SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. __)
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[ ] Preliminary Proxy Statement
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by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
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[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
PENN CAPITAL FUNDS, INC.
(Name of registrant as Specified In Its Charter)
____________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:______________________________________________
2) Aggregate number of securities to which transaction
applies:_______________________________________________
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth
the amount on which the filing fee is calculated and
state how it was
determined):___________________________________________
_______________________________________________________
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_______________________________________________________
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<PAGE>
PENN CAPITAL FUNDS, INC.
216 Boulevard of the Allies
Pittsburgh, PA 15222
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 20, 1996
TO THE SHAREHOLDERS:
Notice is hereby given that the Annual Meeting of
Shareholders of Penn Capital Funds, Inc. (the "Fund") will be
held at the offices of the Fund's counsel, Pluumer, Beaman &
DeWalt, L.L.P., 3800 Gulf Tower, 707 Grant Street, Pittsburgh, PA
15219, on Friday, May 20, 1996 at 11:00 a.m., Eastern time for
the following purposes:
1. To elect four (4) directors to serve until the next
Annual Meeting of Shareholders, or until their successors are
duly elected and have qualified;
2. To approve the Advisory Agreement between the Asset
Allocation Fund of the Fund and International Investments, Inc.;
3. To approve the Fund's Distribution Plan and related
Distribution Assistance Agreement;
4. To ratify the selection of McCurdy & Associates CPA's,
Inc. as auditors of the Fund for the fiscal year ending September
30, 1996;
5. To approve an amendment to the Fund's Restated Articles
of Incorporation to change the name of the Fund to "Triumph
Funds, Inc.";
6. To transact such other business as may properly come
before the meeting or any adjournments thereof.
Only shareholders of record at the close of business on
May 9 , 1996, the record date for this meeting, will be
entitled to notice of and to vote at the meeting or any
adjournments thereof. If you attend the meeting, you may vote
your shares in person. IF YOU DO NOT EXPECT TO ATTEND THE
MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED
PROXY CARD IN THE ENCLOSED POSTAGE PAID ENVELOPE. Sending in
your proxy will not prevent you from personally voting your
shares at the meeting since you may revoke your proxy by advising
the Secretary of the Fund in writing (by subsequent proxy or
otherwise) of such revocation at any time before it is voted.
By order of the Board of Directors,
James M. Beimel, Jr., President
May 13 , 1996
Pittsburgh, Pennsylvania
<PAGE>
PENN CAPITAL FUNDS, INC.
216 Boulevard of Allies
Pittsburgh, PA 15222
PROXY STATEMENT
Annual Meeting of Shareholders to be held on May 20, 1996
The enclosed proxy is being solicited by and on behalf of
the Board of Directors of Penn Capital Funds, Inc. (the "Fund")
for use at its Annual Meeting Of Shareholders to be held at the
offices of its counsel, Plummer, Beaman & DeWalt, L.L.P., 3800
Gulf Tower, 707 Grant Street, Pittsburgh, Pennsylvania on May 20,
1996 at 11:00 am, Eastern time and at any adjournments thereof
(the "Meeting"), for the purposes set forth in the attached
Notice of Annual Meeting of Shareholders.
The Fund's investment adviser is Investments International,
Inc., 100 South Ashley Drive, Suite 1260, Tampa, Florida 36602-
5310. The Fund's principal distributor is Dunwoody Brokerage
Services, Inc., 8309 Dunwoody Place, Atlanta, Georgia 30350-3307.
The Fund's administrator is James M. Beimel, Jr., 216 Boulevard
of the Allies, 6th Floor, Pittsburgh, Pennsylvania 15222, with
American Data Services, Inc., 24 West Carver Street, Huntington,
New York 11743 as sub-administrator.
