N-CSR

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, 2018

Date of reporting period: June 30, 2018

Item 1. Reports to Stockholders.

 

ANNUAL REPORT

JUNE 30, 2018

PENN CAPITAL MANAGED ALPHA SMID CAP EQUITY FUND

PENN CAPITAL SPECIAL SITUATIONS SMALL CAP EQUITY FUND

PENN CAPITAL MULTI-CREDIT HIGH INCOME FUND

PENN CAPITAL DEFENSIVE FLOATING RATE INCOME FUND

PENN CAPITAL DEFENSIVE SHORT DURATION HIGH INCOME FUND

TABLE OF CONTENTS

President’s Letter to Shareholders	1
Manager’s Discussion of Fund Performance	6
Disclosure of Fund Expenses	11

Fund Schedules of Investments

Penn Capital Managed Alpha SMID Cap Equity Fund	16
Penn Capital Special Situations Small Cap Equity Fund	18
Penn Capital Multi-Credit High Income Fund	20
Penn Capital Defensive Floating Rate Income Fund	25
Penn Capital Defensive Short Duration High Income Fund	31
Statements of Assets and Liabilities	34
Statements of Operations	35
Statements of Changes in Net Assets	36
Financial Highlights	37
Notes to the Financial Statements	38
Additional Information	49
Report of Independent Registered Public Accounting Firm	50
Trustees and Officers	51
Privacy Policy	53

PENN CAPITAL FUNDS TRUST
PRESIDENT’S LETTER TO SHAREHOLDERS (UNAUDITED)

Dear Penn Capital Funds Shareholder:

As we approach the three-year anniversary of launching the PENN Capital Funds Trust, I would like to thank our shareholders for entrusting their investments with our firm. Our team remains committed to focusing our efforts on our shareholders, and we value your confidence in our vision.

Our investment strategies incorporate Penn Capital’s Complete Capital Structure Analysis^®, an in-depth high yield and equity research philosophy used to identify a company’s optimal capital structure. Our investment professionals are capital structure generalists, meaning they are responsible for understanding the entire capital structure of the companies they follow. By following this philosophy, we believe that integrating credit and equity research allows us to construct a more comprehensive investment mosaic. Participating in both credit and equity markets, along with this integrated research process, provides Penn Capital’s investment team with what we believe is an informational advantage. Finding inefficiencies in the market has never been more challenging, but we remain committed to the pursuit of strong investment returns on behalf of our shareholders.

The current Penn Capital fund line-up embodies our investment philosophy and our research-driven process. We are excited to note that this year’s annual report includes the most recent addition to our fund family: the Penn Capital Defensive Short Duration High Income Fund (the “Short Duration Fund”), which launched in July 2017 and which seeks to provide a high level of current income through primarily investing in fixed income securities and senior floating rate loans that are rated below investment grade.

Finally, I am excited to share with you recent ventures by Penn Capital to expand our philanthropic endeavors and support diversity in the financial services industry. Through a partnership with Invest in Girls, Penn Capital’s PRIME Program is sponsoring a three-year financial literacy and investing curriculum for female high school students attending a school in the Philadelphia School District. The PRIME Program is also pleased to announce the first year of the PRIME Internship, which will further expand our commitment to community outreach and promoting gender and racial diversity by offering a summer Internship to a collegiate female majoring in business or finance.

The following pages review the current market environment and provides additional insight into our funds over the past year. Once again, I would like to thank you for your confidence in investing with us.

Overview

Looking ahead, we anticipate nominal Gross Domestic Product (GDP) growth should benefit the cyclical sectors where our equity strategies tend to favor. Smaller, domestically-focused companies should, in our view, benefit disproportionately from the recently enacted US tax policy and are poised to outperform the global large-cap companies, which could be negatively impacted by evolving trade policies. We expect a moderation of spreads to continue in the latter half of 2018 as the US economy absorbs measured Federal Reserve (Fed) interest rate increases. We believe commodities will continue to rebound over the next year as we anticipate that the supply and demand for both oil and natural gas will come into balance. Most of our equity strategies continue to underweight the defensive-oriented areas of their respective benchmarks that generally offer low earnings growth with high dividend payouts such as the Utilities, Consumer Staples, and Real Estate sectors. These sectors are more influenced by rising interest rates because of their increased cost of capital without the offset of growth in their earnings power. We expect that rising rates will also make dividend yields less attractive since yields tend to rise on more traditional fixed income products.

With solid recovery in both the employment and housing fronts, we believe the US economy will accelerate from last year’s moderate growth. As a result, we continue to be overweight our respective benchmarks in the Consumer Discretionary sector and believe the US consumer stands to benefit from these trends.

During the last fiscal year, economic numbers continued to impress with the Fed raising interest rates three times during the period, in-line with expectations. After a period of GDP growth during the first half of the fiscal year, the stock market began to experience a bout of volatility in 2018 as the reality of potential US tariff conflicts emerged. The current White House Administration continues to raise expectations for fiscal policies with a focus on higher domestic growth rates despite recent news at fiscal year-end regarding potential US tariff wars. With this in mind, we continue to stress the importance of asset allocation in a potentially higher growth and interest rate environment. Typically, high yield and smaller cap equity asset classes are more influenced by economic growth than by rising interest rates. As a manager of both below investment grade debt and smaller (micro, small, and small to mid) cap equities, we believe our funds could benefit in an environment of expanding GDP growth and government spending.

Spreads have compressed modestly during the fiscal year and we are still forecasting coupon-like bond market returns in 2018. In a low-rate world, we believe mid-single digit returns with relatively less duration risk still represent attractive value relative

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PENN CAPITAL FUNDS TRUST
PRESIDENT’S LETTER TO SHAREHOLDERS (UNAUDITED)

to most other fixed income asset classes due to a defensive nature. To the extent that long-term interest rates rise in a growing economy, we believe larger-cap dividend paying equities and longer duration fixed income asset classes, including investment-grade corporates, may underperform. We continue to favor the senior floating rate bank loan asset class, especially for more conservative investors. Although bank loan returns have generally lagged bonds, we believe they provide an effective complement to bonds, particularly given their seniority and floating rate nature.

The following paragraphs provide more detailed information on the performance of our funds, as well as selected holdings.

Penn Capital Defensive Floating Rate Income Fund

For the fiscal year ended June 30, 2018, the Penn Capital Defensive Floating Rate Income Fund (formerly the Penn Capital Senior Floating Rate Income Fund) (the “Floating Rate Income Fund”) generated a 3.71% return versus 4.19% for its benchmark, S&P/LSTA Leveraged BB/B Loan Index. The three-month LIBOR rate rose 100 basis points during the fiscal year, providing a tailwind for bank loans compared with other fixed income asset classes. The Floating Rate Income Fund is managed with a conservative bias, prioritizing safety of principal over maximizing yield. To carry out this objective, the Floating Rate Income Fund excludes CCC-rated bank loans or second lien loans; both areas of the market are exposed to a higher degree of volatility and potential investment losses. With bank loans outperforming bonds during the fiscal year, the Floating Rate Income Fund’s high yield allocation, nearly 12% of Fund assets, was a modest detractor from performance. The Floating Rate Income Fund holds conservative short duration high yield bonds in an effort to enhance the Fund’s liquidity, as opposed to seeking higher yields and adding additional risk.

The Floating Rate Income Fund’s investments in Healthcare, Materials, and Transportation sectors made positive contributions to performance. However, the Fund’s exposure to Financial and Media sectors detracted from performance. Top single name contributors were Windstream and GIII Apparel. As of fiscal year-end, the Floating Rate Income Fund maintained its allocation in the Windstream term loan and had exited GIII Apparel on valuation concerns. Top single name detractors included PetSmart and Save-A-Lot. Both names triggered our sell discipline threshold and were sold from the Fund as of fiscal year-end.

We continue to be very selective in credit selection reflecting our belief that we are in the mid-to-late stages of the current credit cycle, and as we focus on risk-adjusted, rather than absolute, returns.

Penn Capital Defensive Short Duration High Income Fund

For the period beginning July 17, 2017 (inception) through June 30, 2018, the Penn Capital Defensive Short Duration High Income Fund (the “Short Duration Fund”) generated a 1.03% return versus 1.64% for its benchmark, the ICE BofAML1-3 Year BB-Rated US Cash Pay High Yield Index.

The Short Duration Fund benefitted from security selection within the Metals & Mining and Technology sectors. Technology benefitted as several high coupon bonds were tendered for refinancing, including Allegheny Technologies, Cleveland-Cliffs, and Western Digital. The Fund maintained an underweight position in the sector compared to its benchmark, which further strengthened performance. Within Energy, the Short Duration Fund benefitted from its security selection within the Distribution segment of that sector from improved fundamentals at PBF Holding Company and NGPL PipeCo. An overweight position compared to its benchmark in the Exploration & Production segment saw rising oil prices that also helped to contribute to the Fund’s performance. Security selection within Utilities added value as Dynegy refinanced debt and was then acquired by Vistra, a higher quality company. Weakness within the Media & Telecommunications sector was the primary detractor for the fiscal year, mainly in the first quarter of 2018, including DISH Network, Frontier, Windstream, CenturyLink, and Sprint. However, this underperformance was partially offset by a benchmark overweight to the Aerospace & Defense sector.

During the fiscal year, LIBOR rose over 100 basis points and loan coupons began to rise. During the period, the Short Duration Fund held an average weighting of 10% in bank loans (through its investment in the Penn Capital Defensive Floating Rate Income Fund). The position contributed positively to the Short Duration Fund’s performance and was gradually increased throughout the period to end the fiscal year representing approximately 15% of the Fund’s assets.

We continue to believe that a complementary allocation to bank loans is prudent given today’s rising interest rate environment.

Penn Capital Multi-Credit High Income Fund

For the fiscal year ended June 30, 2018, the Penn Capital Multi-Credit High Income Fund (formerly the Penn Capital Opportunistic High Yield Fund) (the “High Income Fund”) generated a 3.81% return, outperforming the 2.52% return of its

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PENN CAPITAL FUNDS TRUST
PRESIDENT’S LETTER TO SHAREHOLDERS (UNAUDITED)

benchmark, the ICE BofAML US High Yield Constrained Index. The High Income Fund increased its bank loan exposure to approximately 26% of its assets at period end, a shift that proved beneficial as loans outperformed bonds during the fiscal year. With LIBOR rising 100 basis points over the past year, we believe the bias towards floating rate bank loans will likely increase the Fund’s allocation within this segment of the market.

Over the last twelve (12) months, Transportation and Metals & Mining sectors were the largest positive contributors to performance as a combination of credit specific developments, strong industry fundamentals, and recovering commodity prices aided these sectors. The Fund also benefitted from strong security selection within Energy, specifically in the Exploration & Production segment of the market. The Fund’s investment in VistaJet, a private aviation company, benefitted from a large capital injection provided by a European private equity sponsor. News of this capitalization event relieved market uncertainty concerning their ability to address a 2020 bond maturity (as of fiscal year-end, the Fund maintained its holding in VistaJet bonds). The Fund also benefitted from an overweight investment position compared to its benchmark in Valeant Pharmaceuticals as those bonds outperformed due to a successful tender offer and refinancing transaction that allowed for additional operating capital. As of fiscal year-end, the Fund maintained this overweight position to the Valeant Pharmaceuticals complex. Financial Services and Telecommunication sectors contributed the greatest share of negative performance during the fiscal period. PetroQuest, a distressed natural gas producer, underwent an out-of-court restructuring detracted from performance as the Fund exited this position by the conclusion of the fiscal period. Performance was also negatively impacted by DISH Network, a satellite TV company. However, we believe this company controls a highly valuable strategic asset in its ownership of Spectrum, a cable service provider, and we retain our conviction in this investment.

Penn Capital Managed Alpha SMID Cap Equity Fund

For the fiscal year ended June 30, 2018, the Penn Capital Managed Alpha SMID Cap Equity Fund (formerly the Penn Capital Small/Mid Cap Equity Fund) (the “Managed Alpha SMID Fund”) generated a 17.41% return outperforming the 16.24% returns of its benchmark, the Russell 2500^™ Index. At the sector level, Consumer Discretionary, Information Technology, and Industrials contributed positively to performance driven by favorable bottom-up stock selection. In the Consumer Discretionary sector, Roku, Inc., a streaming video player manufacturer, performed well as an increased number of users viewed more hours on Roku’s over-the-top platform. Building product companies also benefitted as a solid housing market lead to new home starts and increased investments in renovations. Within Technology, consumer focused software companies performed well as their user base expanded while increasing average revenue per user. In the Industrials sector, transportation stocks strengthened as freight pricing increased as new regulations pressured industry capacity.

The Healthcare, Materials, and Energy sectors hindered relative performance in the Managed Alpha SMID Fund. In Healthcare, Acadia Healthcare struggled to integrate their United Kingdom-based acquisition due to local market challenges. Pharmaceutical companies, such as Pacira Pharmaceuticals, struggled to realize pricing and procedure volume growth, while managed care companies focused on cost containment. Materials companies, such as Commercial Metals Company and Berry Global Group, suffered margin pressures as higher energy prices increased input costs, reduced margins, and required higher levels of working capital. Energy services companies experienced increased activity, but demand fell short in an effort to raise prices in line with expectations.

Penn Capital Special Situations Small Cap Equity Fund

For the fiscal year ended June 30, 2018 the Penn Capital Special Situations Small Cap Equity Fund (formerly the Penn Capital Small Cap Equity Fund) (the “Special Situations Fund”) generated a 20.31% return outperforming the 17.57% return of its benchmark, the Russell 2000^® Index. At the sector level, Utilities, Real Estate and Financials contributed positively to performance driven by favorable bottom-up stock selection. In the Utilities space, Dynegy was acquired by Vistra Energy for a sizeable premium, which bested the Index by a considerable margin. Real Estate was the weakest sector in an otherwise strong environment, as the Fund’s overall underweight to the group compared to its benchmark was rewarded. Pebblebrook Hotel Trust is a lone position in the space and benefited from an uptick in corporate group and leisure travel. In Financials, higher rate expectations propelled the sector broadly with both banks and financial services firms benefitting. As a result, Hamilton Lane and PJT Partners experienced strong performance.

The Healthcare, Materials, and Energy sectors hindered relative performance during the period. In Healthcare, Acadia Healthcare struggled to integrate their United Kingdom- based acquisition due to local market challenges. Within the Healthcare sector, companies such as NuVasive, Inc. struggled to realize pricing and procedure volume growth as managed care companies focused on cost containment. In Materials, the Fund suffered margin pressures from Venator Materials and Cleveland-Cliffs, Inc.

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PENN CAPITAL FUNDS TRUST
PRESIDENT’S LETTER TO SHAREHOLDERS (UNAUDITED)

as higher energy prices reduced margins and required higher levels of working capital. Energy services companies experienced increased activity, but demand fell short in an effort to raise prices in line with expectations. Despite the positive commodity backdrop, Sanchez Energy, an exploration and production company, struggled operationally with an acquired asset which offset the positive effects of higher oil prices.

Looking Forward

This report contains Fund performance data and financial information. Please keep in mind that all securities markets, as well as mutual fund prices, fluctuate in value. If you would like more frequent updates, http://www.penncapitalfunds.com provides daily NAV, monthly performance figures, portfolio holdings, and other valuable information. We encourage you to visit penncapitalfunds.com, through which you may access your account, buy and sell shares, and find other helpful tools.

At Penn Capital Funds, we believe that active management continues to serve as a critical element of investing in high yield debt securities and equity securities of smaller companies. Although challenges remain, and markets may continue to be uneven, we are confident that investors with a well-diversified portfolio and a patient, long-term outlook should be well positioned for the years ahead.

We thank you for investing with us and look forward to continuing to serve your investment needs.

Sincerely,

 

Richard A. Hocker
Chairman & President
PENN Capital Funds Trust

This letter reflects Penn Capital’s analysis and opinions as of the most recent fiscal year-end. The information is not a complete analysis of any market, country, industry, security, or fund and should not be considered as a recommendation to buy, sell or hold any specific security or securities.

All investments involve risk, including possible loss of principal, and there is no guarantee the Funds will achieve their investment objectives. Investments made in small and mid-capitalization companies may be more volatile and less liquid due to limited resources or product lines and more sensitive to economic factors. Investments in ETFs are subject to the same risks as the underlying securities in which the ETF invests as well as entails higher expenses than if invested into the underlying ETF directly. Investments in foreign securities and ADRs involve certain risks such as currency volatility, political and social instability and reduced market liquidity. As interest rates rise the value of bond prices will decline. Credit risk refers to the loss in the value of a security based on a default in the payment of principle and/or interest of the security, or the perception of the market of such default. High-yield bonds have a higher risk of default or other adverse credit events, but have the potential to pay higher earnings over investment grade bonds. The value of convertible securities tends to decline as interest rates rise and, because of the conversion feature, tends to vary with fluctuations in the market value of the underlying securities. Bank loans in which the Fund may invest have similar risks to below investment grade fixed income securities. In the event of the insolvency of an agent bank, a loan could be subject to settlement risk as well as the risk of interruptions in the administrative duties performed in the day to day administration of the loan.

Index Definitions

The ICE BofAML US High Yield Constrained Index contains all securities in the ICE BofAML US High Yield Index but caps issuer exposure at 2%.

The ICE BofAML 1-3 Year BB US Cash Pay High Yield Index is a subset of the ICE BofAML US Cash Pay High Yield Index, which tracks the performance of non-investment-grade corporate bonds with a remaining term to final maturity less than three years and rated BB.

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PENN CAPITAL FUNDS TRUST
PRESIDENT’S LETTER TO SHAREHOLDERS (UNAUDITED)

The S&P/LSTA Leveraged BB/B Loan Index is a market value-weighted index designed to measure the performance of the US leveraged loan market and is comprised of loans whose rating is BB+, BB, BB-, B+, B or B-. Standard & Poor’s Rating Services is used to determine membership within this sub-index.

The Russell 2000^® Index measures the performance of the small-cap segment of the U.S. equity universe. The Russell 2000 is a subset of the Russell 3000^® Index representing approximately 10% of the total market capitalization of that index. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership. The Russell 2000 Index is constructed to provide a comprehensive and unbiased small-cap opportunity barometer and is completely reconstituted annually to ensure larger stocks do not distort the performance and characteristics of the true small-cap opportunity set.

The Russell 2500^™ Index is composed of the bottom 500 stocks in the Russell 1000^® Index and all the stocks in the Russell 2000^® Index. The Russell 2500^™ Index return reflect adjustments for income dividends and capital gains distributions reinvested as of the ex-dividend dates.

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PENN CAPITAL MANAGED ALPHA SMID CAP EQUITY FUND
FUND SUMMARY (UNAUDITED)

 

This chart assumes an initial gross investment of $10,000 made on December 1, 2015, inception of the Institutional Class shares. Returns shown in the chart and table include the reinvestment of all dividends, but do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. In the absence of fee waivers and reimbursements, when they are necessary to keep expenses at the expense cap, total return would be reduced. Past performance is not predictive of future performance. Investment return and principal value will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. Index returns do not reflect the effects of fees, transaction costs or expenses. It is not possible to invest directly in an index. No information is provided for Investor Class shares because shares of that class had not yet been issued as of June 30, 2018.

Average Annual Total Returns for the Year Ended June 30, 2018	One Year			Since Inception(1)
Penn Capital Managed Alpha SMID Cap Equity Fund
Institutional Class Shares		17.41	%		13.19	%
Russell 2500™ Index		16.24	%		13.58	%(2)

(1) Inception date is 12/1/15.

(2) The return shown for the Russell 2500™ Index is from the inception date of the Institutional Class shares.

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PENN CAPITAL SPECIAL SITUATIONS SMALL CAP EQUITY FUND
FUND SUMMARY (UNAUDITED)

 

This chart assumes an initial gross investment of $10,000 made on December 18, 2015, inception of the Institutional Class shares. Returns shown in the chart and table include the reinvestment of all dividends, but do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. In the absence of fee waivers and reimbursements, when they are necessary to keep expenses at the expense cap, total return would be reduced. Past performance is not predictive of future performance. Investment return and principal value will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. Index returns do not reflect the effects of fees, transaction costs or expenses. It is not possible to invest directly in an index. No information is provided for Investor Class shares because shares of that class had not yet been issued as of June 30, 2018.

Average Annual Total Returns for the Year Ended June 30, 2018	One Year			Since Inception(1)
Penn Capital Special Situations Small Cap Equity Fund
Institutional Class Shares		20.31	%		17.60	%
Russell 2000® Index		17.57	%		17.31	%(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.

7

PENN CAPITAL MULTI-CREDIT HIGH INCOME FUND
FUND SUMMARY (UNAUDITED)

 

This chart assumes an initial gross investment of $10,000 made on December 1, 2015, inception of the Institutional Class shares. Returns shown in the chart and table include the reinvestment of all dividends, but do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. In the absence of fee waivers and reimbursements, when they are necessary to keep expenses at the expense cap, total return would be reduced. Past performance is not predictive of future performance. Investment return and principal value will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. Index returns do not reflect the effects of fees, transaction costs or expenses. It is not possible to invest directly in an index. No information is provided for Investor Class shares because shares of that class had not yet been issued as of June 30, 2018.

Average Annual Total Returns for the Year Ended June 30, 2018	One Year			Since Inception(1)
Penn Capital Multi-Credit High Income Fund
Institutional Class Shares		3.81	%		7.59	%
ICE BofAML US High Yield Constrained Index		2.52	%		8.38	%(2)

(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.

8

PENN CAPITAL DEFENSIVE FLOATING RATE INCOME FUND
FUND SUMMARY (UNAUDITED)

 

This chart assumes an initial gross investment of $10,000 made on December 1, 2015, inception of the Institutional Class shares. Returns shown in the chart and table include the reinvestment of all dividends, but do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. In the absence of fee waivers and reimbursements, when they are necessary to keep expenses at the expense cap, total return would be reduced. Past performance is not predictive of future performance. Investment return and principal value will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. Index returns do not reflect the effects of fees, transaction costs or expenses. It is not possible to invest directly in an index. No information is provided for Investor Class shares because shares of that class had not yet been issued as of June 30, 2018.

Average Annual Total Returns for the Year Ended June 30, 2018	One Year			Since Inception(1)
Penn Capital Defensive Floating Rate Income Fund
Institutional Class Shares		3.71	%		4.40	%
S&P/LSTA BB/B Loan Index(2)		4.19	%		5.47	%(3)
Credit Suisse Institutional Leveraged Loan Index		4.56	%		5.31	%(4)

(1) Inception date is 12/1/15.

(2) The S&P/LSTA BB/B Loan Index has replaced the Credit Suisse Institutional Leveraged Loan Index as the Fund’s primary benchmark. Penn Capital Management Company, Inc. believes that the new index is more appropriate given the Fund’s holdings.

(3) The return shown for the S&P/LSTA BB/B Loan Index is from the inception date of the Institutional Class shares.

(4) The return shown for the Credit Suisse Institutional Leveraged Loan Index is from the inception date of the Institutional Class shares.

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PENN CAPITAL DEFENSIVE SHORT DURATION HIGH INCOME FUND
FUND SUMMARY (UNAUDITED)

 

This chart assumes an initial gross investment of $10,000 made on July 17, 2017, inception of the Institutional Class shares. Returns shown in the chart and table include the reinvestment of all dividends, but do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. In the absence of fee waivers and reimbursements, when they are necessary to keep expenses at the expense cap, total return would be reduced. Past performance is not predictive of future performance. Investment return and principal value will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. Index returns do not reflect the effects of fees, transaction costs or expenses. It is not possible to invest directly in an index.

