united states
securities and exchange commission
washington, d.c. 20549
form n-csr
certified shareholder report of registered management
investment companies
Investment Company Act file number 811-22655
Northern Lights Fund Trust III
(Exact name of registrant as specified in charter)
225 Pictoria Dr, Ste 450 Cincinnati, Ohio 45246
(Address of principal executive offices) (Zip code)
Eric Kane
80 Arkay Drive, Hauppauge, NY 11788
(Name and address of agent for service)
Registrant's telephone number, including area code: 631-470-2600
Date of fiscal year end: 9/30
Date of reporting period: 9/30/22
Item 1. Reports to Stockholders.
Annual Report
September 30, 2022
RESQ Dynamic Allocation Fund
RQEAX
RQECX
RQEIX
RESQ Strategic Income Fund
RQIAX
RQICX
RQIIX
1-877-940-2526
www.RESQFunds.com
Distributed by Northern Lights Distributors, LLC
Member FINRA
Shareholder Letter 2022
After a tentative recovery in 2021, the year 2022 proved to be increasingly gloomy as risks surfaced everywhere. A world economy already weakened by the global pandemic faced numerous shocks. Higher than expected inflation was coupled with a slowdown in China, a Russian war, and a US consumer that under-consumed. Major asset class indices all reflected negative returns.
Continued rate hikes by the US Federal Reserve (the “Fed”) may be necessary to tame this stubbornly difficult to control inflation. Rising food and energy prices along with higher borrowing costs and debt stress will likely tilt the US economy to the downside. Taming inflation will be the priority of the Central Banks and worldwide standards of living will suffer. Loose monetary policy comes back to bite and relief is too far over the horizon to see.
The question becomes, is the recession here or still to come? The economy’s main core components, food and rent, remain high while oil prices rise on the Saudi production cuts. The Fed’s rate hikes, their reaction to the rising inflation, usually take twelve or so months to filter into the economy. History shows that the Fed rarely gets things right. The Fed normally moves very slow while the market moves very fast. Based on the spread between the 2-year treasury note (4.3%) and the Fed Funds rate (3-3.25%), it seems likely the Fed will have to raise rates again and again. Their long-term inflation target is 2%, a far cry from today’s 8.5%. Continued hikes could cause prolonged economic misery until some data point or geopolitical event reverses the trend. This would leave a recovering economy with tight monetary policy and a Fed unable to reverse course quick enough to help. It would be best for the economy if the Fed tread lightly from here.
RESQ Dynamic Allocation Fund
Fund’s Goal
The RESQ Dynamic Allocation Fund seeks long term capital appreciation with capital preservation as a secondary objective. The Fund seeks a positive return through all market cycles and moves to a cash position when the market declines and back into securities when the markets resume an uptrend. The Fund’s flexibility allows it to shift to different sectors based on technical analysis.
Performance Overview
The Fund’s I Share Class had a cumulative total return of -20.19% for the 12-month period ended September 30, 2022. For comparison, the Fund’s benchmark, the MSCI World Index performance had a total return of -19.63%.
Investment Overview
For the year ended September 30, 2022, the Fund remained in the inflation model which was overweight emerging markets and mining companies. Unfortunately, the strong dollar hurt these positions and subdued the expected return. The Fund was underweight equities with energy as the only positive position. Almost every asset class had a negative return making gains difficult to find.
A look back at the year shows the Fund defensive in Q4 2021. This positioning put the Fund down 0.5% with the benchmark, MSCI World Index, up 7.77% for the quarter. The major performance detractors were the emerging markets and gold miners. The benchmark was carried by strong US large cap and developed international stock gains. The Fund invested in technology and small caps which showed relative strength but ultimately failed and underperformed.
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Q1 2022 began with the Fund holding 57% equities. This would prove to be well positioned for a quarter of negative equity returns. A VIX position was used to hedge off the long equity exposure. The inversion of the yield curve between 2-year and 10-year treasuries put the models on recession watch. Typically, a recession is not imminent but likely in the next 9-12 months. The model’s long-term indicators moved near but still above bear market levels. This signaling moved the portfolio into a 26% cash position and a 5.4% VIX position.
Finally, the Fund increased exposure to 93% in May as the markets began to find footing after the 25% correction. This move was met with record inflation data which spooked the markets and began a very sharp selloff. All 11 S&P sectors were negative for the quarter and the markets experienced the worst first half of the year since 1970. The Fund sold the rallies and got back to a defensive stance.
The Fund bumped its way through Q3 2022, trying to take advantage of small gains between the sharp moves of the market. All long-term indicators went to SELL, and the models no longer sought to buy the rallies. Overall markets moved lower and lower as inflation continued to heat up. The Federal Reserve’s rate hikes continued to add to the misery of 2022 as all asset classes deteriorated including the normal inflation-protected positions.
Class I shares are down 19.79% YTD as of September 30, 2022 and the benchmark, MSCI World Index, is down 25.42%.
RESQ Strategic Income Fund
Fund’s Goal
The RESQ Strategic Income Fund seeks income with an emphasis on total return and capital preservation as a secondary objective.
Performance Overview
The Fund’s I share class had a cumulative total return of -17.11% for the 12 months ended September 30th, 2022. For comparison, the Fund’s benchmark, the Bloomberg U.S. Aggregate Bond Index performance had a total return of -14.60%.
Investment Overview
Fixed income markets have suffered their worst returns in more than 50 years as inflation and monetary policy interventions have forced large bond sell offs. All major fixed income asset classes declined during the fiscal year, including those with the highest credit quality. The Fund started out Q4 2021 in a very balanced fixed income allocation. The Fund had a diversified mix of positions across all fixed-income sectors. This included high yield, convertibles, municipal bonds, mortgage-backed securities, TIPS, emerging market bonds, corporates, bank loans and a 15% short treasuries position. The short treasury position began to whip saw back and forth as the 10-year treasury yield rose modestly before tailing off downward into year-end 2021. The Fund sustained about a 5% decline in that position before being sold at the end of the year.
During Q2 2022, volatility picked up substantially. The Fund sustained large declines in convertibles, emerging market bonds and bank loans. Convertibles fell 15% during Q2, emerging market bonds fell close to 12% and bank loans dropped 6%. Mid way through Q2, the Fund increased trading to capitalize on volatility in the markets. The Fund shifted a part of the allocation into the equity markets with VIX overlays for hedging. This provided opportunities to hedge risk on positions during drawdowns and participate on the upside. The increased trading during Q3 helped the Fund to outperform the benchmark
2
by about 6.31% and recoup some underperformance during Q2. The 10-year treasury yield moved down 12% during July which also gave a relief rally to the Fund’s fixed income positions.
As our long-term indicators began triggering to SELL throughout Q2 and into Q3, the Fund started to shift the allocation. During Q2, 4 out of 5 of the long-term technical indicators triggered to SELL. By Q3 2022, all indicators had triggered. These SELL signals are an indication of a recession on the horizon. As the markets begin to price in slower economic growth, our indicators started signaling a flight to quality.
The Fund began to strategically position on the long end of the curve as the indicators are suggesting a safe haven trade heading into 2023. The Fund started to sell off all risk on assets. The Fund aggressively dollar cost averaged into long term treasuries as the 10-year yield moved to 4%. By the end of the fiscal year, the Fund had sold off all remaining convertibles, emerging market debt, preferred securities, mortgage-backed securities, TIPS, and equity positions. As rates moved higher, the Fund reduced trading in the equity markets & VIX. At the end of the fiscal year, the Fund had given back some performance to the benchmark as the Fund focused on building a position in long-term treasury markets. The Fund ended the fiscal year with an 84% allocation to long-term treasuries.
On a 1-year look back the Fund has underperformed the Bloomberg U.S. Aggregate Bond Index by 3.77% and its peer group by 3.73%. This can be mainly attributed to two areas. In Q2, there were large declines across the Fund’s positions, mainly in convertibles and emerging market debt. The heavy positioning in treasuries during the back half of the fiscal year also added to slight underperformance. There was a significant snap back in the Fund’s performance in July as the 10-year yield dropped from 3.5% to 2.5%. However, the 10-year yield rallied to 4% at the end of the fiscal year adding to slight underperformance.
Class I shares are down 15.75% YTD as of September 30, 2022 and the benchmark, Bloomberg U.S.
Aggregate Bond Index, is down 14.61%.
The economy and the markets all work in cycles. As the present cycle ages, it brings the markets closer to the point of recovery. Everyone here at the ResQ Funds appreciates the support and stand ready for better days ahead. We wish you all the best.
Thank you,
The Team at ResQ
MSCI World Index
The MSCI World is a market cap weighted stock market index of 1,655 stocks from companies throughout the world. You cannot invest directly in an index.
Bloomberg U.S Aggregate Bond Index
The Bloomberg US Aggregate Bond Index is a broad benchmark index for the U.S. bond market. The index covers all major types of bonds, including taxable corporate bonds, Treasury bonds, and municipal bonds. You cannot invest directly in an index.
7153-NLD-10252022
3
RESQ Dynamic Allocation Fund
PORTFOLIO REVIEW (Unaudited)
September 30, 2022
The Fund’s performance figures* for the years ended September 30, 2022, as compared to its benchmarks:
Annualized | Annualized | Annualized | ||
One Year | Five Year | Since Inception (a) | Since Inception (b) | |
RESQ Dynamic Allocation Fund - Class A | (20.44)% | (3.11)% | (2.22)% | N/A |
RESQ Dynamic Allocation Fund - Class A with Load | (24.99)% | (4.25)% | (2.88)% | N/A |
RESQ Dynamic Allocation Fund - Class C | (20.92)% | (3.70)% | N/A | (3.21)% |
RESQ Dynamic Allocation Fund - Class I | (20.19)% | (2.73)% | (1.82)% | N/A |
MSCI World Index (c) | (19.63)% | 5.30% | 6.35% | 6.91% |
S&P 500 Total Return Index (d) | (15.47)% | 9.24% | 10.13% | 10.49% |
Comparision of the Change in Value of a $100,000 Investment
* | 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 return of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. 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. Performance figures for periods greater than 1 year are annualized. The total operating expenses as stated in the fee table to the Fund’s prospectus dated February 1, 2022 are 2.73%, 3.33% and 2.33% for the Class A, C and I Shares, respectively. Class A shares are subject to a maximum sales charge of 5.75% of the original purchase price imposed on purchases. Redemptions of any share class made within 30 days of purchase may be assessed a redemption fee of 2.00%. For performance information current to the most recent month-end, please call 1-877-940-2526. |
(a) | Inception date is December 20, 2013. |
(b) | Inception date is October 17, 2014 |
(c) | The MSCI World Index captures large and mid cap representation across 23 Developed Markets (DM) countries. With 1,650 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country. Investors may not invest in the Index directly. Unlike the Fund’s returns, the Index does not reflect any fees or expenses. |
(d) | The S&P 500 Total Return Index is an unmanaged free-float capitalization-weighted index which measures the performance of 500 large-cap common stocks actively traded in the United States. Index returns assume reinvestment of dividends. Investors may not invest in the Index directly. Unlike the Fund’s returns, the Index does not reflect any fees or expenses. |
Portfolio Composition as of September 30, 2022 | ||||
Holdings by Asset Type | % of Net Assets | |||
Exchange-Traded Funds - Equity Funds | 80.9 | % | ||
Short-Term Investments | 19.1 | % | ||
Liabilities In Excess of Other Assets | (0.0 | )% | ||
100.0 | % |
Please refer to the Schedule of Investments in this shareholder report for a detailed listing of the Fund’s holdings.
