09/09/2024 | Press release | Distributed by Public on 09/09/2024 18:20
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 | 811-22655 |
Northern Lights Fund Trust III
(Exact name of registrant as specified in charter)
225 Pictoria Drive, Suite 450, Cincinnati, Ohio | 45246 | |
(Address of principal executive offices) | (Zip code) |
The Corporation Trust Company
1209 Orange Street Wilmington, DE 19801
(Name and address of agent for service)
Registrant's telephone number, including area code: | 631-490-4300 |
Date of fiscal year end: | 6/30 | |
Date of reporting period: | 6/30/24 |
Item 1. Reports to Stockholders.
(a) |
Annual Shareholder Report - June 30, 2024
This annual shareholder report contains important information about HCM Defender 100 Index ETF for the period of July 1, 2023 to June 30, 2024.You can find additional information about the Fund at www.howardcmetfs.com. You can also request this information by contacting us at 1-770-642-4902.
(based on a hypothetical $10,000 investment)
Fund Name
|
Costs of a $10,000 investment
|
Costs paid as a percentage of a $10,000 investment
|
HCM Defender 100 Index ETF
|
$86
|
0.86%
|
In the early part of the third quarter of 2023 equity markets continued their upward trajectory. However, by August and September 2023 several factors began to weigh on the major indices. Renewed inflation fears and concerns about economic slowdown weighed heavy on the equity markets. October saw continued downward pressure with additional geopolitical concerns around the Israel- Hamas conflict. This downward pressure caused the HCM-BuyLine® to go negative, pushing us to reduce exposure. The downtrend, as determined by the HCM-BuyLine®, was short lived as the markets staged an impressive reversal thanks to a dovish pivot from the Federal Reserve accompanied by solid economic activity and declining inflation. This reversal quickly pushed us back above the HCM-BuyLine® resulting in us deploying cash back into the markets. The 2023 rally continued into 2024 with no signs of slowing down. However, April 2024 saw a pickup in volatility as fears of no rate cuts in 2024, or even a rate hike, pressured stocks. The higher then expected March Consumer Price Index (CPI) reversed several months of declines in CPI reports and the markets sold off quickly. This swift selloff triggered HCM Pivot Point® sell stops. Quickly liquidating leveraged ETF positions helped us significantly limit our drawdown and preserve capital. Cash was quickly redeployed as the HCM Pivot Point® turned back up. All the money we took off was reinvested at a lower price. Following dovish comments from Fed Chair Powell at the May 1, 2024 Federal Open Market Committee (FOMC) meeting, markets continued to climb. The resumption of disinflation and increased rate cut expectations fueled the S&P 500 to new highs as we were well positioned to take part in this powerful move higher. HCM Defender 100 Index ETF outperformance can be attributed to the use of leveraged Nasdaq 100 ETFs. We believe that the Fund makes for a great core holding in everyone's portfolio. As we look beyond the reporting period, we remain cautiously optimistic. The HCM-BuyLine® and HCM Pivot Point® will be our compass and we are confident it will lead us in the right direction.
HCM Defender 100 Index ETF - NAV
|
HCM Defender 100 Index
|
NASDAQ- 100 Total Return Index
|
|
10/09/19
|
$10,000
|
$10,000
|
$10,000
|
06/30/20
|
$12,111
|
$12,542
|
$13,304
|
06/30/21
|
$19,210
|
$18,158
|
$19,205
|
06/30/22
|
$14,809
|
$15,127
|
$15,292
|
06/30/23
|
$18,922
|
$19,632
|
$20,358
|
06/30/24
|
$24,731
|
$25,588
|
$26,622
|
1 Year
|
Since Inception (October 9, 2019)
|
|
HCM Defender 100 Index ETF - NAV
|
30.70%
|
21.12%
|
HCM Defender 100 Index ETF - Market Price
|
30.62%
|
21.12%
|
HCM Defender 100 Index
|
30.34%
|
21.99%
|
NASDAQ- 100 Total Return Index
|
30.77%
|
23.02%
|
The Fund's past performance is not a good predictor of how the Fund will perform in the future.The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or redemption of fund shares.
Value
|
Value
|
Common Stocks
|
80.5%
|
Exchange-Traded Funds
|
19.5%
|
Value
|
Value
|
Other Assets in Excess of Liabilities
|
0.1%
|
Energy
|
0.3%
|
Utilities
|
0.8%
|
Materials
|
1.0%
|
Industrials
|
1.7%
|
Consumer Staples
|
3.6%
|
Health Care
|
3.8%
|
Consumer Discretionary
|
9.4%
|
Communications
|
13.0%
|
Equity
|
19.4%
|
Technology
|
46.9%
|
Holding Name
|
% of Net Assets
|
ProShares UltraPro QQQ
|
19.4%
|
Microsoft Corporation
|
12.2%
|
Apple, Inc.
|
11.5%
|
NVIDIA Corporation
|
5.0%
|
Amazon.com, Inc.
|
4.7%
|
Meta Platforms, Inc., Class A
|
4.5%
|
Broadcom, Inc.
|
3.5%
|
Tesla, Inc.
|
2.4%
|
Alphabet, Inc., Class A
|
2.3%
|
Alphabet, Inc., Class C
|
2.3%
|
No material changes occurred during the year ended June 30, 2024.
TSR-AR 063024-QQH
Annual Shareholder Report - June 30, 2024
Additional information is available on the Fund's website (www.howardcmetfs.com), including its:
Prospectus
Financial information
Holdings
Proxy voting information
TSR-AR 063024-QQH
Annual Shareholder Report - June 30, 2024
This annual shareholder report contains important information about HCM Defender 500 Index ETF for the period of July 1, 2023 to June 30, 2024.You can find additional information about the Fund at www.howardcmetfs.com. You can also request this information by contacting us at 1-770-642-4902.
(based on a hypothetical $10,000 investment)
Fund Name
|
Costs of a $10,000 investment
|
Costs paid as a percentage of a $10,000 investment
|
HCM Defender 500 Index ETF
|
$89
|
0.89%
|
In the early part of the third quarter of 2023 equity markets continued their upward trajectory. However, by August and September 2023 several factors began to weigh on the major indices. Renewed inflation fears and concerns about economic slowdown weighed heavily on the equity markets. October saw continued downward pressure with additional geopolitical concerns around the Israel- Hamas conflict. This downward pressure caused the HCM-BuyLine® to go negative, pushing us to reduce exposure. The downtrend, as determined by the HCM-BuyLine®, was short-lived as the markets staged an impressive reversal thanks to a dovish pivot from the Federal Reserve accompanied by solid economic activity and declining inflation. This reversal quickly pushed us back above the HCM-BuyLine® resulting in us deploying cash back into the markets. The 2023 rally continued into 2024 with no signs of slowing down. However, April 2024 saw a pickup in volatility as fears of no rate cuts in 2024, or even a rate hike, pressured stocks. The higher then expected March Consumer Price Index (CPI) reversed several months of declines in CPI reports and the markets sold off quickly. This swift selloff triggered HCM Pivot Point® sell stops. Quickly liquidating leveraged ETF positions helped us significantly limit our drawdown. Cash was quickly redeployed as the HCM Pivot Point® turned back up. All the money we took off was reinvested at a lower price. Following dovish comments from Fed Chair Powell at the May 1, 2024 Federal Open Market Committee (FOMC) meeting, markets continued to climb. The resumption of disinflation and increased rate cut expectations fueled the S&P 500 to new highs as we were well positioned to take part in this powerful move higher. HCM Defender 500 Index ETF outperformance can be attributed to the use of leveraged S&P 500 ETFs. We believe that the Fund makes for a great core holding in everyone's portfolio. As we look beyond the reporting period, we remain cautiously optimistic. The HCM-BuyLine® and HCM Pivot Point® will be our compass and we are confident it will lead us in the right direction.
HCM Defender 500 Index ETF - NAV
|
HCM Defender 500 Index
|
S&P 500® Index
|
|
10/09/19
|
$10,000
|
$10,000
|
$10,000
|
06/30/20
|
$10,078
|
$10,559
|
$10,772
|
06/30/21
|
$16,047
|
$15,005
|
$15,166
|
06/30/22
|
$13,953
|
$13,307
|
$13,556
|
06/30/23
|
$15,916
|
$15,084
|
$16,212
|
06/30/24
|
$20,130
|
$18,243
|
$20,193
|
1 Year
|
Since Inception (October 9, 2019)
|
|
HCM Defender 500 Index ETF - NAV
|
26.48%
|
15.96%
|
HCM Defender 500 Index ETF - Market Price
|
26.48%
|
15.97%
|
HCM Defender 500 Index
|
20.94%
|
13.57%
|
S&P 500® Index
|
24.56%
|
16.03%
|
The Fund's past performance is not a good predictor of how the Fund will perform in the future.The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or redemption of fund shares.
Value
|
Value
|
Common Stocks
|
80.6%
|
Exchange-Traded Funds
|
19.4%
|
Right
|
0.0%
|
Value
|
Value
|
Other Assets in Excess of Liabilities
|
0.1%
|
Real Estate
|
1.4%
|
Utilities
|
1.5%
|
Materials
|
1.5%
|
Energy
|
2.9%
|
Consumer Staples
|
4.0%
|
Industrials
|
5.0%
|
Financials
|
7.0%
|
Consumer Discretionary
|
7.8%
|
Communications
|
8.8%
|
Health Care
|
9.1%
|
Equity
|
19.4%
|
Technology
|
31.5%
|
Holding Name
|
% of Net Assets
|
Direxion Daily S&P 500 Bull 3X
|
19.4%
|
Microsoft Corporation
|
7.0%
|
Apple, Inc.
|
6.6%
|
NVIDIA Corporation
|
6.3%
|
Amazon.com, Inc.
|
3.7%
|
Meta Platforms, Inc., Class A
|
2.3%
|
Alphabet, Inc., Class A
|
2.2%
|
Alphabet, Inc., Class C
|
1.9%
|
Eli Lilly & Company
|
1.5%
|
Broadcom, Inc.
|
1.4%
|
No material changes occurred during the year ended June 30, 2024.
Annual Shareholder Report - June 30, 2024
Additional information is available on the Fund's website (www.howardcmetfs.com), including its:
Prospectus
Financial information
Holdings
Proxy voting information
TSR-AR 063024-LGH
(b) | Not applicable |
Item 2. Code of Ethics.
(a) | The registrant has, as of the end of the period covered by this report, adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, and principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. |
(b) | N/A |
(c) | During the period covered by this report, there were no amendments to any provision of the code of ethics. |
(d) | During the period covered by this report, there were no waivers or implicit waivers of a provision of the code of ethics. |
(e) | N/A |
(f) | See Item 19(a)(1) |
Item 3. Audit Committee Financial Expert.
(a)(1) | The Registrant's board of trustees has determined that Mark H. Taylor is an audit committee financial expert, as defined in Item 3 of Form N-CSR. Mr. Taylor is independent for purposes of this Item. |
(a)(2) | Not applicable. |
(a)(3) | Not applicable. |
Item 4. Principal Accountant Fees and Services.
(a) |
Audit Fees. The aggregate fees billed for each of the last two fiscal years for professional services rendered by the registrant's principal accountant for the audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years are as follows: |
2024 - $ 36,500
2023 - $ 35,500
(b) | Audit-Related Fees. There were no fees billed in each of the last two fiscal years for assurances and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant's financial statements and are not reported under paragraph (a) of this item. |
(c) | Tax Fees. The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance are as follows: |
2024 - $ 8,000
2023 - $ 7,500
Preparation of Federal & State income tax returns, assistance with calculation of required income, capital gain and excise distributions and preparation of Federal excise tax returns.
(d) | All Other Fees. The aggregate fees billed in each of the last two fiscal years for products and services provided by the registrant's principal accountant, other than the services reported in paragraphs (a) through (c) of this item were $0 and $0 for the fiscal years ended June 30, 2023, and 2024 respectively. |
(e)(1) |
The audit committee does not have pre-approval policies and procedures. Instead, the audit committee or audit committee chairman approves on a case-by-case basis each audit or non-audit service before the principal accountant is engaged by the registrant. |
(e)(2) |
There were no services described in each of paragraphs (b) through (d) of this Item that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. |
(f) | Not applicable. The percentage of hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees was zero percent (0%). |
(g) |
All non-audit fees billed by the registrant's principal accountant for services rendered to the registrant for the fiscal years ended June 30, 2023, and 2024 respectively are disclosed in (b)-(d) above. There were no audit or non-audit services performed by the registrant's principal accountant for the registrant's adviser. |
(h) |
Not applicable. |
(i) |
Not applicable. |
(j) |
Not applicable. |
Item 5. Audit Committee of Listed Companies.
The Registrant is a listed issuer as defined in Rule 10A-3 under the Exchange Act and has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The Registrant's audit committee members are Mark H. Taylor (chairman), Patricia Luscombe, John V. Palancia and Jeffrey D. Young.
Item 6. Schedule of Investments.
The Registrant's schedule of investments in unaffiliated issuers is included in the Financial Statements under Item 7 of this form.
Item 7. Financial Statements and Financial Highlights for Open-End Management Investment Companies.
