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Name | Symbol | Market | Type |
---|---|---|---|
Cp High Yield Trend Etf | AMEX:HYTR | AMEX | Exchange Traded Fund |
Price Change | % Change | Price | High Price | Low Price | Open Price | Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.06 | 0.28% | 21.47 | 21.47 | 21.455 | 21.46 | 206 | 18:04:59 |
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)
4221 North 203rd Street, Ste 100, Elkhorn, Nebraska 68022
(Address of principal executive offices) (Zip code)
Eric Kane, Gemini Fund Services
80 Arkay Drive, Suite 110 Hauppauge, NY 11788
(Name and address of agent for service)
Registrant's telephone number, including area code: 631-470-2688
Date of fiscal year end: 9/30
Date of reporting period: 3/31/20
Item 1. Reports to Stockholders.
Class I Shares – LSEIX
Semi-Annual Report
March 31, 2020
1-855-233-8300
www.persimmonfunds.com
Distributed by Northern Lights Distributors, LLC
Member FINRA
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Funds shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Funds website www.persimmonfunds.com, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically or to continue receiving paper copies of shareholder reports, which are available free of charge, by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by following the instructions included with paper Fund documents that have been mailed to you.
Persimmon
Capital Management
Semi-Annual Shareholder Letter |
|
Dear Shareholder:
The Persimmon Log Short Fund (the Fund) continued its evolution and development over the prior two quarters. A year ago, we transitioned the portfolio from multiple external managers into our proprietary internally managed strategy. Our internal strategy managed a portion of the Fund alongside the external managers for two years before we made the move to eliminate the external managers. As an organization we believe that it is vital to continue to adapt and evolve as experience and knowledge gained will provide the resources to improve upon a strategy and the resulting client experience.
Over the course of the past six months we have implemented a series of strategic changes to the strategy that we believe will enhance the shareholders investment experience. The first and most dramatic change that we made to the portfolio was to reconfigure how we invested the long book. Since the launch of our strategy we have utilized a process that combined both fundamental and quantitative inputs. The portfolio that was borne from this process tended to have a few embedded factor tilts primarily relying on both momentum, quality and value. This factor-based investment style served the portfolio well in both 2017 and 2018 but resulted in a significant drag in 2019. The outperformance and underperformance is the double edged sword of such a philosophy. We believe that this investment approach can be beneficial over long time frames but creates significant terminal risk in that it is highly dependent upon when you buy and sell. Investors who buy prior to an outperformance period will likely experience a more pleasant investment experience when compared to those who invest after the strong performance and before a lull in the relative performance.
To address this fluctuating out/underperformance we redeployed the long portion of the portfolio into a S&P 500 tracking portfolio. A tracking portfolio has several potential benefits for shareholders as the portfolio seeks to be more efficient, more transparent and allows for improved risk management. Efficiency is achieved as the tracking portfolio is not traded on a tactical basis as rankings of the individual securities change. Under the new long portfolio, we anticipate liquidating positions only when the index changes its members, reducing transaction costs from the higher turnover utilized in the fund under the prior structure. In tracking the S&P 500 we are following the largest companies listed in the United States and an index that is widely followed by both professional and retail investors.
Another hurdle experienced over the years was that short-term trading strategies generated a substantial level of short term capital gains. For taxable investors this was a less than ideal solution as their returns were taking a haircut when viewed on an after-tax basis. This led to the second evolution comprised of a tax harvesting overlay. By reconfiguring the long book to a tracking portfolio, it allowed us to add an overlay to portfolio designed to harvest tax losses, with the goal of improving after tax returns for our investors. To ensure the fund maintains its ability to track the S&P we substitute each position with a representative sector ETF to wait out the wash sale period before we reenter the original position.
The final progression for the fund was an adjustment to the net exposure range of the portfolio. A core component of our strategy, and one that we believe has added value over the previous three years, is our proprietary hedging process that allows the fund to dynamically reduce exposure to the markets. The hedge program works in concert with the exposure in the long portfolio to produce a net exposure to the market, which is the long book amount invested less the level of the hedge program. Historically, we were running this net exposure between 0% and 60%. This served the fund extremely well during the first and fourth quarter selloffs of 2018 when the fund was able to drop market exposure to 0%. However, during the strong market periods the low net range was a drag on the funds performance. During 2017, markets were exhibiting strength compounded with low volatility and were an ideal environment for our strategy. The prior exposure range capitated the amount of exposure the fund could add to participate in the bull market. This was also experienced during recoveries from the market selloffs as the funds low net exposure when the market had bottomed did not allow the fund to participate in the initial stage of a recovery. To allow the fund to participate to a higher degree in bull markets and maintain exposure during market selloffs, the fund shifted the net exposure upward to a range of between 40% and 100%.
These changes to the fund were implemented in the middle of December around the time that the Covid-19 virus was beginning its assault on Wuhan, China. When the virus was contained to mainland China markets continued to push to new
Timothy Melly, CFA | 484-572-0500 | tmelly@persimmoncapital.com | |||||
CONTACT | |||||||
US |
1
Persimmon
Capital Management
Semi-Annual Shareholder Letter |
|
highs and the revamped strategy within the fund participated to a meaningful degree up to the market peak in February 2020. As markets reached all-time highs the virus began appearing in countries across the globe with some of the first reports of local spread. Stocks experienced the quickest bear market in history, taking only 21 calendar days to breach the technical 20% bear market sell off. The correction throughout March ultimately resulted in a 34% peak to trough drop for the S&P 500. The daily moves in the market were of a magnitude only seen during 2008, 1987 and during the Great Depression. The VIX index reached 82.6, a measure exceeding the 2008 recession and 1987 Black Monday. The swings in the market were not unilaterally negative as the S&P 500 had several large one-day gains during the waterfall decline. These included gains of 9.3%, 6.0%, 4.9%, 4.6% and 4.2%, and were each limited to a single day as the market failed to follow through. It was not until March 24 that we saw a 9.4% gain followed by two more positive days, for a three day gain north of 17%.
The coronavirus pandemic resulted in extreme market conditions and served as a real-life stress test of our revamped portfolio methodology. The Persimmon Long Short Fund was able to utilize the dynamic hedging process to reduce exposure to the markets and limit the depth of the funds drawdown. For the first six weeks of the year the Fund maintained elevated market exposure with average net exposure of 80%. When the selloff accelerated on February 24th the Fund quickly shifted to a reduced net exposure and held a maximum hedge position for most of the down move, averaging 43% net exposure. As the hedges were seeking to manage risk within the portfolio the fund had the opportunity to harvest substantial losses in the long portfolio with the fund liquidating approximately half of the equity capital in the long book at losses to cost and simultaneously replace individual equities with sector ETFs, thus maintaining market exposure. With the hedging overlay, the fund was also able to tamp down the exposure of the long book and limit the magnitude of the selloff relative to the S&P 500. During the quarter the fund outperformed the S&P 500 by 990 bps. We believe that with the modified portfolio management structure, the Persimmon Long Short Fund is well positioned to deliver substantial value to our investors.
The following table summarizes returns of the Persimmon Long Short Fund alongside the S&P 500 and the HFRX Equity Hedge Index:
As of March 31th | YTD | 1 Year | 5 Year | Inception to Date* |
Fund – LSEIX | -9.70% | -7.00% | -0.47% | 1.48% |
HFRX Equity Hedge Index | -13.33% | -9.43% | -1.77% | 0.72% |
S&P 500 TR | -19.60% | -6.96% | 5.09% | 8.92% |
* | Inception Date 01/01/2013 |
Returns greater than one year are annualized
We thank you for your continued support and encourage you to reach out to us with any questions you may have.
Sincerely,
Greg
Horn
Tim Melly
The Persimmon Capital Management Investment Team
The above table contains the Fund returns as of the last quarter end. Performance is based on the return of the Institutional class shares (LSEIX). The performance data quoted here represents past performance. For more current performance information, please call toll-free 855-233-8300 or visit our website, www.persimmonfunds.com. Current performance may be lower or higher than the performance data quoted above. Past performance is no guarantee of future results. The investment
Timothy Melly, CFA | 484-572-0500 | tmelly@persimmoncapital.com | |||||
CONTACT | |||||||
US |
2
Persimmon
Capital Management
Semi-Annual Shareholder Letter |
|
return and principal value of an investment in the investment adviser has contractually agreed to reduce its fees and/or absorb expenses until at least February 2, 2021, to ensure that net annual, operating expenses of the Class I Shares will not exceed 2.49%, subject to the possible recoupment from the Fund within three years after the fees have been waived or reimbursed. Without these waivers, the Class I shares total annual operating expenses would be 2.88%. Please review the Fund prospectus for more information regarding the Funds fees and expenses, including other share classes.
