TRIUMPH FUNDS, INC.
THE ASSET ALLOCATION FUND
116 Boulevard of the Allies
Pittsburgh, Pennsylvania 15222
412-281-2754
PROSPECTUS MAY 6, 1996
TRIUMPH FUNDS, INC. ("Triumph") is an open-end, diversified
management investment company. Triumph intends to offer shares in more
than one fund, each of which will represent a separate class of Triumph'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
Asset Allocation Fund (the "Fund"). The Fund seeks a high total
investment return for investors willing to assume a higher degree of
risk through investment primarily in common stocks, preferred stocks
and securities convertible into common stocks and common stocks of
companies in the precious metals industry, although the Fund may
invest in fixed income securities from time to time.
The Fund's investment adviser is International Investments, Inc.
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 6, 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 Triumph at the address or telephone number listed above.
Prospectuses for the other series may be obtained by writing Triumph
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 6
Risks to be Considered 8
Management of the Fund 9
Portfolio Brokerage 10
Portfolio Turnover 10
Rule 12b-1 Distribution Plan 10
Your Account:
How Shares May Be Purchased (including sales charges) 11
Calculation of Net Asset Value 13
Tax-Sheltered Retirement Plans 14
Redemption and Repurchases 14
Automatic Withdrawal Plan 15
Dividends, Distributions and Taxes 16
More About The Fund:
Additional Information 16
<PAGE>
THE FUND AT A GLANCE
Investment Goal: High total investment return through investment
among specified types of securities as selected by the Fund's
investment adviser.
Strategy: Invest primarily in common stocks, preferred stocks,
securities convertible into common stocks and common stocks of
companies in the precious metals industry, although the Fund may
invest in fixed income securities. The Fund is a diversified
management company.
Risks: The Fund is intended for long-term investors who want long-term
growth rather than income and who are willing to assume significant
fluctuations in value over the short-term. It is not suitable for
short-term investors or those seeking current income.
Investment Adviser: International Investments, Inc., which currently
manages approximately $21 million in assets for its private
clients. 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
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net asset)
Management Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.00%
12b-1 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00%
Other Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19.76%
Administrative Fees . . . . . . . . . . . . . . . . . . . . . . . . 1.16%
Total Fund Operating Expenses. . . . . . . . . . . . . . . . . . . . . .21.92%
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. The expenses and fees shown are for the fiscal year
ended September 30, 1995.
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
$201 $506 $717 $1000
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES OR PERFORMANCE. ACTUAL EXPENSES IN THE FUTURE MAY BE
GREATER OR LESSER THAN THOSE SHOWN.
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial information, with respect to the year
ended September 30, 1995, has been audited by McCurdy & Associates
CPA's, Inc., independent certified public accountants, whose
unqualified report thereon, appears in the Fund's Annual Report to
Shareholders, which is incorporated by reference in the Statement of
Additional Information. The financial information for the period
prior to October 1, 1994 was audited by other independent certified
public accountants. This information should be read in conjunction
with the financial statements and notes thereto which appear in the
Fund's Annual Report to Shareholders. Further information about the
Fund's performance is contained in its Annual Report to Shareholders
which may be obtained without charge from Triumph .
Period from
Nov. 12, 1991
Year ended September 30 start up
1995 1994 1993 1992
Per share operating
performance for a share
(for a share outstanding
throughout the period)
Net asset value, beginning
of period $5.47 $6.29 $7.41 $10.00
Income from investment operations:
Net Investment Income (loss) (1.07) (0.88) (0.60) (0.16)
Net realized and unrealized gains
(losses) on investments 0.90 0.06 (0.12) (2.43)
Total from investment operations (0.17) (0.82) (0.72) (2.59)
Less Distributions
Distributions from net realized gains (0.36)
Return of capital (0.04)
Total distributions (0.40)
Change in net asset value (0.17) (0.82) (1.12) (2.59)
Net asset value, end of period $5.30 $5.47 $6.29 $7.41
TOTAL RETURN*** (3.11)% (13.04)% (10.49%) (25.90)%*
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) 697 485 664 1,065
Ratios to average net assets:
Expenses 21.92% 12.56% 8.40%** 4.93%
Net investment income 20.61% (11.55)% (6.48)%** (2.82)%
Portfolio turnover rate 141% 200% 116% 23%
* Not annualized
** Annualized
*** Total return does not reflect sales commissions
Effective December 1, 1995, after the end of the 1995 fiscal year on September
30, 1995, the investment adviser to the Fund was changed.