(a)
HCM Defender 100 Index ETF
QQH
HCM Defender 500 Index ETF
LGH
Annual Financial Statements
June 30, 2024
1-770-642-4902
www.howardcmetfs.com
HCM DEFENDER 100 INDEX ETF
SCHEDULE OF INVESTMENTS
June 30, 2024
Shares | Fair Value | |||||||
COMMON STOCKS - 80.5% | ||||||||
ADVERTISING & MARKETING - 0.2% | ||||||||
11,483 | Trade Desk, Inc. (The), Class A(a) | $ | 1,121,545 | |||||
AUTOMOTIVE - 2.4% | ||||||||
60,539 | Tesla, Inc.(a) | 11,979,457 | ||||||
BEVERAGES - 1.3% | ||||||||
4,217 | Coca-Cola Europacific Partners plc | 307,293 | ||||||
18,849 | Keurig Dr Pepper, Inc. | 629,557 | ||||||
11,289 | Monster Beverage Corporation(a) | 563,886 | ||||||
31,130 | PepsiCo, Inc. | 5,134,270 | ||||||
6,635,006 | ||||||||
BIOTECH & PHARMA - 2.5% | ||||||||
11,686 | Amgen, Inc. | 3,651,290 | ||||||
3,424 | Biogen, Inc.(a) | 793,752 | ||||||
1,818 | BioNTech S.E. - ADR(a) | 146,094 | ||||||
28,518 | Gilead Sciences, Inc. | 1,956,620 | ||||||
640 | GRAIL, Inc.(a) | 9,837 | ||||||
7,313 | Moderna, Inc.(a) | 868,419 | ||||||
2,295 | Regeneron Pharmaceuticals, Inc.(a) | 2,412,114 | ||||||
5,679 | Vertex Pharmaceuticals, Inc.(a) | 2,661,861 | ||||||
12,499,987 | ||||||||
CABLE & SATELLITE - 0.9% | ||||||||
2,148 | Charter Communications, Inc., Class A(a) | 642,166 | ||||||
94,433 | Comcast Corporation, Class A | 3,697,996 | ||||||
4,340,162 | ||||||||
CHEMICALS - 1.0% | ||||||||
10,794 | Linde plc | 4,736,515 | ||||||
COMMERCIAL SUPPORT SERVICES - 0.3% | ||||||||
1,788 | Cintas Corporation | 1,252,065 | ||||||
DIVERSIFIED INDUSTRIALS - 0.6% | ||||||||
14,370 | Honeywell International, Inc. | 3,068,569 |
See accompanying notes to financial statements.
1
HCM DEFENDER 100 INDEX ETF
SCHEDULE OF INVESTMENTS (Continued)
June 30, 2024
Shares | Fair Value | |||||||
COMMON STOCKS - 80.5% (Continued) | ||||||||
E-COMMERCE DISCRETIONARY - 5.6% | ||||||||
119,005 | Amazon.com, Inc.(a) | $ | 22,997,717 | |||||
11,978 | eBay, Inc. | 643,458 | ||||||
944 | MercadoLibre, Inc.(a) | 1,551,370 | ||||||
13,706 | PDD Holdings, Inc. - ADR(a) | 1,822,213 | ||||||
27,014,758 | ||||||||
ELECTRIC UTILITIES - 0.8% | ||||||||
11,276 | American Electric Power Company, Inc. | 989,356 | ||||||
7,161 | Constellation Energy Corporation | 1,434,133 | ||||||
21,300 | Exelon Corporation | 737,193 | ||||||
12,404 | Xcel Energy, Inc. | 662,498 | ||||||
3,823,180 | ||||||||
ENTERTAINMENT CONTENT - 0.2% | ||||||||
5,501 | Electronic Arts, Inc. | 766,455 | ||||||
54,810 | Warner Bros Discovery, Inc.(a) | 407,786 | ||||||
1,174,241 | ||||||||
FOOD - 0.5% | ||||||||
16,669 | Kraft Heinz Company (The) | 537,075 | ||||||
28,577 | Mondelez International, Inc., A | 1,870,079 | ||||||
2,407,154 | ||||||||
INDUSTRIAL SUPPORT SERVICES - 0.2% | ||||||||
12,209 | Fastenal Company | 767,214 | ||||||
INTERNET MEDIA & SERVICES - 11.3% | ||||||||
9,020 | Airbnb, Inc., Class A(a) | 1,367,703 | ||||||
62,428 | Alphabet, Inc., Class A | 11,371,260 | ||||||
61,746 | Alphabet, Inc., Class C | 11,325,451 | ||||||
727 | Booking Holdings, Inc. | 2,880,011 | ||||||
44,542 | Meta Platforms, Inc., Class A | 22,458,967 | ||||||
9,672 | Netflix, Inc.(a) | 6,527,439 | ||||||
55,930,831 | ||||||||
LEISURE FACILITIES & SERVICES - 0.6% | ||||||||
5,394 | Marriott International, Inc., Class A | 1,304,107 | ||||||
24,502 | Starbucks Corporation | 1,907,481 | ||||||
3,211,588 |
See accompanying notes to financial statements.
2
HCM DEFENDER 100 INDEX ETF
SCHEDULE OF INVESTMENTS (Continued)
June 30, 2024
Shares | Fair Value | |||||||
COMMON STOCKS - 80.5% (Continued) | ||||||||
MEDICAL EQUIPMENT & DEVICES - 1.3% | ||||||||
1,518 | Align Technology, Inc.(a) | $ | 366,491 | |||||
8,136 | DexCom, Inc.(a) | 922,460 | ||||||
7,959 | GE HealthCare Technologies, Inc. | 620,165 | ||||||
1,697 | IDEXX Laboratories, Inc.(a) | 826,778 | ||||||
3,842 | Illumina, Inc.(a) | 401,028 | ||||||
7,544 | Intuitive Surgical, Inc.(a) | 3,355,948 | ||||||
6,492,870 | ||||||||
OIL & GAS PRODUCERS - 0.1% | ||||||||
3,673 | Diamondback Energy, Inc. | 735,298 | ||||||
OIL & GAS SERVICES & EQUIPMENT - 0.2% | ||||||||
22,438 | Baker Hughes Company | 789,144 | ||||||
RETAIL - CONSUMER STAPLES - 1.8% | ||||||||
9,821 | Costco Wholesale Corporation | 8,347,752 | ||||||
4,477 | Dollar Tree, Inc.(a) | 478,009 | ||||||
8,825,761 | ||||||||
RETAIL - DISCRETIONARY - 0.6% | ||||||||
2,380 | Lululemon Athletica, Inc.(a) | 710,906 | ||||||
1,245 | O'Reilly Automotive, Inc.(a) | 1,314,795 | ||||||
7,135 | Ross Stores, Inc. | 1,036,858 | ||||||
3,062,559 | ||||||||
SEMICONDUCTORS - 16.2% | ||||||||
37,528 | Advanced Micro Devices, Inc.(a) | 6,087,417 | ||||||
10,659 | Analog Devices, Inc. | 2,433,023 | ||||||
21,196 | Applied Materials, Inc. | 5,002,044 | ||||||
10,701 | Broadcom, Inc. | 17,180,777 | ||||||
1,405 | GLOBALFOUNDRIES, Inc.(a) | 71,037 | ||||||
93,124 | Intel Corporation | 2,884,050 | ||||||
2,754 | KLA Corporation | 2,270,701 | ||||||
2,675 | Lam Research Corporation | 2,848,474 | ||||||
17,493 | Marvell Technology, Inc. | 1,222,761 | ||||||
11,444 | Microchip Technology, Inc. | 1,047,126 | ||||||
22,749 | Micron Technology, Inc. | 2,992,176 |
See accompanying notes to financial statements.
3
HCM DEFENDER 100 INDEX ETF
SCHEDULE OF INVESTMENTS (Continued)
June 30, 2024
Shares | Fair Value | |||||||
COMMON STOCKS - 80.5% (Continued) | ||||||||
SEMICONDUCTORS - 16.2% (Continued) | ||||||||
201,770 | NVIDIA Corporation | $ | 24,926,665 | |||||
5,518 | NXP Semiconductors N.V. | 1,484,839 | ||||||
9,240 | ON Semiconductor Corporation(a) | 633,402 | ||||||
28,052 | QUALCOMM, Inc. | 5,587,397 | ||||||
19,532 | Texas Instruments, Inc. | 3,799,560 | ||||||
80,471,449 | ||||||||
SOFTWARE - 16.9% | ||||||||
10,670 | Adobe, Inc.(a) | 5,927,613 | ||||||
1,743 | ANSYS, Inc.(a) | 560,375 | ||||||
3,122 | Atlassian Corporation, Class A(a) | 552,219 | ||||||
4,363 | Autodesk, Inc.(a) | 1,079,624 | ||||||
5,576 | Cadence Design Systems, Inc.(a) | 1,716,014 | ||||||
4,486 | Crowdstrike Holdings, Inc., Class A(a) | 1,718,990 | ||||||
4,644 | Datadog, Inc., Class A(a) | 602,280 | ||||||
14,516 | Fortinet, Inc.(a) | 874,879 | ||||||
5,562 | Intuit, Inc. | 3,655,402 | ||||||
135,525 | Microsoft Corporation | 60,572,900 | ||||||
1,251 | MongoDB, Inc.(a) | 312,700 | ||||||
6,083 | Palo Alto Networks, Inc.(a) | 2,062,198 | ||||||
2,178 | Roper Technologies, Inc. | 1,227,651 | ||||||
3,014 | Synopsys, Inc.(a) | 1,793,511 | ||||||
4,106 | Workday, Inc., Class A(a) | 917,937 | ||||||
83,574,293 | ||||||||
TECHNOLOGY HARDWARE - 12.5% | ||||||||
271,010 | Apple, Inc. | 57,080,126 | ||||||
93,819 | Cisco Systems, Inc. | 4,457,341 | ||||||
518 | Super Micro Computer, Inc.(a) | 424,423 | ||||||
61,961,890 | ||||||||
TECHNOLOGY SERVICES - 1.3% | ||||||||
8,482 | Automatic Data Processing, Inc. | 2,024,568 | ||||||
11,075 | Cognizant Technology Solutions Corporation, Class A | 753,100 | ||||||
8,319 | CoStar Group, Inc.(a) | 616,771 | ||||||
6,659 | Paychex, Inc. | 789,491 | ||||||
23,469 | PayPal Holdings, Inc.(a) | 1,361,906 |
See accompanying notes to financial statements.
4
HCM DEFENDER 100 INDEX ETF
SCHEDULE OF INVESTMENTS (Continued)
June 30, 2024
Shares | Fair Value | |||||||
COMMON STOCKS - 80.5% (Continued) | ||||||||
TECHNOLOGY SERVICES - 1.3% (Continued) | ||||||||
3,083 | Verisk Analytics, Inc. | $ | 831,023 | |||||
6,376,859 | ||||||||
TELECOMMUNICATIONS - 0.4% | ||||||||
11,178 | T-Mobile US, Inc. | 1,969,340 | ||||||
TRANSPORTATION & LOGISTICS - 0.4% | ||||||||
42,995 | CSX Corporation | 1,438,183 | ||||||
4,024 | Old Dominion Freight Line, Inc. | 710,638 | ||||||
2,148,821 | ||||||||
TRANSPORTATION EQUIPMENT - 0.2% | ||||||||
10,801 | PACCAR, Inc. | 1,111,855 | ||||||
WHOLESALE - DISCRETIONARY - 0.2% | ||||||||
17,283 | Copart, Inc.(a) | 936,047 | ||||||
TOTAL COMMON STOCKS (Cost $302,459,669) | 398,418,458 | |||||||
EXCHANGE-TRADED FUND - 19.4% | ||||||||
EQUITY - 19.4% | ||||||||
1,303,417 | ProShares UltraPro QQQ (Cost $71,339,923) | 96,218,243 | ||||||
TOTAL INVESTMENTS - 99.9% (Cost $373,799,592) | $ | 494,636,701 | ||||||
OTHER ASSETS IN EXCESS OF LIABILITIES - 0.1% | 579,188 | |||||||
NET ASSETS - 100.0% | $ | 495,215,889 |
ADR | - American Depositary Receipt |
ETF | - Exchange-Traded Fund |
NV | - Naamioze Vennootschap |
PLC | - Public Limited Company |
(a) | Non-income producing security. |
See accompanying notes to financial statements.
5
HCM DEFENDER 500 INDEX ETF
SCHEDULE OF INVESTMENTS
June 30, 2024
Shares | Fair Value | |||||||
COMMON STOCKS - 80.5% | ||||||||
ADVERTISING & MARKETING - 0.1% | ||||||||
1,182 | Omnicom Group, Inc. | $ | 106,025 | |||||
3,268 | Trade Desk, Inc. (The), Class A(a) | 319,186 | ||||||
425,211 | ||||||||
AEROSPACE & DEFENSE - 1.0% | ||||||||
3,315 | Boeing Company (The)(a) | 603,362 | ||||||
1,340 | General Dynamics Corporation | 388,788 | ||||||
2,416 | Howmet Aerospace, Inc. | 187,554 | ||||||
1,143 | L3Harris Technologies, Inc. | 256,695 | ||||||
1,535 | Lockheed Martin Corporation | 716,998 | ||||||
893 | Northrop Grumman Corporation | 389,303 | ||||||
8,668 | RTX Corporation | 870,180 | ||||||
297 | Teledyne Technologies, Inc.(a) | 115,230 | ||||||
1,175 | Textron, Inc. | 100,886 | ||||||
260 | TransDigm Group, Inc. | 332,179 | ||||||
3,961,175 | ||||||||
APPAREL & TEXTILE PRODUCTS - 0.2% | ||||||||
126 | Deckers Outdoor Corporation(a) | 121,962 | ||||||
7,570 | NIKE, Inc., Class B | 570,551 | ||||||
692,513 | ||||||||
ASSET MANAGEMENT - 0.8% | ||||||||
607 | Ameriprise Financial, Inc. | 259,304 | ||||||
2,453 | Apollo Global Management, Inc. | 289,626 | ||||||
837 | Ares Management Corporation, Class A | 111,555 | ||||||
850 | BlackRock, Inc. | 669,222 | ||||||
4,268 | Blackstone, Inc. | 528,378 | ||||||
8,245 | Charles Schwab Corporation (The) | 607,574 | ||||||
3,776 | KKR & Company, Inc. | 397,386 | ||||||
385 | LPL Financial Holdings, Inc. | 107,531 | ||||||
1,190 | Raymond James Financial, Inc. | 147,096 | ||||||
1,290 | T Rowe Price Group, Inc. | 148,750 | ||||||
3,266,422 | ||||||||
AUTOMOTIVE - 1.3% | ||||||||
24,405 | Ford Motor Company | 306,039 | ||||||
8,956 | General Motors Company | 416,096 |
See accompanying notes to financial statements.