PROSPECTUS OFFERING
Investors should carefully consider the investment objectives, risks, charges and expenses of the Persimmon Long Short Fund. This and other important information about the Fund is contained in the prospectus, which can be obtained at www.persimmonfunds.com or by calling 855-233-8300. The prospectus should be read carefully before investing. The Persimmon Long Short Fund is distributed by Northern Lights Distributors, LLC, member FINRA.
Persimmon Capital Management, LP is not affiliated with Northern Lights Distributors, LLC.
RISK DISCLOSURE
Mutual Funds involve risk including the possible loss of principal.
The Fund will invest a percentage of its assets in derivatives and options contracts. The use of such investments and the resulting high portfolio turn-over, may expose the Fund to additional risks that it would not be subject to, if it invested directly in the securities of the underlying those derivatives. The Fund may experience losses that exceed those experienced by funds that do not use options and derivatives.
The Fund may invest in high yield or junk bonds which present a greater risk than bonds of higher quality. Other risks include credit risks and investments in fixed income securities that may be subject to default, prepayment and interest rate changes. The Fund may also invest in U.S treasury obligations and securities issued by federal agencies and U.S. government sponsorship.
Investments in foreign securities and emerging markets involve risks not generally associated with investments in securities of U.S. companies including currency rate changes, sovereign debt risk, political, social and economic conditions, accurate company information, foreign control on investment and market operations including banks and security depositories. These risks may be greater in emerging markets and less developed countries.
ETNs and ETFs are subject to investment strategy risks and expenses which are indirectly paid by the Fund. The value of small or medium capitalization equities and issuers may be subject to more erratic market movements than those of larger more established companies and issuers. Furthermore, the use short positions can magnify the potential for gain or loss and amplify the effects of market volatility on the Funds share price.
DEFINITIONS
Indices presented are for comparison purposes only. They may not hold substantially similar securities to the Fund, and thus, little correlation may exist. The S&P 500 index measures the return of 500 widely held securities that currently trade in the US. Index performance returns do not reflect any management fees, transaction costs or expenses. HFRXEH (HFRX Equity Hedge) is a daily index of Long/Short Equity Hedge Fund Returns provided by Hedge Fund Research (hedgefundresearch.com). Index performance returns do not reflect any management fees, transaction costs or expenses. Indices are unmanaged and one may not invest directly in an index.
3574-NLD-5/12/2020
Timothy Melly, CFA | 484-572-0500 | tmelly@persimmoncapital.com | |||||
CONTACT | |||||||
US |
3
Persimmon Long/Short Fund |
Portfolio Review (Unaudited) |
March 31, 2020 |
The Funds performance figures* for the period ended March 31, 2020, as compared to its benchmark:
Annualized | ||||
Annualized | Since Inception | |||
Six Months | One Year | Five Years | (12/31/2012) | |
Persimmon Long Short Fund - Class I | (7.39)% | (7.02)% | (0.48)% | 1.48% |
HFRX Equity Hedge Index ** | (11.50)% | (9.44)% | 0.72% | 0.72% |
S&P 500 Total Return Index *** | (12.31)% | (6.98)% | 6.73% | 10.81% |
* | The performance data quoted is historical. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance data quoted. The principal value and investment return of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Total returns are calculated using the traded net asset value on March 31, 2020. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemptions of Fund shares. Returns greater than 1 year are annualized. The total annual gross operating expenses as stated in the fee table of the Funds prospectus dated February 3, 2020 are 2.88% for Class I Shares. Redemptions made within 60 days of purchase may be assessed a redemption fee of 1.00%. Total returns would have been lower had the advisor not waived a portion of its fees or reimbursed certain expenses. For performance information current to the most recent month-end, please call 1-855-233-8300. |
** | HFRXEH (HFRX Equity Hedge) is a daily index of Long/Short Equity Hedge Fund Returns provided by Hedge Fund Research (hedgefundresearch.com). Index performance returns do not reflect any management fees, transaction costs or expenses. You cannot invest directly in an index. |
*** | The S&P 500 Total Return Index is an unmanaged composite of 500 large capitalization companies and includes the reinvestment of dividends. This index is widely used by professional investors as a performance benchmark for large-cap stocks. You cannot invest directly in an index. |
Asset Class | % of Net Assets | |||
Exchanged-Traded Funds | 49.3 | % | ||
Common Stock | 32.0 | % | ||
Short-Term Investment | 6.2 | % | ||
Other Assets In Excess of Liabilities | 12.5 | % | ||
Total | 100.0 | % | ||
Please refer to the Portfolio of Investments in this semi-annual report for a detailed listing of the Funds holdings.
4
Persimmon Long/Short Fund |
PORTFOLIO OF INVESTMENTS (Unaudited) |
March 31, 2020 |
Shares | Fair Value | |||||||
COMMON STOCK - 32.0% | ||||||||
ADVERTISING - 0.0% | ||||||||
383 | Interpublic Group of Cos, Inc. | $ | 6,201 | |||||
AEROSPACE/DEFENSE - 0.4% | ||||||||
214 | Harris Corp. | 38,546 | ||||||
236 | Lockheed Martin Corp. | 79,992 | ||||||
118,538 | ||||||||
AGRICULTURE - 0.4% | ||||||||
1,536 | Philip Morris International, Inc. | 112,067 | ||||||
BANKS - 0.1% | ||||||||
139 | M&T Bank Corp. | 14,378 | ||||||
BEVERAGES - 0.7% | ||||||||
179 | Molson Coors Brewing Co. | 6,983 | ||||||
376 | Monster Beverage Corp. * | 21,154 | ||||||
1,442 | PepsiCo, Inc. | 173,184 | ||||||
201,321 | ||||||||
BIOTECHNOLOGY - 1.4% | ||||||||
612 | Amgen, Inc. | 124,071 | ||||||
193 | Biogen, Inc. * | 61,061 | ||||||
700 | Corteva, Inc. | 16,450 | ||||||
1,365 | Gilead Sciences, Inc. | 102,047 | ||||||
232 | Incyte Corp. * | 16,989 | ||||||
80 | Regeneron Pharmaceuticals, Inc. * | 39,063 | ||||||
258 | Vertex Pharmaceuticals, Inc. * | 61,391 | ||||||
421,072 | ||||||||
BUILDING MATERIALS - 0.0% | ||||||||
287 | Masco Corp. | 9,922 | ||||||
CHEMICALS - 0.2% | ||||||||
101 | International Flavors & Fragrances, Inc. | 10,310 | ||||||
84 | Sherwin-Williams Co. | 38,600 | ||||||
48,910 | ||||||||
COMMERCIAL SERVICES - 0.7% | ||||||||
280 | Global Payments, Inc. | 40,384 | ||||||
39 | MarketAxess Holdings, Inc. | 12,970 | ||||||
155 | Moodys Corp. | 32,783 | ||||||
1,093 | PayPal Holdings, Inc. * | 104,644 | ||||||
140 | Rollins, Inc. | 5,060 | ||||||
157 | Verisk Analytics, Inc. | 21,883 | ||||||
217,724 | ||||||||
COMPUTERS - 3.6% | ||||||||
3,717 | Apple, Inc. | 945,196 | ||||||
130 | Fortinet, Inc. * | 13,152 | ||||||
897 | International Business Machines Corp. | 99,504 | ||||||
124 | Leidos Holdings, Inc. | 11,365 | ||||||
1,069,217 | ||||||||
COSMETICS / PERSONAL CARE - 0.3% | ||||||||
859 | Colgate-Palmolive Co. | 57,003 | ||||||
212 | Estee Lauder Cos, Inc. | 33,781 | ||||||
90,784 | ||||||||
DIVERSIFIED FINANCIAL SERVICES - 1.8% | ||||||||
563 | Intercontinental Exchange, Inc | 45,462 | ||||||
845 | Mastercard, Inc. | 204,118 | ||||||
117 | Nadsaq, Inc. | 11,109 | ||||||
1,665 | Visa, Inc. | 268,265 | ||||||
528,954 | ||||||||
ELECTRIC - 0.8% | ||||||||
369 | NextEra Energy, Inc. | 115,498 | ||||||
85 | Pinnacle West Capital Corp. | 8,185 | ||||||
791 | Southern Co. | 54,736 | ||||||
237 | WEC Energy Group, Inc. | 27,232 | ||||||
404 | Xcel Energy, Inc. | 24,361 | ||||||
230,012 | ||||||||
ELECTRONICS - 0.1% | ||||||||
96 | Allegion PLC | 8,834 | ||||||
193 | Keysight Technologies, Inc. * | 16,150 | ||||||
23 | Mettler-Toledo International, Inc. * | 15,882 | ||||||
40,866 | ||||||||
See accompanying notes to financial statements.
