Beneficial Interest Outstanding Throughout Each Period Presented.

 

    Institutional Class **  
    For the     For the     For the     For the     Period  
    Six Months Ended     Year Ended     Year Ended     Year Ended     Ended  
    February 29, 2020     August 31, 2019     August 31, 2018     August 31, 2017     August 31, 2016*  
    (Unaudited)                          
Net asset value, beginning of period   $ 9.70     $ 9.73     $ 10.06     $ 10.26     $ 10.00  
Activity from investment operations:                                        
Net investment income (loss) (1)     0.04       0.00  (7)     (0.05 )     0.23       0.07  
Net realized and unrealized gain (loss) on investments     0.01       —       (0.11 )     (0.01 )     0.25  
Total from investment operations     0.05       0.00       (0.16 )     0.22       0.32  
Less distributions:                                        
From net investment income     (0.20 )     (0.01 )     (0.13 )     (0.28 )     (0.06 )
From net realized gains     —       —       (0.04 )     (0.14 )     —  
From return of capital     —       (0.02 )     —       —       —  
Total distributions     (0.20 )     (0.03 )     (0.17 )     (0.42 )     (0.06 )
Paid-in capital from redemption fees (1)     —       —       0.00  (7)     0.00  (7)     —  
Net asset value, end of period   $ 9.55     $ 9.70     $ 9.73     $ 10.06     $ 10.26  
Total return (2)     0.53 % (3)     (0.04 )%     (1.65 )%     2.22 %     3.17 % (3)
Net assets, end of period (000s)   $ 26,067     $ 23,086     $ 40,086     $ 90,784     $ 143,767  
Ratio of gross expenses to average net assets including interest and dividend expense (5)(8)(10)     3.28 % (4)     4.02 %     3.94 %     2.63 %     2.86 % (4)
Ratio of net expenses to average net assets including interest and dividend expense (5)(9)     3.02 % (4)     3.85 %     3.94 %     2.63 %     2.86 % (4)
Ratio of net investment income (loss) to average net assets (5)(6)     0.83 % (4)     (0.01 )%     (0.49 )%     2.23 %     0.71 % (4)
Portfolio turnover rate     603 % (3)     1,816 %     1,409 %     1,009 %     1,832 % (3)
                                         
 
* For the period September 29, 2015 (commencement of operations) through August 31, 2016.

 

** Formerly the Investor Class through July 31, 2017.

 

(1) Per share amounts calculated using the average shares method, which more appropriately presents the per share data for the period.

 

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

 

(3) Not annualized.

 

(4) Annualized.

 

(5) The ratios of expenses to average net assets and net investment income (loss) to average net assets do not reflect the expenses of the underlying investment companies in which the Fund invests.

 

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

 

(7) Amount is less than $0.005.

 

(8) The net realized and unrealized gain on investments per share does not accord with the net of the amounts reported in the statement of operations due to the timing of purchases and redemptions of the Fund shares during the period.

 

(9) Ratio of gross expenses to average net assets excluding interest expense and dividend expense     2.51 % (4)     2.42 %     2.22 %     2.15 %     2.21 % (4)
                                           
(10) Ratio of net expenses to average net assets excluding interest expense and dividend expense     2.25 % (4)     2.25 %     2.22 %     2.15 %     2.21 % (4)

 

(11) Represents the ratio of expenses to average net assets absent fee waivers and/or expense reimbursements by the Adviser.

 

See accompanying notes to financial statements.

17

 

Anchor Risk Managed Equity Strategies Fund
FINANCIAL HIGHLIGHTS
 
Per Share Data and Ratios for a Share of Beneficial Interest Outstanding Throughout Each Period Presented.

 

    Institutional Class  
    For the     Year     Year     Period  
    Six Months Ended     Ended     Ended     Ended  
    February 29, 2020     August 31, 2019     August 31, 2018     August 31, 2017*  
    (Unaudited)                    
Net asset value, beginning of period   $ 12.06     $ 12.13     $ 11.05     $ 10.00  
Activity from investment operations:                                
Net investment loss (1)     (0.07 )     (0.09 )     (0.14 )     (0.13 )
Net realized and unrealized gain on investments     1.15       0.84       1.89       1.26  
Total from investment operations     1.08       0.75       1.75       1.13  
Less distributions:                                
From net realized gains     (1.35 )     (0.82 )     (0.67 )     (0.09 )
Total distributions     (1.35 )     (0.82 )     (0.67 )     (0.09 )
Paid-in capital from redemption fees (1)     —       —       0.00  (7)     0.01  
Net asset value, end of period   $ 11.79     $ 12.06     $ 12.13     $ 11.05  
Total return (2)     9.31 % (3)     7.08 %     16.33 %     11.48 % (3)
Net assets, end of period (000s)   $ 153,037     $ 124,361     $ 160,260     $ 60,366  
Ratio of gross expenses to average net assets including interest and dividend expense (5)(8)(10)     2.32 % (4)     2.19 %     2.19 %     2.40 % (4)
Ratio of net expenses to average net assets including interest and dividend expense (5)(9)     2.32 % (4)     2.19 %     2.19 %     2.40 % (4)
Ratio of net investment loss to average net assets (5)(6)     (1.10 )% (4)     (0.80 )%     (1.25 )%     (1.24 )% (4)
Portfolio turnover rate     111 % (3)     1,068 %     1,091 %     1,576 % (3)
                                 
 
* For the period September 6, 2016 (commencement of operations) through August 31, 2017.