6
HCM DEFENDER 500 INDEX ETF
SCHEDULE OF INVESTMENTS (Continued)
June 30, 2024
Shares | Fair Value | |||||||
COMMON STOCKS - 80.5% (Continued) | ||||||||
AUTOMOTIVE - 1.3% (Continued) | ||||||||
22,239 | Tesla, Inc.(a) | $ | 4,400,653 | |||||
5,122,788 | ||||||||
BANKING - 2.5% | ||||||||
43,288 | Bank of America Corporation | 1,721,564 | ||||||
11,398 | Citigroup, Inc. | 723,317 | ||||||
2,376 | Citizens Financial Group, Inc. | 85,607 | ||||||
4,780 | Fifth Third Bancorp | 174,422 | ||||||
8,722 | Huntington Bancshares, Inc. | 114,956 | ||||||
23,001 | JPMorgan Chase & Company | 4,652,182 | ||||||
5,399 | KeyCorporation | 76,720 | ||||||
1,007 | M&T Bank Corporation | 152,420 | ||||||
2,475 | PNC Financial Services Group, Inc. (The) | 384,813 | ||||||
5,927 | Regions Financial Corporation | 118,777 | ||||||
8,161 | Truist Financial Corporation | 317,055 | ||||||
8,764 | US Bancorp | 347,931 | ||||||
21,972 | Wells Fargo & Company | 1,304,917 | ||||||
10,174,681 | ||||||||
BEVERAGES - 0.9% | ||||||||
2,094 | Brown-Forman Corporation, Class B | 90,440 | ||||||
23,698 | Coca-Cola Company (The) | 1,508,378 | ||||||
990 | Constellation Brands, Inc., Class A | 254,707 | ||||||
5,749 | Keurig Dr Pepper, Inc. | 192,017 | ||||||
3,253 | Monster Beverage Corporation(a) | 162,487 | ||||||
8,408 | PepsiCo, Inc. | 1,386,731 | ||||||
3,594,760 | ||||||||
BIOTECH & PHARMA - 4.6% | ||||||||
11,037 | AbbVie, Inc. | 1,893,066 | ||||||
740 | Alnylam Pharmaceuticals, Inc.(a) | 179,820 | ||||||
3,251 | Amgen, Inc. | 1,015,775 | ||||||
921 | Biogen, Inc.(a) | 213,506 | ||||||
1,055 | BioMarin Pharmaceutical, Inc.(a) | 86,858 | ||||||
13,143 | Bristol-Myers Squibb Company | 545,829 | ||||||
6,777 | Eli Lilly & Company | 6,135,760 | ||||||
7,901 | Gilead Sciences, Inc. | 542,088 |
See accompanying notes to financial statements.
7
HCM DEFENDER 500 INDEX ETF
SCHEDULE OF INVESTMENTS (Continued)
June 30, 2024
Shares | Fair Value | |||||||
COMMON STOCKS - 80.5% (Continued) | ||||||||
BIOTECH & PHARMA - 4.6% (Continued) | ||||||||
210 | GRAIL, Inc.(a) | $ | 3,228 | |||||
17,418 | Johnson & Johnson | 2,545,815 | ||||||
15,882 | Merck & Company, Inc. | 1,966,192 | ||||||
2,152 | Moderna, Inc.(a) | 255,550 | ||||||
36,768 | Pfizer, Inc. | 1,028,769 | ||||||
623 | Regeneron Pharmaceuticals, Inc.(a) | 654,792 | ||||||
1,578 | Vertex Pharmaceuticals, Inc.(a) | 739,640 | ||||||
6,447 | Viatris, Inc. | 68,532 | ||||||
2,818 | Zoetis, Inc. | 488,528 | ||||||
18,363,748 | ||||||||
CABLE & SATELLITE - 0.3% | ||||||||
572 | Charter Communications, Inc., Class A(a) | 171,005 | ||||||
24,981 | Comcast Corporation, Class A | 978,256 | ||||||
1,149,261 | ||||||||
CHEMICALS - 1.0% | ||||||||
1,215 | Air Products and Chemicals, Inc. | 313,531 | ||||||
762 | Albemarle Corporation | 72,786 | ||||||
499 | Avery Dennison Corporation | 109,106 | ||||||
1,128 | CF Industries Holdings, Inc. | 83,607 | ||||||
4,768 | Corteva, Inc. | 257,186 | ||||||
4,226 | Dow, Inc. | 224,189 | ||||||
2,601 | DuPont de Nemours, Inc. | 209,354 | ||||||
1,505 | Ecolab, Inc. | 358,190 | ||||||
1,668 | International Flavors & Fragrances, Inc. | 158,810 | ||||||
2,907 | Linde plc | 1,275,620 | ||||||
1,580 | LyondellBasell Industries N.V., Class A | 151,143 | ||||||
1,375 | PPG Industries, Inc. | 173,099 | ||||||
598 | RPM International, Inc. | 64,393 | ||||||
1,385 | Sherwin-Williams Company (The) | 413,326 | ||||||
3,864,340 | ||||||||
COMMERCIAL SUPPORT SERVICES - 0.3% | ||||||||
502 | Cintas Corporation | 351,531 | ||||||
1,134 | Republic Services, Inc. | 220,382 |
See accompanying notes to financial statements.
8
HCM DEFENDER 500 INDEX ETF
SCHEDULE OF INVESTMENTS (Continued)
June 30, 2024
Shares | Fair Value | |||||||
COMMON STOCKS - 80.5% (Continued) | ||||||||
COMMERCIAL SUPPORT SERVICES - 0.3% (Continued) | ||||||||
2,431 | Waste Management, Inc. | $ | 518,629 | |||||
1,090,542 | ||||||||
CONSTRUCTION MATERIALS - 0.2% | ||||||||
334 | Carlisle Companies, Inc. | 135,340 | ||||||
4,002 | CRH plc | 300,070 | ||||||
387 | Martin Marietta Materials, Inc. | 209,677 | ||||||
841 | Vulcan Materials Company | 209,140 | ||||||
854,227 | ||||||||
CONTAINERS & PACKAGING - 0.1% | ||||||||
1,829 | Ball Corporation | 109,777 | ||||||
1,808 | International Paper Company | 78,015 | ||||||
566 | Packaging Corporation of America | 103,329 | ||||||
291,121 | ||||||||
DATA CENTER REIT - 0.2% | ||||||||
1,862 | Digital Realty Trust, Inc. | 283,117 | ||||||
540 | Equinix, Inc. | 408,564 | ||||||
691,681 | ||||||||
DIVERSIFIED INDUSTRIALS - 1.0% | ||||||||
3,197 | 3M Company | 326,701 | ||||||
900 | Dover Corporation | 162,405 | ||||||
2,280 | Eaton Corporation PLC | 714,894 | ||||||
3,434 | Emerson Electric Company | 378,289 | ||||||
6,485 | General Electric Company | 1,030,921 | ||||||
3,992 | Honeywell International, Inc. | 852,452 | ||||||
1,806 | Illinois Tool Works, Inc. | 427,950 | ||||||
3,893,612 | ||||||||
E-COMMERCE DISCRETIONARY - 3.8% | ||||||||
76,954 | Amazon.com, Inc.(a) | 14,871,362 | ||||||
2,995 | eBay, Inc. | 160,891 | ||||||
15,032,253 | ||||||||
ELECTRIC UTILITIES - 1.4% | ||||||||
1,825 | Alliant Energy Corporation | 92,893 | ||||||
1,545 | Ameren Corporation | 109,865 | ||||||
3,036 | American Electric Power Company, Inc. | 266,379 |
See accompanying notes to financial statements.
9
HCM DEFENDER 500 INDEX ETF
SCHEDULE OF INVESTMENTS (Continued)
June 30, 2024
Shares | Fair Value | |||||||
COMMON STOCKS - 80.5% (Continued) | ||||||||
ELECTRIC UTILITIES - 1.4% (Continued) | ||||||||
3,286 | CenterPoint Energy, Inc. | $ | 101,800 | |||||
1,589 | CMS Energy Corporation | 94,593 | ||||||
1,991 | Consolidated Edison, Inc. | 178,035 | ||||||
1,940 | Constellation Energy Corporation | 388,524 | ||||||
5,287 | Dominion Energy, Inc. | 259,063 | ||||||
1,195 | DTE Energy Company | 132,657 | ||||||
4,718 | Duke Energy Corporation | 472,885 | ||||||
2,336 | Edison International | 167,748 | ||||||
1,218 | Entergy Corporation | 130,326 | ||||||
1,195 | Evergy, Inc. | 63,299 | ||||||
2,187 | Eversource Energy | 124,025 | ||||||
6,027 | Exelon Corporation | 208,594 | ||||||
3,341 | FirstEnergy Corporation | 127,860 | ||||||
12,962 | NextEra Energy, Inc. | 917,838 | ||||||
14,149 | PG&E Corporation | 247,042 | ||||||
4,689 | PPL Corporation | 129,651 | ||||||
2,907 | Public Service Enterprise Group, Inc. | 214,246 | ||||||
3,827 | SEMPRA | 291,082 | ||||||
6,535 | Southern Company (The) | 506,920 | ||||||
1,846 | WEC Energy Group, Inc. | 144,837 | ||||||
3,512 | Xcel Energy, Inc. | 187,576 | ||||||
5,557,738 | ||||||||
ELECTRICAL EQUIPMENT - 0.8% | ||||||||
1,381 | AMETEK, Inc. | 230,227 | ||||||
6,908 | Amphenol Corporation, Class A | 465,392 | ||||||
5,219 | Carrier Global Corporation | 329,215 | ||||||
2,271 | Fortive Corporation | 168,281 | ||||||
1,561 | GE Vernova, LLC(a) | 267,727 | ||||||
294 | Hubbell, Inc. | 107,451 | ||||||
4,088 | Johnson Controls International plc | 271,729 | ||||||
976 | Keysight Technologies, Inc.(a) | 133,468 | ||||||
2,542 | Otis Worldwide Corporation | 244,693 | ||||||
691 | Rockwell Automation, Inc. | 190,218 | ||||||
1,323 | Trane Technologies PLC | 435,174 |
See accompanying notes to financial statements.
10
HCM DEFENDER 500 INDEX ETF
SCHEDULE OF INVESTMENTS (Continued)
June 30, 2024
Shares | Fair Value | |||||||
COMMON STOCKS - 80.5% (Continued) | ||||||||
ELECTRICAL EQUIPMENT - 0.8% (Continued) | ||||||||
1,431 | Trimble, Inc.(a) | $ | 80,022 | |||||
2,845 | Vertiv Holdings Company | 246,292 | ||||||
3,169,889 | ||||||||
ENGINEERING & CONSTRUCTION - 0.1% | ||||||||
668 | Jacobs Solutions, Inc. | 93,326 | ||||||
856 | Quanta Services, Inc. | 217,501 | ||||||
310,827 | ||||||||
ENTERTAINMENT CONTENT - 0.4% | ||||||||
1,554 | Electronic Arts, Inc. | 216,519 | ||||||
2,285 | ROBLOX Corporation, Class A(a) | 85,025 | ||||||
996 | Take-Two Interactive Software, Inc.(a) | 154,868 | ||||||
10,538 | Walt Disney Company (The) | 1,046,318 | ||||||
15,077 | Warner Bros Discovery, Inc.(a) | 112,173 | ||||||
1,614,903 | ||||||||
FOOD - 0.4% | ||||||||
3,196 | Conagra Brands, Inc. | 90,830 | ||||||
3,630 | General Mills, Inc. | 229,634 | ||||||
923 | Hershey Company (The) | 169,675 | ||||||
543 | JM Smucker Co./The | 59,209 | ||||||
1,710 | Kellanova | 98,633 | ||||||
4,517 | Kraft Heinz Company (The) | 145,538 | ||||||
930 | Lamb Weston Holdings, Inc. | 78,194 | ||||||
1,373 | McCormick & Company, Inc. | 97,401 | ||||||
8,191 | Mondelez International, Inc. | 536,018 | ||||||
1,904 | Tyson Foods, Inc., Class A | 108,795 | ||||||
1,613,927 | ||||||||
GAMING REIT - 0.0%(b) | ||||||||
6,298 | VICI Properties, Inc. | 180,375 | ||||||
GAS & WATER UTILITIES - 0.1% | ||||||||
1,188 | American Water Works Company, Inc. | 153,442 | ||||||
786 | Atmos Energy Corporation | 91,687 | ||||||
245,129 |
See accompanying notes to financial statements.
