As filed with the Securities and Exchange Commission on March ___, 2017
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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)
(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, 2017
Date of reporting period: December 31, 2016
Item 1. Reports to Stockholders.
SEMIANNUAL REPORT
DECEMBER 31, 2016
PENN CAPITAL SMALL/MID CAP EQUITY FUND
PENN CAPITAL SMALL CAP EQUITY FUND
PENN CAPITAL OPPORTUNISTIC HIGH YIELD FUND
PENN CAPITAL SENIOR FLOATING RATE INCOME FUND
TABLE OF CONTENTS
2 | |
6 | |
Fund | Schedules of Investments |
10 | |
12 | |
14 | |
19 | |
22 | |
23 | |
24 | |
26 | |
27 | |
36 |
This chart assumes an initial gross investment of $10,000 made on December 1, 2015. 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 December 31, 2016.
Average Annual Total Returns for the Period Ended December 31, 2016 | One Year | Since Inception(1) | |||
Penn Capital Small/Mid Cap Equity Fund | |||||
Institutional Class Shares | 16.98 | % | 10.01 | % | |
Russell 2500™ Index | 17.59 | % | 11.74 | %(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. |
2
PENN CAPITAL SMALL CAP EQUITY FUND
FUND SUMMARY (UNAUDITED)
FUND SUMMARY (UNAUDITED)
This chart assumes an initial gross investment of $10,000 made on December 18, 2015. 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 December 31, 2016.
Average Annual Total Returns for the Period Ended December 31, 2016 | One Year | Since Inception(1) | |||
Penn Capital Small Cap Equity Fund | |||||
Institutional Class Shares | 20.60 | % | 20.57 | % | |
Russell 2000™ Index | 21.31 | % | 20.61 | %(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. |
3
PENN CAPITAL OPPORTUNISTIC HIGH YIELD FUND
FUND SUMMARY (UNAUDITED)
This chart assumes an initial gross investment of $10,000 made on December 1, 2015. 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 December 31, 2016.
Average Annual Total Returns for the Period Ended December 31, 2016 | One Year | Since Inception(1) | |||
Penn Capital Opportunistic High Yield Fund | |||||
Institutional Class Shares | 15.23 | % | 10.89 | % | |
BofA Merrill Lynch High Yield Constrained Index | 17.49 | % | 14.46 | %(2) |
(1) | Inception date is 12/1/15. |
(2) | The return shown for the BofA Merrill Lynch High Yied Constrained Index is from the inception date of the Institutional Class shares. |
4
PENN CAPITAL SENIOR FLOATING RATE INCOME FUND
FUND SUMMARY (UNAUDITED)
FUND SUMMARY (UNAUDITED)
This chart assumes an initial gross investment of $10,000 made on December 1, 2015. 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 December 31, 2016.
Average Annual Total Returns for the Period Ended December 31, 2016 | One Year | Since Inception(1) | |||
Penn Capital Senior Floating Rate Income Fund | |||||
Institutional Class Shares | 6.90 | % | 5.56 | % | |
Credit Suisse Institutional Leveraged Loan Index | 7.65 | % | 7.26 | %(2) |
(1) | Inception date is 12/1/15. |
(2) | The return shown for the Credit Suisse Institutional Leveraged Loan Index is from the inception date of the Institutional Class shares. |
5
PENN CAPITAL FUNDS TRUST
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
Cost in Dollars of a $1,000 Investment in Penn Capital Small/Mid Cap Equity Fund (Unaudited)
The example below is intended to describe the fees and expenses borne by shareholders during the six-month period from July 1, 2016 to December 31, 2016, 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 July 1, 2016 to December 31, 2016.
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 December 31, 2016. 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 7/1/16 | Ending Account Value (Based on Actual Returns and Expenses) 12/31/16 | Expenses Paid During Period2 | Ending Account Value (Based on Hypothetical 5% Annualized Return and Actual Expenses) 12/31/16 | Expenses Paid During Period2 | ||||||||||||||||
Institutional Class Shares | $ | 1,000.00 | $ | 1,150.40 | $ | 5.75 | $ | 1,019.86 | $ | 5.40 |
1. | No information is provided for Investor Class shares because shares of that class had not yet been issued as of December 31, 2016. |
2. | Expenses are equal to the Fund’s annualized expense ratio, net of waivers (1.06% for the Institutional Class), multiplied by the average account value over the period, divided by 365 and multiplied by 184 for the Institutional Class (to reflect the six-month period). The table above represents the actual expenses incurred during the six-month period. |
6
PENN CAPITAL FUNDS TRUST
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
FOR THE SIX MONTH PERIOD FROM JULY 1, 2016 TO DECEMBER 31, 2016
Cost in Dollars of a $1,000 Investment in Penn Capital 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 July 1, 2016 to December 31, 2016, 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 July 1, 2016 to December 31, 2016.
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 December 31, 2016. 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 7/1/16 | Ending Account Value (Based on Actual Returns and Expenses) 12/31/16 | Expenses Paid During Period2 | Ending Account Value (Based on Hypothetical 5% Annualized Return and Actual Expenses) 12/31/16 | Expenses Paid During Period2 | ||||||||||||||||
Institutional Class Shares | $ | 1,000.00 | $ | 1,176.80 | $ | 5.98 | $ | 1,019.71 | $ | 5.55 |
1. | No information is provided for Investor Class shares because shares of that class had not yet been issued as of December 31, 2016. | |
2. | Expenses are equal to the Fund’s annualized expense ratio, net of waivers (1.09% for the Institutional Class), multiplied by the average account value over the period, divided by 365 and multiplied by 184 for the Institutional Class (to reflect the six-month period). The table above represents the actual expenses incurred during the six-month period. |
7
PENN CAPITAL FUNDS TRUST
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
FOR THE SIX MONTH PERIOD FROM JULY 1, 2016 TO DECEMBER 31, 2016
Cost in Dollars of a $1,000 Investment in Penn Capital Opportunistic High Yield Fund (Unaudited)
The example below is intended to describe the fees and expenses borne by shareholders during the six-month period from July 1, 2016 to December 31, 2016, 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 July 1, 2016 to December 31, 2016.
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 December 31, 2016. 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 7/1/16 | Ending Account Value (Based on Actual Returns and Expenses) 12/31/16 | Expenses Paid During Period2 | Ending Account Value (Based on Hypothetical 5% Annualized Return and Actual Expenses) 12/31/16 | Expenses Paid During Period2 | |||||||||||||||
Institutional Class Shares | $ | 1,000.00 | $ | 1,089.70 | $ | 3.79 | $ | 1,021.58 | $ | 3.67 |
1. | No information is provided for Investor Class shares because shares of that class had not yet been issued as of December 31, 2016. | |
2. | Expenses are equal to the Fund’s annualized expense ratio, net of waivers (0.72% for the Institutional Class), multiplied by the average account value over the period, divided by 365 and multiplied by 184 for the Institutional Class (to reflect the six-month period). The table above represents the actual expenses incurred during the six-month period. |
8
PENN CAPITAL FUNDS TRUST
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
FOR THE SIX MONTH PERIOD FROM JULY 1, 2016 TO DECEMBER 31, 2016
Cost in Dollars of a $1,000 Investment in Penn Capital Senior 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 July 1, 2016 to December 31, 2016, 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 July 1, 2016 to December 31, 2016.
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 December 31, 2016. 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 7/1/16 | Ending Account Value (Based on Actual Returns and Expenses) 12/31/16 | Expenses Paid During Period2 | Ending Account Value (Based on Hypothetical 5% Annualized Return and Actual Expenses) 12/31/16 | Expenses Paid During Period2 | |||||||||||||||
Institutional Class Shares | $ | 1,000.00 | $ | 1,039.70 | $ | 3.80 | $ | 1,021.48 | $ | 3.77 |
1. | No information is provided for Investor Class shares because shares of that class had not yet been issued as of December 31, 2016. | |
2. | Expenses are equal to the Fund’s annualized expense ratio, net of waivers (0.74% for the Institutional Class), multiplied by the average account value over the period, divided by 365 and multiplied by 184 for the Institutional Class (to reflect the six-month period). The table above represents the actual expenses incurred during the six-month period. |
9
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2016 (UNAUDITED)
Shares | Value | |||||||
Common Stocks: 94.4% | ||||||||
Air Freight & Logistics: 1.6% | ||||||||
XPO Logistics, Inc.(a) | 3,794 | $ | 163,749 | |||||
Airlines: 1.5% | ||||||||
Spirit Airlines, Inc.(a) | 2,610 | 151,015 | ||||||
Banks: 9.3% | ||||||||
BankUnited, Inc. | 4,749 | 178,990 | ||||||
BNC Bancorp | 7,070 | 225,533 | ||||||
BOK Financial Corp. | 929 | 77,144 | ||||||
Chemical Financial Corp. | 2,429 | 131,579 | ||||||
PacWest Bancorp | 3,132 | 170,506 | ||||||
Western Alliance Bancorp(a) | 3,510 | 170,972 | ||||||
954,724 | ||||||||
Building Products: 1.3% | ||||||||
A. O. Smith Water Products Co. | 2,802 | 132,675 | ||||||
Capital Markets: 1.7% | ||||||||
Affiliated Managers Group, Inc.(a) | 1,199 | 174,215 | ||||||
Chemicals: 1.0% | ||||||||
Valvoline, Inc. | 4,910 | 105,565 | ||||||
Commercial Services & Supplies: 1.6% | ||||||||
Mobile Mini, Inc. | 5,282 | 159,781 | ||||||
Communications Equipment: 1.0% | ||||||||
CommScope Holding Co, Inc.(a) | 2,798 | 104,086 | ||||||
Construction Materials: 3.3% | ||||||||
Headwaters, Inc.(a) | 5,209 | 122,516 | ||||||
Summit Materials, Inc.(a) | 9,054 | 215,403 | ||||||
337,919 | ||||||||
Consumer Finance: 2.0% | ||||||||
Sallie Mae Corp.(a) | 18,998 | 209,358 | ||||||
Containers & Packaging: 1.6% | ||||||||
Berry Plastics Group, Inc.(a) | 3,426 | 166,949 | ||||||
Diversified Financial Services: 1.3% | ||||||||
FNF Group | 3,944 | 133,938 | ||||||
Diversified Telecommunication Services: 1.7% | ||||||||
8x8, Inc.(a) | 11,996 | 171,543 | ||||||
Electronic Equipment, Instruments & Components: 1.6% | ||||||||
Mercury Systems, Inc.(a) | 5,356 | 161,858 | ||||||
Energy Equipment & Services: 3.6% | ||||||||
Superior Energy Services, Inc. | 10,739 | 181,274 | ||||||
U.S. Silica Holdings, Inc. | 3,231 | 183,133 | ||||||
364,407 | ||||||||
Health Care Equipment & Supplies: 1.5% | ||||||||
NuVasive, Inc.(a) | 2,261 | 152,301 | ||||||
Health Care Providers & Services: 2.3% | ||||||||
Acadia Healthcare Co., Inc.(a) | 3,522 | 116,578 | ||||||
WellCare Health Plans, Inc.(a) | 888 | 121,727 | ||||||
238,305 |
Shares | Value | |||||||
Hotels, Restaurants & Leisure: 7.6% | ||||||||
Boyd Gaming Corp.(a) | 4,252 | $ | 85,763 | |||||
Fiesta Restaurant Group, Inc.(a) | 4,490 | 134,026 | ||||||
Jack In The Box, Inc. | 1,170 | 130,619 | ||||||
La Quinta Holdings, Inc.(a) | 7,656 | 108,792 | ||||||
Red Rock Resorts, Inc. | 7,482 | 173,508 | ||||||
SeaWorld Entertainment, Inc. | 7,555 | 143,016 | ||||||
775,724 | ||||||||
Household Durables: 3.3% | ||||||||
CalAtlantic Group, Inc. | 5,346 | 181,818 | ||||||
TopBuild Corp.(a) | 4,412 | 157,067 | ||||||
338,885 | ||||||||
Industrial Conglomerates: 1.0% | ||||||||
Carlisle Companies, Inc. | 932 | 102,790 | ||||||
Insurance: 1.3% | ||||||||
Arch Capital Group Ltd.(a) | 1,576 | 135,993 | ||||||
Internet Software & Services: 3.3% | ||||||||
GoDaddy, Inc.(a) | 4,811 | 168,144 | ||||||
Match Group, Inc.(a) | 9,878 | 168,914 | ||||||
337,058 | ||||||||
Leisure Products: 1.3% | ||||||||
Brunswick Corp. | 2,518 | 137,332 | ||||||
Life Sciences Tools & Services: 1.4% | ||||||||
ICON plc(a) | 1,906 | 143,331 | ||||||
Machinery: 1.9% | ||||||||
Oshkosh Corp. | 2,985 | 192,861 | ||||||
Media: 7.3% | ||||||||
E. W. Scripps Co.(a) | 8,309 | 160,613 | ||||||
Gray Television, Inc.(a) | 11,201 | 121,531 | ||||||
Lions Gate Entertainment Corp.(a) | 4,556 | 117,180 | ||||||
Live Nation Entertainment, Inc.(a) | 4,510 | 119,966 | ||||||
Media General, Inc.(a) | 2,576 | 48,506 | ||||||
Nexstar Broadcasting Group, Inc. | 2,893 | 183,127 | ||||||
750,923 | ||||||||
Multiline Retail: 1.5% | ||||||||
Burlington Stores, Inc.(a) | 1,851 | 156,872 | ||||||
Oil, Gas & Consumable Fuels: 7.4% | ||||||||
Carrizo Oil & Gas, Inc.(a) | 4,393 | 164,079 | ||||||
Gulfport Energy Corp.(a) | 5,247 | 113,545 | ||||||
Newfield Exploration Co.(a) | 3,055 | 123,727 | ||||||
Oasis Petroleum, Inc.(a) | 3,305 | 50,038 | ||||||
Rice Energy, Inc.(a) | 7,061 | 150,752 | ||||||
WPX Energy, Inc.(a) | 10,439 | 152,096 | ||||||
754,237 | ||||||||
Pharmaceuticals: 2.6% | ||||||||
Akorn, Inc.(a) | 5,303 | 115,765 | ||||||
Depomed, Inc.(a) | 8,168 | 147,187 | ||||||
262,952 |
The accompanying notes are an integral part of the financial statements.