4
RESQ Strategic Income Fund
PORTFOLIO REVIEW (Unaudited)
September 30, 2022
The Fund’s performance figures* for the years ended September 30, 2022, as compared to its benchmarks:
Annualized | Annualized | Annualized | ||
One Year | Five Year | Since Inception (a) | Since Inception (b) | |
RESQ Strategic Income Fund - Class A | (17.37)% | (4.41)% | (2.26)% | N/A |
RESQ Strategic Income Fund - Class A with Load | (21.31)% | (5.34)% | (2.80)% | N/A |
RESQ Strategic Income Fund - Class C | (17.93)% | (4.99)% | N/A | (3.67)% |
RESQ Strategic Income Fund - Class I | (17.11)% | (4.00)% | (1.86)% | N/A |
Bloomberg U.S. Aggregate Bond Index (c) | (14.60)% | (0.27)% | 1.19% | 0.66% |
Dow Jones Conservative Portfolio Index (d) | (16.09)% | (0.35)% | 1.00% | 0.64% |
Comparision of the Change in Value of a $100,000 Investment
* | 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 return of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. 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. Performance figures for periods greater than 1 year are annualized. The total operating expenses as stated in the fee table to the Fund’s prospectus dated February 1, 2022 are 2.70%, 3.30% and 2.30% for the Class A, C and I Shares, respectively. Class A shares are subject to a maximum sales charge of 4.75% of the original purchase price imposed on purchases. Redemptions of any share class made within 30 days of purchase may be assessed a redemption fee of 2.00%. For performance information current to the most recent month-end, please call 1-877-940-2526. |
(a) | Inception date is December 20, 2013. |
(b) | Inception date is October 17, 2014. |
(c) | The Bloomberg U.S. Aggregate Bond Index is an unmanaged index comprised of U.S. investment grade, fixed rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and ten years. Index returns assume reinvestment of dividends. Investors may not invest in the Index directly. Unlike the Fund’s returns, the Index does not reflect any fees or expenses. |
(d) | The Dow Jones Conservative Portfolio Index is a member of the Dow Jones Relative Risk Index Series and is designed to measure a total portfolio of stocks, bonds, and cash, allocated to represent an investor’s desired risk profile. The Dow Jones Conservative Portfolio Index risk level is set to 20% of the Dow Jones Global Stock CMAC Index’s downside risk (past 36 months). Investors may not invest in the Index directly. Unlike the Fund’s returns, the Index does not reflect any fees or expenses. |
Portfolio Composition as of September 30, 2022 | ||||
Holdings by Asset Type | % of Net Assets | |||
Exchange-Traded Funds - Fixed Income Funds | 78.7 | % | ||
Short-Term Investments | 23.2 | % | ||
Liabilities In Excess of Other Assets | (1.9 | )% | ||
100.0 | % |
Please refer to the Schedule of Investments in this shareholder report for a detailed listing of the Fund’s holdings.
5
RESQ DYNAMIC ALLOCATION FUND |
SCHEDULE OF INVESTMENTS |
September 30, 2022 |
Shares | Fair Value | |||||||
EXCHANGE-TRADED FUNDS — 80.9% | ||||||||
EQUITY - 80.9% | ||||||||
66,900 | ARK Innovation ETF | $ | 2,524,137 | |||||
66,200 | Bitwise Crypto Industry Innovators ETF | 424,342 | ||||||
13,300 | Communication Services Select Sector SPDR Fund | 636,937 | ||||||
6,100 | Consumer Discretionary Select Sector SPDR Fund | 868,945 | ||||||
7,600 | Consumer Staples Select Sector SPDR Fund | 507,148 | ||||||
5,450 | Energy Select Sector SPDR Fund | 392,509 | ||||||
29,100 | Financial Select Sector SPDR Fund | 883,476 | ||||||
219,300 | Global X Blockchain ETF | 1,287,291 | ||||||
40,400 | Global X Silver Miners ETF | 974,044 | ||||||
9,363 | Health Care Select Sector SPDR Fund | 1,133,953 | ||||||
7,300 | Industrial Select Sector SPDR Fund | 604,732 | ||||||
66,400 | Invesco China Technology ETF(a) | 2,412,312 | ||||||
33,700 | iShares China Large-Cap ETF | 871,482 | ||||||
42,900 | KraneShares Bosera MSCI China A 50 Connect Index ETF | 1,301,586 | ||||||
3,100 | Materials Select Sector SPDR Fund | 210,831 | ||||||
5,600 | Real Estate Select Sector SPDR Fund | 201,656 | ||||||
16,509 | Technology Select Sector SPDR Fund | 1,960,939 | ||||||
3,700 | Utilities Select Sector SPDR Fund | 242,387 | ||||||
113,000 | VanEck Gold Miners ETF | 2,725,560 | ||||||
35,000 | Vanguard FTSE Emerging Markets ETF | 1,277,150 | ||||||
TOTAL EXCHANGE-TRADED FUNDS (Cost $25,310,370) | 21,441,417 | |||||||
SHORT-TERM INVESTMENTS — 19.1% | ||||||||
MONEY MARKET FUNDS - 19.1% | ||||||||
5,065,943 | First American Government Obligations Fund Class X, 2.77% (Cost $5,065,943)(b) | 5,065,943 | ||||||
TOTAL INVESTMENTS - 100.0% (Cost $30,376,313) | $ | 26,507,360 | ||||||
LIABILITIES IN EXCESS OF OTHER ASSETS – (0.0)% | (7,561 | ) | ||||||
NET ASSETS - 100.0% | $ | 26,499,799 |
FTSE | - Financial Times Stock Exchange |
MSCI | - Morgan Stanley Capital International |
SPDR | - Standard & Poor’s Depositary Receipt |
(a) | Non-income producing security. |
(b) | Rate disclosed is the seven day effective yield as of September 30, 2022. |
See accompanying notes to financial statements.
6
RESQ STRATEGIC INCOME FUND |
SCHEDULE OF INVESTMENTS |
September 30, 2022 |
Shares | Fair Value | |||||||
EXCHANGE-TRADED FUNDS — 78.7% | ||||||||
FIXED INCOME - 78.7% | ||||||||
440,000 | Direxion Daily 20 Year Plus Treasury Bull 3x Shares | $ | 3,770,800 | |||||
62,200 | iShares 20+ Year Treasury Bond ETF | 6,372,390 | ||||||
26,400 | iShares 7-10 Year Treasury Bond ETF | 2,534,136 | ||||||
36,600 | iShares iBoxx $ High Yield Corporate Bond ETF | 2,612,874 | ||||||
17,300 | Vanguard Extended Duration Treasury ETF | 1,500,083 | ||||||
60,500 | Vanguard Long-Term Treasury ETF | 3,807,870 | ||||||
TOTAL EXCHANGE-TRADED FUNDS (Cost $22,147,136) | 20,598,153 | |||||||
SHORT-TERM INVESTMENTS — 23.2% | ||||||||
MONEY MARKET FUNDS - 23.2% | ||||||||
6,071,441 | First American Government Obligations Fund Class X, 2.77% (Cost $6,071,441)(a) | 6,071,441 | ||||||
TOTAL INVESTMENTS - 101.9% (Cost $28,218,577) | $ | 26,669,594 | ||||||
LIABILITIES IN EXCESS OF OTHER ASSETS - (1.9)% | (494,554 | ) | ||||||
NET ASSETS - 100.0% | $ | 26,175,040 |
(a) | Rate disclosed is the seven day effective yield as of September 30, 2022. |
See accompanying notes to financial statements.
7
RESQ Funds |
STATEMENTS OF ASSETS AND LIABILITIES |
September 30, 2022 |
RESQ Dynamic | RESQ Strategic | |||||||
Allocation Fund | Income Fund | |||||||
ASSETS | ||||||||
Investment securities: | ||||||||
Total investments, at cost | $ | 30,376,313 | $ | 28,218,577 | ||||
Total investments, at value | $ | 26,507,360 | $ | 26,669,594 | ||||
Dividends and interest receivable | 6,072 | 15,619 | ||||||
Prepaid expenses and other assets | 43,860 | 43,866 | ||||||
TOTAL ASSETS | 26,557,292 | 26,729,079 | ||||||
LIABILITIES | ||||||||
Investment advisory fees payable | 17,955 | 17,303 | ||||||
Audit fees payable | 17,504 | 17,494 | ||||||
Distribution (12b-1) fees payable | 9,058 | 8,835 | ||||||
Payable to related parties | 7,052 | 7,086 | ||||||
Payable for investments purchased | — | 496,823 | ||||||
Accrued expenses and other liabilities | 5,924 | 6,498 | ||||||
TOTAL LIABILITIES | 57,493 | 554,039 | ||||||
NET ASSETS | $ | 26,499,799 | $ | 26,175,040 | ||||
NET ASSETS CONSIST OF: | ||||||||
Paid in capital | $ | 35,103,847 | $ | 36,809,247 | ||||
Accumulated losses | (8,604,048 | ) | (10,634,207 | ) | ||||
NET ASSETS | $ | 26,499,799 | $ | 26,175,040 | ||||
NET ASSET VALUE PER SHARE: | ||||||||
Class A Shares: | ||||||||
Net Assets | $ | 26,305,443 | $ | 26,162,124 | ||||
Shares of Beneficial Interest Outstanding ($0 par value, unlimited shares authorized) | 3,408,732 | 3,475,848 | ||||||
Net Asset Value (Net Assets ÷ Shares Outstanding) and Redemption Price Per Share (a) | $ | 7.72 | $ | 7.53 | ||||
Maximum Offering Price Per Share (b) | $ | 8.19 | $ | 7.91 | ||||
Class C Shares: | ||||||||
Net Assets | $ | 19,219 | $ | 10,825 | ||||
Shares of Beneficial Interest Outstanding ($0 par value, unlimited shares authorized) | 2,609 | 1,476 | ||||||
Net Asset Value (Net Assets ÷ Shares Outstanding), Offering and Redemption Price Per Share (a) | $ | 7.37 | $ | 7.33 | ||||
Class I Shares: | ||||||||
Net Assets | $ | 175,137 | $ | 2,091 | ||||
Shares of Beneficial Interest Outstanding ($0 par value, unlimited shares authorized) | 21,974 | 275 | ||||||
Net Asset Value (Net Assets ÷ Shares Outstanding), Offering and Redemption Price Per Share (a) | $ | 7.97 | $ | 7.60 |
(a) | Redemptions made within 30 days of purchase may be assessed a redemption fee of 2.00%. |
(b) | There is a maximum front-end sales charge (load) of 5.75% and 4.75% imposed on purchases of Class A shares of the RESQ Dynamic Allocation Fund and RESQ Strategic Income Fund, respectively. |
See accompanying notes to financial statements.
