UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-23011
PENN CAPITAL FUNDS TRUST
(Exact name of registrant as specified in charter)
Navy Yard Corporate Center
1200 Intrepid Ave., Suite 400
Philadelphia, Pennsylvania 19112
(Address of principal executive offices) (Zip code)
Richard A. Hocker
Navy Yard Corporate Center
1200 Intrepid Ave., Suite 400
Philadelphia, Pennsylvania 19112
(Name and address of agent for service)
With copies to:
Lisa L.B. Matson, Esq.
Navy Yard Corporate Center
1200 Intrepid Ave., Suite 400
Philadelphia, Pennsylvania 19112
Michael P. O’Hare, Esq.
Stradley Ronon Stevens & Young, LLP
2005 Market Street, Suite 2600
Philadelphia, Pennsylvania 19103
(215) 302-1500
Registrant's telephone number, including area code
Date of fiscal year end: June 30, 2020
Date of reporting period: December 31, 2019
Item 1. Reports to Stockholders.
SEMIANNUAL REPORT
December 31, 2019
PENN CAPITAL DEFENSIVE FLOATING RATE INCOME FUND
PENN CAPITAL DEFENSIVE SHORT DURATION HIGH INCOME FUND
PENN CAPITAL MULTI-CREDIT HIGH INCOME FUND
PENN CAPITAL SPECIAL SITUATIONS SMALL CAP EQUITY FUND
PENN CAPITAL MANAGED ALPHA SMID CAP EQUITY FUND
Beginning on January 1, 2021, as permitted by regulations adopted by the SEC, paper copies of the Fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund (defined herein) or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on the Fund’s website (www.penncapitalfunds.com), and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by calling 1-844-302-7366.
You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. If you invest directly with the Fund, you can call 1-844-302-7366 to let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held in your account if you invest through your financial intermediary.
PENN CAPITAL DEFENSIVE FLOATING RATE INCOME FUND
FUND SUMMARY (UNAUDITED)
This chart assumes an initial gross investment of $10,000 made on December 1, 2015, inception of the Institutional Class shares. Returns shown in the chart and table include the reinvestment of all dividends, but do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. In the absence of fee waivers and reimbursements, when they are necessary to keep expenses at the expense cap, total return would be reduced. Past performance is not predictive of future performance. Investment return and principal value will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. Index returns do not reflect the effects of fees, transaction costs or expenses. It is not possible to invest directly in an index. No information is provided for Investor Class shares because shares of that class had not yet been issued as of December 31, 2019.
Average Annual Total Returns for the Period Ended December 31, 2019 | One Year | Three Years | Since Inception(1) | ||||||
Penn Capital Defensive Floating Rate Income Fund Institutional Class Shares | 8.25 | % | 4.00 | % | 4.41 | % | |||
S&P/LSTA BB Loan Index | 9.31 | % | 4.04 | % | 4.64 | %(2) | |||
S&P/LSTA BB/B Loan Index | 9.12 | % | 4.41 | % | 5.23 | %(3) |
(1) | Inception date is 12/1/15. |
(2) | The return shown for the S&P/LSTA BB Loan Index in from the inception date of the Institutional Class shares. |
(3) | The return shown for the S&P/LSTA BB/B Loan Index is from the inception date of the Institutional Class shares. |
1
PENN CAPITAL DEFENSIVE SHORT DURATION HIGH INCOME FUND
FUND SUMMARY (UNAUDITED)
This chart assumes an initial gross investment of $10,000 made on July 17, 2017, inception of the Institutional Class shares. Returns shown in the chart and table include the reinvestment of all dividends, but do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. In the absence of fee waivers and reimbursements, when they are necessary to keep expenses at the expense cap, total return would be reduced. Past performance is not predictive of future performance. Investment return and principal value will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. Index returns do not reflect the effects of fees, transaction costs or expenses. It is not possible to invest directly in an index.
Average Annual Total Returns for the Period Ended December 31, 2019 | One Year | Since Inception(1) | ||||
Penn Capital Defensive Short Duration High Income Fund | ||||||
Institutional Class Shares | 7.29 | % | 3.31 | % | ||
ICE BofAML 1-3 Year BB-Rated US Cash Pay High Yield Index | 8.69 | % | 4.46 | %(2) | ||
ICE BofAML US High Yield Cash Pay BB-B Rated 1-3 Years Index | 8.83 | % | 5.03 | %(3) |
(1) | Inception date is 7/17/17. |
(2) | The return shown for the ICE BofAML 1-3 Year BB-Rated US Cash Pay High Yield Index is from the inception date of the Institutional Class shares. |
(3) | The return shown for the ICE BofAML US High Yield Cash Pay BB-B Rated 1-3 Years Index is from the inception date of the Institutional Class shares. |
2
PENN CAPITAL MULTI-CREDIT HIGH INCOME FUND
FUND SUMMARY (UNAUDITED)
This chart assumes an initial gross investment of $10,000 made on December 1, 2015, inception of the Institutional Class shares. Returns shown in the chart and table include the reinvestment of all dividends, but do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. In the absence of fee waivers and reimbursements, when they are necessary to keep expenses at the expense cap, total return would be reduced. Past performance is not predictive of future performance. Investment return and principal value will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. Index returns do not reflect the effects of fees, transaction costs or expenses. It is not possible to invest directly in an index. No information is provided for Investor Class shares because shares of that class had not yet been issued as of December 31, 2019.
Average Annual Total Returns for the Period Ended December 31, 2019 | One Year | Three Years | Since Inception(1) | ||||||
Penn Capital Multi-Credit High Income Fund | |||||||||
Institutional Class Shares | 11.36 | % | 5.60 | % | 6.98 | % | |||
ICE BofAML US High Yield Constrained Index | 14.41 | % | 6.32 | % | 8.12 | %(2) | |||
50% ICE BofAML High Yield Constrained Index -50% S&P/LSTA BB Loan Index | 11.85 | % | 5.18 | % | 6.38 | %(3) |
(1) | Inception date is 12/1/15. |
(2) | The return shown for the ICE BofAML US High Yield Constrained Index is from the inception date of the Institutional Class shares. |
(3) | The return for the 50% ICE BofAML High Yield Constrained Index -50% S&P/LSTA BB Loan Index is from the inception date of the Institutional Class shares. |
3
PENN CAPITAL SPECIAL SITUATIONS SMALL CAP EQUITY FUND
FUND SUMMARY (UNAUDITED)
This chart assumes an initial gross investment of $10,000 made on December 18, 2015, inception of the Institutional Class shares. Returns shown in the chart and table include the reinvestment of all dividends, but do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. In the absence of fee waivers and reimbursements, when they are necessary to keep expenses at the expense cap, total return would be reduced. Past performance is not predictive of future performance. Investment return and principal value will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. Index returns do not reflect the effects of fees, transaction costs or expenses. It is not possible to invest directly in an index. No information is provided for Investor Class shares because shares of that class had not yet been issued as of December 31, 2019.
Average Annual Total Returns for the Period Ended December 31, 2019 | One Year | Three Years | Since Inception(1) | ||||||
Penn Capital Special Situations Small Cap Equity Fund | |||||||||
Institutional Class Shares | 28.98 | % | 7.80 | % | 10.95 | % | |||
Russell 2000® Index | 25.52 | % | 8.59 | % | 11.56 | %(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. |
4
PENN CAPITAL MANAGED ALPHA SMID CAP EQUITY FUND
FUND SUMMARY (UNAUDITED)
This chart assumes an initial gross investment of $10,000 made on December 1, 2015, inception of the Institutional Class shares. Returns shown in the chart and table include the reinvestment of all dividends, but do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. In the absence of fee waivers and reimbursements, when they are necessary to keep expenses at the expense cap, total return would be reduced. Past performance is not predictive of future performance. Investment return and principal value will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. Index returns do not reflect the effects of fees, transaction costs or expenses. It is not possible to invest directly in an index. No information is provided for Investor Class shares because shares of that class had not yet been issued as of December 31, 2019.
Average Annual Total Returns for the Period Ended December 31, 2019 | One Year | Three Years | Since Inception(1) | ||||||
Penn Capital Managed Alpha SMID Cap Equity Fund | |||||||||
Institutional Class Shares | 30.83 | % | 12.22 | % | 11.63 | % | |||
Russell 2500TM Index | 27.77 | % | 10.33 | % | 10.71 | %(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. |
5
PENN CAPITAL FUNDS TRUST
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
FOR THE SIX MONTH PERIOD FROM JULY 1, 2019 TO DECEMBER 31, 2019
Cost in Dollars of a $1,000 Investment in Penn Capital Defensive Floating Rate Income Fund (Unaudited)
The example below is intended to describe the fees and expenses borne by shareholders during the six-month period from July 1, 2019 to December 31, 2019, and the impact of those costs on your investment.
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees on sales (as applicable) and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses (as applicable). This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 made at the beginning of the six-month period and held for the entire period from July 1, 2019 to December 31, 2019.
This example illustrates your Fund’s ongoing costs in two ways:
Actual Expenses
The second and third data columns in the table below provide information about actual account values and actual expenses. You may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid during the six months ended December 31, 2019. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled Expenses Paid During Period to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The fourth and fifth data columns in the table below provide information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balances or expenses you paid for the six-month period shown. You may use this information to compare the ongoing costs of investing in the Fund with the ongoing costs of investing in other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees. Therefore, the fourth and fifth data columns of the table are useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Actual | Hypothetical | ||||||||||||||
Share Class(1) | Beginning Account Value 7/1/19 | Ending Account Value (Based on Actual Returns and Expenses) 12/31/19 | Expenses Paid During Period(2) | Ending Account Value (Based on Hypothetical 5% Annualized Return and Actual Expenses) 12/31/19 | Expenses Paid During Period(2) | ||||||||||
Institutional Class Shares | $ | 1,000.00 | $ | 1,025.90 | $ | 3.26 | $ | 1,021.92 | $ | 3.25 |
(1) | No information is provided for Investor Class shares because shares of that class had not yet been issued as of December 31, 2019. |
(2) | Expenses are equal to the Fund’s annualized expense ratio, net of waivers and excluding acquired fund fees and expenses if any (0.64% for the Institutional Class), multiplied by the average account value over the period, divided by 366 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)
FOR THE PERIOD FROM JULY 1, 2019 TO DECEMBER 31, 2019
Cost in Dollars of a $1,000 Investment in Penn Capital Defensive Short Duration High Income Fund (Unaudited)
The example below is intended to describe the fees and expenses borne by shareholders during the six-month period from July 1, 2019 to December 31, 2019, and the impact of those costs on your investment.
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees on sales (as applicable) and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses (as applicable). This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 made at the beginning of the six-month period and held for the entire period from July 1, 2019 to December 31, 2019.
This example illustrates your Fund’s ongoing costs in two ways:
Actual Expenses
The second and third data columns in the table below provide information about actual account values and actual expenses. You may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid during the period ended December 31, 2019. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled Expenses Paid During Period to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The fourth and fifth data columns in the table below provide information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balances or expenses you paid for the six-month period shown. You may use this information to compare the ongoing costs of investing in the Fund with the ongoing costs of investing in other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees. Therefore, the fourth and fifth data columns of the table are useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Actual | Hypothetical | ||||||||||||||
Share Class(1) | Beginning Account Value 7/1/19 | Ending Account Value (Based on Actual Returns and Expenses) 12/31/19 | Expenses Paid During Period(2) | Ending Account Value (Based on Hypothetical 5% Annualized Return and Actual Expenses) 12/31/19 | Expenses Paid During Period(2) | ||||||||||
Institutional Class Shares | $ | 1,000.00 | $ | 1,024.50 | $ | 2.75 | $ | 1,022.42 | $ | 2.75 |
(1) | No information is provided for Investor Class shares because shares of that class had not yet been issued as of December 31, 2019. |
(2) | Expenses are equal to the Fund’s annualized expense ratio, net of waivers and excluding acquired fund fees and expenses if any (0.54% for the Institutional Class), multiplied by the average account value over the period, divided by 366 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)
FOR THE SIX MONTH PERIOD FROM JULY 1, 2019 TO DECEMBER 31, 2019
Cost in Dollars of a $1,000 Investment in Penn Capital Multi-Credit High Income Fund (Unaudited)
The example below is intended to describe the fees and expenses borne by shareholders during the six-month period from July 1, 2019 to December 31, 2019, and the impact of those costs on your investment.
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees on sales (as applicable) and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses (as applicable). This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 made at the beginning of the six-month period and held for the entire period from July 1, 2019 to December 31, 2019.
This example illustrates your Fund’s ongoing costs in two ways:
Actual Expenses
The second and third data columns in the table below provide information about actual account values and actual expenses. You may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid during the six months ended December 31, 2019. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled Expenses Paid During Period to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The fourth and fifth data columns in the table below provide information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balances or expenses you paid for the six-month period shown. You may use this information to compare the ongoing costs of investing in the Fund with the ongoing costs of investing in other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees. Therefore, the fourth and fifth data columns of the table are useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Actual | Hypothetical | ||||||||||||||
Share Class(1) | Beginning Account Value 7/1/19 | Ending Account Value (Based on Actual Returns and Expenses) 12/31/19 | Expenses Paid During Period(2) | Ending Account Value (Based on Hypothetical 5% Annualized Return and Actual Expenses) 12/31/19 | Expenses Paid During Period(2) | ||||||||||
Institutional Class Shares | $ | 1,000.00 | $ | 1,030.50 | $ | 3.67 | $ | 1,021.52 | $ | 3.66 |
(1) | No information is provided for Investor Class shares because shares of that class had not yet been issued as of December 31, 2019. |
(2) | Expenses are equal to the Fund’s annualized expense ratio, net of waivers and excluding acquired fund fees and expenses if any (0.72% for the Institutional Class), multiplied by the average account value over the period, divided by 366 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, 2019 TO DECEMBER 31, 2019
Cost in Dollars of a $1,000 Investment in Penn Capital Special Situations Small Cap Equity Fund (Unaudited)
The example below is intended to describe the fees and expenses borne by shareholders during the six-month period from July 1, 2019 to December 31, 2019, and the impact of those costs on your investment.
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees on sales (as applicable) and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses (as applicable). This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 made at the beginning of the six-month period and held for the entire period from July 1, 2019 to December 31, 2019.
This example illustrates your Fund’s ongoing costs in two ways:
Actual Expenses
The second and third data columns in the table below provide information about actual account values and actual expenses. You may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid during the six months ended December 31, 2019. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled Expenses Paid During Period to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The fourth and fifth data columns in the table below provide information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balances or expenses you paid for the six-month period shown. You may use this information to compare the ongoing costs of investing in the Fund with the ongoing costs of investing in other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees. Therefore, the fourth and fifth data columns of the table are useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Actual | Hypothetical | ||||||||||||||
Share Class(1) | Beginning Account Value 7/1/19 | Ending Account Value (Based on Actual Returns and Expenses) 12/31/19 | Expenses Paid During Period(2) | Ending Account Value (Based on Hypothetical 5% Annualized Return and Actual Expenses) 12/31/19 | Expenses Paid During Period(2) | ||||||||||
Institutional Class Shares | $ | 1,000.00 | $ | 1,094.80 | $ | 5.79 | $ | 1,019.61 | $ | 5.58 |
(1) | No information is provided for Investor Class shares because shares of that class had not yet been issued as of December 31, 2019. |
(2) | Expenses are equal to the Fund’s annualized expense ratio (including interest expense), net of waivers and excluding acquired fund fees and expenses if any (1.09% for the Institutional Class), multiplied by the average account value over the period, divided by 366 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
PENN CAPITAL FUNDS TRUST
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
FOR THE SIX MONTH PERIOD FROM JULY 1, 2019 TO DECEMBER 31, 2019
Cost in Dollars of a $1,000 Investment in Penn Capital Managed Alpha SMID Cap Equity Fund (Unaudited)
The example below is intended to describe the fees and expenses borne by shareholders during the six-month period from July 1, 2019 to December 31, 2019, and the impact of those costs on your investment.
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees on sales (as applicable) and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses (as applicable). This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 made at the beginning of the six-month period and held for the entire period from July 1, 2019 to December 31, 2019.
This example illustrates your Fund’s ongoing costs in two ways:
Actual Expenses
The second and third data columns in the table below provide information about actual account values and actual expenses. You may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid during the six months ended December 31, 2019. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled Expenses Paid During Period to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The fourth and fifth data columns in the table below provide information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balances or expenses you paid for the six-month period shown. You may use this information to compare the ongoing costs of investing in the Fund with the ongoing costs of investing in other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees. Therefore, the fourth and fifth data columns of the table are useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Actual | Hypothetical | ||||||||||||||
Share Class(1) | Beginning Account Value 7/1/19 | Ending Account Value (Based on Actual Returns and Expenses) 12/31/19 | Expenses Paid During Period(2) | Ending Account Value (Based on Hypothetical 5% Annualized Return and Actual Expenses) 12/31/19 | Expenses Paid During Period(2) | ||||||||||
Institutional Class Shares | $ | 1,000.00 | $ | 1,097.90 | $ | 5.59 | $ | 1,019.81 | $ | 5.38 |
(1) | No information is provided for Investor Class shares because shares of that class had not yet been issued as of December 31, 2019. |
(2) | Expenses are equal to the Fund’s annualized expense ratio, net of waivers and excluding acquired fund fees and expenses if any (1.06% for the Institutional Class), multiplied by the average account value over the period, divided by 366 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. |
10
PENN CAPITAL FUNDS TRUST |
PENN CAPITAL DEFENSIVE FLOATING RATE INCOME FUND |
SCHEDULE OF INVESTMENTS |
DECEMBER 31, 2019 (UNAUDITED) |
Principal | Value | |||||
Bank Loans: 78.9% (a)(b) | ||||||
Aerospace: 0.8% | ||||||
1199169 BC ULC, 5.945% (3 Month US LIBOR + 4.000%), 4/8/26 | $87,194 | $ | 87,725 | |||
Ducommun, Inc., 5.984%, 11/21/25 | ||||||
(2 Month US LIBOR + 4.000%) | 71,141 | 71,141 | ||||
(3 Month US LIBOR + 4.000%) | 92,291 | 92,291 | ||||
Dynasty Acquisition Co., Inc., 5.945% (3 Month US LIBOR + 4.000%), 4/4/26 | 162,181 | 163,169 | ||||
414,326 | ||||||
Airline Companies: 1.7% | ||||||
Allegiant Travel Co., 6.393% (3 Month US LIBOR + 4.500%), 2/5/24 | 248,624 | 250,178 | ||||
American Airlines, Inc., 3.542% (1 Month US LIBOR + 1.750%), 6/27/25 | 431,200 | 431,536 | ||||
United Airlines, Inc., 3.549% (1 Month US LIBOR + 1.750%), 4/1/24 | 148,096 | 148,745 | ||||
830,459 | ||||||
Automotive: 0.7% | ||||||
Navistar, Inc., 5.240% (1 Month US LIBOR + 3.500%), 11/6/24 | 345,625 | 344,184 | ||||
Brokerage: 1.0% | ||||||
Blackstone Mortgage Trust, Inc., 4.750% (3 Month US LIBOR + 3.500%), 4/23/26 | 249,375 | 250,727 | ||||
Victory Capital Holdings, Inc., 5.569% (3 Month US LIBOR + 3.250%), 7/1/26 | 220,528 | 221,906 | ||||
472,633 | ||||||
Building & Construction: 0.2% | ||||||
Janus International Group LLC, 5.549% (1 Month US LIBOR + 3.750%), 2/15/25 | 123,125 | 121,894 | ||||
Building Materials: 1.3% | ||||||
Beacon Roofing Supply, Inc., 4.055% (1 Month US LIBOR + 2.250%), 10/11/24 | 247,609 | 248,538 | ||||
Foundation Building Materials Holding Co. LLC, 4.799% (1 Month US LIBOR + 3.000%), 8/13/25 | 148,500 | 148,965 | ||||
Quikrete Holdings, Inc., 4.549% (1 Month US LIBOR + 2.750%), 11/15/23 | 240,385 | 241,199 | ||||
638,702 | ||||||
Building Products: 0.7% | ||||||
Atkore International, Inc., 4.700% (3 Month US LIBOR + 2.750%), 12/22/23 | 329,234 | 330,221 | ||||
Principal | Value | |||
Chemical Companies: 2.1% | ||||
Encapsys LLC, 5.299% (1 Month US LIBOR + 3.500%), 11/30/24 | $120,538 | $ | 121,217 | |
HB Fuller Co., 3.765% (1 Month US LIBOR + 2.000%), 10/20/24 | 194,843 | 195,289 | ||
Hexion, Inc., 5.820% (3 Month US LIBOR + 3.500%), 7/1/26 | 248,750 | 249,683 | ||
Tronox Finance LLC, 4.609%, 9/22/24 | ||||
(3 Month US LIBOR + 2.750%) | 126,313 | 126,471 | ||
(1 Month US LIBOR + 2.750%) | 179,013 | 179,236 | ||
Univar USA, Inc., 4.049% (1 Month US LIBOR + 2.250%), 7/1/24 | 164,550 | 165,126 | ||
1,037,022 | ||||
Computer Hardware: 1.0% | ||||
Dell International LLC, 3.540% (1 Month US LIBOR + 1.750%), 3/13/24 | 241,135 | 242,040 | ||
GLOBALFOUNDRIES, Inc., 6.750% (3 Month US LIBOR + 4.750%), 6/5/26 | 248,750 | 240,354 | ||
482,394 | ||||
Consumer-Products: 1.1% | ||||
BDF Acquisition Corp., 7.049% (1 Month US LIBOR + 5.250%), 8/8/23 | 295,837 | 284,004 | ||
HLF Financing Sarl LLC, 4.549% (1 Month US LIBOR + 2.750%), 8/16/25 | 246,875 | 247,423 | ||
531,427 | ||||
Diversified Capital Goods: 1.2% | ||||
DXP Enterprises, Inc., 6.549% (1 Month US LIBOR + 4.750%), 8/29/23 | 223,668 | 223,389 | ||
EWT Holdings III Corp., 4.799% (1 Month US LIBOR + 3.000%), 12/20/24 | 253,816 | 254,768 | ||
Thermon Holding Corp., 5.441% (1 Month US LIBOR + 3.750%), 10/30/24 | 89,313 | 89,535 | ||
567,692 | ||||
Diversified Financial Services: 1.0% | ||||
Canyon Valor Cos, Inc., 4.549% (1 Month US LIBOR + 2.750%), 6/16/23 | 232,298 | 232,588 | ||
Pivotal Payments Direct Corp., 6.801%, 9/28/25 | ||||
(1 Month US LIBOR + 5.000%) | 173,450 | 174,317 | ||
(1 Month US LIBOR + 5.000%) | 25,409 | 25,536 | ||
(1 Month US LIBOR + 5.000%) | 35,046 | 35,221 | ||
467,662 |
The Accompanying Notes are an Integral Part of these Financial Statements.
