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., Suite 450, Cincinnati, Ohio 45246
(Address of principal executive offices) (Zip code)
Brian Curley, Ultimus Fund Solutions, LLC.
4221 North 203rd Street, Suite 100, Elkhorn, NE 68022
(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: 3/31/24
Item 1. Reports to Stockholders.
Semi-Annual Report
March 31, 2024
Absolute Capital Asset Allocator Fund
Class A Shares (AAMAX)
Institutional Class Shares (AAMIX)
Investor Class Shares (AAMCX)
Absolute Capital Defender Fund
Class A Shares (ACMAX)
Institutional Class Shares (ACMIX)
Investor Class Shares (ACMDX)
1-877-594-1249
www.abscapfunds.com
Distributed by Northern Lights Distributors, LLC
Member FINRA
Absolute Capital Asset Allocator Fund
PORTFOLIO REVIEW (Unaudited)
March 31, 2024
The Fund’s performance figures* for the periods ended March 31, 2024, compared to its benchmarks:
Annualized | |||||
Since Inception | |||||
Six Months | One Year | Three Year | Five Year | December 18, 2015 | |
Absolute Capital Asset Allocator Fund - Class A | 16.19% | 17.99% | 3.42% | 4.90% | 4.69% |
Absolute Capital Asset Allocator Fund - Class A with load ** | 9.50% | 11.21% | 1.41% | 3.66% | 3.95% |
Absolute Capital Asset Allocator Fund - Institutional Class | 16.19% | 17.99% | 3.42% | 4.93% | 4.71% |
Absolute Capital Asset Allocator Fund - Investor Class | 15.72% | 17.10% | 2.65% | 4.10% | 3.93% |
Morningstar Moderate Target Risk TR Index # | 13.78% | 12.77% | 2.64% | 6.42% | 7.19% |
Morningstar Moderately Conservative Target Risk Index (Total Return) + | 11.09% | 9.42% | 1.27% | 4.70% | 5.46% |
Morningstar Conservative Target Risk Index (Total Return) ^ | 8.26% | 5.26% | (0.68)% | 2.37% | 3.27% |
Dow Jones Moderately Conservative Portfolio Index ~ | 10.63% | 7.96% | 0.07% | 3.54% | 4.51% |
* | The performance data quoted is historical. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance data quoted. The principal value and investment return of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. 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. The Fund’s total annual fund operating expense ratios, gross of fee waivers or expense reimbursements, are 2.11%, 1.86%, and 2.86% for Class A, Institutional Class, and Investor Class shares, respectively, per the Fund’s Prospectus dated February 1, 2024. For performance information current to the most recent month-end, please call 1-877-594-1249. |
** | Class A with load total return is calculated using the maximum sales charge of 5.75%. |
# | The Morningstar Moderate Target Risk TR Index represents a portfolio of global equities, bonds and traditional inflation hedges such as commodities and Treasury Inflation-Protected Securities. Index returns assume reinvestment of dividends. Unlike the Fund’s returns, the Index does not reflect any fees or expenses. Investors can not invest directly in an Index. |
+ | The Morningstar Moderately Conservative Target Risk Index (Total Return) is an index designed to meet the benchmarking needs of target risk investors by offering an objective yardstick for performance comparison. The index seeks approximately 40% exposure to global equity markets. Investors cannot invest directly in an index. |
^ | The Morningstar Conservative Target Risk Index (Total Return) is an index designed to meet the benchmarking needs of target risk investors by offering an objective yardstick for performance comparison. The index seeks approximately 20% global equity exposure and 80% global bond exposure. Investors cannot invest directly in an index. |
~ | The Dow Jones Moderately 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 40% of the Dow Jones U.S. Stock CMAC Index’s downside risk over the past 36 months. Index returns assume reinvestment of dividends. Unlike the Fund’s returns, the Index does not reflect any fees or expenses. Investors can not invest directly in an Index. |
The Absolute Capital Asset Allocator Fund is not sponsored, endorsed, sold or promoted by Morningstar, Inc. or any of its affiliates (all such entities, collectively, “Morningstar Entities”). The Morningstar Entities make no representation or warranty, express or implied, to the owners of the Absolute Capital Asset Allocator Fund or any member of the public regarding the advisability of investing in common stocks or mutual funds generally or in the Absolute Capital Asset Allocator Fund in particular or the ability of the Morningstar Moderate Target Risk TR Index, Morningstar Moderately Conservative Target Risk Index and/or Morningstar Conservative Target Risk Index to track general common stocks or mutual funds market performance.
THE MORNINGSTAR ENTITIES DO NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE BENCHMARKS OR ANY DATA INCLUDED THEREIN AND MORNINGSTAR ENTITIES SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN.
Holdings by type of investment as of March 31, 2024 | % of Net Assets | |||
Exchange-Traded Funds: | ||||
Equity Funds | 64.6 | % | ||
Commodity Fund | 0.2 | % | ||
Common Stocks | 15.4 | % | ||
Short-Term Investments: | ||||
Money Market Fund | 0.1 | % | ||
U.S. Treasury Bills | 20.1 | % | ||
Liabilities in Excess of Other Assets | (0.4 | )% | ||
100.0 | % |
Please refer to the Schedule of Investments in this semi-annual report for a listing of the Fund’s holdings.
1
Absolute Capital Defender Fund
PORTFOLIO REVIEW (Unaudited)
March 31, 2024
The Fund’s performance figures* for the periods ended March 31, 2024, compared to its benchmarks:
Annualized | |||||
Since Inception | |||||
Six Months | One Year | Three Year | Five Year | December 18, 2015 | |
Absolute Capital Defender Fund - Class A | 10.22% | 12.15% | 2.62% | 3.98% | 3.39% |
Absolute Capital Defender Fund - Class A with load ** | 3.91% | 5.73% | 0.62% | 2.76% | 2.66% |
Absolute Capital Defender Fund - Institutional Class | 10.22% | 12.15% | 2.62% | 4.02% | 3.42% |
Absolute Capital Defender Fund - Investor Class | 9.85% | 11.40% | 1.85% | 3.23% | 2.64% |
Morningstar Moderate Target Risk TR Index # | 13.78% | 12.77% | 2.64% | 6.42% | 7.19% |
Morningstar Moderately Conservative Target Risk Index (Total Return) + | 11.09% | 9.42% | 1.27% | 4.70% | 5.46% |
Morningstar Conservative Target Risk Index (Total Return) ^ | 8.26% | 5.26% | (0.68)% | 2.37% | 3.27% |
Dow Jones Conservative Portfolio Index ~ | 6.38% | 5.67% | (1.38)% | 1.22% | 2.13% |
* | The performance data quoted is historical. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance data quoted. The principal value and investment return of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. 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. The Fund’s total annual fund operating expense ratios, gross of fee waivers or expense reimbursements, are 2.28%, 2.03%, and 3.02% for Class A, Institutional Class and Investor Class shares, respectively, per the Fund’s Prospectus dated February 1, 2024. For performance information current to the most recent month-end, please call 1-877-594-1249. |
** | Class A with load total return is calculated using the maximum sales charge of 5.75%. |
# | The Morningstar Moderate Target Risk TR Index represents a portfolio of global equities, bonds and traditional inflation hedges such as commodities and Treasury Inflation-Protected Securities. Index returns assume reinvestment of dividends. Unlike the Fund’s returns, the Index does not reflect any fees or expenses. Investors can not invest directly in an Index. |
+ | The Morningstar Moderately Conservative Target Risk Index (Total Return) is an index designed to meet the benchmarking needs of target risk investors by offering an objective yardstick for performance comparison. The index seeks approximately 40% exposure to global equity markets. Investors cannot invest directly in an index. |
^ | The Morningstar Conservative Target Risk Index (Total Return) is an index designed to meet the benchmarking needs of target risk investors by offering an objective yardstick for performance comparison. The index seeks approximately 20% global equity exposure and 80% global bond exposure. Investors cannot invest directly in an index. |
~ | 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 20% of the Dow Jones U.S. Stock CMAC Index’s downside risk over the past 36 months. Index returns assume reinvestment of dividends. Unlike the Fund’s returns, the Index does not reflect any fees or expenses. Investors can not invest directly in an Index. |
The Absolute Capital Defender Fund is not sponsored, endorsed, sold or promoted by Morningstar, Inc. or any of its affiliates (all such entities, collectively, “Morningstar Entities”). The Morningstar Entities make no representation or warranty, express or implied, to the owners of the Absolute Capital Defender Fund or any member of the public regarding the advisability of investing in common stocks or mutual funds generally or in the Absolute Capital Defender Fund in particular or the ability of the Morningstar Moderate Target Risk TR Index, Morningstar Moderately Conservative Target Risk Index and/or Morningstar Conservative Target Risk Index to track general common stocks or mutual funds market performance.
THE MORNINGSTAR ENTITIES DO NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE BENCHMARKS OR ANY DATA INCLUDED THEREIN AND MORNINGSTAR ENTITIES SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN.
Holdings by type of investment as of March 31, 2024 | % of Net Assets | |||
Exchange-Traded Funds: | ||||
Equity Funds | 43.6 | % | ||
Fixed Income Funds | 3.8 | % | ||
Commodity Fund | 1.4 | % | ||
Common Stocks | 14.2 | % | ||
U.S. Treasury Note | 5.4 | % | ||
Short-Term Investments: | ||||
Money Market Fund | 4.2 | % | ||
U.S. Treasury Bills | 28.2 | % | ||
Liabilities in Excess of Other Assets | (0.8 | )% | ||
100.0 | % |
Please refer to the Schedule of Investments in this semi-annual report for a listing of the Fund’s holdings.