10
PENN CAPITAL SMALL/MID CAP EQUITY FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2016 (UNAUDITED)
Shares | Value | |||||||
Professional Services: 1.5% | ||||||||
TransUnion(a) | 5,093 | $ | 157,526 | |||||
Road & Rail: 1.5% | ||||||||
Genesee & Wyoming, Inc.(a) | 2,255 | 156,520 | ||||||
Semiconductors & Semiconductor Equipment: 3.7% | ||||||||
Cavium, Inc.(a) | 2,493 | 155,663 | ||||||
Tessera Holding Corp. | 5,177 | 228,823 | ||||||
384,486 | ||||||||
Software: 3.7% | ||||||||
Ellie Mae, Inc.(a) | 1,561 | 130,625 | ||||||
NICE Systems Ltd. | 1,732 | 119,092 | ||||||
Tyler Technologies, Inc.(a) | 927 | 132,348 | ||||||
382,065 | ||||||||
Specialty Retail: 1.5% | ||||||||
Select Comfort Corp.(a) | 6,907 | 156,236 | ||||||
TravelCenters of America(a) | 1 | 4 | ||||||
156,240 | ||||||||
Trading Companies & Distributors: 4.7% | ||||||||
HD Supply Holdings, Inc.(a) | 4,219 | 179,350 | ||||||
United Rentals, Inc.(a) | 1,783 | 188,249 | ||||||
WESCO International, Inc.(a) | 1,652 | 109,940 | ||||||
477,539 | ||||||||
Total Common Stocks (cost $8,527,341) | 9,685,722 | |||||||
Real Estate Investment Trusts (REITs): 5.0% | ||||||||
The GEO Group, Inc. | 3,898 | 140,055 | ||||||
FelCor Lodging Trust, Inc. | 17,441 | 139,703 | ||||||
Gaming & Leisure Properties, Inc. | 3,736 | 114,396 | ||||||
MGM Growth Properties LLC | 4,755 | 120,349 | ||||||
Total REITs (cost $492,781) | 514,503 | |||||||
Short-Term Investments: 1.3% | ||||||||
Invesco Short-Term Investments Trust Treasury Portfolio Institutional Class, 0.39%(b) | 129,878 | 129,878 | ||||||
Total Short-Term Investments (cost $129,878) | 129,878 | |||||||
Total Investments - 100.7% (cost $9,150,000) | 10,330,103 | |||||||
Liabilities in Excess of Other Assets (0.7)% | (66,625 | ) | ||||||
Net Assets: 100.0% | $ | 10,263,478 |
(a) | No distribution or dividend was made during the period ending December 31, 2016. As such, it is classified as a non-income producing security as of December 31, 2016. |
(b) | Rate reported is the current yield as of December 31, 2016. |
The cost basis of investments for federal income tax purposes at December 31, 2016 was as follows*: | ||||
Cost of investments | $ | 9,150,000 | ||
Gross unrealized appreciation | 1,518,449 | |||
Gross unrealized depreciation | (338,346 | ) | ||
Net unrealized appreciation | $ | 1,180,103 |
* | Because tax adjustments are calculated annually, the above table does not reflect tax adjustments. For the previous fiscal year’s federal income tax information, please refer to the Notes to Financial Statements section in the Fund’s most recent annual report. |
Country Exposure (as a percentage of total investments) | ||||
United States | 95.01 | % | ||
Israel | 1.39 | % | ||
Bermuda | 1.32 | % | ||
Ireland | 1.15 | % | ||
Canada | 1.13 | % |
Sector Allocation (as a percentage of total investments) (Unaudited)
The accompanying notes are an integral part of the financial statements.
11
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2016 (UNAUDITED)
Shares | Value | |||||||
Common Stocks: 87.5% | ||||||||
Banks: 11.3% | ||||||||
Capital Bank Financial Corp. | 8,244 | $ | 323,577 | |||||
Chemical Financial Corp. | 3,848 | 208,446 | ||||||
FCB Financial Holdings, Inc.(a) | 3,862 | 184,218 | ||||||
Pinnacle Financial Partners, Inc. | 3,161 | 219,057 | ||||||
Texas Capital Bancshares, Inc.(a) | 3,436 | 269,383 | ||||||
Webster Financial Corp. | 4,137 | 224,556 | ||||||
Western Alliance Bancorp(a) | 4,672 | 227,573 | ||||||
1,656,810 | ||||||||
Capital Markets: 2.9% | ||||||||
Evercore Partners, Inc. | 1,769 | 121,530 | ||||||
KCG Holdings, Inc.(a) | 11,116 | 147,287 | ||||||
OM Asset Management plc | 10,607 | 153,802 | ||||||
422,619 | ||||||||
Chemicals: 1.5% | ||||||||
Huntsman Corp. | 11,532 | 220,031 | ||||||
Commercial Services & Supplies: 1.2% | ||||||||
Mobile Mini, Inc. | 5,919 | 179,050 | ||||||
Communications Equipment: 0.7% | ||||||||
ShoreTel, Inc.(a) | 14,112 | 100,901 | ||||||
Construction & Engineering: 1.0% | ||||||||
Tutor Perini Corp.(a) | 5,401 | 151,228 | ||||||
Construction Materials: 2.4% | ||||||||
Summit Materials, Inc.(a) | 9,051 | 215,324 | ||||||
US Concrete, Inc.(a) | 2,194 | 143,707 | ||||||
359,031 | ||||||||
Diversified Telecommunication Services: 0.8% | ||||||||
8x8, Inc.(a) | 7,681 | 109,838 | ||||||
Electronic Equipment, Instruments & Components: 1.2% | ||||||||
Mercury Systems, Inc.(a) | 5,899 | 178,268 | ||||||
Energy Equipment & Services: 4.0% | ||||||||
Fairmount Santrol Holdings, Inc.(a) | 15,453 | 182,191 | ||||||
Superior Energy Services, Inc. | 12,386 | 209,075 | ||||||
U.S. Silica Holdings, Inc. | 3,485 | 197,530 | ||||||
588,796 | ||||||||
Health Care Equipment & Supplies: 2.7% | ||||||||
Natus Medical, Inc.(a) | 1,529 | 53,209 | ||||||
NuVasive, Inc.(a) | 2,612 | 175,944 | ||||||
Wright Medical Group NV(a) | 6,960 | 159,941 | ||||||
389,094 | ||||||||
Health Care Providers & Services: 1.4% | ||||||||
Acadia Healthcare Co., Inc.(a) | 2,842 | 94,070 | ||||||
WellCare Health Plans, Inc.(a) | 782 | 107,197 | ||||||
201,267 |
Shares | Value | |||||||
Hotels, Restaurants & Leisure: 8.5% | ||||||||
Belmond Ltd.(a) | 11,478 | $ | 153,231 | |||||
Fiesta Restaurant Group, Inc.(a) | 3,796 | 113,311 | ||||||
Jack In The Box, Inc. | 758 | 84,623 | ||||||
Penn National Gaming, Inc.(a) | 10,065 | 138,796 | ||||||
Pinnacle Entertainment, Inc.(a) | 12,777 | 185,267 | ||||||
Red Rock Resorts, Inc. | 8,645 | 200,478 | ||||||
Scientific Games Corp.(a) | 11,319 | 158,466 | ||||||
SeaWorld Entertainment, Inc. | 11,051 | 209,195 | ||||||
1,243,367 | ||||||||
Household Durables: 1.2% | ||||||||
TopBuild Corp.(a) | 5,159 | 183,660 | ||||||
Independent Power and Renewable Electricity Producers: 1.2% | ||||||||
Dynegy, Inc.(a) | 20,886 | 176,696 | ||||||
Internet Software & Services: 1.3% | ||||||||
Gogo, Inc.(a) | 9,913 | 91,398 | ||||||
Hortonworks, Inc.(a) | 12,968 | 107,764 | ||||||
199,162 | ||||||||
IT Services: 0.8% | ||||||||
Interxion Holding NV(a) | 3,459 | 121,307 | ||||||
Life Sciences Tools & Services: 2.4% | ||||||||
Cambrex Corp.(a) | 3,895 | 210,135 | ||||||
ICON plc(a) | 1,914 | 143,933 | ||||||
354,068 | ||||||||
Machinery: 5.0% | ||||||||
Atkore International Group, Inc.(a) | 8,550 | 204,431 | ||||||
Harsco Corp. | 18,314 | 249,070 | ||||||
Rexnord Corp.(a) | 5,683 | 111,330 | ||||||
SPX FLOW, Inc.(a) | 5,324 | 170,687 | ||||||
735,518 | ||||||||
Media: 7.9% | ||||||||
E. W. Scripps Co.(a) | 12,209 | 236,000 | ||||||
Gray Television, Inc.(a) | 24,803 | 269,113 | ||||||
IMAX Corp.(a) | 3,416 | 107,262 | ||||||
Media General, Inc.(a) | 1,867 | 35,156 | ||||||
Nexstar Broadcasting Group, Inc. | 4,140 | 262,062 | ||||||
Sinclair Broadcast Group, Inc. | 6,146 | 204,969 | ||||||
Townsquare Media, Inc.(a) | 5,101 | 53,101 | ||||||
1,167,663 | ||||||||
Oil, Gas & Consumable Fuels: 8.4% | ||||||||
Arch Coal, Inc.(a) | 2,118 | 165,310 | ||||||
Callon Petroleum Co.(a) | 6,412 | 98,552 | ||||||
Carrizo Oil & Gas, Inc.(a) | 3,930 | 146,786 | ||||||
Extraction Oil & Gas, Inc.(a) | 3,180 | 63,727 | ||||||
Oasis Petroleum, Inc.(a) | 12,641 | 191,385 | ||||||
Rice Energy, Inc.(a) | 9,075 | 193,751 |
The accompanying notes are an integral part of the financial statements.
12
PENN CAPITAL SMALL CAP EQUITY FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2016 (UNAUDITED)
Shares | Value | |||||||
Sanchez Energy Corp.(a) | 13,572 | $ | 122,555 | |||||
WildHorse Resource Development Corp.(a) | 3,387 | 49,450 | ||||||
WPX Energy, Inc.(a) | 13,665 | 199,099 | ||||||
1,230,615 | ||||||||
Pharmaceuticals: 2.0% | ||||||||
Akorn, Inc.(a) | 6,472 | 141,284 | ||||||
Depomed, Inc.(a) | 8,451 | 152,287 | ||||||
293,571 | ||||||||
Road & Rail: 2.8% | ||||||||
Genesee & Wyoming, Inc.(a) | 2,528 | 175,469 | ||||||
Swift Transportation Co.(a) | 9,381 | 228,521 | ||||||
403,990 | ||||||||
Semiconductors & Semiconductor Equipment: 4.4% | ||||||||
Cavium, Inc.(a) | 2,879 | 179,765 | ||||||
Semtech Corp.(a) | 6,301 | 198,796 | ||||||
Tessera Holding Corp. | 6,109 | 270,018 | ||||||
648,579 | ||||||||
Software: 4.1% | ||||||||
Callidus Software, Inc.(a) | 8,200 | 137,760 | ||||||
Ellie Mae, Inc.(a) | 1,451 | 121,420 | ||||||
Model N, Inc.(a) | 7,272 | 64,357 | ||||||
NICE Systems Ltd. | 2,662 | 183,039 | ||||||
Tyler Technologies, Inc.(a) | 680 | 97,084 | ||||||
603,660 | ||||||||
Specialty Retail: 1.7% | ||||||||
Five Below, Inc.(a) | 3,825 | 152,847 | ||||||
Select Comfort Corp.(a) | 4,409 | 99,732 | ||||||
252,579 | ||||||||
Textiles, Apparel & Luxury Goods: 1.3% | ||||||||
G-III Apparel Group Ltd.(a) | 6,584 | 194,623 | ||||||
Thrifts & Mortgage Finance: 1.5% | ||||||||
WSFS Financial Corp. | 4,715 | 218,540 | ||||||
Trading Companies & Distributors: 1.9% | ||||||||
Beacon Roofing Supply, Inc.(a) | 3,378 | 155,624 | ||||||
DXP Enterprises, Inc.(a) | 3,458 | 120,131 | ||||||
275,755 | ||||||||
Total Common Stocks (cost $11,571,633) | 12,860,286 | |||||||
Real Estate Investment Trusts (REITs): 1.1% | ||||||||
FelCor Lodging Trust, Inc. | 20,100 | 161,001 | ||||||
Total REITs (cost $154,896) | 161,001 | |||||||
Short-Term Investments: 3.4% | ||||||||
Invesco Short-Term Investments Trust Treasury | ||||||||
Portfolio Institutional Class, 0.39%(b) | 505,227 | 505,227 | ||||||
Total Short-Term Investments (cost $505,227) | 505,227 |
Shares | Value | |||||||
Total Investments - 92.0% | ||||||||
(cost $12,231,756) | $ | 13,526,514 | ||||||
Other Assets and Liabilities 8.0% | 1,172,023 | |||||||
Net Assets: 100.0% | $ | 14,698,537 |
(a) | No distribution or dividend was made during the period ending December 31, 2016. As such, it is classified as a non-income producing security as of December 31, 2016. |
(b) | Rate reported is the current yield as of December 31, 2016. |
The cost basis of investments for federal income tax purposes at December 31, 2016 was as follows*:
Cost of investments | $ | 12,231,756 | ||
Gross unrealized appreciation | 1,543,832 | |||
Gross unrealized depreciation | (249,074 | ) | ||
Net unrealized appreciation | $ | 1,294,758 |
* | Because tax adjustments are calculated annually, the above table does not reflect tax adjustments. For the previous fiscal year’s federal income tax information, please refer to the Notes to Financial Statements section in the Fund’s most recent annual report. |
Country Exposure (as a percentage of total investments) |
United States | 92.44 | % | ||
Netherlands | 2.08 | % | ||
Israel | 1.35 | % | ||
United Kingdom | 1.14 | % | ||
Bermuda | 1.13 | % | ||
Ireland | 1.07 | % | ||
Canada | 0.79 | % |
Sector Allocation (as a percentage of total investments) (Unaudited)
The accompanying notes are an integral part of the financial statements.