11
PENN CAPITAL FUNDS TRUST |
PENN CAPITAL DEFENSIVE FLOATING RATE INCOME FUND |
SCHEDULE OF INVESTMENTS |
DECEMBER 31, 2019 (UNAUDITED) |
Principal | Value | |||
Electric Utilities: 0.2% | ||||
Compass Power Generation LLC, 5.299% (1 Month US LIBOR + 3.500%), 12/20/24 | $119,568 | $ | 119,120 | |
Electric-Distribution/Transportation: 0.3% | ||||
Pike Corp., 5.050% (1 Month US LIBOR + 3.250%), 7/24/26 | 146,618 | 147,302 | ||
Electric-Generation: 2.1% | ||||
Calpine Corp., 4.200% (3 Month US LIBOR + 2.250%), 4/6/26 | 248,750 | 250,006 | ||
Edgewater Generation LLC, 5.549% (1 Month US LIBOR + 3.750%), 12/12/25 | 290,657 | 277,578 | ||
Lightstone Holdco LLC, 5.549% (1 Month US LIBOR + 3.750%), 1/30/24 | 285,444 | 261,324 | ||
Lightstone Holdco LLC, 5.549% (1 Month US LIBOR + 3.750%), 1/30/24 | 16,099 | 14,739 | ||
Talen Energy Supply LLC, 5.549% (1 Month US LIBOR + 3.750%), 7/8/26 | 249,375 | 249,270 | ||
1,052,917 | ||||
Electronics: 0.7% | ||||
Cohu, Inc., 4.799% (1 Month US LIBOR + 3.000%), 10/1/25 | 322,813 | 319,584 | ||
Energy Equipment & Services: 0.3% | ||||
Blackstone CQP Holdco LP, 5.408% (3 Month US LIBOR + 3.500%), 9/30/24 | 149,250 | 149,833 | ||
Entertainment: 3.5% | ||||
Alterra Mountain Co., 4.549% (1 Month US LIBOR + 2.750%), 7/31/24 | 245,000 | 246,838 | ||
AMC Entertainment Holdings, Inc., 4.800% (1 Month US LIBOR + 3.000%), 4/22/26 | 248,885 | 250,618 | ||
Crown Finance US, Inc., 4.049% (1 Month US LIBOR + 2.250%), 2/28/25 | 258,820 | 258,466 | ||
Life Time, Inc., 4.658% (3 Month US LIBOR + 2.750%), 6/15/22 | 339,849 | 340,488 | ||
Nascar Holdings, Inc., 4.495% (1 Month US LIBOR + 2.750%), 10/18/26 | 141,862 | 143,334 | ||
Playtika Holding Corp., 7.736% (1 Month US LIBOR + 6.000%), 12/3/24 | 200,000 | 201,900 | ||
SeaWorld Parks & Entertainment, Inc., 4.799% (1 Month US LIBOR + 3.000%), 3/31/24 | 245,275 | 246,297 | ||
United PF Holdings LLC, 6.198% (US LIBOR + 4.500%), 6/10/26 | 33,903 | 33,691 | ||
1,721,632 | ||||
Environmental & Waste: 1.0% | ||||
Advanced Drainage Systems, Inc., 4.000% (1 Month US LIBOR + 2.250%), 9/24/26 | 185,714 | 186,953 | ||
GFL Environmental, Inc., 4.799% (1 Month US LIBOR + 3.000%), 5/31/25 | 297,494 | 297,705 | ||
484,658 | ||||
Food & Drug Retailers: 0.5% | ||||
Albertson's LLC, 4.549% (1 Month US LIBOR + 2.750%), 8/17/26 | 244,530 | 246,494 |
Principal | Value | |||
Food-Wholesale: 1.6% | ||||
American Seafoods Group LLC, 4.563%, 8/21/23 | ||||
(1 Month US LIBOR + 2.750%) | $216,002 | $ | 217,082 | |
(Prime Rate + 1.750%) | 6,857 | 6,891 | ||
Bellring Brands LLC, 6.799% (1 Month US LIBOR + 5.000%), 10/21/24 | 275,000 | 277,579 | ||
JBS USA LUX SA, 3.799% (1 Month US LIBOR + 2.000%), 5/1/26 | 299,248 | 300,993 | ||
802,545 | ||||
Forestry/Paper: 0.4% | ||||
Sabert Corp., 6.250% (1 Month US LIBOR + 4.500%), 11/26/26 | 200,000 | 201,584 | ||
Gaming: 2.7% | ||||
Boyd Gaming Corp., 3.853% (1 Week US LIBOR + 2.250%), 9/15/23 | 157,184 | 158,122 | ||
Eldorado Resorts, Inc., 4.062%, 4/17/24 | ||||
(1 Month US LIBOR + 2.250%) | 35,006 | 34,973 | ||
(1 Month US LIBOR + 2.250%) | 107,230 | 107,129 | ||
PCI Gaming Authority, 4.299% (1 Month US LIBOR + 2.500%), 5/31/26 | 226,298 | 227,618 | ||
Scientific Games International, Inc., 4.452%, 8/14/24 | ||||
(1 Month US LIBOR + 2.750%) | 357,600 | 358,197 | ||
(1 Month US LIBOR + 2.750%) | 86,651 | 86,796 | ||
Stars Group Holdings BV, 5.445%, 7/10/25 | ||||
(3 Month US LIBOR + 3.500%) | 335,333 | 337,975 | ||
(3 Month US LIBOR + 3.500%) | 29,229 | 29,459 | ||
1,340,269 | ||||
Gas Distribution: 1.2% | ||||
Prairie ECI Acquiror LP, 6.695% (3 Month US LIBOR + 4.750%), 3/11/26 | 146,250 | 144,856 | ||
Stonepeak Lonestar Holdings LLC, 6.299% (1 Month US LIBOR + 4.500%), 10/19/26 | 350,000 | 349,125 | ||
Woodford Express LLC, 6.700% (1 Month US LIBOR + 5.000%), 1/26/25 | 122,808 | 106,475 | ||
600,456 | ||||
Health Care Providers & Services: 0.6% | ||||
Emerald TopCo, Inc., 5.299% (1 Month US LIBOR + 3.500%), 7/26/26 | 299,500 | 300,905 | ||
Health Services: 3.1% | ||||
Acadia Healthcare Co., Inc., 4.299% (1 Month US LIBOR + 2.500%), 2/16/23 | 230,911 | 231,241 | ||
American Renal Holdings, Inc., 6.799% (1 Month US LIBOR + 5.000%), 6/22/24 | 221,589 | 209,799 | ||
FC Compassus LLC, 7.250% (1 Month LIBOR USD + 5.000%), 11/5/26 | 200,000 | 198,500 | ||
Gentiva Health Services, Inc., 5.562% (1 Month US LIBOR + 3.750%), 7/2/25 | 241,290 | 242,346 | ||
Option Care Health, Inc., 6.299% (1 Month US LIBOR + 4.500%), 8/6/26 | 225,000 | 223,875 | ||
Select Medical Corp., 6.250% (6 Month US LIBOR + 2.500%), 3/6/25 | 423,440 | 423,970 | ||
1,529,731 |
The Accompanying Notes are an Integral Part of these Financial Statements.
12
PENN CAPITAL FUNDS TRUST |
PENN CAPITAL DEFENSIVE FLOATING RATE INCOME FUND |
SCHEDULE OF INVESTMENTS |
DECEMBER 31, 2019 (UNAUDITED) |
Principal | Value | |||
Hotels: 0.2% | ||||
Marriott Ownership Resorts, Inc., 3.549% (1 Month US LIBOR + 1.750%), 8/29/25 | $99,250 | $ | 99,746 | |
Industrial Conglomerates: 0.7% | ||||
Deliver Buyer, Inc., 6.945% (3 Month US LIBOR + 5.000%), 5/1/24 | 247,472 | 248,556 | ||
MTS Systems Corp., 5.050% (1 Month US LIBOR + 3.250%), 7/5/23 | 94,483 | 94,719 | ||
343,275 | ||||
Internet & Direct Marketing Retail: 0.3% | ||||
Shutterfly, Inc., 8.104%, 10/1/26 | ||||
(3 Month US LIBOR + 6.000%) | 152,419 | 142,638 | ||
(1 Month US LIBOR + 6.000%) | 22,581 | 21,132 | ||
163,770 | ||||
Investments & Miscellaneous Financial Services: 4.5% | ||||
FinCo I LLC, 3.799% (1 Month US LIBOR + 2.000%), 12/27/22 | 195,112 | 196,016 | ||
iStar, Inc., 4.484%, 6/8/23 | ||||
(1 Month US LIBOR + 2.750%) | 67,308 | 67,644 | ||
(1 Month US LIBOR + 2.750%) | 121,875 | 122,485 | ||
LPL Holdings, Inc., 3.542% (1 Month US LIBOR + 1.750%), 11/12/26 | 177,887 | 178,555 | ||
Nexus Buyer LLC, 5.460% (1 Month US LIBOR + 3.750%), 10/30/26 | 250,000 | 251,485 | ||
Russell Investments US Institutional Holdco, Inc., 5.049% (1 Month US LIBOR + 3.250%), 6/1/23 | 439,719 | 439,719 | ||
The Edelman Financial Center LLC, 5.035% (1 Month US LIBOR + 3.250%), 7/19/25 | 297,748 | 299,174 | ||
TransUnion LLC, 3.549% (1 Month US LIBOR + 1.750%), 11/13/26 | 144,939 | 145,433 | ||
VeriFone Systems, Inc., 5.898% (3 Month US LIBOR + 4.000%), 8/20/25 | 247,749 | 243,988 | ||
WisdomTree International Holdings Ltd., 3.844% (2 Month US LIBOR + 2.000%), 1/31/21 | 241,892 | 238,868 | ||
2,183,367 | ||||
IT Services: 1.2% | ||||
NAB Holdings LLC, 4.945% (3 Month US LIBOR + 3.000%), 6/30/24 | 244,397 | 244,397 | ||
Paysafe Holdings US Corp., 5.049% (1 Month US LIBOR + 3.250%), 1/1/25 | 345,371 | 346,452 | ||
590,849 | ||||
Machinery Companies: 1.4% | ||||
Gates Global LLC, 4.549% (1 Month US LIBOR + 2.750%), 3/31/24 | 247,597 | 247,597 | ||
RBS Global, Inc., 3.472% (1 Month US LIBOR + 1.750%), 8/21/24 | 195,313 | 196,119 | ||
Welbilt, Inc., 4.299% (1 Month US LIBOR + 2.500%), 10/3/25 | 237,500 | 238,094 | ||
681,810 |
Principal | Value | |||
Media: 0.5% | ||||
Nexstar Broadcasting, Inc., 3.510% (3 Month US LIBOR + 1.750%), 10/26/23 | $243,267 | $ | 241,241 | |
WXXA-TV LLC, 3.510% (3 Month US LIBOR + 1.750%), 10/24/23 | 6,644 | 6,589 | ||
247,830 | ||||
Media-Broadcast: 5.8% | ||||
Beasley Mezzanine Holdings LLC, 5.780% (1 Month US LIBOR + 4.000%), 11/1/23 | 228,819 | 228,533 | ||
CBS Radio, 4.305% (1 Month US LIBOR + 2.500%), 11/17/24 | 290,199 | 292,013 | ||
CSC Holdings LLC, 3.990% (1 Month US LIBOR + 2.250%), 7/17/25 | 244,361 | 244,498 | ||
Cumulus Media New Holdings, Inc., 5.549% (1 Month US LIBOR + 3.750%), 3/31/26 | 199,500 | 201,361 | ||
Diamond Sports Group LLC, 5.030% (1 Month US LIBOR + 3.250%), 8/24/26 | 249,375 | 248,856 | ||
Gray Television, Inc., 3.947% (1 Month US LIBOR + 2.250%), 2/7/24 | 231,834 | 232,309 | ||
ION Media Networks, Inc., 4.812% (1 Month US LIBOR + 3.000%), 12/18/24 | 249,375 | 250,103 | ||
Sinclair Television Group, Inc., 4.050% (1 Month US LIBOR + 2.250%), 1/3/24 | 242,500 | 241,792 | ||
The E.W. Scripps Co., 4.299% (1 Month US LIBOR + 2.500%), 5/1/26 | 248,377 | 249,154 | ||
Univision Communications, Inc., 4.549% (1 Month US LIBOR + 2.750%), 3/15/24 | 193,738 | 191,030 | ||
Urban One, Inc., 5.800% (1 Month US LIBOR + 4.000%), 4/18/23 | 213,423 | 205,732 | ||
WideOpenWest Finance LLC, 5.030% (1 Month US LIBOR + 3.250%), 8/19/23 | 244,375 | 242,339 | ||
2,827,720 | ||||
Media-Cable: 2.3% | ||||
Altice France SA, 5.740% (1 Month US LIBOR + 4.000%), 8/14/26 | 392,883 | 393,209 | ||
Charter Communications Operating LLC, 3.550% (1 Month US LIBOR + 1.750%), 4/30/25 | 148,485 | 149,437 | ||
Cogeco Communications USA II LP, 4.049% (1 Month US LIBOR + 2.250%), 1/4/25 | 247,487 | 248,168 | ||
Radiate Holdco LLC, 4.799% (1 Month US LIBOR + 3.000%), 2/1/24 | 348,339 | 349,384 | ||
1,140,198 | ||||
Media-Services: 0.9% | ||||
Clear Channel Outdoor Holdings, Inc., 5.299% (1 Month US LIBOR + 3.500%), 8/21/26 | 249,375 | 250,532 | ||
Terrier Media Buyer, Inc. (1 Month US LIBOR + 4.250%), 6.500%, 12/12/26 | 200,000 | 201,876 | ||
452,408 | ||||
Metals & Mining: 1.1% | ||||
Big River Steel LLC, 6.945% (3 Month US LIBOR + 5.000%), 8/23/23 | 293,744 | 293,009 | ||
Zekelman Industries, Inc., 4.035% (1 Month US LIBOR + 2.250%), 6/14/21 | 242,705 | 242,958 | ||
535,967 |
The Accompanying Notes are an Integral Part of these Financial Statements.
13
PENN CAPITAL FUNDS TRUST |
PENN CAPITAL DEFENSIVE FLOATING RATE INCOME FUND |
SCHEDULE OF INVESTMENTS |
DECEMBER 31, 2019 (UNAUDITED) |
Principal | Value | |||
Metals/Mining Excluding Steel: 1.1% | ||||
Aleris International, Inc., 6.555% (1 Month US LIBOR + 4.750%), 2/27/23 | $247,497 | $ | 247,373 | |
American Rock Salt Co. LLC, 5.549% (1 Month US LIBOR + 3.750%), 3/21/25 | 290,025 | 291,838 | ||
539,211 | ||||
Mortgage Real Estate Investment Trusts (REITs): 0.3% | ||||
GGP Nimbus LLC, 4.299% (1 Month US LIBOR + 2.500%), 8/24/25 | 148,869 | 147,784 | ||
Multi-Line Insurance: 1.1% | ||||
Asurion LLC, 4.799% (1 Month US LIBOR + 3.000%), 8/4/22 | 267,555 | 268,949 | ||
HUB International Ltd., 4.940% (3 Month US LIBOR + 2.750%), 4/25/25 | 246,250 | 245,925 | ||
514,874 | ||||
Non-Food & Drug Retailers: 1.4% | ||||
Calceus Acquisition, Inc., 7.305% (1 Month US LIBOR + 5.500%), 2/12/25 | 281,269 | 280,332 | ||
Coty, Inc., 3.960% (1 Month US LIBOR + 2.250%), 4/5/25 | 199,494 | 195,171 | ||
PetSmart, Inc., 5.740% (1 Month US LIBOR + 4.000%), 3/11/22 | 225,657 | 222,954 | ||
698,457 | ||||
Oil, Gas & Consumable Fuels: 0.6% | ||||
Apergy Corp., 4.608%, 5/9/25 | ||||
(1 Month US LIBOR + 2.500%) | 75,301 | 75,395 | ||
(Prime Rate + 1.500%) | 4,518 | 4,524 | ||
Centurion Pipeline Co. LLC, 5.049% (1 Month US LIBOR + 3.250%), 9/30/25 | 198,000 | 197,753 | ||
277,672 | ||||
Packaging: 0.9% | ||||
Berry Global, Inc., 3.715% (1 Month US LIBOR + 2.000%), 10/3/22 | 174,680 | 175,163 | ||
Reynolds Group Holdings, Inc., 4.549%, 2/5/23 | ||||
(I Month US LIBOR + 2.750%) | 57,312 | 57,446 | ||
(I Month US LIBOR + 2.750%) | 34,989 | 35,072 | ||
(I Month US LIBOR + 2.750%) | 155,278 | 155,643 | ||
423,324 | ||||
Pharmaceuticals: 1.5% | ||||
Aldevron LLC, 6.195% (3 Month US LIBOR + 4.250%), 10/11/26 | 300,000 | 303,000 | ||
Jaguar Holding, Inc., 4.299% (1 Month US LIBOR + 2.500%), 8/18/22 | 467,922 | 448,590 | ||
751,590 | ||||
Pharmaceuticals & Devices: 1.4% | ||||
Bausch Health Americas, Inc., 4.740% (US LIBOR + 3.000%), 6/1/25 | 211,908 | 212,968 | ||
Cambrex Corp., 6.704% (1 Month US LIBOR + 5.000%), 11/22/26 | 250,000 | 248,750 | ||
Greatbatch Ltd., 4.220% (1 Month US LIBOR + 2.500%), 10/27/22 | 231,557 | 232,509 | ||
694,227 |
Principal | Value | |||
Printing & Publishing: 0.8% | ||||
Meredith Corp., 4.549% (1 Month US LIBOR + 2.750%), 1/31/25 | $144,684 | $ | 145,327 | |
Nielsen Finance LLC, 3.710% (1 Month US LIBOR + 2.000%), 10/4/23 | 250,000 | 250,652 | ||
395,979 | ||||
Railroads: 0.6% | ||||
Genesee & Wyoming, Inc., 4.250% (1 Month LIBOR USD + 2.000%), 11/6/26 | 275,000 | 277,357 | ||
Restaurants: 1.6% | ||||
Carrols Restaurant Group, Inc., 5.050% (1 Month US LIBOR + 3.250%), 4/30/26 | 298,625 | 293,897 | ||
IRB Holding Corp., 5.216% (3 Month US LIBOR + 3.250%), 2/5/25 | 247,609 | 248,917 | ||
Whatabrands LLC, 4.944% (1 Month US LIBOR + 3.250%), 8/2/26 | 249,375 | 250,577 | ||
793,391 | ||||
Semiconductors & Semiconductor Equipment: 0.5% | ||||
Xperi Corp., 4.299% (1 Month US LIBOR + 2.500%), 12/1/23 | 230,643 | 230,571 | ||
Software: 0.8% | ||||
Omnitracs LLC, 4.678% (3 Month US LIBOR + 2.750%), 3/23/25 | 246,312 | 245,312 | ||
SCS Holdings I, Inc., 6.049% (1 Month US LIBOR + 4.250%), 7/3/26 | 149,250 | 149,823 | ||
395,135 | ||||
Software/Services: 4.9% | ||||
Avaya, Inc., 5.990% (1 Month US LIBOR + 4.250%), 12/15/24 | 324,878 | 318,218 | ||
Blucora, Inc., 4.799% (1 Month US LIBOR + 3.000%), 5/22/24 | 176,525 | 177,628 | ||
Go Daddy Operating Co. LLC, 3.549%, 2/15/24 | ||||
(1 Month US LIBOR + 1.750%) | 44,955 | 45,180 | ||
�� (1 Month US LIBOR + 1.750%) | 140,991 | 141,695 | ||
(1 Month US LIBOR + 1.750%) | 200,000 | 201,000 | ||
Infor US, Inc., 4.695% (3 Month US LIBOR + 2.750%), 2/1/22 | 223,910 | 224,790 | ||
Match Group, Inc., 4.436% (3 Month US LIBOR + 2.500%), 11/16/22 | 109,375 | 109,238 | ||
McAfee LLC, 5.555% (1 Month US LIBOR + 3.750%), 9/29/24 | 241,669 | 242,575 | ||
Rackspace Hosting, Inc., 4.902% (3 Month US LIBOR + 3.000%), 11/3/23 | 467,922 | 453,430 | ||
SS&C Technologies Holdings Europe Sarl, 4.049% (1 Month US LIBOR + 2.250%), 4/16/25 | 50,492 | 50,818 | ||
SS&C Technologies, Inc., 4.049% (1 Month US LIBOR + 2.250%), 4/16/25 | 72,824 | 73,293 | ||
The Ultimate Software Group, Inc., 5.549% (1 Month US LIBOR + 3.750%), 5/3/26 | 149,625 | 150,490 | ||
Web.com Group, Inc., 5.495% (1 Month US LIBOR + 3.750%), 10/11/25 | 211,301 | 210,989 | ||
2,399,344 |
The Accompanying Notes are an Integral Part of these Financial Statements.
14
PENN CAPITAL FUNDS TRUST |
PENN CAPITAL DEFENSIVE FLOATING RATE INCOME FUND |
SCHEDULE OF INVESTMENTS |
DECEMBER 31, 2019 (UNAUDITED) |
Principal | Value | |||
Specialty Retail: 0.5% | ||||
Staples, Inc., 6.191% (1 Month US LIBOR + 4.500%), 9/12/24 | $244,274 | $ | 240,153 | |
Support-Services: 4.3% | ||||
Aramark Services, Inc., 3.452% (1 Month US LIBOR + 1.750%), 3/11/25 | 150,000 | 150,516 | ||
Aramark Services, Inc., 3.549% (1 Month US LIBOR + 1.750%), 12/10/26 | 215,000 | 216,008 | ||
CoreCivic, Inc., 6.250% (1 Month US LIBOR + 4.500%), 12/12/24 | 200,000 | 191,500 | ||
KAR Auction Services, Inc., 4.062% (1 Month US LIBOR + 2.250%), 9/19/26 | 117,781 | 118,517 | ||
PetVet Care Centers LLC, 4.549% (1 Month US LIBOR + 2.750%), 2/14/25 | 321,100 | 316,184 | ||
Prime Security Services Borrower, LLC, 4.944% (1 Month US LIBOR + 3.250%), 9/23/26 | 315,079 | 315,710 | ||
ServiceMaster Co. LLC, 3.000% (1 Month US LIBOR + 1.750%), 11/5/26 | 175,000 | 175,548 | ||
The Hertz Corp., 4.550% (1 Month US LIBOR + 2.750%), 6/30/23 | 242,288 | 243,550 | ||
UOS LLC, 7.299% (1 Month US LIBOR + 5.500%), 4/18/23 | 392,861 | 394,826 | ||
2,122,359 | ||||
Telecom - Integrated/Services: 0.6% | ||||
Telesat Canada LLC, 4.630% (3 Month US LIBOR + 2.750%), 11/22/26 | 300,000 | 300,876 | ||
Telecom-Integrated/Services: 3.6% | ||||
CenturyLink, Inc., 4.549% (1 Month US LIBOR + 2.750%), 1/31/25 | 470,746 | 472,393 | ||
CenturyLink, Inc., 4.549% (1 Month US LIBOR + 2.750%), 11/1/22 | 142,105 | 142,372 | ||
Cincinnati Bell, Inc., 5.049% (1 Month US LIBOR + 3.250%), 10/2/24 | 346,622 | 348,141 | ||
Consolidated Communications, Inc., 4.800% (1 Month US LIBOR + 3.000%), 10/5/23 | 244,047 | 230,522 | ||
Intelsat Jackson Holdings SA, 5.682% (6 Month US LIBOR + 3.750%), 11/27/23 | 250,000 | 250,223 | ||
Sprint Communications, Inc., 4.312% (1 Month US LIBOR + 2.500%), 2/3/24 | 318,863 | 315,754 | ||
1,759,405 | ||||
Telecom-Wireless: 0.4% | ||||
Sable International Finance Ltd., 5.049% (1 Month US LIBOR + 3.250%), 1/31/26 | 218,667 | 219,863 | ||
Telecommunications Equipment: 1.0% | ||||
CommScope, Inc., 5.049% (1 Month US LIBOR + 3.250%), 4/4/26 | 299,250 | 300,839 | ||
Dawn Acquisition LLC, 5.695% (3 Month US LIBOR + 3.750%), 12/31/25 | 173,250 | 164,298 | ||
465,137 | ||||
Transportation Excluding Air/Rail: 0.3% | ||||
United Road Services, Inc., 7.549% (1 Month US LIBOR + 5.750%), 10/19/24 | 140,783 | 122,481 |
Principal | Value | |||
Wireless Telecommunication Services: 0.8% | ||||
Iridium Satellite LLC, 5.549% (1 Month US LIBOR + 3.750%), 11/4/26 | $375,000 | $ | 379,455 | |
Total Bank Loans (cost $38,566,590) | 38,671,231 | |||
Corporate Bonds: 12.2% | ||||
Airline Companies: 0.2% | ||||
VistaJet Malta Finance PLC, 10.500%, 6/1/24 (c) | 95,000 | 90,250 | ||
Auto Parts & Equipment: 0.7% | ||||
American Axle & Manufacturing, Inc., 6.625%, 10/15/22 | 125,000 | 126,719 | ||
Meritor, Inc., 6.250%, 2/15/24 | 200,000 | 204,940 | ||
331,659 | ||||
Brokerage: 0.3% | ||||
Oppenheimer Holdings, Inc., 6.750%, 7/1/22 | 138,000 | 142,140 | ||
Computer Hardware: 0.4% | ||||
NCR Corp., 5.000%, 7/15/22 | 195,000 | 197,072 | ||
Consumer/Commercial/Lease Financing: 0.3% | ||||
Navient Corp., 7.250%, 9/25/23 | 150,000 | 169,505 | ||
Diversified Capital Goods: 0.5% | ||||
Griffon Corp., 5.250%, 3/1/22 | 230,000 | 230,862 | ||
Energy-Exploration & Production: 0.7% | ||||
Northern Oil and Gas, Inc., 8.500% Cash or 1.500% PIK, 5/15/23 (d) | 228,905 | 236,917 | ||
QEP Resources, Inc., 6.875%, 3/1/21 | 110,000 | 113,850 | ||
350,767 | ||||
Food & Drug Retailers: 0.4% | ||||
Ingles Markets, Inc., 5.750%, 6/15/23 | 183,000 | 186,431 | ||
Food-Wholesale: 0.7% | ||||
KeHE Distributors LLC, 8.625%, 10/15/26 (c) | 135,000 | 141,412 | ||
Simmons Foods, Inc., 7.750%, 1/15/24 (c) | 190,000 | 204,725 | ||
346,137 | ||||
Gas Distribution: 0.9% | ||||
Blue Racer Midstream LLC, 6.125%, 11/15/22 (c) | 260,000 | 254,800 | ||
NGL Energy Partners LP, 7.500%, 11/1/23 | 195,000 | 195,727 | ||
450,527 | ||||
Health Services: 0.3% | ||||
MEDNAX, Inc., 5.250%, 12/1/23 (c) | 150,000 | 153,375 | ||
Investments & Miscellaneous Financial Services: 0.2% | ||||
Icahn Enterprises LP, 6.250%, 2/1/22 | 100,000 | 101,900 | ||
Media-Broadcast: 1.1% | ||||
Diamond Sports Group LLC, 5.375%, 8/15/26 (c) | 190,000 | 192,195 | ||
Gray Television, Inc., 5.125%, 10/15/24 (c) | 185,000 | 191,937 | ||
Sirius XM Radio, Inc., 4.625%, 7/15/24 (c) | 150,000 | 157,500 | ||
541,632 |
The Accompanying Notes are an Integral Part of these Financial Statements.