<PAGE>
GENERAL DESCRIPTION OF FUND
INVESTMENT OBJECTIVE - The Fund's investment objective is to provide
you with long-term high total investment return. Total return is
achieved partly through current income, but principally through
capital appreciation. 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) of the Fund's outstanding voting
shares. There can be no assurance that the Fund's investment
objective will be achieved.
MANAGEMENT POLICIES - The Fund may invest in multiple market segments.
Which segments, and in what proportion the Fund invests at any given
time, will be dictated by current investment conditions and the
judgment of the Fund's investment adviser. When market conditions
warrant, the Fund may have 100% of its assets invested in one market
segment. The Fund is not required to invest a fixed percentage of its
net assets in any market segment. The Fund may invest in the
following market segments: equity securities, equity securities of the
precious metal industry (which the Fund views as a separate market
segment, even though others might view it as only an industry segment
of equity securities), and fixed income securities. Notwithstanding
the foregoing, the Fund has adopted a concentration policy that
restricts investments in the precious metal industry to less than 25%
of the total net assets of the Fund.
Equity Securities - The equity securities in which the Fund may invest
consist of common stocks, preferred stocks, including those is the
form of American Depositary Receipts, and convertible securities
(which have characteristics of both debt and equity securities) of
domestic U.S. companies only. See "Certain Portfolio Securities"
below. The securities selected in this sector are those considered by
the Fund's investment adviser to have long-term appreciation
potential. Selections are based on fundamental research
considerations including qualitative and quantitative factors.
Qualitative factors considered include industry outlook, management,
and research and development capability. Quantitative factors
considered include earnings, dividends, and price momentum. The
investment adviser's investment approach involves both sector
allocation and style allocation through various proprietary
mathematical models.
Precious Metals Industry - Investments in the precious metal industry
("Precious Metal Investments") are made by purchasing the common
stocks of U.S. companies, or foreign companies, through the medium of
American Depository Rights (see "Certain Portfolio Securities" below),
which are primarily involved, directly or indirectly, in the business
of exploring for, mining, processing, fabricating, manufacturing,
marketing or otherwise dealing in gold, silver, or platinum. The Fund
does not intend to invest in precious metals bullion or in the
securities of South African issuers. The Fund will not invest in
Precious Metal Investments that do no meet the Fund's criteria for
investing in equity securities generally.
Fixed Income Securities - The fixed income securities in which the
Fund may invest are limited to: (a) corporate obligations rated within
the four highest investment grades as established by Standards &
Poor's or Moody's Investors Service, Inc. (debt securities in the
lowest of these four ratings are medium grade obligations, and have
speculative characteristics, i.e., changes in economic conditions or
other circumstances are more likely to lead to a weakened capacity on
the part of the issuer to make principal and interest payments than is
the case with higher grade debt securities. If any such security is
downgraded in its rating below these guidelines or is otherwise seen
to have become an unsuitable investment under these guidelines, the
Fund will sell that security as soon as practicable.), and (b)
securities issued by, or guaranteed by, the U.S. Government, its
agencies or instrumentalities. Examples of U.S. Government securities
are: U.S. Treasury Bills, Notes, and Bonds. See "Certain Portfolio
Securities" below. IT IS THE CURRENT POLICY OF THE FUND, ALTHOUGH NOT
A FUNDAMENTAL POLICY SUBJECT TO CHANGE ONLY UPON SHAREHOLDER APPROVAL,
TO LIMIT ITS INVESTMENTS IN SECURITIES ISSUED OR GUARANTEED BY THE
U.S. GOVERNMENT, ITS AGENCIES OR INSTRUMENTALITIES TO NO MORE THAN 10%
OF THE TOTAL NET ASSETS OF THE FUND. The value of fixed income assets
generally will vary inversely to changes in interest rates. If
interest rates increase after a security is purchased, the security,
if sold prior to maturity, may return less than its cost.