2
ABSOLUTE CAPITAL ASSET ALLOCATOR FUND |
SCHEDULE OF INVESTMENTS (Unaudited) |
March 31, 2024 |
Shares | Fair Value | |||||||
COMMON STOCKS — 15.4% | ||||||||
FOOD - 0.4% | ||||||||
4,200 | Campbell Soup Company | $ | 186,690 | |||||
HEALTH CARE FACILITIES & SERVICES - 1.7% | ||||||||
1,500 | UnitedHealth Group, Inc. | 742,050 | ||||||
INDUSTRIAL INTERMEDIATE PRODUCTS - 0.5% | ||||||||
1,400 | Chart Industries, Inc.(a) | 230,608 | ||||||
INSURANCE - 1.1% | ||||||||
1,100 | Berkshire Hathaway, Inc., Class B(a) | 462,572 | ||||||
INTERNET MEDIA & SERVICES - 2.0% | ||||||||
600 | Netflix, Inc.(a) | 364,398 | ||||||
6,400 | Uber Technologies, Inc.(a) | 492,736 | ||||||
857,134 | ||||||||
LEISURE FACILITIES & SERVICES - 3.0% | ||||||||
200 | Chipotle Mexican Grill, Inc.(a) | 581,354 | ||||||
2,600 | McDonald’s Corporation | 733,070 | ||||||
1,314,424 | ||||||||
RETAIL - CONSUMER STAPLES - 1.2% | ||||||||
350 | Costco Wholesale Corporation | 256,420 | ||||||
4,500 | Walmart, Inc. | 270,765 | ||||||
527,185 | ||||||||
RETAIL - DISCRETIONARY - 0.6% | ||||||||
2,500 | TJX Companies, Inc. (The) | 253,550 | ||||||
SOFTWARE - 0.4% | ||||||||
6,900 | Palantir Technologies, Inc., Class A(a) | 158,769 | ||||||
TECHNOLOGY HARDWARE - 1.7% | ||||||||
2,600 | Arista Networks, Inc.(a) | 753,948 | ||||||
TECHNOLOGY SERVICES - 1.2% | ||||||||
600 | Mastercard, Inc., Class A | 288,942 |
See accompanying notes to financial statements.
3
ABSOLUTE CAPITAL ASSET ALLOCATOR FUND |
SCHEDULE OF INVESTMENTS (Unaudited) (Continued) |
March 31, 2024 |
Shares | Fair Value | |||||||
COMMON STOCKS — 15.4% (Continued) | ||||||||
TECHNOLOGY SERVICES - 1.2% (Continued) | ||||||||
800 | Visa, Inc., Class A | $ | 223,264 | |||||
512,206 | ||||||||
TRANSPORTATION EQUIPMENT - 1.6% | ||||||||
5,800 | PACCAR, Inc. | 718,562 | ||||||
TOTAL COMMON STOCKS (Cost $6,170,634) | 6,717,698 | |||||||
EXCHANGE-TRADED FUNDS — 64.8% | ||||||||
COMMODITY - 0.2% | ||||||||
500 | SPDR Gold Shares(a) | 102,860 | ||||||
EQUITY - 64.6% | ||||||||
28,200 | Fidelity Low Volatility Factor ETF | 1,584,276 | ||||||
4,800 | Industrial Select Sector SPDR Fund | 604,608 | ||||||
1,900 | Invesco Building & Construction ETF | 142,234 | ||||||
6,100 | Invesco QQQ Trust Series 1 | 2,708,461 | ||||||
77,900 | Invesco S&P 500 High Dividend Low Volatility ETF | 3,458,760 | ||||||
41,600 | Invesco S&P 500 Revenue ETF | 3,899,168 | ||||||
22,600 | iShares Cybersecurity and Tech ETF | 1,058,810 | ||||||
1,200 | iShares U.S. Home Construction ETF | 138,924 | ||||||
13,400 | Proshares S&P 500 Ex-Financials ETF | 1,513,787 | ||||||
14,600 | SPDR S&P 1500 Value Tilt ETF | 2,559,627 | ||||||
3,000 | Technology Select Sector SPDR Fund | 624,810 | ||||||
15,300 | Vanguard Communication Services ETF | 2,007,666 | ||||||
4,000 | Vanguard Health Care ETF | 1,082,080 | ||||||
15,100 | Vanguard Industrials ETF | 3,686,665 | ||||||
8,500 | Vanguard Total Stock Market ETF | 2,209,150 | ||||||
7,100 | Vanguard U.S. Multifactor ETF | 900,908 | ||||||
28,179,934 | ||||||||
TOTAL EXCHANGE-TRADED FUNDS (Cost $24,140,632) | 28,282,794 |
See accompanying notes to financial statements.
4
ABSOLUTE CAPITAL ASSET ALLOCATOR FUND |
SCHEDULE OF INVESTMENTS (Unaudited) (Continued) |
March 31, 2024 |
Shares | Fair Value | |||||||
SHORT-TERM INVESTMENTS — 20.2% | ||||||||
MONEY MARKET FUND - 0.1% | ||||||||
44,344 | First American Government Obligations Fund, Class X, 5.23% (b) | $ | 44,344 |
Principal | ||||||||||||
Amount ($) | Yield Rate (%) | Maturity | ||||||||||
U.S. TREASURY BILLS — 20.1% | ||||||||||||
1,400,000 | United States Treasury Bill | 4.72 | 04/09/24 | 1,398,371 | ||||||||
2,700,000 | United States Treasury Bill | 5.13 | 04/25/24 | 2,690,547 | ||||||||
3,000,000 | United States Treasury Bill | 5.17 | 04/30/24 | 2,987,305 | ||||||||
1,700,000 | United States Treasury Bill | 5.25 | 06/18/24 | 1,680,917 | ||||||||
8,757,140 | ||||||||||||
TOTAL SHORT-TERM INVESTMENTS (Cost $8,801,507) | 8,801,484 | |||||||||||
TOTAL INVESTMENTS - 100.4% (Cost $39,112,773) | $ | 43,801,976 | ||||||||||
LIABILITIES IN EXCESS OF OTHER ASSETS - (0.4)% | (82,100 | ) | ||||||||||
NET ASSETS - 100.0% | $ | 43,619,876 |
ETF | - Exchange-Traded Fund |
SPDR | - Standard & Poor’s Depositary Receipt |
(a) | Non-income producing security. |
(b) | Rate disclosed is the seven day effective yield as of March 31, 2024. |
See accompanying notes to financial statements.
5
ABSOLUTE CAPITAL DEFENDER FUND |
SCHEDULE OF INVESTMENTS (Unaudited) |
March 31, 2024 |
Shares | Fair Value | |||||||
COMMON STOCKS — 14.2% | ||||||||
FOOD - 0.5% | ||||||||
3,100 | Campbell Soup Company | $ | 137,795 | |||||
HEALTH CARE FACILITIES & SERVICES - 2.5% | ||||||||
1,300 | UnitedHealth Group, Inc. | 643,110 | ||||||
INDUSTRIAL INTERMEDIATE PRODUCTS - 0.5% | ||||||||
800 | Chart Industries, Inc.(a) | 131,776 | ||||||
INSURANCE - 0.5% | ||||||||
300 | Berkshire Hathaway, Inc., Class B(a) | 126,156 | ||||||
INTERNET MEDIA & SERVICES - 0.5% | ||||||||
200 | Netflix, Inc.(a) | 121,466 | ||||||
LEISURE FACILITIES & SERVICES - 3.4% | ||||||||
100 | Chipotle Mexican Grill, Inc.(a) | 290,677 | ||||||
2,000 | McDonald’s Corporation | 563,900 | ||||||
854,577 | ||||||||
RETAIL - CONSUMER STAPLES - 1.0% | ||||||||
200 | Costco Wholesale Corporation | 146,526 | ||||||
1,600 | Walmart, Inc. | 96,272 | ||||||
242,798 | ||||||||
RETAIL - DISCRETIONARY - 0.5% | ||||||||
1,300 | TJX Companies., Inc. (The) | 131,846 | ||||||
SOFTWARE - 0.4% | ||||||||
4,200 | Palantir Technologies, Inc., Class A(a) | 96,642 | ||||||
TECHNOLOGY HARDWARE - 1.9% | ||||||||
1,700 | Arista Networks, Inc.(a) | 492,966 | ||||||
TECHNOLOGY SERVICES - 0.9% | ||||||||
300 | Mastercard, Inc., Class A | 144,471 |
See accompanying notes to financial statements.
6
ABSOLUTE CAPITAL DEFENDER FUND |
SCHEDULE OF INVESTMENTS (Unaudited) (Continued) |
March 31, 2024 |
Shares | Fair Value | |||||||
COMMON STOCKS — 14.2% (Continued) | ||||||||
TECHNOLOGY SERVICES - 0.9% (Continued) | ||||||||
300 | Visa, Inc., Class A | $ | 83,724 | |||||
228,195 | ||||||||
TRANSPORTATION EQUIPMENT - 1.6% | ||||||||
3,300 | PACCAR, Inc. | 408,837 | ||||||
TOTAL COMMON STOCKS (Cost $3,433,134) | 3,616,164 | |||||||
EXCHANGE-TRADED FUNDS — 48.8% | ||||||||
COMMODITY - 1.4% | ||||||||
1,700 | SPDR Gold Shares(a) | 349,724 | ||||||
EQUITY - 43.6% | ||||||||
16,200 | Fidelity Low Volatility Factor ETF | 910,116 | ||||||
8,200 | Industrial Select Sector SPDR Fund | 1,032,872 | ||||||
1,600 | Invesco Building & Construction ETF | 119,776 | ||||||
3,000 | Invesco QQQ Trust Series 1 | 1,332,030 | ||||||
25,000 | Invesco S&P 500 High Dividend Low Volatility ETF | 1,110,000 | ||||||
22,800 | Invesco S&P 500 Revenue ETF | 2,137,044 | ||||||
1,000 | iShares U.S. Home Construction ETF | 115,770 | ||||||
6,000 | Proshares S&P 500 Ex-Financials ETF | 677,815 | ||||||
5,000 | SPDR S&P 1500 Value Tilt ETF | 876,585 | ||||||
1,000 | Technology Select Sector SPDR Fund | 208,270 | ||||||
10,000 | Vanguard Communication Services ETF | 1,312,200 | ||||||
800 | Vanguard Health Care ETF | 216,416 | ||||||
1,800 | Vanguard Industrials ETF | 439,470 | ||||||
2,300 | Vanguard Total Stock Market ETF | 597,770 | ||||||
11,086,134 |
See accompanying notes to financial statements.
