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: 811-03752
AMG Funds III
(Exact name of registrant as specified in charter)
600 Steamboat Road, Suite 300, Greenwich, Connecticut 06830
(Address of principal executive offices) (Zip code)
AMG Funds LLC
600 Steamboat Road, Suite 300, Greenwich, Connecticut 06830
(Name and address of agent for service)
Registrants telephone number, including area code: (203) 299-3500
Date of fiscal year end: May 31
Date of reporting period: June 1, 2018 May 31, 2019
(Annual Shareholder Report)
Item 1. | Reports to Shareholders |
|
ANNUAL REPORT |
AMG Funds | ||||||
May 31, 2019 | ||||||
AMG Managers Cadence Mid Cap Fund | ||||||
Class N: MCMAX | |
Class I: MCMYX | | Class Z: MCMFX | ||||
AMG Managers Cadence Emerging Companies Fund | ||||||
Class N: MECAX | |
Class I: MECIX | | Class Z: MECZX | ||||
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Funds shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the Funds or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on the Funds website (https://www.amgfunds.com/resources/order_literature.html), and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Funds electronically at any time by contacting your financial intermediary or, if you invest directly with the Funds, by logging into your account at www.amgfunds.com.
You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. If you invest directly with the Funds, you can call 1.800.548.4539 to inform the Funds that you wish to continue receiving paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds in the AMG Funds Family of Funds held in your account if you invest through your financial intermediary or all funds in the AMG Funds Family of Funds held with the fund complex if you invest directly with the Funds.
amgfunds.com |
053119 AR065 | |
AMG Funds |
Annual Report May 31, 2019 |
|
PAGE | |||||||
2 | ||||||||
3 | ||||||||
PORTFOLIO MANAGERS COMMENTS, FUND SNAPSHOTS AND SCHEDULES OF PORTFOLIO INVESTMENTS | ||||||||
4 | ||||||||
9 | ||||||||
FINANCIAL STATEMENTS |
||||||||
15 | ||||||||
Balance sheets, net asset value (NAV) per share computations and cumulative distributable earnings (loss) |
||||||||
17 | ||||||||
Detail of sources of income, expenses, and realized and unrealized gains (losses) during the fiscal year |
||||||||
18 | ||||||||
Detail of changes in assets for the past two fiscal years |
||||||||
19 | ||||||||
Historical net asset values per share, distributions, total returns, income and expense ratios, turnover ratios and net assets |
||||||||
25 | ||||||||
Accounting and distribution policies, details of agreements and transactions with Fund management and affiliates, and descriptions of certain investment risks |
||||||||
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 31 | |||||||
32 | ||||||||
33 |
Nothing contained herein is to be considered an offer, sale or solicitation of an offer to buy shares of any series of the AMG Funds family of mutual funds. Such offering is made only by prospectus, which includes details as to offering price and other material information.
![]() |
|
|||
2 |
About Your Funds Expenses | ||||
As a shareholder of a Fund, you may incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; distribution (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on $1,000 invested at the beginning of the period and held for the entire period as indicated below.
ACTUAL EXPENSES
The first line of the following table provides information about the actual account values and |
actual expenses. You may use the information in this line, 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 first line 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 second line of the following table provides information about hypothetical account values and hypothetical expenses based on the Funds actual expense ratio and an assumed annual rate of return of 5% before expenses, which is not the Funds |
actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds by comparing this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. | ||
Six Months Ended May 31, 2019 |
Expense Ratio for the Period |
Beginning 12/01/18 |
Ending Account Value 05/31/19 |
Expenses Paid |
||||||
AMG Managers Cadence Mid Cap Fund |
| |||||||||
Based on Actual Fund Return | ||||||||||
Class N | 1.06% | $1,000 | $985 | $5.25 | ||||||
Class I | 0.87% | $1,000 | $986 | $4.31 | ||||||
Class Z | 0.72% | $1,000 | $987 | $3.57 | ||||||
Based on Hypothetical 5% Annual Return | ||||||||||
Class N | 1.06% | $1,000 | $1,020 | $5.34 | ||||||
Class I | 0.87% | $1,000 | $1,021 | $4.38 | ||||||
Class Z
|
0.72%
|
$1,000
|
$1,021
|
|
$3.63
|
| ||||
AMG Managers Cadence Emerging Companies Fund |
| |||||||||
Based on Actual Fund Return | ||||||||||
Class N | 1.15% | $1,000 | $925 | $5.52 | ||||||
Class I | 1.00% | $1,000 | $925 | $4.80 | ||||||
Class Z | 0.89% | $1,000 | $926 | $4.27 | ||||||
Based on Hypothetical 5% Annual Return | ||||||||||
Class N | 1.15% | $1,000 | $1,019 | $5.79 | ||||||
Class I | 1.10% | $1,000 | $1,020 | $5.04 | ||||||
Class Z | 0.89% | $1,000 | $1,020 | $4.48 |
* | Expenses are equal to the Funds annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year (182), then divided by 365. |
3 |
AMG Managers Cadence Mid Cap Fund | ||||
Portfolio Managers Comments (unaudited) |
For the fiscal year ended May 31, 2019, the AMG Managers Cadence Mid Cap Fund (Class Z) (the Fund or Portfolio) returned (3.73%), lagging its benchmark, the Russell Midcap® Growth Index, which returned 6.87%.
PERFORMANCE SUMMARY
The fiscal year ending May 31, 2019, was a volatile time in U.S. markets. Early strength was followed by near bear market conditions for the broad market in the fourth quarter of 2018, driven by fears of a Chinese trade war and indications of prolonged interest rate hikes from the U.S. Federal Reserve (the Fed). Trade deal optimism and a dovish pivot by the Fed spawned a strong recovery in Q1, leading the broad market (Russell 3000® Index) to almost hit new highs by early May 2019, before a breakdown in trade talks sent the market south by month-end. Smaller companies did not recover as strongly as larger-caps and remain well below their 2018 highs.
As mentioned, the fiscal year ended May 31, 2019, was a very volatile time in U.S. markets with a great deal of performance dispersion across styles and capitalization. Within the mid-cap space growth trounced value with the Russell Midcap Growth Index up 6.87%, outperforming value by nearly 9%.
The Funds disciplined growth strategy invests in stocks that exhibit a combination of growth, quality, and valuation. For the second year in a row, these attributes in our process served as a drag on results. Valuation underperformed as investors placed a strong premium on growth at any price. For example, our analysis shows the grouping of mid-cap growth stocks with a price-earnings ratio less than 24x (bottom two quintiles) strongly lagged the overall benchmark. When viewed from a price to cashflow perspective, results were even more revealing, with stocks with a P/CF of under 14x (again the bottom two quintiles) falling for the period while those with a P/CF over 18x (the top two quintiles) rose over 14% in the benchmark. In keeping with our approach, the Fund was overweight the more attractively valued stocks (lower valuation ratios) and underweight the more expensive ones (higher ratios). This pattern of |
reasonably valued stocks underperforming more expensive ones was pervasive across sectors, broadly hurting stock selection. Thus, our more conservative growth approach faced strong headwinds, whereas aggressive growth strategies once again had a strong tailwind. While the valuation component of our process has not been rewarded during this period, we believe consistent inclusion of valuation in our strategy is an important underpinning of sound investing over longer investment horizons.
At the sector level, technology was the dominant sector over this period and accounted for 65% of the Russell Midcap Growths performance. This sector detracted over -2% from relative performance, due to both allocation (underweighting a strong sector) and stock selection. Almost all of the strong returns in the benchmark were derived from the software and services industry group, which at approximately 21% of the benchmark was by far the largest weighting of all 24 industry groups. The Portfolios software and services holdings rose 22%, better than the benchmarks 21%. Nevertheless, the Portfolios underallocation (11% vs. 21%) detracted from relative performance. Many of this fiscal years top performing software and services stocks have elevated valuations and thus are beyond the reach of our disciplined growth process, accounting for much of the underweight. Stock selection in the semiconductor space also contributed to underperformance as this group was hurt most by sentiment around trade tensions, global growth worries, and supply chain concerns.
The consumer discretionary sector was also a large detractor with overweights in the auto industry and stock selection in retailing hurting performance. Stock performance in auto and auto parts was also a detractor, with all four of our holdings falling more than -25% for the year.
At the other end of the spectrum, healthcare and energy were top contributors to performance. While we held a market weight in healthcare, stock selection helped us outperform the benchmark by over 15% in the sector. Energy (the poorest |
performing sector in the index) was a different story in that we outperformed by avoiding the group altogether.
MARKET OUTLOOK
Looking ahead, economic statistics from employment to consumer spending continue to be healthy, although some, like industrial production, have retreated from recent highs. We wrote last year that trade policy has now taken center stage, and there it remains. The recent failure to strike a deal with China and the subsequent tit-for-tat tariff volleys have the market on edge. An escalation of tensions could negatively impact corporate earnings, and business confidence could suffer. The combination of cooling economic statistics and tariff uncertainty has not only paused the Feds pattern of rate increases over the last several years but has led to rising expectations for a Fed rate cut.
Despite recent machinations, we are optimistic about a trade resolution by year-end (as it is in the best interest of all parties) and continue to anticipate a generally favorable economic backdrop of modest growth. We remain optimistic regarding the potential impact of other fiscal or regulatory actions which would be beneficial for prospective earnings growth. Tax cuts have been favorable for corporate earnings and M&A activity. While gridlock rules Washington, bipartisan infrastructure-related initiatives may be still to come. While overall market valuations have risen broadly with 2019s sharp market bounce, they continue to look reasonable given the low interest rate environment.
Going forward, we remain focused on the implementation of our disciplined investment process, centered around bottom-up investment decision making, which over the long term has generated alpha from stock selection. Thank you for your continued support.
This commentary reflects the viewpoints of the Cadence Capital Management, LLC. as of May 31, 2019, and is not intended as a forecast or guarantee of future results. |
4 |
AMG Managers Cadence Mid Cap Fund | ||||
Portfolio Managers Comments (continued) |
5 |
AMG Managers Cadence Mid Cap Fund | ||||
Fund Snapshots (unaudited) May 31, 2019 |
Because a funds strategy may result in multiple investments in particular sectors of the economy, its performance may depend on the performance of those sectors and may fluctuate more widely than investments diversified across more sectors. For additional information on these and other risk considerations, please see the Funds prospectus.
Any sectors, industries, or securities discussed should not be perceived as investment recommendations. Mention of a specific security should not be considered a recommendation to buy or solicitation to sell that security. Specific securities mentioned in this report may have been sold from the Funds portfolio of investments by the time you receive this report.
6 |
AMG Managers Cadence Mid Cap Fund Schedule of Portfolio Investments |
||||
May 31, 2019 |
The accompanying notes are an integral part of these financial statements.
7 |
AMG Managers Cadence Mid Cap Fund |
||||
Schedule of Portfolio Investments (continued) |
The following table summarizes the inputs used to value the Funds investments by the fair value hierarchy levels as of May 31, 2019:
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Investments in Securities | ||||||||||||||||
Common Stocks |
$ | 98,299,880 | | | $ | 98,299,880 | ||||||||||
Short-Term Investments |
||||||||||||||||
Other Investment Companies |
1,590,384 | | | 1,590,384 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Investments in Securities |
$ | 99,890,264 | | | $ | 99,890,264 | ||||||||||
|
|
|
|
|
|
|
|
| All common stocks held in the Fund are Level 1 securities. For a detailed breakout of common stocks by major industry classification, please refer to the Funds Schedule of Portfolio Investments. |
For the fiscal year ended May 31, 2019, there were no transfers in or out of Level 3.