8
RESQ Funds |
STATEMENTS OF OPERATIONS |
For the Year Ended September 30, 2022 |
RESQ Dynamic | RESQ Strategic | |||||||
Allocation Fund | Income Fund | |||||||
INVESTMENT INCOME | ||||||||
Dividends | $ | 561,322 | $ | 755,104 | ||||
Interest | 31,309 | 39,987 | ||||||
TOTAL INVESTMENT INCOME | 592,631 | 795,091 | ||||||
EXPENSES | ||||||||
Investment advisory fees | 374,265 | 348,284 | ||||||
Distribution (12b-1) fees: | ||||||||
Class A | 123,773 | 116,038 | ||||||
Class C | 223 | 119 | ||||||
Registration fees | 50,001 | 50,001 | ||||||
Transfer agent fees | 38,851 | 38,851 | ||||||
Administrative services fees | 54,052 | 53,052 | ||||||
Accounting services fees | 32,549 | 32,333 | ||||||
Audit fees | 18,002 | 18,002 | ||||||
Printing and postage expenses | 7,001 | 7,501 | ||||||
Compliance officer fees | 14,252 | 14,001 | ||||||
Trustees fees and expenses | 13,002 | 13,002 | ||||||
Legal fees | 13,501 | 13,502 | ||||||
Custodian fees | 5,219 | 5,001 | ||||||
Insurance expense | 1,201 | 1,099 | ||||||
Other expenses | 4,250 | 4,000 | ||||||
TOTAL EXPENSES | 750,142 | 714,786 | ||||||
Fees waived by the Advisor | (65,027 | ) | (76,569 | ) | ||||
NET EXPENSES | 685,115 | 638,217 | ||||||
NET INVESTMENT INCOME (LOSS) | (92,484 | ) | 156,874 | |||||
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS | ||||||||
Net realized loss on investments | (3,756,366 | ) | (4,333,345 | ) | ||||
Distributions from underlying investment companies | 7,833 | 61,902 | ||||||
Net change in unrealized depreciation on investments | (3,063,851 | ) | (1,452,888 | ) | ||||
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS | (6,812,384 | ) | (5,724,331 | ) | ||||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | (6,904,868 | ) | $ | (5,567,457 | ) |
See accompanying notes to financial statements.
9
RESQ Dynamic Allocation Fund |
STATEMENTS OF CHANGES IN NET ASSETS |
For the Year Ended | For the Year Ended | |||||||
September 30, 2022 | September 30, 2021 | |||||||
FROM OPERATIONS | ||||||||
Net investment loss | $ | (92,484 | ) | $ | (429,032 | ) | ||
Net realized gain (loss) on investments | (3,756,366 | ) | 2,614,435 | |||||
Distributions from underlying investment companies | 7,833 | — | ||||||
Net change in unrealized depreciation on investments | (3,063,851 | ) | (997,067 | ) | ||||
Net increase (decrease) in net assets resulting from operations | (6,904,868 | ) | 1,188,336 | |||||
DISTRIBUTIONS TO SHAREHOLDERS | ||||||||
From return of capital: | ||||||||
Class A | (54,460 | ) | — | |||||
Class I | (738 | ) | — | |||||
Net decrease in net assets from distributions to shareholders | (55,198 | ) | — | |||||
FROM SHARES OF BENEFICIAL INTEREST | ||||||||
Proceeds from shares sold: | ||||||||
Class A | 1,458,065 | 5,235,536 | ||||||
Class I | — | 35,971 | ||||||
Net asset value of shares issued in reinvestment of distributions: | ||||||||
Class A | 54,399 | — | ||||||
Class I | 738 | — | ||||||
Redemption fee proceeds: | ||||||||
Class A | 1 | 430 | ||||||
Payments for shares redeemed: | ||||||||
Class A | (2,859,663 | ) | (4,771,220 | ) | ||||
Class C | — | (19,595 | ) | |||||
Class I | (38,672 | ) | (216,470 | ) | ||||
Net increase (decrease) in net assets from shares of beneficial interest | (1,385,132 | ) | 264,652 | |||||
TOTAL INCREASE (DECREASE) IN NET ASSETS | (8,345,198 | ) | 1,452,988 | |||||
NET ASSETS | ||||||||
Beginning of Year | 34,844,997 | 33,392,009 | ||||||
End of Year | $ | 26,499,799 | $ | 34,844,997 | ||||
SHARE ACTIVITY | ||||||||
Class A: | ||||||||
Shares Sold | 163,922 | 508,878 | ||||||
Shares Reinvested | 6,085 | — | ||||||
Shares Redeemed | (315,560 | ) | (458,709 | ) | ||||
Net increase (decrease) in shares of beneficial interest outstanding | (145,553 | ) | 50,169 | |||||
Class C: | ||||||||
Shares Redeemed | — | (1,948 | ) | |||||
Net decrease in shares of beneficial interest outstanding | — | (1,948 | ) | |||||
Class I: | ||||||||
Shares Sold | — | 3,245 | ||||||
Shares Reinvested | 80 | — | ||||||
Shares Redeemed | (4,307 | ) | (20,345 | ) | ||||
Net decrease in shares of beneficial interest outstanding | (4,227 | ) | (17,100 | ) |
See accompanying notes to financial statements.
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RESQ Strategic Income Fund |
STATEMENTS OF CHANGES IN NET ASSETS |
For the Year Ended | For the Year Ended | |||||||
September 30, 2022 | September 30, 2021 | |||||||
FROM OPERATIONS | ||||||||
Net investment income (loss) | $ | 156,874 | $ | (233,242 | ) | |||
Net realized loss on investments | (4,333,345 | ) | (406,681 | ) | ||||
Distributions from underlying investment companies | 61,902 | 25,130 | ||||||
Net change in unrealized depreciation on investments | (1,452,888 | ) | (323,815 | ) | ||||
Net decrease in net assets resulting from operations | (5,567,457 | ) | (938,608 | ) | ||||
DISTRIBUTIONS TO SHAREHOLDERS | ||||||||
From return of capital: | ||||||||
Class A | (190,168 | ) | — | |||||
Class C | (23 | ) | — | |||||
Class I | (23 | ) | — | |||||
Distributions paid: | ||||||||
Class A | — | (33,542 | ) | |||||
Class C | — | — | ||||||
Class I | — | (43 | ) | |||||
Net decrease in net assets from distributions to shareholders | (190,214 | ) | (33,585 | ) | ||||
FROM SHARES OF BENEFICIAL INTEREST | ||||||||
Proceeds from shares sold: | ||||||||
Class A | 1,954,689 | 6,117,945 | ||||||
Class I | — | 29,694 | ||||||
Net asset value of shares issued in reinvestment of distributions: | ||||||||
Class A | 189,921 | 33,523 | ||||||
Class C | 23 | — | ||||||
Class I | 23 | 43 | ||||||
Redemption fee proceeds: | ||||||||
Class A | 2 | 477 | ||||||
Payments for shares redeemed: | ||||||||
Class A | (2,759,260 | ) | (4,193,119 | ) | ||||
Class I | (4 | ) | (49,165 | ) | ||||
Net increase (decrease) in net assets from shares of beneficial interest | (614,606 | ) | 1,939,398 | |||||
TOTAL INCREASE (DECREASE) IN NET ASSETS | (6,372,277 | ) | 967,205 | |||||
NET ASSETS | ||||||||
Beginning of Year | 32,547,317 | 31,580,112 | ||||||
End of Year | $ | 26,175,040 | $ | 32,547,317 | ||||
SHARE ACTIVITY | ||||||||
Class A: | ||||||||
Shares Sold | 238,472 | 636,489 | ||||||
Shares Reinvested | 25,329 | 3,417 | ||||||
Shares Redeemed | (330,838 | ) | (439,261 | ) | ||||
Net increase (decrease) in shares of beneficial interest outstanding | (67,037 | ) | 200,645 | |||||
Class C: | ||||||||
Shares Reinvested | 3 | — | ||||||
Net increase in shares of beneficial interest outstanding | 3 | — | ||||||
Class I: | ||||||||
Shares Sold | — | 3,000 | ||||||
Shares Reinvested | 3 | 4 | ||||||
Shares Redeemed | (1 | ) | (5,194 | ) | ||||
Net increase (decrease) in shares of beneficial interest outstanding | 2 | (2,190 | ) |
See accompanying notes to financial statements.
11
RESQ Dynamic Allocation Fund |
FINANCIAL HIGHLIGHTS |
Per Share Data and Ratios for a Share of Beneficial Interest Outstanding Throughout Each Year
Class A | ||||||||||||||||||||
For the | For the | For the | For the | For the | ||||||||||||||||
Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||
September 30, 2022 | September 30, 2021 | September 30, 2020 | September 30, 2019 | September 30, 2018 | ||||||||||||||||
Net asset value, beginning of year | $ | 9.72 | $ | 9.40 | $ | 9.02 | $ | 9.62 | $ | 9.07 | ||||||||||
Activity from investment operations: | ||||||||||||||||||||
Net investment loss (1) | (0.02 | ) | (0.12 | ) | (0.05 | ) | (0.05 | ) | (0.06 | ) | ||||||||||
Net realized and unrealized gain (loss) on investments | (1.96 | ) | 0.44 | 0.44 | (0.55 | ) | 0.61 | |||||||||||||
Total from investment operations | (1.98 | ) | 0.32 | 0.39 | (0.60 | ) | 0.55 | |||||||||||||
Paid-in-capital from redemption fees (1) | 0.00 | (2) | 0.00 | (2) | — | — | 0.00 | (2) | ||||||||||||
Less distributions from: | ||||||||||||||||||||
Return of capital | (0.02 | ) | — | (0.01 | ) | — | — | |||||||||||||
Total distributions | (0.02 | ) | — | (0.01 | ) | — | — | |||||||||||||
Net asset value, end of year | $ | 7.72 | $ | 9.72 | $ | 9.40 | $ | 9.02 | $ | 9.62 | ||||||||||
Total return (3) | (20.44 | )% | 3.40 | % | 4.35 | % | (6.24 | )% | 6.06 | % | ||||||||||
Net assets, at end of year (000s) | $ | 26,305 | $ | 34,558 | $ | 32,933 | $ | 36,754 | $ | 45,351 | ||||||||||
Ratio of gross expenses to average net assets (4) | 2.41 | % | 2.26 | % | 2.49 | % | 2.49 | % | 2.42 | % | ||||||||||
Ratio of net expenses to average net assets (4) | 2.20 | % | 2.20 | % | 2.20 | % | 2.20 | % | 2.25 | % | ||||||||||
Ratio of net investment loss before waiver to average net assets (5) | (0.51 | )% | (1.19 | )% | (0.82 | )% | (0.89 | )% | (0.76 | )% | ||||||||||
Ratio of net investment loss to average net assets (5) | (0.30 | )% | (1.13 | )% | (0.53 | )% | (0.60 | )% | (0.59 | )% | ||||||||||
Portfolio Turnover Rate | 691 | % | 441 | % | 710 | % | 861 | % | 448 | % |
(1) | Per share amounts calculated using the average shares method, which more appropriately presents the per share data for the period. |
(2) | Amount is less than $0.01. |
(3) | Total returns shown are historical in nature and assume changes in share price, reinvestment of dividends and distributions, if any, and exclude the effect of applicable sales charges and redemption fees. Had the adviser not waived fees and/or reimbursed a portion of its expenses, total returns would have been lower. |
(4) | Does not include the expenses of other investment companies in which the Fund invests. |
(5) | Recognition of net investment loss by the Fund is affected by the timing and declaration of dividends by the underlying investment companies in which the Fund invests. |
See accompanying notes to financial statements.
