Quarterly Schedule of Portfolio Holdings of Registered Management Investment Company (n-q)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number

811-22655

Northern Lights Fund Trust III

(Exact name of registrant as specified in charter)

17605 Wright Street, Suit 2 Omaha, NE 68130

(Address of principal executive offices)(Zip code)

James Ash, Gemini Fund Services, LLC.

             80 Arkay Drive, Suite 110 Hauppauge NY 11788

(Name and address of agent for service)

Registrant's telephone number, including area code:

631-470-2619

Date of fiscal year end:

      9/30  

Date of reporting period:  12/31/2013

Form N-Q is to be used by management investment companies, other than small business investment companies registered on Form N-5 (§§239.24 and 274.5 of this chapter), to file reports with the Commission, not later than 60 days after the close of the first and third fiscal quarters, pursuant to rule 30b1-5 under the Investment Company Act of 1940 (17 CFR 270.30b1-5).  The Commission may use the information provided on Form N-Q in its regulatory, disclosure review, inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-Q, and the Commission will make this information public.  A registrant is not required to respond to the collection of information contained in Form N-Q unless the Form displays a currently valid Office of Management and Budget ("OMB") control number.  Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609.  The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.

Item 1.  Schedule of Investments.  

Persimmon Long/Short Fund
PORTFOLIO OF INVESTMENTS (Unaudited)
December 31, 2013
Shares						Fair Value
		COMMON STOCKS - 83.5 %
		AEROSPACE / DEFENSE - 1.6 %
1,475		Raytheon Co.				$                133,783
1,457		TransDigm Group, Inc.				234,606
955		United Technologies Corp.				108,679
						477,068
		AGRICULTURE - 0.5 %
1,717		Philip Morris International, Inc.				149,602
		APPAREL - 3.9 %
3,562		Deckers Outdoor Corp.  *				300,847
4,004		Hanesbrands, Inc.				281,361
1,520		Ralph Lauren Corp.				268,386
1,922		Under Armour, Inc. - Cl. A  *				167,791
2,392		VF Corp.				149,117
						1,167,502
		AUTO MANUFACTURERS - 2.3 %
5,970		Ford Motor Co.				92,117
14,812		General Motors Co.  *				605,366
						697,483
		AUTO PARTS & EQUIPMENT - 1.1 %
1,170		Autoliv, Inc.				107,406
2,858		TRW Automotive Holdings Corp.  *				212,607
						320,013
		BANKS - 3.7 %
6,805		Bank of America Corp.				105,954
5,889		Citigroup, Inc.				306,876
570		Goldman Sachs Group, Inc.				101,038
2,526		Northern Trust Corp.				156,334
2,598		Signature Bank/New York NY *				279,077
3,725		US Bancorp/MN				150,490
						1,099,769
		BEVERAGES - 1.9 %
1,851		Anheuser-Busch InBev NV				197,057
3,683		Coca-Cola Co.				152,145
2,196		Constellation Brands, Inc.  *				154,554
1,005		Monster Beverage Corp.  *				68,109
						571,865
		BIOTECHNOLOGY - 1.4 %
790		Amgen, Inc.				90,186
1,830		Gilead Sciences, Inc. *				137,525
1,669		Onconova Therapeutics, Inc.  *				19,160