Total Returns for the Fiscal Period Ended June 30, 2018	Since Inception(1)
Penn Capital Defensive Short Duration High Income Fund
Institutional Class Shares		1.03	%
ICE BofAML 1-3 Year BB US Cash Pay High Yield Index		1.64	%(2)
ICE BofAML US High Yield Cash Pay BB-B Rated 1-3 Years Index		2.91	%(3)

(1) Inception date is 7/17/17.

(2) The return shown for the ICE BofAML 1-3 Year BB US Cash Pay High Yield Index is from the inception date of the Institutional Class shares.

(3) The return shown for the ICE BofAML US High Yield Cash Pay BB-B Rated 1-3 Years Index is from the inception date of the Institutional Class shares.

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PENN CAPITAL FUNDS TRUST
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
FOR THE SIX MONTH PERIOD FROM JANUARY 1, 2018 TO JUNE 30, 2018

Cost in Dollars of a $1,000 Investment in Penn Capital Managed Alpha SMID Cap Equity Fund (Unaudited)

The example below is intended to describe the fees and expenses borne by shareholders during the six-month period from January 1, 2018 to June 30, 2018, and the impact of those costs on your investment.

Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees on sales (as applicable) and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses (as applicable). This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 made at the beginning of the six-month period and held for the entire period from January 1, 2018 to June 30, 2018.

This example illustrates your Fund’s ongoing costs in two ways:

Actual Expenses

The second and third data columns in the table below provide information about actual account values and actual expenses. You may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid during the six months ended June 30, 2018. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled Expenses Paid During Period to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The fourth and fifth data columns in the table below provide information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balances or expenses you paid for the six-month period shown. You may use this information to compare the ongoing costs of investing in the Fund with the ongoing costs of investing in other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees. Therefore, the fourth and fifth data columns of the table are useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

			Actual				Hypothetical
Share Class1	Beginning Account Value 1/1/18		Ending Account Value (Based on Actual Returns and Expenses) 6/30/18		Expenses Paid During Period2		Ending Account Value (Based on Hypothetical 5% Annualized Return and Actual Expenses) 6/30/18		Expenses Paid During Period2
Institutional Class Shares	$	1,000.00	$	1,035.10	$	5.35	$	1,019.54	$	5.31

1. No information is provided for Investor Class shares because shares of that class had not yet been issued as of June 30, 2018.

2. Expenses are equal to the Fund’s annualized expense ratio, net of waivers and excluding acquired fund fees and expenses if any (1.06% for the Institutional Class), multiplied by the average account value over the period, divided by 365 and multiplied by 181 for the Institutional Class (to reflect the six-month period). The table above represents the actual expenses incurred during the six-month period.

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PENN CAPITAL FUNDS TRUST
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
FOR THE SIX MONTH PERIOD FROM JANUARY 1, 2018 TO JUNE 30, 2018

Cost in Dollars of a $1,000 Investment in Penn Capital Special Situations Small Cap Equity Fund (Unaudited)

The example below is intended to describe the fees and expenses borne by shareholders during the six-month period from January 1, 2018 to June 30, 2018, and the impact of those costs on your investment.

Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees on sales (as applicable) and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses (as applicable). This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 made at the beginning of the six-month period and held for the entire period from January 1, 2018 to June 30, 2018.

This example illustrates your Fund’s ongoing costs in two ways:

Actual Expenses

The second and third data columns in the table below provide information about actual account values and actual expenses. You may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid during the six months ended June 30, 2018. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled Expenses Paid During Period to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The fourth and fifth data columns in the table below provide information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balances or expenses you paid for the six-month period shown. You may use this information to compare the ongoing costs of investing in the Fund with the ongoing costs of investing in other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees. Therefore, the fourth and fifth data columns of the table are useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

			Actual				Hypothetical
Share Class1	Beginning Account Value 1/1/18		Ending Account Value (Based on Actual Returns and Expenses) 6/30/18		Expenses Paid During Period2		Ending Account Value (Based on Hypothetical 5% Annualized Return and Actual Expenses) 6/30/18		Expenses Paid During Period2
Institutional Class Shares	$	1,000.00	$	1,072.40	$	5.60	$	1,019.39	$	5.46

1. No information is provided for Investor Class shares because shares of that class had not yet been issued as of June 30, 2018.

2. Expenses are equal to the Fund’s annualized expense ratio, 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 365 and multiplied by 181 for the Institutional Class (to reflect the six-month period). The table above represents the actual expenses incurred during the six-month period.

12

PENN CAPITAL FUNDS TRUST
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
FOR THE SIX MONTH PERIOD FROM JANUARY 1, 2018 TO JUNE 30, 2018

Cost in Dollars of a $1,000 Investment in Penn Capital Multi-Credit High Income Fund (Unaudited)

The example below is intended to describe the fees and expenses borne by shareholders during the six-month period from January 1, 2018 to June 30, 2018, and the impact of those costs on your investment.

Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees on sales (as applicable) and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses (as applicable). This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 made at the beginning of the six-month period and held for the entire period from January 1, 2018 to June 30, 2018.

This example illustrates your Fund’s ongoing costs in two ways:

Actual Expenses

The second and third data columns in the table below provide information about actual account values and actual expenses. You may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid during the six months ended June 30, 2018. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled Expenses Paid During Period to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The fourth and fifth data columns in the table below provide information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balances or expenses you paid for the six-month period shown. You may use this information to compare the ongoing costs of investing in the Fund with the ongoing costs of investing in other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees. Therefore, the fourth and fifth data columns of the table are useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

			Actual				Hypothetical
Share Class1	Beginning Account Value 1/1/18		Ending Account Value (Based on Actual Returns and Expenses) 6/30/18		Expenses Paid During Period2		Ending Account Value (Based on Hypothetical 5% Annualized Return and Actual Expenses) 6/30/18		Expenses Paid During Period2
Institutional Class Shares	$	1,000.00	$	1,010.50	$	3.59	$	1,021.22	$	3.61

1. No information is provided for Investor Class shares because shares of that class had not yet been issued as of June 30, 2018.

2. Expenses are equal to the Fund’s annualized expense ratio, net of waivers and excluding acquired fund fees and expenses if any (0.72% for the Institutional Class), multiplied by the average account value over the period, divided by 365 and multiplied by 181 for the Institutional Class (to reflect the six-month period). The table above represents the actual expenses incurred during the six-month period.

13

PENN CAPITAL FUNDS TRUST
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
FOR THE SIX MONTH PERIOD FROM JANUARY 1, 2018 TO JUNE 30, 2018

Cost in Dollars of a $1,000 Investment in Penn Capital Defensive Floating Rate Income Fund (Unaudited)

The example below is intended to describe the fees and expenses borne by shareholders during the six-month period from January 1, 2018 to June 30, 2018, and the impact of those costs on your investment.

Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees on sales (as applicable) and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses (as applicable). This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 made at the beginning of the six-month period and held for the entire period from January 1, 2018 to June 30, 2018.

This example illustrates your Fund’s ongoing costs in two ways:

Actual Expenses

The second and third data columns in the table below provide information about actual account values and actual expenses. You may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid during the six months ended June 30, 2018. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled Expenses Paid During Period to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The fourth and fifth data columns in the table below provide information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balances or expenses you paid for the six-month period shown. You may use this information to compare the ongoing costs of investing in the Fund with the ongoing costs of investing in other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees. Therefore, the fourth and fifth data columns of the table are useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

			Actual				Hypothetical
Share Class1	Beginning Account Value 1/1/18		Ending Account Value (Based on Actual Returns and Expenses) 6/30/18		Expenses Paid During Period2		Ending Account Value (Based on Hypothetical 5% Annualized Return and Actual Expenses) 6/30/18		Expenses Paid During Period2
Institutional Class Shares	$	1,000.00	$	1,015.80	$	3.20	$	1,021.62	$	3.21

1. No information is provided for Investor Class shares because shares of that class had not yet been issued as of June 30, 2018.

2. Expenses are equal to the Fund’s annualized expense ratio, net of waivers and excluding acquired fund fees and expenses if any (0.64% for the Institutional Class), multiplied by the average account value over the period, divided by 365 and multiplied by 181 for the Institutional Class (to reflect the six-month period). The table above represents the actual expenses incurred during the six-month period.

14

PENN CAPITAL FUNDS TRUST
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
FOR THE PERIOD FROM JANUARY 1, 2018 TO JUNE 30, 2018

Cost in Dollars of a $1,000 Investment in Penn Capital Defensive Short Duration High Income Fund (Unaudited)

The example below is intended to describe the fees and expenses borne by shareholders during the six-month period from January 1, 2018 to June 30, 2018, and the impact of those costs on your investment.

Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees on sales (as applicable) and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses (as applicable). This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 made at the beginning of the six-month period and held for the entire period from January 1, 2018 to June 30, 2018.

This example illustrates your Fund’s ongoing costs in two ways:

Actual Expenses

The second and third data columns in the table below provide information about actual account values and actual expenses. You may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid during the period ended June 30, 2018. 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	Beginning Account Value 1/1/18		Ending Account Value (Based on Actual Returns and Expenses) 6/30/18		Expenses Paid During Period1		Ending Account Value (Based on Hypothetical 5% Annualized Return and Actual Expenses) 6/30/18		Expenses Paid During Period1
Institutional Class Shares2	$	1,000.00	$	1,006.80	$	2.69	$	1,022.12	$	2.71

1. No information is provided for Investor Class shares because shares of that class had not yet been issued as of June 30, 2018.

2. Expenses are equal to the Fund’s annualized expense ratio, net of waivers and excluding acquired fund fees and expenses if any (0.54% for the Institutional Class), multiplied by the average account value over the period, divided by 365 and multiplied by 181 for the Institutional Class (to reflect the six-month period). The table above represents the actual expenses incurred during the six-month period.

15

PENN CAPITAL FUNDS TRUST

PENN CAPITAL MANAGED ALPHA SMID CAP EQUITY FUND

SCHEDULE OF INVESTMENTS

JUNE 30, 2018

	Shares		Value
Common Stocks: 91.6%
Air Freight & Logistics: 1.3%
XPO Logistics, Inc. (a)		2,011	$	201,462
Banks: 9.6%
BOK Financial Corp.		2,635		247,716
Chemical Financial Corp.		4,167		231,977
Pinnacle Financial Partners, Inc.		3,186		195,461
Sterling Bancorp		10,243		240,711
Webster Financial Corp.		4,413		281,108
Western Alliance Bancorp (a)		4,105		232,384
				1,429,357
Biotechnology: 2.8%
Exelixis, Inc. (a)		8,382		180,381
Ironwood Pharmaceuticals, Inc. (a)		12,361		236,342
				416,723
Building Products: 1.3%
Allegion PLC		2,480		191,853
Capital Markets: 1.4%
Affiliated Managers Group, Inc.		1,415		210,368
Chemicals: 2.5%
HB Fuller Co.		4,146		222,557
Valvoline, Inc.		6,995		150,882
				373,439
Commercial Services & Supplies: 1.8%
KAR Auction Services, Inc.		4,800		263,040
Construction Materials: 1.4%
Summit Materials, Inc. - Class A (a)		7,806		204,907
Consumer Finance: 1.3%
SLM Corp. (a)		17,400		199,230
Containers & Packaging: 1.2%
Berry Global Group, Inc. (a)		3,745		172,045
Diversified Financial Services: 3.2%
FNF Group		5,482		206,233
Voya Financial, Inc.		5,713		268,511
				474,744
Electronic Equipment, Instruments & Components: 1.1%
Mercury Systems, Inc. (a)		4,398		167,388
Energy Equipment & Services: 0.7%
FTS International, Inc. (a)		7,722		109,961
Health Care Equipment & Supplies: 4.6%
ICU Medical, Inc. (a)		913		268,102
Teleflex, Inc.		784		210,277
Wright Medical Group NV (a)		7,965		206,771
				685,150
Health Care Providers & Services: 2.9%
LHC Group, Inc. (a)		1,437		122,993
WellCare Health Plans, Inc. (a)		1,234		303,860
				426,853

	Shares		Value
Hotels, Restaurants & Leisure: 5.1%
Boyd Gaming Corp.		7,160		248,166
Red Rock Resorts, Inc. - Class A		7,392		247,632
Vail Resorts, Inc.		983		269,529
				765,327
Household Durables: 2.0%
Roku, Inc. (a)		3,573		152,281
TopBuild Corp. (a)		1,811		141,874
				294,155
Independent Power and Renewable Electricity Producers: 1.5%
Ormat Technologies, Inc.		4,150		220,739
Insurance: 1.8%
Arch Capital Group Ltd. (a)		9,936		262,907
Internet Software & Services: 6.4%
Five9, Inc. (a)		3,419		118,195
GoDaddy, Inc. - Class A (a)		4,519		319,041
IAC/InterActiveCorp (a)		1,284		195,797
Match Group, Inc. (a)		3,030		117,382
MongoDB, Inc. (a)		4,005		198,768
				949,183
IT Services: 1.6%
Black Knight, Inc. (a)		4,591		245,848
Machinery: 2.9%
Allison Transmission Holdings, Inc.		4,407		178,439
Oshkosh Corp.		3,666		257,793
				436,232
Media: 5.4%
Gray Television, Inc. (a)		13,060		206,348
Live Nation Entertainment, Inc. (a)		6,252		303,660
Nexstar Media Group, Inc. - Class A		3,927		288,242
				798,250
Metals & Mining: 0.9%
Commercial Metals Co.		6,066		128,053
Multiline Retail: 1.8%
Burlington Stores, Inc. (a)		1,784		268,546
Oil, Gas & Consumable Fuels: 4.5%
Arch Coal, Inc. - Class A		1,262		98,979
Cabot Oil & Gas Corp.		7,796		185,545
Callon Petroleum Co. (a)		17,605		189,078
Cimarex Energy Co.		2,012		204,701
				678,303
Pharmaceuticals: 1.1%
Pacira Pharmaceuticals, Inc. (a)		5,088		163,070
Professional Services: 2.4%
TransUnion		5,105		365,722
Road & Rail: 1.7%
Schneider National, Inc. - Class B		9,165		252,129

The Accompanying Notes are an Integral Part of these Financial Statements.

16

PENN CAPITAL FUNDS TRUST

PENN CAPITAL MANAGED ALPHA SMID CAP EQUITY FUND

SCHEDULE OF INVESTMENTS

JUNE 30, 2018

	Shares		Value
Semiconductors & Semiconductor Equipment: 5.4%
Cavium, Inc. (a)		1,873		162,015
Semtech Corp. (a)		2,726		128,258
Silicon Laboratories, Inc. (a)		2,559		254,876
Teradyne, Inc.		6,942		264,282
				809,431
Software: 3.0%
Nice Ltd. - ADR (a)		2,093		217,191
Tyler Technologies, Inc. (a)		1,031		228,985
				446,176
Specialty Retail: 2.8%
Camping World Holdings, Inc. - Class A		6,683		166,941
Floor & Decor Holdings, Inc. - Class A (a)		5,104		251,780
TravelCenters of America LLC (a)		-		2
				418,723
Trading Companies & Distributors: 2.9%
United Rentals, Inc. (a)		1,788		263,945
WESCO International, Inc. (a)		2,894		165,247
				429,192
Water Utilities: 1.3%
Aqua America, Inc.		5,461		192,118
Total Common Stocks (cost $11,369,380)				13,650,624
Real Estate Investment Trusts (REITs): 6.3%
CyrusOne, Inc.		4,457		260,110
Invitation Homes, Inc.		10,262		236,642
MGM Growth Properties LLC - Class A		8,146		248,127
The GEO Group, Inc.		7,063		194,515
Total REITS (cost $862,609)				939,394
Short-Term Investment: 2.4%
Short-Term Investment Trust Treasury Portfolio Institutional Class, 1.750% (b)		362,429		362,429
Total Short-Term Investment (cost $362,429)				362,429
Total Investments - 100.3% (cost $12,594,418)				14,952,447
Liabilities in Excess of Other Assets (0.3)%				(42,264	)
Net Assets: 100.0%			$	14,910,183

Percentages are stated as a percent of net assets.

(a) No distribution or dividend was made during the year ending June 30, 2018. As such, it is classified as a non-income producing security as of June 30, 2018.

(b) Rate reported is the 7-day effective yield as of June 30, 2018.

Country Exposure (as a percentage of total investments) (Unaudited)
United States	94.13	%
Bermuda	1.76	%
Israel	1.45	%
Netherlands	1.38	%
Ireland	1.28	%

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. Bancorp Fund Services, LLC.

The Accompanying Notes are an Integral Part of these Financial Statements.

17

PENN CAPITAL FUNDS TRUST

PENN CAPITAL SPECIAL SITUATIONS SMALL CAP EQUITY FUND

SCHEDULE OF INVESTMENTS

JUNE 30, 2018

	Shares		Value
Common Stocks: 97.9%
Auto Components: 1.4%
Modine Manufacturing Co. (a)		15,907	$	290,303
Banks: 10.6%
Banc of California, Inc.		14,583		285,098
Chemical Financial Corp.		5,041		280,632
FB Financial Corp.		9,392		382,442
Sterling Bancorp		15,392		361,712
Texas Capital Bancshares, Inc. (a)		4,169		381,463
Webster Financial Corp.		3,865		246,201
Western Alliance Bancorp (a)		5,790		327,772
				2,265,320
Biotechnology: 1.6%
Ironwood Pharmaceuticals, Inc. (a)		18,227		348,500
Capital Markets: 2.6%
Hamilton Lane, Inc. - Class A		5,943		285,086
PJT Partners, Inc. - Class A		5,002		267,057
				552,143
Chemicals: 1.2%
Venator Materials PLC (a)		16,126		263,821
Construction & Engineering: 1.5%
MasTec, Inc. (a)		6,193		314,295
Diversified Consumer Services: 1.3%
Chegg, Inc. (a)		9,532		264,894
Electronic Equipment, Instruments & Components: 1.2%
Mercury Systems, Inc. (a)		6,818		259,493
Energy Equipment & Services: 5.6%
C&J Energy Services, Inc. (a)		6,299		148,657
Keane Group, Inc. (a)		21,303		291,212
Mammoth Energy Services, Inc. (a)		12,365		419,915
Noble Corp. PLC (a)		52,303		331,078
				1,190,862
Food & Staples Retailing: 0.6%
BJ’s Wholesale Club Holdings, Inc. (a)		5,190		122,744
Health Care Equipment & Supplies: 6.0%
ICU Medical, Inc. (a)		1,316		386,443
K2M Group Holdings, Inc. (a)		13,628		306,630
LivaNova PLC (a)		2,989		298,362
Wright Medical Group NV (a)		11,335		294,257
				1,285,692
Health Care Providers & Services: 3.7%
LHC Group, Inc. (a)		3,243		277,568
R1 RCM, Inc. (a)		25,633		222,495
WellCare Health Plans, Inc. (a)		1,193		293,764
				793,827
Health Care Technology: 1.3%
Omnicell, Inc. (a)		5,212		273,369

	Shares		Value
Hotels, Restaurants & Leisure: 9.8%
Extended Stay America, Inc.		6,874		148,547
Full House Resorts, Inc. (a)		64,588		215,078
Golden Entertainment, Inc. (a)		6,077		164,018
Penn National Gaming, Inc. (a)		11,441		384,303
Planet Fitness, Inc. - Class A (a)		5,362		235,606
Red Rock Resorts, Inc. - Class A		10,345		346,558
Scientific Games Corp. (a)		6,271		308,220
SeaWorld Entertainment, Inc. (a)		12,715		277,441
				2,079,771
Household Durables: 1.4%
TopBuild Corp. (a)		3,767		295,107
Internet Software & Services: 8.3%
Carbonite, Inc. (a)		7,370		257,213
Five9, Inc. (a)		6,034		208,595
Gogo, Inc. (a)		29,194		141,883
Hortonworks, Inc. (a)		16,983		309,430
Instructure, Inc. (a)		5,948		253,088
Mimecast Ltd. (a)		5,129		211,366
MINDBODY, Inc. (a) - Class A		3,748		144,673
Q2 Holdings, Inc. (a)		4,305		245,600
				1,771,848
IT Services: 2.6%
Everi Holdings, Inc. (a)		35,534		255,845
InterXion Holding NV (a)		4,839		302,050
				557,895
Machinery: 3.9%
Astec Industries, Inc.		5,732		342,774
Milacron Holdings Corp. (a)		13,140		248,740
Woodward, Inc.		2,953		226,967
				818,481
Media: 8.7%
AMC Entertainment Holdings, Inc. - Class A		17,384		276,405
The E. W. Scripps Co. - Class A		15,877		212,593
Gray Television, Inc. (a)		37,977		600,037
Nexstar Media Group, Inc. - Class A		5,344		392,250
Sinclair Broadcast Group, Inc. - Class A		11,273		362,427
				1,843,712
Metals & Mining: 0.9%
Cleveland-Cliffs, Inc. (a)		23,490		198,021
Oil, Gas & Consumable Fuels: 5.9%
Enerplus Corp.		24,851		313,123
Resolute Energy Corp. (a)		9,670		301,704
Sanchez Energy Corp. (a)		29,537		133,507
Whiting Petroleum Corp. (a)		5,238		276,147
WPX Energy, Inc. (a)		12,946		233,417
				1,257,898

The Accompanying Notes are an Integral Part of these Financial Statements.

18

PENN CAPITAL FUNDS TRUST

PENN CAPITAL SPECIAL SITUATIONS SMALL CAP EQUITY FUND

SCHEDULE OF INVESTMENTS

JUNE 30, 2018

	Shares		Value
Pharmaceuticals: 1.0%
Pacira Pharmaceuticals, Inc. (a)		6,854		219,671
Road & Rail: 2.2%
Marten Transport Ltd.		6,810		159,695
Schneider National, Inc. - Class B		10,999		302,582
				462,277
Semiconductors & Semiconductor Equipment: 2.6%
Semtech Corp. (a)		7,019		330,244
Versum Materials, Inc.		6,088		226,169
				556,413
Software: 3.2%
Nice Ltd. - ADR (a)		2,693		279,453
Tyler Technologies, Inc. (a)		816		181,233
Zynga, Inc. - Class A (a)		51,589		209,967
				670,653
Specialty Retail: 2.0%
Camping World Holdings, Inc. - Class A		8,488		212,030
Five Below, Inc. (a)		2,250		219,848
				431,878
Textiles, Apparel & Luxury Goods: 1.5%
G-III Apparel Group Ltd. (a)		7,297		323,987
Thrifts & Mortgage Finance: 1.5%
WSFS Financial Corp.		6,117		326,036
Trading Companies & Distributors: 3.8%
Beacon Roofing Supply, Inc. (a)		8,230		350,763
DXP Enterprises, Inc. (a)		5,330		203,606
Triton International Ltd.		8,003		245,372
				799,741
Total Common Stocks (cost $18,047,942)				20,838,652
Contingent Value Right - 0.0%
Media - 0.0%
Media General, Inc.		1,867		93
Total Contingent Value Right (cost $0)				93
Real Estate Investment Trust (REIT): 1.2%
Pebblebrook Hotel Trust		6,308		244,750
Total REIT (cost $227,382)				244,750
Short-Term Investment: 0.4%
Money Market Fund - 0.4%
Short-Term Investments Trust Treasury Portfolio Institutional Class, 1.750% (b)		90,106		90,106
Total Short-Term Investment (cost $90,106)				90,106

	Shares	Value
Total Investments - 99.5% (cost $18,365,430)			21,173,601
Other Assets and Liabilities 0.5%			115,307
Net Assets: 100.0%		$	21,288,908

Percentages are stated as a percent of net assets.

