<PAGE>
As filed with the Securities and Exchange Commission on December 30, 1997
1933 Act Registration No. 33-39574
1940 Act Registration No. 811-6254
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------
Form N-1A
REGISTRATION STATEMENT UNDER THE [ ]
SECURITIES ACT OF 1993
Pre-Effective Amendment No.___ [ ]
Post-Effective Amendment No. 8 [X]
and/or
REGISTRATION STATEMENT UNDER THE [ ]
INVESTMENT COMPANY ACT OF 1940
Amendment No. 8 [X]
(Check appropriate box or boxes)
---------------
TRIUMPH FUNDS, INC.
(exact name of Registrant as Specified in Charter)
1501 Reedsdale Street, Suite 3002
Pittsburgh, Pennsylvania 15223
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code: (412) 322-3300
Timothy Gabriel, President
Triumph Funds, Inc.
1501 Reedsdale Street
Suite 3002
Pittsburgh, PA 15223
(Name and Address of Agent for Service)
Registrant has registered an indefinite number of its shares under the
Securities Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act
of 1940. A Rule 24f-2 Notice for Registrant's fiscal year ended September 30,
1997 has been filed.
It is proposed that this filing will become effective (check appropriate box)
__ immediately upon filing pursuant to paragraph (b)
__ on (date) pursuant to paragraph (b)
__ 60 days after filing pursuant to paragraph (a)(1)
__ on (date) pursuant to paragraph (a)(1)
x
__ 75 days after filing pursuant to paragraph (a)(2)
__ on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
__ this post-effective amendment designates a new effective date for
a previously filed post-effective amendment
<PAGE>
TRIUMPH FUNDS, INC.
ASSET ALLOCATION FUND
CROSS-REFERENCE SHEET
Between Items Enumerated in Part A
of Form N-1A and Prospectus
Item Number
of Form N-1A Location in Prospectus
------------ ----------------------
1. Cover Page...........................Cover Page
2. Synopsis.............................Summary of Fund Expenses
3. Condensed Financial Information......Financial Highlights
4. General Description of Registrant....General Description of
Fund
5. Management of the Fund...............Management of the Fund
5A. Management's Discussion of
Fund Performance.....................Inapplicable
6. Capital Stock and Other Securities...Description of Shares
7. Purchase of Securities Being
Offered..............................How Shares May Be
Purchased
8. Redemption or Repurchase.............Redemption or
Repurchases
9. Legal Proceedings....................Inapplicable
<PAGE>
TRIUMPH FUNDS, INC.
ASSET ALLOCATION FUND
CROSS-REFERENCE SHEET
Between Items Enumerated in Part B
of Form N-1A and Statement of Additional Information
Item Number Location in Statement of
of Form N-1A Additional Information
------------ ----------------------
10. Cover Page...........................Cover Page
11. Table of Contents....................Table of Contents
12. General Information and History......General Information
13. Investment Objectives and Policies...Investment Objective and
Policies
14. Management of the Fund...............Directors and Officers
15. Control Persons and Principal
Holders of Securities................Directors and Officers
16. Investment Advisory and Other
Services.............................Investment Adviser;
Subadviser
17. Brokerage Allocation.................Brokerage
18. Capital Stock and Other Securities...Capital Stock
19. Purchase, Redemption and Pricing of
Securities Being Offered.............Additional Purchase and
Redemption Information;
Tax Shelter Plans
20. Tax Status...........................Federal Taxes
21. Underwriters.........................Distributor
22. Calculation of Performance Data......Inapplicable
23. Financial Statements.................Audited Financial
Statements
<PAGE>
TRIUMPH FUNDS, INC.
THE ASSET ALLOCATION FUND
1501 Reedsdale Street, Suite 3002
Pittsburgh, Pennsylvania 15223
412-322-3300
PROSPECTUS MARCH , 1998
TRIUMPH FUNDS, INC. ("Company") is an open-end, diversified management
investment Company. The Company intends to offer shares in more than one fund,
each of which will represent a separate class of the Company'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 Executive Investment Advisors, 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 March , 1998, 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 the Company at the address or telephone number listed above.
Prospectuses for the other series may be obtained by writing the Company 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
<TABLE>
<CAPTION>
<S> <C>
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 8
Portfolio Brokerage 10
Rule 12b-1 Distribution Plan 10
Your Account:
How Shares May Be Purchased (including sales charges) 11
Calculation of Net Asset Value 14
Tax-Sheltered Retirement Plans 15
Redemption and Repurchases 15
Automatic Withdrawal Plan 16
Dividends, Distributions and Taxes 16
More About The Fund:
Additional Information 17
</TABLE>
<PAGE>
THE FUND AT A GLANCE
Investment Goal: Capital appreciation (increase in the value of the Fund's
shares) 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: Executive Investment Advisors, Inc. (the "Adviser"), which
currently manages approximately $350 million in assets for its private clients.
The Adviser became advisor to the Fund as of March, 1997. Except as otherwise
noted, the data for the Fund's performance reflects the decisions of the prior
advisors. 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
<TABLE>
<CAPTION>
<S> <C>
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................................................. 0.75%
12b-1 Fees...................................................... 0.25%
Other Expenses.................................................. 11.06%
Administrative Fees........................................ 0.50%
------
Total Fund Operating Expenses................................... 12.56%
</TABLE>
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, 1997.
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
------ ------- ------- --------
$163 $367 $542 $876
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, 1997, 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 the
Company.
<PAGE>
Since February, 1997, Timothy Gabriel, the President of the Company, has paid
the expenses of the Fund using his personal funds so as preserve the Fund's cash
until it can start selling shares again. These expenses were accrued as such in
the books of the Fund, and the payments are treated as loans on the books of the
Company and the Fund. The loans will be repaid once the Board of Directors
determines that the Fund's cash flow situation has improved sufficiently to
afford it.
<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 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: (1) equity securities, (2) 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 (3) 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.
The investment adviser's investment approach involves both sector allocation and
style allocation.
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.
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 &
<PAGE>
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. 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 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
<PAGE>
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.
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 1997 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 1997 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 1997, the calculation without including the
sales charge improves the Fund's performance for that year by 26%.
