As filed with the Securities and Exchange Commission on March
22, 1996
1933 Act Registration No. 33-39574
1940 Act Registration No. 811-6254
_____________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________
FORM N-1A
REGISTRATION STATEMENT UNDER THE [ ]
SECURITIES ACT OF 1993
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 8 [X]
and/or
REGISTRATION STATEMENT UNDER THE [ ]
INVESTMENT COMPANY ACT OF 1940
Amendment No. 8 [X]
(Check appropriate box or boxes)
__________
PENN CAPITAL FUNDS, INC.
(exact name of Registrant as Specified in Charter)
216 Boulevard of the Allies, 6th Floor, Pittsburgh, Pennsylvania 15222
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code: (412) 281-2754
James M. Beimel, Jr. President
Penn Capital Funds,Inc.
216 Boulevard of the Allies, 6th floor,
Pittsburgh, PA 15222
(Name and Address of Agent for Service)
Registrant has registered an indefinite number of its shares
under the Securities Act of 1933, as amended, pursuant to Rule 24f-2
under the Investment Company Act of 1940, as amended. A Rule 24f-2
Notice for Registrant's fiscal year ended September 30, 1995 has been
filed.
It is proposed that this filing will become effective (check
appropriate box)
__ immediately upon filing pursuant to paragraph (b)
__ on (date) pursuant to paragraph (b)
__ 60 days after filing pursuant to paragraph (a)(1)
__ on (date) pursuant to paragraph (a)(1)
x 75 days after filing pursuant to paragraph (a)(2)
__ on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
__ this post-effective amendment designates a new effective
date for a previously filed post-effective amendment
<PAGE>
PENN CAPITAL FUNDS, INC.
AGGRESSIVE GROWTH FUND
CROSS-REFERENCE SHEET
BETWEEN ITEMS ENUMERATED IN PART A
OF FORM N-1A AND PROSPECTUS
Item Number
of Form N-1A Location in Prospectus
1. Cover Page...........................Cover Page
2. Synopsis.............................Summary of Fund Expenses
3. Condensed Financial Information......Financial Highlights
4. General Description of Registrant....General Description of
Fund
5. Management of the Fund...............Management of the Fund
5A. Management's Discussion of
Fund Performance.....................Inapplicable
6. Capital Stock and Other Securities...Description of Shares
7. Purchase of Securities Being
Offered..............................How Shares May Be
Purchased
8. Redemption or Repurchase.............Redemption or
Repurchases
9. Legal Proceedings....................Inapplicable
This prospectus relates only to the Aggressive Growth Fund Series
of Penn Capital Funds, Inc. Information relating to the Asset
Allocation Fund Series is contained in Post-Effective Amendment No.
7.
<PAGE>
PENN CAPITAL FUNDS, INC.
AGGRESSIVE GROWTH FUND
CROSS-REFERENCE SHEET
BETWEEN ITEMS ENUMERATED IN PART B
OF FORM N-1A AND STATEMENT OF ADDITIONAL INFORMATION
Item Number Location in Statement of
of Form N-1A Additional Information
10. Cover Page...........................Cover Page
11. Table of Contents....................Table of Contents
12. General Information and History......General Information
13. Investment Objectives and Policies...Investment Objective and
Policies
14. Management of the Fund...............Directors and Officers
15. Control Persons and Principal
Holders of Securities................Directors and Officers
16. Investment Advisory and Other
Services.............................Investment Adviser
17. Brokerage Allocation.................Brokerage
18. Capital Stock and Other Securities...Capital Stock
19. Purchase, Redemption and Pricing of
Securities Being Offered.............Additional Purchase and
Redemption Information;
Tax Shelter Plans
20. Tax Status...........................Federal Taxes
21. Underwriters.........................Distributor
22. Calculation of Performance Data......Inapplicable
23. Financial Statements.................Inapplicable
<PAGE>
PENN CAPITAL FUNDS, INC.
AGGRESSIVE GROWTH FUND
216 Boulevard of the Allies
Pittsburgh, Pennsylvania 15222
412-281-2754
PROSPECTUS-MAY , 1996
PENN CAPITAL FUNDS, INC. ("PCF") is an open-end, diversified
management investment company. PCF intends to offer shares in more
than one fund, each of which will represent a separate class of PCF's
shares and each of which will have a different investment objective
and different investment policies.
The class of securities offered hereby consists of shares of the
Aggressive Growth Fund (the "Fund"). The Fund seeks a high
total investment return for investors willing to assume a higher
degree of risk through investment in common stocks and American
Depository Receipts (see General Description of the Fund").
The Fund's investment adviser is George M. Ruby .
This Prospectus sets forth concisely information about the Fund
that a prospective investor ought to know before investing. You
should read this prospectus and retain it for future reference.
Additional information about the Fund is contained in a Statement
of Additional Information dated May , 1996, which may be revised from
time to time and which provides further information on certain matters
discussed in this Prospectus and other matters which may be of
interest to some investors. It has been filed with the Securities and
Exchange Commission and (together with any supplement thereto) is
incorporated herein by reference. A copy of the Statement of
Additional Information may be obtained without charge by writing or
telephoning PCF at the address or telephone number listed above.
Prospectuses for the other series may be obtained by writing PCF
at the above address.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
CONTENTS
Key Facts:
The Fund at a Glance 3
Summary of Fund Expenses 4
Financial Highlights 5
The Fund In Detail:
General Description of Fund 5
Risks to be Considered 7
Management of the Fund 7
Portfolio Brokerage 7
Rule 12b-1 Distribution Plan 8
Your Account:
How Shares May Be Purchased (including sales charges) 9
Calculation of Net Asset Value 11
Tax-Sheltered Retirement Plans 12
Redemption and Repurchases 12
Automatic Withdrawal Plan 13
Dividends, Distributions and Taxes 14
More About The Fund:
Additional Information 14
<PAGE>
THE FUND AT A GLANCE
Investment Goal: Capital appreciation (increase in the value of the
Fund's shares) through investment in common stocks and American
Depository Receipts, as selected by the Fund's investment adviser.
Strategy: Invest in common stock and American Depository Receipts.
The Fund is an open-end diversified management investment company.
Risks: The Fund is intended for long-term investors who want long-term
growth rather than income and who are willing to assume a risk of
significant fluctuations in value over the short-term. It is not
suitable for short-term investors or those seeking current income.
Investment Adviser: George M. Ruby . See "Management of the
Fund" in this Prospectus.
To Purchase Shares: See "How Shares May Be Purchased" in this
Prospectus.
To Redeem Shares: See "Redemption and Repurchases" in this Prospectus.
<PAGE>
SUMMARY OF FUND EXPENSES
SHAREHOLDER TRANSACTION EXPENSE
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price). . . . . . . . . . . . . . 4.75%
Maximum Sales Load Imposed on Reinvested Dividends. . . . . . . . . .None
Deferred Sales Loan . . . . . . . . . . . . . . . . . . . . . . . . .None
Redemption Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . .None
Exchange Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . .None
Estimated Annual Fund Operating Expenses
(as a percentage of average net asset)
Management Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.00%
12b-1 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.25%
Other Expenses*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.00%
Administrative Fees . . . . . . . . . . . . . . . . . . . . . . . . 0.50%
Total Fund Operating Expenses* . . . . . . . . . . . . . . . . . . . . . 4.75%
*Estimated
The purpose of the tables is to help you understand all expenses
and fees that you would bear directly or indirectly as a Fund
shareholder. Since the Fund has not commenced operation yet, the
Fund's expenses are estimated based on the experience of PCF's
existing fund.
EXAMPLE
You would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return, (2) redemption at the end of each time
period and (3) reinvestment of all dividends and capital distribution.
1 Year 3 Years 5 Years 10 Years
$92.80 $185.74 $275.14 $505.63
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF ACTUAL
FUTURE EXPENSES OR PERFORMANCE. ACTUAL EXPENSES IN THE FUTURE MAY BE
GREATER OR LESSER THAN THOSE SHOWN.
<PAGE>
FINANCIAL HIGHLIGHTS
The Fund will commence operations using the funds acquired
pursuant to this offering. As a result, it has no operating history
at this point. It is anticipated that once this offering is declared
effective by the Securities and Exchange Commission, the Fund's
Investment Adviser will immediately invest in the Fund approximately
$100,000 as the initial funds for operation of the Fund.
GENERAL DESCRIPTION OF FUND
INVESTMENT OBJECTIVE - The Fund's investment objective is capital
appreciation. It seeks to achieve its objective by investing
primarily in common stocks and American Depository Receipts, the
earnings and prices of which the Investment Adviser expects to grow at
a rate above that of the S&P 500. However, there can be no assurance
that the Fund's investment objective will be achieved. The Fund's
investment objective cannot be changed without approval by the holders
of a majority, as defined in the Investment Company Act of 1940, as
amended, (the "Investment Company Act"), of the Fund's outstanding
voting shares.
INVESTMENT POLICIES - The Fund intends that, under normal market
conditions, it will have at least 90% of its total assets invested in
a portfolio of common stocks and American Depository Receipts, which
the Investment Adviser believes have above-average earnings growth
prospects based on a company-by-company analysis (rather than on
broader analysis of specific industries or sectors of the economy).
The Investment Adviser seeks to identify stocks of companies
which he expects to enter into an accelerating earnings period, to
attract increasing institutional sponsorship or to demonstrate strong
price appreciation relative to broad market averages over the long
term. The companies in which the Fund invests do not necessarily have
records of past high growth. Examples of possible investments include
companies with cyclical earnings, companies with new and innovative
products or services, companies facing a changed economic, competitive
or regulatory environment, companies with a new or different
management approach and initial public offerings of companies which
the Investment Adviser believes offer above-average growth potential.