11
HCM DEFENDER 500 INDEX ETF
SCHEDULE OF INVESTMENTS (Continued)
June 30, 2024
Shares | Fair Value | |||||||
COMMON STOCKS - 80.5% (Continued) | ||||||||
HEALTH CARE FACILITIES & SERVICES - 2.0% | ||||||||
1,414 | Cardinal Health, Inc. | $ | 139,024 | |||||
1,041 | Cencora, Inc. | 234,537 | ||||||
3,327 | Centene Corporation(a) | 220,580 | ||||||
1,838 | Cigna Group (The) | 607,588 | ||||||
8,054 | CVS Health Corporation | 475,669 | ||||||
1,420 | Elevance Health, Inc. | 769,441 | ||||||
1,295 | HCA Healthcare, Inc. | 416,058 | ||||||
769 | Humana, Inc. | 287,337 | ||||||
1,069 | IQVIA Holdings, Inc.(a) | 226,029 | ||||||
573 | Labcorp Holdings, Inc. | 116,611 | ||||||
823 | McKesson Corporation | 480,665 | ||||||
333 | Molina Healthcare, Inc.(a) | 99,001 | ||||||
673 | Quest Diagnostics, Inc. | 92,120 | ||||||
7,300 | UnitedHealth Group, Inc. | 3,717,599 | ||||||
7,882,259 | ||||||||
HEALTH CARE REIT - 0.1% | ||||||||
2,810 | Ventas, Inc. | 144,041 | ||||||
3,121 | Welltower, Inc. | 325,364 | ||||||
469,405 | ||||||||
HOME CONSTRUCTION - 0.2% | ||||||||
1,941 | DR Horton, Inc. | 273,544 | ||||||
1,465 | Lennar Corporation, Class A | 219,560 | ||||||
1,580 | Masco Corporation | 105,339 | ||||||
17 | NVR, Inc.(a) | 129,006 | ||||||
1,454 | PulteGroup, Inc. | 160,085 | ||||||
887,534 | ||||||||
HOTEL REIT - 0.0%(b) | ||||||||
3,647 | Host Hotels & Resorts, Inc. | 65,573 | ||||||
HOUSEHOLD PRODUCTS - 0.9% | ||||||||
1,320 | Church & Dwight Company, Inc. | 136,858 | ||||||
668 | Clorox Company (The) | 91,162 | ||||||
5,153 | Colgate-Palmolive Company | 500,047 | ||||||
1,305 | Estee Lauder Companies, Inc. (The), Class A | 138,852 |
See accompanying notes to financial statements.
12
HCM DEFENDER 500 INDEX ETF
SCHEDULE OF INVESTMENTS (Continued)
June 30, 2024
Shares | Fair Value | |||||||
COMMON STOCKS - 80.5% (Continued) | ||||||||
HOUSEHOLD PRODUCTS - 0.9% (Continued) | ||||||||
10,822 | Kenvue, Inc. | $ | 196,744 | |||||
1,964 | Kimberly-Clark Corporation | 271,425 | ||||||
14,858 | Procter & Gamble Company (The) | 2,450,381 | ||||||
3,785,469 | ||||||||
INDUSTRIAL REIT - 0.2% | ||||||||
5,730 | Prologis, Inc. | 643,535 | ||||||
INDUSTRIAL SUPPORT SERVICES - 0.2% | ||||||||
3,469 | Fastenal Company | 217,992 | ||||||
386 | United Rentals, Inc. | 249,638 | ||||||
220 | WW Grainger, Inc. | 198,493 | ||||||
666,123 | ||||||||
INFRASTRUCTURE REIT - 0.3% | ||||||||
2,926 | American Tower Corporation | 568,756 | ||||||
2,487 | Crown Castle, Inc. | 242,980 | ||||||
674 | SBA Communications Corporation | 132,306 | ||||||
144 | Texas Pacific Land Corporation | 105,735 | ||||||
1,049,777 | ||||||||
INSTITUTIONAL FINANCIAL SERVICES - 0.8% | ||||||||
4,572 | Bank of New York Mellon Corporation (The) | 273,817 | ||||||
672 | Cboe Global Markets, Inc. | 114,280 | ||||||
2,043 | CME Group, Inc. | 401,654 | ||||||
2,010 | Goldman Sachs Group, Inc. (The) | 909,164 | ||||||
3,251 | Intercontinental Exchange, Inc. | 445,029 | ||||||
7,964 | Morgan Stanley | 774,021 | ||||||
2,284 | Nasdaq, Inc. | 137,634 | ||||||
1,262 | Northern Trust Corporation | 105,983 | ||||||
1,773 | State Street Corporation | 131,202 | ||||||
3,292,784 | ||||||||
INSURANCE - 2.5% | ||||||||
3,277 | Aflac, Inc. | 292,669 | ||||||
1,590 | Allstate Corporation (The) | 253,859 | ||||||
4,218 | American International Group, Inc. | 313,144 | ||||||
1,155 | Aon PLC, Class A | 339,085 |
See accompanying notes to financial statements.
13
HCM DEFENDER 500 INDEX ETF
SCHEDULE OF INVESTMENTS (Continued)
June 30, 2024
Shares | Fair Value | |||||||
COMMON STOCKS - 80.5% (Continued) | ||||||||
INSURANCE - 2.5% (Continued) | ||||||||
2,070 | Arch Capital Group Ltd.(a) | $ | 208,842 | |||||
1,320 | Arthur J Gallagher & Company | 342,289 | ||||||
10,665 | Berkshire Hathaway, Inc., Class B(a) | 4,338,523 | ||||||
1,220 | Brown & Brown, Inc. | 109,080 | ||||||
2,430 | Chubb Ltd. | 619,844 | ||||||
891 | Cincinnati Financial Corporation | 105,227 | ||||||
2,008 | Hartford Financial Services Group, Inc. (The) | 201,884 | ||||||
79 | Markel Group, Inc.(a) | 124,477 | ||||||
2,826 | Marsh & McLennan Companies, Inc. | 595,495 | ||||||
3,954 | MetLife, Inc. | 277,531 | ||||||
1,291 | Principal Financial Group, Inc. | 101,279 | ||||||
3,493 | Progressive Corporation (The) | 725,532 | ||||||
2,273 | Prudential Financial, Inc. | 266,373 | ||||||
1,397 | Travelers Companies, Inc. (The) | 284,066 | ||||||
1,312 | W R Berkley Corporation | 103,097 | ||||||
607 | Willis Towers Watson PLC | 159,119 | ||||||
9,761,415 | ||||||||
INTERNET MEDIA & SERVICES - 7.4% | ||||||||
2,520 | Airbnb, Inc., Class A(a) | 382,108 | ||||||
46,961 | Alphabet, Inc., Class A | 8,553,945 | ||||||
40,474 | Alphabet, Inc., Class C | 7,423,740 | ||||||
208 | Booking Holdings, Inc. | 823,992 | ||||||
1,711 | DoorDash, Inc., Class A(a) | 186,123 | ||||||
742 | Expedia Group, Inc.(a) | 93,485 | ||||||
1,020 | GoDaddy, Inc., Class A(a) | 142,504 | ||||||
18,011 | Meta Platforms, Inc., Class A | 9,081,506 | ||||||
2,533 | Netflix, Inc.(a) | 1,709,471 | ||||||
3,840 | Pinterest, Inc., Class A(a) | 169,229 | ||||||
11,570 | Uber Technologies, Inc.(a) | 840,908 | ||||||
568 | VeriSign, Inc.(a) | 100,990 | ||||||
29,508,001 | ||||||||
LEISURE FACILITIES & SERVICES - 0.9% | ||||||||
6,900 | Chipotle Mexican Grill, Inc.(a) | 432,285 | ||||||
784 | Darden Restaurants, Inc. | 118,635 |
See accompanying notes to financial statements.
14
HCM DEFENDER 500 INDEX ETF
SCHEDULE OF INVESTMENTS (Continued)
June 30, 2024
Shares | Fair Value | |||||||
COMMON STOCKS - 80.5% (Continued) | ||||||||
LEISURE FACILITIES & SERVICES - 0.9% (Continued) | ||||||||
230 | Domino's Pizza, Inc. | $ | 118,756 | |||||
1,477 | Hilton Worldwide Holdings, Inc. | 322,281 | ||||||
1,865 | Las Vegas Sands Corporation | 82,526 | ||||||
1,516 | Marriott International, Inc., Class A | 366,523 | ||||||
4,446 | McDonald's Corporation | 1,133,019 | ||||||
1,247 | Royal Caribbean Cruises Ltd.(a) | 198,809 | ||||||
6,948 | Starbucks Corporation | 540,902 | ||||||
1,663 | Yum! Brands, Inc. | 220,281 | ||||||
3,534,017 | ||||||||
LEISURE PRODUCTS - 0.0%(b) | ||||||||
400 | Axon Enterprise, Inc.(a) | 117,696 | ||||||
MACHINERY - 0.7% | ||||||||
2,992 | Caterpillar, Inc. | 996,634 | ||||||
1,588 | Deere & Company | 593,324 | ||||||
453 | IDEX Corporation | 91,144 | ||||||
2,178 | Ingersoll Rand, Inc. | 197,850 | ||||||
768 | Parker-Hannifin Corporation | 388,462 | ||||||
1,050 | Stanley Black & Decker, Inc. | 83,885 | ||||||
1,257 | Veralto Corporation | 120,006 | ||||||
1,512 | Xylem, Inc. | 205,073 | ||||||
2,676,378 | ||||||||
MEDICAL EQUIPMENT & DEVICES - 2.4% | ||||||||
10,565 | Abbott Laboratories | 1,097,809 | ||||||
1,953 | Agilent Technologies, Inc. | 253,167 | ||||||
455 | Align Technology, Inc.(a) | 109,851 | ||||||
3,238 | Avantor, Inc.(a) | 68,646 | ||||||
3,625 | Baxter International, Inc. | 121,256 | ||||||
1,907 | Becton Dickinson and Company | 445,685 | ||||||
8,716 | Boston Scientific Corporation(a) | 671,219 | ||||||
1,066 | Cooper Companies, Inc. (The) | 93,062 | ||||||
4,106 | Danaher Corporation | 1,025,884 | ||||||
2,216 | DexCom, Inc.(a) | 251,250 | ||||||
3,706 | Edwards Lifesciences Corporation(a) | 342,323 |
See accompanying notes to financial statements.
15
HCM DEFENDER 500 INDEX ETF
SCHEDULE OF INVESTMENTS (Continued)
June 30, 2024
Shares | Fair Value | |||||||
COMMON STOCKS - 80.5% (Continued) | ||||||||
MEDICAL EQUIPMENT & DEVICES - 2.4% (Continued) | ||||||||
2,161 | GE HealthCare Technologies, Inc. | $ | 168,385 | |||||
1,243 | Hologic, Inc.(a) | 92,293 | ||||||
488 | IDEXX Laboratories, Inc.(a) | 237,754 | ||||||
1,263 | Illumina, Inc.(a) | 131,832 | ||||||
379 | Insulet Corporation(a) | 76,482 | ||||||
2,165 | Intuitive Surgical, Inc.(a) | 963,100 | ||||||
8,501 | Medtronic PLC | 669,114 | ||||||
132 | Mettler-Toledo International, Inc.(a) | 184,482 | ||||||
835 | ResMed, Inc. | 159,836 | ||||||
708 | Revvity, Inc. | 74,241 | ||||||
582 | STERIS plc | 127,772 | ||||||
1,981 | Stryker Corporation | 674,035 | ||||||
2,425 | Thermo Fisher Scientific, Inc. | 1,341,025 | ||||||
351 | Waters Corporation(a) | 101,832 | ||||||
425 | West Pharmaceutical Services, Inc. | 139,991 | ||||||
1,146 | Zimmer Biomet Holdings, Inc. | 124,375 | ||||||
9,746,701 | ||||||||
METALS & MINING - 0.2% | ||||||||
8,875 | Freeport-McMoRan, Inc. | 431,325 | ||||||
5,233 | Newmont Corporation | 219,106 | ||||||
650,431 | ||||||||
MULTI ASSET CLASS REIT - 0.0%(b) | ||||||||
1,080 | WP Carey, Inc. | 59,454 | ||||||
OFFICE REIT - 0.0%(b) | ||||||||
929 | Alexandria Real Estate Equities, Inc. | 108,665 | ||||||
OIL & GAS PRODUCERS - 2.7% | ||||||||
1,617 | APA Corporation | 47,604 | ||||||
1,378 | Cheniere Energy, Inc. | 240,916 | ||||||
10,641 | Chevron Corporation | 1,664,465 | ||||||
7,208 | ConocoPhillips | 824,451 | ||||||
4,395 | Coterra Energy, Inc. | 117,215 | ||||||
3,923 | Devon Energy Corporation | 185,950 |
See accompanying notes to financial statements.
16
HCM DEFENDER 500 INDEX ETF
SCHEDULE OF INVESTMENTS (Continued)
June 30, 2024
Shares | Fair Value | |||||||
COMMON STOCKS - 80.5% (Continued) | ||||||||
OIL & GAS PRODUCERS - 2.7% (Continued) | ||||||||
927 | Diamondback Energy, Inc. | $ | 185,576 | |||||
3,396 | EOG Resources, Inc. | 427,455 | ||||||
2,286 | EQT Corporation | 84,536 | ||||||
35,386 | Exxon Mobil Corporation | 4,073,637 | ||||||
1,679 | Hess Corporation | 247,686 | ||||||
12,721 | Kinder Morgan, Inc. | 252,766 | ||||||
3,557 | Marathon Oil Corporation | 101,979 | ||||||
2,477 | Marathon Petroleum Corporation | 429,710 | ||||||
3,922 | Occidental Petroleum Corporation | 247,204 | ||||||
3,669 | ONEOK, Inc. | 299,207 | ||||||
2,635 | Phillips 66 | 371,983 | ||||||
1,399 | Targa Resources Corporation | 180,163 | ||||||
2,188 | Valero Energy Corporation | 342,991 | ||||||
7,664 | Williams Companies, Inc. (The) | 325,720 | ||||||
10,651,214 | ||||||||
OIL & GAS SERVICES & EQUIPMENT - 0.2% | ||||||||
6,047 | Baker Hughes Company | 212,673 | ||||||
5,438 | Halliburton Company | 183,696 | ||||||
8,391 | Schlumberger Limited | 395,887 | ||||||
792,256 | ||||||||
REAL ESTATE SERVICES - 0.0%(b) | ||||||||
2,029 | CBRE Group, Inc., Class A(a) | 180,804 | ||||||
RENEWABLE ENERGY - 0.1% | ||||||||
763 | Enphase Energy, Inc.(a) | 76,079 | ||||||
671 | First Solar, Inc.(a) | 151,283 | ||||||
227,362 | ||||||||
RESIDENTIAL REIT - 0.2% | ||||||||
881 | AvalonBay Communities, Inc. | 182,270 | ||||||
2,188 | Equity Residential | 151,716 | ||||||
413 | Essex Property Trust, Inc. | 112,419 | ||||||
3,778 | Invitation Homes, Inc. | 135,592 | ||||||
725 | Mid-America Apartment Communities, Inc. | 103,392 |
See accompanying notes to financial statements.