12
RESQ Dynamic Allocation Fund |
FINANCIAL HIGHLIGHTS |
Per Share Data and Ratios for a Share of Beneficial Interest Outstanding Throughout Each Year
Class C | ||||||||||||||||||||
For the | For the | For the | For the | For the | ||||||||||||||||
Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||
September 30, 2022 | September 30, 2021 | September 30, 2020 | September 30, 2019 | September 30, 2018 | ||||||||||||||||
Net asset value, beginning of year | $ | 9.32 | $ | 9.06 | $ | 8.76 | $ | 9.40 | $ | 8.92 | ||||||||||
Activity from investment operations: | ||||||||||||||||||||
Net investment loss (1) | (0.07 | ) | (0.16 | ) | (0.11 | ) | (0.11 | ) | (0.15 | ) | ||||||||||
Net realized and unrealized gain (loss) on investments | (1.88 | ) | 0.42 | 0.43 | (0.53 | ) | 0.63 | |||||||||||||
Total from investment operations | (1.95 | ) | 0.26 | 0.32 | (0.64 | ) | 0.48 | |||||||||||||
Less distributions from: | ||||||||||||||||||||
Return of capital | — | — | (0.02 | ) | — | — | ||||||||||||||
Total distributions | — | — | (0.02 | ) | — | — | ||||||||||||||
Net asset value, end of year | $ | 7.37 | $ | 9.32 | $ | 9.06 | $ | 8.76 | $ | 9.40 | ||||||||||
Total return (3) | (20.92 | )% | 2.87 | % | 3.65 | % | (6.81 | )% | 5.38 | % | ||||||||||
Net assets, at end of year (000s) | $ | 19 | $ | 24 | $ | 41 | $ | 51 | $ | 81 | ||||||||||
Ratio of gross expenses to average net assets (4) | 3.01 | % | 2.86 | % | 3.09 | % | 3.09 | % | 3.02 | % | ||||||||||
Ratio of net expenses to average net assets (4) | 2.80 | % | 2.80 | % | 2.80 | % | 2.80 | % | 2.85 | % | ||||||||||
Ratio of net investment loss before waiver to average net assets (5) | (1.12 | )% | (1.65 | )% | (1.48 | )% | (1.50 | )% | (1.82 | )% | ||||||||||
Ratio of net investment loss to average net assets (5) | (0.91 | )% | (1.59 | )% | (1.19 | )% | (1.21 | )% | (1.65 | )% | ||||||||||
Portfolio Turnover Rate | 691 | % | 441 | % | 710 | % | 861 | % | 448 | % |
(1) | Per share amounts calculated using the average shares method, which more appropriately presents the per share data for the period. |
(2) | Amount is less than $0.01. |
(3) | Total returns shown are historical in nature and assume changes in share price, reinvestment of dividends and distributions, if any, and exclude the effect of applicable sales charges and redemption fees. Had the adviser not waived fees and/or reimbursed a portion of its expenses, total returns would have been lower. |
(4) | Does not include the expenses of other investment companies in which the Fund invests. |
(5) | Recognition of net investment loss by the Fund is affected by the timing and declaration of dividends by the underlying investment companies in which the Fund invests. |
See accompanying notes to financial statements.
13
RESQ Dynamic Allocation Fund |
FINANCIAL HIGHLIGHTS |
Per Share Data and Ratios for a Share of Beneficial Interest Outstanding Throughout Each Year
Class I | ||||||||||||||||||||
For the | For the | For the | For the | For the | ||||||||||||||||
Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||
September 30, 2022 | September 30, 2021 | September 30, 2020 | September 30, 2019 | September 30, 2018 | ||||||||||||||||
Net asset value, beginning of year | $ | 10.02 | $ | 9.65 | $ | 9.24 | $ | 9.82 | $ | 9.21 | ||||||||||
Activity from investment operations: | ||||||||||||||||||||
Net investment income (loss) (1) | 0.01 | (0.08 | ) | (0.02 | ) | (0.02 | ) | (0.03 | ) | |||||||||||
Net realized and unrealized gain (loss) on investments | (2.03 | ) | 0.45 | 0.46 | (0.56 | ) | 0.64 | |||||||||||||
Total from investment operations | (2.02 | ) | 0.37 | 0.44 | (0.58 | ) | 0.61 | |||||||||||||
Paid-in-capital from redemption fees (1) | — | — | — | — | 0.00 | (2) | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Return of capital | (0.03 | ) | — | (0.03 | ) | — | — | |||||||||||||
Total distributions | (0.03 | ) | — | (0.03 | ) | — | — | |||||||||||||
Net asset value, end of year | $ | 7.97 | $ | 10.02 | $ | 9.65 | $ | 9.24 | $ | 9.82 | ||||||||||
Total return (3) | (20.19 | )% | 3.83 | % | 4.73 | % | (5.91 | )% | 6.62 | % | ||||||||||
Net assets, at end of year (000s) | $ | 175 | $ | 262 | $ | 418 | $ | 274 | $ | 521 | ||||||||||
Ratio of gross expenses to average net assets (4) | 2.01 | % | 1.86 | % | 2.09 | % | 2.09 | % | 2.02 | % | ||||||||||
Ratio of net expenses to average net assets (4) | 1.80 | % | 1.80 | % | 1.80 | % | 1.80 | % | 1.85 | % | ||||||||||
Ratio of net investment loss before waiver to average net assets (5) | (0.08 | )% | (0.78 | )% | (0.57 | )% | (0.52 | )% | (0.46 | )% | ||||||||||
Ratio of net investment income (loss) to average net assets (5) | 0.13 | % | (0.72 | )% | (0.28 | )% | (0.22 | )% | (0.29 | )% | ||||||||||
Portfolio Turnover Rate | 691 | % | 441 | % | 710 | % | 861 | % | 448 | % |
(1) | Per share amounts calculated using the average shares method, which more appropriately presents the per share data for the period. |
(2) | Amount is less than $0.01. |
(3) | Total returns shown are historical in nature and assume changes in share price, reinvestment of dividends and distributions, if any, and exclude the effect of applicable sales charges and redemption fees. Had the adviser not waived fees and/or reimbursed a portion of its expenses, total returns would have been lower. |
(4) | Does not include the expenses of other investment companies in which the Fund invests. |
(5) | Recognition of net investment income (loss) by the Fund is affected by the timing and declaration of dividends by the underlying investment companies in which the Fund invests. |
See accompanying notes to financial statements.
14
RESQ Strategic Income Fund |
FINANCIAL HIGHLIGHTS |
Per Share Data and Ratios for a Share of Beneficial Interest Outstanding Throughout Each Year
Class A | ||||||||||||||||||||
For the | For the | For the | For the | For the | ||||||||||||||||
Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||
September 30, 2022 | September 30, 2021 | September 30, 2020 | September 30, 2019 | September 30, 2018 | ||||||||||||||||
Net asset value, beginning of year | $ | 9.18 | $ | 9.44 | $ | 8.89 | $ | 8.98 | $ | 9.63 | ||||||||||
Activity from investment operations: | ||||||||||||||||||||
Net investment income (loss) (1) | 0.04 | (0.07 | ) | (0.02 | ) | 0.00 | (2) | 0.08 | ||||||||||||
Net realized and unrealized gain (loss) on investments | (1.63 | ) | (0.18 | ) | 0.59 | (0.08 | ) | (0.65 | ) | |||||||||||
Total from investment operations | (1.59 | ) | (0.25 | ) | 0.57 | (0.08 | ) | (0.57 | ) | |||||||||||
Paid-in-capital from redemption fees (1) | 0.00 | (2) | 0.00 | (2) | — | — | — | |||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | — | (0.01 | ) | (0.02 | ) | (0.01 | ) | (0.08 | ) | |||||||||||
Return of capital | (0.06 | ) | — | — | — | — | ||||||||||||||
Total distributions | (0.06 | ) | (0.01 | ) | (0.02 | ) | (0.01 | ) | (0.08 | ) | ||||||||||
Net asset value, end of year | $ | 7.53 | $ | 9.18 | $ | 9.44 | $ | 8.89 | $ | 8.98 | ||||||||||
Total return (3) | (17.37 | )% | (2.66 | )% | 6.40 | % | (0.88 | )% | (5.91 | )% | ||||||||||
Net assets, at end of year (000s) | $ | 26,162 | $ | 32,532 | $ | 31,543 | $ | 34,016 | $ | 39,116 | ||||||||||
Ratio of gross expenses to average net assets (4) | 2.46 | % | 2.34 | % | 2.55 | % | 2.57 | % | 2.47 | % | ||||||||||
Ratio of net expenses to average net assets (4) | 2.20 | % | 2.20 | % | 2.20 | % | 2.20 | % | 2.25 | % | ||||||||||
Ratio of net investment income (loss) before waiver to average net assets (5) | 0.28 | % | (0.84 | )% | (0.62 | )% | (0.33 | )% | 0.59 | % | ||||||||||
Ratio of net investment income (loss) to average net assets (5) | 0.54 | % | (0.70 | )% | (0.27 | )% | 0.05 | % | 0.81 | % | ||||||||||
Portfolio Turnover Rate | 713 | % | 318 | % | 526 | % | 1504 | % | 738 | % |
(1) | Per share amounts calculated using the average shares method, which more appropriately presents the per share data for the period. |
(2) | Amount is less than $0.01. |
(3) | Total returns shown are historical in nature and assume changes in share price, reinvestment of dividends and distributions, if any, and exclude the effect of applicable sales charges and redemption fees. Had the adviser not waived fees and/or reimbursed a portion of its expenses, total returns would have been lower. |
(4) | Does not include the expenses of other investment companies in which the Fund invests. |
(5) | Recognition of net investment income (loss) by the Fund is affected by the timing and declaration of dividends by the underlying investment companies in which the Fund invests. |
See accompanying notes to financial statements.