1,509		Puma Biotechnology, Inc.  *				156,227
						403,098
		CHEMICALS - 2.5 %
1,005		Ashland, Inc.				97,525
839		CF Industries Holdings, Inc.				195,521
2,406		EI du Pont de Nemours & Co.				156,318
1,175		Praxair, Inc.				152,785
7,156		Taminco Corp. *				144,623
						746,772
		COMMERCIAL SERVICES - 7.9 %
2,170		Advisory Board Co. *				138,164
453		Ascent Capital Group, Inc. *				38,759
1,882		Automatic Data Processing, Inc.				152,084
Persimmon Long/Short Fund
PORTFOLIO OF INVESTMENTS (Unaudited)(Continued)
December 31, 2013
Shares						Fair Value
		COMMERCIAL SERVICES - 7.9 % (Continued)
1,785		Cintas Corp.				$                106,368
40,111		Command Security Corp. *				81,425
4,575		Convergys Corp.				96,304
7,224		Electro Rent Corp.				133,788
4,960		ExamWorks Group, Inc. *				148,155
1,470		FirstService Corp.				63,254
1,844		H&E Equipment Services, Inc. *				54,638
5,756		Hertz Global Holdings, Inc. *				164,737
1,565		Huron Consulting Group, Inc. *				98,157
145		MasterCard, Inc.				121,142
2,974		Moody's Corp.				233,370
5,019		Science Applications International Corp.				165,978
4,788		ServiceSource International, Inc. *				40,123
473		Stantec, Inc.				29,326
2,260		United Rentals, Inc. *				176,167
1,480		Verisk Analytics, Inc. *				97,265
36,681		Xueda Education Group *				224,855
						2,364,059
		COMPUTERS - 2.8 %
208		Apple, Inc.				116,711
3,333		Computer Sciences Corp.				186,248
6,213		EMC Corp/MA				156,257
1,873		FleetMatics Group PLC  *				81,007
1,618		IHS Inc. - Cl. A  *				193,674
1,540		SanDisk Corp.				108,632
						842,529
		COSMETICS / PERSONAL CARE - 0.8 %
3,812		Colgate-Palmolive Co.				248,581
		DISTRIBUTION / WHOLESALE - 0.8 %
7,040		LKQ Corp.  *				231,616
		DIVERSIFIED FINANCIAL SERVICE - 1.9 %
648		Affiliated Managers Group, Inc.  *				140,538
2,305		FXCM Inc. - Cl. A				41,121
1,407		Portfolio Recovery Associates, Inc.  *				74,346
1,234		Virtus Investment Partners, Inc.  *				246,862
907		WageWorks, Inc.  *				53,912
						556,779
		ELECTRIC - 1.5 %
2,310		Dominion Resources, Inc.				149,434
2,139		Duke Energy Corp.				147,612
5,286		Xcel Energy, Inc. *				147,691
						444,737
		ELECTRONICS - 1.3 %
1,448		FARO Technologies, Inc.  *				84,418
3,440		Gentex Corp.				113,486
1,682		Honeywell International, Inc.				153,684
1,066		InvenSense, Inc. - Cl. A  *				22,151
						373,739
Persimmon Long/Short Fund
PORTFOLIO OF INVESTMENTS (Unaudited)(Continued)
December 31, 2013
Shares						Fair Value
		ENTERTAINMENT - 2.6 %
7,994		Gaming and Leisure Properties, Inc. *				$                406,175
7,227		Multimedia Games Holding Co., Inc. *				226,639
8,314		Scientific Games Corp. *				140,756
						773,570
		ENVIRONMENTAL CONTROL - 1.0 %
3,201		Waste Connections, Inc.				139,660
3,328		Waste Management, Inc.				149,327
						288,987
		FOOD - 3.6 %
1,515		Fresh Market, Inc.  *				61,357
1,829		Hormel Foods Corp.				82,616
3,535		Ingredion, Inc.				242,006
800		JM Smucker Co.				82,896
4,290		Mondelez International, Inc.				151,437