5
Persimmon Long/Short Fund |
PORTFOLIO OF INVESTMENTS (Unaudited) (Continued) |
March 31, 2020 |
Shares | Fair Value | |||||||
COMMON STOCK - 32.0% (Continued) | ||||||||
ENGINEERING & CONSTRUCTION - 0.0% | ||||||||
134 | Jacobs Engineering Group, Inc. | $ | 10,622 | |||||
ENVIRONMENTAL CONTROL - 0.2% | ||||||||
211 | Republic Services, Inc. | 15,838 | ||||||
382 | Waaste Management, Inc. | 35,358 | ||||||
51,196 | ||||||||
FOOD - 0.7% | ||||||||
177 | Campbell Soup Co. | 8,170 | ||||||
457 | Conagra Brands, Inc. | 13,408 | ||||||
622 | General Mills, Inc. | 32,823 | ||||||
279 | Hormel Foods Corp. | 13,013 | ||||||
118 | JM Smucker Co. | 13,098 | ||||||
246 | Kellogg Co. | 14,758 | ||||||
811 | Kroger Co. | 24,427 | ||||||
139 | Lamb Weston Holdings, Inc. | 7,937 | ||||||
131 | McCormick & Co, Inc. | 18,498 | ||||||
1,475 | Mondelez International, Inc. | 73,868 | ||||||
220,000 | ||||||||
GAS - 0.0% | ||||||||
372 | NiSource, Inc. | 9,289 | ||||||
HEALTHCARE-PRODUCTS - 1.1% | ||||||||
487 | Baxter International, Inc. | 39,540 | ||||||
615 | Danaher Corp. | 85,122 | ||||||
79 | IDEXX Laboratories, Inc * | 19,137 | ||||||
114 | Intuitive Surgical, Inc. * | 56,454 | ||||||
139 | ResMed, Inc. | 20,473 | ||||||
45 | Teleflex, Inc. | 13,179 | ||||||
395 | Thermo Fisher Scientific, Inc. | 112,022 | ||||||
345,927 | ||||||||
HEALTHCARE-SERVICES - 1.1% | ||||||||
88 | DaVita, Inc. | 6,693 | ||||||
135 | Humana, Inc. | 42,393 | ||||||
174 | IQVIA Holdings, Inc. | 18,767 | ||||||
95 | Laboratory Corp of America Holdings | 12,008 | ||||||
957 | UnitedHealth Group, Inc. | 238,656 | ||||||
318,517 | ||||||||
HOME BUILDERS - 0.0% | ||||||||
287 | Lennar Corp. | 10,963 | ||||||
HOUSEHOLD PRODUCTS - 0.2% | ||||||||
248 | Church & Dwight Co., Inc. | 15,917 | ||||||
127 | Clorox Co. | 22,003 | ||||||
343 | Kimberly-Clark Corp. | 43,859 | ||||||
81,779 | ||||||||
INSURANCE - 0.4% | ||||||||
259 | Loews Corp. | 9,021 | ||||||
508 | Marsh & McLennan Cos, Inc. | 43,922 | ||||||
584 | Progressive Corp | 43,123 | ||||||
97 | Willis Towers Watson PLC | 16,475 | ||||||
112,541 | ||||||||
INTERNET - 3.2% | ||||||||
395 | Amazon.com, Inc. * | 770,139 | ||||||
391 | Netflix, Inc. * | 146,820 | ||||||
730 | Twitter, Inc. * | 17,929 | ||||||
96 | Verisign, Inc. * | 17,289 | ||||||
952,177 | ||||||||
LODGING - 0.0% | ||||||||
311 | Las Vegas Sands Corp. | 13,208 | ||||||
MACHINERY-DIVERSIFIED - 0.1% | ||||||||
73 | IDEX Corp. | 10,082 | ||||||
219 | Intersoll-Rand, Inc. * | 5,431 | ||||||
137 | Xylem, Inc. | 8,923 | ||||||
24,436 | ||||||||
MEDIA - 0.2% | ||||||||
151 | Charter Communications, Inc. * | 65,883 | ||||||
MINING - 0.1% | ||||||||
796 | Newmont GoldCorp Corporation | 36,043 | ||||||
See accompanying notes to financial statements.
6
Persimmon Long/Short Fund |
PORTFOLIO OF INVESTMENTS (Unaudited) (Continued) |
March 31, 2020 |
Shares | Fair Value | |||||||
COMMON STOCK - 32.0% (Continued) | ||||||||
MISCELLANEOUS MANUFATURING - 0.2% | ||||||||
296 | Illinois Tool Works, Inc. | $ | 42,067 | |||||
249 | Trane Technologies PLC | 20,565 | ||||||
62,632 | ||||||||
OIL & GAS -0.0% | ||||||||
411 | Cabot Oil & Gas Corp. | 7,065 | ||||||
PACKAGING & CONTAINERS - 0.1% | ||||||||
325 | Ball Corp. | 21,014 | ||||||
PHARMACEUTICALS - 2.0% | ||||||||
329 | Allergan PLC | 58,266 | ||||||
157 | AmerisourceBergen Corp. | 13,894 | ||||||
762 | Eli Lily & Co. | 105,705 | ||||||
2,620 | Johnson & Johnson | 343,561 | ||||||
190 | McKesson Corp. * | 25,699 | ||||||
359 | Zoetis, Inc. | 42,251 | ||||||
589,376 | ||||||||
PIPELINES - 0.1% | ||||||||
1,871 | Kinder Morgan, Inc. | 26,044 | ||||||
REAL ESTATE INVESTMENT TRUSTS - 1.1% | ||||||||
408 | American Tower Corp. | 88,842 | ||||||
401 | Crown Castle International Corp. | 57,904 | ||||||
206 | Digital Realty Trust, Inc. | 28,615 | ||||||
82 | Equinix, Inc. | 51,215 | ||||||
316 | Iron Mountain, Inc. | 7,521 | ||||||
117 | Mid-America Apartment Communities, Inc. | 12,054 | ||||||
151 | Public Storage | 29,990 | ||||||
329 | Realty Income Corp. | 16,404 | ||||||
110 | SBA Communications Corp. | 29,697 | ||||||
311 | UDR, Inc. | 11,364 | ||||||
333,606 | ||||||||
RETAIL - 2.5% | ||||||||
448 | Costco Wholesale Corp. | 127,738 | ||||||
266 | Dollar General Corp. | 40,169 | ||||||
247 | Dollar Tree, Inc. * | 18,147 | ||||||
1,094 | Home Depot, Inc. | 204,261 | ||||||
216 | L Brands, Inc. | 2,497 | ||||||
767 | Lowes Cos, Inc. | 66,000 | ||||||
741 | McDonalds Corp. | 122,524 | ||||||
1,511 | Walmart, Inc. | 171,680 | ||||||
753,016 | ||||||||
SEMICONDUCTORS - 1.0% | ||||||||
909 | Advanced Micro Devices, Inc. * | 41,341 | ||||||
37 | IPG Photonics Corp. * | 4,080 | ||||||
153 | KLA-Tencor Corp. | 21,992 | ||||||
135 | Lam Research Corp. | 32,400 | ||||||
259 | Maxim Integrated Products, Inc. | 12,590 | ||||||
216 | Microchip Technology, Inc. | 14,645 | ||||||
942 | Micron Technology, Inc. * | 39,621 | ||||||
534 | NVIDIA Corp. | 140,762 | ||||||
307,431 | ||||||||
SOFTWARE - 5.8% | ||||||||
748 | Activision Blizzard, Inc. | 44,491 | ||||||
441 | Adobe, Inc. * | 140,344 | ||||||
150 | Akamai Technologies, Inc. * | 13,723 | ||||||
83 | Ansys, Inc. * | 19,295 | ||||||
261 | Cadence Design Systems, Inc. * | 17,236 | ||||||
121 | Citrix Systems, Inc. | 17,127 | ||||||
283 | Electronic Arts, Inc. * | 28,348 | ||||||
246 | Intuit, Inc. | 56,580 | ||||||
80 | Jack Henry & Associates, Inc. | 12,419 | ||||||
7,301 | Microsoft Corp. | 1,151,441 | ||||||
83 | MSCI, Inc. | 23,984 | ||||||
771 | Salesforce.com, Inc. * | 111,009 | ||||||
169 | ServiceNow, Inc. * | 48,432 | ||||||
135 | Snyopsys, Inc. * | 17,387 | ||||||
110 | Take-Two Interactive Software, Inc. * | 13,047 | ||||||
1,714,863 | ||||||||
See accompanying notes to financial statements.