13
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2016 (UNAUDITED)
Principal | Value | |||||||
Corporate Bonds: 94.9% | ||||||||
Agriculture: 0.8% | ||||||||
Simmons Foods, Inc., 7.875%, 10/1/21(a) | 70,000 | $ | 72,100 | |||||
Airline Companies: 1.0% | ||||||||
Air Canada, 7.750%, 4/15/21(a) | 50,000 | 55,875 | ||||||
American Airlines Group, Inc., 4.625%, 3/1/20(a) | 30,000 | 30,375 | ||||||
86,250 | ||||||||
Automotive: 0.6% | ||||||||
Navistar International Corp., 8.250%, 11/1/21 | 50,000 | 50,500 | ||||||
Banking: 1.7% | ||||||||
Ally Financial, Inc., 8.000%, 11/1/31 | 25,000 | 28,998 | ||||||
Ally Financial, Inc., 5.750%, 11/20/25 | 65,000 | 64,837 | ||||||
Ally Financial, Inc., 5.125%, 9/30/24 | 50,000 | 50,875 | ||||||
144,710 | ||||||||
Beverage: 0.5% | ||||||||
Cott Beverages, Inc., 5.375%, 7/1/22 | 45,000 | 45,787 | ||||||
Building & Construction: 1.4% | ||||||||
Ashton Woods LLC, 6.875%, 2/15/21(a) | 40,000 | 38,500 | ||||||
Beazer Homes USA, Inc., 8.750%, 3/15/22(a) | 20,000 | 21,600 | ||||||
William Lyon Homes, Inc., 8.500%, 11/15/20 | 60,000 | 62,700 | ||||||
122,800 | ||||||||
Building Materials: 1.1% | ||||||||
Griffon Corp., 5.250%, 3/1/22 | 55,000 | 55,729 | ||||||
US Concrete, Inc., 6.375%, 6/1/24 | 40,000 | 42,300 | ||||||
98,029 | ||||||||
Chemical Companies: 0.6% | ||||||||
Blue Cube Spinco, Inc., 9.750%, 10/15/23 | 20,000 | 23,800 | ||||||
Platform Specialty Products, 6.500%, 2/1/22(a) | 25,000 | 25,187 | ||||||
48,987 | ||||||||
Computer Hardware: 6.9% | ||||||||
Dell, Inc., 7.125%, 6/15/24(a) | 10,000 | 11,097 | ||||||
Dell, Inc., 8.100%, 7/15/36(a) | 125,000 | 148,506 | ||||||
Dell, Inc., 6.020%, 6/15/26(a) | 10,000 | 10,819 | ||||||
Micron Technology, Inc., 5.625%, 1/15/26(a) | 30,000 | 29,737 | ||||||
Micron Technology, Inc., 5.250%, 8/1/23(a) | 45,000 | 45,169 | ||||||
Micron Technology, Inc., 5.875%, 2/15/22 | 15,000 | 15,637 | ||||||
Qorvo, Inc., 6.750%, 12/1/23 | 40,000 | 44,000 | ||||||
Seagate HDD Cayman, 4.875%, 6/1/27 | 35,000 | 31,498 | ||||||
Seagate HDD Cayman, 5.750%, 12/1/34 | 50,000 | 42,625 | ||||||
Western Digital Corp., 10.500%, 4/1/24(a) | 185,000 | 218,763 | ||||||
597,851 | ||||||||
Consumer - Products: 0.5% | ||||||||
Radio Systems Corp., 8.375%, 11/1/19(a)(d) | 45,000 | 46,913 | ||||||
Consumer/Commercial/Lease Financing: 1.3% | ||||||||
Aircastle Ltd., 7.625%, 4/15/20 | 25,000 | 28,313 | ||||||
International Lease Financial Corp., 8.625%, 1/15/22 | 35,000 | 42,044 | ||||||
Navient Corp., 5.875%, 10/25/24 | 45,000 | 42,750 | ||||||
113,107 |
Principal | Value | |||||||
Diversified Capital Goods: 1.2% | ||||||||
Anixter International, Inc., 5.125%, 10/1/21 | 50,000 | $ | 52,000 | |||||
Gardner Denver, Inc., 6.875%, 8/15/21(a) | 55,000 | 54,725 | ||||||
106,725 | ||||||||
Electric - Generation: 4.1% | ||||||||
Calpine Corp., 5.750%, 1/15/25 | 20,000 | 19,300 | ||||||
Calpine Corp., 5.375%, 1/15/23 | 65,000 | 63,537 | ||||||
Dynegy, Inc., 7.375%, 11/1/22 | 85,000 | 81,175 | ||||||
Dynegy, Inc., 6.750%, 11/1/19 | 45,000 | 45,788 | ||||||
NRG Energy, Inc., 6.625%, 1/15/27(a) | 40,000 | 37,800 | ||||||
NRG Energy, Inc., 6.625%, 3/15/23 | 110,000 | 110,275 | ||||||
357,875 | ||||||||
Electrical Equipment: 0.3% | ||||||||
Cortes NP Acquisition Corp., 9.250%, 10/15/24(a) | 25,000 | 26,500 | ||||||
Energy - Exploration & Production: 9.3% | ||||||||
Antero Resources Corp., 5.125%, 12/1/22 | 30,000 | 30,300 | ||||||
Approach Resources, Inc., 7.000%, 6/15/21(d) | 75,000 | 67,500 | ||||||
Bill Barrett Corp., 7.000%, 10/15/22 | 65,000 | 62,075 | ||||||
Carrizo Oil & Gas, Inc., 7.500%, 9/15/20 | 40,000 | 41,400 | ||||||
Chesapeake Energy Corp., 6.625%, 8/15/20 | 45,000 | 45,450 | ||||||
Comstock Resources, Inc., 10.000%, 3/15/20(f) | 85,000 | 87,125 | ||||||
Continental Resources, Inc., 5.000%, 9/15/22 | 20,000 | 20,188 | ||||||
Everest Acquisition LLC, 9.375%, 5/1/20 | 25,000 | 23,047 | ||||||
Everest Acquisition LLC, 6.375%, 6/15/23 | 25,000 | 19,750 | ||||||
Freeport-McMoRan, Inc., 6.125%, 6/15/19 | 20,000 | 20,450 | ||||||
Gastar Exploration, Inc., 8.625%, 5/15/18 | 85,000 | 83,300 | ||||||
Gulfport Energy Corp., 6.625%, 5/1/23 | 15,000 | 15,675 | ||||||
Halcon Resources Corp., 8.625%, 2/1/20(a) | 35,000 | 36,400 | ||||||
Jones Energy Holdings LLC, 6.750%, 4/1/22 | 50,000 | 47,625 | ||||||
Oasis Petroleum, Inc., 6.875%, 3/15/22 | 15,000 | 15,375 | ||||||
PetroQuest Energy, Inc., 10.000%, 2/15/21(a)(d) | 55,000 | 38,500 | ||||||
Resolute Energy Corp., 8.500%, 5/1/20 | 45,000 | 45,787 | ||||||
Sanchez Energy Corp., 6.125%, 1/15/23 | 50,000 | 47,500 | ||||||
Unit Corp., 6.625%, 5/15/21 | 55,000 | 53,350 | ||||||
800,797 | ||||||||
Entertainment: 0.3% | ||||||||
Viking Cruises Ltd., 8.500%, 10/15/22(a) | 25,000 | 25,938 | ||||||
Food - Wholesale: 1.2% | ||||||||
JBS USA, Inc., 5.750%, 6/15/25(a) | 35,000 | 35,438 | ||||||
JBS USA, Inc., 5.875%, 7/15/24(a) | 65,000 | 67,112 | ||||||
102,550 | ||||||||
Gaming: 3.5% | ||||||||
Caesars Entertainment Resort Properties LLC, 11.000%, 10/1/21 | 35,000 | 38,237 | ||||||
Chester Downs & Marina LLC, 9.250%, 2/1/20(a) | 25,000 | 24,000 | ||||||
Jack Ohio Finance LLC, 10.250%, 11/15/22 | 30,000 | 30,525 | ||||||
MGM Growth Properties Operating Partnership, L.P., 5.625%, 5/1/24(a) | 40,000 | 41,900 |
The accompanying notes are an integral part of the financial statements.
