<PAGE>
As filed with the Securities and Exchange Commission on September 25, 1998
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 1933
Pre-Effective Amendment No.___ [ ]
Post-Effective Amendment No. 11 [X]
and/or
REGISTRATION STATEMENT UNDER THE [ ]
INVESTMENT COMPANY ACT OF 1940
Amendment No. 11 [X]
(Check appropriate box or boxes)
---------------
TRIUMPH FUNDS, INC.
(exact name of Registrant as Specified in Charter)
P.O. Box 13156
Pittsburgh, Pennsylvania 15243
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code: (412) 396-4431
Angelo M. Gabriel, President
Triumph Funds, Inc.
P.O. Box 13156
Pittsburgh, PA 15243
(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)
x 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)
---
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
Pittsburgh, Pennsylvania 15223
(412) 396-4431
PROSPECTUS SEPTEMBER 25, 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 capital appreciation (increase in
the value of the Fund's shares) 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 September 25, 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
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
<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. Although the Fund is not currently invested in stocks
of the precious metals industry and does not intend to invest in them, the Fund
may do so and if it did, that investment would involve certain additional risks.
See "Risks To Be Considered Precious Metal Industry".
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
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........................................................ 0.00%
Other Expenses
Administrative Fees.......................................... 0.50%
Other Expenses...............................................555.43%
Total Other Expenses.........................................555.93%
Total Fund Operating Expenses.....................................556.68%
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 based on fees and expenses for the six months ended March 31,
1998.
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
------ ------- ------- --------
* * * *
* Because the Fund's small size means that its annual fixed costs currently
exceed the value of its net assets, its expense ratio exceeds 105% of net
assets. Thus for each year the expenses paid in the example would exceed the
$1,000 investment and result in an increasingly negative number.
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 six months ended March
31, 1998 is unaudited. Information for the year ended September 30, 1997 has
been audited by McCurdy & Associates CPA's, Inc., independent certified public
accountants ("McCurdy"), 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 fiscal year
1995-1996 were also audited by McCurdy, while the periods prior to October 1,
1994 were 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 1997 Annual Report
to Shareholders and the Semi-Annual Report for the period ended March 31, 1998,
both of which may be obtained without charge from the Company.
(FOR A SHARE OUTSTANDING THROUGHOUT A PERIOD)
<TABLE>
<CAPTION>
For the Six
months ended
March 31, 1998
(unaudited) 1997 1996 1995 1994 1993
-------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $1.09 $2.76 $5.30 $5.47 $6.29 $7.41
Income from Investment
Operations:
Net Investment Loss (0.91) (1.57) (1.50) (1.07) (0.88) (0.60)
Net Realized and Unrealized
Gains (Losses) on Investments 0.00 (0.12) (1.02) 0.90 0.06 (0.12)
---- ---- ---- ----- ---- ----
Total from Investment Operations (0.91) (1.69) (2.52) (0.17) (0.82) (0.72)
Less Distributions:
Distributions from Net Realized
Gains 0.00 0.00 0.00 0.00 0.00 0.36
Return of Capital 0.00 0.00 0.00 0.00 0.00 0.04
---- ---- ---- ---- ---- ----
Total Distributions 0.00 0.00 0.00 0.00 0.00 0.40
Change in Net Asset Value (0.91) (1.69) (2.52) (0.17) (0.82) (1.12)
---- ---- ---- ---- ---- ----
Net Asset Value,
End of Period $0.18 $1.09 $2.78 $5.30 $5.47 $6.29
Total Return*** (83.49)% (60.79)% (47.55)% (3.11)% (13.04)% (10.49)%
Ratios/Supplemental Data
Net Assets, End of Period (000) 4 24 73 697 485 664
Ratios to Average Net Assets:
Expenses 556.68%* 109.62% 33.74% 21.92% 12.56% 8.40%
Net Investment Income (Loss) (544.63)%* (103.44%) (31.37)% (20.61)% (11.55)% (6.48)%
Portfolio Turnover Rate 0.60% 162% 187% 141% 200% 116%
Average commission Rate Paid $0.00 $.5881 $.2102
</TABLE>
*Annualized
***Total return does not reflect sales commissions
Since February, 1997, Timothy Gabriel, who was the President of the Company
until May 1, 1998, has paid the expenses of the Fund from his personal funds so
as preserve the Fund's assets until it can start selling shares again. These
payments are treated on the Company's books as a capital contribution. In
addition, the Fund's Investment Advisor and its administrator have waived their
fees until the Fund is able to sell its shares.
