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 811-23011
PENN CAPITAL FUNDS TRUST
(Exact name of registrant as specified in charter)
Navy Yard Corporate Center
1200 Intrepid Ave., Suite 400
Philadelphia, Pennsylvania 19112
(Address of principal executive offices) (Zip code)
Richard A. Hocker
Navy Yard Corporate Center
1200 Intrepid Ave., Suite 400
Philadelphia, Pennsylvania 19112
(Name and address of agent for service)
With copies to:
Lisa L.B. Matson, Esq.
Navy Yard Corporate Center
1200 Intrepid Ave., Suite 400
Philadelphia, Pennsylvania 19112
Michael P. O’Hare, Esq.
Stradley Ronon Stevens & Young, LLP
2005 Market Street, Suite 2600
Philadelphia, Pennsylvania 19103
(215) 302-1500
Registrant's telephone number, including area code
Date of fiscal year end: June 30, 2019
Date of reporting period: June 30, 2019
Item 1. Reports to Stockholders.
ANNUAL REPORT
JUNE 30, 2019
PENN CAPITAL MANAGED ALPHA SMID CAP EQUITY FUND
PENN CAPITAL SPECIAL SITUATIONS SMALL CAP EQUITY FUND
PENN CAPITAL MULTI-CREDIT HIGH INCOME FUND
PENN CAPITAL DEFENSIVE FLOATING RATE INCOME FUND
PENN CAPITAL DEFENSIVE SHORT DURATION HIGH INCOME FUND
Beginning on January 1, 2021, as permitted by regulations adopted by the SEC, paper copies of the Fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund (defined herein) or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on the Fund’s website (www.penncapitalfunds.com), and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by calling 1-844-302-7366.
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 Fund, you can call 1-844-302-7366 to let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held in your account if you invest through your financial intermediary.
PENN CAPITAL FUNDS TRUST
PRESIDENT’S LETTER TO SHAREHOLDERS (UNAUDITED)
Dear Penn Capital Funds Shareholder:
The Penn Capital Funds recently celebrated their three-year anniversary milestone. Our current fund line-up embodies our investment philosophy and our dedicated research-driven process. I would like to take this opportunity to thank our shareholders for entrusting their investments with our firm. Our team remains committed to focusing our efforts on behalf of our shareholders, and we value your confidence in our vision.
Our investment strategies incorporate Penn Capital’s Complete Capital Structure Analysis®, an in-depth high yield and equity research philosophy used to identify a company’s optimal capital structure. Our investment professionals are capital structure generalists, meaning they are responsible for understanding the entire capital structure of the companies they follow. By following this philosophy, we believe that integrating credit and equity research allows us to construct a more comprehensive investment mosaic. Participating in both credit and equity markets, along with this integrated research process, provides Penn Capital’s investment team with what we believe is an informational advantage. Finding inefficiencies in the market can be challenging, but we remain committed to the pursuit of strong investment returns on behalf of our shareholders.
Finally, I am excited to share Penn Capital’s continued expansion of our philanthropic endeavors and support for diversity in the financial services industry. Penn Capital’s PRIME program sponsors a three-year financial literacy and investing curriculum for female high school students in Philadelphia. The PRIME Internship is entering its second year with a six-month internship to a collegiate female majoring in business or finance. We are excited about these PRIME endeavors, which reflect our firm’s commitment to gender and racial diversity in our industry.
The following pages review the current market environment and provide additional insight into our funds and their performance over the past fiscal year. Once again, I would like to thank you for your confidence in investing with us.
Overview
During 2018, the Federal Reserve (“Fed”) raised interest rates four times, but the federal funds rate has settled at 2.25-2.50% as of June 30, 2019. Trade clashes between the US and Chinese governments dominated headlines late in 2018 as concerns regarding a tightening monetary policy sparked sharp risk aversion during the fourth quarter of 2018. During this turbulent period, global supply chains were reexamined as the potential tariff regime required companies to contemplate moving product sourcing, raising prices, or absorbing higher costs that typically reduce profit margins. However, trade fears abated early 2019 as optimism grew regarding positive US-China trade discussions, while a more dovish Fed signaled an end to the tightening cycle with no anticipated interest rate increases for the remainder of 2019. During the first quarter of 2019, the Fed announced it would cease the drawdown of the central bank’s bond holdings as of September 2019.
During the fiscal year, the 10-year US Treasury yield declined from 2.87% to 2.00% as economic concerns mounted. After spreads touched post-Lehman lows in the third quarter of 2018, and then hit almost +550 basis points at year-end, they rallied back to +400 basis points as of June 30, 2019. As the fiscal period neared its end, we witnessed commodity market turbulence returning; however, the housing market took its cue from interest rates and performed well, as did the retail sector. Consumers appeared to be resilient whereas corporations clearly became more uncertain of their spending plans and some continued to rehash their supply chains.
Looking ahead, we believe the domestic economy remains stable, supported by low unemployment, improving wage growth, improving confidence, low interest rates, and rising home values. However, we are cautious that earnings growth is decelerating as we lap those benefits derived from the 2018 Tax Cuts & Jobs Act. A moderate pace of economic expansion sets the stage for a continuation of the current credit cycle. We expect high yield spreads to drift lower, which is supportive of equity valuations.
At this point in the economic cycle, we believe quality of corporate credit issuance needs to be monitored for possible deterioration, which would signal a downturn in the credit cycle. Key downside risks to this outlook in our opinion include a re-escalation of trade tensions, a Fed policy mistake, further Washington dysfunction, and slowing economic conditions outside the US (China in particular). Strategic decisions based on recent tariff instability can cause short term disruptions for companies that could lead to operations that are marginally more insulated from future geopolitical events.
The following paragraphs provide more detailed information on the performance of our funds, as well as selected holdings, during the reporting period.
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Penn Capital Defensive Floating Rate Income Fund
For the fiscal year ended June 30, 2019, the Penn Capital Defensive Floating Rate Income Fund (the “Floating Rate Income Fund”) generated a 4.04% return versus 4.05% for its benchmark, the S&P/LSTA BB Loan Index. Three-month LIBOR surrendered all gains realized through December 2018 and finished the period down two basis points at fiscal year end. In response to the decline in LIBOR, retail investors redeemed $20b from loan funds during the first six months of the 2019 calendar year, creating a performance headwind versus longer duration fixed income asset classes like high yield and investment grade bonds. The Floating Rate Income Fund is managed with a conservative bias, prioritizing preservation of principal as opposed to reaching for yield. To meet that objective, the strategy does not invest in triple C-rated or 2nd lien loans, as both areas of the market are exposed to a greater risk of impairment and volatility. With bonds outperforming loans over the last fiscal year, the Floating Rate Income Fund’s allocation to high yield bonds, nearly 12% of assets, contributed positively to performance. The Floating Rate Income Fund holds conservative short duration high yield bonds to enhance liquidity as opposed to increasing yield or risk.
The Floating Rate Income Fund’s investments in Telecom and Transportation sectors were positive contributions to performance whereas Midstream/Energy Infrastructure and Basic Materials investments lagged. Top single name contributors to performance were XO Jet and WideOpen West. The Floating Rate Income Fund’s investment in XO Jet was repaid as part of a global refinancing transaction. Top single name detractors included Maxar Technologies and Keane Group. Both names triggered our sell discipline threshold and were exited as of fiscal year end. We continue to be selective for inclusions in the Floating Rate Income Fund given that we believe we are in the latter stages of the current credit cycle and are most focused on risk-adjusted, rather than absolute, returns.
Penn Capital Defensive Short Duration High Income Fund
For the fiscal year ended June 30, 2019, the Penn Capital Defensive Short Duration High Income Fund (the “Short Duration Fund”) generated a 4.65% return, underperforming its benchmark, the ICE BofAML 1-3 Year BB-Rated US Cash Pay High Yield Index, which returned 6.37%. The Short Duration Fund maintains an average portfolio maturity of three years or less and excludes triple C-rated bonds. The Short Duration Fund finished the fiscal year with a positive return that approximates the average coupon of its underlying investments.
During the fiscal year, performance was negatively impacted by both an overweight allocation (compared to the index) and security selection within the commodity-oriented sectors of Energy and Metals & Mining. Lower oil and gas prices and a prolonged “Trade War” with China raised concerns regarding global demand and the ability of these companies to refinance their short-term debt. Commodity-oriented companies such as Nabors Industries, Unit Corp, Carrizo, and Ryerson Holding Corporation were all weaker earlier in the fiscal year before bouncing (partially) back by period end. Additionally, the Short Duration Fund was conservatively positioned towards Financials and Retail & Apparel, which rallied during the period. Whereas the Media sector was a detractor in the last fiscal year, the Short Duration Fund was able to add value this fiscal year in part due to a rally in Dish Network Corporation, which benefitted from a large contract resolution and from the value of its spectrum. Positive contributions to performance were found in security selection within Healthcare and Utilities sectors, which outperformed most particularly in hospital companies such as HCA Healthcare and Tenet Health. During the fiscal year, the Short Duration Fund held an average weighting of 2% in cash and 15% in bank loan securities via exposure from a combination of individual bank loan holdings and investment in the Penn Capital Defensive Floating Rate Income Fund. Our loan positions were a detractor to performance and we gradually decreased our overall weighting throughout the fiscal year with a final ending weight of approximately 8% of total net assets. Despite falling for most of calendar year 2019, 1-month LIBOR finished the fiscal year +30 basis points. We continue to believe that a complementary allocation to bank loans is prudent given their security within capital structures.
Penn Capital Multi-Credit High Income Fund
For the fiscal year ended June 30, 2019, the Penn Capital Multi-Credit High Income Fund (the “High Income Fund”) generated a 5.83% return, underperforming the 7.56% return of the ICE BofAML US High Yield Constrained Index, but outperforming the 5.81% return of the 50% ICE BofAML High Yield Constrained Index -50% S&P/LSTA BB Loan Index. In a rotation toward preservation of principal, the High Income Fund increased its leveraged loans allocation throughout the year, finishing with a 40% loan weighting. This shift ultimately disadvantaged performance as falling interest rates and a Fed induced rally benefitted long duration fixed income at the expense of floating rate loans. Despite the expectation for LIBOR to fall further in tandem with Fed rate cuts, we remain optimistic on loans given their senior position in the capital structure while offering comparable yields to unsecured high yield bonds. Loans may also insulate investors from near record negative convexity in high yield bonds, which leaves premium callable bonds, particularly long maturity low-coupon double B-rated credits, vulnerable to extension risk in a selloff. In conjunction with that view, the High Income Fund remained overweight single B-rated bonds and underweight double B-rated bonds during the period. The High Income Fund also remained underweight triple C bonds as a late cycle precaution.
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The largest positive performance contributors during the fiscal year were found through security selection in the Energy E&P, Energy Services, and Food & Beverage sectors. Investment in these areas outperformed as a result of strong credit selection. An investment in Simmons Foods, a domestic value-added poultry processor, was the most significant contributor to performance and remains a core holding in the High Income Fund. The company is in the final stages of a capital investment program that will increase their capacity and cash flow generation while management is also executing a cost cutting plan. The High Income Fund also benefitted from an overweight investment in Gogo, which successfully executed a refinancing transaction that extended their debt maturity profile and alleviated near term restructuring concerns. We believe the company is well positioned to grow its commercial aviation segment to sustainable profitability while the bonds remain fully covered by the value of Gogo’s business aviation segment. Telecommunication and Healthcare sector investments contributed the greatest share of negative performance during the period. Several natural gas producers, in particular Comstock, Covey Park, and Montage, came under significant pressure as a result of weak domestic gas prices. In fact, Covey Park and Comstock have announced a plan to merge. At fiscal year end, the High Income Fund reduced exposure to gas names in favor of oil while maintaining the High Income Fund’s underweight to the sector. Within Healthcare, an underweight position to HCA detracted from performance after the company’s secured credit ratings were upgraded to investment grade. The High Income Fund gradually increased its exposure to HCA, but remains underweight the hospital industry within the Healthcare sector.
Penn Capital Managed Alpha SMID Cap Equity Fund
For the fiscal year ended June 30, 2019, the Penn Capital Managed Alpha SMID Cap Equity Fund (the “Managed Alpha SMID Fund”) generated a 3.64% return outperforming the 1.77% return of its benchmark, the Russell 2500™ Index. Positive performance resulted from selections in the Communication Services, Energy, and Consumer Discretionary sectors, which were driven by favorable bottom-up stock selection. In the Communication Services sector, the Managed Alpha SMID Fund benefited from holding IAC, which enjoyed growth via its subsidiary Match Group and which continues to trade at a significant discount to the sum of its parts. In addition, the Managed Alpha SMID Fund’s performance was further supported by the successful merger of HomeAdvisor with Angie’s List. In the Energy sector, our focus on companies with low cost structures and strong balance sheets provided outperformance as oil prices weakened in the fourth quarter of 2018. In the Consumer Discretionary sector, Roku, Inc., a streaming video player manufacturer, performed well for the second consecutive year as users continued to adopt their over-the-top solution and consumed more streaming hours.
Despite the Managed Alpha SMID Fund outperforming its benchmark for the fiscal year, certain sectors including Financial Services, Consumer Staples, and Industrials hindered overall relative performance. In Financial Services, regional banks struggled as interest rates peaked in the fourth quarter of 2018, placing intermediate term pressure on net interest margins. In Consumer Staples, Lamb Weston struggled as industry announcements of additional potato processing plant capacity additions raised concerns regarding pricing and margin dynamics. In the Industrials sector, Schneider National experienced a weaker trucking price environment as the industry adapted to tighter driver regulations and underlying demand softened due to slowing trade activity.
Penn Capital Special Situations Small Cap Equity Fund
For the fiscal year ended June 30, 2019 the Penn Capital Special Situations Small Cap Equity Fund (the “Special Situations Fund”) generated a -7.91% return underperforming the -3.31% return of its benchmark, the Russell 2000® Index. Energy, Financials, and Consumer Discretionary sectors led the performance detractors. Within Energy, underperformance was driven by the significant decline in crude oil prices during the fiscal year ending June 30, 2019. Further, the sharp widening of credit spreads in the fourth quarter of 2018 resulted in an out-sized negative impact on smaller capitalization energy companies that feature higher balance sheet leverage. Banks were pressured throughout the fiscal year as the flattening yield curve compressed net interest margins and investors worried that slowing economic conditions would eventually impact credit quality and loan growth. Texas Capital Bancshares’ results missed street expectations due to increased charge-offs in its commercial loan book. Management forecasts slowing loan growth as they tighten lending standards. Within Consumer Discretionary, casino operators and gaming equipment suppliers underperformed due to a soft patch in the Las Vegas market during the latter half of 2018 amid increased economic uncertainty. G-III Apparel Group continued to report strong sales, earnings, and free cash flow, yet shares plunged in May 2019 amid increased trade tensions with China (where the company sources most of its goods).
Healthcare, Communications Services, and Materials sectors contributed positively to performance reflecting favorable sector allocation as well as positive stock selection. Omnicell, a provider of software solutions for healthcare facilities, delivered robust sales and earnings growth driven by an increase in larger, multi-product platform bookings. Within Communications Services, the television broadcasters broadly outperformed due to improving core advertising trends, optimism regarding the outlook for 2020 political advertising, and increased merger & acquisition activity. Within Materials, mining company Cleveland-Cliffs benefitted from strong end-market demand for steel, favorable iron ore, and pellet pricing on the back of capacity reduction stemming from a leading mining company. This benefitted the company with improved margins and cash flow funding, incremental share repurchasing, and initiation of a new dividend.
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Looking Forward
This report contains performance data and financial information. Please keep in mind that all securities markets, as well as mutual fund prices, fluctuate in value. If you would like more frequent updates, http://www.penncapitalfunds.com provides daily NAV, monthly performance figures, portfolio holdings, and other valuable information. We encourage you to visit penncapitalfunds.com, through which you may access your account, buy and sell shares, and find other helpful tools.
At Penn Capital Funds, we believe that active management continues to serve as a critical element of investing in high yield debt securities and equity securities of smaller and mid-sized companies. Although challenges remain, and markets may continue to be uneven, we are confident that investors with a well-diversified portfolio and a patient, long-term outlook should be well positioned for the years ahead.
We thank you for investing with us and look forward to continuing to serve your investment needs.
Sincerely,
Richard A. Hocker
Chairman & President
PENN Capital Funds Trust
This letter reflects Penn Capital’s analysis and opinions as of the most recent fiscal year-end. The information is not a complete analysis of any market, country, industry, security, or fund and should not be considered as a recommendation to buy, sell or hold any specific security or securities.
All investments involve risk, including possible loss of principal, and there is no guarantee the Funds will achieve their investment objectives. Investments made in small and mid-capitalization companies may be more volatile and less liquid due to limited resources or product lines and more sensitive to economic factors. Investments in ETFs are subject to the same risks as the underlying securities in which the ETF invests as well as entails higher expenses than if invested into the underlying ETF directly. Investments in foreign securities and ADRs involve certain risks such as currency volatility, political and social instability and reduced market liquidity. As interest rates rise the value of bond prices will decline. Credit risk refers to the loss in the value of a security based on a default in the payment of principle and/or interest of the security, or the perception of the market of such default. High-yield bonds have a higher risk of default or other adverse credit events, but have the potential to pay higher earnings over investment grade bonds. The value of convertible securities tends to decline as interest rates rise and, because of the conversion feature, tends to vary with fluctuations in the market value of the underlying securities. Bank loans in which the Fund may invest have similar risks to below investment grade fixed income securities. In the event of the insolvency of an agent bank, a loan could be subject to settlement risk as well as the risk of interruptions in the administrative duties performed in the day to day administration of the loan.
Index Definitions
The ICE BofAML US High Yield Constrained Index contains all securities in the ICE BofAML US High Yield Index but caps issuer exposure at 2%.
The ICE BofAML 1-3 Year BB-Rated US Cash Pay High Yield Index is a subset of the ICE BofAML US Cash Pay High Yield Index, which tracks the performance of non-investment-grade corporate bonds with a remaining term to final maturity less than three years and rated BB.
The S&P/LSTA BB Loan Index is a market value-weighted index designed to measure the performance of the US leveraged loan market and is comprised of loans whose rating is BB+, BB, BB-.
The S&P/LSTA Leveraged BB/B Loan Index is a market value-weighted index designed to measure the performance of the US leveraged loan market and is comprised of loans whose rating is BB+, BB, BB-, B+, B or B-. Standard & Poor’s Rating Services is used to determine membership within this sub-index.
The Russell 2000® Index measures the performance of the small-cap segment of the U.S. equity universe. The Russell 2000 is a subset of the Russell 3000® Index representing approximately 10% of the total market capitalization of that index. It includes
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approximately 2000 of the smallest securities based on a combination of their market cap and current index membership. The Russell 2000 Index is constructed to provide a comprehensive and unbiased small-cap opportunity barometer and is completely reconstituted annually to ensure larger stocks do not distort the performance and characteristics of the true small-cap opportunity set.
The Russell 2500™ Index is composed of the bottom 500 stocks in the Russell 1000® Index and all the stocks in the Russell 2000® Index. The Russell 2500™ Index return reflect adjustments for income dividends and capital gains distributions reinvested as of the ex-dividend dates.
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PENN CAPITAL MANAGED ALPHA SMID CAP EQUITY FUND
FUND SUMMARY (UNAUDITED)
This chart assumes an initial gross investment of $10,000 made on December 1, 2015, inception of the Institutional Class shares. Returns shown in the chart and table include the reinvestment of all dividends, but do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. In the absence of fee waivers and reimbursements, when they are necessary to keep expenses at the expense cap, total return would be reduced. Past performance is not predictive of future performance. Investment return and principal value will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. Index returns do not reflect the effects of fees, transaction costs or expenses. It is not possible to invest directly in an index. No information is provided for Investor Class shares because shares of that class had not yet been issued as of June 30, 2019.
Average Annual Total Returns for the Year Ended June 30, 2019 | One Year | Three Years | Since Inception(1) | ||||||
Penn Capital Managed Alpha SMID Cap Equity Fund | |||||||||
Institutional Class Shares | 3.64 | % | 13.98 | % | 10.44 | % | |||
Russell 2500TM Index | 1.77 | % | 12.34 | % | 10.15 | %(2) |
(1) | Inception date is 12/1/15. |
(2) | The return shown for the Russell 2500® Index is from the inception date of the Institutional Class shares. |
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PENN CAPITAL SPECIAL SITUATIONS SMALL CAP EQUITY FUND
FUND SUMMARY (UNAUDITED)
This chart assumes an initial gross investment of $10,000 made on December 18, 2015, inception of the Institutional Class shares. Returns shown in the chart and table include the reinvestment of all dividends, but do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. In the absence of fee waivers and reimbursements, when they are necessary to keep expenses at the expense cap, total return would be reduced. Past performance is not predictive of future performance. Investment return and principal value will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. Index returns do not reflect the effects of fees, transaction costs or expenses. It is not possible to invest directly in an index. No information is provided for Investor Class shares because shares of that class had not yet been issued as of June 30, 2019.
Average Annual Total Returns for the Year Ended June 30, 2019 | One Year | Three Years | Since Inception(1) | ||||||
Penn Capital Special Situations Small Cap Equity Fund | |||||||||
Institutional Class Shares | -7.91 | % | 10.42 | % | 9.75 | % | |||
Russell 2000® Index | -3.31 | % | 12.30 | % | 11.07 | %(2) |
(1) | Inception date is 12/18/15. |
(2) | The return shown for the Russell 2000® Index is from the inception date of the Institutional Class shares. |
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PENN CAPITAL MULTI-CREDIT HIGH INCOME FUND
FUND SUMMARY (UNAUDITED)
This chart assumes an initial gross investment of $10,000 made on December 1, 2015, inception of the Institutional Class shares. Returns shown in the chart and table include the reinvestment of all dividends, but do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. In the absence of fee waivers and reimbursements, when they are necessary to keep expenses at the expense cap, total return would be reduced. Past performance is not predictive of future performance. Investment return and principal value will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. Index returns do not reflect the effects of fees, transaction costs or expenses. It is not possible to invest directly in an index. No information is provided for Investor Class shares because shares of that class had not yet been issued as of June 30, 2019.
Average Annual Total Returns for the Year Ended June 30, 2019 | One Year | Three Years | Since Inception(1) | ||||||
Penn Capital Multi-Credit High Income Fund | |||||||||
Institutional Class Shares | 5.83 | % | 7.59 | % | 7.10 | % | |||
ICE BofAML US High Yield Constrained Index | 7.56 | % | 7.53 | % | 8.15 | %(2) | |||
50% ICE BofAML High Yield Constrained Index -50% S&P/LSTA BB Loan Index | 5.81 | % | 5.90 | % | 6.31 | %(3) |
(1) | Inception date is 12/1/15. |
(2) | The return shown for the ICE BofAML US High Yield Constrained Index is from the inception date of the Institutional Class shares. |
(3) | The return for the 50% ICE BofAML High Yield Constrained Index -50% S&P/LSTA BB Loan Index is from the inception date of the Institutional Class shares. |
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PENN CAPITAL DEFENSIVE FLOATING RATE INCOME FUND
FUND SUMMARY (UNAUDITED)
This chart assumes an initial gross investment of $10,000 made on December 1, 2015, inception of the Institutional Class shares. Returns shown in the chart and table include the reinvestment of all dividends, but do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. In the absence of fee waivers and reimbursements, when they are necessary to keep expenses at the expense cap, total return would be reduced. Past performance is not predictive of future performance. Investment return and principal value will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. Index returns do not reflect the effects of fees, transaction costs or expenses. It is not possible to invest directly in an index. No information is provided for Investor Class shares because shares of that class had not yet been issued as of June 30, 2019.
Average Annual Total Returns for the Year Ended June 30, 2019 | One Year | Three Years | Since Inception(1) | ||||||
Penn Capital Defensive Floating Rate Income Fund | |||||||||
Institutional Class Shares | 4.04 | % | 4.50 | % | 4.30 | % | |||
S&P/LSTA BB Loan Index* | 4.05 | % | 4.27 | % | 4.46 | %(2) | |||
S&P/LSTA BB/B Loan Index | 4.13 | % | 4.97 | % | 5.09 | %(3) |
* | Effective October 31, 2018, the S&P/LSTA BB Loan Index has replaced the S&P/LSTA BB/B Loan Index as the Fund’s primary benchmark. The Advisor believes that the new index is more appropriate given the Fund’s holdings. |
(1) | Inception date is 12/1/15. |
(2) | The return shown for the S&P/LSTA BB Loan Index in from the inception date of the Institutional Class shares. |
(3) | The return shown for the S&P/LSTA BB/B Loan Index is from the inception date of the Institutional Class shares. |
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PENN CAPITAL DEFENSIVE SHORT DURATION HIGH INCOME FUND
FUND SUMMARY (UNAUDITED)
This chart assumes an initial gross investment of $10,000 made on July 17, 2017, inception of the Institutional Class shares. Returns shown in the chart and table include the reinvestment of all dividends, but do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. In the absence of fee waivers and reimbursements, when they are necessary to keep expenses at the expense cap, total return would be reduced. Past performance is not predictive of future performance. Investment return and principal value will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. Index returns do not reflect the effects of fees, transaction costs or expenses. It is not possible to invest directly in an index.
Total Returns for the Fiscal Year Ended June 30, 2019 | One Year | Since Inception(1) | ||||
Penn Capital Defensive Short Duration High Income Fund | ||||||
Institutional Class Shares | 4.65 | % | 2.90 | % | ||
ICE BofAML 1-3 Year BB-Rated US Cash Pay High Yield Index | 6.37 | % | 4.07 | %(2) | ||
ICE BofAML US High Yield Cash Pay BB-B Rated 1-3 Years Index | 6.53 | % | 4.81 | %(3) |
(1) | Inception date is 7/17/17. |
(2) | The return shown for the ICE BofAML 1-3 Year BB-Rated US Cash Pay High Yield Index is from the inception date of the Institutional Class shares. |
(3) | The return shown for the ICE BofAML US High Yield Cash Pay BB-B Rated 1-3 Years Index is from the inception date of the Institutional Class shares. |
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PENN CAPITAL FUNDS TRUST
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
FOR THE SIX MONTH PERIOD FROM JANUARY 1, 2019 TO JUNE 30, 2019
Cost in Dollars of a $1,000 Investment in Penn Capital Managed Alpha SMID Cap Equity Fund (Unaudited)
The example below is intended to describe the fees and expenses borne by shareholders during the six-month period from January 1, 2019 to June 30, 2019, and the impact of those costs on your investment.
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees on sales (as applicable) and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses (as applicable). 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 an investment of $1,000 made at the beginning of the six-month period and held for the entire period from January 1, 2019 to June 30, 2019.
This example illustrates your Fund’s ongoing costs in two ways:
Actual Expenses
The second and third data columns in the table below provide information about actual account values and actual expenses. You may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid during the six months ended June 30, 2019. 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 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 fourth and fifth data columns in the table below provide information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balances or expenses you paid for the six-month period shown. You may use this information to compare the ongoing costs of investing in the Fund with the ongoing costs of investing in other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the 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 redemption fees. Therefore, the fourth and fifth data columns of the table are useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Actual | Hypothetical | ||||||||||||||
Share Class1 | Beginning Account Value 1/1/19 | Ending Account Value (Based on Actual Returns and Expenses) 6/30/19 | Expenses Paid During Period2 | Ending Account Value (Based on Hypothetical 5% Annualized Return and Actual Expenses) 6/30/19 | Expenses Paid During Period2 | ||||||||||
Institutional Class Shares | $ | 1,000.00 | $ | 1,191.70 | $ | 5.76 | $ | 1,019.54 | $ | 5.31 |
1. | No information is provided for Investor Class shares because shares of that class had not yet been issued as of June 30, 2019. |
2. | Expenses are equal to the Fund’s annualized expense ratio, net of waivers and excluding acquired fund fees and expenses if any (1.06% for the Institutional Class), multiplied by the average account value over the period, divided by 365 and multiplied by 181 for the Institutional Class (to reflect the six-month period). The table above represents the actual expenses incurred during the six-month period. |
11
PENN CAPITAL FUNDS TRUST
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
FOR THE SIX MONTH PERIOD FROM JANUARY 1, 2019 TO JUNE 30, 2019
Cost in Dollars of a $1,000 Investment in Penn Capital Special Situations Small Cap Equity Fund (Unaudited)
The example below is intended to describe the fees and expenses borne by shareholders during the six-month period from January 1, 2019 to June 30, 2019, and the impact of those costs on your investment.