 

(1) Per share amounts calculated using the average shares method, which more appropriately presents the per share data for the period.

 

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

 

(3) Not annualized.

 

(4) Annualized.

 

(5) The ratios of expenses to average net assets and net investment loss to average net assets do not reflect the expenses of the underlying investment companies in which the Fund invests.

 

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

 

(7) Amount is less than $0.005.

 

(8) Ratio of gross expenses to average net assets excluding interest expense and dividend expense     2.12 % (4)     2.10 %     2.10 %     2.20 % (4)
                                   
(9) Ratio of net expenses to average net assets excluding interest expense and dividend expense     2.12 % (4)     2.10 %     2.10 %     2.20 % (4)
                                   

See accompanying notes to financial statements.

18

 

Anchor Risk Managed Global Strategies Fund
FINANCIAL HIGHLIGHTS
 
Per Share Data and Ratios for a Share of Beneficial Interest Outstanding Throughout the Period Presented.

 

    Institutional Class  
    For the     For the  
    Six Months Ended     Period Ended  
    February 29, 2020     August 31, 2019*  
    (Unaudited)        
Net asset value, beginning of period   $ 11.07     $ 10.00  
Activity from investment operations:                
Net investment loss (1)     0.00  (10)     (0.16 )
Net realized and unrealized gain (loss) on investments     0.47       1.23  
Total from investment operations     0.47       1.07  
Less distributions:                
From net realized gains     (0.77 )     —  
Total distributions     (0.77 )     —  
Net asset value, end of period   $ 10.77     $ 11.07  
Total return (2)     4.24 % (3)     10.70 % (3)
Net assets, end of period (000s)   $ 15,073     $ 9,961  
Ratio of gross expenses to average net assets including interest and dividend expense (5)(7)(9)     2.94 % (4)     4.96 % (4)
Ratio of net expenses to average net assets including interest and dividend expenses (5)(8)     2.25 % (4)     3.60 % (4)
Ratio of net investment loss to average net assets (5)(6)     (0.06 )% (4)     (2.45 )% (4)
Portfolio turnover rate     441 % (3)     746 % (3)
                 
 
* For the period January 15, 2019 (commencement of operations) through August 31, 2019.

 

(1) Per share amounts calculated using the average shares method, which more appropriately presents the per share data for the period.

 

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

 

(3) Not annualized.

 

(4) Annualized.

 

(5) The ratios of expenses to average net assets and net investment loss to average net assets do not reflect the expenses of the underlying investment companies in which the Fund invests.

 

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

 

(7) Ratio of gross expenses to average net assets excluding interest expense and dividend expense     2.94 % (4)     3.61 % (4)
                   
(8) Ratio of net expenses to average net assets excluding interest expense and dividend expense     2.25 % (4)     2.25 % (4)
                   
(9) Represents the ratio of expenses to average net assets absent fee waivers and/or expense reimbursements by the Adviser.

 

(10) Amount is less than $0.005.

 

See accompanying notes to financial statements.

19

 

Anchor Risk Managed Municipal Strategies Fund
FINANCIAL HIGHLIGHTS
 
Per Share Data and Ratios for a Share of Beneficial Interest Outstanding Throughout Each Period Presented.

 

    Institutional Class  
    For the     Year     Year     Period  
    Six Months Ended     Ended     Ended     Ended  
    February 29, 2020     August 31, 2019     August 31, 2018     August 31, 2017*  
    (Unaudited)                          
Net asset value, beginning of period   $ 10.67     $ 9.68     $ 9.85     $ 10.00  
Activity from investment operations:                                
Net investment income (1)     0.10       0.15       0.16       0.00  (7)
Net realized and unrealized gain (loss) on investments     0.02       1.00       (0.14 )     (0.16 )
Total from investment operations     0.12       1.15       0.02       (0.16 )
Less distributions:                                
From net investment income     (0.08 )     (0.16 )     (0.19 )     0.00  (7)
Total distributions     (0.08 )     (0.16 )     (0.19 )     0.00  
Paid-in capital from redemption fees (1)     —       —       0.00  (7)     0.01  
Net asset value, end of period   $ 10.71     $ 10.67     $ 9.68     $ 9.85  
Total return (2)     1.16 % (3)     12.02 %     0.25 %     (1.47 )% (3)
Net assets, end of period (000s)   $ 25,083     $ 18,425     $ 21,689     $ 71,063  
Ratio of gross expenses to average net assets including interest and dividend expense (5)(8)(10)     2.36 % (4)     2.67 %     2.26 %     2.10 % (4)
Ratio of net expenses to average net assets including interest and dividend expenses (5)(9)     2.25 % (4)     2.35 %     2.25 %     2.10 % (4)
Ratio of net investment income to average net assets (5)(6)     1.87 % (4)     1.51 %     1.64 %     0.02 % (4)
Portfolio turnover rate     12 % (3)     183 %     298 %     366 % (3)
                                 
 
* For the period September 6, 2016 (commencement of operations) through August 31, 2017.