The accompanying notes are an integral part of these financial statements.
8 |
AMG Managers Cadence Emerging Companies Fund | ||||
Portfolio Managers Comments (unaudited) |
For the fiscal year ended May 31, 2019, the AMG Managers Cadence Emerging Companies Fund (Class I) (the Fund or Portfolio) returned (10.82%), outperforming its benchmark, the Russell Microcap® Growth Index, which returned (14.25%).
PERFORMANCE SUMMARY
The fiscal year ending May 31, 2019, was a volatile time in U.S. markets. Early strength was followed by near bear market conditions for the broad market in the fourth quarter of 2018, driven by fears of a Chinese trade war and indications of prolonged interest rate hikes from the U.S. Federal Reserve (the Fed). Smaller-cap names did indeed enter bear market territory, falling over 25% from their highs in early September. Trade deal optimism and a dovish pivot by the Fed spawned a strong recovery in Q1, leading the broad market (Russell 3000® Index) to almost hit new highs by early May 2019, before a breakdown in trade talks sent the market south by month-end. Small-cap companies did not recover as strongly as larger-caps and remain well below their 2018 highs.
As mentioned, the fiscal year ended May 31, 2019, was a very volatile time in U.S. markets with a great deal of performance dispersion across styles and capitalization. The Funds primary benchmark, the Russell Microcap Growth Index, fell -14.25% for the period. This loss trailed well behind the Funds secondary benchmark, the Russell 2000® Growth Index, which fell -6.88%. Small cap indices underperformed larger cap indices for the year. The Russell 1000® Growth Index and Russell Midcap® Growth Index rose 5.39% and 6.87%, respectively, as growth indices continued to trounce value benchmarks across the broad market. The Funds focus on smaller small cap stocks (from the bottom half of the Russell 2000®) worked against Portfolio returns given the notable underperformance of microcap stocks.
The Funds outperformance vs. its primary benchmark was driven by positive stock selection. At the sector level, healthcare, industrials, and information technology accounted for much of the Funds outperformance. Consumer discretionary detracted from relative performance.
Healthcare had the strongest contribution to relative outperformance. The Portfolios holdings in the pharmaceuticals, biotechnology, and life sciences industry group outpaced the benchmarks -20.3% decline due to strong stock selection and an
|
underweight position. We remind Fund investors that the Portfolio is historically underweight this industry group, as it is comprised of many companies which lose money, are not self-financing, and have business models predicated on scientific breakthroughs and regulatory approvals. This Portfolio positioning has added value over the long run, as it did this year. Nevertheless, there are periods, such as fiscal year 2018s strong up market, when the underweight hurts results. It is gratifying that this years +385 basis point relative contribution in the sector more than offset last years -331 basis point hit.
Industrials were also a notable contributor to outperformance. Fund holdings in the capital goods industry group rose 5.5% compared to the benchmarks capital goods position which fell -14.0%. Portfolio holdings ranged from industrial distributors to engineering & construction. There were no significant losers among the Funds holdings in this sector.
Information technology was another contributor to outperformance. Hardware stocks were top contributors, paced by manufacturers of optical components and wireless equipment. The Portfolios allocation to this sector rose during the year from approximately 15% to 20%, with attractive investments viewed across each of the three industry groups.
Fund holdings in defensive sectors contributed modestly to outperformance. The market peaked roughly around the beginning of the Funds fiscal year and closed the fiscal year with a negative return. The benchmarks three top performing sectors were utilities, real estate, and consumer staples, with gains of 16% to 26%. These buoyant sectors also likely benefited from falling interest rates during the period. The Portfolios allocation to these three sectors represented only 7.5% of the Portfolio, yet it was overweight the benchmarks 4.7%, and this over-allocation contributed modestly to outperformance.
Consumer discretionary was a notable detractor from relative performance, primarily due to poor stock selection in consumer durables and apparel. Several holdings, ranging from housing-related to electronics accessories, declined during the period and were sold from the Fund. These sales contributed to the decline in the Portfolios sector allocation during the year from approximately 11% to 8%. Cyclicality weighed on performance, as many |
|
stocks of economically sensitive companies were weak during the fiscal year as investors grappled with a potential peak in growth rates. This years performance in consumer discretionary is a bit of a give-back of 2018 performance, during which the sector was the top contributor. The sector has been strong contributor over the recent three- and five-year period, and longer.
MARKET OUTLOOK
Looking ahead, we intend to maintain the Portfolios pro-cyclical positioning. Economic statistics from employment to consumer spending continue to be healthy though some, like industrial production, have retreated from recent highs. We wrote last year that trade policy has now taken center stage, and there it remains. The recent failure to strike a deal with China and the subsequent tit-for-tat tariff volleys have the market on edge. An escalation of tensions could negatively impact corporate earnings and business confidence could suffer. The combination of cooling economic statistics and tariff uncertainty has not only paused the Feds pattern of rate increases over the last several years but has led to rising expectations for a Fed rate cut.
Despite recent machinations, we are optimistic about a trade resolution by year-end (as it is in the best interest of all parties) and continue to anticipate a generally favorable economic backdrop of modest growth. We remain optimistic regarding the potential impact of other fiscal or regulatory actions which would be beneficial for prospective earnings growth. Tax cuts have been favorable for corporate earnings and M&A activity. While gridlock rules in Washington, bipartisan infrastructure-related initiatives may be still to come. While valuations have risen broadly with 2019s sharp market bounce, they continue to look reasonable given the low interest rate environment, and small caps trade at a discount to large cap stocks.
Going forward, we remain focused on the implementation of our disciplined investment process, centered around bottom-up investment decision making, which over the long term and short term has generated alpha from strong stock selection. Thank you for your continued support.
This commentary reflects the viewpoints of the Cadence Capital Management, LLC as of May 31, 2019, and is not intended as a forecast or guarantee of future results. |
9 |
AMG Managers Cadence Emerging Companies Fund | ||||
Portfolio Managers Comments (continued) |
10 |
AMG Managers Cadence Emerging Companies Fund | ||||
Fund Snapshots (unaudited) May 31, 2019 |
Because a funds strategy may result in multiple investments in particular sectors of the economy, its performance may depend on the performance of those sectors and may fluctuate more widely than investments diversified across more sectors. For additional information on these and other risk considerations, please see the Funds prospectus.
Any sectors, industries, or securities discussed should not be perceived as investment recommendations. Mention of a specific security should not be considered a recommendation to buy or solicitation to sell that security. Specific securities mentioned in this report may have been sold from the Funds portfolio of investments by the time you receive this report.
11 |
AMG Managers Cadence Emerging Companies Fund | ||||
Schedule of Portfolio Investments May 31, 2019 |
The accompanying notes are an integral part of these financial statements. 12 |
AMG Managers Cadence Emerging Companies Fund Schedule of Portfolio Investments (continued) |
The accompanying notes are an integral part of these financial statements. |
13 |
AMG Managers Cadence Emerging Companies Fund | ||||
Schedule of Portfolio Investments (continued) |
The following table summarizes the inputs used to value the Funds investments by the fair value hierarchy levels as of May 31, 2019:
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Investments in Securities | ||||||||||||||||
Common Stocks |
$175,048,679 | | | $175,048,679 | ||||||||||||
Short-Term Investments |
||||||||||||||||
Joint Repurchase Agreements |
| $5,203,891 | | 5,203,891 | ||||||||||||
Other Investment Companies |
986,963 | | | 986,963 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Investments in Securities |
$176,035,642 | $5,203,891 | | $181,239,533 | ||||||||||||
|
|
|
|
|
|
|
|
| All common stocks held in the Fund are Level 1 securities. For a detailed breakout of common stocks by major industry classification, please refer to the Funds Schedule of Portfolio Investments. |
For the fiscal year ended May 31, 2019, there were no transfers in or out of Level 3.
