TRIUMPH FUNDS, INC.
216 BOULEVARD OF THE ALLIES, PITTSBURGH, PENNSYLVANIA 15222
(412) 281-2754, Fax (412) 281-9018
1996
ANNUAL REPORT
TO
SHAREHOLDERS
<PAGE>
TRIUMPH FUNDS, INC.
216 BOULEVARD OF THE ALLIES
PITTSBURGH, PA 15222
PRESIDENT'S MESSAGE
Dear Shareholders:
As we look over the past year your Asset Allocation Fund has
faced a considerable number of difficult challenges. A
reorganization was conducted to reduce expenses, provide
outstanding services to our clients and improve performance.
Although we were able to make significant progress in the areas
of expenses and services, shrinkage in the Fund s total assets
has resulted in a disappointing performance for the year.
During the year the Fund's decrease in total assets can be
attributed to a number of reasons; a flurry of redemptions in the
first two quarters, the inability to generate sales due to long
periods of time for re-registration and proxy efforts, and past
performance of the Fund. This shrinkage and the resulting small
size of total assets magnifies the impact of any fixed expenses
and curtails the ability of the portfolio manager to fully take
advantage of market opportunities for performance. Our focus
continues to be to increase the total assets of the Fund. We are
continuing to explore all means of increasing the net assets and
initiating a sales network.
Expenses were able to be decreased on an item by item basis
compared with those of previous years, and our gross fixed costs
decreased significantly. The quantity and quality of services to
shareholders also improved dramatically this year. Timely
shareholder statements, prompt turnaround time on callbacks and
transactions and the delivery of scheduled reports have been
established.
In conclusion, your Board of Directors wishes to thank you for
your continued support, and we look forward to finding solutions
that will result in improved performance for our shareholders.
Sincerely yours,
James M. Beimel Jr.
President
<PAGE>
TRIUMPH FUNDS, INC.
216 BOULEVARD OF THE ALLIES
PITTSBURGH, PA 15222
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
The Asset Allocation Fund undertakes a quantitative strategy
based on broad diversification. The Advisor s emphasis on a
company s future sustainable earnings' growth tends to promote
less adjustment to short term market conditions in favor of long
term growth of the portfolio. For the fiscal year, continued
decreasing assets and the inability to initiate sales constrained
the ability of the Advisor to fully implement his investment
strategy. Performance was also eroded by the impact of the fixed
costs as total assets decreased. These conditions resulted in a
decline in the overall return of the Fund by 47.55% for the
fiscal year ended September 30, 1996. During the same period the
Standard and Poor s 500 index, the benchmark of the largest 500
companies in the marketplace, performed at a 18.9% increase.
Market performance was again led by blue chip stocks and fueled
by the continuation of declining long-term interest rates,
slowing domestic economic growth, easing inflation fears and
strong corporate profits. The year s best performing sectors were
energy, consumer cyclicals and financial companies that were held
by the Fund but in proportions that were insufficient to reap the
benefits of their rally.
[GRAPHIC - Line chart showing historical performance of $10,00 investment
vs. S&P 500 index.]
<PAGE>
TRIUMPH FUNDS, INC.
ASSET ALLOCATION FUND
PITTSBURGH, PENNSYLVANIA
INDEPENDENT AUDITOR'S REPORT
AND
FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
<PAGE>
McCurdy & Associates CPA's Inc. 27955 Clemens Road
Westlake, Ohio 44145
Phone: (216)835-8500
Fax: (216)835-1093
INDEPENDENT AUDITOR'S REPORT
To The Shareholders and
Board of Directors:
Triumph Funds, Inc.
We have audited the accompanying statement of assets and
liabilities of the Asset Allocation Fund (the sole portfolio of
the Triumph Funds, Inc.), including the schedule of investments,
as of September 30, 1996, and the related statements of
operations for the year then ended, the statement of changes in
net assets for each of the two years in the period then ended,
and the financial highlights for each of the five years since
inception in the period then ended. These financial statements
and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements and financial highlights are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned as of September 30, 1996, by correspondence with
the custodian. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of the Asset Allocation Fund of the Triumph
Funds, Inc. as of September 30, 1996, the results of its
operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended, and the
financial highlights for each of the five years since inception
in the period then ended, in conformity with generally accepted
accounting principles.