 

(1) Per share amounts calculated using the average shares method, which more appropriately presents the per share data for the period.

 

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

 

(3) Not annualized.

 

(4) Annualized.

 

(5) The ratios of expenses to average net assets and net investment income to average net assets do not reflect the expenses of the underlying investment companies in which the Fund invests.

 

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

 

(7) Amount is less than $0.005.

 

(8) Ratio of gross expenses to average net assets excluding interest expense and dividend expense     2.36 % (4)     2.57 %     2.26 %     2.10 % (4)
                                   
(9) Ratio of net expenses to average net assets excluding interest expense and dividend expense     2.25 % (4)     2.25 %     2.25 %     2.10 % (4)
                                   
(10) Represents the ratio of expenses to average net assets absent fee waivers and/or expense reimbursements by the Adviser.

 

See accompanying notes to financial statements.

20

 

Anchor Funds
NOTES TO FINANCIAL STATEMENTS (Unaudited)
February 29, 2020
 
1. ORGANIZATION

 

The Anchor Risk Managed Credit Strategies Fund (“Credit Fund”) (formerly the Anchor Tactical Credit Strategies Fund), Anchor Risk Managed Equity Strategies Fund (“Equity Fund”) (formerly the Anchor Tactical Equity Strategies Fund), Anchor Risk Managed Global Strategies Fund (“Global Fund”) (formerly the Anchor Tactical Global Strategies Fund) and Anchor Risk Managed Municipal Strategies Fund (“Muni Fund”) (formerly the Anchor Tactical Municipal Strategies Fund) (each a “Fund” or collectively the “Funds”) are diversified series of shares of beneficial interest of Northern Lights Fund Trust IV (the “Trust”), a 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 Credit Fund, Equity Fund and Muni Fund each have the investment objective to provide total return from income and capital appreciation with a secondary objective of limiting risk during unfavorable market conditions. The Global Fund seeks to achieve above average total returns over a full market cycle with lower correlation and reduced risk when compared to traditional world indices. The Credit Fund commenced operations on September 29, 2015. The Equity Fund and Muni Fund commenced operations on September 6, 2016. The Global Fund commenced operations on January 15, 2019.

 

The Equity Fund, Global Fund and Muni Fund offer two share classes designated as Investor Class and Institutional Class. The Investor Class of the Credit Fund converted to the Institutional Class of the Credit Fund on August 1, 2017. The Investor Class of the Credit Fund is no longer available for sale and the Investor Class of the Equity Fund, Global Fund and Muni Fund have not commenced operations. Each class represents an interest in the same assets of each Fund and classes are identical except for differences in their ongoing service and distribution charges. Fund level income and expenses and realized and unrealized capital gains and losses are allocated to each class of shares based on their relative net assets within the respective Fund. Class specific expenses are allocated to that share class.

 

2. SIGNIFICANT ACCOUNTING POLICIES

 

The following is a summary of significant accounting policies followed by each Fund in preparation of its 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 income and expenses for the period. Actual results could differ from those estimates. Each Fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946 “Financial Services – Investment Companies” including FASB Accounting Standards Update (“ASU”) 2013-08.

 

Security 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 (“NOCP”). 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. Exchange traded futures are valued at the final settle price or, in the absence of a sale price, at the mean between the

21

 

Anchor Funds
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
February 29, 2020
 

current bid and ask prices on the day of valuation. The independent pricing service does not distinguish between smaller-sized bond positions known as “odd lots” and larger institutional-sized bond positions known as “round lots”. The Funds may fair value a particular bond if the adviser does not believe that the round lot value provided by the independent pricing service reflects fair value of the Funds’ holding. Short-term debt obligations having 60 days or less remaining until maturity, at time of purchase, may be valued at amortized cost.

 

Valuation of Underlying Funds – The Funds may invest in portfolios of open- end or closed-end investment companies (the “Underlying Funds”). Investment companies are valued at their respective net asset values as reported by such investment companies. Open-end investment companies 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. The shares of many closed-end investment companies and exchange traded funds (“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.

 

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 Trust’s 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. The Board reviews and ratifies the execution of this process and the resultant fair value prices at least quarterly to assure the process produces reliable results.

 

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 asked price is available; the spread between bid and asked 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

22

 

Anchor Funds
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
February 29, 2020
 

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 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.