Whether you expect to be personally present at the Meeting
or not, please complete, sign, date and return the accompanying
form of proxy. Timely executed proxies will be voted as you
instruct. If no choice is indicated, proxies will be voted FOR
the election of the nominees for directors and FOR each of the
proposals set forth in the Notice of Annual Meeting of
Shareholders. If any nominee for Director should withdraw or
otherwise become unavailable for election (something which the
Board does not anticipate happening), your shares will be voted
in favor of such other nominee or nominees as management may
recommend. Any shareholder giving a proxy has the power to
revoke it at any time before it is exercised by giving notice
thereof to the Fund in writing (by subsequent proxy or
otherwise), but if not so revoked, the shares represented by the
proxy will be voted at the Meeting. Presence at the Meeting of a
shareholder who has signed a proxy does not in itself revoke a
proxy.
In the event that a quorum is not present at the Meeting, or
if a quorum is present at the Meeting but sufficient votes to
approve any of the proposals are not received, the persons named
as proxies may propose one or more adjournments of the Meeting to
permit further solicitation of proxies. Any adjournment will
require the affirmative vote of a majority of those shares
represented at the Meeting in person or by proxy. The persons
named as proxies will vote those proxies which they are entitled
to vote FOR any proposal for adjournment.
Proxies will be solicited by mail, and certain officers of
the Fund may solicit by telephone and personally. These officers
will not be paid for these services. The cost of solicitation,
including preparing, assembling and mailing the proxy material,
will be borne by the Fund. The Notice of Annual Meeting of
Shareholders, this Proxy Statement and the accompanying form of
proxy were first mailed to shareholders of the Fund on or about
May 13 , 1996.
Only shareholders of record at the close of business on May
9 , 1996 will be entitled to notice of and to vote at the
Meeting. On that date, there were issued and outstanding
35,813.649 shares of Common Stock, without par value, of
the Fund. The record holder of each outstanding share is
entitled to one vote on all matters submitted to shareholders.
As of the record date, no shareholder owned 5% or more of the
outstanding shares of the Common Stock.
Copies of the Fund's most recent annual and semi-annual
reports, including financial statements, have previously been
delivered to shareholders. Shareholders may request copies of
those annual and semi-annual reports by writing the Fund at 216
Boulevard of the Allies, 6th Floor, Pittsburgh, PA 15222, or by
calling 1-800-314-4339.
1. ELECTION OF DIRECTORS
Three directors are to be elected at the Meeting, each of
whom is to hold office until the next annual meeting of
shareholders or until his or her successor is elected and
qualified. The table set forth below identifies the three
nominees for election as directors of the Fund and provides
information given as of April 1, 1996 as to the age, principal
occupation and background for the last five years and the number
of shares of the Fund beneficially owned by each person. All of
the nominees for director have been appointed as directors since
the beginning of the current fiscal year on October 1, 1995. The
Board of Directors held one meeting during the fiscal year ended
September 30, 1995 which was attended by Joseph Jacobs, the only
current director who was a director at that time. The Board has
no audit, nominating or similar committees. It is not
expected that the Board will ordinarily consider nominees
recommended by shareholders.
Each nominees has consented to be named in this Proxy
Statement and to serve if elected. 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 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
receiving a sufficient number of votes to be elected.
Name of Nominee* Age Principal Occupation
Kathleen A. Donnelly 35 Attorney in private practice
James M. Beimel, Jr.** 45 President of the Fund
Richard J. Kowalski 49 Chief Financial Officer, US Home
Mortgage (mortgage broker)
division of JMB Holdings, Inc.,
a business holding company.
*All of the nominees are presently serving as directors of the
Fund. Ms. Donnelly and Mr. Beimel since 1995 and Mr. Kowalski
since April, 1996.
** This director is deemed to be an "interested person" of the
Fund because he is an officer of the Fund.
None of the nominees, nor any of the officers of the Fund,
own any shares of the Fund.
Ms. Donnelly has been in her present position since
September, 1995. From May, 1995 to September, 1995, she was
employed as an attorney at Penn Capital Management, Inc.,
Pittsburgh, Pennsylvania (a financial services holding company).
From May, 1990 to May, 1995, she was employed by Equitable
Resources, Inc., Pittsburgh, Pennsylvania (a natural gas utility
holding company) as a budget analyst. Mr. Beimel has been
consulting with the Fund on all aspects of its operations since
August, 1995. 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. 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 standard arrangement with directors is to 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.