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees on sales (as applicable) and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses (as applicable). 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 an investment of $1,000 made at the beginning of the six-month period and held for the entire period from January 1, 2019 to June 30, 2019.
This example illustrates your Fund’s ongoing costs in two ways:
Actual Expenses
The second and third data columns in the table below provide information about actual account values and actual expenses. You may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid during the six months ended June 30, 2019. 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 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 fourth and fifth data columns in the table below provide information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balances or expenses you paid for the six-month period shown. You may use this information to compare the ongoing costs of investing in the Fund with the ongoing costs of investing in other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the 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 redemption fees. Therefore, the fourth and fifth data columns of the table are useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Actual | Hypothetical | ||||||||||||||
Share Class1 | Beginning Account Value 1/1/19 | Ending Account Value (Based on Actual Returns and Expenses) 6/30/19 | Expenses Paid During Period2 | Ending Account Value (Based on Hypothetical 5% Annualized Return and Actual Expenses) 6/30/19 | Expenses Paid During Period2 | ||||||||||
Institutional Class Shares | $ | 1,000.00 | $ | 1,178.10 | $ | 5.94 | $ | 1,019.34 | $ | 5.51 |
1. | No information is provided for Investor Class shares because shares of that class had not yet been issued as of June 30, 2019. |
2. | Expenses are equal to the Fund’s annualized expense ratio (including interest expense), net of waivers and excluding acquired fund fees and expenses if any (1.10% for the Institutional Class), multiplied by the average account value over the period, divided by 365 and multiplied by 181 for the Institutional Class (to reflect the six-month period). The table above represents the actual expenses incurred during the six-month period. |
12
PENN CAPITAL FUNDS TRUST
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
FOR THE SIX MONTH PERIOD FROM JANUARY 1, 2019 TO JUNE 30, 2019
Cost in Dollars of a $1,000 Investment in Penn Capital Multi-Credit High Income Fund (Unaudited)
The example below is intended to describe the fees and expenses borne by shareholders during the six-month period from January 1, 2019 to June 30, 2019, and the impact of those costs on your investment.
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees on sales (as applicable) and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses (as applicable). 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 an investment of $1,000 made at the beginning of the six-month period and held for the entire period from January 1, 2019 to June 30, 2019.
This example illustrates your Fund’s ongoing costs in two ways:
Actual Expenses
The second and third data columns in the table below provide information about actual account values and actual expenses. You may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid during the six months ended June 30, 2019. 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 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 fourth and fifth data columns in the table below provide information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balances or expenses you paid for the six-month period shown. You may use this information to compare the ongoing costs of investing in the Fund with the ongoing costs of investing in other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the 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 redemption fees. Therefore, the fourth and fifth data columns of the table are useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Actual | Hypothetical | ||||||||||||||
Share Class1 | Beginning Account Value 1/1/19 | Ending Account Value (Based on Actual Returns and Expenses) 6/30/19 | Expenses Paid During Period2 | Ending Account Value (Based on Hypothetical 5% Annualized Return and Actual Expenses) 6/30/19 | Expenses Paid During Period2 | ||||||||||
Institutional Class Shares | $ | 1,000.00 | $ | 1,080.70 | $ | 3.71 | $ | 1,021.22 | $ | 3.61 |
1. | No information is provided for Investor Class shares because shares of that class had not yet been issued as of June 30, 2019. |
2. | Expenses are equal to the Fund’s annualized expense ratio, net of waivers and excluding acquired fund fees and expenses if any (0.72% for the Institutional Class), multiplied by the average account value over the period, divided by 365 and multiplied by 181 for the Institutional Class (to reflect the six-month period). The table above represents the actual expenses incurred during the six-month period. |
13
PENN CAPITAL FUNDS TRUST
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
FOR THE SIX MONTH PERIOD FROM JANUARY 1, 2019 TO JUNE 30, 2019
Cost in Dollars of a $1,000 Investment in Penn Capital Defensive Floating Rate Income Fund (Unaudited)
The example below is intended to describe the fees and expenses borne by shareholders during the six-month period from January 1, 2019 to June 30, 2019, and the impact of those costs on your investment.
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees on sales (as applicable) and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses (as applicable). 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 an investment of $1,000 made at the beginning of the six-month period and held for the entire period from January 1, 2019 to June 30, 2019.
This example illustrates your Fund’s ongoing costs in two ways:
Actual Expenses
The second and third data columns in the table below provide information about actual account values and actual expenses. You may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid during the six months ended June 30, 2019. 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 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 fourth and fifth data columns in the table below provide information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balances or expenses you paid for the six-month period shown. You may use this information to compare the ongoing costs of investing in the Fund with the ongoing costs of investing in other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the 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 redemption fees. Therefore, the fourth and fifth data columns of the table are useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Actual | Hypothetical | ||||||||||||||
Share Class1 | Beginning Account Value 1/1/19 | Ending Account Value (Based on Actual Returns and Expenses) 6/30/19 | Expenses Paid During Period2 | Ending Account Value (Based on Hypothetical 5% Annualized Return and Actual Expenses) 6/30/19 | Expenses Paid During Period2 | ||||||||||
Institutional Class Shares | $ | 1,000.00 | $ | 1,055.20 | $ | 3.26 | $ | 1,021.62 | $ | 3.21 |
1. | No information is provided for Investor Class shares because shares of that class had not yet been issued as of June 30, 2019. |
2. | Expenses are equal to the Fund’s annualized expense ratio, net of waivers and excluding acquired fund fees and expenses if any (0.64% for the Institutional Class), multiplied by the average account value over the period, divided by 365 and multiplied by 181 for the Institutional Class (to reflect the six-month period). The table above represents the actual expenses incurred during the six-month period. |
14
PENN CAPITAL FUNDS TRUST
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
FOR THE PERIOD FROM JANUARY 1, 2019 TO JUNE 30, 2019
Cost in Dollars of a $1,000 Investment in Penn Capital Defensive Short Duration High Income Fund (Unaudited)
The example below is intended to describe the fees and expenses borne by shareholders during the six-month period from January 1, 2019 to June 30, 2019, and the impact of those costs on your investment.
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees on sales (as applicable) and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses (as applicable). 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 an investment of $1,000 made at the beginning of the six-month period and held for the entire period from January 1, 2019 to June 30, 2019.
This example illustrates your Fund’s ongoing costs in two ways:
Actual Expenses
The second and third data columns in the table below provide information about actual account values and actual expenses. You may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid during the period ended June 30, 2019. 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 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 fourth and fifth data columns in the table below provide information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balances or expenses you paid for the six-month period shown. You may use this information to compare the ongoing costs of investing in the Fund with the ongoing costs of investing in other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the 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 redemption fees. Therefore, the fourth and fifth data columns of the table are useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Actual | Hypothetical | ||||||||||||||
Share Class1 | Beginning Account Value 1/1/19 | Ending Account Value (Based on Actual Returns and Expenses) 6/30/19 | Expenses Paid During Period2 | Ending Account Value (Based on Hypothetical 5% Annualized Return and Actual Expenses) 6/30/19 | Expenses Paid During Period2 | ||||||||||
Institutional Class Shares | $ | 1,000.00 | $ | 1,047.20 | $ | 2.74 | $ | 1,022.12 | $ | 2.71 |
1. | No information is provided for Investor Class shares because shares of that class had not yet been issued as of June 30, 2019. |
2. | Expenses are equal to the Fund’s annualized expense ratio, net of waivers and excluding acquired fund fees and expenses if any (0.54% for the Institutional Class), multiplied by the average account value over the period, divided by 365 and multiplied by 181 for the Institutional Class (to reflect the six-month period). The table above represents the actual expenses incurred during the six-month period. |
15
PENN CAPITAL FUNDS TRUST |
PENN CAPITAL MANAGED ALPHA SMID CAP EQUITY FUND |
SCHEDULE OF INVESTMENTS |
JUNE 30, 2019 |
Shares | Value | |||||
Common Stocks: 86.5% | ||||||
Aerospace & Defense: 3.2% | ||||||
Huntington Ingalls Industries, Inc. | 853 | $ | 191,703 | |||
Mercury Systems, Inc. (a) | 3,830 | 269,441 | ||||
461,144 | ||||||
Banks: 5.6% | ||||||
BOK Financial Corp. | 2,589 | 195,418 | ||||
Pinnacle Financial Partners, Inc. | 3,159 | 181,579 | ||||
Webster Financial Corp. | 4,361 | 208,325 | ||||
Western Alliance Bancorp (a) | 4,815 | 215,327 | ||||
800,649 | ||||||
Beverages: 1.4% | ||||||
MGP Ingredients, Inc. | 3,001 | 198,996 | ||||
Biotechnology: 1.5% | ||||||
Exelixis, Inc. (a) | 10,229 | 218,594 | ||||
Building Products: 1.7% | ||||||
Allegion PLC | 2,217 | 245,089 | ||||
Chemicals: 0.9% | ||||||
HB Fuller Co. | 2,873 | 133,307 | ||||
Commercial Services & Supplies: 2.4% | ||||||
IAA, Inc. (a) | 5,467 | 212,010 | ||||
KAR Auction Services, Inc. | 5,467 | 136,675 | ||||
348,685 | ||||||
Construction Materials: 1.5% | ||||||
Martin Marietta Materials, Inc. | 952 | 219,065 | ||||
Containers & Packaging: 1.0% | ||||||
Berry Global Group, Inc. (a) | 2,654 | 139,574 | ||||
Diversified Financial Services: 2.3% | ||||||
Voya Financial, Inc. | 6,078 | 336,113 | ||||
Electric Utilities: 1.8% | ||||||
ALLETE, Inc. | 3,109 | 258,700 | ||||
Entertainment: 1.7% | ||||||
Live Nation Entertainment, Inc. (a) | 3,562 | 235,983 | ||||
Food Products: 1.4% | ||||||
Lamb Weston Holdings, Inc. | 3,234 | 204,906 | ||||
Health Care Equipment & Supplies: 6.0% | ||||||
ICU Medical, Inc. (a) | 853 | 214,879 | ||||
LivaNova PLC (a) | 2,362 | 169,970 | ||||
Teleflex, Inc. | 736 | 243,726 | ||||
Wright Medical Group NV (a) | 7,560 | 225,439 | ||||
854,014 | ||||||
Health Care Providers & Services: 1.0% | ||||||
LHC Group, Inc. (a) | 1,206 | 144,213 | ||||
Health Care Technology: 1.6% | ||||||
Allscripts Healthcare Solutions, Inc. (a) | 20,287 | 235,938 | ||||
Hotels, Restaurants & Leisure: 3.6% | ||||||
Boyd Gaming Corp. | 5,406 | 145,638 | ||||
Red Rock Resorts, Inc. - Class A | 5,401 | 116,013 | ||||
Vail Resorts, Inc. | 1,132 | 252,640 | ||||
514,291 |
Shares | Value | |||
Household Durables: 1.1% | ||||
Roku, Inc. (a) | 1,803 | $ | 163,316 | |
Independent Power and Renewable Electricity Producers: 1.1% | ||||
Ormat Technologies, Inc. | 2,516 | 159,489 | ||
Insurance: 6.1% | ||||
Arch Capital Group Ltd. (a) | 11,021 | 408,659 | ||
Fidelity National Financial, Inc. | 6,069 | 244,581 | ||
Reinsurance Group of America, Inc. | 1,404 | 219,066 | ||
872,306 | ||||
Interactive Media & Services: 1.8% | ||||
IAC (a) | 1,203 | 261,689 | ||
IT Services: 4.0% | ||||
Black Knight, Inc. (a) | 4,314 | 259,487 | ||
GoDaddy, Inc. - Class A (a) | 3,305 | 231,846 | ||
MongoDB, Inc. (a) | 508 | 77,262 | ||
568,595 | ||||
Machinery: 1.3% | ||||
Allison Transmission Holdings, Inc. | 4,112 | 190,591 | ||
Media: 2.4% | ||||
Liberty Media Corp.-Liberty SiriusXM - Class A (a) | 4,317 | 163,226 | ||
Nexstar Media Group, Inc. - Class A | 1,796 | 181,396 | ||
344,622 | ||||
Metals & Mining: 1.2% | ||||
Commercial Metals Co. | 9,420 | 168,147 | ||
Oil, Gas & Consumable Fuels: 3.4% | ||||
Arch Coal, Inc. - Class A | 1,957 | 184,369 | ||
Cabot Oil & Gas Corp. | 6,157 | 141,364 | ||
Diamondback Energy, Inc. | 1,540 | 167,814 | ||
493,547 | ||||
Pharmaceuticals: 5.1% | ||||
Catalent, Inc. (a) | 3,859 | 209,196 | ||
Elanco Animal Health, Inc. (a) | 9,179 | 310,250 | ||
Pacira BioSciences, Inc. (a) | 4,797 | 208,622 | ||
728,068 | ||||
Professional Services: 2.5% | ||||
TransUnion | 4,794 | 352,407 | ||
Road & Rail: 0.9% | ||||
Schneider National, Inc. - Class B | 6,988 | 127,461 | ||
Semiconductors & Semiconductor Equipment: 4.4% | ||||
Marvell Technology Group Ltd. | 9,854 | 235,215 | ||
Semtech Corp. (a) | 3,562 | 171,154 | ||
Teradyne, Inc. | 4,581 | 219,476 | ||
625,845 | ||||
Software: 5.1% | ||||
Five9, Inc. (a) | 4,240 | 217,469 | ||
Nice Ltd. - ADR (a) | 1,967 | 269,479 | ||
Tyler Technologies, Inc. (a) | 1,138 | 245,831 | ||
732,779 |
The Accompanying Notes are an Integral Part of these Financial Statements.
16
PENN CAPITAL FUNDS TRUST |
PENN CAPITAL MANAGED ALPHA SMID CAP EQUITY FUND |
SCHEDULE OF INVESTMENTS |
JUNE 30, 2019 |
Shares | Value | |||
Specialty Retail: 3.4% | ||||
Burlington Stores, Inc. (a) | 1,677 | $ | 285,341 | |
Floor & Decor Holdings, Inc. - Class A (a) | 4,914 | 205,897 | ||
TravelCenters of America LLC (a) | 1 | 2 | ||
491,240 | ||||
Technology Hardware, Storage & Peripherals: 0.9% | ||||
Pure Storage, Inc. - Class A (a) | 8,141 | 124,313 | ||
Trading Companies & Distributors: 1.0% | ||||
United Rentals, Inc. (a) | 1,115 | 147,882 | ||
Water Utilities: 2.2% | ||||
Aqua America, Inc. | 7,781 | 321,900 | ||
Total Common Stocks (cost $10,274,895) | 12,423,458 | |||
Real Estate Investment Trusts (REITs): 9.6% | ||||
Camden Property Trust | 2,614 | 272,877 | ||
CyrusOne, Inc. | 4,710 | 271,861 | ||
Healthcare Trust of America, Inc. - Class A | 9,315 | 255,510 | ||
Invitation Homes, Inc. | 11,487 | 307,047 | ||
MGM Growth Properties LLC - Class A | 9,029 | 276,739 | ||
Total REITs (cost $1,247,091) | 1,384,034 | |||
Total Investments - 96.1% (cost $11,521,986) | 13,807,492 | |||
Other Assets and Liabilities 3.9% | 555,822 | |||
Net Assets: 100.0% | $ | 14,363,314 |
Percentages are stated as a percent of net assets.
ADR - American Depository Receipt
(a) | No distribution or dividend was made during the year ending June 30, 2019. As such, it is classified as a non-income producing security as of June 30, 2019. |
Country Exposure (as a percentage of total investments) (Unaudited) | |
United States | 89.22% |
Bermuda | 4.47% |
Israel | 1.87% |
Ireland | 1.70% |
Netherlands | 1.56% |
United Kingdom | 1.18% |
Sector Allocation (as a percentage of total investments) (Unaudited) |
The industry classifications presented in this report, present the Global Industry Classification Standard (GICS®). GICS® was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor Financial Services LLC (“S&P”). GICS® is a service mark of MSCI and S&P and has been licensed for use by U.S. Bank Global Fund Services.
The Accompanying Notes are an Integral Part of these Financial Statements.
17
PENN CAPITAL FUNDS TRUST |
PENN CAPITAL SPECIAL SITUATIONS SMALL CAP EQUITY FUND |
SCHEDULE OF INVESTMENTS |
JUNE 30, 2019 |
Shares | Value | |||||
Common Stocks: 95.7% | ||||||
Auto Components: 0.8% | ||||||
Modine Manufacturing Co. (a) | 5,943 | $ | 85,044 | |||
Banks: 8.2% | ||||||
CenterState Bank Corp. | 5,436 | 125,191 | ||||
FB Financial Corp. | 4,830 | 176,778 | ||||
First BanCorp | 12,348 | 136,322 | ||||
Veritex Holdings, Inc. | 6,810 | 176,719 | ||||
Western Alliance Bancorp (a) | 4,912 | 219,665 | ||||
834,675 | ||||||
Beverages: 1.0% | ||||||
MGP Ingredients, Inc. | 1,600 | 106,096 | ||||
Biotechnology: 1.5% | ||||||
Exelixis, Inc. (a) | 7,353 | 157,134 | ||||
Capital Markets: 0.9% | ||||||
PJT Partners, Inc. - Class A | 2,293 | 92,912 | ||||
Construction & Engineering: 1.8% | ||||||
MasTec, Inc. (a) | 3,589 | 184,941 | ||||
Construction Materials: 1.9% | ||||||
Summit Materials, Inc. - Class A (a) | 10,106 | 194,540 | ||||
Diversified Consumer Services: 1.4% | ||||||
Chegg, Inc. (a) | 3,657 | 141,124 | ||||
Electrical Equipment: 1.6% | ||||||
Atkore International Group, Inc. (a) | 2,825 | 73,083 | ||||
TPI Composites, Inc. (a) | 3,491 | 86,297 | ||||
159,380 | ||||||
Electronic Equipment, Instruments & Components: 2.7% | ||||||
Itron, Inc. (a) | 2,431 | 152,108 | ||||
Littelfuse, Inc. | 671 | 118,706 | ||||
270,814 | ||||||
Energy Equipment & Services: 2.7% | ||||||
Keane Group, Inc. (a) | 12,000 | 80,640 | ||||
Select Energy Services, Inc. - Class A (a) | 7,401 | 85,926 | ||||
Transocean Ltd. (a) | 16,400 | 105,124 | ||||
271,690 | ||||||
Entertainment: 3.4% | ||||||
AMC Entertainment Holdings, Inc. - Class A | 10,647 | 99,337 | ||||
Sciplay Corp. - Class A (a) | 7,625 | 104,539 | ||||
Zynga, Inc. - Class A (a) | 22,442 | 137,569 | ||||
341,445 | ||||||
Food & Staples Retailing: 1.7% | ||||||
BJ's Wholesale Club Holdings, Inc. (a) | 6,471 | 170,834 | ||||
Health Care Equipment & Supplies: 6.6% | ||||||
ICU Medical, Inc. (a) | 785 | 197,749 | ||||
LivaNova PLC (a) | 2,288 | 164,645 | ||||
OraSure Technologies, Inc. (a) | 13,969 | 129,632 | ||||
Wright Medical Group NV (a) | 5,959 | 177,698 | ||||
669,724 |
Shares | Value | |||
Health Care Providers & Services: 1.8% | ||||
R1 RCM, Inc. (a) | 14,707 | $ | 185,014 | |
Health Care Technology: 3.1% | ||||
Allscripts Healthcare Solutions, Inc. (a) | 14,420 | 167,705 | ||
Omnicell, Inc. (a) | 1,776 | 152,789 | ||
320,494 | ||||
Hotels, Restaurants & Leisure: 13.1% | ||||
Everi Holdings, Inc. (a) | 14,010 | 167,139 | ||
Extended Stay America, Inc. | 5,700 | 96,273 | ||
Full House Resorts, Inc. (a) | 62,873 | 117,573 | ||
Golden Entertainment, Inc. (a) | 13,121 | 183,694 | ||
Marriott Vacations Worldwide Corp. | 1,011 | 97,460 | ||
Penn National Gaming, Inc. (a) | 7,136 | 137,439 | ||
Planet Fitness, Inc. - Class A (a) | 1,238 | 89,681 | ||
Red Rock Resorts, Inc. - Class A | 7,504 | 161,186 | ||
Scientific Games Corp. (a) | 5,298 | 105,006 | ||
SeaWorld Entertainment, Inc. (a) | 5,666 | 175,646 | ||
1,331,097 | ||||
IT Services: 3.1% | ||||
Carbonite, Inc. (a) | 4,117 | 107,207 | ||
InterXion Holding NV (a) | 2,711 | 206,280 | ||
313,487 | ||||
Life Sciences Tools & Services: 1.2% | ||||
Syneos Health, Inc. (a) | 2,406 | 122,923 | ||
Machinery: 6.2% | ||||
Chart Industries, Inc. (a) | 1,265 | 97,253 | ||
Evoqua Water Technologies Corp. (a) | 13,109 | 186,672 | ||
Gardner Denver Holdings, Inc. (a) | 3,175 | 109,855 | ||
Milacron Holdings Corp. (a) | 12,129 | 167,380 | ||
Welbilt, Inc. (a) | 4,494 | 75,050 | ||
636,210 | ||||
Media: 8.1% | ||||
Cardlytics, Inc. (a) | 3,584 | 93,112 | ||
The E.W. Scripps Co. - Class A | 9,726 | 148,710 | ||
Gray Television, Inc. (a) | 11,356 | 186,125 | ||
Nexstar Media Group, Inc. - Class A | 1,702 | 171,902 | ||
Sinclair Broadcast Group, Inc. - Class A | 4,244 | 227,606 | ||
827,455 | ||||
Metals & Mining: 1.0% | ||||
Cleveland-Cliffs, Inc. | 9,897 | 105,601 | ||
Oil, Gas & Consumable Fuels: 2.8% | ||||
Enerplus Corp. | 14,392 | 108,372 | ||
Whiting Petroleum Corp. (a) | 2,905 | 54,265 | ||
WPX Energy, Inc. (a) | 10,944 | 125,966 | ||
288,603 | ||||
Pharmaceuticals: 1.6% | ||||
Pacira BioSciences, Inc. (a) | 3,844 | 167,176 | ||
Road & Rail: 0.8% | ||||
Marten Transport Ltd. | 4,380 | 79,497 |
The Accompanying Notes are an Integral Part of these Financial Statements.
18
PENN CAPITAL FUNDS TRUST |
PENN CAPITAL SPECIAL SITUATIONS SMALL CAP EQUITY FUND |
SCHEDULE OF INVESTMENTS |
JUNE 30, 2019 |
Shares | Value | |||
Semiconductors & Semiconductor Equipment: 2.9% | ||||
Semtech Corp. (a) | 2,984 | $ | 143,381 | |
Silicon Motion Technology Corp. - ADR | 3,418 | 151,691 | ||
295,072 | ||||
Software: 5.1% | ||||
Five9, Inc. (a) | 2,521 | 129,302 | ||
Mimecast Ltd. (a) | 3,183 | 148,678 | ||
Nice Ltd. - ADR (a) | 969 | 132,753 | ||
Q2 Holdings, Inc. (a) | 1,394 | 106,446 | ||
517,179 | ||||
Specialty Retail: 4.3% | ||||
Five Below, Inc. (a) | 1,090 | 130,822 | ||
Floor & Decor Holdings, Inc. - Class A (a) | 3,129 | 131,105 | ||
National Vision Holdings, Inc. (a) | 5,785 | 177,773 | ||
439,700 | ||||
Textiles, Apparel & Luxury Goods: 1.1% | ||||
G-III Apparel Group Ltd. (a) | 3,748 | 110,266 | ||
Thrifts & Mortgage Finance: 1.0% | ||||
WSFS Financial Corp. | 2,548 | 105,232 | ||
Trading Companies & Distributors: 1.4% | ||||
Beacon Roofing Supply, Inc. (a) | 3,944 | 144,824 | ||
Wireless Telecommunication Services: 0.9% | ||||
Gogo, Inc. (a) | 23,612 | 93,976 | ||
Total Common Stocks (cost $8,796,654) | 9,764,159 | |||
Contingent Value Right - 0.0% | ||||
Media - 0.0% | ||||
Media General, Inc. (a) | 1,867 | 19 | ||
Total Contingent Value Right (cost $0) | 19 | |||
Real Estate Investment Trusts (REITs): 3.8% | ||||
NexPoint Residential Trust, Inc. | 3,818 | 158,065 | ||
Pebblebrook Hotel Trust | 3,668 | 103,364 | ||
Physicians Realty Trust | 7,200 | 125,568 | ||
Total REITs (cost $381,944) | 386,997 | |||
Total Investments - 99.5% (cost $9,178,598) | 10,151,175 | |||
Other Assets and Liabilities 0.5% | 46,386 | |||
Net Assets: 100.0% | $ | 10,197,561 |
Percentages are stated as a percent of net assets.
ADR - American Depository Receipt
(a) | No distribution or dividend was made during the year ending June 30, 2019. As such, it is classified as a non-income producing security as of June 30, 2019. |
Country Exposure (as a percentage of total investments) (Unaudited) | |
United States | 88.08% |
Netherlands | 3.73% |
United Kingdom | 1.60% |
Cayman Islands | 1.47% |
Jersey | 1.45% |
Puerto Rico | 1.33% |
Israel | 1.29% |
Canada | 1.05% |
Sector Allocation (as a percentage of total investments) (Unaudited) |
The Accompanying Notes are an Integral Part of these Financial Statements.