CERTAIN PORTFOLIO SECURITIES
American Depository Receipts - The Fund's assets may be invested 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.
Other Securities - Although it is authorized to do so under its
investment policy, the Fund does not currently intend to invest more
than 5% of its net assets in convertible securities, U.S. Government
securities, put or call options, repurchase agreements or other
hedging instruments or illiquid securities. Under any circumstances,
less than 15% of the total net assets of the Fund may be invested in
illiquid securities, including repurchase agreements of more than
seven days maturity. For further information on these types of
securities and investment strategies, see the Statement of Additional
Information.
Defensive Asset Allocation - During periods of unusual market
conditions and, as a temporary defensive measure, the Fund may invest
up to 100% of its assets in short-term instruments such as commercial
paper, domestic certificates of deposit, banker's acceptances, and
U.S. Treasury Bills. These short-term, fixed-income investments will
be limited to obligations rated at the time of purchase within the two
highest ratings of either Standard & Poor's Corporation or Moody's
Investors Service, Inc.
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 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.
The Fund may invest a portion of its assets in all three market
segments at any given time. However, when market conditions warrant,
the Fund may have 100% of its assets invested in any one market area,
with the limitation that the maximum amount of its assets which are
invested in Precious Metals Investments must be less than 25% of the
total net assets of the Fund at all times. Additionally, during
periods of unusual market conditions and as a temporary defensive
measure, the Fund may invest 100% of its assets in high-quality short-
term money market instruments. The Fund's investment adviser has
determined that current market conditions warrant the investment of
basically all of the Fund's assets in equity securities in order to
meet the Fund's investment goal.
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); or (b) purchase more than 10% of the
outstanding voting securities of such issuer.
For 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 is calculated pursuant to a formula which is
described in detail in the Statement of Additional Information, which
is incorporated herein by reference. The chart contained in the
Fund's Annual Report to Shareholders for fiscal 1995 which shows
historical performance of the fund is calculated based on the payment
of the maximum sales load, the only non-recurring charge. The annual
return for fiscal 1995 for the Fund which is described in the same
report is calculated without any sales load. The effect of
calculating the Fund's performance without including the sales load is
to improve the Funds' reported performance. In fiscal 1995, the
calculation without including the sales charge improves the Fund's
performance for that year by 4.2%
RISKS TO BE CONSIDERED
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.
PRECIOUS METALS INDUSTRY - To the extent the Fund allocates assets to
Precious Metal Investments, the Fund will be subject to the risk of
industry-wide adverse developments. Precious metals prices may be
affected by a variety of factors such as economic conditions,
political events, monetary policies and other factors. As a result,
prices of Precious Metal Investments may fluctuate sharply, which
could adversely affect Fund share values.
OTHER INVESTMENT CONSIDERATIONS - Although the Fund's investment
adviser manages money for various private clients, it has no
experience managing a mutual fund. Also, 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
International Investments, Inc. (the "Adviser"), located at 100
South Ashley Drive, Suite 1260, Tampa, Florida 36602-5310, was
incorporated in 1989 and serves as the Fund's investment adviser,
subject to the overall authority of the Triumph's Board of Directors.
The Adviser is wholly owned by John J. Bartoletta, who is its President.
He is the principal manager of the Fund. From December, 1991 to the
present he has worked for the Adviser. From February, 1991 to
December, 1991, he worked as a pension consultant for The Hannah
Group, Boston, Massachusetts. As of February 1, 1995, the Adviser
managed or administered approximately $21 million in assets for
various clients. 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 amount over $100 million in average daily
net asset value.
American Data Services, Inc. ("ADS"), located at 24 West Carver
Street, Huntington, New York 11743, 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.
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.
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 Triumph'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 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 Triumph's
funds, with a minimum fee of $5,000 per month ($6,000 per month if
Triumph adds another fund). If Triumph adds another fund, the
fee will be approtioned between the two funds based on their respective net
assets. 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 a minimum of $4,000
($5,000 if Triumph adds another fund). 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. The Fund has no
employees.