The Fund intends to invest primarily in companies with low and
medium market capitalization. On occasion, the Fund will invest in
large capitalization companies that, in the opinion of the Investment
Adviser, are undervalued and present an opportunity for significant
appreciation over the long term.
The Investment Adviser gets information from various sources and
daily publications which show current earnings reports for most
domestic and many international companies. He analyzes financial
reports and makes investment decisions based on the financial strength
of companies. The Investment Adviser also looks for companies which
have paid dividends consistently, but also have a likelihood of
significant appreciation over the long term.
The Fund retains cash and cash equivalents in amounts deemed
adequate for current needs, and may make short-term investments during
periods when, in the opinion of the Investment Adviser, attractive
equity investments are not available. See "Certain Portfolio
Securities - Short-Term Investments".
The Fund's net asset value may be subject to above-average
fluctuations compared to the net asset value of other investment
companies because greater than average risk will be assumed in
investing in companies for the purposes of seeking to achieve higher
than average capital growth. The Fund's investment policies may
result in portfolio turnover substantially greater than the turnover
of many other investment companies. See "Portfolio Turnover".
CERTAIN PORTFOLIO SECURITIES
American Depository Receipts - The Fund may invest up to 50% of its
total net assets in the securities of foreign issuers in the form of
American Depository Receipts ("ADRs"). ADRs are receipts typically
issued by a United States bank or trust company which evidence
ownership of underlying securities issued by a foreign corporation.
Generally, ADRs in registered form are designed for use in the United
States securities markets. The Fund may invest in ADRs through
"sponsored" or "unsponsored" facilities. A sponsored facility is
established jointly by the issuer of the underlying security and a
depository, whereas a depository may establish an unsponsored facility
without participation by the issuer of the deposited security.
Holders of unsponsored depository receipts generally bear all the
costs of such facilities and the depository of an unsponsored facility
frequently is under no obligation to distribute shareholder
communications received from the issuer of the deposited security or
to pass through voting rights to the holders of such receipts in
respect of the deposited securities.
Short-Term Investments - The Fund may invest in short-term investments
during periods when, in the opinion of the Investment Adviser,
attractive equity investments are temporarily unavailable or other
circumstances or market conditions warrant such investments. Under
normal circumstances no more than 10% of the Fund's total assets will
be retained in cash and equivalents. Such investments may include
U.S. Treasury Bills or other U.S. Government or Government agency
obligations; certificates of deposit of the 50 largest commercial
banks in the United States, measured by total assets as shown by their
most recent annual financial statements; commercial paper rated A-1 or
A-2 by Standard & Poor's Corporation or P-1 or P-2 by Moody's
Investors Service or, if not rated, issued by companies having an
outstanding debt issue rated AA or better by Standard & Poor's or Aa
by Moody's; or shares of money market mutual funds.
INVESTMENT RESTRICTIONS
Borrowings by the Fund are not permitted except (a) from banks
for temporary or emergency purposes up to a maximum of 5% of the value
of the total net assets of the Fund at the date of borrowing and (b)
in an amount up to one-third of the value of the Fund's total net
assets, in order to meet redemption requests without immediately
selling any securities.
For a further discussion of investment policies, see the
Statement of Additional Information.
The Fund's investment objective and investment policies are
deemed fundamental policies and may not be changed without shareholder
approval.
CALCULATING FUND PERFORMANCE
Fund performance will be calculated pursuant to a formula which
is described in detail in the Statement of Additional Information,
which is incorporated herein by reference.
RISK FACTORS
The Fund is intended for long-term investors who are willing to
assume the risk of significant fluctuations in value over the short-
run in search of potentially greater-than-average capital
appreciation. It is not suitable for short-term investors or those
seeking current income.
LACK OF EXPERIENCE OF THE INVESTMENT ADVISER - Although the Investment
Adviser has been investing his own money in stocks of both U.S and
foreign issuers for many years, he has no experience in managing a
portfolio of stocks for an investment company or mutual fund, such as
the Fund, or any other institutional or individual investor.
OTHER INVESTMENT CONSIDERATIONS - The Fund's net asset value is not
fixed and should be expected to fluctuate. You should purchase Fund
shares only as a supplement to an overall investment program and only
if you are willing to undertake the risks involved.
MANAGEMENT OF THE FUND
George M. Ruby (the "Investment Adviser"), who maintains his
office at 648 Regency Drive, Pittsburgh, Pennsylvania 15239, serves as
the Fund's investment adviser, subject to the overall authority of the
PCF's Board of Directors. During the past five years, Mr. Ruby has
worked as a commercial real estate broker. For his services as the
Fund's Investment Adviser, he will be paid an advisory fee at an
annual rate of 1.00% of the daily net assets of the Fund.
American Data Services, Inc. ("ADS"), located at 24 West Carver
Street, Huntington, New York 11743, provides the PCF and the Fund with
accounting services, pursuant to a Fund Accounting Services Agreement
with PCF dated November 1, 1995. For these services ADS is paid a
monthly fee based on the average net assets of each of the funds
offered by PCF, including the Fund, during the prior month on the
following scale: under $2 million - $600; from $2 million to $5
million - $800; from $5 million to $10 million - $1,100; from $10
million to $15 million - $1,400; from $15 million to $20 million -
$1,700; from $20 million to $25 million - $2,000; and for amounts over
$25 million - $2,000 plus 1/12th of .0275% on all average net assets
in excess of $25 million. Fees are subject to increase to reflect the
annual change in the Consumer Price Index for the Northeast region.
The Fund is also to reimburse ADS for its out-of-pocket expenses
incurred in connection with this work.
ADS is also acting as the transfer agent for the Fund. For these
services it will receive a monthly fee of the greater of $200.00 or
$10.00 per account which is open at any time during the year plus
certain transaction fees. These fees are subject to annual increase
to reflect the Consumer Price Index for the Northeast region.
PCF has entered into an administrative services agreement with
James M. Beimel, Jr., the President of PCF . Under this
agreement Mr. Beimel, who does not receive a salary from PCF or
the Fund, will perform all the needed administrative services for
PCF and all of its funds, including the Fund, including
providing space for PCF's offices in Pittsburgh. Mr. Beimel has
entered into a sub-administrator agreement with ADS whereby it will
perform certain of the administrative functions needed by PCF
and the Fund. The total monthly fee for both Mr. Beimel and ADS
under these agreements is 1/12 of 0.5% of the combined average net
assets of PCF's funds, with a minimum fee of $5,000 per month. The
fees are subject to annual increase to reflect the Consumer Price
Index for the Northeast region. Of the total fee amount, Mr. Beimel
will receive each month minimum of $4,000. Mr. Beimel and ADS will be
reimbursed for their out-of-pocket expenses in connection with
performing the agreements, other than those costs which Mr. Beimel has
specifically agreed to assume on the Fund's behalf. Neither PCF
nor the Fund has any employees.
Dunwoody Brokerage Services, Inc. ("Dunwoody") is the Fund's
distributor. It is located at 8309 Dunwoody Place, Atlanta, Georgia
30350-3307.
Mr. Ruby, the Fund's Investment Adviser, is acting as custodian
for the Fund under a self-custody arrangement permitted under the
applicable laws.
PORTFOLIO BROKERAGE
The Adviser intends to direct brokerage through one or more
brokerage firms, none of which will be an affiliate of the Fund, based
on best price and execution. The Board of Directors of the Fund must
periodically determine that the brokerage fees are fair and
reasonable.
PORTFOLIO TURNOVER
The rate of portfolio turnover will depend upon market and other
conditions, and it will not be a limiting factor when the Investment
Adviser believes that portfolio changes are appropriate. It is
anticipated that the annual portfolio turnover rate for the Fund
ordinarily will approximate 100%. An annual turnover rate of 100% or
more could occur, for example, if all, or more than all, of the
securities in the portfolio are replaced within a period of one year.
An annual turnover rate of 100% or more would result in the Fund
paying more in brokerage fees in any given year than a mutual fund
with a less active investment adviser.
RULE 12b-1 DISTRIBUTION PLAN
The Fund has adopted a Distribution Plan (the "Distribution
Plan"), pursuant to Rule 12b-1 under the Investment Company Act of
1940, which provides that the Fund may incur certain costs in
connection with the distribution of the Funds shares. In any year
those costs will equal the expenses the Fund may incur in the
distribution of the Fund's shares, other than distribution expenses
incurred by the Fund's primary distributor Dunwoody Brokerage
Services, Inc., (including reasonable allocation of overhead) but will
not exceed 0.25% per annum of the Fund's daily net assets. The Plan
is intended to benefit the Fund through increased sales of shares,
thereby reducing the Fund's expense ratio and providing an asset size
that will allow the Adviser greater flexibility in management.
Amounts paid under the Plan and a related Distribution Assistance
Agreement are paid to the Fund's administrator James Beimel, for his
services in marketing the Fund and may be spent by him on any
activities or expenses primarily intended to result in the sale of
shares of the Fund, including but not limited to, expenses (including
overhead and telephone expenses) of printing of prospectuses and
reports for other than existing shareholders, and advertising and
preparation and distribution of sales literature. Allocation of
overhead (rent, utilities, etc.) will be based on the percentage of
utilization in, and time devoted to, distribution activities. Each
expenditure must be specifically approved in advance by the Board of
Directors and by the President of PCF and persons authorized to make
expenditures must provide at least quarterly to the Board, and Board
is required to review, a written report setting forth amounts expended
and the purposes for which the expenditures were made. Payments
pursuant to the Distribution Plan are included in the operating
expenses of the Fund.