8,623		Pinnacle Foods, Inc.				236,788
1,493		Safeway, Inc.				48,627
5,024		Tyson Foods, Inc.				168,103
						1,073,830
		FOREST PRODUCTS & PAPER - 0.8 %
1,000		Domtar Corp.				94,340
3,129		International Paper Co.				153,415
						247,755
		HEALTHCARE - PRODUCTS - 0.9 %
4,325		Insulet Corp. *				160,458
3,806		Masimo Corp. *				111,249
						271,707
		INSURANCE - 3.6 %
4,701		American International Group, Inc.				239,986
1,781		Aon PLC				149,408
1,565		Chubb Corp.				151,226
1,855		Cincinnati Financial Corp.				97,146
8,146		Greenlight Capital Re Ltd.				274,602
1,865		HCC Insurance Holdings, Inc.				86,051
4,685		Third Point Reinsurance Ltd.				86,813
						1,085,232
		INTERNET - 2.9 %
2,299		HomeAway, Inc.  *				93,983
5,053		Liquidity Services, Inc.  *				114,501
3,512		RetailMeNot, Inc.  *				101,110
730		SPS Commerce, Inc.  *				47,669
2,548		Stamps.com, Inc.  *				107,271
916		Textura Corp. *				27,425
6,045		VeriSign, Inc.  *				361,370
						853,329
		LEISURE TIME - 0.7 %
16,548		Black Diamond, Inc.  *				220,585
		LODGING - 1.9 %
12,610		Boyd Gaming Corp				141,989
3,534		Extended Stay America Inc				92,803
2,071		Las Vegas Sands Corp.				163,340
9,593		Morgans Hotel Group Co.  *				77,991
6,648		Orient-Express Hotels Ltd. - Cl. A  *				100,451
						576,574
Persimmon Long/Short Fund
PORTFOLIO OF INVESTMENTS (Unaudited)(Continued)
December 31, 2013
Shares						Fair Value
		MACHINERY - DIVERSIFIED - 0.7 %
903		Joy Global, Inc.				$                  52,817
1,012		Graco, Inc.				79,057
264		Middleby Corp.  *				63,352
						195,226
		MEDIA - 1.2 %
1,835		CBS Corp.				116,963
974		Scripps Networks Interactive, Inc.				84,250
1,113		Time Warner Inc.				150,811
						352,024
		METAL FABRICATE / HARDWARE - 0.2 %
1,769		Rexnord Corp.  *				47,781
		MISCELLANEOUS MANUFACTURING - 0.7 %
5,459		General Electric Co.				153,016
1,130		Ingersoll-Rand PLC				69,608
						222,624
		OIL & GAS - 2.5 %
4,410		Chesapeake Energy Corp.				119,688
1,203		Chevron Corp.				150,267
2,111		ConocoPhillips				149,142
1,536		Exxon Mobil Corp.				155,443
838		Hess Corp.				69,554
1,965		Oasis Petroleum, Inc. *				92,296
						736,390
		OIL & GAS SERVICES - 2.9 %
726		Core Laboratories NV				138,630
2,355		Dril-Quip, Inc.  *				258,885
1,560		FMC Technologies, Inc. *				81,448
1,433		Geospace Technologies Corp.  *				135,891
2,095		Halliburton Co.				106,321
1,692		Schlumberger Ltd.				152,466
						873,641
		PHARMACEUTICALS - 2.4 %
3,980		Abbott Laboratories				152,553
1,937		BioMarin Pharmaceutical Inc.  *				136,113
1,593		Johnson & Johnson				145,903
3,011		Merck & Co., Inc.				150,701
4,808		Pfizer, Inc.				147,269
						732,539
		REITS - 1.1 %
24,798		FelCor Lodging Trust Inc.  *				202,352
3,685		Wyerhaeuser Co.				116,335
						318,687
		RETAIL - 4.8 %
3,398		BJ's Restaurants, Inc.  *				105,542
1,675		CarMax, Inc. *				78,758
1,436		Chuy's Holdings Inc.  *				51,725
1,530		CVS Caremark Corp.				109,502
13,047		Dominion Diamond Corp.  *				187,355
4,605		Fifth & Pacific Cos, Inc.  *				147,682
