Shenkman Credit Fund Plc 30.06.20
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Shenkman Credit Fund plc An open ended umbrella investment company with variable capital and segregated liability between funds established in Ireland as an undertaking for collective investment in transferable securities pursuant to the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011, as amended, and the Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Undertakings for Collective Investment in Transferable Securities) Regulations 2019 Registered number 499990 Annual Report and Audited Financial Statements For the financial year ended 30 June 2020 Shenkman Credit Fund plc Annual report and audited financial statements Contents Page Directors and Other Information 2 - 3 Directors’ Report 4 - 7 Statement of Directors’ Responsibilities 8 Report from the Depositary to the Shareholders 9 Independent Auditor’s Report 10 - 13 Investment Manager’s Report 14 - 15 Statement of Financial Position 16 - 22 Statement of Comprehensive Income 23 - 24 Statement of Changes in Net Assets Attributable to Holders of Redeemable Participating Shares 25 - 26 Statement of Cash Flows 27 - 28 Notes to the Financial Statements 29 - 73 Schedule of Investments 74 - 106 Unaudited Schedule of Portfolio Changes 107 - 110 Appendix: Unaudited Total Expense Ratios 111 Unaudited Fund Performance Data 112 Unaudited UCITS V Remuneration Policy 113 1 Shenkman Credit Fund plc Directors and other information Directors Mark R. Shenkman (American) α Teddy Otto (German/Irish Resident)* Yvonne Connolly (Irish)* Frank X. Whitley (American) Kevin Molony (Irish)** Serge Todorovich (American) β Company Secretary Carne Global Financial Services Limited 2nd Floor, Block E Iveagh Court Harcourt Road Dublin 2 Ireland D02 YT22 Registered Number 499990 Registered Office 2nd Floor, Block E Iveagh Court Harcourt Road Dublin 2 Ireland D02 YT22 Investment Manager Shenkman Capital Management, Inc. and Promoter 461 Fifth Avenue, 22 nd Floor New York, NY 10017 United States of America Depositary BNY Mellon Trust Company (Ireland) Limited (until 1 December 2019) μ Guild Street IFSC Dublin 1 Ireland D01 E4X0 The Bank of New York Mellon SA/NV, Dublin Branch (effective from 1 December 2019) μ Riverside Two Sir John Rogerson’s Quay Grand Canal Dock Dublin 2 Ireland D02 KV60 Administrator, Registrar BNY Mellon Fund Services (Ireland) Designated Activity Company and Transfer Agent One Dockland Central Guild Street IFSC Dublin 1 Ireland D01 E4X0 2 Shenkman Credit Fund plc Directors and other information (continued) Legal Advisers Irish Law Arthur Cox Ten Earlsfort Terrace Dublin 2 Ireland D02 CK83 Independent Auditors Grant Thornton Chartered Accountants 13-18 City Quay Dublin 2 Ireland D02 ED70 * Directors independent of the Investment Manager. ** Independent Director as per the Corporate Governance Code for Collective Investment Schemes and Management Companies as published by Irish Funds. All Directors are non-executive. α Resigned effective 25 September 2019. β Appointed effective 25 September 2019. μ BNY Mellon Trust Company (Ireland) Limited merged into The Bank of New York Mellon SA/NV effective 1 December 2019. 3 Shenkman Credit Fund plc Directors’ Report For the financial year ended 30 June 2020 The Directors present their annual report and audited financial statements for the financial year ended 30 June 2020. Date of Incorporation Shenkman Credit Fund plc (the ‘‘Company”), an open-ended umbrella investment company with variable capital and segregated liability between its Sub-Funds, was incorporated in Ireland on 15 June 2011 under registration number 499990. The Company has been authorised as an Undertaking for Collective Investment in Transferable Securities (‘‘UCITS’’) by the Central Bank of Ireland (the “Central Bank”), and is organised as an investment company with variable capital pursuant to the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 2011, as amended (the "UCITS Regulations"), and the Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Undertakings for Collective Investment in Transferable Securities) Regulations 2019 (the "Central Bank UCITS Regulations"). The Company is an umbrella fund and, as of the date of this report, there are three active Sub- Funds (30 June 2019: four) in operation. Shenkman High Income Fund was launched on 1 July 2011, Shenkman Short Duration High Income Fund was launched on 25 August 2011 and Shenkman Global Convertible Bond Fund was launched on 21 May 2015. Shenkman Global High Yield Bond Fund was launched on 16 December 2016 and ceased trading on 22 May 2020. Principal Activities and Review of Business The Company’s principal activity is the collective investment of capital raised from the public in