Dunwoody Brokerage Services, Inc. ("Dunwoody") is the Fund's
distributor. It is located at 8309 Dunwoody Place, Atlanta, Georgia
30350-3307.
The Fund's custodian is Star Bank, N.A., whose address is Star
Bank Center, 425 Walnut Street, Cincinnati, Ohio 45202.
PORTFOLIO BROKERAGE
The Adviser intends to direct brokerage through several brokerage
firms, none of which is related to the Fund, based on best price and
execution. The Board of Directors of the Fund must periodically
determine that the brokerage fees being charged it 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 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 Triumph 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.
The Distribution Plan was adopted by the Board of Directors of
Triumph , including a majority of the directors who are not "interested
persons" and who have no direct or indirect financial interest in the
Distribution Plan (the "Rule 12b-1 Directors"). The Plan will be
presented to the Fund's shareholders for their approval at the next
annual meeting of shareholders. Until it is approved by the
shareholders, no funds will be expended under the Distribution Plan.
While the Distribution Plan is in effect, the Fund is required to
commit the selection and nomination of candidates for disinterested
directors to the discretion of other disinterested directors of the
Fund. The Distribution Plan may be terminated by a vote of a majority
of the Rule 12b-1 Directors or by the vote of a majority of the
outstanding voting shares of the Fund. Under the terms of the
Distribution Plan, any change in the Distribution Plan that would
materially increase the distribution expenses of the Fund will require
shareholder approval; otherwise the Distribution Plan may be amended
by the Board of Directors, including a majority of the Rule 12b-1
Directors.
HOW SHARES MAY BE PURCHASED
An investor wishing to purchase shares of the Fund should use the
Asset Allocation Fund Share Purchase Application. A copy may also be
obtained from any broker with whom Dunwoody, the Fund's distributor,
has a dealer agreement. The executed application, together with the
investor's check made payable to Triumph Funds, Inc. should be
transmitted to the Fund, c/o Star Bank, N.A., Lock Box Location 0153,
Cincinnati, Ohio 45201-0153. 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 Triumph 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 Triumph 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
requirement 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 sales 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 of 1940, 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 are less than the amount specified in the Letter, the
purchaser must remit to Triumph 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, Triumph does
not receive said difference in sales charges, Triumph 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 Triumph for the difference. The remaining shares after the
redemption will be deposited in the investor's account unless Triumph is
otherwise instructed.
The purchaser irrevocably constitutes and appoints Triumh 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;
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; and
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. at Lock Box Location 0153,
Cincinnati, Ohio 45201-0153.
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 corporations, trustees, executors or administrators.
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 Dunwoody 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 Dunwoody 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 Dunwoody 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
Triumph 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 Triumph 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
Triumph 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 A Common
Stock- Triumph Asset Allocation 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 Triumph's Directors. All
consideration received by Triumph 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 Triumph . Currently, no class of securities of
Triumph 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 ADS at 24 West Carver Street,
Huntington, New York 11743; telephone (516) 385-9580; or 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
Triumph will hold both annual and special shareholder meetings at
times and places to be determined by the Board of Directors.
<PAGE>
TRIUMPH FUNDS, INC.
ASSET ALLOCATION FUND
Statement of Additional Information
May 6, 1996
This Statement of Additional Information is not a prospectus but
should be read in conjunction with the current prospectus for the
Asset Allocation Fund of Triumph Funds, Inc. (dated May 6,
1996). A copy of the prospectus may be obtained by writing the
Distributor, Dunwoody Brokerage Services, Inc., at 8309 Dunwoody
Place, Atlanta, Georgia 30350-3307 or by calling (800) 537-9165.
<PAGE>
TRIUMPH FUNDS, INC.