The Fund's high expense ratio is largely caused by the fact that the Fund's
small size results in an income that does not equal its expenses. As the Fund
becomes smaller over time, this disparity increases. Thus, each year for the
past four fiscal years the Fund's expense ratio has increased at an accelerating
rate. This situation will be reversed when the Fund's net assets are increased
to the point where income on those assets exceeds the expenses.
<PAGE>
GENERAL DESCRIPTION OF FUND
Investment Objective - The Fund's investment objective is to provide you with
long-term capital appreciation. This is achieved principally through increase
of growth of the underlying investments, but also through income on those
investments. 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 assets of the Fund.
The investment adviser's investment approach is categorized as a value
approach to equity investment. This methodology focuses on the fundamentals of
a company rather than the charts used by technicians. The investment adviser
analyses the publicly available information about a company and develops a
Private Market Value ("PMV") for the company. The investment adviser attempts
to purchase the stock of the company at a substantial discount from the PMV.
The adviser also reviews the U.S. economy to ascertain which industries or
"sectors" of the economy appear to possess above average growth prospects and
resistance to economic downturns. The various sectors are explored to located
companies that meet the adviser's parameters for their specific industry. The
parameters vary significantly between sectors, and therefore, one series of
parameters does not apply to all sectors.
---
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
<PAGE>
of exploring for, mining, processing, fabricating, manufacturing, marketing or
otherwise dealing in gold, silver, or platinum. The Fund does not intend to
invest in precious metals bullion or in the securities of South African issuers.
The Fund will not invest in Precious Metal Investments that do no meet the
Fund's criteria for investing in equity securities generally.
Fixed Income Securities - The fixed income securities in which the Fund may
- -----------------------
invest are limited to: (a) corporate obligations rated within the four highest
investment grades as established by Standards & Poor's or Moody's Investors
Service, Inc. (debt securities in the lowest of these four ratings are medium
grade obligations, and have speculative characteristics, i.e., changes in
economic conditions or other circumstances are more likely to lead to a weakened
capacity on the part of the issuer to make principal and interest payments than
is the case with higher grade debt securities. If any such security is
downgraded in its rating below these guidelines or is otherwise seen to have
become an unsuitable investment under these guidelines, the Fund will sell that
security as soon as practicable.), and (b) securities issued by, or guaranteed
by, the U.S. Government, its agencies or instrumentalities. Examples of U.S.
Government securities are: U.S. Treasury Bills, Notes, and Bonds. See "Certain
Portfolio Securities" below. 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.
Defensive Asset Allocation - During periods of unusual market conditions and, as
- --------------------------
a temporary defensive measure, the Fund may invest up to 100% of its assets in
short-term instruments such as commercial paper, domestic certificates of
deposit, banker's acceptances, and U.S. Treasury Bills. These short-term,
fixed-income investments will be limited to obligations rated at the time of
purchase within the two highest ratings of either Standard & Poor's Corporation
or Moody's Investors Service, Inc.
Investment Restrictions
Borrowings by the Fund are not permitted except (a) from banks
<PAGE>
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-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,
<PAGE>
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.
Small Asset Base - Currently the Fund has a very small asset base. As a result,
the fixed expenses of the Fund exceed the income of the Fund. Until there are
sufficient additional purchases of shares of the Fund, this situation will cause
the Fund's ratio of average net assets to expenses to be much higher than Funds
with a much larger asset base.
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 private
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.
The Fund has entered into an administrative services agreement with Gabriel
Capital Management, Inc., a Pennsylvania corporation ("Management"), which is
controlled by two of the Directors of the
<PAGE>
Company, Angelo Gabriel and Marlee Smith. (Angelo Gabriel is the father of 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.
Wheat First Securities, Inc. is the primary distributor of the Company's
shares. It is located at One PPG Place, Pittsburgh, PA 15222.