19
PENN CAPITAL FUNDS TRUST |
PENN CAPITAL MULTI-CREDIT HIGH INCOME FUND |
SCHEDULE OF INVESTMENTS |
JUNE 30, 2019 |
Principal | Value | |||||
Corporate Bonds: 56.5% | ||||||
Aerospace: 1.7% | ||||||
Bombardier, Inc., 7.500%, 3/15/25 (a) | $45,000 | $ | 45,126 | |||
Bombardier, Inc., 8.750%, 12/1/21 (a) | 60,000 | 65,400 | ||||
TransDigm, Inc., 6.375%, 6/15/26 | 35,000 | 35,437 | ||||
TransDigm, Inc., 6.250%, 3/15/26 (a) | 35,000 | 36,619 | ||||
TransDigm, Inc., 7.500%, 3/15/27 | 35,000 | 36,531 | ||||
Triumph Group, Inc., 7.750%, 8/15/25 | 35,000 | 33,863 | ||||
252,976 | ||||||
Airline Companies: 0.6% | ||||||
VistaJet Malta Finance PLC, 10.500%, 6/1/24 (a) | 85,000 | 84,788 | ||||
Automotive: 0.5% | ||||||
Delphi Technologies PLC, 5.000%, 10/1/25 (a) | 85,000 | 75,650 | ||||
Banking: 0.9% | ||||||
Ally Financial, Inc., 8.000%, 3/15/20 | 35,000 | 36,181 | ||||
Ally Financial, Inc., 5.750%, 11/20/25 | 90,000 | 99,554 | ||||
135,735 | ||||||
Brokerage: 0.6% | ||||||
Oppenheimer Holdings, Inc., 6.750%, 7/1/22 | 95,000 | 97,375 | ||||
Building & Construction: 0.6% | ||||||
Ashton Woods USA LLC, 6.750%, 8/1/25 (a) | 50,000 | 48,250 | ||||
Ashton Woods USA LLC, 9.875%, 4/1/27 (a) | 35,000 | 36,881 | ||||
85,131 | ||||||
Building Materials: 0.5% | ||||||
Beacon Roofing Supply, Inc., 4.875%, 11/1/25 (a) | 75,000 | 74,250 | ||||
Chemical Companies: 1.8% | ||||||
CF Industries, Inc., 4.950%, 6/1/43 | 45,000 | 40,275 | ||||
Hexion, Inc., 7.875%, 7/15/27 (a) | 45,000 | 45,225 | ||||
Olin Corp., 5.000%, 2/1/30 | 75,000 | 74,156 | ||||
Venator Finance Sarl, 5.750%, 7/15/25 (a) | 120,000 | 109,950 | ||||
269,606 | ||||||
Computer Hardware: 0.4% | ||||||
Dell International LLC, 8.100%, 7/15/36 (a) | 45,000 | 55,189 | ||||
Consumer/Commercial/Lease Financing: 1.9% | ||||||
DAE Funding LLC, 5.750%, 11/15/23 (a) | 65,000 | 68,250 | ||||
Navient Corp., 5.875%, 10/25/24 | 65,000 | 65,731 | ||||
Navient Corp., 7.250%, 9/25/23 | 35,000 | 37,363 | ||||
Navient Corp., 8.000%, 3/25/20 | 35,000 | 36,225 | ||||
Park Aerospace Holdings Ltd., 5.250%, 8/15/22 (a) | 35,000 | 36,946 | ||||
Park Aerospace Holdings Ltd., 4.500%, 3/15/23 (a) | 45,000 | 46,555 | ||||
291,070 | ||||||
Consumer-Products: 0.3% | ||||||
HLF Financing Sarl LLC, 7.250%, 8/15/26 (a) | 45,000 | 45,225 |
Principal | Value | |||
Electric-Generation: 2.5% | ||||
Calpine Corp., 5.375%, 1/15/23 | $35,000 | $ | 35,393 | |
GenOn Energy, Inc., 9.392% (6 Month LIBOR USD + 6.500%), 12/1/23 (b) | 160,000 | 158,600 | ||
Talen Energy Supply LLC, 6.500%, 6/1/25 | 130,000 | 108,875 | ||
Talen Energy Supply LLC, 6.625%, 1/15/28 (a) | 25,000 | 24,844 | ||
Vistra Operations Co. LLC, 5.625%, 2/15/27 (a) | 45,000 | 47,644 | ||
375,356 | ||||
Electronics: 0.3% | ||||
MagnaChip Semiconductor Corp., 6.625%, 7/15/21 | 40,000 | 39,750 | ||
Energy-Exploration & Production: 4.7% | ||||
Callon Petroleum Co., 6.125%, 10/1/24 | 35,000 | 35,350 | ||
Comstock Resources, Inc., 9.750%, 8/15/26 | 50,000 | 38,375 | ||
Covey Park Energy LLC, 7.500%, 5/15/25 (a) | 40,000 | 28,800 | ||
Gulfport Energy Corp., 6.625%, 5/1/23 | 15,000 | 12,900 | ||
Gulfport Energy Corp., 6.000%, 10/15/24 | 60,000 | 46,350 | ||
Jagged Peak Energy LLC, 5.875%, 5/1/26 | 40,000 | 39,400 | ||
Matador Resources Co., 5.875%, 9/15/26 | 50,000 | 50,500 | ||
Montage Resources Corp., 8.875%, 7/15/23 | 85,000 | 71,613 | ||
Northern Oil and Gas, Inc., 8.500% Cash or 1.000% PIK, 5/15/23 (c) | 55,137 | 56,929 | ||
Oasis Petroleum, Inc., 6.250%, 5/1/26 (a) | 60,000 | 58,050 | ||
PDC Energy, Inc., 6.125%, 9/15/24 | 50,000 | 50,000 | ||
Range Resources Corp., 5.000%, 8/15/22 | 80,000 | 76,200 | ||
SM Energy Co., 5.625%, 6/1/25 | 40,000 | 36,400 | ||
Southwestern Energy Co., 6.200%, 1/23/25 | 35,000 | 32,025 | ||
Unit Corp., 6.625%, 5/15/21 | 90,000 | 81,000 | ||
713,892 | ||||
Entertainment: 1.1% | ||||
AMC Entertainment Holdings, Inc., 5.750%, 6/15/25 | 110,000 | 101,893 | ||
Lions Gate Capital Holdings LLC, 6.375%, 2/1/24 (a) | 30,000 | 31,537 | ||
National CineMedia LLC, 5.750%, 8/15/26 | 40,000 | 38,100 | ||
171,530 | ||||
Food & Drug Retailers: 0.6% | ||||
Albertsons Cos LLC, 6.625%, 6/15/24 | 95,000 | 98,444 | ||
Food-Wholesale: 2.0% | ||||
JBS USA LUX SA, 6.750%, 2/15/28 (a) | 70,000 | 76,037 | ||
KeHE Distributors LLC, 7.625%, 8/15/21 (a) | 95,000 | 94,288 | ||
Pilgrim's Pride Corp., 5.750%, 3/15/25 (a) | 60,000 | 60,900 | ||
Simmons Foods, Inc., 5.750%, 11/1/24 (a) | 90,000 | 81,900 | ||
313,125 | ||||
Forestry/Paper: 0.6% | ||||
Mercer International, Inc., 7.375%, 1/15/25 (a) | 40,000 | 42,500 | ||
Rayonier AM Products, Inc., 5.500%, 6/1/24 (a) | 50,000 | 42,750 | ||
85,250 |
The Accompanying Notes are an Integral Part of these Financial Statements.
20
PENN CAPITAL FUNDS TRUST |
PENN CAPITAL MULTI-CREDIT HIGH INCOME FUND |
SCHEDULE OF INVESTMENTS |
JUNE 30, 2019 |
Principal | Value | |||
Gaming: 1.3% | ||||
Gateway Casinos & Entertainment Ltd., 8.250%, 3/1/24 (a) | $40,000 | $ | 42,100 | |
Scientific Games International, Inc., 10.000%, 12/1/22 | 35,000 | 36,706 | ||
Scientific Games International, Inc., 8.250%, 3/15/26 (a) | 35,000 | 36,750 | ||
Stars Group Holdings BV, 7.000%, 7/15/26 (a) | 50,000 | 52,875 | ||
The Enterprise Development Authority, 12.000%, 7/15/24 (a) | 35,000 | 37,975 | ||
206,406 | ||||
Gas Distribution: 2.4% | ||||
DCP Midstream Operating LP, 5.850% (3 Month LIBOR USD + 3.850%), 5/21/43 (a)(b) | 90,000 | 84,375 | ||
Enterprise Products Operating LLC, 4.875% (3 Month LIBOR USD + 2.986%), 8/16/77 (b) | 50,000 | 47,106 | ||
NGL Energy Partners LP, 7.500%, 11/1/23 | 55,000 | 57,475 | ||
NGPL PipeCo LLC, 7.768%, 12/15/37 (a) | 45,000 | 57,150 | ||
Rockies Express Pipeline LLC, 6.875%, 4/15/40 (a) | 45,000 | 50,193 | ||
Sabine Pass Liquefaction LLC, 4.200%, 3/15/28 | 60,000 | 62,989 | ||
359,288 | ||||
Health Services: 0.3% | ||||
MEDNAX, Inc., 6.250%, 1/15/27 | 40,000 | 39,350 | ||
Hospitals: 1.0% | ||||
HCA, Inc., 5.500%, 6/15/47 | 35,000 | 37,356 | ||
Tenet Healthcare Corp., 8.125%, 4/1/22 | 40,000 | 42,000 | ||
Tenet Healthcare Corp., 6.750%, 6/15/23 | 70,000 | 70,262 | ||
149,618 | ||||
Hotels: 0.2% | ||||
Marriott Ownership Resorts, Inc., 6.500%, 9/15/26 | 30,000 | 32,175 | ||
Household & Leisure Products/Durables: 0.3% | ||||
Tempur Sealy International, Inc., 5.500%, 6/15/26 | 45,000 | 46,688 | ||
Investments & Miscellaneous Financial Services: 1.0% | ||||
Icahn Enterprises LP, 6.375%, 12/15/25 | 60,000 | 61,248 | ||
Icahn Enterprises LP, 6.250%, 5/15/26 (a) | 85,000 | 85,956 | ||
147,204 | ||||
Machinery Companies: 0.3% | ||||
Cleaver-Brooks, Inc., 7.875%, 3/1/23 (a) | 45,000 | 43,153 | ||
Media-Broadcast: 3.0% | ||||
Cumulus Media New Holdings, Inc., 6.750%, 7/1/26 (a) | 45,000 | 44,887 | ||
Entercom Media Corp., 7.250%, 11/1/24 (a) | 35,000 | 36,881 | ||
Entercom Media Corp., 6.500%, 5/1/27 (a) | 35,000 | 36,400 | ||
Salem Media Group, Inc., 6.750%, 6/1/24 (a) | 45,000 | 39,375 |
Principal | Value | |||
Sinclair Television Group, Inc., 5.625%, 8/1/24 (a) | $30,000 | $ | 30,675 | |
The E.W. Scripps Co., 5.125%, 5/15/25 (a) | 120,000 | 115,200 | ||
Townsquare Media, Inc., 6.500%, 4/1/23 (a) | 40,000 | 39,400 | ||
Univision Communications, Inc., 5.125%, 5/15/23 (a) | 75,000 | 73,313 | ||
Urban One, Inc., 7.375%, 10/15/22 (a) | 45,000 | 44,888 | ||
461,019 | ||||
Media-Cable: 2.0% | ||||
CSC Holdings LLC, 6.750%, 11/15/21 | 65,000 | 69,550 | ||
DISH DBS Corp., 5.875%, 7/15/22 | 145,000 | 147,175 | ||
DISH DBS Corp., 5.875%, 11/15/24 | 100,000 | 94,625 | ||
311,350 | ||||
Media-Services: 1.0% | ||||
Clear Channel Worldwide Holdings, Inc., 9.250%, 2/15/24 (a) | 110,000 | 119,350 | ||
MDC Partners, Inc., 6.500%, 5/1/24 (a) | 45,000 | 41,353 | ||
160,703 | ||||
Metals/Mining Excluding Steel: 2.9% | ||||
AK Steel Corp., 7.000%, 3/15/27 | 55,000 | 44,550 | ||
Alliance Resource Operating Partners LP, 7.500%, 5/1/25 (a) | 65,000 | 68,250 | ||
Cleveland-Cliffs, Inc., 5.750%, 3/1/25 | 115,000 | 114,425 | ||
CONSOL Energy, Inc., 11.000%, 11/15/25 (a) | 90,000 | 97,425 | ||
Peabody Energy Corp., 6.375%, 3/31/25 (a) | 75,000 | 75,938 | ||
Teck Resources Ltd., 6.250%, 7/15/41 | 35,000 | 39,171 | ||
439,759 | ||||
Multi-Line Insurance: 0.4% | ||||
Genworth Holdings, Inc., 7.700%, 6/15/20 | 15,000 | 15,059 | ||
Genworth Holdings, Inc., 7.625%, 9/24/21 | 55,000 | 53,900 | ||
68,959 | ||||
Non-Food & Drug Retailers: 0.3% | ||||
L Brands, Inc., 6.694%, 1/15/27 | 40,000 | 39,200 | ||
Oil Field Equipment & Services: 1.8% | ||||
CSI Compressco LP, 7.500%, 4/1/25 (a) | 25,000 | 24,531 | ||
CSI Compressco LP, 7.250%, 8/15/22 | 40,000 | 35,900 | ||
Nabors Industries, Inc., 4.625%, 9/15/21 | 40,000 | 39,000 | ||
Nabors Industries, Inc., 5.500%, 1/15/23 | 80,000 | 74,800 | ||
Transocean Poseidon Ltd., 6.875%, 2/1/27 (a) | 35,000 | 36,991 | ||
Transocean, Inc., 6.800%, 3/15/38 | 45,000 | 33,750 | ||
Transocean, Inc., 9.000%, 7/15/23 (a) | 30,000 | 31,950 | ||
276,922 | ||||
Oil Refining & Marketing: 0.3% | ||||
PBF Holding Co. LLC, 7.000%, 11/15/23 | 20,000 | 20,750 | ||
PBF Holding Co. LLC, 7.250%, 6/15/25 | 30,000 | 31,425 | ||
52,175 | ||||
Packaging: 0.7% | ||||
LABL Escrow Issuer LLC, 6.750%, 7/15/26 (a) | 45,000 | 45,472 | ||
Pactiv LLC, 7.950%, 12/15/25 | 50,000 | 54,563 | ||
100,035 |
The Accompanying Notes are an Integral Part of these Financial Statements.
21
PENN CAPITAL FUNDS TRUST |
PENN CAPITAL MULTI-CREDIT HIGH INCOME FUND |
SCHEDULE OF INVESTMENTS |
JUNE 30, 2019 |
Principal | Value | |||
Pharmaceuticals & Devices: 3.1% | ||||
Bausch Health Americas, Inc., 9.250%, 4/1/26 (a) | $140,000 | $ | 156,632 | |
Bausch Health Cos, Inc., 6.125%, 4/15/25 (a) | 35,000 | 35,700 | ||
Endo Finance LLC, 5.375%, 1/15/23 (a) | 100,000 | 72,000 | ||
Kinetic Concepts, Inc., 12.500%, 11/1/21 (a) | 50,000 | 55,063 | ||
Mallinckrodt International Finance SA, 4.875%, 4/15/20 (a) | 155,000 | 149,381 | ||
468,776 | ||||
Printing & Publishing: 1.2% | ||||
Lee Enterprises, Inc., 9.500%, 3/15/22 (a) | 45,000 | 45,787 | ||
Meredith Corp., 6.875%, 2/1/26 | 130,000 | 137,947 | ||
183,734 | ||||
Real Estate Development & Management: 0.5% | ||||
Realogy Group LLC, 4.875%, 6/1/23 (a) | 85,000 | 76,500 | ||
Restaurants: 0.3% | ||||
Yum! Brands, Inc., 6.875%, 11/15/37 | 20,000 | 21,050 | ||
Yum! Brands, Inc., 5.350%, 11/1/43 | 30,000 | 26,850 | ||
47,900 | ||||
Software/Services: 0.3% | ||||
Rackspace Hosting, Inc., 8.625%, 11/15/24 (a) | 55,000 | 50,463 | ||
Steel Producers/Products: 1.2% | ||||
AK Steel Corp., 7.625%, 10/1/21 | 105,000 | 103,425 | ||
United States Steel Corp., 6.875%, 8/15/25 | 80,000 | 75,200 | ||
178,625 | ||||
Support-Services: 2.2% | ||||
Herc Holdings, Inc., 5.500%, 7/15/27 (a) | 40,000 | 40,250 | ||
The ADT Security Corp., 4.875%, 7/15/32 (a) | 50,000 | 43,125 | ||
The GEO Group, Inc., 6.000%, 4/15/26 | 85,000 | 73,924 | ||
The Hertz Corp., 5.500%, 10/15/24 (a) | 90,000 | 85,977 | ||
The Hertz Corp., 7.625%, 6/1/22 (a) | 85,000 | 88,294 | ||
331,570 | ||||
Telecom-Integrated/Services: 5.6% | ||||
CenturyLink, Inc., 7.600%, 9/15/39 | 125,000 | 116,575 | ||
CenturyLink, Inc., 7.500%, 4/1/24 | 80,000 | 88,500 | ||
Cincinnati Bell, Inc., 7.000%, 7/15/24 (a) | 55,000 | 48,537 | ||
Cogent Communications Group, Inc., 5.625%, 4/15/21 (a) | 65,000 | 65,894 | ||
Consolidated Communications, Inc., 6.500%, 10/1/22 | 70,000 | 65,253 | ||
Gogo Intermediate Holdings LLC, 9.875%, 5/1/24 (a) | 170,000 | 174,888 | ||
Intelsat Connect Finance SA, 9.500%, 2/15/23 (a) | 80,000 | 70,800 | ||
Intelsat Luxembourg SA, 7.750%, 6/1/21 | 190,000 | 181,925 | ||
Qwest Corp., 6.875%, 9/15/33 | 45,000 | 44,926 | ||
857,298 |
Principal | Value | |||
Telecom-Wireless: 1.3% | ||||
GTT Communications, Inc., 7.875%, 12/31/24 (a) | $80,000 | $ | 65,400 | |
Sprint Corp., 7.875%, 9/15/23 | 40,000 | 43,500 | ||
Sprint Corp., 7.125%, 6/15/24 | 90,000 | 95,427 | ||
204,327 | ||||
Total Corporate Bonds (cost $8,501,947) | 8,597,539 | |||
Convertible Bond: 0.2% | ||||
Pharmaceuticals & Devices: 0.2% | ||||
Teva Pharmaceutical Finance Co. LLC, 0.250%, 2/1/26 | 40,000 | 36,575 | ||
Total Convertible Bond (cost $36,375) | 36,575 | |||
Bank Loans: 15.7% (d) | ||||
Aerospace: 0.3% | ||||
1199169 BC ULC, 6.330% (3 Month US LIBOR + 4.000%), 4/4/26 | 17,483 | 17,545 | ||
Dynasty Acquisition Co., Inc., 6.330% (3 Month US LIBOR + 4.000%), 4/8/26 | 32,517 | 32,634 | ||
50,179 | ||||
Auto Parts & Equipment: 0.3% | ||||
Adient US LLC, 6.870%, 5/6/24 | ||||
(6 Month US LIBOR + 4.250%) | 37,500 | 36,493 | ||
(3 Month US LIBOR + 4.250%) | 12,500 | 12,164 | ||
48,657 | ||||
Consumer-Products: 1.3% | ||||
BDF Acquisition Corp., 7.652% (1 Month US LIBOR + 5.250%), 8/8/23 | 99,219 | 96,615 | ||
HLF Financing Sarl LLC, 5.652% (1 Month US LIBOR + 3.250%), 8/16/25 | 99,374 | 99,234 | ||
195,849 | ||||
Diversified Financial Services: 0.4% | ||||
Nuvei Technologies Corp., 7.500% (3 Month US LIBOR + 5.000%), 9/28/25 | 60,000 | 59,237 | ||
Electric-Generation: 0.3% | ||||
Lightstone Holdco LLC, 6.152% (3 Month US LIBOR + 3.750%), 1/30/24 | 47,330 | 46,650 | ||
Lightstone Holdco LLC, 6.152% (3 Month US LIBOR + 3.750%), 1/30/24 | 2,670 | 2,631 | ||
49,281 | ||||
Entertainment: 0.2% | ||||
United PF Holdings LLC, 7.000% (3 Month US LIBOR + 4.500%), 6/14/26 | 30,800 | 30,761 | ||
United PF Holdings LLC, 7.000% (3 Month US LIBOR + 4.500%), 6/14/26 | 4,200 | 4,195 | ||
34,956 | ||||
Environmental & Waste: 0.3% | ||||
GFL Environmental, Inc., 5.402%, 5/31/25 | ||||
(1 Month US LIBOR + 3.000%) | 32,475 | 31,918 | ||
(1 Month US LIBOR + 3.000%) | 15,250 | 14,988 | ||
(1 Month US LIBOR + 3.000%) | 1,899 | 1,867 | ||
48,773 |
The Accompanying Notes are an Integral Part of these Financial Statements.
22
PENN CAPITAL FUNDS TRUST |
PENN CAPITAL MULTI-CREDIT HIGH INCOME FUND |
SCHEDULE OF INVESTMENTS |
JUNE 30, 2019 |
Principal | Value | |||
Gaming: 0.6% | ||||
PCI Gaming Authority, 5.402% (1 Month US LIBOR + 3.000%), 5/31/26 | $50,000 | $ | 50,052 | |
Stars Group Holdings BV, 5.830%, 7/10/25 | ||||
(3 Month US LIBOR + 3.500%) | 41,247 | 41,225 | ||
(3 Month US LIBOR + 3.500%) | 3,470 | 3,468 | ||
94,745 | ||||
Gas Distribution: 0.7% | ||||
Prairie ECI Acquiror LP, 7.080% (3 Month US LIBOR + 4.750%), 3/11/26 | 49,875 | 50,037 | ||
Woodford Express LLC, 7.402% (1 Month US LIBOR + 5.000%), 1/26/25 | 49,375 | 48,429 | ||
98,466 | ||||
Health Services: 0.8% | ||||
American Renal Holdings, Inc., 7.902% (1 Month US LIBOR + 5.500%), 6/22/24 | 74,242 | 74,127 | ||
Gentiva Health Services, Inc., 6.187% (1 Month US LIBOR + 3.750%), 7/2/25 | 48,502 | 48,502 | ||
122,629 | ||||
Industrial Conglomerates: 0.3% | ||||
Deliver Buyer, Inc., 7.330% (3 Month US LIBOR + 5.000%), 5/1/24 | 49,495 | 49,247 | ||
Investments & Miscellaneous Financial Services: 1.0% | ||||
Russell Investments US Institutional Holdco, Inc., 5.652% (1 Month US LIBOR + 3.250%), 6/1/23 | 49,364 | 48,833 | ||
The Edelman Financial Center LLC, 5.644% (1 Month US LIBOR + 3.250%), 7/19/25 | 49,625 | 49,421 | ||
VeriFone Systems, Inc., 6.520% (3 Month US LIBOR + 4.000%), 8/20/25 | 49,750 | 48,133 | ||
146,387 | ||||
Machinery Companies: 0.3% | ||||
Crosby Acquisition Corp., 7.250%, (3 Month US LIBOR + 4.750%), 6/19/26 | 50,000 | 49,521 | ||
Media-Broadcast: 0.9% | ||||
Cumulus Media New Holdings, Inc., 6.910% (1 Month US LIBOR + 4.500%), 5/15/22 | 37,278 | 37,231 | ||
ION Media Networks, Inc., 5.160% (1 Month US LIBOR + 2.750%), 12/18/20 | 50,000 | 49,875 | ||
Univision Communications, Inc., 5.152% (1 Month US LIBOR + 2.750%), 3/15/24 | 48,497 | 46,118 | ||
133,224 | ||||
Media-Cable: 1.6% | ||||
Altice France SA, 6.394% (1 Month US LIBOR + 4.000%), 8/14/26 | 249,750 | 244,131 | ||
Metals & Mining: 0.7% | ||||
Big River Steel LLC, 7.330% (3 Month US LIBOR + 5.000%), 8/23/23 | 98,993 | 99,241 |
Principal | Value | |||
Metals/Mining Excluding Steel: 1.0% | ||||
Aleris International, Inc., 7.152% (1 Month US LIBOR + 4.750%), 2/27/23 | $49,500 | $ | 49,515 | |
American Rock Salt Co. LLC, 6.152% (1 Month US LIBOR + 3.750%), 3/21/25 | 48,032 | 47,852 | ||
CONSOL Energy, Inc., 6.910% (1 Month US LIBOR + 4.500%), 9/28/24 | 49,875 | 49,688 | ||
147,055 | ||||
Multi-Line Insurance: 0.3% | ||||
Asurion LLC, 5.402% (1 Month US LIBOR + 3.000%), 8/4/22 | 45,310 | 45,181 | ||
Non-Food & Drug Retailers: 0.6% | ||||
Calceus Acquisition, Inc., 7.938% (1 Month US LIBOR + 5.500%), 2/12/25 | 49,688 | 49,268 | ||
PetSmart, Inc., 6.750% (3 Month US LIBOR + 4.250%), 3/11/22 | 41,886 | 40,721 | ||
89,989 | ||||
Pharmaceuticals: 0.3% | ||||
Amneal Pharmaceuticals LLC, 5.937% (1 Month US LIBOR + 3.500%), 5/4/25 | 49,488 | 49,066 | ||
Pharmaceuticals & Devices: 0.9% | ||||
Bausch Health Americas, Inc., 5.412% (1 Month US LIBOR + 3.000%), 6/1/25 | 45,360 | 45,332 | ||
Endo International PLC, 6.687% (1 Month US LIBOR + 4.250%), 4/27/24 | 49,370 | 46,244 | ||
Greatbatch Ltd., 5.420% (1 Month US LIBOR + 3.000%), 10/27/22 | 45,888 | 45,919 | ||
137,495 | ||||
Software/Services: 1.0% | ||||
Go Daddy Operating Co. LLC, 4.402%, 2/15/24 | ||||
(1 Month US LIBOR + 2.000%) | 28,343 | 28,335 | ||
(1 Month US LIBOR + 2.000%) | 9,100 | 9,098 | ||
New Media Holdings II LLC, 8.580% (3 Month US LIBOR + 6.250%), 7/14/22 | 74,061 | 73,505 | ||
Rackspace Hosting, Inc., 5.575% (3 Month US LIBOR + 0.000%), 11/3/23 | ||||
(3 Month US LIBOR + 3.000%) | 49,873 | 45,958 | ||
(1 Month US LIBOR + 3.000%) | 127 | 117 | ||
157,013 | ||||
Support-Services: 0.7% | ||||
Drive Chassis Holdco LLC, 10.834% (3 Month US LIBOR + 8.250%), 4/10/26 | 50,000 | 47,938 | ||
UOS LLC, 7.830%, 4/18/23 | ||||
(3 Month US LIBOR + 5.500%) | 45,185 | 45,297 | ||
(3 Month US LIBOR + 5.500%) | 4,435 | 4,447 | ||
97,682 | ||||
Telecom-Integrated/Services: 0.3% | ||||
Cyxtera DC Holdings, Inc., 9.670% (1 Month US LIBOR + 7.250%), 5/1/25 | 50,000 | 43,214 |
The Accompanying Notes are an Integral Part of these Financial Statements.
23
PENN CAPITAL FUNDS TRUST |
PENN CAPITAL MULTI-CREDIT HIGH INCOME FUND |
SCHEDULE OF INVESTMENTS |
JUNE 30, 2019 |
Principal | Value | |||
Telecommunications Equipment: 0.3% | ||||
CommScope, Inc., 5.652% (1 Month US LIBOR + 3.250%), 4/4/26 | $ 50,000 | $ | 49,800 | |
Transportation Excluding Air/Rail: 0.3% | ||||
CB URS Holdings Corp., 7.652% (1 Month US LIBOR + 5.250%), 10/19/24 | 49,221 | 48,821 | ||
Total Bank Loans (cost $2,400,943) | 2,389,839 | |||
Shares | ||||
Common Stock: 0.0% | ||||
Media-Cable: 0.0% | ||||
ACC Claims Holdings LLC (e)(f) | 11,610 | — | ||
Total Common Stock (cost $237) | — | |||
Mutual Fund: 24.5% | ||||
Bank Loan Related: 24.5% | ||||
Penn Capital Defensive Floating Rate Income Fund - Institutional Class (g) | 374,790 | 3,736,653 | ||
Total Mutual Fund (cost $3,798,301) | 3,736,653 | |||
Preferred Stock: 0.0% | ||||
Spanish Broadcasting System, Inc. 10.750% Cash or 10.750% PIK (e)(h) | 1 | 40 | ||
Total Preferred Stock (cost $613) | 40 | |||
Principal | ||||
U.S. Government Notes: 1.9% | ||||
United States Treasury Fixed Rate Note | ||||
2.875%, 10/31/20 | $ 135,000 | 136,751 | ||
United States Treasury Fixed Rate Note | ||||
2.125%, 5/31/21 | 150,000 | 150,978 | ||
Total U.S. Government Notes (cost $285,860) | 287,729 | |||
Total Investments - 98.8% (cost $15,024,276) | 15,048,375 | |||
Other Assets and Liabilities 1.2% | 187,415 | |||
Net Assets: 100.0% | $ | 15,235,790 |
Percentages are stated as a percent of net assets.
(a) | Securities purchased pursuant to Rule 144A of the Securities Act of 1933, as amended, and may be sold only to dealers in that program or other “qualified institutional buyers.” As of June 30, 2019, the value of these investments was $4,281,051, or 28.1% of total net assets. |
(b) | Variable rate security. The rate listed is as of June 30, 2019. |
(c) | Payment-in-kind security which may pay/invest interest in additional par/shares and/or in cash. As of June 30, 2019, the total payment-in-kind was $0, or 0.0%, of total net assets. |
(d) | Bank Loans typically have rates of interest which are redetermined either daily, monthly, quarterly or semi-annually by reference to a base lending rate, plus a premium. These base lending rates are primarily the London Interbank Offered Rate (“LIBOR”) and secondarily, the prime rate offered by one or more major United States banks (the “Prime Rate”) and the certificate of deposit (“CD”) rate or other base lending rates used by commercial lenders. |
(e) | This security is currently being fair valued in accordance with procedures established by the Board of Trustees and is deemed a Level 3 security as it is valued using significant unobservable inputs. |
(f) | No distribution or dividend was made during the year ending June 30, 2019. As such, it is classified as a non-income producing security as of June 30, 2019. |
(g) | Affiliated company. See Note 7. |
(h) | Payment-in-kind security which may pay interest/dividends in additional par/shares and/or in cash. No distribution or dividend was made during the year ended June 30, 2019. As such, it is classified as a non-income producing security as of June 30, 2019. |
Country Exposure (as a percentage of total investments) (Unaudited) | |
United States | 92.37% |
Luxembourg | 3.77% |
Canada | 1.72% |
Cayman Islands | 0.77% |
Malta | 0.54% |
Jersey | 0.49% |
Netherlands | 0.34% |
Asset Type (as a percentage of total investments) (Unaudited) |
The Accompanying Notes are an Integral Part of these Financial Statements.