COMPENSATION TABLE
The Fund has no employees and did not have any during the
fiscal year ended September 30, 1995. As a result, during that
year it paid no compensation to any officer or director of the
Fund. The Fund, with the approval of the Board, including the
approval of all of the independent directors, has entered into an
Administrative Services Agreement with Mr. Beimel, the President
of the Fund and a Director, pursuant to which Mr. Beimel will
perform all the needed administrative services for the Fund
(other than accounting services which are provided by American
Data Services, Inc, ("ADS") under a separate agreement),
including providing space for the Fund'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 the greater $5,000 (or
$6,000 if the Fund adds another portfolio, as it is in the
process of doing) or 1/12 of 0.5% of the combined average net
assets of all of the funds offered by the Fund. The fees are
subject to annual increase to reflect the Consumer Price Index
for the Northeast region. Of the total fee amount, Mr. Beimel
will receive each month minimum of $4,000 ($5,000 is there are
two funds). 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 pay pursuant to the Administrative Services Agreement. If and
when a second fund is offered by the Fund, the costs of this
Agreement will be split between the two funds based upon their
proportional shares of the aggregate daily net assets of the
Fund.
The officers of the fund are elected annually by the Board
of Directors. The officers of the Fund are Mr. Beimel
(President) and Karl Beimel (Secretary-Treasurer), who is 26 and
his brother.
THE BOARD, INCLUDING THE INDEPENDENT BOARD MEMBERS,
RECOMMEND THAT SHAREHOLDERS VOTE "FOR" EACH OF THE NOMINEES
LISTED ABOVE.
2. APPROVAL OF ADVISORY AGREEMENT
Shareholders are being ask to approve International
Investments, Inc. (the "Adviser") as the investment adviser to
the Asset Allocation Fund and the related Advisory Agreement
between the Adviser and the Fund. This change is necessitated by
the fact that by letter dated October 5, 1995, Dollins Symons
Management, Inc. ("Dollins Symons"), the previous adviser to the
Asset Allocation Fund, exercised its option under the Investment
Advisory Agreement dated February 22, 1994, between it and the
Fund to terminate the agreement. Although the termination
letter from Dollins Symons gave no reasons for the termination,
the Board believes that, among other things, its was dissatisfied
with the size of the Fund, its slow growth and a lack of
communications between it and the prior management of the
Fund. That contract was approved by the shareholders of the
Fund at a meeting held on July 29, 1994. During the fiscal year
ended September 30, 1995, the Fund paid Dollins Symons a total of
$5,132 in fees.
Pending Shareholder approval, the Fund entered into the
Advisory Agreement dated December 1, 1995 with the Adviser (the
"New Agreement"). The President of the Fund conducted an
extensive search to locate a replacement adviser, but the Fund's
small size and the desire to have an adviser that had some track
record in managing money severely limited the number of potential
candidates. The Board's decision to hire the Adviser was
based on two factors. First, the Board (and the Adviser)
believes that the Adviser's approach to managing investments is
very compatible with the investment objectives of the Asset
Allocation Fund. The Adviser uses several mathematical models
which it has developed to allocate investments. These models
help the Adviser to decided when to switch the portfolio from a
growth orientation to a value orientation. This frees the
Adviser from being tied to one approach or the other, as many
other funds are. This flexibility is in keeping with the
investment philosophy of the Asset Allocation Fund.
Second, the Fund's principal distributor, Dunwoody Brokerage
Services, Inc. ("Dunwoody") is familiar with the Adviser and
likes its approach to investing. The Board believes that it is
very important for the principal distributor of a fund to believe
in the investment approach of the investment adviser of any fund
which it is trying to sell. If the brokers do not believe that
the investment adviser will do a good job for a fund, they will
not recommend that their clients invest in it. The Board
believes that Dunwoody's familiarity with the Adviser will be
very important in helping the Asset Allocation Fund to grow,
which would reduce the Fund's current high expense ratio.