Statement of Additional Information
May 6, 1996
Table of Contents
General Information..........................................B-1
Investment Objective and Policies............................B-1
Asset Allocation Fund........................................B-1
Covered Call Options and Hedging.............................B-1
Purchasing Call and Puts.....................................B-2
Convertible Securities.......................................B-4
Illiquid Securities..........................................B-5
Yield Disclosure.............................................B-5
Investment Restrictions......................................B-6
Additional Purchase and Redemption Information...............B-8
Tax-Sheltered Plans..........................................B-9
Individual Retirement Account Plan...........................B-10
Directors and Officers.......................................B-11
Investment Adviser...........................................B-12
Administrator................................................B-13
Rule 12b-1 Distribution Plan.................................B-14
Custodian....................................................B-14
Transfer and Dividend Agent..................................B-15
Independent Certified Public Accountants.....................B-15
Portfolio Brokerage..........................................B-15
Capital Stock................................................B-16
Distributor..................................................B-16
<PAGE>
GENERAL INFORMATION
Triumph was incorporated under the laws of the Commonwealth of
Pennsylvania on February 27, 1991. It operated as Penn Capital Funds, Inc.
until June, 1996 , and has only been engaged in business as an open-end
management investment company.
INVESTMENT OBJECTIVES AND POLICIES
The following policies supplement the Asset Allocation Fund's
investment objectives and policies as set forth in the Prospectus
dated May 6, 1996.
ASSET ALLOCATION FUND
The Asset Allocation 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 of 1940, as
amended. 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.
The Fund may purchase put and call options on individual stocks
and index options, as well as writing covered call options on
portfolio stocks.
COVERED CALL OPTIONS AND HEDGING
The Fund may write covered calls or employ one or more types of
hedging instruments. When hedging to attempt to protect against
declines in the market value of the Fund's portfolio, to permit the
Fund to retain unrealized gains in the value of portfolio securities
which have appreciated, or to facilitate selling securities for
investment reasons, the Fund may (a) buy puts on such securities, or
(b) write calls on securities held by it. When hedging to permit the
Fund to establish a position in the securities market as a temporary
substitute for purchasing individual securities (which the Fund will
normally purchase, and then terminate that hedging position), the Fund
may buy calls on such securities. Additional information about the
Hedging Instruments the Fund may use is provided below.
WRITING COVERED CALL OPTIONS
When the Fund writes a call, it receives a premium and agrees to
sell the callable investment to a purchaser of a corresponding call
during the call period (usually not more than 9 months) at a fixed
exercise price (which may differ from the market price of the
underlying investment) regardless of market price changes during the
call period. To terminate its obligation on a call it has written,
the Fund may purchase a corresponding call in a "closing purchase
transaction." A profit or loss will be realized depending upon
whether the net of the amount of option transaction costs and the
premium previously received on the call written is more or less than
the price of the call subsequently purchased. A profit may also be
realized if the call lapses unexercised, because the Fund retains the
related investments and the premium received. If the Fund could not
effect a closing purchase transaction due to a lack of a market, it
would have to hold the callable investments until the call lapsed or
was exercised.
The Fund's Custodian, or a securities depository acting for the
Custodian, will act as the Fund's escrow agent through the facilities
of the Options Clearing Corporation ("OCC"), as to the investments on
which the Fund has written calls, or as to acceptable escrow
securities, so that no margin will be required for such transactions.
OCC will release the securities on the expiration of the calls or upon
the Fund entering into a closing purchase transaction. Call writing
affects the Fund's turnover rate and the brokerage commissions it
pays. Commissions payable on writing or purchasing a call are
normally higher on a relative basis than on general securities
transactions.
PURCHASING CALLS AND PUTS
When the Fund purchases a call (other than in a closing purchase
transaction), it pays a premium and, except as to calls on stock
indices, has the right to buy the underlying investment from a seller
of a corresponding call on the same investment during the call period
at a fixed exercise price. When the Fund purchases a call on a stock
index, it pays a premium, but settlement is in cash rather than by
delivery of the underlying investment to the Fund. The Fund benefits
only if the call is sold at a profit or if, during the call period,
the market price of the underlying investment is above the sum of the
call price plus the transaction costs and the premium paid and the
call is exercised. If the call is not exercised or sold (whether or
not at a profit), it will become worthless at its expiration date and
the Fund will lose its premium payment and the right to purchase the
underlying investment.