14
PENN CAPITAL OPPORTUNISTIC HIGH YIELD FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2016 (UNAUDITED)
Principal | Value | |||||||
MGM Resorts International, 4.625%, 9/1/26 | 25,000 | $ | 24,063 | |||||
MGM Resorts International, 7.750%, 3/15/22 | 55,000 | 63,250 | ||||||
Scientific Games International, Inc., 6.625%, 5/15/21(d) | 45,000 | 38,025 | ||||||
Scientific Games International, Inc., 6.250%, 9/1/20(d) | 55,000 | 46,750 | ||||||
306,750 | ||||||||
Gas Distribution: 7.4% | ||||||||
Blue Racer Midstream, 6.125%, 11/15/22(a) | 45,000 | 45,000 | ||||||
DCP Midstream Partners, L.P., 4.950%, 4/1/22 | 33,000 | 33,825 | ||||||
DCP Midstream Partners, L.P., 3.875%, 3/15/23(d) | 35,000 | 33,666 | ||||||
DCP Midstream Partners, L.P., 9.750%, 3/15/19(a) | 25,000 | 28,000 | ||||||
DCP Midstream Partners, L.P., 5.850%, 5/21/43(a) | 80,000 | 68,000 | ||||||
MPLX, L.P., 4.500%, 7/15/23 | 55,000 | 55,803 | ||||||
NGL Energy Partners, L.P., 5.125%, 7/15/19 | 25,000 | 24,812 | ||||||
NGL Energy Partners, L.P., 6.875%, 10/15/21 | 10,000 | 10,225 | ||||||
NGPL PipeCo LLC, 7.768%, 12/15/37(a) | 25,000 | 26,500 | ||||||
Rockies Express Pipeline, 6.875%, 4/15/40(a)(d) | 45,000 | 44,775 | ||||||
Rockies Express Pipeline, 5.625%, 4/15/20(a) | 25,000 | 26,313 | ||||||
Sabine Pass Liquefaction LLC, 5.000%, 3/15/27(a) | 30,000 | 30,263 | ||||||
Sabine Pass Liquefaction LLC, 6.250%, 3/15/22 | 100,000 | 109,500 | ||||||
Sunoco, L.P., 6.375%, 4/1/23 | 20,000 | 20,250 | ||||||
Sunoco, L.P., 5.500%, 8/1/20 | 35,000 | 35,700 | ||||||
Targa Resources Partners, L.P., 5.250%, 5/1/23 | 30,000 | 30,300 | ||||||
Williams Partners, L.P., 5.100%, 9/15/45 | 15,000 | 14,231 | ||||||
637,163 | ||||||||
Health Services: 3.2% | ||||||||
Acadia Healthcare Company, Inc., 6.125%, 3/15/21 | 35,000 | 36,094 | ||||||
AmSurg Corp., 5.625%, 7/15/22 | 30,000 | 30,930 | ||||||
Centene Corp., 6.125%, 2/15/24 | 30,000 | 31,612 | ||||||
HealthSouth Corp., 5.750%, 9/15/25 | 45,000 | 44,775 | ||||||
One Call Care Management, 8.875%, 12/15/21(a) | 60,000 | 51,300 | ||||||
Select Medical Corp., 6.375%, 6/1/21 | 85,000 | 85,000 | ||||||
279,711 | ||||||||
Hospitals: 1.2% | ||||||||
HCA Holdings, Inc., 7.500%, 2/15/22 | 25,000 | 28,375 | ||||||
HCA Holdings, Inc., 5.250%, 6/15/26 | 15,000 | 15,506 | ||||||
HCA Holdings, Inc., 5.375%, 2/1/25 | 20,000 | 20,050 | ||||||
Tenet Healthcare Corp., 8.125%, 4/1/22 | 45,000 | 42,458 | ||||||
106,389 | ||||||||
Hotels: 0.7% | ||||||||
FelCor Lodging Partnership Ltd., 5.625%, 3/1/23 | 60,000 | 61,200 | ||||||
Investments & Miscellaneous Financial Services: 2.8% | ||||||||
Cardtronics, Inc., 5.125%, 8/1/22 | 35,000 | 35,262 | ||||||
First Data Corp., 5.750%, 1/15/24(a) | 50,000 | 51,594 |
Principal | Value | |||||||
First Data Corp., 5.000%, 1/15/24(a) | 30,000 | $ | 30,160 | |||||
First Data Corp., 7.000%, 12/1/23(a) | 75,000 | 79,875 | ||||||
Icahn Enterprises, L.P., 5.875%, 2/1/22 | 45,000 | 44,663 | ||||||
241,554 | ||||||||
Machinery Companies: 0.5% | ||||||||
Zekelman Industries, Inc., 9.875%, 6/15/23(a) | 40,000 | 44,800 | ||||||
Media - Broadcast: 4.3% | ||||||||
Ensco PLC, 5.750%, 10/1/44 | 30,000 | 21,750 | ||||||
Gray Television, Inc., 5.875%, 7/15/26(a) | 25,000 | 24,812 | ||||||
Gray Television, Inc., 5.125%, 10/15/24(a) | 10,000 | 9,675 | ||||||
iHeartCommunications, Inc., 9.000%, 12/15/19 | 80,000 | 65,400 | ||||||
iHeartCommunications, Inc., 10.000%, 1/15/18 | 65,000 | 48,425 | ||||||
Nexstar Broadcasting, Inc., 6.875%, 11/15/20 | 30,000 | 31,050 | ||||||
Radio One, Inc., 7.375%, 4/15/22(a) | 45,000 | 44,550 | ||||||
Radio One, Inc., 9.250%, 2/15/20(a)(d) | 90,000 | 81,675 | ||||||
Sinclair Broadcast Group, Inc., 5.625%, 8/1/24(a) | 45,000 | 46,013 | ||||||
373,350 | ||||||||
Media - Cable: 3.3% | ||||||||
Cablevision Systems Corp., 5.875%, 9/15/22 | 90,000 | 87,750 | ||||||
CSC Holdings, Inc., 6.750%, 11/15/21 | 45,000 | 48,375 | ||||||
CSC Holdings, Inc., 5.250%, 6/1/24 | 15,000 | 14,662 | ||||||
Dish Network Corp., 7.750%, 7/1/26 | 20,000 | 22,550 | ||||||
Dish Network Corp., 6.750%, 6/1/21 | 40,000 | 43,400 | ||||||
Midcontinent Communications, 6.250%, 8/1/21(a) | 65,000 | 68,088 | ||||||
284,825 | ||||||||
Media - Services: 0.7% | ||||||||
Clear Channel Worldwide Holdings, Inc., 7.625%, 3/15/20 | 50,000 | 48,394 | ||||||
Lamar Media Corp., 5.750%, 2/1/26 | 10,000 | 10,525 | ||||||
58,919 | ||||||||
Metals/Mining Excluding Steel: 4.8% | ||||||||
Cliffs Natural Resources, Inc., 7.750%, 3/31/20(a) | 20,000 | 20,550 | ||||||
Cloud Peak Energy Resources LLC, 12.000%, 11/1/21 | 25,000 | 26,000 | ||||||
FMG Resources, 9.750%, 3/1/22(a) | 50,000 | 58,003 | ||||||
Freeport-McMoRan, Inc., 3.100%, 3/15/20 | 45,000 | 43,875 | ||||||
Freeport-McMoRan, Inc., 5.450%, 3/15/43 | 25,000 | 20,688 | ||||||
Peabody Energy Corp., 10.000%, 3/15/22(a)(e) | 95,000 | 84,550 | ||||||
Peabody Energy Corp., 6.000%, 11/15/18(e) | 45,000 | 27,563 | ||||||
Teck Resources Ltd, 5.200%, 3/1/42 | 50,000 | 44,000 | ||||||
Teck Resources Ltd., 6.250%, 7/15/41 | 35,000 | 33,729 | ||||||
Teck Resources Ltd., 3.750%, 2/1/23 | 35,000 | 33,075 | ||||||
Teck Resources Ltd., 4.500%, 1/15/21 | 20,000 | 20,100 | ||||||
412,133 | ||||||||
Multi-Line Insurance: 0.4% | ||||||||
Hub International Ltd., 7.875%, 10/1/21(a) | 35,000 | 36,974 | ||||||
Non-Food & Drug Retailers: 1.3% | ||||||||
JC Penney, Inc., 8.125%, 10/1/19 | 45,000 | 48,600 |
The accompanying notes are an integral part of the financial statements.
15
PENN CAPITAL OPPORTUNISTIC HIGH YIELD FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2016 (UNAUDITED)
Principal | Value | |||||||
Men’s Wearhouse, 7.000%, 7/1/22 | 20,000 | $ | 19,600 | |||||
PetSmart, Inc., 7.125%, 3/15/23(a) | 45,000 | 45,900 | ||||||
114,100 | ||||||||
Oil Field Equipment & Services: 3.6% | ||||||||
Access Midstream Partners, L.P., 4.875%, 3/15/24 | 25,000 | 25,224 | ||||||
CSI Compressco, L.P., 7.250%, 8/15/22 | 45,000 | 42,525 | ||||||
Hornbeck Offshore Services, Inc., 5.000%, 3/1/21 | 30,000 | 20,100 | ||||||
Noble Holding International Ltd, 6.050%, 3/1/41 | 30,000 | 20,700 | ||||||
Noble Holding International Ltd, 4.625%, 3/1/21 | 4,000 | 3,840 | ||||||
Pioneer Energy Services Corp., 6.125%, 3/15/22(d) | 60,000 | 55,200 | ||||||
SESI LLC, 7.125%, 12/15/21 | 25,000 | 25,437 | ||||||
Transocean, Inc., 9.000%, 7/15/23(a) | 20,000 | 20,500 | ||||||
Transocean, Inc., 8.125%, 12/15/21 | 20,000 | 20,000 | ||||||
Transocean, Inc., 6.800%, 3/15/38 | 55,000 | 42,625 | ||||||
Trinidad Drilling Ltd., 7.875%, 1/15/19(a) | 35,000 | 34,913 | ||||||
311,064 | ||||||||
Oil Refining & Marketing: 0.5% | ||||||||
PBF Energy, 7.000%, 11/15/23 | 40,000 | 39,800 | ||||||
Pharmaceuticals & Devices: 3.6% | ||||||||
Endo Finance, 5.370%, 1/15/23(a) | 70,000 | 59,500 | ||||||
Jaguar Holding Co., 6.375%, 8/1/23(a) | 55,000 | 58,850 | ||||||
Kinetic Concepts, Inc., 9.625%, 10/1/21(a) | 35,000 | 37,012 | ||||||
Mallinckrodt International Finance SA, 4.750%, 4/15/23 | 35,000 | 30,450 | ||||||
Valeant Pharmaceuticals, Inc., 5.875%, 5/15/23(a) | 15,000 | 11,325 | ||||||
Valeant Pharmaceuticals, Inc., 5.625%, 12/1/21(a) | 30,000 | 23,250 | ||||||
Valeant Pharmaceuticals, Inc., 6.375%, 10/15/20(a) | 65,000 | 55,839 | ||||||
Valeant Pharmaceuticals, Inc., 5.375%, 3/15/20(a) | 45,000 | 38,025 | ||||||
314,251 | ||||||||
Printing & Publishing: 0.8% | ||||||||
Lee Enterprises, Inc., 9.500%, 3/15/22(a) | 45,000 | 47,700 | ||||||
Time, Inc., 5.750%, 4/15/22(a) | 20,000 | 20,700 | ||||||
68,400 | ||||||||
Railroads: 0.7% | ||||||||
Watco Companies, 6.375%, 4/1/23(a) | 60,000 | 62,100 | ||||||
Real Estate Development & Management: 0.6% | ||||||||
Realogy Group, 5.250%, 12/1/21(a) | 50,000 | 51,250 | ||||||
Restaurants: 0.9% | ||||||||
Landry’s, Inc., 6.750%, 10/15/24(a) | 35,000 | 35,525 | ||||||
P.F. Chang’s China Bistro, 10.250%, 6/30/20(a)(d) | 40,000 | 39,100 | ||||||
74,625 |
Principal | Value | |||||||
Software/Services: 0.4% | ||||||||
Nuance Communications, Inc., 5.375%, 8/15/20(a) | 30,000 | $ | 30,862 | |||||
Steel Producers/Products: 0.7% | ||||||||
United States Steel Corp., 7.500%, 3/15/22 | 20,000 | 20,650 | ||||||
United States Steel Corp., 7.375%, 4/1/20 | 35,000 | 37,538 | ||||||
58,188 | ||||||||
Support - Services: 1.8% | ||||||||
ADT Corp., 4.875%, 7/15/32(a) | 50,000 | 41,000 | ||||||
ADT Corp., 6.250%, 10/15/21 | 20,000 | 21,700 | ||||||
ADT Corp., 3.500%, 7/15/22 | 10,000 | 9,525 | ||||||
GEO Group, Inc., 5.875%, 10/15/24 | 20,000 | 19,725 | ||||||
Herc Rentals, Inc., 7.500%, 6/1/22(a) | 25,000 | 26,344 | ||||||
West Corp., 5.375%, 7/15/22(a) | 40,000 | 38,650 | ||||||
156,944 | ||||||||
Telecom - Integrated/Services: 8.8% | ||||||||
CenturyLink, Inc., 5.625%, 4/1/20 | 25,000 | 26,437 | ||||||
CenturyLink, Inc., 6.450%, 6/15/21 | 5,000 | 5,262 | ||||||
CenturyLink, Inc., 7.600%, 9/15/39 | 25,000 | 21,812 | ||||||
Cincinnati Bell, Inc., 7.000%, 7/15/24(a) | 25,000 | 26,437 | ||||||
Cogent Communications Finance, Inc., 5.625%, 4/15/21(a) | 50,000 | 50,500 | ||||||
Communications Sales & Leasing, Inc., 7.125%, 12/15/24(a) | 35,000 | 35,350 | ||||||
CyrusOne, L.P., 6.375%, 11/15/22 | 30,000 | 31,575 | ||||||
EarthLink, Inc., 7.375%, 6/1/20 | 60,000 | 63,300 | ||||||
Frontier Communications Corp., 8.875%, 9/15/20 | 30,000 | 31,950 | ||||||
Frontier Communications Corp., 11.000%, 9/15/25 | 50,000 | 51,625 | ||||||
Frontier Communications Corp., 7.625%, 4/15/24 | 55,000 | 49,225 | ||||||
Frontier Communications Corp., 6.875%, 1/15/25 | 55,000 | 46,613 | ||||||
Gogo, Inc., 12.500%, 7/1/22(a) | 50,000 | 54,250 | ||||||
Intelsat Connect Finance SA, 12.500%, 4/1/22 | 8,000 | 4,920 | ||||||
Intelsat Jackson Holdings SA, 7.250%, 4/1/19 | 80,000 | 67,200 | ||||||
Intelsat Luxembourg SA, 7.750%, 6/1/21 | 85,000 | 27,838 | ||||||
Level 3 Financing, Inc., 5.125%, 5/1/23 | 20,000 | 20,075 | ||||||
WaveDivision Escrow, 8.125%, 9/1/20(a)(d) | 50,000 | 52,000 | ||||||
Windstream Corp., 7.750%, 10/1/21 | 60,000 | 61,680 | ||||||
Windstream Corp., 7.750%, 10/15/20 | 30,000 | 30,840 | ||||||
758,889 | ||||||||
Telecom - Wireless: 3.5% | ||||||||
GTT Escrow Corp., 7.875%, 12/31/24(a) | 35,000 | 36,662 | ||||||
Sprint Capital Corp., 6.875%, 11/15/28 | 25,000 | 24,687 | ||||||
Sprint Corp., 7.250%, 9/15/21 | 115,000 | 122,188 | ||||||
Sprint Corp., 7.875%, 9/15/23 | 40,000 | 42,700 | ||||||
Sprint Nextel Corp., 7.000%, 3/1/20(a) | 15,000 | 16,275 | ||||||
Sprint Nextel Corp., 7.000%, 8/15/20 | 30,000 | 31,803 |
The accompanying notes are an integral part of the financial statements.