7
Persimmon Long/Short Fund |
PORTFOLIO OF INVESTMENTS (Unaudited) (Continued) |
March 31, 2020 |
Shares | Fair Value | |||||||
COMMON STOCK - 32.0% (Continued) | ||||||||
TELECOMMUNICATIONS - 1.0% | ||||||||
51 | Arista Networks, Inc. * | $ | 10,330 | |||||
342 | Juniper Networks, Inc. | 6,546 | ||||||
161 | Motorola Solutions, Inc. | 21,400 | ||||||
308 | T-Mobile US, Inc. * | 25,841 | ||||||
4,424 | Verizon Communications, Inc. | 237,702 | ||||||
301,819 | ||||||||
TEXTILES - 0.0% | ||||||||
64 | Mohawk Industries, Inc. * | 4,879 | ||||||
TRANSPORTATION - 0.4% | ||||||||
98 | Kansas City Southern | 12,464 | ||||||
TOTAL COMMON STOCK (Cost - $9,984,866) | 9,496,756 | |||||||
EXCHANGE-TRADED FUNDS - 49.3% | ||||||||
EQUITY FUNDS - 49.3% | ||||||||
6,086 | iShares U.S. Basic Materials ETF | 421,577 | ||||||
6,227 | iShares U.S. Consumer Goods ETF | 673,761 | ||||||
4,924 | iShares U.S. Consumer Services ETF | 872,336 | ||||||
33,592 | iShares U.S. Energy ETF | 514,294 | ||||||
8,305 | iShares U.S. Healthcare ETF | 1,559,679 | ||||||
11,702 | iShares U.S. Industrials ETF | 1,453,388 | ||||||
21,939 | iShares U.S. Financials ETF | 2,134,226 | ||||||
10,344 | iShares U.S.Technology ETF | 2,114,210 | ||||||
41,068 | iShares U.S. Telecommunications ETF | 1,020,540 | ||||||
3,724 | iShares U.S. Utilities ETF | 514,247 | ||||||
11,828 | SPDR S&P 500 ETF Trust | 3,048,667 | ||||||
4,252 | Vanguard Real Estate ETF | 297,002 | ||||||
TOTAL EXCHANGE TRADED FUNDS (Cost - $15,352,559) | 14,623,927 | |||||||
SHORT-TERM INVESTMENT - 6.2% | ||||||||
MONEY MARKET FUND - 6.2% | ||||||||
1,832,377 | Fidelity Investments Money Market Fund - Institutional Class, 0.30% + | $ | 1,832,377 | |||||
TOTAL SHORT-TERM INVESTMENT (Cost - $1,832,377) | ||||||||
TOTAL INVESTMENTS - 87.5% (Cost - $27,169,802) | $ | 25,953,060 | ||||||
OTHER ASSETS IN EXCESS OF LIABILITIES - 12.5% | 3,703,694 | |||||||
NET ASSETS - 100.0% | $ | 29,656,754 | ||||||
ETF - Exchange Traded Fund
PLC - Public Limited Company
* | Non-income producing security. |
+ | Money market fund; interest rate reflects seven-day effective yield on March 31, 2020. |
See accompanying notes to financial statements.
8
Persimmon Long/Short Fund |
STATEMENT OF ASSETS AND LIABILITIES (Unaudited) |
March 31, 2020 |
ASSETS | ||||
Investment securities, at cost | $ | 27,169,802 | ||
Investment securities, at fair value | $ | 25,953,060 | ||
Segregated cash at broker | 3,770,346 | |||
Dividends and interest receivable | 31,737 | |||
Prepaid expenses | 5,331 | |||
TOTAL ASSETS | 29,760,474 | |||
LIABILITIES | ||||
Unrealized depreciation on open short futures contracts | 22,877 | |||
Investment advisory fees payable | 49,034 | |||
Payable to related parties | 7,254 | |||
Payable for dividends on shorts | 8 | |||
Accrued expenses and other liabilities | 24,547 | |||
TOTAL LIABILITIES | 103,720 | |||
NET ASSETS | $ | 29,656,754 | ||
COMPOSITION OF NET ASSETS: | ||||
Paid in capital | $ | 30,029,144 | ||
Accumulated Earnings | (372,390 | ) | ||
NET ASSETS | $ | 29,656,754 | ||
NET ASSET VALUE PER SHARE: | ||||
Class I Shares: | ||||
Net Assets | $ | 29,656,754 | ||
Shares of beneficial interest outstanding ($0 par value, unlimited shares authorized) | 3,218,594 | |||
Net asset value (Net Assets ÷ Shares Outstanding), offering price and redemption price per share (a) | $ | 9.21 | ||
(a) | The Fund will impose a 1.00% redemption fee for any redemptions of Fund shares occurring within 60 days of purchase. |
See accompanying notes to financial statements.
9
Persimmon Long/Short Fund |
STATEMENT OF OPERATIONS (Unaudited) |
For the Six Months Ended March 31, 2020 |
INVESTMENT INCOME | ||||
Dividends | $ | 256,468 | ||
Interest | 15,772 | |||
Less: Foreign withholding taxes | (34 | ) | ||
TOTAL INVESTMENT INCOME | 272,206 | |||
EXPENSES | ||||
Advisory fees | 267,234 | |||
Interest expenses | 21,372 | |||
Administrative services fees | 17,937 | |||
Transfer agent fees | 12,724 | |||
Accounting services fees | 11,470 | |||
Audit fees | 9,719 | |||
Compliance officer fees | 7,722 | |||
Legal fees | 7,605 | |||
Trustees fees and expenses | 7,425 | |||
Printing and postage expenses | 6,826 | |||
Custodian fees | 3,935 | |||
Registration fees | 2,224 | |||
Other expenses | 1,609 | |||
Third party administrative servicing fees | 183 | |||
TOTAL EXPENSES | 377,985 | |||
Fees recaptured by the Advisor | 23,722 | |||
TOTAL NET EXPENSES | 401,707 | |||
NET INVESTMENT LOSS | (129,501 | ) | ||
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS | ||||
Net realized gain (loss) from: | ||||
Investments | (439,483 | ) | ||
Futures contracts | 2,022,313 | |||
Net Realized Gain | 1,582,830 | |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | (3,765,560 | ) | ||
Futures contracts | (214,290 | ) | ||
Net Change in Unrealized Depreciation | (3,979,850 | ) | ||
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS | (2,397,020 | ) | ||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | (2,526,521 | ) | |
See accompanying notes to financial statements.
10
Persimmon Long/Short Fund |
STATEMENT OF CHANGES IN NET ASSETS |
For the | For the | |||||||
Six Months Ended | Year Ended | |||||||
March 31, 2020 | September 30, 2019 | |||||||
(Unaudited) | ||||||||
FROM OPERATIONS | ||||||||
Net investment loss | $ | (129,501 | ) | $ | (361,278 | ) | ||
Net realized gain from investments, securities sold short, options contracts purchased, futures contracts, and foreign currency transactions | 1,582,830 | 1,080,483 | ||||||
Net change in unrealized depreciation on investments, securities sold short, options contracts purchased, and futures contracts | (3,979,850 | ) | (2,857,280 | ) | ||||
Net decrease in net assets resulting from operations | (2,526,521 | ) | (2,138,075 | ) | ||||
DISTRIBUTIONS TO SHAREHOLDERS | ||||||||
Total distributions paid: | ||||||||
Class I | (351,214 | ) | (966,781 | ) | ||||
Total distributions to shareholders | (351,214 | ) | (966,781 | ) | ||||
SHARES OF BENEFICIAL INTEREST | ||||||||
Proceeds from shares sold: | ||||||||
Class I | 12,638,800 | 643,320 | ||||||
Net asset value of shares issued in reinvestment of distributions: | ||||||||
Class I | 351,214 | 966,781 | ||||||
Redemption fee proceeds: | ||||||||
Class I | 61 | — | ||||||
Payments for shares redeemed: | ||||||||
Class I | (9,005,028 | ) | (1,589,287 | ) | ||||
Net increase from shares of beneficial interest transactions | 3,985,047 | 20,814 | ||||||
NET INCREASE (DECREASE) IN NET ASSETS | 1,107,312 | (3,084,042 | ) | |||||
NET ASSETS | ||||||||
Beginning of Period | 28,549,442 | 31,633,484 | ||||||
End of Period | $ | 29,656,754 | $ | 28,549,442 | ||||
SHARE ACTIVITY | ||||||||
Class I: | ||||||||
Shares Sold | 1,228,854 | 64,591 | ||||||
Shares Reinvested | 34,912 | 97,458 | ||||||
Shares Redeemed | (878,535 | ) | (158,365 | ) | ||||
Net increase in shares of beneficial interest outstanding | 385,231 | 3,684 | ||||||
See accompanying notes to financial statements.