15
RESQ Strategic Income Fund |
FINANCIAL HIGHLIGHTS |
Per Share Data and Ratios for a Share of Beneficial Interest Outstanding Throughout Each Year
Class C | ||||||||||||||||||||
For the | For the | For the | For the | For the | ||||||||||||||||
Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||
September 30, 2022 | September 30, 2021 | September 30, 2020 | September 30, 2019 | September 30, 2018 | ||||||||||||||||
Net asset value, beginning of year | $ | 8.95 | $ | 9.25 | $ | 8.75 | $ | 8.88 | $ | 9.52 | ||||||||||
Activity from investment operations: | ||||||||||||||||||||
Net investment income (loss) (1) | (0.00 | ) (2) | (0.12 | ) | (0.08 | ) | (0.05 | ) | 0.01 | |||||||||||
Net realized and unrealized gain (loss) on investments | (1.60 | ) | (0.18 | ) | 0.58 | (0.08 | ) | (0.62 | ) | |||||||||||
Total from investment operations | (1.60 | ) | (0.30 | ) | 0.50 | (0.13 | ) | (0.61 | ) | |||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | — | — | — | — | (0.03 | ) | ||||||||||||||
Return of capital | (0.02 | ) | — | — | — | — | ||||||||||||||
Total distributions | (0.02 | ) | — | — | — | (0.03 | ) | |||||||||||||
Net asset value, end of year | $ | 7.33 | $ | 8.95 | $ | 9.25 | $ | 8.75 | $ | 8.88 | ||||||||||
Total return (3) | (17.93 | )% | (3.24 | )% | 5.71 | % | (1.46 | )% | (6.41 | )% | ||||||||||
Net assets, at end of year (000s) | $ | 11 | $ | 13 | $ | 14 | $ | 13 | $ | 13 | ||||||||||
Ratio of gross expenses to average net assets (4) | 3.06 | % | 2.94 | % | 3.15 | % | 3.17 | % | 3.07 | % | ||||||||||
Ratio of net expenses to average net assets (4) | 2.80 | % | 2.80 | % | 2.80 | % | 2.80 | % | 2.85 | % | ||||||||||
Ratio of net investment loss before waiver waiver to average net assets (5) | (0.32 | )% | (1.44 | )% | (1.24 | )% | (0.92 | )% | (0.07 | )% | ||||||||||
Ratio of net investment income (loss) to average net assets (5) | (0.06 | )% | (1.30 | )% | (0.89 | )% | (0.55 | )% | 0.13 | % | ||||||||||
Portfolio Turnover Rate | 713 | % | 318 | % | 526 | % | 1504 | % | 738 | % |
(1) | Per share amounts calculated using the average shares method, which more appropriately presents the per share data for the period. |
(2) | Amount is less then $0.01. |
(3) | Total returns shown are historical in nature and assume changes in share price, reinvestment of dividends and distributions, if any, and exclude the effect of applicable sales charges and redemption fees. Had the adviser not waived fees and/or reimbursed a portion of its expenses, total returns would have been lower. |
(4) | Does not include the expenses of other investment companies in which the Fund invests. |
(5) | Recognition of net investment income (loss) by the Fund is affected by the timing and declaration of dividends by the underlying investment companies in which the Fund invests. |
See accompanying notes to financial statements.
16
RESQ Strategic Income Fund |
FINANCIAL HIGHLIGHTS |
Per Share Data and Ratios for a Share of Beneficial Interest Outstanding Throughout Each Year
Class I | ||||||||||||||||||||
For the | For the | For the | For the | For the | ||||||||||||||||
Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||
September 30, 2022 | September 30, 2021 | September 30, 2020 | September 30, 2019 | September 30, 2018 | ||||||||||||||||
Net asset value, beginning of year | $ | 9.27 | $ | 9.52 | $ | 8.95 | $ | 9.01 | $ | 9.66 | ||||||||||
Activity from investment operations: | ||||||||||||||||||||
Net investment income (loss) (1) | 0.08 | (0.03 | ) | (0.00 | ) (2) | 0.04 | 0.12 | |||||||||||||
Net realized and unrealized gain (loss) on investments | (1.67 | ) | (0.19 | ) | 0.61 | (0.06 | ) | (0.65 | ) | |||||||||||
Total from investment operations | (1.59 | ) | (0.22 | ) | 0.61 | (0.02 | ) | (0.53 | ) | |||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | — | (0.03 | ) | (0.04 | ) | (0.04 | ) | (0.12 | ) | |||||||||||
Return of capital | (0.08 | ) | — | — | — | — | ||||||||||||||
Total distributions | (0.08 | ) | (0.03 | ) | (0.04 | ) | (0.04 | ) | (0.12 | ) | ||||||||||
Net asset value, end of year | $ | 7.60 | $ | 9.27 | $ | 9.52 | $ | 8.95 | $ | 9.01 | ||||||||||
Total return (3) | (17.11 | )% | (2.36 | )% | 6.90 | % | (0.23 | )% | (5.52 | )% | ||||||||||
Net assets, at end of year (000s) | $ | 2 | $ | 3 | $ | 23 | $ | 8 | $ | 120 | ||||||||||
Ratio of gross expenses to average net assets (4) | 2.06 | % | 1.94 | % | 2.15 | % | 2.17 | % | 2.07 | % | ||||||||||
Ratio of net expenses to average net assets (4) | 1.80 | % | 1.80 | % | 1.80 | % | 1.80 | % | 1.85 | % | ||||||||||
Ratio of net investment income (loss) before waiver to average net assets (5) | 0.70 | % | (0.43 | )% | (0.33 | )% | 0.04 | % | 1.01 | % | ||||||||||
Ratio of net investment income (loss) to average net assets (5) | 0.96 | % | (0.29 | )% | 0.02 | % | 0.41 | % | 1.24 | % | ||||||||||
Portfolio Turnover Rate | 713 | % | 318 | % | 526 | % | 1504 | % | 738 | % |
(1) | Per share amounts calculated using the average shares method, which more appropriately presents the per share data for the period. |
(2) | Amount is less than $0.01. |
(3) | Total returns shown are historical in nature and assume changes in share price, reinvestment of dividends and distributions, if any, and exclude the effect of applicable sales charges and redemption fees. Had the adviser not waived fees and/or reimbursed a portion of its expenses, total returns would have been lower. |
(4) | Does not include the expenses of other investment companies in which the Fund invests. |
(5) | Recognition of net investment income (loss) by the Fund is affected by the timing and declaration of dividends by the underlying investment companies in which the Fund invests. |
See accompanying notes to financial statements.
17
RESQ FUNDS
NOTES TO FINANCIAL STATEMENTS
September 30, 2022
1. | ORGANIZATION |
The RESQ Dynamic Allocation Fund and the RESQ Strategic Income Fund (each a “Fund” and collectively the “Funds”), are each a diversified series of shares of beneficial interest of Northern Lights Fund Trust III (the “Trust”), a Delaware statutory trust organized under the laws of the state of Delaware on December 5, 2011. The Trust is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The investment objective of the RESQ Dynamic Allocation Fund is to seek long term capital appreciation with capital preservation as a secondary objective. The investment objective of the RESQ Strategic Income Fund is to seek income with an emphasis on total return and capital preservation as a secondary objective.
Each Fund currently offers three classes of shares: Class A, Class C and Class I shares. Class A and Class I shares of each Fund commenced operations on December 20, 2013. Class C shares of each Fund commenced operations on October 17, 2014. RESQ Dynamic Allocation Fund Class A shares are offered at net asset value plus a maximum sales charge of 5.75%. RESQ Strategic Income Fund Class A shares are offered at net asset value plus a maximum sales charge of 4.75%. Class C and Class I shares of the Funds are offered at net asset value. Each class represents an interest in the same assets of the applicable Fund and classes are identical except for differences in their distribution charges. All classes of shares have equal voting privileges except that each class has exclusive voting rights with respect to its service and/or distribution plans. Each Fund’s income, expenses (other than class specific distribution fees) and realized and unrealized gains and losses are allocated proportionately each day based upon the relative net assets of each class.
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
The following is a summary of significant accounting policies followed by the Funds in preparation of their financial statements. These policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements in conformity with GAAP 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 increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. The Funds are investment companies and accordingly follow the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946 “Financial Services – Investment Companies.”
Securities Valuation – Securities listed on an exchange are valued at the last reported sale price at the close of the regular trading session of the primary exchange on the business day the value is being determined, or in the case of securities listed on NASDAQ at the NASDAQ Official Closing Price (“NOCP”). In the absence of a sale, such securities shall be valued at the mean between the current bid and ask prices on the day of valuation. Investments valued in currencies other than the U.S. dollar are converted to U.S. dollars using exchange rates obtained from pricing services. Short-term debt obligations having 60 days or less remaining until maturity, at time of purchase, may be valued at amortized cost. Investments in open-end investment companies are valued at net asset value.
Valuation of Fund of Funds – The Funds may invest in portfolios of open-end or closed-end investment companies (the “underlying funds”). Underlying open-end investment companies are valued at their respective net asset values as reported by such investment companies. 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 by the methods established by the boards of the underlying funds. 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 a Fund will not change.
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 Board. The Board has delegated execution of these procedures to the Advisor as its valuation designee (the “Valuation Designee”). The Board may also enlist third party consultants such a valuation specialist at a public accounting firm, valuation consultant or financial officer of a security issuer on an as-needed basis to assist the Valuation Designee in determining a security-specific fair value. The Board is responsible for reviewing and approving fair value methodologies utilized by the
18
RESQ FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
September 30, 2022
Valuation Designee, which approval shall be based upon whether the Valuation Designee followed the valuation procedures established by the Board.
Fair Valuation Process – The applicable investments are valued by the Valuation Designee pursuant to valuation procedures established by the Board. For example, fair value determinations are required for the following securities: (i) securities for which market quotations are insufficient or not readily available on a particular business day (including securities for which there is a short and temporary lapse in the provision of a price by the regular pricing source); (ii) securities for which, in the judgment of the Valuation Designee, the prices or values available do not represent the fair value of the instrument; factors which may cause the Valuation Designee to make such a judgment include, but are not limited to, the following: only a bid price or an 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; and (iv) securities with respect to which an event that will affect the value thereof has occurred (a “significant event”) since the closing prices were established on the principal exchange on which they are traded, but prior to a Fund’s calculation of its net asset value. Specifically, interests in commodity pools or managed futures pools are valued on a daily basis by reference to the closing market prices of each futures contract or other asset held by a pool, as adjusted for pool expenses. Restricted or illiquid securities, such as private investments or non -traded securities are valued based upon the current bid for the security from two or more independent dealers or other parties reasonably familiar with the facts and circumstances of the security (who should take into consideration all relevant factors as may be appropriate under the circumstances). If a current bid from such independent dealers or other independent parties is unavailable, the Valuation Designee shall determine, the fair value of such security using the following factors: (i) the type of security; (ii) the cost at date of purchase; (iii) the size and nature of the Fund’s holdings; (iv) the discount from market value of unrestricted securities of the same class at the time of purchase and subsequent thereto; (v) information as to any transactions or offers with respect to the security; (vi) the nature and duration of restrictions on disposition of the security and the existence of any registration rights; (vii) how the yield of the security compares to similar securities of companies of similar or equal creditworthiness; (viii) the level of recent trades of similar or comparable securities; (ix) the liquidity characteristics of the security; (x) current market conditions; and (xi) the market value of any securities into which the security is convertible or exchangeable.