 

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.

23

 

Anchor Funds
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
February 29, 2020
 

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following table summarizes the inputs used as of February 29, 2020 for the Funds’ assets and liabilities measured at fair value:

 

Anchor Risk Managed Credit Strategies Fund

 

Assets *   Level 1     Level 2     Level 3     Total  
Exchange Traded Fund   $ 10,324,800     $ —     $ —     $ 10,324,800  
Mutual Fund     1,989,788       —       —       1,989,788  
Total     $ 12,314,588     $ —     $ —     $ 12,314,588  
Liabilities*   Level 1     Level 2     Level 3     Total  
Securities Sold Short            
Exchange Traded Fund   $ (10,376,090 )   $ —     $ —     $ (10,376,090 )
Total     $ (10,376,090 )   $ —     $ —     $ (10,376,090 )

 

Anchor Risk Managed Equity Strategies Fund

 

Assets *   Level 1     Level 2     Level 3     Total  
Exchange Traded Fund   $ 122,236,000     $ —     $ —     $ 122,236,000  
Futures Contracts **     5,274,607       —       —     $ 5,274,607  
Total     $ 127,510,607     $ —     $ —     $ 127,510,607  

 

Anchor Risk Managed Global Strategies Fund

 

Assets *   Level 1     Level 2     Level 3     Total  
Exchange Traded Fund   $ 9,136,600     $ —     $ —     $ 9,136,600  
Total     $ 9,136,600     $ —     $ —     $ 9,136,600  
Liabilities *   Level 1     Level 2     Level 3     Total  
Securities Sold Short                                
Exchange Traded Fund   $ (6,348,480 )   $ —     $ —     $ (6,348,480 )
Total     $ (6,348,480 )   $ —     $ —     $ (6,348,480 )

 

Anchor Risk Managed Municipal Strategies Fund

 

Assets *   Level 1     Level 2     Level 3     Total  
Closed-End Funds   $ 19,427,957     $ —     $ —     $ 19,427,957  
Mutual Funds     4,469,418       —       —       4,469,418  
Total     $ 23,897,375     $ —     $ —     $ 23,897,375  

 

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

 

* Please refer to the Portfolio of Investments for industry classifications.

 

** Represents cumulative appreciation on futures contracts at February 29, 2020.

 

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 and represents a fixed portfolio of securities. The Funds may purchase an ETF to gain exposure to a portion of the U.S. or a foreign market. The risks of owning an ETF generally reflect the risks of owning its underlying securities, 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.

 

Short Sales – A “short sale” is a transaction in which the Funds sell a security they do not own but have borrowed in anticipation that the market price of that security will decline. The Funds are obligated to replace the security borrowed by purchasing it on the open market at a later date. If the price of the security sold short increases between the time of the short sale and the

24

 

Anchor Funds
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
February 29, 2020
 

time the Funds replace the borrowed security, the Funds will incur a loss, potentially unlimited in size. Conversely, if the price declines, the Funds will realize a gain, limited to the price at which the Funds sold the security short.

 

Futures – The Funds are subject to equity price risk in the normal course of pursuing their investment objectives. To manage equity price risk, the Funds may enter into futures contracts. Upon entering into a futures contract with a broker, the Funds are required to deposit, in a segregated account, a specified amount of cash or U.S. government securities which are classified as “cash deposit” with broker in the accompanying Statements of Assets and Liabilities. Futures contracts are valued daily and unrealized gains or losses are recorded in the “net unrealized appreciation from future contracts” account. Periodically, the Funds receive from, or pay to the brokers, a specified amount of cash based upon changes in the “net unrealized appreciation from open future contracts” account. When a contract is closed, the Funds recognize a realized gain or loss. Futures contracts have market risks, including the risk that the change in the value of the contract may not correlate with changes in the value of the underlying securities. With futures contracts, there is minimal counterparty credit risk to the Funds since futures are exchange traded and the exchange’s clearinghouse, as counterparty to all exchange traded futures, guarantees the futures against default. Futures contracts outstanding at period end are listed after the Funds’ portfolio of investments.

 

The notional value represents amounts related to each Fund’s futures contracts upon which the fair value of the futures contracts held by the Fund are based. Notional values do not represent the current fair value of the Funds’ futures contracts. Further, the underlying price changes in relation to variables specified by the notional values, affects the fair value of these derivative financial instruments. Theoretically, each Fund’s exposure is equal to the notional value of contracts held. Each Fund’s obligations will generally equal only the amount to be paid or received through a futures contract.

 

The notional value of the derivative instruments outstanding as of February 29, 2020 as disclosed in the Portfolio of Investments and the amounts realized and changes in unrealized gains and losses on derivative instruments during the period as disclosed above and within the Statement of Operations serve as indicators of the volume of derivative activity.