15
PENN CAPITAL FUNDS TRUST |
PENN CAPITAL DEFENSIVE FLOATING RATE INCOME FUND |
SCHEDULE OF INVESTMENTS |
DECEMBER 31, 2019 (UNAUDITED) |
Principal | Value | |||
Media-Cable: 0.9% | ||||
CSC Holdings LLC, 5.250%, 6/1/24 | $95,000 | $ | 102,362 | |
DISH DBS Corp., 5.875%, 7/15/22 | 230,000 | 243,800 | ||
DISH DBS Corp., 5.875%, 11/15/24 | 100,000 | 102,188 | ||
448,350 | ||||
Media-Services: 0.3% | ||||
Nielsen Finance LLC, 5.000%, 4/15/22 (c) | 150,000 | 150,563 | ||
Metals/Mining Excluding Steel: 0.2% | ||||
Peabody Energy Corp., 6.000%, 3/31/22 (c) | 100,000 | 97,500 | ||
Multi-Line Insurance: 0.4% | ||||
Genworth Holdings, Inc., 7.700%, 6/15/20 | 175,000 | 178,979 | ||
Oil Field Equipment & Services: 0.2% | ||||
Nabors Industries, Inc., 5.000%, 9/15/20 | 110,000 | 110,275 | ||
Oil Refining & Marketing: 0.4% | ||||
PBF Holding Co. LLC, 7.000%, 11/15/23 | 180,000 | 186,750 | ||
Pharmaceuticals & Devices: 0.6% | ||||
Bausch Health Cos, Inc., 5.875%, 5/15/23 (c) | 136,000 | 137,190 | ||
Kinetic Concepts, Inc., 12.500%, 11/1/21 (c) | 170,000 | 174,888 | ||
312,078 | ||||
Real Estate Development & Management: 0.3% | ||||
Realogy Group LLC, 5.250%, 12/1/21 (c) | 170,000 | 171,700 | ||
Real Estate Investment Trusts (REITs): 0.5% | ||||
iStar, Inc., 4.750%, 10/1/24 | 240,000 | 248,700 | ||
Steel Producers/Products: 0.4% | ||||
AK Steel Corp., 7.625%, 10/1/21 | 190,000 | 191,425 | ||
Support-Services: 0.7% | ||||
CoreCivic, Inc., 5.000%, 10/15/22 | 160,000 | 160,800 | ||
The GEO Group, Inc., 5.875%, 1/15/22 | 165,000 | 163,762 | ||
324,562 | ||||
Telecom-Integrated/Services: 0.3% | ||||
Qwest Corp., 6.750%, 12/1/21 | 125,000 | 134,485 | ||
Telecom-Wireless: 0.3% | ||||
Sprint Corp., 7.875%, 9/15/23 | 135,000 | 148,950 | ||
Total Corporate Bonds (cost $5,909,077) | 5,996,574 | |||
U.S. Government Note: 2.6% | ||||
United States Treasury Fixed Rate Note | ||||
2.875%, 10/31/20 | 1,240,000 | 1,252,290 | ||
Total U.S. Government Note (cost $1,247,519) | 1,252,290 | |||
Total Investments - 93.7% (cost $45,723,186) | 45,920,095 | |||
Other Assets and Liabilties 6.3% | 3,072,032 | |||
Net Assets: 100.0% | $ | 48,992,127 |
(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) | Senior floating-rate loans (Senior Loans) often require prepayments from excess cash flows or permit the borrowers to repay at their election. The degree to which borrowers repay, whether as a contractual requirement or at their election, cannot be predicted with accuracy. As a result, the actual remaining maturity may be substantially less than the stated maturities shown. However, Senior Loans will typically have an expected average life of approximately two to four years. |
(c) | 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, 2019, the value of these investments was $2,118,035, or 4.3% of total net assets. |
(d) | Payment-in-kind (“PIK”) security which may pay/invest interest in additional par/shares and/or in cash. As of December 31, 2019, the total payment-in-kind was $0, or 0.0% of total net assets. |
Asset Type (as a percentage of total investments) (Unaudited) |
The Accompanying Notes are an Integral Part of these Financial Statements.
16
PENN CAPITAL FUNDS TRUST |
PENN CAPITAL DEFENSIVE SHORT DURATION HIGH INCOME FUND |
SCHEDULE OF INVESTMENTS |
DECEMBER 31, 2019 (UNAUDITED) |
Principal | Value | |||||
Convertible Bonds: 0.9% | ||||||
Energy-Exploration & Production: 0.4% | ||||||
Whiting Petroleum Corp., 1.250%, 4/1/20 | $ | 65,000 | $ | 63,446 | ||
PDC Energy, Inc., 1.125%, 9/15/21 | 125,000 | 117,367 | ||||
180,813 | ||||||
Pharmaceuticals & Devices: 0.5% | ||||||
Teva Pharmaceutical Finance Co. LLC, 0.250%, 2/1/26 | 220,000 | 208,545 | ||||
Total Convertible Bonds (cost $390,702) | 389,358 | |||||
Corporate Bonds: 87.7% | ||||||
Aerospace: 1.5% | ||||||
Bombardier, Inc., 8.750%, 12/1/21 (a) | 615,000 | 673,809 | ||||
Airline Companies: 2.0% | ||||||
Air Canada, 7.750%, 4/15/21 (a) | 469,000 | 498,829 | ||||
American Airlines Group, Inc., 5.000%, 6/1/22 (a) | 285,000 | 298,181 | ||||
Virgin Australia Holdings Ltd., 7.875%, 10/15/21 (a) | 118,000 | 121,771 | ||||
918,781 | ||||||
Auto Parts & Equipment: 1.2% | ||||||
American Axle & Manufacturing, Inc., 6.625%, 10/15/22 | 450,000 | 456,188 | ||||
The Goodyear Tire & Rubber Co., 8.750%, 8/15/20 | 75,000 | 77,906 | ||||
534,094 | ||||||
Automotive: 0.9% | ||||||
Ford Motor Credit Co. LLC, 5.875%, 8/2/21 | 200,000 | 209,334 | ||||
Jaguar Land Rover Automotive PLC, 3.500%, 3/15/20 (a) | 200,000 | 199,774 | ||||
409,108 | ||||||
Banking: 2.7% | ||||||
Ally Financial, Inc., 8.000%, 3/15/20 | 580,000 | 585,075 | ||||
Ally Financial, Inc., 7.500%, 9/15/20 | 190,000 | 196,650 | ||||
Ally Financial, Inc., 4.125%, 2/13/22 | 60,000 | 61,950 | ||||
Ally Financial, Inc., 3.875%, 5/21/24 | 85,000 | 89,037 | ||||
CIT Group, Inc., 4.125%, 3/9/21 | 275,000 | 280,187 | ||||
1,212,899 | ||||||
Brokerage: 0.4% | ||||||
Oppenheimer Holdings, Inc., 6.750%, 7/1/22 | 183,000 | 188,490 | ||||
Building & Construction: 4.1% | ||||||
Brookfield Residential Properties, Inc., 6.125%, 7/1/22 (a) | 190,000 | 192,850 | ||||
KB Home, 7.500%, 9/15/22 | 485,000 | 544,412 | ||||
KB Home, 7.000%, 12/15/21 | 145,000 | 155,512 | ||||
Lennar Corp., 8.375%, 1/15/21 | 320,000 | 338,400 | ||||
Meritage Homes Corp., 7.000%, 4/1/22 | 150,000 | 163,688 | ||||
TRI Pointe Group, Inc., 4.875%, 7/1/21 | 135,000 | 138,375 | ||||
William Lyon Homes, Inc., 7.000%, 8/15/22 | 15,000 | 15,038 | ||||
William Lyon Homes, Inc., 6.000%, 9/1/23 | 295,000 | 307,538 | ||||
1,855,813 |
Principal | Value | |||||
Chemical Companies: 1.6% | ||||||
Blue Cube Spinco LLC, 9.750%, 10/15/23 | $ | 105,000 | $ | 112,909 | ||
OCI NV, 6.625%, 4/15/23 (a) | 200,000 | 208,500 | ||||
OCI NV, 5.250%, 11/1/24 (a) | 200,000 | 207,500 | ||||
WR Grace & Co, 5.125%, 10/1/21 (a) | 195,000 | 203,225 | ||||
732,134 | ||||||
Computer Hardware: 3.4% | ||||||
Dell International LLC, 5.875%, 6/15/21 (a) | 241,000 | 244,767 | ||||
EMC Corp., 2.650%, 6/1/20 | 535,000 | 535,096 | ||||
NCR Corp., 5.000%, 7/15/22 | 177,000 | 178,881 | ||||
NCR Corp., 6.375%, 12/15/23 | 85,000 | 87,125 | ||||
Xerox Corp., 4.500%, 5/15/21 | 480,000 | 492,950 | ||||
1,538,819 | ||||||
Consumer/Commercial/Lease Financing: 6.3% | ||||||
Global Aircraft Leasing Co. Ltd., 6.500% Cash or 0.750% PIK, 9/15/24 (a)(b) | 375,000 | 391,294 | ||||
Navient Corp., 7.250%, 9/25/23 | 160,000 | 180,805 | ||||
Navient Corp., 6.500%, 6/15/22 | 90,000 | 97,537 | ||||
Navient Corp., 8.000%, 3/25/20 | 136,000 | 137,404 | ||||
Navient Corp., 7.250%, 1/25/22 | 662,000 | 719,223 | ||||
SLM Corp., 5.125%, 4/5/22 | 85,000 | 87,975 | ||||
Springleaf Finance Corp., 7.750%, 10/1/21 | 285,000 | 309,581 | ||||
Springleaf Finance Corp., 8.250%, 12/15/20 | 530,000 | 556,103 | ||||
Springleaf Finance Corp., 8.250%, 10/1/23 | 240,000 | 279,600 | ||||
Springleaf Finance Corp., 6.125%, 3/15/24 | 95,000 | 104,025 | ||||
2,863,547 | ||||||
Consumer-Products: 4.3% | ||||||
Avon International Capital PLC, 6.500%, 8/15/22 (a) | 370,000 | 383,875 | ||||
Edgewell Personal Care Co., 4.700%, 5/19/21 | 234,000 | 239,265 | ||||
Edgewell Personal Care Co., 4.700%, 5/24/22 | 190,000 | 197,125 | ||||
Mattel, Inc., 3.150%, 3/15/23 | 435,000 | 428,475 | ||||
Mattel, Inc., 6.750%, 12/31/25 (a) | 250,000 | 268,700 | ||||
Tupperware Brands Corp., 4.750%, 6/1/21 | 425,000 | 428,255 | ||||
1,945,695 | ||||||
Diversified Capital Goods: 1.4% | ||||||
Actuant Corp., 5.625%, 6/15/22 | 150,000 | 151,500 | ||||
Anixter, Inc., 5.125%, 10/1/21 | 140,000 | 145,313 | ||||
Griffon Corp., 5.250%, 3/1/22 | 359,000 | 360,346 | ||||
657,159 | ||||||
Electric Utilities: 0.4% | ||||||
NextEra Energy Operating Partners LP, 4.250%, 7/15/24 (a) | 165,000 | 171,806 | ||||
Electronics: 1.9% | ||||||
Advanced Micro Devices, Inc., 7.500%, 8/15/22 | 460,000 | 518,075 | ||||
MagnaChip Semiconductor Corp., 6.625%, 7/15/21 | 323,000 | 321,385 | ||||
839,460 |
The Accompanying Notes are an Integral Part of these Financial Statements.
17
PENN CAPITAL FUNDS TRUST |
PENN CAPITAL DEFENSIVE SHORT DURATION HIGH INCOME FUND |
SCHEDULE OF INVESTMENTS |
DECEMBER 31, 2019 (UNAUDITED) |
Principal | Value | |||||
Energy-Exploration & Production: 2.5% | ||||||
Antero Resources Corp., 5.375%, 11/1/21 | $ | 310,000 | $ | 295,178 | ||
Northern Oil and Gas, Inc., 8.500% Cash or 1.000% PIK, 5/15/23 (b) | 190,609 | 197,280 | ||||
QEP Resources, Inc., 6.875%, 3/1/21 | 200,000 | 207,000 | ||||
Range Resources Corp., 5.750%, 6/1/21 | 285,000 | 284,288 | ||||
Whiting Petroleum Corp., 5.750%, 3/15/21 | 65,000 | 61,490 | ||||
WPX Energy, Inc., 8.250%, 8/1/23 | 72,000 | 82,800 | ||||
1,128,036 | ||||||
Environmental & Waste: 0.4% | ||||||
Stericycle, Inc., 5.375%, 7/15/24 (a) | 185,000 | 194,250 | ||||
Food-Wholesale: 1.5% | ||||||
Simmons Foods, Inc., 5.750%, 11/1/24 (a) | 175,000 | 175,875 | ||||
Simmons Foods, Inc., 7.750%, 1/15/24 (a) | 240,000 | 258,600 | ||||
TreeHouse Foods, Inc. 4.875%, 3/15/22 | 230,000 | 230,863 | ||||
665,338 | ||||||
Food & Drug Retailers: 0.6% | ||||||
Albertsons Cos, Inc. 5.750%, 3/15/25 | 125,000 | 129,375 | ||||
Ingles Markets, Inc., 5.750%, 6/15/23 | 118,000 | 120,212 | ||||
249,587 | ||||||
Forestry & Paper Products: 0.7% | ||||||
Norbord, Inc., 6.250%, 4/15/23 (a) | 280,000 | 299,600 | ||||
Gaming: 4.9% | ||||||
GLP Capital LP, 4.375%, 4/15/21 | 120,000 | 122,331 | ||||
International Game Technology PLC, 6.250%, 2/15/22 (a) | 575,000 | 606,625 | ||||
Jack Ohio Finance LLC, 6.750%, 11/15/21 (a) | 19,000 | 19,380 | ||||
Jacobs Entertainment, Inc., 7.875%, 2/1/24 (a) | 210,000 | 222,600 | ||||
MGM Resorts International, 7.750%, 3/15/22 | 765,000 | 852,975 | ||||
Stars Group Holdings BV, 7.000%, 7/15/26 (a) | 375,000 | 406,406 | ||||
2,230,317 | ||||||
Gas Distribution: 3.9% | ||||||
Blue Racer Midstream LLC, 6.125%, 11/15/22 (a) | 430,000 | 421,400 | ||||
Crestwood Midstream Partners LP, 6.250%, 4/1/23 | 688,000 | 701,760 | ||||
Energy Transfer Operating LP, 7.500%, 10/15/20 | 240,000 | 249,403 | ||||
NGL Energy Partners LP, 7.500%, 11/1/23 | 150,000 | 150,560 | ||||
Rockies Express Pipeline LLC, 5.625%, 4/15/20 (a) | 255,000 | 257,702 | ||||
1,780,825 | ||||||
Health Services: 1.3% | ||||||
DaVita, Inc., 5.125%, 7/15/24 | 200,000 | 205,000 | ||||
MEDNAX, Inc., 5.250%, 12/1/23 (a) | 365,000 | 373,212 | ||||
578,212 | ||||||
Hospitals: 2.7% | ||||||
HCA Healthcare, Inc., 6.250%, 2/15/21 | 355,000 | 370,087 | ||||
HCA, Inc., 7.500%, 2/15/22 | 785,000 | 867,425 | ||||
1,237,512 |
Principal | Value | |||||
Hotels: 1.0% | ||||||
Wyndham Destinations, Inc., 5.625%, 3/1/21 | $ | 175,000 | $ | 180,688 | ||
Wyndham Destinations, Inc., 4.250%, 3/1/22 | 280,000 | 285,600 | ||||
466,288 | ||||||
Investments & Miscellaneous Financial Services: 2.7% | ||||||
Icahn Enterprises LP, 6.250%, 2/1/22 | 718,000 | 731,642 | ||||
Icahn Enterprises LP, 6.750%, 2/1/24 | 92,000 | 95,450 | ||||
Icahn Enterprises LP, 4.750%, 9/15/24 (a) | 190,000 | 195,225 | ||||
Refinitiv US Holdings, Inc., 6.250%, 5/15/26 (a) | 180,000 | 196,425 | ||||
1,218,742 | ||||||
Media-Broadcast: 1.1% | ||||||
Entercom Media Corp., 7.250%, 11/1/24 (a) | 95,000 | 99,987 | ||||
Townsquare Media, Inc., 6.500%, 4/1/23 (a) | 100,000 | 101,500 | ||||
Univision Communications, Inc., 5.125%, 5/15/23 (a) | 305,000 | 304,238 | ||||
505,725 | ||||||
Media-Diversified: 0.7% | ||||||
Netflix, Inc., 5.375%, 2/1/21 | 95,000 | 97,969 | ||||
Netflix, Inc., 5.500%, 2/15/22 | 200,000 | 211,750 | ||||
309,719 | ||||||
Media-Services: 3.9% | ||||||
Clear Channel Worldwide Holdings, Inc., 9.250%, 2/15/24 (a) | 380,000 | 420,850 | ||||
Nielsen Finance LLC, 5.000%, 4/15/22 (a) | 1,315,000 | 1,319,931 | ||||
1,740,781 | ||||||
Media-Cable: 2.9% | ||||||
CSC Holdings LLC, 6.750%, 11/15/21 | 330,000 | 355,162 | ||||
DISH DBS Corp., 6.750%, 6/1/21 | 280,000 | 294,367 | ||||
DISH DBS Corp., 5.875%, 7/15/22 | 625,000 | 662,500 | ||||
1,312,029 | ||||||
Metals/Mining Excluding Steel: 3.5% | ||||||
Allegheny Technologies, Inc., 7.875%, 8/15/23 | 285,000 | 319,437 | ||||
Arconic, Inc., 6.150%, 8/15/20 | 585,000 | 598,186 | ||||
Compass Minerals International, Inc., 4.875%, 7/15/24 (a) | 200,000 | 199,250 | ||||
Freeport-McMoRan, Inc., 3.550%, 3/1/22 | 248,000 | 251,100 | ||||
Peabody Energy Corp., 6.000%, 3/31/22 (a) | 220,000 | 214,500 | ||||
1,582,473 | ||||||
Multi-Line Insurance: 0.7% | ||||||
Genworth Holdings, Inc., 7.700%, 6/15/20 | 120,000 | 122,728 | ||||
Genworth Holdings, Inc., 7.625%, 9/24/21 | 105,000 | 110,607 | ||||
Genworth Holdings, Inc., 7.200%, 2/15/21 | 95,000 | 97,850 | ||||
331,185 | ||||||
Non-Food & Drug Retailers: 1.7% | ||||||
Foot Locker, Inc., 8.500%, 1/15/22 | 275,000 | 304,563 | ||||
L Brands, Inc., 5.625%, 10/15/23 | 110,000 | 118,662 | ||||
L Brands, Inc., 5.625%, 2/15/22 | 240,000 | 252,600 | ||||
Penske Automotive Group, Inc., 3.750%, 8/15/20 | 85,000 | 85,850 | ||||
761,675 |
The Accompanying Notes are an Integral Part of these Financial Statements.
18
PENN CAPITAL FUNDS TRUST |
PENN CAPITAL DEFENSIVE SHORT DURATION HIGH INCOME FUND |
SCHEDULE OF INVESTMENTS |
DECEMBER 31, 2019 (UNAUDITED) |
Principal | Value | |||||
Office Equipment: 0.1% | ||||||
Avnet, Inc., 3.750%, 12/1/21 | $ | 60,000 | $ | 61,561 | ||
Oil Field Equipment & Services: 0.4% | ||||||
Nabors Industries, Inc., 5.000%, 9/15/20 | 79,000 | 79,197 | ||||
Nabors Industries, Inc., 4.625%, 9/15/21 | 105,000 | 104,344 | ||||
183,541 | ||||||
Oil Refining & Marketing: 0.5% | ||||||
PBF Holding Co. LLC, 7.000%, 11/15/23 | 215,000 | 223,063 | ||||
Packaging: 2.5% | ||||||
Ardagh Packaging Finance PLC, 4.250%, 9/15/22 (a) | 200,000 | 202,420 | ||||
Ball Corp., 4.375%, 12/15/20 | 110,000 | 112,309 | ||||
Berry Global, Inc., 6.000%, 10/15/22 | 82,000 | 83,537 | ||||
OI European Group BV, 4.000%, 3/15/23 (a) | 210,000 | 211,575 | ||||
Owens-Brockway Glass Container, Inc., 5.875%, 8/15/23 (a) | 100,000 | 106,750 | ||||
Reynolds Group Issuer, Inc., 5.750%, 10/15/20 | 130,829 | 130,993 | ||||
Reynolds Group Issuer, Inc., 5.125%, 7/15/23 (a) | 295,000 | 302,006 | ||||
1,149,590 | ||||||
Pharmaceuticals & Devices: 1.8% | ||||||
Bausch Health Cos, Inc., 6.125%, 4/15/25 (a) | 220,000 | 227,311 | ||||
Kinetic Concepts, Inc., 12.500%, 11/1/21 (a) | 310,000 | 318,912 | ||||
Teva Pharmaceutical Finance IV LLC, 2.250%, 3/18/20 | 225,000 | 225,133 | ||||
Teva Pharmaceutical Finance Netherlands III BV, 2.200%, 7/21/21 | 39,000 | 37,769 | ||||
809,125 | ||||||
Real Estate Development & Management: 0.6% | ||||||
Realogy Group LLC, 5.250%, 12/1/21 (a) | 190,000 | 191,900 | ||||
Realogy Group LLC, 4.875%, 6/1/23 (a) | 100,000 | 98,250 | ||||
290,150 | ||||||
Real Estate Investment Trusts (REITs): 1.8% | ||||||
HAT Holdings I LLC, 5.250%, 7/15/24 (a) | 365,000 | 383,706 | ||||
iStar, Inc., 4.750%, 10/1/24 | 285,000 | 295,331 | ||||
Starwood Property Trust, Inc., 3.625%, 2/1/21 | 140,000 | 140,875 | ||||
819,912 | ||||||
Software/Services: 0.2% | ||||||
NortonLifeLock, Inc., 4.200%, 9/15/20 | 75,000 | 75,886 | ||||
Steel Producers/Products: 0.7% | ||||||
AK Steel Corp., 7.625%, 10/1/21 | 300,000 | 302,250 | ||||
Support-Services: 4.3% | ||||||
CoreCivic, Inc., 4.125%, 4/1/20 | 120,000 | 120,000 | ||||
CoreCivic, Inc., 5.000%, 10/15/22 | 645,000 | 648,225 | ||||
The ADT Security Corp., 6.250%, 10/15/21 | 445,000 | 469,475 | ||||
The GEO Group, Inc., 5.875%, 1/15/22 | 395,000 | 392,037 | ||||
The Hertz Corp., 5.500%, 10/15/24 (a) | 145,000 | 148,625 | ||||
Mobile Mini, Inc., 5.875%, 7/1/24 | 145,000 | 150,800 | ||||
1,929,162 |
Principal | Value | |||||
Telecom-Integrated/Services: 2.9% | ||||||
CenturyLink, Inc., 6.450%, 6/15/21 | $ | 150,000 | $ | 157,012 | ||
CenturyLink, Inc., 5.625%, 4/1/20 | 130,000 | 130,813 | ||||
CenturyLink, Inc., 7.500%, 4/1/24 | 260,000 | 293,150 | ||||
Cogent Communications Group, Inc., 5.375%, 3/1/22 (a) | 145,000 | 151,525 | ||||
Hughes Satellite Systems Corp., 7.625%, 6/15/21 | 385,000 | 411,353 | ||||
Qwest Corp., 6.750%, 12/1/21 | 172,000 | 185,052 | ||||
1,328,905 | ||||||
Telecom-Wireless: 1.5% | ||||||
Sprint Communications, Inc., 11.500%, 11/15/21 | 100,000 | 114,250 | ||||
Sprint Communications, Inc., 7.000%, 8/15/20 | 180,000 | 183,825 | ||||
Sprint Corp., 7.250%, 9/15/21 | 350,000 | 370,125 | ||||
668,200 | ||||||
Telecommunications Equipment: 0.7% | ||||||
CommScope, Inc., 5.000%, 6/15/21 (a) | 85,000 | 85,042 | ||||
CommScope, Inc., 5.500%, 6/15/24 (a) | 105,000 | 106,315 | ||||
CommScope, Inc., 5.500%, 3/1/24 (a) | 100,000 | 104,250 | ||||
295,607 | ||||||
Transportation Excluding Air/Rail: 0.9% | ||||||
Teekay Corp., 9.250%, 11/15/22 (a) | 335,000 | 352,588 | ||||
Total Corporate Bonds (cost $39,246,344) | 39,623,448 | |||||
Bank Loans: 5.2% (c)(d) | ||||||
Airline Companies: 0.3% | ||||||
American Airlines, Inc., 3.805% (1 Month US LIBOR + 2.000%), 4/28/23 | 123,724 | 123,963 | ||||
Auto Parts & Equipment: 0.3% | ||||||
Aptiv Corp., 3.000% (LIBOR (1 month) + 1.250%), 8/17/21 | 116,883 | 116,153 | ||||
Diversified Telecommunication Services: 0.2% | ||||||
Consolidated Communications, Inc., 4.800% (1 Month US LIBOR + 3.000%), 10/5/23 | 99,235 | 93,735 | ||||
Investments & Miscellaneous Financial Services: 1.3% | ||||||
Russell Investments US Institutional Holdco, Inc., 5.049% (1 Month US LIBOR + 3.250%), 6/1/23 | 249,354 | 249,354 | ||||
WisdomTree International Holdings Ltd., 3.844% (2 Month US LIBOR + 2.000%), 1/29/21 | 335,625 | 331,430 | ||||
580,784 | ||||||
Media: 0.5% | ||||||
Nexstar Broadcasting, Inc., 3.441% (3 Month LIBOR USD + 1.750%), 10/26/23 | 240,066 | 238,067 | ||||
WXXA-TV LLC, 3.441% (3 Month LIBOR USD + 1.750%), 10/20/23 | 6,644 | 6,589 | ||||
244,656 | ||||||
Metals & Mining: 0.3% | ||||||
Zekelman Industries, Inc., 4.035% (1 Month US LIBOR + 2.250%), 6/14/21 | 148,962 | 149,117 |
The Accompanying Notes are an Integral Part of these Financial Statements.