HOW SHARES MAY BE PURCHASED
An investor wishing to purchase shares of the Fund should use the
Aggressive Growth Fund Share Purchase Application. A copy of that
Application is contained in the back of this Prospectus. A copy may
also be obtained from any broker with whom Dunwoody, the Fund's
primary distributor, has a dealer agreement. The executed
application, together with the investor's check made payable to Penn
Capital Funds, Inc. should be transmitted to the Fund, c/o Star Bank,
N.A., P.O. Box 640153, Cincinnati, Ohio 45264-0153. Share purchases
become effective at the offering price next determined after receipt
of the above.
Shares of the Fund are continuously offered and may be purchased
at an offering price equal to the net asset value per share next
determined following the time of sale plus the applicable sales
charges. The offering price is computed once daily at 4:00 p.m. New
York time each day the New York Stock Exchange is open. (See
"Calculation of Net Asset Value").
The minimum initial investment in the Fund is $500. Subsequent
investments must be in the minimum amount of $50. Investments under
tax qualified plans sponsored by PCF will be subject only to the
minimum investment requirements specified in such plans. The amount of
sales charge is computed in accordance with the following schedule:
Dealer
Discount
Sales Charges as % of as % of
Amount Offering Offering
Amount of Purchase Invested Price Price
Less than $100,000 4.99% 4.75% 4.00%
$100,000 but under $250,000 3.90% 3.75% 2.85%
$250,000 but under $500,000 2.56% 2.50% 2.00%
$500,000 but under $1,000.000 2.04% 2.00% 1.60%
$1,000,000 but under $3,000,000 1.01% 1.00% 0.80%
There is no sales charge on purchases of $3,000,000 and above. If
investments at net asset value are made, the distributor will pay the
dealer a fee of .15% of the amount invested out of its sales
commission, or if there is no commission on that sale, out of sales
commissions from other sales or its own resources.
Purchases of Fund shares are aggregated in determining the
applicable level of sales charge. The above scale of sales charges
applies to purchases made at one time by a single purchaser or by an
individual, his spouse or their children under the age of 21. The
scale also applies to share purchases made at one time for a single
trust or fiduciary account, including a pension, profit sharing or
other employee benefit trust created pursuant to a plan qualified
under Section 401 of the Internal Revenue Code.
Under certain other circumstances shares may also be purchased at
net asset value without a sales charge. The shares of the Fund will
be offered and sold without a sales charge to those investors who have
redeemed securities or an interest in securities issued by other
investment companies (including unit investment trusts) not affiliated
with PCF in order to invest in the Fund. You must provide appropriate
documentation that the redemption occurred not more than 60 days prior
to the reinvestment of the proceeds in shares of the Fund, and that
you either paid an up-front sales charge or contingent deferred sales
charge in respect of the redemption of such shares of such other
investment company. Finally, shares of the Fund may be issued at net
asset value without a sales charge in connection with the acquisition
by the Fund of another investment company. All purchases under the
special sales charge waivers will be subject to minimum purchase
requirements as established by the Fund.
PRE-AUTHORIZED CHECK PLAN
Shareholders may accumulate Fund shares regularly each month by
means of pre-authorized bank drafts drawn on their checking accounts.
Such a plan is voluntary and may be discontinued by the shareholder at
any time without penalty. To participate in this plan, shareholders
should request signature authorization cards from Dunwoody or from any
broker/dealer having a dealer agreement with Dunwoody.
WRITTEN STATEMENT OF INTENTION
A Letter of Intent provides an opportunity for an investor to
obtain a reduced sales charge by aggregating his/her investments over
a 13-month period for purposes of determining the sales charge (as
calculated from the above chart) applicable to the investments made
over that time. The amount of the aggregate investment can be
calculated to include purchases of shares of the Fund made by the
investor over a 13-month period based on the total amount of intended
purchases plus the purchase price of all shares of the Fund previously
purchased and still owned. An alternative method of calculation is to
compute the 13-month period starting up to 90 days before the date of
execution of a Letter of Intent. Each investment made during the
period receives the reduced sales commission applicable to the amount
of the investment goal. If the goal is not achieved within the
period, the investor must pay the difference between the commissions
applicable to the aggregate amount of purchases actually made and the
amount of commissions previously paid.
To insure compliance with provisions of the Investment Company
Act out of the initial purchase, 5% of the total dollar amount of
intended purchases stated in the Letter of Intent will be held in
escrow in the form of shares (computed to the nearest full share at
the applicable public offering price) registered in the purchaser's
name. These shares will be held in escrow at ADS. Dividends and
capital distributions paid with respect to these shares will be used
to purchase shares of the Fund at its then current net asset value.
Shares so purchased will be applied to reduce the investor's total
shares to be purchased under the Letter of Intent.
When the total amount of purchases actually made pursuant to the
Letter of Intent equals the amount specified in the Letter, the escrow
shares will be released from restriction.
If the total amount of purchases actually made pursuant to the
Letter of Intent is less than the amount specified in the Letter, the
purchaser must remit to PCF an amount equal to the difference between
the dollar amount of sales charges actually paid by the investor and
the amount of sales charges which would have been paid on the total
purchases if all such purchases had been made at a single time. If
within 10 business days after it makes a written request, PCF does not
receive said difference in sales charges, PCF will redeem an
appropriate number of escrow shares to realize such difference. If
the proceeds from this redemption are inadequate, the purchaser will
be liable to PCF for the difference. The remaining shares after the
redemption will be deposited in the investor's account unless PCF is
otherwise instructed.
The purchaser irrevocably constitutes and appoints PCF as his/her
attorney to surrender for redemption any or all shares on the books of
the Fund under the conditions previously outlined.
RIGHT OF ACCUMULATION
Reduced sales charges are also applicable to Fund shares
purchased by a person if the dollar amount thereof, plus the value of
shares of the Fund then held of record by such person (valued at their
current offering price or at their original purchase price, whichever
is greater), equals $100,000 or more.
Dunwoody must be promptly notified of each sale which entitles a
shareholder to this reduced sales charge. The notice to Dunwoody may
come from either the shareholder or the shareholder's dealer, and
notice from either will be sufficient to entitle the shareholder to
the reduced sales charge.
CALCULATION OF NET ASSET VALUE
The net asset value per share is computed as of the close of
trading on the floor of the New York Stock Exchange (currently 4:00
p.m. New York time), on each day the New York Stock Exchange is open
for business. The Fund observes the following holidays and does not
calculate net asset value on those days: New Years Day, Memorial Day,
Fourth of July, Labor Day, Thanksgiving, and Christmas, or the day on
which any of such holidays is observed as a federal holiday. For
purposes of determining net asset value, options contracts will be
valued 15 minutes after the close of trading on the floor of the New
York Stock Exchange. The net asset value per share is calculated by
determining the value of the Fund's assets, subtracting its
liabilities and dividing the result by the total number of shares
outstanding.
Current values for the Fund's securities are determined as
follows:
1. Securities that are traded on a national securities exchange or on
the over-the-counter Nasdaq National Market are valued on the basis of
the last sales price on the exchange where primarily traded or Nasdaq
prior to the time of the valuation, provided that a sale has occurred
and that this price reflects current market value according to
procedures established by the Board of Directors;
2. Securities traded in the over-the-counter market, other than on
Nasdaq, for which market quotations are readily available, are valued
at the mean of the bid and asked prices at the time of valuation;
3. Short-term debt instruments with remaining maturities of sixty days
or less are valued at market value, if market quotations are
available, or amortized cost (original purchase cost as adjusted for
amortization of premium or accretion of discount), if market
quotations are not available, which, when combined with accrued
interest approximates market and which reflects fair value as
determined by the Fund's Board of Directors; and
4. Short-term debt instruments with remaining maturities of more than
sixty days, for which market quotations are readily available, are
valued at current market value. If such security was traded on the
valuation date, current market value is the last quoted sale price. In
the absence of a sale on the valuation date, the mean of the current
closing bid and ask prices is used.
5. In the event a listed security does not trade on an exchange on any
given date, the security value is the mean of the bid and asked prices
of any market makers making a market in such listed security. In the
absence of such mean prices, the valuation is the fair value as
determined in good faith by the Board of Directors in accordance with
its procedures.
TAX-SHELTERED RETIREMENT PLANS
Shares of the Fund are available for purchase in connection with
the following tax sheltered retirement plans:
- -- Tax Sheltered Custodial Plan Section 403(b)(7) for those persons
who are employees of tax exempt charitable, religious and educational
organizations
- -- Individual Retirement Account Plans for individuals.
Detailed information concerning these plans is available from
Dunwoody. That information should be read carefully before deciding
to invest, and the investor may wish to consult with a tax advisor.
That information describes the Federal income tax consequences of
establishing a plan. ADS, as trustee of all such plans, charges a $13
annual maintenance fee (subject to change by the trustee) for each
retirement plan account.
REDEMPTION AND REPURCHASES
Shares of the Fund may be redeemed at any time at their current
net asset value next determined after the Fund receives a redemption
request in proper form. The value of shares of the Fund on redemption
may be more or less than the shareholder's initial cost, depending
upon the market value of the Fund's assets at the time. Redemption
requests should be sent to Star Bank, N.A., P.O. Box 640153,
Cincinnati, Ohio 45264-0153.