The Funds utilize various methods to measure the fair value of all of its investments on a recurring basis. GAAP establishes a hierarchy that prioritizes inputs to valuation methods. The three levels of input are:
Level 1 – Unadjusted quoted prices in active markets for identical assets and liabilities that the Funds have the ability to access.
Level 2 – Observable inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument 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 each 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 observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
19
RESQ FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
September 30, 2022
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 September 30, 2022 for each Fund’s investments measured at fair value:
RESQ Dynamic Allocation Fund
Assets * | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Exchange-Traded Funds | $ | 21,441,417 | $ | — | $ | — | $ | 21,441,417 | ||||||||
Short-Term Investments | 5,065,943 | — | — | 5,065,943 | ||||||||||||
Total | $ | 26,507,360 | $ | — | $ | — | $ | 26,507,360 | ||||||||
RESQ Strategic Income Fund | ||||||||||||||||
Assets * | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Exchange-Traded Funds | $ | 20,598,153 | $ | — | $ | — | $ | 20,598,153 | ||||||||
Short-Term Investments | 6,071,441 | — | — | 6,071,441 | ||||||||||||
Total | $ | 26,669,594 | $ | — | $ | — | $ | 26,669,594 |
The Funds did not hold any Level 2 or 3 securities during the period.
* | Please refer to the Schedules of Investments for classification by asset type. |
Security Transactions and Investment Income – Investment security transactions are accounted for on a trade date basis. Cost is determined and gains and losses are based upon the specific identification method for both financial statement and federal income tax purposes. Dividend income is recorded on the ex-dividend date and interest income is recorded on an accrual basis. Purchase discounts and premiums on securities are accreted and amortized over the life of the respective securities using the effective interest method.
Distributions to Shareholders – Distributions from net investment income, if any, are declared and paid at least annually and are recorded on the ex-dividend date. The Funds will declare and pay net realized capital gains, if any, annually. The character of income and gains to be distributed is 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 classification.
Federal Income Taxes – It is each Fund’s policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to its shareholders. Therefore, no provision for federal income tax is required. The Funds recognize the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. Management has analyzed the Funds’ tax positions and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on returns filed for open tax years 2019-2021 or expected to be taken in the Funds’ 2022 tax returns. Each Fund identifies its major tax jurisdictions as U.S. federal, Ohio (Nebraska in years prior to 2019), and foreign jurisdictions where the Fund makes significant investments. Neither Fund is 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. The Funds recognize interest and penalties if any, related to unrecognized tax benefits as income tax expense in the Statements of Operations. During the period, the Funds did not incur any interest or penalties.
Exchange Traded Funds – The Funds may invest in exchange traded funds (“ETFs”). ETFs are a type of fund bought and sold on a securities exchange. An ETF trades like common stock and may be actively managed or represent a fixed portfolio of securities. The risks of owning an ETF generally reflect the risks of owning the underlying securities in which they invest, although the lack of liquidity on an ETF could result in it being more volatile. Additionally, ETFs have fees and expenses that reduce their value.
Exchange Traded Notes – The Funds may invest in exchange traded notes (“ETNs”). ETNs are a type of debt security that is linked to the performance of underlying securities. The risks of owning ETNs generally reflect the risks of owning the underlying securities they are designed to track. In addition, ETNs are subject to credit risk generally to the same extent as debt securities.
20
RESQ FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
September 30, 2022
Expenses – Expenses of the Trust that are directly identifiable to a specific fund are charged to that fund. Expenses that are not readily identifiable to a specific fund are allocated in such a manner as deemed equitable, taking into consideration the nature and type of expense and the relative sizes of the funds in the Trust.
Indemnification – The Trust indemnifies its officers and Trustees for certain liabilities that may arise from the performance of their duties to the Trust. Additionally, in the normal course of business, the Funds enter into contracts that contain a variety of representations and warranties and which provide general indemnities. The Funds’ maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Funds that have not yet occurred. However, based on experience, the Funds expect the risk of loss due to these warranties and indemnities to be remote.
Cash and Cash Equivalents – Cash and cash equivalents include cash and overnight investments in interest-bearing demand deposits with a financial institution with original maturities of three months or less. The Funds maintain deposits with a high quality financial institution in an amount that is in excess of federally insured limits.
3. | INVESTMENT ADVISORY AGREEMENT AND TRANSACTIONS WITH RELATED PARTIES |
RESQ Investment Partners, LLC (the “Advisor”), serves as investment advisor to the Funds. Subject to the oversight of the Board, the Advisor is responsible for the management of each Fund’s investment portfolio. Pursuant to an investment advisory agreement with the Trust, on behalf of each Fund, the Advisor directs the daily operations of each 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, each Fund pays the Advisor a fee, computed and accrued daily and paid monthly at an annual rate of 1.20% of each of the RESQ Dynamic Allocation Fund’s and RESQ Strategic Income Fund’s average daily net assets. For the year ended September 30, 2022, the Advisor earned advisory fees of $374,265 and $348,284 for the RESQ Dynamic Allocation Fund and RESQ Strategic Income Fund, respectively.
Pursuant to a written contract (the “Waiver Agreement”), the Advisor has agreed to waive a portion of its advisory fee and has agreed to reimburse the Funds for other expenses until at least January 31, 2023 to the extent necessary so that the total operating expenses incurred by a Fund 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 expense on securities sold short), taxes and extraordinary expenses, such as litigation expenses (which may include indemnification of Fund officers and Trustees, contractual indemnification of Fund service providers (other than the Advisor)) do not exceed 2.20%, 2.80% and 1.80% of the daily average net assets attributable to each Fund’s Class A, Class C and Class I shares, respectively (the “Expense Limitation”). During the year ended September 30, 2022, the Advisor waived fees pursuant to the Waiver Agreement in the amount of $65,027 and $76,569 for the RESQ Dynamic Allocation Fund and the RESQ Strategic Income Fund, respectively.
If the Advisor waives any fee or reimburses any expense pursuant to the Waiver Agreement, and a Fund’s operating expenses are subsequently less than the expense limitation, the Advisor shall be entitled to reimbursement by the Fund for such waived fees or reimbursed expenses provided that such reimbursement does not cause the Fund’s expenses to exceed the expense limitation then in effect or in effect at time of waiver. If Fund operating expenses subsequently exceed the expense limitation, the reimbursements shall be suspended. The Advisor may seek reimbursement only for expenses waived or paid by it during the three years prior to such reimbursement; provided, however, that such expenses may only be reimbursed to the extent they were waived or paid after the date of the Waiver Agreement (or any similar agreement). The Board may terminate this expense reimbursement arrangement at any time upon 60 days written notice to the Advisor. As of September 30, 2022, the total amount of expense reimbursement subject to recapture for the Funds were as follows:
Expires | Expires | Expires | ||||||||||
September 30, 2023 | September 30, 2024 | September 30, 2025 | ||||||||||
RESQ Dynamic Allocation Fund | $ | 100,399 | $ | 22,408 | $ | 65,027 | ||||||
RESQ Strategic Income Fund | $ | 111,624 | $ | 47,464 | $ | 76,569 |
Distributor – The distributor of the Funds is Northern Lights Distributors, LLC (the “Distributor”). The Board has adopted, on behalf of the Funds, the Trust’s Master Distribution and Shareholder Servicing Plans for Class A and Class C shares,
21
RESQ FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
September 30, 2022
as amended (the “Plans”), pursuant to Rule 12b-1 under the 1940 Act, to pay for certain distribution activities and shareholder services related to Class A and Class C shares. Under the Plans, the Funds may each pay 0.40% per year of the average daily net assets of Class A shares and 1.00% per year of the average daily net assets of Class C shares for such distribution and shareholder service activities. For the year ended September 30, 2022 the Funds incurred distribution fees as follows:
Class A | Class C | |||||||
RESQ Dynamic Allocation Fund | $ | 123,773 | $ | 223 | ||||
RESQ Strategic Income Fund | $ | 116,038 | $ | 119 |
The Distributor acts as the Funds’ principal underwriter in a continuous public offering of the Funds’ shares. During the year ended September 30, 2022, the Distributor did not receive any underwriting commissions for sales of RESQ Dynamic Allocation Fund’s Class A shares or RESQ Strategic Income Fund’s Class A shares.
In addition, certain affiliates of the Distributor provide services to the Funds as follows:
Ultimus Fund Solutions, LLC (“UFS”) – UFS, an affiliate of the Distributor, provides administration, fund accounting, and transfer agent services to the Fund. Pursuant to a separate servicing agreement with UFS, the Funds pay UFS customary fees for providing administration, fund accounting and transfer agency services to the Funds. Certain officers of the Trust are also officers of UFS and are not paid any fees directly by the Funds for serving in such capacities.
Northern Lights Compliance Services, LLC (“NLCS”) – NLCS, an affiliate of UFS and the Distributor, provides a Chief Compliance Officer to the Funds, as well as related compliance services, pursuant to a consulting agreement between NLCS and the Funds. Under the terms of such agreement, NLCS receives customary fees from the Funds. An officer of the Funds are also an officer of NLCS, and are not paid any fees directly by the Funds for serving in such capacity.
Blu Giant, LLC (“Blu Giant”) – Blu Giant, an affiliate of UFS and the Distributor, provides EDGAR conversion and filing services as well as print management services for the Funds on an ad-hoc basis. For the provision of these services, Blu Giant receives customary fees from the Funds.
4. | REDEMPTION FEES |
Each Fund may assess a short-term redemption fee of 2.00% of the total redemption amount if a shareholder sells his shares after holding them for less than 30 days. The redemption fee is paid directly to the applicable Fund. For the year ended September 30, 2022, the RESQ Dynamic Allocation Fund and RESQ Strategic Income Fund received $1 and $2 in redemption fees, respectively.