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-
<PAGE>
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
Executive Investment Advisors, Inc. (the "Adviser"), located at
119 North College Street, Myerstown, PA 17067, was incorporated in 1984 and
serves as the Fund's investment adviser, subject to the overall authority of the
Company's Board of Directors. The Adviser is majority owned by Tarey R.
Gabriele, who is its President. He has served in this capacity since prior to
August, 1992. He is the principal manager of the Fund. As of April 1, 1997, the
Adviser managed or administered approximately $350 million in assets for various
clients. For its services as Fund adviser, the Adviser 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 nest $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. 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.
<PAGE>
The Fund has entered into an administrative services agreement with Gabriel
Capital Management, Inc., a Pennsylvania corporation ("Management"), which is
controlled by three of the Directors of the Company, Timothy Gabriel, Angelo
Gabriel and Marlee Smith. (Timothy Gabriel is the President of the Company and
the brother of Tarey Gabriele, the President of the Fund's Adviser. Angelo
Gabriel is the father of Timothy Gabriel and Tarey Gabriele.) Under this
agreement, Management will perform all the needed administrative services for
the Fund. Management 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. Gabriel and ADS under these agreements
is 1/12 of 0.5% of the combined average net assets of Company's funds, with a
minimum fee of $5,000 per month. The fees are subject to annual increase to
reflect the Consumer Price Index for the Northeast region. Of the total fee
amount, Management will receive each month a minimum of $4,000. Management and
ADS will be reimbursed for their out-of-pocket expenses in connection with
performing the agreements. Fund has no employees.
Summit Investment Group, Inc. ("Summit") is the Fund's distributor. Timothy
Gabriel, the President of the Company, is the President of Summit. Angelo
Gabriel, a Director of the Company is CEO of Summit. It is located at 1501
Reedsdale Street, Suite 3002, Pittsburgh, PA 15223.
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 Summit, the Fund's
distributor, which has agreed its charges for brokerage services will be no more
than its usual charges to unaffiliated customers and will not exceed the amounts
that would be charged by unaffiliated brokers for arms-length transactions of a
similar kind. Timothy Gabriel, the President of the Fund and of Summit is the
brother of Tarey Gabriele, the President of the Adviser. 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
<PAGE>
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
Management, as administrator of the Fund, and Summit, as primary distributor,
incur certain costs in connection with the distribution of the Fund's shares. In
any year those costs will equal the expenses incurred by Management and Summit
in the distribution of the Fund's shares, 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, Management, and its distributor,
Summit, for services in marketing the Fund and may be spent by them on any
activities or expenses primarily intended to result in the sale of shares of the
Fund, including but not limited to, expenses of printing of prospectuses and
reports for other than existing shareholders, and advertising and preparation
and distribution of sales literature. Each expenditure must be specifically
approved in advance by the President or the Board of Directors and by the
President of Company 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 the Company,
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.
<PAGE>
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 of the Asset Allocation Fund
Share Purchase Application is contained in the back of this Prospectus. A copy
may also be obtained from any broker with whom Summit, 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., P.O. Box 640153, Cincinnati, Ohio 45264-0153. Share purchases
become effective at the offering price next determined after receipt of the
above.
Shares of the Fund are continuously offered and may be purchased at an
offering price equal to the net asset value per share next determined following
the time of sale plus the applicable sales charges. The offering price is
computed once daily at 4:00 p.m. New York time each day the New York Stock
Exchange is open. (See "Calculation of Net Asset Value").
The minimum initial investment in the Fund is $500. Subsequent investments
must be in the minimum amount of $50. Investments under tax qualified plans
sponsored by the Company 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:
<TABLE>
<CAPTION>
Dealer
Sales Charges as % of Discount
--------------------- as % of
Amount Offering Offering
Amount of Purchase Invested Price Price
- ------------------ -------- ----- -----
<S> <C> <C> <C>
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%
</TABLE>
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
<PAGE>
redeemed securities or an interest in securities issued by other investment
companies (including unit investment trusts) not affiliated with the Company 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 Summit or from any broker/dealer having a sales
agreement with Summit.
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
<PAGE>
Letter of Intent are less than the amount specified in the Letter, the purchaser
must remit to the Company 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, the Company does not receive said difference in sales charges,
the Company 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 the Company for the difference. The remaining shares after the
redemption will be deposited in the investor's account unless the Company is
otherwise instructed.
The purchaser irrevocably constitutes and appoints the Company 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.
Summit must be promptly notified of each sale which entitles a shareholder to
this reduced sales charge. The notice to Summit 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
<PAGE>
procedures established by the Board of Directors;
2. Securities traded in the over-the-counter market, other than on Nasdaq, for
which market quotations are readily available, are valued at the mean of the bid
and asked prices at the time of valuation;
3. Short-term debt instruments with remaining maturities of sixty days or less
are valued at market value, if market quotations are available, or amortized
cost (original purchase cost as adjusted for amortization of premium or
accretion of discount), if market quotations are not available, which, when
combined with accrued interest approximates market and which reflects fair value
as determined by the Fund's Board of Directors; and
4. Short-term debt instruments with remaining maturities of more than sixty
days, for which market quotations are readily available, are valued at current
market value. If such security was traded on the valuation date, current market
value is the last quoted sale price. In the absence of a sale on the valuation
date, the mean of the current closing bid and ask prices is used.
5. In the event a listed security does not trade on an exchange on any given
date, the security value is the mean of the bid and asked prices of any market
makers making a market in such listed security. In the absence of such mean
prices, the valuation is the fair value as determined in good faith by the Board
of Directors in accordance with its procedures.
TAX-SHELTERED RETIREMENT PLANS
Shares of the Fund are available for purchase in connection with the following
tax sheltered retirement plans:
- -- Tax Sheltered Custodial Plan Section 403(b)(7) for those persons who are
employees of tax exempt charitable, religious and educational organizations
- -- Individual Retirement Account Plans for individuals.
Detailed information concerning these plans is available from Summit. 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
P.O. Box 640153,
<PAGE>
Cincinnati, Ohio 45264-0153.