The Adviser, which is located at 100 South Ashley Drive,
Suite 1260, Tampa, Florida 36602-5310, was incorporated in 1989.
The Adviser is wholly owned by John J. Bartoletta, who is its
President and the principal manager of the Asset Allocation
Fund's portfolio. 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, 1996, the Adviser managed or
administered approximately $21 million in assets for various
individual and institutional clients.
Under the Advisory Agreement, a copy of which is attached
hereto as Exhibit A, the Adviser, is to be paid an advisory fee
at an annual rate of 1.00% of the average daily net asset value
of the Asset Allocation 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 amounts over $100
million in average daily net asset value. The previous
investment adviser was being paid at a fee at an annual rate of
0.75% of the daily net assets of the Asset Allocation Fund, with
a minimum monthly payment of $200. If the New Agreement had been
in effect during the last fiscal year, the Adviser would have
been paid a total of $5,295 in fees under it. (See "Summary of
Actual and Pro Forma Expenses" below.) With the exception of the
change in fees structure, the New Agreement is substantially
similar to the old agreement.
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) 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 directors of the Adviser are: Dr. Peter Karas, Finance
Professor, University of Souther Florida; Dr. David Brown, Dean
of the Business School, University of Florida; Richard Cope,
Chief Executive Officer, Prudential Florida Realty; and James
Harper, Chief Executive Officer, Accordia Insurance Company.
SUMMARY OF ACTUAL AND PRO FORMA EXPENSES
Annual Fund Operating Expenses Actual Pro Forma
(as a percentage of average
net asset)
Management Fees 1.00% 1.00%
12b-1 Fees 0.00% 0.25%
Other Expenses 19.76% 6.53%
Administrative Fees 1.16% 7.79%
------ ------
Total Fund Operating Expenses 21.92% 15.57%
The "Actual" expenses and fees shown above represent the
actual fees and expenses incurred by the Fund during the fiscal
year ended September 30, 1995. The "Pro Forma" fees and expenses
represent those which it would have incurred during that fiscal
year if the New Agreement had been in effect and the
"Distribution Plan" fees described below under Item 3 had
actually been expended. The expense ratios shown in the table
are not a prediction of future expense ratios, which may be
higher or lower than the 1995 fiscal year "actual" or the "pro
forma" expenses.
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
------ ------- ------- --------
Actual $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.
Required Vote. Approval of Proposal 2 requires the
affirmative vote of the lesser of (i) the majority of the Fund's
shares entitled to vote or (ii) 67% of the shares present at the
Meeting if more than 50% of the outstanding shares are present.
The failure to vote (whether by broker non-vote or otherwise,
except abstention), assuming more than 50% of the outstanding
shares of the Fund are present, has the same effect as a vote
against the proposal if (i) above is applicable and has no effect
if (ii) above is applicable. In the event the new Advisory
Agreement is not approved at the Meeting by the requisite
majority, the Board of Directors will immediately enter into a
new investment advisory agreement with the Adviser on an interim
basis until presents to the shareholders for their approval
another proposed investment advisory agreement, which
presentation will be made as promptly as possible.
THE BOARD, INCLUDING ALL OF THE INDEPENDENT DIRECTORS,
RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" PROPOSAL 2.
3. APPROVAL OF DISTRIBUTION PLAN AND RELATED
DISTRIBUTION ASSISTANCE AGREEMENT
The shareholders are being asked to approve a new
Distribution Plan (the "Plan") pursuant to the requirements of
Rule 12b-1 under the Investment Company Act of 1940, as amended,
(the "Rule") to replace the current plan with the Fund's former
principal distributor. The old plan was terminated when the
former principal distributor went out of business on or about
October 5, 1995. No money was ever spent under the old plan.
The Board has adopted the Plan to permit the Fund to spend
some money on activities which would otherwise be considered
impermissible advertising activities under the Rule. Although
the Board expects Dunwoody, as the new principal underwriter, to
be the primary sales agency for the Fund and its series funds, it
wants the flexibility to do some advertising on its own.