17
HCM DEFENDER 500 INDEX ETF
SCHEDULE OF INVESTMENTS (Continued)
June 30, 2024
Shares | Fair Value | |||||||
COMMON STOCKS - 80.5% (Continued) | ||||||||
RESIDENTIAL REIT - 0.2% (Continued) | ||||||||
762 | Sun Communities, Inc. | $ | 91,699 | |||||
777,088 | ||||||||
RETAIL - CONSUMER STAPLES - 1.3% | ||||||||
2,742 | Costco Wholesale Corporation | 2,330,673 | ||||||
1,254 | Dollar General Corporation | 165,816 | ||||||
1,310 | Dollar Tree, Inc.(a) | 139,869 | ||||||
4,731 | Kroger Company (The) | 236,219 | ||||||
2,786 | Target Corporation | 412,439 | ||||||
4,359 | Walgreens Boots Alliance, Inc. | 52,722 | ||||||
25,545 | Walmart, Inc. | 1,729,652 | ||||||
5,067,390 | ||||||||
RETAIL - DISCRETIONARY - 1.3% | ||||||||
99 | AutoZone, Inc.(a) | 293,446 | ||||||
1,398 | Best Buy Company, Inc. | 117,837 | ||||||
871 | Genuine Parts Company | 120,477 | ||||||
6,179 | Home Depot, Inc. (The) | 2,127,059 | ||||||
3,571 | Lowe's Companies, Inc. | 787,263 | ||||||
358 | O'Reilly Automotive, Inc.(a) | 378,069 | ||||||
1,946 | Ross Stores, Inc. | 282,793 | ||||||
6,888 | TJX Companies, Inc. (The) | 758,369 | ||||||
599 | Tractor Supply Company | 161,730 | ||||||
292 | Ulta Beauty, Inc.(a) | 112,674 | ||||||
5,139,717 | ||||||||
RETAIL REIT - 0.1% | ||||||||
3,319 | Kimco Realty Corporation | 64,588 | ||||||
4,126 | Realty Income Corporation | 217,935 | ||||||
2,061 | Simon Property Group, Inc. | 312,860 | ||||||
595,383 | ||||||||
SELF-STORAGE REIT - 0.1% | ||||||||
1,231 | Extra Space Storage, Inc. | 191,310 | ||||||
967 | Public Storage | 278,158 | ||||||
469,468 | ||||||||
SEMICONDUCTORS - 10.3% | ||||||||
9,886 | Advanced Micro Devices, Inc.(a) | 1,603,608 |
See accompanying notes to financial statements.
18
HCM DEFENDER 500 INDEX ETF
SCHEDULE OF INVESTMENTS (Continued)
June 30, 2024
Shares | Fair Value | |||||||
COMMON STOCKS - 80.5% (Continued) | ||||||||
SEMICONDUCTORS - 10.3% (Continued) | ||||||||
2,963 | Analog Devices, Inc. | $ | 676,334 | |||||
4,794 | Applied Materials, Inc. | 1,131,336 | ||||||
3,502 | Broadcom, Inc. | 5,622,567 | ||||||
937 | Entegris, Inc. | 126,870 | ||||||
25,329 | Intel Corporation | 784,439 | ||||||
776 | KLA Corporation | 639,820 | ||||||
739 | Lam Research Corporation | 786,924 | ||||||
4,961 | Marvell Technology, Inc. | 346,774 | ||||||
3,134 | Microchip Technology, Inc. | 286,761 | ||||||
6,333 | Micron Technology, Inc. | 832,979 | ||||||
283 | Monolithic Power Systems, Inc. | 232,535 | ||||||
203,883 | NVIDIA Corporation | 25,187,707 | ||||||
2,656 | ON Semiconductor Corporation(a) | 182,069 | ||||||
6,494 | QUALCOMM, Inc. | 1,293,475 | ||||||
1,002 | Skyworks Solutions, Inc. | 106,793 | ||||||
1,022 | Teradyne, Inc. | 151,552 | ||||||
5,540 | Texas Instruments, Inc. | 1,077,696 | ||||||
41,070,239 | ||||||||
SOFTWARE - 10.0% | ||||||||
2,711 | Adobe, Inc.(a) | 1,506,069 | ||||||
811 | Akamai Technologies, Inc.(a) | 73,055 | ||||||
511 | ANSYS, Inc.(a) | 164,287 | ||||||
1,013 | Atlassian Corporation, Class A(a) | 179,179 | ||||||
1,269 | Autodesk, Inc.(a) | 314,014 | ||||||
1,583 | Cadence Design Systems, Inc.(a) | 487,168 | ||||||
1,908 | Cloudflare, Inc., Class A(a) | 158,040 | ||||||
1,366 | Crowdstrike Holdings, Inc., Class A(a) | 523,438 | ||||||
1,729 | Datadog, Inc., Class A(a) | 224,234 | ||||||
4,129 | Fortinet, Inc.(a) | 248,855 | ||||||
3,130 | Gen Digital, Inc. | 78,187 | ||||||
266 | HubSpot, Inc.(a) | 156,884 | ||||||
1,577 | Intuit, Inc. | 1,036,420 | ||||||
62,438 | Microsoft Corporation | 27,906,665 | ||||||
389 | MongoDB, Inc.(a) | 97,234 |
See accompanying notes to financial statements.
19
HCM DEFENDER 500 INDEX ETF
SCHEDULE OF INVESTMENTS (Continued)
June 30, 2024
Shares | Fair Value | |||||||
COMMON STOCKS - 80.5% (Continued) | ||||||||
SOFTWARE - 10.0% (Continued) | ||||||||
9,268 | Oracle Corporation | $ | 1,308,642 | |||||
10,792 | Palantir Technologies, Inc., Class A(a) | 273,361 | ||||||
1,751 | Palo Alto Networks, Inc.(a) | 593,607 | ||||||
776 | PTC, Inc.(a) | 140,976 | ||||||
617 | Roper Technologies, Inc. | 347,778 | ||||||
5,596 | Salesforce, Inc. | 1,438,732 | ||||||
1,174 | ServiceNow, Inc.(a) | 923,551 | ||||||
1,670 | Snowflake, Inc.(a) | 225,600 | ||||||
1,133 | SS&C Technologies Holdings, Inc. | 71,005 | ||||||
855 | Synopsys, Inc.(a) | 508,776 | ||||||
207 | Tyler Technologies, Inc.(a) | 104,075 | ||||||
1,071 | Veeva Systems, Inc., Class A(a) | 196,004 | ||||||
1,156 | Workday, Inc., Class A(a) | 258,435 | ||||||
1,449 | Zoom Video Communications, Inc., Class A(a) | 85,766 | ||||||
39,630,037 | ||||||||
SPECIALTY FINANCE - 0.3% | ||||||||
3,483 | American Express Company | 806,488 | ||||||
2,299 | Capital One Financial Corporation | 318,297 | ||||||
1,425 | Discover Financial Services | 186,404 | ||||||
2,021 | Synchrony Financial | 95,371 | ||||||
1,406,560 | ||||||||
SPECIALTY REIT - 0.0%(b) | ||||||||
1,501 | Iron Mountain, Inc. | 134,520 | ||||||
STEEL - 0.1% | ||||||||
1,562 | Nucor Corporation | 246,921 | ||||||
334 | Reliance, Inc. | 95,390 | ||||||
818 | Steel Dynamics, Inc. | 105,931 | ||||||
448,242 | ||||||||
TECHNOLOGY HARDWARE - 7.6% | ||||||||
124,079 | Apple, Inc. | 26,133,519 | ||||||
1,422 | Arista Networks, Inc.(a) | 498,383 | ||||||
24,989 | Cisco Systems, Inc. | 1,187,227 | ||||||
4,385 | Corning, Inc. | 170,357 |
See accompanying notes to financial statements.
20
HCM DEFENDER 500 INDEX ETF
SCHEDULE OF INVESTMENTS (Continued)
June 30, 2024
Shares | Fair Value | |||||||
COMMON STOCKS - 80.5% (Continued) | ||||||||
TECHNOLOGY HARDWARE - 7.6% (Continued) | ||||||||
1,618 | Dell Technologies, Inc., Class C | $ | 223,138 | |||||
1,017 | Garmin Ltd. | 165,690 | ||||||
7,527 | Hewlett Packard Enterprise Company | 159,347 | ||||||
5,420 | HP, Inc. | 189,808 | ||||||
696 | Jabil, Inc. | 75,718 | ||||||
966 | Motorola Solutions, Inc. | 372,924 | ||||||
1,160 | NetApp, Inc. | 149,408 | ||||||
1,229 | Seagate Technology Holdings PLC | 126,919 | ||||||
438 | Super Micro Computer, Inc.(a) | 358,875 | ||||||
1,996 | Western Digital Corporation(a) | 151,237 | ||||||
276 | Zebra Technologies Corporation, Class A(a) | 85,265 | ||||||
30,047,815 | ||||||||
TECHNOLOGY SERVICES - 3.7% | ||||||||
4,026 | Accenture PLC, Class A | 1,221,529 | ||||||
2,479 | Automatic Data Processing, Inc. | 591,713 | ||||||
3,473 | Block, Inc., Class A(a) | 223,974 | ||||||
698 | Booz Allen Hamilton Holding Corporation | 107,422 | ||||||
671 | Broadridge Financial Solutions, Inc. | 132,187 | ||||||
847 | CDW Corporation | 189,592 | ||||||
3,166 | Cognizant Technology Solutions Corporation, Class A | 215,288 | ||||||
1,275 | Coinbase Global, Inc., Class A(a) | 283,343 | ||||||
380 | Corpay, Inc.(a) | 101,236 | ||||||
2,275 | CoStar Group, Inc.(a) | 168,669 | ||||||
375 | EPAM Systems, Inc.(a) | 70,541 | ||||||
814 | Equifax, Inc. | 197,362 | ||||||
194 | FactSet Research Systems, Inc. | 79,204 | ||||||
133 | Fair Isaac Corporation(a) | 197,992 | ||||||
3,440 | Fidelity National Information Services, Inc. | 259,238 | ||||||
3,677 | Fiserv, Inc.(a) | 548,020 | ||||||
425 | Gartner, Inc.(a) | 190,851 | ||||||
1,651 | Global Payments, Inc. | 159,652 | ||||||
5,611 | International Business Machines Corporation | 970,422 | ||||||
393 | Jack Henry & Associates, Inc. | 65,246 | ||||||
853 | Leidos Holdings, Inc. | 124,436 |
See accompanying notes to financial statements.
21
HCM DEFENDER 500 INDEX ETF
SCHEDULE OF INVESTMENTS (Continued)
June 30, 2024
Shares | Fair Value | |||||||
COMMON STOCKS - 80.5% (Continued) | ||||||||
TECHNOLOGY SERVICES - 3.7% (Continued) | ||||||||
6,025 | Mastercard, Inc., Class A | $ | 2,657,989 | |||||
938 | Moody's Corporation | 394,832 | ||||||
457 | MSCI, Inc. | 220,160 | ||||||
1,814 | Paychex, Inc. | 215,068 | ||||||
6,556 | PayPal Holdings, Inc.(a) | 380,445 | ||||||
1,884 | S&P Global, Inc. | 840,264 | ||||||
1,134 | TransUnion | 84,097 | ||||||
869 | Verisk Analytics, Inc. | 234,239 | ||||||
12,988 | Visa, Inc., Class A | 3,408,960 | ||||||
14,533,971 | ||||||||
TELECOMMUNICATIONS - 0.6% | ||||||||
44,028 | AT&T, Inc. | 841,375 | ||||||
3,023 | T-Mobile US, Inc. | 532,592 | ||||||
25,835 | Verizon Communications, Inc. | 1,065,436 | ||||||
2,439,403 | ||||||||
TIMBER REIT - 0.0%(b) | ||||||||
4,962 | Weyerhaeuser Company | 140,871 | ||||||
TOBACCO & CANNABIS - 0.4% | ||||||||
11,168 | Altria Group, Inc. | 508,702 | ||||||
9,635 | Philip Morris International, Inc. | 976,315 | ||||||
1,485,017 | ||||||||
TRANSPORTATION & LOGISTICS - 0.8% | ||||||||
11,681 | CSX Corporation | 390,729 | ||||||
3,521 | Delta Air Lines, Inc. | 167,036 | ||||||
765 | Expeditors International of Washington, Inc. | 95,464 | ||||||
1,333 | FedEx Corporation | 399,687 | ||||||
511 | JB Hunt Transport Services, Inc. | 81,760 | ||||||
1,359 | Norfolk Southern Corporation | 291,764 | ||||||
1,176 | Old Dominion Freight Line, Inc. | 207,682 | ||||||
3,908 | Southwest Airlines Company | 111,808 | ||||||
3,668 | Union Pacific Corporation | 829,921 | ||||||
1,575 | United Airlines Holdings, Inc.(a) | 76,640 |
See accompanying notes to financial statements.