(a) No distribution or dividend was made during the year ending June 30, 2018. As such, it is classified as a non-income producing security as of June 30, 2018.

(b) Rate reported is the 7-day effective yield as of June 30, 2018.

Country Exposure (as a percentage of total investments) (Unaudited)
United States	88.01	%
United Kingdom	4.22	%
Netherlands	2.81	%
Canada	1.48	%
Israel	1.32	%
Bermuda	1.16	%
Jersey	1.00	%

Sector Allocation (as a percentage of total investments) (Unaudited)

 

The Accompanying Notes are an Integral Part of these Financial Statements.

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SCHEDULE OF INVESTMENTS

JUNE 30, 2018

	Principal		Value
Corporate Bonds: 70.9%
Aerospace: 0.8%
Bombardier, Inc., 8.750%, 12/1/21 (a)		105,000	$	115,500
Agriculture: 0.2%
Simmons Foods, Inc., 5.750%, 11/1/24 (a)		40,000		34,700
Airline Companies: 1.8%
Air Canada, 7.750%, 4/15/21 (a)		50,000		53,375
VistaJet Malta Finance PLC, 7.750%, 6/1/20 (a)		200,000		198,000
				251,375
Auto Parts & Equipment: 0.3%
Meritor, Inc., 6.250%, 2/15/24		35,000		35,263
Automotive: 0.7%
Navistar International Corp., 6.625%, 11/1/25 (a)		100,000		102,750
Banking: 1.2%
Ally Financial, Inc., 8.000%, 11/1/31		25,000		29,750
Ally Financial, Inc., 5.750%, 11/20/25		90,000		91,687
Ally Financial, Inc., 5.125%, 9/30/24		50,000		50,875
				172,312
Brokerage: 0.4%
Oppenheimer Holdings, Inc., 6.750%, 7/1/22		60,000		61,275
Building & Construction: 0.5%
Ashton Woods USA LLC, 6.750%, 8/1/25 (a)		50,000		47,500
Ashton Woods USA LLC, 6.875%, 2/15/21 (a)		24,000		24,120
				71,620
Building Materials: 1.2%
Griffon Corp., 5.250%, 3/1/22		105,000		102,155
U.S. Concrete, Inc., 6.375%, 6/1/24		60,000		60,000
				162,155
Chemical Companies: 1.4%
Platform Specialty Products Corp., 5.875%, 12/1/25 (a)		80,000		78,200
Trinseo Materials Operating SCA, 5.375%, 9/1/25 (a)		45,000		44,606
Versum Materials, Inc., 5.500%, 9/30/24 (a)		65,000		65,904
				188,710
Computer Hardware: 1.1%
Dell International LLC, 8.100%, 7/15/36 (a)		85,000		99,255
Western Digital Corp., 4.750%, 2/15/26		55,000		53,487
				152,742
Consumer/Commercial/Lease Financing: 1.9%
International Lease Finance Corp., 8.625%, 1/15/22		35,000		40,145
Navient Corp., 7.250%, 9/25/23		35,000		36,662
Navient Corp., 6.125%, 3/25/24		15,000		14,813
Navient Corp., 5.875%, 10/25/24		65,000		62,806
Navient Corp., 6.625%, 7/26/21		10,000		10,272

	Principal		Value
Park Aerospace Holdings Ltd., 5.250%, 8/15/22 (a)		100,000		99,001
				263,699
Electric-Generation: 2.1%
Calpine Corp., 5.375%, 1/15/23 (a)		35,000		33,294
Calpine Corp., 5.875%, 1/15/24 (a)		25,000		24,750
NRG Energy, Inc., 5.750%, 1/15/28 (a)		25,000		24,563
NRG Energy, Inc., 6.625%, 1/15/27		25,000		25,688
NRG Energy, Inc., 7.250%, 5/15/26		20,000		21,300
Vistra Energy Corp, 8.125%, 1/30/26 (a)		50,000		54,312
Vistra Energy Corp., 7.625%, 11/1/24		70,000		74,637
Vistra Energy Corp., 7.375%, 11/1/22		25,000		26,125
				284,669
Electric-Integrated: 0.2%
Talen Energy Supply LLC, 9.500%, 7/15/22 (a)		35,000		34,366
Energy-Exploration & Production: 4.7%
Antero Resources Corp., 5.125%, 12/1/22		50,000		50,125
Approach Resources, Inc., 7.000%, 6/15/21		40,000		39,000
Callon Petroleum Co., 6.125%, 10/1/24		35,000		35,437
Carrizo Oil & Gas, Inc., 8.250%, 7/15/25		25,000		26,500
Centennial Resource Production LLC, 5.375%, 1/15/26 (a)		30,000		29,175
Gulfport Energy Corp., 6.000%, 10/15/24		60,000		57,750
Gulfport Energy Corp., 6.625%, 5/1/23		15,000		15,113
HighPoint Operating Corp., 7.000%, 10/15/22		35,000		35,000
Jagged Peak Energy LLC, 5.875%, 5/1/26 (a)		40,000		39,200
Range Resources Corp., 5.000%, 8/15/22		80,000		79,200
Resolute Energy Corp., 8.500%, 5/1/20		125,000		124,922
Sanchez Energy Corp., 7.250%, 2/15/23 (a)		55,000		54,450
Unit Corp., 6.625%, 5/15/21		70,000		69,825
				655,697
Entertainment: 0.8%
AMC Entertainment Holdings, Inc., 5.875%, 11/15/26		25,000		24,062
AMC Entertainment Holdings, Inc., 5.750%, 6/15/25		55,000		53,900
National CineMedia LLC, 5.750%, 8/15/26		40,000		36,500
				114,462
Food-Wholesale: 1.3%
JBS USA LUX SA, 5.875%, 7/15/24 (a)		100,000		95,500
JBS USA LUX SA, 7.250%, 6/1/21 (a)		15,000		15,150
JBS USA LUX SA, 7.250%, 6/1/21 (a)		15,000		15,150
Pilgrim’s Pride Corp., 5.750%, 3/15/25 (a)		60,000		57,600
				183,400
Food & Drug Retailers: 1.1%
Albertsons Cos LLC, 6.625%, 6/15/24		60,000		56,550
Albertsons Cos, Inc., 6.085% (3 Month LIBOR USD + 3.750%), 1/15/24 (a)(b)		35,000		35,087
Ingles Markets, Inc., 5.750%, 6/15/23		65,000		64,025

The Accompanying Notes are an Integral Part of these Financial Statements.

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SCHEDULE OF INVESTMENTS

JUNE 30, 2018

	Principal		Value
				155,662
Forestry/Paper: 0.5%
Rayonier AM Products, Inc., 5.500%, 6/1/24 (a)		70,000		65,800
Gaming: 1.3%
Gateway Casinos & Entertainment Ltd., 8.250%, 3/1/24 (a)		40,000		42,200
MGM Resorts International, 7.750%, 3/15/22		30,000		32,700
The Stars Group Holdings, 7.000%, 7/15/26 (a)		50,000		50,500
Wynn Las Vegas LLC, 5.500%, 3/1/25 (a)		55,000		54,038
				179,438
Gas Distribution: 3.6%
Blue Racer Midstream LLC, 6.125%, 11/15/22 (a)		45,000		45,450
Cheniere Energy Partners LP, 5.250%, 10/1/25 (a)		65,000		63,404
DCP Midstream Operating LP, 3.875%, 3/15/23 (a)		55,000		53,144
DCP Midstream Operating LP, 4.950%, 4/1/22		33,000		33,371
DCP Midstream Operating LP, 5.850% (3 Month LIBOR USD + 3.850%), 5/21/43 (b)		90,000		82,350
NGL Energy Partners LP, 5.125%, 7/15/19		65,000		65,081
NGL Energy Partners LP, 6.875%, 10/15/21		20,000		20,250
NGPL PipeCo LLC, 7.768%, 12/15/37 (a)		45,000		52,875
Rockies Express Pipeline LLC, 6.875%, 4/15/40 (a)		45,000		51,300
Targa Resources Partners LP, 5.250%, 5/1/23		30,000		30,000
				497,225
Health Services: 2.0%
Acadia Healthcare Co., Inc., 5.625%, 2/15/23		50,000		50,375
Acadia Healthcare Co., Inc., 6.125%, 3/15/21		35,000		35,350
Centene Escrow I Corp., 5.375%, 6/1/26		30,000		31,612
Centene Corp., 6.125%, 2/15/24 (a)		30,000		30,394
DaVita, Inc., 5.125%, 6/15/24		40,000		38,800
Encompass Health Corp., 5.750%, 9/15/25		50,000		50,500
Universal Hospital Services, Inc., 7.625%, 8/15/20		35,000		34,913
				271,944
Hospitals: 1.6%
HCA, Inc., 7.500%, 2/15/22		25,000		27,188
HCA, Inc., 5.250%, 6/15/26		40,000		39,728
HCA, Inc., 5.375%, 2/1/25		65,000		64,005
Tenet Healthcare Corp., 8.125%, 4/1/22		80,000		83,500
				214,421
Household & Leisure Products/Durables: 0.3%
Tempur Sealy International, Inc., 5.500%, 6/15/26		45,000		43,538

	Principal		Value
Investments & Misc Financial Services: 2.4%
First Data Corp., 5.750%, 1/15/24 (a)		50,000		49,968
First Data Corp., 7.000%, 12/1/23 (a)		75,000		78,118
Icahn Enterprises LP, 6.375%, 12/15/25		60,000		60,075
Icahn Enterprises LP, 6.750%, 2/1/24		110,000		110,825
VFH Parent LLC, 6.750%, 6/15/22 (a)		35,000		36,269
				335,255
Machinery Companies: 0.7%
Apergy Corp., 6.375%, 5/1/26 (a)		35,000		35,569
Zekelman Industries, Inc., 9.875%, 6/15/23 (a)		50,000		54,750
				90,319
Media-Broadcast: 3.2%
Gray Television, Inc., 5.125%, 10/15/24 (a)		25,000		23,875
Gray Television, Inc., 5.875%, 7/15/26 (a)		25,000		23,781
Salem Media Group, Inc., 6.750%, 6/1/24 (a)		45,000		40,838
Sinclair Television Group, Inc., 5.625%, 8/1/24 (a)		65,000		64,513
Townsquare Media, Inc., 6.500%, 4/1/23 (a)		40,000		36,000
Univision Communications, Inc., 5.125%, 5/15/23 (a)		60,000		57,600
Univision Communications, Inc., 5.125%, 2/15/25 (a)		15,000		13,856
Urban One, Inc., 7.375%, 4/15/22 (a)		45,000		43,537
Urban One, Inc., 9.250%, 2/15/20 (a)		140,000		135,800
				439,800
Media-Cable: 4.4%
Altice France SA, 6.000%, 5/15/22 (a)		200,000		201,250
Altice Luxembourg SA, 7.750%, 5/15/22 (a)		200,000		193,500
DISH DBS Corp., 5.875%, 7/15/22		185,000		173,900
DISH DBS Corp., 7.750%, 7/1/26		40,000		35,050
				603,700
Media-Services: 0.7%
Clear Channel Worldwide Holdings, Inc., 7.625%, 3/15/20		40,000		39,700
MDC Partners, Inc., 6.500%, 5/1/24 (a)		70,000		60,725
				100,425
Metals/Mining Excluding Steel: 3.8%
Alliance Resource Operating Partners LP, 7.500%, 5/1/25 (a)		65,000		69,225
Century Aluminum Co., 7.500%, 6/1/21 (a)		60,000		60,450
Cleveland-Cliffs, Inc., 5.750%, 3/1/25		35,000		33,162
CONSOL Energy, Inc., 11.000%, 11/15/25 (a)		90,000		99,000
Freeport-McMoRan, Inc., 4.550%, 11/14/24		15,000		14,250
Freeport-McMoRan, Inc., 5.450%, 3/15/43		50,000		43,860
Freeport-McMoRan, Inc., 3.875%, 3/15/23		5,000		4,725
Peabody Energy Corp., 10.000%, 3/15/22 (c)		95,000		0
Peabody Energy Corp., 6.375%, 3/31/25 (a)		45,000		46,237
SunCoke Energy Partners LP, 7.500%, 6/15/25 (a)		65,000		66,138

The Accompanying Notes are an Integral Part of these Financial Statements.

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SCHEDULE OF INVESTMENTS

JUNE 30, 2018

	Principal		Value
Teck Resources Ltd., 5.200%, 3/1/42		35,000		30,669
Teck Resources Ltd., 3.750%, 2/1/23		35,000		33,206
Teck Resources Ltd., 6.250%, 7/15/41		25,000		24,875
				525,797
Non-Food & Drug Retailers: 0.9%
Hot Topic, Inc., 9.250%, 6/15/21 (a)		65,000		61,994
The Men’s Wearhouse, Inc., 7.000%, 7/1/22		55,000		56,787
				118,781
Oil Field Equipment & Services: 3.0%
CSI Compressco LP, 7.250%, 8/15/22		45,000		41,175
CSI Compressco LP, 7.500%, 4/1/25 (a)		25,000		25,094
Nabors Industries, Inc., 5.500%, 1/15/23		60,000		57,360
Noble Holding International Ltd., 7.875%, 2/1/26 (a)		25,000		25,750
Noble Holding International Ltd., 7.750%, 1/15/24		130,000		123,175
Pioneer Energy Services Corp., 6.125%, 3/15/22		60,000		57,000
Transocean, Inc., 8.375%, 12/15/21		35,000		37,450
Transocean, Inc., 6.800%, 3/15/38		50,000		40,625
				407,629
Oil Refining & Marketing: 0.6%
PBF Holding Co. LLC, 7.250%, 6/15/25		35,000		36,794
PBF Holding Co. LLC, 7.000%, 11/15/23		40,000		41,400
				78,194
Pharmaceuticals & Devices: 4.6%
Endo Finance LLC, 5.375%, 1/15/23 (a)		55,000		44,000
Jaguar Holding Co. II, 6.375%, 8/1/23 (a)		55,000		54,736
Kinetic Concepts, Inc., 12.500%, 11/1/21 (a)		75,000		82,875
Mallinckrodt International Finance SA, 4.875%, 4/15/20 (a)		65,000		63,862
Mallinckrodt International Finance SA, 5.750%, 8/1/22 (a)		75,000		67,500
Valeant Pharmaceuticals International, Inc., 5.625%, 12/1/21 (a)		30,000		29,512
Valeant Pharmaceuticals International, Inc., 7.500%, 7/15/21 (a)		60,000		60,938
Valeant Pharmaceuticals International, Inc., 5.875%, 5/15/23 (a)		210,000		197,269
Valeant Pharmaceuticals International, Inc., 6.125%, 4/15/25 (a)		35,000		32,244
				632,936
Printing & Publishing: 1.3%
Lee Enterprises, Inc., 9.500%, 3/15/22 (a)		45,000		46,969
Meredith Corp., 6.875%, 2/1/26 (a)		130,000		128,212
				175,181
Railroads: 0.4%
Watco Cos LLC, 6.375%, 4/1/23 (a)		60,000		60,975
Real Estate Development & Management: 0.4%
Realogy Group LLC, 5.250%, 12/1/21 (a)		50,000		49,875

	Principal		Value
Restaurants: 0.7%
Golden Nugget, Inc., 6.750%, 10/15/24 (a)		50,000		50,009
P.F. Chang’s China Bistro, Inc., 10.250%, 6/30/20 (a)		45,000		40,500
				90,509
Steel Producers & Products: 1.0%
Joseph T. Ryerson & Son, Inc., 11.000%, 5/15/22 (a)		50,000		55,000
United States Steel Corp., 6.875%, 8/15/25		55,000		55,327
United States Steel Corp., 7.375%, 4/1/20		25,000		26,500
				136,827
Support-Services: 1.4%
Herc Rentals, Inc., 7.750%, 6/1/24 (a)		35,000		37,363
The ADT Corp., 4.875%, 7/15/32 (a)		50,000		39,125
The ADT Corp., 6.250%, 10/15/21		20,000		20,700
The GEO Group, Inc., 5.875%, 10/15/24		45,000		44,325
The Hertz Corp., 5.875%, 10/15/20		55,000		53,762
				195,275
Telecom-Integrated/Services: 6.7%
CenturyLink, Inc., 7.500%, 4/1/24		65,000		66,787
CenturyLink, Inc., 6.450%, 6/15/21		35,000		35,986
Cincinnati Bell, Inc., 7.000%, 7/15/24 (a)		35,000		31,937
Cogent Communications Finance, Inc., 5.625%, 4/15/21 (a)		65,000		65,406
Consolidated Communications, Inc., 6.500%, 10/1/22		70,000		65,275
Frontier Communications Corp., 8.500%, 4/1/26 (a)		20,000		19,300
Frontier Communications Corp., 10.500%, 9/15/22		30,000		27,225
Frontier Communications Corp., 8.750%, 4/15/22		40,000		33,800
Gogo Intermediate Holdings LLC, 12.500%, 7/1/22 (a)		90,000		96,075
Intelsat Jackson Holdings SA, 5.500%, 8/1/23 (a)		45,000		40,374
Intelsat Jackson Holdings SA, 7.250%, 10/15/20		180,000		179,100
Intelsat Connect Finance SA, 12.500%, 4/1/22 (a)		35,000		34,552
Level 3 Financing, Inc., 5.125%, 5/1/23		40,000		39,200
Uniti Group LP, 6.000%, 4/15/23 (a)		90,000		86,794
Uniti Group LP, 7.125%, 12/15/24 (a)		25,000		22,875
Windstream Services LLC, 7.750%, 10/15/20		91,000		81,673
				926,359
Telecom-Wireless: 2.5%
GTT Communications, Inc., 7.875%, 12/31/24 (a)		35,000		34,650
Sprint Capital Corp., 6.875%, 11/15/28		55,000		52,800
Sprint Communications, Inc., 6.000%, 11/15/22		25,000		24,781

The Accompanying Notes are an Integral Part of these Financial Statements.

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SCHEDULE OF INVESTMENTS

JUNE 30, 2018

	Principal		Value
Sprint Corp., 7.125%, 6/15/24		90,000		90,863
Sprint Corp., 7.625%, 3/1/26		25,000		25,469
Sprint Corp., 7.250%, 9/15/21		20,000		20,800
Sprint Corp., 7.875%, 9/15/23		40,000		41,475
Telesat Canada, 8.875%, 11/15/24 (a)		25,000		26,750
United States Cellular Corp., 6.700%, 12/15/33		30,000		31,350
				348,938
Telecommunications Equipment: 0.3%
CommScope, Inc., 5.500%, 6/15/24 (a)		40,000		40,200
Transportation Excluding Air/Rail: 0.9%
Deck Chassis Acquisition, Inc., 10.000%, 6/15/23 (a)		70,000		74,200
The Kenan Advantage Group, Inc., 7.875%, 7/31/23 (a)		45,000		45,900
				120,100
Total Corporate Bonds (cost $9,735,200)				9,789,798
Convertible Bond: 0.3%
Support-Services: 0.3%
Gogo, Inc., 3.750%, 3/1/20		45,000		39,264
Total Convertible Bond (cost $41,533)				39,264
Bank Loans: 7.9% (d)
Chemical Companies: 0.4%
Tronox Blocked Borrower LLC, 5.093% (1 Month US LIBOR + 3.000%), 9/22/24		34,709		34,674
Tronox Finance LLC, 5.093% (1 Month US LIBOR + 3.000%), 9/22/24		15,041		15,026
				49,700
Consumer-Products: 0.7%
Bob’s Discount Furniture, 7.270% (1 Month US LIBOR + 5.250%), 8/8/23		50,000		49,312
HLF Financing Sarl, 7.593% (1 Month US LIBOR + 5.500%), 2/15/23		48,986		49,324
				98,636
Entertainment: 0.3%
Delta 2 Lux Sarl, 4.593% (1 Month US LIBOR + 2.500%), 2/1/24		50,000		49,282
Gas Distribution: 0.3%
Woodford Express LLC, 7.093% (1 Month US LIBOR + 5.000%), 1/26/25		49,875		48,154
Health Care Providers & Services: 0.4%
R1 RCM, Inc., 7.619%, (3 Month US Libor + 5.250%), 5/2/25		50,000		49,750
Health Services: 0.4%
Gentiva Health Services, Inc., 5.840% (3 Month US LIBOR + 3.750%), 6/21/25		19,231		19,087
Gentiva Health Services, Inc., 5.840% (3 Month US LIBOR + 3.750%), 6/21/25		30,769		30,538
				49,625

	Principal		Value
Industrial Conglomerates: 0.4%
Deliver Buyer, Inc., 6.000% (3 Month US LIBOR + 5.000%), 5/1/24		49,874		49,781
Investments & Miscellaneous Financial Services: 0.7%
Edelman Financial Services LLC, 5.340%, (3 Month US LIBOR + 3.250%), 6/26/25		50,000		49,906
Russell Investments US Institutional Holdco, Inc., 5.343%, 6/1/23
(1 Month US LIBOR + 3.250%)		13,169		13,219
(1 Month US LIBOR + 3.250%)		36,704		36,841
				99,966
Metals & Mining: 0.4%
Big River Steel LLC, 7.334% (3 Month US LIBOR + 5.000%), 8/23/23		49,874		50,467
Metals/Mining Excluding Steel: 0.4%
Aleris International, Inc., 6.856% (1 Month US LIBOR + 4.750%), 4/15/23		50,000		49,516
Non-Food & Drug Retailers: 0.4%
The Men’s Wearhouse, Inc., 5.482% (1 Month US LIBOR + 3.500%), 4/9/25		49,875		50,083
Oil Field Equipment & Services: 0.7%
Keane Group Holdings LLC, 5.750% (1 Month US LIBOR + 3.750%), 5/25/25		50,000		49,875
McDermott Technology Americas, Inc., 7.093% (1 Month US LIBOR + 5.000%), 5/10/25		50,000		50,187
				100,062
Pharmaceuticals: 0.4%
Amneal Pharmaceuticals LLC, 5.625% (2 Month US LIBOR + 3.500%), 5/4/25		49,988		49,848
Pharmaceuticals & Devices: 0.7%
Endo International PLC, 6.375% (1 Month US LIBOR + 4.250%), 4/27/24		50,000		49,875
Valeant Pharmaceuticals International, Inc., 4.982% (1 Month US LIBOR + 3.000%), 5/30/25		50,000		49,797
				99,672
Software/Services: 0.4%
New Media Holdings II LLC, 8.343% (1 Month US LIBOR + 6.250%), 7/14/22		49,749		49,967
Specialty Retail: 0.3%
Staples, Inc., 6.358% (3 Month US LIBOR + 4.000%), 9/12/24		50,000		49,297
Support-Services: 0.3%
Monitronics International, Inc., 7.834% (3 Month US LIBOR + 5.500%), 9/30/22		49,747		47,384
Telecom-Integrated/Services: 0.3%
Frontier Communications Corp., 4.850% (1 Month US LIBOR + 2.750%), 3/31/21		50,000		49,203
Total Bank Loans (cost $1,092,196)				1,090,393

The Accompanying Notes are an Integral Part of these Financial Statements.