Therefore, it is proposing that Mr. Beimel, as the Administrator
of the Fund, be permitted to spend up to a specified amount of
money to help market shares of the Fund. Because Mr. Beimel has
a background in marketing mutual funds, the Board believes that
he will be able to create and carry out an effective marketing
plan, if the need arises.
The Plan provides that Mr. Beimel, on behalf of the Fund,
may incur certain costs relating to the distribution of the
Fund's 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 allows the Adviser greater flexibility and more opportunity
in its 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. 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 will be 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 direct 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.
See "Summary of Actual and Pro Form Expenses" in Item 2
above for information on how the Distribution Plan would have
affected fiscal 1995 expenses.
Required Vote. Approval of Proposal 3 requires the
affirmative vote of the lesser of (i) the majority of the Fund's
shares entitled to vote or (ii) 67% of the shares present at the
Meeting if more than 50% of the outstanding shares are present.
The failure to vote (other than by Abstention) assuming more than
50% of the outstanding shares of the Fund are present, has the
same effect a vote against the proposal if (i) above is
applicable and has no effect if (ii) above is applicable.
THE BOARD, INCLUDING ALL OF THE INDEPENDENT DIRECTORS,
RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" PROPOSAL 3.
4. RATIFICATION OF SELECTION OF AUDITORS
Shareholders are being asked to ratify the Board's selection
of McCurdy & Associates CPA's, Inc. ("Auditors") as auditors for
the Fund for the fiscal year ending September 30, 1996. The
Auditors are located at 27955 Clemens Road, Westlake, Ohio 44145.
The Auditors audited the Fund's financial statements for the
fiscal year ended September 30, 1995, as a result of the
resignation of the previous auditors, McGladrey & Pullen, LLP,
after the end of that fiscal year. Since the Auditors serve as
the auditors for approximately 30 other investment companies, the
Board believes they have the experience necessary to properly act
as the Fund's auditors. The Fund also believes that use of the
Auditors will result in a cost savings for the Fund. The reports
of McGladrey & Pullen, LLP on the Fund's financial statements for
its two most recent fiscal years prior to October 1, 1994 did not
contain adverse opinions, disclaimers, qualifications or
modifications of opinion. McGladrey & Pullen, LLP did not
disagree during the two most recent fiscal years on any matter of
accounting principles or practices, financial statement or
disclosure, auditing scope or procedure, which disagreements, if
not resolved to its satisfaction, would have caused it to make
reference to the subject matter of the disagreements in
connection with its reports on those financial statements.
Representatives of the Auditors are not expected to be
present at the Meeting but have been given the opportunity to
make a statement if they so desire, and will be available should
any matters arise requiring their presence. The Auditors have
informed the Fund that they have no material direct or indirect
financial interest in the Fund.
The persons named in the accompanying proxy will vote FOR
ratification of the selection of the Auditors unless contrary
instructions are given.
Required Vote. Approval of Proposal 4 requires a majority
of the votes cast with respect to Proposal 4 at the Meeting,
provided a quorum is present.
THE BOARD, INCLUDING ITS INDEPENDENT BOARD MEMBERS,
RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" PROPOSAL 4.
5. PROPOSED AMENDMENT TO RESTATED
ARTICLES OF INCORPORATION
The shareholders are being asked to approve an amendment to
the Fund's Restated Articles of Incorporation which would change
the name of the Fund to "Triumph Funds, Inc." This amendment was
been approved by the Board at a meeting held on April 1, 1996.
The Board believes that a change in the Fund's name would be
beneficial because there are several companies located in
Pennsylvania which are involved in financial services
businesses and which have the words "Penn Capital" or
something very similar in their name or call themselves Penn
Capital as a shortened form of their full legal name. Since the
Fund has no connection with any of these companies, the Board
feels that adopting a new name would enable it to avoid any
confusion as to any possible relationship with any of these other
companies.
The full text of the proposed amendment is as follows:
"Article I of the Corporation's Restated Articles of
Incorporation is hereby amended to read in full as follows: 'The
name of the corporation (hereinafter called "Corporation") is:
Triumph Funds, Inc.'"