16
PENN CAPITAL OPPORTUNISTIC HIGH YIELD FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2016 (UNAUDITED)
Principal | Value | |||||||
Telesat Canada, 8.875%, 11/15/24(a) | 25,000 | $ | 26,063 | |||||
300,378 | ||||||||
Telecommunications Equipment: 0.3% | ||||||||
CommScope, Inc., 5.500%, 6/15/24(a) | 25,000 | 25,875 | ||||||
Transportation Excluding Air/Rail: 1.8% | ||||||||
Con-Way, Inc., 7.250%, 1/15/18 | 50,000 | 51,350 | ||||||
Deck Chassis Acquisition, Inc., 10.000%, 6/15/23(a) | 30,000 | 30,975 | ||||||
Eletson Holdings, Inc., 9.625%, 1/15/22(a)(d) | 50,000 | 36,500 | ||||||
OPE KAG Finance Sub, Inc., 7.875%, 7/31/23(a) | 40,000 | 40,400 | ||||||
159,225 | ||||||||
Total Corporate Bonds (cost $7,755,448) | 8,217,138 | |||||||
Convertible Bonds: 0.9% | ||||||||
Automotive: 0.3% | ||||||||
Navistar International Corp., 4.750%, 4/15/19 | 25,000 | 24,687 | ||||||
Energy - Exploration & Production: 0.3% | ||||||||
Comstock Resources, Inc., 7.750%, 4/1/19 | 25,000 | 21,750 | ||||||
Metals/Mining Excluding Steel: 0.1% | ||||||||
Peabody Energy Corp., 4.750%, 12/15/66(e) | 35,000 | 5,863 | ||||||
Oil Field Equipment & Services: 0.1% | ||||||||
Hornbeck Offshore Services, Inc., 1.500%, 9/1/19 | 15,000 | 10,641 | ||||||
Support - Services: 0.1% | ||||||||
Gogo, Inc., 3.750%, 3/1/20 | 15,000 | 11,278 | ||||||
Total Convertible Bonds (cost $70,802) | 74,219 |
Shares | Value | |||||||
Common Stocks: 0.0% | ||||||||
Energy - Exploration & Production: 0.0% | ||||||||
PetroQuest Energy, Inc.(d)(g) | 794 | $ | 2,628 | |||||
Southwestern Energy Co.(c) | 80 | 866 | ||||||
3,494 | ||||||||
Media - Cable: 0.0% | ||||||||
ACC Claims Holdings LLC | 11,610 | 43 | ||||||
Total Common Stocks (cost $1,252) | 3,537 | |||||||
Convertible Preferred Stocks: 0.3% | ||||||||
Energy - Exploration & Production: 0.3% | ||||||||
Southwestern Energy Co. | 1,000 | 25,470 | ||||||
Total Convertible Preferred Stocks (cost $33,470) | 25,470 | |||||||
Preferred Stocks: 0.0% | ||||||||
Spanish Broadcasting Systems, Inc.(c)(d) | 1 | 38 | ||||||
Total Preferred Stocks (cost $613) | 38 | |||||||
Warrants: 0.0% | ||||||||
Comstock Resources, Inc.(c) | 138 | 1,358 | ||||||
Total Warrants (cost $0) | 1,358 | |||||||
Short-Term Investments: 2.5% | ||||||||
Invesco Short-Term Investments Trust Treasury Portfolio Institutional Class, 0.39%(b) | 220,807 | $ | 220,807 | |||||
Total Short-Term Investments (cost $220,807) | 220,807 | |||||||
Total Investments - 98.6% (cost $8,082,392) | 8,542,567 | |||||||
Other Assets and Liabilities 1.4% | 121,045 | |||||||
Net Assets: 100.0% | $ | 8,663,612 |
(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 December 31, 2016, the value of these investments was $3,354,056, or 38.7% of total net assets. |
(b) | Rate reported is the current yield as of December 31, 2016. |
(c) | No distribution or dividend was made during the period ending December 31, 2016. As such, it is classified as a non-income producing security as of December 31, 2016. |
(d) | Securities considered illiquid. As of December 31, 2016, the value of these investments was $583,270 or 6.73% of total net assets. |
(e) | Non-income producing. Item identified as in default as to payment of interest. |
(f) | Payment-in-kind security which may pay interest/dividends in additional par/shares and/or in cash. |
(g) | Restricted security as to resale, excluding 144A securities. As of December 31, 2016, the Fund held a restricted security with a current value of $2,628, or 0.03% of its total net assets. |
The accompanying notes are an integral part of the financial statements.
17
PENN CAPITAL OPPORTUNISTIC HIGH YIELD FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2016 (UNAUDITED)
The cost basis of investments for federal income tax purposes at December 31, 2016 was as follows*: | ||||
Cost of investments | $ | 8,082,392 | ||
Gross unrealized appreciation | 522,794 | |||
Gross unrealized depreciation | (62,619 | ) | ||
Net unrealized appreciation | $ | 460,175 |
* | Because tax adjustments are calculated annually, the above table does not reflect tax adjustments. For the previous fiscal year’s federal income tax information, please refer to the Notes to Financial Statements section in the Fund’s most recent annual report. |
Country Exposure (as a percentage of total investments) | ||||
United States | 93.86 | % | ||
Canada | 2.90 | % | ||
Luxembourg | 1.17 | % | ||
Australia | 0.68 | % | ||
Britain | 0.62 | % | ||
Greece | 0.43 | % | ||
Bermuda | 0.30 | % | ||
Cayman Islands | 0.04 | % |
Sector Allocation (as a percentage of total investments) (Unaudited) |
The accompanying notes are an integral part of the financial statements.
18
Principal | Value | |||||||
Bank Loans: 80.6%(a) | ||||||||
Airline Companies: 1.6% | ||||||||
American Airlines, 3.250%, 12/9/23 | 247,449 | $ | 248,624 | |||||
American Airlines, 3.261%, 4/28/23 | 100,000 | 100,479 | ||||||
349,103 | ||||||||
Auto Parts & Equipment: 2.2% | ||||||||
Key Safety Systems, 5.500%, 8/29/21 | 235,287 | 237,523 | ||||||
TI Group Automotive Systems, 4.500%, 6/30/22 | 246,875 | 249,499 | ||||||
487,022 | ||||||||
Automotive: 2.3% | ||||||||
Navistar, Inc., 6.500%, 8/17/17 | 249,370 | 252,238 | ||||||
Winnebago Industries, Inc., 5.500%, 11/3/23 | 250,000 | 251,875 | ||||||
504,113 | ||||||||
Building Materials: 3.5% | ||||||||
HD Supply, Inc., 3.588%, 8/13/21 | 246,881 | 247,963 | ||||||
Jeld -Wen, Inc., 4.750%, 7/1/22 | 250,000 | 252,812 | ||||||
Quikrete Holdings, Inc., 4.000%, 11/3/23 | 250,000 | 252,293 | ||||||
753,068 | ||||||||
Chemical Companies: 0.9% | ||||||||
Huntsman International, 3.580%, 4/19/19 | 197,632 | 198,312 | ||||||
Communications Equipment: 2.3% | ||||||||
GTT Communications, Inc., 5.750%, 10/22/22 | 248,121 | 249,982 | ||||||
Polycom, Inc., 7.500%, 9/27/23 | 241,771 | 242,677 | ||||||
492,659 | ||||||||
Computer Hardware: 2.7% | ||||||||
Avago Technologies, 3.524%, 2/1/23 | 336,514 | 341,141 | ||||||
Dell Software Group, 7.000%, 9/27/22 | 250,000 | 252,970 | ||||||
594,111 | ||||||||
Computers & Peripherals: 1.9% | ||||||||
Western Digital Corp., 4.520%, 4/28/23 | 398,000 | . 404,093 | ||||||
Diversified Capital Goods: 1.2% | ||||||||
Harsco Corp., 6.000%, 10/27/23 | 250,000 | 254,688 | ||||||
Diversified Telecommunication Services: 1.2% | ||||||||
Consolidated Communications, Inc., 4.000%, 10/5/23 | 250,000 | 251,295 | ||||||
Electric - Generation: 2.3% | ||||||||
Calpine Corp., 3.750%, 1/15/23 | 245,000 | 246,362 | ||||||
Lightsone Generation LLC, 6.500%, 1/31/24 | 250,000 | 252,813 | ||||||
499,175 | ||||||||
Electronics: 1.2% | ||||||||
Micron Technology, Inc., 8.500%, 4/11/22 | 248,750 | 252,295 | ||||||
Energy - Other: 0.9% | ||||||||
Western Refining, Inc., 5.500%, 6/30/23 | 186,250 | 187,181 | ||||||
Entertainment: 1.1% | ||||||||
Life Time Fitness, 4.250%, 6/10/22 | 247,487 | 248,841 | ||||||
Environmental & Waste: 1.1% | ||||||||
USAGM HoldCo LLC, 5.500%, 7/28/22 | 249,426 | 251,142 | ||||||
251,142 |
Principal | Value | |||||||
Food & Drug Retailers: 2.3% | ||||||||
Albertsons, 4.000%, 12/21/22 | 248,752 | 251,861 | ||||||
Save-A-Lot, 7.000%, 12/1/23 | 250,000 | 248,750 | ||||||
500,611 | ||||||||
Gaming: 1.2% | ||||||||
Affinity Gaming LLC, 5.000%, 7/1/23 | 248,750 | 250,305 | ||||||
Health Care Providers & Services: 2.3% | ||||||||
Press Ganey Holdings, Inc., 4.250%, 12/31/23 | 250,000 | 251,250 | ||||||
Prospect Medical Holdings, Inc., 7.000%, 6/1/22 | 248,750 | 244,397 | ||||||
495,647 | ||||||||
Health Services: 4.6% | ||||||||
Acadia Healthcare, 3.750%, 2/16/23 | 247,500 | 249,356 | ||||||
American Renal Holdings, Inc., 4.750%, 8/20/19 | 248,671 | 248,671 | ||||||
Concentra Operating Corp., 4.001%, 6/1/22 | 248,737 | 249,359 | ||||||
Envision Healthcare Corp., 4.000%, 11/17/23 | 247,503 | 249,825 | ||||||
997,211 | ||||||||
Hotels: 1.1% | ||||||||
Belmond Hotels, 4.000%, 3/19/21 | 247,455 | 247,455 | ||||||
Investments & Miscellaneous Financial Services: 1.2% | ||||||||
Russell Investment Management Company, 6.750%, 4/14/23 | 248,750 | 252,481 | ||||||
Media - Broadcast: 3.4% | ||||||||
Lions Gate Entertainment Corp., 3.750%, 10/13/23 | 250,000 | 251,250 | ||||||
RCN Business, 3.750%, 12/11/23 | 250,000 | 251,527 | ||||||
Univision Communications, Inc, 4.000%, 3/1/20 | 246,674 | 247,863 | ||||||
750,640 | ||||||||
Media - Cable: 1.2% | ||||||||
Wide Open West, 4.500%, 8/5/23 | 249,375 | 251,824 | ||||||
Media - Services: 1.7% | ||||||||
Match Group, Inc., 7.000%, 11/16/22 | 109,375 | 110,879 | ||||||
Nielsen Finance, 3.031%, 10/4/23 | 250,000 | 252,605 | ||||||
363,484 | ||||||||
Metals & Mining: 1.1% | ||||||||
JMC Steel, 6.000%, 6/7/21 | 248,750 | 250,616 | ||||||
Non-Food & Drug Retailers: 4.4% | ||||||||
G-III Apparel Group Ltd., 6.250%, 10/5/22 | 214,286 | 214,286 | ||||||
Men’s Wearhouse, 4.500%, 3/11/21 | 249,325 | 249,014 | ||||||
PetCo Animal Supplies, Inc., 5.000%, 1/31/23 | 248,125 | 249,189 | ||||||
PetSmart, Inc., 4.000%, 3/10/22 | 244,975 | 245,587 | ||||||
958,076 | ||||||||
Oil Refining & Marketing: 1.1% | ||||||||
Gulf Finance, 6.250%, 8/25/23 | 249,375 | 249,998 | ||||||
Other Industrial & Manufacturing: 3.2% | ||||||||
Rexnord LLC, 3.750%, 8/21/23 | 211,226 | 211,965 | ||||||
WTG Holdings Corp., 4.750%, 1/15/21 | 299,229 | 300,913 | ||||||
XPO Logistics, Inc., 4.250%, 10/30/21 | 181,427 | 183,639 | ||||||
696,517 | ||||||||
Packaging: 1.0% | ||||||||
Berry Plastics Corp., 3.750%, 10/1/22 | 214,258 | 216,267 |
The accompanying notes are an integral part of the financial statements.