The Fund's custodian is Star Bank, N.A., whose address is Star Bank Center,
425 Walnut Street, Cincinnati, Ohio 45202. When funds come in to the Fund, they
are deposited with the custodian which is responsible for holding the cash and
securities owned by the Fund.
PORTFOLIO TURNOVER
The rate of portfolio turnover will depend upon market and other conditions,
and it will not be a limiting factor when the Adviser believes that portfolio
changes are appropriate. It is anticipated that the annual portfolio turnover
rate for the Fund ordinarily will approximate 100%. An annual turnover rate of
100% or more could occur, for example, if all, or more than all, of the
securities in the portfolio are replaced within a period of one year. An annual
turnover rate of 100% or more would result in the Fund paying more in brokerage
fees in any given year than a mutual fund with a less active investment adviser.
<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 Wheat, 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>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<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 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
<PAGE>
execution of a Letter of Intent. Each investment made during the period receives
the reduced sales commission applicable to the amount of the investment goal. If
the goal is not achieved within the period, the investor must pay the difference
between the commissions applicable to the aggregate amount of purchases actually
made and the amount of commissions previously paid.
To insure compliance with provisions of the Investment Company Act of 1940,
out of the initial purchase, 5% of the total dollar amount of intended purchases
stated in the Letter of Intent will be held in escrow in the form of shares
(computed to the nearest full share at the applicable public offering price)
registered in the purchaser's name. These shares will be held in escrow at ADS.
Dividends and capital distributions paid with respect to these shares will be
used to purchase shares of the Fund at its then current net asset value. Shares
so purchased will be applied to reduce the investor's total shares to be
purchased under the Letter of Intent.
When the total amount of purchases actually made pursuant to the Letter of
Intent equals the amount specified in the Letter, the escrow shares will be
released from restriction.
If the total amount of purchases actually made pursuant to the Letter of
Intent are less than the amount specified in the Letter, the purchaser must
remit to 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
<PAGE>
p.m. New York time), on each day the New York Stock Exchange is open for
business. The Fund observes the following holidays and does not calculate net
asset value on those days: New Years Day, Memorial Day, Fourth of July, Labor
Day, Thanksgiving, and Christmas, or the day on which any of such holidays is
observed as a federal holiday. For purposes of determining net asset value,
options contracts will be valued 15 minutes after the close of trading on the
floor of the New York Stock Exchange. The net asset value per share is
calculated by determining the value of the Fund's assets, subtracting its
liabilities and dividing the result by the total number of shares outstanding.
Current values for the Fund's securities are determined as follows:
1. Securities that are traded on a national securities exchange or on the over-
the-counter Nasdaq National Market are valued on the basis of the last sales
price on the exchange where primarily traded or Nasdaq prior to the time of the
valuation, provided that a sale has occurred and that this price reflects
current market value according to procedures established by the Board of
Directors;
2. Securities traded in the over-the-counter market, other than on Nasdaq, for
which market quotations are readily available, are valued at the mean of the bid
and asked prices at the time of valuation;
3. Short-term debt instruments with remaining maturities of sixty days or less
are valued at market value, if market quotations are available, or amortized
cost (original purchase cost as adjusted for amortization of premium or
accretion of discount), if market quotations are not available, which, when
combined with accrued interest approximates market and which reflects fair value
as determined by the Fund's Board of Directors; and
4. Short-term debt instruments with remaining maturities of more than sixty
days, for which market quotations are readily available, are valued at current
market value. If such security was traded on the valuation date, current market
value is the last quoted sale price. In the absence of a sale on the valuation
date, the mean of the current closing bid and ask prices is used.
5. In the event a listed security does not trade on an exchange on any given
date, the security value is the mean of the bid and asked prices of any market
makers making a market in such listed security. In the absence of such mean
prices, the valuation is the fair value as determined in good faith by the Board
of Directors in accordance with its procedures.
TAX-SHELTERED RETIREMENT PLANS
Shares of the Fund are available for purchase in connection with the following
tax sheltered retirement plans:
- -- Tax Sheltered Custodial Plan Section 403(b)(7) for those persons who are
employees of tax exempt charitable, religious and educational organizations
- -- Individual Retirement Account Plans for individuals.