19
PENN CAPITAL FUNDS TRUST |
PENN CAPITAL DEFENSIVE SHORT DURATION HIGH INCOME FUND |
SCHEDULE OF INVESTMENTS |
DECEMBER 31, 2019 (UNAUDITED) |
Principal | Value | |||||
Pharmaceuticals: 0.9% | ||||||
Jaguar Holding Co. II, 4.299% (1 Month US LIBOR + 2.500%), 8/18/22 | $ | 395,989 | $ | 397,834 | ||
Software/Services: 0.8% | ||||||
Infor US, Inc., 4.695% (3 Month US LIBOR + 2.750%), 2/1/22 | 124,252 | 124,740 | ||||
Rackspace Hosting, Inc., 4.902% (3 Month US LIBOR + 3.000%), 11/30/24 | 249,361 | 241,638 | ||||
366,378 | ||||||
Telecom-Integrated/Services: 0.6% | ||||||
CenturyLink, Inc., 4.549% (1 Month US LIBOR + 2.750%), 11/1/22 | 115,385 | 115,601 | ||||
Zayo Group LLC, 3.702% (1 Month US LIBOR + 2.000%), 1/19/21 | 148,852 | 149,062 | ||||
264,663 | ||||||
Total Bank Loans (cost $2,332,138) | 2,337,283 | |||||
Shares | ||||||
Mutual Fund: 2.3% | ||||||
Bank Loan Related 2.3% | ||||||
Penn Capital Defensive Floating Rate Income Fund - Institutional Class (e) | 105,000 | 1,049,996 | ||||
Total Mutual Fund (cost $1,055,685) | 1,049,996 | |||||
Total Investments - 96.1% (cost $43,024,869) | $ | 43,400,085 | ||||
Other Assets and Liabilities 3.9% | 1,758,652 | |||||
Net Assets: 100.0% | $ | 45,158,737 |
Percentages are stated as a percent of net assets.
(a) | Securities purchased pursuant to Rule 144A of the Securities Act of 1933, as amended, and may be sold only to dealers in that program or other “qualified institutional buyers”. As of December 31, 2019, the value of these investments was $13,343,612, or 30.0% of total net assets. |
(b) | Payment-in-kind (“PIK”) security which may pay interest/dividends in additional par/shares and/or in cash. As of December 31, 2019, the total payment-in-kind was $0, or 0.0% of total net assets. |
(c) | Bank Loans typically have rates of interest which are redetermined either daily, monthly, quarterly or semi-annually by reference to a base lending rate, plus a premium. These base lending rates are primarily the London Interbank Offered Rate (“LIBOR”) and secondarily, the prime rate offered by one or more major United States banks (the “Prime Rate”) and the certificate of deposit (“CD”) rate or other base lending rates used by commercial lenders. |
(d) | Senior floating-rate loans (Senior Loans) often require prepayments from excess cash flows or permit the borrowers to repay at their election. The degree to which borrowers repay, whether as a contractual requirement or at their election, cannot be predicted with accuracy. As a result, the actual remaining maturity may be substantially less than the stated maturities shown. However, Senior Loans will typically have an expected average life of approximately two to four years. |
(e) | Affiliated company. See Note 7. |
Country Exposure (as a percentage of total investments) | |
United States | 87.58% |
Canada | 4.36% |
Netherlands | 2.86% |
United Kingdom | 2.74% |
Cayman Islands | 0.90% |
Marshall Islands | 0.81% |
Ireland | 0.47% |
Australia | 0.28% |
Asset Type (as a percentage of total investments) (Unaudited) |
The Accompanying Notes are an Integral Part of these Financial Statements.
20
PENN CAPITAL FUNDS TRUST |
PENN CAPITAL MULTI-CREDIT HIGH INCOME FUND |
SCHEDULE OF INVESTMENTS |
DECEMBER 31, 2019 (UNAUDITED) |
Principal | Value | |||||
Corporate Bonds: 59.7% | ||||||
Aerospace: 2.3% | ||||||
Bombardier, Inc., 7.500%, 3/15/25 (a) | $55,000 | $ | 56,718 | |||
Bombardier, Inc., 8.750%, 12/1/21 (a) | 75,000 | 82,172 | ||||
Moog, Inc., 4.250%, 12/15/27 (a) | 70,000 | 71,232 | ||||
TransDigm, Inc., 6.375%, 6/15/26 | 45,000 | 47,728 | ||||
TransDigm, Inc., 6.250%, 3/15/26 (a) | 40,000 | 43,304 | ||||
TransDigm, Inc., 7.500%, 3/15/27 | 40,000 | 43,752 | ||||
Triumph Group, Inc., 7.750%, 8/15/25 | 90,000 | 93,843 | ||||
438,749 | ||||||
Airline Companies: 0.9% | ||||||
Virgin Australia Holdings Ltd., 8.125%, 11/15/24 (a) | 70,000 | 69,570 | ||||
VistaJet Malta Finance PLC, 10.500%, 6/1/24 (a) | 100,000 | 95,000 | ||||
164,570 | ||||||
Auto Parts & Equipment: 1.0% | ||||||
American Axle & Manufacturing, Inc., 6.625%, 10/15/22 | 90,000 | 91,237 | ||||
Gates Global LLC, 6.250%, 1/15/26 (a) | 95,000 | 96,635 | ||||
187,872 | ||||||
Automotive: 0.5% | ||||||
Delphi Technologies PLC, 5.000%, 10/1/25 (a) | 105,000 | 97,125 | ||||
Banking: 0.9% | ||||||
Ally Financial, Inc., 8.000%, 3/15/20 | 35,000 | 35,306 | ||||
Ally Financial, Inc., 5.750%, 11/20/25 | 130,000 | 145,438 | ||||
180,744 | ||||||
Brokerage: 0.4% | ||||||
Oppenheimer Holdings, Inc., 6.750%, 7/1/22 | 72,000 | 74,160 | ||||
Building & Construction: 1.3% | ||||||
Ashton Woods USA LLC, 9.875%, 4/1/27 (a) | 85,000 | 95,625 | ||||
Beazer Homes USA, Inc., 7.250%, 10/15/29 (a) | 90,000 | 96,075 | ||||
William Lyon Homes, Inc., 5.875%, 1/31/25 | 50,000 | 51,437 | ||||
243,137 | ||||||
Building Materials: 0.5% | ||||||
Installed Building Products, Inc., 5.750%, 2/1/28 (a) | 90,000 | 96,188 | ||||
Chemical Companies: 1.9% | ||||||
CF Industries, Inc., 4.950%, 6/1/43 | 145,000 | 151,163 | ||||
Hexion, Inc., 7.875%, 7/15/27 (a) | 55,000 | 57,197 | ||||
Olin Corp., 5.000%, 2/1/30 | 40,000 | 40,600 | ||||
Olin Corp., 5.625%, 8/1/29 | 35,000 | 36,967 | ||||
Tronox, Inc., 6.500%, 4/15/26 (a) | 70,000 | 72,114 | ||||
358,041 | ||||||
Computer Hardware: 0.6% | ||||||
Dell International LLC, 8.100%, 7/15/36 (a) | 55,000 | 72,187 | ||||
NCR Corp., 6.125%, 9/1/29 (a) | 40,000 | 43,405 | ||||
115,592 |
Principal | Value | |||
Consumer/Commercial/Lease Financing: 1.5% | ||||
Global Aircraft Leasing Co. Ltd., 6.500% Cash or 0.750% PIK, 9/15/24 (a)(b) | $90,000 | $ | 93,911 | |
Navient Corp., 5.875%, 10/25/24 | 80,000 | 85,600 | ||
Navient Corp., 7.250%, 9/25/23 | 40,000 | 45,201 | ||
Navient Corp., 8.000%, 3/25/20 | 12,000 | 12,124 | ||
Springleaf Finance Corp., 5.375%, 11/15/29 | 45,000 | 46,971 | ||
283,807 | ||||
Consumer-Products: 0.8% | ||||
HLF Financing Sarl LLC, 7.250%, 8/15/26 (a) | 55,000 | 58,300 | ||
Mattel, Inc., 3.150%, 3/15/23 | 50,000 | 49,250 | ||
Mattel, Inc., 5.875%, 12/15/27 (a) | 50,000 | 52,688 | ||
160,238 | ||||
Electric-Generation: 1.6% | ||||
Calpine Corp., 5.125%, 3/15/28 (a) | 70,000 | 71,449 | ||
Talen Energy Supply LLC, 6.500%, 6/1/25 | 160,000 | 136,549 | ||
Talen Energy Supply LLC, 6.625%, 1/15/28 (a) | 30,000 | 30,600 | ||
Vistra Operations Co. LLC, 5.625%, 2/15/27 (a) | 55,000 | 57,956 | ||
296,554 | ||||
Electronics: 0.5% | ||||
MagnaChip Semiconductor Corp., 6.625%, 7/15/21 | 90,000 | 89,550 | ||
Energy-Exploration & Production: 4.4% | ||||
Antero Resources Corp., 5.375%, 11/1/21 | 50,000 | 47,609 | ||
Callon Petroleum Co., 6.125%, 10/1/24 | 50,000 | 50,947 | ||
Comstock Resources, Inc., 9.750%, 8/15/26 | 50,000 | 45,375 | ||
Covey Park Energy LLC, 7.500%, 5/15/25 (a) | 40,000 | 34,400 | ||
Jagged Peak Energy LLC, 5.875%, 5/1/26 | 50,000 | 51,624 | ||
Matador Resources Co., 5.875%, 9/15/26 | 60,000 | 60,150 | ||
Montage Resources Corp., 8.875%, 7/15/23 | 85,000 | 78,412 | ||
Northern Oil and Gas, Inc., 8.500% Cash or 1.000% PIK, 5/15/23 (b) | 105,632 | 109,329 | ||
Oasis Petroleum, Inc., 6.250%, 5/1/26 (a) | 75,000 | 62,250 | ||
PDC Energy, Inc., 6.125%, 9/15/24 | 60,000 | 60,750 | ||
QEP Resources, Inc., 6.875%, 3/1/21 | 45,000 | 46,575 | ||
SM Energy Co., 5.625%, 6/1/25 | 100,000 | 94,917 | ||
Whiting Petroleum Corp., 5.750%, 3/15/21 | 45,000 | 42,570 | ||
WPX Energy, Inc., 5.250%, 10/15/27 | 45,000 | 47,475 | ||
832,383 | ||||
Entertainment: 1.1% | ||||
AMC Entertainment Holdings, Inc., 5.750%, 6/15/25 | 135,000 | 124,875 | ||
Lions Gate Capital Holdings LLC, 6.375%, 2/1/24 (a) | 20,000 | 20,900 | ||
National CineMedia LLC, 5.750%, 8/15/26 | 40,000 | 39,100 | ||
National CineMedia LLC, 5.875%, 4/15/28 (a) | 15,000 | 15,938 | ||
200,813 | ||||
The Accompanying Notes are an Integral Part of these Financial Statements.
21
PENN CAPITAL FUNDS TRUST |
PENN CAPITAL MULTI-CREDIT HIGH INCOME FUND |
SCHEDULE OF INVESTMENTS |
DECEMBER 31, 2019 (UNAUDITED) |
Principal | Value | |||
Food/Drug Retailers: 0.7% | ||||
Albertsons Cos, Inc., 5.875%, 2/15/28 (a) | $85,000 | $ | 90,312 | |
Albertsons Cos, Inc., 4.625%, 1/15/27 (a) | 40,000 | 39,952 | ||
130,264 | ||||
Food-Wholesale: 2.5% | ||||
Dole Food Co., Inc., 7.250%, 6/15/25 (a) | 85,000 | 82,237 | ||
JBS USA LUX SA, 5.500%, 1/15/30 (a) | 130,000 | 139,633 | ||
JBS USA LUX SA, 6.750%, 2/15/28 (a) | 85,000 | 93,926 | ||
Pilgrim's Pride Corp., 5.750%, 3/15/25 (a) | 50,000 | 51,682 | ||
Simmons Foods, Inc., 5.750%, 11/1/24 (a) | 110,000 | 110,550 | ||
478,028 | ||||
Forestry/Paper: 0.4% | ||||
Mercer International, Inc., 7.375%, 1/15/25 | 70,000 | 75,352 | ||
Gaming: 1.6% | ||||
Scientific Games International, Inc., 8.250%, 3/15/26 (a) | 60,000 | 66,150 | ||
Scientific Games International, Inc., 7.000%, 5/15/28 (a) | 20,000 | 21,400 | ||
Stars Group Holdings BV, 7.000%, 7/15/26 (a) | 110,000 | 119,212 | ||
The Enterprise Development Authority, 12.000%, 7/15/24 (a) | 85,000 | 97,325 | ||
304,087 | ||||
Gas Distribution: 2.5% | ||||
Blue Racer Midstream LLC, 6.125%, 11/15/22 (a) | 115,000 | 112,700 | ||
Crestwood Midstream Partners LP, 6.250%, 4/1/23 | 60,000 | 61,200 | ||
Enterprise Products Operating LLC, 4.875% (3 Month LIBOR USD + 2.986%), 8/16/77 (c) | 50,000 | 49,375 | ||
NGL Energy Partners LP, 7.500%, 11/1/23 | 95,000 | 95,354 | ||
NGPL PipeCo LLC, 7.768%, 12/15/37 (a) | 45,000 | 57,993 | ||
Rockies Express Pipeline LLC, 6.875%, 4/15/40 (a) | 40,000 | 41,700 | ||
Sabine Pass Liquefaction LLC, 4.200%, 3/15/28 | 60,000 | 63,528 | ||
481,850 | ||||
Health Services: 1.2% | ||||
MEDNAX, Inc., 6.250%, 1/15/27 (a) | 90,000 | 92,250 | ||
Select Medical Corp., 6.250%, 8/15/26 (a) | 120,000 | 129,902 | ||
222,152 | ||||
Hospitals: 1.0% | ||||
HCA, Inc., 5.500%, 6/15/47 | 40,000 | 45,852 | ||
Tenet Healthcare Corp., 8.125%, 4/1/22 | 50,000 | 55,312 | ||
Tenet Healthcare Corp., 6.750%, 6/15/23 | 85,000 | 93,390 | ||
194,554 |
Principal | Value | |||
Investments & Miscellaneous Financial Services: 1.5% | ||||
Icahn Enterprises LP, 6.375%, 12/15/25 | $75,000 | $ | 78,656 | |
Icahn Enterprises LP, 6.250%, 5/15/26 | 105,000 | 111,825 | ||
Icahn Enterprises LP, 5.250%, 5/15/27 (a) | 55,000 | 56,245 | ||
MSCI, Inc., 4.000%, 11/15/29 (a) | 45,000 | 45,619 | ||
292,345 | ||||
Machinery Companies: 0.3% | ||||
Cleaver-Brooks, Inc., 7.875%, 3/1/23 (a) | 55,000 | 54,862 | ||
Media-Broadcast: 4.7% | ||||
Cumulus Media New Holdings, Inc., 6.750%, 7/1/26 (a) | 95,000 | 101,769 | ||
Diamond Sports Group LLC, 5.375%, 8/15/26 (a) | 95,000 | 96,097 | ||
Entercom Media Corp., 7.250%, 11/1/24 (a) | 85,000 | 89,462 | ||
iHeartCommunications, Inc., 4.750%, 1/15/28 (a) | 40,000 | 41,000 | ||
Salem Media Group, Inc., 6.750%, 6/1/24 (a) | 55,000 | 50,600 | ||
Scripps Escrow, Inc., 5.875%, 7/15/27 (a) | 75,000 | 78,562 | ||
Sinclair Television Group, Inc., 5.625%, 8/1/24 (a) | 35,000 | 36,006 | ||
The E.W. Scripps Co., 5.125%, 5/15/25 (a) | 145,000 | 148,263 | ||
Townsquare Media, Inc., 6.500%, 4/1/23 (a) | 70,000 | 71,050 | ||
Univision Communications, Inc., 5.125%, 5/15/23 (a) | 125,000 | 124,688 | ||
Urban One, Inc., 7.375%, 4/15/22 (a) | 55,000 | 54,175 | ||
891,672 | ||||
Media-Cable: 1.6% | ||||
Altice Luxembourg SA, 10.500%, 5/15/27 (a) | 200,000 | 228,010 | ||
DISH DBS Corp., 5.875%, 11/15/24 | 70,000 | 71,531 | ||
299,541 | ||||
Media-Services: 1.3% | ||||
Clear Channel Worldwide Holdings, Inc., 9.250%, 2/15/24 (a) | 115,000 | 127,362 | ||
MDC Partners, Inc., 6.500%, 5/1/24 (a) | 95,000 | 85,975 | ||
Terrier Media Buyer, Inc., 8.875%, 12/15/27 (a) | 40,000 | 42,300 | ||
255,637 | ||||
Metals/Mining Excluding Steel: 2.0% | ||||
Cleveland-Cliffs, Inc., 5.750%, 3/1/25 | 70,000 | 69,081 | ||
Compass Minerals International, Inc., 6.750%, 12/1/27 (a) | 90,000 | 95,625 | ||
CONSOL Energy, Inc., 11.000%, 11/15/25 (a) | 110,000 | 93,707 | ||
Peabody Energy Corp., 6.000%, 3/31/22 (a) | 135,000 | 131,625 | ||
390,038 | ||||
Multi-Line Insurance: 0.9% | ||||
Genworth Holdings, Inc., 7.700%, 6/15/20 | 20,000 | 20,455 | ||
Genworth Holdings, Inc., 7.625%, 9/24/21 | 90,000 | 94,806 | ||
Genworth Holdings, Inc., 4.900%, 8/15/23 | 60,000 | 59,400 | ||
174,661 |
The Accompanying Notes are an Integral Part of these Financial Statements.
22
PENN CAPITAL FUNDS TRUST |
PENN CAPITAL MULTI-CREDIT HIGH INCOME FUND |
SCHEDULE OF INVESTMENTS |
DECEMBER 31, 2019 (UNAUDITED) |
Principal | Value | |||
Non-Food & Drug Retailers: 0.5% | ||||
L Brands, Inc., 6.694%, 1/15/27 | $90,000 | $ | 90,000 | |
Oil Field Equipment & Services: 1.8% | ||||
CSI Compressco LP, 7.500%, 4/1/25 (a) | 25,000 | 24,562 | ||
CSI Compressco LP, 7.250%, 8/15/22 | 50,000 | 46,000 | ||
Nabors Industries, Inc., 5.000%, 9/15/20 | 30,000 | 30,075 | ||
Nabors Industries, Inc., 4.625%, 9/15/21 | 95,000 | 94,406 | ||
Oceaneering International, Inc., 4.650%, 11/15/24 | 55,000 | 53,900 | ||
Oceaneering International, Inc., 6.000%, 2/1/28 | 20,000 | 19,600 | ||
Transocean, Inc., 6.800%, 3/15/38 | 55,000 | 39,050 | ||
Transocean, Inc., 9.000%, 7/15/23 (a) | 35,000 | 36,969 | ||
344,562 | ||||
Oil Refining & Marketing: 0.5% | ||||
PBF Holding Co. LLC, 7.000%, 11/15/23 | 25,000 | 25,938 | ||
PBF Holding Co. LLC, 7.250%, 6/15/25 | 60,000 | 64,050 | ||
89,988 | ||||
Packaging: 0.6% | ||||
Owens-Brockway Glass Container, Inc., 5.875%, 8/15/23 (a) | 40,000 | 42,700 | ||
Pactiv LLC, 7.950%, 12/15/25 | 60,000 | 68,550 | ||
111,250 | ||||
Pharmaceuticals & Devices: 1.3% | ||||
Bausch Health Americas, Inc., 9.250%, 4/1/26 (a) | 90,000 | 103,374 | ||
Bausch Health Cos, Inc., 5.000%, 1/30/28 (a) | 45,000 | 46,188 | ||
Kinetic Concepts, Inc., 12.500%, 11/1/21 (a) | 100,000 | 102,875 | ||
252,437 | ||||
Printing & Publishing: 1.3% | ||||
Lee Enterprises, Inc., 9.500%, 3/15/22 (a) | 85,000 | 79,050 | ||
Meredith Corp., 6.875%, 2/1/26 | 160,000 | 166,352 | ||
245,402 | ||||
Real Estate Development & Management: 0.7% | ||||
Realogy Group LLC, 5.250%, 12/1/21 (a) | 75,000 | 75,750 | ||
Realogy Group LLC, 4.875%, 6/1/23 (a) | 50,000 | 49,125 | ||
124,875 | ||||
Restaurants: 0.6% | ||||
Yum! Brands, Inc., 6.875%, 11/15/37 | 45,000 | 52,200 | ||
Yum! Brands, Inc., 5.350%, 11/1/43 | 55,000 | 54,450 | ||
106,650 | ||||
Software/Services: 0.7% | ||||
Photo Holdings Merger Sub, Inc., 8.500%, 10/1/26 (a) | 75,000 | 69,750 | ||
Rackspace Hosting, Inc., 8.625%, 11/15/24 (a) | 65,000 | 63,538 | ||
133,288 | ||||
Specialty Retail: 0.3% | ||||
Lithia Motors, Inc., 4.625%, 12/15/27 (a) | 50,000 | 51,393 | ||
Steel Producers/Products: 0.4% | ||||
AK Steel Corp., 7.625%, 10/1/21 | 70,000 | 70,525 |
Principal | Value | |||
Support-Services: 2.8% | ||||
CoreCivic, Inc., 5.000%, 10/15/22 | $95,000 | $ | 95,475 | |
Prime Security Services Borrower LLC, 5.750%, 4/15/26 (a) | 90,000 | 97,819 | ||
The ADT Security Corp., 4.875%, 7/15/32 (a) | 60,000 | 55,050 | ||
The GEO Group, Inc., 5.875%, 1/15/22 | 80,000 | 79,400 | ||
The GEO Group, Inc., 5.875%, 10/15/24 | 50,000 | 45,375 | ||
The Hertz Corp., 5.500%, 10/15/24 (a) | 100,000 | 102,500 | ||
The Hertz Corp., 7.125%, 8/1/26 (a) | 45,000 | 48,735 | ||
524,354 | ||||
Telecom-Integrated/Services: 5.0% | ||||
CenturyLink, Inc., 7.600%, 9/15/39 | 150,000 | 156,750 | ||
CenturyLink, Inc., 7.500%, 4/1/24 | 95,000 | 107,113 | ||
CenturyLink, Inc., 5.125%, 12/15/26 (a) | 30,000 | 30,529 | ||
Cincinnati Bell, Inc., 8.000%, 10/15/25 (a) | 100,000 | 106,000 | ||
Cincinnati Bell, Inc., 7.000%, 7/15/24 (a) | 35,000 | 36,706 | ||
Gogo Intermediate Holdings LLC, 9.875%, 5/1/24 (a) | 205,000 | 216,531 | ||
Intelsat Jackson Holdings SA, 5.500%, 8/1/23 | 155,000 | 133,151 | ||
Intelsat Luxembourg SA, 7.750%, 6/1/21 | 135,000 | 106,650 | ||
Qwest Corp., 6.875%, 9/15/33 | 55,000 | 55,248 | ||
948,678 | ||||
Telecommunications Equipment: 0.2% | ||||
CommScope, Inc., 5.500%, 3/1/24 (a) | 45,000 | 46,912 | ||
Telecom-Wireless: 0.6% | ||||
Sprint Capital Corp., 8.750%, 3/15/32 | 40,000 | 48,550 | ||
Sprint Corp., 7.125%, 6/15/24 | 70,000 | 75,513 | ||
124,063 | ||||
Total Corporate Bonds (cost $10,980,608) | 11,328,943 | |||
Convertible Bonds: 2.5% | ||||
Energy-Exploration & Production: 0.6% | ||||
PDC Energy, Inc., 1.125%, 9/15/21 | 75,000 | 70,421 | ||
Whiting Petroleum Corp., 1.250%, 4/1/20 | 50,000 | 48,804 | ||
119,225 | ||||
Media-Broadcast: 0.7% | ||||
DISH Network Corp., 2.375%, 3/15/24 | 150,000 | 136,965 | ||
Pharmaceuticals & Devices: 0.9% | ||||
Teva Pharmaceutical Finance Co. LLC, 0.250%, 2/1/26 | 170,000 | 161,148 | ||
Transportation Excluding Air/Rail: 0.3% | ||||
Teekay Corp., 5.000%, 1/15/23 | 75,000 | 65,794 | ||
Total Convertible Bonds (cost $479,973) | 483,132 | |||
The Accompanying Notes are an Integral Part of these Financial Statements.