transferable securities. As at 30 June 2020, the following are the active share classes for each launched Sub-Fund: Sub-Fund Name Base Currency Share Classes Shenkman High US$ Share Class A USD Accumulating Income Fund US$ Share Class A USD Income Distributing EUR Share Class A EUR Hedged Accumulating GBP Share Class A GBP Hedged Income Distributing NOK Share Class A NOK Hedged Accumulating Shenkman Short US$ Share Class A USD Accumulating Duration High Income Fund US$ Share Class A USD Income Distributing US$ Share Class B USD Accumulating US$ Share Class B USD Income Distributing Shenkman Global US$ Share Class A USD Accumulating Convertible Bond Fund EUR Share Class A EUR Hedged Accumulating GBP ShareShenkman Class Finsbury A GBP Hedged Global US$Accumulating Share Class A US$ Shenkman Finsbury Global US$ Share Class A US$ 4 Shenkman Credit Fund plc Directors’ Report (continued) For the financial year ended 30 June 2020 Principal Activities and Review of Business (continued) Details of the overview of the financial year are set out in the Investment Manager’s Report on pages 14 - 15. Risks and Uncertainties A Risk Management Policy Statement has been agreed with Shenkman Capital Management, Inc. (the “Investment Manager”) and this sets out the rules and limits that are to be applied to investments. The risk management and compliance teams within the Investment Manager monitor and report on the operation of these procedures. An analysis of the financial risk management objectives and policies of the Company and how these are managed are set out in Note 7 to the financial statements. The coronavirus (“COVID-19”) outbreak which was declared by the World Health Organisation as a pandemic on 11 March 2020 has resulted in increased volatility and uncertainty in the global financial markets. The Board has also noted the operational risks that are posed to the Company and its service providers due to global and local movement restrictions that have been in place that have been enacted by various governments. COVID-19 pandemic is an unprecedented event and the eventual impact on the global economy and markets will largely depend on the scale and duration of the outbreak. The Board will continue to monitor the situation. The financial impact on this entity is not possible to estimate at this time. Significant Events During the Financial Year As previously mentioned, Shenkman Global High Yield Bond Fund ceased trading on 22 May 2020. Please refer to Note 14 of the financial statements for further details on significant events during the financial year. Subsequent Events Please refer to Note 15 of the financial statements for details on subsequent events after the financial year ended 30 June 2020. Results The financial position and results for the financial year are set out on pages 16 - 24. A detailed review of the market performances and the management policy of each of the Sub- Funds are included in the Investment Manager’s Report on pages 14 - 15. Directors The names of the persons who were Directors at any time during the financial year are set out on page 2. All Directors served throughout the financial year unless otherwise stated. Directors’ Interests The Directors and Secretary (including family interests) do not have any direct shareholdings in the Company as at 30 June 2020. 5 Shenkman Credit Fund plc Directors’ Report (continued) For the financial year ended 30 June 2020 Directors’ Interests (continued) Mark R. Shenkman was a Director (until 25 September 2019) and is the President and controlling shareholder of the Investment Manager, which is a shareholder of the Shenkman Short Duration High Income Fund. Frank Whitley is a shareholder of the Investment Manager, which is a shareholder of the Shenkman Short Duration High Income Fund. Serge Todorovich is General Counsel, Chief Compliance Officer and a shareholder of the Investment Manager. The remaining Directors did not directly or indirectly hold any shares in the Company during or as at the end of the financial year. Apart from as noted above, there are no contracts or arrangements of any significance in relation to the business of the Company in which Directors had any beneficial interest at any time during the financial year. Dividends Dividends paid or declared during the financial years ended 30 June 2020 and 30 June 2019 are shown in Note 2(e) of the financial statements. Corporate Governance Code The Directors have adopted all corporate governance practices and procedures in the voluntary Corporate Governance Code for Collective Investment Schemes and Management Companies as published by Irish Funds (the “IF Corporate Governance Code”). The Independent Director of the Company, Kevin Molony, is identified as the Independent Director