The accompanying notes are an integral part of these financial statements. |
14 |
Statement of Assets and Liabilities | ||||
May 31, 2019 |
AMG Managers Cadence Mid Cap Fund |
AMG Managers Cadence Emerging Companies Fund |
|||||||
Assets: |
||||||||
Investments at value1 (including securities on loan valued at $6,025,915, and $24,078,486, respectively) |
$99,890,264 | $181,239,533 | ||||||
Receivable for investments sold |
| 551,362 | ||||||
Dividend, interest and other receivables |
113,367 | 101,792 | ||||||
Receivable for Fund shares sold |
13,127 | 44,510 | ||||||
Receivable from affiliate |
4,477 | 23,476 | ||||||
Prepaid expenses and other assets
|
24,720 | 32,215 | ||||||
Total assets
|
|
100,045,955
|
|
|
181,992,888
|
| ||
Liabilities: |
||||||||
Payable upon return of securities loaned |
| 5,203,891 | ||||||
Payable for investments purchased |
| 1,108,207 | ||||||
Payable for Fund shares repurchased |
46,777 | 178,348 | ||||||
Accrued expenses: |
||||||||
Investment advisory and management fees |
40,463 | 109,351 | ||||||
Administrative fees |
13,488 | 23,772 | ||||||
Distribution fees |
14,504 | | ||||||
Shareholder service fees |
5,021 | 30,797 | ||||||
Other
|
65,441 | 73,413 | ||||||
Total liabilities
|
185,694 | 6,727,779 | ||||||
Net Assets
|
$99,860,261 | $175,265,109 | ||||||
1 Investments at cost |
$91,188,704 | $185,993,514 |
The accompanying notes are an integral part of these financial statements. |
15 |
Statement of Assets and Liabilities (continued) | ||||
AMG Managers Cadence Mid Cap Fund |
AMG Managers Cadence Emerging Companies Fund |
|||||||
Net Assets Represent: |
||||||||
Paid-in capital |
$90,079,953 | $188,140,919 | ||||||
Total distributable earnings (loss)
|
9,780,308 | (12,875,810) | ||||||
Net Assets
|
|
$99,860,261
|
|
|
$175,265,109
|
| ||
Class N:
|
||||||||
Net Assets
|
|
$64,332,965
|
|
|
$32,440,224
|
| ||
Shares outstanding
|
2,658,558 | 678,053 | ||||||
Net asset value, offering and redemption price per share
|
|
$24.20
|
|
|
$47.84
|
| ||
Class I:
|
||||||||
Net Assets
|
|
$14,737,685
|
|
|
$116,100,591
|
| ||
Shares outstanding
|
584,963 | 2,219,104 | ||||||
Net asset value, offering and redemption price per share
|
|
$25.19
|
|
|
$52.32
|
| ||
Class Z:
|
||||||||
Net Assets
|
|
$20,789,611
|
|
|
$26,724,294
|
| ||
Shares outstanding
|
780,145 | 509,704 | ||||||
Net asset value, offering and redemption price per share
|
|
$26.65
|
|
|
$52.43
|
|
The accompanying notes are an integral part of these financial statements. |
16 |
Statement of Operations | ||||
For the fiscal year ended May 31, 2019 |
AMG Managers Cadence Mid Cap Fund |
AMG Managers Cadence Emerging Companies Fund |
|||||||
Investment Income: |
||||||||
Dividend income |
$1,335,825 | $983,953 | ||||||
Interest income |
| 715 | ||||||
Securities lending income |
26,023 | 41,700 | ||||||
Total investment income
|
|
1,361,848
|
|
|
1,026,368
|
| ||
Expenses: |
||||||||
Investment advisory and management fees |
520,926 | 1,246,974 | ||||||
Administrative fees |
173,642 | 271,081 | ||||||
Distribution fees - Class N |
188,474 | | ||||||
Shareholder servicing fees - Class N |
74,706 | 83,585 | ||||||
Shareholder servicing fees - Class I |
24,204 | 115,307 | ||||||
Registration fees |
52,675 | 60,601 | ||||||
Professional fees |
35,218 | 38,595 | ||||||
Reports to shareholders |
28,533 | 40,047 | ||||||
Custodian fees |
23,010 | 42,529 | ||||||
Transfer agent fees |
20,894 | 6,943 | ||||||
Trustee fees and expenses |
8,378 | 11,569 | ||||||
Miscellaneous |
|
5,182 |
|
|
5,982 |
| ||
Total expenses before offsets
|
|
1,155,842
|
|
|
1,923,213
|
| ||
Expense reimbursements |
(34,975) | (115,905) | ||||||
Net expenses
|
|
1,120,867
|
|
|
1,807,308
|
| ||
Net investment income (loss)
|
|
240,981
|
|
|
(780,940)
|
| ||
Net Realized and Unrealized Loss: |
||||||||
Net realized gain (loss) on investments |
8,978,011 | (734,635) | ||||||
Net change in unrealized appreciation/depreciation on investments |
(13,958,181) | (22,994,817) | ||||||
Net realized and unrealized loss
|
|
(4,980,170)
|
|
|
(23,729,452)
|
| ||
Net decrease in net assets resulting from operations
|
|
$(4,739,189)
|
|
|
$(24,510,392)
|
|
The accompanying notes are an integral part of these financial statements. |
17 |
Statements of Changes in Net Assets | ||||
For the fiscal years ended May 31, |
AMG | AMG | |||||||||||||||
Managers | Managers Cadence | |||||||||||||||
Cadence Mid Cap Fund | Emerging Companies Fund | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Increase (Decrease) in Net Assets Resulting From Operations: |
|
|||||||||||||||
Net investment income (loss) |
$240,981 | $147,767 | $(780,940 | ) | $(372,051 | ) | ||||||||||
Net realized gain (loss) on investments |
8,978,011 | 13,993,660 | (734,635 | ) | 14,455,489 | |||||||||||
Net change in unrealized appreciation/depreciation on investments |
(13,958,181 | ) | 5,322,340 | (22,994,817 | ) | 10,412,277 | ||||||||||
Net increase (decrease) in net assets resulting from operations
|
|
(4,739,189
|
)
|
|
19,463,767
|
|
|
(24,510,392
|
)
|
|
24,495,715
|
| ||||
Distributions to Shareholders:1 |
|
|||||||||||||||
Class N |
(11,671,054 | ) | (9,470,697 | ) | (3,105,279 | ) | | |||||||||
Class I |
(2,512,248 | ) | (1,635,519 | ) | (8,893,635 | ) | | |||||||||
Class Z |
(3,599,803 | ) | (2,690,280 | ) | (2,214,428 | ) | | |||||||||
Total distributions to shareholders
|
|
(17,783,105
|
)
|
|
(13,796,496
|
)
|
|
(14,213,342
|
)
|
| ||||||
Capital Share Transactions:2 |
|
|||||||||||||||
Net increase (decrease) from capital share transactions
|
|
(6,080,790
|
)
|
|
(2,318,922
|
)
|
|
81,488,589
|
|
|
37,608,483
|
| ||||
Total increase (decrease) in net assets
|
|
(28,603,084
|
)
|
|
3,348,349
|
|
|
42,764,855
|
|
|
62,104,198
|
| ||||
Net Assets:3 |
|
|||||||||||||||
Beginning of year
|
128,463,345 | 125,114,996 | 132,500,254 | 70,396,056 | ||||||||||||
End of year |
$99,860,261 | $128,463,345 | $175,265,109 | $132,500,254 | ||||||||||||
1 | See Note 1(d) of the Notes to Financial Statements. |
2 | See Note 1(g) of the Notes to Financial Statements. |
3 | Net assets - End of year includes undistributed (distributions in excess of) net investment income of $159,559 and $(188,620) for AMG Managers Cadence Mid Cap Fund and AMG Managers Cadence Emerging Companies Fund, respectively, in 2018. During the fiscal year ended May 31, 2019, the requirement to disclose undistributed (distribution in excess of) net investment income was eliminated. |
The accompanying notes are an integral part of these financial statements. |
18 |
AMG Managers Cadence Mid Cap Fund | ||||
Financial Highlights | ||||
For a share outstanding throughout each fiscal year |
For the fiscal years ended May 31, |
||||||||||||||||||||
Class N | 2019 | 2018 | 20171 | 2016 | 2015 | |||||||||||||||
Net Asset Value, Beginning of Year |
$30.86 | $29.66 | $26.87 | $32.15 | $34.15 | |||||||||||||||
Income (loss) from Investment Operations: |
||||||||||||||||||||
Net investment income (loss)2,3 |
0.03 | 0.01 | (0.09) | 0.19 | 4 | (0.06) | ||||||||||||||
Net realized and unrealized gain (loss) on investments |
(1.78) | 4.75 | 4.58 | (2.32) | 4.88 | |||||||||||||||
Total income (loss) from investment operations |
(1.75) | 4.76 | 4.49 | (2.13) | 4.82 | |||||||||||||||
Less Distributions to Shareholders from: | ||||||||||||||||||||
Net investment income |
(0.03) | | (0.16) | | | |||||||||||||||
Net realized gain on investments |
(4.88) | (3.56) | (1.54) | (3.15) | (6.82) | |||||||||||||||
Total distributions to shareholders |
(4.91) | (3.56) | (1.70) | (3.15) | (6.82) | |||||||||||||||
Net Asset Value, End of Year |
$24.20 | $30.86 | $29.66 | $26.87 | $32.15 | |||||||||||||||
Total Return3,5 |
(4.06) | % | 16.25 | % | 17.23 | % | (6.64) | % | 15.14 | % | ||||||||||
Ratio of net expenses to average net assets6 |
1.07 | % | 1.08 | % | 1.10 | % | 1.11 | % | 1.12 | % | ||||||||||
Ratio of gross expenses to average net assets7 |
1.10 | % | 1.09 | % | 1.14 | % | 1.21 | % | 1.19 | % | ||||||||||
Ratio of net investment income (loss) to average net assets3 |
0.11 | % | 0.02 | % | (0.31) | % | 0.67 | % | (0.16) | % | ||||||||||
Portfolio turnover |
46 | % | 72 | % | 141 | % | 149 | % | 130 | % | ||||||||||
Net assets end of year (000s) omitted |
$64,333 | $86,096 | $84,873 | $89,179 | $116,666 | |||||||||||||||
19 |
AMG Managers Cadence Mid Cap Fund | ||||
Financial Highlights | ||||
For a share outstanding throughout each fiscal year |
For the fiscal years ended May 31, | ||||||||||||||||||||
Class I
|
2019 | 2018 | 20171 | 2016 | 2015 | |||||||||||||||
Net Asset Value, Beginning of Year
|
|
$31.93
|
|
|
$30.52
|
|
|
$27.65
|
|
|
$33.07
|
|
|
$35.04
|
| |||||
Income (loss) from Investment Operations:
|
||||||||||||||||||||
Net investment income (loss)2,3
|
0.09 | 0.07 | (0.03 | ) | 0.25 | 4 | (0.01 | ) | ||||||||||||
Net realized and unrealized gain (loss) on investments
|
(1.85 | ) | 4.90 | 4.70 | (2.39 | ) | 5.02 | |||||||||||||
Total income (loss) from investment operations
|
|
(1.76
|
)
|
|
4.97
|
|
|
4.67
|
|
|
(2.14
|
)
|
|
5.01
|
| |||||
Less Distributions to Shareholders from:
|
||||||||||||||||||||
Net investment income
|
(0.10 | ) | | (0.21 | ) | (0.03 | ) | | ||||||||||||
Net realized gain on investments
|
(4.88 | ) | (3.56 | ) | (1.59 | ) | (3.25 | ) | (6.98 | ) | ||||||||||
Total distributions to shareholders
|
|
(4.98
|
)
|
|
(3.56
|
)
|
|
(1.80
|
)
|
|
(3.28
|
)
|
|
(6.98
|
)
| |||||
Net Asset Value, End of Year
|
$25.19 | $31.93 | $30.52 | $27.65 | $33.07 | |||||||||||||||
Total Return3,5
|
|
(3.90
|
)%
|
|
16.49
|
%
|
|
17.44
|
%
|
|
(6.50
|
)%
|
|
15.34
|
%
| |||||
Ratio of net expenses to average net assets6
|
0.87 | % | 0.87 | % | 0.90 | % | 0.97 | % | 0.97 | % | ||||||||||
Ratio of gross expenses to average net assets7
|
0.90 | % | 0.88 | % | 0.95 | % | 1.07 | % | 1.04 | % | ||||||||||
Ratio of net investment income (loss) to average net assets3
|
0.31 | % | 0.22 | % | (0.11 | )% | 0.86 | % | (0.01 | )% | ||||||||||
Portfolio turnover
|
46 | % | 72 | % | 141 | % | 149 | % | 130 | % | ||||||||||
Net assets end of year (000s) omitted |
$14,738 | $16,516 | $15,245 | $13,715 | $14,809 | |||||||||||||||
20 |
AMG Managers Cadence Mid Cap Fund | ||||
Financial Highlights | ||||
For a share outstanding throughout each fiscal year |
For the fiscal years ended May 31, | ||||||||||||||||||||
Class Z
|
2019
|
2018
|
20171
|
2016