<PAGE>
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, 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 Wheat 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.
<PAGE>
The Fund and Wheat 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 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.
<PAGE>
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.
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 P.O. Box 13156, Pittsburgh, Pennsylvania 15243. 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
<PAGE>
in the aggregate and not by class except as otherwise expressly required by law.
See the Statement of Additional Information, "Capital Stock", for a description
of each Fund's voting rights.
Shareholders have no preemptive rights. Shares when issued will be maintained
in book entry form. Paper certificates will not be issued. Shares when issued
will be fully paid and nonassessable, and there are no restrictions on their
transferability.
Shareholder Inquiries
Shareholders may direct inquires to ADS at 24 West Carver Street, Huntington,
New York 11743; telephone (516) 385-9580; or to the Fund at its offices at P.O.
Box 13156, Pittsburgh, Pennsylvania 15243; telephone (412) 396-4431.
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
September 25, 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, September 25, 1998. A copy of the prospectus may be
obtained by writing the Distributor, Wheat First Securities, Inc., at One PPG
Place, Pittsburgh, PA 15222 or by calling (412) 394-3100.
<PAGE>
TRIUMPH FUNDS, INC.
Statement of Additional Information
September 25, 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
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 September 25, 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
<PAGE>
stocks and index options, as well as writing covered call options on portfolio
stocks.
Covered Call Options and Hedging
The Fund may write covered calls or employ one or more types of hedging
instruments. When hedging to attempt to protect against declines in the market
value of the Fund's portfolio, to permit the Fund to retain unrealized gains in
the value of portfolio securities which have appreciated, or to facilitate
selling securities for investment reasons, the Fund may (a) buy puts on such
securities, or (b) write calls on securities held by it. When hedging to permit
the Fund to establish a position in the securities market as a temporary
substitute for purchasing individual securities (which the Fund will normally
purchase, and then terminate that hedging position), the Fund may buy calls on
such securities. Additional information about the Hedging Instruments the Fund
may use is provided below.
Writing Covered Call Options
When the Fund writes a call, it receives a premium and agrees to sell the
callable investment to a purchaser of a corresponding call during the call
period (usually not more than 9 months) at a fixed exercise price (which may
differ from the market price of the underlying investment) regardless of market
price changes during the call period. To terminate its obligation on a call it
has written, the Fund may purchase a corresponding call in a "closing purchase
transaction." A profit or loss will be realized depending upon whether the net
of the amount of option transaction costs and the premium previously received on
the call written is more or less than the price of the call subsequently
purchased. A profit may also be realized if the call lapses unexercised,
because the Fund retains the related investments and the premium received. If
the Fund could not effect a closing purchase transaction due to a lack of a
market, it would have to hold the callable investments until the call lapsed or
was exercised.
The Fund's Custodian, or a securities depository acting for the Custodian,
will act as the Fund's escrow agent through the facilities of the Options
Clearing Corporation ("OCC"), as to the investments on which the Fund has
written calls, or as to acceptable escrow securities, so that no margin will be
required for such transactions. OCC will release the securities on the
expiration of the calls or upon the Fund entering into a closing purchase
transaction. Call writing affects the Fund's turnover rate and the brokerage
commissions it pays. Commissions payable on writing or purchasing a call are
normally higher on a relative basis than on general securities transactions.
Purchasing Calls and Puts
When the Fund purchases a call (other than in a closing purchase transaction),
it pays a premium and, except as to calls on stock indices, has the right to buy
the underlying investment from a seller of a corresponding call on the same
investment
C-22
<PAGE>
during the call period at a fixed exercise price. When the Fund purchases a call
on a stock index, it pays a premium, but settlement is in cash rather than by
delivery of the underlying investment to the Fund. The Fund benefits only if the
call is sold at a profit or if, during the call period, the market price of the
underlying investment is above the sum of the call price plus the transaction
costs and the premium paid and the call is exercised. If the call is not
exercised or sold (whether or not at a profit), it will become worthless at its
expiration date and the Fund will lose its premium payment and the right to
purchase the underlying investment.