7
ABSOLUTE CAPITAL DEFENDER FUND |
SCHEDULE OF INVESTMENTS (Unaudited) (Continued) |
March 31, 2024 |
Shares | Fair Value | |||||||||||
EXCHANGE-TRADED FUNDS — 48.8% (Continued) | ||||||||||||
FIXED INCOME - 3.8% | ||||||||||||
31,100 | iShares iBonds 2024 Term High Yield and Income ETF | $ | 725,096 | |||||||||
9,500 | iShares iBonds Dec 2024 Term Corporate ETF | 237,975 | ||||||||||
963,071 | ||||||||||||
TOTAL EXCHANGE-TRADED FUNDS (Cost $10,744,816) | 12,398,929 | |||||||||||
Principal | ||||||||||||
Amount ($) | Coupon (%) | Maturity | ||||||||||
U.S. GOVERNMENT & AGENCIES — 5.4% | ||||||||||||
U.S. TREASURY NOTE — 5.4% | ||||||||||||
1,400,000 | United States Treasury Note (Cost $1,392,516)(b) | 3.88 | 12/31/27 | 1,378,289 | ||||||||
Shares | ||||||||||||
SHORT-TERM INVESTMENTS — 32.4% | ||||||||||||
MONEY MARKET FUND - 4.2% | ||||||||||||
1,057,364 | First American Government Obligations Fund, Class X, 5.23%(b) | 1,057,364 | ||||||||||
Principal | ||||||||||||
Amount ($) | Yield Rate (%) | Maturity | ||||||||||
U.S. TREASURY BILLS — 28.2% | ||||||||||||
1,400,000 | United States Treasury Bill | 4.72 | 04/09/24 | 1,398,371 | ||||||||
2,200,000 | United States Treasury Bill | 5.13 | 04/25/24 | 2,192,297 | ||||||||
500,000 | United States Treasury Bill | 5.17 | 04/30/24 | 497,884 | ||||||||
2,800,000 | United States Treasury Bill | 5.25 | 05/23/24 | 2,778,815 | ||||||||
300,000 | United States Treasury Bill | 5.25 | 06/18/24 | 296,633 | ||||||||
7,164,000 | ||||||||||||
TOTAL SHORT-TERM INVESTMENTS (Cost $8,221,862) | 8,221,364 | |||||||||||
TOTAL INVESTMENTS - 100.8% (Cost $23,792,328) | $ | 25,614,746 | ||||||||||
LIABILITIES IN EXCESS OF OTHER ASSETS – (0.8)% | (207,658 | ) | ||||||||||
NET ASSETS - 100.0% | $ | 25,407,088 |
ETF | - Exchange-Traded Fund |
SPDR | - Standard & Poor’s Depositary Receipt |
(a) | Non-income producing security. |
(b) | Rate disclosed is the seven day effective yield as of March 31, 2024. |
See accompanying notes to financial statements.
8
Absolute Funds |
Statements of Assets and Liabilities (Unaudited) |
March 31, 2024 |
Absolute Capital Asset | Absolute Capital | |||||||
Allocator Fund | Defender Fund | |||||||
ASSETS | ||||||||
Investment securities, at cost | $ | 39,112,773 | $ | 23,792,328 | ||||
Investment securities, at value | $ | 43,801,976 | $ | 25,614,746 | ||||
Net change in unrealized appreciation on investments | 605,068 | 201,889 | ||||||
Dividends and interest receivable | 9,826 | 21,211 | ||||||
Prepaid expenses and other assets | 24,102 | 22,935 | ||||||
TOTAL ASSETS | 44,440,972 | 25,860,781 | ||||||
LIABILITIES | ||||||||
Fund shares redeemed | 728,293 | 402,885 | ||||||
Payable to Advisor | 41,275 | 13,057 | ||||||
Distribution fees (12b-1) payable | 33,011 | 14,866 | ||||||
Accrued trustees’ fees | — | 797 | ||||||
Payable to Related Parties | 9,310 | 11,440 | ||||||
Accrued expenses and other liabilities | 9,207 | 10,648 | ||||||
TOTAL LIABILITIES | 821,096 | 453,693 | ||||||
NET ASSETS | $ | 43,619,876 | $ | 25,407,088 | ||||
Net Assets Consist Of: | ||||||||
Paid in capital | $ | 39,208,913 | $ | 24,035,507 | ||||
Accumulated earnings | 4,410,963 | 1,371,581 | ||||||
REALIZED AND UNREALIZED GAIN FROM INVESTMENTS | $ | 43,619,876 | $ | 25,407,088 | ||||
NET ASSET VALUE PER SHARE: | ||||||||
Class A Shares: | ||||||||
Net Assets | $ | 2,963,795 | $ | 4,661,027 | ||||
Shares of beneficial interest outstanding [$0 par value, unlimited shares authorized] | 259,856 | 428,001 | ||||||
Net asset value (Net Assets ÷ Shares Outstanding) and redemption price per share | $ | 11.41 | $ | 10.89 | ||||
Maximum offering price per share (maximum sales charge of 5.75%) | $ | 12.11 | $ | 11.55 | ||||
Institutional Class Shares: | ||||||||
Net Assets | $ | 2,872,621 | $ | 4,943,525 | ||||
Shares of beneficial interest outstanding [$0 par value, unlimited shares authorized] | 251,865 | 453,952 | ||||||
Net asset value (Net Assets ÷ Shares Outstanding), offering price and redemption price per share | $ | 11.41 | $ | 10.89 | ||||
Investor Class Shares: | ||||||||
Net Assets | $ | 37,783,460 | $ | 15,802,536 | ||||
Shares of beneficial interest outstanding [$0 par value, unlimited shares authorized] | 3,515,239 | 1,540,978 | ||||||
Net asset value (Net Assets ÷ Shares Outstanding), offering price and redemption price per share | $ | 10.75 | $ | 10.25 |
See accompanying notes to financial statements.
9
Absolute Funds |
Statements of Operations (Unaudited) |
For the Six Months Ended March 31, 2024 |
Absolute Capital Asset | Absolute Capital | |||||||
Allocator Fund | Defender Fund | |||||||
INVESTMENT INCOME | ||||||||
Dividends | $ | 237,980 | $ | 141,179 | ||||
Interest | 269,063 | 297,354 | ||||||
TOTAL INVESTMENT INCOME | 507,043 | 438,533 | ||||||
EXPENSES | ||||||||
Investment advisory fees | 203,722 | 130,180 | ||||||
Distribution (12b-1) fees: | ||||||||
Class A | 7,831 | 11,874 | ||||||
Investor Class | 170,761 | 80,041 | ||||||
Administrative services fees | 25,269 | 25,018 | ||||||
Transfer agent fees | 19,189 | 17,905 | ||||||
Accounting services fees | 14,331 | 13,365 | ||||||
Registration fees | 13,859 | 12,758 | ||||||
Audit fees | 9,211 | 9,260 | ||||||
Legal fees | 8,306 | 7,177 | ||||||
Compliance officer fees | 7,961 | 8,252 | ||||||
Trustees fees and expenses | 7,629 | 9,327 | ||||||
Third party administrative servicing fees | 3,342 | 1,659 | ||||||
Printing and postage expenses | 2,686 | 2,238 | ||||||
Custodian fees | 2,406 | 2,564 | ||||||
Insurance expense | 1,609 | 1,554 | ||||||
Other expenses | 2,486 | 2,000 | ||||||
TOTAL EXPENSES | 500,598 | 335,172 | ||||||
Less: Fees waived by the Advisor | — | (22,041 | ) | |||||
Plus: Recapture of fees previously waived by the Advisor | 24,696 | — | ||||||
NET EXPENSES | 525,294 | 313,131 | ||||||
NET INVESTMENT INCOME/(LOSS) | (18,251 | ) | 125,402 | |||||
REALIZED AND UNREALIZED GAIN FROM INVESTMENTS | ||||||||
Net realized gain from investments | 1,478,884 | 705,419 | ||||||
Net change in unrealized appreciation of investments | 4,558,279 | 1,631,555 | ||||||
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS | 6,037,163 | 2,336,974 | ||||||
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 6,018,912 | $ | 2,462,376 |
See accompanying notes to financial statements.