Required Vote. Approval of proposal 5 requires the
affirmative vote of an majority of the Fund's outstanding shares
of Common Stock entitled to vote at the Meeting. Any shares not
voted at the Meeting (whether by broker non-vote or otherwise,
except abstention), will have no impact on the vote. If adopted,
the amendment would become effective upon being filed with the
Secretary of State of the Commonwealth of Pennsylvania.
THE BOARD, INCLUDING ITS INDEPENDENT BOARD MEMBERS,
RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" PROPOSAL 5.
6. OTHER MATTERS
The Board of Directors of the Fund knows of no other matters
that may come before the Meeting. If any other matters properly
come before the Meeting, it is the intention of the persons
acting pursuant to the enclosed form of proxy to vote the shares
represented by said proxies in accordance with their best
judgment with respect to such matters.
SHAREHOLDER PROPOSALS
Any shareholder proposals to be presented at the 1997 annual
meeting of shareholders must be received at the executive offices
of the Fund on or before September 19, 1996. Notwithstanding the
foregoing, the Fund is not required to include a shareholder
proposal in its proxy statement unless the shareholder has
complied with the requirements of Rule 14a-8 under the Securities
Act of 1934, as amended.
By Order Of The Board Of Directors
James M. Beimel, Jr.
President
Pittsburgh, Pennsylvania
May 13 , 1996
<PAGE>
Exhibit A
ADVISORY CONTRACT
THIS AGREEMENT made this 1st day of December, 1995, by and
between INTERNATIONAL INVESTMENTS, INC., a/k/a ADS/INTERNATIONAL
INVESTMENTS, a Florida corporation, (hereinafter referred to as
the "Adviser"), and PENN CAPITAL FUNDS, INC. a Pennsylvania
corporation (hereinafter referred to as the "Fund").
WHEREAS, the Fund is an open-end management investment
company as that term is defined in the Investment Company Act of
1940, as amended, and is registered as such with the U.S.
Securities and Exchange Commission; and
WHEREAS, the Adviser is in the business of rendering
investment advisory, statistical and research services, and is
registered as an investment adviser with the U.S. Securities and
Exchange Commission under the Investment Adviser's Act of 1940,
as amended; and
WHEREAS, the parties desire to provide for continuing
services by the Adviser to the Fund pursuant to the terms and
conditions hereinafter set forth,
NOW, THEREFORE, in consideration of the premises, the
parties hereto agree as follows:
1. The Fund hereby retains and appoints the Adviser as its
investment adviser and portfolio manager to render research,
statistical and advisory services to the Fund, and to supervise
the investments of the Fund for the period and upon the terms
herein set forth, subject to the direction and control of the
Board of Directors of the Fund. The Advisor accepts such
employment and agrees during such period to render the services
and to assume the obligation herein set forth for the
compensation herein provided.
2. The Adviser in its supervision of the investments of
the Fund will be guided by the Fund's fundamental investment
policies and the provisions and restrictions contained in the
Charter and By-Laws of the Fund as set forth in the Fund's
registration statement, and exhibits thereto, as may be filed
with the U.S. Securities and Exchange Commission (the
"Commission"), all subject to the applicable provisions of the
Investment Company Act of 1940, as amended (the "Act").
3. The Fund will pay and is solely responsible for its own
expenses including, without limitation, interest charges, taxes,
costs of purchasing and selling securities for its portfolio,
rent expenses of redemption of shares, auditing and legal
expenses; expenses attributable to printing prospectuses
directors' fees and expenses necessarily incurred by a director
in attendance at directors' meeting; expenses of administrative
personnel and administrative series, custodian fees; fees of
transfer agents, registrar and dividend disbursing agents; the
cost of stock certificates and corporate reports; all other
printing expenses; costs in connection with Board of Director's
meetings and the annual or special meetings of shareholders,
including proxy material preparation and distribution, filing
fees, dues, insurance premiums, miscellaneous management and
operating expenses and expenses of an extraordinary and
nonrecurring nature.