The shares of the Fund will be redeemed and the redemption proceeds will be
paid to the person(s) entitled thereto within seven days after receipt by the
Fund of the following items:
1. A written request for redemption which sets forth the name(s) in which the
account is registered, the account number, and the number of shares or the
dollar value of the shares to be redeemed. Shareholders requesting redemption
must have their signatures guaranteed either by a national bank or trust
Company, a state bank which is a member bank of the Federal Reserve System or
the Federal Deposit Insurance Corporation, or by a member firm of a national
securities exchange or a firm that is a member of the National Association of
Securities Dealers, Inc.
2. Such additional documents as the Fund may require in the case of shares held
by 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 Summit as its agent to accept orders from dealers by
wire or telephone for the redemption of Fund shares. The Fund may revoke or
suspend this appointment 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 Summit 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
Summit 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
<PAGE>
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
The Company 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 annually
in 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 Company 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.
<PAGE>
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 1501 Reedsdale Street, Suite 3002, Pittsburgh, Pennsylvania 15223.
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-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 the Company's Directors. All
consideration received by the Company 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 the Company. Currently, no class of
securities of the Company 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
<PAGE>
at its offices at 1501 Reedsdale Street, Suite 3002, Pittsburgh, Pennsylvania
15233; telephone (412) 322-3300.
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
The Company 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
March , 1998
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 March , 1998. A copy of the prospectus may be
obtained by writing the Distributor, Summit Investment Group, Inc., at 1501
Reedsdale Street, Suite 3002, Pittsburgh, PA 15233 or by calling (800) 539-3677.
<PAGE>
TRIUMPH FUNDS, INC.
Statement of Additional Information
March , 1998
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-4
Yield Disclosure.............................................B-5
Investment Restrictions......................................B-5
Additional Purchase and Redemption Information...............B-7
Tax-Sheltered Plans..........................................B-8
Individual Retirement Account Plan...........................B-8
Directors and Officers.......................................B-10
Investment Adviser...........................................B-11
Administrator................................................B-12
Rule 12b-1 Distribution Plan.................................B-12
Custodian....................................................B-13
Transfer and Dividend Agent..................................B-13
Independent Certified Public Accountants.....................B-13
Portfolio Brokerage..........................................B-14
Capital Stock................................................B-15
Distributor..................................................B-15
<PAGE>
General Information
The Company was incorporated under the laws of the Commonwealth of
Pennsylvania on February 27, 1991. Until June, 1996, it operated under the name
Penn Capital Funds, Inc. 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 March , 1998.
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. 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
<PAGE>
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
B-2
<PAGE>
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
B-3
<PAGE>
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. 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
B-4
<PAGE>
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:
Yield = 2 [(a - b + 1)/6/ - 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
P(1 + T)/n/ = 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, to the extent deemed practicable and prudent
by the Advisor, be fully invested. The Fund will have a portion of its
assets invested in all three market segments at any given time to the
extent deemed practical and prudent by the Advisor. However, when market
conditions warrant, the Fund may have 100% of its assets invested in any
one market area
B-5
<PAGE>
with the 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.
B-6
<PAGE>
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); or
(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 a 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
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
B-7
<PAGE>
policies.
9.
B-8
<PAGE>
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
illiquid 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% or more of its net assets and does not
expect to do so at all 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:
B-9
<PAGE>
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, Summit Investment Group, 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
Summit Investment Group, 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
B-10
<PAGE>
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 Summit Investment
Group, Inc., 1501 Reedsdale Street, Suite 3002, Pittsburgh, PA 15223; telephone
(800) 539-3677.
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.
B-11
<PAGE>
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, Executive Investment Advisors, Inc., its distributor, Summit
Investment Group, Inc., and its administrators, Timothy Gabriel and American
Data Services, Inc., are as follows:
<TABLE>
<CAPTION>
Offices Principal
Name and Address With Fund Occupation
- --------------------- ------------- --------------------
<S> <C> <C>
Timothy Gabriel* President President,
and Director Summit Investment
Group, Inc.
Angelo M. Gabriel*, Secretary and CEO, Summit
PhD Treasurer and Investment Group,
Director Inc.
Marlee B. Smith* Director Consultant
Peter Rostosky Director Business owner
Saul Weitz Director President, Harold B.
Weitz, Inc.
</TABLE>
* Messrs. Gabriel is each deemed to be an "interested person" of the Fund in
that he is an officer of the Fund, a shareholder of the Fund's administrative
services provider, Gabriel Capital Management, Inc. and is an affiliate of the
Fund's principal distributor, Summit Investment Group, Inc. Ms. Smith is deemed
to be an "interested person" in that she is an affiliate of Gabriel Capital
Management, Inc.
Mr. Gabriel has held his present position since December, 1994. From July,
1993 to December, 1994, he was Executive Vice President with Penn Capital
Financial Services, Inc., a registered broker dealer. From 1989 to June, 1993,
he was a Training manager/financial planner at American Express Company, a
B-12
<PAGE>
financial services company.
For over five years, Dr. Gabriel has served as a business consultant and fund-
raiser for various community and educational institutions. He has served in his
present position since December, 1994. Dr. Gabriel is the father of Timothy
Gabriel, and Tarey R. Gabriele, the president of the Fund's investment
advisor.
From 1990 to the present, Ms. Smith has been a shareholder/consultant to the
Smith Family Partnership, WDS Realty and Super Shoe Stores.
For the last five years, Mr. Rostosky has owned and operated Rostosky
Excavating, Inc., a land reclamation and heavy equipment operations business,
and Rostosky Enterprises, Inc., an international distributions systems
development business. Both businesses are located in the greater Pittsburgh,
Pennsylvania area.
For the past five years, Mr. Weitz has been President of Harold B. Weitz,
Inc., a numismatic business located in Pittsburgh, Pennsylvania, which is
engaged in buying and selling coins, currency and precious metals.
During the fiscal year ended September 30, 1997, the Fund did not pay any
directors' fees or reimburse any 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 October 31, 1997,
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 the Company has any affiliation with the
Fund's investment adviser, Executive Investment Advisors, Inc., or American Data
Services, Inc. However, Timothy Gabriel, the President and a director of the
Fund, is the brother of Tarey Gabriele, the President and majority shareholder
of the Fund's investment
B-13
<PAGE>
adviser, Executive Investment Advisors, Inc. and Dr. Angelo Gabriel, a director
and officer of the Fund, is the father of Tarey Gabriele.