|
2015
|
|||||||||||||||
Net Asset Value, Beginning of Year
|
|
$33.45
|
|
|
$31.78
|
|
|
$28.79
|
|
|
$34.45
|
|
|
$36.44
|
| |||||
Income (loss) from Investment Operations:
|
||||||||||||||||||||
Net investment income2,3
|
0.14 | 0.12 | 0.02 | 0.33 | 4 | 0.09 | ||||||||||||||
Net realized and unrealized gain (loss) on investments
|
(1.91 | ) | 5.11 | 4.92 | (2.49 | ) | 5.21 | |||||||||||||
Total income (loss) from investment operations
|
|
(1.77
|
)
|
|
5.23
|
|
|
4.94
|
|
|
(2.16
|
)
|
|
5.30
|
| |||||
Less Distributions to Shareholders from:
|
||||||||||||||||||||
Net investment income
|
(0.15 | ) | | (0.29 | ) | (0.11 | ) | | ||||||||||||
Net realized gain on investments
|
(4.88 | ) | (3.56 | ) | (1.66 | ) | (3.39 | ) | (7.29 | ) | ||||||||||
Total distributions to shareholders
|
|
(5.03
|
)
|
|
(3.56
|
)
|
|
(1.95
|
)
|
|
(3.50
|
)
|
|
(7.29
|
)
| |||||
Net Asset Value, End of Year
|
$26.65 | $33.45 | $31.78 | $28.79 | $34.45 | |||||||||||||||
Total Return3,5
|
|
(3.73
|
)%
|
|
16.66
|
%
|
|
17.71
|
%
|
|
(6.28
|
)%
|
|
15.62
|
%
| |||||
Ratio of net expenses to average net assets6
|
0.72 | % | 0.72 | % | 0.72 | % | 0.72 | % | 0.72 | % | ||||||||||
Ratio of gross expenses to average net assets7
|
0.75 | % | 0.73 | % | 0.76 | % | 0.82 | % | 0.79 | % | ||||||||||
Ratio of net investment income to average net assets3
|
0.46 | % | 0.37 | % | 0.07 | % | 1.07 | % | 0.24 | % | ||||||||||
Portfolio turnover
|
46 | % | 72 | % | 141 | % | 149 | % | 130 | % | ||||||||||
Net assets end of year (000s) omitted |
$20,790 | $25,851 | $24,997 | $26,636 | $33,693 | |||||||||||||||
1 | Effective October 1, 2016, the Investor Class, Service Class and Institutional Class were renamed Class N, Class I and Class Z, respectively. |
2 | Per share numbers have been calculated using average shares. |
3 | Total returns and net investment income (loss) would have been lower had certain expenses not been offset. |
4 | Includes non-recurring dividends. Without these dividends, net investment income per share would have been $0.01, $0.07, and $0.13 for Class N, Class I, and Class Z, respectively. |
5 | The total return is calculated using the published Net Asset Value as of fiscal year end. |
6 | Includes reduction from broker recapture amounting to 0.01% for the fiscal year ended 2015. |
7 | Excludes the impact of expense reimbursement or fee waivers and expense reductions such as brokerage credits, but includes expense repayments and non-reimbursable expenses, if any, such as interest, taxes, and extraordinary expenses. (See Note 1(c) and 2 in the Notes to Financial Statements.) |
21 |
AMG Managers Cadence Emerging Companies Fund | ||||
Financial Highlights | ||||
For a share outstanding throughout each fiscal year |
For the fiscal years ended May 31, | ||||||||||||||||||||
Class N | 2019 | 2018 | 20171 | 2016 | 2015 | |||||||||||||||
Net Asset Value, Beginning of Year
|
|
$59.14
|
|
|
$45.76
|
|
|
$36.33
|
|
|
$35.29
|
|
|
$30.70
|
| |||||
Income (loss) from Investment Operations: |
||||||||||||||||||||
Net investment loss2,3 |
(0.30 | ) | (0.25 | )4 | (0.36 | )5 | (0.33 | )6 | (0.32 | )7 | ||||||||||
Net realized and unrealized gain (loss) on investments |
(6.47 | ) | 13.63 | 9.79 | 1.37 | 4.91 | ||||||||||||||
Total income (loss) from investment operations |
|
(6.77
|
)
|
|
13.38
|
|
|
9.43
|
|
|
1.04
|
|
|
4.59
|
| |||||
Less Distributions to Shareholders from: |
||||||||||||||||||||
Net realized gain on investments |
(4.53 | ) | | | | | ||||||||||||||
Net Asset Value, End of Year |
|
$47.84
|
|
|
$59.14
|
|
|
$45.76
|
|
|
$36.33
|
|
|
$35.29
|
| |||||
Total Return3 |
|
(10.92 |
)%8 |
29.24 | %8 | |
25.92 |
% |
2.95 | % | 14.95 | %8 | ||||||||
Ratio of net expenses to average net assets9 |
1.11 | % | 1.08 | % | 1.62 | % | 1.65 | % | 1.66 | % | ||||||||||
Ratio of gross expenses to average net assets10 |
1.17 | % | 1.20 | % | 1.79 | % | 1.97 | % | 1.96 | % | ||||||||||
Ratio of net investment loss to average net assets3 |
(0.54 | )% | (0.47 | )% | (0.83 | )% | (0.96 | )% | (0.98 | )% | ||||||||||
Portfolio turnover |
96 | % | 89 | % | 90 | % | 150 | % | 146 | % | ||||||||||
Net assets end of year (000s) omitted |
$ | 32,440 | $ | 23,759 | $ | 13,446 | $3,099 | $3,143 | ||||||||||||
22 |
AMG Managers Cadence Emerging Companies Fund | ||||
Financial Highlights | ||||
For a share outstanding throughout each fiscal year |
For the fiscal years ended May 31, | ||||||||||||||||||||
Class I
|
2019 | 2018 | 20171 | 2016 | 2015 | |||||||||||||||
Net Asset Value, Beginning of Year
|
$64.10 | $49.54 | $39.25 | $38.04 | $33.00 | |||||||||||||||
Income (loss) from Investment Operations:
|
||||||||||||||||||||
Net investment loss2,3
|
(0.25 | ) | (0.21 | )4 | (0.29 | )5 | (0.27 | )6 | (0.25 | )7 | ||||||||||
Net realized and unrealized gain (loss) on investments
|
(7.00 | ) | 14.77 | 10.58 | 1.48 | 5.29 | ||||||||||||||
Total income (loss) from investment operations
|
|
(7.25
|
)
|
|
14.56
|
|
|
10.29
|
|
|
1.21
|
|
|
5.04
|
| |||||
Less Distributions to Shareholders from:
|
||||||||||||||||||||
Net realized gain on investments
|
(4.53 | ) | | | | | ||||||||||||||
Net Asset Value, End of Year |
$52.32 | $64.10 | $49.54 | $39.25 | $38.04 | |||||||||||||||
Total Return3,8 |
|
(10.82
|
)%
|
|
29.39
|
%
|
|
26.22
|
%
|
|
3.18
|
%
|
|
15.27
|
%
| |||||
Ratio of net expenses to average net assets9
|
0.99 | % | 0.98 | % | 1.42 | % | 1.42 | % | 1.41 | % | ||||||||||
Ratio of gross expenses to average net assets10
|
1.05 | % | 1.10 | % | 1.60 | % | 1.74 | % | 1.71 | % | ||||||||||
Ratio of net investment loss to average net assets3
|
(0.42 | )% | (0.37 | )% | (0.64 | )% | (0.71 | )% | (0.73 | )% | ||||||||||
Portfolio turnover
|
96 | % | 89 | % | 90 | % | 150 | % | 146 | % | ||||||||||
Net assets end of year (000s) omitted |
$116,101 | $85,329 | $56,850 | $36,064 | $34,566 | |||||||||||||||
23 |
AMG Managers Cadence Emerging Companies Fund | ||||
Financial Highlights |
||||
For a share outstanding throughout each fiscal year |
For the fiscal years ended May 31, | ||||||||
Class Z | 2019 | 201811 | ||||||
Net Asset Value, Beginning of Year
|
|
$64.16
|
|
|
$49.54
|
| ||
Income (loss) from Investment Operations:
|
||||||||
Net investment loss2,3 |
(0.19 | ) | (0.17 | )4 | ||||
Net realized and unrealized gain (loss) on investments |
(7.01 | ) | 14.79 | |||||
Total income (loss) from investment operations
|
|
(7.20
|
)
|
|
14.62
|
| ||
Less Distributions to Shareholders from: |
||||||||
Net realized gain on investments
|
|
(4.53
|
)
|
|
|
| ||
Net Asset Value, End of Year |
$52.43 | $64.16 | ||||||
Total Return3,8
|
|
(10.73
|
)%
|
|
29.51
|
%
| ||
Ratio of net expenses to average net assets |
0.89 | % | 0.89 | % | ||||
Ratio of gross expenses to average net assets10 |
0.95 | % | 1.01 | % | ||||
Ratio of net investment loss to average net assets3 |
(0.32 | )% | (0.28 | )% | ||||
Portfolio turnover |
96 | % | 89 | % | ||||
Net assets end of year (000s) omitted |
$26,724 | $23,412 | ||||||
1 | Effective October 1, 2016, the Service Class and Institutional Class were renamed Class S and Class I, respectively. Effective February 27, 2017, Class S was renamed Class N. |
2 | Per share numbers have been calculated using average shares. |
3 | Total returns and net investment loss would have been lower had certain expenses not been offset. |
4 | Includes non-recurring dividends. Without these dividends, net investment loss per share would have been $(0.26), $(0.23), and $(0.19) for Class N, Class I and Class Z shares, respectively. |
5 | Includes non-recurring dividends. Without these dividends, net investment loss per share would have been $(0.38) and $(0.31) for Class N and Class I, respectively. |
6 | Includes non-recurring dividends. Without these dividends, net investment loss per share would have been $(0.36) and $(0.29) for Class N and Class I, respectively. |
7 | Includes non-recurring dividends. Without these dividends, net investment loss per share would have been $(0.33) and $(0.27) for Class N and Class I, respectively. |
8 | The total return is calculated using the published Net Asset Value as of fiscal year end. |
9 | Includes reduction from broker recapture amounting to 0.01% for the fiscal year ended 2015. |
10 | Excludes the impact of expense reimbursement or fee waivers and expense reductions such as brokerage credits, but includes expense repayments and non-reimbursable expenses, if any, such as interest, taxes, and extraordinary expenses. (See Note 1(c) and 2 in the Notes to Financial Statements.) |
11 | Commencement of operations was on May 31, 2017. |
24 |
Notes to Financial Statements | ||||
May 31, 2019 |
25 |
Notes to Financial Statements (continued) | ||||
The tax character of distributions paid during the fiscal years ended May 31, 2019 and May 31, 2018 were as follows:
Mid Cap | Emerging Companies | |||||||||||||||
Distributions paid from:
|
2019
|
2018
|
2019
|
2018
|
||||||||||||
Ordinary income |
$217,239 | | | | ||||||||||||
Short-term capital gains |
1,399,791 | $3,519,352 | $1,420,874 | | ||||||||||||
Long-term capital gains |
16,166,075 | 10,277,144 | 12,792,468 | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
$17,783,105 | $13,796,496 | $14,213,342 | | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||
As of May 31, 2019, the components of distributable earnings (excluding unrealized appreciation/depreciation) on a tax basis consisted of:
Mid Cap
|
Emerging Companies
|
|||||||
Capital loss carryforward
|
|
|
|
|
|
| ||
Undistributed ordinary income
|
|
$252,800
|
|
|
|
| ||
Undistributed short-term capital gains
|
|
|
|
|
|
| ||
Undistributed long-term capital gains
|
|
850,853
|
|
|
|
| ||
Late-year loss deferral |
|
|
|
|
$8,011,749
|
|
26 |
Notes to Financial Statements (continued) | ||||
At May 31, 2019, the cost of investments and the aggregate gross unrealized appreciation and depreciation for federal income tax purposes were as follows:
Fund
|
Cost
|
Appreciation
|
Depreciation
|
Net
|
||||||||||||
Mid Cap
|
|
$91,213,609
|
|
|
$15,669,469
|
|
|
$(6,992,814)
|
|
|
$8,676,655
|
| ||||
Emerging Companies |
186,103,594 | 13,234,140 | (18,098,201) | (4,864,061) |
g. CAPITAL STOCK
The Trusts Declaration of Trust authorizes for each Fund the issuance of an unlimited number of shares of beneficial interest, without par value. Each Fund records sales and repurchases of its capital stock on the trade date.