5. | INVESTMENT TRANSACTIONS |
For the year ended September 30, 2022, cost of purchases and proceeds from sales of portfolio securities, other than short-term investments, amounted to the following:
Purchases | Sales | |||||||
RESQ Dynamic Allocation Fund | $ | 181,492,478 | $ | 178,268,401 | ||||
RESQ Strategic Income Fund | $ | 180,453,788 | $ | 176,366,484 |
22
RESQ FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
September 30, 2022
6. | AGGREGATE UNREALIZED APPRECIATION AND DEPRECIATION – TAX BASIS |
The identified cost of investments in securities owned by each Fund for federal income tax purposes, and its respective gross unrealized appreciation and depreciation at September 30, 2022, were as follows:
Gross | Gross | Net Unrealized | ||||||||||||||
Tax | Unrealized | Unrealized | Appreciation | |||||||||||||
Fund | Cost | Appreciation | Depreciation | (Depreciation) | ||||||||||||
RESQ Dynamic Allocation Fund | $ | 30,970,655 | $ | 40,693 | $ | (4,503,988 | ) | $ | (4,463,295 | ) | ||||||
RESQ Strategic Income Fund | 28,348,088 | — | (1,678,494 | ) | (1,678,494 | ) |
7. | DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF CAPITAL |
The tax character of distributions paid during the fiscal years ended September 30, 2022 and September 30, 2021 was as follows:
For fiscal year ended | Ordinary | Long-Term | Exempt | Return of | ||||||||||||||||
9/30/2022 | Income | Capital Gains | Income | Capital | Total | |||||||||||||||
RESQ Dynamic Allocation Fund | $ | — | $ | — | $ | — | $ | 55,198 | $ | 55,198 | ||||||||||
RESQ Strategic Income Fund | — | — | — | 190,214 | 190,214 | |||||||||||||||
For fiscal year ended | Ordinary | Long-Term | Exempt | Return of | ||||||||||||||||
9/20/2021 | Income | Capital Gains | Income | Capital | Total | |||||||||||||||
RESQ Dynamic Allocation Fund | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
RESQ Strategic Income Fund | 33,217 | — | — | 368 | 33,585 |
As of September 30, 2022, the components of accumulated earnings (deficit) on a tax basis were as follows:
Undistributed | Undistributed | Post October Loss | Capital Loss | Other | Unrealized | Total | ||||||||||||||||||||||
Ordinary | Long-Term | and | Carry | Book/Tax | Appreciation/ | Accumulated | ||||||||||||||||||||||
Income | Capital Gains | Late Year Loss | Forwards | Differences | (Depreciation) | Earnings/(Deficits) | ||||||||||||||||||||||
RESQ Dynamic Allocation Fund | $ | — | $ | — | $ | (3,892,786 | ) | $ | (247,967 | ) | $ | — | $ | (4,463,295 | ) | $ | (8,604,048 | ) | ||||||||||
RESQ Strategic Income Fund | — | — | (4,399,416 | ) | (4,556,297 | ) | — | (1,678,494 | ) | (10,634,207 | ) |
The difference between book basis and tax basis accumulated net realized loss and unrealized appreciation/(depreciation) from investments is primarily attributable to the tax deferral of losses on wash sales.
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 RESQ Dynamic Allocation Fund incurred and elected to defer such late year losses of $245,997.
Capital losses incurred after October 31 within the fiscal year are deemed to arise on the first business day of the following fiscal year for tax purposes. The Funds incurred and elected to defer such capital losses as follows:
Post October | ||||
Losses | ||||
RESQ Dynamic Allocation Fund | $ | 3,646,789 | ||
RESQ Strategic Income Fund | 4,399,416 |
23
RESQ FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
September 30, 2022
At September 30, 2022, the Funds had capital loss carry forwards for federal income tax purposes available to offset future capital gains, along with capital loss carryforwards utilized, as follows:
Non-Expiring | Non-Expiring | |||||||||||||||
Short-Term | Long-Term | Total | CLCF Utilized | |||||||||||||
RESQ Dynamic Allocation Fund | $ | — | $ | 247,967 | $ | 247,967 | $ | 159,466 | ||||||||
RESQ Strategic Income Fund | 4,556,297 | — | 4,556,297 | — |
Permanent book and tax differences, primarily attributable to the reclass of net operating losses, resulted in reclassifications for the fiscal year ended September 30, 2022 as follows:
Paid | ||||||||
In | Accumulated | |||||||
Capital | Earnings (Losses) | |||||||
RESQ Dynamic Allocation Fund | $ | (304,027 | ) | $ | 304,027 | |||
RESQ Strategic Income Fund | (47,272 | ) | 47,272 |
8. | CONTROL OWNERSHIP |
The beneficial ownership, either directly or indirectly, of more than 25% of the voting securities of a Fund creates presumption of control of the Fund, under Section 2(a)(9) of the 1940 Act. As of September 30, 2022, the shareholders listed below held more than 25% of a Fund and may be deemed to control that Fund.
Shareholder | Fund | Percent | ||
Charles Schwab & Co. | RESQ Dynamic Allocation Fund | 57.15% | ||
NFS LLC | RESQ Dynamic Allocation Fund | 42.78% | ||
Charles Schwab & Co. | RESQ Strategic Income Fund | 55.30% | ||
NFS LLC | RESQ Strategic Income Fund | 44.61% |
9. | SUBSEQUENT EVENTS |
Subsequent events after the date of the Statements of Assets and Liabilities have been evaluated through the date the financial statements were issued. Management has determined that no events or transactions occurred requiring adjustment or disclosure in the financial statements.
24
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders of RESQ Dynamic Allocation Fund and RESQ Strategic Income Fund and
Board of Trustees of Northern Lights Fund Trust III
Opinion on the Financial Statements
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of RESQ Dynamic Allocation Fund and RESQ Strategic Income Fund (the “Funds”), each a series of Northern Lights Fund Trust III, as of September 30, 2022, the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the related notes, and the financial highlights for each of the five years in the period then ended (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Funds as of September 30, 2022, the results of their operations for the year then ended, the changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of September 30, 2022, by correspondence with the custodian and brokers. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the Funds’ auditor since 2013.
COHEN & COMPANY, LTD.
Cleveland, Ohio
November 29, 2022
COHEN & COMPANY, LTD.
800.229.1099 | 866.818.4538 fax | cohencpa.com
Registered with the Public Company Accounting Oversight Board
25
RESQ FUNDS
EXPENSE EXAMPLES
September 30, 2022
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchases and 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 Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from April 1, 2022 through September 30, 2022.
Actual Expenses
The “Actual” columns in the tables below provide information about actual account values and actual expenses. You may use the information below, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The “Hypothetical” columns in the tables below provide information about hypothetical account values and hypothetical expenses based on each Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s 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 tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). 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.
RESQ Dynamic Allocation Fund
Hypothetical | ||||||||||||||||||||||||||||
Actual | (5% return before expenses) | |||||||||||||||||||||||||||
Fund’s | Beginning | Ending | Expenses | Beginning | Ending | Expenses | ||||||||||||||||||||||
Annualized | Account | Account | Paid | Account | Account | Paid | ||||||||||||||||||||||
Expense | Value | Value | During | Value | Value | During | ||||||||||||||||||||||
Ratio | 4/1/22 | 9/30/22 | Period (a) | 4/1/22 | 9/30/22 | Period (a) | ||||||||||||||||||||||
Class A | 2.20 | % | $ | 1,000.00 | $ | 854.90 | $ | 10.23 | $ | 1,000.00 | $ | 1,014.04 | $ | 11.11 | ||||||||||||||
Class C | 2.80 | % | $ | 1,000.00 | $ | 852.00 | $ | 13.00 | $ | 1,000.00 | $ | 1,011.03 | $ | 14.12 | ||||||||||||||
Class I | 1.80 | % | $ | 1,000.00 | $ | 856.10 | $ | 8.38 | $ | 1,000.00 | $ | 1,016.04 | $ | 9.10 | ||||||||||||||
RESQ Strategic Income Fund | ||||||||||||||||||||||||||||
Hypothetical | ||||||||||||||||||||||||||||
Actual | (5% return before expenses) | |||||||||||||||||||||||||||
Fund’s | Beginning | Ending | Expenses | Beginning | Ending | Expenses | ||||||||||||||||||||||
Annualized | Account | Account | Paid | Account | Account | Paid | ||||||||||||||||||||||
Expense | Value | Value | During | Value | Value | During | ||||||||||||||||||||||
Ratio | 4/1/22 | 9/30/22 | Period (a) | 4/1/22 | 9/30/22 | Period (a) | ||||||||||||||||||||||
Class A | 2.20 | % | $ | 1,000.00 | $ | 903.00 | $ | 10.50 | $ | 1,000.00 | $ | 1,014.04 | $ | 11.11 | ||||||||||||||
Class C | 2.80 | % | $ | 1,000.00 | $ | 900.20 | $ | 13.34 | $ | 1,000.00 | $ | 1,011.03 | $ | 14.12 | ||||||||||||||
Class I | 1.80 | % | $ | 1,000.00 | $ | 903.90 | $ | 8.59 | $ | 1,000.00 | $ | 1,016.04 | $ | 9.10 |
(a) | Expenses are equal to the average account value over the period, multiplied by each Fund’s annualized expense ratio, multiplied by the number of days in the period (183) divided by the number of days in the fiscal year (365). |
26
RESQ FUNDS
SUPPLEMENTAL INFORMATION (Unaudited)
March 31, 2022
LIQUIDITY RISK MANAGEMENT PROGRAM
The Funds have adopted and implemented a written liquidity risk management program as required by Rule 22e-4 (the “Liquidity Rule”) under the 1940 Act. The program is reasonably designed to assess and manage the Funds’ liquidity risk, taking into consideration, among other factors, the Funds’ investment strategies and the liquidity of their portfolio investments during normal and reasonably foreseeable stressed conditions; their short and long-term cash flow projections; and their cash holdings and access to other funding sources.
During the year ended September 30, 2022, the Trust’s Liquidity Risk Management Program Committee (the “Committee”) reviewed the Funds’ investments and determined that the Funds held adequate levels of cash and highly liquid investments to meet shareholder redemption activities in accordance with applicable requirements. Accordingly, the Committee concluded that (i) the Funds’ liquidity risk management program is reasonably designed to prevent violations of the Liquidity Rule and (ii) the Funds’ liquidity risk management program has been effectively implemented.
27
RESQ FUNDS
SUPPLEMENTAL INFORMATION
September 30, 2022
The Trustees and officers of the Trust, together with information as to their principal business occupations during the past five years and other information, are shown below. Unless otherwise noted, the address of each Trustee and officer is 225 Pictoria Drive, Suite 450, Cincinnati, Ohio 45246.