11
Persimmon Long/Short Fund |
FINANCIAL HIGHLIGHTS |
Per Share Data and Ratios for a Share of Beneficial Interest Outstanding Throughout Each Period |
Class I | ||||||||||||||||||||||||
Six Months Ended | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||||||||
March 31, 2020 | September 30, 2019 | September 30, 2018 | September 30, 2017 | September 30, 2016 | September 30, 2015 | |||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
Net asset value, beginning of period | $ | 10.08 | $ | 11.18 | $ | 11.23 | $ | 10.41 | $ | 10.90 | $ | 11.02 | ||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||
Net investment loss (1) | (0.04 | ) | (0.13 | ) | (0.31 | ) | (0.28 | ) | (0.37 | ) | (0.33 | ) | ||||||||||||
Net realized and unrealized gain (loss) on investments (2) | (0.70 | ) | (0.63 | ) | 0.93 | 1.10 | 0.40 | 0.56 | ||||||||||||||||
Total from investment operations | (0.74 | ) | (0.76 | ) | 0.62 | 0.82 | 0.03 | 0.23 | ||||||||||||||||
Less distributions from: | ||||||||||||||||||||||||
Net realized gains | (0.13 | ) | (0.34 | ) | (0.67 | ) | — | (0.52 | ) | (0.35 | ) | |||||||||||||
Total distributions | (0.13 | ) | (0.34 | ) | (0.67 | ) | — | (0.52 | ) | (0.35 | ) | |||||||||||||
Net asset value, end of period | $ | 9.21 | $ | 10.08 | $ | 11.18 | $ | 11.23 | $ | 10.41 | $ | 10.90 | ||||||||||||
Total return (3) | (7.39 | )% (8) | (6.72 | )% | 5.80 | % | 7.88 | % | 0.17 | % | 2.17 | % | ||||||||||||
Net assets, at end of year (000s) | $ | 29,657 | $ | 28,549 | $ | 31,633 | $ | 23,079 | $ | 27,518 | $ | 28,549 | ||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||
Ratio of gross expenses to average net assets before fee waiver/recapture (4)(6)(7) | 2.48 | % (9) | 2.85 | % | 3.88 | % | 4.17 | % | 4.33 | % | 3.93 | % | ||||||||||||
Ratio of net expenses to average net assets after fee waiver/recapture (6)(7) | 2.63 | % (9) | 2.90 | % | 3.69 | % | 3.86 | % | 4.33 | % | 3.93 | % | ||||||||||||
Ratio of net investment loss to average net assets before fee waiver/recapture (5)(7) | (0.69 | )% (9) | (1.20 | )% | (2.96 | )% | (2.97 | )% | (3.56 | )% | (2.97 | )% | ||||||||||||
Ratio of net investment loss to average net assets after fee waiver/recapture (5)(7) | (0.85 | )% (9) | (1.24 | )% | (2.78 | )% | (2.66 | )% | (3.44 | )% | (2.97 | )% | ||||||||||||
Portfolio Turnover Rate | 180 | % (8) | 326 | % | 263 | % | 86 | % | 207 | % | 214 | % | ||||||||||||
(1) | Per share amounts calculated using the average shares method, which more appropriately presents the per share data for the period. |
(2) | Realized and unrealized gains per share in this caption are balancing amounts necessary to reconcile the change in net assets value per share for the period, and may not reconcile with aggregate gains and losses in the Statement of Operations due to timing of share transactions during the year. |
(3) | Total returns shown exclude the effect of applicable sales charges and redemption fees and assumes reinvestment of all distributions, if any. Total returns would have been lower absent the fee waiver. |
(4) | Represents the ratio of expenses to average net assets absent fee waivers and/or fees recaptured by the Advisor. |
(5) | Recognition of net investment loss by the Fund is affected by the timing of the declaration of dividends by the underlying investment companies in which the Fund invests. |
(6) | Excluding interest expense and dividends on securities sold short, the following ratios would have been: |
Gross expenses to average net assets | 2.33 | % (9) | 2.53 | % | 2.93 | % | 3.09 | % | 2.89 | % | 2.99 | % | ||||||||||||
Net expenses to average net assets | 2.49 | % (9) | 2.58 | % | 2.75 | % | 2.78 | % | 2.89 | % | 2.99 | % | ||||||||||||
(7) | Ratio does not include the expenses of other investment companies in which the Fund invests. |
(8) | Not annualized. |
(9) | Annualized for periods less than one full year. |
See accompanying notes to financial statements.
12
Persimmon Long/Short Fund |
NOTES TO FINANCIAL STATEMENTS (Unaudited) |
March 31, 2020 |
1. | ORGANIZATION |
The Persimmon Long/Short Fund (the Fund) is a diversified series of shares of beneficial interest of Northern Lights Fund Trust III (the Trust), a statutory trust organized under the laws of the State of Delaware on December 5, 2011, and registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company. The Fund commenced operations on December 31, 2012. The Fund seeks long-term capital appreciation.
The Fund offers Class I shares. Effective May 25, 2016, sales and operations of Class A shares of the Fund were suspended. A principal of the investment advisor solely held the Class A shares for the period from October 1, 2015 to May 25, 2016. The Fund may recommence offering and operation of Class A shares of the Fund in the future. Class I shares of the Fund are sold at NAV without an initial sales charge and are not subject to 12b-1 distribution fees. Class I shares are subject to a 1.00% redemption fee on redemptions made within 60 days of the original purchase.
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
All investments in securities are recorded at their estimated fair values. The following is a summary of significant accounting policies followed by the Fund in preparation of its financial statements. The policies are in conformity with U.S. generally accepted accounting principles (GAAP). The preparation of the 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 ended. Actual results could differ from those estimates. The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services – Investment Companies, including FASB Accounting Standards Updates (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 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). If the NOCP is not available, such securities shall be valued at the last sale price on the day of valuation, or if there has been no sale on such day, at the mean between the current bid and ask prices. Options contracts listed on a securities exchange or board of trade (not including Index Options contracts) for which market quotations are readily available shall be valued at the last quoted sales price or, in the absence of a sale, at the mean between the current bid and ask prices on the valuation date. Index Options listed on a securities exchange or board of trade for which market quotations are readily available shall be valued at the mean between the current bid and ask prices on the valuation date. Investments in open-end investment companies are valued at net asset value. Short-term debt obligations having 60 days or less remaining until maturity, at time of purchase may be valued at amortized cost.
The Fund may hold securities, such as private investments, interests in commodity pools, other non-traded securities or temporarily illiquid securities, for which market quotations are not readily available or are determined to be unreliable. These securities will be valued using the fair value procedures approved by the Trusts Board of Trustees (the Board). The Board has delegated execution of these procedures to a fair value committee composed of one or more representatives from each of the (i) Trust, (ii) administrator, and (iii) advisor. The committee may also enlist third party consultants such as a valuation specialist at a public accounting firm, valuation consultant, or financial officer of a security issuer on an as-needed basis to assist in determining a security-specific fair value. The Board reviews and ratifies the execution of this process and the resultant fair value prices at least quarterly to assure the process produces reliable results.
Valuation of Fund of Funds – The Fund may invest in portfolios of open-end or closed-end investment companies (the Underlying Funds). The Underlying Funds value securities in their portfolios for which market quotations are readily available at their market values (generally the last reported sale price) and all other securities and assets at their fair value to the methods established by the board of directors of the Underlying Funds.
13
Persimmon Long/Short Fund |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued) |
March 31, 2020 |
Open-end investment companies are valued at their respective net asset values as reported by such investment companies. The shares of many closed -end investment companies, after their initial public offering, frequently trade at a price per share, which is different than the net asset value per share. The difference represents a market premium or market discount of such shares. There can be no assurances that the market discount or market premium on shares of any closed-end investment company purchased by the Fund will not change.
Fair Valuation Process – As noted above, the fair value committee is composed of one or more representatives from each of the (i) Trust, (ii) administrator, and (iii) advisor. The applicable investments are valued collectively via inputs from each of these groups. For example, fair value determinations are required for the following securities: (i) securities for which market quotations are insufficient or not readily available on a particular business day (including securities for which there is a short and temporary lapse in the provision of a price by the regular pricing source), (ii) securities for which, in the judgment of the advisor, the prices or values available do not represent the fair value of the instrument. Factors which may cause the advisor to make such a judgment include, but are not limited to, the following: only a bid price or an ask price is available; the spread between bid and ask prices is substantial; the frequency of sales; the thinness of the market; the size of reported trades; and actions of the securities markets, such as the suspension or limitation of trading; (iii) securities determined to be illiquid; (iv) securities with respect to which an event that will affect the value thereof has occurred (a significant event) since the closing prices were established on the principal exchange on which they are traded, but prior to the Funds 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 securities, such as private placements or non-traded securities are valued via inputs from the advisor based upon the current bid for the security from two or more independent dealers or other parties reasonably familiar with the facts and circumstances of the security (who should take into consideration all relevant factors as may be appropriate under the circumstances). If the advisor is unable to obtain a current bid from such independent dealers or other independent parties, the fair value committee shall determine the fair value of such security using the following factors: (i) the type of security; (ii) the cost at date of purchase; (iii) the size and nature of the Funds holdings; (iv) the discount from market value of unrestricted securities of the same class at the time of purchase and subsequent thereto; (v) information as to any transactions or offers with respect to the security; (vi) the nature and duration of restrictions on disposition of the security and the existence of any registration rights; (vii) how the yield of the security compares to similar securities of companies of similar or equal creditworthiness; (viii) the level of recent trades of similar or comparable securities; (ix) the liquidity characteristics of the security; (x) current market conditions; and (xi) the market value of any securities into which the security is convertible or exchangeable.