11,392		Francesca's Holdings Corp.  *				209,727
1,725		GameStop Corp. - Cl. A				84,973
1,848		Home Depot, Inc.				152,164
1,543		McDonald's Corp.				149,717
5,985		Staples, Inc.				95,102
815		Tiffany & Co.				75,616
						1,447,863
Persimmon Long/Short Fund
PORTFOLIO OF INVESTMENTS (Unaudited)(Continued)
December 31, 2013
Shares						Fair Value
		SAVINGS & LOANS - 0.6 %
2,476		BofI Holding, Inc.  *				$                194,193
		SEMICONDUCTORS - 1.5 %
924		Hittite Microwave Corp.  *				57,039
4,000		International Rectifier Corp. *				104,280
3,452		Microchip Technology, Inc.				154,477
2,088		QUALCOMM, Inc.				149,094
						464,890
		SOFTWARE - 7.0 %
98		ANSYS, Inc.  *				8,546
1,480		Check Point Software Technologies Ltd. *				95,490
458		Concur Technologies, Inc.  *				47,256
5,276		Electronic Arts, Inc.  *				121,031
4,855		Envestnet, Inc.  *				195,657
2,205		Informatica Corp. *				91,508
11,739		Microsoft Corp.				439,391
1,964		Monotype Imaging Holdings, Inc.				62,573
1,060		Open Text Corp.				97,478
3,395		Progress Coftware Corp. *				87,693
6,271		RealPage, Inc.  *				146,616
1,637		Solera Holdings, Inc.				115,834
222		Tableau Software, Inc. - Cl. A  *				15,302
12,665		Take-Two Interactive Software, Inc.  *				219,991
960		Ultimate Software Group Inc.  *				147,091
7,248		VeriFone Systems, Inc.  *				194,391
						2,085,848
		TELECOMMUNICATIONS - 3.8 %
4,306		AT&T, Inc.				151,399
1,975		Cisco Systems, Inc.				44,339
5,305		Comverse, Inc.  *				205,834
10,767		Corning, Inc.				191,868
29,729		Extreme Networks, Inc.  *				208,103
1,470		InterDigital, Inc.				43,350
1,123		IPG Photonics Corp.				87,156
10,617		ORBCOMM, Inc.  *				67,312
3,046		Verizon Communications, Inc.				149,680
						1,149,041
		TRANSPORTATION - 1.1 %
3,898		Echo Global Logistics, Inc.  *				83,729
880		Kansas City Southern				108,970
1,444		united PARcel Service, Inc.				151,736
						344,435
		TOTAL COMMON STOCKS (Cost - $21,933,697)				25,251,963
Number of
Contracts					Expiration
		PURCHASED OPTIONS - 0.0 %
		PURCHASED CALL OPTIONS - 0.0 %
13		Liquidity Services, Inc.  @ $30.00  (Cost - $8,224) *			Mar-14	455
Shares
		SHORT-TERM INVESTMENTS - 19.3 %
		MONEY MARKET FUND - 19.3 %
5,761,767		Dreyfus Cash Management Institution Shares - 0.04 %
		(Cost - $5,761,767) (a) +				5,761,767
Persimmon Long/Short Fund
PORTFOLIO OF INVESTMENTS (Unaudited)(Continued)
December 31, 2013
Shares						Fair Value
		TOTAL INVESTMENTS - 103.7 % (Cost - $27,703,688) (c)				$           31,014,185
		LIABILITIES LESS OTHER ASSETS - (3.7) %				(1,100,487)
		NET ASSETS - 100.0%				$           29,913,698
		SECURITIES SOLD SHORT - (22.0) %
		COMMON STOCKS - (19.4) %
		AGRICULTURE - (0.2) %
(690)		Philip Morris International, Inc.				$                (60,120)
		APPAREL - (0.7) %
(850)		Carter's, Inc.				(61,021)
(1,031)		Michael Kors Holdings Ltd.  *				(83,707)
(660)		Sketchers U.S.A., Inc. *				(21,866)
(1,215)		Vince Holding Corp. *				(37,264)
						(203,858)
		BEVERAGES - (1.5) %