23
PENN CAPITAL FUNDS TRUST |
PENN CAPITAL MULTI-CREDIT HIGH INCOME FUND |
SCHEDULE OF INVESTMENTS |
DECEMBER 31, 2019 (UNAUDITED) |
Principal | Value | |||
Bank Loans: 18.1% (d)(e) | ||||
Aerospace: 0.5% | ||||
1199169 BC ULC, 5.945% (3 Month US LIBOR + 4.000%), 4/4/26 | $17,439 | $ | 17,545 | |
Ducommun, Inc., 5.984%, 11/21/25 | ||||
(2 Month US LIBOR + 4.000%) | 16,300 | 16,300 | ||
(3 Month US LIBOR + 4.000%) | 21,145 | 21,145 | ||
Dynasty Acquisition Co., Inc., 5.945% (3 Month US LIBOR + 4.000%), 4/8/26 | 32,436 | 32,634 | ||
87,624 | ||||
Consumer-Products: 1.0% | ||||
BDF Acquisition Corp., 7.049% (1 Month US LIBOR + 5.250%), 8/8/23 | 98,697 | 94,750 | ||
HLF Financing Sarl LLC, 4.549% (1 Month US LIBOR + 2.750%), 8/16/25 | 98,874 | 99,093 | ||
193,843 | ||||
Diversified Capital Goods: 0.4% | ||||
DXP Enterprises, Inc., 6.549% (1 Month US LIBOR + 4.750%), 8/29/23 | 74,809 | 74,715 | ||
Diversified Financial Services: 0.3% | ||||
Pivotal Payments Direct Corp., 6.801%, 9/28/25 | ||||
(1 Month US LIBOR + 5.000%) | 41,614 | 41,822 | ||
(1 Month US LIBOR + 5.000%) | 6,096 | 6,127 | ||
(1 Month US LIBOR + 5.000%) | 8,408 | 8,450 | ||
56,399 | ||||
Electric-Generation: 0.2% | ||||
Lightstone Holdco LLC, 5.549% (1 Month US LIBOR + 3.750%), 1/30/24 | 47,330 | 43,331 | ||
Lightstone Holdco LLC, 5.549% (1 Month US LIBOR + 3.750%), 1/30/24 | 2,670 | 2,444 | ||
45,775 | ||||
Electronics: 0.5% | ||||
Cohu, Inc., 4.799% (1 US LIBOR + 3.000%), 9/19/25 | 100,000 | 99,000 | ||
Entertainment: 0.3% | ||||
Playtika Holding Corp., 7.736% (1 Month US LIBOR + 6.000%), 12/3/24 | 50,000 | 50,475 | ||
United PF Holdings LLC, 6.198% (US LIBOR + 4.500%), 6/10/26 | 2,908 | 2,889 | ||
53,364 | ||||
Environmental & Waste: 0.5% | ||||
GFL Environmental, Inc., 4.799% (1 Month US LIBOR + 3.000%), 5/31/25 | 99,373 | 99,444 | ||
Food-Wholesale: 0.5% | ||||
Bellring Brands LLC, 6.799% (1 Month US LIBOR + 5.000%), 10/21/24 | 100,000 | 100,938 |
Principal | Value | |||
Gaming: 0.5% | ||||
PCI Gaming Authority, 4.299% (1 Month US LIBOR + 2.500%), 5/31/26 | $45,260 | $ | 45,524 | |
Stars Group Holdings BV, 5.455%, 7/10/25 | ||||
(3 Month US LIBOR + 3.500%) | 39,611 | 39,923 | ||
(3 Month US LIBOR + 3.500%) | 3,453 | 3,480 | ||
88,927 | ||||
Gas Distribution: 0.9% | ||||
Prairie ECI Acquiror LP, 6.695% (3 Month US LIBOR + 4.750%), 3/11/26 | 48,750 | 48,285 | ||
Stonepeak Lonestar Holdings LLC, 6.299% (1 Month US LIBOR + 4.500%), 10/19/26 | 75,000 | 74,813 | ||
Woodford Express LLC, 6.700% (1 Month US LIBOR + 5.000%), 1/26/25 | 49,123 | 42,590 | ||
165,688 | ||||
Health Care Providers & Services: 0.3% | ||||
Emerald TopCo, Inc., 5.299% (1 Month US LIBOR + 3.500%), 7/26/26 | 49,875 | 50,109 | ||
Health Services: 0.9% | ||||
American Renal Holdings, Inc., 6.799% (1 Month US LIBOR + 5.000%), 6/22/24 | 73,864 | 69,934 | ||
Gentiva Health Services, Inc., 5.562% (1 Month US LIBOR + 3.750%), 7/2/25 | 48,258 | 48,469 | ||
Option Care Health, Inc., 6.299% (1 Month US LIBOR + 4.500%), 8/6/26 | 50,000 | 49,750 | ||
168,153 | ||||
Industrial Conglomerates: 0.3% | ||||
Deliver Buyer, Inc., 6.945% (3 Month US LIBOR + 5.000%), 5/1/24 | 49,242 | 49,458 | ||
Investments & Miscellaneous Financial Services: 0.8% | ||||
Russell Investments US Institutional Holdco, Inc., 5.049% (1 Month US LIBOR + 3.250%), 6/1/23 | 49,109 | 49,109 | ||
The Edelman Financial Center LLC, 5.035% (1 Month US LIBOR + 3.250%), 7/19/25 | 49,500 | 49,737 | ||
VeriFone Systems, Inc., 5.898% (3 Month US LIBOR + 4.000%), 8/20/25 | 49,500 | 48,749 | ||
147,595 | ||||
Media-Broadcast: 1.0% | ||||
Diamond Sports Group LLC, 5.030% (1 Month US LIBOR + 3.250%), 8/24/26 | 99,750 | 99,542 | ||
ION Media Networks, Inc., 4.812% (1 Month US LIBOR + 3.000%), 12/18/24 | 49,875 | 50,021 | ||
Univision Communications, Inc., 4.549% (1 Month US LIBOR + 2.750%), 3/15/24 | 48,497 | 47,819 | ||
197,382 | ||||
Media-Cable: 1.3% | ||||
Altice France SA, 5.740% (1 Month US LIBOR + 4.000%), 8/14/26 | 248,495 | 248,701 |
The Accompanying Notes are an Integral Part of these Financial Statements.
24
PENN CAPITAL FUNDS TRUST |
PENN CAPITAL MULTI-CREDIT HIGH INCOME FUND |
SCHEDULE OF INVESTMENTS |
DECEMBER 31, 2019 (UNAUDITED) |
Principal | Value | |||
Media-Services: 0.5% | ||||
Terrier Media Buyer, Inc. 6.500 (1 Month US LIBOR + 4.250%), 12/12/26 | $100,000 | $ | 100,938 | |
Metals & Mining: 0.8% | ||||
Big River Steel LLC, 6.945% (3 Month US LIBOR + 5.000%), 8/23/23 | 148,235 | 147,864 | ||
Metals/Mining Excluding Steel: 0.6% | ||||
Aleris International, Inc., 6.555% (1 Month US LIBOR + 4.750%), 2/27/23 | 74,124 | 74,087 | ||
American Rock Salt Co. LLC, 5.549% (1 Month US LIBOR + 3.750%), 3/21/25 | 47,784 | 48,083 | ||
122,170 | ||||
Multi-Line Insurance: 0.2% | ||||
Asurion LLC, 4.799% (1 Month US LIBOR + 3.000%), 8/4/22 | 41,038 | 41,251 | ||
Non-Food & Drug Retailers: 0.9% | ||||
Calceus Acquisition, Inc., 7.305% (1 Month US LIBOR + 5.500%), 2/12/25 | 88,559 | 88,264 | ||
PetSmart, Inc., 5.740% (1 Month US LIBOR + 4.000%), 3/11/22 | 91,886 | 90,785 | ||
179,049 | ||||
Pharmaceuticals: 0.7% | ||||
Aldevron LLC, 6.195% (3 Month US LIBOR + 4.250%), 10/11/26 | 125,000 | 126,250 | ||
Pharmaceuticals & Devices: 1.0% | ||||
Bausch Health Americas, Inc., 4.740% (1 Month US LIBOR + 3.000%), 6/1/25 | 42,381 | 42,593 | ||
Cambrex Corp., 6.704% (1 Month US LIBOR + 5.000%), 11/22/26 | 100,000 | 99,500 | ||
Greatbatch Ltd., 4.220% (1 Month US LIBOR + 2.500%), 10/27/22 | 44,148 | 44,329 | ||
186,422 | ||||
Software/Services: 0.5% | ||||
Rackspace Hosting, Inc., 4.902% (3 Month US LIBOR + 3.000%), 11/3/23 | 99,490 | 96,409 | ||
Specialty Retail: 0.3% | ||||
Staples, Inc., 6.191% (1 Month US LIBOR + 4.500%), 9/12/24 | 49,750 | 48,911 | ||
Support-Services: 0.8% | ||||
CoreCivic, Inc., 6.250% (1 Month US LIBOR + 4.500%), 12/12/24 | 100,000 | 95,750 | ||
UOS LLC, 7.299% (1 Month US LIBOR + 5.500%), 4/18/23 | 49,367 | 49,614 | ||
145,364 | ||||
Telecom-Integrated/Services: 0.5% | ||||
Consolidated Communications, Inc., 4.800% (1 Month US LIBOR + 3.000%), 10/5/23 | 104,731 | 98,927 |
Principal | Value | |||
Telecommunications Equipment: 0.3% | ||||
CommScope, Inc., 5.049% (1 Month US LIBOR + 5.049%), 4/4/26 | $49,875 | $ | 50,140 | |
Transportation Excluding Air/Rail: 0.2% | ||||
United Road Services, Inc., 7.549% (1 Month US LIBOR + 5.750%), 10/19/24 | 48,442 | 42,144 | ||
Wireless Telecommunication Services: 0.6% | ||||
Iridium Satellite LLC, 5.549% (1 Month US LIBOR + 3.750%), 11/4/26 | 115,000 | 116,366 | ||
Total Bank Loans (cost $3,428,407) | 3,429,320 | |||
Shares | ||||
Mutual Fund: 17.0% | ||||
Bank Loan Related 17.0% | ||||
Penn Capital Defensive Floating Rate Income Fund - Institutional Class (f) | 323,655 | 3,236,546 | ||
Total Mutual Funds (cost $3,273,568) | 3,236,546 | |||
Preferred Stock: 0.0% | ||||
Spanish Broadcasting System, Inc. 10.750% Cash or 10.750% PIK (g)(h) | 1 | 47 | ||
Total Preferred Stocks (cost $613) | 47 | |||
Total Investments - 97.3% (cost $18,163,169) | 18,477,988 | |||
Other Assets and Liabilities 2.7% | 511,572 | |||
Net Assets: 100.0% | $ | 18,989,560 |
(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, 2019, the value of these investments was $6,328,921, or 33.3% of total net assets. |
(b) | Payment-in-kind (“PIK”) security which may pay interest/dividends in additional par/shares and/or in cash. As of December 31, 2019, the total payment-in-kind was $0, or 0.0% of total net assets. |
(c) | Variable rate security. The rate listed is as of December 31, 2019. |
(d) | Bank Loans typically have rates of interest which are redetermined either daily, monthly, quarterly or semi-annually by reference to a base lending rate, plus a premium. These base lending rates are primarily the London Interbank Offered Rate (“LIBOR”) and secondarily, the prime rate offered by one or more major United States banks (the “Prime Rate”) and the certificate of deposit (“CD”) rate or other base lending rates used by commercial lenders. |
(e) | Senior floating-rate loans (Senior Loans) often require prepayments from excess cash flows or permit the borrowers to repay at their election. The degree to which borrowers repay, whether as a contractual requirement or at their election, cannot be predicted with accuracy. As a result, the actual remaining maturity may be substantially less than the stated maturities shown. However, Senior Loans will typically have an expected average life of approximately two to four years. |
(f) | Affiliated company. See Note 7. |
(g) | This security is currently being fair valued in accordance with procedures established by the Board of Trustees and is deemed a Level 3 security as it is valued using significant unobservable inputs. |
The Accompanying Notes are an Integral Part of these Financial Statements.
25
PENN CAPITAL FUNDS TRUST |
PENN CAPITAL MULTI-CREDIT HIGH INCOME FUND |
SCHEDULE OF INVESTMENTS |
DECEMBER 31, 2019 (UNAUDITED) |
(h) | Payment-in-kind (“PIK”) security which may pay interest/dividends in additional par/shares and/or in cash. No distribution or dividend was made during the year ended December 31, 2019. As such, it is classified as a non-income producing security as of December 31, 2019. |
Country Exposure (as a percentage of total investments) | |
United States | 98.54% |
Luxembourg | 0.69% |
Canada | 0.29% |
Germany | 0.28% |
Cayman Islands | 0.20% |
The Accompanying Notes are an Integral Part of these Financial Statements.
26
PENN CAPITAL FUNDS TRUST |
PENN CAPITAL SPECIAL SITUATIONS SMALL CAP EQUITY FUND |
SCHEDULE OF INVESTMENTS |
DECEMBER 31, 2019 (UNAUDITED) |
Shares | Value | |||||
Common Stocks: 93.3% | ||||||
Aerospace & Defense: 2.4% | ||||||
Aerojet Rocketdyne Holdings, Inc. (a) | 3,242 | $ | 148,030 | |||
AeroVironment, Inc. (a) | 1,608 | 99,278 | ||||
247,308 | ||||||
Banks: 9.4% | ||||||
Ameris Bancorp | 2,400 | 102,096 | ||||
CenterState Bank Corp. | 5,880 | 146,882 | ||||
FB Financial Corp. | 5,004 | 198,108 | ||||
First BanCorp | 13,229 | 140,095 | ||||
Veritex Holdings, Inc. | 4,922 | 143,378 | ||||
Western Alliance Bancorp | 4,432 | 252,624 | ||||
983,183 | ||||||
Biotechnology: 2.5% | ||||||
Amarin Corp PLC - ADR (a) | 6,572 | 140,904 | ||||
Exelixis, Inc. (a) | 6,924 | 122,001 | ||||
262,905 | ||||||
Chemicals: 2.5% | ||||||
Ferro Corp. (a) | 4,642 | 68,841 | ||||
Huntsman Corp. | 8,003 | 193,352 | ||||
262,193 | ||||||
Construction & Engineering: 1.6% | ||||||
MasTec, Inc. (a) | 2,575 | 165,212 | ||||
Construction Materials: 1.1% | ||||||
Summit Materials, Inc. - Class A (a) | 5,014 | 119,835 | ||||
Diversified Consumer Services: 1.0% | ||||||
Chegg, Inc. (a) | 2,647 | 100,348 | ||||
Electrical Equipment: 0.8% | ||||||
Atkore International Group, Inc. (a) | 2,021 | 81,770 | ||||
Electronic Equipment, Instruments & Components: 0.8% | ||||||
Itron, Inc. (a) | 941 | 78,997 | ||||
Energy Equipment & Services: 1.6% | ||||||
Core Laboratories NV | 1,862 | 70,142 | ||||
Transocean Ltd. (a) | 14,863 | 102,257 | ||||
172,399 | ||||||
Entertainment: 1.4% | ||||||
AMC Entertainment Holdings, Inc. - Class A | 10,224 | 74,022 | ||||
Zynga, Inc. - Class A (a) | 11,600 | 70,992 | ||||
145,014 | ||||||
Food & Staples Retailing: 1.3% | ||||||
BJ's Wholesale Club Holdings, Inc. (a) | 6,022 | 136,940 | ||||
Glass and Glass Product Manufacturing: 0.9% | ||||||
O-I Glass, Inc. | 8,106 | 96,705 | ||||
Health Care Equipment & Supplies: 4.2% | ||||||
ICU Medical, Inc. (a) | 593 | 110,962 | ||||
LivaNova PLC (a) | 1,151 | 86,820 | ||||
OraSure Technologies, Inc. (a) | 15,202 | 122,072 | ||||
Oxford Immunotec Global PLC (a) | 7,309 | 121,329 | ||||
441,183 |
Shares | Value | |||
Health Care Providers & Services: 3.4% | ||||
Option Care Health, Inc. (a) | 51,681 | $ | 192,770 | |
R1 RCM, Inc. (a) | 13,059 | 169,506 | ||
362,276 | ||||
Health Care Technology: 3.0% | ||||
Allscripts Healthcare Solutions, Inc. (a) | 17,938 | 176,061 | ||
Omnicell, Inc. (a) | 1,704 | 139,251 | ||
315,312 | ||||
Hotels, Restaurants & Leisure: 13.8% | ||||
Everi Holdings, Inc. (a) | 11,667 | 156,688 | ||
Full House Resorts, Inc. (a) | 35,740 | 119,729 | ||
Golden Entertainment, Inc. (a) | 12,662 | 243,364 | ||
Marriott Vacations Worldwide Corp. | 1,093 | 140,735 | ||
Papa John's International, Inc. | 2,056 | 129,836 | ||
Penn National Gaming, Inc. (a) | 4,796 | 122,586 | ||
Planet Fitness, Inc. - Class A (a) | 1,238 | 92,454 | ||
Red Rock Resorts, Inc. - Class A | 7,386 | 176,895 | ||
Scientific Games Corp. (a) | 4,312 | 115,475 | ||
SeaWorld Entertainment, Inc. (a) | 4,913 | 155,791 | ||
1,453,553 | ||||
Household Durables: 1.9% | ||||
Installed Building Products, Inc. (a) | 1,444 | 99,448 | ||
Meritage Homes Corp. (a) | 1,687 | 103,093 | ||
202,541 | ||||
Insurance: 1.6% | ||||
Stewart Information Services Corp. | 4,044 | 164,955 | ||
IT Services: 1.3% | ||||
CACI International, Inc. - Class A (a) | 551 | 137,744 | ||
Life Sciences Tools & Services: 1.8% | ||||
Syneos Health, Inc. (a) | 3,106 | 184,729 | ||
Machinery: 6.3% | ||||
Alamo Group, Inc. | 992 | 124,546 | ||
Chart Industries, Inc. (a) | 2,487 | 167,848 | ||
Crane Co. | 2,075 | 179,238 | ||
Gates Industrial Corp. PLC (a) | 13,521 | 186,049 | ||
657,681 | ||||
Media: 8.8% | ||||
Cardlytics, Inc. (a) | 1,860 | 116,920 | ||
The EW Scripps Co. - Class A | 13,825 | 217,191 | ||
Gray Television, Inc. (a) | 11,672 | 250,248 | ||
Nexstar Media Group, Inc. - Class A | 1,566 | 183,613 | ||
Sinclair Broadcast Group, Inc. - Class A | 4,760 | 158,698 | ||
926,670 | ||||
Metals & Mining: 0.7% | ||||
SSR Mining, Inc. (a) | 3,601 | 69,355 | ||
Multiline Retail: 0.8% | ||||
Ollie's Bargain Outlet Holdings, Inc. (a) | 1,274 | 83,205 | ||
Oil, Gas & Consumable Fuels: 2.1% | ||||
Northern Oil and Gas, Inc. (a) | 41,955 | 98,175 | ||
Parsley Energy, Inc. - Class A | 6,535 | 123,577 | ||
221,752 |
The Accompanying Notes are an Integral Part of these Financial Statements.
27
PENN CAPITAL FUNDS TRUST |
PENN CAPITAL SPECIAL SITUATIONS SMALL CAP EQUITY FUND |
SCHEDULE OF INVESTMENTS |
DECEMBER 31, 2019 (UNAUDITED) |
Shares | Value | |||
Paper & Forest Products: 0.9% | ||||
Norbord, Inc. | 3,644 | $ | 97,404 | |
Road & Rail: 0.5% | ||||
Marten Transport Ltd. | 2,605 | 55,981 | ||
Semiconductors & Semiconductor Equipment: 6.4% | ||||
Diodes, Inc. (a) | 2,747 | 154,848 | ||
Rambus, Inc. (a) | 8,913 | 122,777 | ||
Semtech Corp. (a) | 3,244 | 171,608 | ||
Silicon Motion Technology Corp. - ADR | 4,414 | 223,834 | ||
673,067 | ||||
Software: 3.1% | ||||
Avaya Holdings Corp. (a) | 11,143 | 150,430 | ||
Five9, Inc. (a) | 1,983 | 130,045 | ||
Q2 Holdings, Inc. (a) | 536 | 43,459 | ||
323,934 | ||||
Specialty Retail: 3.6% | ||||
Five Below, Inc. (a) | 851 | 108,809 | ||
Floor & Decor Holdings, Inc. - Class A (a) | 2,108 | 107,107 | ||
National Vision Holdings, Inc. (a) | 5,104 | 165,523 | ||
381,439 | ||||
Thrifts & Mortgage Finance: 0.9% | ||||
WSFS Financial Corp. | 2,066 | 90,883 | ||
Wireless Telecommunication Services: 0.9% | ||||
Gogo, Inc. (a) | 15,115 | 96,736 | ||
Total Common Stocks (cost $8,266,197) | 9,793,209 | |||
Contingent Value Right - 0.0% | ||||
Media - 0.0% | ||||
Media General, Inc. (a) | 1,867 | 19 | ||
Total Contingent Value Right (cost $0) | 19 | |||
Real Estate Investment Trusts (REITs): 6.0% | ||||
Easterly Government Properties, Inc. | 5,987 | 142,071 | ||
Essential Properties Realty Trust, Inc. | 2,804 | 69,567 | ||
NexPoint Residential Trust, Inc. | 4,290 | 193,050 | ||
Physicians Realty Trust | 7,583 | 143,622 | ||
QTS Realty Trust, Inc. - Class A | 1,607 | 87,212 | ||
Total REITs (cost $558,281) | 635,522 | |||
Total Investments - 99.3% (cost $8,824,478) | 10,428,750 | |||
Other Assets and Liabilities 0.7% | 68,755 | |||
Net Assets: 100.0% | $ | 10,497,505 |
Percentages are stated as a percent of net assets.
ADR - American Depository Receipt
(a) | No distribution or dividend was made during the period ending December 31, 2019. As such, it is classified as a non-income producing security as of December 31, 2019. |
Country Exposure (as a percentage of total investments) | |
United States | 89.11% |
United Kingdom | 5.13% |
Cayman Islands | 2.15% |
Canada | 1.60% |
Puerto Rico | 1.34% |
Netherlands | 0.67% |
Sector Allocation (as a percentage of total investments) (Unaudited) |
The industry classifications presented in this report, present the Global Industry Classification Standard (GICS®). GICS® was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor Financial Services LLC (“S&P”). GICS® is a service mark of MSCI and S&P and has been licensed for use by U.S. Bank Global Fund Services.
The Accompanying Notes are an Integral Part of these Financial Statements.