McCurdy & Associates CPA's, Inc.
Westlake, Ohio 44145
October 22, 1996
<PAGE>
TRIUMPH ASSET ALLOCATION FUND
Statement of Assets and Liabilities
September 30, 1996
ASSETS:
Investments at market value (Cost $83,359) $ 81,666
Receivable for securities sold 10,875
Receivable for dividends and interest 73
Deferred organization expense (Note 1) 2,659
Other assets 5,157
---------
TOTAL ASSETS 100,430
---------
LIABILITIES:
Payable for capital stock reacquired 4,904
Accrued expenses and other 22,172
---------
TOTAL LIABILITIES 27,076
---------
NET ASSETS: $ 73,354
=========
Net Assets consist of:
Paid in capital $ 212,619
Undistributed realized capital loss (137,572)
Net unrealized appreciation on investments (1,693)
---------
Net Assets for 26,424 shares outstanding $ 73,354
=========
Net Asset Value and Redemption Price
Per Share (73,354/26,424 Shares) $ 2.78
=========
The accompanying notes are an integral part of these financial
statements.
<PAGE>
TRIUMPH ASSET ALLOCATION FUND
Schedule of Investments
September 30, 1996
Shares Value
------ -----
COMMON STOCKS 103.69%
CONSUMER STAPLES 7.70%
Pepsico Inc. . . . . . . . . . . . . . . . 200 $5,650
ENERGY 6.95%
Williams Co. . . . . . . . . . . . . . . . 100 5,100
HEALTH 22.70%
American Home Products . . . . . . . . . . 100 6,375
Pharmacia & Upjohn Inc. . . . . . . . . . 100 4,125
Schering Plough . . . . . . . . . . . . . 100 6,150
-----
16,650
INDUSTRIAL CYCLICALS 19.29%
Eastman Kodak . . . . . . . . . . . . . . 100 7,850
Trinova . . . . . . . . . . . . . . . . . 200 6,300
-----
14,150
RETAIL 11.96%
Charming Shoppes* . . . . . . . . . . . . 500 3,000
Gap Inc. . . . . . . . . . . . . . . . . . 200 5,775
-----
8,775
SERVICES 27.50%
Alco Standard . . . . . . . . . . . . . . 100 4,988
<PAGE>
TRIUMPH ASSET ALLOCATION FUND
Schedule of Investments
September 30, 1996
Norfolk Southern........................... 100 9,137
Service Corp International................. 200 6,050
------
20,175
------
UTILITIES 7.59%
Telefonica de Espana ADR^*................ 100 5,563
------
TOTAL COMMON STOCKS (Cost $77,756) $76,063
------
SHORT TERM INVESTMENTS 7.64%
Star Treasury Fund (Cost $5,603)........... 5,603 $ 5,603
------
TOTAL INVESTMENTS 111.33%
(Cost $83,359)** $81,666
Other Assets Less Liabilities (11.33)% (8,312)
--------
Total Net Assets 100% $73,354
=========
** Cost for federal income tax purposes is the same.
* Non-income producing
^ Foreign security
<PAGE>
TRIUMPH ASSET ALLOCATION FUND
Statement of Operations
The year ended September 30, 1996
INVESTMENT INCOME:
Interest $ 3,065
Dividends 3,475
---------
TOTAL INCOME 6,540
---------
EXPENSES:
Advisory fees (Note 4) 2,437
Legal expenses 9,225
Audit expenses 9,651
Regulatory & filing fees 1,203
Custodial fees 8,464
Transfer agent fees 4,113
Accounting fees 9,313
Administrative fees (Note 4) 25,276
Amortized organizational expense (Note 1) 18,916
Other expenses 4,730
--------
TOTAL EXPENSES 93,328
--------
Net Investment Loss (86,788)
--------
REALIZED AND UNREALIZD GAIN (LOSS)
Net realized gain on investments 35,510
Net unrealized loss on investments (42,387)
--------
Net realized and unrealized gain
on investments (6,877)
---------
Net decrease in net assets from operations $(93,665)
=========
The accompanying notes are an integral part of these financial statements.