Investment Adviser
Executive Investment Advisors, Inc. (the "Adviser") serves as investment
adviser to the Fund and has done so since February, 1997. The Adviser acts as an
investment manager to individuals and institutional clients with substantial
investment portfolios. The Adviser was organized in 1984 and is majority owned
by Tarey R. Gabriele, 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) 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 judgment 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
B-14
<PAGE>
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
Management 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. Pursuant
to a Distribution Assistance Agreement dated December 18, 1997, Summit and
Management have agreed to assist in the marketing of the shares of the Fund
pursuant to the Plan. The Plan provides that Summit and Management may incur
certain costs relating to the distribution of the Fund's shares. Management and
Summit are to be reimbursed by the Fund for these costs (including a reasonable
allocation for overhead) provided that the costs may not exceed 0.25% per annum
of the Fund's daily net assets. The Plan is intended to benefit the Fund
through increased sales of shares, thereby reducing the Fund's expense ratio and
providing an asset size that allows the adviser greater flexibility in
management. Amounts paid under the Plan and related Distribution Assistance
Agreement are paid to the Company for its services as distributor of the shares
and may be spent by the Company on any activities or expenses primarily intended
to result in the sale of the Fund's shares, including but not limited to,
compensation to, and expenses (including overhead and telephone expenses) of,
employees of the Company who engage in or support distribution of the shares,
printing of prospectuses and
B-15
<PAGE>
reports for other than existing shareholders, advertising and preparation and
distribution of sales literature. Allocation of overhead (rent, utilities, etc.)
and salaries will be based on the percentage of utilization in, and time devoted
to, distribution activities. The Fund did not pay either Management or Summit
any fee under the Plan during the fiscal year ending September 30, 1997.
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 the
Company (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
the Company.
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
B-16
<PAGE>
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. However, in most
circumstances the Adviser expects to direct brokerage through Summit, the Fund's
distributor. Timothy Gabriel, the Fund's President, is President of Summit and
the brother of Tarey Gabriele, the President of the Adviser. 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. The Agreement provides
that the Adviser may request that the Fund pay a broker which provides brokerage
and research services to the Adviser a commission for effecting a securities
transaction in excess of the amount another broker would have charged for
effecting the transaction, if the Adviser determines in good faith that such
amount of commission is reasonable in
B-17
<PAGE>
relation to the value of brokerage and research services provided by the
executing broker viewed in terms of either the particular transaction or the
Adviser's overall responsibilities with respect to the Fund and the other
accounts as to which it exercises investment discretion. Brokerage commissions
paid by the Fund during the fiscal year ended September 30, 1997, all of which
were paid to Dunwoody Brokerage Services, Inc., the Fund' s former distributor,
totaled $1,235 on transactions involving securities having a total market value
of approximately $74,849.
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
Summit Investment Group, Inc. ("Summit") serves as the Fund's distributor in a
continuous offering of the Fund's shares pursuant to a Underwriting Agreement
dated February 1, 1997. 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. Summit received
no commissions from the Fund during the preceding three fiscal years. Summit
received sales commissions of $0 during the fiscal year ended September 30,
1997. The previous distributors received sales commissions of $1,235, $0 and
$2,828 during the fiscal years ended September 30, 1997, 1996, and 1995,
respectively.
B-18
<PAGE>
B-19
<PAGE>
PART C
Other Information
Item 24. Financial Statements and Exhibits
(a) Financial Statements - Asset Allocation Fund
--------------------------------------------
(i) Financial Statements included in Part A of the Registration
Statement: None
(ii) Financial Statements included in Part B of the Registration
Statement:
Incorporated by reference from the registrant's Annual Report to
Shareholders for the year ended September 30, 1997, which is on file
with the Commission.
(b) Exhibits
--------
1. Restated Articles of Incorporation****
2. By-Laws**
3. Inapplicable
4. Article IV of the Restated Articles of Incorporation incorporated by
reference to Exhibit 1 hereto
5. Advisory Contract dated March 1, 1997
6. Underwriting Agreement dated October 1, 1997
7. Inapplicable
8. Custody Agreement dated January 1, 1996#
---------
9. (a) Transfer Agency and Service Agreement dated November 1, 1995#
(b) Administrative Services Agreement dated October 1, 1997
10. Opinion of Counsel*****
11. Consent of Independent Auditors
12. Inapplicable
13. Letters of Intent From Initial Investors*
14. Inapplicable
15. Distribution Plan
16. Specimen Price Mark-up Sheet
17. Financial Data Schedule
18. Inapplicable
* Incorporated herein by reference to the Registration Statement of Registrant
on Form N-1A filed on or about March 20, 1991.
** Incorporated herein by reference to Pre-Effective Amendment No. 3 to the
Registration Statement of Registrant on Form N-1A filed on or about August 6,
1991.
*** Incorporated herein by reference to Pre-Effective Amendment No. 4 to the
Registration Statement of Registrant on Form N-1A filed on or about September 6,
1991.
**** Incorporated herein by reference to Post-Effective Amendment No. 5 to the
Registration Statement of Registrant on Form N-1A filed on or about October 24,
1994.
***** Incorporated herein by reference to Post-Effective Amendment No. 6 to the
Registration Statement of Registrant on Form N-1A filed on or about December 28,
1994.
# Incorporated herein by reference to Post-Effective Amendment No. 7 to the
Registration Statement of Registrant on Form N-1A filed on or about March 6,
1996.
Item 25. Persons Controlled by or Under Common Control with Registrant
C-1
<PAGE>
Inapplicable
Item 26. Number of Holders of Securities
As of September 30, 1997, there were 42 holders of record of the shares
of the Fund and the Company.
Item 27. Indemnification
Article VIII of the Registrant's By-Laws (Exhibit 2 hereto, which is
incorporated herein by reference) and Sections 1741 - 1747 of the Pennsylvania
Business Corporation Act of 1988, as amended, provide, in effect, that the
Registrant will indemnify its officers and directors under certain
circumstances. However, in accordance with Sections 17(h) and 17(i) of the
Investment Company Act of 1940 and by its own terms, said By-Law does not
protect any person against liability to the Registrant or its shareholders to
which he/she would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties involved in the
conduct of his/her office.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer, or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question as to whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
Information pertaining to business and other connections of the Registrant's
investment adviser is hereby incorporated by reference to the section of the
Prospectus captioned "Management of the Fund" and to the section of the
Statement of Additional Information captioned "Investment Adviser".