When the Fund purchases a put, it pays a premium and, except as
to puts on stock indexes, has the right to sell the underlying
investment to a seller of a corresponding put on the same investment
during the put period at a fixed exercise price. Buying a put on an
investment the Fund owns enables the Fund to protect itself during the
period against a decline in the value of the underlying investment
below the exercise price by selling such underlying investment at the
exercise price to a seller of a corresponding put. If the market
price of the underlying investment is equal to or above the exercise
price and as a result the put is not exercised or resold, the put will
become worthless at its expiration date, and the Fund will lose its
premium payment and the right to sell the underlying investment. The
put may, however, be sold prior to expiration (whether or not at a
profit).
An option position may be closed out only on a market which
provides secondary trading for options of the same series, and there
is no assurance that a liquid secondary market will exist for any
particular option. The Fund's option activities may affect its
turnover rate and brokerage commissions. The exercise by the Fund of
puts on securities will cause the sale of related investments, and
increase portfolio turnover. Although such exercise is within the
Fund's control, holding a put might cause the Fund to sell the related
investments for reasons which would not exist in the absence of the
put. The Fund will pay a brokerage commission each time it buys a put
or call, or sells a call. Such commissions may be higher than those
which would apply to direct purchases or sales of such underlying
investments. Premiums paid for options are small in relation to the
market value of the related investments, and consequently, put and
call options offer large amounts of leverage. The leverage offered by
trading in options could result in the Fund's net asset value being
more sensitive to change in the value of the underlying investments.
TAX ASPECTS OF HEDGING INSTRUMENTS
The Fund intends to qualify as a "regulated investment company"
under the Internal Revenue Code. One of the tests for such
qualifications is that less than 30% of its gross income (irrespective
of losses) must be derived from gains realized on the sale of
securities held for less than three months. Due to this limitation,
the Fund will limit the extent to which it engages in the following
activities, but will not be precluded from them: (i) selling
investments held for less than three months, whether or not they were
purchased on the exercise of a call held by the Fund; (ii) writing
calls on investments held for less than three months; (iii) purchasing
calls or puts which expire in less than three months; (iv) effecting
closing transactions with respect to calls or puts purchased less than
three months previously; and (v) exercising puts or calls held by the
Fund for less than three months.
POSSIBLE RISK FACTORS IN HEDGING
In addition to the risks with respect to options tracking
discussed above, there is additional risk to the Fund if it attempts
to engage in short hedging by purchasing puts on stock indexes in that
the prices of the applicable index will correlate imperfectly with the
behavior of the cash (i.e., market value) prices of the Fund's
portfolio securities.
The risk of imperfect correlation increases as the composition of
the Fund's portfolio diverges from the securities included in any
applicable index. To compensate for the imperfect correlation of
movements in the price of the hedging instruments, the Fund may use
hedging instruments in a greater dollar amount than the dollar amount
of such portfolio securities being hedged if the historical volatility
of the prices of such portfolio securities being hedged is more than
the historical volatility of the applicable index. It is also
possible that where the Fund has used hedging instruments in a short
hedge, the market may advance and the value of the securities held in
the Fund's portfolio may decline. If this occurred, the Fund would
lose money on the hedging instruments and also experience a decline in
value in its portfolio securities. If the Fund uses hedging to
establish a position in the securities markets as a temporary
substitute for the purchase of particular securities (long hedging) by
buying calls on securities or on stock indexes, it is possible that
the market may decline. If the Fund then concludes not to invest in
securities at that time because of concerns as to possible further
market decline or for other reasons, the Fund will realize a loss on
the hedging instruments that is not offset by a reduction in the price
of such securities. In other words, if the investment adviser is
incorrect in the assessment of whether the overall market will advance
or decline, as the case may be, the Fund may not experience any
benefit and may have been better off if the hedging instruments were
not used.
CONVERTIBLE SECURITIES
A convertible security is a fixed-income security (a bond or preferred
stock) which may be converted at a stated price within a specified
period of time into a certain quantity of the common stock of the same
or a different issuer. Convertible securities are senior to common
stocks in a corporation's capital structure, but are usually
subordinated to similar nonconvertible securities. While providing a
fixed income stream (generally higher in yield than the income
derivable from a common stock but lower than that afforded by a
similar nonconvertible security) a convertible security also affords
an investor the opportunity, through its conversion feature, to
participate in the capital appreciation attendant upon a market price
advance in the convertible security's underlying common stock.