23

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SCHEDULE OF INVESTMENTS

JUNE 30, 2018

	Shares
Common Stock: 0.0%
Media - Cable: 0.0%
ACC Claims Holdings LLC (e)(f)		11,610		46
Total Common Stock (cost $237)				46
Mutual Fund: 18.1%
Penn Capital Defensive Floating Rate Income Fund-Institutional Class (g)		248,153		2,503,862
Total Mutual Funds (cost $2,520,274)				2,503,862
Preferred Stock: 0.0%
Spanish Broadcasting Systems, Inc. 10.750% Cash or 10.750% PIK (e)(h)		1		41
Total Preferred Stock (cost $613)				41
Short-Term Investment: 5.7%
Short-Term Investments Trust Treasury Portfolio Institutional Class, 1.750% (i)		786,796		786,796
Total Short-Term Investments (cost $786,796)				786,796
Total Investments - 102.9% (cost $14,176,849)				14,210,200
Liabilities in Excess of Other Assets (2.9)%				(396,340	)
Net Assets: 100.0%			$	13,813,860

Percentages are stated as a percent of net assets.

(a) Securities purchased pursuant to Rule 144A of the Securities Act of 1933, as amended, and may be sold only to dealers in that program or other “qualified institutional buyers.” As of June 30, 2018, the value of these investments was $5,348,427, or 38.7% of total net assets.

(b) Variable rate security. The rate listed is as of June 30, 2018.

(c) Item identified as in default as to payment of interest, the value of these investments were $0.00 or 0.0% of total net assets.

(d) Bank Loans typically have rates of interest which are redetermined either daily, monthly, quarterly or semi-annually by reference to a base lending rate, plus a premium. These base lending rates are primarily the London Interbank Offered Rate (“LIBOR”) and secondarily, the prime rate offered by one or more major United States banks (the “Prime Rate”) and the certificate of deposit (“CD”) rate or other base lending rates used by commercial lenders.

(e) This security is currently being fair valued in accordance with procedures established by the Board of Trustees and is deemed a level 3 security as it is valued using significant unobservable inputs.

(f) No distribution or dividend was made during the year ending June 30, 2018. As such, it is classified as a non-income producing security as of June 30, 2018.

(g) Affiliated company. See Note 7.

(h) Payment-in-kind security which may pay interest/dividends in additional par/shares and/or in cash. No distribution or dividend was made during the year ended June 30, 2018. As such, it is classified as a non-income producing security as of June 30, 2018.

(i) Rate reported is the 7-day effective yield as of June 30, 2018.

Country Exposure (as a percentage of total investments) (Unaudited)
United States	85.18	%
Canada	4.98	%
Luxembourg	4.39	%
Cayman Islands	2.29	%
France	1.42	%
Malta	1.39	%
Netherlands	0.35	%

Asset Type (as a percentage of total investments) (Unaudited)

 

The Accompanying Notes are an Integral Part of these Financial Statements.

24

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SCHEDULE OF INVESTMENTS

JUNE 30, 2018

	Principal		Value
Bank Loans: 85.6% (a)
Airline Companies: 1.1%
American Airlines, Inc., 4.093% (1 Month US LIBOR + 2.000%), 4/28/23		98,000	$	96,824
United Airlines, Inc., 3.843% (1 Month US LIBOR + 1.750%), 4/1/24		246,875		244,098
				340,922
Automotive: 1.6%
Navistar, Inc., 5.530% (1 Month US LIBOR + 3.500%), 11/6/24		249,375		249,220
Octavius Corp., 5.720% (1 Month US LIBOR + 3.500%), 11/8/23
(3 Month US LIBOR + 3.500%)		163,462		164,279
(1 Month US LIBOR + 3.500%)		86,538		86,971
				500,470
Building Materials: 2.0%
Foundation Building Materials, 5.180% (3 Month US LIBOR + 3.250%), 5/11/25		150,000		149,532
NCI Building Systems, Inc., 4.093% (1 Month US LIBOR + 2.000%), 2/8/25		124,688		124,103
Pike Corp., 5.600% (1 Month US LIBOR + 3.500%), 3/23/25		118,182		118,427
Quikrete Holdings, Inc., 4.843% (1 Month US LIBOR + 2.750%), 11/15/23		240,385		239,082
				631,144
Building Products: 0.8%
Atkore International, Inc., 5.090% (3 Month US LIBOR + 2.750%), 12/22/23		246,262		245,585
Chemical Companies: 1.8%
Composite Resins Holdings, 5.250% (3 Month US LIBOR + 4.250%), 6/28/25		75,000		74,437
HB Fuller Co., 4.084% (1 Month US LIBOR + 2.000%), 10/20/24		247,006		244,845
Tronox Blocked Borrower LLC, 5.093% (1 Month US LIBOR + 3.000%), 9/22/24		173,547		173,373
Tronox Finance LLC, 5.093% (1 Month US LIBOR + 3.000%), 9/22/24		75,204		75,128
				567,783
Chemicals: 0.4%
Encapsys LLC, 5.343% (1 Month US LIBOR + 3.250%), 10/27/24		124,687		124,688
Commercial Services & Supplies: 0.3%
Helix Acquisition Holdings, Inc., 5.834% (3 Month US LIBOR + 3.500%), 9/29/24		96,756		96,514
Communications Equipment: 0.6%
Polycom, Inc., 7.343%, 9/27/23
(1 Month US LIBOR + 5.250%)		108,396		108,396
(1 Month US LIBOR + 5.250%)		77,000		77,000
				185,396
Computers & Peripherals: 0.6%
Western Digital Corp., 3.843% (1 Month US LIBOR + 1.750%), 4/29/23		203,165		202,911

	Principal		Value
Consumer/Commercial/Lease Financing: 0.8%
Avolon TLB Borrower 1 US LLC, 4.088% (1 Month US LIBOR + 2.000%), 1/15/25		125,000		123,385
NAI Entertainment Holdings LLC, 4.600% (1 Month US LIBOR + 2.500%), 5/8/25		125,000		124,219
				247,604
Consumer-Products: 1.7%
BDF Acquisition Corp., 7.270% (1 Month US LIBOR + 5.250%), 8/8/23		199,481		196,738
HLF Financing Sarl, 7.593% (1 Month US LIBOR + 5.500%), 2/15/23		226,562		228,121
Lifetime Brands, Inc., 5.545%, 2/28/25
(1 Month US LIBOR + 3.500%)		67,870		67,530
(1 Month US LIBOR + 3.500%)		56,818		56,534
				548,923
Defense: 0.5%
The KeyW, 6.530% (1 Month US LIBOR + 4.500%), 5/8/24		150,000		150,750
Diversified Capital Goods: 1.5%
Gardner Denver, Inc., 4.843% (1 Month US LIBOR + 2.750%), 7/30/24		114,339		114,296
Harsco Corp., 4.375% (1 Month US LIBOR + 2.250%), 12/9/24		247,505		247,272
Thermon Industries, Inc., 5.732% (1 Month US LIBOR + 3.750%), 10/30/24		112,188		112,468
				474,036
Diversified Financial Services: 0.7%
Canyon Valor Cos, Inc., 5.584% (3 Month US LIBOR + 3.250%), 6/16/23		238,463		237,748
Diversified Telecommunication Services: 0.8%
Consolidated Communications, Inc., 5.100% (1 Month US LIBOR + 3.000%), 10/5/23		247,810		243,888
Electric-Generation: 3.0%
Calpine Corp., 4.840% (3 Month US LIBOR + 2.500%), 1/15/23		241,908		241,152
Exgen Renewables IV LLC, 5.310% (3 Month US LIBOR + 3.000%), 11/28/24		122,587		122,894
Helix Gen Funding LLC, 5.843% (1 Month US LIBOR + 3.750%), 6/3/24		230,323		230,563
Lightstone Holdco LLC, 5.843% (1 Month US LIBOR + 3.750%), 1/30/24		14,493		14,538
Lightstone Holdco LLC, 5.843% (1 Month US LIBOR + 3.750%), 1/30/24		226,359		227,067
TerraForm Power, 4.093% (1 Month US LIBOR + 2.000%), 11/8/22		124,375		124,167
				960,381
Electric Utilities: 0.4%
Compass Power Generation LLC, 5.843% (1 Month US LIBOR + 3.750%), 12/20/24		124,023		124,519

The Accompanying Notes are an Integral Part of these Financial Statements.

25

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SCHEDULE OF INVESTMENTS

JUNE 30, 2018

	Principal		Value
Electronics: 0.8%
Micron Technology, Inc., 3.850% (1 Month US LIBOR + 1.750%), 4/26/22		245,000		245,368
Entertainment: 2.9%
Alterra Mountain Co., 5.093% (1 Month US LIBOR + 3.000%), 7/31/24		248,750		248,285
Crown Finance US, Inc., 4.593% (1 Month US LIBOR + 2.500%), 2/22/25		124,687		123,664
Delta 2 Lux Sarl, 4.593% (1 Month US LIBOR + 2.500%), 2/1/24		200,000		197,126
Life Time Fitness, Inc., 5.057% (3 Month US LIBOR + 2.750%), 6/15/22		243,789		242,814
SeaWorld Parks & Entertainment, Inc., 5.093% (1 Month US LIBOR + 3.000%), 3/31/24		124,058		123,017
				934,906
Food & Drug Retailers: 1.1%
Albertson’s LLC, 5.337% (3 Month US LIBOR + 3.000%), 12/21/22		245,648		243,238
SuperValu, Inc., 5.593% (1 Month US LIBOR + 3.500%), 6/8/24		65,409		65,376
SuperValu, Inc., 5.593% (1 Month US LIBOR + 3.500%), 6/8/24		39,245		39,226
				347,840
Food-Wholesale: 1.5%
American Seafoods Group LLC, 4.850% (1 Month US LIBOR + 2.750%), 8/21/23		242,708		241,495
JBS USA LUX SA, 4.835%, 10/30/22
(3 Month US LIBOR + 2.500%)		209,679		207,897
(3 Month US LIBOR + 2.500%)		37,196		36,880
				486,272
Gaming: 2.7%
Boyd Gaming Corp., 4.487% (1 Week US LIBOR + 2.500%), 9/15/23		229,142		229,458
Eldorado Resorts, Inc., 4.375%, 4/17/24
(1 Month US LIBOR + 2.250%)		77,198		76,861
(2 Month US LIBOR + 2.250%)		68,793		68,492
(2 Month US LIBOR + 2.250%)		18,966		18,883
Gateway Casinos & Entertainment Ltd., 5.472% (6 Month US LIBOR + 3.000%), 3/13/25		75,000		75,000
Scientific Games International, Inc., 4.921%, 8/14/24
(2 Month US LIBOR + 2.750%)		200,962		199,455
(1 Month US LIBOR + 2.750%)		47,790		47,431
The Stars Group Holdings, 4.590% (1 Month US LIBOR + 3.000%), 7/29/25		150,000		149,269
				864,849
Gas Distribution: 0.4%
Woodford Express LLC, 7.093% (1 Month US LIBOR + 5.000%), 1/26/25		124,687		120,386

	Principal		Value
Gas Utilities: 0.8%
Vistra Operations Co. LLC, 4.343% (1 Month US LIBOR + 2.250%), 12/14/23		246,250		244,866
Health Care Equipment & Supplies: 0.7%
Exactech, Inc., 5.843% (1 Month US LIBOR + 3.750%), 2/14/25		124,687		124,999
Mallinckrodt International Finance SA, 5.203% (6 Month US LIBOR + 2.750%), 9/24/24		107,888		105,596
				230,595
Health Care Providers & Services: 1.0%
Press Ganey Holdings, Inc., 4.843% (1 Month US LIBOR + 2.750%), 10/23/23		124,055		123,745
Prospect Medical Holdings, Inc., 7.500% (1 Month US LIBOR + 5.500%), 2/24/24		124,688		124,376
R1 RCM, Inc., 7.619% (3 Month US LIBOR + 5.250%), 5/2/25		75,000		74,625
				322,746
Health Services: 3.5%
Acadia Healthcare Co., Inc., 4.593% (1 Month US LIBOR + 2.500%), 2/16/23		237,931		238,271
Concentra, Inc., 4.740% (1 Month US LIBOR + 2.750%), 6/1/22		239,804		239,505
Envision Healthcare Corp., 5.100% (1 Month US LIBOR + 3.000%), 12/1/23		139,122		138,832
Gentiva Health Services, Inc., 5.840% (3 Month US LIBOR + 3.750%), 6/21/25		96,154		95,433
Gentiva Health Services, Inc., 5.840% (3 Month US LIBOR + 3.750%), 6/21/25		153,846		152,692
Select Medical Corp., 4.800%, 3/6/25
(1 Month US LIBOR + 2.750%)		246,739		246,122
(Prime US LIBOR + 1.750%)		136		136
				1,110,991
Hotels: 0.8%
Belmond Interfin Ltd., 4.843% (1 Month US LIBOR + 2.750%), 7/3/24		247,500		247,500
Household Durables: 0.4%
Floor & Decor Outlets of America, Inc., 4.600% (1 Month US LIBOR + 2.500%), 9/30/23		122,848		123,156
Industrial Conglomerates: 0.5%
Deliver Buyer, Inc., 6.000% (3 Month US LIBOR + 5.000%), 5/1/24		149,622		149,342
Insurance: 0.8%
Meredith Corp., 5.093% (1 Month US LIBOR + 3.000%), 1/31/25		249,375		249,063
Internet & Catalog Retail: 0.4%
Shutterfly, Inc., 4.850% (1 Month US LIBOR + 2.750%), 8/17/24		125,000		125,053

The Accompanying Notes are an Integral Part of these Financial Statements.

26

PENN CAPITAL FUNDS TRUST

PENN CAPITAL DEFENSIVE FLOATING RATE INCOME FUND

SCHEDULE OF INVESTMENTS

JUNE 30, 2018

	Principal		Value
Investments & Miscellaneous Financial Services: 4.0%
Edelman Financial Center LLC, 5.340% (3 Month US LIBOR + 3.250%), 6/26/25		200,000		199,626
FinCo I LLC, 4.093% (1 Month US LIBOR + 2.000%), 12/27/22		214,485		214,055
Janus International Group LLC, 5.093% (1 Month US LIBOR + 3.000%), 2/15/25		124,687		122,505
LPL Holdings, Inc., 4.489%, 9/21/24
(6 Month US LIBOR + 2.250%)		123,753		122,979
(1 Month US LIBOR + 2.250%)		123,752		122,979
Russell Investments US Institutional Holdco, Inc., 5.343%, 6/1/23
(1 Month US LIBOR + 3.250%)		180,306		180,982
(1 Month US LIBOR + 3.250%)		64,694		64,937
TransUnion, 4.020% (1 Month US LIBOR + 2.000%), 6/19/25		250,000		249,062
				1,277,125
IT Services: 1.5%
NAB Holdings LLC, 5.334% (3 Month US LIBOR + 3.000%), 6/30/24		248,128		246,424
Pi US Mergerco, Inc., 5.593% (1 Month US LIBOR + 3.500%), 1/1/25		249,375		245,634
				492,058
Media-Broadcast: 7.4%
Altice US Finance I Corp., 4.343% (1 Month US LIBOR + 2.250%), 7/28/25		245,030		243,040
Beasley Mezzanine Holdings LLC, 6.085% (1 Month US LIBOR + 4.000%), 11/1/23		244,444		245,972
CBS Radio, Inc., 4.838% (1 Month US LIBOR + 2.750%), 11/17/24		149,624		147,380
CSC Holdings LLC, 4.323% (1 Month US LIBOR + 2.250%), 7/17/25		248,120		246,259
Gray Television, Inc., 4.251%, 2/7/24
(1 Month US LIBOR + 2.250%)		231,834		230,849
(1 Month US LIBOR + 2.250%)		14,416		14,355
Lions Gate Capital Holdings LLC, 4.341% (1 Month US LIBOR + 2.250%), 3/24/25		124,688		124,064
Radiate Holdco LLC, 5.093% (1 Month US LIBOR + 3.000%), 2/1/24		246,875		243,132
Sinclair Television Group, Inc., 4.350% (1 Month US LIBOR + 2.250%), 1/3/24		246,250		244,915
Univision Communications, Inc., 4.843% (1 Month US LIBOR + 2.750%), 3/15/24		247,972		239,398
Urban One, Inc., 6.100% (1 Month US LIBOR + 4.000%), 4/18/23		122,817		120,514
WideOpenWest Finance LLC, 5.335% (1 Month US LIBOR + 3.250%), 8/19/23		248,125		236,339
				2,336,217
Metals & Mining: 1.9%
Big River Steel LLC, 7.334% (3 Month US LIBOR + 5.000%), 8/23/23		248,125		251,073

	Principal		Value
Phoenix Services Merger Sub LLC, 5.751% (1 Month US LIBOR + 3.750%), 3/1/25		124,688		124,843
Zekelman Industries, Inc., 4.582% (3 Month US LIBOR + 2.250%), 6/14/21		245,019		244,406
				620,322
Metals/Mining Excluding Steel: 0.9%
Aleris International, Inc., 6.856% (1 Month US LIBOR + 4.750%), 4/15/23		150,000		148,546
American Rock Salt Co. LLC, 5.843% (1 Month US LIBOR + 3.750%), 3/21/25		124,687		124,532
				273,078
Multi-Line Insurance: 0.8%
HUB International Ltd., 5.360% (3 Month US LIBOR + 3.000%), 4/25/25		250,000		248,345
Multi-Utilities: 0.4%
PowerTeam Services LLC, 5.584% (3 Month US LIBOR + 3.250%), 3/5/25		124,688		123,052
Non-Food & Drug Retailers: 0.8%
The Men’s Wearhouse, Inc., 5.482% (1 Month US LIBOR + 3.500%), 4/9/25		249,375		250,415
Oil Field Equipment & Services: 1.2%
Keane Group Holdings LLC, 5.750% (1 Month US LIBOR + 3.750%), 5/25/25		200,000		199,500
McDermott Technology Americas, Inc., 7.093% (1 Month US LIBOR + 5.000%), 5/10/25		174,563		175,217
				374,717
Oil, Gas & Consumable Fuel: 0.4%
Apergy Corp., 4.562% (1 Month US LIBOR + 2.500%), 5/9/25		125,000		125,000
Other Industrial & Manufacturing: 2.5%
Harland Clarke Holdings Corp., 7.084% (3 Month US LIBOR + 4.750%), 11/3/23		240,726		233,906
PS HoldCo LLC, 7.297% (1 Month US LIBOR + 5.250%), 3/13/25		125,000		125,625
RBS Global, Inc., 4.341% (1 Month US LIBOR + 2.250%), 8/21/24		250,000		249,533
XPO Logistics, Inc., 4.091% (1 Month US LIBOR + 2.000%), 2/24/25		181,427		179,774
				788,838
Packaging: 0.6%
Berry Global, Inc., 4.093%, 10/1/22
(1 Month US LIBOR + 2.000%)		113,080		112,838
(1 Month US LIBOR + 2.000%)		72,908		72,752
				185,590
Pharmaceuticals: 0.3%
Amneal Pharmaceuticals LLC, 5.625% (2 Month US LIBOR + 3.500%), 5/4/25		99,977		99,696

The Accompanying Notes are an Integral Part of these Financial Statements.

27

PENN CAPITAL FUNDS TRUST

PENN CAPITAL DEFENSIVE FLOATING RATE INCOME FUND

SCHEDULE OF INVESTMENTS

JUNE 30, 2018

	Principal		Value
Pharmaceuticals & Devices: 2.3%
Endo International PLC, 6.375% (1 Month US LIBOR + 4.250%), 4/27/24		247,500		246,881
Kinetic Concepts, Inc., 5.584% (3 Month US LIBOR + 3.250%), 2/3/24		123,128		123,166
LUX HOLDCO III, 5.099% (2 Month US LIBOR + 3.000%), 3/28/25		124,687		124,532
Valeant Pharmaceuticals International, Inc., 4.982% (1 Month US LIBOR + 3.000%), 5/30/25		250,005		248,990
				743,569
Real Estate Investment Trusts (REITs): 0.8%
Brookfield Retail Holdings VII Sub 3 LLC, 4.410% (3 Month US LIBOR + 2.500%), 5/7/25		250,000		245,313
Restaurants: 0.8%
Burger King, 4.343%, 2/17/24
(1 Month US LIBOR + 2.250%)		66,885		66,551
(1 Month US LIBOR + 2.250%)		54,587		54,314
P.F. Chang’s China Bistro, Inc., 6.330%, 9/1/22
(3 Month US LIBOR + 5.000%)		123,128		122,358
(3 Month US LIBOR + 5.000%)		624		620
				243,843
Road & Rail: 0.4%
Daseke Cos, Inc., 7.093% (1 Month US LIBOR + 5.000%), 2/27/24		124,375		124,609
Semiconductors & Semiconductor Equipment: 0.6%
Xperi Corp., 4.593% (1 Month US LIBOR + 2.500%), 12/1/23		205,833		205,125
Software: 0.8%
Omnitracs LLC, 5.085% (3 Month US LIBOR + 2.750%), 3/23/25		125,000		123,360
Quest Software US Holdings, Inc., 6.576%, 5/18/25
(3 Month US LIBOR + 4.250%)		64,827		64,530
(3 Month US LIBOR + 4.250%)		63,193		62,903
(3 Month US LIBOR + 4.250%)		21,980		21,880
				272,673
Software/Services: 5.2%
Almonde, Inc., 5.807%, 6/16/24
(3 Month US LIBOR + 3.500%)		181,972		178,586
(3 Month US LIBOR + 3.500%)		34,635		33,990
(3 Month US LIBOR + 3.500%)		31,518		30,931
Avaya, Inc., 6.323% (1 Month US LIBOR + 4.250%), 12/15/24		124,375		124,453
Blucora, Inc., 5.334% (3 Month US LIBOR + 3.000%), 5/22/24		176,667		176,446
First Data Corp., 4.091% (1 Month US LIBOR + 2.000%), 4/26/24		230,733		229,208

	Principal		Value
Match Group, Inc., 4.585% (1 Month US LIBOR + 2.500%), 11/16/22		109,375		109,785
McAfee LLC, 6.593% (1 Month US LIBOR + 4.500%), 9/29/24		248,125		249,145
MTS Systems Corp., 5.340% (1 Month US LIBOR + 3.250%), 7/5/23		214,963		214,963
New Media Holdings II LLC, 8.343% (1 Month US LIBOR + 6.250%), 7/14/22		74,623		74,950
SS&C European Holdings Sarl, 4.593% (1 Month US LIBOR + 2.500%), 4/16/25		64,602		64,566
SS&C Technologies, Inc., 4.593% (1 Month US LIBOR + 2.500%), 4/16/25		170,762		170,667
				1,657,690
Specialty Retail: 0.5%
Staples, Inc., 6.358% (3 Month US LIBOR + 4.000%), 9/12/24		150,000		147,891
Support-Services: 4.5%
Aramark Services, Inc., 4.084% (3 Month US LIBOR + 1.750%), 3/11/25		249,375		248,909
Monitronics International, Inc., 7.834% (3 Month US LIBOR + 5.500%), 9/30/22		74,620		71,076
Prime Security Services Borrower LLC, 4.843% (1 Month US LIBOR + 2.750%), 5/2/22		249,370		247,896
Pearl Intermediate Parent LLC, 4.800% (3 Month US LIBOR + 2.750%), 2/14/25 (b)		28,409		27,841
Pearl Intermediate Parent LLC, 4.835% (1 Month US LIBOR + 2.750%), 2/14/25		96,349		94,422
The ServiceMaster Co. LLC, 4.593% (1 Month US LIBOR + 2.500%), 11/8/23		246,250		245,531
TruGreen LP, 6.046% (1 Month US LIBOR + 4.000%), 4/13/23		245,644		248,100
UOS LLC, 7.593% (1 Month US LIBOR + 5.500%), 4/18/23		247,500		253,069
				1,436,844
Telecom-Integrated/Services: 6.2%
CenturyLink, Inc., 4.843% (1 Month US LIBOR + 2.750%), 1/31/25		224,124		219,362
Cincinnati Bell, Inc., 5.343% (1 Month US LIBOR + 3.250%), 10/2/24		250,000		249,647
Cyxtera DC Holdings, Inc., 4.380% (3 Month US LIBOR + 3.000%), 5/1/24		124,685		124,436
Frontier Communications Corp., 4.850% (1 Month US LIBOR + 2.750%), 3/31/21		147,917		145,559
Intelsat Jackson Holdings SA, 5.853% (1 Month US LIBOR + 3.750%), 11/27/23		125,000		124,589
Level 3 Parent LLC, 4.334% (1 Month US LIBOR + 2.250%), 2/22/24		250,000		249,062
Maxar Technologies Ltd., 4.854% (1 Month US LIBOR + 2.750%), 10/5/24		248,750		247,568
Sprint Communications, Inc., 4.625% (1 Month US LIBOR + 2.500%), 2/2/24		122,505		121,841

The Accompanying Notes are an Integral Part of these Financial Statements.