10
Absolute Funds |
STATEMENTS OF CHANGES IN NET ASSETS |
Absolute Capital Asset Allocator Fund | Absolute Capital Defender Fund | |||||||||||||||
Six Months Ended | Six Months Ended | |||||||||||||||
March 31, 2024 | Year Ended | March 31, 2024 | Year Ended | |||||||||||||
(Unaudited) | September 30, 2023 | (Unaudited) | September 30, 2023 | |||||||||||||
FROM OPERATIONS | ||||||||||||||||
Net investment income/(loss) | $ | (18,251 | ) | $ | (82,315 | ) | $ | 125,402 | $ | 76,151 | ||||||
Net realized gain/(loss) from investments | 1,478,884 | (447,249 | ) | 705,419 | (114,998 | ) | ||||||||||
Net change in unrealized appreciation on investments | 4,558,279 | 2,831,197 | 1,631,555 | 1,419,646 | ||||||||||||
Net increase in net assets resulting from operations | 6,018,912 | 2,301,633 | 2,462,376 | 1,380,799 | ||||||||||||
FROM CAPITAL SHARE TRANSACTIONS | ||||||||||||||||
Proceeds from shares sold | ||||||||||||||||
Class A | 794,939 | 2,570,989 | 1,533,485 | 3,073,069 | ||||||||||||
Institutional Class | 3,137,167 | — | 4,977,498 | — | ||||||||||||
Investor Class | 5,760,319 | 10,857,862 | 1,186,259 | 4,866,416 | ||||||||||||
Payments for shares redeemed | ||||||||||||||||
Class A | (5,456,074 | ) | (3,028,380 | ) | (7,687,541 | ) | (4,552,876 | ) | ||||||||
Institutional Class | (317,049 | ) | — | (100,498 | ) | — | ||||||||||
Investor Class | (3,258,719 | ) | (4,131,316 | ) | (3,440,349 | ) | (2,091,615 | ) | ||||||||
Net increase/(decrease) in net assets from capital share transactions | 660,583 | 6,269,155 | (3,531,146 | ) | 1,294,994 | |||||||||||
TOTAL INCREASE/(DECREASE) IN NET ASSETS | 6,679,495 | 8,570,788 | (1,068,770 | ) | 2,675,793 | |||||||||||
NET ASSETS | ||||||||||||||||
Beginning of Year/Period | 36,940,381 | 28,369,593 | 26,475,858 | 23,800,065 | ||||||||||||
End of Year/Period | $ | 43,619,876 | $ | 36,940,381 | $ | 25,407,088 | $ | 26,475,858 | ||||||||
CAPITAL SHARE ACTIVITY | ||||||||||||||||
Class A | ||||||||||||||||
Shares Sold | 75,966 | 266,970 | 148,920 | 314,352 | ||||||||||||
Shares Redeemed | (496,854 | ) | (312,589 | ) | (723,900 | ) | (467,706 | ) | ||||||||
Net decrease in shares outstanding | (420,888 | ) | (45,619 | ) | (574,980 | ) | (153,354 | ) | ||||||||
Institutional Class | ||||||||||||||||
Shares Sold | 279,945 | — | 463,306 | — | ||||||||||||
Shares Redeemed | (28,081 | ) | — | (9,355 | ) | — | ||||||||||
Net increase in shares outstanding | 251,864 | — | 453,951 | — | ||||||||||||
Investor Class | ||||||||||||||||
Shares Sold | 581,764 | 1,172,118 | 120,922 | 522,105 | ||||||||||||
Shares Redeemed | (323,229 | ) | (452,831 | ) | (354,533 | ) | (225,305 | ) | ||||||||
Net increase/(decrease) in shares outstanding | 258,535 | 719,287 | (233,611 | ) | 296,800 |
See accompanying notes to financial statements.
11
Absolute Funds |
FINANCIAL HIGHLIGHTS |
Per Share Data and Ratios for a Share of Capital Stock Outstanding Throughout each Year/Period
Absolute Capital Asset Allocator Fund | ||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||
Six Months Ended | ||||||||||||||||||||||||
March 31, 2024 | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||||||||
(Unaudited) | September 30, 2023 | September 30, 2022 | September 30, 2021 | September 30, 2020 | September 30, 2019 | |||||||||||||||||||
Net Asset Value, Beginning of Year/Period | $ | 9.82 | $ | 9.02 | $ | 11.71 | $ | 10.10 | $ | 9.99 | $ | 11.47 | ||||||||||||
Activity from investment operations: | ||||||||||||||||||||||||
Net investment income/(loss) (1,6) | 0.02 | 0.03 | (0.03 | ) | (0.02 | ) | 0.00 | (7) | 0.06 | |||||||||||||||
Net realized and unrealized gain/(loss) on investments | 1.57 | 0.77 | (1.67 | ) | 1.63 | 0.15 | (0.45 | ) | ||||||||||||||||
Total from investment operations | 1.59 | 0.80 | (1.70 | ) | 1.61 | 0.15 | (0.39 | ) | ||||||||||||||||
Less distributions from: | ||||||||||||||||||||||||
Net investment income | — | — | — | — | (0.01 | ) | — | |||||||||||||||||
Net realized gains | — | — | (0.99 | ) | — | — | (1.09 | ) | ||||||||||||||||
Return of capital | — | — | — | — | (0.03 | ) | — | |||||||||||||||||
Total distributions | — | — | (0.99 | ) | — | (0.04 | ) | (1.09 | ) | |||||||||||||||
Net Asset Value, End of Year/Period | $ | 11.41 | $ | 9.82 | $ | 9.02 | $ | 11.71 | $ | 10.10 | $ | 9.99 | ||||||||||||
Total Return (2) | 16.19 | % (9) | 8.87 | % | (16.36 | )% | 15.94 | % | 1.47 | % | (2.73 | )% | ||||||||||||
Net Assets, At End of Year/Period (000s) | $ | 2,964 | $ | 6,687 | $ | 6,554 | $ | 10,226 | $ | 9,656 | $ | 8,140 | ||||||||||||
Ratio of gross expenses to average net assets (5) | 1.83 | % (3,8) | 1.93 | % (3) | 2.07 | % (4) | 2.02 | % (4) | 2.27 | % (4) | 2.43 | % (4) | ||||||||||||
Ratio of net expenses to average net assets (5) | 1.95 | % (8) | 1.95 | % | 1.95 | % | 1.95 | % | 1.95 | % | 1.95 | % | ||||||||||||
Ratio of net investment income/(loss) to average net assets (5,6) | 0.40 | % (8) | 0.32 | % | (0.23 | )% | (0.21 | )% | (0.03 | )% | 0.49 | % | ||||||||||||
Portfolio Turnover Rate | 97 | % (9) | 159 | % | 228 | % | 219 | % | 149 | % | 179 | % |
(1) | Per share amounts calculated using the average shares method, which more appropriately presents the per share data for the year/period. |
(2) | Total returns shown exclude the effect of applicable sales charges. 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 Advisor not waived fees and/or reimbursed a portion of its expenses, total returns would have been lower. |
(3) | Represents the ratio of expenses to average net assets absent of the Advisor’s recapture of waived/reimbursed fees from prior periods. |
(4) | Represents the ratio of expenses to average net assets absent fee waivers and/or expense reimbursements by the Advisor. |
(5) | The ratios of expenses to average net assets and net investment income/(loss) to average net assets do not reflect the expenses of the underlying investment companies in which the Fund invests. |
(6) | 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. |
(7) | Amount represents less than $0.01 |
(8) | Annualized. |
(9) | Not annualized. |
See accompanying notes to financial statements.
12
Absolute Funds |
FINANCIAL HIGHLIGHTS |
Per Share Data and Ratios for a Share of Capital Stock Outstanding Throughout each Year/Period
Absolute Capital Asset Allocator Fund | ||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||
Six Months Ended | ||||||||||||||||||||||||
March 31, 2024 | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||||||||
(Unaudited) | September 30, 2023 | September 30, 2022 | September 30, 2021 | September 30, 2020 | September 30, 2019 | |||||||||||||||||||
Net Asset Value, Beginning of Year/Period | $ | 9.82 | $ | 9.02 | $ | 11.71 | $ | 10.10 | $ | 9.99 | $ | 11.48 | ||||||||||||
Activity from investment operations: | ||||||||||||||||||||||||
Net investment income (1,7) | 0.18 | 0.16 | 0.11 | 0.15 | 0.18 | 0.23 | ||||||||||||||||||
Net realized and unrealised gain/(loss) on investments | 1.41 | 0.64 | (1.81 | ) | 1.46 | (0.02 | ) (8) | (0.63 | ) | |||||||||||||||
Total from investment operations | 1.59 | 0.80 | (1.70 | ) | 1.61 | 0.16 | (0.40 | ) | ||||||||||||||||
Less distributions from: | ||||||||||||||||||||||||
Net investment income | — | — | — | — | (0.02 | ) | — | |||||||||||||||||
Net realized gains | — | — | (0.99 | ) | — | — | (1.09 | ) | ||||||||||||||||
Return of capital | — | — | — | — | (0.03 | ) | — | |||||||||||||||||
Total distributions | — | — | (0.99 | ) | — | (0.05 | ) | (1.09 | ) | |||||||||||||||
Net Asset Value, End of Year/Period | $ | 11.41 | $ | 9.82 | $ | 9.02 | $ | 11.71 | $ | 10.10 | $ | 9.99 | ||||||||||||
Total Return (2) | 16.19 | % (10) | 8.87 | % | (16.36 | )% | 15.94 | % | 1.60 | % | (2.81 | )% | ||||||||||||
Net Assets, At End of Year/Period (000s) | $ | 2,873 | $ | 12.62 | (3) | $ | 11.59 | (3) | $ | 13.85 | (3) | $ | 11.95 | (3) | $ | 11.76 | (3) | |||||||
Ratio of gross expenses to average net assets (6) | 1.56 | % (4,9) | 1.68 | % (4) | 1.82 | % (5) | 1.77 | % (5) | 2.02 | % (5) | 2.18 | % (5) | ||||||||||||
Ratio of net expenses to average net assets (6) | 1.56 | % (9) | 1.70 | % | 1.70 | % | 1.70 | % | 1.70 | % | 1.70 | % | ||||||||||||
Ratio of net investment income to average net assets (6,7) | 2.98 | % (9) | 0.57 | % | 0.02 | % | 0.04 | % | 0.22 | % | 0.74 | % | ||||||||||||
Portfolio Turnover Rate | 97 | % (10) | 159 | % | 228 | % | 219 | % | 149 | % | 179 | % |
(1) | Per share amounts calculated using the average shares method, which more appropriately presents the per share data for the year/period. |
(2) | Total returns shown exclude the effect of applicable sales charges. 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 Advisor not waived fees and/or reimbursed a portion of its expenses, total returns would have been lower. |
(3) | Actual net asset amount. |
(4) | Represents the ratio of expenses to average net assets absent of the Advisor’s recapture of waived/reimbursed fees from prior periods. |
(5) | Represents the ratio of expenses to average net assets absent fee waivers and/or expense reimbursements by the Advisor. |
(6) | The ratios of expenses to average net assets and net investment income to average net assets do not reflect the expenses of the underlying investment companies in which the Fund invests. |
(7) | Recognition of net investment income by the Fund is affected by the timing and declaration of dividends by the underlying investment companies in which the Fund invests. |
(8) | Realized and unrealized gains and losses per share in this caption are balancing amounts necessary to reconcile the change in net asset value per share for the period, and may not reconcile with the aggregate gains and losses in the Statement of Operations due to share transactions for the period. |
(9) | Annualized. |
(10) | Not annualized. |
See accompanying notes to financial statements.