(1,005)		Beam, Inc.				(68,400)
(2,898)		Coca-Cola Enterprises, Inc.				(127,889)
(1,407)		Green Mountain Coffee Roasters, Inc. *				(106,341)
(1,848)		PepsiCo., Inc.				(153,273)
						(455,903)
		BIOTECHNOLOGY - (0.1) %
(3,198)		Arena Pharmaceuticals, Inc.  *				(18,708)
		COMMERCIAL SERVICES - (0.0) %
(7,401)		Ambow Education Holding Ltd. - ADR (b) *				(7,029)
		COMPUTERS - (0.2) %
(295)		International Business Machines Corp.				(55,333)
		COSMETICS / PERSONAL CARE - (0.9) %
(1,649)		Colgate-Palmolive Co.				(107,531)
(1,951)		Procter & Gamble Co.				(158,831)
						(266,362)
		DISTRIBUTION / WHOLESALE - (0.2) %
(322)		Fossil Group, Inc. *				(38,621)
		DIVERSIFIED FINANCIAL SERVICES - (0.5) %
(13,366)		Calamos Asset Management, Inc. - Cl. A				(158,253)
		ENERGY - ALTERNATE SOURCES - (0.1) %
(3,830)		Amyris, Inc.  *				(20,261)
(101)		SolarCity Corp.  *				(5,739)
						(26,000)
		ENTERTAINMENT - (0.6) %
(3,027)		International Game Technology				(54,970)
(2,783)		Penn National Gaming, Inc. *				(39,880)
(3,096)		Pinnacle Entertainment, Inc. *				(80,465)
						(175,315)
		FOOD - (0.2) %
(889)		Sanderson Farms, Inc.				(64,302)
		HEALTHCARE - PRODUCTS - (0.2) %
(130)		Intuitive Surgical Inc				(49,930)
		HOME BUILDERS - (0.8) %
(1,750)		Meritage Homes Corp. *				(83,983)
(4,285)		PulteGroup, Inc.				(87,285)
(1,770)		Ryland Group, Inc.				(76,836)
						(248,104)
Persimmon Long/Short Fund
PORTFOLIO OF INVESTMENTS (Unaudited)(Continued)
December 31, 2013
Shares						Fair Value
		HOME FURNISHINGS - (1.1) %
(9,954)		DTS Inc.  *				$              (238,697)
(2,219)		iRobot Corp.  *				(77,155)
						(315,852)
		HOUSEHOLD PRODUCTS / WARES - (0.6) %
(958)		Clorox Co.				(88,864)
(835)		Kimberly-Clark Corp.				(87,224)
						(176,088)
		INTERNET - (1.0) %
(1,050)		Angie's List, Inc.  *				(15,908)
(4,894)		Blue Nile, Inc.  *				(230,458)
(4,946)		ReachLocal, Inc.  *				(62,864)
						(309,230)
		LEISURE TIME - (0.1) %
(206)		Polaris Industries, Inc.				(30,002)
		LODGING - (0.2) %
(1,066)		Hyatt Hotels Corp. - Cl. A  *				(52,724)
		OIL & GAS SERVICES - (0.5) %
(3,279)		Thermon Group Holdings, Inc.  *				(89,615)
(4,267)		Willbros Group, Inc. *				(40,195)
						(129,810)
		PHARMACEUTICALS - (0.9) %
(18,266)		Mannkind Corp. *				(95,166)
(1,069)		USANA Health Sciences Inc.  *				(80,795)
(8,418)		Vivus, Inc.  *				(76,435)
						(252,396)
		REITS - (1.1) %
(1,050)		American Tower Corp.				(83,811)
(530)		AvalonBay Communities, Inc.				(62,662)
(9,029)		Host Hotels & Resorts, Inc.				(175,524)
						(321,997)
		RETAIL - (5.9) %
(1,934)		Bed Bath & Beyond Inc.  *				(155,300)
(653)		Bid Lots, Inc. *				(21,085)
(4,058)		Bloomin' Brands, Inc.  *				(97,433)
(2,529)		Brinker International, Inc.				(117,194)
(1,229)		Cheesecake Factory, Inc.				(59,324)
(361)		Conn's, Inc.  *				(28,443)
(1,063)		Costco Wholesale Corp.				(126,508)
(516)		Dick's Sporting Goods, Inc.				(29,980)
(582)		Dillard's, Inc.				(56,576)
(1,058)		Dollar General Corp.  *				(63,819)