28

PENN CAPITAL FUNDS TRUST

PENN CAPITAL DEFENSIVE FLOATING RATE INCOME FUND

SCHEDULE OF INVESTMENTS

JUNE 30, 2018

	Principal		Value
Telenet Financing USD LLC, 4.323% (1 Month US LIBOR + 2.250%), 8/15/26		250,000		247,395
Telesat Canada, 4.840% (3 Month US LIBOR + 2.500%), 11/17/23		240,511		238,481
				1,967,940
Telecom-Wireless: 1.4%
Sable International Finance Ltd., 5.343% (1 Month US LIBOR + 3.250%), 1/31/26		250,000		249,827
Windstream Services LLC, 6.090%, 3/30/21
(1 Month US LIBOR + 4.000%)		221,707		210,147
				459,974
Trading Companies & Distributors: 0.8%
DXP Enterprises, Inc., 7.401% (1 Month US LIBOR + 4.750%), 8/29/23		248,125		248,435
Transportation Excluding Air/Rail: 0.8%
CB URS Holdings Corp., 7.343% (1 Month US LIBOR + 5.250%), 10/19/24		122,188		123,104
Deck Chassis Acquisition, Inc., 8.093% (1 Month US LIBOR + 6.000%), 6/15/23		125,000		125,937
				249,041
Water Utilities: 0.9%
EWT Holdings III Corp., 5.093% (1 Month US LIBOR + 3.000%), 12/20/24		157,458		157,262
Shape Technologies Group, Inc., 5.153%, 4/20/25
(1 Month US LIBOR + 3.000%)		100,000		99,500
(3 Month US LIBOR + 3.000%)		12,500		12,438
(6 Month US LIBOR + 3.000%)		12,500		12,437
				281,637
Total Bank Loans (cost $27,150,118)				27,165,232
Corporate Bonds: 11.9%
Chemicals: 0.2%
CF Industries, Inc., 7.125%, 5/1/20		47,000		49,644
Consumer/Commercial/Lease Financing: 0.5%
Navient Corp., 8.000%, 3/25/20		150,000		158,250
Electric-Generation: 0.9%
DPL, Inc., 7.250%, 10/15/21		150,000		161,977
NRG Energy, Inc., 6.250%, 7/15/22		115,000		118,341
				280,318
Electric-Integrated: 0.4%
Vistra Energy Corp., 5.875%, 6/1/23		125,000		128,594
Entertainment: 0.3%
NCL Corp. Ltd., 4.750%, 12/15/21 (c)		101,000		100,748
Food & Drug Retailers: 0.2%
Ingles Markets, Inc., 5.750%, 6/15/23		70,000		68,950

	Principal		Value
Gas Distribution: 0.4%
NGL Energy Partners LP, 5.125%, 7/15/19		130,000		130,163
Health Services: 0.6%
Universal Hospital Services, Inc., 7.625%, 8/15/20		195,000		194,513
Hospitals: 0.4%
HCA, Inc., 7.500%, 2/15/22		125,000		135,937
Investments & Miscellaneous Financial Services: 0.9%
Icahn Enterprises LP, 6.750%, 2/1/24		195,000		196,462
Icahn Enterprises, LP, 6.250%, 2/1/22		100,000		102,000
				298,462
Media-Cable: 1.6%
Altice France SA, 6.000%, 5/15/22 (c)		200,000		201,250
DISH DBS Corp., 7.875%, 9/1/19		75,000		77,812
DISH DBS Corp., 5.875%, 7/15/22		230,000		216,200
				495,262
Metals/Mining Excluding Steel: 0.2%
Peabody Energy Corp., 6.000%, 3/31/22 (c)		65,000		65,813
Non-Food & Drug Retailers: 0.4%
Hot Topic, Inc., 9.250%, 6/15/21 (c)		140,000		133,525
Oil Field Equipment & Services: 0.4%
Nabors Industries, Inc., 4.625%, 9/15/21		125,000		122,188
Pharmaceuticals & Devices: 0.9%
Mallinckrodt International Finance SA, 4.875%, 4/15/20 (c)		150,000		147,375
Valeant Pharmaceuticals International, Inc., 5.875%, 5/15/23 (c)		150,000		140,906
				288,281
Steel Producers & Products: 0.7%
United States Steel Corp., 7.375%, 4/1/20		102,000		108,120
Joseph T Ryerson & Son, Inc., 11.000%, 5/15/22 (c)		100,000		110,000
				218,120
Support-Services: 0.4%
The Hertz Corp., 5.875%, 10/15/20		125,000		122,187
Telecom-Integrated/Services: 2.1%
Frontier Communications Corp., 8.125%, 10/1/18		195,000		195,975
Gogo Intermediate Holdings LLC, 12.500%, 7/1/22 (c)		115,000		122,762
Hughes Satellite Systems Corp., 7.625%, 6/15/21		125,000		132,969
Qwest Corp., 6.750%, 12/1/21		125,000		133,002
Uniti Group LP, 6.000%, 4/15/23 (c)		80,000		77,150
				661,858
Telecom-Wireless: 0.4%
Sprint Communications, Inc., 6.000%, 11/15/22		125,000		123,906
Total Corporate Bonds (cost $3,797,052)				3,776,719

The Accompanying Notes are an Integral Part of these Financial Statements.

29

PENN CAPITAL FUNDS TRUST

PENN CAPITAL DEFENSIVE FLOATING RATE INCOME FUND

SCHEDULE OF INVESTMENTS

JUNE 30, 2018

	Shares
Short-Term Investment: 6.0%
Money Market Fund: 6.0%
Short-Term Investment Trust Treasury Portfolio Institutional Class, 1.750% (d)		1,895,482		1,895,482
Total Short-Term Investment (cost $1,895,482)				1,895,482
Total Investments - 103.5% (cost $32,842,652)				32,837,433
Liabilities in Excess of Other Assets (3.5)%				(1,108,677	)
Net Assets: 100.0%			$	31,728,756

Percentages are stated as a percent of net assets.

(a) Bank Loans typically have rates of interest which are redetermined either daily, monthly, quarterly or semi-annually by reference to a base lending rate, plus a premium. These base lending rates are primarily the London Interbank Offered Rate (“LIBOR”) and secondarily, the prime rate offered by one or more major United States banks (the “Prime Rate”) and the certificate of deposit (“CD”) rate or other base lending rates used by commercial lenders.

(b) All or a portion of the loan is unfunded.

(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 June 30, 2018, the value of these investments was $1,099,529, or 3.5% of total net assets.

(d) Rate reported is the 7-day effective yield as of June 30, 2018.

Country Exposure (as a percentage of total investments) (Unaudited)
United States	98.20	%
France	0.61	%
Luxembourg	0.45	%
Canada	0.43	%
Bermuda	0.31	%

Asset Type (as a percentage of total investments) (Unaudited)

 

The Accompanying Notes are an Integral Part of these Financial Statements.

30

PENN CAPITAL FUNDS TRUST

PENN CAPITAL DEFENSIVE SHORT DURATION HIGH INCOME FUND

SCHEDULE OF INVESTMENTS

JUNE 30, 2018

	Principal		Value
Corporate Bonds: 80.3%
Aerospace: 1.3%
Bombardier, Inc., 8.750%, 12/1/21 (a)		60,000	$	66,000
Bombardier, Inc., 7.750%, 3/15/20 (a)		95,000		100,225
				166,225
Airline Companies: 2.3%
Air Canada, 7.750%, 4/15/21 (a)		129,000		137,707
Allegiant Travel Co., 5.500%, 7/15/19		80,000		80,400
American Airlines Group, Inc., 5.500%, 10/1/19 (a)		65,000		65,650
				283,757
Auto Parts & Equipment: 1.0%
American Axle & Manufacturing, Inc., 7.750%, 11/15/19		45,000		47,250
The Goodyear Tire & Rubber Co., 8.750%, 8/15/20		75,000		81,562
				128,812
Automotive: 2.0%
Fiat Chrysler Automobiles NV, 4.500%, 4/15/20		200,000		199,938
Penske Automotive Group, Inc., 3.750%, 8/15/20		45,000		44,550
				244,488
Banking: 5.1%
Ally Financial, Inc., 4.125%, 2/13/22		60,000		58,932
Ally Financial, Inc., 8.000%, 12/31/18		75,000		76,406
Ally Financial, Inc., 8.000%, 3/15/20		155,000		165,656
Ally Financial, Inc., 3.750%, 11/18/19		60,000		59,925
CIT Group, Inc., 5.375%, 5/15/20		165,000		169,331
CIT Group, Inc., 4.125%, 3/9/21		110,000		109,313
				639,563
Building & Construction: 1.8%
KB Home, 8.000%, 3/15/20		75,000		79,875
Lennar Corp., 8.375%, 1/15/21		65,000		71,012
Toll Brothers Finance Corp., 6.750%, 11/1/19		35,000		36,444
William Lyon Homes, Inc., 7.000%, 8/15/22		40,000		40,750
				228,081
Chemical Companies: 1.7%
Blue Cube Spinco LLC, 9.750%, 10/15/23		55,000		62,150
CF Industries, Inc., 7.125%, 5/1/20		54,000		57,038
Huntsman International LLC, 4.875%, 11/15/20		90,000		91,350
				210,538
Computer Hardware: 2.3%
EMC Corp., 2.650%, 6/1/20		290,000		281,619
Consumer/Commercial/Lease Financing: 4.9%
Aircastle Ltd., 6.250%, 12/1/19		55,000		56,783
International Lease Finance Corp., 6.250%, 5/15/19		70,000		71,769
Navient Corp., 8.000%, 3/25/20		360,000		379,800

	Principal		Value
Navient Corp., 6.500%, 6/15/22		40,000		40,950
Springleaf Finance Corp., 8.250%, 12/15/20		50,000		54,000
				603,302
Diversified Capital Goods: 0.5%
Anixter, Inc., 5.625%, 5/1/19		60,000		61,050
Electric-Generation: 2.5%
DPL, Inc., 7.250%, 10/15/21		105,000		113,384
DPL, Inc., 6.750%, 10/1/19		27,000		27,844
NRG Energy, Inc., 6.250%, 7/15/22		95,000		97,760
Vistra Energy Corp., 7.375%, 11/1/22		65,000		67,925
				306,913
Energy-Exploration & Production: 2.2%
Comstock Resources, Inc., 10.000% Cash or 12.250% PIK, 3/15/20 (b)		60,000		62,700
Resolute Energy Corp., 8.500%, 5/1/20		65,000		64,959
SM Energy Co., 6.500%, 11/15/21		55,000		56,265
Unit Corp., 6.625%, 5/15/21		25,000		24,937
WPX Energy, Inc., 8.250%, 8/1/23		55,000		62,288
				271,149
Entertainment: 0.6%
NCL Corp. Ltd., 4.750%, 12/15/21 (a)		70,000		69,825
Food & Drug Retailers: 0.5%
Albertsons Cos, Inc., 6.085% (3 Month LIBOR USD + 3.750%), 1/15/24 (a)(c)		60,000		60,150
Food-Wholesale: 1.0%
JBS USA LUX SA, 7.250%, 6/1/21 (a)		40,000		40,400
JBS USA LUX SA, 7.250%, 6/1/21 (a)		40,000		40,400
TreeHouse Foods, Inc., 4.875%, 3/15/22		45,000		45,056
				125,856
Gaming: 4.4%
GLP Capital LP, 4.375%, 4/15/21		120,000		120,000
MGM Resorts International, 6.750%, 10/1/20		255,000		267,113
MGM Resorts International, 8.625%, 2/1/19		40,000		41,000
Scientific Games International, Inc., 10.000%, 12/1/22		115,000		122,475
				550,588
Gas Distribution: 5.9%
DCP Midstream Operating LP, 5.350%, 3/15/20 (a)		40,000		40,750
DCP Midstream Operating LP, 9.750%, 3/15/19 (a)		80,000		83,300
Energy Transfer Equity LP, 7.500%, 10/15/20		240,000		255,900
Midcontinent Express Pipeline LLC, 6.700%, 9/15/19 (a)		105,000		108,097
NGL Energy Partners LP, 5.125%, 7/15/19		95,000		95,119
Rockies Express Pipeline LLC, 5.625%, 4/15/20 (a)		145,000		148,444
				731,610

The Accompanying Notes are an Integral Part of these Financial Statements.

31

PENN CAPITAL FUNDS TRUST

PENN CAPITAL DEFENSIVE SHORT DURATION HIGH INCOME FUND

SCHEDULE OF INVESTMENTS

JUNE 30, 2018

	Principal		Value
Health Services: 2.4%
Fresenius Medical Care US Finance II, Inc., 5.625%, 7/31/19 (a)		65,000		66,584
Kindred Healthcare, Inc., 8.000%, 1/15/20		15,000		16,073
Select Medical Corp., 6.375%, 6/1/21		115,000		116,567
Universal Hospital Services, Inc., 7.625%, 8/15/20		95,000		94,762
				293,986
Hospitals: 7.0%
HCA Healthcare, Inc., 6.250%, 2/15/21		205,000		212,687
HCA, Inc., 7.500%, 2/15/22		100,000		108,750
HCA, Inc., 3.750%, 3/15/19		55,000		55,206
HCA, Inc., 6.500%, 2/15/20		80,000		83,300
Tenet Healthcare Corp., 4.750%, 6/1/20		45,000		45,113
Tenet Healthcare Corp., 6.000%, 10/1/20		353,000		362,708
				867,764
Hotels: 1.1%
RHP Hotel Properties LP, 5.000%, 4/15/21		50,000		50,125
Wyndham Destinations, Inc., 5.625%, 3/1/21		90,000		92,025
				142,150
Investments & Miscellaneous Financial Services: 2.1%
Icahn Enterprises LP, 6.000%, 8/1/20		185,000		187,313
Icahn Enterprises LP, 6.250%, 2/1/22		73,000		74,460
				261,773
Media-Broadcast: 0.4%
Sinclair Television Group, Inc., 5.375%, 4/1/21		45,000		45,338
Media-Cable: 3.4%
Cablevision Systems Corp., 8.000%, 4/15/20		110,000		115,467
CSC Holdings LLC, 6.750%, 11/15/21		60,000		62,850
DISH DBS Corp., 5.125%, 5/1/20		35,000		34,650
DISH DBS Corp., 6.750%, 6/1/21		100,000		100,125
DISH DBS Corp., 7.875%, 9/1/19		110,000		114,125
				427,217
Media-Diversified: 0.2%
Netflix, Inc., 5.375%, 2/1/21		25,000		25,695
Metals/Mining Excluding Steel: 2.3%
Arconic, Inc., 6.150%, 8/15/20		115,000		119,600
Freeport-McMoRan, Inc., 3.100%, 3/15/20		105,000		102,900
Peabody Energy Corp., 6.000%, 3/31/22 (a)		65,000		65,812
				288,312
Non-Food & Drug Retailers: 2.0%
Hot Topic, Inc., 9.250%, 6/15/21 (a)		45,000		42,919
L Brands, Inc., 7.000%, 5/1/20		160,000		168,000
The Men’s Wearhouse, Inc., 7.000%, 7/1/22		40,000		41,300
				252,219
Office Equipment: 0.5%
Avnet, Inc., 3.750%, 12/1/21		60,000		59,782

	Principal		Value
Oil Field Equipment & Services: 1.8%
Nabors Industries, Inc., 4.625%, 9/15/21		20,000		19,550
Nabors Industries, Inc., 9.250%, 1/15/19		47,000		48,645
Rowan Cos, Inc., 7.875%, 8/1/19		50,000		51,500
SESI LLC, 7.125%, 12/15/21		45,000		45,788
Transocean, Inc., 8.375%, 12/15/21		60,000		64,200
				229,683
Oil Refining & Marketing: 0.3%
PBF Holding Co. LLC, 7.000%, 11/15/23		40,000		41,400
Packaging: 1.5%
Greif, Inc., 7.750%, 8/1/19		50,000		51,750
Reynolds Group Issuer, Inc., 5.750%, 10/15/20		130,829		131,320
				183,070
Pharmaceuticals & Devices: 2.2%
Kinetic Concepts, Inc., 7.875%, 2/15/21 (a)		70,000		71,050
Mallinckrodt International Finance SA, 4.875%, 4/15/20 (a)		60,000		58,950
Teva Pharmaceutical Finance IV LLC, 2.250%, 3/18/20		60,000		57,834
Valeant Pharmaceuticals International, Inc., 7.500%, 7/15/21 (a)		80,000		81,250
				269,084
Printing & Publishing: 0.5%
Harland Clarke Holdings Corp., 6.875%, 3/1/20 (a)		65,000		64,350
Real Estate Investment Trusts (REITs): 1.1%
iStar, Inc., 4.625%, 9/15/20		140,000		137,900
Software/Services: 0.6%
Symantec Corp., 4.200%, 9/15/20		75,000		75,215
Steel Producers/Products: 3.0%
AK Steel Corp., 7.625%, 10/1/21		65,000		66,280
ArcelorMittal, 5.125%, 6/1/20		75,000		76,875
Joseph T. Ryerson & Son, Inc., 11.000%, 5/15/22 (a)		50,000		55,000
United States Steel Corp., 7.375%, 4/1/20		160,000		169,600
				367,755
Support-Services: 1.5%
CoreCivic, Inc., 4.125%, 4/1/20		75,000		74,812
The ADT Corp., 6.250%, 10/15/21		55,000		56,925
The Hertz Corp., 5.875%, 10/15/20		60,000		58,650
				190,387
Telecom-Integrated/Services: 3.5%
CenturyLink, Inc., 5.625%, 4/1/20		70,000		70,787
Frontier Communications Corp., 8.125%, 10/1/18		120,000		120,600
Frontier Communications Corp., 7.125%, 3/15/19		20,000		20,150
Gogo Intermediate Holdings LLC, 12.500%, 7/1/22 (a)		35,000		37,363

The Accompanying Notes are an Integral Part of these Financial Statements.

32

PENN CAPITAL FUNDS TRUST

PENN CAPITAL DEFENSIVE SHORT DURATION HIGH INCOME FUND

SCHEDULE OF INVESTMENTS

JUNE 30, 2018

	Principal		Value
Hughes Satellite Systems Corp., 6.500%, 6/15/19		65,000		66,524
Hughes Satellite Systems Corp., 7.625%, 6/15/21		35,000		37,231
Qwest Corp., 6.750%, 12/1/21		72,000		76,609
				429,264
Telecom-Wireless: 2.6%
Sprint Capital Corp., 6.900%, 5/1/19		80,000		81,616
Sprint Communications, Inc., 7.000%, 8/15/20		180,000		186,300
Sprint Corp., 7.250%, 9/15/21		55,000		57,200
				325,116
Transportation Excluding Air/Rail: 0.3%
XPO Logistics, Inc., 6.500%, 6/15/22 (a)		40,000		41,000
Total Corporate Bonds (cost $10,109,084)				9,981,986

	Shares
Mutual Fund: 14.9%
Penn Capital Defensive Floating Rate Income Fund - Institutional Class (d)		183,599		1,852,519
Total Mutual Fund (cost $1,865,035)				1,852,519
Short-Term Investment: 3.1%
Money Market Fund: 3.1%
Short-Term Investment Trust Treasury Portfolio Institutional Class, 1.750% (e)		386,382		386,382
Total Short-Term Investment (cost $386,382)				386,382
Total Investments - 98.3% (cost $12,360,501)				12,220,887
Other Assets and Liabilities 1.7%				214,955
Net Assets: 100.0%			$	12,435,842

Percentages are stated as a percent of net assets.

(a) Securities purchased pursuant to Rule 144A of the Securities Act of 1933, as amended, and may be sold only to dealers in that program or other “qualified institutional buyers.” As of June 30, 2018, the value of these investments was $1,545,226, or 12.4% of total net assets.

(b) Payment-in-kind security which may pay interest/dividends in additional par/shares and/or in cash. As of June 30, 2018, the total payment-in-kind was $0, or 0.0% of total net assets.

(c) Variable rate security. The rate listed is as of June 30, 2018.

(d) Affiliated company. See Note 7.

(e) Rate reported is the 7-day effective yield as of June 30, 2018.

Country Exposure (as a percentage of total investments) (Unaudited)
United States	92.54	%
Canada	3.15	%
Netherlands	1.64	%
Luxembourg	1.11	%
Bermuda	1.04	%
Cayman Islands	0.52	%

Asset Type (as a percentage of total investments) (Unaudited)

 

The Accompanying Notes are an Integral Part of these Financial Statements.