28
PENN CAPITAL FUNDS TRUST PENN CAPITAL MANAGED ALPHA SMID CAP EQUITY FUNDSCHEDULE OF INVESTMENTSDECEMBER 31, 2019 (UNAUDITED)
Shares | Value | |||||
Common Stocks: 87.1% | ||||||
Aerospace & Defense: 3.2% | ||||||
Huntington Ingalls Industries, Inc. | 1,203 | $ | 301,809 | |||
Mercury Systems, Inc. (a) | 4,065 | 280,932 | ||||
582,741 | ||||||
Banks: 6.5% | ||||||
BOK Financial Corp. | 2,982 | 260,627 | ||||
Pinnacle Financial Partners, Inc. | 5,409 | 346,176 | ||||
Webster Financial Corp. | 4,993 | 266,426 | ||||
Western Alliance Bancorp | 5,501 | 313,557 | ||||
1,186,786 | ||||||
Biotechnology: 3.1% | ||||||
Amarin Corp PLC - ADR (a) | 12,212 | 261,825 | ||||
Exelixis, Inc. (a) | 16,587 | 292,263 | ||||
554,088 | ||||||
Building Products: 3.5% | ||||||
Allegion PLC | 2,540 | 316,332 | ||||
Masco Corp. | 6,517 | 312,751 | ||||
629,083 | ||||||
Chemicals: 0.9% | ||||||
HB Fuller Co. | 3,272 | 168,737 | ||||
Commercial Services & Supplies: 3.2% | ||||||
IAA, Inc. (a) | 7,462 | 351,162 | ||||
KAR Auction Services, Inc. | 10,184 | 221,909 | ||||
573,071 | ||||||
Construction Materials: 1.7% | ||||||
Martin Marietta Materials, Inc. | 1,090 | 304,808 | ||||
Diversified Financial Services: 2.3% | ||||||
Voya Financial, Inc. | 6,961 | 424,482 | ||||
Entertainment: 1.7% | ||||||
Liberty Media Corp.-Liberty SiriusXM - Class A (a) | 6,409 | 309,811 | ||||
Food Products: 1.8% | ||||||
Lamb Weston Holdings, Inc. | 3,728 | 320,720 | ||||
Health Care Equipment & Supplier: 1.7% | ||||||
Teleflex, Inc. | 841 | 316,586 | ||||
Health Care Technology: 1.3% | ||||||
Allscripts Healthcare Solutions, Inc. (a) | 23,236 | 228,061 | ||||
Hotels, Restaurants & Leisure: 3.0% | ||||||
Boyd Gaming Corp. | 7,786 | 233,113 | ||||
Vail Resorts, Inc. | 1,293 | 310,100 | ||||
543,213 | ||||||
Household Durables: 2.0% | ||||||
Meritage Homes Corp. (a) | 4,755 | 290,578 | ||||
Roku, Inc. (a) | 522 | 69,896 | ||||
360,474 | ||||||
Independent Power and Renewable Electricity Producers: 1.5% | ||||||
Ormat Technologies, Inc. | 3,575 | 266,409 |
Shares | Value | |||
Insurance: 7.1% | ||||
Arch Capital Group Ltd. (a) | 12,606 | $ | 540,671 | |
Fidelity National Financial, Inc. | 9,573 | 434,136 | ||
Reinsurance Group of America, Inc. | 1,933 | 315,195 | ||
1,290,002 | ||||
Interactive Media & Services: 1.5% | ||||
IAC (a) | 1,122 | 279,501 | ||
IT Services: 2.8% | ||||
Black Knight, Inc. (a) | 3,018 | 194,601 | ||
GoDaddy, Inc. - Class A (a) | 4,533 | 307,881 | ||
502,482 | ||||
Life Sciences Tools & Services: 2.6% | ||||
Avantor, Inc. (a) | 14,763 | 267,949 | ||
PRA Health Sciences, Inc. (a) | 1,803 | 200,403 | ||
468,352 | ||||
Machinery: 1.5% | ||||
Allison Transmission Holdings, Inc. | 5,804 | 280,449 | ||
Media: 2.4% | ||||
Nexstar Media Group, Inc. - Class A | 2,063 | 241,887 | ||
Live Nation Entertainment, Inc. (a) | 2,850 | 203,690 | ||
445,577 | ||||
Metals & Mining: 3.0% | ||||
Alcoa Corp. (a) | 11,242 | 241,815 | ||
Commercial Metals Co. | 13,471 | 299,999 | ||
541,814 | ||||
Oil, Gas & Consumable Fuels: 3.9% | ||||
Arch Coal, Inc. - Class A | 2,238 | 160,554 | ||
Continental Resources, Inc. | 8,483 | 290,967 | ||
Diamondback Energy, Inc. | 2,701 | 250,815 | ||
702,336 | ||||
Pharmaceuticals: 3.8% | ||||
Catalent, Inc. (a) | 6,824 | 384,191 | ||
Elanco Animal Health, Inc. (a) | 10,496 | 309,107 | ||
693,298 | ||||
Professional Services: 2.1% | ||||
TransUnion | 4,393 | 376,085 | ||
Road & Rail: 1.4% | ||||
Schneider National, Inc. - Class B | 12,035 | 262,604 | ||
Semiconductors & Semiconductor Equipment: 5.6% | ||||
Marvell Technology Group Ltd. | 11,298 | 300,075 | ||
Skyworks Solutions, Inc. | 2,558 | 309,211 | ||
Teradyne, Inc. | 5,865 | 399,934 | ||
1,009,220 | ||||
Software: 4.4% | ||||
Five9, Inc. (a) | 3,130 | 205,265 | ||
Nice Ltd. - ADR (a) | 1,823 | 282,838 | ||
Tyler Technologies, Inc. (a) | 1,061 | 318,321 | ||
806,424 |
The Accompanying Notes are an Integral Part of these Financial Statements.
29
PENN CAPITAL FUNDS TRUST PENN CAPITAL MANAGED ALPHA SMID CAP EQUITY FUNDSCHEDULE OF INVESTMENTSDECEMBER 31, 2019 (UNAUDITED)
Shares | Value | |||
Specialty Retail: 3.8% | ||||
Burlington Stores, Inc. (a) | 1,919 | $ | 437,590 | |
Floor & Decor Holdings, Inc. - Class A (a) | 5,076 | 257,912 | ||
695,502 | ||||
Trading Companies & Distributors: 1.9% | ||||
United Rentals, Inc. (a) | 2,027 | 338,043 | ||
Water Utilities: 1.9% | ||||
Aqua America, Inc. | 7,395 | 347,121 | ||
Total Common Stocks (cost $12,536,049) | 15,807,880 | |||
Real Estate Investment Trusts (REITs): 10.2% | ||||
Camden Property Trust | 2,982 | 316,390 | ||
CyrusOne, Inc. | 3,755 | 245,690 | ||
Healthcare Trust of America, Inc. - Class A | 10,653 | 322,573 | ||
Invitation Homes, Inc. | 11,192 | 335,424 | ||
MGM Growth Properties LLC - Class A | 11,096 | 343,643 | ||
Sun Communities, Inc. | 1,883 | 282,638 | ||
Total REITS (cost $1,593,787) | 1,846,358 | |||
Total Investments - 97.3% (cost $14,129,836) | 17,654,238 | |||
Other Assets and Liabilities 2.7% | 494,884 | |||
Net Assets: 100.0% | $ | 18,149,122 |
Percentages are stated as a percent of net assets.
ADR - American Depository Receipt
(a) | No distribution or dividend was made during the period ending December 31, 2019. As such, it is classified as a non-income producing security as of December 31, 2019. |
Country Exposure (as a percentage of total investments) | |
United States | 90.37% |
Bermuda | 4.76% |
Ireland | 1.79% |
Israel | 1.60% |
United Kingdom | 1.48% |
Sector Allocation (as a percentage of total investments) (Unaudited) |
The industry classifications presented in this report, present the Global Industry Classification Standard (GICS®). GICS® was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor Financial Services LLC (“S&P”). GICS® is a service mark of MSCI and S&P and has been licensed for use by U.S. Bank Global Fund Services.
The Accompanying Notes are an Integral Part of these Financial Statements.
30
PENN Capital Funds Trust
Statements of Assets and Liabilities
December 31, 2019 (Unaudited)
Assets | Penn Capital Defensive Floating Rate Income Fund | Penn Capital Defensive Short Duration High Income Fund | Penn Capital Multi-Credit High Income Fund | Penn Capital Special Situations Small Cap Equity Fund | Penn Capital Managed Alpha SMID Cap Equity Fund | ||||||||||
Investments, at fair value(1) | |||||||||||||||
Unaffiliated issuers | $ | 45,920,095 | $ | 42,350,088 | $ | 15,241,442 | $ | 10,428,750 | $ | 17,654,238 | |||||
Affiliated mutual fund (see Note 7) | — | 1,049,996 | 3,236,546 | — | — | ||||||||||
Receivables: | |||||||||||||||
Advisor reimbursement due | 5,145 | 6,439 | 12,315 | 6,799 | 353 | ||||||||||
Dividends and interest | 210,726 | 652,641 | 202,911 | 2,617 | 21,179 | ||||||||||
Investments sold | 424,998 | — | 46,884 | — | — | ||||||||||
Fund shares sold | 70,000 | 5,000 | — | — | 100,000 | ||||||||||
Cash | 5,858,149 | 5,248,169 | 884,235 | 116,654 | 412,015 | ||||||||||
Other assets | 28,130 | 14,090 | 14,887 | 17,100 | 16,100 | ||||||||||
Total assets | 52,517,243 | 49,326,395 | 19,639,220 | 10,571,920 | 18,203,885 | ||||||||||
Liabilities | |||||||||||||||
Payables: | |||||||||||||||
Investments purchased | 3,437,735 | 4,106,550 | 587,724 | 16,052 | — | ||||||||||
Fund shares redeemed | 108 | — | — | — | — | ||||||||||
Accrued expenses: | |||||||||||||||
Professional fees | 16,658 | 16,787 | 16,672 | 11,562 | 11,647 | ||||||||||
Administration fees | 42,694 | 30,854 | 33,084 | 22,574 | 22,356 | ||||||||||
Custody fees | 3,488 | 2,895 | 675 | 4,613 | 524 | ||||||||||
Transfer agent fees and expenses | 11,390 | 6,225 | 6,349 | 7,005 | 6,643 | ||||||||||
Trustee fees and expenses | 2,539 | 1,603 | 1,454 | 817 | 1,190 | ||||||||||
Other accrued expenses | 10,504 | 2,744 | 3,702 | 11,792 | 12,403 | ||||||||||
Total liabilities | 3,525,116 | 4,167,658 | 649,660 | 74,415 | 54,763 | ||||||||||
Net assets | $ | 48,992,127 | $ | 45,158,737 | $ | 18,989,560 | $ | 10,497,505 | $ | 18,149,122 | |||||
Composition of Net Assets | |||||||||||||||
Paid-in capital | $ | 49,306,712 | $ | 44,806,294 | $ | 18,956,322 | $ | 9,003,800 | $ | 14,534,865 | |||||
Total distributable earnings | (314,585 | ) | 352,443 | 33,238 | 1,493,705 | 3,614,257 | |||||||||
Net assets | $ | 48,992,127 | $ | 45,158,737 | $ | 18,989,560 | $ | 10,497,505 | $ | 18,149,122 | |||||
Institutional Class | |||||||||||||||
Net assets applicable to outstanding shares | $ | 48,992,127 | $ | 45,158,737 | $ | 18,989,560 | $ | 10,497,505 | $ | 18,149,122 | |||||
Shares of beneficial interest outstanding, no par value, unlimited authorization | 4,900,682 | 4,522,878 | 1,899,510 | 900,501 | 1,364,031 | ||||||||||
Net asset value per share outstanding | $ | 10.00 | $ | 9.98 | $ | 10.00 | $ | 11.66 | $ | 13.31 | |||||
Investor Class(2) | |||||||||||||||
Net assets applicable to outstanding shares | $ | — | $ | — | $ | — | $ | — | $ | — | |||||
Shares of beneficial interest outstanding, no par value, unlimited authorization | — | — | — | — | — | ||||||||||
Net asset value per share outstanding | $ | — | $ | — | $ | — | $ | — | $ | — | |||||
_________ | |||||||||||||||
(1) Investment in securities at cost | |||||||||||||||
Unaffiliated issuers | $ | 45,723,186 | $ | 41,969,184 | $ | 14,889,601 | $ | 8,824,478 | $ | 14,129,836 | |||||
Affiliated mutual fund (see Note 7) | — | 1,055,685 | 3,273,568 | — | — | ||||||||||
(2) No information is provided for Investor Share Class shares because shares of that Class had not yet been issued as of December 31, 2019. |
The accompanying notes are an integral part of the financial statements.
31
PENN Capital Funds Trust
Statements of Operations (Unaudited)
Penn Capital Defensive Floating Rate Income Fund | Penn Capital Defensive Short Duration High Income Fund | Penn Capital Multi-Credit High Income Fund | Penn Capital Special Situations Small Cap Equity Fund | Penn Capital Managed Alpha SMID Cap Equity Fund | |||||||||||
Investment Income (Loss) | July 1, 2019 - December 31, 2019 | July 1, 2019 - December 31, 2019 | July 1, 2019 - December 31, 2019 | July 1, 2019 - December 31, 2019 | July 1, 2019 - December 31, 2019 | ||||||||||
Income | |||||||||||||||
Dividends** | |||||||||||||||
Unaffiliated dividends | $ | — | $ | — | $ | — | $ | 43,078 | $ | 91,402 | |||||
Dividend distributions from affiliated mutual fund (see Note 7) | — | 18,666 | 73,654 | — | — | ||||||||||
Interest*** | 1,094,535 | 831,372 | 490,865 | 855 | 5,664 | ||||||||||
Total income | 1,094,535 | 850,038 | 564,519 | 43,933 | 97,066 | ||||||||||
Expenses | |||||||||||||||
Investment advisory fees | 115,901 | 88,455 | 61,616 | 46,034 | 69,877 | ||||||||||
Administration and accounting | 69,163 | 49,770 | 53,525 | 33,648 | 33,337 | ||||||||||
Professional fees | 21,876 | 21,814 | 21,869 | 16,889 | 16,840 | ||||||||||
Registration | 11,060 | 11,858 | 11,083 | 10,899 | 11,026 | ||||||||||
Transfer agent expense | 10,921 | 10,755 | 9,399 | 9,190 | 9,643 | ||||||||||
Shareholder communication | 9,962 | 4,582 | 1,426 | 2,451 | 1,901 | ||||||||||
Compliance fees | 7,094 | 7,135 | 7,038 | 7,038 | 7,038 | ||||||||||
Shareholder servicing fees | 6,998 | 8,549 | 3,089 | 4,041 | 2,991 | ||||||||||
Custodian | 5,539 | 4,459 | 4,178 | 3,548 | 2,965 | ||||||||||
Insurance | 5,245 | 4,544 | 2,114 | 1,314 | 1,940 | ||||||||||
Trustees | 5,230 | 5,467 | 2,304 | 1,314 | 1,937 | ||||||||||
Miscellaneous | — | — | — | 6,606 | 6,606 | ||||||||||
Interest expense | — | — | — | 32 | — | ||||||||||
Total expenses | 268,989 | 217,388 | 177,641 | 143,004 | 166,101 | ||||||||||
Expense waiver and reimbursement from Advisor | (134,123 | ) | (111,242 | ) | (113,345 | ) | (90,154 | ) | (83,802 | ) | |||||
Net expenses | 134,866 | 106,146 | 64,296 | 52,850 | 82,299 | ||||||||||
Net investment income (loss) | 959,669 | 743,892 | 500,223 | (8,917 | ) | 14,767 | |||||||||
Realized and Unrealized Gain (Loss) on Investments | |||||||||||||||
Net realized gain (loss) on investments | |||||||||||||||
Unaffiliated issuers | (201,338 | ) | 30,980 | (226,582 | ) | 220,749 | 255,001 | ||||||||
Affiliated Mutual Fund (See Note 7) | — | — | (13,277 | ) | — | — | |||||||||
Net change in unrealized appreciation (depreciation) | |||||||||||||||
Unaffiliated issuers | 321,531 | 189,052 | 266,094 | 631,695 | 1,238,896 | ||||||||||
Affiliated Mutual Fund (See Note 7) | — | 2,658 | 24,626 | — | — | ||||||||||
Net realized and unrealized gain on investments | 120,193 | 222,690 | 50,861 | 852,444 | 1,493,897 | ||||||||||
Net increase in net assets resulting from operations | $ | 1,079,862 | $ | 966,582 | $ | 551,084 | $ | 843,527 | $ | 1,508,664 | |||||
_________ | |||||||||||||||
** Net of foreign taxes withheld | $ | — | $ | — | $ | — | $ | — | $ | 335 | |||||
*** Net of foreign taxes withheld | $ | 774 | $ | 846 | $ | — | $ | — | $ | — |
The accompanying notes are an integral part of the financial statements.
32
PENN Capital Funds Trust
Statements of Changes in Net Assets
Penn Capital Defensive Floating Rate Income Fund | Penn Capital Defensive Short Duration High Income Fund | Penn Capital Multi-Credit High Income Fund | Penn Capital Special Situations Small Cap Equity Fund | Penn Capital Managed Alpha SMID Cap Equity Fund | ||||||||||||||||||||||||||
Increase (Decrease) in Net Assets | July 1, 2019 - December 31, 2019 (Unaudited) | July 1, 2018 - June 30, 2019 | July 1, 2019 - December 31, 2019 (Unaudited) | July 1, 2018 - June 30, 2019 | July 1, 2019 - December 31, 2019 (Unaudited) | July 1, 2018 - June 30, 2019 | July 1, 2019 - December 31, 2019 (Unaudited) | July 1, 2018 - June 30, 2019 | July 1, 2019 - December 31, 2019 (Unaudited) | July 1, 2018 - June 30, 2019 | ||||||||||||||||||||
Operations | ||||||||||||||||||||||||||||||
Net investment income (loss) | $ | 959,669 | $ | 1,792,841 | $ | 743,892 | $ | 837,408 | $ | 500,223 | $ | 841,513 | $ | (8,917 | ) | $ | (51,603 | ) | $ | 14,767 | $ | (15,532 | ) | |||||||
Net realized gain (loss) on investments: | (201,338 | ) | (273,197 | ) | 30,980 | (42,322 | ) | (239,859 | ) | 3,151 | 220,749 | (214,421 | ) | 255,001 | 570,842 | |||||||||||||||
Net change in unrealized appreciation (depreciation) | 321,531 | (119,403 | ) | 191,710 | 323,119 | 290,720 | (9,252 | ) | 631,695 | (1,835,597 | ) | 1,238,896 | (72,523 | ) | ||||||||||||||||
Net increase (decrease) in net assets resulting from operations | 1,079,862 | 1,400,241 | 966,582 | 1,118,205 | 551,084 | 835,412 | 843,527 | (2,101,621 | ) | 1,508,664 | 482,787 | |||||||||||||||||||
Dividends and distributions to shareholders | ||||||||||||||||||||||||||||||
Net dividends and distributions from net investment income and realized gain - Institutional Class | (962,624 | ) | (1,892,386 | ) | (762,110 | ) | (856,770 | ) | (523,026 | ) | (902,124 | ) | — | (1,194,500 | ) | (768,746 | ) | (1,274,995 | ) | |||||||||||
Total dividends and distributions to shareholders | (962,624 | ) | (1,892,386 | ) | (762,110 | ) | (856,770 | ) | (523,026 | ) | (902,124 | ) | — | (1,194,500 | ) | (768,746 | ) | (1,274,995 | ) | |||||||||||
Capital share transactions | ||||||||||||||||||||||||||||||
Net proceeds from sale of shares | 12,353,120 | 10,672,029 | 10,454,703 | 22,772,480 | 3,363,256 | 1,638,773 | 517,586 | 1,418,042 | 2,760,905 | 224,305 | ||||||||||||||||||||
Dividends and distributions reinvested | 644,633 | 1,380,000 | 726,081 | 853,180 | 521,985 | 895,794 | — | 1,167,457 | 763,334 | 1,251,646 | ||||||||||||||||||||
Cost of shares redeemed** | (1,607,387 | ) | (5,804,117 | ) | (1,150,105 | ) | (1,399,351 | ) | (159,529 | ) | (1,045,925 | ) | (1,061,169 | ) | (10,380,725 | ) | (478,349 | ) | (1,230,612 | ) | ||||||||||
Net increase (decrease) in net assets resulting from capital share transactions | 11,390,366 | 6,247,912 | 10,030,679 | 22,226,309 | 3,725,712 | 1,488,642 | (543,583 | ) | (7,795,226 | ) | 3,045,890 | 245,339 | ||||||||||||||||||
Net increase (decrease) in net assets | 11,507,604 | 5,755,767 | 10,235,151 | 22,487,744 | 3,753,770 | 1,421,930 | 299,944 | (11,091,347 | ) | 3,785,808 | (546,869 | ) | ||||||||||||||||||
Net Assets | ||||||||||||||||||||||||||||||
Beginning of period | 37,484,523 | 31,728,756 | 34,923,586 | 12,435,842 | 15,235,790 | 13,813,860 | 10,197,561 | 21,288,908 | 14,363,314 | 14,910,183 | ||||||||||||||||||||
End of period | $ | 48,992,127 | $ | 37,484,523 | $ | 45,158,737 | $ | 34,923,586 | $ | 18,989,560 | $ | 15,235,790 | $ | 10,497,505 | $ | 10,197,561 | $ | 18,149,122 | $ | 14,363,314 | ||||||||||
** Net of redemption fees of: | $ | 693 | $ | 485 | $ | — | $ | 2,584 | $ | 929 | $ | 511 | $ | — | $ | 1,063 | $ | — | $ | — |
The accompanying notes are an integral part of the financial statements.
33
PENN Capital Funds Trust
Financial Highlights
Per Common Share Data(a) | Supplemental data and ratios | ||||||||||||||||||||||||||||||||||||||||||||
Income from investment operations | Distributions to shareholders | ||||||||||||||||||||||||||||||||||||||||||||
Penn Capital Defensive Floating Rate Income Fund | |||||||||||||||||||||||||||||||||||||||||||||
Institutional Class | |||||||||||||||||||||||||||||||||||||||||||||
7/1/19 to 12/31/19 (Unaudited) | $ | 9.97 | 0.23 | 0.03 | 0.26 | (f) | (0.23 | ) | — | (0.23 | ) | $ | 10.00 | 2.59 | %(d) | $ | 48,992 | 0.64 | % | 1.28 | % | 4.56 | % | 3.92 | % | 26 | %(d) | ||||||||||||||||||
7/1/18 to 6/30/19 | $ | 10.09 | 0.48 | (0.09 | ) | 0.39 | (f) | (0.51 | ) | — | (0.51 | ) | $ | 9.97 | 4.04 | % | $ | 37,485 | 0.64 | % | 1.43 | % | 4.89 | % | 4.10 | % | 57 | % | |||||||||||||||||
7/1/17 to 6/30/18 | $ | 10.21 | 0.43 | (0.06 | ) | 0.37 | (0.43 | ) | (0.06 | ) | (0.49 | ) | $ | 10.09 | 3.71 | % | $ | 31,729 | 0.65 | %(g) | 1.64 | % | 4.31 | %(g) | 3.32 | % | 65 | % | |||||||||||||||||
7/1/16 to 6/30/17 | $ | 10.09 | 0.40 | 0.17 | 0.57 | (0.40 | ) | (0.05 | ) | (0.45 | ) | $ | 10.21 | 5.66 | % | $ | 25,031 | 0.74 | % | 1.95 | % | 3.90 | % | 2.69 | % | 108 | % | ||||||||||||||||||
12/1/15(e) to 6/30/16 | $ | 10.00 | 0.14 | 0.06 | 0.20 | (0.11 | ) | — | (0.11 | ) | $ | 10.09 | 1.99 | %(d) | $ | 18,625 | 0.74 | % | 2.77 | % | 2.56 | % | 0.53 | % | 43 | %(d) | |||||||||||||||||||
Penn Capital Defensive Short Duration High Income Fund | |||||||||||||||||||||||||||||||||||||||||||||
Institutional Class | |||||||||||||||||||||||||||||||||||||||||||||
7/1/19 to 12/31/19 (Unaudited) | $ | 9.93 | 0.19 | 0.05 | 0.24 | (0.19 | ) | — | (0.19 | ) | $ | 9.98 | 2.45 | %(d) | $ | 45,159 | 0.54 | % | 1.11 | % | 3.79 | % | 3.22 | % | 35 | %(d) | |||||||||||||||||||
7/1/18 to 6/30/2019 | $ | 9.85 | 0.35 | 0.10 | 0.45 | (f) | (0.37 | ) | — | (0.37 | ) | $ | 9.93 | 4.65 | % | $ | 34,924 | 0.54 | % | 1.44 | % | 3.75 | % | 2.85 | % | 48 | % | ||||||||||||||||||
7/17/17(e) to 6/30/18 | $ | 10.00 | 0.27 | (0.17 | ) | 0.10 | (0.25 | ) | — | (0.25 | ) | $ | 9.85 | 1.03 | %(d) | $ | 12,436 | 0.54 | % | 2.70 | % | 3.08 | % | 0.92 | % | 39 | %(d) | ||||||||||||||||||
Penn Capital Multi-Credit High Income Fund | |||||||||||||||||||||||||||||||||||||||||||||
Institutional Class | |||||||||||||||||||||||||||||||||||||||||||||
7/1/19 to 12/31/19 (Unaudited) | $ | 9.99 | 0.27 | 0.03 | 0.30 | (f) | (0.29 | ) | — | (0.29 | ) | $ | 10.00 | 3.05 | %(d) | $ | 18,990 | 0.72 | % | 1.99 | % | 5.60 | % | 4.33 | % | 42 | %(d) | ||||||||||||||||||
7/1/18 to 6/30/19 | $ | 10.06 | 0.59 | (0.02 | ) | 0.57 | (0.61 | ) | (0.03 | ) | (0.64 | ) | $ | 9.99 | 5.83 | % | $ | 15,236 | 0.72 | % | 2.26 | % | 5.90 | % | 4.36 | % | 85 | % | |||||||||||||||||
7/1/17 to 6/30/18 | $ | 10.52 | 0.61 | (0.22 | ) | 0.39 | (f) | (0.63 | ) | (0.22 | ) | (0.85 | ) | $ | 10.06 | 3.81 | % | $ | 13,814 | 0.72 | % | 2.80 | % | 5.89 | % | 3.81 | % | 66 | % | ||||||||||||||||
7/1/16 to 6/30/17 | $ | 9.95 | 0.73 | 0.56 | 1.29 | (0.72 | ) | — | (0.72 | ) | $ | 10.52 | 13.36 | % | $ | 8,772 | 0.72 | % | 3.25 | % | 7.01 | % | 4.48 | % | 79 | % | |||||||||||||||||||
12/1/15(e) to 6/30/16 | $ | 10.00 | 0.35 | (0.10 | ) | 0.25 | (0.30 | ) | — | (0.30 | ) | $ | 9.95 | 2.66 | %(d) | $ | 7,843 | 0.72 | % | 5.14 | % | 6.34 | % | 1.92 | % | 62 | %(d) | ||||||||||||||||||
Penn Capital Special Situations Small Cap Equity Fund | |||||||||||||||||||||||||||||||||||||||||||||
Institutional Class | |||||||||||||||||||||||||||||||||||||||||||||
7/1/19 to 12/31/19 (Unaudited) | $ | 10.67 | (0.01 | ) | 1.00 | 0.99 | — | — | — | $ | 11.66 | 9.48 | %(d) | $ | 10,498 | 1.09 | % | 2.95 | % | (0.18 | )% | (2.04 | )% | 53 | %(d) | ||||||||||||||||||||
7/1/18 to 6/30/19 | $ | 12.59 | (0.05 | ) | (0.98 | ) | (1.03 | ) (f) | — | (0.89 | ) | (0.89 | ) | $ | 10.67 | — | $ | 10,198 | 1.09 | % | 2.38 | % | (0.35 | )% | (1.64 | )% | 97 | % | |||||||||||||||||
7/1/17 to 6/30/18 | $ | 11.71 | (0.08 | ) | 2.36 | 2.28 | (f) | — | (1.40 | ) | (1.40 | ) | $ | 12.59 | 20.31 | % | $ | 21,289 | 1.09 | % | 2.09 | % | (0.64 | )% | (1.64 | )% | 105 | % | |||||||||||||||||
7/1/16 to 6/30/17 | $ | 10.32 | (0.04 | ) | 2.24 | 2.20 | (f) | — | (0.81 | ) | (0.81 | ) | $ | 11.71 | 21.52 | % | $ | 21,867 | 1.09 | % | 2.19 | % | (0.54 | )% | (1.64 | )% | 101 | % | |||||||||||||||||
12/1/15(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 Managed Alpha SMID Cap Equity Fund | |||||||||||||||||||||||||||||||||||||||||||||
Institutional Class | |||||||||||||||||||||||||||||||||||||||||||||
7/1/19 to 12/31/2019 (Unaudited) | $ | 12.68 | 0.01 | 1.21 | 1.22 | — | (0.59 | ) | (0.59 | ) | $ | 13.31 | 9.79 | %(d) | $ | 18,149 | 1.06 | % | 2.14 | % | (0.89 | )% | 0.19 | % | 23 | %(d) | |||||||||||||||||||
7/1/18 to 6/30/2019 | $ | 13.55 | (0.01 | ) | 0.37 | 0.36 | (f) | — | (1.23 | ) | (1.23 | ) | $ | 12.68 | 3.64 | % | $ | 14,363 | 1.06 | % | 2.20 | % | (0.11 | )% | (1.25 | )% | 40 | % | |||||||||||||||||
7/1/17 to 6/30/18 | $ | 11.73 | (0.04 | ) | 2.07 | 2.03 | — | (0.21 | ) | (0.21 | ) | $ | 13.55 | 17.41 | % | $ | 14,910 | 1.06 | % | 2.38 | % | (0.34 | )% | (1.66 | )% | 64 | % | ||||||||||||||||||
7/1/16 to 6/30/17 | $ | 9.65 | (0.02 | ) | 2.10 | 2.08 | — | — | — | $ | 11.73 | 21.55 | % | $ | 11,027 | 1.06 | % | 2.63 | % | (0.29 | )% | (1.86 | )% | 91 | % | ||||||||||||||||||||
12/1/15(e) to 6/30/16 | $ | 10.00 | (0.03 | ) | (0.32 | ) | (0.35 | ) | — | — | — | $ | 9.65 | — | $ | 9,462 | 1.06 | % | 3.74 | % | (0.53 | )% | (3.21 | )% | 70 | %(d) |
* | No information is provided for Investor Class shares because shares of that class had not yet been issued as of December 31, 2019. |
(a) | Information presented related to a share outstanding for the entire period. |
(b) | Annualized for periods less than one full year. |
(c) | Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. |
(d) | Not annualized for periods less than one year. |
(e) | Commencement of operations. |
(f) | Total from investment operations per share includes redemption fees of less than $0.01 per share. |
(g) | Expense waiver of 0.64% was implemented on August 1, 2017. |
The accompanying notes are an integral part of the financial statements.