Independent Trustees | |||||
Name, Address, Year of Birth | Position(s) Held with Registrant | Length of Service and Term | Principal Occupation(s) During Past 5 Years | Number of Funds Overseen In The Fund Complex* | Other Directorships Held During Past 5 Years** |
Patricia Luscombe 1961 | Trustee | Since January 2015, Indefinite | Managing Director of the Valuations and Opinions Group, Lincoln International LLC (since August 2007). | 2 | Northern Lights Fund Trust III (for series not affiliated with the Fund since 2015); Monetta Mutual Funds (since November 2015). |
John V. Palancia 1954 | Trustee, Chairman | Trustee, since February 2012, Indefinite; Chairman of the Board since May 2014. | Retired (since 2011); formerly, Director of Global Futures Operations Control, Merrill Lynch, Pierce, Fenner & Smith, Inc. (1975-2011). | 2 | Northern Lights Fund Trust III (for series not affiliated with the Fund since 2012); Northern Lights Fund Trust (since 2011); Northern Lights Variable Trust (since 2011); Alternative Strategies Fund (since 2012). |
Mark H. Taylor 1964 | Trustee, Chairman of the Audit Committee | Since February 2012, Indefinite | Director, Lynn Pippenger School of Accountancy, Muma College of Business, University of South Florida (since August 2019); Chair, Department of Accountancy and Andrew D. Braden Professor of Accounting and Auditing, Weatherhead School of Management, Case Western Reserve University (2009- 2019); President, American Accounting Association (since August 2022); Vice President- Finance, American Accounting Association (2017-2020); President, Auditing Section of the American Accounting Association (2012-2015); AICPA Auditing Standards Board Member (2009-2012); Academic Fellow, United States Securities and Exchange Commission (2005- 2006). | 2 | Northern Lights Fund Trust III (for series not affiliated with the Fund since 2012); Northern Lights Fund Trust (since 2007); Northern Lights Variable Trust (since 2007); Alternative Strategies Fund (since June 2010). |
Jeffery D. Young 1956 | Trustee | Since January 2015, Indefinite | Co-owner and Vice President, Latin America Agriculture Development Corp. (since May 2015); President, Celeritas Rail Consulting (since June 2014); Asst. Vice President - Transportation Systems, Union Pacific Railroad Company (June 1976 to April 2014). | 2 | Northern Lights Fund Trust III (for series not affiliated with the Fund since 2015). |
* | As of September 30, 2022, the Trust was comprised of 32 active portfolios managed by 16 unaffiliated investment advisers. The term “Fund Complex” applies only to the Funds. The Funds do not hold themselves out as related to any other series within the Trust for investment purposes, nor do they share the same investment adviser with any other series. |
** | Only includes directorships held within the past 5 years in a company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934 or subject to the requirements of Section 15(d) of the Securities Exchange Act of 1934, or any company registered as an investment company under the 1940 Act. |
09/30/22-NLFT III-v2
28
RESQ FUNDS
SUPPLEMENTAL INFORMATION (Unaudited) (Continued)
September 30, 2022
Officers of the Trust
Name, Address, Year of Birth | Position(s) Held with Registrant | Length of Service and Term | Principal Occupation(s) During Past 5 Years |
Eric Kane 1981 | President | Since August 2022, indefinite | Vice President and Senior Managing Counsel, Ultimus Fund Solutions, LLC (since 2022); Vice President and Managing Counsel, Ultimus Fund Solutions, LLC (2020- 2022); Vice President and Counsel, Gemini Fund Services, LLC (2017-2020); Assistant Vice President, Gemini Fund Services, LLC (2014- 2017). |
Brian Curley 1970 | Treasurer | Since February 2013, indefinite | Vice President, Ultimus Fund Solutions, LLC (since 2020); Vice President, Gemini Fund Services, LLC (2015-2020). |
Viktoriya Pallino 1995 | Secretary | Since August 2022, indefinite | Legal Administrator II, Ultimus Fund Solutions, LLC (since 2021); Legal Administrator I, Ultimus Fund Solutions, LLC (2019-2021); Legal Administration Associate, Gemini Fund Services, LLC (2017-2019). |
William Kimme 1962 | Chief Compliance Officer | Since February 2012, indefinite | Senior Compliance Officer of Northern Lights Compliance Services, LLC (since 2011). |
The Funds’ Statement of Additional Information includes additional information about the Trustees and is available free of charge, upon request, by calling toll-free at 1-877-940-2526.
09/30/22-NLFT III-v2
29
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 don’t share |
For joint marketing with other financial companies | No | We don’t share |
For our affiliates’ everyday business purposes – information about your transactions and experiences | No | We don’t share |
For our affiliates’ everyday business purposes – information about your creditworthiness | No | We don’t share |
For nonaffiliates to market to you | No | We don’t share |
Questions? | Call (402) 493-4603 | ||||
25
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 driver’s license
We also collect your personal information from other companies. | ||||
Why can’t I limit all sharing? | Federal law gives you the right to limit only ■ Sharing for affiliates’ everyday business purposes – information about your creditworthiness ■ Affiliates from using your information to market to you
■ Sharing for nonaffiliates to market to you
State laws and individual companies may give you additional rights to limit sharing. | ||||
Definitions | |||||
Affiliates | Companies related by common ownership or control. They can be financial and nonfinancial companies.
■ Northern Lights Fund Trust 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 doesn’t jointly market. | ||||
26
PROXY VOTING POLICY
Information regarding how the Funds voted proxies relating to portfolio securities for the most recent twelve-month period ended June 30 as well as a description of the policies and procedures that the Funds use to determine how to vote proxies is available without charge, upon request, by calling 1-877-940-2526 or by referring to the Securities and Exchange Commission’s (“SEC”) website at http://www.sec.gov.
PORTFOLIO HOLDINGS
The Funds file their complete schedules of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT. Form N-PORT is available on the SEC’s website at http://www.sec.gov. The information on Form N-PORT is available without charge, upon request, by calling 1-877-940-2526.
INVESTMENT ADVISOR |
RESQ Investment Partners, LLC |
9260 E. Raintree Drive, Suite 100 |
Scottsdale, Arizona 85260 |
ADMINISTRATOR |
Ultimus Fund Solutions, LLC |
225 Pictoria Drive, Suite 450 |
Cincinnati, Ohio 45246 |
RESQ-AR22 |
(a) Include a copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Act (17 CFR 270.30e-1).
(b) Include a copy of each notice transmitted to stockholders in reliance on Rule 30e-3 under the Act (17 CFR 270.30e-3) that contains disclosures specified by paragraph (c)(3) of that rule. Not applicable.
Item 2. Code of Ethics.
(a) As of the end of the period covered by this report, the registrant has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party.
(b) For purposes of this item, “code of ethics” means written standards that are reasonably designed to deter wrongdoing and to promote:
(1) | Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; |
(2) | Full, fair, accurate, timely, and understandable disclosure in reports and documents that a registrant files with, or submits to, the Commission and in other public communications made by the registrant; |
(3) Compliance with applicable governmental laws, rules, and regulations;
(4) | The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and |
(5) Accountability for adherence to the code.
(c) Amendments: During the period covered by the report, there have not been any amendments to the provisions of the code of ethics.
(d) Waivers: During the period covered by the report, the registrant has not granted any express or implicit waivers from the provisions of the code of ethics.
(e) The Code of Ethics is not posted on Registrant’ website.
(f) A copy of the Code of Ethics is attached as an exhibit.
Item 3. Audit Committee Financial Expert.
(a)(1)ii The Registrant’s board of trustees has determined that Mark H. Taylor is the audit committee financial expert, as defined in Item 3 of Form N-CSR. Mr. Taylor is independent for purposes of this Item 3.
(a)(2) Not applicable.
(a)(3) In this regard, no member of the audit committee was identified as having all of the required technical attributes identified in instruction 2 (b) to item 3 of Form N-CSR to qualify as an “audit committee financial expert,” whether through the type of specialized education or experience required by that instruction. At this time, the board believes the experience provided by each member of the audit committee collectively offers the fund adequate oversight by its audit committee given the fund’s level of financial complexity. The board will from time to time reexamine such belief.
Item 4. Principal Accountant Fees and Services.
(a) | Audit Fees |
RESQ Dynamic Allocation Fund | RESQ Strategic Income Fund | |||||||||
2021: | $ | 14,000 | $ | 14,000 | ||||||
2022: | $ | 14,000 | $ | 14,000 |
(b) | Audit-Related Fees |
RESQ Dynamic Allocation Fund | RESQ Strategic Income Fund | |||||
2021: | None | None | ||||
2022: | None | None |
(c) | Tax Fees |
RESQ Dynamic Allocation Fund | RESQ Strategic Income Fund | |||||||||
2021: | $ | 3,500 | $ | 3,500 | ||||||
2022: | $ | 3,500 | $ | 3,500 |
Preparation of Federal & State income tax returns, assistance with calculation of required income, capital gain and excise distributions and preparation of Federal excise tax returns.
(d) | All Other Fees |
RESQ Dynamic Allocation Fund | RESQ Strategic Income Fund | |||||
2021: | None | None | ||||
2022: | None | None |
(e) | (1) Audit Committee’s Pre-Approval Policies |
The registrant’s Audit Committee is required to pre-approve all audit services and, when appropriate, any non-audit services (including audit-related, tax and all other services) to the registrant. The registrant’s Audit Committee also is required to pre-approve, when appropriate, any non-audit services (including audit-related, tax and all other services) to its adviser, or any entity controlling, controlled by or under common control with the adviser that provides ongoing services to the registrant, to the extent that the services may be determined to have an impact on the operations or financial reporting of the registrant. Services are reviewed on an engagement by engagement basis by the Audit Committee.
(2) | Percentages of Services Approved by the Audit Committee |
RESQ Dynamic Allocation Fund | ||||||||
2021 | 2022 | |||||||
Audit-Related Fees: | 0.00% | 0.00% | ||||||
Tax Fees: | 0.00% | 0.00% | ||||||
All Other Fees: | 0.00% | 0.00% |
RESQ Strategic Income Fund | ||||||||
2021 | 2022 | |||||||
Audit-Related Fees: | 0.00% | 0.00% | ||||||
Tax Fees: | 0.00% | 0.00% | ||||||
All Other Fees: | 0.00% | 0.00% |
(f) | During the audit of registrant's financial statements for the most recent fiscal year, less than 50 percent of the hours expended on the principal accountant's engagement were attributed to work performed by persons other than the principal accountant's full-time, permanent employees. |
(g) | The aggregate non-audit fees billed by the registrant's accountant for services rendered to the registrant, and rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant: |
2021 - $7,000
2022 - $7,000
(h) The registrant's audit committee has considered whether the provision of non-audit services to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant, that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, is compatible with maintaining the principal accountant's independence.
(i) Not applicable.
(j) 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 period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.
Item 12. Disclosure of securities lending activities for closed-end management investment companies.
Not applicable to open-end investment companies.
Item 13. Exhibits.
(a)(1) Code of Ethics filed herewith.
(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/ Eric Kane
Eric Kane, Principal Executive Officer/President
Date 12/5/22
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/ Eric Kane
Eric Kane, Principal Executive Officer/President
Date 12/5/22
By (Signature and Title)
/s/ Brian Curley
Brian Curley, Principal Financial Officer/Treasurer
Date 12/5/22