The shares of the Fund will be redeemed and the redemption
proceeds will be paid to the person(s) entitled thereto within seven
days after receipt by the Fund of the following items:
1. A written request for redemption which sets forth the name(s) in
which the account is registered, the account number, and the number of
shares or the dollar value of the shares to be redeemed. Shareholders
requesting redemption must have their signatures guaranteed either by
a national bank or trust company, a state bank which is a member bank
of the Federal Reserve System or the Federal Deposit Insurance
Corporation, or by a member firm of a national securities exchange or
a firm that is a member of the National Association of Securities
Dealers, Inc.
2. Such additional documents as the Fund may require in the case of
shares held by a corporation, trustee, executor or administrator.
In addition, if a check (including a certified or cashier's
check) issued for the purchase of shares being redeemed has not
cleared, then a request for redemption will be held up until such
check has cleared, which may take up to 15 days, although the shares
being redeemed will be priced for redemption at the next determined
net asset value. The "next determined net asset value" will be the
first net asset value per share computed after receipt of the
redemption request.
The Fund has appointed ADS as its agent to accept orders from
dealers by wire or telephone for the redemption of Fund shares. The
Fund may revoke or suspend its authorization at any time. It is the
dealer's responsibility to promptly transmit redemption orders. The
redemption price will be the per share net asset value next computed
after receipt of a redemption order placed by the shareholder's dealer
by telephone or telegraph. Payment of the redemption proceeds will be
made to the dealer who placed the redemption order promptly upon
delivery of a stock power with signature(s) guaranteed as described
above. If any supporting documents are necessary, these must be
forwarded simultaneously. Dealers may charge a fee for handling your
redemption transactions.
The Fund and ADS will employ reasonable procedures to confirm
that instructions communicated by dealer's telephone are genuine,
including use of dealer numbers, call-backs and receipt of written
confirmation. The Fund and ADS may be liable for any losses due to
unauthorized or fraudulent instructions if reasonable procedures are
not employed.
The Board of Directors has authorized the Fund to redeem all Fund
shares in any shareholder account which has a total value of $500 or
less due to redemptions. Prior written notice of at least sixty days
must be given to any shareholder before such a redemption may take
place. If the shareholder increases the value of his/her account
through the purchase of additional shares to an amount equal to or
greater than $500 by the end of the sixty-day period or such longer
period as indicated, no such automatic redemption will take place.
Shareholders making a minimum initial investment of $500 should be
aware that the Fund may redeem the entire shareholder account if the
value of shares in the account falls below $500 due to redemptions.
AUTOMATIC WITHDRAWAL PLAN
Any shareholder who owns or purchases shares of the Fund which
are valued at $10,000 or more, may establish an Automatic Withdrawal
Plan under which he/she will receive a monthly or quarterly check in a
stated amount which cannot be less than $50.
Dividends and distributions with respect to the shareholder's
account must be reinvested in the Fund at net asset value, and shares
of the Fund will be redeemed as necessary to meet withdrawal payments.
A shareholder may request that the amount of the withdrawal be
calculated on the basis of a selected percentage of the aggregate net
asset value of his/her account as of the end of the preceding year.
This will result in a fixed dollar amount for each withdrawal.
Redemption of shares for withdrawal purposes may reduce or even
liquidate the account. A withdrawal plan may be terminated at any
time by the shareholder. Purchases of additional shares made
concurrently with withdrawal are undesirable because of the sales
charges when purchases are made. While an occasional lump sum
investment may be made by a shareholder who is maintaining an
automatic withdrawal plan, such investment should normally be in the
amount of $10,000 or more.
DIVIDENDS, DISTRIBUTIONS AND TAXES
PCF has elected to qualify for treatment as a regulated
investment company under Subchapter M of the Internal Revenue Code.
The Fund will distribute to shareholders substantially all of their
investment income semiannually in June and December and will
distribute substantially all of its net capital gains, if any, in
December of each year. All dividends and capital gains distributions
made will be reinvested in additional shares of the Fund at net asset
value per share as of the payment date, unless the shareholder
otherwise elects by notifying the Fund in writing or by checking the
appropriate box on the Fund application.
Each PCF fund is treated as a separate corporation for Federal
tax purposes. Any net capital gains recognized by a fund in a tax
year will be distributed to its investors without need to offset (for
Federal tax purposes) such gains against any net capital losses of
another fund. Because the Fund intends to distribute all of its net
investment income and capital gains to shareholders, it is not
expected that the Fund will be required to pay any Federal income tax.
However, shareholders of the Fund normally will have to pay
Federal income taxes, and any applicable state and local taxes, on the
dividends and capital gains distributions they receive from the Fund,
whether or not they are reinvested in additional shares of the Fund.
Shareholders not subject to tax on their income will not be required
to pay tax on amounts distributed to them. Information as to the tax
status of dividends and distributions paid by the Fund on its shares
will be sent annually to shareholders after the close of each year.
You should consult your tax adviser regarding specific questions
as to Federal, state and local taxes.
ADDITIONAL INFORMATION
Penn Capital Funds, Inc. is an open-end, diversified management
investment company located at 216 Boulevard of the Allies, 6th Floor,
Pittsburgh, Pennsylvania 15222. It was incorporated under the laws of
the Commonwealth of Pennsylvania on February 27, 1991. The Fund has
300,000,000 authorized shares of common stock, no par value. The
Board of Directors may classify or reclassify any unissued shares of
common stock into any number of classes or series of common stock. It
is the Board's intention, over time, to create several additional
classes or series of common stock, each to be an interest in a
different investment fund with differing investment approaches. The
Board may set or change the preferences, conversion or other rights,
voting powers, restrictions, limitations as to dividends,
qualifications and terms or conditions of redemption of any class of
unissued shares of common stock.
Description of Shares
The securities offered hereby are shares of Series B Common Stock
- - Aggressive Growth Fund. There are 10,000,000 shares of common stock
classified in this Fund. Each share of common stock of the Fund
is without par value, represents an equal proportionate interest in
the Fund, and is entitled to such dividends and distributions out of
the income earned on the assets belonging to the Fund as are declared
in the discretion of PCF's Directors. All consideration received by
PCF for the issue or sale of shares of any class of common stock,
together with all assets in which that consideration is invested and
reinvested, income, earnings, profits and proceeds thereof, including
any proceeds derived from the sales, exchange or liquidation thereof,
and any funds or payments derived from any reinvestment of such
proceeds will belong solely to the class of common stock with respect
to which such assets, payments or funds were received by PCF.
Currently, no class of securities of PCF other than common stock of
the Fund is outstanding.
Shareholders are entitled to one vote for each full share held
(and a fractional vote for each fractional share held), and will vote
in the aggregate and not by class except as otherwise expressly
required by law. See the Statement of Additional Information,
"Capital Stock", for a description of each Fund's voting rights.
Shareholders have no preemptive rights. Shares when issued will
be maintained in book entry form. Paper certificates will not be
issued. Shares when issued will be fully paid and nonassessable, and
there are no restrictions on their transferability.
Shareholder Inquiries
Shareholders may direct inquires to the Fund at its offices at
216 Boulevard of the Allies, 6th Floor, Pittsburgh, Pennsylvania
15222; telephone (412) 281-2754.
Withholding
Mutual funds are required to withhold 31% of dividends,
distributions of capital gains and redemption proceeds from accounts
without a valid social security or tax identification number. You
must provide this information when you complete the Fund's application
and certify that your are not currently subject to backup withholding.
The Fund reserves the right to close by redemption accounts for which
the holder fails to provide a valid social security or tax
identification number.
Shareholder Meetings
PCF will hold both annual and special shareholder meetings at
times and places to be determined by the Board of Directors.
<PAGE>
PENN CAPITAL FUNDS, INC.
AGGRESSIVE GROWTH FUND
Statement of Additional Information
May , 1996
This Statement of Additional Information is not a prospectus but
should be read in conjunction with the current prospectus for the
Aggressive Growth Fund of Penn Capital Funds, Inc. (dated May , 1996).
A copy of the prospectus may be obtained by writing the Distributor,
Dunwoody Brokerage Services, Inc., 8309 Dunwoody Place, Georgia 30350-
3307.
This Statement of Additional Information relates only to the
Aggressive Growth Fund Series of Penn Capital Funds, Inc. Information
relating to the Asset Allocation Fund Series is contained in Post-
Effective Amendment No. 7.
<PAGE>
PENN CAPITAL FUNDS, INC.
Statement of Additional Information
May , 1996
Table of Contents
General Information..........................................B-1
Investment Objective and Policies............................B-1
Aggressive Growth Fund.......................................B-1
Yield Disclosure.............................................B-1
Investment Restrictions......................................B-2
Additional Purchase and Redemption Information...............B-3
Tax-Sheltered Plans..........................................B-4
Individual Retirement Account Plan...........................B-4
Directors and Officers.......................................B-5
Investment Adviser...........................................B-6
Administrator................................................B-7
Rule 12b-1 Distribution Plan.................................B-7
Custodian....................................................B-8
Transfer and Dividend Agent..................................B-8
Independent Certified Public Accountants.....................B-8
Portfolio Brokerage..........................................B-9
Capital Stock................................................B-9
Distributor..................................................B-10
<PAGE>
GENERAL INFORMATION
PCF was incorporated under the laws of the Commonwealth of
Pennsylvania on February 27, 1991. It has never operated under any
other name and has only been engaged in business as an open-end
management investment company.