In no event shall the Adviser be responsible for the payment
or reimbursement of any Fund expense of any king what-so-ever.
4. Fund Management is solely responsible for the day-to-
day operations of the Fund, maintaining compliance with the
Securities Act of 1933, the Investment Company Act of 1940,
Section 851 of the Internal Revenue Code of 1986, as amended, and
any law or regulation of any governmental agency having
jurisdictional over the Fund. The Adviser shall be held harmless
and the Fund will indemnify the Adviser for any fines or damages
that may be levied or charged to the Adviser and for any expenses
incurred by the Adviser, including but not limited to legal fees,
that may arise as a result of any violation or error committed by
Fund Management to any party.
5. Subject to the provision of Paragraph 7 hereof, the
Fund agrees to pay to the Adviser for its services rendered
during the preceding month thereunder on the first business day
each month during the term of the Agreement a cash fee in an
amount determined by applying the following monthly rates to the
average daily net asset value of the Fund during the preceding
month, determined in the manner used for the determination of the
offering price of the Fund's shares:
Equivalent Average Daily
Monthly Rate Annual Rate Net Asset Values
1/12 of 1% 1% On the first
$25 million
1/16 of 1% 3/4 of 1% On the next
$75 million
5/96 of 1% 5/8 of 1% On amounts over
$100 million
6. The term of this Agreement shall begin on the date
first above written and shall continue in effect for two years
from that date and from year-to-year thereafter, subject to the
provisions for termination and all of the other terms and
conditions hereof, if; (a) such continuation shall be
specifically approved at least annually by the vote of a majority
of the directors who are not parties to such contract or
interested persons of any such party to such contract (other than
as directors of the Fund) cast in person at a meeting called for
that purpose, or by a vote of the majority of the outstanding
voting securities of the Fund, and (b) the Adviser shall not have
notified the Fund in writing at least sixty (60) days prior to
the anniversary date of this Agreement in any year hereafter that
it does not desire such continuation.
7. Notwithstanding anything to the contrary herein, the
Agreement may be terminated at any time, without the payment of
any penalty, by the directors of the Fund or by a vote of a
majority of the outstanding voting securities of the Fund on
sixty (60) days written notice to the Adviser.
8. This Agreement shall automatically terminate in the
event of its assignment, the term "assignment" for this purpose
having the meaning defined in Section 2(a)(4) of the 1940 Act.
9. The Adviser may employ or contract with such other
person or persons, corporation or corporations at its own cost
and expense as it shall determine in order to assist it in
carrying out this Agreement; provided, however, that to the
extent that any such employment or contract constitutes such
other person or persons, corporation or corporations to be an
investment adviser to the Fund within the meaning of the 1940
Act, such employment or contracts shall be subject to the
approval of the Fund's shareholders in the manner provided by
such Act, prior to its effectiveness.
10. The adviser shall not be liable to the Fund for
anything done or omitted by it, except acts or omissions
involving willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties imposed on it by this Agreement.
11. The services of the Adviser herein provided are not to
be deemed exclusive and, so long as its services hereunder shall
not be impaired thereby, should the Adviser so desire, it may
sponsor, promote, and provide investment advisory and management
series to one or more investment companies other than the Fund.
12. This Agreement may be amended at any time by agreement
of the parties, provided that the amendment shall be approved by
the vote of a majority of directors of the Fund, including a
majority of directors who are not parties to this Agreement or
interested persons of any such party to this Agreement (other
than as directors of the Fund) cast in person at a meeting called
for that purpose.
IN WITNESS WHEREOF, the parties have caused this Investment
Advisory Contract to be executed on their behalf by their duly
authorized officers and their corporate seals to be affixed
hereto as of the date first above written.
The Adviser: The Fund:
INTERNATIONAL INVESTMENTS, INC. PENN CAPITAL ASSET
ALLOCATION FUND
By:/s/ John J. Bartoletta By:/s/ Karl T. Beimel
John J. Bartoletta, President Karl T. Beimel