(7,374)		Fred's, Inc.				(136,566)
(2,362)		Lululemon Athletica, Inc.  *				(139,429)
(1,211)		McDonald's Corp.				(117,503)
(740)		Panera Bread Co.  *				(130,751)
(1,016)		PetSmart, Inc.				(73,914)
(451)		PVH Corp.				(61,345)
(583)		Target Corp.				(36,886)
(4,332)		Vitamin Shoppe, Inc.  *				(225,307)
(1,675)		Williams-Sonoma, Inc.				(97,619)
						(1,774,982)
		SEMICONDUCTORS - (1.2) %
(14,114)		Intel Corp.				(366,399)
Persimmon Long/Short Fund
PORTFOLIO OF INVESTMENTS (Unaudited)(Continued)
December 31, 2013
Shares						Fair Value
		SOFTWARE - (0.3) %
(1,180)		Red Hat, Inc. 9				$                (66,127)
(873)		Rosetta Stone, Inc. *				(10,668)
						(76,795)
		TELECOMMUNICATIONS - (0.1) %
(719)		NETGEAR, Inc.  *				(23,684)
		TOYS GAMES HOBBIES - (0.4) %
(1,351)		Hasbro, Inc.				(74,319)
(1,083)		Mattel, Inc.				(51,529)
						(125,848)
		TOTAL COMMON STOCKS SOLD SHORT (Proceed - $5,498,408)				(5,783,645)
		EXCHANGE TRADED FUNDS - (2.6) %
(4,840)		Consumer Staples Select Sector SPDR Fund				(208,023)
(740)		iShares Russell 2000 ETF				(85,329)
(413)		iShares Russell 2000 Growth ETF				(55,966)
(2,356)		SPDR S&P 500 ETF Trust				(435,083)
		TOTAL EXCHANGED TRADED FUNDS SOLD SHORT (Proceed - $701,278)				(784,401)
		TOTAL SECURITIES SOLD SHORT (Proceed - $6,199,686) (c)				$           (6,568,046)
Number
of Contracts					Expiration
		WRITTEN OPTIONS  - (0.3) %
		WRITTEN CALL OPTIONS  - (0.3) %
(2)		S & P 500 Index @ 18.15 *			Jan-14	$                  (6,984)
(2)		S & P 500 Index @ 18.20 *			Jan-14	(6,202)
(2)		S & P 500 Index @ 18.25 *			Jan-14	(6,112)
(2)		S & P 500 Index @ 18.30 *			Jan-14	(5,600)
(2)		S & P 500 Index @ 18.20 *			Jan-14	(7,688)
(2)		S & P 500 Index @ 18.25 *			Jan-14	(7,142)
(2)		S & P 500 Index @ 18.12 *			Jan-14	(9,298)
(2)		S & P 500 Index @ 18.30 *			Jan-14	(6,782)
(2)		S & P 500 Index @ 18.15 *			Jan-14	(9,134)
(2)		S & P 500 Index @ 18.17 *			Jan-14	(8,946)
(2)		S & P 500 Index @ 18.18 *			Feb-14	(9,050)
(2)		S & P 500 Index @ 18.53 *			Feb-14	(4,624)
(2)		S & P 500 Index @ 18.22 *			Feb-14	(8,514)
(2)		S & P 500 Index @18.56 *			Feb-14	(4,594)
(1)		S & P 500 Index @ 18.68 *			Feb-14	(1,767)
		TOTAL WRITTEN OPTIONS (Premiums - $35,383)				$              (102,437)
ADR		American Depositary Receipt.
*		Non-income producing security.
+		All or part of the security was held as collateral for securities sold short as of December 31, 2013.
(a)		Money market fund; interest rate reflects seven-day effective yield on December 31, 2013.
(b)		The value of this security has been determined in good faith under the polices of the Board of Trustees.
(c)		Represents cost for financial reporting purposes. Aggregate cost for federal tax  purposes (including securities sold short and options) is $21,468,619 and differs from market value by net unrealized appreciation (depreciation) of securities as follows:
		Unrealized Appreciation:				$             3,673,077
		Unrealized Depreciation:				(797,994)
		Net Unrealized Appreciation:				$             2,875,083