The sole director of the Adviser Tarey R. Gabriele.
Item 29. Principal Underwriters
(a) Inapplicable
C-2
<PAGE>
(b) The following is certain information with respect to the officers and
directors of Summit Investment Group, Inc., the former principal distributor for
the Fund:
<TABLE>
<CAPTION>
Positions and
Positions and Offices Offices
Name with Underwriter with Registrant
- ------------------- --------------------- ----------------------------------
<S> <C> <C>
Dr. A. M. Gabriel CEO and Director Director, Secretary and Treasurer
Timothy Gabriel President and Director Director and President
</TABLE>
Their principal business address is 1501 Reedsdale Street, Suite 3002,
Pittsburgh, PA 15223.
(c) Inapplicable.
Item 30. Location of Accounts and Records
All such accounts, books and other documents are maintained at the offices the
Registrant, 1501 Reedsdale Street, Pittsburgh, Pennsylvania 15223, the offices
of American Data Services, Inc., the sub-administrator, provider of accounting
services and transfer agent of the Fund, 24 West Carver Street, Huntington, New
York 11743 or at the offices of the custodian Star Bank, N.A., Star Bank Center,
425 Walnut Street, Cincinnati, Ohio 45202.
Item 31. Management Services
Inapplicable
Item 32. Undertakings
(a) Inapplicable
(b) Inapplicable
(c) Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of the Registrant's latest annual report to
shareholders upon request and without charge.
(d) Registrant undertakes to have a majority of the non-interested
directors determine at least annually that the arrangement concerning
liability insurance for each Series of Penn Capital Funds, Inc. satisfied
the standards contained in Section 17(d)-1(d)(7)(i) and (ii) of the
Investment Company Act of 1940, as amended.
C-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Pittsburgh and the State of Pennsylvania on the
23rd of December, 1997.
Triumph Funds, Inc.
By:/s/ Timothy Gabriel
-------------------------------
President
Pursuant to the requirement of the Securities Act of 1933, this amendment to
the Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Timothy Gabriel President December 23, 1997
- ------------------------------- (Principal Executive Officer)
Timothy Gabriel and Director
/s/Marlee B. Smith Director December 23, 1997
------------------------------
Marlee B. Smith
/s/Angelo M. Gabriel Treasurer December 23, 1997
------------------------------ (Principal Accounting Officer)
Angelo M. Gabriel Director
/s/ Peter Rostosky Director December 23, 1997
------------------------------
Peter Rostosky
/s/Saul Weitz Director December 23, 1997
-------------------------------
Saul Weitz
</TABLE>
C-4
<PAGE>
INDEX TO EXHIBITS
Sequentially
Numbered
Page
Reference
---------
Exhibits
1. Restated Articles of Incorporation****
2. By-Laws**
4. Articles IV of the Restated Articles of Incorporation
incorporated by reference to Exhibit 1 hereto
5. Advisory Contract dated March 1, 1997
6. Underwriting Agreement dated October 1, 1997
8. Custody Agreement dated January 1, 1996#
9. (a) Transfer Agency and Service Agreement dated November 1, 1995#
----------
(b) Administrative Services Agreement dated October 1, 1997
10. Opinion of Counsel*****
11. Consent of Independent Auditors
13. Letters of Intent From Initial Investors*
15. Distribution Plan
16. Specimen Price Mark-up Sheet
17. Financial Data Schedule
18. Inapplicable
* Incorporated herein by reference to the Registration Statement of Registrant
on Form N-1A filed on or about March 20, 1991.
** Incorporated herein by reference to Pre-Effective Amendment No. 3 to the
Registration Statement of Registrant on Form N-1A filed on or 1-22 herein by
reference to Pre-Effective Amendment No. 4 to the Registration Statement of
Registrant on Form N-1A filed on or about September 6, 1991.
**** Incorporated herein by reference to Post-Effective Amendment No. 5 to the
Registration Statement of Registrant on Form N-1A filed on or about October 24,
1994.
***** Incorporated herein by reference to Post-Effective Amendment No. 6 to the
Registration Statement of Registrant on Form N-1A filed on or about December 28,
1994.
# Incorporated herein by reference to Post-Effective Amendment No. 7 to the
Registration Statement of Registrant on Form N-1A filed on or about March 6,
1996.
C-5
<PAGE>
Exhibit 5
ADVISORY CONTRACT
THIS AGREEMENT made this 1st day of March, 1997, by and between EXECUTIVE
INVESTMENT ADVISORS, INC., a Pennsylvania corporation, (hereinafter referred to
as the "Adviser"), and TRIUMPH 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, and intending to be legally
bound, 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 Adviser accepts such employment and agrees during
such period to render the services and to assume the obligations 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
<PAGE>
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 kind 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 provisions 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:
<TABLE>
<CAPTION>
Equivalent Average Daily
Monthly Rate Annual Rate Net Asset Values
- -------------- ------------ ------------------------
<S> <C> <C>
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
</TABLE>
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
<PAGE>
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:
EXECUTIVE INTESTMENT ADVISORS, TRIUMPH FUNDS, INC.
INC.
<PAGE>
By:/s/ Tarey R. Gabriele By:/s/ Timothy Gabriel
--------------------- --------------------------
Tarey R. Gabriele, President Timothy Gabriel, President
<PAGE>
Exhibit 6
UNDERWRITING AGREEMENT
----------------------
AGREEMENT made as of this 1st day of October, 1997, between TRIUMPH FUNDS,
INC., a Pennsylvania corporation (the "Fund"), and SUMMIT INVESTMENT GROUP,
INC., a Pennsylvania corporation (the "Underwriter").
1. The Underwriter will use its best efforts to find purchasers for and the
Fund will sell, issue and deliver from time to time such purchasers, such part
of the authorized shares of capital stock of the Fund remaining unissued as from
time to time shall be effectively registered under the Securities Act of 1933,
as amended (the "33 Act"), at prices determined as hereinafter provided and on
the terms hereinafter set forth, all subject to applicable Federal and State
laws and regulations and to the charter of the Fund.