33

PENN CAPITAL FUNDS TRUST
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 2018

Assets	Penn Capital Managed Alpha SMID Cap Equity Fund		Penn Capital Special Situations Small Cap Equity Fund		Penn Capital Multi-Credit High Income Fund			Penn Capital Defensive Floating Rate Income Fund			Penn Capital Defensive Short Duration High Income Fund
Investments, at fair value(1)
Unaffiliated issuers	$	14,952,447	$	21,173,601	$	11,706,338		$	32,837,433		$	10,368,368
Affiliated mutual fund (see Note 7)		—		—		2,503,862			—			1,852,519
		14,952,447		21,173,601		14,210,200			32,837,433			12,220,887
Receivables:
Advisor reimbursement due		17,823		12,011		24,767			23,777			26,643
Dividends and interest		10,295		6,668		180,176			210,485			159,503
Investments sold		316,026		628,672		21,403			475,916			15,265
Fund shares sold		4,050		8,024		—			—			75,500
Cash		521		1,092		—			—			—
Other assets		3,503		8,496		2,543			6,728			7,807
Total assets		15,304,665		21,838,564		14,439,089			33,554,339			12,505,605
Liabilities
Payables:
Investments purchased		330,000		434,862		546,367			1,735,670			—
Fund shares redeemed		—		43,637		—			2,300			—
Accrued expenses:
Professional fees		28,413		28,718		38,413			38,718			40,557
Administration fees		16,701		16,741		24,921			29,906			17,952
Custody fees		1,843		4,070		2,135			2,808			1,766
Transfer agent fees and expenses		4,919		5,938		4,623			6,236			4,200
Trustee fees and expenses		1,720		2,473		1,417			3,302			1,313
Other accrued expenses		10,886		13,217		7,353			6,643			3,975
Total liabilities		394,482		549,656		625,229			1,825,583			69,763
Net assets	$	14,910,183	$	21,288,908	$	13,813,860		$	31,728,756		$	12,435,842
Composition of Net Assets
Paid-in capital	$	11,258,866	$	17,394,232	$	13,741,861		$	31,668,434		$	12,549,307
Accumulated net investment income		—		—		43,679			115,673			33,307
Accumulated net realized gain (loss) on investments		1,293,288		1,086,502		(5,031	)		(50,132	)		(7,158	)
Net unrealized appreciation (depreciation) on investments		2,358,029		2,808,174		33,351			(5,219	)		(139,614	)
Net assets	$	14,910,183	$	21,288,908	$	13,813,860		$	31,728,756		$	12,435,842
Institutional Class
Net assets applicable to outstanding shares	$	14,910,183	$	21,288,908	$	13,813,860		$	31,728,756		$	12,435,842
Shares of beneficial interest outstanding, no par value, unlimited authorization		1,100,696		1,690,323		1,373,371			3,146,049			1,262,518
Net asset value per share outstanding	$	13.55	$	12.59	$	10.06		$	10.09		$	9.85
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	$	12,594,418	$	18,365,430	$	11,656,575		$	32,842,652		$	10,495,466
Affiliated mutual fund (see Note 7)		—		—		2,520,274			—			1,865,035
(2)   No information is provided for Investor Share Class shares because shares of that Class had not yet been issued as of June 30, 2018.

The accompanying Notes are an integral part of the financial statements.

34

PENN CAPITAL FUNDS TRUST
STATEMENTS OF OPERATIONS
JUNE 30, 2018

	Penn Capital Managed Alpha SMID Cap Equity Fund			Penn Capital Special Situations Small Cap Equity Fund			Penn Capital Multi-Credit High Income Fund			Penn Capital Defensive Floating Rate Income Fund			Penn Capital Defensive Short Duration High Income Fund
Investment Income (Loss)	July 1, 2017 - June 30, 2018			July 1, 2017 - June 30, 2018			July 1, 2017 - June 30, 2018			July 1, 2017 - June 30, 2018			July 17, 2017* - June 30, 2018
Income
Dividends**
Unaffiliated dividends	$	89,402		$	91,120		$	656		$	—		$	—-
Dividend distributions from affiliated mutual fund (see Note 7)		—			—			44,283			—			35,038
Interest		5,729			3,202			671,951			1,405,582			246,950
Total income		95,131			94,322			716,890			1,405,582			281,988
Expenses
Investment advisory fees		119,195			198,297			74,798			158,946			35,111
Administration and accounting		63,175			64,094			96,283			138,748			68,567
Professional fees		45,705			46,068			56,054			60,929			48,599
Registration		27,316			28,615			27,400			27,420			13,878
Transfer agent expense		19,159			22,131			17,897			23,094			16,138
Compliance fees		14,060			14,176			14,019			14,359			12,834
Miscellaneous		8,874			8,874			113			114			114
Custodian		6,941			10,610			7,927			14,492			6,570
Trustees		5,529			7,871			4,590			11,505			4,735
Insurance		4,706			8,471			3,695			10,170			554
Shareholder servicing fees		741			10,266			897			4,007			83
Shareholder communication		108			16,995			450			1,592			3,342
Total expenses		315,509			436,468			304,123			465,376			210,525
Expense waiver and reimbursement from Advisor		(175,125	)		(208,947	)		(226,073	)		(281,780	)		(168,391	)
Net expenses		140,384			227,521			78,050			183,596			42,134
Net investment income (loss)		(45,253	)		(133,199	)		638,840			1,221,986			239,854
Realized and Unrealized Gain (Loss) on Investments
Net realized gain (loss) on investments
Unaffiliated issuers		1,333,038			2,322,912			1,085			(49,428	)		(7,382	)
Capital gain distribution from affiliated mutual fund (see Note 7)		—			—			5,991			—			4,997
Net change in unrealized appreciation (depreciation)		815,952			1,826,691			(261,461	)		(177,558	)		(139,614	)
Net realized and unrealized gain (loss) on investments		2,148,990			4,149,603			(254,385	)		(226,986	)		(141,999	)
Net increase in net assets resulting from operations	$	2,103,737		$	4,016,404		$	384,455		$	995,000		$	97,855
**Net of foreign taxes withheld of:	$	56		$	28		$	—		$	—		$	—
_________ * Commencement of operations.

The accompanying Notes are an integral part of the financial statements.

35

PENN CAPITAL FUNDS TRUST
STATEMENTS OF CHANGES IN NET ASSETS
JUNE 30, 2018

	Penn Capital Managed Alpha SMID Cap Equity Fund						Penn Capital Special Situations Small Cap Equity Fund						Penn Capital Multi-Credit High Income Fund						Penn Capital Defensive Floating Rate Income Fund						Penn Capital Defensive Short Duration High Income Fund
Increase (Decrease) in Net Assets	Year Ended June 30, 2018			Year Ended June 30, 2017			Year Ended June 30, 2018			Year Ended June 30, 2017			Year Ended June 30, 2018			Year Ended June 30, 2017			Year Ended June 30, 2018			Year Ended June 30, 2017			July 17, 2017* - June 30, 2018
Operations
Net investment income (loss)	$	(45,253	)	$	(29,053	)	$	(133,199	)	$	(78,582	)	$	638,840		$	603,650		$	1,221,986		$	844,177		$	239,854
Net realized gain (loss) on investments:
Unaffiliated issuers		1,333,038			324,087			2,322,912			1,733,389			1,085			366,485			(49,428	)		228,049			(7,382	)
Capital gain distribution from affiliated mutual fund		—			—			—			—			5,991			—			—			—			4,997
Net change in unrealized appreciation (depreciation)		815,952			1,669,969			1,826,691			408,497			(261,461	)		99,903			(177,558	)		73,586			(139,614	)
Net increase in net assets resulting from operations		2,103,737			1,965,003			4,016,404			2,063,304			384,455			1,070,038			995,000			1,145,812			97,855
Dividends and distributions to shareholders
From net investment income
Institutional Class		—			—			—			—			(632,448	)		(596,135	)		(1,186,100	)		(826,690	)		(211,320	)
From realized gain
Institutional Class		(217,398	)		—			(2,239,983	)		(850,482	)		(222,565	)		—			(167,014	)		(95,164	)		—
Total dividends and distributions to shareholders		(217,398	)		—			(2,239,983	)		(850,482	)		(855,013	)		(596,135	)		(1,353,114	)		(921,854	)		(211,320	)
Capital share transactions
Net proceeds from sale of shares		2,179,641			240,732			6,262,562			12,938,608			4,996,417			457,456			7,039,836			6,674,297			12,597,665
Dividends and distributions reinvested		217,014			—			2,233,477			845,459			824,258			558,116			1,346,434			916,744			211,090
Cost of shares redeemed**		(400,183	)		(640,048	)		(10,850,646	)		(1,684,172	)		(307,821	)		(560,783	)		(1,330,752	)		(1,408,771	)		(259,448	)
Net increase (decrease) in net assets resulting from capital share transactions		1,996,472			(399,316	)		(2,354,607	)		12,099,895			5,512,854			454,789			7,055,518			6,182,270			12,549,307
Net increase (decrease) in net assets		3,882,811			1,565,687			(578,186	)		13,312,717			5,042,296			928,692			6,697,404			6,406,228			12,435,842
Net Assets
Beginning of period		11,027,372			9,461,685			21,867,094			8,554,377			8,771,564			7,842,872			25,031,352			18,625,124			—
End of period	$	14,910,183		$	11,027,372		$	21,288,908		$	21,867,094		$	13,813,860		$	8,771,564		$	31,728,756		$	25,031,352		$	12,435,842
** Net of redemption fees of:	$	—		$	—		$	741		$	1,853		$	32		$	—		$	—		$	—		$	—
Accumulated net investment income (loss) at the end of period	$	—		$	(51,724	)	$	—		$	(78,582	)	$	43,679		$	49,801		$	115,673		$	79,799		$	33,307
*  Commencement of operations.

The accompanying Notes are an integral part of the financial statements.

36

PENN CAPITAL FUNDS TRUST
FINANCIAL HIGHLIGHTS
JUNE 30, 2018

	Per Common Share Data(a)																									Supplemental data and ratios
			Income from investment operations									Distributions to shareholders
Penn Capital Managed Alpha SMID Cap Equity Fund
Institutional Class
7/1/17 to 6/30/18	$	11.73		(0.04	)		2.07			2.03			—			(0.21	)		(0.21	)	$	13.55		17.41	%	$	14,910		1.06	%		2.38	%		(0.34	)%		(1.66	)%		64	%
7/1/16 to 6/30/17	$	9.65		(0.02	)		2.10			2.08			—			—			—		$	11.73		21.55	%	$	11,027		1.06	%		2.63	%		(0.29	)%		(1.86	)%		91	%
12/1/15(e) to 6/30/16	$	10.00		(0.03	)		(0.32	)		(0.35	)		—			—			—		$	9.65		(3.50	)%(d)	$	9,462		1.06	%		3.74	%		(0.53	)%		(3.21	)%		70	%(d)
Penn Capital Special Situations Small Cap Equity Fund
Institutional Class
7/1/17 to 6/30/18	$	11.71		(0.08	)		2.36			2.28	(f)		—			(1.40	)		(1.40	)	$	12.59		20.31	%	$	21,289		1.09	%		2.09	%		(0.64	)%		(1.64	)%		105	%
7/1/16 to 6/30/17	$	10.32		(0.04	)		2.24			2.20	(f)		—			(0.81	)		(0.81	)	$	11.71		21.52	%	$	21,867		1.09	%		2.19	%		(0.54	)%		(1.64	)%		101	%
12/18/15(e) to 6/30/16	$	10.00		(0.02	)		0.34			0.32			—			—			—		$	10.32		3.20	%(d)	$	8,554		1.09	%		5.63	%		(0.48	)%		(5.02	)%		102	%(d)
Penn Capital Multi-Credit High Income Fund
Institutional Class
7/1/17 to 6/30/18	$	10.52		0.61			(0.22	)		0.39	(f)		(0.63	)		(0.22	)		(0.85	)	$	10.06		3.81	%	$	13,814		0.72	%		2.80	%		5.89	%		3.81	%		66	%
7/1/16 to 6/30/17	$	9.95		0.73			0.56			1.29			(0.72	)		—			(0.72	)	$	10.52		13.36	%	$	8,772		0.72	%		3.25	%		7.01	%		4.48	%		79	%
12/1/15(e) to 6/30/16	$	10.00		0.35			(0.10	)		0.25			(0.30	)		—			(0.30	)	$	9.95		2.66	%(d)	$	7,843		0.72	%		5.14	%		6.34	%		1.92	%		62	%(d)
Penn Capital Defensive Floating Rate Income Fund
Institutional Class
7/1/17 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
7/17/17(e) to 6/30/18	$	10.00		0.27			(0.17	)		0.10			(0.25	)		—			(0.25	)	$	9.85		1.03	%(d)	$	12,436		0.54	%		2.70	%		3.08	%		0.92	%		39	%(d)

* No information is provided for Investor Class shares because shares of that class had not yet been issued as of June 30, 2018.

^(a) Information presented related to a share outstanding for the entire period.

^(b) Annualized for periods less than one full year.

^(c) Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.

^(d) Not annualized.

^(e) Commencement of operations.

^(f) Total from investment operations per share includes redemption fees of less than $0.01 per share.

^(g) Expense waiver of 0.64% was implemented on August 1, 2017.

The accompanying Notes are an integral part of the financial statements.

37

PENN CAPITAL FUNDS TRUST
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2018

1. Organization (Unaudited)

PENN Capital Funds Trust (the “Trust”) was organized as a Delaware statutory trust on August 29, 2014, and is registered under the Investment Company Act of 1940 (the “1940 Act”), as amended, as an open-end management investment company. The Trust consists of five series that are available for investment: the Penn Capital Managed Alpha SMID Cap Equity Fund, the Penn Capital Special Situations Small Cap Equity Fund, the Penn Capital Multi-Credit High Income Fund, the Penn Capital Defensive Floating Rate Income Fund and the Penn Capital Defensive Short Duration High Income Fund (collectively referred to as the “Funds” and each individually referred to as a “Fund”). Two other series: the Penn Capital Micro Cap Equity Fund and the Penn Capital Enterprise Value Small Cap Equity Fund are not currently offered. The Funds follow the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification Topic 946 “Financial Services- Investment Companies.”

The Penn Capital Managed Alpha SMID Cap Equity Fund and the Penn Capital Special Situations Small Cap Equity Fund’s investment objective is to seek to provide capital appreciation. The Penn Capital Managed Alpha SMID Cap Equity Fund commenced operations on December 1, 2015. The Penn Capital Special Situations Small Cap Equity Fund commenced operations on December 18, 2015.

The Penn Capital Multi-Credit High Income Fund’s investment objective is to seek to provide total return through interest income and capital appreciation. The Penn Capital Mulit-Credit High Income Fund commenced operations on December 1, 2015.

The Penn Capital Defensive Floating Rate Income Fund’s investment objective is to seek to provide current income. The Penn Capital Defensive Floating Rate Income Fund commenced operations on December 1, 2015.

The Penn Capital Defensive Short Duration High Income Fund’s investment objective is to seek to provide a high level of current income. The Penn Capital Defensive Short Duration High Income Fund commenced operations on July 17, 2017.

Each Fund’s investment objective is non-fundamental, and may be changed by the Trust’s Board of Trustees (the “Board” or “Trustees”) without shareholder approval. Unless otherwise noted, all of the other investment policies and strategies described in the Prospectus or hereafter are nonfundamental. The Advisor serves as the investment advisor to the Funds.

The Trust offers two classes of shares for the Penn Capital Managed Alpha SMID Cap Equity Fund, the Penn Capital Special Situations Small Cap Equity Fund, the Penn Capital Multi-Credit High Income Fund and the Penn Capital Defensive Floating Rate Income Fund: Institutional and Investor Class. The Trust offers Institutional Class shares for the Penn Capital Defensive Short Duration High Income Fund. The Trust has also registered two other series, each with one class: the Penn Capital Micro Cap Equity Fund and the Penn Capital Enterprise Value Small Cap Equity Fund: Institutional Class. No information is provided in this report for Investor Class shares because shares of that class had not yet been issued as of June 30, 2018. Neither class has a front-end or back-end sales charge. The Penn Capital Micro Cap Equity Fund and Penn Capital Enterprise Value Small Cap Fund have not commenced operations as of June 30, 2018.

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.

38

PENN CAPITAL FUNDS TRUST
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2018

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, 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

39

PENN CAPITAL FUNDS TRUST
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2018

on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability and are developed based on the best information available under the circumstances. The three-tier hierarchy of inputs is summarized in the three broad levels listed below.

Level 1 — unadjusted quoted prices in active markets for identical securities that the Funds have the ability to access

Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

Level 3 — significant unobservable inputs (including a Fund’s own assumptions in determining the fair value of investments)

The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.

The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

The following table summarizes the inputs used as of June 30, 2018 in valuing each Fund’s investments:

Description	Level 1		Level 2		Level 3		Total
Penn Capital Managed Alpha SMID Cap Equity
Investments in Securities(a)
Common Stocks	$	13,650,624	$	—	$	—	$	13,650,624
Real Estate Investment Trusts (REITs)		939,394		—		—		939,394
Short-Term Investment		362,429		—		—		362,429
Total Investments in Securities	$	14,952,447	$	—	$	—	$	14,952,447

Penn Capital Special Situations Small Cap Equity Fund
Investments in Securities(a)	Level 1		Level 2		Level 3		Total
Common Stocks		20,838,652				—		20,838,652
Contingent Value Right		—		93		—		93
Real Estate Investment Trust (REIT)		244,750		—		—		244,750
Short-Term Investment		90,106		—		—		90,106
Total Investments in Securities	$	21,173,508	$	93	$	—	$	21,173,601

Penn Capital Multi-Credit High Income Fund
Investments in Securities(a)	Level 1		Level 2		Level 3		Total
Corporate Bonds	$	—	$	9,789,798	$	—	$	9,789,798
Convertible Bond		—		39,264		—		39,264
Bank Loans		—		1,090,393		—		1,090,393
Common Stock		—		—		46		46
Mutual Fund		2,503,862		—		—		2,503,862
Preferred Stock		—		—		41		41
Short-Term Investment		786,796		—		—		786,796
Total Investments in Securities	$	3,290,658	$	10,919,455	$	87	$	14,210,200

Penn Capital Defensive Floating Rate Income Fund
Investments in Securities(a)	Level 1		Level 2		Level 3		Total
Bank Loans	$	—	$	27,165,232	$	—	$	27,165,232
Corporate Bonds		—		3,776,719		—		3,776,719
Short-Term Investment		1,895,482		—		—		1,895,482
Total Investments in Securities	$	1,895,482	$	30,941,951	$	—	$	32,837,433

40

PENN CAPITAL FUNDS TRUST
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2018

Penn Capital Defensive Short Duration High Income Fund
Investments in Securities(a)	Level 1		Level 2		Level 3		Total
Corporate Bonds	$	—	$	9,981,986	$	—	$	9,981,986
Mutual Fund		1,852,519		—		—		1,852,519
Short-Term Investment		386,382		—		—		386,382
Total Investments in Securities	$	2,238,901	$	9,981,986	$	—	$	12,220,887

(a) All other industry classifications are identified in the Schedule of Investments for each Fund.

The following table summarizes quantitative information about significant unobservable valuation inputs for Level 3 fair value measurement as of June 30, 2018:

Type of Assets	Fair Value as of June 30, 2018		Valuation Techniques	Unobservable Input
Penn Capital Multi-Credit High Income Fund
Common Stock
ACC Claims Holdings LLC	$	46	Broker Quote	Unpublished independent broker quote
Preferred Stock
Spanish Broadcasting Systems, Inc.	$	41	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, 2017		Purchases		Sales		Accretion of Discount		Net Realized Gain/Loss		Balance as of June 30, 2018		Change in Unrealized Appreciation from Investments Held as of June 30, 2018
Penn Capital Multi-Credit High Income Fund
Common Stock
ACC Claims Holdings LLC	$	44	$	—	$	—	$	—	$	—	$	46	$	2
Preferred Stock
Spanish Broadcasting Systems, Inc.	$	32		—		—		—		—	$	41	$	9

The Funds disclose transfers between Levels based on valuations at the end of the reporting period. There were no transfers between Levels 1, 2, or 3 for the period ended June 30, 2018.

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.

41

PENN CAPITAL FUNDS TRUST
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2018

D. Use of Estimates

The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

E. Dividends and Distributions

Dividends and distributions to Shareholders are recorded on the ex-date. The Penn Capital Multi-Credit High Income Fund, the Penn Capital Defensive Floating Rate Income Fund and the Penn Capital Defensive Short Duration High Income Fund declare and distribute their net investment income, if any, monthly and make distributions of their net realized capital gains, if any, at least annually, usually in December. The Penn Capital Managed Alpha SMID Cap Equity Fund and the Penn Capital Special Situations Small Cap Equity Fund declare and distribute their net investment income, if any, annually and make distributions of net realized capital gains, if any, at least annually, usually in December.

The character of distributions made during the period from net investment income or net realized gains may differ from its ultimate characterization for federal income tax purposes. In addition, due to the timing of dividend distributions, the fiscal period in which the amounts are distributed may differ from the period that income or realized gains (losses) were recorded by each Fund.

F. Federal Income Taxes

Each Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended. If so qualified, the Funds will not be subject to federal income tax to the extent they distribute all of their net investment income and capital gains to shareholders. Therefore, no federal income tax provision is required.

The Funds evaluate tax positions taken or expected to be taken in the course of preparing their tax returns to determine whether it is more-likely-than-not (i.e., greater than 50%) that each tax position will be sustained upon examination by a taxing authority based on the technical merits of the position. Tax positions not deemed to meet the more-likely-than-not threshold are recorded as a tax benefit or expense in the current year. The Funds did not record any tax provision in the current period and have no provision for taxes in the financial statements. However, management’s conclusions regarding tax positions taken may be subject to review and adjustment at a later date based on factors including, but not limited to, examination by tax authorities (i.e., the last three open tax year ends, as applicable) and on-going analysis of and changes to tax laws, regulations and interpretations thereof.

G. Indemnifications

Under the Trust’s organizational documents, its officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust and each Fund. In addition, in the normal course of business, the Trust may enter into contracts that provide general indemnification to other parties. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust that have not yet occurred, and may not occur. However, the Trust has not had prior claims or losses pursuant to these contracts and considers the risk of loss to be remote.

3. Agreements and Related Party Transactions

Investment Advisory Agreement

The Trust has entered into an investment advisory agreement with the Advisor. Under the terms of the agreement, each Fund pays the Advisor a fee, payable at the end of each month, at an annual rate, set forth in the table below, of the respective Fund’s average daily net assets.

Penn Capital Managed Alpha SMID Cap Equity Fund	0.90	%
Penn Capital Special Situations Small Cap Equity Fund	0.95	%
Penn Capital Multi-Credit High Income Fund	0.69	%
Penn Capital Defensive Floating Rate Income Fund	0.55	%*
Penn Capital Defensive Short Duration High Income Fund	0.45	%

* Advisor fee reduced to 0.55% effective August 1, 2017. Prior to August 1, 2017, the Fund’s contractual advisory fee rate was 0.69%.

42

PENN CAPITAL FUNDS TRUST
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2018

With respect to each Fund other than the Penn Capital Multi-Credit High Income Fund and the Penn Capital Defensive Short Duration High Income Fund, the Advisor has contractually agreed to waive its fees and/or pay Fund expenses so that the Funds’ total annual operating expenses (excluding any acquired fund fees and expenses, taxes, interest, brokerage fees, certain insurance costs, and extraordinary and other non-routine expenses) do not exceed the amounts shown below as a percentage of each Fund’s average daily net assets. With respect to the Penn Capital Multi-Credit High Income Fund and the Penn Capital Defensive Short Duration High Income Fund, the Advisor has contractually agreed to waive its fees and/or pay Fund expenses so that the Fund’s total annual operating expenses (including any acquired fund fees and expenses incurred by the Fund as a result of its investments in other investment companies managed by the Advisor, but excluding any acquired fund fees and expenses incurred by the Fund as a result of its investments in unaffiliated investment companies, taxes, interest, brokerage fees, certain insurance costs, and extraordinary and other non-routine expenses) do not exceed the amounts shown below as a percentage of each Fund’s average daily net assets. The expense limitation agreement will remain in place through October 30, 2018. Thereafter, the expense limitation agreement for the Funds will be reviewed annually by the Advisor and the Board.