13
Absolute Funds |
FINANCIAL HIGHLIGHTS |
Per Share Data and Ratios for a Share of Capital Stock Outstanding Throughout each Year/Period
Absolute Capital Asset Allocator Fund | ||||||||||||||||||||||||
Investor Class | ||||||||||||||||||||||||
Six Months Ended | ||||||||||||||||||||||||
March 31, 2024 | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||||||||
(Unaudited) | September 30, 2023 | September 30, 2022 | September 30, 2021 | September 30, 2020 | September 30, 2019 | |||||||||||||||||||
Net Asset Value, Beginning of Year/Period | $ | 9.29 | $ | 8.60 | $ | 11.28 | $ | 9.81 | $ | 9.74 | $ | 11.29 | ||||||||||||
Activity from investment operations: | ||||||||||||||||||||||||
Net investment loss (1,6) | (0.01 | ) | (0.04 | ) | (0.10 | ) | (0.11 | ) | (0.08 | ) | (0.03 | ) | ||||||||||||
Net realized and unrealised gain/(loss) on investments | 1.47 | 0.73 | (1.59 | ) | 1.58 | 0.15 | (0.43 | ) | ||||||||||||||||
Total from investment operations | 1.46 | 0.69 | (1.69 | ) | 1.47 | 0.07 | (0.46 | ) | ||||||||||||||||
Less distributions from: | ||||||||||||||||||||||||
Net realized gains | — | — | (0.99 | ) | — | — | (1.09 | ) | ||||||||||||||||
Net Asset Value, End of Year/Period | $ | 10.75 | $ | 9.29 | $ | 8.60 | $ | 11.28 | $ | 9.81 | $ | 9.74 | ||||||||||||
Total Return (2) | 15.72 | % (8) | 8.02 | % | (16.93 | )% | 14.98 | % | 0.72 | % | (3.44 | )% | ||||||||||||
Net Assets, At End of Year/Period (000s) | $ | 37,783 | $ | 30,254 | $ | 21,815 | $ | 20,931 | $ | 11,379 | $ | 11,663 | ||||||||||||
Ratio of gross expenses to average net assets (5) | 2.58 | % (3,7) | 2.67 | % (3) | 2.81 | % (4) | 2.78 | % (4) | 3.02 | % (4) | 3.18 | % (4) | ||||||||||||
Ratio of net expenses to average net assets (5) | 2.70 | % (7) | 2.70 | % | 2.70 | % | 2.70 | % | 2.70 | % | 2.70 | % | ||||||||||||
Ratio of net investment loss to average net assets (5,6) | (0.21 | )% (7) | (0.40 | )% | (0.94 | )% | (0.96 | )% | (0.78 | )% | (0.26 | )% | ||||||||||||
Portfolio Turnover Rate | 97 | % (8) | 159 | % | 228 | % | 219 | % | 149 | % | 179 | % |
(1) | Per share amounts calculated using the average shares method, which more appropriately presents the per share data for the year/period. |
(2) | Total returns shown exclude the effect of applicable sales charges. 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 Advisor not waived fees and/or reimbursed a portion of its expenses, total returns would have been lower. |
(3) | Represents the ratio of expenses to average net assets absent of the Advisor’s recapture of waived/reimbursed fees from prior periods. |
(4) | Represents the ratio of expenses to average net assets absent fee waivers and/or expense reimbursements by the Advisor. |
(5) | The ratios of expenses to average net assets and net investment loss to average net assets do not reflect the expenses of the underlying investment companies in which the Fund invests. |
(6) | 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. |
(7) | Annualized. |
(8) | Not annualized. |
See accompanying notes to financial statements.
14
Absolute Funds |
FINANCIAL HIGHLIGHTS |
Per Share Data and Ratios for a Share of Capital Stock Outstanding Throughout each Year/Period
Absolute Capital Defender Fund | ||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||
Six Months Ended | ||||||||||||||||||||||||
March 31, 2024 | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||||||||
(Unaudited) | September 30, 2023 | September 30, 2022 | September 30, 2021 | September 30, 2020 | September 30, 2019 | |||||||||||||||||||
Net Asset Value, Beginning of Year/Period | $ | 9.88 | $ | 9.28 | $ | 11.48 | $ | 10.09 | $ | 9.95 | $ | 10.97 | ||||||||||||
Activity from investment operations: | ||||||||||||||||||||||||
Net investment income/(loss) (1,5) | 0.07 | 0.07 | (0.03 | ) | (0.01 | ) | (0.01 | ) | 0.03 | |||||||||||||||
Net realized and unrealised gain/(loss) on investments | 0.94 | 0.53 | (1.16 | ) | 1.40 | 0.18 | (0.41 | ) | ||||||||||||||||
Total from investment operations | 1.01 | 0.60 | (1.19 | ) | 1.39 | 0.17 | (0.38 | ) | ||||||||||||||||
Less distributions from: | ||||||||||||||||||||||||
Net investment income | — | — | — | — | (0.02 | ) | — | |||||||||||||||||
Net realized gains | — | — | (1.01 | ) | — | — | (0.64 | ) | ||||||||||||||||
Return of capital | — | — | — | — | (0.01 | ) | — | |||||||||||||||||
Total distributions | — | — | (1.01 | ) | — | (0.03 | ) | (0.64 | ) | |||||||||||||||
Net Asset Value, End of Year/Period | $ | 10.89 | $ | 9.88 | $ | 9.28 | $ | 11.48 | $ | 10.09 | $ | 9.95 | ||||||||||||
Total Return (2) | 10.22 | % (7) | 6.47 | % | (11.84 | )% | 13.78 | % | 1.72 | % | (3.18 | )% | ||||||||||||
Net Assets, At End of Year/Period (000s) | $ | 4,661 | $ | 9,908 | $ | 10,736 | $ | 11,917 | $ | 11,072 | $ | 11,050 | ||||||||||||
Ratio of gross expenses to average net assets (3,4) | 2.11 | % (6) | 2.12 | % | 2.17 | % | 2.20 | % | 2.29 | % | 2.42 | % | ||||||||||||
Ratio of net expenses to average net assets (4) | 1.95 | % (6) | 1.95 | % | 1.95 | % | 1.95 | % | 1.95 | % | 1.95 | % | ||||||||||||
Ratio of net investment income/(loss) to average net assets (4,5) | 1.36 | % (6) | 0.75 | % | (0.32 | )% | (0.09 | )% | (0.09 | )% | 0.34 | % | ||||||||||||
Portfolio Turnover Rate | 100 | % (7) | 170 | % | 263 | % | 183 | % | 180 | % | 179 | % |
(1) | Per share amounts calculated using the average shares method, which more appropriately presents the per share data for the year/period. |
(2) | Total returns shown exclude the effect of applicable sales charges. 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 Advisor not waived fees and/or reimbursed a portion of its expenses, total returns would have been lower. |
(3) | Represents the ratio of expenses to average net assets absent fee waivers and/or expense reimbursements by the Advisor. |
(4) | The ratios of expenses to average net assets and net investment income/(loss) to average net assets do not reflect the expenses of the underlying 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. |
(6) | Annualized. |
(7) | Not annualized. |
See accompanying notes to financial statements.
15
Absolute Funds |
FINANCIAL HIGHLIGHTS |
Per Share Data and Ratios for a Share of Capital Stock Outstanding Throughout each Year/Period
Absolute Capital Defender Fund | ||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||
Six Months Ended | ||||||||||||||||||||||||
March 31, 2024 | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||||||||
(Unaudited) | September 30, 2023 | September 30, 2022 | September 30, 2021 | September 30, 2020 | September 30, 2019 | |||||||||||||||||||
Net Asset Value, Beginning of Year/Period | $ | 9.88 | $ | 9.28 | $ | 11.48 | $ | 10.09 | $ | 9.95 | $ | 10.97 | ||||||||||||
Activity from investment operations: | ||||||||||||||||||||||||
Net investment income (1,6) | 0.15 | 0.14 | 0.10 | 0.15 | 0.16 | 0.21 | ||||||||||||||||||
Net realized and unrealised gain/(loss) on investments | 0.86 | 0.46 | (1.29 | ) | 1.24 | 0.03 | (7) | (0.59 | ) | |||||||||||||||
Total from investment operations | 1.01 | 0.60 | (1.19 | ) | 1.39 | 0.19 | (0.38 | ) | ||||||||||||||||
Less distributions from: | ||||||||||||||||||||||||
Net investment income | — | — | — | — | (0.04 | ) | — | |||||||||||||||||
Net realized gains | — | — | (1.01 | ) | — | — | (0.64 | ) | ||||||||||||||||
Return of capital | — | — | — | — | (0.01 | ) | — | |||||||||||||||||
Total distributions | — | — | (1.01 | ) | — | (0.05 | ) | (0.64 | ) | |||||||||||||||
Net Asset Value, End of Year/Period | $ | 10.89 | $ | 9.88 | $ | 9.28 | $ | 11.48 | $ | 10.09 | $ | 9.95 | ||||||||||||
Total Return (2) | 10.22 | % (9) | 6.47 | % | (11.84 | )% | 13.78 | % | 1.92 | % | (3.18 | )% | ||||||||||||
Net Assets, At End of Year/Period (000s) | $ | 4,944 | $ | 11.99 | (3) | $ | 11.27 | (3) | $ | 12.78 | (3) | $ | 11.23 | (3) | $ | 11.01 | (3) | |||||||
Ratio of gross expenses to average net assets (4,5) | 1.93 | % (8) | 1.87 | % | 1.92 | % | 1.95 | % | 2.04 | % | 2.17 | % | ||||||||||||
Ratio of net expenses to average net assets (5) | 1.70 | % (8) | 1.70 | % | 1.70 | % | 1.70 | % | 1.70 | % | 1.70 | % | ||||||||||||
Ratio of net investment income/(loss) to average net assets (5,6) | 2.66 | % (8) | 1.00 | % | (0.07 | )% | 0.16 | % | 0.16 | % | 0.59 | % | ||||||||||||
Portfolio Turnover Rate | 100 | % (9) | 170 | % | 263 | % | 183 | % | 180 | % | 179 | % |
(1) | Per share amounts calculated using the average shares method, which more appropriately presents the per share data for the year/period. |
(2) | Total returns shown exclude the effect of applicable sales charges. 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 Advisor not waived fees and/or reimbursed a portion of its expenses, total returns would have been lower. |
(3) | Actual net asset amount. |
(4) | Represents the ratio of expenses to average net assets absent fee waivers and/or expense reimbursements by the Advisor. |
(5) | The ratios of expenses to average net assets and net investment income/(loss) to average net assets do not reflect the expenses of the underlying investment companies in which the Fund invests. |
(6) | 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. |
(7) | Realized and unrealized gains and losses per share in this caption are balancing amounts necessary to reconcile the change in net asset value per share for the period, and may not reconcile with the aggregate gains and losses in the Statement of Operations due to share transactions for the period. |
(8) | Annualized. |
(9) | Not annualized. |
See accompanying notes to financial statements.