2. The Underwriter shall present all orders received by it for shares of
capital stock of the Fund to the Fund by fax, telephone or written purchase
orders and each such order shall be subject to the acceptance or rejection by
the Fund in its sole discretion.
2.1 Notwithstanding any other provision hereof, whenever in the judgment of
the President or a Vice President and the Treasurer or Secretary of the Fund
such action is warranted by market, economic or political conditions or by
abnormal circumstances of any kind, the Fund may suspend the offer of shares in
effect and may, without liability under the provisions of this Agreement,
decline to accept or confirm any orders or make any sales of shares or capital
stock under this Agreement until such time as the Fund shall deem it advisable
to resume the offering of such shares, provided that as soon as practicable
after the taking of any such action, a special meeting of the Board of Directors
shall be called to be held as soon as practicable thereafter to determine
whether or not such action shall then continue to be effective, and the period
during, or the circumstance under, which such action shall continue or cease to
be effective. During any period during which the offer of shares shall be
suspended or the Fund shall decline to accept or confirm any such orders or make
any such sales, the Fund shall be under no obligation to confirm or accept any
such orders or make any such sale at any price.
2.2 The Fund will use its best efforts to keep effectively registered under
the 33 Act for sale as herein contemplated such shares of its capital stock as
the Underwriter shall reasonably request and as the Securities and Exchange
Commission (the "SEC") shall permit to be so registered.
3. Sales by the Underwriter shall be made as agent for the Fund and all such
sales be made to or though qualified dealers or others in such manner, not
inconsistent with the provisions hereof and the then effective registration
statement of the Fund under the 33 Act, (and related prospectus), as the
Underwriter may determine from time to time.
<PAGE>
3.1 The Underwriter may form a group of underwriters to participate with it
in performing under this Agreement, and the composition of such ground may be
changed from time to time. If such group shall be formed, the Underwriter shall
remain the principal underwriter, and be the representative of any other
underwriters with respect to the terms and conditions of this Agreement. It is
understood and agreed that the Underwriter as principal underwriters will be
primarily responsible for the preparation and supply of sales literature to all
underwriters, be paid a fee by the other underwriters for managing the
underwriting group and providing sales literature, payable out of the premium
above net asset value at which underwriters are permitted to sell shares of
capital stock of the Fund. The Fund reserves the right to engage and contract
with other principal underwriters for the sale and distribution of its shares.
3.2 The Underwriter will not make, or authorize any dealers or others to
make, (a) any short sales of shares or (b) any sales of such shares to any
officers, directors or partners of the Fund or of the Underwriters or of any
corporation or firm furnishing investment advisory, managerial, or supervisory
services to the Fund unless such sales are at the price then available to the
public and unless the Underwriter shall be advised that the purchases are for
investment and that such purchasers will advise the Underwriter of any sales of
shares so purchased made less than two months after the date of purchase and the
Underwriter will promptly advise the Fund of all such sales of shares, made less
than two months after the purchase, of which it is advised. The Underwriter
shall order shares of capital stock of the Fund from the Fund only to the extent
that it shall have received purchase orders therefor.
4. All shares of capital stock offered for sale or sold by the Underwriter
shall be so offered or sold at a price per share (the "Offering Price") equal to
the net asset value per share (determined as authorized from time to time by the
Board of Directors of the Fund pursuant to its charter), plus a premium of not
more than 4.75% of the offering price thereof. If the Offering Price per share
so determined is not an exact multiple of one cent it shall be adjusted to the
nearest cent. In all cases the Offering Price per share for the size of
purchase shall be strictly in accordance with the Offering Price described in
the then current offering prospectus of the Fund.
4.1 For the purpose of determining the offering price, the net asset value of
any such shares shall be so determined in accordance with the then current
offering prospectus. The Fund, or its authorized agent, will promptly furnish
to the Underwriter a statement of the Offering Price as often as such net asset
value is determined and such statement shall, at the request of the Underwriter,
show the basis of computation of the Offering Price.
4.2 Orders presented by the Underwriter for shares, if accepted by the Fund,
shall be accepted and confirmed by it or its duly authorized agent at the
Offering Price in effect at the time of its receipt of such order at its
principal office.
<PAGE>
4.3 The Underwriter will not in any event (a) offer for sale or sell shares
of capital stock in excess of the number then effectively registered under the
33 Act, and available for sale, or (b) offer for sale or sell any shares in
violation of any applicable Federal or State law, rule or regulation.
4.4 The public offering price may be reduced within the limits of the above-
mentioned premium in the case of single sales (as defined in the prospectus
forming part of such registration statement at the time when the same becomes
effective) in amounts equal to or exceeding $100,000 on such basis or bases as
may from time to time be satisfactory to the Fund and set forth in its then
current offering prospectus.
4.5 Out of the above-mentioned premium, the Underwriter shall allow
commissions or concessions to dealers and may allow them to others in its
discretion in such amounts as the Underwriter shall determine from time to time;
except as may be otherwise determined by the Underwriter and the Fund from time
to time, such commissions or concessions shall be uniform to all dealers.
4.6 The Underwriter will require all dealers to conform to the provisions
hereof and the registration statement (and related prospectus) at the time in
effect under the 33 Act with respect to the public offering price of the shares,
and no dealer shall in any event withhold the placing of orders for the shares
so that dealers shall profit as a result of such withholding by a change in the
net asset value of the shares from that used in determining the price to the
customer of such dealer or otherwise.
5. At or prior to the delivery by the Fund to or on the order of the
Underwriter of certificates for any shares of capital stock, the Underwriter
will pay or cause to be paid to the Fund or to its order an amount equal to the
offering Price of such shares at which such order has been confirmed, less the
premium included therein as aforesaid which shall constitute the entire sales
load (including the entire compensation to the Underwriter and of any dealer)
other than incidental issuance of sale expenses to be borne by the issuer.
Delivery of certificates shall be made to or on the order of the Underwriter as
promptly as practicable after confirmation of its order thereof. Certificates
shall be registered in such names and amounts as the Underwriter may specify.