For the fiscal years ended May 31, 2019 and May 31, 2018, the capital stock transactions by class for the Funds were as follows:
Mid Cap
|
Emerging Companies
|
|||||||||||||||||||||||||||||||
May 31, 2019
|
May 31, 2018
|
May 31, 2019
|
May 31, 2018
|
|||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||||||||||||
Class N:
|
||||||||||||||||||||||||||||||||
Proceeds from sale of shares
|
76,652 | $2,046,041 | 79,386 | $2,468,248 | 553,435 | $32,853,873 | 203,266 | $10,809,102 | ||||||||||||||||||||||||
Reinvestment of distributions
|
498,568 | 10,938,587 | 283,917 | 8,616,888 | 69,190 | 3,097,621 | | | ||||||||||||||||||||||||
Cost of shares repurchased
|
(706,402) | (19,940,058) | (434,937) | (13,456,952) | (346,279) | (18,720,758) | (95,372) | (4,974,586) | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Net increase (decrease)
|
(131,182) | $(6,955,430) | (71,634) | $(2,371,816) | 276,346 | $17,230,736 | 107,894 | $5,834,516 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Class I:
|
||||||||||||||||||||||||||||||||
Proceeds from sale of shares
|
95,778 | $2,937,073 | 94,171 | $3,030,852 | 1,555,248 | $95,289,101 | 999,353 | $57,934,341 | ||||||||||||||||||||||||
Reinvestment of distributions
|
109,623 | 2,501,590 | 51,845 | 1,626,363 | 181,635 | 8,885,595 | | | ||||||||||||||||||||||||
Cost of shares repurchased
|
(137,754) | (4,015,046) | (128,235) | (4,114,931) | (849,043) | (48,666,379) | (815,553) | (47,238,166) | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Net increase
|
67,647 | $1,423,617 | 17,781 | $542,284 | 887,840 | $55,508,317 | 183,800 | $10,696,175 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Class Z:
|
||||||||||||||||||||||||||||||||
Proceeds from sale of shares
|
101,826 | $3,055,443 | 66,413 | $2,199,000 | 197,498 | $12,164,785 | 394,060 | $22,907,969 | ||||||||||||||||||||||||
Reinvestment of distributions
|
125,549 | 3,028,249 | 68,772 | 2,259,153 | 44,817 | 2,196,036 | | | ||||||||||||||||||||||||
Cost of shares repurchased
|
(220,047) | (6,632,669) | (148,964) | (4,947,543) | (97,530) | (5,611,285) | (31,160) | (1,830,177) | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Net increase (decrease)
|
7,328 | $(548,977) | (13,779) | $(489,390) | 144,785 | $8,749,536 | 362,900 | $21,077,792 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27 |
Notes to Financial Statements (continued) | ||||
28 |
Notes to Financial Statements (continued) | ||||
29 |
Notes to Financial Statements (continued) | ||||
The following table is a summary of the Funds open Repurchase Agreements that are subject to a master netting agreement as of May 31, 2019:
Gross Amount Not Offset in the | ||||||||||
Statement of Assets and Liabilities |
||||||||||
Fund | Gross Amounts of Assets Presented in the Statement of Assets and Liabilities |
Offset Amount |
Net Asset Balance |
Collateral Received |
Net Amount | |||||
Emerging Companies
|
||||||||||
BNP Paribas S.A. |
$259,855 | | $259,855 | $259,855 | | |||||
Citigroup Global Markets, Inc. |
1,236,009 | | 1,236,009 | 1,236,009 | | |||||
Daiwa Capital Markets America |
1,236,009 | | 1,236,009 | 1,236,009 | | |||||
HSBC Securities USA, Inc. |
1,236,009 | | 1,236,009 | 1,236,009 | | |||||
Morgan, Stanley & Co. LLC |
1,236,009 | | 1,236,009 | 1,236,009 | | |||||
|
|
|
|
| ||||||
Total |
$5,203,891 | | $5,203,891 | $5,203,891 | | |||||
|
|
|
|
|
30 |
Report of Independent Registered Public Accounting Firm | ||||
TO THE BOARD OF TRUSTEES OF AMG FUNDS III AND SHAREHOLDERS OF AMG MANAGERS CADENCE EMERGING COMPANIES FUND AND AMG MANAGERS CADENCE MID CAP FUND
Opinions on the Financial Statements
We have audited the accompanying statements of assets and liabilities, including the schedules of portfolio investments, of AMG Managers Cadence Emerging Companies Fund and AMG Managers Cadence Mid Cap Fund, (two of the funds constituting AMG Funds III, hereafter collectively referred to as the Funds) as of May 31, 2019, the related statements of operations for the year ended May 31, 2019, the statements of changes in net assets for each of the two years in the period ended May 31, 2019, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of May 31, 2019, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period ended May 31, 2019 and each of the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinions
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 of these financial statements 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 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. Our procedures included confirmation of securities owned as of May 31, 2019 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinions.
PricewaterhouseCoopers LLP
Boston, Massachusetts
July 26, 2019
We have served as the auditor of one or more investment companies in the AMG Funds Family since 1993.
31 |
Other Information |
TAX INFORMATION
32 |
AMG Funds | ||||
Trustees and Officers |
The Trustees and Officers of the Trust, their business addresses, principal occupations for the past five years and ages are listed below. The Trustees provide broad supervision over the affairs of the Trust and the Funds. The Trustees are experienced executives who meet periodically throughout the year to oversee the Funds activities, review contractual arrangements with companies that provide services to the Funds, and | review the Funds performance. Unless otherwise noted, the address of each Trustee or Officer is the address of the Trust: 600 Steamboat Road, Suite 300, Greenwich, Connecticut 06830.
There is no stated term of office for Trustees. Trustees serve until their resignation, retirement or removal in |
accordance with the Trusts organizational documents and policies adopted by the Board from time to time. The Chairman of the Trustees, President, Treasurer and Secretary of the Trust are elected by the Trustees annually. Other officers hold office at the pleasure of the Trustees. |
Independent Trustees
The following Trustees are not interested persons of the Trust within the meaning of the 1940 Act:
Number of Funds Overseen in Fund Complex |
Name, Age, Principal Occupation(s) During Past 5 Years and Other Directorships Held by Trustee | |
Trustee since 2012 Oversees 53 Funds in Fund Complex
|
Bruce B. Bingham, 70 Partner, Hamilton Partners (real estate development firm) (1987-Present); Director of The Yacktman Funds (2000-2012).
| |
Trustee since 1999 Oversees 53 Funds in Fund Complex |
Edward J. Kaier, 73 Attorney at Law and Partner, Teeters Harvey Marrone & Kaier LLP (2007-Present); Attorney at Law and Partner, Hepburn Willcox Hamilton & Putnam, LLP (1977-2007); Trustee of Third Avenue Trust (3 portfolios); Trustee of Third Avenue Variable Trust (1 portfolio).
| |
Trustee since 2013 Oversees 56 Funds in Fund Complex |
Kurt A. Keilhacker, 55 Managing Partner, TechFund Capital (1997-Present); Managing Partner, TechFund Europe (2000-Present); Board Member, 6wind SA, (2002-Present); Managing Partner, Elementum Ventures (2013-Present); Director, MetricStory, Inc. (2017-Present); Trustee, Wheaton College (2018-Present); Trustee, Gordon College (2001-2016).
| |
Trustee since 2000 Oversees 53 Funds in Fund Complex |
Steven J. Paggioli, 69 Independent Consultant (2002-Present); Trustee, Professionally Managed Portfolios (32 portfolios); Advisory Board Member, Sustainable Growth Advisors, LP; Independent Director, Chase Investment Counsel (2008Present); Executive Vice President, Secretary and Director, Investment Company Administration, LLC (1990-2001).
| |
Trustee since 2013 Oversees 53 Funds in Fund Complex
|
Richard F. Powers III, 73 Adjunct Professor, U.S. Naval War College (2016-Present); Adjunct Professor, Boston College (2010-2013); President and CEO of Van Kampen Investments Inc. (1998-2003).
| |
Independent Chairman Trustee since 2000 Oversees 56 Funds in Fund Complex
|
Eric Rakowski, 61 Professor of Law, University of California at Berkeley School of Law - Boalt Hall (1990-Present); Director of Harding, Loevner Funds, Inc. (9 portfolios); Trustee of Third Avenue Trust (3 portfolios); Trustee of Third Avenue Variable Trust (1 portfolio).
| |
Trustee since 2013 Oversees 56 Funds in Fund Complex |
Victoria L. Sassine, 53 Adjunct Professor, Babson College (2007-Present); Director, Board of Directors, PRG Group (2017-Present); CEO, Founder, Scale Smarter Partners, LLC (2018-Present); Chairperson, Board of Directors, Business Management Associates (2018-Present).
| |
Trustee since 2004 Oversees 53 Funds in Fund Complex |
Thomas R. Schneeweis, 72 Professor Emeritus, University of Massachusetts (2013-Present); President, TRS Associates (1982-Present); Board Member, Chartered Alternative Investment Association (CAIA) (2002-Present); Director, Institute for Global Asset and Risk Management (Education) (2010-Present); Co-Owner, Quantitative Investment Technologies (2014-Present); Director of Research, Yes Wealth Management (2018-Present); Partner, S Capital Wealth Advisors (2015-2018); Partner, S Capital Management, LLC (2007-2015); President, Alternative Investment Analytics, LLC, (formerly Schneeweis Partners, LLC) (2001-2013).
|
33 |
AMG Funds | ||||
Trustees and Officers (continued) |
Interested Trustees
Each Trustee in the following table is an interested person of the Trust within the meaning of the 1940 Act. Ms. Carsman is an interested person of the Trust within the meaning of the 1940 Act by virtue of her position with, and interest in securities of, AMG.