34
PENN CAPITAL FUNDS TRUST
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2019 (UNAUDITED)
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 five series that are available for investment: the Penn Capital Defensive Floating Rate Income Fund, the Penn Capital Defensive Short Duration High Income Fund, the Penn Capital Multi-Credit High Income Fund, the Penn Capital Special Situations Small Cap Equity Fund and the Penn Capital Managed Alpha SMID Cap Equity Fund (collectively referred to as the “Funds” and each individually referred to as a “Fund”). Two other series: the Penn Capital Micro Cap Equity Fund and the Penn Capital Enterprise Value Small Cap Equity Fund are not currently offered. The Funds follow the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification Topic 946 “Financial Services- Investment Companies.”
The Penn Capital Defensive Floating Rate Income Fund’s investment objective is to seek to provide current income. The Penn Capital Defensive Floating Rate Income Fund commenced operations on December 1, 2015.
The Penn Capital Defensive Short Duration High Income Fund’s investment objective is to seek to provide a high level of current income. The Penn Capital Defensive Short Duration High Income Fund commenced operations on July 17, 2017.
The Penn Capital Multi-Credit High Income Fund’s investment objective is to seek to provide total return through interest income and capital appreciation. The Penn Capital Multi-Credit High Income Fund commenced operations on December 1, 2015.
The Penn Capital Managed Alpha SMID Cap Equity Fund and the Penn Capital Special Situations Small Cap Equity Fund’s investment objective is to seek to provide capital appreciation. The Penn Capital Managed Alpha SMID Cap Equity Fund commenced operations on December 1, 2015. The Penn Capital Special Situations Small Cap Equity Fund commenced operations on December 18, 2015.
Each Fund’s investment objective is non-fundamental, and may be changed by the Trust’s Board of Trustees (the “Board” or “Trustees”) without shareholder approval. Unless otherwise noted, all of the other investment policies and strategies described in the Prospectus or hereafter are nonfundamental. The Penn Capital Management Company, Inc. (“Advisor”) serves as the investment advisor to the Funds.
The Trust offers two classes of shares for the Penn Capital Defensive Floating Rate Income Fund, the Penn Capital Defensive Short Duration High Income Fund, the Penn Capital Multi-Credit High Income Fund, the Penn Capital Special Situations Small Cap Equity Fund and the Penn Capital Managed Alpha SMID Cap Equity Fund: Institutional and Investor Class. The Trust offers Institutional Class shares for the Penn Capital Defensive Short Duration High Income Fund. The Trust has also registered two other series, each with one class: the Penn Capital Micro Cap Equity Fund and the Penn Capital Enterprise Value Small Cap Equity Fund: Institutional Class. No information is provided in this report for Investor Class shares because shares of that class had not yet been issued as of December 31, 2019. Neither class has a front-end or back-end sales charge. The Penn Capital Micro Cap Equity Fund and Penn Capital Enterprise Value Small Cap Fund have not commenced operations as of December 31, 2019.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the Funds in the preparation of their financial statements. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).
A. Investment Valuation
The Funds use the following valuation methods to determine fair value as either fair value for investments for which market quotations are available, or if not available, the fair value, as determined in good faith pursuant to such policies and procedures as may be approved by the Trust’s Board from time to time. The valuation of the portfolio investments of the Funds currently includes the following processes:
Portfolio securities listed on a national or foreign securities exchange, except those listed on the NASDAQ® Stock Market and Small CapSM exchanges (“NASDAQ®”), for which market quotations are available, are valued at the official closing price of such exchange on each business day (defined as days on which the Funds are open for business (“Business Day”)). Portfolio securities traded on the NASDAQ® will be valued at the NASDAQ® Official Closing Price on each Business Day. If there is no such reported sale on an exchange or NASDAQ®, the portfolio security will be valued at the most recent quoted bid price. Price information on listed securities is taken from the exchange where the security is primarily traded.
35
PENN CAPITAL FUNDS TRUST
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2019 (UNAUDITED)
Other assets and securities for which no quotations are readily available (such as for certain restricted or unlisted securities and private placements) or that may not be reliably priced (such as in the case of trade suspensions or halts, price movement limits set by certain foreign markets, and thinly traded or illiquid securities) will be valued in good faith at fair value using procedures and methods approved by the Board. Under the procedures adopted by the Board, the Board has delegated day-to-day responsibility for fair value determinations to a Valuation Committee comprised of representatives from the Advisor.
A Fund’s portfolio holdings may also consist of shares of other investment companies in which the Fund invests. The value of each such investment company will be its net asset value (“NAV”) at the time the Fund’s shares are priced. Each investment company calculates its NAV based on the current market value for its portfolio holdings. Each investment company values securities and other instruments in a manner as described in that investment company’s prospectus. The investment company’s prospectus explains the circumstances under which the company will use fair value pricing and the effects of using fair value pricing.
Because a Fund may invest in foreign securities, the Fund’s NAV may change on days when a shareholder will not be able to purchase or redeem Fund shares because foreign markets are open at times and on days when U.S. markets are not. Investments quoted in foreign currencies will be valued daily in U.S. dollars on the basis of the foreign currency exchange rates prevailing at the time such valuation is determined. Foreign currency exchange rates are generally determined as of the close of the New York Stock Exchange (“NYSE”) (generally 4:00 p.m. Eastern time). If an event that could materially affect the value of the Fund’s foreign securities has occurred between the time the securities were last traded and the time that the Fund calculates its NAV, the closing price of the Fund’s securities may no longer reflect their market value at the time the Fund calculates its NAV. In such a case, the Fund may use fair value methods to value such securities.
Fixed income securities shall be valued at the evaluated bid price supplied by the Fund’s pricing agent based on broker-dealer supplied valuations and other criteria, or directly by independent brokers when the pricing agent does not provide a price or the Valuation Committee does not believe that the pricing agent price reflects the current market value. If a price of a position is sought using independent brokers, the Advisor shall seek to obtain an evaluation bid price from at least two independent brokers who are knowledgeable about the position. The price of the position would be deemed to be an average of such bid prices. In the absence of sufficient broker dealer quotes, securities shall be valued at fair value pursuant to procedures adopted by the Board.
Bank loans are not listed on any securities exchange or board of trade. They are typically bought and sold by institutional investors in individually negotiated private transactions that function in many respects like an over-the-counter secondary market. This market generally has fewer trades and less liquidity than the secondary market for other types of securities. Some bank loans have few or no trades, or trade infrequently, and information regarding a specific bank loan may not be widely available or may be incomplete. Except as otherwise specified, bank loan securities shall be valued at the evaluated bid prices supplied by the Fund’s pricing agent based on broker-dealer supplied valuations and other criteria, such as, issuer details, interest rates, yield curves, prepayment speeds, credit risks/spreads, default rates and quoted prices for similar assets, or directly by independent brokers when the pricing agent does not provide a price or the Valuation Committee does not believe that the pricing agent price reflects the current market value. If a price of a position is sought using independent brokers, the Advisor shall seek to obtain a bid price from at least two independent brokers who are knowledgeable about the position. The price of the position would be deemed to be an average of such bid prices. In the absence of sufficient broker dealer quotes, securities shall be valued at fair value pursuant to procedures adopted by the Board.
Occasionally, reliable market quotations are not readily available (such as for certain restricted or unlisted securities and private placements) or securities and other assets may not be reliably priced (such as in the case of trade suspensions or halts, price movement limits set by certain foreign markets, and thinly traded or illiquid securities), or there may be events affecting the value of foreign securities or other securities held by the Funds that occur when regular trading on foreign or other exchanges is closed, but before trading on the NYSE is closed. Fair value determinations are then made in good faith in accordance with procedures adopted by the Board. Under the procedures adopted by the Board, the Board has delegated the responsibility for making fair value determinations to a Valuation Committee, subject to the Board’s oversight. Generally, the fair value of a portfolio security or other asset shall be the amount that the owner of the security or asset might reasonably expect to receive upon its current sale. A three-tier hierarchy is utilized to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability and are developed based
36
PENN CAPITAL FUNDS TRUST
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2019 (UNAUDITED)
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, 2019 in valuing each Fund’s investments:
Description | Level 1 | Level 2 | Level 3 | Total | ||||||||
Penn Capital Defensive Floating Rate Income Fund | ||||||||||||
Investments in Securities(a) | ||||||||||||
Bank Loans | $ | — | $ | 38,671,231 | $ | — | $ | 38,671,231 | ||||
Corporate Bonds | — | 5,996,574 | — | 5,996,574 | ||||||||
U.S. Government Notes | — | 1,252,290 | — | 1,252,290 | ||||||||
Total Investments in Securities | $ | — | $ | 45,920,095 | $ | — | $ | 45,920,095 |
Penn Capital Defensive Short Duration High Income Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||
Investments in Securities(a) | ||||||||||||
Convertible Bonds | $ | — | $ | 389,358 | $ | — | $ | 389,358 | ||||
Corporate Bonds | — | 39,623,448 | — | 39,623,448 | ||||||||
Bank Loans | — | 2,337,282 | — | 2,337,283 | ||||||||
Mutual Fund | 1,049,996 | — | — | 1,049,996 | ||||||||
Total Investments in Securities | $ | 1,049,996 | $ | 42,350,088 | $ | — | $ | 43,400,085 |
Penn Capital Multi-Credit High Income Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||
Investments in Securities(a) | ||||||||||||
Corporate Bonds | $ | — | $ | 11,328,943 | $ | — | $ | 11,328,943 | ||||
Convertible Bonds | — | 483,132 | — | 483,132 | ||||||||
Bank Loans | — | 3,429,320 | — | 3,429,320 | ||||||||
Mutual Fund | 3,236,546 | — | — | 3,236,546 | ||||||||
Preferred Stock | — | — | 47 | 47 | ||||||||
Total Investments in Securities | $ | 3,236,546 | $ | 15,241,395 | $ | 47 | $ | 18,477,988 |
37
PENN CAPITAL FUNDS TRUST
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2019 (UNAUDITED)
Penn Capital Special Situations Small Cap Equity Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||
Investments in Securities(a) | ||||||||||||
Common Stocks | $ | 9,793,209 | $ | — | $ | — | $ | 9,793,209 | ||||
Contingent Value Right | — | 19 | — | 19 | ||||||||
Real Estate Investment Trusts (REITs) | 635,522 | — | — | 635,522 | ||||||||
Total Investments in Securities | $ | 10,428,731 | $ | 19 | $ | — | $ | 10,428,750 |
Penn Capital Managed Alpha SMID Cap Equity | Level 1 | Level 2 | Level 3 | Total | ||||||||
Investments in Securities(a) | ||||||||||||
Common Stocks | $ | 15,807,880 | $ | — | $ | — | $ | 15,807,880 | ||||
Real Estate Investment Trusts (REITs) | 1,846,358 | — | — | 1,846,358 | ||||||||
Total Investments in Securities | $ | 17,654,238 | $ | — | $ | — | $ | 17,654,238 |
(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, 2019:
Type of Assets | Fair Value as of December 31, 2019 | Valuation Techniques | Unobservable Input | ||||||
Penn Capital Multi-Credit High Income Fund | |||||||||
Preferred Stock | |||||||||
Spanish Broadcasting Systems, Inc. | 47 | Broker Quote | Unpublished independent broker quote |
The following table reconciles Level 3 investments based on the inputs used to determine fair value:
Balance as of July 1, 2019 | Purchases | Sales | Accretion of Discount | Net Realized Gain/Loss | Balance as of December 31, 2019 | Change in Unrealized Appreciation (Depreciation) from Investments Held as of December 31, 2019 | |||||||||||||||
Penn Capital Multi-Credit High Income Fund | |||||||||||||||||||||
Preferred Stock | |||||||||||||||||||||
Spanish Broadcasting Systems, Inc. | $ | 40 | $ | — | $ | — | $ | — | $ | — | $ | 47 | $ | 7 |
As of December 31, 2019, the change in unrealized appreciation on positions still held for securities that were considered Level 3 was $7.
B. Investment Transactions and Related Investment Income
Investment transactions are accounted for on a trade-date basis. Interest income is recorded on the accrual basis, including the amortization of premiums and accretion of discounts on bonds held using the yield-to-maturity method. Dividend income is recognized on ex-dividend date.
Realized gains and losses on investment transactions and unrealized appreciation and depreciation of investments are reported for financial statement and Federal income tax purposes on the identified cost method.
C. Expenses
The Trust’s expenses are allocated to the individual Fund in proportion to the net assets of the respective Fund when the expenses were incurred, except where direct allocations of expenses can be made.
38
PENN CAPITAL FUNDS TRUST
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2019 (UNAUDITED)
D. Use of Estimates
The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting year. Actual results could differ from those estimates.
E. Dividends and Distributions
Dividends and distributions to Shareholders are recorded on the ex-date. The Penn Capital Defensive Floating Rate Income Fund, the Penn Capital Defensive Short Duration High Income Fund, and the Penn Capital Multi-Credit High Income Fund declare and distribute their net investment income, if any, monthly and make distributions of their net realized capital gains, if any, at least annually, usually in December. The Penn Capital Special Situations Small Cap Equity Fund and the Penn Capital Managed Alpha SMID Cap Equity Fund declare and distribute their net investment income, if any, annually and make distributions of net realized capital gains, if any, at least annually, usually in December.
The character of distributions made during the period from net investment income or net realized gains may differ from its ultimate characterization for federal income tax purposes. In addition, due to the timing of dividend distributions, the fiscal period in which the amounts are distributed may differ from the period that income or realized gains (losses) were recorded by each Fund.
F. Federal Income Taxes
Each Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended. If so qualified, the Funds will not be subject to federal income tax to the extent they distribute all of their net investment income and capital gains to shareholders. Therefore, no federal income tax provision is required.
The Funds evaluate tax positions taken or expected to be taken in the course of preparing their tax returns to determine whether it is more-likely-than-not (i.e., greater than 50%) that each tax position will be sustained upon examination by a taxing authority based on the technical merits of the position. Tax positions not deemed to meet the more-likely-than-not threshold are recorded as a tax benefit or expense in the current year. The Funds did not record any tax provision in the current period and have no provision for taxes in the financial statements. However, management’s conclusions regarding tax positions taken may be subject to review and adjustment at a later date based on factors including, but not limited to, examination by tax authorities (i.e., the last three open tax year ends, as applicable) and on-going analysis of and changes to tax laws, regulations and interpretations thereof.
G. Indemnifications
Under the Trust’s organizational documents, its officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust and each Fund. In addition, in the normal course of business, the Trust may enter into contracts that provide general indemnification to other parties. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust that have not yet occurred, and may not occur. However, the Trust has not had prior claims or losses pursuant to these contracts and considers the risk of loss to be remote.
3. Agreements and Related Party Transactions
Investment Advisory Agreement
The Trust has entered into an investment advisory agreement with the Advisor. Under the terms of the agreement, each Fund pays the Advisor a fee, payable at the end of each month, at an annual rate, set forth in the table below, of the respective Fund’s average daily net assets.
Penn Capital Defensive Floating Rate Income Fund | 0.55 | % | |
Penn Capital Defensive Short Duration High Income Fund | 0.45 | % | |
Penn Capital Multi-Credit High Income Fund | 0.69 | % | |
Penn Capital Special Situations Small Cap Equity Fund | 0.95 | % | |
Penn Capital Managed Alpha SMID Cap Equity Fund | 0.90 | % |
With respect to each Fund other than the Penn Capital Defensive Short Duration High Income Fund and the Penn Capital Multi-Credit High Income Fund, the Advisor has contractually agreed to waive its fees and/or pay Fund expenses so that the Funds’
39
PENN CAPITAL FUNDS TRUST
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2019 (UNAUDITED)
total annual operating expenses (excluding any acquired fund fees and expenses, taxes, interest, brokerage fees, certain insurance costs, and extraordinary and other non-routine expenses) do not exceed the amounts shown below as a percentage of each Fund’s average daily net assets. With respect to the Penn Capital Multi-Credit High Income Fund and the Penn Capital Defensive Short Duration High Income Fund, the Advisor has contractually agreed to waive its fees and/or pay Fund expenses so that the Fund’s total annual operating expenses (including any acquired fund fees and expenses incurred by the Fund as a result of its investments in other investment companies managed by the Advisor, but excluding any acquired fund fees and expenses incurred by the Fund as a result of its investments in unaffiliated investment companies, taxes, interest, brokerage fees, certain insurance costs, and extraordinary and other non-routine expenses) do not exceed the amounts shown below as a percentage of each Fund’s average daily net assets. The expense limitation agreement will remain in place through October 30, 2020. Thereafter, the expense limitation agreement for the Funds will be reviewed annually by the Advisor and the Board.
Institutional Class | Investor Class | |||||
Penn Capital Defensive Floating Rate Income Fund | 0.64 | % | 0.89 | % | ||
Penn Capital Defensive Short Duration High Income Fund | 0.54 | % | N/A | |||
Penn Capital Multi-Credit High Income Fund | 0.72 | % | 0.97 | % | ||
Penn Capital Special Situations Small Cap Equity Fund | 1.09 | % | 1.34 | % | ||
Penn Capital Managed Alpha SMID Cap Equity Fund | 1.06 | % | 1.31 | % |
Any waived or reimbursed expenses by the Advisor to the Funds excluding any waivers related to acquired fund fees and expenses incurred by the Funds as a result of its investments in other investment companies managed by the Advisor, are subject to repayment by a Fund in the three years following the date the fees were waived or the expenses were paid, provided that the respective Fund is able to make the repayment without exceeding the Fund’s expense limitation in place when the fees were waived or expenses paid. The Advisor’s waived fees and paid expenses that are subject to potential recoupment are as follows:
Fiscal Period Incurred | Amount Waived/ Expenses Assumed | Amount Recouped | Amount Subject to Potential Recoupment | Year of Expiration | ||||||||
Penn Capital Defensive Floating Rate Income Fund | ||||||||||||
June 30, 2017 | $ | 261,441 | — | $ | 261,441 | 2020 | ||||||
June 30, 2018 | 281,780 | — | 281,780 | 2021 | ||||||||
June 30, 2019 | 291,034 | — | 291,034 | 2022 | ||||||||
June 30, 2020 | 134,123 | — | 134,123 | 2023 | ||||||||
Total | $ | 968,378 | $ | — | $ | 968,378 | ||||||
Penn Capital Defensive Short Duration High Income Fund | ||||||||||||
June 30, 2018 | $ | 164,748 | — | $ | 164,748 | 2021 | ||||||
June 30, 2019 | 200,969 | (1) | — | 198,460 | 2022 | |||||||
June 30, 2020 | 111,242 | (1) | — | 108,645 | 2023 | |||||||
Total | $ | 476,959 | $ | — | $ | 471,853 | ||||||
Penn Capital Multi-Credit High Income Fund | ||||||||||||
June 30, 2017 | $ | 218,116 | — | $ | 218,116 | 2020 | ||||||
June 30, 2018 | 226,073 | — | 226,073 | 2021 | ||||||||
June 30, 2019 | 219,408 | (1) | — | 204,979 | 2022 | |||||||
June 30, 2020 | 113,345 | (1) | — | 102,712 | 2023 | |||||||
Total | $ | 776,942 | $ | — | $ | 751,880 | ||||||
Penn Capital Special Situations Small Cap Equity Fund | ||||||||||||
June 30, 2017 | $ | 158,820 | — | $ | 158,820 | 2020 | ||||||
June 30, 2018 | 208,947 | — | 208,947 | 2021 | ||||||||
June 30, 2019 | 187,190 | — | 187,190 | 2022 | ||||||||
June 30, 2020 | 90,154 | — | 90,154 | 2023 | ||||||||
Total | $ | 654,111 | $ | — | $ | 654,111 | ||||||
Penn Capital Managed Alpha SMID Cap Equity Fund | ||||||||||||
June 30, 2017 | $ | 162,111 | — | $ | 162,111 | 2020 | ||||||
June 30, 2018 | 175,125 | — | 175,125 | 2021 | ||||||||
June 30, 2019 | 160,750 | — | 160,750 | 2022 | ||||||||
June 30, 2020 | 83,802 | — | 83,802 | 2023 | ||||||||
Total | $ | 581,788 | $ | — | $ | 581,788 |
(1) | Includes fees waived that are not subject to potential recoupment. |
40
PENN CAPITAL FUNDS TRUST
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2019 (UNAUDITED)
Certain Officers and Trustees of the Funds are also Officers of the Advisor.
As of December 31, 2019, greater than 5% of the following PENN Capital Fund was held by another PENN Capital Fund.
Affiliated Fund Held | % Owned | Significant Owner | ||
Penn Capital Defensive Floating Rate Income Fund | 7 | % | Penn Capital Multi-Credit High Income Fund | |
The Trust has engaged Foreside Fund Officers Services, LLC to provide compliance services including the appointment of the Trust’s Chief Compliance Officer and Anti-Money Laundering Officer.
Distribution Agreement
Foreside Fund Services, LLC is the Trust’s distributor and principal underwriter (the Distributor). The Trust has adopted a plan of distribution under Rule 12b-1 of the 1940 Act applicable to the Investor Class. Under the plan, 12b-1 distribution fees at an annual rate of 0.25% of average daily net assets of Investor Class shares are paid to the Distributor or others for distribution and shareholder services. For the period ended December 31, 2019, there were no distribution fees paid under the plan because the Investor Class shares had not yet been issued as of December 31, 2019.