 

For the six months ended February 29, 2020, the amount of unrealized appreciation (depreciation) and realized gain (loss) on futures contracts subject to equity price risk amounted to the following:

 

Fund   Statements of Assets
and Liabilities
Unrealized
Appreciation
(Depreciation) from
Futures Contracts* 		    Statements of
Operations
Change in
Unrealized
Appreciation
(Depreciation) on
Futures Contracts 		    Statements of
Operations
Realized Gain
(Loss) on
Futures
Contracts 		 
Credit Fund   $ —     $ —     $ 299,820  
Equity Fund     5,274,607       5,274,607       2,994,989  
Global Fund     —       —       128,711  

 

Such figures can be found on the Statements of Operations.

 

* Cumulative unrealized gain (loss) on futures contracts.

25

 

Anchor Funds
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
February 29, 2020
 

Offsetting of Financial Assets and Derivative Assets and Liabilities – The Funds’ policy is to recognize a net asset or liability equal to the net appreciation (depreciation) of the derivative. The following tables show additional information regarding derivatives and the offsetting of assets and liabilities at February 29, 2020.

 

Equity Fund:

 

                      Gross Amounts Not Offset in the Statement of        
Assets:                     Assets & Liabilities        
          Gross Amounts     Net Amounts                    
          Offset in the     Presented in the                    
    Gross Amounts of     Statement of     Statement of     Financial     Collateral        
Description   Recognized Assets     Assets & Liabilities     Assets & Liabilities     Instruments     Pledged/(Received)     Net Amount  
Futures contracts   $ 5,274,607     $ —     $ 5,274,607     $ —     $ 484,418     $ 5,759,025  
Total   $ 5,274,607     $ —     $ 5,274,607     $ —     $ 484,418     $ 5,759,025  
                                                 

Security Transactions and Related Income – Security transactions are accounted for on the trade date. Interest income is recognized on an accrual basis. Discounts are accreted and premiums are amortized on securities purchased over the lives of the respective securities. Dividend income and expenses are 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. Withholding taxes on foreign dividends have been provided for in accordance with the Funds’ understanding of the applicable country’s tax rules and rates.

 

Dividends and Distributions to Shareholders – Dividends from net investment income, if any, are declared quarterly by the Credit Fund, Equity Fund and Global Fund; and monthly by the Muni Fund. 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, capital loss carryforwards, etc.) 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. Any such reclassifications will have no effect on net assets, results of operations, or net asset values per share of the Funds.

 

Federal Income Tax – It is the Funds’ policy to qualify as regulated investment companies by complying with the provisions of the Internal Revenue Code that are applicable to regulated investment companies and to distribute substantially all of their taxable income and net realized gains to shareholders. Therefore, no federal income tax provision 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. 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 taken on returns filed for open tax years ended August 31, 2017 to August 31, 2019, or expected to be taken in the Funds’ August 31, 2020 year-end tax returns. The Funds identify their major tax jurisdictions as U.S. federal, state of Ohio, and foreign jurisdictions where the Funds make significant investments; however, the

26

 

Anchor Funds
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
February 29, 2020
 

Funds are not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next twelve months.

 

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, 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.

 

3. CASH – CONCENTRATION IN UNINSURED ACCOUNT

 

For cash management purposes, the Funds may concentrate cash with the Funds’ custodian. This typically results in cash balances exceeding the Federal Deposit Insurance Corporation (“FDIC”) insurance limits. As of February 29, 2020, the Credit Fund, Equity Fund, Global Fund and Muni Fund held $ 12,053,640, $9,484,954, $3,777,319 and $670,747, respectively, in cash at MUFG Union Bank, N.A. that exceeded the FDIC insurance limit of $250,000.

 

4. INVESTMENT TRANSACTIONS

 

For the six months ended February 29, 2020, cost of purchases and proceeds from sales of portfolio securities, other than short-term investments, amounted to $102,567,775 and $103,724,429, respectively, for the Credit Fund, $136,590,676 and $207,621,507 respectively, for the Equity Fund, $39,497,401 and $40,213,044 respectively, for the Global Fund and $8,662,045 and $2,600,000, respectively, for the Muni Fund.

 

5. INVESTMENT ADVISORY AGREEMENT AND TRANSACTIONS WITH RELATED PARTIES

 

Anchor Capital Management Group, Inc. serves as the Funds’ investment adviser (the “Adviser”).

 

Pursuant to an investment advisory agreement with the Trust, on behalf of each Fund, the Adviser, under the oversight of the Board, oversees 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, each Fund pays the Adviser a management fee, computed and accrued daily and paid monthly, at an annual rate of 1.60% of each Fund’s average daily net assets. For the six months ended February 29, 2020, the Funds incurred advisory fees, as follows of $202,779 for the Credit Fund, $1,099,109 for the Equity Fund, $99,615 for the Global Fund and $190,155 for the Muni Fund.