24
PENN CAPITAL FUNDS TRUST |
PENN CAPITAL DEFENSIVE FLOATING RATE INCOME FUND |
SCHEDULE OF INVESTMENTS |
JUNE 30, 2019 |
Principal | Value | |||||
Bank Loans: 80.8% (a) | ||||||
Aerospace: 0.7% | ||||||
1199169 BC ULC, 6.330% (3 Month US LIBOR + 4.000%), 4/4/26 | $52,448 | $ | 52,635 | |||
Ducommun, Inc., 6.371%, 11/21/25 | ||||||
(1 Month US LIBOR + 4.000%) | 67,708 | 67,962 | ||||
(1 Month US LIBOR + 4.000%) | 50,521 | 50,710 | ||||
Dynasty Acquisition Co., Inc., 6.330% (3 Month US LIBOR + 4.000%), 4/8/26 | 97,552 | 97,901 | ||||
269,208 | ||||||
Airline Companies: 1.7% | ||||||
Allegiant Travel Co., 7.065% (3 Month US LIBOR + 4.500%), 2/5/24 | 149,625 | 149,532 | ||||
American Airlines, Inc., 4.061% (3 Month US LIBOR + 1.750%), 6/27/25 | 331,123 | 321,838 | ||||
United Airlines, Inc., 4.152% (1 Month US LIBOR + 1.750%), 4/1/24 | 148,858 | 147,974 | ||||
619,344 | ||||||
Auto Parts & Equipment: 0.8% | ||||||
Adient US LLC, 6.870%, 5/6/24 | ||||||
(6 Month US LIBOR + 4.250%) | 112,500 | 109,478 | ||||
(3 Month US LIBOR + 4.250%) | 37,500 | 36,492 | ||||
Gates Global LLC, 5.152% (1 Month US LIBOR + 2.750%), 3/31/24 | 148,864 | 147,814 | ||||
293,784 | ||||||
Automotive: 0.7% | ||||||
Navistar, Inc., 5.910% (1 Month US LIBOR + 3.500%), 11/6/24 | 246,875 | 246,026 | ||||
Building & Construction: 0.3% | ||||||
Janus International Group LLC, 5.402% (1 Month US LIBOR + 3.000%), 2/15/25 | 123,437 | 122,203 | ||||
Building Materials: 1.0% | ||||||
Foundation Building Materials LLC, 5.402% (1 Month US LIBOR + 3.000%), 7/30/25 | 149,250 | 148,504 | ||||
Quikrete Holdings, Inc., 5.152% (1 Month US LIBOR + 2.750%), 11/15/23 | 240,385 | 235,911 | ||||
384,415 | ||||||
Building Products: 0.6% | ||||||
Atkore International, Inc., 5.070% (3 Month US LIBOR + 2.750%), 12/22/23 | 239,994 | 238,945 | ||||
Principal | Value | |||
Chemical Companies: 2.5% | ||||
Composite Resins Subholding BV, 6.815%, 8/1/25 | ||||
(3 Month US LIBOR + 4.250%) | $53,962 | $ | 53,288 | |
(3 Month US LIBOR + 4.250%) | 11,766 | 11,619 | ||
(3 Month US LIBOR + 4.250%) | 8,522 | 8,415 | ||
Encapsys LLC, 5.652% (1 Month US LIBOR + 3.250%), 11/7/24 | 121,162 | 120,505 | ||
HB Fuller Co., 4.383% (1 Month US LIBOR + 2.000%), 10/20/24 | 220,262 | 216,257 | ||
Hexion, Inc., 5.900% (3 Month US LIBOR + 3.500%), 6/27/26 | 150,000 | 149,812 | ||
Tronox Finance LLC, 5.330%, 9/22/24 | ||||
(1 Month US LIBOR + 3.000%) | 136,402 | 134,916 | ||
(3 Month US LIBOR + 3.000%) | 87,209 | 86,260 | ||
Univar USA, Inc., 4.652% (1 Month US LIBOR + 2.250%), 7/1/24 | 164,550 | 163,984 | ||
945,056 | ||||
Computer Hardware: 0.8% | ||||
Dell International LLC, 4.150% (1 Month US LIBOR + 1.750%), 3/13/24 | 146,053 | 144,227 | ||
GLOBALFOUNDRIES, Inc., 6.437% (1 Month US LIBOR + 4.000%), 6/5/26 | 150,000 | 147,375 | ||
291,602 | ||||
Consumer/Commercial/Lease Financing: 0.4% | ||||
Avolon TLB Borrower 1 US LLC, 4.133% (1 Month US LIBOR + 1.750%), 1/15/25 | 142,305 | 142,039 | ||
Consumer-Products: 1.2% | ||||
BDF Acquisition Corp., 7.652% (1 Month US LIBOR + 5.250%), 8/8/23 | 197,403 | 192,221 | ||
HLF Financing Sarl LLC, 5.652% (1 Month US LIBOR + 3.250%), 8/16/25 | 248,125 | 247,775 | ||
439,996 | ||||
Diversified Capital Goods: 0.9% | ||||
Harsco Corp., 4.687% (1 Month US LIBOR + 2.250%), 12/8/24 | 245,030 | 245,029 | ||
Thermon Holding Corp., 6.190% (1 Month US LIBOR + 3.750%), 10/30/24 | 102,937 | 102,809 | ||
347,838 | ||||
Diversified Financial Services: 0.4% | ||||
Nuvei Technologies Corp., 7.500% (3 Month US LIBOR + 5.000%), 9/28/25 | 150,000 | 148,037 | ||
148,037 |
The Accompanying Notes are an Integral Part of these Financial Statements.
25
PENN CAPITAL FUNDS TRUST |
PENN CAPITAL DEFENSIVE FLOATING RATE INCOME FUND |
SCHEDULE OF INVESTMENTS |
JUNE 30, 2019 |
Principal | Value | |||
Electric Utilities: 0.3% | ||||
Compass Power Generation LLC, 5.902% (1 Month US LIBOR + 3.500%), 12/20/24 | $120,188 | $ | 120,219 | |
Electric-Generation: 3.0% | ||||
Calpine Corp., 5.080% (3 Month US LIBOR + 2.750%), 4/1/26 | 250,000 | 249,493 | ||
Edgewater Generation LLC, 6.152% (1 Month US LIBOR + 3.750%), 12/13/25 | 174,125 | 173,653 | ||
Edgewater Generation LLC, 6.233% (3 Month US LIBOR + 3.750%), 12/13/25 | 18,000 | 17,955 | ||
Lightstone Holdco LLC, 6.152% (1 Month US LIBOR + 3.750%), 1/30/24 | 285,444 | 281,342 | ||
Lightstone Holdco LLC, 6.152% (1 Month US LIBOR + 3.750%), 1/30/24 | 16,099 | 15,868 | ||
Talen Energy Supply LLC, 6.402% (1 Month US LIBOR + 4.000%), 4/13/24 | 247,730 | 247,497 | ||
TerraForm Power Operating LLC, 4.402% (1 Month US LIBOR + 2.000%), 11/8/22 | 123,125 | 122,355 | ||
1,108,163 | ||||
Electric-Integrated: 0.6% | ||||
Pike Corp., 5.910% (1 Month US LIBOR + 3.500%), 3/23/25 | 233,776 | 233,902 | ||
Energy Distribution: 0.4% | ||||
Blackstone CQP Holdco LP, 5.920% (3 Month US LIBOR + 3.500%), 6/20/24 | 150,000 | 150,150 | ||
Entertainment: 3.3% | ||||
Alterra Mountain Co., 5.402% (1 Month US LIBOR + 3.000%), 7/31/24 | 246,250 | 245,019 | ||
AMC Entertainment Holdings, Inc., 5.230% (6 Month US LIBOR + 3.000%), 4/22/26 | 148,854 | 148,407 | ||
Crown Finance US, Inc., 4.652% (1 Month US LIBOR + 2.250%), 2/28/25 | 185,175 | 181,992 | ||
Life Time Fitness, Inc., 5.272% (3 Month US LIBOR + 2.750%), 6/15/22 | 241,333 | 240,126 | ||
Lions Gate Capital Holdings LLC, 4.652% (1 Month US LIBOR + 2.250%), 3/24/25 | 110,437 | 109,563 | ||
SeaWorld Parks & Entertainment, Inc., 5.438% (1 Month US LIBOR + 3.000%), 3/31/24 | 246,536 | 245,478 | ||
United PF Holdings LLC, 7.000% (3 Month US LIBOR + 4.500%), 6/14/26 | 74,800 | 74,707 | ||
United PF Holdings LLC, 7.000% (3 Month US LIBOR + 4.500%), 6/14/26 | 10,200 | 10,187 | ||
1,255,479 | ||||
Environmental & Waste: 0.5% | ||||
GFL Environmental, Inc., 5.402%, 5/31/25 | ||||
(1 Month US LIBOR + 3.000%) | 129,901 | 127,674 | ||
(1 Month US LIBOR + 3.000%) | 60,999 | 59,954 | ||
(1 Month US LIBOR + 3.000%) | 7,596 | 7,466 | ||
195,094 | ||||
Food & Drug Retailers: 0.6% | ||||
Albertson’s LLC, 5.311% (3 Month US LIBOR + 3.000%), 12/21/22 | 243,167 | 243,106 |
Principal | Value | |||
Food-Wholesale: 0.6% | ||||
American Seafoods Group LLC, 5.180%, 8/21/23 | ||||
(1 Month US LIBOR + 2.750%) | $235,490 | $ | 234,461 | |
(1 Month US LIBOR + 2.750%) | 3,609 | 3,593 | ||
238,054 | ||||
Gaming: 3.2% | ||||
Boyd Gaming Corp., 4.622% (1 Week US LIBOR + 2.250%), 9/15/23 | 216,757 | 215,378 | ||
Eldorado Resorts, Inc., 4.687%, 4/17/24 | ||||
(1 Month US LIBOR + 2.250%) | 77,198 | 76,836 | ||
(1 Month US LIBOR + 2.250%) | 68,793 | 68,470 | ||
(1 Month US LIBOR + 2.250%) | 18,966 | 18,877 | ||
Gateway Casinos & Entertainment Ltd., 5.330% (3 Month US LIBOR + 3.000%), 3/13/25 | 222,936 | 219,035 | ||
PCI Gaming Authority, 5.402% (1 Month US LIBOR + 3.000%), 5/31/26 | 150,000 | 150,156 | ||
Scientific Games International, Inc., 5.152%, 8/14/24 | ||||
(2 Month US LIBOR + 2.750%) | 198,469 | 195,299 | ||
(1 Month US LIBOR + 2.750%) | 47,789 | 47,026 | ||
Stars Group Holdings BV, 5.830%, 7/10/25 | ||||
(3 Month US LIBOR + 3.500%) | 205,923 | 205,816 | ||
(3 Month US LIBOR + 3.500%) | 17,325 | 17,316 | ||
1,214,209 | ||||
Gas Distribution: 1.3% | ||||
Centurion Pipeline Co. LLC, 5.652% (1 Month US LIBOR + 3.250%), 9/30/25 | 199,000 | 198,751 | ||
Prairie ECI Acquiror LP, 7.080% (3 Month US LIBOR + 4.750%), 3/11/26 | 149,625 | 150,111 | ||
Woodford Express LLC, 7.402% (1 Month US LIBOR + 5.000%), 1/26/25 | 123,437 | 121,071 | ||
469,933 | ||||
Health Care Equipment & Supplies: 0.3% | ||||
Exactech, Inc., 6.152% (1 Month US LIBOR + 3.750%), 2/14/25 | 123,437 | 122,820 | ||
Health Care Providers & Services: 0.9% | ||||
Press Ganey Holdings, Inc., 5.152% (1 Month US LIBOR + 2.750%), 10/23/23 | 222,033 | 221,755 | ||
Prospect Medical Holdings, Inc., 7.937% (1 Month US LIBOR + 5.500%), 2/24/24 | 123,437 | 116,134 | ||
337,889 |
The Accompanying Notes are an Integral Part of these Financial Statements.
26
PENN CAPITAL FUNDS TRUST |
PENN CAPITAL DEFENSIVE FLOATING RATE INCOME FUND |
SCHEDULE OF INVESTMENTS |
JUNE 30, 2019 |
Principal | Value | |||
Health Services: 3.1% | ||||
Acadia Healthcare Co., Inc., 4.902% (1 Month US LIBOR + 2.500%), 2/16/23 | $235,520 | $ | 234,197 | |
American Renal Holdings, Inc., 7.902% (1 Month US LIBOR + 5.500%), 6/22/24 | 222,727 | 222,380 | ||
Concentra, Inc., 5.210% (3 Month US LIBOR + 2.750%), 6/1/22 | 232,800 | 232,509 | ||
Gentiva Health Services, Inc., 6.187% (1 Month US LIBOR + 3.750%), 7/2/25 | 242,511 | 242,511 | ||
Select Medical Corp., 4.850% (3 Month US LIBOR + 2.500%), 3/6/25 | 223,991 | 222,732 | ||
1,154,329 | ||||
Hotels: 0.3% | ||||
Marriott Ownership Resorts, Inc., 4.652% (1 Month US LIBOR + 2.250%), 8/29/25 | 99,500 | 99,417 | ||
Industrial Conglomerates: 1.0% | ||||
Deliver Buyer, Inc., 7.330% (3 Month US LIBOR + 5.000%), 5/1/24 | 148,485 | 147,742 | ||
MTS Systems Corp., 5.660% (1 Month US LIBOR + 3.250%), 7/5/23 | 212,444 | 211,516 | ||
359,258 | ||||
Internet & Direct Marketing Retail: 0.5% | ||||
Shutterfly, Inc., 4.910% (1 Month US LIBOR + 2.500%), 8/17/24 | 168,673 | 168,547 | ||
Investments & Miscellaneous Financial Services: 5.2% | ||||
FinCo I LLC, 4.402% (1 Month US LIBOR + 2.000%), 12/27/22 | 195,115 | 194,687 | ||
iStar, Inc., 5.133%, 6/28/23 | ||||
(1 Month US LIBOR + 2.750%) | 125,000 | 124,687 | ||
(1 Month US LIBOR + 2.750%) | 122,500 | 122,194 | ||
LPL Holdings, Inc., 4.654% (1 Month US LIBOR + 2.250%), 9/21/24 | 245,011 | 244,168 | ||
Russell Investments US Institutional Holdco, Inc., 5.652% (1 Month US LIBOR + 3.250%), 6/1/23 | 341,480 | 337,809 | ||
The Edelman Financial Center LLC, 5.644% (1 Month US LIBOR + 3.250%), 7/19/25 | 199,000 | 198,182 | ||
Trans Union LLC, 4.402% (1 Month US LIBOR + 2.000%), 6/19/25 | 149,375 | 148,890 | ||
Verifone Systems, Inc., 6.446%, 8/20/25 | ||||
(3 Month US LIBOR + 4.000%) | 26,471 | 25,842 | ||
(3 Month US LIBOR + 4.000%) | 23,529 | 22,971 | ||
VeriFone Systems, Inc., 6.520% (3 Month US LIBOR + 4.000%), 8/20/25 | 199,000 | 192,532 | ||
Victory Capital Holdings, Inc., 6.750% (3 Month US LIBOR + 3.250%), 7/1/26 | 150,000 | 150,063 | ||
WisdomTree International Holdings Ltd., 4.154% (1 Month US LIBOR + 1.750%), 1/31/21 | 200,000 | 196,500 | ||
1,928,525 |
Principal | Value | |||
IT Services: 1.3% | ||||
NAB Holdings LLC, 5.330% (3 Month US LIBOR + 3.000%), 6/30/24 | $245,641 | $ | 242,160 | |
Paysafe Holdings US Corp., 5.652% (1 Month US LIBOR + 3.250%), 1/1/25 | 246,875 | 243,429 | ||
485,589 | ||||
Machinery: 0.7% | ||||
Milacron LLC, 4.902% (1 Month US LIBOR + 2.500%), 9/28/23 | 144,783 | 140,801 | ||
Savage Enterprises LLC, 6.920% (1 Month US LIBOR + 4.500%), 8/1/25 | 130,943 | 131,026 | ||
271,827 | ||||
Machinery Companies: 1.0% | ||||
Crosby Acquisition Corp., 7.250% (3 Month US LIBOR + 4.750%), 6/19/26 | 150,000 | 148,563 | ||
Welbilt, Inc., 4.902% (1 Month US LIBOR + 2.500%), 10/23/25 | 237,500 | 232,750 | ||
381,313 | ||||
Media: 0.4% | ||||
Meredith Corp., 5.152% (1 Month US LIBOR + 2.750%), 1/31/25 | 144,684 | 144,480 | ||
Media-Broadcast: 5.7% | ||||
Beasley Mezzanine Holdings LLC, 6.390% (1 Month US LIBOR + 4.000%), 11/1/23 | 235,042 | 233,867 | ||
CSC Holdings LLC, 4.644% (1 Month US LIBOR + 2.250%), 7/17/25 | 245,614 | 241,392 | ||
Cumulus Media New Holdings, Inc., 6.910% (1 Month US LIBOR + 4.500%), 5/15/22 | 86,982 | 86,873 | ||
Entercom Media Corp., 5.152% (1 Month US LIBOR + 2.750%), 11/17/24 | 97,993 | 97,789 | ||
Gray Television, Inc., 4.680% (1 Month US LIBOR + 2.250%), 2/7/24 | 231,834 | 230,675 | ||
ION Media Networks, Inc., 5.160% (1 Month US LIBOR + 2.750%), 12/18/20 | 150,000 | 149,625 | ||
Nexstar Broadcasting, Inc., 5.000% (3 Month US LIBOR + 2.750%), 6/20/26 | 250,000 | 249,062 | ||
Sinclair Television Group, Inc., 4.660% (1 Month US LIBOR + 2.250%), 1/3/24 | 243,750 | 240,398 | ||
The E.W. Scripps Co., 5.152% (1 Month US LIBOR + 2.750%), 5/1/26 | 149,625 | 149,188 | ||
Univision Communications, Inc., 5.152% (1 Month US LIBOR + 2.750%), 3/15/24 | 93,738 | 89,140 | ||
Urban One, Inc., 6.410% (1 Month US LIBOR + 4.000%), 4/18/23 | 114,521 | 109,940 | ||
WideOpenWest Finance LLC, 5.654% (1 Month US LIBOR + 3.250%), 8/19/23 | 245,625 | 239,607 | ||
2,117,556 |
The Accompanying Notes are an Integral Part of these Financial Statements.
27
PENN CAPITAL FUNDS TRUST |
PENN CAPITAL DEFENSIVE FLOATING RATE INCOME FUND |
SCHEDULE OF INVESTMENTS |
JUNE 30, 2019 |
Principal | Value | |||
Media-Cable: 1.8% | ||||
Altice France SA, 6.394% (1 Month US LIBOR + 4.000%), 8/14/26 | $149,250 | $ | 145,892 | |
Charter Communications Operating LLC, 4.330% (3 Month US LIBOR + 2.000%), 4/30/25 | 149,242 | 149,019 | ||
Cogeco Communications USA II LP, 4.652% (1 Month US LIBOR + 2.250%), 1/4/25 | 248,744 | 246,122 | ||
Radiate Holdco LLC, 5.402% (1 Month US LIBOR + 3.000%), 2/1/24 | 149,375 | 145,742 | ||
686,775 | ||||
Metals & Mining: 1.4% | ||||
Big River Steel LLC, 7.330% (3 Month US LIBOR + 5.000%), 8/23/23 | 295,246 | 295,985 | ||
Zekelman Industries, Inc., 4.652% (1 Month US LIBOR + 2.250%), 6/14/21 | 244,397 | 243,683 | ||
539,668 | ||||
Metals/Mining Excluding Steel: 1.3% | ||||
Aleris International, Inc., 7.152% (1 Month US LIBOR + 4.750%), 2/27/23 | 148,500 | 148,546 | ||
American Rock Salt Co. LLC, 6.152% (1 Month US LIBOR + 3.750%), 3/21/25 | 191,526 | 190,808 | ||
CONSOL Energy, Inc., 6.910% (1 Month US LIBOR + 4.500%), 9/28/24 | 149,625 | 149,064 | ||
488,418 | ||||
Mortgage Real Estate Investment Trusts (REITs): 0.4% | ||||
GGP Nimbus LLC, 4.902%, 8/24/25 | ||||
(1 Month US LIBOR + 2.500%) | 112,281 | 109,486 | ||
(1 Month US LIBOR + 2.500%) | 37,342 | 36,413 | ||
145,899 | ||||
Multi-Line Insurance: 1.0% | ||||
Asurion LLC, 5.402% (1 Month US LIBOR + 3.000%), 8/4/22 | 135,930 | 135,542 | ||
HUB International Ltd., 5.336% (1 Month US LIBOR + 3.000%), 4/25/25 | 247,500 | 241,114 | ||
376,656 | ||||
Non-Food & Drug Retailers: 1.2% | ||||
Calceus Acquisition, Inc., 7.938% (1 Month US LIBOR + 5.500%), 2/12/25 | 124,219 | 123,170 | ||
Michaels Stores, Inc., 4.902%, 1/28/23 | ||||
(1 Month US LIBOR + 2.500%) | 101,326 | 97,970 | ||
(1 Month US LIBOR + 2.500%) | 58,769 | 56,823 | ||
(1 Month US LIBOR + 2.500%) | 52,813 | 51,064 | ||
(1 Month US LIBOR + 2.500%) | 10,133 | 9,797 | ||
PetSmart, Inc., 6.750% (3 Month US LIBOR + 4.250%), 3/11/22 | 125,657 | 122,163 | ||
460,987 | ||||
Oil Field Equipment & Services: 0.6% | ||||
Apergy Corp., 4.937% (1 Month US LIBOR + 2.500%), 5/9/25 | 96,386 | 96,024 | ||
McDermott Technology Americas, Inc., 7.402% (1 Month US LIBOR + 5.000%), 5/10/25 | 149,621 | 147,027 | ||
243,051 |
Principal | Value | |||
Other Industrial & Manufacturing: 0.6% | ||||
RBS Global, Inc., 4.402% (1 Month US LIBOR + 2.000%), 8/21/24 | $226,562 | $ | 226,223 | |
Packaging: 0.9% | ||||
Berry Global, Inc., 4.441% (1 Month US LIBOR + 2.000%), 10/1/22 | 174,680 | 173,333 | ||
Reynolds Group Holdings, Inc., 5.152%, 2/5/23 | ||||
(1 Month US LIBOR + 2.750%) | 93,360 | 92,585 | ||
(1 Month US LIBOR + 2.750%) | 34,458 | 34,172 | ||
(1 Month US LIBOR + 2.750%) | 21,037 | 20,862 | ||
320,952 | ||||
Pharmaceuticals & Devices: 3.4% | ||||
Amneal Pharmaceuticals LLC, 5.937% (1 Month US LIBOR + 3.500%), 5/4/25 | 198,225 | 196,532 | ||
Bausch Health Americas, Inc., 5.412% (1 Month US LIBOR + 3.000%), 6/1/25 | 226,805 | 226,664 | ||
Endo International PLC, 6.687% (1 Month US LIBOR + 4.250%), 4/27/24 | 245,000 | 229,484 | ||
Greatbatch Ltd., 5.420% (1 Month US LIBOR + 3.000%), 10/27/22 | 137,664 | 137,759 | ||
Jaguar Holding Co. II, 4.902% (1 Month US LIBOR + 2.500%), 8/18/22 | 248,062 | 246,484 | ||
Kinetic Concepts, Inc., 5.580% (3 Month US LIBOR + 3.250%), 2/3/24 | 122,195 | 122,170 | ||
LUX HOLDCO III, 5.522%, 3/28/25 | ||||
(3 Month US LIBOR + 3.000%) | 119,891 | 118,543 | ||
(3 Month US LIBOR + 3.000%) | 3,547 | 3,506 | ||
1,281,142 | ||||
Real Estate Investment Trust (REITs): 0.4% | ||||
Apollo Commercial Real Estate Finance, Inc., 5.144% (1 Month US LIBOR + 2.750%), 5/15/26 | 150,000 | 149,250 | ||
Restaurants: 0.8% | ||||
Carrols Restaurant Group, Inc., 5.660% (1 Month US LIBOR + 3.250%), 4/30/26 | 150,000 | 148,734 | ||
IRB Holding Corp., 5.644% (1 Month US LIBOR + 3.250%), 2/5/25 | 148,869 | 146,846 | ||
295,580 | ||||
Road & Rail: 0.3% | ||||
Daseke Cos, Inc., 7.402% (1 Month US LIBOR + 5.000%), 2/27/24 | 123,125 | 122,779 | ||
Semiconductors & Semiconductor Equipment: 0.9% | ||||
Cohu, Inc., 5.200% (6 Month US LIBOR + 3.000%), 10/1/25 | 173,687 | 167,174 | ||
Xperi Corp., 4.902% (1 Month US LIBOR + 2.500%), 12/1/23 | 164,167 | 161,910 | ||
329,084 |
The Accompanying Notes are an Integral Part of these Financial Statements.