<PAGE>
TRIUMPH ASSET ALLOCATION FUND
Statement of Changes in Net Assets
For the year ended September 30,
1996 1995
-------------- ------------
INCREASE (DECREASE)IN NET ASSETS
FROM OPERATIONS:
Net investment loss $(86,788) $(106,784)
Net realized gain on investments 35,510 53,670
Change in unrealized appreciation
(depreciation) of investments (42,387) 44,616
---------- ---------
Net decrease in net assets
from operations (93,665) (8,498)
Dividends Paid to Shareholders From:
Net realized gain on investments 0 0
Return of capital 0 0
Capital shares transactions
(Note 2) (530,469) 220,825
--------- -------
Total increase (decrease)
in net assets (624,134) 212,327
NET ASSETS:
Beginning of Period 697,488 485,161
-------- -------
End of Period $73,354 $697,488
======== ========
The accompanying notes are an integral part of these financial
statements.
<PAGE>
Notes to Financial Statements
September 30,1996
NOTE 1. Summary of Accounting Policies
Triumph Funds, Inc. (the "Fund"),formerly known as
Penn Capital Funds, Inc. is registered under the
Investment Company Act of 1940 as an open end
diversified management investment company. The Fund
currently has one series, the Asset Allocation Fund
whose investment objective is to provide long term
high total investment return, partly through current
income, but principally through capital appreciation.
Its financial statements are prepared in accordance
with generally accepted accounting principles for
investment companies as follows:
Security Valuation
Investments securities listed or traded on a
recognized national stock exchange or NASDAQ are
valued at the last reported sales prices on the
principal exchange on which the securities are traded.
Over-the-counter securities and listed securities for
which no sale is reported are valued at the mean
between the last current bid and asked prices.
Securities for which market quotations are not readily
available are valued at fair value in accordance with
standards determined in good faith by the Board of
Directors.
Federal Income Taxes
The Fund's policy is to comply with requirements of
the Internal Revenue Code that are applicable to
regulated investment companies and to distribute all
its taxable income to its shareholders. Therefore, no
federal income tax provision is required.
<PAGE>
TRIUMPH ASSET ALLOCATION FUND
Notes to Financial Statements
September 30,1996
Deferred Organization Expense
Organization costs have been deferred and are being
amortized over a five year period ending November 12,
1996.
Estimates
The preparation of financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumptions that
affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at
the date of the finanial statements and the reported
amounts of revenues and expenses during the reporting
period. Actual results could differ from those
estimates.
<PAGE>
TRIUMPH ASSET ALLOCATION FUND
Notes to Financial Statements
September 30, 1996
Other
Investment transactions are accounted for on a trade
date basis. Realized gains and losses from securities
transactions are reported on the identified cost
basis. Dividend income is recognized on the ex-
dividend date, and interest income is recorded on an
accrual basis. Dividends and capital gain
distributions to shareholders are recorded on the ex-
dividend date.
Note 2. Capital Share Transactions
As of September 30, 1996, there were 300,000,000
shares of no par value capital stock authorized of
which 10,000,000 shares have been allocated to the
Asset Allocation Fund. Transactions in capital stock
were as follows:
Year ended Year Ended
September 30,1996 September 30, 1995
Shares Amount Shares Amount
Shares sold 0 $ 0 100,274 $533,680
Shares redeemed (105,071) (530,469) (57,480) (305,288)
--------- --------- -------- ---------
Net increase (decrease) (105,071) $(530,469) 42,794 $ 228,392
========= ======== ======== =========
<PAGE>
TRIUMPH ASSET ALLOCATION FUND
Notes to Financial Statements
September 30, 1996
Note 3. Investment Transactions
During the year ended September 30, 1996, the cost of
purchases and proceeds from sales of investment
securities (excluding short-term securities) were
$451,203 and $975,495, respectively. At September 30,
1996, the Fund had tax basis net capital losses of
$137,572, which may be carried forward to offset
future capital gains. Such losses expire September
30, 2001 and 2002. At September 30, 1996, the
aggregate gross unrealized appreciation and
depreciation of securities was as follows:
Unrealized appreciation $ 1,545
Unrealized depreciation $ (3,238)
---------
Net unrealized depreciation $ (1,693)
=========
<PAGE>
TRIUMPH ASSET ALLOCATION FUND
Notes to Financial Statements
September 30, 1996
Note 4. Investment Advisory fees and Other Affiliates
International Investments, Inc. (the " Adviser")
serves as the Fund's investment adviser, subject to
the overall authority of the PCF's Board of
Directors. For its services as Fund Adviser, it is
paid an advisory fee at an annual rate of 1.00% of
the average daily net asset value of the Fund on the
first $25 million of average daily net asset value;
0.75% on the next $75 million of average daily net
asset value; and 5/8th of 1% on any amount over $100
million in average daily net asset value.