	Institutional Class			Investor Class
Penn Capital Managed Alpha SMID Cap Equity Fund		1.06	%		1.31	%
Penn Capital Special Situations Small Cap Equity Fund		1.09	%		1.34	%
Penn Capital Multi-Credit High Income Fund		0.72	%		0.97	%
Penn Capital Defensive Floating Rate Income Fund		0.64	%*		0.89	%*
Penn Capital Defensive Short Duration High Income Fund		0.54	%	N/A

* Prior to August 1, 2017, the Penn Capital Defensive Floating Rate Income Fund’s total annual operating expenses (excluding certain specified items) were limited to 0.74% for Institutional Class shares and 0.99% for Investor Class shares.

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 payment was made, provided that the respective Fund is able to make the repayment without exceeding the Fund’s expense limitation in place when the fees were waived or expenses paid. The Advisor’s waived fees and paid expenses that are subject to potential recoupment are as follows:

Fiscal Period Incurred	Amount Waived/ Expenses Assumed		Amount Recouped		Amount Subject to Potential Recoupment		Year of Expiration
Penn Capital Managed Alpha SMID Cap Equity Fund
June 30, 2016	$	146,572	$	—	$	146,572	2019
June 30, 2017		162,111		—		162,111	2020
June 30, 2018		175,125		—		175,125	2021
Total	$	483,808	$	—	$	483,808
Penn Capital Special Situations Small Cap Equity Fund
June 30, 2016	$	128,464	$	—	$	128,464	2019
June 30, 2017		158,820		—		158,820	2020
June 30, 2018		208,947		—		208,947	2021
Total	$	496,231	$	—	$	496,231
Penn Capital Multi-Credit High Income Fund
June 30, 2016	$	171,803	$	—	$	171,803	2019
June 30, 2017		218,116		—		218,116	2020
June 30, 2018		226,073		—		226,073	2021
Total	$	615,992	$	—	$	615,992
Penn Capital Defensive Floating Rate Income Fund
June 30, 2016	$	205,304	$	—	$	205,304	2019
June 30, 2017		261,441		—		261,441	2020
June 30, 2018		281,780		—		281,780	2021
Total	$	748,525	$	—	$	748,525
Penn Capital Defensive Short Duration High Income Fund
June 30, 2018	$	164,748	$	—	$	164,748	2021
Total	$	164,748	$	—	$	164,748

Certain Officers and Trustees of the Funds are also Officers of the Advisor.

43

PENN CAPITAL FUNDS TRUST
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2018

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 June 30, 2018, there were no distribution fees paid under the plan because the Investor Class shares had not yet been issued as of June 30, 2018.

The Trust has engaged U.S. Bancorp Fund Services, LLC to serve as the Fund’s administrator, fund accountant, and transfer agent. The Trust has engaged U.S. Bank, N.A. to serve as the 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 June 30, 2018, there were no service fees incurred by the Investor Class shares because the Investor Class shares had not yet been issued as of June 30, 2018. The amount actually incurred by the Institutional Class shares for the period ended June 30, 2018 on an annualized basis was 0.01% for the Penn Capital Managed Alpha SMID Cap Equity Fund, 0.05% for the Penn Capital Special Situations Small Cap Equity Fund, 0.01% for the Penn Capital Multi-Credit High Income Fund, 0.01% for the Penn Capital Defensive Floating Rate Income Fund, and less than 0.01% for the Penn Capital Defensive Short Duration High Income Fund.

4. Federal Tax Information

It is each Fund’s intention to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code and distribute all of its taxable income. Accordingly, no provision for federal income taxes is required in the financial statements.

The amount and character of income and capital gain distributions to be paid, if any, are determined in accordance with federal income tax regulations, which may differ from GAAP. These differences are primarily due to differences in the timing of recognition of gains or losses on investments. Permanent book and tax basis differences, if any, may result in reclassifications to undistributed net investment income (loss), undistributed net realized gain (loss) and additional paid-in capital.

The following information is provided on a tax basis as of June 30, 2018:

	Penn Capital Managed Alpha SMID Cap Equity Fund			Penn Capital Special Situations Small Cap Equity Fund			Penn Capital Multi-Credit High Income Fund			Penn Capital Defensive Floating Rate Income Fund			Penn Capital Defensive Short Duration High Income Fund
Cost of investments	$	12,431,271		$	18,473,409		$	14,181,880		$	32,842,652		$	12,363,215
Gross unrealized appreciation		2,970,093			3,608,110			229,027			142,170			8,708
Gross unrealized depreciation		(448,917	)		(907,915	)		(200,706	)		(147,389	)		(151,036	)
Net unrealized appreciation (depreciation)		2,521,176			2,700,195			28,320			(5,219	)		(142,328	)
Undistributed ordinary income		385,888			272,534			43,679			115,673			33,307
Undistributed long-term capital gains		744,253			921,947			—			—			—
Total distributable earnings		1,130,141			1,194,481			43,679			115,673			33,307
Other accumulated losses		—			—			—			(50,132	)		(4,444	)
Total accumulated earnings (losses)	$	3,651,317		$	3,894,676		$	71,999		$	60,322		$	(113,465	)

Net investment income and realized gains and losses for federal income tax purposes may differ from that reported on the financial statements because of permanent book-to-tax differences. GAAP requires that permanent differences between financial reporting and tax reporting be reclassified between various components of net assets.

44

PENN CAPITAL FUNDS TRUST
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2018

These differences are primarily due to net operating losses. On the Statement of Assets and Liabilities, the following adjustments were made:

	Undistributed Net Investment Income			Accumulated Net Realized Gain (Loss) on Investments			Paid-In Capital
Penn Capital Managed Alpha SMID Cap Equity Fund	$	45,253		$	(45,253	)	$	—
Penn Capital Special Situations Small Cap Equity Fund		133,199			(133,199	)		—
Penn Capital Multi-Credit High Income Fund		(12,514	)		12,796			(282	)
Penn Capital Defensive Floating Rate Income Fund		(12	)		12			—
Penn Capital Defensive Short Duration High Income Fund		4,773			(4,773	)		—

The Funds intend to utilize capital loss carryforwards to offset future realized capital gains. Capital loss carry forwards available for federal income tax purposes are as follows:

	Capital Loss Available Through		Short-Term Capital Loss Amounts		Long-Term Capital Loss Amounts
Penn Capital Managed Alpha SMID Cap Equity Fund		Unlimited	$	—	$	—
Penn Capital Special Situations Small Cap Equity Fund		Unlimited		—		—
Penn Capital Multi-Credit High Income Fund		Unlimited		—		—
Penn Capital Defensive Floating Rate Income Fund		Unlimited		50,132		—
Penn Capital Defensive Short Duration High Income Fund		Unlimited		4,444		—

A regulated investment company may elect for any taxable year to treat any portion of the qualified late year loss as arising on the first day of the next taxable year. Qualified late year losses are certain capital and ordinary losses which occur during the portion of the taxable year subsequent to October 31 and December 31, respectively.

The character of distributions for tax purposes paid during the period ended June 30, 2018 is as follows:

	Ordinary Income Distributions		Long-Term Capital Gain Distributions
Penn Capital Managed Alpha SMID Cap Equity Fund	$	103,969	$	113,429
Penn Capital Special Situations Small Cap Equity Fund		1,149,801		1,090,182
Penn Capital Multi-Credit High Income Fund		831,287		23,726
Penn Capital Defensive Floating Rate Income Fund		1,345,610		7,504
Penn Capital Defensive Short Duration High Income Fund		211,320		—

The character of distributions for tax purposes paid during the fiscal year ended June 30, 2017 is as follows:

	Ordinary Income Distributions		Long-Term Capital Gain Distributions
Penn Capital Managed Alpha SMID Cap Equity Fund	$	—	$	—
Penn Capital Special Situations Small Cap Equity Fund		850,428		54
Penn Capital Multi-Credit High Income Fund		596,135		—
Penn Capital Defensive Floating Rate Income Fund		921,854		—

45

PENN CAPITAL FUNDS TRUST
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2018

5. Investment Transactions

The cost of security purchases and the proceeds from security sales, other than short-term investments, for the period ended June 30, 2018, were as follows:

	Purchases		Sales
Penn Capital Managed Alpha SMID Cap Equity Fund	$	9,825,871	$	8,244,587
Penn Capital Special Situations Small Cap Equity Fund		21,866,815		26,575,531
Penn Capital Multi-Credit High Income Fund		12,042,205		6,822,702
Penn Capital Defensive Floating Rate Income Fund		23,876,518		17,579,479
Penn Capital Defensive Short Duration High Income Fund		15,043,530		2,940,172

6. Capital Share Transactions

	Penn Capital Managed Alpha SMID Cap Equity Fund Year Ended June 30, 2018			Penn Capital Special Situations Small Cap Fund Year Ended June 30, 2018			Penn Capital Multi-Credit High Income Fund Year Ended June 30, 2018			Penn Capital Defensive Floating Rate Income Fund Year Ended June 30, 2018			Penn Capital Defensive Short Duration High Income Fund Period Ended June 30, 2018
Institutional Class Shares
Share sold		175,264			531,370			489,121			692,903			1,267,496
Shares sold to holders in reinvestment of dividends		16,642			189,922			80,338			132,711			21,354
Shares redeemed		(31,443	)		(898,039	)		(29,546	)		(130,898	)		(26,332	)
Net increase (decrease)		160,463			(176,747	)		539,913			694,716			1,262,518
Institutional Amount
Shares sold	$	2,179,641		$	6,262,562		$	4,996,417		$	7,039,836		$	12,597,665
Shares sold to holders in reinvestment of dividends		217,014			2,233,477			824,258			1,346,434			211,090
Shares redeemed		(400,183	)		(10,850,646	)		(307,821	)		(1,330,752	)		(259,448	)
Net increase (decrease)	$	1,996,472		$	(2,354,607	)	$	5,512,854		$	7,055,518		$	12,549,307

	Penn Capital Managed Alpha SMID Cap Equity Fund Year Ended June 30, 2017			Penn Capital Special Situations Small Cap Equity Fund Year Ended June 30, 2017			Penn Capital Multi-Credit High Income Fund Year Ended June 30, 2017			Penn Capital Defensive Floating Rate Income Fund Year Ended June 30, 2017
Institutional Class Shares
Shares sold		21,067			1,115,266			45,061			653,532
Shares sold to holders in reinvestment of dividends		—			74,359			53,946			90,055
Shares redeemed		(61,810	)		(151,648	)		(54,000	)		(137,775	)
Net increase (decrease)		(40,743	)		1,037,977			45,007			605,812
Institutional Amount
Shares sold	$	240,732		$	12,938,608		$	457,456		$	6,674,297
Shares sold to holders in reinvestment of dividends		—			845,459			558,116			916,744
Shares redeemed		(640,048	)		(1,684,172	)		(560,783	)		(1,408,771	)
Net increase (decrease)	$	(399,316	)	$	12,099,895		$	454,789		$	6,182,270

46

PENN CAPITAL FUNDS TRUST
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2018

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, 2017 through June 30, 2018. As defined in Section (2)(a)(3) of the Investment Company Act of 1940; such issues are:

	July 1, 2017				Additions				Reductions				June 30, 2018		Dividend				Unrealized			Realized		June 30, 2018
Issuer Name	Share Balance		Cost		Share Balance		Cost		Share Balance		Cost		Share Balance		Income		Capital Gain Distribution		Depreciation Change			Gain/(Loss)		Value		Cost
Penn Capital Multi-Credit High Income Fund
Penn Capital Defensive Floating Rate Income Fund		—	$	—		248,153	$	2,520,274		—	$	—		248,153	$	44,283	$	5,991	$	(16,412	)	$	—	$	2,503,862	$	2,520,274
			$	—			$	2,520,274			$	—			$	44,283	$	5,991	$	(16,412	)	$	—	$	2,503,862	$	2,520,274
Penn Capital Defensive Short Duration High Income Fund
Penn Capital Defensive Floating Rate Income Fund		—	$	—		183,599	$	1,865,035		—	$	—		183,599	$	35,038	$	4,997	$	(12,516	)	$	—	$	1,852,519	$	1,865,035
			$	—			$	1,865,035			$	—			$	35,038	$	4,997	$	(12,516	)	$	—	$	1,852,519	$	1,865,035

8. Credit Risk and Asset Concentration

Small- and mid-capitalization companies may not have the size, resources and other assets of large capitalization companies. As a result, the securities of small- and mid-capitalization companies may be subject to greater market risks and fluctuations in value than large capitalization companies or may not correspond to changes in the stock market in general. In addition, small- and mid-capitalization companies may be particularly affected by interest rate increases, as they may find it more difficult to borrow money to continue or expand operations, or may have difficulty in repaying any loans.

High yield securities and unrated securities of similar credit quality have speculative characteristics and involve greater volatility of price and yield, greater of liquidity risk, and generally reflect a greater possibility of an adverse change in financial condition that could affect an issuer’s ability to honor its obligations.

There are a number of risks associated with an investment in bank loans, including credit risk, interest rate risk, liquidity risk and prepayment risk. Lack of an active trading market, restrictions on resale, irregular trading activity, wide bid/ask spreads and extended trade settlement periods may impair the Fund’s ability to sell bank loans within its desired time frame or at an acceptable price and its ability to accurately value existing and prospective investments. Extended trade settlement periods may result in cash not being immediately available to the Fund. As a result of such illiquidity, the Fund may have to sell other investments or engage in borrowing transactions to raise cash to meet its obligations.

9. Line of Credit

The Penn Capital Defensive Floating Rate Income Fund has a Credit Agreement for a line of credit equal to the lesser of (i) $3.0 Million, (ii) 20% of the gross market value of the Fund or (iii) 33.3% of the net market value of the Fund. Borrowings pursuant to the agreement are collateralized by the investments in the Fund. The line of credit is intended to provide short term financing, if necessary, in connection with shareholder redemptions. The interest rate as of June 30, 2018 was 5.00%. The Fund did not utilize any borrowings under the line of credit for the fiscal year ended June 30, 2018.

47

PENN CAPITAL FUNDS TRUST
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2018

10. Recent Accounting Pronouncements

In March 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2017-08, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. The amendments in the ASU shorten the amortization period for certain callable debt securities, held at a premium, to be amortized to the earliest call date. The ASU does not require an accounting change for securities held at a discount; which continues to be amortized to maturity. The ASU is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018. Management is currently evaluating the impact, if any, of applying this provision.

11. 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.

48

PENN CAPITAL FUNDS TRUST
ADDITIONAL INFORMATION
JUNE 30, 2018 (UNAUDITED)

Shareholder Notification of Federal Tax Status

For the fiscal period ended June 30, 2018, certain dividends paid by the Funds may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The percentage of dividends declared from ordinary income designated as qualified dividend income was as follows:

Penn Capital Managed Alpha SMID Cap Equity Fund	55.03	%
Penn Capital Special Situations Small Cap Equity Fund	8.08	%
Penn Capital Multi-Credit High Income Fund	0.00	%
Penn Capital Defensive Floating Rate Income Fund	0.00	%
Penn Capital Defensive Short Duration High Income Fund	0.00	%

For corporate shareholders, the percentage of ordinary income distributions qualifying for the corporate dividends received deduction for the fiscal period ended June 30, 2018 was as follows:

Penn Capital Managed Alpha SMID Cap Equity Fund	34.88	%
Penn Capital Special Situations Small Cap Equity Fund	7.60	%
Penn Capital Multi-Credit High Income Fund	0.00	%
Penn Capital Defensive Floating Rate Income Fund	0.00	%
Penn Capital Defensive Short Duration High Income Fund	0.00	%

The percentage of taxable ordinary income distributions designated as short-term capital gain distributions under Internal Revenue Section 871(k)(2)(c) for the fiscal period ended June 30, 2018 was as follows:

Penn Capital Managed Alpha SMID Cap Equity Fund	100.00	%
Penn Capital Special Situations Small Cap Equity Fund	100.00	%
Penn Capital Multi-Credit High Income Fund	23.92	%
Penn Capital Defensive Floating Rate Income Fund	11.85	%
Penn Capital Defensive Short Duration High Income Fund	0.00	%

Trustee and Officer Compensation

The Trust does not compensate any of its Trustees who are interested persons nor any of its officers. For the year ended June 30, 2018, the aggregate compensation paid by the Trust to the independent Trustees was $36,000. The Trust did not pay any special compensation to any of its Trustees or officers. The Statement of Additional Information includes additional information about the Trustees and is available without charge, upon request, by calling 844-302-7366.

Proxy Voting Policies

A description of the policies and procedures that each Fund uses to determine how to vote proxies relating to portfolio securities owned by that Fund is available: (1) without charge, upon request, by calling 844-302-7366; (2) in the Statement of Additional Information on the Trust’s website www.penncapitalfunds.com; and (3) on the SEC’s website at www.sec.gov. Information about how the Funds voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 may be obtained (1) without charge, upon request, by calling 844-302-7366 and (2) on the SEC’s website at www.sec.gov.

Form N-Q

Each Fund files its complete schedule of portfolio holdings for the first and third quarters of each fiscal year with the SEC on Form N-Q. Each Fund’s Forms N-Q are available without charge by visiting the SEC’s website at www.sec.gov. In addition, you may review and copy each Fund’s Forms N-Q at the SEC’s Public Reference Room in Washington D.C. You may obtain information on the operation of the Public Reference Room by calling (800) SEC-0330.

Householding

In an effort to decrease costs, the Funds intend to reduce the number of duplicate prospectuses, annual and semi-annual reports, proxy statements and other similar documents you receive by sending only one copy of each to those addresses shared by two or more accounts and to shareholders that the transfer agent reasonably believes are from the same family or household. Once implemented, if you would like to discontinue householding for your accounts, please call (844) 302-7366 to request individual copies of these documents. The transfer agent will begin sending individual copies thirty days after receiving your request to stop householding. This policy does not apply to account statements.

49

PENN CAPITAL FUNDS TRUST
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Trustees of
PENN Capital Funds Trust:

Opinion on the Financial Statements

We have audited the accompanying statements of assets and liabilities of the Penn Capital Managed Alpha SMID Cap Equity Fund, Penn Capital Special Situations Small Cap Equity Fund, Penn Capital Multi-Credit High Income Fund, Penn Capital Defensive Floating Rate Income Fund and Penn Capital Defensive Short Duration High Income Fund (inception of July 17, 2017), each a series of the PENN Capital Funds Trust, (collectively, the “Funds”), including the schedules of investments as of June 30, 2018, the related statements of operations for the year or period ended June 30, 2018, the statements of changes in net assets for each of the years or period in the two-year period then ended, and the related notes (collectively, the “financial statements”) and financial highlights for each of the years or periods in the three-year period then ended. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Funds as of June 30, 2018, the results of their operations for the year or period then ended, the changes in their net assets for each of the years or period in the two year period then ended, and the financial highlights for each of the years or periods in the three year period then ended, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Such procedures also included confirmation of securities owned as of June 30, 2018, by correspondence with custodians, agent banks, and brokers or other appropriate auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. We believe that our audits provide a reasonable basis for our opinion.

We have served as the auditor of one or more PENN Capital Management Inc. investment companies since 2015.

 

Philadelphia, Pennsylvania
August 28, 2018

50

PENN CAPITAL FUNDS TRUST
TRUSTEES AND OFFICERS (UNAUDITED)

Name, Address and Year of Birth	Position with the Trust	Term of Office and Length of Time Served	Principal Occupation During the Past Five Years	Number of Portfolios in Fund Complex Overseen by Trustee	Other Directorship/ Trusteeship Positions held by Trustee During the Past 5 Years
Independent Trustees
Dennis S. Hudson, III c/o Penn Capital Management Company, Inc. 1200 Intrepid Avenue, Suite 400 Philadelphia, Pennsylvania 19112 Year of Birth: 1955	Trustee	Since 2015	Chief Executive Officer (since 1998) and Chairman (since 2005), Seacoast Banking Corporation of Florida; Chairman and Chief Executive Officer, Seacoast National Bank (since 1992).	7	Chesapeake Utilities Corporation (since 2006). Martin Health System (medical) (since 2017).
John R. Schwab c/o Penn Capital Management Company, Inc. 1200 Intrepid Avenue, Suite 400 Philadelphia, Pennsylvania 19112 Year of Birth: 1967	Trustee	Since 2015	Chief Financial Officer, Flagship Credit Corp. (since 2015); Executive Vice President and Chief Financial Officer, The J.G. Wentworth Company (from 2013 to 2015); Executive Vice President and Chief Financial Officer, Expert Global Solutions (from 2004 to 2012).	7	N/A
Interested Trustee
Richard A. Hocker* c/o Penn Capital Management Company, Inc. 1200 Intrepid Avenue, Suite 400 Philadelphia, Pennsylvania 19112 Year of Birth: 1946	Trustee, President and Chairman	Since 2014	Founder, Chief Investment Officer and Chief Executive Officer, Penn Capital Management Company, Inc. (since 1987).	7	N/A

51

PENN CAPITAL FUNDS TRUST
TRUSTEES AND OFFICERS (UNAUDITED)

Name, Address and Year of Birth	Position with the Trust	Term of Office and Length of Time Served	Principal Occupations During the Past Five Years
Officers of the Trust**
Gerald McBride c/o Penn Capital Management Company, Inc. 1200 Intrepid Avenue, Suite 400 Philadelphia, Pennsylvania 19112 Year of Birth: 1963	Treasurer	Since 2014	Chief Operating Officer and Chief Financial Officer, Penn Capital Management Company, Inc. (since 2007).
Lisa L.B. Matson c/o Penn Capital Management Company, Inc. 1200 Intrepid Avenue, Suite 400 Philadelphia, Pennsylvania 19112 Year of Birth: 1970	Secretary	Since 2014	General Counsel, Penn Capital Management Company, Inc. (since 2014); Senior Counsel and Assistant Vice President, Lincoln Financial Group, Inc., and Assistant Secretary, Lincoln Investment Advisors, Corp., Lincoln Variable Insurance Products Trust and Lincoln Advisors Trust (from 2012 to 2014); Associate Counsel, The Vanguard Group, Inc. (from 2002 to 2012).
Jack P. Huntington 10 High Street Suite 302 Boston, MA 02110 Year of Birth: 1970	Chief Compliance Officer	Since 2015	Fund Chief Compliance Officer, Foreside Fund Officer Services, LLC (since 2015); Senior Vice President of Regulatory Administration, Citi Fund Services, Ohio, Inc. (from 2008 to 2015).

* Richard A. Hocker is a Trustee who is an “interested person” of the Trust as defined in the 1940 Act because he is an officer of the Advisor and certain of its affiliates.