When the Fund purchases a put, it pays a premium and, except as to puts on
stock indexes, has the right to sell the underlying investment to a seller of a
corresponding put on the same investment during the put period at a fixed
exercise price. Buying a put on an investment the Fund owns enables the Fund to
protect itself during the period against a decline in the value of the
underlying investment below the exercise price by selling such underlying
investment at the exercise price to a seller of a corresponding put. If the
market price of the underlying investment is equal to or above the exercise
price and as a result the put is not exercised or resold, the put will become
worthless at its expiration date, and the Fund will lose its premium payment and
the right to sell the underlying investment. The put may, however, be sold
prior to expiration (whether or not at a profit).
An option position may be closed out only on a market which provides secondary
trading for options of the same series, and there is no assurance that a liquid
secondary market will exist for any particular option. The Fund's option
activities may affect its turnover rate and brokerage commissions. The exercise
by the Fund of puts on securities will cause the sale of related investments,
and increase portfolio turnover. Although such exercise is within the Fund's
control, holding a put might cause the Fund to sell the related investments for
reasons which would not exist in the absence of the put. The Fund will pay a
brokerage commission each time it buys a put or call, or sells a call. Such
commissions may be higher than those which would apply to direct purchases or
sales of such underlying investments. Premiums paid for options are small in
relation to the market value of the related investments, and consequently, put
and call options offer large amounts of leverage. The leverage offered by
trading in options could result in the Fund's net asset value being more
sensitive to change in the value of the underlying investments.
Tax Aspects of Hedging Instruments
The Fund intends to qualify as a "regulated investment Company" under the
Internal Revenue Code. One of the tests for such qualifications is that less
than 30% of its gross income (irrespective of losses) must be derived from gains
realized on the sale of securities held for less than three months. Due to this
limitation, the Fund will limit the extent to which it engages in the following
activities, but will not be precluded
C-23
<PAGE>
from them: (i) selling investments held for less than three months, whether or
not they were purchased on the exercise of a call held by the Fund; (ii) writing
calls on investments held for less than three months; (iii) purchasing calls or
puts which expire in less than three months; (iv) effecting closing transactions
with respect to calls or puts purchased less than three months previously; and
(v) exercising puts or calls held by the Fund for less than three months.
Possible Risk Factors in Hedging
In addition to the risks with respect to options tracking discussed above,
there is additional risk to the Fund if it attempts to engage in short hedging
by purchasing puts on stock indexes in that the prices of the applicable index
will correlate imperfectly with the behavior of the cash (i.e., market value)
prices of the Fund's portfolio securities.
The risk of imperfect correlation increases as the composition of the Fund's
portfolio diverges from the securities included in any applicable index. To
compensate for the imperfect correlation of movements in the price of the
hedging instruments, the Fund may use hedging instruments in a greater dollar
amount than the dollar amount of such portfolio securities being hedged if the
historical volatility of the prices of such portfolio securities being hedged is
more than the historical volatility of the applicable index. It is also
possible that where the Fund has used hedging instruments in a short hedge, the
market may advance and the value of the securities held in the Fund's portfolio
may decline. If this occurred, the Fund would lose money on the hedging
instruments and also experience a decline in value in its portfolio securities.
If the Fund uses hedging to establish a position in the securities markets as a
temporary substitute for the purchase of particular securities (long hedging) by
buying calls on securities or on stock indexes, it is possible that the market
may decline. If the Fund then concludes not to invest in securities at that
time because of concerns as to possible further market decline or for other
reasons, the Fund will realize a loss on the hedging instruments that is not
offset by a reduction in the price of such securities. In other words, if the
investment adviser is incorrect in the assessment of whether the overall market
will advance or decline, as the case may be, the Fund may not experience any
benefit and may have been better off if the hedging instruments were not used.
Convertible Securities
A convertible security is a fixed-income security (a bond or preferred stock)
which may be converted at a stated price within a specified period of time into
a certain quantity of the common stock of the same or a different issuer.
Convertible securities are senior to common stocks in a corporation's capital
structure, but are usually subordinated to similar nonconvertible securities.