INVESTMENT OBJECTIVES AND POLICIES
The following policies supplement the Aggressive Growth Fund's
investment objectives and policies as set forth in the Prospectus
dated May , 1996.
AGGRESSIVE GROWTH FUND
The Aggressive Growth Fund (the "Fund") is classified as being
diversified which means that it will qualify as a diversified open-end
management company under the Investment Company Act. The Fund will
invest its assets so as to meet its concentration policy of investing
less than 25% of its assets in any one industry group. Further, the
Fund will invest its assets in such a manner that 75% of its assets
will be diversified in the following manner: (a) no investments will
be made in any company that exceeds 5% of the total net assets of the
Fund; and (b) no investments will be made if such investment would
cause the Fund to own more than 10% of the voting stock of any
company. The remaining 25% of the Fund's net assets need not be
diversified as specified in (a) and (b), but still may not violate the
Fund's basic concentration policy.
YIELD DISCLOSURE
A non-money market fund must calculate yield based on a 30 day or one
month period ended on the date of the most recent balance sheet. The
following formula is to be used:
6
Yield = 2 [(a - b + 1) - 1]
-------------------
c x d
Where a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursement)
c = the average daily number of shares outstanding during
the period that were entitled to receive dividends
d = the maximum offering price per share on the last day of
the period
AVERAGE ANNUAL COMPOUNDED TOTAL RATE OF RETURN
n
P(1 + T) = ERV
Where:
P= a hypothetical initial payment of $1,000
T= average annual total return
n= number of years
ERV= ending redeemable value of a hypothetical $1,000
payment made at the beginning of the 1, 5 or 10
year periods at the end of the 1, 5, or 10 year
periods (or fractional portion thereof)
The maximum sales load is to be deducted from the initial $1,000
payment. All dividends and capital gains are assumed to have been
reinvested at the price in effect on the reinvestment date. Full
redemption and any corresponding redemption or contingent deferred
sales load are to be assumed as of the last day of each period.
INVESTMENT RESTRICTIONS
The following are fundamental investment policies of the Fund and may
not be changed without the approval of a majority of the shareholders
of the Fund:
1. The assets of the Fund will normally be fully invested, with 90%
of its total net assets invested in common stock and American
Depository Receipts. However, during periods of unusual market
conditions and, as a temporary defensive measure the Fund may
invest up to 100% of its net assets in high-quality short-term
money market instruments.
2. As to 75% of the market value of its total net assets, the Fund
shall not:
(a) invest more than 5% of the value of the net assets of the
Fund in securities of one issuer (except cash or cash
instruments and securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities).
(b) purchase more than 10% of the outstanding voting securities
of such issuer.
3. Less than 25% of the total net assets of the Fund will be
invested in the securities of issuers in any one industry.
4. Borrowings by the Fund are not permitted except (a) from banks
for temporary or emergency purposes up to a maximum of 5% of the
value of the total net assets of the Fund at the date of
borrowing and (b) in an amount up to one-third of the value of
the Fund's total assets, in order to meet redemption requests
without immediately selling any securities. This borrowing
provision is not for investment leverage purposes but solely to
facilitate management of the portfolio by enabling the Fund to
meet redemption requests where the liquidation of portfolio
securities is deemed to be inconvenient or disadvantageous. A
liquidation would be inconvenient or disadvantageous if it would
require a sale of securities during periods of temporarily
depressed security prices, or if a sale would place the Fund in
violation of rules relating to short security profits or cause an
imbalance in the Fund's investment or diversification postures.
Interest paid on borrowed funds will not be available for
investment. While any such borrowings are outstanding, no
investment securities may be purchased by the Fund. If the asset
coverage of the indebtedness falls below 300%, the Fund may be
required to sell certain of its portfolio securities to be in
compliance with the Investment Company Act, which may be at a
time when it is disadvantageous to dispose of such securities.
The Fund will attempt to liquidate any such borrowings as soon as
possible after they are incurred.
5. Securities of other issuers will not be underwritten and
investments will not be made in restricted securities.
6. Investments in real estate or real estate mortgage loans will not
be made.
7. No purchase or sale will be made of future contracts, commodities
or commodity contracts or oil or gas interests.
8. Loans will not be made to other persons except by the purchase of
the debt obligations in which the Fund is authorized to invest in
accordance with its investment policies.
9. Short sales or purchases on margin and the writing of put and
call options will not be permitted, but the Fund may obtain such
short-term credits as may be necessary for clearance of purchases
and sales of securities.
10. The Fund will not issue senior securities, however, the Fund may
borrow money from banks. (See Fundamental Investment Restriction
3 above.)
The following are significant investment policies of the Fund which
are not deemed fundamental and may be changed without shareholder
approval:
1. No investment will be made in the securities of any issuer for
the purpose of exercising management or control.
2. Investments will not be made in foreign securities or foreign
currencies, although the Fund may invest in the American
Depository Receipts of non-U.S. Companies.
3. No more than 10% of the total net assets of the Fund will be
invested in the securities of other investment companies.
4. The Fund will not purchase any security if, as a result, the Fund
would then have more than 5% of its total net assets (taken at
current value) invested in the securities of companies (including
predecessors) less than three years old.
5. The Fund will not purchase or retain securities of any company
if, to the knowledge of the Fund, Officers and Directors of the
Fund or of the Adviser who individually own more than 1/2 of 1%
of the securities of that company together own beneficially more
than 5% of such securities.
With respect to Fundamental Investment Restriction 3, the Fund will
not engage in such activities to in an amount in excess of 5% of its
net assets and does not expect to do so during the coming year.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Orders for the purchase of shares of the Fund received prior to 4:00
p.m. on any day on which the New York Stock Exchange is open for
business will be priced at the per share net asset value computed for
that day. Orders received after that time or on Saturdays, Sundays or
holidays will be priced at the per share net asset value next
computed.
The Fund's Board of Directors may suspend the right of redemption or
postpone the date of payment upon redemption when:
1. The New York Stock Exchange is closed for other than customary
weekend or holiday closings or trading on such Exchange is restricted;
2. There exists an emergency as a result of which (a) disposal by
the Fund of securities owned by it is not reasonably practicable or
(b) it is not reasonably practicable for the Fund fairly to determine
the value of its net assets;
3. For such other periods as the Securities and Exchange Commission
may permit for the protection of the shareholders.
Payment for shares redeemed may be made either in cash or in kind
or partly in cash and partly in kind. However, the Fund has elected,
pursuant to rule 18f-1 under the Investment Company Act, to redeem its
shares solely in cash up to the lesser of $250,000 or 1% of the net
asset value of the Fund during any ninety (90) day period for any one
shareholder. Payments will be made wholly in cash unless the Board of
Directors believes that conditions exist which would make such a
practice detrimental to the best interests of the Fund. Any portfolio
securities paid or distributed in kind would be valued as described
under "Determination of Net Asset Value". Subsequent sale of such
securities may require payments of brokerage commissions by a
shareholder.
Shares are issued in book entry form. No paper certificates are
issued. The Fund reserves the right to reject any purchase order.
TAX-SHELTERED PLANS
For those persons who are employees of tax exempt charitable,
religious and educational organizations [technically, organizations
described in Internal Revenue Code Sections 501(c)(3) and
170(b)(1)(A)(ii)], there is available through the distributor,
Dunwoody Brokerage Services, Inc., a Model Tax-Sheltered Custodial
Plan for investment of retirement funds in shares of the Fund under
Code Section 403(b)(7). This plan is established with the intention
that it will qualify and remain qualified under Code Section
403(b)(7), and it may be amended prospectively or retrospectively to
meet the requirements of that Section.
Persons interested in the Plan should consult a qualified tax
advisor.
Copies of the Plan Application, the Custodial Plan and supporting
documents as well as further detailed information concerning the Plan
may be obtained from Dunwoody Brokerage Services, Inc.
INDIVIDUAL RETIREMENT ACCOUNT PLAN
Individuals, who are not active participants (and who do not have
a spouse who is an active participant) in an employer maintained
retirement plan are eligible to contribute on a deductible basis to an
Individual Retirement Account ("IRA"). The IRA deduction is also for
individual taxpayers and married couples with adjusted gross incomes
not in excess of certain specified limits. All individuals may make
nondeductible IRA contributions to a separate account to an extent
that they are not eligible for a deductible contribution. Income
earned by an IRA will continue to be tax deferred. Income dividends
and capital gain distributions on Fund shares held in the account
accumulate free from Federal income tax.
Because investments in the IRA are intended to provide a
retirement fund and because the Internal Revenue Code imposes
penalties on premature distributions from an IRA, investors should
carefully consider the investment objectives of the Fund and consult
with a qualified tax advisor prior to establishing an IRA.
If you wish to establish an Individual Retirement Account, the
necessary forms, including an Individual Retirement Custodial Account
Form and further detailed information regarding the Account, are
available from Dunwoody Brokerage Services, Inc., 8309 dunwoody Place,
Atlanta, Georgia 30350-3307; telephone (800) 537-9165.
Included with the forms that you will receive will be a
Disclosure Statement which you should read carefully. This Disclosure
Statement sets forth important Federal tax and other information
concerning the account. An Individual Retirement Account which is
established on the day of receipt of the Disclosure Statement may be
revoked within seven days after the account is established. An
Account established more than seven days after the date of the receipt
of the Disclosure Statement may not be revoked.