Persimmon Long Short Fund
PORTFOLIO OF INVESTMENTS (Unaudited) (Continued)
December 31, 2013
The following is a summary of significant accounting policies followed by the Fund in preparation of the financial statements.  These policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”).
Security valuation – Securities listed on an exchange are valued at the last reported sale price at the close of the regular trading session of the exchange on the business day the value is being determined, or in the case of securities listed on NASDAQ at the NASDAQ Official Closing Price (“NOCP”).  In the absence of a sale such securities shall be valued at the mean between the current bid and ask prices on the valuation date. 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.
A Fund may hold securities, such as private placements, 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 at their fair market value as determined using the “fair value” procedures approved by the Board. The Board has delegated execution of these procedures to a fair value team composed of one or more officers from each of the (i) Trust, (ii) administrator, and (iii) advisor and/or sub-advisor.  The team may also enlist third party consultants such as an audit firm or financial officer of a security issuer on an as-needed basis to assist in determining a security-specific fair value. The Board reviews and ratifies the execution of this process and the resultant fair value prices at least quarterly to assure the process produces reliable results.
Fair Value Team and Valuation Process – This team is composed of one or more representatives from each of the (i) Trust, (ii) administrator, and (iii) adviser and/or sub-advisers.  The applicable investments are valued collectively via inputs from each of these groups.  For example, fair value determinations are required for the following securities:  (i) securities for which market quotations are insufficient or not readily available on a particular business day (including securities for which there is a short and temporary lapse in the provision of a price by the regular pricing source), (ii) securities for which, in the judgment of the adviser or sub-advisers, the prices or values available do not represent the fair value of the instrument.  Factors which may cause the adviser or sub-advisers to make such a judgment include, but are not limited to, the following: only a bid price or an asked price is available; the spread between bid and asked prices is substantial; the frequency of sales; the thinness of the market; the size of reported trades; and actions of the securities markets, such as the suspension or limitation of trading; (iii) securities determined to be illiquid; (iv) securities with respect to which an event that will affect the value thereof has occurred (a “significant event”) since the closing prices were established on the principal exchange on which they are traded, but prior to a Fund’s calculation of its net asset value.  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 adviser or sub-adviser based upon the current bid for the security from two or more independent dealers or other parties reasonably familiar with the facts and circumstances of the security (who should take into consideration all relevant factors as may be appropriate under the circumstances).  If the adviser or sub-advisers is unable to obtain a current bid from such independent dealers or other independent parties, the fair value team 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.
Persimmon Long Short Fund
PORTFOLIO OF INVESTMENTS (Unaudited) (Continued)
December 31, 2013
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.
Open-ended funds 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.
The Fund utilizes various methods to measure the fair value of its investments on a recurring basis.  GAAP establishes a hierarchy that prioritizes inputs to valuation methods. The three levels of input are:
Level 1 - Unadjusted quoted prices in active markets for identical assets and liabilities that the Fund has 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 on 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 Fund's 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 of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.
The inputs used to measure fair value may fall into different levels of the fair value hierarchy.  In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.  The following tables summarize the inputs used as of December 31, 2013 for the Fund’s assets and liabilities measured at fair value:
* Refer to the Portfolio of Investments for industry classification.
There were no transfers into or out of Level 1 and Level 2 during the current period presented. It is the Fund’s policy to recognize transfers into or out of Level 1 and Level 2 at the end of the reporting period.
Persimmon Long Short Fund
PORTFOLIO OF INVESTMENTS (Unaudited) (Continued)
December 31, 2013
					Common Stock	Total
Beginning Balance 9/30/13 *					$                  (7,029)	$                  (7,029)
Total realized gain (loss)					-	-
Appreciation (Depreciation)					-	-
Cost of Purchases					-	-
Proceeds from Short Sales					-	-
Accrued Interest					-	-
Net transfers in/out of level 3					-	-
Ending Balance 12/31/13					$                  (7,029)	$                  (7,029)
The significant unobservable inputs used in the fair value measurement of the reporting entity’s Level 3 Common stock investment was based on information relating to a third-party  purchase of certain shares of the applicable security with a share price of $0.6818 per share. The transaction was noted and discussed at the Funds' Fair Valuation Committee ("Committee') meeting. The Committee concluded that the last sale price of $0.9497 was the best price to use to price the security at fair value given the lack of other information In the market place.
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.
The number of option contracts written and the premiums received by the Fund for the period September 30, 2013 to December 31, 2013, were as follows:
					Put Options			Call Options
					Number of	Premiums		Number of	Premiums
Written Options					Contracts	Received		Contracts	Received
Options outstanding, beginning of period					-	$                           -		64	$                    3,934
Options purchased/written					34	1,155		249	41,210
Options closed					(34)	(1,155)		(284)	(9,761)
Options exercised					-	-		-	-
Options expired
Options outstanding, end of period					-	$                           -		29	$                  35,383
Put options are purchased to hedge against a decline in the value of securities held in the Fund’s 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 exchange’s clearinghouse, as counterparty to all exchange traded options, guarantees against a possible default.

Item 2. Controls and Procedures.

(a)

The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective, as of a date within 90 days of the filing date of this report that includes the disclosure required by this paragraph, based on their evaluation of the controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rules 13a-15(b) or 15d-15(b) under the  Securities Exchange Act of 1934, as amended.

(b)

There were no significant changes in the registrant’s internal control over financial reporting that occurred during the registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

  Item 3.  Exhibits.  

Certifications required by Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) (and Item 3 of Form N-Q) are filed herewith.

SIGNATURES

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

Northern Lights Fund Trust III

By

*/s/ Andrew B. Rogers

       Andrew B. Rogers, President

       

Date  

02/24/2014

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

*/s/ Andrew B. Rogers

       Andrew B. Rogers, President

       

Date

02/24/2014

By

*/s/ Brian Curley

       Brian Curley, Treasurer

        

Date

02/24/2014