19
PENN CAPITAL SENIOR FLOATING RATE INCOME FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2016 (UNAUDITED)
DECEMBER 31, 2016 (UNAUDITED)
Principal | Value | |||||||
Pharmaceuticals: 1.2% | ||||||||
Pharmaceutical Product Development LLC, 4.250%, 8/18/22 | 249,367 | 251,923 | ||||||
Pharmaceuticals & Devices: 3.4% | ||||||||
Alere, Inc., 4.250%, 6/20/22 | 248,737 | 248,426 | ||||||
Endo Pharmaceuticals, Inc., 3.750%, 9/26/22 | 247,500 | 248,562 | ||||||
Valeant Pharmaceuticals, Inc., 4.500%, 2/13/19 | 239,375 | 239,016 | ||||||
736,004 | ||||||||
Printing & Publishing: 1.1% | ||||||||
Tribune Media Co., 3.770%, 12/27/20 | 246,867 | 248,657 | ||||||
Restaurants: 1.2% | ||||||||
Landry’s, Inc., 4.000%, 10/4/23 | 250,000 | 252,278 | ||||||
Semiconductors & Semiconductor Equipment: 1.2% | ||||||||
Tessera Holding Corp., 4.000%, 10/25/23 | 250,000 | 252,033 | ||||||
Software/Services: 3.8% | ||||||||
First Data Corp., 3.468%, 3/24/21 | 360,790 | 364,849 | ||||||
Premiere Global Services, Inc., 7.500%, 5/2/22 | 240,602 | 234,136 | ||||||
Zayo Group, 3.750%, 5/6/21 | 225,333 | 227,618 | ||||||
826,603 | ||||||||
Support - Services: 4.6% | ||||||||
Advanced Disposal Services, Inc., 3.500%, 11/10/23 | 246,667 | 248,672 | ||||||
KAR Auction Services, Inc., 4.370%, 3/9/23 | 248,125 | 251,227 | ||||||
ServiceMaster Clean, 3.270%, 11/3/23 | 250,000 | 250,625 | ||||||
TruGreen, 6.500%, 3/29/23 | 248,750 | 251,859 | ||||||
1,002,383 | ||||||||
Telecom - Integrated/Services: 6.8% | ||||||||
Altice US Finance Corp., 3.882%, 1/15/25 | 248,125 | 250,606 | ||||||
Frontier Communications Corp., 3.030%, 3/31/21 | 243,671 | 235,142 | ||||||
Global Eagle Entertainments, Inc., 7.000%, 12/22/22 | 250,000 | 245,000 | ||||||
Level 3 Financing, Inc., 4.000%, 1/15/20 | 250,000 | 253,250 | ||||||
Numericable-SFR, 4.038%, 1/14/25 | 250,000 | 251,938 | ||||||
Telesat Canada, 4.500%, 11/30/23 | 250,000 | 253,203 | ||||||
1,489,139 | ||||||||
Telecom - Wireless: 1.1% | ||||||||
FairPoint Communications, Inc., 7.500%, 2/14/19 | 247,429 | 249,518 | ||||||
Total Bank Loans (cost $17,210,364) | 17,516,768 | |||||||
Corporate Bonds: 9.4% | ||||||||
Chemical Companies: 0.4% | ||||||||
Valvoline, Inc., 5.500%, 7/15/24(b) | 90,000 | 93,150 | ||||||
Chemicals: 0.5% | ||||||||
CF Industries, Inc., 7.125%, 5/1/20 | 100,000 | 109,000 | ||||||
Computer Hardware: 0.5% | ||||||||
Diamond 1 Finance Corp., 5.875%, 6/15/21(b) | 100,000 | 106,361 | ||||||
Diversified Capital Goods: 0.5% | ||||||||
WESCO Distribution, Inc., 5.375%, 6/15/24(b) | 100,000 | 100,250 |
Principal | Value | |||||||
Electric - Generation: 0.5% | ||||||||
Dynegy, Inc., 6.750%, 11/1/19 | 110,000 | 111,925 | ||||||
Energy - Exploration & Production: 0.5% | ||||||||
Continental Resources, Inc., 5.000%, 9/15/22 | 100,000 | 100,939 | ||||||
Gas Distribution: 1.7% | ||||||||
AmeriGas Partners, L.P., 5.500%, 5/20/25 | 115,000 | 116,150 | ||||||
Sunoco, L.P., 6.250%, 4/15/21 | 100,000 | 101,875 | ||||||
Tallgrass Energy Partners, L.P., 5.500%, 9/15/24(b) | 145,000 | 143,912 | ||||||
361,937 | ||||||||
Hospitals: 1.7% | ||||||||
HCA Holdings, Inc., 7.500%, 2/15/22 | 125,000 | 141,875 | ||||||
Tenet Healthcare Corp., 4.350%, 6/15/20 | 225,000 | 226,125 | ||||||
368,000 | ||||||||
Investments & Miscellaneous Financial | ||||||||
Services: 0.5% | ||||||||
E*Trade Financial Corp., 5.375%, 11/15/22 | 100,000 | 105,803 | ||||||
Media - Cable: 0.5% | ||||||||
CSC Holdings, Inc., 8.625%, 2/15/19 | 100,000 | 110,500 | ||||||
Support - Services: 1.4% | ||||||||
CoreCivic, Inc., 4.125%, 4/1/20 | 110,000 | 109,725 | ||||||
West Corp., 4.750%, 7/15/21(b) | 200,000 | 204,500 | ||||||
314,225 | ||||||||
Telecom - Integrated/Services: 0.7% | ||||||||
Frontier Communications Corp., 10.500%, 9/15/22 | 155,000 | 162,952 | ||||||
Total Corporate Bonds (cost $2,023,531) | 2,045,042 | |||||||
Shares | Value | |||||||
Short-Term Investments: 10.7% | ||||||||
Invesco Short-Term Investments Trust Treasury Portfolio Institutional Class, 0.39%(c) | 2,321,931 | 2,321,931 | ||||||
Total Short-Term Investments (cost $2,321,931) | 2,321,931 | |||||||
Total Investments - 100.7% (cost $21,555,826) | 21,883,741 | |||||||
Liabilities in Excess of Other Assets (0.7)% | (152,630 | ) | ||||||
Net Assets: 100.0% | 21,731,111 |
(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 December 31, 2016, the value of these investments was $648,173, or 3.0% of total net assets. |
(c) | Rate reported is the current yield as of December 31, 2016. |
The accompanying notes are an integral part of the financial statements.
20
PENN CAPITAL SENIOR FLOATING RATE INCOME FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2016 (UNAUDITED)
DECEMBER 31, 2016 (UNAUDITED)
The cost basis of investments for federal income tax purposes at December 31, 2016 was as follows*: | ||||
Cost of investments | 21,555,826 | |||
Gross unrealized appreciation | 332,866 | |||
Gross unrealized depreciation | (4,951 | ) | ||
Net unrealized appreciation | $ | 327,915 |
* | Because tax adjustments are calculated annually, the above table does not reflect tax adjustments. For the previous fiscal year’s federal income tax information, please refer to the Notes to Financial Statements section in the Fund’s most recent annual report. |
Country Exposure (as a percentage of total investments) | ||||
United States | 100 00 | % |
The accompanying notes are an integral part of the financial statements.
21
PENN CAPITAL FUNDS TRUST
DECEMBER 31, 2016 (UNAUDITED)
Penn Capital Small/Mid Cap Equity Fund | Penn Capital Small Cap Equity Fund | Penn Capital Opportunistic High Yield Fund | Penn Capital Senior Floating Rate Income Fund | |||||||||||||
Assets | ||||||||||||||||
Investments, at fair value (1) | $ | 10,330,103 | $ | 13,526,514 | $ | 8,542,567 | $ | 21,883,741 | ||||||||
Receivables: | ||||||||||||||||
Dividends and interest | 2,125 | 316 | 154,942 | 163,353 | ||||||||||||
Advisor reimbursement due | 1,722 | — | 12,730 | 2,873 | ||||||||||||
Fund shares sold | — | 1,568,000 | — | — | ||||||||||||
Cash | — | 470 | — | — | ||||||||||||
Investments sold | — | — | 37,792 | 1,516,553 | ||||||||||||
Prepaid expenses | 12,631 | 16,697 | 11,726 | 14,319 | ||||||||||||
Total assets | 10,346,581 | 15,111,997 | 8,759,757 | 23,580,839 | ||||||||||||
Liabilities | ||||||||||||||||
Payables: | ||||||||||||||||
Investments purchased | — | 330,355 | — | 1,747,083 | ||||||||||||
Fund shares redeemed | 2 | 7 | 7 | 7 | ||||||||||||
Investment advisory fees (See Note 3) | — | 2,996 | — | — | ||||||||||||
Accrued expenses: | ||||||||||||||||
Professional fees | 24,136 | 30,029 | 26,063 | 27,601 | ||||||||||||
Administration fees | 22,312 | 18,691 | 30,465 | 28,132 | ||||||||||||
Transfer agent fees and expenses | 11,513 | 4,402 | 6,992 | 18,011 | ||||||||||||
Trustee fees and expenses | 2,261 | 1,993 | 1,637 | 3,582 | ||||||||||||
Distribution and service fees | 40 | 40 | 35 | 40 | ||||||||||||
Other accrued expenses | 22,839 | 24,947 | 30,946 | 25,272 | ||||||||||||
Total liabilities | 83,103 | 413,460 | 96,145 | 1,849,728 | ||||||||||||
Net assets | $ | 10,263,478 | $ | 14,698,537 | $ | 8,663,612 | $ | 21,731,111 | ||||||||
Composition of Net Assets | ||||||||||||||||
Paid-in capital | $ | 9,095,864 | $ | 13,216,242 | $ | 8,229,575 | $ | 21,329,254 | ||||||||
Accumulated net investment income (loss) | (24,795 | ) | (7,730 | ) | (3,729 | ) | 4,302 | |||||||||
Accumulated net realized gain (loss) on investments | 6,460 | 194,398 | (22,409 | ) | 69,640 | |||||||||||
Net unrealized appreciation (depreciation) on investments | 1,185,949 | 1,295,627 | 460,175 | 327,915 | ||||||||||||
Net assets | $ | 10,263,478 | $ | 14,698,537 | $ | 8,663,612 | $ | 21,731,111 | ||||||||
Institutional Class | ||||||||||||||||
Net assets applicable to outstanding shares | $ | 10,263,478 | $ | 14,698,537 | $ | 8,663,612 | $ | 21,731,111 | ||||||||
Shares of beneficial interest outstanding, no par value, unlimited authorization | 925,637 | 1,295,801 | 833,013 | 2,130,012 | ||||||||||||
Net asset value per share outstanding | $ | 11.09 | $ | 11.34 | $ | 10.40 | $ | 10.20 | ||||||||
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. | $ | 9,144,154 | $ | 12,230,887 | $ | 8,082,392 | $ | 21,555,826 |
(2) | No information is provided for Investor Share Class shares because shares of that Class had not yet been issued as of December 31, 2016. |
The accompanying notes are an integral part of the financial statements.
22
PENN CAPITAL FUNDS TRUST
Penn Capital | Penn Capital | |||||||||||||||
Penn Capital | Penn Capital | Opportunistic | Senior Floating | |||||||||||||
Small/Mid Cap | Small Cap | High Yield | Rate | |||||||||||||
Equity Fund | Equity Fund | Fund | Income Fund | |||||||||||||
July 1, 2016 - | July 1, 2016 - | July 1, 2016 - | July 1, 2016 - | |||||||||||||
December 31, | December 31, | December 31, | December 31, | |||||||||||||
Investment Income (Loss) | 2016 | 2016 | 2016 | 2016 | ||||||||||||
Income | ||||||||||||||||
Dividends* | $ | 50,461 | $ | 43,117 | $ | 1,530 | $ | — | ||||||||
Interest | 258 | 256 | 330,008 | 501,133 | ||||||||||||
Other income | — | — | 644 | — | ||||||||||||
Total income | 50,719 | 43,373 | 332,182 | 501,133 | ||||||||||||
Expenses | ||||||||||||||||
Investment advisory fees | 44,867 | 44,539 | 29,177 | 70,828 | ||||||||||||
Administration and accounting | 33,047 | 28,482 | 49,817 | 51,993 | ||||||||||||
Professional fees | 20,290 | 16,571 | 18,998 | 26,774 | ||||||||||||
Transfer agent expense | 13,947 | 7,192 | 7,682 | 17,203 | ||||||||||||
Compliance fees | 8,222 | 8,222 | 8,222 | 8,222 | ||||||||||||
Registration | 6,103 | 5,246 | 7,801 | 6,103 | ||||||||||||
Insurance | 5,306 | 1,748 | 2,284 | 10,329 | ||||||||||||
Shareholder communication | 3,907 | 3,831 | 4,083 | 4,109 | ||||||||||||
Custodian | 3,737 | 4,988 | 4,369 | 3,280 | ||||||||||||
Trustees | 3,335 | 3,127 | 2,862 | 6,607 | ||||||||||||
Shareholder servicing fees | 40 | 40 | 35 | 40 | ||||||||||||
Total expenses | 142,801 | 123,986 | 135,330 | 205,488 | ||||||||||||
Expense waiver and reimbursement from Advisor | (89,958 | ) | (72,883 | ) | (104,884 | ) | (129,527 | ) | ||||||||
Net expenses | 52,843 | 51,103 | 30,446 | 75,961 | ||||||||||||
Net investment income (loss) | (2,124 | ) | (7,730 | ) | 301,736 | 425,172 | ||||||||||
Realized and Unrealized Gain (Loss) on Investments | ||||||||||||||||
Net realized gain (loss) on investments | 55,922 | 712,433 | 151,142 | 131,391 | ||||||||||||
Net change in unrealized appreciation (depreciation) | 1,313,841 | 722,641 | 265,266 | 229,162 | ||||||||||||
Net realized and unrealized gain (loss) on investments | 1,369,763 | 1,435,074 | 416,408 | 360,553 | ||||||||||||
Net increase (decrease) in net assets resulting from operations | $ | 1,367,639 | $ | 1,427,344 | $ | 718,144 | $ | 785,725 |
* Foreign taxes withheld | $ | 92 | $ | 88 | $ | 361 | $ | — |
The accompanying notes are an integral part of the financial statements.