16
Absolute Funds |
FINANCIAL HIGHLIGHTS |
Per Share Data and Ratios for a Share of Capital Stock Outstanding Throughout each Year/Period
Absolute Capital Defender Fund | ||||||||||||||||||||||||
Investor Class | ||||||||||||||||||||||||
Six Months Ended | ||||||||||||||||||||||||
March 31, 2024 | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||||||||
(Unaudited) | September 30, 2023 | September 30, 2022 | September 30, 2021 | September 30, 2020 | September 30, 2019 | |||||||||||||||||||
Net Asset Value, Beginning of Year/Period | $ | 9.34 | $ | 8.84 | $ | 11.06 | $ | 9.79 | $ | 9.69 | $ | 10.79 | ||||||||||||
Activity from investment operations: | ||||||||||||||||||||||||
Net investment income/(loss) (1,5) | 0.03 | 0.00 | (6) | (0.10 | ) | (0.09 | ) | (0.08 | ) | (0.04 | ) | |||||||||||||
Net realized and unrealised gain/(loss) on investments | 0.88 | 0.50 | (1.11 | ) | 1.36 | 0.18 | (0.42 | ) | ||||||||||||||||
Total from investment operations | 0.91 | 0.50 | (1.21 | ) | 1.27 | 0.10 | (0.46 | ) | ||||||||||||||||
Less distributions from: | ||||||||||||||||||||||||
Net realized gains | — | — | (1.01 | ) | — | — | (0.64 | ) | ||||||||||||||||
Net Asset Value, End of Year/Period | $ | 10.25 | $ | 9.34 | $ | 8.84 | $ | 11.06 | $ | 9.79 | $ | 9.69 | ||||||||||||
Total Return (2) | 9.85 | % (8) | 5.66 | % | (12.50 | )% | 12.97 | % | 1.03 | % | (4.01 | )% | ||||||||||||
Net Assets, At End of Year/Period (000s) | $ | 15,803 | $ | 16,568 | $ | 13,064 | $ | 9,751 | $ | 8,415 | $ | 7,483 | ||||||||||||
Ratio of gross expenses to average net assets (3,4) | 2.87 | % (7) | 2.86 | % | 2.92 | % | 2.95 | % | 3.05 | % | 3.17 | % | ||||||||||||
Ratio of net expenses to average net assets (4) | 2.70 | % (7) | 2.70 | % | 2.70 | % | 2.70 | % | 2.70 | % | 2.70 | % | ||||||||||||
Ratio of net investment income/(loss) to average net assets (4,5) | 0.67 | % (7) | 0.01 | % | (1.03 | )% | (0.83 | )% | (0.86 | )% | (0.41 | )% | ||||||||||||
Portfolio Turnover Rate | 100 | % (8) | 170 | % | 263 | % | 183 | % | 180 | % | 179 | % |
(1) | Per share amounts calculated using the average shares method, which more appropriately presents the per share data for the year/period. |
(2) | Total returns shown exclude the effect of applicable sales charges. 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 Advisor not waived fees and/or reimbursed a portion of its expenses, total returns would have been lower. |
(3) | Represents the ratio of expenses to average net assets absent fee waivers and/or expense reimbursements by the Advisor. |
(4) | The ratios of expenses to average net assets and net investment loss to average net assets do not reflect the expenses of the underlying 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. |
(6) | Amount represents less than $0.01. |
(7) | Annualized. |
(8) | Not annualized. |
See accompanying notes to financial statements.
17
Absolute Funds |
NOTES TO FINANCIAL STATEMENTS (Unaudited) |
March 31, 2024 |
1. | ORGANIZATION |
Absolute Capital Asset Allocator Fund (the “Allocator Fund”) and the Absolute Capital Defender Fund (the “Defender Fund”), comprising the Absolute Funds (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 statutory trust organized under laws of Delaware on December 5, 2011, and registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The investment objective of each Fund is long-term capital appreciation. The Funds commenced operations on December 18, 2015.
Each Fund offers Class A, Institutional Class, and Investor Class shares. Institutional Class shares are not currently available for sale. Class A shares are offered at net asset value plus a maximum sales charge of 5.75%. Investor class shares are offered at net asset value. Each share class represents an interest in the same assets of the applicable Fund and classes are identical except for differences in their sales charge structures and ongoing service and distribution charges. All classes of shares have equal voting privileges except that each class has exclusive voting rights with respect to any distribution and/or shareholder servicing 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. | SIGNIFICANT ACCOUNTING POLICIES |
The following is a summary of significant accounting policies followed by the Funds in preparation of their financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. 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" including Accounting Standards Update 2013-08.
Securities Valuation – Securities listed on an exchange are valued at the last reported sale price at the close of the regular trading session of the primary exchange on the business day the value is being determined, or in the case of securities listed on NASDAQ at the NASDAQ Official Closing Price (“NOCP”). In the absence of a sale, such securities are 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.
Each Fund may hold investments, such as private investments, interest in commodity pools, other non-traded securities or temporarily illiquid investments, 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 Trust’s Board of Trustees (the “Board”). The Board may also enlist third party consultants such as a valuation specialist at a public accounting firm, valuation consultant or financial officer of a security issuer on an as-needed basis to assist in determining a security-specific fair value. The Board reviews the execution of this process and the resultant fair value prices at least quarterly to assure the process produces reliable results.
Fair Valuation Process – 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 Board, the prices or values available do not represent the fair value of the instrument. Factors which may cause the Board to make such a judgment include, but are not limited to, the following: only a bid price or an ask price is available; the spread between bid and ask prices is substantial; the frequency of sales; the thinness of the market; the size of reported trades; and actions of the securities markets, such as the suspension or limitation of trading; (iii) securities determined to be illiquid; and (iv) securities with respect to which an event that will affect the value thereof has occurred (a “significant event”) since the closing prices were established on the principal exchange on which they are traded, but prior to a Fund’s calculation of its net asset value. Specifically, interests in commodity pools or managed futures pools are valued on a daily basis by reference to the closing market prices of each futures contract or other asset held by a pool, as adjusted for pool expenses. Restricted or
18
Absolute Funds |
NOTES TO FINANCIAL STATEMENTS (Unaudited)(Continued) |
March 31, 2024 |
illiquid investments, such as private investments or non-traded securities are valued via inputs from the advisor based upon the current bid for the security from two or more independent dealers or other parties reasonably familiar with the facts and circumstances of the security (who should take into consideration all relevant factors as may be appropriate under the circumstances). If the advisor is unable to obtain a current bid from such independent dealers or other independent parties, the Board 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 a 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.
Valuation of Fund of Funds – The Funds may invest in portfolios of open-end or closed-end investment companies (the “Underlying Funds”). The Underlying Funds value securities in their portfolios for which market quotations are readily available at their market values (generally the last reported sale price) and all other securities and assets at their fair value pursuant to the methods established by the boards of directors of the Underlying Funds.
Open-end investment companies are valued at their respective net asset values as reported by such investment companies. The shares of many closed-end investment companies, after their initial public offering, frequently trade at a price per share, which is different than the net asset value per share. The difference represents a market premium or market discount of such shares. There can be no assurances that the market discount or market premium on shares of any closed-end investment company purchased by the Funds will not change.
The Funds utilize various methods to measure the fair value of all of their investments on a recurring basis. GAAP establishes a hierarchy that prioritizes inputs to valuation methods. The three levels of input are:
Level 1 – Unadjusted quoted prices in active markets for identical assets and liabilities that each Fund has the ability to access.
Level 2 – Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument in an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.
Level 3 – Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available; representing 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
Absolute Funds |
NOTES TO FINANCIAL STATEMENTS (Unaudited)(Continued) |
March 31, 2024 |
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following tables summarize the inputs used as of March 31, 2024 for each Fund’s investments measured at fair value:
Allocator Fund | ||||||||||||||||
Assets | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Investments * | ||||||||||||||||
Common Stocks | $ | 6,717,698 | $ | — | $ | — | $ | 6,717,698 | ||||||||
Exchange-Traded Funds | 28,282,794 | — | — | 28,282,794 | ||||||||||||
Short-Term Investments | 44,344 | 8,757,140 | — | 8,801,484 | ||||||||||||
Total Investments | $ | 35,044,836 | $ | 8,757,140 | $ | — | $ | 43,801,976 | ||||||||
Defender Fund | ||||||||||||||||
Assets | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Investments * | ||||||||||||||||
Common Stocks | $ | 3,616,164 | $ | — | $ | — | $ | 3,616,164 | ||||||||
Exchange-Traded Funds | 12,398,929 | — | — | 12,398,929 | ||||||||||||
U.S. Treasury Note | — | 1,378,289 | — | 1,378,289 | ||||||||||||
Short-Term Investments | 1,057,364 | 7,164,000 | — | 8,221,364 | ||||||||||||
Total Investments | $ | 17,072,457 | $ | 8,542,289 | $ | — | $ | 25,614,746 |
* | Refer to the Schedules of Investments for classification. |
The Funds did not hold any Level 3 securities during the six months ended March 31, 2024.