6. The Underwriter, except as hereinafter stated, will pay or cause to be
paid all expenses (other than expenses which one or more dealers may bear
pursuant to any agreement with the Underwriter) incident to the sale and
distribution of shares issued or sold hereunder, including, without limiting the
generality of the foregoing, (i) all expenses of preparing, printing and
distributing or disseminating any sales literature, advertising and selling aids
in connection with the offering of the shares for sale (except that such
expenses shall not include expenses incurred by the Fund in connection with the
preparation, printing, and distribution of prospectuses and of any report or
other communication to stockholders to the extent that such expenses are
necessarily incurred to effect compliance by the Fund with any Federal or State
law or to comply with the
<PAGE>
Articles of Incorporation or By-Laws of the Fund and director's fees and
expenses necessarily incurred by directors in attendance at directors'
meetings); and (ii) expenses of advertising performed by the Underwriter in
connection with such offerings. No transfer taxes, if any, which may be payable
in connection with the issuance or delivery of shares sold as herein provided
shall be borne by the Fund, and the Underwriter will indemnify and hold the Fund
harmless against liability for all such transfer taxes.
7. The Fund will execute any and all documents and furnish any and all
information which may be reasonably necessary in connection with the
qualification of its shares of capital stock in such states as the Underwriter
may reasonably request (it being understood that the Fund shall be required
without its consent to qualify to do business in any jurisdiction or to comply
with any requirement which in its opinion is unduly burdensome). The
Underwriter, at its own expense, will effect all qualifications as dealer or
broker or otherwise under all applicable state or Federal laws required in order
that the shares may be sold in as broad a territory as practicable.
8. The Fund will furnish to the Underwriter from time to time such
information with respect to its shares as the Underwriter may reasonably request
for use in connection with the sale of shares. The Underwriter will not use or
distribute or authorize the use, distribution or dissemination by its dealers or
others in connection with such sale of any literature, advertising or selling
aids in any form or through any medium, written or oral, without prior written
specific approval thereof by the Corporation.
9. Nothing herein contained shall limit the right of the Fund, in its
absolute discretion, to issue or sell shares of its capital stock for such other
considerations (whether in connection with the acquisition of assets or shares
or securities of another corporation or entity or with the merger or
consolidation of any other corporation into or with the Fund, or otherwise) as
and to the extent permitted by its charter and any applicable laws, or to issue
or sell any such shares directly to the shareholders of the Fund, upon such
terms and conditions and for such consideration, if any, as may be determined by
the Board of Directors, whether pursuant to the distribution of subscription or
purchase rights to such holders or by way of dividends or otherwise.
10. At the request of the Fund, the Underwriter agrees to act as agent for
the Fund for the repurchase or redemption of shares of the Fund at such prices
as the Fund from time to time shall prescribe.
11. In selling or reacquiring shares, the Underwriter agrees to conform to
the requirements of all state and Federal laws relating to such sale or
reacquisition, as the case may be, and will indemnify and hold the Fund harmless
from any damage or expense on account of any wrongful act by the Underwriter or
any employee, representative or agent of the Underwriter. The Underwriter will
observe and be bound by all the provisions of the charter of the Fund and any
fundamental policies adopted by the Fund pursuant to the Investment Company Act
of 1940, as amended (the "40 Act"), notice of which has been given to the
Underwriter.
<PAGE>
11.1 Neither the Underwriter, any dealer nor any other person is authorized
by the Fund to give any information or to make any representation other than
those contained (a) in the latest effective registration statement (and related
prospectus) filed with the SEC under the 33 Act, as such registration statement
(and prospectus) may be amended from time to time, or (b) in any statement
expressly authorized by the Fund for use in connection with any sale or
reacquisition of capital stock for the account of the Fund.
12.1 The Underwriter will:
12.1(a) not, directly or indirectly (i) declare or pay any dividends or
distributions (other than dividends payable in its capital stock), or (ii) use
any part of its assets or property for the purchase, redemption or other
retirement of shares of its capital stock, or (iii) make any other distribution
or transfer of assets to its stockholders, unless in any such case, after giving
effect to such action, the excess of its assets over its liabilities shall be at
least $5,000;
12.2(b) at all times keep its assets (other than those, such as office
furniture and fixtures, equipment, records and the like required for the
operation of the business herein contemplated) in cash or invested in readily
marketable securities;
12.3(c) not incur any indebtedness on account of borrowing or any other
indebtedness except in the ordinary course of business in the performance of its
obligations under this Agreement.
12.4 Any determination required hereunder shall be made by the independent
public accountants of the Fund or of the Underwriter in accordance with sound
accounting practices at such reasonable intervals as the Fund may from time to
time require.
13. This Agreement shall continue in effect until such time as there remains
no unsold balance of shares of capital stock effectively registered under the 33
Act; provided, however, that (a) this Agreement shall continue in effect for a
period more than two years from the date hereof only so long as such continuance
is specifically approved at least annually by the Board of Directors or a
majority of the outstanding voting securities of the Fund, and (b) either party
hereto may terminate this Agreement on any date by giving the other party at
least six months prior written notice of such termination specifying the date
fixed therefor, and (c) without prejudice to any other remedies, the Fund may
terminate this Agreement at any time immediately upon failure of fulfillment of
any of the obligations of the Underwriter hereunder or any of the conditions set
forth in paragraph 12 hereof.
<PAGE>
13.1 This Agreement shall automatically terminate in the event of its
assignment by the Underwriter, the term "assignment" having the meaning defined
in Section 2(a)(4) of the 40 Act.
14. Any notice under this Agreement shall be in writing addressed and
delivered by mail, postage prepaid, to the party to whom addressed at the
address given below, or at such other address as such party shall theretofore
have designated (by notice given to the other party as herein provided) in
writing for the receipt of such notice:
To the Fund:
1501 Reedsdale Street, Suite 302
Pittsburgh, PA 15233
To the Underwriter:
Summit Investment Group, Inc.
1501 Reedsdale Street, Suite 302
Pittsburgh, PA 15233
IN WITNESS WHEREOF, the Fund and the Underwriter have each caused this
Agreement to be executed on its behalf by an officer thereunto duly authorized
on the day and year first above written.