23
Penn Capital | Penn Capital | |||||||||||||||
Small/Mid Cap | Small Cap | |||||||||||||||
Equity Fund | Equity Fund | |||||||||||||||
Period from | Period from | |||||||||||||||
December 1, 2015(a) | December 18, 2015(a) | |||||||||||||||
July 1, 2016 - | through | July 1, 2016 - | through | |||||||||||||
Increase (Decrease) in Net Assets | December 31, 2016 | June 30, 2016 | December 31, 2016 | June 30, 2016 | ||||||||||||
Operations | ||||||||||||||||
Net investment income (loss) | $ | (2,124 | ) | $ | (29,177 | ) | $ | (7,730 | ) | $ | (13,547 | ) | ||||
Net realized gain (loss) on investments | 55,922 | (240,806 | ) | 712,433 | 345,994 | |||||||||||
Net change in unrealized appreciation (depreciation) | 1,313,841 | (127,892 | ) | 722,641 | 572,986 | |||||||||||
Net increase (decrease) in net assets resulting from operations | 1,367,639 | (397,875 | ) | 1,427,344 | 905,433 | |||||||||||
Dividends and distributions to shareholders | ||||||||||||||||
From net investment income | ||||||||||||||||
Institutional Class | — | — | — | — | ||||||||||||
From realized gain | ||||||||||||||||
Institutional Class | — | — | (850,482 | ) | — | |||||||||||
Total dividends and distributions to shareholders | — | — | (850,482 | ) | — | |||||||||||
Capital share transactions (Note 6) | ||||||||||||||||
Net proceeds from sale of shares | 4,471 | 234,411 | 5,912,889 | 7,665,602 | ||||||||||||
Proceeds from Transfer In-Kind | — | 10,547,899 | — | — | ||||||||||||
Dividends and distributions reinvested | — | — | 845,459 | — | ||||||||||||
Cost of shares redeemed | (570,317 | ) | (922,750 | ) | (1,191,050 | ) | (16,658 | ) | ||||||||
Net increase (decrease) in net assets resulting from capital share transactions | (565,846 | ) | 9,859,560 | 5,567,298 | 7,648,944 | |||||||||||
Net increase (decrease) in net assets | 801,793 | 9,461,685 | 6,144,160 | 8,554,377 | ||||||||||||
Net Assets | ||||||||||||||||
Beginning of period | 9,461,685 | — | 8,554,377 | — | ||||||||||||
End of period | $ | 10,263,478 | $ | 9,461,685 | $ | 14,698,537 | $ | 8,554,377 | ||||||||
Accumulated net investment income (loss) at the end of period | $ | (24,795 | ) | $ | (29,177 | ) | $ | (7,730 | ) | $ | (13,547 | ) |
(a) | Commencement of operations. |
The accompanying notes are an integral part of the financial statements.
24
Penn Capital | Penn Capital | |||||||||||||
Opportunistic | Senior Floating Rate | |||||||||||||
High Yield Fund | Income Fund | |||||||||||||
Period from | Period from | |||||||||||||
December 1, 2015(a) | December 1, 2015(a) | |||||||||||||
July 1, 2016 - | through | July 1, 2016 - | through | |||||||||||
December 31, 2016 | June 30, 2016 | December 31, 2016 | June 30, 2016 | |||||||||||
$ | 301,736 | $ | 246,285 | $ | 425,172 | $ | 259,411 | |||||||
151,142 | (168,020 | ) | 131,391 | 33,413 | ||||||||||
265,266 | 194,909 | 229,162 | 98,753 | |||||||||||
718,144 | 273,174 | 785,725 | 391,577 |
(347,751 | ) | (203,999 | ) | (483,182 | ) | (197,099 | ) | |||||||
— | — | (95,164 | ) | — | ||||||||||
(347,751 | ) | (203,999 | ) | (578,346 | ) | (197,099 | ) | |||||||
388,920 | 2,234,772 | 3,293,616 | 18,362,260 | |||||||||||
— | 5,612,139 | — | — | |||||||||||
324,913 | 189,623 | 575,627 | 197,099 | |||||||||||
(263,486 | ) | (262,837 | ) | (970,635 | ) | (228,713 | ) | |||||||
450,347 | 7,773,697 | 2,898,608 | 18,330,646 | |||||||||||
820,740 | 7,842,872 | 3,105,987 | 18,525,124 | |||||||||||
7,842,872 | — | 18,625,124 | 100,000 | |||||||||||
$ | 8,663,612 | $ | 7,842,872 | $ | 21,731,111 | $ | 18,625,124 | |||||||
$ | (3,729 | ) | $ | 42,286 | $ | 4,302 | $ | 62,312 |
The accompanying notes are an integral part of the financial statements.
25
PENN CAPITAL FUNDS TRUST
Per Common Share Data(a) | Supplemental data and ratios | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income from investment operations | Distributions to shareholders | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | Net investment income (loss) | Net realized and unrealized gains (losses) | Total from investment operations | Dividends from net investment income | Distributions from capital gains | Total distributions | Net asset value, end of period | Total return | Net assets, end of period (in 000’s) | Ratio of expenses to average net assets, including waivers and reimbursement(b) | Ratio of expenses to average net assets, excluding waivers and reimbursement(b) | Ratio of net investment income (loss) to average net assets, including waivers and reimbursement(b) | Ratio of net investment income (loss) to average net assets, excluding waivers and reimbursement(b) | Portfolio turnover rate(c) | ||||||||||||||||||||||||||||||||||||||||||||||
Penn Capital | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Small/Mid Cap | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Fund | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7/1/16 to 12/31/16 | $ | 9.65 | — | ‡ | 1.44 | 1.44 | — | — | — | $ | 11.09 | 15.04 | %(d) | $ | 10,263 | 1.06 | % | 2.87 | % | (0.04 | )% | (1.85 | )% | 53 | %(d) | |||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Small Cap | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Fund | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7/1/16 to 12/31/16 | $ | 10.32 | — | ‡ | 1.83 | 1.83 | — | (0.81 | ) | (0.81 | ) | $ | 11.34 | 17.68 | %(d) | $ | 14,699 | 1.09 | % | 2.64 | % | (0.17 | )% | (1.72 | )% | 67 | %(d) | |||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Opportunistic | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
High Yield Fund | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7/1/16 to 12/31/16 | $ | 9.95 | 0.37 | 0.51 | 0.88 | (0.43 | ) | — | (0.43 | ) | $ | 10.40 | 8.97 | %(d) | $ | 8,664 | 0.72 | % | 3.20 | % | 7.14 | % | 4.66 | % | 41 | %(d) | ||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Senior Floating Rate | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Fund | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7/1/16 to 12/31/16 | $ | 10.09 | 0.21 | 0.19 | 0.40 | (0.24 | ) | (0.05 | ) | (0.29 | ) | $ | 10.20 | 3.97 | %(d) | $ | 21,731 | 0.74 | % | 2.00 | % | 4.14 | % | 2.88 | % | 53 | %(d) | |||||||||||||||||||||||||||||||||
12/1/15(e) to 6/30/15 | $ | 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) |
* | No information is provided for Investor Class shares because shares of that Class had not yet been issued as of December 31, 2016. |
‡ | Less than one cent per share. |
(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. |
The accompanying notes are an integral part of the financial statements.
26
1. Organization
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 four series: the Penn Capital Small/Mid Cap Equity Fund, the Penn Capital Small Cap Equity Fund, the Penn Capital Opportunistic High Yield Fund and the Penn Capital Senior Floating Rate Income Fund (collectively referred to as the “Funds” and each individually referred to as a “Fund”). The Funds follow the Financial Accounting Standards Board (FASB) Accounting Standard Codification Topic 946 “Financial Services- Investment Companies.”
The Penn Capital Small/Mid Cap Equity Fund and Penn Capital Small Cap Equity Fund’s investment objective is to seek to provide capital appreciation.
A privately offered fund managed by Penn Capital Management Company, Inc. (the “Advisor”) reorganized into the Penn Capital Small/Mid Cap Equity Fund after the close of business on November 30, 2015, with the Penn Capital Small/Mid Cap Equity Fund commencing operations on December 1, 2015. The reorganization consisted of the transfer of the assets and stated liabilities of the private fund to the Penn Capital Small/Mid Cap Equity Fund in exchange for Institutional Class shares of the Penn Capital Small/Mid Cap Equity Fund, which were then distributed to the private fund partners. The reorganization was non-taxable, whereby the Fund issued 1,054,790 shares. The fair value and cost of securities, for tax purposes, received by the Fund was $10,185,471 and $10,120,793 respectively. In addition, the Fund received $362,428 of cash. For financial reporting purposes, assets received and shares issued by the Fund were recorded at fair value.
The Penn Capital Small Cap Equity Fund commenced operations on December 18, 2015.
The Penn Capital Opportunistic High Yield Fund’s investment objective is to seek to provide total return through interest income and capital appreciation.
A privately offered fund managed by the Advisor reorganized into the Penn Capital Opportunistic High Yield Fund after the close of business on November 30, 2015, with the Penn Capital Opportunistic High Yield Fund commencing operations on December 1, 2015. The reorganization consisted of the transfer of the assets and stated liabilities of the private fund to the Penn Capital Opportunistic High Yield Fund in exchange for Institutional Class shares of the Penn Capital Opportunistic High Yield Fund, which were then distributed to the private fund partners. The reorganization was non-taxable, whereby the Fund issued 561,214 shares. The fair value and cost of securities, for tax purposes, received by the Fund was $4,879,311. Certain investments cost basis were adjusted to the limitation of built in losses for tax purposes. In addition, the Fund received $732,828 of cash, receivables and accrued interest. For financial reporting purposes, assets received and shares issued by the Fund were recorded at fair value.
The Penn Capital Senior Floating Rate Income Fund’s investment objective is to seek to provide current income. The Penn Capital Senior Floating Rate Income Fund commenced operations on December 1, 2015.
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 Advisor serves as the investment advisor to the Funds.
The Trust offers two classes of shares of each Fund: Institutional Class and Investor Class. No information is provided in this report for Investor Class shares because shares of that class had not yet been issued as of December 31, 2016. Neither class has a front-end or back-end sales charge.
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”).
27
PENN CAPITAL FUNDS TRUST
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2016 (UNAUDITED)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2016 (UNAUDITED)
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.
Options contracts listed for trading on a securities exchange or board of trade are valued at the last quoted sales price, or if no sales are reported for exchange-traded options, or the options are not exchange-traded, then they are valued at the most recent quoted bid price. Futures contracts are valued at the daily quoted settlement prices. 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 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. 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, 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.
28
PENN CAPITAL FUNDS TRUST
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2016 (UNAUDITED)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2016 (UNAUDITED)
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 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 December 31, 2016 in valuing each Fund’s investments:
Penn Capital Small/Mid Cap Equity Fund | ||||||||||||||||
Investments in Securities(a) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | . 9,685,722 | $ | — | $ | — | $ | 9,685,722 | ||||||||
Real Estate Investment Trusts (REITs) | 514,503 | — | — | 514,503 | ||||||||||||
Short-Term Investments | 129,878 | — | — | 129,878 | ||||||||||||
Total Investments in Securities | $ | 10,330,103 | $ | — | $ | — | $ | 10,330,103 | ||||||||
Penn Capital Small Cap Equity Fund | ||||||||||||||||
Investments in Securities(a) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 12,860,286 | $ | — | $ | — | $ | 12,860,286 | ||||||||
Real Estate Investment Trusts (REITs) | 161,001 | — | — | 161,001 | ||||||||||||
Short-Term Investments | 505,227 | — | — | 505,227 | ||||||||||||
Total Investments in Securities | $ | 13,526,514 | $ | — | $ | — | $ | 13,526,514 |
29
PENN CAPITAL FUNDS TRUST | |||||||||||
NOTES TO THE FINANCIAL STATEMENTS | |||||||||||
DECEMBER 31, 2016 (UNAUDITED) |
Penn Capital Opportunistic High Yield Fund | ||||||||||||||||
Investments in Securities(a) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Corporate Bonds | $ | — | $ | . 8,217,138 | $ | — | $ | 8,217,138 | ||||||||
Convertible Bonds | — | 74,219 | — | 74,219 | ||||||||||||
Common Stocks | 3,494 | — | 43 | 3,537 | ||||||||||||
Convertible Preferred Stocks | 25,470 | — | — | 25,470 | ||||||||||||
Preferred Stocks | — | — | 38 | 38 | ||||||||||||
Warrants | — | 1,358 | — | 1,358 | ||||||||||||
Short-Term Investments | 220,807 | — | — | 220,807 | ||||||||||||
Total Investments in Securities | $ | 249,771 | $ | . 8,292,715 | $ | 81 | $ | 8,542,567 | ||||||||
Penn Capital Senior Floating Rate Income Fund | ||||||||||||||||
Investments in Securities(a) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Bank Loans | $ | — | $ | 17,516,768 | $ | — | $ | 17,516,768 | ||||||||
Corporate Bonds | — | 2,045,042 | — | 2,045,042 | ||||||||||||
Short-Term Investments | 2,321,931 | — | — | 2,321,931 | ||||||||||||
Total Investments in Securities | $ | 2,321,931 | $ | 19,561,810 | $ | — | $ | 21,883,741 |
(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 December 31, 2016:
Fair value as of | |||||||||
December 31, | Valuation | Unobservable | |||||||
Type of Assets | 2016 | Techniques(s) | Input | ||||||
Penn Capital Opportunistic High Yield Fund Preferred Stock | |||||||||
ACC Claims Holdings LLC. | $ | 43 | Broker Quote(a) | — | |||||
Spanish Broadcasting Systems, Inc. | 38 | Broker Quote(a) | — |
(a) | Unaudited. |
The following table reconciles Level 3 investments based on the inputs used to determine fair value:
Change in | ||||||||||||||||||||||||||||||||
Unrealized | ||||||||||||||||||||||||||||||||
Appreciation/ | ||||||||||||||||||||||||||||||||
Depreciation | ||||||||||||||||||||||||||||||||
from | ||||||||||||||||||||||||||||||||
Change in | Investments | |||||||||||||||||||||||||||||||
Balance as | Unrealized | Balance as of | Held as of | |||||||||||||||||||||||||||||
of July 1, | Accretion of | Net Realized | Appreciation | December 31, | December 31, | |||||||||||||||||||||||||||
2016 | Purchases | Sales | Discount | Gain (Loss) | (Depreciation) | 2016 | 2016 | |||||||||||||||||||||||||
Penn Capital Opportunistic High Yield | ||||||||||||||||||||||||||||||||
Fund Preferred Stock | ||||||||||||||||||||||||||||||||
ACC Claims Holdings LLC. | $ | 73 | $ | — | $ | — | $ | — | $ | — | $ | (30 | ) | $ | 43 | $ | (30 | ) | ||||||||||||||
Spanish Broadcasting Systems, Inc. | 496 | — | — | — | — | (458 | ) | 38 | (458 | ) |
The Funds disclose transfers between Levels based on valuations at the end of the reporting period. There were no transfers between Levels 1, 2, or 3 for the period ended December 31, 2016.