Each Plan provides for a Custodian. For providing its services,
the Custodian will receive the following fees:
Annual Maintenance Fee $13.00
Periodic Distribution Fee $15.00/year
Lump Sum Distribution Fee $15.00
The Annual Maintenance Fee compensates the Custodian for
maintaining the account. The Lump Sum Distribution fee occurs when
there is a complete account liquidation, either to the account owner
or for transfer to another Custodian. The Periodic Distribution Fee
covers the situation where an individual is in the payout phase of a
Tax-Sheltered Account and is receiving monthly or quarterly checks on
a regular periodic basis. The fees are charged per plan. The total
charge per account will be at least $13 per year. What additional
charges will be assessed against a particular account is dependent on
when and if lump sum or periodic distributions are made.
DIRECTORS AND OFFICERS
The Directors and Officers of Penn Capital Funds, Inc., their
addresses, principal occupations during the past five years and their
affiliations, if any, with the Fund's adviser, International
Investments, Inc., its distributor, Dunwoody Securities, Inc., and its
administrators, James M. Beimel, Jr. and American Data Services, Inc.,
are as follows:
Offices Principal
Name and Address With Fund Occupation
Joseph M. Jacobs Chairman Deputy Director of the
274 Sleepy Hollow Rd. and Director Dept. of Budget and
Pittsburgh, PA 15228 Finance, Allegheny
County, PA
James M. Beimel, Jr.* President President of the
172 Surrey Drive Fund
Delmont, PA 15626
Kathleen A. Donnelly Director Attorney
531 Greenfield Avenue
Pittsburgh, PA 15207
* Mr. Beimel is deemed to be an "interested person" of the Fund in
that he is an officer of the Fund and has an administrative services
contract with the Fund.
Mr. Jacobs has held his current position for over five years.
Mr. Beimel has been consulting with PCF since August, 1995 on all
aspects of its operations. From January, 1993 to August, 1995, he was
employed by the Vanguard Group, Valley Forge, Pennsylvania, a major
mutual fund group, where he worked primarily on marketing and related
matters. From January, 1991 to January, 1993, he was employed by and
worked as a consultant in the area of financial management for Unisis,
Inc., a major computer manufacturer located in Blue Bell,
Pennsylvania. Ms. Donnelly has been a self-employed attorney since
September, 1995. Prior to that she was employed as an attorney by
Penn Capital Management, Inc. from May, 1995 to September, 1995, and
from May, 1990 to May, 1995, was a budget analyst for Equitable
Resources, Inc., Pittsburgh, Pennsylvania.
During the fiscal year ended September 30, 1995, the Fund did not
pay any directors' fees or reimburse director expenses. The Fund's
arrangement with directors is that, at some time in the future when
its economic situation warrants it, it will reimburse each director
who is not an "interested person" of the Fund for expenses incurred in
connection with attendance of meetings of the Board of Directors and
to pay each such director an annual fee of $2,000 and $250 for each
meeting of the Board of Directors attended. On February 15, 1996, the
directors and officers, as a group, owned less than 1% of the
outstanding shares of the Fund and, to the knowledge of the Fund, no
person owned of record or beneficially 5% or more of the outstanding
shares of the Fund.
None of the officers or directors of PCF has any affiliation with
the Fund's investment adviser, George Ruby or American Data Services,
Inc.
INVESTMENT ADVISER
George M. Ruby (the "Investment Adviser") serves as the
investment adviser to the Fund and has done so since its organization.
The Investment Adviser does not act as an investment manager to any
individual client or any institutional client other than the Fund.
The Investment Adviser receives a monthly fee at an annual rate
of 1.00% of the daily net assets of the Fund. These fees are higher
than those paid by most investment companies.
The Advisory Agreement with the Investment Adviser will remain in
effect as long as its continuance is specifically approved at least
annually by (i) the Board of Directors of the Fund, or by the vote of
a majority (as defined in the Investment Company Act) of the
outstanding shares of the Fund, and (ii) by the vote of a majority of
the directors of the Fund who are not parties to the Advisory
Agreement or interested persons of the Investment Adviser, cast in
person at a meeting called for the purpose of voting on such approval.
The Advisory Agreement may be terminated at any time without the
payment of any penalty, by the Board of Directors of the Fund or by
vote of a majority of the Fund's shareholders, on 90 day's written
notice to the Investment Adviser in the event that a majority of the
Board of Directors determines that the Investment Adviser has
willfully violated Federal or states securities laws or rules and
regulations adopted thereunder or committed a violation of any other
law which renders him unfit to act as the adviser for the Fund, and by
the Investment Adviser on the same notice to the Fund, and it will
automatically terminate if it is assigned.
The Advisory Agreement provides that it will not be deemed to
protect the Investment Adviser against any liability to the Fund or
its shareholders to which he might otherwise be subject by reason of
any willful malfeasance, bad faith or gross negligence in the
performance of his duties or the reckless disregard of his duties
under the Advisory Agreement.
The Fund will pay, among other expenses and fees, all taxes and
brokerage costs, the Securities and Exchange Commission fees for
federal registration of shares for sale to the public and for
preparing, printing and filing any amendments or supplements to the
federal registration statement of the Fund; state securities
qualification and registration fees; issuance and redemption expenses;
custodian, transfer and dividend disbursing costs; accounting,
auditing and legal services; fidelity bonds and other insurance
premiums necessary to the Fund's operation, including all or a portion
of any Directors' and Officers' liability insurance premiums if the
Fund is the sole insured or a joint insured under such a policy of
insurance; the costs of preparing, printing and mailing of proxy
materials and the costs of the annual and any special shareholders'
meetings, as well as such extraordinary nonrecurring expenses as may
arise, including litigation affecting the Fund and the legal right or
obligation which the Fund may have to indemnify its Officers or
Directors with respect thereto, unless the Fund has the right to
receive such indemnity payments from the Investment Adviser, subject
always to any reimbursement due to the Fund under any policy of
insurance under which the Fund may be insured. The Fund will also
arrange for the preparation of reports and filings to be made in
states in which the Fund's shares are being sold.
ADMINISTRATOR
James M. Beimel, Jr., the President of the Fund, and American
Data Services, Inc. ("ADS") provide the administrative and clerical
personnel necessary for the proper operation and general supervision
of the affairs of the Fund, including preparing and maintaining the
books, accounts and other documents required by the Investment Company
Act of 1940, calculating the Fund's net asset value, keeping and
maintaining shareholder records and responding to shareholder
inquires, preparing the Fund's financial statements and tax returns,
preparing reports and filings with the Securities and Exchange
Commission (other than the Fund's registration statements), furnishing
statistical and research data, clerical and bookkeeping services and
stationery and office supplies, keeping and maintaining the Fund's
financial accounts and records, and generally assisting in all aspects
of the Funds operations.
They perform these services pursuant to the Administrative
Services Agreement, Accounting Services Agreement and Transfer Agency
and Services Agreement described in the Prospectus.
RULE 12B-1 DISTRIBUTION PLAN
The Fund has adopted a Distribution Plan (the "Plan") pursuant to
the requirements of Rule 12b-1 under the Investment Company Act. The
Plan provides that the Fund may incur certain costs relating to the
distribution of its shares, other than those paid by Dunwoody itself
as the Fund's primary distributor. Mr. Beimel, as PCF's and the
Fund's administrator is to be reimbursed by the Fund for these costs
(including a reasonable allocation for overhead) provided that the
costs may not exceed 0.25% per annum of the Fund's daily net assets.
The Plan is intended to benefit the Fund through increased sales of
shares, thereby reducing the Fund's expense ratio and providing an
asset size that allows the adviser greater flexibility in management.
Amounts paid under the Plan may be spent by Mr. Beimel on any
activities or expenses primarily intended to result in the sale of the
Fund's shares, including but not limited to, expenses (including
overhead and telephone expenses) of printing of prospectuses and
reports for other than existing shareholders, advertising and
preparation and distribution of sales literature. Allocation of
overhead (rent, utilities, etc.) will be based on the percentage of
utilization in, and time devoted to, distribution activities.
Distribution expenses incurred in a fiscal year which are in excess of
the minimum amount permitted to be borne by the Fund under the Plan
are borne by Mr. Beimel (i.e., they cannot be carried forward and paid
in a subsequent year). Further, the Plan does not permit expenses
incurred in one year to be paid out of amounts authorized to be spent
in another year.
The Plan will continue in effect as long as their continuance is
specifically approved at least annually by the Board of Directors,
including the Directors of the Fund who are not interested persons of
the Fund and who have no director or indirect financial interest in
the Plan or any agreement related thereto (the "Rule 12b-1
Directors"). The Plan may be terminated at any time by a vote of the
Rule 12b-1 Directors or by a vote of a majority of the outstanding
shares of the Fund. Any change in the Plan that would materially
increase the distribution expenses of the Fund provided for in the
Plan requires approval of the shareholders and the Board of Directors,
including the Rule 12b-1 Directors. While the Plan is in effect, the
selection and nomination of Directors who are not interested persons
of the Fund will be committed to the discretion of the directors of
the Fund who are not interested persons of the Fund. The Board of
Directors must review the amount and purposes of expenditures pursuant
to the Plan quarterly as reported to it by Mr. Beimel.
CUSTODIAN
George M. Ruby, the Fund's Investment Adviser, acts as the
custodian for the Fund, and has custody of all securities and cash of
the Fund. He attends to the collection of principal and income, and
payment for and collection of proceeds of securities bought and sold
by the Fund. Mr. Ruby does not have physical custody of any
securities, however. They are held by a registered broker dealer as
nominee for the Fund. Mr. Ruby is not affiliated with the Fund or any
of its affiliates. Mr. Ruby is not paid a fee for acting as
custodian.