22
HCM DEFENDER 500 INDEX ETF
SCHEDULE OF INVESTMENTS (Continued)
June 30, 2024
Shares | Fair Value | |||||||
COMMON STOCKS - 80.5% (Continued) | ||||||||
TRANSPORTATION & LOGISTICS - 0.8% (Continued) | ||||||||
4,549 | United Parcel Service, Inc. | $ | 622,531 | |||||
3,275,022 | ||||||||
TRANSPORTATION EQUIPMENT - 0.2% | ||||||||
820 | Cummins, Inc. | 227,083 | ||||||
3,031 | PACCAR, Inc. | 312,011 | ||||||
1,047 | Westinghouse Air Brake Technologies Corporation | 165,478 | ||||||
704,572 | ||||||||
WHOLESALE - CONSUMER STAPLES - 0.1% | ||||||||
3,272 | Archer-Daniels-Midland Company | 197,792 | ||||||
853 | Bunge Global S.A. | 91,075 | ||||||
3,123 | Sysco Corporation | 222,951 | ||||||
511,818 | ||||||||
WHOLESALE - DISCRETIONARY - 0.1% | ||||||||
4,901 | Copart, Inc.(a) | 265,438 | ||||||
1,332 | LKQ Corporation | 55,398 | ||||||
261 | Pool Corporation | 80,213 | ||||||
401,049 | ||||||||
TOTAL COMMON STOCKS (Cost $242,016,090) | 320,196,158 | |||||||
EXCHANGE-TRADED FUND - 19.4% | ||||||||
EQUITY - 19.4% | ||||||||
528,892 | Direxion Daily S&P 500 Bull 3X (Cost $63,818,753) | 77,255,254 |
See accompanying notes to financial statements.
23
HCM DEFENDER 500 INDEX ETF
SCHEDULE OF INVESTMENTS (Continued)
June 30, 2024
Shares | Expiration Date | Exercise Price | Fair Value | |||||||||||
RIGHT - 0.0%(b) | ||||||||||||||
MEDICAL EQUIPMENT & DEVICES - 0.0%(b) | ||||||||||||||
143 | ABIOMED, Inc. - CVR(a)(c)(d)(Cost $0) | 12/31/2029 | $35 | $ | - | (e) | ||||||||
TOTAL INVESTMENTS - 99.9% (Cost $305,834,843) | $ | 397,451,412 | ||||||||||||
OTHER ASSETS IN EXCESS OF LIABILITIES - 0.1% | 432,033 | |||||||||||||
NET ASSETS - 100.0% | $ | 397,883,445 |
CVR | - Contingent Value Right |
ETF | - Exchange-Traded Fund |
LLC | - Limited Liability Company |
LTD | - Limited Company |
MSCI | - Morgan Stanley Capital International |
NV | - Naamioze Vennootschap |
PLC | - Public Limited Company |
REIT | - Real Estate Investment Trust |
S/A | - Société Anonyme |
(a) | Non-income producing security. |
(b) | Percentage rounds to less than 0.1%. |
(c) | Illiquid security. The total fair value of these securities as of June 30, 2024 was $0, representing 0.0% of net assets. |
(d) | The fair value of this investment is determined using significant unobservable inputs. |
(e) | Amount represents less than $1. |
See accompanying notes to financial statements.
24
The HCM ETFs
STATEMENTS OF ASSETS AND LIABILITIES
June 30, 2024
|
HCM Defender 100 Index ETF |
|
|
HCM Defender 500 Index ETF |
|
|||
ASSETS | ||||||||
Investment securities: | ||||||||
At cost | $ | 373,799,592 | $ | 305,834,843 | ||||
At fair value | $ | 494,636,701 | $ | 397,451,412 | ||||
Cash and cash equivalents | 469,961 | 419,058 | ||||||
Dividends and interest receivable | 437,503 | 335,255 | ||||||
Prepaid expenses | 2,369 | 661 | ||||||
TOTAL ASSETS | 495,546,534 | 398,206,386 | ||||||
LIABILITIES | ||||||||
Investment advisory fees payable | 298,498 | 242,213 | ||||||
Payable to related parties | 12,306 | 25,725 | ||||||
Accrued expenses and other liabilities | 19,841 | 55,003 | ||||||
TOTAL LIABILITIES | 330,645 | 322,941 | ||||||
NET ASSETS | $ | 495,215,889 | $ | 397,883,445 | ||||
Net Assets Consist Of: | ||||||||
Paid in capital | $ | 468,197,624 | $ | 363,268,305 | ||||
Accumulated earnings | 27,018,265 | 34,615,140 | ||||||
NET ASSETS | $ | 495,215,889 | $ | 397,883,445 | ||||
Net Asset Value Per Share: | ||||||||
Net Assets | $ | 495,215,889 | $ | 397,883,445 | ||||
Shares of beneficial interest outstanding ($0 par value, unlimited shares authorized) | 8,050,000 | 8,050,000 | ||||||
Net asset value, offering and redemption price per share (Net Assets ÷ Shares Outstanding) | $ | 61.52 | $ | 49.43 |
See accompanying notes to financial statements.
25
The HCM ETFs
STATEMENTS OF OPERATIONS
For the Year Ended June 30, 2024
HCM Defender 100 | HCM Defender 500 | |||||||
Index ETF | Index ETF | |||||||
INVESTMENT INCOME | ||||||||
Dividends (net of tax withholding of $3,127 and $1,767, respectively) | $ | 3,711,609 | $ | 4,207,766 | ||||
Interest | 766,589 | 515,330 | ||||||
TOTAL INVESTMENT INCOME | 4,478,198 | 4,723,096 | ||||||
EXPENSES | ||||||||
Investment advisory fees | 2,940,585 | 2,445,601 | ||||||
Administrative services | 203,909 | 189,834 | ||||||
Legal fees | 23,663 | 22,334 | ||||||
Compliance officer fees | 23,325 | 24,611 | ||||||
Audit fees | 22,706 | 22,629 | ||||||
Printing and postage expenses | 22,681 | 23,101 | ||||||
Custodian fees | 20,041 | 41,656 | ||||||
Trustees fees and expenses | 17,288 | 17,231 | ||||||
Transfer agent fees | 9,450 | 11,640 | ||||||
Insurance expense | 7,057 | 7,967 | ||||||
Other expenses | 10,982 | 16,878 | ||||||
TOTAL EXPENSES | 3,301,687 | 2,823,482 | ||||||
NET INVESTMENT INCOME | 1,176,511 | 1,899,614 | ||||||
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS | ||||||||
Net realized gain (loss) on: | ||||||||
In-kind redemptions | 53,897,371 | 3,997,679 | ||||||
Net realized gain on investments | 3,811,461 | 17,949,967 | ||||||
Foreign currency transactions | (180 | ) | - | |||||
57,708,652 | 21,947,646 | |||||||
Net change in unrealized appreciation on investments | 49,104,836 | 54,415,599 | ||||||
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS | 106,813,488 | 76,363,245 | ||||||
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 107,989,999 | $ | 78,262,859 |
See accompanying notes to financial statements.
26
HCM Defender 100 Index ETF
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended June 30, 2024 |
Year Ended June 30, 2023 |
|||||||
FROM OPERATIONS | ||||||||
Net investment income | $ | 1,176,511 | $ | 1,564,774 | ||||
Net realized gain (loss) on investments, in-kind redemptions, and foreign currency transactions | 57,708,652 | (4,724,484 | ) | |||||
Net change in unrealized appreciation on investments | 49,104,836 | 71,732,273 | ||||||
Net increase in net assets resulting from operations | 107,989,999 | 68,572,563 | ||||||
DISTRIBUTIONS TO SHAREHOLDERS | ||||||||
Total distributions paid | (992,525 | ) | - | |||||
Net decrease in net assets resulting from distributions to shareholders | (992,525 | ) | - | |||||
FROM SHARES OF BENEFICIAL INTEREST | ||||||||
Proceeds from shares sold | 258,121,147 | 44,605,111 | ||||||
Cost of shares redeemed | (197,959,846 | ) | (36,340,067 | ) | ||||
Net increase in net assets resulting from shares of beneficial interest | 60,161,301 | 8,265,044 | ||||||
TOTAL INCREASE IN NET ASSETS | 167,158,775 | 76,837,607 | ||||||
NET ASSETS | ||||||||
Beginning of Year | 328,057,114 | 251,219,507 | ||||||
End of Year | $ | 495,215,889 | $ | 328,057,114 | ||||
SHARE ACTIVITY | ||||||||
Shares Sold | 5,250,000 | 1,100,000 | ||||||
Shares Redeemed | (4,150,000 | ) | (950,000 | ) | ||||
Net increase in shares of beneficial interest outstanding | 1,100,000 | 150,000 |
See accompanying notes to financial statements.
27
HCM Defender 500 Index ETF
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended June 30, 2024 |
Year Ended June 30, 2023 |
|||||||
FROM OPERATIONS | ||||||||
Net investment income | $ | 1,899,614 | $ | 2,577,711 | ||||
Net realized gain (loss) on investments, in-kind redemptions, and foreign currency transactions | 21,947,646 | (5,780,658 | ) | |||||
Net change in unrealized appreciation on investments | 54,415,599 | 37,200,970 | ||||||
Net increase in net assets resulting from operations | 78,262,859 | 33,998,023 | ||||||
DISTRIBUTIONS TO SHAREHOLDERS | ||||||||
Total distributions paid | (1,881,940 | ) | (1,454,080 | ) | ||||
Net decrease in net assets resulting from distributions to shareholders | (1,881,940 | ) | (1,454,080 | ) | ||||
FROM SHARES OF BENEFICIAL INTEREST | ||||||||
Proceeds from shares sold | 57,219,022 | 41,588,392 | ||||||
Cost of shares redeemed | (24,759,247 | ) | (45,294,648 | ) | ||||
Net increase (decrease) in net assets resulting from shares of beneficial interest | 32,459,775 | (3,706,256 | ) | |||||
TOTAL INCREASE IN NET ASSETS | 108,840,694 | 28,837,687 | ||||||
NET ASSETS | ||||||||
Beginning of Year | 289,042,751 | 260,205,064 | ||||||
End of Year | $ | 397,883,445 | $ | 289,042,751 | ||||
SHARE ACTIVITY | ||||||||
Shares Sold | 1,350,000 | 1,150,000 | ||||||
Shares Redeemed | (650,000 | ) | (1,300,000 | ) | ||||
Net increase (decrease) in shares of beneficial interest outstanding | 700,000 | (150,000 | ) |
See accompanying notes to financial statements.
28
HCM Defender 100 Index ETF
FINANCIAL HIGHLIGHTS
Per Share Data and Ratios for a Share of Beneficial Interest Outstanding Throughout Each Period
|
Year Ended June 30, 2024 |
|
|
Year Ended June 30, 2023 |
|
|
Year Ended June 30, 2022 |
|
|
Year Ended June 30, 2021 |
|
|
Period Ended June 30, 2020(1) |
|
||||||
Net asset value, beginning of period | $ | 47.20 | $ | 36.94 | $ | 47.92 | $ | 30.21 | $ | 25.00 | ||||||||||
Activity from investment operations: | ||||||||||||||||||||
Net investment income (loss)(2) | 0.16 | 0.23 | (0.18 | ) | (0.10 | ) | (0.04 | ) | ||||||||||||
Net realized and unrealized gain (loss) on investments | 14.30 | 10.03 | (10.80 | ) | 17.81 | 5.31 | ||||||||||||||
Total from investment operations | 14.46 | 10.26 | (10.98 | ) | 17.71 | 5.27 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (0.14 | ) | - | - | - | (0.00 | )(5) | |||||||||||||
Net realized gains | - | - | - | - | (0.06 | ) | ||||||||||||||
Total distributions | (0.14 | ) | - | - | - | (0.06 | ) | |||||||||||||
Net asset value, end of period | $ | 61.52 | $ | 47.20 | $ | 36.94 | $ | 47.92 | $ | 30.21 | ||||||||||
Market price, end of period | $ | 61.52 | $ | 47.23 | $ | 36.96 | $ | 47.97 | $ | 30.25 | ||||||||||
Total return(4) | 30.70 | % | 27.77 | % | (22.91 | )% | 58.62 | % | 21.11 | %(8) | ||||||||||
Market price total return | 30.62 | % | 27.79 | % | (22.95 | )% | 58.58 | % | 21.27 | % | ||||||||||
Net assets, at end of period (000s) | $ | 495,216 | $ | 328,057 | $ | 251,220 | $ | 208,433 | $ | 101,197 | ||||||||||
Ratio of net expenses to average net assets(6)(7) | 0.86 | % | 0.89 | % | 0.89 | % | 0.91 | % | 1.02 | % | ||||||||||
Ratio of net investment income (loss) to average net assets(6)(7) | 0.31 | % | 0.61 | % | (0.37 | )% | (0.26 | )% | (0.18 | )% | ||||||||||
Portfolio Turnover Rate(3) | 124 | % | 45 | % | 73 | % | 5 | % | 150 | %(8) |
(1) | The HCM Defender 100 Index ETF commenced operations on October 9, 2019. |
(2) | Per share amounts calculated using the average shares method, which more appropriately presents the per share data for the period. |
(3) | Portfolio turnover rate excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
(4) | Total return is calculated assuming a purchase of shares at net asset value on the first day and a sale at net asset value on the last day of the period. Distributions are assumed, for the purpose of this calculation, to be reinvested at the ex-dividend date net asset value per share on their respective payment dates. |
(5) | Represents less than $0.005. |
(6) | Does not include the expenses of other investment companies in which the Fund invests, as these expenses are included in the realized and unrealized gain/(loss) on investments. |
(7) | Annualized for periods less than one year. |
(8) | Not annualized. |
See accompanying notes to financial statements.