30
PENN CAPITAL FUNDS TRUST
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2016 (UNAUDITED)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2016 (UNAUDITED)
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.
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.
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 period. 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 Opportunistic High Yield Fund and the Penn Capital Senior Floating Rate 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 Small/Mid Cap Equity Fund and the Penn Capital 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 substantially 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.
31
PENN CAPITAL FUNDS TRUST
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2016 (UNAUDITED)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2016 (UNAUDITED)
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 Small/Mid Cap Equity Fund | 0.90 | % | ||
Penn Capital Small Cap Equity Fund | 0.95 | % | ||
Penn Capital Opportunistic High Yield Fund | 0.69 | % | ||
Penn Capital Senior Floating Rate Income Fund | 0.69 | % |
The Advisor has contractually agreed to waive its fees and/or pay Fund expenses so that the total annual operating expenses of the Funds (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. The expense limitation agreement will remain in place through October 30, 2017. Thereafter, the expense limitation agreement for the Funds will be reviewed annually by the Advisor and the Board.
Institutional | Investor | |||||||
Class | Class | |||||||
Penn Capital Small/Mid Cap Equity Fund | 1.06 | % | 1.31 | % | ||||
Penn Capital Small Cap Equity Fund | 1.09 | % | 1.34 | % | ||||
Penn Capital Opportunistic High Yield Fund | 0.72 | % | 0.97 | % | ||||
Penn Capital Senior Floating Rate Income Fund | 0.74 | % | 0.99 | % |
Any waived or reimbursed expenses by the Advisor to the Funds are subject to repayment by a Fund in the three fiscal years following the fiscal year in which the payment was made, 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:
Amount | Amount | ||||||||||||
Waived/ | Subject to | ||||||||||||
Expenses | Amount | Potential | |||||||||||
Fiscal Year Incurred | Assumed | Recouped | Recoupment | Expiration Date | |||||||||
Penn Capital Small/Mid Cap Equity Fund | |||||||||||||
June 30, 2016 | $ | .146,572 | $ | — | $ | 146,572 | June 30, 2019 | ||||||
June 30, 2017 | 89,958 | — | 89,958 | June 30, 2020 | |||||||||
Total | $ | . 236,530 | $ | — | $ | 236,530 | |||||||
Penn Capital Small Cap Equity Fund | |||||||||||||
June 30, 2016 | $ | .128,464 | $ | — | $ | 128,464 | June 30, 2019 | ||||||
June 30, 2017 | 72,883 | — | 72,883 | June 30, 2020 | |||||||||
Total | $ | . 201,347 | $ | — | $ | 201,347 | |||||||
Penn Capital Opportunistic High Yield Fund | |||||||||||||
June 30, 2016 | $ | .171,803 | $ | — | $ | 171,803 | June 30, 2019 | ||||||
June 30, 2017 | 104,884 | — | 104,884 | June 30, 2020 | |||||||||
Total | $ | . 276,687 | $ | — | $ | 276,687 | |||||||
Penn Capital Senior Floating Rate Income Fund | |||||||||||||
June 30, 2016 | $ | .205,304 | $ | — | $ | 205,304 | June 30, 2019 | ||||||
June 30, 2017 | 129,527 | — | 129,527 | June 30, 2020 | |||||||||
Total | $ | . 334,831 | $ | — | $ | 334,831 |
32
PENN CAPITAL FUNDS TRUST
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2016 (UNAUDITED)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2016 (UNAUDITED)
Certain Officers and Trustees of the Funds are also Officers of the Advisor.
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 period ended December 31, 2016, there were no distribution fees paid under the plan because the Investor Class shares had not yet been issued as of December 31, 2016.
The Trust has engaged U.S. Bancorp Fund Services, LLC to serve as the Funds’ administrator, fund accountant, and transfer agent. The Trust has engaged U.S. Bank, N.A. to serve as the Funds’ custodian.
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 undistributed net investment income (loss), undistributed net realized gain (loss) and additional paid-in capital.
The Funds intend to utilize capital loss carryforwards to offset future realized capital gains. Capital loss carryforwards available for federal income tax purposes are as follows:
Capital Loss | Short-Term | Long-Term | ||||||||
Available | Capital Loss | Capital Loss | ||||||||
Through | Amounts | Amounts | ||||||||
Penn Capital Small/Mid Cap Equity Fund | Unlimited | $ | 142,159 | $ | 148,206 | |||||
Penn Capital Small Cap Equity Fund | Unlimited | — | — | |||||||
Penn Capital Opportunistic High Yield Fund | Unlimited | 101,044 | 72,190 | |||||||
Penn Capital Senior Floating Rate Income Fund | Unlimited | — | — |
Additionally, at June 30, 2016, the Funds deferred on a tax basis losses as follows:
Capital | Ordinary Late | |||||||
Loss | Year Loss | |||||||
Penn Capital Small/Mid Cap Equity Fund | $ | — | $ | 22,671 | ||||
Penn Capital Small Cap Equity Fund | — | — | ||||||
Penn Capital Opportunistic High Yield Fund | — | — | ||||||
Penn Capital Senior Floating Rate Income Fund | — | — |
Aregulated 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.
33
PENN CAPITAL FUNDS TRUST
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2016 (UNAUDITED)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2016 (UNAUDITED)
The character of distributions for tax purposes paid during the period ended December 31, 2016 is as follows:
Ordinary | Long-Term | |||||||
Income | Capital Gain | |||||||
Distributions | Distributions | |||||||
Penn Capital Small/Mid Cap Equity Fund | $ | — | $ | — | ||||
Penn Capital Small Cap Equity Fund | 850,482 | (a) | — | |||||
Penn Capital Opportunistic High Yield Fund | 347,751 | — | ||||||
Penn Capital Senior Floating Rate Income Fund | 578,346 | (b) | — |
(a) | Includes short-term capital gain distributions of $850,482. |
(b) | Includes short-term capital gain distributions of $95,164. |
The character of distributions for tax purposes paid during the period ended June 30, 2016 is as follows:
Ordinary | Long-Term | ||||||||
Income | Capital Gain | ||||||||
Distributions | Distributions | ||||||||
Penn Capital Small/Mid Cap Equity Fund | $ | — | $ | — | |||||
Penn Capital Small Cap Equity Fund | — | — | |||||||
Penn Capital Opportunistic High Yield Fund | 203,999 | — | |||||||
Penn Capital Senior Floating Rate Income Fund | 197,099 | — |
5. Investment Transactions |
The cost of security purchases and the proceeds from security sales, other than short-term investments, for the period ended December 31, 2016, were as follows:
Purchases | Sales | |||||||
Penn Capital Small/Mid Cap Equity Fund | $ | 5,178,410 | $ | 5,646,764 | ||||
Penn Capital Small Cap Equity Fund | 9,491,052 | 6,345,459 | ||||||
Penn Capital Opportunistic High Yield Fund | 3,630,928 | 3,350,226 | ||||||
Penn Capital Senior Floating Rate Income Fund | 12,286,893 | 10,305,767 |
6. Capital Share Transactions |
Penn Capital | Penn Capital | |||||||||||||||
Penn Capital | Penn Capital | Opportunistic | Senior Floating | |||||||||||||
Small/Mid Cap | Small Cap | High Yield | Rate Income | |||||||||||||
Equity Fund | Equity Fund | Fund | Fund | |||||||||||||
July 1, 2016 – | July 1, 2016 – | July 1, 2016 – | July 1, 2016 – | |||||||||||||
December 31, | December 31, | December 31, | December 31, | |||||||||||||
2016 | 2016 | 2016 | 2016 | |||||||||||||
Institutional Class Shares | ||||||||||||||||
Shares sold | 434 | 501,240 | 38,553 | 322,718 | ||||||||||||
Shares sold to holders in reinvestment of dividends | — | 74,359 | 31,871 | 56,612 | ||||||||||||
Shares redeemed | (55,773 | ) | (108,891 | ) | (25,862 | ) | (94,839 | ) | ||||||||
Net increase (decrease) | (55,339 | ) | 466,708 | 44,562 | 284,491 | |||||||||||
Institutional Amount | ||||||||||||||||
Shares sold | $ | 4,471 | $ | 5,912,889 | $ | 388,920 | $ | 3,293,616 | ||||||||
Shares sold to holders in reinvestment of dividends | — | 845,459 | 324,914 | 575,627 | ||||||||||||
Shares redeemed | (570,317 | ) | (1,191,050 | ) | (263,486 | ) | (970,635 | ) | ||||||||
Net increase (decrease) | $ | (565,846 | ) | $ | 5,567,298 | $ | 450,348 | $ | 2,898,608 |
34
PENN CAPITAL FUNDS TRUST | |||||||||||||||||||
NOTES TO THE FINANCIAL STATEMENTS | |||||||||||||||||||
DECEMBER 31, 2016 (UNAUDITED) | |||||||||||||||||||
Penn Capital | Penn Capital | ||||||||||||||||||
Penn Capital | Penn Capital | Opportunistic | Senior Floating | ||||||||||||||||
Small/Mid Cap | Small Cap | High Yield | Rate Income | ||||||||||||||||
Equity Fund | Equity Fund | Fund | Fund | ||||||||||||||||
Period from | Period from | Period from | Period from | ||||||||||||||||
December 1, | December 18, | December 1, | December 1, | ||||||||||||||||
2015(a) through | 2015(a) through | 2015(a) through | 2015(a) through | ||||||||||||||||
June 30, 2016 | June 30, 2016 | June 30, 2016 | June 30, 2016 | ||||||||||||||||
Institutional Class Shares | |||||||||||||||||||
Shares sold | 25,535 | 830,761 | 234,868 | 1,838,636 | |||||||||||||||
Shares sold to holders in transfer-in-kind | 1,054,790 | — | 561,214 | — | |||||||||||||||
Shares sold to holders in reinvestment of dividends | — | — | 19,609 | 19,675 | |||||||||||||||
Shares redeemed | (99,349 | ) | (1,668 | ) | (27,240 | ) | (22,790 | ) | |||||||||||
Net increase | 980,976 | 829,093 | 788,451 | 1,835,521 | |||||||||||||||
Institutional Amount | |||||||||||||||||||
Shares sold | $ | 234,411 | $ | 7,665,602 | $ | 2,234,772 | $ | 18,362,260 | |||||||||||
Shares sold to holders in transfer-in-kind | 10,547,899 | — | 5,612,139 | — | |||||||||||||||
Shares sold to holders in reinvestment of dividends | — | — | 189,623 | 197,099 | |||||||||||||||
Shares redeemed | (922,750 | ) | (16,658 | ) | (262,837 | ) | (228,713 | ) | |||||||||||
Net increase | $ | 9,859,560 | $ | 7,648,944 | $ | 7,773,697 | $ | 18,330,646 |
(a) | Commencement of operations. |
7. Line of Credit
The Penn Capital Senior Floating Rate Income Fund has entered into a Credit Agreement for a line of credit equal to the lesser of (i) $3.0 Million, (ii) 20% of the gross market value of the Fund or (iii) 33.3% of the net market value of the Fund. Borrowings pursuant to the agreement are collateralized by the investments in the Fund. The line of credit is intended to provide short term financing, if necessary, in connection with shareholder redemptions. The Fund did not utilize any borrowings under the line of credit for the period ended December 31, 2016.
8. Recent Accounting Pronouncements
In October 2016, the U.S. Securities and Exchange Commission adopted new rules and amended existing rules (together, “final rules”) intended to modernize the reporting and disclosure of information by registered investment companies. In part, the final rules amend Regulation S-X which set forth the form and content of financial statements. Management is currently evaluating the impact that the adoption of the amendments to Regulation S-X will have on the financial statements and related disclosures.
9. 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.
35
Trustee and Officer Compensation
The Trust does not compensate any of its Trustees who are interested persons nor any of its officers. For the period ended December 31, 2016, the aggregate compensation paid by the Trust to the independent Trustees was $18,000. 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 twelve-month period ended June 30 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. In addition, you may review and copy each Fund’s Forms N-Q at the SEC’s Public Reference Room in Washington D.C. You may obtain information on the operation of the Public Reference Room by calling (800) SEC-0330.
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.
36
Item 2. Code of Ethics.
Not applicable for semi-annual reports.
Item 3. Audit Committee Financial Expert.
Not applicable for semi-annual reports.
Item 4. Principal Accountant Fees and Services.
Not applicable for semi-annual reports.
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 has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting. |
Item 12. Exhibits.
(a) | (1) Any code of ethics or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy Item 2 requirements through filing an exhibit. Not applicable for semi-annual reports. |
(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 2/24/17
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 2/24/17
By (Signature and Title) /s/ Gerald McBride
Gerald McBride, Treasurer
Date 2/24/17