In general, the market value of a convertible security is at least the
higher of its "investment value" (i.e., its value as a fixed-income
security) or its "conversion value" (i.e., its value upon conversion
into its underlying common stock). As a fixed-income security, a
convertible security tends to increase in market value when interest
rates decline and tends to decrease in value when interest rates rise.
However, the price of a convertible security is also influenced by the
market value of the security's underlying common stock. The price of
a convertible security tends to increase as the market value of the
underlying stock rises, whereas it tends to decrease as the market
value of the underlying stock declines. While no securities
investment is without some risk, investments in convertible securities
generally entail less risk than investments in the common stock of the
same issuer.
ILLIQUID SECURITIES
The Fund may invest up to 15% of its net assets (determined at the
time of investment) in illiquid securities including securities that
are illiquid by virtue of the absence of a readily available market or
legal or contractual restrictions on resale and repurchase agreements
which have a maturity of longer than seven days. This policy is
subject to state securities commissions restrictions. Rule 144A
securities that have legal or contractual restrictions on resale but
have a readily available market are not considered illiquid for
purposes of this limitation. The investment adviser will monitor the
liquidity of such restricted securities under the supervision of the
Board of Directors. Repurchase agreements subject to demand are
deemed to have a maturity equal to the notice period.
The staff of the SEC has taken the position that purchased over-the-
counter options and the assets used as "cover" for written over-the-
counter options are illiquid securities. However, with respect to
U.S. government securities, the Fund may treat the securities it uses
as "cover" for written over-the-counter options on U.S. Government
securities as liquid provided it follows a specified procedure. The
Fund may sell such over-the-counter options only to qualified dealers
who agree that the Fund may repurchase any options it writes for a
maximum price to be calculated by a predetermined formula. In such
cases, over-the-counter options would be considered liquid only to the
extent that the maximum repurchase price under the formula exceeds the
intrinsic value of the option.
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
1. The assets of the Fund will be fully invested. The Fund
intends to invest a portion of its assets in all three market
segments at any given time. However, when market conditions
warrant, the Fund may have 100% of its assets invested in any one
market area with limitation that less than 25% of the total
assets of the Fund will be invested in the precious metal
industry. Additionally, during periods of unusual market
conditions and, as a temporary defensive measure the Fund may
invest 100% of its assets in high-quality short-term money market
instruments.
2. As to 75% of the market value of its total assets, the Fund shall
not:
(a) invest more than 5% of the value of the 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. Borrowings by the Fund are not permitted except (a) from banks
for temporary or emergency purposes up to maximum of 5% of the
value of the total assets of the appropriate 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 asset allocation or diversification
posture. 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 of 1940, as amended,
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.
4. Securities of other issuers will not be underwritten, which shall
also be deemed to include investment in restricted securities.
5. Less than 25% of the total assets of the Fund will be invested in
the securities of issuers in any one industry.
6. Investments in real estate or real estate mortgage loans will not
be made. However, investment in United States Government Agency
securities representing real estate loans may be made.
7. No purchase or sale will be made of future contracts, commodities
or commodity contracts or oil or gas interest.
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 will not be made 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 Investment Restriction 3 above.)
11. No investment will be made in the securities of any issuer for
the purpose of exercising management or control.
12. Investments will not be made in restricted securities or foreign
securities, though the Fund may invest in the American Depository
Receipts of non-U.S. Companies.
13. No more than 5% of the total assets of the Fund will be invested
in the securities of other investment companies.
14. The Fund will not purchase any security if, as a result, the Fund
would then have more than 5% of its total assets (taken at
current value) invested in the securities of companies (including
predecessors) less than three years old.
15. 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.
16. The Fund's assets will not be mortgaged, pledged or hypothecated
unless there is at all times an asset coverage of at least 300%
for all pledging, mortgaging and hypothecation of the Fund's
assets.
17. Less than 15% of the total net assets of any Series may be
invested in liquid securities including repo agreements of more
than seven days maturity.
With respect to Investment Restrictions 3 and 16, the Fund will not
engage in such activities to the extent 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 of 1940, 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 Triumph 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
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
Richard J. Kowalski Director Chief Financial Officer,
232 Kansas Drive US Home Mortgage division
Lower Burrell, PA of JMB Holdings, Inc.