28
PENN CAPITAL FUNDS TRUST |
PENN CAPITAL DEFENSIVE FLOATING RATE INCOME FUND |
SCHEDULE OF INVESTMENTS |
JUNE 30, 2019 |
Principal | Value | |||
Software: 1.7% | ||||
Canyon Valor Cos, Inc., 5.080% (3 Month US LIBOR + 2.750%), 6/16/23 | $233,548 | $ | 231,913 | |
Omnitracs LLC, 5.099% (3 Month US LIBOR + 2.750%), 3/23/25 | 247,562 | 243,539 | ||
SCS Holdings I, Inc., 6.690% (3 Month US LIBOR + 4.250%), 5/21/26 | 150,000 | 149,562 | ||
625,014 | ||||
Software/Services: 5.7% | ||||
Avaya, Inc., 6.651% (1 Month US LIBOR + 4.250%), 12/15/24 | 246,931 | 235,819 | ||
Blucora, Inc., 5.481% (2 Month US LIBOR + 3.000%), 5/22/24 | 176,667 | 176,151 | ||
Carbonite, Inc., 6.152% (1 Month US LIBOR + 3.750%), 3/26/26 | 135,000 | 135,112 | ||
First Data Corp., 4.404% (1 Month US LIBOR + 2.000%), 4/26/24 | 230,733 | 230,447 | ||
Go Daddy Operating Co. LLC, 4.402%, 2/15/24 | ||||
(1 Month US LIBOR + 2.000%) | 113,371 | 113,343 | ||
(1 Month US LIBOR + 2.000%) | 36,399 | 36,390 | ||
Infor US, Inc., 5.080% (3 Month US LIBOR + 2.750%), 2/1/22 | 149,869 | 149,388 | ||
Match Group, Inc., 4.904% (1 Month US LIBOR + 2.500%), 11/16/22 | 109,375 | 109,238 | ||
McAfee LLC, 6.152% (1 Month US LIBOR + 3.750%), 9/29/24 | 242,892 | 242,399 | ||
New Media Holdings II LLC, 8.580% (3 Month US LIBOR + 6.250%), 7/14/22 | 148,308 | 147,196 | ||
Rackspace Hosting, Inc., 5.575%, 11/3/23 | ||||
(3 Month US LIBOR + 3.000%) | 134,656 | 124,085 | ||
(1 Month US LIBOR + 3.000%) | 344 | 317 | ||
SS&C Technologies Holdings Europe Sarl, 4.652% (1 Month US LIBOR + 2.250%), 4/16/25 | 55,430 | 55,181 | ||
SS&C Technologies, Inc., 4.652% (1 Month US LIBOR + 2.250%), 4/16/25 | 80,827 | 80,463 | ||
The Ultimate Software Group, Inc., 6.080% (2 Month US LIBOR + 3.750%), 5/3/26 | 150,000 | 150,188 | ||
Web.com Group, Inc., 6.161% (1 Month US LIBOR + 3.750%), 10/11/25 | 136,301 | 134,257 | ||
2,119,974 | ||||
Support-Services: 3.1% | ||||
Aramark Services, Inc., 4.080% (3 Month US LIBOR + 1.750%), 3/11/25 | 150,000 | 149,363 | ||
KAR Auction Services, Inc., 4.625% (3 Month US LIBOR + 2.250%), 3/11/21 | 39,359 | 39,260 | ||
PetVet Care Centers LLC, 5.152% (1 Month US LIBOR + 2.750%), 2/14/25 | 171,838 | 165,824 | ||
PetVet Care Centers LLC, 4.161% (1 Month US LIBOR + 2.750%), 2/14/25 | 50,851 | 49,071 | ||
Prime Security Services Borrower, LLC, 5.152%, 5/2/22 | ||||
(1 Month US LIBOR + 2.750%) | 192,550 | 191,123 | ||
(1 Month US LIBOR + 2.750%) | 23,319 | 23,147 |
Principal | Value | |||
The Hertz Corp., 5.160% (1 Month US LIBOR + 2.750%), 6/30/23 | $244,859 | $ | 243,710 | |
UOS LLC, 7.830%, 4/18/23 | ||||
(3 Month US LIBOR + 5.500%) | 268,284 | 268,955 | ||
(3 Month US LIBOR + 5.500%) | 26,336 | 26,402 | ||
1,156,855 | ||||
Telecom-Integrated/Services: 5.3% | ||||
CenturyLink, Inc., 5.152% (1 Month US LIBOR + 2.750%), 1/31/25 | 221,872 | 216,449 | ||
CenturyLink, Inc., 5.152% (1 Month US LIBOR + 2.750%), 9/30/22 | 146,053 | 145,505 | ||
Cincinnati Bell, Inc., 5.652% (1 Month US LIBOR + 3.250%), 10/2/24 | 248,125 | 246,212 | ||
Consolidated Communications, Inc., 5.410% (1 Month US LIBOR + 3.000%), 10/5/23 | 245,301 | 234,223 | ||
Cyxtera DC Holdings, Inc., 5.420% (1 Month US LIBOR + 3.000%), 5/1/24 | 198,045 | 183,564 | ||
Intelsat Jackson Holdings SA, 6.154% (1 Month US LIBOR + 3.750%), 11/27/23 | 125,000 | 123,594 | ||
Level 3 Parent LLC, 4.652% (1 Month US LIBOR + 2.250%), 2/22/24 | 250,000 | 247,875 | ||
MLN US Holdco LLC, 6.938% (1 Month US LIBOR + 4.500%), 11/30/25 | 149,250 | 142,255 | ||
Sprint Communications, Inc., 4.937% (1 Month US LIBOR + 2.500%), 2/3/24 | 220,503 | 216,919 | ||
Telesat LLC, 4.830% (3 Month US LIBOR + 2.500%), 11/17/23 | 238,100 | 235,224 | ||
1,991,820 | ||||
Telecommunications Equipment: 1.3% | ||||
CommScope, Inc., 5.652% (1 Month US LIBOR + 3.250%), 4/4/26 | 300,000 | 298,800 | ||
Dawn Acquisition LLC, 6.080% (3 Month US LIBOR + 3.750%), 12/31/25 | 174,125 | 170,860 | ||
469,660 | ||||
Telecom-Wireless: 0.6% | ||||
Sable International Finance Ltd., 5.652% (1 Month US LIBOR + 3.250%), 1/31/26 | 218,667 | 218,940 | ||
Trading Companies & Distributors: 0.3% | ||||
DXP Enterprises, Inc., 7.152% (1 Month US LIBOR + 4.750%), 8/29/23 | 99,494 | 99,245 | ||
Transportation Excluding Air/Rail: 0.4% | ||||
CB URS Holdings Corp., 7.652% (1 Month US LIBOR + 5.250%), 10/19/24 | 143,048 | 141,886 | ||
Water Utilities: 1.2% | ||||
EWT Holdings III Corp., 5.402% (1 Month US LIBOR + 3.000%), 12/20/24 | 255,114 | 253,839 | ||
Shape Technologies Group, Inc., 5.487% (3 Month US LIBOR + 3.000%), 4/20/25 | 222,750 | 213,283 | ||
467,122 | ||||
Total Bank Loans (cost $30,442,742) | 30,275,332 | |||
The Accompanying Notes are an Integral Part of these Financial Statements.
29
PENN CAPITAL FUNDS TRUST |
PENN CAPITAL DEFENSIVE FLOATING RATE INCOME FUND |
SCHEDULE OF INVESTMENTS |
JUNE 30, 2019 |
Principal | Value | |||
Corporate Bonds: 12.9% | ||||
Airline Companies: 0.3% | ||||
VistaJet Malta Finance PLC, 10.500%, 6/1/24 (b) | $95,000 | $ | 94,763 | |
Auto Parts & Equipment: 0.5% | ||||
Meritor, Inc., 6.250%, 2/15/24 | 200,000 | 206,000 | ||
Brokerage: 0.4% | ||||
Oppenheimer Holdings, Inc., 6.750%, 7/1/22 | 145,000 | 148,625 | ||
Computer Hardware: 0.5% | ||||
NCR Corp., 5.000%, 7/15/22 | 195,000 | 196,650 | ||
Consumer/Commercial/Lease Financing: 0.4% | ||||
Navient Corp., 7.250%, 9/25/23 | 150,000 | 160,125 | ||
Energy-Exploration & Production: 0.5% | ||||
Northern Oil and Gas, Inc., 8.500% Cash or 1.000% PIK, 5/15/23 (c) | 95,000 | 98,087 | ||
Unit Corp., 6.625%, 5/15/21 | 105,000 | 94,500 | ||
192,587 | ||||
Entertainment: 0.5% | ||||
NCL Corp. Ltd., 4.750%, 12/15/21 (b) | 201,000 | 203,764 | ||
Environmental & Waste: 0.3% | ||||
Stericycle, Inc., 5.375%, 7/15/24 (b) | 95,000 | 99,168 | ||
Food & Drug Retailers: 0.6% | ||||
Ingles Markets, Inc., 5.750%, 6/15/23 | 235,000 | 240,288 | ||
Food-Wholesale: 0.3% | ||||
Simmons Foods, Inc., 7.750%, 1/15/24 (b) | 90,000 | 96,975 | ||
Gas Distribution: 0.7% | ||||
Blue Racer Midstream LLC, 6.125%, 11/15/22 (b) | 180,000 | 182,475 | ||
NGL Energy Partners LP, 7.500%, 11/1/23 | 90,000 | 94,050 | ||
276,525 | ||||
Health Services: 0.4% | ||||
MEDNAX, Inc., 5.250%, 12/1/23 (b) | 150,000 | 148,125 | ||
Investments & Miscellaneous Financial Services: 0.5% | ||||
Icahn Enterprises LP, 6.250%, 2/1/22 | 100,000 | 102,750 | ||
VFH Parent LLC, 6.750%, 6/15/22 (b) | 90,000 | 93,255 | ||
196,005 | ||||
Media-Broadcast: 0.7% | ||||
Gray Television, Inc., 5.125%, 10/15/24 (b) | 100,000 | 101,875 | ||
Sirius XM Radio, Inc., 4.625%, 7/15/24 (b) | 150,000 | 153,492 | ||
255,367 | ||||
Media-Cable: 1.2% | ||||
Altice France SA, 6.250%, 5/15/24 (b) | 200,000 | 206,000 | ||
DISH DBS Corp., 5.875%, 11/15/24 | 100,000 | 94,625 | ||
DISH DBS Corp., 5.875%, 7/15/22 | 130,000 | 131,950 | ||
432,575 | ||||
Media-Services: 0.3% | ||||
Nielsen Finance LLC, 5.000%, 4/15/22 (b) | 95,000 | 94,881 | ||
Metals/Mining Excluding Steel: 0.3% | ||||
Peabody Energy Corp., 6.375%, 3/31/25 (b) | 95,000 | 96,188 |
Principal | Value | |||
Multi-Line Insurance: 0.5% | ||||
Genworth Holdings, Inc., 7.700%, 6/15/20 | $175,000 | $ | 175,691 | |
Oil Field Equipment & Services: 0.1% | ||||
Nabors Industries, Inc., 5.000%, 9/15/20 | 45,000 | 45,103 | ||
Oil Refining & Marketing: 0.5% | ||||
PBF Holding Co. LLC, 7.000%, 11/15/23 | 180,000 | 186,752 | ||
Pharmaceuticals & Devices: 0.6% | ||||
Bausch Health Cos, Inc., 5.875%, 5/15/23 (b) | 42,000 | 42,488 | ||
Kinetic Concepts, Inc., 12.500%, 11/1/21 (b) | 85,000 | 93,606 | ||
Mallinckrodt International Finance SA, 4.875%, 4/15/20 (b) | 100,000 | 96,375 | ||
232,469 | ||||
Real Estate Development & Management: 0.4% | ||||
Realogy Group LLC, 5.250%, 12/1/21 (b) | 170,000 | 163,200 | ||
Steel Producers/Products: 0.4% | ||||
AK Steel Corp., 7.625%, 10/1/21 | 150,000 | 147,750 | ||
Support-Services: 1.0% | ||||
The GEO Group, Inc., 5.125%, 4/1/23 | 80,000 | 71,600 | ||
The GEO Group, Inc., 5.875%, 1/15/22 | 95,000 | 92,862 | ||
The Hertz Corp., 7.625%, 6/1/22 (b) | 200,000 | 207,750 | ||
372,212 | ||||
Telecom-Integrated/Services: 0.6% | ||||
Intelsat Jackson Holdings SA, 9.500%, 9/30/22 (b) | 80,000 | 93,331 | ||
Qwest Corp., 6.750%, 12/1/21 | 125,000 | 134,219 | ||
227,550 | ||||
Telecom-Wireless: 0.4% | ||||
Sprint Corp., 7.875%, 9/15/23 | 135,000 | 146,813 | ||
Total Corporate Bonds (cost $4,799,219) | 4,836,151 | |||
U.S. Government Note: 1.9% | ||||
United States Treasury Fixed Rate Note | ||||
2.875%, 10/31/20 | 725,000 | 734,402 | ||
Total U.S. Government Note (cost $728,546) | 734,402 | |||
Total Investments - 95.6% (cost $35,970,507) | 35,845,885 | |||
Other Assets and Liabilities 4.4% | 1,638,638 | |||
Net Assets: 100.0% | $ | 37,484,523 |
Percentages are stated as a percent of net assets.
(a) | Bank Loans typically have rates of interest which are redetermined either daily, monthly, quarterly or semi-annually by reference to a base lending rate, plus a premium. These base lending rates are primarily the London Interbank Offered Rate (“LIBOR”) and secondarily, the prime rate offered by one or more major United States banks (the “Prime Rate”) and the certificate of deposit (“CD”) rate or other base lending rates used by commercial lenders. |
(b) | Securities purchased pursuant to Rule 144A of the Securities Act of 1933, as amended, and may be sold only to dealers in that program or other “qualified institutional buyers.” As of June 30, 2019, the value of these investments was $2,267,711, or 6.0% of total net assets. |
The Accompanying Notes are an Integral Part of these Financial Statements.
30
PENN CAPITAL FUNDS TRUST |
PENN CAPITAL DEFENSIVE FLOATING RATE INCOME FUND |
SCHEDULE OF INVESTMENTS |
JUNE 30, 2019 |
(c) | Payment-in-kind security which may pay/invest interest in additional par/shares and/or in cash. As of June 30, 2019, the total payment-in-kind was $0, or 0.0% of total net assets. |
Country Exposure (as a percentage of total investments) (Unaudited) | |
United States | 98.07% |
France | 0.54% |
Bermuda | 0.53% |
Luxembourg | 0.50% |
Malta | 0.25% |
Canada | 0.11% |
Asset Type (as a percentage of total investments) (Unaudited) |
The Accompanying Notes are an Integral Part of these Financial Statements.
31
PENN CAPITAL FUNDS TRUST |
PENN CAPITAL DEFENSIVE SHORT DURATION HIGH INCOME FUND |
SCHEDULE OF INVESTMENTS |
JUNE 30, 2019 |
Principal | Value | |||||
Corporate Bonds: 87.0% | ||||||
Airline Companies: 1.9% | ||||||
Air Canada, 7.750%, 4/15/21 (a) | $394,000 | $ | 424,732 | |||
American Airlines Group, Inc., 5.500%, 10/1/19 (a) | 65,000 | 65,292 | ||||
American Airlines Group, Inc., 5.000%, 6/1/22 (a) | 180,000 | 185,454 | ||||
675,478 | ||||||
Auto Parts & Equipment: 0.5% | ||||||
Gates Global LLC, 6.000%, 7/15/22 (a) | 115,000 | 115,072 | ||||
The Goodyear Tire & Rubber Co., 8.750%, 8/15/20 | 75,000 | 78,937 | ||||
194,009 | ||||||
Automotive: 1.2% | ||||||
Ford Motor Credit Co. LLC, 5.875%, 8/2/21 | 200,000 | 210,832 | ||||
Jaguar Land Rover Automotive PLC, 3.500%, 3/15/20 (a) | 200,000 | 198,000 | ||||
408,832 | ||||||
Banking: 3.5% | ||||||
Ally Financial, Inc., 8.000%, 3/15/20 | 525,000 | 542,718 | ||||
Ally Financial, Inc., 7.500%, 9/15/20 | 190,000 | 199,975 | ||||
Ally Financial, Inc., 3.750%, 11/18/19 | 60,000 | 60,120 | ||||
Ally Financial, Inc., 4.125%, 2/13/22 | 60,000 | 61,500 | ||||
Ally Financial, Inc., 3.875%, 5/21/24 | 85,000 | 87,125 | ||||
CIT Group, Inc., 4.125%, 3/9/21 | 275,000 | 280,239 | ||||
1,231,677 | ||||||
Brokerage: 0.4% | ||||||
Oppenheimer Holdings, Inc., 6.750%, 7/1/22 | 130,000 | 133,250 | ||||
Building & Construction: 3.6% | ||||||
KB Home, 8.000%, 3/15/20 | 150,000 | 154,905 | ||||
KB Home, 7.500%, 9/15/22 | 95,000 | 105,806 | ||||
KB Home, 7.000%, 12/15/21 | 145,000 | 155,621 | ||||
Lennar Corp., 4.500%, 11/15/19 | 210,000 | 210,788 | ||||
Lennar Corp., 8.375%, 1/15/21 | 195,000 | 209,625 | ||||
Toll Brothers Finance Corp., 6.750%, 11/1/19 | 35,000 | 35,296 | ||||
TRI Pointe Group, Inc., 4.875%, 7/1/21 | 135,000 | 137,700 | ||||
William Lyon Homes, Inc., 7.000%, 8/15/22 | 90,000 | 90,338 | ||||
William Lyon Homes, Inc., 6.000%, 9/1/23 | 170,000 | 172,550 | ||||
1,272,629 | ||||||
Chemical Companies: 1.7% | ||||||
Blue Cube Spinco LLC, 9.750%, 10/15/23 | 105,000 | 116,025 | ||||
CF Industries, Inc., 7.125%, 5/1/20 | 54,000 | 55,826 | ||||
Methanex Corp., 3.250%, 12/15/19 | 220,000 | 220,229 | ||||
WR Grace & Co-Conn, 5.125%, 10/1/21 (a) | 195,000 | 202,313 | ||||
594,393 |
Principal | Value | |||
Computer Hardware: 5.5% | ||||
Dell International LLC, 5.875%, 6/15/21 (a) | $365,000 | $ | 371,057 | |
EMC Corp., 2.650%, 6/1/20 | 535,000 | 532,043 | ||
NCR Corp., 4.625%, 2/15/21 | 340,000 | 340,850 | ||
NCR Corp., 5.000%, 7/15/22 | 85,000 | 85,719 | ||
NCR Corp., 6.375%, 12/15/23 | 85,000 | 87,656 | ||
Xerox Corp., 4.500%, 5/15/21 | 480,000 | 490,046 | ||
1,907,371 | ||||
Consumer/Commercial/Lease Financing: 5.8% | ||||
DAE Funding LLC, 5.250%, 11/15/21 (a) | 175,000 | 181,781 | ||
Navient Corp., 6.500%, 6/15/22 | 90,000 | 95,602 | ||
Navient Corp., 8.000%, 3/25/20 | 415,000 | 429,525 | ||
Navient Corp., 7.250%, 1/25/22 | 477,000 | 514,564 | ||
Park Aerospace Holdings Ltd., 5.250%, 8/15/22 (a) | 140,000 | 147,785 | ||
Springleaf Finance Corp., 7.750%, 10/1/21 | 285,000 | 311,719 | ||
Springleaf Finance Corp., 8.250%, 12/15/20 | 330,000 | 354,337 | ||
2,035,313 | ||||
Consumer-Products: 2.2% | ||||
Edgewell Personal Care Co., 4.700%, 5/19/21 | 210,000 | 213,675 | ||
Edgewell Personal Care Co., 4.700%, 5/24/22 | 190,000 | 191,900 | ||
Mattel, Inc., 2.350%, 8/15/21 | 235,000 | 226,775 | ||
Prestige Brands, Inc., 5.375%, 12/15/21 (a) | 145,000 | 145,725 | ||
778,075 | ||||
Diversified Capital Goods: 1.5% | ||||
Actuant Corp., 5.625%, 6/15/22 | 150,000 | 151,125 | ||
Anixter, Inc., 5.125%, 10/1/21 | 140,000 | 145,075 | ||
Griffon Corp., 5.250%, 3/1/22 | 220,000 | 219,311 | ||
515,511 | ||||
Electric Utilities: 0.5% | ||||
NextEra Energy Operating Partners LP, 4.250%, 7/15/24 (a) | 165,000 | 165,722 | ||
Electric-Generation: 0.3% | ||||
DPL, Inc., 7.250%, 10/15/21 | 87,000 | 93,525 | ||
Energy-Exploration & Production: 2.0% | ||||
Antero Resources Corp., 5.375%, 11/1/21 | 100,000 | 98,750 | ||
Northern Oil and Gas, Inc., 8.500% Cash or 1.000% PIK, 5/15/23 (b) | 80,200 | 82,806 | ||
QEP Resources, Inc., 6.875%, 3/1/21 | 120,000 | 123,300 | ||
Range Resources Corp., 5.750%, 6/1/21 | 120,000 | 121,200 | ||
Unit Corp., 6.625%, 5/15/21 | 130,000 | 117,000 | ||
WPX Energy, Inc., 8.250%, 8/1/23 | 125,000 | 142,500 | ||
685,556 | ||||
Entertainment: 1.1% | ||||
National CineMedia LLC, 6.000%, 4/15/22 | 305,000 | 308,050 | ||
NCL Corp. Ltd., 4.750%, 12/15/21 (a) | 70,000 | 70,963 | ||
379,013 |
The Accompanying Notes are an Integral Part of these Financial Statements.
32
PENN CAPITAL FUNDS TRUST |
PENN CAPITAL DEFENSIVE SHORT DURATION HIGH INCOME FUND |
SCHEDULE OF INVESTMENTS |
JUNE 30, 2019 |
Principal | Value | |||
Environmental & Waste: 0.5% | ||||
Stericycle, Inc., 5.375%, 7/15/24 (a) | $155,000 | $ | 161,800 | |
Food & Drug Retailers: 0.4% | ||||
Ingles Markets, Inc., 5.750%, 6/15/23 | 154,000 | 157,465 | ||
Food-Wholesale: 1.0% | ||||
Simmons Foods, Inc., 7.750%, 1/15/24 (a) | 115,000 | 123,912 | ||
TreeHouse Foods, Inc., 4.875%, 3/15/22 | 230,000 | 231,438 | ||
355,350 | ||||
Gaming: 3.7% | ||||
GLP Capital LP, 4.375%, 4/15/21 | 120,000 | 122,084 | ||
Jack Ohio Finance LLC, 6.750%, 11/15/21 (a) | 225,000 | 231,120 | ||
MGM Resorts International, 7.750%, 3/15/22 | 365,000 | 406,975 | ||
MGM Resorts International, 6.625%, 12/15/21 | 409,000 | 441,720 | ||
Scientific Games International, Inc., 10.000%, 12/1/22 | 89,000 | 93,339 | ||
1,295,238 | ||||
Gas Distribution: 3.3% | ||||
Blue Racer Midstream LLC, 6.125%, 11/15/22 (a) | 340,000 | 344,675 | ||
Energy Transfer Operating LP, 7.500%, 10/15/20 | 240,000 | 254,542 | ||
Midcontinent Express Pipeline LLC, 6.700%, 9/15/19 (a) | 290,000 | 291,349 | ||
Rockies Express Pipeline LLC, 5.625%, 4/15/20 (a) | 255,000 | 259,144 | ||
1,149,710 | ||||
Health Services: 3.1% | ||||
Centene Corp., 5.625%, 2/15/21 | 450,000 | 458,437 | ||
MEDNAX, Inc., 5.250%, 12/1/23 (a) | 240,000 | 237,000 | ||
Select Medical Corp., 6.375%, 6/1/21 | 405,000 | 405,547 | ||
1,100,984 | ||||
Hospitals: 5.5% | ||||
HCA Healthcare, Inc., 6.250%, 2/15/21 | 355,000 | 371,862 | ||
HCA, Inc., 6.500%, 2/15/20 | 185,000 | 189,253 | ||
HCA, Inc., 7.500%, 2/15/22 | 420,000 | 463,050 | ||
Tenet Healthcare Corp., 6.000%, 10/1/20 | 838,000 | 864,188 | ||
Tenet Healthcare Corp., 4.750%, 6/1/20 | 45,000 | 45,450 | ||
1,933,803 | ||||
Hotels: 1.5% | ||||
RHP Hotel Properties LP, 5.000%, 4/15/21 | 50,000 | 49,937 | ||
Wyndham Destinations, Inc., 5.625%, 3/1/21 | 175,000 | 180,688 | ||
Wyndham Destinations, Inc., 4.250%, 3/1/22 | 280,000 | 284,200 | ||
514,825 | ||||
Investments & Miscellaneous Financial Services: 4.3% | ||||
Icahn Enterprises LP, 6.000%, 8/1/20 | 500,000 | 500,900 | ||
Icahn Enterprises LP, 6.250%, 2/1/22 | 718,000 | 737,745 | ||
Icahn Enterprises LP, 6.750%, 2/1/24 | 92,000 | 95,565 | ||
VFH Parent LLC, 6.750%, 6/15/22 (a) | 170,000 | 176,149 | ||
1,510,359 |
Principal | Value | |||
Machinery Companies: 1.1% | ||||
Briggs & Stratton Corp., 6.875%, 12/15/20 | $365,000 | $ | 379,600 | |
Media-Broadcast: 0.4% | ||||
Sinclair Television Group, Inc., 5.375%, 4/1/21 | 45,000 | 45,028 | ||
Tribune Media Co., 5.875%, 7/15/22 | 100,000 | 101,740 | ||
146,768 | ||||
Media-Cable: 2.5% | ||||
Cablevision Systems Corp., 8.000%, 4/15/20 | 110,000 | 113,611 | ||
CSC Holdings LLC, 6.750%, 11/15/21 | 330,000 | 353,100 | ||
DISH DBS Corp., 7.875%, 9/1/19 | 110,000 | 110,413 | ||
DISH DBS Corp., 6.750%, 6/1/21 | 280,000 | 294,000 | ||
871,124 | ||||
Media-Diversified: 0.9% | ||||
Netflix, Inc., 5.375%, 2/1/21 | 95,000 | 98,206 | ||
Netflix, Inc., 5.500%, 2/15/22 | 200,000 | 210,250 | ||
308,456 | ||||
Media-Services: 2.2% | ||||
Nielsen Finance LLC, 5.000%, 4/15/22 (a) | 775,000 | 774,031 | ||
Metals/Mining Excluding Steel: 3.3% | ||||
Arconic, Inc., 6.150%, 8/15/20 | 585,000 | 605,491 | ||
Freeport-McMoRan, Inc., 3.550%, 3/1/22 | 250,000 | 250,312 | ||
Peabody Energy Corp., 6.000%, 3/31/22 (a) | 290,000 | 296,888 | ||
1,152,691 | ||||
Multi-Line Insurance: 0.3% | ||||
Genworth Holdings, Inc., 7.700%, 6/15/20 | 120,000 | 120,474 | ||
Non-Food & Drug Retailers: 1.7% | ||||
Foot Locker, Inc., 8.500%, 1/15/22 | 220,000 | 244,200 | ||
L Brands, Inc., 5.625%, 2/15/22 | 240,000 | 250,826 | ||
Penske Automotive Group, Inc., 3.750%, 8/15/20 | 85,000 | 85,000 | ||
580,026 | ||||
Office Equipment: 0.2% | ||||
Avnet, Inc., 3.750%, 12/1/21 | 60,000 | 61,105 | ||
Oil Field Equipment & Services: 0.8% | ||||
Nabors Industries, Inc., 5.000%, 9/15/20 | 24,000 | 24,055 | ||
Nabors Industries, Inc., 4.625%, 9/15/21 | 140,000 | 136,500 | ||
Pride International LLC, 6.875%, 8/15/20 | 55,000 | 54,863 | ||
Transocean, Inc., 8.375%, 12/15/21 | 60,000 | 63,075 | ||
278,493 | ||||
Oil Refining & Marketing: 0.3% | ||||
PBF Holding Co. LLC, 7.000%, 11/15/23 | 90,000 | 93,376 | ||
Packaging: 2.1% | ||||
Ardagh Packaging Finance PLC, 4.250%, 9/15/22 (a) | 200,000 | 202,000 | ||
Ball Corp., 4.375%, 12/15/20 | 110,000 | 112,420 | ||
Berry Global, Inc., 6.000%, 10/15/22 | 110,000 | 112,200 | ||
Reynolds Group Issuer, Inc., 5.750%, 10/15/20 | 130,829 | 131,156 | ||
Reynolds Group Issuer, Inc., 5.125%, 7/15/23 (a) | 170,000 | 173,188 | ||
730,964 |
The Accompanying Notes are an Integral Part of these Financial Statements.