Number of Funds Overseen in Fund Complex |
Name, Age, Principal Occupation(s) During Past 5 Years and Other Directorships Held by Trustee | |
Trustee since 2011 Oversees 56 Funds in Fund Complex |
Christine C. Carsman, 67 Senior Policy Advisor, Affiliated Managers Group, Inc. (2019-Present); Director of Harding, Loevner Funds, Inc. (9 portfolios); Executive Vice President, Deputy General Counsel and Chief Regulatory Counsel, Affiliated Managers Group, Inc. (2017-2018); Director (2010-2018) and Chair of the Board of Directors (2015-2018), AMG Funds plc; Senior Vice President and Deputy General Counsel, Affiliated Managers Group, Inc.(2011-2016); Senior Vice President and Chief Regulatory Counsel, Affiliated Managers Group, Inc. (2007-2011); Vice President and Chief Regulatory Counsel, Affiliated Managers Group, Inc. (2004-2007); Secretary and Chief Legal Officer, AMG Funds, AMG Funds I, AMG Funds II and AMG Funds III (2004-2011); Senior Counsel, Vice President and Director of Operational Risk Management and Compliance, Wellington Management Company, LLP (1995-2004). | |
Officers | ||
Position(s) Held with Fund and Length of Time Served |
Name, Age, Principal Occupation(s) During Past 5 Years | |
President since 2018 Principal Executive Officer since 2018 Chief Executive Officer since 2018 Chief Operating Officer since 2007 |
Keitha L. Kinne, 61 Chief Operating Officer, AMG Funds LLC (2007-Present); Chief Investment Officer, AMG Funds LLC (2008-Present); President and Principal, AMG Distributors, Inc. (2018-Present); Chief Operating Officer, AMG Distributors, Inc. (2007-Present); President, Chief Executive Officer and Principal Executive Officer, AMG Funds, AMG Funds I, AMG Funds II, AMG Funds III and AMG Funds IV (2018-Present); Chief Operating Officer, AMG Funds, AMG Funds I, AMG Funds II, and AMG Funds III (2007-Present); Chief Operating Officer, AMG Funds IV (2016-Present); Chief Operating Officer and Chief Investment Officer, Aston Asset Management, LLC (2016); President and Principal Executive Officer, AMG Funds, AMG Funds I, AMG Funds II and AMG Funds III (2012-2014); Managing Partner, AMG Funds LLC (2007-2014); President and Principal, AMG Distributors, Inc. (2012-2014); Managing Director, Legg Mason & Co., LLC (2006-2007); Managing Director, Citigroup Asset Management (2004-2006). | |
Secretary since 2015 Chief Legal Officer since 2015 |
Mark J. Duggan, 54 Senior Vice President and Senior Counsel, AMG Funds LLC (2015-Present); Secretary and Chief Legal Officer, AMG Funds, AMG Funds I, AMG Funds II, AMG Funds III and AMG Funds IV (2015-Present); Attorney, K&L Gates, LLP (2009-2015). | |
Chief Financial Officer since 2017 Treasurer since 2017 Principal Financial Officer since 2017 Principal Accounting Officer since 2017 |
Thomas G. Disbrow, 53 Vice President, Mutual Fund Treasurer & CFO, AMG Funds, AMG Funds LLC (2017-Present); Chief Financial Officer, Principal Financial Officer, Treasurer and Principal Accounting Officer, AMG Funds, AMG Funds I, AMG Funds II, AMG Funds III and AMG Funds IV (2017-Present); Managing Director - Global Head of Traditional Funds Product Control, UBS Asset Management (Americas), Inc. (2015-2017); Managing Director - Head of North American Funds Treasury, UBS Asset Management (Americas), Inc. (2011-2015). | |
Deputy Treasurer since 2017 |
John A. Starace, 48 Director, Mutual Fund Accounting, AMG Funds LLC (2017-Present); Vice President, Deputy Treasurer of Mutual Funds Services, AMG Funds LLC (2014-2017); Deputy Treasurer, AMG Funds, AMG Funds I, AMG Funds II, AMG Funds III and AMG Funds IV (2017-Present); Vice President, Citi Hedge Fund Services (2010-2014); Audit Senior Manager (2005-2010) and Audit Manager (2001-2005), Deloitte & Touche LLP. | |
Chief Compliance Officer since 2016 |
Gerald F. Dillenburg, 52 Vice President, Chief Compliance Officer AMG Funds, AMG Funds LLC (2017-Present); Chief Compliance Officer AMG Funds, AMG Funds LLC (2016-2017); Chief Compliance Officer and Sarbanes-Oxley Code of Ethics Compliance Officer, AMG Funds, AMG Funds I, AMG Funds II and AMG Funds III (2016-Present); Chief Compliance Officer, AMG Funds IV (1996-Present); Sarbanes-Oxley Code of Ethics Compliance Officer, AMG Funds IV (2016-Present); Chief Compliance Officer, Aston Asset Management, LLC (2006-2016); Chief Operating Officer, Aston Funds (2003-2016); Secretary, Aston Funds (1996-2015); Chief Financial Officer, Aston Funds (1997-2010); Chief Financial Officer, Aston Asset Management, LLC (2006-2010); Treasurer, Aston Funds (1996-2010). | |
Anti-Money Laundering Compliance Officer since 2014 |
Patrick J. Spellman, 45 Vice President, Chief Compliance Officer, AMG Funds LLC (2017-Present); Senior Vice President, Chief Compliance Officer, AMG Funds LLC (2011-2017); Chief Compliance Officer, AMG Distributors, Inc., (2010-Present); Anti-Money Laundering Compliance Officer, AMG Funds, AMG Funds I, AMG Funds II, and AMG Funds III (2014-Present); Anti-Money Laundering Officer, AMG Funds IV, (2016-Present); Compliance Manager, Legal and Compliance, Affiliated Managers Group, Inc. (2005-2011). | |
Assistant Secretary since 2016 |
Maureen A. Meredith, 34 Vice President, Counsel, AMG Funds LLC (2019-Present); Director, Counsel, AMG Funds LLC (2017-2018); Vice President, Counsel, AMG Funds LLC (2015-2017); Assistant Secretary, AMG Funds, AMG Funds I, AMG Funds II, AMG Funds III and AMG Funds IV (2016-Present); Associate, Ropes & Gray LLP (2011-2015); Law Fellow, Massachusetts Appleseed Center for Law and Justice (2010-2011). |
34 |
THIS PAGE INTENTIONALLY LEFT BLANK
THIS PAGE INTENTIONALLY LEFT BLANK
INVESTMENT MANAGER AND ADMINISTRATOR AMG Funds LLC 600 Steamboat Road, Suite 300 Greenwich, CT 06830 800.835.3879
DISTRIBUTOR AMG Distributors, Inc. 600 Steamboat Road, Suite 300 Greenwich, CT 06830 800.835.3879
SUBADVISER Cadence Capital Management, LLC 265 Franklin Street, 11th Floor Boston, MA 02110 |
CUSTODIAN The Bank of New York Mellon 111 Sanders Creek Parkway East Syracuse, NY 13057
LEGAL COUNSEL Ropes & Gray LLP Prudential Tower, 800 Boylston Street
TRANSFER AGENT BNY Mellon Investment Servicing (US) Inc. P.O. Box 9769 Providence, RI 02940 800.548.4539 |
This report is prepared for the Funds shareholders. It is authorized for distribution to prospective investors only when preceded or accompanied by an effective prospectus. To receive a free copy of the prospectus or Statement of Additional Information, which includes additional information about Fund Trustees, please contact us by calling 800.548.4539. Distributed by AMG Distributors, Inc., member FINRA/SIPC.
Current net asset values per share for each Fund are available on the Funds website at amgfunds.com.
A description of the policies and procedures each Fund uses to vote its proxies is available: (i) without charge, upon request, by calling 800.548.4539, or (ii) on the Securities and Exchange Commissions (SEC) website at sec.gov. For information regarding each Funds proxy voting record for the 12-month period ended June 30, call 800.548.4539 or visit the SEC website at sec.gov.
The Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to their reports on Form N-PORT, which has replaced Form NQ. The Funds portfolio holdings on Form N-PORT are available on the SECs website at sec.gov. To review a complete list of the Funds portfolio holdings, or to view the semiannual report, or annual report, please visit amgfunds.com. |
37 |
AFFILIATE SUBADVISED FUNDS
BALANCED FUNDS AMG Chicago Equity Partners Balanced Chicago Equity Partners, LLC
AMG FQ Global Risk-Balanced First Quadrant, L.P.
EQUITY FUNDS AMG FQ Tax-Managed U.S. Equity AMG FQ Long-Short Equity First Quadrant, L.P.
AMG Frontier Small Cap Growth Frontier Capital Management Co., LLC
AMG GW&K Small Cap Core AMG GW&K Small/Mid Cap AMG GW&K Trilogy Emerging Markets Equity AMG GW&K Trilogy Emerging Wealth Equity AMG GW&K U.S. Small Cap Growth GW&K Investment Management, LLC
AMG Renaissance Large Cap Growth The Renaissance Group LLC
AMG River Road Dividend All Cap Value AMG River Road Dividend All Cap Value II AMG River Road Focused Absolute Value AMG River Road Long-Short AMG River Road Small-Mid Cap Value AMG River Road Small Cap Value River Road Asset Management, LLC
AMG SouthernSun Small Cap AMG SouthernSun U.S. Equity SouthernSun Asset Management, LLC |
AMG TimesSquare Emerging Markets Small Cap AMG TimesSquare Global Small Cap AMG TimesSquare International Small Cap AMG TimesSquare Mid Cap Growth AMG TimesSquare Small Cap Growth TimesSquare Capital Management, LLC
AMG Yacktman AMG Yacktman Focused AMG Yacktman Focused Fund - Security Selection Only AMG Yacktman Special Opportunities Yacktman Asset Management LP
FIXED INCOME FUNDS AMG GW&K Core Bond ESG AMG GW&K Enhanced Core Bond ESG AMG GW&K Municipal Bond AMG GW&K Municipal Enhanced Yield GW&K Investment Management, LLC
OPEN-ARCHITECTURE FUNDS
EQUITY FUNDS AMG Managers Brandywine AMG Managers Brandywine Advisors Mid Cap Growth AMG Managers Brandywine Blue Friess Associates, LLC
AMG Managers Cadence Emerging Companies AMG Managers Cadence Mid Cap Cadence Capital Management LLC
AMG Managers CenterSquare Real Estate CenterSquare Investment Management LLC
AMG Managers Emerging Opportunities WEDGE Capital Management L.L.P. Next Century Growth Investors LLC RBC Global Asset Management (U.S.) Inc. |
AMG Managers Essex Small/Micro Cap Growth Essex Investment Management Company, LLC
AMG Managers Fairpointe ESG Equity AMG Managers Fairpointe Mid Cap Fairpointe Capital LLC
AMG Managers LMCG Small Cap Growth LMCG Investments, LLC
AMG Managers Montag & Caldwell Growth Montag & Caldwell, LLC
AMG Managers Pictet International Pictet Asset Management Limited
AMG Managers Silvercrest Small Cap Silvercrest Asset Management Group LLC
AMG Managers Skyline Special Equities Skyline Asset Management, L.P.
AMG Managers Special Equity Ranger Investment Management, L.P. Lord, Abbett & Co. LLC Smith Asset Management Group, L.P. Federated MDTA LLC
FIXED INCOME FUNDS AMG Managers Amundi Intermediate Government AMG Managers Amundi Short Duration Government Amundi Pioneer Institutional Asset Management, Inc.
AMG Managers Doubleline Core Plus Bond DoubleLine Capital LP
AMG Managers Global Income Opportunity AMG Managers Loomis Sayles Bond Loomis, Sayles & Company, L.P. |
amgfunds.com
|
053119 AR065
|
Item 2. CODE OF ETHICS
Registrant has adopted a Code of Ethics. See attached Exhibit (a)(1).
Item 3. AUDIT COMMITTEE FINANCIAL EXPERT
Registrants Board of Trustees has determined that independent Trustee Mr. Steven J. Paggioli qualifies as the Audit Committee Financial expert. Mr. Paggioli is independent as such term is defined in Form N-CSR.
Item 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
(a) Audit Fees
The aggregate fees billed by the Funds independent registered public accounting firm, PricewaterhouseCoopers LLP (PwC), to the Funds for the Funds two most recent fiscal years for professional services rendered for audits of annual financial statements, or services that are normally provided in connection with statutory and regulatory filings or engagements (Audit Fees) were as follows:
Fiscal 2019 | Fiscal 2018 | |||||||
AMG Managers Cadence Emerging Companies Fund |
$ | 24,314 | $ | 32,040 | ||||
AMG Managers Cadence Mid-Cap Fund |
$ | 24,550 | $ | 28,200 |
(b) Audit-Related Fees
There were no fees billed by PwC to the Funds in its two recent fiscal years for services rendered for assurance and related services that are reasonably related to the performance of the audit or review of the Funds financial statements, but are not reported as Audit Fees (Audit-Related Fees).