TRANSFER AND DIVIDEND AGENT
American Data Services, Inc. serves as the Fund's Transfer and
Dividend Disbursing Agent.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
McCurdy & Associates CPA's, Inc., with principal offices at 27955
Clemens Road, Westlake, Ohio 44145, act as the independent certified
public accountants for the Fund. As such they audit and report on the
Fund's annual financial statements, review certain regulatory reports,
and perform other professional accounting, auditing, and advisory
services when engaged to do so by the Fund. Shareholders will receive
annual audited financial statements and semi-annual unaudited
financial statements. The selection of independent accountants is
subject to annual ratification by the Fund's shareholders.
PORTFOLIO BROKERAGE
Decisions to buy and sell securities for the Fund are made by the
Investment Adviser subject to review by the Fund's Board of Directors.
The Investment Adviser intends to direct brokerage on the basis of the
best execution of orders at the most favorable price in light of the
overall quality of brokerage and research services provided, as
described in this and the following paragraph. In selecting brokers
to effect portfolio transactions, the determination of what is
expected to result in best execution at the most favorable price
involves a number of largely judgmental considerations. Among them
are the Adviser's evaluation of the broker's efficiency in executing
and clearing transactions, block trading capability (including the
broker's willingness to position securities) and the broker's
financial strength and stability. The most favorable price to the
Fund means the best net price without regard to the mix between
purchase or sale price and commission, if any. Over-the-counter
securities may be purchased and sold directly with principal market
makers who retain the difference in their cost in the security and its
selling price or from non-principal market makers who are paid
commissions directly. The Adviser may allocate portfolio brokerage on
the basis of recommendations to purchase shares of the Fund made by
brokers, but only if the Adviser reasonably believes the commissions
and transaction quality are comparable to that available from other
brokers. Under the Investment Company Act, the Adviser is prohibited
from dealing with the Fund as a principal in the purchase and sale of
securities.
In allocating brokerage business for the Fund, the Adviser may
also take into consideration the research, analytical, statistical and
other information and services provided by the broker, such as general
economic reports and information, reports or analyses of particular
companies or industry groups, market timing and technical information,
and the availability of the brokerage firm's analysts for
consultation. While the Adviser believes these services have some
value, they are considered supplemental to the Adviser's own efforts
in the performance of his duties under the Agreement. Other clients
of the Adviser may indirectly benefit from the availability of these
services to the Adviser, and the Fund may indirectly benefit from
services available to the Adviser as a result of transactions for
other clients.
CAPITAL STOCK
In the election of directors, shareholders have the unconditional
right of cumulative voting. This means that each shareholder will be
entitled to as many votes as equals the number of shares registered in
the shareholder's name multiplied by the number of directors to be
elected at the meeting. A shareholder may cast all of such votes for
one nominee or distribute them among any two or more nominees.
Directors are elected by a plurality of the votes cast by the holders
of the Fund's common stock entitled to vote in the election of
directors at a meeting at which a quorum is present. "Plurality"
means that the individuals who receive the largest number of votes
cast are elected as directors up to the maximum number of directors to
be chosen at the meeting. Consequently, any shares not voted (whether
by abstention, broker non-vote or otherwise) have no effect on the
election of directors except to the extent the failure to vote for an
individual results in that individual not receiving a sufficient
number of votes to be elected.
DISTRIBUTOR
Dunwoody Brokerage Services, Inc. ("Dunwoody") serves as the
Fund's distributor in a continuous offering of the Fund's shares
pursuant to a Underwriting Agreement dated February 1, 1996. For
these services, it receives a sales charge (currently ranging from
1.00% to 4.75% based on the size of the investment) payable by an
investor upon the purchase of shares of the Fund.
<PAGE>
PART C
Other Information
Item 24. Financial Statements and Exhibits
(a) Financial Statements - Aggressive Growth Fund
(i) Financial Statements included in Part A of the
Registration Statement: None
(ii) Financial Statements included in Part B of the
Registration Statement: Not Applicable
(b) Exhibits
1. Restated Articles of Incorporation****
1.a. Statement With Respect To Shares
2. By-Laws**
3. Inapplicable
4. Article IV of the Restated Articles of Incorporation
incorporated by reference to Exhibits 1 and 1a hereto.
5. Investment Advisory Agreement dated June 15, 1995
6. (a) Underwriting Agreement dated February 1, 1996#
7. Inapplicable
8. Inapplicable
9. (a) Transfer Agency and Service Agreement dated November
1, 1995 #
(b) Administrative Services Agreement dated February 1,
1996 #
10. Opinion of Counsel
11. Consent of Independent Auditors
12. Inapplicable
13. Inapplicable
14. Inapplicable
15. Distribution Plan #
16. Inapplicable
17. Inapplicable
18. Inapplicable
* Incorporated herein by reference to the Registration Statement of
Registrant on Form N-1A filed on or about March 20, 1991.
** Incorporated herein by reference to Pre-Effective Amendment No. 3
to the Registration Statement of Registrant on Form N-1A filed on or
about August 6, 1991.
*** Incorporated herein by reference to Pre-Effective Amendment No. 4
to the Registration Statement of Registrant on Form N-1A filed on or
about September 6, 1991.
****Incorporated herein by reference to Post-Effective Amendment No. 5
to the Registration Statement of Registrant on Form N-1A filed on or
about October 24, 1994.
#Incorporated herein by reference to Post-Effective Amendment No. 7
to the Registration Statement of Registrant on Form N-1A filed on or
about March 6, 1996.
Item 25. Persons Controlled by or Under Common Control with
Registrant
Inapplicable
Item 26. Number of Holders of Securities
As of March 11, 1996, there was one (1) holder of record of the
shares of the Fund and 88 of PCF.
Item 27. Indemnification
Article VIII of the Registrant's By-Laws (Exhibit 2 hereto, which
is incorporated herein by reference) and Sections 1741 - 1747 of the
Pennsylvania Business Corporation Act of 1988 provide, in effect, that
the Registrant will indemnify its officers and directors under certain
circumstances. However, in accordance with Sections 17(h) and 17(i)
of the Investment Company Act and by its own terms, said By-Law does
not protect any person against liability to the Registrant or its
shareholders to which he/she would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his/her office.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that, in the
opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer, or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer, or
controlling person in connection with the securities being registered,
the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question as to whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
Information pertaining to business and other connections of the
Registrant's investment adviser is hereby incorporated by reference to
the section of the Prospectus captioned "Management of the Fund" and
to the section of the Statement of Additional Information captioned
"Investment Adviser". Mr. Ruby is a licensed real estate broker in
the Commonwealth of Pennsylvania.
Item 29. Principal Underwriters
(a) Inapplicable
(b) Inapplicable
(c) Inapplicable
Item 30. Location of Accounts and Records
All such accounts, books and other documents are maintained at
the offices the Registrant, 216 Boulevard of the Allies, 6th Floor,
Pittsburgh, Pennsylvania 15222, the offices of American Data Services,
Inc., sub-administrator, provider of accounting services and transfer
agent of the Fund, 24 West Carver Street, Huntington, New York 11743,
or at the offices of George M. Ruby, the Fund's custodian, 649
Regency Drive, Pittsburgh, PA 15239.
Item 31. Management Services
Inapplicable
Item 32. Undertakings
(a) Inapplicable
(b) Registrant undertakes to file a post-effective amendment,
using financial statements for its Aggressive Growth Fund which
need not be certified, within four to six months from the
effective date of the post-effective amendment to Registrant's
1933 Act Registration Statement which first registers shares of
its Aggressive Growth Fund.
(c) Registrant undertakes to furnish each person to whom a
prospectus for its Aggressive Growth Fund is delivered with a
copy of the Registrant's latest annual report to shareholders
with respect to the Aggressive Growth Fund upon request and
without charge once such annual report is available.
(d) Registrant undertakes to have a majority of the non-
interested directors determine at least annually that the
arrangement concerning liability insurance for each Series of
Penn Capital Funds, Inc. satisfied the standards contained in
Section 17(d)-1(d)(7)(i) and (ii) of the Investment Company Act.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant has duly caused
this amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Pittsburgh and the State of Pennsylvania on the 8th day of
March, 1996.
Penn Capital Funds, Inc.
By:/s/ James Beimel
President
Pursuant to the requirement of the Securities Act of 1933, this
amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated:
Signature Title Date
/a/ James Beimel President (Principal March 8, 1996
James Beimel Executive Officer)
and Director
/s/ Joseph Jacobs Director March 8, 1996
Joseph Jacobs
/s/ Kathleen A. Donnelly Director March 8, 1996
Kathleen Donnelly
/s/ Karl Beimel Treasurer March 8, 1996
Karl Beimel (Principal Financial
and Accounting Officer)
<PAGE>
INDEX TO EXHIBITS
Sequentially
Numbered
Page
Reference
Exhibits
1. Restated Articles of Incorporation****
1.a. Statement With Respect To Shares
2. By-Laws**
4. Article IV of the Restated Articles of Incorporation
incorporated by reference to Exhibits 1 and 1a
hereto.
5. Investment Advisory Agreement dated
June 15, 1995
6. Underwriting Agreement dated February 1, 1996 #
9. (a) Transfer Agency and Service Agreement dated November 1,
1995 #
(b) Administrative Services Agreement dated February 1,
1996 #
10. Opinion of Counsel
11. Consent of Independent Auditors
15. Distribution Plan #
* Incorporated herein by reference to the Registration Statement of
Registrant on Form N-1A filed on or about March 20, 1991.