33
PENN CAPITAL FUNDS TRUST |
PENN CAPITAL DEFENSIVE SHORT DURATION HIGH INCOME FUND |
SCHEDULE OF INVESTMENTS |
JUNE 30, 2019 |
Principal | Value | |||
Pharmaceuticals & Devices: 3.3% | ||||
Bausch Health Cos, Inc., 5.500%, 3/1/23 (a) | $347,000 | $ | 349,776 | |
Kinetic Concepts, Inc., 7.875%, 2/15/21 (a) | 105,000 | 107,643 | ||
Kinetic Concepts, Inc., 12.500%, 11/1/21 (a) | 310,000 | 341,387 | ||
Teva Pharmaceutical Finance IV LLC, 2.250%, 3/18/20 | 225,000 | 222,862 | ||
Teva Pharmaceutical Finance Netherlands III BV, 2.200%, 7/21/21 | 150,000 | 142,313 | ||
1,163,981 | ||||
Real Estate Development & Management: 0.4% | ||||
Realogy Group LLC, 5.250%, 12/1/21 (a) | 130,000 | 124,800 | ||
Real Estate Investment Trusts (REITs): 2.0% | ||||
HAT Holdings I LLC, 5.250%, 7/15/24 (a) | 175,000 | 178,500 | ||
iStar, Inc., 6.500%, 7/1/21 | 73,000 | 74,277 | ||
iStar, Inc., 6.000%, 4/1/22 | 125,000 | 128,125 | ||
iStar, Inc., 4.625%, 9/15/20 | 190,000 | 191,663 | ||
Starwood Property Trust, Inc., 3.625%, 2/1/21 | 140,000 | 139,650 | ||
712,215 | ||||
Software/Services: 0.2% | ||||
Symantec Corp., 4.200%, 9/15/20 | 75,000 | 76,166 | ||
Steel Producers/Products: 0.9% | ||||
AK Steel Corp., 7.625%, 10/1/21 | 170,000 | 167,450 | ||
Allegheny Technologies, Inc., 5.950%, 1/15/21 | 70,000 | 71,925 | ||
ArcelorMittal, 5.125%, 6/1/20 | 75,000 | 76,723 | ||
316,098 | ||||
Support-Services: 3.8% | ||||
CoreCivic, Inc., 4.125%, 4/1/20 | 120,000 | 119,100 | ||
CoreCivic, Inc., 5.000%, 10/15/22 | 135,000 | 134,325 | ||
The ADT Security Corp., 6.250%, 10/15/21 | 350,000 | 370,125 | ||
The GEO Group, Inc., 5.875%, 1/15/22 | 170,000 | 166,175 | ||
The Hertz Corp., 7.375%, 1/15/21 | 125,000 | 125,156 | ||
The Hertz Corp., 5.875%, 10/15/20 | 402,000 | 402,503 | ||
1,317,384 | ||||
Telecom-Integrated/Services: 4.0% | ||||
CenturyLink, Inc., 6.450%, 6/15/21 | 150,000 | 158,625 | ||
CenturyLink, Inc., 5.625%, 4/1/20 | 130,000 | 131,463 | ||
Cogent Communications Group, Inc., 5.375%, 3/1/22 (a) | 145,000 | 150,075 | ||
Hughes Satellite Systems Corp., 7.625%, 6/15/21 | 385,000 | 411,950 | ||
Intelsat Jackson Holdings SA, 9.500%, 9/30/22 (a) | 300,000 | 349,992 | ||
Qwest Corp., 6.750%, 12/1/21 | 172,000 | 184,685 | ||
1,386,790 | ||||
Telecommunications Equipment: 0.4% | ||||
CommScope, Inc., 5.000%, 6/15/21 (a) | 125,000 | 124,688 |
Principal | Value | |||
Telecom-Wireless: 1.2% | ||||
Sprint Communications, Inc., 11.500%, 11/15/21 | $100,000 | $ | 115,500 | |
Sprint Communications, Inc., 7.000%, 8/15/20 | 180,000 | 186,525 | ||
Sprint Corp., 7.250%, 9/15/21 | 105,000 | 111,563 | ||
413,588 | ||||
Total Corporate Bonds (cost $30,174,686) | 30,382,706 | |||
Convertible Bond: 0.4% | ||||
Energy - Exploration & Production: 0.4% | ||||
Whiting Petroleum Corp., 1.250%, 4/1/20 | 150,000 | 145,125 | ||
Total Convertible Bond (cost $146,362) | 145,125 | |||
Bank Loans: 6.2% (c) | ||||
Airline Companies: 0.3% | ||||
American Airlines, Inc., 4.402% (1 Month US LIBOR + 2.000%), 4/28/23 | 123,724 | 121,900 | ||
Auto Parts & Equipment: 0.3% | ||||
Aptiv Corp., 3.687% (1 Month US LIBOR + 1.250%), 8/17/21 | 123,377 | 121,834 | ||
Computer Hardware: 0.2% | ||||
Dell International LLC, 4.160% (1 Month US LIBOR + 1.750%), 9/7/21 | 68,404 | 68,250 | ||
Diversified Telecommunication Services: 0.3% | ||||
Consolidated Communications, Inc., 5.410% (3 Month US LIBOR + 3.000%), 10/5/23 | 99,745 | 95,240 | ||
Health Services: 0.6% | ||||
DaVita, Inc., 5.135% (1 Month US LIBOR + 2.750%), 6/24/21 | 198,433 | 198,062 | ||
Investments & Miscellaneous Financial Services: 0.4% | ||||
WisdomTree International Holdings Ltd., 4.154% (1 Month US LIBOR + 1.750%), 1/31/21 | 125,000 | 122,813 | ||
Media-Broadcast: 0.4% | ||||
ION Media Networks, Inc., 5.160% (1 Month US LIBOR + 2.750%), 12/18/20 | 125,000 | 124,688 | ||
Metals & Mining: 0.4% | ||||
Zekelman Industries, Inc., 4.652% (1 Month US LIBOR + 2.250%), 6/14/21 | 150,000 | 149,562 | ||
Non-Food & Drug Retailers: 0.3% | ||||
Michaels Stores, Inc., 4.902%, 1/28/23 | ||||
(1 Month US LIBOR + 2.500%) | 56,292 | 54,428 | ||
(1 Month US LIBOR + 2.500%) | 32,650 | 31,568 | ||
(1 Month US LIBOR + 2.500%) | 29,341 | 28,369 | ||
(1 Month US LIBOR + 2.500%) | 5,629 | 5,443 | ||
119,808 | ||||
Packaging: 0.7% | ||||
Berry Global, Inc., 4.162% (1 Month US LIBOR + 1.750%), 1/6/21 | 250,000 | 249,063 |
The Accompanying Notes are an Integral Part of these Financial Statements.
34
PENN CAPITAL FUNDS TRUST |
PENN CAPITAL DEFENSIVE SHORT DURATION HIGH INCOME FUND |
SCHEDULE OF INVESTMENTS |
JUNE 30, 2019 |
Principal | Value | |||
Pharmaceuticals: 0.7% | ||||
Jaguar Holding Co. II, 4.902% (1 Month US LIBOR + 2.500%), 8/18/22 | $248,062 | $ | 246,484 | |
Semiconductors & Semiconductor Equipment: 0.3% | ||||
Cypress Semiconductor Corp., 4.410% (1 Month US LIBOR + 2.000%), 7/5/21 | 117,776 | 117,703 | ||
Software/Services: 0.4% | ||||
Infor US, Inc., 5.080% (3 Month US LIBOR + 2.750%), 2/1/22 | 124,891 | 124,490 | ||
Support-Services: 0.1% | ||||
KAR Auction Services, Inc., 4.625% (3 Month US LIBOR + 2.250%), 3/11/21 | 32,799 | 32,717 | ||
Telecom-Integrated/Services: 0.8% | ||||
CenturyLink, Inc., 5.152% (1 Month US LIBOR + 2.750%), 9/30/22 | 118,590 | 118,145 | ||
Zayo Group LLC, 4.402% (1 Month US LIBOR + 2.000%), 1/19/21 | 149,617 | 149,454 | ||
267,599 | ||||
Total Bank Loans (cost $2,176,068) | 2,160,213 | |||
Shares | ||||
Mutual Fund: 2.2% | ||||
Bank Loan Related: 2.2% | ||||
Penn Capital Defensive Floating Rate Income Fund (d) | 78,102 | 778,673 | ||
Total Mutual Fund (cost $787,019) | 778,673 | |||
Principal | ||||
U.S. Government Note: 1.1% | ||||
United States Treasury Fixed Rate Note | ||||
1.375%, 12/15/19 | $ 375,000 | 373,828 | ||
Total U.S. Government Note (cost $372,905) | 373,828 | |||
Total Investments - 96.9% (cost $33,657,040) | $ | 33,840,545 | ||
Other Assets and Liabilities 3.1% | 1,083,041 | |||
Net Assets: 100.0% | $ | 34,923,586 |
Percentages are stated as a percent of net assets.
(a) | Securities purchased pursuant to Rule 144A of the Securities Act of 1933, as amended, and may be sold only to dealers in that program or other “qualified institutional buyers.” As of June 30, 2019, the value of these investments was $7,272,013, or 20.8% of total net assets. |
(b) | Payment-in-kind security which may pay interest/dividends in additional par/shares and/or in cash. As of June 30, 2019, the total payment-in-kind was $0, or 0.0% of total net assets. |
(c) | Bank Loans typically have rates of interest which are redetermined either daily, monthly, quarterly or semi-annually by reference to a base lending rate, plus a premium. These base lending rates are primarily the London Interbank Offered Rate (“LIBOR”) and secondarily, the prime rate offered by one or more major United States banks (the “Prime Rate”) and the certificate of deposit (“CD”) rate or other base lending rates used by commercial lenders. |
(d) | Affiliated company. See Note 7. |
Country Exposure (as a percentage of total investments) | |
United States | 93.74% |
Canada | 2.85% |
Luxembourg | 1.22% |
Ireland | 0.58% |
United Kingdom | 0.57% |
Cayman Islands | 0.43% |
Netherlands | 0.41% |
Bermuda | 0.20% |
Asset Type (as a percentage of total investments) (Unaudited) |
The Accompanying Notes are an Integral Part of these Financial Statements.
35
PENN CAPITAL FUNDS TRUST
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 2019
Assets | Penn Capital Managed Alpha SMID Cap Equity Fund | Penn Capital Special Situations Small Cap Equity Fund | Penn Capital Multi-Credit High Income Fund | Penn Capital Defensive Floating Rate Income Fund | Penn Capital Defensive Short Duration High Income Fund | ||||||||||
Investments, at fair value(1) | |||||||||||||||
Unaffiliated issuers | $ | 13,807,492 | $ | 10,151,175 | $ | 11,311,722 | $ | 35,845,885 | $ | 33,061,872 | |||||
Affiliated mutual fund (see Note 7) | — | — | 3,736,653 | — | 778,673 | ||||||||||
13,807,492 | 10,151,175 | 15,048,375 | 35,845,885 | 33,840,545 | |||||||||||
Receivables: | |||||||||||||||
Dividend distributions from affiliated mutual fund (see Note 7) | — | — | 14,890 | — | 3,091 | ||||||||||
Advisor reimbursement due | 573 | 3,402 | 12,458 | 34,537 | 49,691 | ||||||||||
Dividends and interest | 12,372 | 1,738 | 161,917 | 195,342 | 446,479 | ||||||||||
Investments sold | — | 79,515 | 35,255 | 882,914 | 92,670 | ||||||||||
Fund shares sold | 50 | — | — | 310,975 | 27,000 | ||||||||||
Cash | 604,908 | 136,224 | 563,089 | 2,239,362 | 1,038,355 | ||||||||||
Other assets | 9,574 | 10,196 | 8,532 | 16,611 | 24,026 | ||||||||||
Total assets | 14,434,969 | 10,382,250 | 15,844,616 | 39,525,626 | 35,521,857 | ||||||||||
Liabilities | |||||||||||||||
Payables: | |||||||||||||||
Investments purchased | — | 91,939 | 515,369 | 1,867,971 | 453,408 | ||||||||||
Fund shares redeemed | — | 15,000 | 4,995 | 1,377 | 51,557 | ||||||||||
Dividend payable | — | — | 186 | 55,141 | 274 | ||||||||||
Accrued expenses: | |||||||||||||||
Professional fees | 27,081 | 26,933 | 37,076 | 37,056 | 37,247 | ||||||||||
Administration fees | 20,405 | 20,629 | 33,039 | 41,176 | 29,917 | ||||||||||
Custody fees | 2,765 | 7,752 | 2,935 | 5,421 | 3,798 | ||||||||||
Transfer agent fees and expenses | 6,486 | 6,712 | 6,361 | 12,927 | 6,983 | ||||||||||
Trustee fees and expenses | 2,539 | 1,705 | 2,905 | 6,192 | 4,313 | ||||||||||
Other accrued expenses | 12,379 | 14,019 | 5,860 | 13,842 | 10,774 | ||||||||||
Total liabilities | 71,655 | 184,689 | 608,726 | 2,041,103 | 598,271 | ||||||||||
Net assets | $ | 14,363,314 | $ | 10,197,561 | $ | 15,235,790 | $ | 37,484,523 | $ | 34,923,586 | |||||
Composition of Net Assets | |||||||||||||||
Paid-in capital | $ | 11,488,975 | $ | 9,547,383 | $ | 15,230,610 | $ | 37,916,346 | $ | 34,775,616 | |||||
Total distributable earnings | 2,874,339 | 650,178 | 5,180 | (431,823 | ) | 147,970 | |||||||||
Net assets | $ | 14,363,314 | $ | 10,197,561 | $ | 15,235,790 | $ | 37,484,523 | $ | 34,923,586 | |||||
Institutional Class | |||||||||||||||
Net assets applicable to outstanding shares | $ | 14,363,314 | $ | 10,197,561 | $ | 15,235,790 | $ | 37,484,523 | $ | 34,923,586 | |||||
Shares of beneficial interest outstanding, no par value, unlimited authorization | 1,132,847 | 955,318 | 1,525,693 | 3,759,233 | 3,516,140 | ||||||||||
Net asset value per share outstanding | $ | 12.68 | $ | 10.67 | $ | 9.99 | $ | 9.97 | $ | 9.93 | |||||
Investor Class(2) | |||||||||||||||
Net assets applicable to outstanding shares | $ | — | $ | — | $ | — | $ | — | $ | — | |||||
Shares of beneficial interest outstanding, no par value, unlimited authorization | — | — | — | — | — | ||||||||||
Net asset value per share outstanding | $ | — | $ | — | $ | — | $ | — | $ | — | |||||
_________ | |||||||||||||||
(1) Investment in securities at cost | |||||||||||||||
Unaffiliated issuers | $ | 11,521,986 | $ | 9,178,598 | $ | 11,225,975 | $ | 35,970,507 | $ | 32,870,021 | |||||
Affiliated mutual fund (see Note 7) | — | — | 3,798,301 | — | 787,019 | ||||||||||
(2) No information is provided for Investor Share Class shares because shares of that Class had not yet been issued as of June 30, 2019. |
The accompanying notes are an integral part of the financial statements.
36
PENN CAPITAL FUNDS TRUST
STATEMENTS OF OPERATIONS
Penn Capital Managed Alpha SMID Cap Equity Fund | Penn Capital Special Situations Small Cap Equity Fund | Penn Capital Multi-Credit High Income Fund | Penn Capital Defensive Floating Rate Income Fund | Penn Capital Defensive Short Duration High Income Fund | |||||||||||
Investment Income (Loss) | July 1, 2018 - June 30, 2019 | July 1, 2018 - June 30, 2019 | July 1, 2018 - June 30, 2019 | July 1, 2018 - June 30, 2019 | July 1, 2018 - June 30, 2019 | ||||||||||
Income | |||||||||||||||
Dividends** | |||||||||||||||
Unaffiliated dividends | $ | 125,746 | $ | 104,869 | $ | — | $ | — | $ | — | |||||
Dividend distributions from affiliated mutual fund (see Note 7) | — | — | 167,917 | — | 76,222 | ||||||||||
Interest*** | 8,135 | 2,701 | 776,357 | 2,023,126 | 881,844 | ||||||||||
Total income | 133,881 | 107,570 | 944,274 | 2,023,126 | 958,066 | ||||||||||
Expenses | |||||||||||||||
Investment advisory fees | 126,861 | 138,497 | 98,479 | 201,339 | 100,548 | ||||||||||
Administration and accounting | 66,527 | 67,380 | 109,178 | 144,014 | 93,064 | ||||||||||
Professional fees | 37,561 | 37,108 | 47,557 | 47,232 | 45,583 | ||||||||||
Transfer agent expense | 19,380 | 19,266 | 18,790 | 28,802 | 20,332 | ||||||||||
Registration | 15,839 | 19,443 | 16,190 | 15,103 | 14,104 | ||||||||||
Compliance fees | 14,168 | 14,168 | 14,168 | 14,000 | 13,874 | ||||||||||
Miscellaneous | 13,140 | 13,140 | 55 | 55 | 56 | ||||||||||
Custodian | 5,966 | 17,190 | 7,095 | 13,709 | 7,455 | ||||||||||
Trustees | 4,558 | 3,543 | 5,170 | 12,559 | 7,915 | ||||||||||
Insurance | 3,886 | 4,648 | 3,393 | 8,277 | 3,139 | ||||||||||
Shareholder communication | 1,377 | 5,542 | 1,203 | 28,340 | 12,158 | ||||||||||
Shareholder servicing fees | 900 | 6,172 | 891 | 7,889 | 3,399 | ||||||||||
Interest expense | — | 266 | — | — | — | ||||||||||
Total expenses | 310,163 | 346,363 | 322,169 | 521,319 | 321,627 | ||||||||||
Expense waiver and reimbursement from Advisor | (160,750 | ) | (187,190 | ) | (219,408 | ) | (291,034 | ) | (200,969 | ) | |||||
Net expenses | 149,413 | 159,173 | 102,761 | 230,285 | 120,658 | ||||||||||
Net investment income (loss) | (15,532 | ) | (51,603 | ) | 841,513 | 1,792,841 | 837,408 | ||||||||
Realized and Unrealized Gain (Loss) on Investments | |||||||||||||||
Net realized gain (loss) on investments | |||||||||||||||
Unaffiliated issuers | 570,842 | (214,421 | ) | 3,151 | (273,197 | ) | (23,084 | ) | |||||||
Affiliated Mutual Fund (See Note 7) | — | — | — | — | (19,238 | ) | |||||||||
Net change in unrealized appreciation (depreciation) | |||||||||||||||
Unaffiliated issuers | (72,523 | ) | (1,835,597 | ) | 35,984 | (119,403 | ) | 318,949 | |||||||
Affiliated Mutual Fund (See Note 7) | — | — | (45,236 | ) | — | 4,170 | |||||||||
Net realized and unrealized gain (loss) on investments | 498,319 | (2,050,018 | ) | (6,101 | ) | (392,600 | ) | 280,797 | |||||||
Net increase (decrease) in net assets resulting from operations | $ | 482,787 | $ | (2,101,621 | ) | $ | 835,412 | $ | 1,400,241 | $ | 1,118,205 | ||||
** Net of foreign taxes withheld of: | $ | — | $ | 387 | $ | — | $ | — | $ | — | |||||
*** Net of foreign taxes withheld of: | $ | — | $ | — | $ | — | $ | 933 | $ | 703 |
The accompanying notes are an integral part of the financial statements.
37
PENN CAPITAL FUNDS TRUST
STATEMENTS OF CHANGES IN NET ASSETS
Penn Capital Managed Alpha SMID Cap Equity Fund | Penn Capital Special Situations Small Cap Equity Fund | Penn Capital Multi-Credit High Income Fund | Penn Capital Defensive Floating Rate Income Fund | Penn Capital Defensive Short Duration High Income Fund | ||||||||||||||||||||||||||
Increase (Decrease) in Net Assets | Year Ended June 30, 2019 | Year Ended June 30, 2018 | Year Ended June 30, 2019 | Year Ended June 30, 2018 | Year Ended June 30, 2019 | Year Ended June 30, 2018 | Year Ended June 30, 2019 | Year Ended June 30, 2018 | Year Ended June 30, 2019 | Period from July 17, 2017* to June 30, 2018 | ||||||||||||||||||||
Operations | ||||||||||||||||||||||||||||||
Net investment income (loss) | $ | (15,532 | ) | $ | (45,253 | ) | $ | (51,603 | ) | $ | (133,199 | ) | $ | 841,513 | $ | 638,840 | $ | 1,792,841 | $ | 1,221,986 | $ | 837,408 | $ | 239,854 | ||||||
Net realized gain (loss) on investments | 570,842 | 1,333,038 | (214,421 | ) | 2,322,912 | 3,151 | 1,085 | (273,197 | ) | (49,428 | ) | (42,322 | ) | (7,382 | ) | |||||||||||||||
Capital gain distribution from affiliated mutual fund | — | — | — | — | — | 5,991 | — | — | — | 4,997 | ||||||||||||||||||||
Net change in unrealized appreciation (depreciation) | (72,523 | ) | 815,952 | (1,835,597 | ) | 1,826,691 | (9,252 | ) | (261,461 | ) | (119,403 | ) | (177,558 | ) | 323,119 | (139,614 | ) | |||||||||||||
Net increase (decrease) in net assets resulting from operations | 482,787 | 2,103,737 | (2,101,621 | ) | 4,016,404 | 835,412 | 384,455 | 1,400,241 | 995,000 | 1,118,205 | 97,855 | |||||||||||||||||||
Dividends and distributions to shareholders | ||||||||||||||||||||||||||||||
Net dividends and distributions from net investment income and realized gain - Institutional Class | (1,274,995 | ) | (217,398 | ) | (1,194,500 | ) | (2,239,983 | ) | (902,124 | ) | (855,013 | ) | (1,892,386 | ) | (1,353,114 | ) | (856,770 | ) | (211,320 | ) | ||||||||||
Total dividends and distributions to shareholders | (1,274,995 | ) | (217,398 | )(1) | (1,194,500 | ) | (2,239,983 | )(2) | (902,124 | ) | (855,013 | )(3) | (1,892,386 | ) | (1,353,114 | )(4) | (856,770 | ) | (211,320 | )(5) | ||||||||||
Capital share transactions | ||||||||||||||||||||||||||||||
Net proceeds from sale of shares | 224,305 | 2,179,641 | 1,418,042 | 6,262,562 | 1,638,773 | 4,996,417 | 10,672,029 | 7,039,836 | 22,772,480 | 12,597,665 | ||||||||||||||||||||
Dividends and distributions reinvested | 1,251,646 | 217,014 | 1,167,457 | 2,233,477 | 895,794 | 824,258 | 1,380,000 | 1,346,434 | 853,180 | 211,090 | ||||||||||||||||||||
Cost of shares redeemed** | (1,230,612 | ) | (400,183 | ) | (10,380,725 | ) | (10,850,646 | ) | (1,045,925 | ) | (307,821 | ) | (5,804,117 | ) | (1,330,752 | ) | (1,399,351 | ) | (259,448 | ) | ||||||||||
Net increase (decrease) in net assets resulting from capital share transactions | 245,339 | 1,996,472 | (7,795,226 | ) | (2,354,607 | ) | 1,488,642 | 5,512,854 | 6,247,912 | 7,055,518 | 22,226,309 | 12,549,307 | ||||||||||||||||||
Net increase (decrease) in net assets | (546,869 | ) | 3,882,811 | (11,091,347 | ) | (578,186 | ) | 1,421,930 | 5,042,296 | 5,755,767 | 6,697,404 | 22,487,744 | 12,435,842 | |||||||||||||||||
Net Assets | ||||||||||||||||||||||||||||||
Beginning of period | 14,910,183 | 11,027,372 | 21,288,908 | 21,867,094 | 13,813,860 | 8,771,564 | 31,728,756 | 25,031,352 | 12,435,842 | — | ||||||||||||||||||||
End of period | $ | 14,363,314 | $ | 14,910,183 | $ | 10,197,561 | $ | 21,288,908 | $ | 15,235,790 | $ | 13,813,860 | (6) | $ | 37,484,523 | $ | 31,728,756 | (7) | $ | 34,923,586 | $ | 12,435,842 | (8) | |||||||
** Net of redemption fees of: | $ | 297 | $ | — | $ | 1,063 | $ | 741 | $ | 511 | $ | 32 | $ | 485 | $ | — | $ | 2,584 | $ | — |
(1) | Includes net realized gain distributions of $217,398. |
(2) | Includes net realized gain distributions of $2,239,983. |
(3) | Includes net investment income distributions of $632,448 and net realized gain distributions of $222,565. |
(4) | Includes net investment income distributions of $1,186,100 and net realized gain distributions of $167,014. |
(5) | Includes net investment income distribution of $211,320. |
(6) | Includes accumulated net investment income of $43,679. |
(7) | Includes accumulated net investment income of $115,673. |
(8) | Includes accumulated net investment income of $33,307. |
* | Commencement of operations. |
The accompanying notes are an integral part of the financial statements.
38
PENN CAPITAL FUNDS TRUST
FINANCIAL HIGHLIGHTS
Per Common Share Data(a) | Supplemental data and ratios | ||||||||||||||||||||||||||||||||||||||||||||
Income from investment operations | Distributions to shareholders | ||||||||||||||||||||||||||||||||||||||||||||
Penn Capital Managed Alpha SMID Cap Equity Fund | |||||||||||||||||||||||||||||||||||||||||||||
Institutional Class | |||||||||||||||||||||||||||||||||||||||||||||
7/1/18 to 6/30/19 | $ | 13.55 | (0.01 | ) | 0.37 | 0.36 | (f) | — | (1.23 | ) | (1.23 | ) | $ | 12.68 | 3.64 | % | $ | 14,363 | 1.06 | % | 2.20 | % | (0.11 | )% | (1.25 | )% | 40 | % | |||||||||||||||||
7/1/17 to 6/30/18 | $ | 11.73 | (0.04 | ) | 2.07 | 2.03 | — | (0.21 | ) | (0.21 | ) | $ | 13.55 | 17.41 | % | $ | 14,910 | 1.06 | % | 2.38 | % | (0.34 | )% | (1.66 | )% | 64 | % | ||||||||||||||||||
7/1/16 to 6/30/17 | $ | 9.65 | (0.02 | ) | 2.10 | 2.08 | — | — | — | $ | 11.73 | 21.55 | % | $ | 11,027 | 1.06 | % | 2.63 | % | (0.29 | )% | (1.86 | )% | 91 | % | ||||||||||||||||||||
12/1/15(e) to 6/30/16 | $ | 10.00 | (0.03 | ) | (0.32 | ) | (0.35 | ) | — | — | — | $ | 9.65 | -3.50 | %(d) | $ | 9,462 | 1.06 | % | 3.74 | % | (0.53 | )% | (3.21 | )% | 70 | %(d) | ||||||||||||||||||
Penn Capital Special Situations Small Cap Equity Fund | �� | ||||||||||||||||||||||||||||||||||||||||||||
Institutional Class | |||||||||||||||||||||||||||||||||||||||||||||
7/1/18 to 6/30/19 | $ | 12.59 | (0.05 | ) | (0.98 | ) | (1.03 | )(f) | — | (0.89 | ) | (0.89 | ) | $ | 10.67 | -7.91 | % | $ | 10,198 | 1.09 | % | 2.38 | % | (0.35 | )% | (1.64 | )% | 97 | % | ||||||||||||||||
7/1/17 to 6/30/18 | $ | 11.71 | (0.08 | ) | 2.36 | 2.28 | (f) | — | (1.40 | ) | (1.40 | ) | $ | 12.59 | 20.31 | % | $ | 21,289 | 1.09 | % | 2.09 | % | (0.64 | )% | (1.64 | )% | 105 | % | |||||||||||||||||
7/1/16 to 6/30/17 | $ | 10.32 | (0.04 | ) | 2.24 | 2.20 | (f) | — | (0.81 | ) | (0.81 | ) | $ | 11.71 | 21.52 | % | $ | 21,867 | 1.09 | % | 2.19 | % | (0.54 | )% | (1.64 | )% | 101 | % | |||||||||||||||||
12/18/15(e) to 6/30/16 | $ | 10.00 | (0.02 | ) | 0.34 | 0.32 | — | — | — | $ | 10.32 | 3.20 | %(d) | $ | 8,554 | 1.09 | % | 5.63 | % | (0.48 | )% | (5.02 | )% | 102 | %(d) | ||||||||||||||||||||
Penn Capital Multi-Credit High Income Fund | |||||||||||||||||||||||||||||||||||||||||||||
Institutional Class | |||||||||||||||||||||||||||||||||||||||||||||
7/1/18 to 6/30/19 | $ | 10.06 | 0.59 | (0.02 | ) | 0.57 | (f) | (0.61 | ) | (0.03 | ) | (0.64 | ) | $ | 9.99 | 5.83 | % | $ | 15,236 | 0.72 | % | 2.26 | % | 5.90 | % | 4.36 | % | 85 | % | ||||||||||||||||
7/1/17 to 6/30/18 | $ | 10.52 | 0.61 | (0.22 | ) | 0.39 | (f) | (0.63 | ) | (0.22 | ) | (0.85 | ) | $ | 10.06 | 3.81 | % | $ | 13,814 | 0.72 | % | 2.80 | % | 5.89 | % | 3.81 | % | 66 | % | ||||||||||||||||
7/1/16 to 6/30/17 | $ | 9.95 | 0.73 | 0.56 | 1.29 | (0.72 | ) | — | (0.72 | ) | $ | 10.52 | 13.36 | % | $ | 8,772 | 0.72 | % | 3.25 | % | 7.01 | % | 4.48 | % | 79 | % | |||||||||||||||||||
12/1/15(e) to 6/30/16 | $ | 10.00 | 0.35 | (0.10 | ) | 0.25 | (0.30 | ) | — | (0.30 | ) | $ | 9.95 | 2.66 | %(d) | $ | 7,843 | 0.72 | % | 5.14 | % | 6.34 | % | 1.92 | % | 62 | %(d) | ||||||||||||||||||
Penn Capital Defensive Floating Rate Income Fund | |||||||||||||||||||||||||||||||||||||||||||||
Institutional Class | |||||||||||||||||||||||||||||||||||||||||||||
7/1/18 to 6/30/19 | $ | 10.09 | 0.48 | (0.09 | ) | 0.39 | (f) | (0.51 | ) | — | (0.51 | ) | $ | 9.97 | 4.04 | % | $ | 37,485 | 0.64 | % | 1.43 | % | 4.89 | % | 4.10 | % | 57 | % | |||||||||||||||||
7/1/17 to 6/30/18 | $ | 10.21 | 0.43 | (0.06 | ) | 0.37 | (0.43 | ) | (0.06 | ) | (0.49 | ) | $ | 10.09 | 3.71 | % | $ | 31,729 | 0.65 | %(g) | 1.64 | % | 4.31 | %(g) | 3.32 | % | 65 | % | |||||||||||||||||
7/1/16 to 6/30/17 | $ | 10.09 | 0.40 | 0.17 | 0.57 | (0.40 | ) | (0.05 | ) | (0.45 | ) | $ | 10.21 | 5.66 | % | $ | 25,031 | 0.74 | % | 1.95 | % | 3.90 | % | 2.69 | % | 108 | % | ||||||||||||||||||
12/1/15(e) to 6/30/16 | $ | 10.00 | 0.14 | 0.06 | 0.20 | (0.11 | ) | — | (0.11 | ) | $ | 10.09 | 1.99 | %(d) | $ | 18,625 | 0.74 | % | 2.77 | % | 2.56 | % | 0.53 | % | 43 | %(d) | |||||||||||||||||||
Penn Capital Defensive Short Duration High Income Fund | |||||||||||||||||||||||||||||||||||||||||||||
Institutional Class | |||||||||||||||||||||||||||||||||||||||||||||
7/1/18 to 6/30/19 | $ | 9.85 | 0.35 | 0.10 | 0.45 | (f) | (0.37 | ) | — | (0.37 | ) | $ | 9.93 | 4.65 | % | $ | 34,924 | 0.54 | % | 1.44 | % | 3.75 | % | 2.85 | % | 48 | % | ||||||||||||||||||
7/17/17(e) to 6/30/18 | $ | 10.00 | 0.27 | (0.17 | ) | 0.10 | (0.25 | ) | — | (0.25 | ) | $ | 9.85 | 1.03 | %(d) | $ | 12,436 | 0.54 | % | 2.70 | % | 3.08 | % | 0.92 | % | 39 | %(d) |
* | No information is provided for Investor Class shares because shares of that class had not yet been issued as of June 30, 2019. |
(a) | Information presented related to a share outstanding for the entire period. |
(b) | Annualized for periods less than one full year. |
(c) | Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. |
(d) | Not annualized. |
(e) | Commencement of operations. |
(f) | Total from investment operations per share includes redemption fees of less than $0.01 per share. |
(g) | Expense waiver of 0.64% was implemented on August 1, 2017. |
The accompanying notes are an integral part of the financial statements.