American Data Services, Inc. ("ADS"), provides the
Fund with accounting services, pursuant to a Fund
Accounting Services Agreement dated November 1, 1995.
For these services ADS is paid a monthly fee based on
the average net assets of 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.
<PAGE>
TRIUMPH ASSET ALLOCATION FUND
Notes to Financial Statements
September 30, 1996
Note 4. Investment Advisory fees...(cont.)
ADS is also acting as the tranfer 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.
The Fund has entered into an administrative services
agreement with James M. Beimel, Jr., the President of
the Fund. Under this agreement Mr. Beimel, who does
not receive a salary from the Fund, will perform all
the needed administrative services for the Fund,
including providing space for PCF s offices in
Pittsburgh. Mr. Beimel was paid $18,000 to perform
these services during the year. From March 1, 1996
through August 31, 1996 Mr. Beimel engaged ADS as a
sub-administrator to perform certain administrative
services for the fund. ADS received $6000 for these
services during the year. The Fund has no employees.
Dunwoody Brokerage Services, Inc.("Dunwoody") is the
Fund's distributor. Dunwoody retained $8,674 from
brokerage fees on execution of portfolio transactions.
<PAGE>
TRIUMPH ASSET ALLOCATION FUND
Notes to Financial Statements
September 30, 1996
Note 5. Reclassification
In accordance with AICPA Statement of Position 93-2
the components of net assets of the Fund have been
reclassified to the extent that the net investment
loss of $86,788 sustained during the fiscal year
ended September 30, 1996, which represents a
permanent difference for income tax purposes, has
been reclassified as a decrease in net capital paid
in.
Note 6. Financial Instruments Disclosure
There are no reportable financial instruments which
have any off-balance sheet risk as of September 30,
1996.
Note 7. Contingencies
The Fund is subject to a lawsuit involving
allegations of unpaid legal fees. The Fund intends
to vigorously oppose the claim. The potential loss
exposure in this action is estimated to be between
approximately $4,000 and $25,500.
<PAGE>
TRIUMPH ASSET ALLOCATION FUND
Financial Highlights
(for a share outstanding throughout a period)
Period from
November 12,
1991* through
Year Ended September 30, September 30,
1996 1995 1994 1993 1992
______________________________________________
Net asset value,
beginning of period $5.30 $5.47 $6.29 $7.41 $10.00
Income from investment
operations:
Net investment loss (1.50) (1.07) (0.88) (0.60) (0.16)
Net realized and unrealized
gains (losses)on investments (1.02) 0.90 0.06 (0.12) (2.43)
---- ------ ----- ------ ------
Total from investment operations(2.52) (0.17) (0.82) (0.72) (2.59)
Less Distributions:
Distributions from net
realized gains 0.00 0.00 0.00 (0.36) 0.00
Return of capital 0.00 0.00 0.00 (0.04) 0.00
---- ----- ------ ------ -----
Total Distributions 0.00 0.00 0.00 (0.40) 0.00
Change in net asset value (2.52) (0.17) (0.82) (1.12) (2.59)
------ ------ ------ ------ ------
Net asset value, end of period $2.78 $5.30 $5.47 $6.29 $7.41
Total return*** (47.55)% (3.11)% (13.04)% (10.49)% (25.90)%
Ratios/Supplemental data
Net assets, end of period (000) 73 697 485 664 1,065
Ratios to average net assets:
Expenses 33.74% 21.92% 12.56% 8.40% 4.93%**
Net investment income (loss) (31.37)% (20.61)% (11.55)% (6.48)% (2.82)%**
Portfolio turnover rate 187% 141% 200% 116% 23%
Average commission rate paid $ .21
* Commencement of operations
** Annualized
*** Total return does not reflect sales commissions
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 83359
<INVESTMENTS-AT-VALUE> 81666
<RECEIVABLES> 10948
<ASSETS-OTHER> 5157
<OTHER-ITEMS-ASSETS> 2659
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