29
HCM Defender 500 Index ETF
FINANCIAL HIGHLIGHTS
Per Share Data and Ratios for a Share of Beneficial Interest Outstanding Throughout Each Period
Year Ended June 30, 2024 |
Year Ended June 30, 2023 |
Year Ended June 30, 2022 |
Year Ended June 30, 2021 |
Period Ended June 30, 2020(1) |
||||||||||||||||
Net asset value, beginning of period | $ | 39.33 | $ | 34.69 | $ | 39.95 | $ | 25.15 | $ | 25.00 | ||||||||||
Activity from investment operations: | ||||||||||||||||||||
Net investment income(2) | 0.26 | 0.36 | 0.03 | 0.09 | 0.07 | |||||||||||||||
Net realized and unrealized gain (loss) on investments | 10.10 | 4.48 | (5.23 | ) | 14.79 | 0.13 | ||||||||||||||
Total from investment operations | 10.36 | 4.84 | (5.20 | ) | 14.88 | 0.20 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (0.26 | ) | (0.20 | ) | (0.06 | ) | (0.08 | ) | (0.05 | ) | ||||||||||
Net realized gains | - | - | - | - | (0.00 | )(5) | ||||||||||||||
Return of capital | - | - | (0.00 | )(5) | - | (0.00 | )(5) | |||||||||||||
Total distributions | (0.26 | ) | (0.20 | ) | (0.06 | ) | (0.08 | ) | (0.05 | ) | ||||||||||
Net asset value, end of period | $ | 49.43 | $ | 39.33 | $ | 34.69 | $ | 39.95 | $ | 25.15 | ||||||||||
Market price, end of period | $ | 49.47 | $ | 39.36 | $ | 34.70 | $ | 40.00 | $ | 25.12 | ||||||||||
Total return(4) | 26.48 | % | 14.06 | % | (13.05 | )% | 59.23 | % | 0.78 | %(8) | ||||||||||
Market price total return | 26.48 | % | 14.12 | % | (13.13 | )% | 59.62 | % | 0.66 | % | ||||||||||
Net assets, at end of period (000s) | $ | 397,883 | $ | 289,043 | $ | 260,205 | $ | 195,733 | $ | 91,806 | ||||||||||
Ratio of net expenses to average net assets(6)(7) | 0.89 | % | 0.92 | % | 0.89 | % | 0.94 | % | 1.14 | % | ||||||||||
Ratio of net investment income to average net assets(6)(7) | 0.60 | % | 1.03 | % | 0.06 | % | 0.27 | % | 0.40 | % | ||||||||||
Portfolio Turnover Rate(3) | 114 | % | 59 | % | 73 | % | 3 | % | 128 | %(8) |
(1) | The HCM Defender 500 Index ETF commenced operations on October 9, 2019. |
(2) | Per share amounts calculated using the average shares method, which more appropriately presents the per share data for the period. |
(3) | Portfolio turnover rate excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
(4) | Total return is calculated assuming a purchase of shares at net asset value on the first day and a sale at net asset value on the last day of the period. Distributions are assumed, for the purpose of this calculation, to be reinvested at the ex-dividend date net asset value per share on their respective payment dates. |
(5) | Represents less than $0.005. |
(6) | Does not include the expenses of other investment companies in which the Fund invests, as these expenses are included in the realized and unrealized gain/(loss) on investments. |
(7) | Annualized for periods less than one year. |
(8) | Not annualized. |
See accompanying notes to financial statements.
30
The HCM ETFs
NOTES TO FINANCIAL STATEMENTS
June 30, 2024
1. ORGANIZATION
The HCM Defender 100 Index ETF ("QQH") and the HCM Defender 500 Index ETF ("LGH") (each a "Fund" and collectively the "Funds") are each a diversified series of Northern Lights Fund Trust III (the "Trust"), a statutory trust organized under the laws of the State of Delaware on December 5, 2011, which is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end management investment company. QQH's investment objective seeks to provide investment results that correspond, before fees and expenses, generally to the performance of the HCM Defender 100 Index. LGH's investment objective seeks to provide investment results that correspond, before fees and expenses, generally to the performance of the HCM Defender 500 Index. The investment objectives of each Fund are non-fundamental. QQH and LGH commenced operations on October 9, 2019.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the Funds in preparation of their financial statements. These policies are in conformity with accounting principles generally accepted in the United States of America ("GAAP"). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates. The Funds are each investment companies and accordingly follow the investment company accounting and reporting guidance of the Financial Accounting Standards Board ("FASB") Accounting Standards Codification Topic 946 "Financial Services - Investment Companies" including FASB Accounting Standards Update ("ASU") 2013-08.
Securities valuation - Securities listed on an exchange are valued at the last reported sale price at the close of the regular trading session of the primary 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 primary exchange on the day of valuation. Debt securities (other than short-term obligations) are valued each day by an independent pricing service approved by the Trust's Board of Trustees (the "Board") based on methods which include consideration of: yields or prices of securities of comparable quality, coupon, maturity and type, indications as to values from dealers, and general market conditions or market quotations from a major market maker in the securities. Investments valued in currencies other than the U.S. dollar are converted to U.S. dollars using exchange rates obtained from pricing services. Short-term debt obligations having 60 days or less remaining until maturity, at time of purchase, may be valued at amortized cost, which approximates fair value. Investments in open-end investment companies are valued at net asset value.
The Funds may hold investments, such as private investments, interests in commodity pools, other non-traded securities or temporarily illiquid securities, for which market quotations are not readily available or are determined to be unreliable. These securities will be valued using the "fair value" procedures approved by the Board. The Board has delegated execution of these procedures to the adviser as its valuation designee (the "Valuation Designee"). The Board may also enlist third party consultants such a valuation specialist at a public accounting firm, valuation consultant or financial officer of a security issuer
31
The HCM ETFs
NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 2024
on an as-needed basis to assist the Valuation Designee in determining a security-specific fair value. The Board is responsible for reviewing and approving fair value methodologies utilized by the Valuation Designee, which approval shall be based upon whether the Valuation Designee followed the valuation procedures established by the Board.
Fair Valuation Process - Applicable investments are valued by the Valuation Designee pursuant to valuation procedures established by the Board. 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 Valuation Designee, the prices or values available do not represent the fair value of the instrument; factors which may cause the Valuation Designee to make such a judgment include, but are not limited to, the following: only a bid price or an ask price is available; the spread between bid and ask prices is substantial; the frequency of sales; the thinness of the market; the size of reported trades; and actions of the securities markets, such as the suspension or limitation of trading; (iii) securities determined to be illiquid; and (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. Specifically, interests in commodity pools or managed futures pools are valued on a daily basis by reference to the closing market prices of each futures contract or other asset held by a pool, as adjusted for pool expenses. Restricted or illiquid investments, such as private investments or non-traded securities are valued based upon the current bid for the security from two or more independent dealers or other parties reasonably familiar with the facts and circumstances of the security (who should take into consideration all relevant factors as may be appropriate under the circumstances). If a current bid from such independent dealers or other independent parties is unavailable, the Valuation Designee 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 the 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.
Exchange Traded Funds ("ETFs") - The Funds may invest in ETFs. ETFs are generally a type of fund bought and sold on a securities exchange. An ETF trades like common stock and represents a portfolio of securities. The risks of owning an ETF generally reflect the risks of owning the underlying securities they hold, 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.
The Funds utilize various methods to measure the fair value of all of their investments on a recurring basis. GAAP establishes a hierarchy that prioritizes inputs to valuation methods. The three levels of input are:
32
The HCM ETFs
NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 2024
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 value requires more judgment. Accordingly, the degree of judgment exercised in determining value is greatest for instruments categorized in Level 3.
The inputs used to measure value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following tables summarize the inputs used as of June 30, 2024 for the Funds' assets measured at fair value:
HCM Defender 100 Index ETF | ||||||||||||||||
Assets* | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 398,418,458 | $ | - | $ | - | $ | 398,418,458 | ||||||||
Exchange Traded Fund | 96,218,243 | - | - | 96,218,243 | ||||||||||||
Total | $ | 494,636,701 | $ | - | $ | - | $ | 494,636,701 |
HCM Defender 500 Index ETF | ||||||||||||||||
Assets* | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 320,196,158 | $ | - | $ | - | $ | 320,196,158 | ||||||||
Exchange Traded Fund | 77,255,254 | - | - | 77,255,254 | ||||||||||||
Right | - | ^ | - | - | - | |||||||||||
Total | $ | 397,451,412 | $ | - | $ | - | $ | 397,451,412 |
The Funds did not hold any Level 2 or 3 securities during the year.
* | See Schedule of Investments for industry classification. |
^ | Includes securities valued at $0. |
33
The HCM ETFs
NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 2024
Security transactions and related income - Security transactions are accounted for on the trade date. Interest income is recognized on an accrual basis. Dividend income is recorded on the ex-dividend date. Realized gains or losses from sales of securities are determined by comparing the identified cost of the security lot sold with the net sales proceeds.
Dividends and distributions to shareholders - Dividends from net investment income and net realized capital gains, if any, are declared and paid annually for each Fund. Dividends from net investment income and distributions from net realized gains are determined in accordance with federal income tax regulations, which may differ from GAAP. These "book/tax" differences are considered either temporary (e.g., deferred losses) or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the composition of net assets based on their federal tax-basis treatment; temporary differences do not require reclassification. Dividends and distributions to shareholders are recorded on the ex-dividend date.
Federal Income Taxes - The Funds intend to continue to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of their taxable income to their shareholders. Therefore, no provision for federal income tax is required. The Funds recognize the tax benefits of uncertain tax positions only where the position is "more likely than not" to be sustained assuming examination by tax authorities. 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 year June 30, 2021 through June 30, 2023, or expected to be taken in the Funds' June 30, 2024 tax returns. The Funds identify their major tax jurisdictions as U.S. federal, Ohio and foreign jurisdictions where the Funds make significant investments. The 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 (as determined by the Board), taking into consideration the nature and type of expense and the relative sizes of the Funds in the Trust.
Foreign Currency - The accounting records of the Funds are maintained in U.S. dollars. Investment securities and other assets and liabilities denominated in a foreign currency, and income receipts and expense payments are translated into U.S. dollars using the prevailing exchange rate at the London market close. Purchases and sales of securities are translated into U.S. dollars at the contractual currency rates established at the approximate time of the trade. Net realized gains and losses on foreign currency transactions represent net gains and losses from currency realized between the trade and settlement dates on securities transactions, gains and losses on the purchase and sale of foreign currencies and the difference between income accrued versus income received. The effects of changes in foreign currency exchange rates on investments in securities are included with the net realized and unrealized gain or loss on investment securities. For the year ended June 30, 2024, QQH and LGH had a realized loss of $180 and $0 on foreign currency transactions, respectively.
34
The HCM ETFs
NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 2024
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. INVESTMENT TRANSACTIONS
For the year ended June 30, 2024, cost of purchases and proceeds from sales of portfolio securities (excluding in-kind transactions and short-term investments) for the Funds were as follows:
Ticker Symbol | Purchases | Sales | ||||||
QQH | $ | 462,281,958 | $ | 454,033,304 | ||||
LGH | $ | 350,938,417 | $ | 352,712,791 |
For the year ended June 30, 2024, cost of purchases and proceeds from sales of portfolio securities for in-kind transactions for the Funds were as follows:
Ticker Symbol | Purchases | Sales | ||||||
QQH | $ | 243,961,311 | $ | 188,539,241 | ||||
LGH | $ | 55,019,457 | $ | 19,264,193 |
4. INVESTMENT ADVISORY AGREEMENT AND TRANSACTIONS WITH RELATED PARTIES
Howard Capital Management, Inc. (the "Adviser") serves as the Funds investment adviser pursuant to an Investment Advisory Agreement with the Trust (the "Advisory Agreement"). The Trust has entered into a Global Custody Agreement with Brown Brothers Harriman & Co. (the "Custodian") to serve as custodian and to act as transfer and shareholder services agent. The Trust has also entered into an Underwriting Agreement with Northern Lights Distributors, LLC (the "Distributor") to serve as the principal underwriter and distributor for the Trust.
Pursuant to the Advisory Agreement, the Adviser, under the oversight of the Board, directs the daily operations of the Funds and supervises the performance of administrative and professional services provided by others. As compensation for its services and the related expenses borne by the Adviser, each Fund pays the Adviser a fee, computed and accrued daily and paid monthly, at an annual rate of 0.77% of each Fund's average daily net assets. For the year ended June 30, 2024, the Adviser earned $2,940,585, and $2,445,601 in advisory fees for QQH and LGH, respectively.
The Trust, with respect to the Funds, has adopted a distribution and service plan ("Plan") pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, the Funds are authorized to pay distribution fees to the Distributor and other firms that provide distribution and shareholder services ("Service Providers"). If a Service Provider provides these services, the Funds may pay fees at an annual rate not to exceed 0.25% of average daily net assets, pursuant to Rule 12b-1 under the 1940 Act.
35
The HCM ETFs
NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 2024
No distribution or service fees are currently paid by the Funds and there are no current plans to impose these fees. In the event Rule 12b-1 fees were charged, over time they would increase the cost of an investment in the Funds.
Ultimus Fund Solutions, LLC ("UFS")- UFS provides administration and fund accounting services to the Trust. Pursuant to separate servicing agreements with UFS, the Funds pay UFS customary fees for providing administration and fund accounting services to the Funds. Certain officers of the Trust are also officers of UFS, and are not paid any fees directly by the Funds for serving in such capacities.
Northern Lights Compliance Services, LLC ("NLCS")- NLCS, an affiliate of UFS and the Distributor, provides a Chief Compliance Officer to the Trust, as well as related compliance services, pursuant to a consulting agreement between NLCS and the Trust. Under the terms of such agreement, NLCS receives customary fees from each Fund.
Blu Giant, LLC ("Blu Giant")- Blu Giant, an affiliate of UFS, 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.