39
PENN CAPITAL FUNDS TRUST
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2019
1. Organization (Unaudited)
PENN Capital Funds Trust (the “Trust”) was organized as a Delaware statutory trust on August 29, 2014, and is registered under the Investment Company Act of 1940 (the “1940 Act”), as amended, as an open-end management investment company. The Trust consists of five series that are available for investment: the Penn Capital Managed Alpha SMID Cap Equity Fund, the Penn Capital Special Situations Small Cap Equity Fund, the Penn Capital Multi-Credit High Income Fund, the Penn Capital Defensive Floating Rate Income Fund and the Penn Capital Defensive Short Duration High Income Fund (collectively referred to as the “Funds” and each individually referred to as a “Fund”). Two other series: the Penn Capital Micro Cap Equity Fund and the Penn Capital Enterprise Value Small Cap Equity Fund are not currently offered. The Funds follow the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification Topic 946 “Financial Services- Investment Companies.”
The Penn Capital Managed Alpha SMID Cap Equity Fund and the Penn Capital Special Situations Small Cap Equity Fund’s investment objective is to seek to provide capital appreciation. The Penn Capital Managed Alpha SMID Cap Equity Fund commenced operations on December 1, 2015. The Penn Capital Special Situations Small Cap Equity Fund commenced operations on December 18, 2015.
The Penn Capital Multi-Credit High Income Fund’s investment objective is to seek to provide total return through interest income and capital appreciation. The Penn Capital Multi-Credit High Income Fund commenced operations on December 1, 2015.
The Penn Capital Defensive Floating Rate Income Fund’s investment objective is to seek to provide current income. The Penn Capital Defensive Floating Rate Income Fund commenced operations on December 1, 2015.
The Penn Capital Defensive Short Duration High Income Fund’s investment objective is to seek to provide a high level of current income. The Penn Capital Defensive Short Duration High Income Fund commenced operations on July 17, 2017.
Each Fund’s investment objective is non-fundamental, and may be changed by the Trust’s Board of Trustees (the “Board” or “Trustees”) without shareholder approval. Unless otherwise noted, all of the other investment policies and strategies described in the Prospectus or hereafter are nonfundamental. The Penn Capital Management Company, Inc. (“Advisor”) serves as the investment advisor to the Funds.
The Trust offers two classes of shares for the Penn Capital Managed Alpha SMID Cap Equity Fund, the Penn Capital Special Situations Small Cap Equity Fund, the Penn Capital Multi-Credit High Income Fund and the Penn Capital Defensive Floating Rate Income Fund: Institutional and Investor Class. The Trust offers Institutional Class shares for the Penn Capital Defensive Short Duration High Income Fund. The Trust has also registered two other series, each with one class: the Penn Capital Micro Cap Equity Fund and the Penn Capital Enterprise Value Small Cap Equity Fund: Institutional Class. No information is provided in this report for Investor Class shares because shares of that class had not yet been issued as of June 30, 2019. Neither class has a front-end or back-end sales charge. The Penn Capital Micro Cap Equity Fund and Penn Capital Enterprise Value Small Cap Fund have not commenced operations as of June 30, 2019.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the Funds in the preparation of their financial statements. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).
A. Investment Valuation
The Funds use the following valuation methods to determine fair value as either fair value for investments for which market quotations are available, or if not available, the fair value, as determined in good faith pursuant to such policies and procedures as may be approved by the Trust’s Board from time to time. The valuation of the portfolio investments of the Funds currently includes the following processes:
Portfolio securities listed on a national or foreign securities exchange, except those listed on the NASDAQ® Stock Market and Small CapSM exchanges (“NASDAQ®”), for which market quotations are available, are valued at the official closing price of such exchange on each business day (defined as days on which the Funds are open for business (“Business Day”)). Portfolio securities traded on the NASDAQ® will be valued at the NASDAQ® Official Closing Price on each Business Day. If there is no such reported sale on an exchange or NASDAQ®, the portfolio security will be valued at the most recent quoted bid price. Price information on listed securities is taken from the exchange where the security is primarily traded.
40
PENN CAPITAL FUNDS TRUST
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2019
Other assets and securities for which no quotations are readily available (such as for certain restricted or unlisted securities and private placements) or that may not be reliably priced (such as in the case of trade suspensions or halts, price movement limits set by certain foreign markets, and thinly traded or illiquid securities) will be valued in good faith at fair value using procedures and methods approved by the Board. Under the procedures adopted by the Board, the Board has delegated day-to-day responsibility for fair value determinations to a Valuation Committee comprised of representatives from the Advisor.
A Fund’s portfolio holdings may also consist of shares of other investment companies in which the Fund invests. The value of each such investment company will be its net asset value (“NAV”) at the time the Fund’s shares are priced. Each investment company calculates its NAV based on the current market value for its portfolio holdings. Each investment company values securities and other instruments in a manner as described in that investment company’s prospectus. The investment company’s prospectus explains the circumstances under which the company will use fair value pricing and the effects of using fair value pricing.
Because a Fund may invest in foreign securities, the Fund’s NAV may change on days when a shareholder will not be able to purchase or redeem Fund shares because foreign markets are open at times and on days when U.S. markets are not. Investments quoted in foreign currencies will be valued daily in U.S. dollars on the basis of the foreign currency exchange rates prevailing at the time such valuation is determined. Foreign currency exchange rates are generally determined as of the close of the New York Stock Exchange (“NYSE”) (generally 4:00 p.m. Eastern time). If an event that could materially affect the value of the Fund’s foreign securities has occurred between the time the securities were last traded and the time that the Fund calculates its NAV, the closing price of the Fund’s securities may no longer reflect their market value at the time the Fund calculates its NAV. In such a case, the Fund may use fair value methods to value such securities.
Fixed income securities shall be valued at the evaluated bid price supplied by the Fund’s pricing agent based on broker-dealer supplied valuations and other criteria, or directly by independent brokers when the pricing agent does not provide a price or the Valuation Committee does not believe that the pricing agent price reflects the current market value. If a price of a position is sought using independent brokers, the Advisor shall seek to obtain an evaluation bid price from at least two independent brokers who are knowledgeable about the position. The price of the position would be deemed to be an average of such bid prices. In the absence of sufficient broker dealer quotes, securities shall be valued at fair value pursuant to procedures adopted by the Board.
Bank loans are not listed on any securities exchange or board of trade. They are typically bought and sold by institutional investors in individually negotiated private transactions that function in many respects like an over-the-counter secondary market. This market generally has fewer trades and less liquidity than the secondary market for other types of securities. Some bank loans have few or no trades, or trade infrequently, and information regarding a specific bank loan may not be widely available or may be incomplete. Except as otherwise specified, bank loan securities shall be valued at the evaluated bid prices supplied by the Fund’s pricing agent based on broker-dealer supplied valuations and other criteria, such as, issuer details, interest rates, yield curves, prepayment speeds, credit risks/spreads, default rates and quoted prices for similar assets, or directly by independent brokers when the pricing agent does not provide a price or the Valuation Committee does not believe that the pricing agent price reflects the current market value. If a price of a position is sought using independent brokers, the Advisor shall seek to obtain a bid price from at least two independent brokers who are knowledgeable about the position. The price of the position would be deemed to be an average of such bid prices. In the absence of sufficient broker dealer quotes, securities shall be valued at fair value pursuant to procedures adopted by the Board.
Occasionally, reliable market quotations are not readily available (such as for certain restricted or unlisted securities and private placements) or securities and other assets may not be reliably priced (such as in the case of trade suspensions or halts, price movement limits set by certain foreign markets, and thinly traded or illiquid securities), or there may be events affecting the value of foreign securities or other securities held by the Funds that occur when regular trading on foreign or other exchanges is closed, but before trading on the NYSE is closed. Fair value determinations are then made in good faith in accordance with procedures adopted by the Board. Under the procedures adopted by the Board, the Board has delegated the responsibility for making fair value determinations to a Valuation Committee, subject to the Board’s oversight. Generally, the fair value of a portfolio security or other asset shall be the amount that the owner of the security or asset might reasonably expect to receive upon its current sale. A three-tier hierarchy is utilized to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability and are developed based
41
PENN CAPITAL FUNDS TRUST
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2019
on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability and are developed based on the best information available under the circumstances. The three-tier hierarchy of inputs is summarized in the three broad levels listed below.
Level 1 — unadjusted quoted prices in active markets for identical securities that the Funds have the ability to access
Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)
Level 3 — significant unobservable inputs (including a Fund’s own assumptions in determining the fair value of investments)
The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.
The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
The following table summarizes the inputs used as of June 30, 2019 in valuing each Fund’s investments:
Description | Level 1 | Level 2 | Level 3 | Total | ||||||||
Penn Capital Managed Alpha SMID Cap Equity | ||||||||||||
Investments(a) | ||||||||||||
Common Stocks | $ | 12,423,458 | $ | — | $ | — | $ | 12,423,458 | ||||
Real Estate Investment Trusts (REITs) | 1,384,034 | — | — | 1,384,034 | ||||||||
Total Investments | $ | 13,807,492 | $ | — | $ | — | $ | 13,807,492 |
Penn Capital Special Situations Small Cap Equity Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||
Investments(a) | ||||||||||||
Common Stocks | $ | 9,764,159 | $ | — | $ | — | $ | 9,764,159 | ||||
Contingent Value Right | — | 19 | — | 19 | ||||||||
Real Estate Investment Trust (REIT) | 386,997 | — | — | 386,997 | ||||||||
Total Investments | $ | 10,151,156 | $ | 19 | $ | — | $ | 10,151,175 |
Penn Capital Multi-Credit High Income Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||
Investments(a) | ||||||||||||
Corporate Bonds | $ | — | $ | 8,597,539 | $ | — | $ | 8,597,539 | ||||
Convertible Bond | — | 36,575 | — | 36,575 | ||||||||
Bank Loans | — | 2,389,839 | — | 2,389,839 | ||||||||
Mutual Fund | 3,736,653 | — | — | 3,736,653 | ||||||||
Preferred Stock | — | — | 40 | 40 | ||||||||
U.S. Government Notes | — | 287,729 | — | 287,729 | ||||||||
Total Investments | $ | 3,736,653 | $ | 11,311,682 | $ | 40 | $ | 15,048,375 |
Penn Capital Defensive Floating Rate Income Fund | ||||||||||||
Investments(a) | Level 1 | Level 2 | Level 3 | Total | ||||||||
Bank Loans | $ | — | $ | 30,275,332 | $ | — | $ | 30,275,332 | ||||
Corporate Bonds | — | 4,836,151 | — | 4,836,151 | ||||||||
U.S. Government Note | — | 734,402 | — | 734,402 | ||||||||
Total Investments | $ | — | $ | 35,845,885 | $ | — | $ | 38,845,885 |
42
PENN CAPITAL FUNDS TRUST
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2019
Penn Capital Defensive Short Duration High Income Fund | ||||||||||||
Investments(a) | Level 1 | Level 2 | Level 3 | Total | ||||||||
Corporate Bonds | $ | — | $ | 30,382,706 | $ | — | $ | 30,382,706 | ||||
Convertible Bond | — | 145,125 | — | 145,125 | ||||||||
Bank Loans | — | 2,160,213 | — | 2,160,213 | ||||||||
Mutual Fund | 778,673 | — | — | 778,673 | ||||||||
U.S. Government Notes | — | 373,828 | — | 373,828 | ||||||||
Total Investments | $ | 778,673 | $ | 33,061,872 | $ | — | $ | 33,840,545 |
(a) | All other industry classifications are identified in the Schedule of Investments for each Fund. |
The following table summarizes quantitative information about significant unobservable valuation inputs for Level 3 fair value measurement as of June 30, 2019:
Type of Assets | Fair Value as of June 30, 2019 | Valuation Techniques | Unobservable Input | ||||||
Penn Capital Multi-Credit High Income Fund | |||||||||
Preferred Stock | |||||||||
Spanish Broadcasting Systems, Inc. | $ | 40 | Broker Quote | Unpublished independent broker quote |
The following table reconciles Level 3 investments based on the inputs used to determine fair value:
Balance as of July 1, 2018 | Purchases | Sales | Accretion of Discount | Net Realized Gain/Loss | Balance as of June 30, 2019 | Change in Unrealized Depreciation from Investments Held as of June 30, 2019 | |||||||||||||||
Penn Capital Multi-Credit High Income Fund | |||||||||||||||||||||
Common Stock | |||||||||||||||||||||
ACC Claims Holdings LLC | $ | 46 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (46 | ) | ||||||
Preferred Stock | |||||||||||||||||||||
Spanish Broadcasting Systems, Inc. | $ | 41 | — | — | — | — | $ | 40 | $ | (1 | ) |
As of June 30, 2019 the change in unrealized depreciation on positions still held for securities that were considered Level 3 was $(47).
B. Investment Transactions and Related Investment Income
Investment transactions are accounted for on a trade-date basis. Interest income is recorded on the accrual basis, including the amortization of premiums and accretion of discounts on bonds held using the yield-to-maturity method. Dividend income is recognized on ex-dividend date.
Realized gains and losses on investment transactions and unrealized appreciation and depreciation of investments are reported for financial statement and Federal income tax purposes on the identified cost method.
C. Expenses
The Trust’s expenses are allocated to the individual Fund in proportion to the net assets of the respective Fund when the expenses were incurred, except where direct allocations of expenses can be made.
43
PENN CAPITAL FUNDS TRUST
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2019
D. Use of Estimates
The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting year. Actual results could differ from those estimates.
E. Dividends and Distributions
Dividends and distributions to Shareholders are recorded on the ex-date. The Penn Capital Multi-Credit High Income Fund, the Penn Capital Defensive Floating Rate Income Fund and the Penn Capital Defensive Short Duration High Income Fund declare and distribute their net investment income, if any, monthly and make distributions of their net realized capital gains, if any, at least annually, usually in December. The Penn Capital Managed Alpha SMID Cap Equity Fund and the Penn Capital Special Situations Small Cap Equity Fund declare and distribute their net investment income, if any, annually and make distributions of net realized capital gains, if any, at least annually, usually in December.
The character of distributions made during the period from net investment income or net realized gains may differ from its ultimate characterization for federal income tax purposes. In addition, due to the timing of dividend distributions, the fiscal period in which the amounts are distributed may differ from the period that income or realized gains (losses) were recorded by each Fund.
F. Federal Income Taxes
Each Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended. If so qualified, the Funds will not be subject to federal income tax to the extent they distribute all of their net investment income and capital gains to shareholders. Therefore, no federal income tax provision is required.
The Funds evaluate tax positions taken or expected to be taken in the course of preparing their tax returns to determine whether it is more-likely-than-not (i.e., greater than 50%) that each tax position will be sustained upon examination by a taxing authority based on the technical merits of the position. Tax positions not deemed to meet the more-likely-than-not threshold are recorded as a tax benefit or expense in the current year. The Funds did not record any tax provision in the current period and have no provision for taxes in the financial statements. However, management’s conclusions regarding tax positions taken may be subject to review and adjustment at a later date based on factors including, but not limited to, examination by tax authorities (i.e., the last three open tax year ends, as applicable) and on-going analysis of and changes to tax laws, regulations and interpretations thereof.
G. Indemnifications
Under the Trust’s organizational documents, its officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust and each Fund. In addition, in the normal course of business, the Trust may enter into contracts that provide general indemnification to other parties. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust that have not yet occurred, and may not occur. However, the Trust has not had prior claims or losses pursuant to these contracts and considers the risk of loss to be remote.
3. Agreements and Related Party Transactions
Investment Advisory Agreement
The Trust has entered into an investment advisory agreement with the Advisor. Under the terms of the agreement, each Fund pays the Advisor a fee, payable at the end of each month, at an annual rate, set forth in the table below, of the respective Fund’s average daily net assets.
Penn Capital Managed Alpha SMID Cap Equity Fund | 0.90 | % | |
Penn Capital Special Situations Small Cap Equity Fund | 0.95 | % | |
Penn Capital Multi-Credit High Income Fund | 0.69 | % | |
Penn Capital Defensive Floating Rate Income Fund | 0.55 | % | |
Penn Capital Defensive Short Duration High Income Fund | 0.45 | % |
With respect to each Fund other than the Penn Capital Multi-Credit High Income Fund and the Penn Capital Defensive Short Duration High Income Fund, the Advisor has contractually agreed to waive its fees and/or pay Fund expenses so that the
44
PENN CAPITAL FUNDS TRUST
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2019
Funds’ total annual operating expenses (excluding any acquired fund fees and expenses, taxes, interest, brokerage fees, certain insurance costs, and extraordinary and other non-routine expenses) do not exceed the amounts shown below as a percentage of each Fund’s average daily net assets. With respect to the Penn Capital Multi-Credit High Income Fund and the Penn Capital Defensive Short Duration High Income Fund, the Advisor has contractually agreed to waive its fees and/or pay Fund expenses so that the Fund’s total annual operating expenses (including any acquired fund fees and expenses incurred by the Fund as a result of its investments in other investment companies managed by the Advisor, but excluding any acquired fund fees and expenses incurred by the Fund as a result of its investments in unaffiliated investment companies, taxes, interest, brokerage fees, certain insurance costs, and extraordinary and other non-routine expenses) do not exceed the amounts shown below as a percentage of each Fund’s average daily net assets. The expense limitation agreement will remain in place through October 31, 2019. Thereafter, the expense limitation agreement for the Funds will be reviewed annually by the Advisor and the Board.
Institutional Class | Investor Class | |||||
Penn Capital Managed Alpha SMID Cap Equity Fund | 1.06 | % | 1.31 | % | ||
Penn Capital Special Situations Small Cap Equity Fund | 1.09 | % | 1.34 | % | ||
Penn Capital Multi-Credit High Income Fund | 0.72 | % | 0.97 | % | ||
Penn Capital Defensive Floating Rate Income Fund | 0.64 | % | 0.89 | % | ||
Penn Capital Defensive Short Duration High Income Fund | 0.54 | % | N/A |
Any waived or reimbursed expenses by the Advisor to the Funds excluding any waivers related to acquired fund fees and expenses incurred by the Funds as a result of its investments in other investment companies managed by the Advisor, are subject to repayment by a Fund in the three years following the date the fees were waived or the expenses were paid, provided that the respective Fund is able to make the repayment without exceeding the Fund’s expense limitation in place when the fees were waived or expenses paid. The Advisor’s waived fees and paid expenses that are subject to potential recoupment are as follows:
Fiscal Period Incurred | Amount Waived/ Expenses Assumed | Amount Recouped | Amount Subject to Potential Recoupment | Year of Expiration | ||||||||
Penn Capital Managed Alpha SMID Cap Equity Fund | ||||||||||||
June 30, 2017 | $ | 162,111 | — | $ | 162,111 | 2020 | ||||||
June 30, 2018 | 175,125 | — | 175,125 | 2021 | ||||||||
June 30, 2019 | 160,750 | — | 160,750 | 2022 | ||||||||
Total | $ | 497,986 | $ | — | $ | 497,986 | ||||||
Penn Capital Special Situations Small Cap Equity Fund | ||||||||||||
June 30, 2017 | $ | 158,820 | — | $ | 158,820 | 2020 | ||||||
June 30, 2018 | 208,947 | — | 208,947 | 2021 | ||||||||
June 30, 2019 | 187,190 | — | 187,190 | 2022 | ||||||||
Total | $ | 554,957 | $ | — | $ | 554,957 | ||||||
Penn Capital Multi-Credit High Income Fund | ||||||||||||
June 30, 2017 | $ | 218,116 | — | $ | 218,116 | 2020 | ||||||
June 30, 2018 | 226,073 | — | 226,073 | 2021 | ||||||||
June 30, 2019 | 219,408 | (1) | — | 204,979 | 2022 | |||||||
Total | $ | 663,597 | $ | — | $ | 649,168 | ||||||
Penn Capital Defensive Floating Rate Income Fund | ||||||||||||
June 30, 2017 | $ | 261,441 | — | $ | 261,441 | 2020 | ||||||
June 30, 2018 | 281,780 | — | 281,780 | 2021 | ||||||||
June 30, 2019 | 291,034 | — | 291,034 | 2022 | ||||||||
Total | $ | 834,255 | $ | — | $ | 834,255 | ||||||
Penn Capital Defensive Short Duration High Income Fund | ||||||||||||
June 30, 2018 | $ | 164,748 | — | $ | 164,748 | 2021 | ||||||
June 30, 2019 | 200,969 | (1) | — | 198,460 | 2022 | |||||||
Total | $ | 365,717 | $ | — | $ | 363,208 |
Certain Officers and Trustees of the Funds are also Officers of the Advisor.
As of June 30, 2019, greater than 5% of the following PENN Capital Fund was held by another PENN Capital Fund.
(1) | Includes fees waived that are not subject to potential recoupment. |
45
PENN CAPITAL FUNDS TRUST
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2019
Affiliated Fund Held | % Owned | Significant Owner | ||
Penn Capital Defensive Floating Rate Income Fund | 10 | % | Penn Capital Multi-Credit High Income Fund | |
The Trust has engaged Foreside Fund Officers Services, LLC to provide compliance services including the appointment of the Trust’s Chief Compliance Officer and Anti-Money Laundering Officer.
Distribution Agreement
Foreside Fund Services, LLC is the Trust’s distributor and principal underwriter (the Distributor). The Trust has adopted a plan of distribution under Rule 12b-1 of the 1940 Act applicable to the Investor Class. Under the plan, 12b-1 distribution fees at an annual rate of 0.25% of average daily net assets of Investor Class shares are paid to the Distributor or others for distribution and shareholder services. For the fiscal year ended June 30, 2019, there were no distribution fees paid under the plan because the Investor Class shares had not yet been issued as of June 30, 2019.
The Trust has engaged U.S. Bank Global Fund Services to serve as each Fund’s administrator, fund accountant, and transfer agent. The Trust has engaged U.S. Bank, N.A. to serve as each Fund’s custodian.
Shareholder Servicing Plan
The Trust has adopted a Shareholder Servicing Plan on behalf of each Fund’s Investor Class and Institutional Class. Under the plan, each Class can pay for non-distribution related shareholder support services (“service fees”) in an amount up to 0.15% of its average daily net assets. For the fiscal year ended June 30, 2019, there were no service fees incurred by the Investor Class shares because the Investor Class shares had not yet been issued as of June 30, 2019. The amount actually incurred by the Institutional Class shares for the year ended June 30, 2019 on an annualized basis was 0.01% for the Penn Capital Managed Alpha SMID Cap Equity Fund, 0.04% for the Penn Capital Special Situations Small Cap Equity Fund, 0.01% for the Penn Capital Multi-Credit High Income Fund, 0.02% for the Penn Capital Defensive Floating Rate Income Fund, and less than 0.02% for the Penn Capital Defensive Short Duration High Income Fund.
Other Related Party Transactions
The Advisor, affiliates of the Advisor and the officers of the Trust, have made investments in the Funds and accordingly, as shareholders of the Funds, pay a proportionate share of the Funds’ investment advisory fees and other expenses identified in each Fund’s Prospectus.
4. Federal Tax Information
It is each Fund’s intention to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code and distribute all of its taxable income. Accordingly, no provision for federal income taxes is required in the financial statements.
The amount and character of income and capital gain distributions to be paid, if any, are determined in accordance with federal income tax regulations, which may differ from GAAP. These differences are primarily due to differences in the timing of recognition of gains or losses on investments. Permanent book and tax basis differences, if any, may result in reclassifications to distributable earnings and additional paid-in capital.
46
PENN CAPITAL FUNDS TRUST
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2019
The following information is provided on a tax basis as of June 30, 2019:
Penn Capital Managed Alpha SMID Cap Equity Fund | Penn Capital Special Situations Small Cap Equity Fund | Penn Capital Multi-Credit High Income Fund | Penn Capital Defensive Floating Rate Income Fund | Penn Capital Defensive Short Duration High Income Fund | |||||||||||
Cost of investments | $ | 11,435,908 | $ | 9,436,794 | $ | 15,024,309 | $ | 35,971,876 | $ | 33,660,665 | |||||
Gross unrealized appreciation | 2,876,876 | 1,746,800 | 258,041 | 143,934 | 268,212 | ||||||||||
Gross unrealized depreciation | (505,292 | ) | (1,032,419 | ) | (233,975 | ) | (269,925 | ) | (88,332 | ) | |||||
Net unrealized appreciation (depreciation) | 2,371,584 | 714,381 | 24,066 | (125,991 | ) | 179,880 | |||||||||
Undistributed ordinary income | — | — | 19,708 | 71,269 | 14,219 | ||||||||||
Undistributed long-term capital gains | 502,755 | — | — | — | — | ||||||||||
Total distributable earnings | 502,755 | — | 19,708 | 71,269 | 14,219 | ||||||||||
Other accumulated losses | — | (64,203 | ) | (38,594 | ) | (377,101 | ) | (46,129 | ) | ||||||
Total accumulated earnings (losses) | $ | 2,874,339 | $ | 650,178 | $ | 5,180 | $ | (431,823 | ) | $ | 147,970 |
Net investment income and realized gains and losses for federal income tax purposes may differ from that reported on the financial statements because of permanent book-to-tax differences. GAAP requires that permanent differences between financial reporting and tax reporting be reclassified between various components of net assets.