The Fund utilizes various methods to measure the fair value of all of its investments on a recurring basis. GAAP establishes a fair value hierarchy and specifies that a valuation technique used to measure fair value shall minimize the use of unobservable inputs. The objective of a fair value measurement is to determine the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants (i.e., the exit price at the measurement date). The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under U.S. GAAP are described below:
Level 1 – Unadjusted quoted prices in active markets for identical assets and liabilities that the Fund has the ability to access at the measurement date.
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 and may require significant management judgment or estimation.
The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.
14
Persimmon Long/Short Fund |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued) |
March 31, 2020 |
The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following tables summarize the inputs used as of March 31, 2020 for the Funds assets and liabilities measured at fair value:
Assets | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Investments * | ||||||||||||||||
Common Stock | $ | 9,496,756 | $ | — | $ | — | $ | 9,496,756 | ||||||||
Exchange-Traded Funds | 14,623,927 | — | — | 14,623,927 | ||||||||||||
Short-Term Investment | 1,832,377 | — | — | 1,832,377 | ||||||||||||
Total | $ | 25,953,060 | $ | — | $ | — | $ | 25,953,060 | ||||||||
Derivatives* | ||||||||||||||||
Futures | $ | (22,877 | ) | $ | — | $ | — | $ | (22,877 | ) | ||||||
Total | $ | (22,877 | ) | $ | — | $ | — | $ | (22,877 | ) |
* | Refer to the Portfolio of Investments for industry classification. |
The Fund did not hold any Level 3 securities during the year.
Security Transactions and Related Income – Security transactions are accounted for on a trade date basis. 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 are declared and distributed annually. Distributable net realized capital gains are declared and distributed annually. Dividends from net investment income and distributions from net realized gains are recorded on the ex-dividend date and determined in accordance with federal income tax regulations, which may differ from GAAP. These book/tax differences are considered either temporary (i.e., deferred losses, capital loss carry forwards) 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.
Federal Income Taxes – It is the Funds policy to continue to qualify as a regulated investment company by complying with the provisions of the Internal Revenue Code, as amended, that are applicable to regulated investment companies and to distribute substantially all of its taxable income and net realized gains to shareholders. In addition, the Fund intends to distribute in each calendar year substantially all of its net investment income, capital gains and certain other amounts, if any, such that the Fund should not be subject to federal excise tax. Therefore, no federal income or excise tax provision has been recorded.
The Fund recognizes 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 expected to be taken on returns filed for open tax years (2017-2019) or expected to be taken in the Funds 2020 returns. The Fund identifies its major tax jurisdictions as U.S. federal, and foreign jurisdictions where the Fund makes significant investments; however the Fund is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next twelve months.
Expenses – Expenses of the Trust that are directly identifiable to a specific fund are charged to that fund. Expenses, which are not readily identifiable to a specific fund, are allocated in such a manner as deemed equitable, taking into consideration the nature and type of expense and the relative sizes of the funds in the Trust.
15
Persimmon Long/Short Fund |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued) |
March 31, 2020 |
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 Fund enters 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 Fund 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 AND ASSOCIATED RISKS |
For the six months ended March 31, 2020, cost of purchases and proceeds from sales of portfolio securities, other than short sales, short-term investments and options amounted to $50,239,146 and $48,418,996, respectively.
Futures Contracts - The Fund may purchase or sell futures contracts to gain exposure to, or hedge against, changes in the value of equities, interest rates, foreign currencies or commodities. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities or cash as collateral for the account of the broker (the Funds agent in acquiring the futures position). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by marking to market on a daily basis to reflect the market value of the contracts at the end of each days trading. Variation margin payments are received or made depending upon whether unrealized gains or losses are incurred. When the contracts are closed, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Funds basis in the contract. If the Fund was unable to liquidate a futures contract and/or enter into an offsetting closing transaction, the Fund would continue to be subject to market risk with respect to the value of the contracts and continue to be required to maintain the margin deposits on the futures contracts. The Fund segregates liquid securities having a value at least equal to the amount of the current obligation under any open futures contract. Risks may exceed amounts recognized in the statement of assets and liabilities. With futures, there is minimal counterparty credit risk to the Fund since futures are exchange traded and the exchanges clearinghouse, as counterparty to all exchange traded futures, guarantees the futures against default.
Short Sales – A short sale is a transaction in which the Fund sells a security it does not own but has borrowed in anticipation that the market price of that security will decline. The Fund is obligated to replace the security borrowed by purchasing it on the open market at a later date. If the price of the security sold short increases between the time of the short sale and the time the Fund replaces the borrowed security, the Fund will incur a loss. Conversely, if the price declines, the Fund will realize a gain.
Option Transactions – Options are derivative financial instruments that give the buyer, in exchange for a premium payment, the right, but not the obligation, to either purchase from (call option) or sell to (put option) the writer a specified underlying instrument at a specified price on or before a specified date. The Fund enters into option contracts to meet the requirements of its trading activities.
The risk in writing a call option is that the Fund may incur a loss if the market price of the security increases and the option is exercised. The risk in writing a put option is that the Fund may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying an option is that the Fund pays a premium whether or not the option is exercised. The Fund also has the additional risk of not being able to enter into a closing transaction if a liquid secondary market does not exist.
Put options are purchased to hedge against a decline in the value of securities held in the Funds portfolio. If such a decline occurs, the put options will permit the Fund to sell the securities underlying such options at the exercise price, or to close out the options at a profit. The Fund may purchase call options as a temporary substitute for the purchase of individual securities, which then could be purchased in orderly fashion. The premium paid for a put or call option plus any transaction costs will reduce the benefit, if any, realized by the Fund upon exercise of the option, and, unless the price of the underlying security rises or declines sufficiently, the option may expire worthless to the Fund. In addition, in the event that the price of the security in connection with which an option was purchased moves in a direction favorable to the Fund, the benefits realized by the Fund as a result of such favorable movement will be reduced by the amount of the premium paid for the option and related transaction costs. Written and purchased options are non-income producing securities. With purchased options, there is minimal counterparty credit risk to the Fund since these options are exchange traded and the exchanges clearinghouse, as counterparty to all exchange traded options, guarantees against a possible default.
16
Persimmon Long/Short Fund |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued) |
March 31, 2020 |
Segregated Cash at Broker – The Fund, as of March 31, 2020, has $3,747,470 of cash on hand at two prime brokers representing the proceeds of securities sold short. Withdrawal of these amounts is restricted based on the level of short trading in the Fund.
Impact of Derivatives on the Statement of Assets and Liabilities and Statement of Operations
The derivative instruments outstanding, as of March 31, 2020, as disclosed in the Notes to the Financial Statements, and the amounts of realized and changes in unrealized gains and losses on derivative instruments during the period, as disclosed in the Statement of Operations, serve as indicators of the volume of derivative activity for the Fund.
The following is a summary of the location of derivative investments on the Funds Statement of Assets and Liabilities for the six months ended March 31, 2020:
Derivative | Risk Type | Statement of Assets and Liabilities | Fair Value | |||||
Futures contracts | Equity | Unrealized depreciation on futures contracts | $ | (22,877 | ) | |||
The following is a summary of the location of derivative investments on the Funds Statement of Operations for the six months ended March 31, 2020:
Derivative Investment Type | Location of Gain/Loss on Derivative | |
Equity | Net realized loss on futures contracts | |
Net change in unrealized appreciation on futures contracts | ||
The following is a summary of the Funds derivative investments activity recognized in the Statement of Operations categorized by primary risk exposure for the six months ended March 31, 2020:
Realized loss on | Change in unrealized | |||||||||
futures contracts and | appreciation (depreciation) on | |||||||||
options contracts | futures contracts and options | |||||||||
Derivative Investment Type | Primary Risk Exposure | purchased | contracts purchased | |||||||
Futures | Equity | $ | 2,022,313 | $ | (214,290 | ) | ||||
Offsetting of Financial Assets and Derivative Assets – The following table shows additional information regarding the offsetting of assets and liabilities at March 31, 2020 for the Fund.
(1) | Value as presented in the Portfolio of Investments |
(2) | Total collateral pledged at broker at March 31, 2020 was 3,747,470. |
17
Persimmon Long/Short Fund |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued) |
March 31, 2020 |
4. | INVESTMENT ADVISORY AGREEMENT AND TRANSACTIONS WITH RELATED PARTIES |
Persimmon Capital Management L.P. serves as the Funds investment advisor (the Advisor). Pursuant to an advisory agreement with the Trust, on behalf of the Fund, the Advisor, under the oversight of the Board, directs the daily operations of the Fund and supervises the performance of administrative and professional services provided by others. As compensation for its services and the related expenses borne by the Advisor, the Fund pays the Advisor a management fee computed and accrued daily and paid monthly, at an annual rate of 1.75% of the average daily net assets. For the six months ended March 31, 2020, the advisory fees incurred by the Fund amounted to $267,234.