Exchange Traded Funds (“ETFs”) and Exchange Traded Notes (“ETNs”) – Each Fund may invest in ETFs and ETNs. ETFs and ETNs are a type of fund bought and sold on a securities exchange. Both an ETF and an ETN trade like common stock and represent a fixed portfolio of securities. The risks of owning an ETF and ETN generally reflect the risks of owning the underlying securities they are designed to track, although the lack of liquidity on an ETF and ETN could result in it being more volatile. Additionally, ETFs and ETNs are subject to investment advisory or management and other expenses, which will be indirectly paid by the Funds. Each is subject to specific risks, depending on investment strategy. Also, each may be subject to leverage risk, which will magnify losses. ETNs are subject to default risks.
Security Transactions and Investment Income – Security transactions are accounted for on a trade date basis. Interest income is recognized on an accrual basis. Discounts are accreted and premiums are amortized on securities purchased over the lives of the respective securities using the effective interest method. Dividend income is recorded on the ex-dividend date. Realized gains or losses from sales of securities are determined by comparing the identified cost of the security lot sold with the net sales proceeds.
Dividends and Distributions to Shareholders – Dividends from net investment income and net realized capital gains are declared and distributed annually. Dividends from net investment income and distributions from net realized gains are recorded on the ex-dividend date and determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either temporary (i.e., deferred losses, capital loss carry forwards) or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the composition of net assets based on their federal tax-basis treatment. Temporary differences do not require reclassification.
Federal Income Taxes – Each Fund qualifies as a regulated investment company by complying with the provisions of the Internal Revenue Code that are applicable to regulated investment companies and to distribute substantially all of its taxable income and net realized gains to shareholders. Therefore, no federal income tax provision has been recorded.
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 each Fund’s tax positions and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions on returns filed for the open tax periods ended September 30, 2020-September 30, 2022, or expected to be taken in each Fund’s September 30, 2023 year-end tax returns. The Funds identify their major tax jurisdictions as U.S. federal, Ohio and foreign jurisdictions where the Funds make significant investments. The Funds are not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next twelve months. The Funds recognize interest
20
Absolute Funds |
NOTES TO FINANCIAL STATEMENTS (Unaudited)(Continued) |
March 31, 2024 |
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.
Expenses – Expenses of the Trust that are directly identifiable to a specific fund are charged to that fund. Expenses, which are not readily identifiable to a specific fund, are allocated in such a manner as deemed equitable, taking into consideration the nature and type of expense and the relative sizes of the funds in the Trust.
Indemnification – The Trust indemnifies its officers and Trustees for certain liabilities that may arise from the performance of their duties to the Trust. Additionally, in the normal course of business, the Funds enter into contracts that contain a variety of representations and warranties and which provide general indemnities. The Funds’ maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Funds that have not yet occurred. However, based on experience, the risk of loss due to these warranties and indemnities appears to be remote.
3. | INVESTMENT TRANSACTIONS AND ASSOCIATED RISKS |
For the six months ended March 31, 2024, the aggregate purchases and sales of investments (excluding short-term investments and U.S. government securities) were:
Allocator Fund | Defender Fund | |||||||
Purchases | $ | 29,956,594 | $ | 14,010,954 | ||||
Sales | $ | 31,635,565 | $ | 20,575,533 |
Principal Investment Risks: As with all mutual funds, there is the risk that you could lose money through your investment in a Fund. Each Fund is not intended to be a complete investment program. Many factors affect each Fund’s net asset value and performance.
● | Emerging Market Risk: A Fund may invest in countries with newly organized or less developed securities markets. There are typically greater risks involved in investing in emerging markets securities. Generally, economic structures in these countries are less diverse and mature than those in developed countries and their political systems tend to be less stable. Emerging market countries may have different regulatory, accounting, auditing, and financial reporting and record keeping standards and may have material limitations on Public Company Accounting Oversight Board inspection, investigation, and enforcement. Therefore, the availability and reliability of information material to an investment decision, particularly financial information, in emerging market companies may be limited in scope and reliability as compared to information provided by U.S. companies. Emerging market economies may be based on only a few industries, therefore security issuers, including governments, may be more susceptible to economic weakness and more likely to default. Emerging market countries also may have relatively unstable governments, weaker economies, and less-developed legal systems with fewer security holder rights. A Fund’s performance may depend on issues other than those that affect U.S. companies and may be adversely affected by different rights and remedies associated with emerging market investments, or the lack thereof, compared to those associated with U.S. companies. Investments in emerging markets countries may be affected by government policies that restrict foreign investment in certain issuers or industries. The potentially smaller size of their securities markets and lower trading volumes can make investments relatively illiquid and potentially more volatile than investments in developed countries, and such securities may be subject to abrupt and severe price declines. Due to this relative lack of liquidity, a Fund may have to accept a lower price or may not be able to sell a portfolio security at all. An inability to sell a portfolio position can adversely affect a Fund’s value or prevent a Fund from being able to meet cash obligations or take advantage of other investment opportunities. |
● | Exchange Traded Notes: Similar to ETFs, owning an ETN generally reflects the risks of owning the assets that comprise the underlying market benchmark or strategy that the ETN is designed to reflect. ETNs also are subject to issuer and fixed-income risk. |
● | Management Risk: The net asset value of each Fund changes daily based on the performance of the securities and derivatives in which they invest. The Advisor’s judgments about the attractiveness, value and potential appreciation of particular asset classes and securities in which the Funds invest (long or short) may prove to be incorrect and may not produce the desired results. |
21
Absolute Funds |
NOTES TO FINANCIAL STATEMENTS (Unaudited)(Continued) |
March 31, 2024 |
● | Market and Geopolitical Risk: The increasing interconnectivity between global economies and financial markets increase the likelihood that events or conditions in one region or financial market may adversely impact issuers in a different country, region, or financial market. Securities in a Fund’s portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters, climate-change or climate-related events, pandemics, epidemics, terrorism, regulatory events, and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years may result in market volatility and may have long term effects on both the U.S. and global financial markets. |
● | Portfolio Turnover Risk: A higher portfolio turnover may result in higher transactional and brokerage costs associated with the turnover which may reduce a Fund’s returns, unless the securities traded can be bought and sold without corresponding commission costs. Active trading of securities may also increase a Fund’s realized capital gains or losses, which may affect the taxes you pay as a Fund shareholder. |
● | Underlying Funds Risk: The Funds invest in Underlying Funds. As a result, your cost of investing in a Fund will be higher than the cost of investing directly in Underlying Funds and may be higher than other mutual funds that invest directly in stocks and bonds. You will indirectly bear fees and expenses charged by the Underlying Funds in addition to a Fund’s direct fees and expenses. When the Funds invest in Underlying Funds that use margin, leverage, short sales and other forms of financial derivatives, such as options and futures, an investment in a Fund may be more volatile than investments in other mutual funds. Short sales are speculative investments and will cause the Funds to lose money if the value of a security sold short by a Fund, or an Underlying Fund in which the Fund invests, does not go down as the Advisor expects. |
4. | INVESTMENT ADVISORY AGREEMENT AND TRANSACTIONS WITH RELATED PARTIES |
Absolute Capital Management, LLC serves as each Fund’s investment advisor (the “Advisor”). Pursuant to an advisory agreement with the Trust on behalf of the Funds, the Advisor, under the oversight of the Board, 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, based on each Fund’s average daily net assets and is computed at the annual rate of 1.00%. Pursuant to the advisory agreement, the Allocator Fund and Defender Fund accrued $203,722 and $130,180, respectively, in advisory fees for the six months ended March 31, 2024.
The Advisor has entered into a contractual agreement (the “Waiver Agreement”) with each Fund under which it has agreed to waive its fees and reimburse expenses of the Funds, if necessary, in an amount that limits “Total Annual Fund Operating Expenses” (exclusive of (i) any front-end or contingent deferred loads; (ii) brokerage fees and commissions, (iii) acquired fund fees and expenses; (iv) borrowing costs (such as interest and dividend expense on securities sold short); (v) taxes; and (vi) extraordinary expenses, such as litigation expenses (which may include indemnification of Fund officers and Trustees, contractual indemnification of Fund service providers (other than the adviser) to 1.95%, 1.70% and 2.70% of average daily net assets attributable to Class A, Institutional Class and Investor Class, respectively, of each Fund through February 1, 2025. These fee waivers and expense reimbursements are subject to possible recoupment from each Fund in future years on a rolling three-year basis (within three years after the fees have been waived or reimbursed) if such recoupment can be achieved within the foregoing expense limits or the expense limits in place at the time of recoupment. The Board may terminate this Waiver Agreement at any time on 60 days' written notice to the Advisor. For the six months ended March 31, 2024, the Advisor waived fees and/or reimbursed expenses in the amount of $22,041 for the Defender Fund pursuant to the Waiver Agreement. For the six months ended March 31, 2024, the Advisor recouped $24,696 of previously waived fees for the Allocator Fund. Cumulative waivers and expense reimbursements subject to the aforementioned reimbursements will expire September 30 of the following years:
Allocator Fund | Defender Fund | |||||||
2024 | $ | 20,566 | $ | 53,476 | ||||
2025 | $ | 32,883 | $ | 54,156 | ||||
2026 | $ | — | $ | 41,165 |
22
Absolute Funds |
NOTES TO FINANCIAL STATEMENTS (Unaudited)(Continued) |
March 31, 2024 |
The Board, on behalf of the Funds, has adopted the Trust’s Master Distribution and Shareholder Servicing Plans for each of Class A and Investor Class shares (the “Plans”) pursuant to Rule 12b-1 under the 1940 Act. The Plans provide that a monthly service and/or distribution fee is calculated by each Fund at an annual rate of 0.25%, and 1.00% of the average daily net assets attributable to Class A and Investor Class shares, respectively. The fee is paid to Northern Lights Distributors, LLC (the “Distributor”) to provide compensation for ongoing distribution-related activities or services and/or maintenance of each Fund’s shareholder accounts, not otherwise required to be provided by the Advisor. For the six months ended March 31, 2024, pursuant to the Plans, Allocator Fund Class A and Investor Class paid $7,831 and $170,761, respectively. Defender Fund Class A and Investor Class paid $11,874 and $80,041, respectively.