These differences are primarily due to net operating losses. On the Statement of Assets and Liabilities, the following adjustments were made:
Distributable Earnings | Paid-In Capital | |||||
Penn Capital Managed Alpha SMID Cap Equity Fund | $ | 15,230 | $ | (15,230 | ) | |
Penn Capital Special Situations Small Cap Equity Fund | 51,623 | (51,623 | ) | |||
Penn Capital Multi-Credit High Income Fund | (107 | ) | 107 | |||
Penn Capital Defensive Floating Rate Income Fund | — | — | ||||
Penn Capital Defensive Short Duration High Income Fund | — | — |
The Funds intend to utilize capital loss carryforwards to offset future realized capital gains. Capital loss carry forwards available for federal income tax purposes are as follows:
Capital Loss Available Through | Short-Term Capital Loss Amounts | Long-Term Capital Loss Amounts | |||||||
Penn Capital Managed Alpha SMID Cap Equity Fund | Unlimited | $ | — | $ | — | ||||
Penn Capital Special Situations Small Cap Equity Fund | Unlimited | — | — | ||||||
Penn Capital Multi-Credit High Income Fund | Unlimited | — | — | ||||||
Penn Capital Defensive Floating Rate Income Fund | Unlimited | 258,413 | 63,547 | ||||||
Penn Capital Defensive Short Duration High Income Fund | Unlimited | 30,109 | 15,746 |
A regulated investment company may elect for any taxable year to treat any portion of the qualified late year loss as arising on the first day of the next taxable year. Qualified late year losses are certain capital and ordinary losses which occur during the portion of the taxable year subsequent to October 31 and December 31, respectively.
For the fiscal year ended June 30, 2019 the Penn Capital Special Situations Small Cap Equity Fund and the Penn Capital Multi-Credit High Income Fund had post-October losses of $64,203 and $38,408, respectively.
47
PENN CAPITAL FUNDS TRUST
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2019
The character of distributions for tax purposes paid during the fiscal year ended June 30, 2019 is as follows:
Ordinary Income Distributions | Long-Term Capital Gain Distributions | |||||
Penn Capital Managed Alpha SMID Cap Equity Fund | $ | 385,893 | $ | 889,102 | ||
Penn Capital Special Situations Small Cap Equity Fund | 272,601 | 921,899 | ||||
Penn Capital Multi-Credit High Income Fund | 888,097 | 14,027 | ||||
Penn Capital Defensive Floating Rate Income Fund | 1,892,386 | — | ||||
Penn Capital Defensive Short Duration High Income Fund | 856,770 | — |
The character of distributions for tax purposes paid during the fiscal year ended June 30, 2018 is as follows:
Ordinary Income Distributions | Long-Term Capital Gain Distributions | |||||
Penn Capital Managed Alpha SMID Cap Equity Fund | $ | 103,969 | $ | 113,429 | ||
Penn Capital Special Situations Small Cap Equity Fund | 1,149,801 | 1,090,182 | ||||
Penn Capital Multi-Credit High Income Fund | 831,287 | 23,726 | ||||
Penn Capital Defensive Floating Rate Income Fund | 1,345,610 | 7,504 | ||||
Penn Capital Defensive Short Duration High Income Fund | 211,320 | — |
5. Investment Transactions
The cost of security purchases and the proceeds from security sales, other than short-term investments, for the fiscal year ended June 30, 2019, were as follows:
Non-U.S. Government | U.S. Government | |||||||||||
Purchases | Sales | Purchases | Sales | |||||||||
Penn Capital Managed Alpha SMID Cap Equity Fund | $ | 5,515,278 | $ | 6,701,017 | $ | — | $ | — | ||||
Penn Capital Special Situations Small Cap Equity Fund | 14,150,667 | 23,021,997 | — | — | ||||||||
Penn Capital Multi-Credit High Income Fund | 12,805,621 | 11,613,395 | 426,000 | 140,394 | ||||||||
Penn Capital Defensive Floating Rate Income Fund | 24,167,327 | 19,679,550 | 1,105,497 | 375,762 | ||||||||
Penn Capital Defensive Short Duration High Income Fund | 30,075,826 | 9,474,213 | 1,024,088 | 656,343 |
6. Capital Share Transactions
Penn Capital Managed Alpha SMID Cap Equity Fund July 1, 2018 - June 30, 2019 | Penn Capital Special Situations Small Cap Fund July 1, 2018 - June 30, 2019 | Penn Capital Multi-Credit High Income Fund July 1, 2018 - June 30, 2019 | Penn Capital Defensive Floating Rate Income Fund July 1, 2018 - June 30, 2019 | Penn Capital Defensive Short Duration High Income Fund July 1, 2018 - June 30, 2019 | |||||||||||
Institutional Class Shares | |||||||||||||||
Share sold | 18,621 | 123,964 | 166,416 | 1,061,083 | 2,309,946 | ||||||||||
Shares issued in reinvestment of dividends | 109,219 | 116,513 | 90,278 | 138,078 | 86,596 | ||||||||||
Shares redeemed | (95,689 | ) | (975,482 | ) | (104,372 | ) | (585,977 | ) | (142,920 | ) | |||||
Net increase (decrease) | 32,151 | (735,005 | ) | 152,322 | 613,184 | 2,253,622 | |||||||||
Institutional Amount | |||||||||||||||
Shares sold | 224,305 | 1,418,042 | 1,638,773 | 10,672,029 | 22,772,480 | ||||||||||
Shares issued in reinvestment of dividends | 1,251,646 | 1,167,457 | 895,794 | 1,380,000 | 853,180 | ||||||||||
Shares redeemed | (1,230,612 | ) | (10,380,725 | ) | (1,045,925 | ) | (5,804,117 | ) | (1,399,351 | ) | |||||
Net increase (decrease) | $ | 245,339 | $ | (7,795,226 | ) | $ | 1,488,642 | $ | 6,247,912 | $ | 22,226,309 |
48
PENN CAPITAL FUNDS TRUST
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2019
7. Transactions with Affiliates
The following issuers are affiliated with the Funds; that is, the Adviser had control of 5% or more of the outstanding voting securities during the fiscal year ended June 30, 2019. As defined in Section (2)(a)(3) of the Investment Company Act of 1940; such issues are:
July 1, 2018 | Additions | Reductions | June 30, 2019 | Dividend | Unrealized | Realized | June 30, 2019 | |||||||||||||||||||||||||||||
Issuer Name | Share Balance | Cost | Share Balance | Cost | Share Balance | Cost | Share Balance | Income | Appreciation (Depreciation) Change | Gain/(Loss) | Value | Cost | ||||||||||||||||||||||||
Penn Capital Multi-Credit High Income Fund | ||||||||||||||||||||||||||||||||||||
Penn Capital Defensive Floating Rate Income Fund | 248,153 | $ | 2,520,274 | 126,637 | $ | 1,278,027 | — | $ | — | 374,790 | $ | 167,917 | $ | (45,236 | ) | $ | — | $ | 3,736,653 | $ | 3,798,301 | |||||||||||||||
$ | 2,520,274 | $ | 1,278,027 | $ | — | $ | 167,917 | $ | (45,236 | ) | $ | — | $ | 3,736,653 | $ | 3,798,301 | ||||||||||||||||||||
Penn Capital Defensive Short Duration High Income Fund | ||||||||||||||||||||||||||||||||||||
Penn Capital Defensive Floating Rate Income Fund | 183,599 | $ | 1,865,035 | 71,092 | $ | 716,222 | (176,589 | ) | $ | (1,794,238 | ) | 78,102 | $ | 76,222 | $ | 4,170 | $ | (19,238 | ) | $ | 778,673 | $ | 787,019 | |||||||||||||
$ | 1,865,035 | $ | 716,222 | $ | (1,794,238 | ) | $ | 76,222 | $ | 4,170 | $ | (19,238 | ) | $ | 778,673 | $ | 787,019 |
8. Credit Risk and Asset Concentration
Small- and mid-capitalization companies may not have the size, resources and other assets of large capitalization companies. As a result, the securities of small- and mid-capitalization companies may be subject to greater market risks and fluctuations in value than large capitalization companies or may not correspond to changes in the stock market in general. In addition, small- and mid-capitalization companies may be particularly affected by interest rate increases, as they may find it more difficult to borrow money to continue or expand operations, or may have difficulty in repaying any loans.
High yield securities and unrated securities of similar credit quality have speculative characteristics and involve greater volatility of price and yield, greater of liquidity risk, and generally reflect a greater possibility of an adverse change in financial condition that could affect an issuer’s ability to honor its obligations.
There are a number of risks associated with an investment in bank loans, including credit risk, interest rate risk, liquidity risk and prepayment risk. Lack of an active trading market, restrictions on resale, irregular trading activity, wide bid/ask spreads and extended trade settlement periods may impair the Fund’s ability to sell bank loans within its desired time frame or at an acceptable price and its ability to accurately value existing and prospective investments. Extended trade settlement periods may result in cash not being immediately available to the Fund. As a result of such illiquidity, the Fund may have to sell other investments or engage in borrowing transactions to raise cash to meet its obligations.
9. Line of Credit
PENN Capital Funds Trust has a $10,000,000 uncommitted, unsecured, umbrella 364-day line of credit, for temporary purposes, including to meet redemption requests. The interest rate as of June 30, 2019 was 5.50%. During the fiscal year ended June 30, 2019, Penn Capital Special Situations Small Cap Equity Fund’s maximum borrowing was $401,000 and average borrowing was $3,279. This borrowing resulted in interest expenses of $266. The Penn Capital Managed Alpha SMID Cap Equity Fund, Penn Capital Multi-Credit High Income Fund, Penn Capital Defensive Floating Rate Income Fund and Penn Capital Defensive Short Duration High Income Fund did not use the credit line during the fiscal year. At the end of the fiscal year, no Fund had any outstanding borrowings.
49
PENN CAPITAL FUNDS TRUST
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2019
10. Recent Accounting Pronouncement
In August 2018, FASB issued ASU 2018-13, Fair Value Measurement (Topic 820):Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). The primary focus of ASU 2018-13 is to improve the effectiveness of the disclosure requirements for fair value measurements. The changes affect all companies that are required to include fair value measurement disclosures. In general, the amendments in ASU 2018-13 are effective for all entities for fiscal years and interim periods within those fiscal years, beginning after December 15, 2019. An entity is permitted to early adopt the removed or modified disclosures upon the issuance of ASU 2018-13 and may delay adoption of the additional disclosures, which are required for public companies only, until their effective date. Management has chosen to early adopt the modified disclosures for the year ended June 30, 2019.
In March 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2017-08, Receivables — Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. The amendments in the ASU shorten the amortization period for certain callable debt securities, held at a premium, to be amortized to the earliest call date. The ASU does not require an accounting change for securities held at a discount; which continues to be amortized to maturity. The ASU is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018. Management is currently evaluating the impact, if any, of applying this provision.
11. Concentration Risks
The Advisor and its employees collectively have beneficial ownership, either directly or indirectly, of more than 20% of each of the Funds as of June 30, 2019. In addition to the Advisor, one or more individual investors own more than 10% of the Penn Capital Managed Alpha SMID Cap Equity Fund and the Penn Capital Special Situations Small Cap Equity Fund as of June 30, 2019. To the extent multiple investors in the Funds rely on the advice of a common investment advisor the Funds may have the risk of a concentrated investor base.
12. Subsequent Events
Except as disclosed above, as of the date the financial statements were available to be issued, Management has determined that no additional material events or transactions occurred that would require recognition or disclosure in the Funds’ financial statements.
50
PENN CAPITAL FUNDS TRUST
ADDITIONAL INFORMATION
JUNE 30, 2019 (UNAUDITED)
Shareholder Notification of Federal Tax Status
For the fiscal year ended June 30, 2019, certain dividends paid by the Funds may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The percentage of dividends declared from ordinary income designated as qualified dividend income was as follows:
Penn Capital Managed Alpha SMID Cap Equity Fund | 18.79 | % | |
Penn Capital Special Situations Small Cap Equity Fund | 13.92 | % | |
Penn Capital Multi-Credit High Income Fund | 0.00 | % | |
Penn Capital Defensive Floating Rate Income Fund | 0.00 | % | |
Penn Capital Defensive Short Duration High Income Fund | 0.00 | % |
For corporate shareholders, the percentage of ordinary income distributions qualifying for the corporate dividends received deduction for the fiscal year ended June 30, 2019 was as follows:
Penn Capital Managed Alpha SMID Cap Equity Fund | 18.23 | % | |
Penn Capital Special Situations Small Cap Equity Fund | 13.48 | % | |
Penn Capital Multi-Credit High Income Fund | 0.00 | % | |
Penn Capital Defensive Floating Rate Income Fund | 0.00 | % | |
Penn Capital Defensive Short Duration High Income Fund | 0.00 | % |
The percentage of taxable ordinary income distributions designated as short-term capital gain distributions under Internal Revenue Section 871(k)(2)(c) for the fiscal year ended June 30, 2019 was as follows:
Penn Capital Managed Alpha SMID Cap Equity Fund | 100.00 | % | |
Penn Capital Special Situations Small Cap Equity Fund | 100.00 | % | |
Penn Capital Multi-Credit High Income Fund | 2.53 | % | |
Penn Capital Defensive Floating Rate Income Fund | 0.00 | % | |
Penn Capital Defensive Short Duration High Income Fund | 0.00 | % |
Trustee and Officer Compensation
The Trust does not compensate any of its Trustees who are interested persons nor any of its officers. For the fiscal year ended June 30, 2019, the aggregate compensation paid by the Trust to the independent Trustees was $36,000. The Trust did not pay any special compensation to any of its Trustees or officers. The Statement of Additional Information includes additional information about the Trustees and is available without charge, upon request, by calling 844-302-7366.
Proxy Voting Policies
A description of the policies and procedures that each Fund uses to determine how to vote proxies relating to portfolio securities owned by that Fund is available: (1) without charge, upon request, by calling 844-302-7366; (2) in the Statement of Additional Information on the Trust’s website www.penncapitalfunds.com; and (3) on the SEC’s website at www.sec.gov. Information about how the Funds voted proxies relating to portfolio securities during the most recent fiscal year ended June 30, 2019 may be obtained (1) without charge, upon request, by calling 844-302-7366 and (2) on the SEC’s website at www.sec.gov.
Form N-Q
Each Fund files its complete schedule of portfolio holdings for the first and third quarters of each fiscal year with the SEC on Form N-Q. Each Fund’s Forms N-Q are available without charge by visiting the SEC’s website at www.sec.gov.
Householding
In an effort to decrease costs, the Funds intend to reduce the number of duplicate prospectuses, annual and semi-annual reports, proxy statements and other similar documents you receive by sending only one copy of each to those addresses shared by two or more accounts and to shareholders that the transfer agent reasonably believes are from the same family or household. Once implemented, if you would like to discontinue householding for your accounts, please call (844) 302-7366 to request individual copies of these documents. The transfer agent will begin sending individual copies thirty days after receiving your request to stop householding. This policy does not apply to account statements.
51
Report of Independent Registered Public Accounting Firm
To the Shareholders of the Funds and Board of Trustees ofPENN Capital Funds Trust:
Opinion on the Financial Statements
We have audited the accompanying statements of assets and liabilities of Penn Capital Managed Alpha SMID Cap Equity Fund, Penn Capital Special Situations Small Cap Equity Fund, Penn Capital Multi-Credit High Income Fund, Penn Capital Defensive Floating Rate Income Fund and Penn Capital Defensive Short Duration High Income Fund, each a series of the PENN Capital Funds Trust, (collectively, the “Funds”), including the schedules of investments as of June 30, 2019, the related statements of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, except for Penn Capital Defensive Short Duration High Income Fund which is for the year ended June 30, 2019 and for the period from July 17, 2017 (commencement of operations) to June 30, 2018, and the related notes (collectively, the financial statements) and the financial highlights for each of the years or periods indicated therein. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Funds as of June 30, 2019, the results of their operations for the year then ended, the changes in their net assets for each of the years in the two-year period then ended, except for Penn Capital Defensive Short Duration High Income Fund which is for the year ended June 30, 2019 and for the period from July 17, 2017 (commencement of operations) to June 30, 2018, and the financial highlights for each of the years or periods indicated therein, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights 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 and financial highlights, 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 and financial highlights. Such procedures also included confirmation of securities owned as of June 30, 2019, by correspondence with custodians, agent banks, and brokers or other appropriate auditing procedures. 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 and financial highlights. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more PENN Capital Management Inc., investment companies since 2015.
Philadelphia, Pennsylvania
August 28, 2019
52
PENN CAPITAL FUNDS TRUST
TRUSTEES AND OFFICERS (UNAUDITED)
Name, Address and Year of Birth | Position with the Trust | Term of Office and Length of Time Served | Principal Occupation During the Past Five Years | Number of Portfolios in Fund Complex Overseen by Trustee | Other Directorship/ Trusteeship Positions held by Trustee During the Past 5 Years |
Independent Trustees | |||||
Dennis S. Hudson, III c/o Penn Capital Management Company, Inc. 1200 Intrepid Avenue, Suite 400 Philadelphia, Pennsylvania 19112 Year of Birth: 1955 | Trustee | Since 2015 | Chief Executive Officer (since 1998) and Chairman (since 2005), Seacoast Banking Corporation of Florida; Chairman and Chief Executive Officer, Seacoast National Bank (since 1992). | 7 | Chesapeake Utilities Corporation (since 2006). Martin Health System (medical) (since 2017). |
John R. Schwab c/o Penn Capital Management Company, Inc. 1200 Intrepid Avenue, Suite 400 Philadelphia, Pennsylvania 19112 Year of Birth: 1967 | Trustee | Since 2015 | Chief Financial Officer, Flagship Credit Corp. (since 2015); Executive Vice President and Chief Financial Officer, The J.G. Wentworth Company (from 2013 to 2015). | 7 | None |
Interested Trustee | |||||
Richard A. Hocker* c/o Penn Capital Management Company, Inc. 1200 Intrepid Avenue, Suite 400 Philadelphia, Pennsylvania 19112 Year of Birth: 1946 | Trustee, President and Chairman | Since 2014 | Founder, Chief Investment Officer and Chief Executive Officer, Penn Capital Management Company, Inc. (since 1987). | 7 | Ethel Mae Hocker Foundation (Charitable) (since 2005) |
53
PENN CAPITAL FUNDS TRUST
TRUSTEES AND OFFICERS (UNAUDITED)
Name, Address and Year of Birth | Position with the Trust | Term of Office and Length of Time Served | Principal Occupations During the Past Five Years |
Officers of the Trust** | |||
Gerald McBride c/o Penn Capital Management Company, Inc. 1200 Intrepid Avenue, Suite 400 Philadelphia, Pennsylvania 19112 Year of Birth: 1963 | Treasurer | Since 2014 | Chief Operating Officer and Chief Financial Officer, Penn Capital Management Company, Inc. (since 2007). |
Lisa L.B. Matson c/o Penn Capital Management Company, Inc. 1200 Intrepid Avenue, Suite 400 Philadelphia, Pennsylvania 19112 Year of Birth: 1970 | Secretary | Since 2014 | General Counsel, Penn Capital Management Company, Inc. (since 2014); Senior Counsel and Assistant Vice President, Lincoln Financial Group, Inc., and Assistant Secretary, Lincoln Investment Advisors, Corp., Lincoln Variable Insurance Products Trust and Lincoln Advisors Trust (from 2012 to 2014). |
Jack P. Huntington 10 High Street Suite 302 Boston, MA 02110 Year of Birth: 1970 | Chief Compliance Officer | Since 2015 | Fund Chief Compliance Officer, Foreside Fund Officer Services, LLC (since 2015); Senior Vice President of Regulatory Administration, Citi Fund Services, Ohio, Inc. (from 2008 to 2015). |
* | Richard A. Hocker is a Trustee who is an “interested person” of the Trust as defined in the 1940 Act because he is an officer of the Advisor and certain of its affiliates. |
** | Each Officer serves at the pleasure of the Board. |
54
PENN CAPITAL FUNDS TRUST
PRIVACY POLICY
FACTS | WHAT DOES THE PENN CAPITAL FUNDS TRUST DO WITH YOUR PERSONAL INFORMATION? | ||
Why? | Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do. | ||
What? | The types of personal information we collect and share depend on the product or service you have with us. The information can include: • Social Security number • Account balances and account transactions • Assets and transaction history When you are no longer our client, we continue to share your information as described in this notice. | ||
How? | All financial companies need to share clients’ personal information to run the everyday business. In the section below, we list the reasons financial companies can share their clients’ personal information; the reasons PENN chooses to share; and whether you can limit this sharing. | ||
Reasons we can share your personal information | Does Penn share? | Can you limit this sharing? | |
For everyday business purposes - such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus | Yes | No | |
For marketing purposes - to offer our products and services to you | No | No | |
For joint marketing with other financial companies | No | No | |
For affiliates’ everyday business purposes - information about transaction(s) and experiences | Yes | No | |
For affiliates’ everyday business purposes - information about your creditworthiness | No | No | |
For nonaffiliates to market to you | No | No |
Questions? | Call 215-302-1500 or go to www.penncapital.com |
55
PENN CAPITAL FUNDS TRUST
PRIVACY POLICY
Who we are | |
Who is providing this notice? | Penn Capital Management Company, Inc. and its affiliates (“Penn”) |
What we do | |
How does Penn protect my personal information? | To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer and secured files and buildings. |
How does Penn collect my personal information? | We collect your personal information, for example, when you • Open an account or deposit money • Provide information on client questionnaires |
Why can’t I limit all sharing? | Federal law gives you the right to limit only • sharing for affiliates everyday business purposes - information about your creditworthiness • affiliates from using your information to market to you • sharing for nonaffiliates to market to you State laws and individual companies may give you additional rights to limit sharing. |
Definitions | |
Affiliates | Companies related by common ownership or control. They can be financial or nonfinancial companies • PENN Capital Funds Group LLC • PENN Capital Funds Trust • Penn Capital Management Company, Inc. |
Nonaffiliates | Companies not related by common ownership or control. They can be financial or nonfinancial companies • Penn does not share information with nonaffiliates |
Joint marketing | A formal agreement between non affiliated companies that together market financial products or services to you • Penn does not have joint marketing partners |
Other important information | |
This notice replaces all previous notices of our consumer privacy policy, and may be amended from time to time. Penn will inform you of updates or changes as required by law. |
56
Board of Trustees
Dennis S. Hudson, III
John R. Schwab
Richard A. Hocker
Investment Advisor
Penn Capital Management Company, Inc.
Navy Yard Corporate Center
1200 Intrepid Avenue, Suite 400
Philadelphia, Pennsylvania 19112
Legal Counsel
Stradley Ronon Stevens & Young, LLP
2005 Market Street, Suite 2600
Philadelphia, Pennsylvania 19103
Custodian
U.S. Bank, N.A.
1555 N. Rivercenter Drive, Suite 302
Milwaukee, WI 53212
Distributor
Foreside Fund Services, LLC
Three Canal Plaza
Portland, ME 04101
Administrator, Transfer Agent
and Dividend Disbursing Agent
U.S. Bancorp Fund Services, LLC
doing business as U.S. Bank Global Fund Services
615 East Michigan Street
Milwaukee, WI 53202
Shareholder/Investor Information
1.844.302.PENN (7366)
www.penncapitalfunds.com
BEFORE INVESTING YOU SHOULD CAREFULLY CONSIDER THE FUND’S INVESTMENT OBJECTIVES, RISKS, CHARGES AND EXPENSES. THIS AND OTHER RELEVANT INFORMATION CAN BE FOUND IN THE PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION, COPIES OF WHICH MAY BE OBTAINED BY CALLING (844) 302-PENN (7366) OR BY VISITING WWW.PENNCAPITALFUNDS.COM. PLEASE READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
Item 2. Code of Ethics.
The registrant has adopted a code of ethics that applies to the registrant’s principal executive officer and principal financial officer. The registrant has not made any substantive amendments to its code of ethics during the period covered by this report. The registrant has not granted any waivers from any provisions of the code of ethics during the period covered by this report.
A copy of the registrant’s Code of Ethics is filed herewith.
Item 3. Audit Committee Financial Expert.
The registrant’s board of trustees has determined that there is at least one audit committee financial expert serving on its audit committee. John R. Schwab is the “audit committee financial expert” and is considered to be “independent” as each term is defined in Item 3 of Form N-CSR.
Item 4. Principal Accountant Fees and Services.
The registrant has engaged its principal accountant to perform audit services, audit-related services, tax services and other services during the past two fiscal years. “Audit services” refer to performing an audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years. “Audit-related services” refer to the assurance and related services by the principal accountant that are reasonably related to the performance of the audit. “Tax services” refer to professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning. There were no “Other services” provided by the principal accountant. The following table details the aggregate fees billed or expected to be billed for each of the last two fiscal years for audit fees, audit-related fees, tax fees and other fees by the principal accountant.
FYE 6/30/2019 | FYE 6/30/2018 | |||||
Audit Fees | $ | 120,000 | $ | 120,000 | ||
Audit-Related Fees | None | None | ||||
Tax Fees | $ | 25,000 | 23,875 | |||
All Other Fees | None | None |
The audit committee has adopted pre-approval policies and procedures that require the audit committee to pre-approve all audit and non-audit services of the registrant, including services provided to any entity affiliated with the registrant.
The percentage of fees billed KPMG applicable to non-audit services pursuant to waiver of pre-approval requirement were as follows:
FYE 6/30/2019 | FYE 6/30/2018 | |||||
Audit-Related Fees | 0 | % | 0 | % | ||
Tax Fees | 0 | % | 0 | % | ||
All Other Fees | 0 | % | 0 | % |
All of the principal accountant’s hours spent on auditing the registrant’s financial statements were attributed to work performed by full-time permanent employees of the principal accountant. (If more than 50 percent of the accountant’s hours were spent to audit the registrant's financial statements for the most recent fiscal year, state how many hours were attributed to work performed by persons other than the principal accountant's full-time, permanent employees.)
The following table indicates the non-audit fees billed or expected to be billed by the registrant’s accountant for services to the registrant and to the registrant’s investment adviser (and any other controlling entity, etc.—not sub-adviser) for the last two years. The audit committee of the board of trustees/directors has considered whether the provision of non-audit services that were rendered to the registrant's investment adviser is compatible with maintaining the principal accountant's independence and has concluded that the provision of such non-audit services by the accountant has not compromised the accountant’s independence.
Non-Audit Related Fees | FYE 6/30/2019 | FYE 6/30/2018 | ||||
Registrant | None | None | ||||
Registrant’s Investment Adviser | None | None |
Item 5. Audit Committee of Listed Registrants.
Not applicable to registrants who are not listed issuers (as defined in Rule 10A-3 under the Securities Exchange Act of 1934).
Item 6. Investments.
(a) | Schedule of Investments is included as part of the report to shareholders filed under Item 1 of this Form. |
(b) | Not Applicable |
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable to open-end investment companies.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable to open-end investment companies.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable to open-end investment companies.
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board of trustees.
Item 11. Controls and Procedures.
(a) | The Registrant’s President and Treasurer have reviewed the Registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”)) as of a date within 90 days of the filing of this report, as required by Rule 30a-3(b) under the Act and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934. Based on their review, such officers have concluded that the disclosure controls and procedures are effective in ensuring that information required to be disclosed in this report is appropriately recorded, processed, summarized and reported and made known to them by others within the Registrant and by the Registrant’s service provider. |
(b) | There were no changes in the Registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant's internal control over financial reporting. |
Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
Not applicable to open-end investment companies.
Item 13. Exhibits.
(2) A separate certification for each principal executive officer and principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith. |
(3) Any written solicitation to purchase securities under Rule 23c-1 under the Act sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons. Not applicable to open-end investment companies. |
(b) | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Furnished 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.
(Registrant) | PENN Capital Funds Trust |
By (Signature and Title)* | /s/ Richard A. Hocker |
Richard A. Hocker, President | |
Date | 8/27/19 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By (Signature and Title)* | /s/ Richard A. Hocker |
Richard A. Hocker, President | |
Date | 8/27/19 |
By (Signature and Title)* | /s/ Gerald McBride |
Gerald McBride, Treasurer | |
Date | 8/27/19 |
* Print the name and title of each signing officer under his or her signature.