For the Funds two most recent fiscal years, there were no Audit-Related Fees billed by PwC for engagements related directly to the operations and financial reporting of one or more Funds by a Fund Service Provider. A Fund Service Provider is (a) any investment adviser to the Fund (not including any Subadvisor whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) or (b) any entity that provides ongoing services to the Fund and is controlling, controlled by or under common control with a Fund investment adviser described in (a).
(c) Tax Fees
The aggregate fees billed by PwC to the Funds for the two most recent fiscal years for professional services rendered for tax compliance, tax advice, and tax planning (Tax Fees) were as follows:
Fiscal 2019 | Fiscal 2018 | |||||||
AMG Managers Cadence Emerging Companies Fund |
$ | 6,219 | $ | 7,369 | ||||
AMG Managers Cadence Mid Cap Fund |
$ | 6,219 | $ | 7,369 |
For the Funds two most recent fiscal years, Tax Fees billed by PwC for engagements by Fund Service Providers that related directly to the operations and financial reporting of the Funds were $0 for fiscal 2019 and $0 for fiscal 2018, respectively.
The services for which Tax Fees were charged comprise all services performed by professional staff in PwCs tax division except those services related to the audit. Typically, this category would include fees for tax compliance, tax planning, and tax advice. Tax compliance, tax advice, and tax planning services include preparation of original and amended tax returns, claims for refund and tax payment-planning services, assistance with tax audits and appeals, tax advice related to mergers and acquisitions and requests for rulings or technical advice from taxing authorities.
(d) All Other Fees
There were no other fees billed by PwC to the Funds for all other non-audit services (Other Fees) during the Funds two most recent fiscal years. During the same period, there were no Other Fees billed by PwC for engagements by Fund Service Providers that related directly to the operations and financial reporting of the Funds.
(e)(1) According to policies adopted by the Audit Committee, services provided by PwC to the Funds must be pre-approved by the Audit Committee. On an annual basis, the Audit Committee reviews and pre-approves various types of services that PwC may perform for the Funds without specific approval of each engagement, subject to specified budget limitations. As contemplated by the Sarbanes-Oxley Act of 2002 and related SEC rules, the Audit Committee also pre-approves non-audit services provided by PwC to any Fund Service Provider for any engagement that relates directly to the operations and financial reporting of the Funds. Any engagement that is not already pre-approved or that will exceed a pre-approved budget must be submitted to the Audit Committee for pre-approval. The Chairman of the Audit Committee is authorized on behalf of the Board of Trustees and the Audit Committee to approve the engagement of PwC to perform non-audit services subject to certain conditions, including notification to the Audit Committee of such pre-approval not later than the next meeting of the Audit Committee following the date of such pre-approval.
(e)(2) None.
(f) Not applicable.
(g) The aggregate fees billed by PwC in 2019 and 2018 for non-audit services rendered to the Funds and Fund Service Providers were $61,938 and $64,238, respectively. For the fiscal year ended May 31, 2019, this amount reflects the amounts disclosed above in Item 4(b),(c),(d), plus $49,500 in fees billed to the Fund Service Providers for non-audit services that did not relate directly to the operations and financial reporting of the Funds. For the fiscal year ended May 31, 2018, this amount reflects the amounts disclosed above in Item 4(b),(c),(d), plus $49,500 in fees billed to the Fund Service Providers for non-audit services that did not relate directly to the operations and financial reporting of the Funds.
(h) The Trusts Audit Committee has considered whether the provision of non-audit services by registrants independent registered public accounting firm to the registrants investment advisor, and any entity controlling, controlled, or under common control with the investment advisor that provided ongoing services to the registrant that were not pre-approved by the Committee (because such services did not relate directly to the operations and financial reporting of the registrant) was compatible with maintaining the independence of the independent registered public accounting firm.
Item 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable.
Item 6. SCHEDULE OF INVESTMENTS
The schedule of investments in unaffiliated issuers as of the close of the reporting period is included as part of the shareholder report contained in Item 1 hereof.
Item 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES
Not applicable.
Item 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES
Not applicable.
Item 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANIES AND AFFILIATED PURCHASERS
Not applicable.
Item 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
Item 11. CONTROLS AND PROCEDURES
(a) The Registrants principal executive and principal financial officers have concluded, based on their evaluation of the registrants disclosure controls and procedures as of a date within 90 days of the filing of this report, that the Registrants disclosure controls and procedures are reasonably designed to ensure that information required to be disclosed by the Registrant on Form N-CSR is recorded, processed, summarized and reported within the required time periods and that information required to be disclosed by the registrant in the reports that it files or submits on Form N-CSR is accumulated and communicated to the Registrants management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
(b) There were no changes in the Registrants internal control over financial reporting during the Registrants fourth fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to affect, the internal control over financial reporting.
Item 12. DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES
Not applicable.
Item 13. EXHIBITS
(a)(1) | Any Code of Ethics or amendments hereto. Filed herewith. | |
(a)(2) | Certifications pursuant to Rule 30a-2(a) under the Investment Company Act of 1940Filed herewith. | |
(a)(3) | Not applicable. | |
(b) | Certifications pursuant to Rule 30a-2(b) under the Investment Company Act of 1940Filed herewith. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
AMG FUNDS III | ||
By: | /s/ Keitha L. Kinne | |
Keitha L. Kinne, Principal Executive Officer |
Date: August 2, 2019
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ Keitha L. Kinne | |
Keitha L. Kinne, Principal Executive Officer |
Date: August 2, 2019
By: | /s/ Thomas Disbrow | |
Thomas Disbrow, Principal Financial Officer |
Date: August 2, 2019
AMG FUNDS, AMG FUNDS I, AMG FUNDS II, AMG FUNDS III AND AMG FUNDS IV
Sarbanes-Oxley Code of Ethics
for Principal Executive and Principal Financial Officers Policy and Procedures
I. Covered Officers/Purpose of the Code
AMG Funds, AMG Funds I, AMG Funds II, AMG Funds III and AMG Funds IV (each, a Trust, and each series thereof, a Fund) have adopted this Sarbanes-Oxley Code of Ethics (this Code) to apply to the Trusts Principal Executive Officer, Principal Financial Officer/Chief Financial Officer and Principal Accounting Officer (the Covered Officers each of whom are set forth in Exhibit A) for the purpose of promoting:
| honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; |
| full, fair, accurate, timely and understandable disclosure in reports and documents that a registrant files with, or submits to, the Securities and Exchange Commission (SEC) and in other public communications made by the Trusts; |
| compliance with applicable laws and governmental rules and regulations; |
| the prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and |
| accountability for adherence to the Code. |
Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest.
The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of the Trusts.
II. Covered Officers Should Ethically Handle Actual and Apparent Conflicts of Interest
A conflict of interest occurs when a Covered Officers private interest interferes with the interests of, or the Covered Officers service to, the Trusts. For example, a conflict of interest would arise if a Covered Officer, or a member of the Covered Officers family, receives improper personal benefits as a result of the Covered Officers position with the Trusts.
AMG Funds LLC Proprietary/Confidential Not To Be Duplicated or Distributed
Last Updated: September 2018
1
Certain conflicts of interest arise out of the relationships between Covered Officers and the Funds and already are subject to conflict of interest provisions in the Investment Company Act of 1940, as amended (the 1940 Act) and the Investment Advisers Act of 1940, as amended (the Advisers Act). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with a Fund because of their status as affiliated persons of the Funds. The compliance programs and procedures of the Funds and AMG Funds LLC (together with AMG Distributors, Inc., AMG Funds Entities) are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code.
Although typically not presenting an opportunity for improper personal benefit, conflicts arise from, or are a result of, the contractual relationship between a Fund and the investment adviser and/or principal underwriter of which the Covered Officers are also officers or employees. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for the Trusts or for AMG Funds Entities, or for both), be involved in establishing policies and implementing decisions that will have different effects on AMG Funds Entities and the Funds. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the Trusts and AMG Funds Entities and is consistent with the performance by the Covered Officers of their duties as officers of the Trusts. Thus, if performed in conformity with the provisions of the 1940 Act and the Advisers Act, such activities will be deemed to have been handled ethically. In addition, it is recognized by the Trusts Boards of Trustees (Trustees) that the Covered Officers may also be officers or employees of one or more other investment companies covered by this or other codes.
Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the 1940 Act and the Advisers Act. The following list provides examples of conflicts of interest under the Code, but Covered Officers should keep in mind that these examples are not exhaustive.
* * * *
Each Covered Officer must not:
| use the Covered Officers personal influence or personal relationships improperly to influence investment decisions or financial reporting by the Trusts whereby the Covered Officer would benefit personally to the detriment of the Trusts; |
| cause the Trusts to take action, or fail to take action, for the individual personal benefit of the Covered Officer, rather than for the benefit of the Trusts; |
AMG Funds LLC Proprietary/Confidential Not To Be Duplicated or Distributed
Last Updated: September 2018
2
| use material non-public knowledge of portfolio transactions made or contemplated for a Fund to profit personally or cause others to profit, by the market effect of such transactions; and |
| retaliate against any other Covered Officer or any employee of AMG Funds Entities or their affiliated persons for reports of potential violations that are made in good faith. |
Material conflict of interest situations should be discussed with the Funds Chief Compliance Officer (the Fund CCO) 1, who shall serve as the Compliance Officer for this Code. Examples of these include:
| any outside business activity other than with AMG Funds Entities that detracts from an individuals ability to devote appropriate time and attention to the Covered Officers responsibilities with a Trust; |
| service as a director on the board of any company that files periodic reports with the SEC; |
| service as a board member of any organization, public or private including non-profits; |
| the receipt of any gifts in excess of $300; |
| the receipt of any entertainment from any company with which the Trusts has current or prospective business dealings unless such entertainment is business-related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety; |
| any ownership interest in, or any consulting or employment relationship with, any of the Trusts service providers, other than AMG Funds Entities, the principal underwriter or any affiliated person thereof; and |
| a direct or indirect financial interest in commissions, transaction charges or spreads paid by a Fund for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officers employment, such as compensation or equity ownership. |
III. Disclosure and Compliance
Each Covered Officer should:
1 | For purposes of this policy and procedure, references to the Fund CCO shall include his/her delegate(s). |
AMG Funds LLC Proprietary/Confidential Not To Be Duplicated or Distributed
Last Updated: September 2018
3
| familiarize himself or herself with the disclosure requirements generally applicable to the Funds; |
| not knowingly misrepresent, or cause others to misrepresent, facts about the Funds to others, whether within or outside Funds, including the Trustees and independent accountants, and to governmental regulators and self-regulatory organizations; |
| to the extent appropriate within the Covered Officers area of responsibility, consult with other officers and employees of AMG Funds Entities with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Trusts file with, or submit to, the SEC and in other public communications made by the Trusts; and |
| assume responsibility for promoting compliance with the standards and restrictions imposed by applicable laws, rules and regulations. |
IV. Reporting and Accountability
Each Covered Officer must:
| report at least annually a list of affiliations or other relationships related to conflicts of interest that the Trusts Trustees and Officers Questionnaire covers; |
| upon adoption of the Code, including amendments to the Code (or thereafter as applicable, upon becoming a Covered Officer), affirm in writing to the Trustees or Fund CCO that the Covered Officer has received, read, and understands the Code; |
| annually thereafter affirm to the Trustees that the Covered Officer has complied with the requirements of the Code; and |
| notify the Fund CCO promptly if the Covered Officer knows of any violation of this Code. |
Failure to take any of the preceding four actions is itself a violation of this Code.