TRIUMPH FUNDS, INC. SUMMIT INVESTMENT GROUP, INC.
/s/ Timothy Gabriel /s/ Timothy Gabriel
- ------------------- -------------------
By: Timothy Gabriel By: Timothy Gabriel
- ------------------- -------------------
<PAGE>
EXHIBIT 11
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the reference to our firm in the Statement of Additional
Information under the caption "Independent Certified Public Accountants", which
in Post Effective Amendment Number 9 to the Registration Statement of the
Triumph Asset Allocation Fund.
McCurdy & Associates CPA's, Inc.
November 24, 1997
<PAGE>
Exhibit 15
DISTRIBUTION PLAN
OF
ASSET ALLOCATION FUND
---------------------
WHEREAS, THE ASSET ALLOCATION FUND (the "Fund") is a series of Triumph Funds,
Inc., (the "Corporation") as that term is used under the Investment Company Act
of 1940, and the rules and regulations thereunder (the "Act");
WHEREAS, the Corporation has registered as an open-end management investment
company under the Act;
WHEREAS, the Board of Directors of the Corporation has determined that there
is a reasonable likelihood that this Distribution Plan will benefit the Fund and
its shareholders; and
WHEREAS, the Corporation intends to have Gabriel Capital Management, Inc., a
Pennsylvania corporation ("Management"), as part of its obligations as
administrator of the Fund, and Summit Investment Group, Inc., a Pennsylvania
corporation ("Summit"), as part of its obligations as the principal distributor
of the Fund, perform certain marketing activities with respect to shares of the
Asset Allocation Fund ("Common Stock").
NOW, THEREFORE, the Corporation hereby adopts the Distribution Plan (the
"Plan") with respect to the Fund in accordance with Rule 12b-1 under the Act
having the following terms and conditions:
1. Payments to Administrator. The Corporation shall pay out of the assets
--------------------------
belonging to the Fund to Management and Summit (as the marketer of the Common
Stock), a distribution fee for distribution of the Common Stock at the rate of
the lesser of (a) .25% per annum of the Fund's average daily net assets or (b)
their total costs incurred by both of them during the year in the distribution
of the Common Stock. Such distribution fee shall be calculated and accrued
daily and paid monthly or at such other intervals as the Board of
Directors shall determine or as otherwise required by the Act. Such payments
shall be in addition to any payments received by the Administrator pursuant to
an
<PAGE>
Administration Agreement between the Corporation and Management with respect to
the Fund.
2. Permitted Expenditures. The amount set forth in paragraph 1 of this Plan
-----------------------
shall be paid for Management's and Summit's services in assisting in the
distribution of the shares of Common Stock and may be spent by either of them on
any activities or expenses primarily intended to result in the sale of the
Common Stock, 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 sale
literature.
3. Effective Date of Plan. This Plan shall not take effect until (a) it has
-----------------------
been approved by a vote of at least a majority of the outstanding shares of
Common Stock (as defined in the Act) and (b) (together with any related
agreements) by votes of a majority of both (i) the Board of Directors of the
Corporation, and (ii) those Directors of the Corporation who are not "interested
persons" of the Fund (as defined in the Act) and have no direct or indirect
financial interest in the operation of this Plan or any agreements related to it
(the "Rule 12b-1 Directors"), cast in person at a meeting (or meetings) called
for the purpose of voting on this Plan and such related agreements.
4. Continuance. This Plan shall continue in effect for as long as such
------------
continuance is specifically approved at least annually in the manner provided
for approval of this Plan in paragraph 3(b).
5. Reports. Management and Summit and other persons authorized to direct the
--------
disposition of monies paid or payable by the Fund pursuant to this Plan or any
related agreement shall provide to the Board of Directors of the Corporation and
the Board shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made. Management and
Summit shall annually certify in writing that the aggregate payments received by
both of them from the Fund pursuant to the Plan during the year did not exceed
the total costs incurred by both of them during the year in assisting in the
distribution of the Common Stock.
6. Termination. This Plan may be terminate at any time by vote of a majority
------------
of the Rule 12b-1 Directors, or by a vote of a majority of the outstanding
shares of Common Stock (as defined in the Act).
<PAGE>
7. Amendments. This Plan may not be amended to increase materially the
-----------
amount of payments provided for in paragraph 1 hereof unless such amendment is
approved in the manner provided for initial approval in paragraph 3 hereof.
8. Selection of Directors. While this Plan is in effect, the selection and
-----------------------
nomination of Directors who are not interested persons (as defined in the Act)
of the Corporation shall be committed to the discretion of the Directors who are
not interested persons.
9. Records. The Corporation shall preserve copies of this Plan and any
--------
related agreements and all reports made pursuant to paragraph 5 hereof, for a
period of not less than six years from the date of this Plan, or of the
agreements or such reports, as the case may be; provided that the first two
years of their existence they shall be kept in an easily accessible place.
<PAGE>
Exhibit 16
SPECIMEN PRICE MARK-UP SHEET
(Based on September 30, 1997 Balance Sheet)
<TABLE>
<CAPTION>
<S> <C> <C>
Net Assets Excluding Securities $ 86,302
Securities At Cost $ 39,089 39,089
Market Value
Unrealized Gain /(Loss) (140,477)
---------
(101,388)
Total Net Assets $ 24,003
=========
Shares Outstanding - 22,191
NET ASSET VALUE AND REDEMPTION PRICE
PER SHARE ($24,003/22,191 SHARES) $1.09
=====
</TABLE>
<PAGE>
Exhibit 17
FINANCIAL DATA SCHEDULE
<TABLE>
<CAPTION>
Item Number Item Description Amount
<S> <C> <C>
3(a) Net asset value per share - $ 2.78
beginning of the period
3(a) Net investment income (loss) (1.57)
per share
3(a) Net realized and unrealized (0.12)
gain (loss) per share
3(a) Dividends per share from 0
net investment income
3(a) Distributions per share from 0
realized gains
3(a) Per share returns of capital 0
and distributions from other
sources
3(a) Net asset value per share - 1.09
end of period
3(a) Ration of expenses to average 109.62%
net assets
3(b) Average debt outstanding 0
during period
3(b) Average debt outstanding per 0
share
</TABLE>