 

The Adviser has contractually agreed to reduce its fees and/or absorb expenses of each Fund until at least December 31, 2020 to ensure that total annual fund operating expenses after fee

27

 

Anchor Funds
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
February 29, 2020
 

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 2.25% of each Fund’s average daily net assets of the Institutional Class Shares. Fees waived or reimbursed by the Adviser may be recouped by the Adviser from the Fund, to the extent that overall expenses fall below the expense limitation, within three years following when such amounts were waived and/or reimbursed if such recoupment can be achieved within the lesser of the foregoing expense limits or the expenses limits in place at the time of the recoupment. During the six months ended February 29, 2020, the Adviser waived fees and reimbursed expenses of $32,648 for Credit Fund, $43,282 for Global Fund and $13,042 for Muni Fund, which are subject to recapture by the Adviser. As of February 29, 2020, the Adviser has waived and reimbursed expenses that can be recouped up to three years from the date incurred below:

 

    Expires August     Expires August     Expires August  
    31, 2021     31, 2022     31, 2023  
Credit Fund   $ —     $ 52,828     $ 32,648  
Global Fund     —       76,235       43,282  
Muni Fund     6,605       69,495       13,042  
                         

Distributor – The distributor of the Funds is Northern Lights Distributors, LLC (the “Distributor”), The Board has adopted, on behalf of the Funds, the Trust’s Master Distribution and Shareholder Servicing Plan (the “Plan”), as amended, pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, Institutional Class Shares may pay up to 0.25% of their average daily net assets to pay for certain distribution activities and shareholder services. For the six months ended February 29, 2020, $31,684, $171,736, $15,565, and $29,712 was incurred under the Plan for the Credit Fund, the Equity Fund, the Global Fund and the Muni Fund, respectively.

 

The Distributor acts as the Funds’ principal underwriter in a continuous public offering of the Funds’ shares. For the six months ended February 29, 2020, the Distributor did not receive any underwriting commissions for sales of the Funds’ shares.

 

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

 

Gemini Fund Services, LLC “GFS”, an affiliate of the Distributor, provides administration, fund accounting, and transfer agent services to the Trust. Pursuant to separate servicing agreements with GFS, the Funds pay GFS customary fees for providing administration, fund accounting and transfer agency services to the Funds. Certain officers of the Trust are also officers of GFS, 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 GFS 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 customary fees from the Funds.

 

Blu Giant, LLC (“Blu Giant”) – Blu Giant, an affiliate of GFS 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 for these services.

28

 

Anchor Funds
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
February 29, 2020
 

Effective February 1, 2019, NorthStar Financial Services Group, LLC, the parent company of GFS and its affiliated companies including NLCS and Blu Giant (collectively, the “Gemini Companies”), sold its interest in the Gemini Companies to a third party private equity firm that contemporaneously acquired Ultimus Fund Solutions, LLC (an independent mutual fund administration firm) and its affiliates (collectively, the “Ultimus Companies”). As a result of these separate transactions, the Gemini Companies and the Ultimus Companies are now indirectly owned through a common parent entity, The Ultimus Group, LLC.

 

6. AGGREGATE UNREALIZED APPRECIATION AND DEPRECIATION – TAX BASIS

 

The identified cost of investments in securities owned by the Funds for federal income tax purposes and the respective gross unrealized appreciation and depreciation at February 29, 2020 were as follows:

 

          Gross     Gross     Net Unrealized  
          Unrealized     Unrealized     Appreciation/  
    Tax Cost     Appreciation     (Depreciation)     (Depreciation)  
Credit Fund   $ 2,817,087     $ —     $ (878,589 )   $ (878,589 )
Equity Fund     119,731,210       2,504,790       —       2,504,790  
Global Fund     2,164,298       718,972       (95,150 )     623,822  
Muni Fund     21,973,211       1,924,164       —       1,924,164  
                                 
7. DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF CAPITAL

 

The tax character of distributions paid during the periods ended August 31, 2019 and August 31, 2018 were as follows:

 

For the year ended August 31, 2019:  
   
    Ordinary     Long-Term           Return of        
    Income     Capital Gains     Exempt Income     Capital     Total  
Anchor Risk Managed Credit Strategies Fund   $ 29,495     $ —     $ —     $ 69,686     $ 99,181  
Anchor Risk Managed Equity Strategies Fund     10,832,958       513,554       —       —       11,346,512  
Anchor Risk Managed Global Strategies Fund     —       —       —       —       —  
Anchor Risk Managed Municipal Strategies Fund     22,535       —       298,009       —       320,544  
                                         
For the year ended August 31, 2018:  
   
    Ordinary     Long-Term           Return of        
    Income     Capital Gains     Exempt Income     Capital     Total  
Anchor Risk Managed Credit Strategies Fund   $ 1,189,725     $ 144,140     $ —     $ —     $ 1,333,865  
Anchor Risk Managed Equity Strategies Fund     4,171,001       —       —       —       4,171,001  
Anchor Risk Managed Municipal Strategies Fund     48,035       —       854,007       4,651       906,693  
                                         