The Advisor has contractually agreed to reduce its fees and/or absorb expenses of the Fund, until at least January 31, 2020, to ensure that Total Annual Fund Operating Expenses (exclusive of any front-end or contingent deferred loads, brokerage fees and commissions, acquired fund fees and expenses; borrowing costs (such as interest and dividend expenses on securities sold short); taxes; expenses incurred in connection with any merger or reorganization; and extraordinary expenses (such as litigation expenses, which may include indemnification of Fund officers and Trustees, and contractual indemnification of Fund service providers (other than the Advisor) will not exceed 2.49% of the daily average net assets attributable to Class I shares. The Advisor may seek reimbursement only for fees waived or expenses paid by it during the prior three years; provided, however, that such fees and expenses may only be reimbursed to the extent they were waived or paid after the date of the waiver agreement (or any similar agreement) . Reimbursements will only be sought if total expenses remain below the expenses limitation in place now or at the time of waiver or reimbursement. The Board may terminate this expense reimbursement arrangement at any time. For the six months ended March 31, 2020, the Advisor recaptured expenses in the amount of $23,722. Cumulative expenses subject to the aforementioned conditions will expire September 30 of the following years:
2020 | $ | 59,303 | ||
2021 | 55,016 | |||
2022 | — | |||
Total | $ | 114,319 |
Northern Lights Distributors, LLC (NLD or the Distributor) acts as the Funds principal underwriter in the continuous public offering of the Funds Class I shares. During the six months ended March 31, 2020, the Distributor did not receive any underwriting commissions for sales of Class I shares.
In addition, certain affiliates of the Distributor provide ancillary services to the Fund as follows:
Gemini Fund Services, LLC (GFS)
GFS, an affiliate of the Distributor, provides administration, fund accounting, and transfer agent services to the Trust. Pursuant to separate servicing agreements with GFS, the Fund pays GFS customary fees for providing administration, fund accounting and transfer agency services to the Fund. Certain officers of the Trust are also officers of GFS, and are not paid any fees directly by the Fund for serving in such capacities.
Northern Lights Compliance Services, LLC (NLCS)
NLCS, an affiliate of GFS and the Distributor, provides a chief compliance officer to the Trust, as well as related compliance services, pursuant to a consulting agreement between NLCS and the Trust. Under the terms of such agreement, NLCS receives customary fees from the Fund.
Blu Giant, LLC (Blu Giant)
Blu Giant, an affiliate of GFS and the Distributor, provides EDGAR conversion and filing services as well as print management services for the Fund on an ad-hoc basis. For the provision of these services, Blu Giant receives customary fees from the Fund.
Effective February 1, 2019, NorthStar Financial Services Group, LLC, the parent company of GFS and its affiliated companies including NLD, NLCS and Blu Giant (collectively, the Gemini Companies), sold its interest in the Gemini Companies to a third party private equity firm that contemporaneously acquired Ultimus Fund Solutions, LLC (an independent mutual fund administration firm) and its affiliates (collectively, the Ultimus Companies). As a result of these separate transactions, the Gemini Companies and the Ultimus Companies are now indirectly owned through a common parent entity, The Ultimus Group, LLC.
18
Persimmon Long/Short Fund |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued) |
March 31, 2020 |
5. | AGGREGATE UNREALIZED APPRECIATION AND DEPRECIATION – TAX BASIS |
The identified cost of investments in securities owned by the Fund for federal income tax purposes, and its respective gross unrealized appreciation and depreciation at March 31, 2020, are as follows:
Cost for Federal Tax purposes | $ | 27,059,991 | ||
Unrealized Appreciation | 516,503 | |||
Unrealized Depreciation | (1,623,434 | ) | ||
Tax net Unrealized Appreciation | $ | (1,106,931 | ) | |
6. | DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF CAPITAL |
The tax character of fund distributions paid for the year ended September 30, 2019 and September 30, 2018 was as follows:
Fiscal Year Ended | Fiscal Year Ended | |||||||
September 30, 2019 | September 30, 2018 | |||||||
Ordinary Income | $ | — | $ | — | ||||
Long-Term Capital Gain | 966,781 | 1,384,825 | ||||||
Return of Capital | — | — | ||||||
$ | 966,781 | $ | 1,384,825 | |||||
As of September 30, 2019, the components of accumulated earnings/ (deficit) on a tax basis were as follows:
Post October | Capital | |||||||||||||||||||||||||
Undistributed | Undistributed | Loss | Loss | Other | Unrealized | Total | ||||||||||||||||||||
Ordinary | Long-Term | and | Carry | Book/Tax | Appreciation/ | Accumulated | ||||||||||||||||||||
Income | Gains | Late Year Loss | Forwards | Differences | (Depreciation) | Earnings/(Deficits) | ||||||||||||||||||||
$ | — | $ | 351,065 | $ | (249,006 | ) | $ | — | $ | (35,721 | ) | $ | 2,439,007 | $ | 2,505,345 | |||||||||||
The difference between book basis and tax basis accumulated net investment losses, accumulated net realized gain (loss), and unrealized appreciation from investments is primarily attributable to the tax deferral of losses on wash sales and straddles, adjustments for real estate investment trusts and mark-to-market on open Section 1256 futures and options contracts. In addition, the amount listed under other book/tax differences is primarily attributable to the tax deferral of losses on straddles.
Late year losses incurred after December 31 within the fiscal year are deemed to arise on the first business day of the following fiscal year for tax purposes. The Fund incurred and elected to defer such late year losses of $249,006.
Permanent book and tax differences, primarily attributable to the book/tax basis treatment of net operating losses, resulted in reclassification for the year ended September 30, 2019 as follows:
Paid | ||||||
In | Accumulated | |||||
Capital | Earnings (Loss) | |||||
$ | (753,024 | ) | $ | 753,024 |
19
Persimmon Long/Short Fund |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued) |
March 31, 2020 |
7. | REDEMPTION FEES |
The Fund may assess a short term redemption fee of 1.00% of the total redemption amount if shareholders sell their shares after holding them for less than sixty days. The redemption fees are paid to the Fund directly and are designed to offset costs associated with fluctuations in Fund asset levels and cash flow caused by short-term shareholder trading. For the six months ended March 31, 2020, the Fund earned $61 in redemption fees.
8. | RECENT ACCOUNTING PRONOUNCEMENTS AND REPORTING UPDATES |
In August 2018, FASB issued ASU No. 2018-13, which changed certain fair value measurement disclosure requirements. The ASU, in addition to other modifications and additions, removed the requirement to disclose the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, and the policy for the timing of transfers between levels. For investment companies, the amendments are effective for financial statements issued for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The amendments have been adopted with these financial statements.
9. | SUBSEQUENT EVENTS |
Subsequent events after the date of the Statement 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.
20
Persimmon Long/Short Fund |
EXPENSE EXAMPLES (Unaudited) |
March 31, 2020 |
As a shareholder of the Persimmon Long/Short Fund, you incur two types of costs: (1) transaction costs, including redemption fees; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Persimmon Long Short/Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the period and held for the period beginning October 1, 2019 and ended March 31, 2020.
Table 1. Actual Expenses
Table 1 Actual Expenses provides information about actual account values and actual expenses. You may use the information below, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number provided under the heading Expenses Paid During Period.
Table 2. Hypothetical Expenses
Table 2 Hypothetical Expenses provides information about hypothetical account values and hypothetical expenses based on the Persimmon Long Short/Funds actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Funds actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balances or expenses you paid for the period. You may use this information to compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), or redemption fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Actual Expenses |
Annualized
Expense Ratio ** 10/1/19 - 3/31/20 |
Beginning
Account Value 10/1/2019 |
Ending
Account
Value 3/31/2020 |
Expenses
Paid During
Period 10/1/19 - 3/31/20 |
Class I | 2.49% | $1,000.00 | $926.10 | $11.99 |
Hypothetical Expenses |
Annualized
Expense Ratio ** 10/1/19 - 3/31/20 |
Beginning
Account Value 10/1/2019 |
Ending
Account
Value 3/31/2020 |
Expenses
Paid During
Period * 10/1/19 - 3/31/20 |
Class I | 2.49% | $1,000.00 | $1,012.54 | $12.53 |
* | Expenses are equal to the Funds annualized expense ratio, multiplied by the number of days in the period (183) divided by the number of days in the fiscal year (366). |
** | Annualized expense ratio does not include interest expense or dividend expense. |
21
Renewal of Advisory Agreement – Persimmon Long/Short Fund*
In connection with a meeting held on November 19-20, 2019, the Board of Trustees (the Board) of the Northern Lights Fund Trust III (the Trust), including a majority of the Trustees who are not interested persons as that term is defined in the Investment Company Act of 1940, as amended, discussed the renewal of the investment advisory agreement (the Advisory Agreement) between Persimmon Capital Management, LLC (the Adviser) and the Trust, with respect to the Persimmon Long/Short Fund (Persimmon). In considering the approval of the Advisory Agreement, the Board reviewed materials specifically relating to Persimmon and the Advisory Agreement.