The Trust has engaged U.S. Bank Global Fund Services to serve as each Fund’s administrator, fund accountant, and transfer agent. The Trust has engaged U.S. Bank, N.A. to serve as each Fund’s custodian.
Shareholder Servicing Plan
The Trust has adopted a Shareholder Servicing Plan on behalf of each Fund’s Investor Class and Institutional Class. Under the plan, each Class can pay for non-distribution related shareholder support services (“service fees”) in an amount up to 0.15% of its average daily net assets. For the period ended December 31, 2019, there were no service fees incurred by the Investor Class shares because the Investor Class shares had not yet been issued as of December 31, 2019. The amount actually incurred by the Institutional Class shares for the period ended December 31, 2019 on an annualized basis was 0.01% for the Penn Capital Managed Alpha SMID Cap Equity Fund, 0.04% for the Penn Capital Special Situations Small Cap Equity Fund, 0.01% for the Penn Capital Multi-Credit High Income Fund, 0.02% for the Penn Capital Defensive Floating Rate Income Fund, and less than 0.02% for the Penn Capital Defensive Short Duration High Income Fund.
Other Related Party Transactions
The Advisor, affiliates of the Advisor and the officers of the Trust, have made investments in the Funds and accordingly, as shareholders of the Funds, pay a proportionate share of the Funds’ investment advisory fees and other expenses identified in each Fund’s Prospectus.
4. Federal Tax Information
It is each Fund’s intention to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code and distribute all of its taxable income. Accordingly, no provision for federal income taxes is required in the financial statements.
The amount and character of income and capital gain distributions to be paid, if any, are determined in accordance with federal income tax regulations, which may differ from GAAP. These differences are primarily due to differences in the timing of recognition of gains or losses on investments. Permanent book and tax basis differences, if any, may result in reclassifications to distributable earnings and additional paid-in capital.
41
PENN CAPITAL FUNDS TRUST
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2019 (UNAUDITED)
The character of distributions for tax purposes paid during the fiscal period ended December 31, 2019 is as follows:
Ordinary Income Distributions | Long-Term Capital Gain Distributions | |||||
Penn Capital Defensive Floating Rate Income Fund | $ | 962,624 | $ | — | ||
Penn Capital Defensive Short Duration High Income Fund | 762,110 | — | ||||
Penn Capital Multi-Credit High Income Fund | 523,026 | — | ||||
Penn Capital Special Situations Small Cap Equity Fund | — | — | ||||
Penn Capital Managed Alpha SMID Cap Equity Fund | — | 768,746 |
The character of distributions for tax purposes paid during the fiscal year ended June 30, 2019 is as follows:
Ordinary Income Distributions | Long-Term Capital Gain Distributions | |||||
Penn Capital Defensive Floating Rate Income Fund | $ | 1,892,386 | $ | — | ||
Penn Capital Defensive Short Duration High Income Fund | 856,770 | — | ||||
Penn Capital Multi-Credit High Income Fund | 888,097 | 14,027 | ||||
Penn Capital Special Situations Small Cap Equity Fund | 272,601 | 921,899 | ||||
Penn Capital Managed Alpha SMID Cap Equity Fund | 385,893 | 889,102 |
5. Investment Transactions
The cost of security purchases and the proceeds from security sales, other than short-term investments, for the fiscal year ended December 31, 2019, were as follows:
Non-U.S. Government | U.S. Government | |||||||||||
Purchases | Sales | Purchases | Sales | |||||||||
Penn Capital Defensive Floating Rate Income Fund | $ | 19,807,106 | $ | 10,272,702 | $ | 403,781 | $ | 400,797 | ||||
Penn Capital Defensive Short Duration High Income Fund | 23,242,189 | 13,049,568 | — | — | ||||||||
Penn Capital Multi-Credit High Income Fund | 10,677,829 | 6,916,935 | — | 288,361 | ||||||||
Penn Capital Special Situations Small Cap Equity Fund | 5,161,278 | 5,734,343 | — | — | ||||||||
Penn Capital Managed Alpha SMID Cap Equity Fund | 5,766,151 | 3,410,198 | — | — |
6. Capital Share Transactions
Penn Capital Defensive Floating Rate Income Fund July 1, 2019 - December 31, 2019 | Penn Capital Defensive Short Duration High Income Fund July 1, 2019 - December 31, 2019 | Penn Capital Multi-Credit High Income Fund July 1, 2019 - December 31, 2019 | Penn Capital Special Situations Small Cap Fund July 1, 2019 - December 31, 2019 | Penn Capital Managed Alpha SMID Cap Equity Fund July 1, 2019 - December 31, 2019 | |||||||||||
Institutional Class Shares | |||||||||||||||
Share sold | 1,237,894 | 1,049,208 | 337,381 | 47,137 | 208,681 | ||||||||||
Shares issued in reinvestment of dividends | 64,706 | 72,938 | 52,580 | — | 58,899 | ||||||||||
Shares redeemed | (161,151 | ) | (115,408 | ) | (16,144 | ) | (101,954 | ) | (36,396 | ) | |||||
Net increase (decrease) | 1,141,449 | 1,006,738 | 373,817 | (54,817 | ) | 231,184 | |||||||||
Institutional Amount | |||||||||||||||
Shares sold | $ | 12,353,120 | $ | 10,454,703 | $ | 3,363,256 | $ | 517,586 | $ | 2,760,905 | |||||
Shares issued in reinvestment of dividends | 644,633 | 726,081 | 521,985 | — | 763,334 | ||||||||||
Shares redeemed | (1,607,387 | ) | (1,150,105 | ) | (159,529 | ) | (1,061,169 | ) | (478,349 | ) | |||||
Net increase (decrease) | $ | 11,390,366 | $ | 10,030,679 | $ | 3,725,712 | $ | (543,583 | ) | $ | 3,045,890 |
42
PENN CAPITAL FUNDS TRUST
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2019 (UNAUDITED)
7. Transactions with Affiliates
The following issuers are affiliated with the Funds; that is, the Adviser had control of 5% or more of the outstanding voting securities during the period from July 1, 2019 through December 31, 2019. As defined in Section (2)(a)(3) of the Investment Company Act of 1940; such issuers are:
July 1, 2019 | Additions | Reductions | December 31, 2019 | Dividend | Unrealized | Realized | December 31, 2019 | |||||||||||||||||||||||||||||
Issuer Name | Share Balance | Cost | Share Balance | Cost | Share Balance | Cost | Share Balance | Income | Appreciation (Depreciation) Change | Gain/(Loss) | Value | Cost | ||||||||||||||||||||||||
Penn Capital Defensive Short Duration High Income Fund | ||||||||||||||||||||||||||||||||||||
Penn Capital Defensive Floating Rate Income Fund | 78,102 | $ | 787,019 | 26,898 | $ | 268,666 | — | $ | — | 105,000 | $ | 18,666 | $ | 2,658 | $ | — | $ | 1,049,996 | $ | 1,055,685 | ||||||||||||||||
$ | 787,019 | $ | 268,666 | $ | — | $ | 18,666 | $ | 2,658 | $ | — | $ | 1,049,996 | $ | 1,055,685 | |||||||||||||||||||||
Penn Capital Multi-Credit High Income Fund | ||||||||||||||||||||||||||||||||||||
Penn Capital Defensive Floating Rate Income Fund | 374,790 | $ | 3,798,301 | 8,885 | $ | 88,544 | (60,020 | ) | $ | (613,277 | ) | 323,655 | $ | 73,654 | $ | 24,626 | $ | (13,277 | ) | $ | 3,236,546 | $ | 3,273,568 | |||||||||||||
$ | 3,798,301 | $ | 88,544 | $ | (613,277 | ) | $ | 73,654 | $ | 24,626 | $ | (13,277 | ) | $ | 3,236,546 | $ | 3,273,568 |
8. Credit Risk, LIBOR and Asset Concentration
Small- and mid-capitalization companies may not have the size, resources and other assets of large capitalization companies. As a result, the securities of small- and mid-capitalization companies may be subject to greater market risks and fluctuations in value than large capitalization companies or may not correspond to changes in the stock market in general. In addition, small- and mid-capitalization companies may be particularly affected by interest rate increases, as they may find it more difficult to borrow money to continue or expand operations, or may have difficulty in repaying any loans.
High yield securities and unrated securities of similar credit quality have speculative characteristics and involve greater volatility of price and yield, greater of liquidity risk, and generally reflect a greater possibility of an adverse change in financial condition that could affect an issuer’s ability to honor its obligations.
There are a number of risks associated with an investment in bank loans, including credit risk, interest rate risk, liquidity risk and prepayment risk. Lack of an active trading market, restrictions on resale, irregular trading activity, wide bid/ask spreads and extended trade settlement periods may impair the Fund’s ability to sell bank loans within its desired time frame or at an acceptable price and its ability to accurately value existing and prospective investments. Extended trade settlement periods may result in cash not being immediately available to the Fund. As a result of such illiquidity, the Fund may have to sell other investments or engage in borrowing transactions to raise cash to meet its obligations.
A Fund may invest in certain instruments that rely in some fashion upon London Interbank Offered Rate (“LIBOR”). LIBOR is an average interest rate, determined by the ICE Benchmark Administration, that banks charge one another for the use of short-term money. The United Kingdom’s Financial Conduct Authority, which regulates LIBOR, has announced plans to phase out the use of LIBOR by the end of 2021. There remains uncertainty regarding future utilization of LIBOR and the nature of any replacement rate, and any potential effects of the transition away for LIBOR on a Fund or on certain instruments in which a Fun invests are not known.
9. Line of Credit
PENN Capital Funds Trust has a $10,000,000 uncommitted, unsecured, umbrella 364-day line of credit, for temporary purposes, including to meet redemption requests. The interest rate as of December 31, 2019 was 4.75%. During the period ended December 31, 2019, Penn Capital Special Situations Small Cap Equity Fund’s maximum borrowing was $139,000 and average borrowing was $1,228. This borrowing resulted in interest expenses of $32. The Penn Capital Defensive Floating Rate Income Fund, Penn Capital Defensive Short Duration High Income Fund, Penn Capital Multi-Credit High Income Fund, Penn Capital Managed Alpha SMID Cap Equity Fund did not use the credit line during the fiscal year. At the end of the fiscal year, no Fund had any outstanding borrowings.
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PENN CAPITAL FUNDS TRUST
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2019 (UNAUDITED)
10. Recent Accounting Pronouncement
In August 2018, FASB issued ASU 2018-13, Fair Value Measurement (Topic 820):Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). The primary focus of ASU 2018-13 is to improve the effectiveness of the disclosure requirements for fair value measurements. The changes affect all companies that are required to include fair value measurement disclosures. In general, the amendments in ASU 2018-13 are effective for all entities for fiscal years and interim periods within those fiscal years, beginning after December 15, 2019. An entity is permitted to early adopt the removed or modified disclosures upon the issuance of ASU 2018-13 and may delay adoption of the additional disclosures, which are required for public companies only, until their effective date. Management has chosen to early adopt the modified disclosures for the year ended June 30, 2019.
In March 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2017-08, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. The amendments in the ASU shorten the amortization period for certain callable debt securities, held at a premium, to be amortized to the earliest call date. The ASU does not require an accounting change for securities held at a discount; which continues to be amortized to maturity. The ASU was effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018.
11. Concentration Risks
The Advisor and its employees collectively have beneficial ownership, either directly or indirectly, of more than 20% of each of the Funds as of December 31, 2019. In addition to the Advisor, one or more individual investors own more than 10% of the Penn Capital Special Situations Small Cap Equity Fund and the Penn Capital Managed Alpha SMID Cap Equity Fund as of December 31, 2019. To the extent multiple investors in the Funds rely on the advice of a common investment advisor the Funds may have the risk of a concentrated investor base.
12. Subsequent Events
Except as disclosed above, as of the date the financial statements were available to be issued, Management has determined that no additional material events or transactions occurred that would require recognition or disclosure in the Funds’ financial statements.
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PENN CAPITAL FUNDS TRUST
ADDITIONAL INFORMATION
DECEMBER 31, 2019 (UNAUDITED)
Trustee and Officer Compensation
The Trust does not compensate any of its Trustees who are interested persons nor any of its officers. For the fiscal period ended December 31, 2019, the aggregate compensation paid by the Trust to the independent Trustees was $17,000. The Trust did not pay any special compensation to any of its Trustees or officers. The Statement of Additional Information includes additional information about the Trustees and is available without charge, upon request, by calling 844-302-7366.
Proxy Voting Policies
A description of the policies and procedures that each Fund uses to determine how to vote proxies relating to portfolio securities owned by that Fund is available: (1) without charge, upon request, by calling 844-302-7366; (2) in the Statement of Additional Information on the Trust’s website www.penncapitalfunds.com; and (3) on the SEC’s website at www.sec.gov. Information about how the Funds voted proxies relating to portfolio securities during the most recent fiscal year ended June 30, 2019 may be obtained (1) without charge, upon request, by calling 844-302-7366 and (2) on the SEC’s website at www.sec.gov.
Form N-PORT
Each Fund will file its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Part F of Form N-PORT. The Fund’s Part F of Form N-PORT will be available on the EDGAR database on the SEC’s website at www.sec.gov. These Forms may also be reviewed and copied at the SEC’s Public Reference Room in Washington D.C. Information about the operation of the Public Reference Room may be obtained by calling 1-800-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.
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Board Approval of Investment Advisory Agreements
At the September 19, 2019 meeting (collectively, the “Meeting”) of the Board of Trustees (the “Board” or “Trustees”) of the PENN Capital Funds Trust (the “Trust”), the Board, including those Trustees who are not “interested persons” (as that term is defined in the Investment Company Act of 1940, as amended (the “1940 Act”) of the Trust (the “Independent Trustees”), approved the renewal of the investment advisory agreement (the “Investment Advisory Agreement”) between Penn Capital Management Company, Inc. (the “Adviser” or “Penn Capital”) and the Trust, on behalf of the Penn Capital Defensive Floating Rate Income Fund, Penn Capital Defensive Short Duration High Income Fund, Penn Capital Multi-Credit High Income Fund, Penn Capital Special Situations Small Cap Equity Fund and Penn Capital Managed Alpha SMID Cap Equity Fund series of the Trust (each a “Fund” and collectively, the “Funds”).
In connection with considering the approval of the Investment Advisory Agreement, the Independent Trustees met in executive session. The Board, including the Independent Trustees, evaluated the terms of the Investment Advisory Agreement, reviewed the information provided by the Adviser in connection with the consideration of approving the continuation of the Investment Advisory Agreement, and reviewed the duties and responsibilities of the Trustees in evaluating and approving the continuation of the agreement.
In considering approval of the continuation of the Investment Advisory Agreement, the Board, including the Independent Trustees, reviewed the Meeting Materials and other information from counsel and from Penn Capital, including: (i) a copy of the Investment Advisory Agreement; (ii) information describing the nature, quality and extent of the services that Penn Capital provides and expects to provide to the Funds; (iii) information concerning Penn Capital’s financial condition, business, operations, portfolio management teams and compliance program; (iv) information describing each Fund’s advisory fee and operating expenses; (v) a copy of the current Form ADV for Penn Capital; and (vi) a memorandum from counsel on the responsibilities of trustees in considering investment advisory arrangements under the 1940 Act. The Board also considered presentations made by, and discussions held with, representatives of Penn Capital, as well as information presented at Board meetings throughout the year. The Board also received information comparing the advisory fee, expenses and performance of each Fund to other investment companies considered to be in the Fund’s peer group.
During its review of this information, the Board focused on and analyzed the factors that the Board deemed relevant, including: (i) the nature, quality and extent of the services provided and expected to be provided to each Fund by Penn Capital; (ii) Penn Capital’s personnel and operations; (iii) each Fund’s expense level; (iv) the profitability to Penn Capital under the Investment Advisory Agreement; (v) any “fall-out” benefits to Penn Capital and its affiliates (i.e., the ancillary benefits realized by Penn Capital and its affiliates from Penn Capital’s relationship with the Trust); (vi) the effect of asset growth on each Fund’s expenses; (vii) possible conflicts of interest; and (viii) the investment performance of the Funds.
The Board, including the Independent Trustees, considered the following in respect of each Fund:
(a) The nature, extent and quality of services provided and expected to be provided by Penn Capital to the Funds; Penn Capital’s personnel and operations. The Board reviewed the services that Penn Capital provides and expected to provide to each Fund. The Board noted the responsibilities that Penn Capital has as the Funds’ investment adviser, including: the responsibility for the management and investment of each Fund’s securities portfolio; executing portfolio security trades; monitoring compliance with each Fund’s investment objective, policies and limitations; the responsibility for quarterly reporting to the Board; the oversight of general portfolio compliance with relevant law; and the implementation of Board directives as they relate to each Fund.
The Board reviewed Penn Capital’s experience, resources and strengths in managing the Funds, as well as other pooled investment vehicles, and Penn Capital’s personnel. Based on its consideration and review of the foregoing information, the Board determined that each Fund was likely to continue to benefit from the nature, quality and extent of these services, as well as Penn Capital’s ability to render such services based on their experience, personnel, operations, and resources.
(b) Comparison of services provided and fees paid to those under other investment advisory contracts. The Board compared both the services provided and the fees paid pursuant to the Investment Advisory Agreement to those under other contracts of Penn Capital, and under contracts of other investment advisers with respect to similar funds. In particular, the Board compared each Fund’s advisory fee and expense ratio to other investment companies considered to be in that Fund’s peer group. The Board noted that Penn Capital entered into an Expense Limitation Agreement whereby Penn Capital waives advisory fees and/or assumes expenses to keep the Funds’ expenses from exceeding certain levels. The Board also noted that Penn Capital has agreed to waive advisory fees and/or assume expenses with respect to the Penn Capital Multi-Credit High Income Fund and Penn Capital Defensive Short Duration High Income Fund to the extent of any acquired fund fees and expenses (“AFFE”) incurred by the Funds as a result of their investment in other investment companies managed by Penn Capital. The Board received and considered information about the fee rates charged to other accounts and clients that are managed by Penn Capital, including information about the differences in services provided to the non-registered investment company clients.
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Consideration was given to the advisory fees and expense ratios of the Institutional Class Shares of the Funds, the only share class with assets to date. With respect to the Penn Capital Defensive Floating Rate Income Fund, the Board considered that the Fund’s advisory fee was below both the median and average of its peer group, and the Fund’s total expenses (including the fee waiver) were below the median and average of its peer group. With respect to the Penn Capital Defensive Short Duration High Income Fund, the Board considered that the Fund’s advisory fee was below both the median and average of its expense peer group, and the Fund’s total expenses (including the fee waiver) were below the median and average of its expense peer group. With respect to the Penn Capital Multi-Credit High Income Fund, the Board considered that the Fund’s advisory fee was above the median and average of its peer group, but the Fund’s total expenses (including the fee waiver) were below the median and average of its peer group. With respect to the Penn Capital Managed Alpha SMID Cap Equity Fund, the Board considered that the Fund’s advisory fee was above both the median and average of its peer group, and the Fund’s total expenses (including the fee waiver) were above the median and average of its peer group. With respect to the Penn Capital Special Situations Small Cap Equity Fund, the Board considered that the Fund’s advisory fee was above both the median and average of its peer group, while the Fund’s total expenses (including the fee waiver) was above the median but below the average of its peer group. To the extent that a Fund’s advisory fee and/or net expenses after waivers were above the median and average of its respective peer group, Penn Capital explained and the Board considered the reasons for the higher fees.
After comparing each Fund’s fees with those of other funds in the Fund’s peer group, and considering the information about fee rates Penn Capital charged to other accounts and clients, and in light of the nature, quality and extent of services provided by Penn Capital and the costs Penn Capital incurred by providing those services, the Board concluded that the level of fees paid to Penn Capital with respect to the Funds was fair and reasonable.
(c) The cost of the services provided and profits realized by Penn Capital from the relationship with the Funds; the extent to which economies of scale were realized as the Funds grew, and whether fee levels reflect such economies of scale; “fall-out” benefits; possible conflicts of interest. The Board discussed the costs, including operational costs, and Penn Capital’s profitability in connection with its serving as each Fund’s investment adviser. The Board considered that the Funds were still not yet of a sufficient size to be experiencing economies of scale. The Board concluded that the profitability of Penn Capital, and the extent to which economies of scale were reflected in the Funds’ advisory fees, were reasonable for the Funds in relation to the performance and asset sizes of the Funds.
The Board considered that Penn Capital may experience reputational “fall-out” benefits based on the success of the Funds, but that such benefits are not easily quantifiable. The Board noted that since the Trust’s service providers are not affiliated with Penn Capital, such services do not give rise to “fall-out” benefits for Penn Capital. The Board also noted Penn Capital’s procedures to manage potential conflicts of interest and Penn Capital’s belief that its management of the Funds does not present a material conflict of interest.
(d) Investment performance of the Funds. The Board considered the investment performance of the Funds. In particular, the Board considered the investment performance of the Funds relative to their stated investment objectives and strategies and the success of Penn Capital in reaching such objectives. The Board considered each Fund’s investment performance compared to the benchmark index that each Fund uses for comparison in its Prospectus and shareholder reports. The Board also considered each Fund’s investment performance compared to the Fund’s respective peer group. Consideration was given to the performance of the Institutional Class Shares of the Funds, the only share class with performance to date. The Board considered that the Penn Capital Defensive Floating Rate Income Fund outperformed both its peer group and the benchmark for the three-year period ended June 30, 2019 and outperformed the peer group, but underperformed the benchmark by 0.01%, for the one-year period. The Board considered that the Penn Capital Defensive Short Duration High Income Fund outperformed its performance peer group for the one-year and since inception periods ended June 30, 2019, and that the Fund underperformed its benchmark for the one-year and since inception periods. The Board considered that the Penn Capital Multi-Credit High Income Fund outperformed both its peer group and benchmark for the three-year period ended June 30, 2019, and outperformed the benchmark during the one-year period, although it underperformed the peer group for the one-year period. The Board considered that the Penn Capital Special Situations Small Cap Equity Fund underperformed its benchmark for the one-year and three-year periods ended June 30, 2019 and underperformed its peer group for the one-year period, but outperformed the peer group over the three-year period. The Board considered that the Penn Capital Managed Alpha SMID Cap Equity Fund outperformed both its peer group and benchmark over both the one-year and three-year periods ended June 30, 2019. The Board discussed with Penn Capital the reasons for relative underperformance of certain Funds for certain periods. The Board concluded that the performance of the Funds was reasonable in light of the respective investment objectives and policies of the Funds.
Conclusion. No single factor was determinative to the Board’s decision. Based on the foregoing and such other matters as were deemed relevant, such as the Expense Limitation Agreement, the Board concluded that the advisory fee rates and total expense ratios were reasonable in relation to the services provided, and to be provided, by Penn Capital to each Fund, as well as the costs incurred and benefits gained by Penn Capital in providing such services. The Board also found the advisory fees to be reasonable in comparison to the fees charged by advisers to other comparable funds of similar size. As a result, the Board concluded that the approval of the continuation of the Investment Advisory Agreement was in the best interests of each Fund.
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Board of Trustees
Dennis S. Hudson, III
John R. Schwab
Richard A. Hocker
Investment Advisor
Penn Capital Management Company, Inc.
Navy Yard Corporate Center
1200 Intrepid Avenue, Suite 400
Philadelphia, Pennsylvania 19112
Legal Counsel
Stradley Ronon Stevens & Young, LLP
2005 Market Street, Suite 2600
Philadelphia, Pennsylvania 19103
Custodian
U.S. Bank, N.A.
1555 N. Rivercenter Drive, Suite 302
Milwaukee, WI 53212
Distributor
Foreside Fund Services, LLC
Three Canal Plaza
Portland, ME 04101
Administrator, Transfer Agent
and Dividend Disbursing Agent
U.S. Bancorp Fund Services, LLC
doing business as U.S. Bank Global Fund Services
615 East Michigan Street
Milwaukee, WI 53202
Shareholder/Investor Information
1.844.302.PENN (7366)
www.penncapitalfunds.com
BEFORE INVESTING YOU SHOULD CAREFULLY CONSIDER THE FUND’S INVESTMENT OBJECTIVES, RISKS, CHARGES AND EXPENSES. THIS AND OTHER RELEVANT INFORMATION CAN BE FOUND IN THE PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION, COPIES OF WHICH MAY BE OBTAINED BY CALLING (844) 302-PENN (7366) OR BY VISITING WWW.PENNCAPITALFUNDS.COM. PLEASE READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
Item 2. Code of Ethics.
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 have materially affected, or are reasonably likely to materially affect, the Registrant's internal control over financial reporting. |
Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
Not applicable to open-end investment companies.
Item 13. Exhibits.
(a) | (1) 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. |
(4) Change in the registrant’s independent public accountant. There was no change in the registrant’s independent public accountant for the period covered by this report. |
(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 | 2/28/20 |
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 | 2/28/20 |
By (Signature and Title)* | /s/ Gerald McBride |
Gerald McBride, Treasurer | |
Date | 2/27/20 |
* Print the name and title of each signing officer under his or her signature.