As of August 31, 2019, the components of accumulated earnings/ (deficit) on a tax basis were as follows:

 

    Undistributed     Undistributed     Post October Loss     Capital Loss     Other     Unrealized     Total  
    Ordinary     Long-Term     and     Carry     Book/Tax     Appreciation     Accumulated  
    Income     Capital Gains     Late Year Loss     Forwards     Differences     (Depreciation)     Earnings/(Deficits)  
Anchor Risk Managed Credit Strategies Fund   $ —     $ —     $ (619,825 )   $ (1,566,382 )   $ (62,489 )   $ (547,688 )   $ (2,796,384 )
Anchor Risk Managed Equity Strategies Fund     13,543,584       1,027,209       —       —       —       (1,523,091 )     13,047,702  
Anchor Risk Managed Global Strategies Fund     854,915       —       —       —       —       68,501       923,416  
Anchor Risk Managed Municipal Strategies Fund     19,552       —       (132,204 )     (3,264,694 )     —       1,772,914       (1,604,432 )

29

 

Anchor Funds
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
February 29, 2020
 

The difference between book basis and tax basis accumulated net investment income (loss), accumulated net realized gain (loss), and unrealized appreciation/(depreciation) from investments is primarily attributable to the tax deferral of losses on wash sales, the unamortized portion of organizational expenses, and the non-deductible interest expense limitation.

 

Capital losses incurred after October 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 capital losses as follows:

 

    Post October  
    Losses  
Anchor Risk Managed Credit Strategies Fund   $ 619,825  
Anchor Risk Managed Equity Strategies Fund     —  
Anchor Risk Managed Global Strategies Fund     —  
Anchor Risk Managed Municipal Strategies Fund     132,204  
         

At August 31, 2019, the Funds had capital loss carry forwards for federal income tax purposes available to offset future capital gains as follows:

 

    Non-Expiring     Non-Expiring        
    Short-Term     Long-Term     Total  
Anchor Risk Managed Credit Strategies Fund   $ 1,566,382     $ —     $ 1,566,382  
Anchor Risk Managed Equity Strategies Fund     —       —       —  
Anchor Risk Managed Global Strategies Fund     —       —       —  
Anchor Risk Managed Municipal Strategies Fund     3,264,694       —       3,264,694  
                         

Permanent book and tax differences, primarily attributable to the book/tax basis treatment of non- deductible expenses and net operating losses, resulted in reclassifications for the Funds for the period ended August 31, 2019 as follows:

 

    Paid        
    in     Accumulated  
    Capital     Earnings (Losses)  
Anchor Risk Managed Credit Strategies Fund   $ —     $ —  
Anchor Risk Managed Equity Strategies Fund     —       —  
Anchor Risk Managed Global Strategies Fund     (10,892 )     10,892  
Anchor Risk Managed Municipal Strategies Fund     —       —  
                 
8. UNDERLYING INVESTMENT IN OTHER INVESTMENT COMPANIES

 

The following Funds currently invest a portion of their assets in the corresponding investment companies. The Funds may redeem their investment from these investment companies at any time if the Adviser determines that it is in the best interest of the Funds and their shareholders to do so. The performance of the Funds will be directly affected by the performance of these

30

 

Anchor Funds
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
February 29, 2020
 

investment companies. The financial statements of these investment companies, including their portfolios of investments, can be found at the Securities and Exchange Commission’s website www.sec.gov and should be read in conjunction with the Funds’ financial statements.

 

Credit Fund   iShares iBoxx High Yield Corporate Bond ETF     39.6 %
    SPDR Bloomberg Barclays High Yield Bond ETF     (39.8 )%
Equity Fund   Invesco QQQ Trust Series 1     79.9 %
Global Fund   Invesco QQQ Trust Series 1     41.0 %
    iShares MSCI EAFE ETF     (42.1 )%
             

Each underlying fund, including each ETF, is subject to specific risks, depending on the nature of the underlying fund. These risks could include liquidity risk, sector risk, foreign and related currency risk. Investors in a Fund will indirectly bear fees and expenses charged by the underlying investment companies in which a Fund invests in addition to a Fund’s direct fees and expenses.

 

9. CONTROL OWNERSHIP

 

The beneficial ownership, either directly or indirectly, of more than 25% of the voting securities of a fund creates presumption of control of the fund, under Section 2(a)(9) of the 1940 Act. As of February 29, 2020, TD Ameritrade Inc., an account holding shares for the benefit of others in nominee name, held approximately 68%, 64%, 70% and 72% of the voting securities for the Credit Fund, the Equity Fund, the Global Fund and the Muni Fund, respectively. The Funds have no knowledge as to whether any beneficial owner included in these nominee accounts holds more than 25% of the voting shares of any Fund.

 

10. SUBSEQUENT EVENTS

 

Subsequent events occurring after the date of the Statements of Assets and Liabilities have been evaluated through the date the financial statements were issued. Management has determined that no events or transactions occurred requiring adjustment or disclosure in the financial statements.