** Incorporated herein by reference to Pre-Effective Amendment No. 3
to the Registration Statement of Registrant on Form N-1A filed on or
about August 6, 1991.
*** Incorporated herein by reference to Pre-Effective Amendment No. 4
to the Registration Statement of Registrant on Form N-1A filed on or
about September 6, 1991.
**** Incorporated herein by reference to Post-Effective Amendment No.
5 to the Registration Statement of Registrant on Form N-1A filed on or
about October 24, 1994.
#Incorporated herein by reference to Post-Effective Amendment No. 7
to the Registration Statement of Registrant on Form N-1A filed on or
about March 6, 1996.
Exhibit 1a
STATEMENT WITH RESPECT TO SHARES
RESOLVED, that the Restated Articles of Incorporation of the
Company (the "Articles") be, and they hereby are, amended pursuant to
the authority granted to this Board of Directors under Article IV of the
Articles and under Section 1522(b) of the Pennsylvania Business
Corporation Law of 1988, as amended, to create a new class of shares of
Common Stock consisting of 10,000,000 shares, which class is hereby
designated "Series B Common Stock - Aggressive Growth Fund" ("Series B
Common Stock"). Shares of Series B Common Stock shall have all of the
terms, rights and provisions set forth in Article IV. B. of the Articles
and shall entitle holders thereof only to an interest in the Company's
Aggressive Growth Fund.
Exhibit 5
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made as of this 15th day of June, 1995, among by and
between Penn Capital Funds, Inc., a Pennsylvania corporation (the
"Company"), and George M. Ruby, an individual ("Advisor").
WHEREAS, the Company is an open-end, diversified management
investment company registered under the Investment Company Act of
1940, as amended (the "1940 Act"), which offers shares of several
diversified investment series, each having its own objective and
policies; and
WHEREAS, the Company desires to retain Advisor to render to that
series of the Company known as the "Aggressive Growth Fund" investment
advisory services relating to the assets of the Aggressive Growth
Fund, and Advisor is willing to render such services.
NOW THEREFORE, this agreement
WITNESSETH:
that in consideration of the premises and mutual promises hereinafter
set forth and intending to be legally bound, the parties hereto agree
as follows:
1. Appointment of Advisor. The Company hereby employs Advisor as
investment adviser, on the terms and conditions set forth herein, for
the assets of the Aggressive Growth Fund. Advisor accepts such
employment and agrees to render the services herein set forth, for the
compensation herein provided.
2. Duties of Advisor. The Company employs Advisor to manage the
investment and reinvestment of the Aggressive Growth Fund (the
"Advisor Portfolio"), to continuously review, supervise and administer
the investment program for the Aggressive Growth Fund, to determine in
its discretion the securities to be purchased or sold and the portion
of such assets to be held uninvested, to provide the Company with
records concerning the activities of Advisor which the Company is
required to maintain, and to render regular reports to the Company's
officers and Board of Directors concerning the discharge of the
foregoing responsibilities. Advisor shall discharge the foregoing
responsibilities subject to the control of the officers and the Board
of Directors of the Company, and in compliance with the objectives,
policies and limitations set forth in the Aggressive Growth Fund's
prospectus and applicable laws and regulations. Advisor agrees to
provide, at its own expense, the office space, furnishings and
equipment and the personnel required by it to perform the services on
the terms and for the compensation provided herein.
3. Securities Transactions. Advisor agrees that he will execute the
purchases and sales of securities for the Aggressive Growth Fund
through Penn Capital Financial Services, Inc., except as prescribed
herein. Subject to policies established by the Board of Directors of
the Company, Advisor may, upon agreement with management of the
Company, also be authorized to effect individual securities
transactions at commission rates in excess of the minimum commission
rates available through the Broker, if Advisor determines in good
faith that such amount of commission was reasonable in relation to the
value of the brokerage or research services provided by such broker or
dealer, viewed in terms of either that particular transaction or
overall responsibilities of Advisor with respect to the Aggressive
Growth Fund. The execution of such transactions shall not be deemed
to represent an unlawful act or breach of any duty created by this
Agreement or otherwise. Advisor will promptly communicate to the
officers and Directors of the Company such information relating to
portfolio transactions as they may reasonably request.
4. Compensation of Advisor. For the services to be rendered by
Advisor as provided in the Agreement, the Aggressive Growth Fund shall
pay to Advisor at the end of the Company's fiscal quarters, an
Advisory Fee equal to one quarter of an annual fee of 1% of the
Aggressive Growth Fund's net assets as of the end of such fiscal
quarter.
5. Reports. The Company and Advisor agree to furnish to each other
current prospectuses, proxy statements, reports to shareholders,
certified copies of their financial statements, and such other
information with regard to their affairs as each may reasonable
request.
6. Status of Advisor. The services of Advisor to the Aggressive
Growth Fund are not to be deemed exclusive, and Advisor shall be free
to render similar services to others so long as its services to the
Aggressive Growth Fund are not impaired thereby. Advisor shall be
deemed to be an independent contractor and shall, unless otherwise
expressly provided or authorized, have no authority to act for or
represent the Company or the Aggressive Growth Fund in any or
otherwise be deemed an agent of the Company or the Aggressive Growth Fund.
7. Liability of Advisor. No provision of this Agreement shall be
deemed to protect Advisor against any liability to the Company or its
shareholders to which it might otherwise be subject by reasons of any
willful misfeasance, bad faith or gross negligence in the performance
of its duties or the reckless disregard of its obligations under this
Agreement.
8. Duration and Termination. This Agreement shall become effective
on August 1, 1995, and shall continue in effect until July 31, 1997.
The Agreement shall continue after July 31, 1997, only so long as such
continuance is approved at least annually by votes of the Company's
Board of Directors, including the votes of a majority of the Directors
who are not parties to such Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of
voting such approval. In addition, the question of continuance of the
Agreement may be presented to the shareholders of the Aggressive
Growth Fund; in such event, such continuance shall be effected only if
approved by the affirmation vote of a majority of the outstanding
voting securities of the Aggressive Growth Fund.
Provided, however, that (i) this Agreement may at any time be
terminated without payment of any penalty either by vote of the Board
of Directors of the Company or by vote of a majority of the
outstanding voting securities of the Aggressive Growth Fund, on ninety
(90) days' written notice to Advisor in the event that a majority of
the Board of Directors of the company determines that the Advisor has
willfully violated Federal or any state securities laws, or the rules
and regulations adopted thereunder or committed a violation of any
other law which renders him unfit to act as the adviser for the
Aggressive Growth Fund; (ii) this Agreement shall automatically
terminate in the event of its assignment, and (iii) this Agreement may
be terminated by Advisor on ninety days' written notice to the
Company. Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed postpaid, to the other party at any
office of such party.
As used in this Section 8, the terms "assignment," "interested
persons," a "vote of a majority of the outstanding voting securities"
shall have the respective meaning set forth in Section 2(a)(4),
Section 2(a)(19) and Section 2(a)(42) of the Investment Company Act of
1940.
9. Severability. If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
10. Notwithstanding the foregoing, should the Adviser become unfit to
continue to act as the adviser to the Aggressive Growth Fund because
of health reasons, the Advisor may appoint a replacement adviser to
the Aggressive Growth Fund, subject to the approval of the Board of
Directors of the Company and the shareholders of the Aggressive Growth
Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of this 15th day of June, 1995.
PENN CAPITAL FUNDS, INC.
By /s/ Christopher E. Beimel
GEORGE M. RUBY
/s/ George M. Ruby
EXHIBIT 10
PLUMMER, BEAMAN
& DEWALT, L.L.P.
__________________________
March 8, 1996
Penn Capital Funds, Inc.
216 Boulevard of the Allies
6th Floor
Pittsburgh, PA 15222
Re: Penn Capital Funds, Inc.
Dear Sirs:
We are counsel for Penn Capital Funds, Inc., a Pennsylvania
corporation (the "Company"), and have acted as such in connection with
the proposed sale by the Company of shares of its Series B Common
Stock - Aggressive Growth Fund (the "Shares"). This opinion is
furnished in connection with the filing by the Company of Post-
Effective Amendment No. 8 to its Registration Statement on Form N1-A
(the "Post-Effective Amendment") under the Securities Act of 1933, as
amended, relating to the proposed sale. We have examined such public
and corporate records and documents and such questions of law, and
have made such other investigations, as we deemed appropriate for
purposes of this opinion.
Based upon the foregoing, we are pleased to advise you that
in our opinion the Shares, upon issuance and delivery and payment
therefor in the manner described in the Post-Effective Amendment, will
be duly authorized, validly issued, fully paid and nonassessable.
In rendering the foregoing opinion, we have not examined the
laws of any jurisdiction other than the laws of the Commonwealth of
Pennsylvania and the federal laws of the United States of America and
the foregoing opinion is limited to such laws.
We hereby consent to the filing of this opinion as an
exhibit to the Post-Effective Amendment.
Very truly yours,
/s/ Plummer, Beaman & DeWalt, L.L.P.
Thirty-Eight Floor - Gulf Tower - 707 Grant Street
Pittsburgh, Pennsylvania 15219-1913
Telephone (412) 566-1600 Telecopier (412) 261-6040
Exhibit 11
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the reference to our firm in the Statement of
Additional Information under the caption "Independent Certified Public
Accountants", which is included in Post-Effective Amendment No. 8 to
the Registration Statement of Penn Capital Funds, Inc.
/s/ McCurdy & Associates
Cleveland, Ohio
March 8, 1996