** Each Officer serves at the pleasure of the Board.

52

PENN CAPITAL FUNDS TRUST
PRIVACY POLICY

FACTS	WHAT DOES THE PENN CAPITAL FUNDS TRUST DO WITH YOUR PERSONAL INFORMATION?
Why?	Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.
What?	The types of personal information we collect and share depend on the product or service you have with us. The information can include: •   Social Security number •   Account balances and account transactions •   Assets and transaction history When you are no longer our client, we continue to share your information as described in this notice.
How?	All financial companies need to share clients’ personal information to run the everyday business. In the section below, we list the reasons financial companies can share their clients’ personal information; the reasons PENN chooses to share; and whether you can limit this sharing.
Reasons we can share your personal information		Does Penn share?	Can you limit this sharing?
For everyday business purposes - such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus		Yes	No
For marketing purposes - to offer our products and services to you		No	No
For joint marketing with other financial companies		No	No
For affiliates’ everyday business purposes - information about transaction(s) and experiences		Yes	No
For affiliates’ everyday business purposes - information about your creditworthiness		No	No
For nonaffiliates to market to you		No	No

Questions?   Call 215-302-1500 or go to ww.penncapital.com

53

PENN CAPITAL FUNDS TRUST
PRIVACY POLICY

Who we are
Who is providing this notice?	Penn Capital Management Company, Inc. and its affiliates (“Penn”)
What we do
How does Penn protect my personal information?	To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer and secured files and buildings.
How does Penn collect my personal information?	We collect your personal information, for example, when you •   Open an account or deposit money •   Provide information on client questionaires
Why can’t I limit all sharing?	Federal law gives you the right to limit only •   sharing for affiliates everyday business purposes -      information about your creditworthiness •   affiliates from using you information to market to you •   sharing for nonaffiliates to market to you State laws and individual companies may give you additional rights to limit sharing.
Definitions
Affiliates	Companies related by common ownership or control. They can be financial or nonfinancial companies •      PENN Capital Funds Group LLC •      PENN Capital Funds Trust •      Penn Capital Management Company, Inc.
Nonaffiliates	Companies not related by common ownership or control. They can be financial or nonfinancial companies •      Penn does not share information with nonaffiliates
Joint marketing	A formal agreement between non affiliated companies that together market financial products or services to you •      Penn does not have joint marketing partners
Other important information
This notice replaces all previous notices of our consumer privacy policy, and may be amended from time to time. Penn will inform you of updates or changes as required by law.

54

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
615 East Michigan Street
Milwaukee, WI 53202

Shareholder/Investor Information
1.844.302.PENN (7366)
www.penncapitalfunds.com

BEFORE INVESTING YOU SHOULD CAREFULLY CONSIDER THE FUND’S INVESTMENT OBJECTIVES, RISKS, CHARGES AND EXPENSES. THIS AND OTHER RELEVANT INFORMATION CAN BE FOUND IN THE PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION, COPIES OF WHICH MAY BE OBTAINED BY CALLING (844) 302-PENN (7366) OR BY VISITING WWW.PENNCAPITALFUNDS.COM. PLEASE READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.

Item 2. Code of Ethics.

The registrant has adopted a code of ethics that applies to the registrant’s principal executive officer and principal financial officer. The registrant has not made any substantive amendments to its code of ethics during the period covered by this report. The registrant has not granted any waivers from any provisions of the code of ethics during the period covered by this report.

A copy of the registrant’s Code of Ethics is filed herewith.

Item 3. Audit Committee Financial Expert.

The registrant’s board of trustees has determined that there is at least one audit committee financial expert serving on its audit committee. Mr. John Schwab is the “audit committee financial expert” and is considered to be “independent” as each term is defined in Item 3 of Form N-CSR.

Item 4. Principal Accountant Fees and Services.

The registrant has engaged its principal accountant to perform audit and tax services during the past two fiscal years. “Audit services” refer to performing an audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years. “Audit-related services” refer to the assurance and related services by the principal accountant that are reasonably related to the performance of the audit. “Tax services” refer to professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning. There were no “Other services” provided by the principal accountant. The following table details the aggregate fees billed or expected to be billed for each of the last two fiscal years for audit fees, audit-related fees, tax fees and other fees by the principal accountant.

	FYE 6/30/2018		FYE 6/30/2017
Audit Fees	$	120,000	$	92,000
Audit-Related Fees		None		None
Tax Fees		23,875		19,100
All Other Fees		None		None

The audit committee has adopted pre-approval policies and procedures that require the audit committee to pre-approve all audit and non-audit services of the registrant, including services provided to any entity affiliated with the registrant.

The percentage of fees billed by KPMG applicable to non-audit services pursuant to waiver of pre-approval requirement were as follows:

	FYE 6/30/2018			FYE 6/30/2017
Audit-Related Fees		0	%		0	%
Tax Fees		0	%		0	%
All Other Fees		0	%		0	%

All of the principal accountant’s hours spent on auditing the registrant’s financial statements were attributed to work performed by full-time permanent employees of the principal accountant. (If more than 50 percent of the accountant’s hours were spent to audit the registrant's financial statements for the most recent fiscal year, state how many hours were attributed to work performed by persons other than the principal accountant's full-time, permanent employees.)

The following table indicates the non-audit fees billed or expected to be billed by the registrant’s accountant for services to the registrant and to the registrant’s investment adviser (and any other controlling entity, etc.—not sub-adviser) for the last two years. The audit committee of the board of trustees/directors has considered whether the provision of non-audit services that were rendered to the registrant's investment adviser is compatible with maintaining the principal accountant's independence and has concluded that the provision of such non-audit services by the accountant has not compromised the accountant’s independence.

Non-Audit Related Fees	FYE 6/30/2018		FYE 6/30/2017
Registrant		None		None
Registrant’s Investment Adviser		None		None

KPMG LLP (“KPMG”) has informed the Trust that it has identified an issue related to its independence under Rule 2-01(c)(1)(ii)(A) of Regulation S-X (referred to as the “Loan Rule”). The Loan Rule prohibits accounting firms, such as KPMG, from being considered independent if they have certain financial relationships with their audit clients or certain affiliates of those clients. Specifically, the Loan Rule provides, in relevant part, that an accounting firm generally would not be independent if it receives a loan from a lender that is “record or beneficial [owner] of more than ten percent of the audit client’s equity securities.” The Trust is required under various securities laws to have its financial statements audited by an independent accounting firm. KPMG has informed the Trust that KPMG has relationships

with a lender who is the holder of record of more than ten percent of the shares of certain series of the Trust (each, a “Fund”). These relationships call into question KPMG’s independence under the Loan Rule with respect to the Fund, as well as all other funds in the complex. The SEC has granted no-action relief to another fund complex in circumstances that appear to be substantially similar to the Trust’s (see Fidelity Management & Research Company et al., No-Action Letter (June 20, 2016)). In addition, KPMG has advised the Trust’s Audit Committee that KPMG believes that under the facts and circumstances surrounding KPMG’s lending relationships, its ability to exercise objective and impartial judgment in connection with its audit engagement with the Trust has not been impaired and that a reasonable investor with knowledge of all relevant facts and circumstances would reach the same conclusion. If in the future the independence of KPMG is called into question under the Loan Rule by circumstances that are not addressed in the SEC’s no-action letter, the Fund may need to take other action in order for the Fund’s filings with the SEC containing financial statements to be deemed compliant with applicable securities laws. Such additional actions could result in additional costs, impair the ability of the Funds to issue new shares or have other material adverse effects on the Funds. The SEC no-action relief was initially set to expire 18 months from issuance, but has been extended by the SEC without an expiration date, except that the no-action letter will be withdrawn upon the effectiveness of any amendments to the Loan Rule designed to address the concerns expressed in the letter.

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. Filed herewith.

(2) A separate certification for each principal executive officer and principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.

(3) Any written solicitation to purchase securities under Rule 23c-1 under the Act sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons. Not applicable to open-end investment companies.

(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Furnished herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

(Registrant)	PENN Capital Funds Trust
By (Signature and Title)	/s/ Richard A. Hocker, President
	Richard A. Hocker, President
Date	9/6/2018

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, President
	Richard A. Hocker, President
Date	9/6/2018
By (Signature and Title)	/s/ Gerald McBride, Treasurer
	Gerald McBride, Treasurer
Date	9/6/2018

EX-99.CODEETH

EX.99.CODE ETH

Financial Code of Ethics for Principal Executive and Financial Officers

Introduction

Section 406 of the Sarbanes-Oxley Act of 2002 directed the SEC to adopt rules requiring companies to disclose whether or not they have adopted a code of ethics for senior financial officers, and if not, why not. The SEC has adopted rules requiring registered investment companies to make such disclosures. These rules extend coverage to chief executive officers as well as senior financial officers, and require disclosure of waivers or substantive changes in any code. This Code of Ethics (this “Code”) addresses these requirements, and is different in nature and scope from the code of ethics adopted as required under Section 17(j) of the 1940 Act, and Rule 17j-1 thereunder, which focuses on personal trading activities.

Policy Statement

It is the policy of the Trust and the Funds to conduct their affairs in accordance with all applicable laws and governmental rules and regulations. This Code has been adopted by the Board and applies to the persons appointed by the Board as Chief Executive Officer, President, Chief Financial Officer, Treasurer and any persons performing similar functions, as modified from time to time (“Covered Officers”). Each Covered Officer is personally responsible for adhering to the standards and restrictions imposed by applicable laws, rules and regulations, including those relating to affiliated transactions, accounting and auditing matters. This Code is designed to deter wrongdoing and promote:

1. honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

2. full, fair, accurate, timely and understandable disclosure in the reports and documents the Funds file with, or submit to, the SEC and in other public communications made by the Funds;

3. compliance with applicable governmental laws, rules and regulations;

4. prompt internal reporting to the appropriate person of violations of this Code; and

5. accountability for adherence to this Code.

This Code covers a wide range of business practices and procedures. It does not cover every issue that may arise, but it sets out basic principles to guide Covered Officers. In this regard, each Covered Officer must:

1. act with integrity, including being honest and candid while still maintaining the confidentiality of information where required by law or the Funds’ policies;

2. observe both the form and spirit of laws and governmental rules and regulations, and accounting standards;

3. adhere to high standards of business ethics; and

4. place the interests of the Funds and their shareholders before the Covered Officer’s own personal interests.

All activities of Covered Officers should be guided by and adhere to these fiduciary standards. Covered Officers should not hesitate to use available resources whenever it is desirable to seek clarification. Covered Officers are encouraged to consult with the CCO or the CCO of the Advisor, or other appropriate resources, when in doubt about the best course of action in a particular situation.

Conflicts of Interest

Covered Officers should handle ethically actual and apparent conflicts of interest. A “conflict of interest” occurs when an individual’s personal interests actually or potentially interfere with the interests of a Fund or its shareholders. A conflict of interest can arise when a Covered Officer takes actions or has interests that may make it difficult to perform his duties as a Fund officer objectively and effectively. Service to the Funds should never be subordinated to either a direct or indirect personal gain or advantage.

Certain conflicts of interests arise out of the relationships between Covered Officers and the Funds that already are subject to conflict of interest provisions in the 1940 Act and the Investment Advisers Act of 1940 (the “Advisers Act”). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the Funds because of their status as “affiliated persons” of the Funds. The compliance programs and procedures of the Funds and the Advisor are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code.

Actual or apparent conflicts may arise from, or as a result of, the contractual relationship between the Funds and the Advisor (or other service provider, e.g., administrator) of which the Covered Officers are also officers or employees. It is recognized by the Board that the Covered Officers will, in the normal course of their duties, be involved in establishing policies and implementing decisions that will have different effects on the Advisor and the Funds. The Board recognizes that the participation of the Covered Officers in such activities is inherent in the contractual relationship between the Funds and the Advisor, and is consistent with the Board’s understanding of the performance by the Covered Officers of their duties as officers of the Funds. Nonetheless, each Covered Officer recognizes that, as an Officer of the Funds, he or she has a duty to act in the best interests of the Funds and their shareholders.

If a Covered Officer believes that his or her responsibilities as an officer or employee of the Advisor (or other service provider) are likely to materially compromise his or her objectivity or ability to perform the duties of his role as an officer of the Funds, he or she should consult with the CCO or the CCO of the Advisor. A Covered Officer should also consider whether to present the matter to the Board or an appropriate committee thereof.

In addition, each Covered Officer must:

1. avoid conflicts of interest wherever possible;

2. not use his or her personal influence or personal relationships to influence investment decisions or financial reporting by a Fund whereby the Covered Officer would benefit personally to the detriment of the Fund;

3. not engage in personal, business or professional relationships or dealings which would impair his or her independence of judgment or adversely affect the performance of his or her duties in the best interests of the Funds and their shareholders; and

4. not cause a Fund to take action, or fail to take action, for the personal benefit of the Covered Officer rather than the benefit of the Fund.

Conflicts of interest may not always be evident and Covered Officers should consult with the Compliance Officer if they are uncertain about any situation. Examples of possible conflicts of interest include:

1. Personal Business Transactions. A Covered Officer may not cause a Fund to engage in any business transaction with his or her immediate family members or utilize the Covered Officer’s relationship with the Fund to cause any third party to engage in any business transaction with his or her immediate family members. This provision is not intended, however, to restrict Covered Officers and their immediate family members from purchasing or redeeming shares of the Fund as long as such purchases or redemptions are made in accordance with the procedures, limitations and restrictions set forth in the Fund’s registration statement. For the purposes of this code, the term “immediate family” means a Covered Officer’s spouse, sibling, child, parent, brother or sister in law, or a spouse, sibling, child or parent of any of the foregoing.

2. Use of Nonpublic or Confidential Information. A Covered Officer may not use, or disclose to a third party, non-public or confidential information about a Fund or its activities or any of the Fund’s service providers for the purpose of personal gain by the Covered Officer or his or her immediate family members (including, but not limited to, securities transactions based on such information).

3. Outside Employment or Activities. A Covered Officer may not engage in any outside employment or activity that interferes with his or her duties and responsibilities with respect to the Funds or is otherwise in conflict with or prejudicial to the Funds. A Covered Officer must disclose to the CCO any outside employment or activity that may constitute, or appear to constitute, a conflict of interest and obtain the requisite approval before engaging in such employment or activity. Any such employment or activity is permissible only if it would not be inconsistent with the best interests of the Funds and their shareholders.

4. Gifts. A Covered Officer may not accept any gift, entertainment, favor, or loan from any person or entity that does or seeks to do business with the Funds which goes beyond the courtesies generally associated with accepted business practice. Non-cash gifts of a de minimis nature are considered to be within accepted business practices. Cash gifts of any amount are strictly prohibited. Entertainment (in the form of meals, tickets to events or otherwise) must be reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety.

5. Corporate Opportunities. A Covered Officer may not exploit, for his or her own personal gain or the personal gain of immediate family members, opportunities that are discovered through the use of Fund property, information, or the Covered Officer’s position unless the opportunity is fully disclosed, in writing, to the Funds’ Board and the Board declines to pursue such opportunity on behalf of the Funds.

6. Other Situations. Because other conflicts of interest may arise, it is not practical to list in this Code all possible situations that could result in a conflict of interest. If a proposed transaction, interest, personal activity, or investment raises any questions, concerns or doubts, a Covered Officer should consult with the CCO before engaging in the transaction, making the investment or pursuing the interest or activity.

Accuracy of Reports, Records and Accounts

All Covered Officers are responsible for the accuracy of the records and reports that they are responsible for maintaining to enable the Funds to provide full, fair and accurate financial information and other disclosure to regulators and Fund shareholders. Accurate information is essential to the Funds’ ability to meet legal and regulatory obligations. The books and records of the Funds shall accurately reflect the true nature of the transactions they record in accordance with applicable law, generally accepted accounting principles and Fund policies. The Covered Officers must not create false or misleading documents or accounting, financial or electronic records for any purpose, and must not direct any other person to do so. If a Covered Officer becomes aware that information filed with the SEC, or state regulatory authority, or made available to the public contains any false or misleading information or omits to disclose necessary information, he shall promptly report it to the Compliance Officer for a determination as to what, if any, corrective action is necessary or appropriate.

No undisclosed or unrecorded account or fund shall be established for any purpose. No false or misleading entries shall be made in the Funds’ books or records for any reason. No disbursement of Fund assets shall be made without adequate supporting documentation or for any purpose other than as described in the Funds’ documents or contracts.

Funds’ Disclosure Controls and Procedures

Each Covered Officer is required to be familiar, and comply, with the Funds’ disclosure controls and procedures. In addition, each Covered Officer having direct or supervisory authority regarding SEC filings or the Funds’ other public communications should, to the extent appropriate within his area of responsibility, consult with other Fund officers and take other appropriate steps regarding these disclosures with the goal of making full, fair, accurate, timely and understandable disclosure.

Each Covered Officer must:

1. familiarize himself or herself with the disclosure requirements applicable to the Funds as well as the business and financial operations of the Funds;

2. ensure that reasonable steps are taken within his or her areas of responsibility to promote full, fair, accurate, timely and understandable disclosure in all regulatory filings, as well as when communicating with the Funds’ shareholders or the general public, in accordance with applicable law;

3. consistent with his or her responsibilities, exercise appropriate supervision over and assist relevant Fund service providers in developing financial information and other disclosure that complies with relevant law and presents information in a clear, comprehensible and complete manner; and

4. not knowingly misrepresent, conceal or omit required disclosures of, or cause others to do the same, facts about the Funds, whether to persons within or outside the Funds, including to outside counsel, independent auditors and governmental regulators.

Confidential Information

Covered Officers who have access to confidential information are not permitted to use or share that information for their personal benefit or for any other purpose except the conduct of the Funds’ business. Covered Officers should maintain the confidentiality of information entrusted to them by the Funds or their shareholders, except when disclosure is authorized or legally mandated. Confidential information includes all non-public information, including information that might be of use to competitors, or harmful to the Funds or their shareholders if disclosed.

All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly by the Funds. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the Board and Trust Counsel.

Compliance, Reporting and Recordkeeping

1. Compliance. Any Covered Officer who violates the provisions of this Code will be subject to disciplinary action and appropriate sanctions, up to and including termination. Sanctions shall be imposed by the Funds’ CEO, subject to review by the full Board, in their sole discretion. Depending on the nature and severity of the violation, the Funds may refer such violation to appropriate authorities for civil action or criminal prosecution.

2. Reporting. Each Covered Officer shall:

a. upon receipt of the Code or upon becoming a Covered Officer, sign and submit an Initial Acknowledgement (form attached) confirming that he/she has received, read and understands the Code;

b. annually, sign and submit an Annual Acknowledgement (form attached) confirming that he or she has complied with the requirements of the Code;

c. not retaliate against any Covered Officer or other person for making reports of violations in good faith; and

d. notify the CCO of any actual or potential violation of this Code, whether the violation or potential violation was committed by the Covered Officer personally or by another Covered Officer. Failure to do so is itself a violation of this Code. The Funds will not retaliate against any Covered Officer for making reports of violations in good faith, but will not be precluded from taking appropriate disciplinary action for the violations themselves.

Except as described otherwise below, the Compliance Officer is authorized to apply this Code to situations presented to it and has the authority to interpret this Code in any particular situation.

The CCO shall take all action it considers appropriate to investigate any actual or potential violations reported to it, and the CCO is authorized and encouraged to consult, as appropriate, with the CEO. The CCO is responsible for granting waivers from the terms and provisions of this Code, as the CCO deems appropriate. Any waiver granted by the CCO shall be reported to the Board at the next regularly scheduled Board meeting.

3. Recordkeeping. The Funds will maintain and preserve for a period of not less than six (6) years from the date such action is taken, the first two (2) years in an easily accessible place, a copy of the information or materials supplied to the CEO and/or Board: (i) that provided the basis for any amendment or waiver to this Code, and (ii) relating to any violation of the Code and sanctions imposed for such violation, together with a written record of the approval or action taken by the CEO and/or Board.

Waivers of Provisions of the Code

A waiver of any provision of the Code shall be requested whenever there is a reasonable likelihood that a contemplated action will violate the Code. A “waiver” is defined as the approval by the Funds of a material departure from any provision of the Code.

The process of requesting a waiver shall consist of the following steps:

1. The Covered Officer shall set forth a request for waiver in writing. The request shall describe the conduct, activity or transaction for which the Covered Officer seeks a waiver, and shall briefly explain the reason for engaging in the conduct, activity or transaction.

2. The determination with respect to the waiver shall be made in a timely fashion by the CCO in consultation with Trust Counsel, and submitted to the Board for review and approval at the next regularly scheduled Board meeting. ¹

3. The decision with respect to the waiver requested shall be documented and kept in the Funds’ records for the appropriate period mandated by applicable law or regulation.

To the extent required by applicable law, waivers (including “implicit waivers”) shall be publicly disclosed on a timely basis. An “implicit waiver” is defined as the Funds’ failure to take action within a reasonable period of time regarding a material departure from a provision of the Code that has been made known to an “executive officer” of the Funds. For this purpose, an “executive officer” is the Funds’ President or Chief Executive Officer, Vice President (who is in charge of a principal policymaking function), or any other person who performs similar policymaking functions for the Funds. If a material departure from a provision of this Code is known only by the Covered Person that has caused the material departure from the Code, the material departure from the Code will not be considered to have been made known to an executive officer of the Funds for purposes of deciding whether there has been an implicit waiver.

Disclosure

The Funds must disclose this Code, any substantive amendments and any waivers or implicit waivers by: (i) filing with the SEC a copy of the Code, any such amendments and waivers or implicit waivers in the Funds’ annual report on Form N-CSR; or (ii) posting the text of the Code, any such amendments and waivers or implicit waivers on the Funds’ Internet website and disclosing

1 If the Covered Officer requesting a waiver is the Compliance Officer, then the determination with respect to the waiver shall be made by the Funds’ Chief Executive Officer, in consultation with the Trust Counsel.

in each report on Form N-CSR, its Internet address and the fact that it has posted the Code on the website; or (iii) undertaking in each report on Form N-CSR to provide to any person without charge, upon request, a copy of this Code, any such amendments and waivers or implicit waivers and explain the manner in which such request may be made.

Amendments to the Code

Any amendments to this Code, other than amendments to Appendix A, must be approved or ratified by a majority vote of the Board. The Covered Officers and the CCO are encouraged to recommend improvements to this Code for the consideration and approval of the Board.

Item	Responsible Party	Frequency
Provide copy of the Code and Initial Acknowledgement to Covered Officers	CCO	Initially upon individual becoming Covered Officer
Provide copy of the Code and Annual Acknowledgement to Covered Officers	CCO	Annual
Review of the Code and Acknowledgments	Board	Annual
Review of any sanctions imposed for Code violations	Board	As required

Adopted: October 21, 2015

EX-99.CERT

EX.99.CERT

CERTIFICATIONS

I, Richard A. Hocker, certify that:

1. I have reviewed this report on Form N-CSR of PENN Capital Funds Trust;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	9/6/2018	/s/ Richard A. Hocker
		Richard A. Hocker
		President

CERTIFICATIONS

I, Gerald McBride, certify that:

1. I have reviewed this report on Form N-CSR of PENN Capital Funds Trust;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	9/6/2018	/s/ Gerald McBride
		Gerald McBride
		Treasurer

EX-99.906 CERT

EX.99.906CERT

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of the PENN Capital Funds Trust, does hereby certify, to such officer’s knowledge, that the report on Form N-CSR of the PENN Capital Funds Trust for the year ended June 30, 2018 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as applicable, and that the information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the PENN Capital Funds Trust for the stated period.

/s/ Richard A. Hocker		/s/ Gerald McBride
Richard A. Hocker		Gerald McBride
President, PENN Capital Funds Trust		Treasurer, PENN Capital Funds Trust
Dated:	9/6/2018

This statement accompanies this report on Form N-CSR pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed as filed by PENN Capital Funds Trust for purposes of Section 18 of the Securities Exchange Act of 1934.