15068
* 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. Beimel has been consulting with Triumph 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 Unisys, 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. Mr. Kowalski
has been in his present position since January, 1996. From July, 1993
to December, 1995, he was employed as an insurance agent with Menhorn
Associates, Inc., an insurance agency located in Greensburg,
Pennsylvania, and starting in July, 1994 was also a registered
representative with Penn Capital Financial Services, Inc., a stock
broker located in Penn Hills, Pennsylvania. From July, 1992 to July,
1993, he was employed as an insurance agent by American General Life
and Accident Company, an insurance company. Prior to that he was an
insurance agent for Metropolitan Life Insurance Companies, an
insurance company.
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 Triumph has any affiliation with
the Fund's investment adviser, International Investments, Inc., or
American Data Services, Inc.
INVESTMENT ADVISER
International Investments, Inc. (the "Adviser") serves as
investment adviser to the Fund and has done so since November 1, 1995.
The Adviser acts as an investment manager to individuals and
institutional clients with substantial investment portfolios. The
Adviser was organized in 1989 and is wholly owned by John J.
Bartoletta, its President.
The Adviser receives a monthly fee at an annual rate of 1.0% of
the average daily net asset value of the Fund on the first $25
million; 0.75% of the average daily net asset value on the next $75
million; and 5/8 of 1% on amounts over $100 million.
The Advisory Agreement with the Adviser will remain in effect for
two years and from year-to-year thereafter, 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 1940, as amended) 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 Adviser, cast in person at a meeting called for the
purpose of voting on such approval. The Adviser may terminate the
Advisory Agreement by giving the Fund written notice at least 60 days
prior to any anniversary date of it. The Advisory Agreement may also
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 sixty day's written notice to the Adviser. It will
automatically terminate if it is assigned.
The Advisory Agreement provides that the Adviser will not be
liable to the Fund for any error of judgement or for any loss arising
out of any investment or recommendation or out of any other act or
omission in the performance of the Advisory Agreement, except for
negligence, willful malfeasance, bad faith or violation of applicable
law.
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 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 of
1940. The Plan provides that Mr. Beimel, on behalf of the Fund,
may incur certain costs relating to the distribution of its shares.
Mr. Beimel is to be reimbursed by the Fund for these costs 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 will allow the Adviser greater
flexibility in management. Amounts paid under the Plan and related
Distribution Assistance Agreement are paid to Mr. Beimel to reimburse
permitted expenses and may be spent by him on any activities or
expenses primarily intended to result in the sale of the Fund's
shares, including but not limited to, expenses of printing of
prospectuses and reports for other than existing shareholders,
advertising and preparation and distribution of sales literature. The
Fund did not pay any fees under the previous Distribution Plan with it
prior primary distributor during the fiscal year ending September 30,
1995. 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 and related Distribution Assistance Agreement 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
Star Bank, N.A. ("Star"), Star Bank Center, 425 Walnut Street,
Cincinnati, Ohio 45202, as custodian, has custody of all securities
and cash of the Fund. It attends to the collection of principal and
income, and payment for and collection of proceeds of securities
bought and sold by the Fund. Star is not affiliated with the Fund or
any of its affiliates. Star is paid a minimum fee of $400 per month
plus various transaction fees to act as custodian for the Fund.
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
Adviser subject to review by the Fund's Board of Directors. The
Adviser intends to direct brokerage on the basis of 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 Advisers 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
of 1940, 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 its 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. Brokerage commissions paid by the Fund during
the fiscal year ended September 30, 1995, all of which were paid to
Penn Capital Financial Services, Inc., totaled $2,543 on transactions
involving securities having a total market value of approximately
$1,211,801.
Purchases of government securities and some fixed income
securities may be made directly from dealers in a principal
transaction and not on an agency basis. Buying from a dealer in a
principal transaction involves paying the dealer's mark-up price which
includes an element of profit to the dealer.
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. Dunwoody received
no commissions from the Fund during the preceding three fiscal years.
The previous distributor received sales commissions of $2,828, $1,436,
and $6,210 during the fiscal years ended September 30, 1995, 1994 and
1993, respectively.