5. CAPITAL SHARE TRANSACTIONS
Shares are not individually redeemable and may be redeemed by the Funds at the net asset value ("NAV") only in large blocks known as "Creation Units." Shares are created and redeemed by the Funds only in Creation Unit size aggregations of 50,000 shares for both QQH and LGH. Only Authorized Participants or transactions done through an Authorized Participant are permitted to purchase or redeem Creation Units from the Funds. An Authorized Participant is either (i) a broker-dealer or other participant in the clearing process through the Continuous Net Settlement System of the National Securities Clearing Corporation or (ii) a DTC participant and, in each case, must have executed a Participant Agreement with the Distributor. Such transactions are generally permitted on an in-kind basis, with a balancing cash component to equate the transaction to the NAV per share of the Funds on the transaction date. Cash may be substituted equivalent to the value of certain securities generally when they are not available in sufficient quantity for delivery, not eligible for trading by the Authorized Participant or as a result of other market circumstances. In addition, the Funds may impose transaction fees on purchases and redemptions of Funds' shares to cover the custodial and other costs incurred by the Funds in effecting trades. A fixed fee may be imposed on each creation and redemption transaction regardless of the number of Creation Units involved in the transaction ("Fixed Fee"). Purchases and redemptions of Creation Units for cash or involving cash-in-lieu are required to pay an additional variable charge to compensate the Funds and its ongoing shareholders for brokerage and market impact expenses relating to Creation Unit transactions ("Variable Charge," and together with the Fixed Fee, the "Transaction Fees").
36
The HCM ETFs
NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 2024
The Transaction Fees for the Funds are listed in the table below:
ETFs | Fee for In-Kind and Cash Purchases | Maximum Additional Variable Charge for Cash Purchases* | ||||||
HCM Defender 100 Index ETF | $ | 500 | 2.00 | %* | ||||
HCM Defender 500 Index ETF | $ | 1,000 | 2.00 | %* |
* | The maximum Transaction Fee may be up to 2.00% of the amount invested. |
6. | DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF CAPITAL |
The tax character of distributions paid for the periods ended June 30, 2024, and June 30, 2023, was as follows:
For the period ended June 30, 2024: | ||||||||||||||||||||
Portfolio |
Ordinary Income |
Long-Term Capital Gains |
Return of Capital |
Tax-Exempt Income |
Total | |||||||||||||||
HCM Defender 100 Index ETF | $ | 992,525 | $ | - | $ | - | $ | - | $ | 992,525 | ||||||||||
HCM Defender 500 Index ETF | 1,881,940 | - | - | - | 1,881,940 |
For the period ended June 30, 2023: | ||||||||||||||||||||
Portfolio |
Ordinary Income |
Long-Term Capital Gains |
Return of Capital |
Tax-Exempt Income |
Total | |||||||||||||||
HCM Defender 100 Index ETF | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
HCM Defender 500 Index ETF | 1,454,080 | - | - | - | 1,454,080 |
As of June 30, 2024, the components of accumulated earnings on a tax basis were as follows:
Portfolio |
Undistributed Ordinary Tax-Exempt Income |
Undistributed Ordinary Income |
Undistributed Long-Term Capital Gains |
Post October Loss and Late Year Loss |
Capital Loss Carry Forwards |
Other Book/Tax Differences |
Unrealized Appreciation/ (Depreciation) |
Total Accumulated Earnings/ (Deficits) |
||||||||||||||||||||||||
HCM Defender 100 Index ETF | $ | - | $ | 1,024,305 | $ | - | $ | - | $ | (83,844,488 | ) | $ | - | 109,838,448 | $ | 27,018,265 | ||||||||||||||||
HCM Defender 500 Index ETF | - | 940,121 | - | - | (49,048,427 | ) | - | 82,723,446 | 34,615,140 |
The difference between book basis and tax basis undistributed 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, and adjustments for C-Corporation return of capital distributions.
At June 30, 2024, the Funds had capital loss carry forwards for federal income tax purposes available to offset future capital gains, along with capital loss carryforwards utilized as follows:
Non-Expiring | CLCF | |||||||||||||||
Portfolio | Short-Term | Long-Term | Total | Utilized | ||||||||||||
HCM Defender 100 Index ETF | $ | 80,632,235 | $ | 3,212,253 | $ | 83,844,488 | $ | 8,073,271 | ||||||||
HCM Defender 500 Index ETF | 49,048,427 | - | 49,048,427 | 26,881,204 |
37
The HCM ETFs
NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 2024
Permanent book and tax differences, primarily attributable to the tax adjustments for realized gain (loss) on in-kind redemptions, the book/tax basis treatment of non-deductible expenses, prior year tax returns resulted in reclassifications for the Funds for the fiscal year ended June 30, 2024, as follows:
Portfolio |
Paid In Capital |
Accumulated Earnings (Losses) |
||||||
HCM Defender 100 Index ETF | $ | 54,208,187 | $ | (54,208,187 | ) | |||
HCM Defender 500 Index ETF | 3,998,763 | (3,998,763 | ) |
7. AGGREGATE UNREALIZED APPRECIATION AND DEPRECIATION - TAX BASIS
Portfolio |
Cost for Federal Tax purposes |
Unrealized Appreciation |
Unrealized Depreciation |
Tax Net Unrealized App/Dep |
||||||||||||
HCM Defender 100 Index ETF | $ | 384,798,253 | $ | 126,147,437 | $ | (16,308,989 | ) | $ | 109,838,448 | |||||||
HCM Defender 500 Index ETF | 314,727,966 | 94,641,434 | (11,917,988 | ) | 82,723,446 |
8. SUBSEQUENT EVENTS
Subsequent events after the date of the Statements of Assets and Liabilities have been evaluated through the date the financial statements were issued.
Management has determined that no events or transactions occurred requiring adjustment or disclosure in the financial statements.
38
Report of Independent Registered Public Accounting Firm
To the Shareholders of HCM Defender 100 Index ETF and HCM Defender 500 Index ETF
and the Board of Trustees of Northern Lights Fund Trust III
Opinion on the Financial Statements
We have audited the accompanying statements of assets and liabilities of HCM Defender 100 Index ETF and HCM Defender 500 Index ETF (collectively, the Funds), including the schedules of investments, as of June 30, 2024, the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the related notes to the financial statements (collectively, the financial statements), and the financial highlights for each of the four years in the period then ended and for the period from October 9, 2019 (commencement of operations) through June 30, 2020. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Funds as of June 30, 2024, the results of their operations for the year then ended, the changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the four years in the period then ended and for the period from October 9, 2019 (commencement of operations) through June 30, 2020, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Funds' management. Our responsibility is to express an opinion on the Funds' financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Funds' internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of June 30, 2024, by correspondence with the custodian. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ RSM US LLP
We have served as the auditor of one or more Howard Capital Management, Inc. investment companies since 2015.
Denver, Colorado
August 29, 2024
39
THE HCM ETFs
SUPPLEMENTAL INFORMATION (Unaudited)
June 30, 2024
Renewal of Advisory Agreement - HCM Defender 100 Index ETF and HCM Defender 500 Index ETF
In connection with a meeting held on February 26 & March 4, 2024, the Board, including a majority of the Trustees who are not "interested persons" as that term is defined in the 1940 Act, discussed the renewal of the investment advisory agreement (the "Advisory Agreement") between Howard Capital Management, Inc. (the "Adviser") and the Trust, with respect to HCM Defender 100 Index ETF ("HCM 100") and HCM Defender 500 Index ETF ("HCM 500"), (collectively, the "HCM ETFs"). In considering the renewal of the Advisory Agreement, the Board reviewed materials specifically relating to the HCM ETFs and the Advisory Agreement.
The Board discussed the Adviser's presentation and materials. The Board relied upon the advice of independent legal counsel and its own business judgment in determining the material factors to be considered in evaluating the Advisory Agreement and the weight to be given to each such factor. The Board's conclusions were based on an evaluation of all of the information provided and were not the result of any one factor. Moreover, each Trustee may have afforded different weight to the various factors in reaching his or her conclusions with respect to the Advisory Agreement.
Nature, Extent and Quality of Services. The Board recognized that the Adviser had approximately $4.8 billion in total assets under management. The Board noted the broad investment experience and academic credentials of the Adviser's investment personnel. The Board discussed how the Adviser continually utilized its proprietary quantitative model to determine when and in which market sectors the HCM ETFs should be invested and augmented its models with third-party research on interest rate direction, international markets and macroeconomic factors. The Board reviewed the Adviser's risk management plan that employed stop losses, closely monitored the market during times of market growth, and used mathematical market ratios in an effort to avoid major market downturns. The Board noted that the Adviser had defined inputs in its proprietary model to ensure compliance with each HCM ETF's investment limitations. The Board discussed the Adviser's cybersecurity protocols. The Board observed that the Adviser selected broker/dealers based on best execution. The Trust's CCO and the Board observed that the Adviser had reported no material compliance issues or data security incidents since the Advisory Agreement was last approved.
With respect to the HCM ETFs, the Board observed that the Adviser monitored liquidity, bid/ask spreads, share price, NAV per share and volume during market hours. The Board discussed that the Adviser reviewed the quality of creation and redemption units each time shares were created or redeemed, and that tracking error was monitored on a real time basis.
The Board concluded that it could reasonably expect the Adviser to continue providing quality service to the HCM ETFs and their respective shareholders.
40
THE HCM ETFs
SUPPLEMENTAL INFORMATION (Unaudited)(Continued)
June 30, 2024
Performance.
HCM 100 - The Board noted that HCM 100 earned a 3-star Morningstar rating and outperformed its Morningstar category and peer group over the 1-year, 3-year and since inception periods. They considered that HCM 100 moderately underperformed the HCM Defender 100 Index since inception, noting that unlike HCM 100, the Index does not incur operating expenses.
HCM 500 - The Board commented that HCM 500 earned a 2-star Morningstar rating and moderately underperformed its peer group and Morningstar category over the 1-year, 3-year, and since inception periods. They considered that HCM 500 moderately outperformed the HCM Defender 500 Index since inception, despite that fact that the Index does not incur operating expenses.
The Board considered the Adviser's analysis of the factors that impacted performance, and the Adviser's ongoing efforts to achieve superior results. After further discussion, the Board concluded that the performance of each HCM ETF was satisfactory.
Fees and Expenses. The Board noted that the advisory fee of each HCM ETF was higher than its peer group and Morningstar category medians and averages. The Board considered the Adviser's explanation for its fees which included that its proprietary model had been developed over many years through extensive research and was continually being reviewed and refined, as deemed appropriate. The Board discussed that the Adviser believed the utilization of its proprietary model commanded a premium. The Board concluded that the advisory fee for each HCM ETF was not unreasonable.
Economies of Scale. The Board discussed the size of HCM 100 and HCM 500 and their respective prospects for growth and concluded that that neither had achieved meaningful economies that would necessitate the establishment of breakpoints. The Board agreed to monitor and revisit this issue at the next renewal.
Profitability. The Board reviewed the Adviser's profitability analysis in connection with its advisory services provided to each of the HCM ETFs and noted that the Adviser had earned a reasonable profit in connection with each HCM ETF. The Board acknowledged the Adviser's continuing investments in resources to effectively manage the HCM ETFs. The Board concluded that the Adviser's profitability for each of the HCM ETFs was not excessive.
Conclusion. Having requested and reviewed such information from the Adviser as the Board believed to be reasonably necessary to evaluate the terms of the Advisory Agreement, and as assisted by the advice of independent counsel, the Board concluded that renewal of the Advisory Agreement was in the best interests of the HCM ETFs and their respective shareholders.
* | Due to timing of the contract renewal schedule, these deliberations may or may not relate to the current performance results of the HCM ETFs. |
41
PROXY VOTING POLICY
Information regarding how the Funds voted proxies relating to portfolio securities for the most recent twelve-month period ended June 30 as well as a description of the policies and procedures that the Funds used to determine how to vote proxies is available without charge, upon request, by calling 1-770-642-4902 or by referring to the Securities and Exchange Commission's ("SEC") website at http://www.sec.gov.
PORTFOLIO HOLDINGS
The Funds file a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to their reports on Form N-PORT, within sixty days after the end of the period. Form N-PORT reports are available at the SEC's website at www.sec.gov.
INVESTMENT ADVISER
Howard Capital Management, Inc.
1145 Hembree Road
Roswell, Georgia 30076
ADMINISTRATOR
Ultimus Fund Solutions, LLC
225 Pictoria Drive, Suite 450
Cincinnati, Ohio 45246
Item 8. Changes in and Disagreements with Accountants for Open-End Management Investment Companies.
Not applicable
Item 9. Proxy Disclosures for Open-End Management Investment Companies.
Not applicable
Item 10. Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies.
Included under Item 7 of this Form.
Item 11. Statement Regarding Basis for Approval of Investment Advisory Contract.
Included under Item 7 of this Form.
Item 12. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 13. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 14. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable.
Item 15. Submission of Matters to a Vote of Security Holders.
None.
Item 16. Controls and Procedures.
(a) | The registrant's Principal Executive Officer and Principal Financial Officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Act) are effective in design and operation and are sufficient to form the basis of the certifications required by Rule 30a-(2) under the Act, based on their evaluation of these disclosure controls and procedures as of a date within 90 days of this report on Form N-CSR. |
(b) | There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. |
Item 17. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
Not applicable.
Item 18. Recovery of Erroneously Awarded Compensation.
(a) | Not applicable. |
(b) | Not applicable. |
Item 19. Exhibits.
(a)(1) | Code of Ethics for Principal Executive and Senior Financial Officers. Exhibit 99.CODE |
(a)(2) | Not applicable |
(a)(3) | A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Act (17 CFR 270.30a-2(a)): Attached hereto. Exhibit 99. CERT |
(a)(4) | Not applicable. |
(b) | Certifications required by Rule 30a-2(b) under the Act (17 CFR 270.30a-2(b)): Attached hereto Exhibit 99.906CERT |
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 III |
By (Signature and Title)
/s/ Brian Curley |
Brian Curley, Principal Executive Officer/President
Date | 09/06/24 |
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/ Brian Curley |
Brian Curley, Principal Executive Officer/President
Date | 09/06/24 |
By (Signature and Title)
/s/ Rich Gleason |
Rich Gleason, Principal Financial Officer/Treasurer
Date | 09/06/24 |