The Board discussed the Advisers 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 Boards 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 & Quality of Services. The Board noted the Adviser was founded in 1998 to provide investment consulting services to high net worth families, foundations and endowments, and had approximately $232 million in assets under management. The Board recognized the academic credentials and industry experience of the Advisers key personnel. The Board acknowledged that the Adviser utilized proprietary quantitative models that were based on value, quality and momentum factors to select securities deemed to be undervalued but have upside potential, and that its risk management process entailed applying a dynamic hedge as a tactical allocation overlay to attempt to protect Persimmons long portfolio during bear market conditions. The Board remarked that the Adviser monitored compliance with Persimmons investment limitations by reviewing portfolio reports daily for possible breaches and performed quarterly execution reviews to monitor trades for commissions, quality and speed of execution. The Board observed that the Adviser had asset management experience and adequate resources to provide effective services to support Persimmon. The Board concluded that it expected the Adviser to continue to provide satisfactory service to Persimmon and its shareholders.
Performance. The Board recalled that Persimmon transitioned portfolio management solely to the Adviser during the past year and was previously managed with the assistance of several sub-advisers. The Board observed that Persimmon had underperformed its peer group, Morningstar category and the S&P 500 Total Return Index over the 1-year period. The Board discussed that the Adviser attributed Persimmons underperformance to the multi-manager structure that Persimmon employed during the fourth quarter of 2018 and noted that Persimmon had positive performance for the year-to-date. The Board noted that the internal strategy managed exclusively by the Adviser performed well and with less volatility. The Board determined that the Adviser should be given more time to manage the entire Persimmon portfolio and that Persimmon had the experience and expertise to manage Persimmon successfully. The Board concluded that the Adviser had the potential to provide satisfactory results to Persimmon and its shareholders.
22
Fees and Expenses. The Board discussed that the Advisers advisory fee for Persimmon of 1.75% was the high of its peer group, but below the Morningstar category high of 2.25%. The Board commented that Persimmons net expense ratio was the high of the peer group and Morningstar category. The Board considered the Advisers rationale that Persimmons smaller size compared to the funds or fund families in its peer group and Morningstar category lent itself to higher expenses. Given these considerations, the Board concluded that the Advisers advisory fee for Persimmon was not unreasonable.
Economies of Scale. The Board discussed the size of Persimmon and its prospects for growth, concluding that it had not yet achieved meaningful economies that would necessitate the establishment of breakpoints. The Board noted the Adviser agreed to discuss the implementation of breakpoints as Persimmons assets grew and the Adviser achieved material economies of scale related to its operation. The Board agreed to monitor and revisit the issue at the appropriate time.
Profitability. The Board reviewed the Advisers profitability analysis in connection with its management of Persimmon over the past year and acknowledged that the Adviser had operated at a reasonable profit. The Board concluded that the Advisers profitability 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 the advisory fee for Persimmon was not unreasonable, and renewal of the Advisory Agreement was in the best interests of Persimmon and its shareholders.
* | Due to timing of the contract renewal schedule, these deliberations may or may not relate to the current performance results of the Fund. |
23
PRIVACY NOTICE
Rev. February 2014
FACTS | WHAT DOES NORTHERN LIGHTS FUND TRUST III DO WITH YOUR PERSONAL INFORMATION? | |||
Why? | Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do. | |||
What? | The types of personal information we collect and share depend on the product or service you have with us. This information can include: | |||
■ | Social Security number | ■ | Purchase History | |
■ | Assets | ■ | Account Balances | |
■ | Retirement Assets | ■ | Account Transactions | |
■ | Transaction History | ■ | Wire Transfer Instructions | |
■ | Checking Account Information | |||
When you are no longer our customer, we continue to share your information as described in this notice. | ||||
How? | All financial companies need to share customers personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers personal information; the reasons Northern Lights Fund Trust III chooses to share; and whether you can limit this sharing. |
Reasons we can share your personal information |
Does
Northern
Lights Fund Trust III share? |
Can
you limit this
sharing? |
For our everyday business purposes – such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus |
Yes | No |
For our marketing purposes – to offer our products and services to you |
No | We dont share |
For joint marketing with other financial companies | No | We dont share |
For our affiliates everyday business purposes – information about your transactions and experiences |
No | We dont share |
For our affiliates everyday business purposes – information about your creditworthiness |
No | We dont share |
For nonaffiliates to market to you | No | We dont share |
Questions? | Call (402) 493-4603 | ||||
24
Who we are | |||||
Who is providing this notice?
|
Northern Lights Fund Trust III |
||||
What we do | |||||
How does Northern Lights Fund Trust III protect my personal information? |
To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings.
Our service providers are held accountable for adhering to strict policies and procedures to prevent any misuse of your nonpublic personal information. |
||||
How does Northern Lights Fund Trust III collect my personal information? |
We collect your personal information, for example, when you
■ Open an account
■ Provide account information
■ Give us your contact information
■ Make deposits or withdrawals from your account
■ Make a wire transfer
■ Tell us where to send the money
■ Tells us who receives the money
■ Show your government-issued ID
■ Show your drivers license
We also collect your personal information from other companies. |
||||
Why cant I limit all sharing? |
Federal law gives you the right to limit only ■ Sharing for affiliates everyday business purposes – information about your creditworthiness
■ Affiliates from using your information to market to you
■ Sharing for nonaffiliates to market to you
State laws and individual companies may give you additional rights to limit sharing. |
||||
Definitions | |||||
Affiliates |
Companies related by common ownership or control. They can be financial and nonfinancial companies.
■ Northern Lights Fund Trust III does not share with our affiliates. |
||||
Nonaffiliates |
Companies not related by common ownership or control. They can be financial and nonfinancial companies ■ Northern Lights Fund Trust III does not share with nonaffiliates so they can market to you. |
||||
Joint marketing |
A formal agreement between nonaffiliated financial companies that together market financial products or services to you.
■ Northern Lights Fund Trust III doesnt jointly market. |
||||
25
PROXY VOTING POLICY
Information regarding how the Fund 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 Fund uses to determine how to vote proxies is available without charge, upon request, by calling 1-855-233-8300 or by referring to the Security and Exchange Commissions (SEC) website at http://www.sec.gov.
PORTFOLIO HOLDINGS
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Form N-Q is available on the SECs website at http://www.sec.gov and may be reviewed and copied at the SECs Public Reference Room in Washington, DC (1-800-SEC-0330). The information on Form N-Q is available without charge, upon request, by calling 1-855-233-8300.
INVESTMENT ADVISOR |
Persimmon Capital Management, LP |
1777 Sentry Parkway West |
VEVA 14, Suite 102 |
Blue Bell, PA 19422 |
ADMINISTRATOR |
Gemini Fund Services, LLC |
80 Arkay Drive, Suite 110 |
Hauppauge, NY 11788 |
Item 2. Code of Ethics. Not applicable.
Item 3. Audit Committee Financial Expert. Not applicable.
Item 4. Principal Accountant Fees and Services. Not applicable.
Item 5. Audit Committee of Listed Companies. Not applicable to open-end investment companies.
Item 6. Schedule of Investments. Schedule of investments in securities of unaffiliated issuers is included under Item 1.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Funds. Not applicable to open-end investment companies.
Item 8. Portfolio Managers of Closed-End Management Investment Companies. Not applicable to open-end investment companies.
Item 9. Purchases of Equity Securities by Closed-End Funds. Not applicable to open-end investment companies.
Item 10. Submission of Matters to a Vote of Security Holders. None
Item 11. Controls and Procedures.
(a) Based on an evaluation of the Registrant’s disclosure controls and procedures as of a date within 90 days of filing date of this Form N-CSR, the principal executive officer and principal financial officer of the Registrant have concluded that the disclosure controls and procedures of the Registrant are reasonably designed to ensure that the information required in filings on Form N-CSR is recorded, processed, summarized, and reported by the filing date, including that information required to be disclosed is accumulated and communicated to the Registrant’s management, including the Registrant’s principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
(b) There were no significant changes in the Registrant’s internal control over financial reporting that occurred during the Registrant’s last fiscal half-year that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.
Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies. (a) Not applicable to open-end investment companies.
(b) Not applicable to open-end investment companies.
Item 13. Exhibits.
(a)(1) Not applicable.
(a)(3) Not applicable for open-end investment companies.
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/ Richard Malinowski
Richard Malinowski, Principal Executive Officer/President
Date 6/9/20
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By (Signature and Title)
/s/ Richard Malinowski
Richard Malinowski, Principal Executive Officer/President
Date 6/9/20
By (Signature and Title)
/s/ Brian Curley
Brian Curley, Principal Financial Officer/Treasurer
Date 6/9/20
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