The Distributor acts as the Funds’ principal underwriter in the continuous public offering of each Fund’s Class A, Institutional Class, and Investor Class shares. During the six months ended March 31, 2024, the Distributor received $196 in underwriting commissions for the sales of Class A for the Allocator Fund, of which $40 was retained by the principal underwriter. The Distributor received $65 in underwriting commissions for the sales of Class A for the Defender Fund, of which $13 was retained by the principal underwriter.
In addition, certain affiliates of the Distributor provide services to the Funds as follows:
Ultimus Fund Services, LLC (“UFS”)
UFS, an affiliate of the Distributor, provides administration, fund accounting, and transfer agent services to the Trust. Pursuant to separate servicing agreements 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 Trust, as well as related compliance services, pursuant to a consulting agreement between NLCS and the Trust. Under the terms of such agreement, NLCS receives customary fees from the Funds.
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.
5. | 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 March 31, 2024, were as follows:
Tax | Unrealized | Unrealized | Appreciation/ | |||||||||||||
Cost | Appreciation | Depreciation | (Depreciation) | |||||||||||||
Allocator Fund | $ | 39,171,757 | $ | 4,656,938 | $ | (26,719 | ) | $ | 4,630,219 | |||||||
Defender Fund | 23,826,651 | 1,820,105 | (32,010 | ) | 1,788,095 |
23
Absolute Funds |
NOTES TO FINANCIAL STATEMENTS (Unaudited)(Continued) |
March 31, 2024 |
6. | DISTRIBUTION TO SHAREHOLDERS AND TAX COMPONENTS OF CAPITAL |
The tax character of fund distributions paid for the year ended September 30, 2022 was as follows:
For fiscal year ended | Ordinary | Long-Term | Return of | |||||||||||||
9/30/2022 | Income | Capital Gains | Capital | Total | ||||||||||||
Allocator Fund | $ | 1,261,460 | $ | 1,501,659 | $ | — | $ | 2,763,119 | ||||||||
Defender Fund | 624,028 | 1,389,553 | — | 2,013,581 |
There were no Fund distributions for the year ended September 30, 2023.
As of September 30, 2023, the components of accumulated earnings/(deficit) on a tax basis were as follows:
Undistributed | Undistributed | Post October Loss | Capital Loss | Other | Unrealized | Total | ||||||||||||||||||||||
Net Investment | Long-Term | and | Carry | Book/Tax | Appreciation/ | Accumulated | ||||||||||||||||||||||
Income | Capital Gains | Late Year Loss | Forwards | Differences | (Depreciation) | Earnings/Deficit) | ||||||||||||||||||||||
Allocator Fund | $ | — | $ | — | $ | (118,885 | ) | $ | (1,561,004 | ) | $ | — | $ | 71,940 | $ | (1,607,949 | ) | |||||||||||
Defender Fund | — | — | — | (1,247,335 | ) | — | 156,540 | (1,090,795 | ) |
The difference between book basis and tax basis undistributed net investment income/(loss), accumulated net realized gain/(loss), and unrealized appreciation/(depreciation) from investments is primarily attributable to the tax deferral of losses on wash sales.
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 Absolute Capital Asset Allocator Fund incurred and elected to defer such late year losses as follows:
Late Year | ||||
Losses | ||||
Allocator Fund | $ | 79,829 |
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 Absolute Capital Asset Allocator Fund incurred and elected to defer such capital losses as follows:
Post October | ||||
Losses | ||||
Allocator Fund | $ | 39,056 |
Permanent book and tax differences, primarily attributable to tax adjustments for realized gain (loss) the book/tax basis treatment of net operating losses, resulted in reclassifications for the Fund for the fiscal year ended September 30, 2023, as follows:
Paid In | Accumulated | |||||||
Capital | Deficit | |||||||
Allocator Fund | $ | (197,011 | ) | $ | 197,011 | |||
Defender Fund | (85,324 | ) | 85,324 |
24
Absolute Funds |
NOTES TO FINANCIAL STATEMENTS (Unaudited)(Continued) |
March 31, 2024 |
7. | 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 pursuant to Section 2(a)(9) of the 1940 Act. As of March 31, 2024, beneficial ownership in excess of 25% was as follows:
Portfolio | Beneficial Owner | % of Outstanding Shares | ||
Allocator Fund | National Financial Services LLC | 57% | ||
Defender Fund | National Financial Services LLC | 46% |
8. | RECENT REGULATORY UPDATES |
On January 24, 2023, the SEC adopted rule and form amendments to require mutual funds and ETFs to transmit concise and visually engaging streamlined annual and semiannual reports to shareholders that highlight key information. Other information, including financial statements, will not appear in a streamlined shareholder report but must be available online, delivered free of charge upon request, and filed on a semiannual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Funds.
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.
25
Absolute Funds |
EXPENSE EXAMPLES (Unaudited) |
March 31, 2024 |
As a shareholder of a Fund you incur two types of costs: (1) transaction costs, including sales loads; (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 Allocator Fund or Defender Fund and 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 October 1, 2023 through March 31, 2024.
Actual Expenses
The “Actual” columns in the table 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 table 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 table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales loads, or redemption fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Fund’s | Beginning | Ending | Expenses Paid | Ending | Expenses Paid | |||||||||
Annualized | Account Value | Account Value | During Period * | Account Value | During * | |||||||||
Expense Ratio | 10/1/2023 | 3/31/2024 | 10/1/23-3/31/24 | 3/31/2024 | 10/1/23-3/31/24 | |||||||||
Class A: | ||||||||||||||
Absolute Capital Asset Allocator Fund | 1.95% | $1,000.00 | $1,161.90 | $100.54 | $1,015.25 | $9.82 | ||||||||
Absolute Capital Defender Fund | 1.95% | $1,000.00 | $1,102.20 | $10.25 | $1,015.25 | $9.82 | ||||||||
Institutional Class: | ||||||||||||||
Absolute Capital Asset Allocator Fund | 1.56% | $1,000.00 | $1,161.90 | $9.19 | $1,016.50 | $8.57 | ||||||||
Absolute Capital Defender Fund | 1.70% | $1,000.00 | $1,102.20 | $8.93 | $1,016.50 | $8.57 | ||||||||
Investor Class: | ||||||||||||||
Absolute Capital Asset Allocator Fund | 2.70% | $1,000.00 | $1,157.20 | $14.56 | $1,011.50 | $13.58 | ||||||||
Absolute Capital Defender Fund | 2.70% | $1,000.00 | $1,098.50 | $14.16 | $1,011.50 | $13.58 |
* | Expenses are equal to 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 (366). |
26
PRIVACY NOTICE | ||||
Rev. June 2021 | ||||
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
■ Assets
■ Retirement Assets
■ Transaction History
■ Checking Account Information | ■ Purchase History
■ Account Balances
■ Account Transactions
■ Wire Transfer Instructions
| |||
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 (631) 490-4300 |
27
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. |
28
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 1-855-645-5462 or by referring to the Securities and Exchange Commission’s (“SEC”) website at http://www.sec.gov.
PORTFOLIO HOLDINGS
The Funds file their complete schedule 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 1-877-594-1249.
INVESTMENT ADVISOR
Absolute Capital Management, LLC
101 Pennsylvania Blvd.
Pittsburgh, PA 15228
ADMINISTRATOR
Ultimus Fund Services, LLC
225 Pictoria Drive, Suite 450
Cincinnati, OH 45246
Absolute Capital-SAR-24
(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.
Item 2. Code of Ethics. Not applicable.
Item 3. Audit Committee Financial Expert. Not applicable.
Item 4. Principal Accountant Fees and Services. Not applicable.
Item 5. Audit Committee of Listed Companies. Not applicable to open-end investment companies.
Item 6. Schedule of Investments. Schedule of investments in securities of unaffiliated issuers is included under Item 1.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Funds. Not applicable to open-end investment companies.
Item 8. Portfolio Managers of Closed-End Management Investment Companies. Not applicable to open-end investment companies.
Item 9. Purchases of Equity Securities by Closed-End Funds. Not applicable to open-end investment companies.
Item 10. Submission of Matters to a Vote of Security Holders. None
Item 11. Controls and Procedures.
(a) Based on an evaluation of the Registrant’s disclosure controls and procedures as of a date within 90 days of filing date of this Form N-CSR, the principal executive officer and principal financial officer of the Registrant have concluded that the disclosure controls and procedures of the Registrant are reasonably designed to ensure that the information required in filings on Form N-CSR is recorded, processed, summarized, and reported by the filing date, including that information required to be disclosed is accumulated and communicated to the Registrant’s management, including the Registrant’s principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
(b) There were no significant changes in the Registrant’s internal control over financial reporting that occurred during the 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) Not applicable.
(a)(3) Not applicable for open-end investment companies.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Northern Lights Fund Trust III
By (Signature and Title)
/s/ Brian Curley
Brian Curley, President/Principal Executive Officer
Date 6/6/24
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By (Signature and Title)
/s/ Brian Curley
Brian Curley, President/Principal Executive Officer
Date 6/6/24
By (Signature and Title)
/s/ Rich Gleason
Rich Gleason, Treasurer/Principal Financial Officer
Date 6/6/24