Measured Risk Strategy Fund
Class A Shares – MRPAX
Class I Shares – MRPIX
(a series of Northern Lights Fund Trust IV)
Supplement dated October 18, 2019 to the Prospectus dated April 1, 2019 and Statement of Additional Information dated April 1, 2019, as amended
The Board of Trustees of Northern Lights Fund Trust IV (the “Board”) authorized an orderly liquidation of the Measured Risk Strategy Fund (the “Fund”), a series of the Northern Lights Fund Trust IV. The Board determined that closing and liquidating the Fund was in the best interests of the Fund and its shareholders.
The Fund’s investment adviser informed the Board of its view that the Fund could not continue to conduct its business and operations in an economically efficient manner over the long term due to the Fund’s inability to attract sufficient investment assets to maintain a competitive operating structure, thereby hindering its ability to operate efficiently, and recommended the Fund’s closure and liquidation to the Board.
The Fund will cease operations. The Board has determined to close the Fund and redeem all outstanding shares on or about November 22, 2019. Effective immediately, the Fund will not accept any purchases and will no longer pursue its stated investment objective. The Fund may begin liquidating its portfolio and may invest in cash equivalents such as money market funds until all shares have been redeemed. Any capital gains will be distributed as soon as practicable to shareholders. The Fund will bear the expenses incurred in carrying out its liquidation including, but not limited to, printing, legal, accounting, custodian and transfer agency fees, and the expenses of reports to shareholders, whether or not the liquidation is effected. Shares of the Fund are otherwise not available for purchase.
Prior to November 22, 2019, you may redeem your shares, including reinvested distributions, in accordance with the “How to Redeem Shares” section in the Prospectus. Unless your investment in a Fund is through a tax-deferred retirement account, a redemption is subject to tax on any taxable gains. Please refer to the “Tax Status, Dividends and Distributions” section in the Prospectus for general information. You may wish to consult your tax advisor about your particular situation.
ANY SHAREHOLDERS WHO HAVE NOT REDEEMED THEIR SHARES OF THE FUND PRIOR TO NOVEMBER 22, 2019 WILL HAVE THEIR SHARES AUTOMATICALLY REDEEMED AS OF THAT DATE, AND PROCEEDS WILL BE SENT TO THE ADDRESS OF RECORD. IF YOU HAVE QUESTIONS OR NEED ASSISTANCE, PLEASE CONTACT YOUR FINANCIAL ADVISOR DIRECTLY OR THE FUND AT 1-855-907-3407.
This Supplement and the existing Prospectus dated April 1, 2019 and Statement of Additional Information dated April 1, 2019, as amended, provide relevant information for all shareholders and should be retained for future reference. Both the Prospectus and the Statement of Additional Information have been filed with the Securities and Exchange Commission, are incorporated by reference and can be obtained without charge by calling the Fund at 1-855-907–3407. 8042-NLD-10/22/2019
Measured Risk Strategy Fund
Measured Risk Strategy Fund (MRPAX/MRPIX) invests tactically in options linked inversely to stock market volatility while the majority of the Fund remains invested in short-term fixed income securities or cash.
The Fund seeks total return from capital appreciation and income.
The Fund invests up to 20% in options on volatility-linked ETPs to capitalize on flat or declining levels of volatility, while the balance (80% or more) is invested in short-term fixed income (i.e. Treasury Bills) seeking to limit maximum overnight drawdown risk versus volatility ETPs.
Tactical exposure to short volatility, via options, attempts to limit the risk of severe single-day price declines in rising periods of volatility. The majority of the risk is in options exposure which can suffer total loss in a short period of time.
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The Fund seeks to outperform equity markets over the long term by purchasing options linked inversely to volatility.
During volatility spikes, these options may lose up to 100% of their value. Yet by limiting this “high-risk component” to a small percentage of the portfolio, the Fund seeks to avoid catastrophic losses, especially over short periods of time. The underlying movement of the Index offers the potential for gains that may counterbalance losses and provide an opportunity for net positive return over time.
Hypothetical allocation percentages illustrated here may not be indicative of actual allocations at any given time and are provided for illustration only. Options Risk. There are risks associated with the purchase of call and put options. As the buyer of a put or call option, the Fund risks losing the entire premium invested in the option if the Fund does not exercise the option or sell to close the position while it still has value. Although a small portion (2%-5%) of the Fund is allocated to mitigate an extreme upward spike in volatility, the Fund may experience extreme price declines in a single day.Fixed Income Risk. When the Fund invests in fixed income securities, the value of your investment in the Fund will fluctuate with changes in interest rates. Typically, a rise in interest rates causes a decline in the value of fixed income securities owned by the Fund. In general, the market price of fixed income securities with longer maturities will increase or decrease more in response to changes in interest rates than shorter-term securities. Other risk factors include credit risk (the debtor may default), extension risk (an issuer may exercise its right to repay principal on a fixed rate obligation held by the Fund later than expected), and prepayment risk (the debtor may pay its obligation early, reducing the amount of interest payments). These risks could affect the value of a particular investment by the Fund, possibly causing the Fund’s share price and total return to be reduced and fluctuate more than other types of investments. The Fund attempts to mitigate these risks by investing in short-term US Government Treasury Bills and cash.