On an annual basis the Fund CCO will provide each Covered Officer with a copy of this Code. Each Covered Officer will complete and deliver to the Fund CCO a completed Acknowledgement and Certification form (as set forth in Exhibit B). A completed Acknowledgement and Certification is one that has been initialed next to each acknowledgement and certification, signed, and dated, with any affiliations or other conflicting relationships provided.
AMG Funds LLC Proprietary/Confidential Not To Be Duplicated or Distributed
Last Updated: September 2018
4
The Fund CCO is responsible for applying this Code to specific situations in which questions are presented under it and has the authority to interpret this Code in any particular situation. However, any approvals or waivers sought by a Covered Officer will be considered by a committee (the Committee) comprised of the Trusts trustees who are not interested persons of the Trusts (as defined in Section 2(a)(19) of the 1940 Act) (the Independent Trustees).
The Trusts will follow these procedures in investigating and enforcing this Code:
| the Fund CCO will take all appropriate action to investigate any actual or potential conflicts or violations reported to him/her; |
| if, after investigating a potential violation, the Fund CCO believes that no violation has occurred, the Fund CCO is not required to take any further action; |
| any matter that the Fund CCO believes is a violation will be reported to the Committee; |
| if the Committee concurs that a violation has occurred, it will make a recommendation to the Trustees, who will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of AMG Funds Entities; or a recommendation to dismiss the Covered Officer as an officer of the Trusts; |
| the Committee will be responsible for granting waivers and/or approvals, as appropriate; |
| the Fund CCO is responsible for identifying and documenting waivers; |
| any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules currently in effect. |
V. Other Policies and Procedures
This Code shall be the sole code of ethics adopted by the Trusts for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder. Insofar as other policies or procedures of the Trusts, either of the AMG Funds Entities, or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they conflict with the provisions of this Code.
The Funds and AMG Funds Entities codes of ethics under Rule 17j-1 under the 1940 Act and the more detailed policies and procedures set forth in the Code of Ethics for AMG Funds Entities are separate requirements applying to the Covered Officers and
AMG Funds LLC Proprietary/Confidential Not To Be Duplicated or Distributed
Last Updated: September 2018
5
others, and are not part of this Code. This Code does not, and is not intended to, repeat or replace these programs and procedures.
VI. Amendments
Any material changes to this Code, other than amendments to Exhibit A, must be approved by a majority vote of the Trustees, including a majority of Independent Trustees. Any non-material changes to this Code, other than amendments to Exhibit A, must be ratified by a majority vote of the Trustees, including a majority of Independent Trustees.
VII. Confidentiality
All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such reports and records shall not be disclosed to anyone other than the Trustees, counsel to the Independent Trustees, counsel to the Trusts and the investment adviser of the Funds.
VIII. Internal Use
The Code is intended solely for the internal use by the Funds and does not constitute an admission, by or on behalf of any Trusts, as to any fact, circumstance, or legal conclusion and does not create any rights of third parties.
AMG Funds LLC Proprietary/Confidential Not To Be Duplicated or Distributed
Last Updated: September 2018
6
EXHIBIT A
COVERED OFFICERS
Keitha L. Kinne | President, Principal Executive Officer, Chief Executive Officer and Chief Operating Officer | |
Thomas G. Disbrow | Chief Financial Officer, Principal Financial Officer, Treasurer and Principal Accounting Officer |
AMG Funds LLC Proprietary/Confidential Not To Be Duplicated or Distributed
Last Updated: September 2018
7
EXHIBIT B
AMG FUNDS, AMG FUNDS I, AMG FUNDS II, AMG FUNDS III AND AMG FUNDS IV
SARBANES-OXLEY CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND
PRINCIPAL FINANCIAL OFFICERS
(Insert Year) ACKNOWLEDGEMENT AND CERTIFICATION
Please initial each individual item and then provide your signature below.
I acknowledge and affirm that I have received, reviewed, and understand the Sarbanes-Oxley Code of Ethics for Principal Executive and Senior Financial Officers (the Code) (each a Covered Officer) adopted by the Boards of Trustees of each of AMG Funds, AMG Funds I, AMG Funds II, AMG Funds III and AMG Funds IV (each, a Trust and collectively, the Trusts).
I understand that as a Covered Officer it is my responsibility now and going forward to comply with the Code and any revisions made to it. Most importantly, I understand that the Codes overarching principle is that my personal interests should not be placed improperly before the interests of the Trusts.
I affirm that I have notified the Compliance Officer for the Code (the Compliance Officer) promptly if I knew of any violation of the Code by myself or any other Covered Officer.
I affirm that I have discussed with the Compliance Officer any material personal conflict of interest comparable to those discussed within Section II of the Code prior to entering into any such arrangements.
On Schedule A of this 2018 Acknowledgement and Certification, I have provided a complete and accurate listing of all affiliations or other relationships related to conflicts of interest that the Trusts Trustees and Officers Questionnaire covers.
I acknowledge and affirm that since I last signed an Acknowledgement and Certification related to the Code, to the best of my knowledge, I have complied with the requirements of the Code.
If I have not so complied with the requirements of the Code, I have included a detailed description of any instances of non-compliance immediately below:
AMG Funds LLC Proprietary/Confidential Not To Be Duplicated or Distributed
Last Updated: September 2018
8
Covered Officers Name (Printed): | ||
Covered Officers Signature: | ||
|
Date: |
AMG Funds LLC Proprietary/Confidential Not To Be Duplicated or Distributed
Last Updated: September 2018
9
SCHEDULE A
TO THE
(Insert Year) ACKNOWLEDGEMENT AND CERTIFICATION
RELATING TO THE TRUSTS
SARBANES-OXLEY CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND
SENIOR FINANCIAL OFFICERS
Please list below all affiliations or other relationships related to conflicts of interest that the Trusts Trustees and Officers Questionnaire covers as of the date of my signing of the (insert year) Acknowledgement and Certification:
AMG Funds LLC Proprietary/Confidential Not To Be Duplicated or Distributed
Last Updated: September 2018
10
CERTIFICATION FILED AS EXHIBIT 13(a)(2) TO FORM N-CSR
I, Keitha L. Kinne, certify that:
1. I have reviewed this report on Form N-CSR of AMG Funds III;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and
(d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer(s) and I have disclosed to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize, and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: August 2, 2019 | ||||||
/s/ Keitha L. Kinne | ||||||
Keitha L. Kinne | ||||||
Principal Executive Officer |
CERTIFICATION FILED AS EXHIBIT 13(a)(2) TO FORM N-CSR
I, Thomas Disbrow, certify that:
1. I have reviewed this report on Form N-CSR of AMG Funds III;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and
(d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer(s) and I have disclosed to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize, and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: August 2, 2019 | ||||||
/s/ Thomas Disbrow | ||||||
Thomas Disbrow | ||||||
Principal Financial Officer |
CERTIFICATION FILED AS EXHIBIT 13(B) TO FORM N-CSR
Name of Issuer: | AMG FUNDS III AMG MANAGERS CADENCE MID CAP FUND AND AMG MANAGERS CADENCE EMERGING COMPANIES FUND |
In connection with the Report on Form N-CSR of the above-named issuer that is accompanied by this certification, the undersigned hereby certifies, to his knowledge, that:
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the issuer. |
Dated: August 2, 2019 | ||||||
/s/ Keitha L. Kinne | ||||||
Keitha L. Kinne | ||||||
Principal Executive Officer |
CERTIFICATION FILED AS EXHIBIT 13(B) TO FORM N-CSR
Name of Issuer: | AMG FUNDS III AMG MANAGERS CADENCE MID CAP FUND AND AMG MANAGERS CADENCE EMERGING COMPANIES FUND |
In connection with the Report on Form N-CSR of the above-named issuer that is accompanied by this certification, the undersigned hereby certifies, to his knowledge, that:
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the issuer. |
Dated: August 2, 2019 | ||||||
/s/ Thomas Disbrow | ||||||
Thomas Disbrow | ||||||
Principal Financial Officer |
NOLUA)/&V&:+8K2GIWOHRH;^8Q-F/
M$RSQ_:(&B9 EJ=#2
2T3!;$EDI,
MZ@\/P1I>)
MZFP[53H[IO"F8D+]03>QBC!M-5Q/\W]X6KX:=8PV,!_+G=5P_LX'_P!,J 0T
M)S2VGT..3,)RZL[5 SC=S#,7SAN]DV!@4*
M1-15NBO.\QIX=OX%@EX6EAM[ASIX3=VY<71@NKE:\,+JEH%"2"VI%1TE@=C8
MS^_&GX4W^[$S(M79YXZU6KA^EUK_ &EGORJ[R&[%FN_UJ3Y9^-6YDKCKT>2<
M7J<>S!IEC8ZLW#97E>XL7BI2'P8Q4OLV(AY?8#"ISJEHVCMZC 1=GH]M
M:7FHQVUZ_=V[B:FM,:&@K0Y
*NIW+FH"M/;&*RWS8:O6-)@F\JXN:0\M&E:?
MM8K[:IC0(I6UM%S.P(V'%*++!F
(2Q,<
M"14@X&H+2#@00"*@BHQ:1@9ZL7+PT]=[YLD=6PZ-_L[6Q0\%<%+E<',HUK]@
MUNUU
D+*BR1OAI'7NEW-7O:5?8+T
M5_2'3RNP<)6;!:[=&0,0NG.LIM:,7MUT?RSU-ZZ=%>R1D5U0$S9MWJACPIA3
MJ6T3<97DT\TCX(##+E&0MP:UCGO#0:YJ%\CGD%QJZA-
CBPU>G4'@_LBJ$X6ZUVTA2^.KFOGY)\9HSB
MQR=A$]BN:M)PMHVEL#>5.NDYMK6E;G\/B7WVYM;&RX3N+<:5;W+8;,L]IM66ET-YD(=-+-&]\L+6O E:7 .%71
M$,8UKUYNA,]3
MO7UB3B:U'3H5^Q7622L[%Y8E8-]/N6599*1=H7($7#@Q8E7,93JB0&Z+>F08
M5Y/#\*VZ?B^[>R!EM##"V&I(:'%KG5/>REU&8&F5F5O12@;:Y.2CZ0K4?5;7
MKJB3[1*KURM62630FV-@V&AK6@3]#TP2[KJ3+Z%68ZT2EVSD$XUA&K2ZD8U\
M.65.D54(W8YI:X.M(&DUMID")L14MYO)O7+S5$N_V64+2!TG+VD2CU/\
MY :#(G(/G$@F4KU0%BSDV]*N[BZ^>]KS%!6AWF#AOBZ,Q$R4?M+'.Q9DH7%P
MH^CAQ->7=]:*R"B=1UPN0Q>GI*( 4FZM12LT(KL[[,>K%
MSGW9P^O=Q(^,!K#]Y<*/:[/ZZ'UC/G)\Y]V7">UV?UT/K&?
M.3YS[LX?7NXD?& UA^\N$]KL_KH?6,^