31

 

Anchor Funds
EXPENSE EXAMPLES
February 29, 2020 (Unaudited)
 

As a shareholder of the Funds you incur ongoing costs, including management fees; distribution and/or service (12b-1) 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.

 

The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period as disclosed in the table below.

 

Actual Expenses

 

The “Actual” lines 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” lines in the table below provide information about hypothetical account values and hypothetical expenses based on the Funds’ actual expense ratios 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 contingent deferred sales charges (loads), or redemption fees. 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.

 

  Beginning Ending Annualized Expenses Paid
  Account Account Expense During Period
  Value Value Ratio 9/1/19 –
  9/1/19 2/29/20   2/29/20*
Actual        
Anchor Risk Managed Credit Strategies Fund $1,000.00 $1,005.30 3.02% $15.07
Anchor Risk Managed Equity Strategies Fund $1,000.00 $1,093.10 2.32% $12.08
Anchor Risk Managed Global Strategies Fund $1,000.00 $1,042.40 2.25% $11.45
Anchor Risk Managed Municipal Strategies Fund $1,000.00 $1,011.60 2.25% $11.27
Hypothetical        
(5% return before expenses)        
Anchor Risk Managed Credit Strategies Fund $1,000.00 $1,009.83 3.02% $15.11
Anchor Risk Managed Equity Strategies Fund $1,000.00 $1,013.32 2.32% $11.62
Anchor Risk Managed Global Strategies Fund $1,000.00 $1,013.65 2.25% $11.29
Anchor Risk Managed Municipal Strategies Fund $1,000.00 $1,013.66 2.25% $11.28

 

* Expenses are equal to the average account value over the period, multiplied by the Fund’s annualized expense ratio, multiplied by the number of days in the period (182) divided by the number of days in the fiscal year (366).

32

 

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 1-402-493-4603

33

 

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.

34

 

PROXY VOTING POLICY

 

Information regarding how the Funds voted proxies relating to portfolio securities for the 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 will be available without charge, upon request, by calling 1-844-594-1226 or by referring to the Securities and Exchange Commission’s (“SEC”) website at http://www.sec.gov.

 

PORTFOLIO HOLDINGS

 

The Funds file their 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 1-844-594-1226.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ADVISER
Anchor Capital Management Group, Inc.
15 Enterprise, Suite 450
Aliso Viejo, California 92656
 
ADMINISTRATOR
Gemini Fund Services, LLC
4221 North 203rd Street, Suite 100
Elkhorn, NE 68022

 

 

Item 2. Code of Ethics. Not applicable.

 

Item 3. Audit Committee Financial Expert. Not applicable.

 

Item 4. Principal Accountant Fees and Services. Not applicable.

 

Item 5. Audit Committee of Listed Companies. Not applicable to open-end investment companies.

 

Item 6. Schedule of Investments. Schedule of investments in securities of unaffiliated issuers is included under Item 1.

 

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Funds. Not applicable to open-end investment companies.

 

Item 8. Portfolio Managers of Closed-End Management Investment Companies. Not applicable to open-end investment companies.

 

Item 9. Purchases of Equity Securities by Closed-End Funds. Not applicable to open-end investment companies.

 

Item 10. Submission of Matters to a Vote of Security Holders. None

 

Item 11. Controls and Procedures.

 

(a)       Based on an evaluation of the Registrant’s disclosure controls and procedures as of a date within 90 days of filing date of this Form N-CSR, the principal executive officer and principal financial officer of the Registrant have concluded that the disclosure controls and procedures of the Registrant are reasonably designed to ensure that the information required in filings on Form N-CSR is recorded, processed, summarized, and reported by the filing date, including that information required to be disclosed is accumulated and communicated to the Registrant’s management, including the Registrant’s principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

 

(b)       There were no significant changes in the Registrant’s internal control over financial reporting that occurred during the Registrant’s last fiscal half-year that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

 

Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies. Not applicable.

 

Item 13. Exhibits.

 

(a)(1) Not applicable.

 

(a)(2) Certifications required by Section 302 of the Sarbanes-Oxley Act of 2002 (and Item 11(a)(2) of Form N-CSR) are filed herewith.

 

(a)(3) Not applicable for open-end investment companies.

 

(b) Certifications required by Section 906 of the Sarbanes-Oxley Act of 2002 (and Item 11(b) of Form N-CSR) are filed herewith.

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

(Registrant) Northern Lights Fund Trust IV

 

By (Signature and Title)

/s/ Wendy Wang

Wendy Wang, Principal Executive Officer/President

 

 

Date 5/4/20

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By (Signature and Title)

/s/ Wendy Wang

Wendy Wang, Principal Executive Officer/President

 

 

Date 5/4/20

 

 

By (Signature and Title)

/s/ Sam Singh

Sam Singh, Principal Financial Officer/Treasurer

 

Date 5/4/20

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