While providing a fixed income stream (generally higher in yield than the income
derivable from a common stock but lower than
C-24
<PAGE>
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. The investment adviser will monitor the liquidity of such
restricted securities under the supervision of the Board of Directors. The
investment advisor will inform the Board of Directors if it purchases for the
Fund any securities which have any restrictions on their sale and will state
whether it thinks they should be classified as liquid or illiquid securities.
The Board of Directors will review these decisions from time to time. Subject
to a full review of the circumstances, the investment advisor and the Board of
Directors will classify any security which has restrictions on its sale which
would prevent immediate sale as illiquid. Repurchase agreements subject to
demand are deemed to have a maturity equal to the notice period.
The staff of the SEC has taken the position that purchased over-the-counter
options and the assets used as "cover" for written over-the-counter options are
illiquid securities. However, with respect to U.S. government securities, the
Fund may treat the securities it uses as "cover" for written over-the-counter
options on U.S. Government securities as liquid provided it follows a specified
procedure. The Fund may sell such over-the-counter
C-25
<PAGE>
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.
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.
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.
C-26
<PAGE>
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 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. 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. In the event borrowings by the Fund
exceed 5% of total assets, it will not purchase any additional securities.
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.
C-27
<PAGE>
6. Investments in real estate or real estate mortgage loans will not be made.
However, investment in United States Government Agency securities
representing real estate loans may be made.
7. No purchase or sale will be made of future contracts, commodities or
commodity contracts or oil or gas interest.
8. Loans will not be made to other persons except by the purchase of the debt
obligations in which the Fund is authorized to invest in accordance with
its investment policies.
9. Short sales or purchases on margin will not be made but the Fund may obtain
such short-term credits as may be necessary for clearance of purchases and
sales of securities.
10. The Fund will not issue senior securities, however, the Fund may borrow
money from banks. (See Investment Restriction 3 above.)
11. No investment will be made in the securities of any issuer for the purpose
of exercising management or control.
12. Investments will not be made in restricted securities or foreign
securities, though the Fund may invest in the American Depository Receipts
of non-U.S. Companies.
13. No more than 5% of the total assets of the Fund will be invested in the
securities of other investment companies.
14. The Fund will not purchase any security if, as a result, the Fund would
then have more than 5% of its total assets (taken at current value)
invested in the securities of companies (including predecessors) less than
three years old.
15. The Fund will not purchase or retain securities of any company if, to the
knowledge of the Fund, Officers and Directors of the Fund or of the Adviser
who individually own more than 1/2 of 1% of the securities of that company
together own beneficially more than 5% of such securities.
16. The Fund's assets will not be mortgaged, pledged or hypothecated unless
there is at all times an asset coverage of at least 300% for all pledging,
mortgaging and hypothecation of the Fund's assets.
17. Less than 15% of the 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 total assets and does not
expect to do so at all during the coming year.
C-28
<PAGE>
Additional Purchase and Redemption Information
Orders for the purchase of shares of the Fund received prior to 4:00 p.m. on any
day on which the New York Stock Exchange is open for business will be priced at
the per share net asset value computed for that day. Orders received after that
time or on Saturdays, Sundays or holidays will be priced at the per share net
asset value next computed.
The Fund's Board of Directors may suspend the right of redemption or postpone
the date of payment upon redemption when:
1. The New York Stock Exchange is closed for other than customary weekend
or holiday closings or trading on such Exchange is restricted;
2. There exists an emergency as a result of which (a) disposal by the Fund
of securities owned by it is not reasonably practicable or (b) it is not
reasonably practicable for the Fund fairly to determine the value of its net
assets;
3. For such other periods as the Securities and Exchange Commission may
permit for the protection of the shareholders.
Payment for shares redeemed may be made either in cash or in kind or partly in
cash and partly in kind. However, the Fund has elected, pursuant to Rule 18f-1
under the Investment Company Act of 1940, to redeem its shares solely in cash up
to the lesser of $250,000 or 1% of the net asset value of the Fund during any
ninety (90) day period for any one shareholder. Payments will be made wholly in
cash unless the Board of Directors believes that conditions exist which would
make such a practice detrimental to the best interests of the Fund. Any
portfolio securities paid or distributed in kind would be valued as described
under "Determination of Net Asset Value". Subsequent sale of such securities
may require payments of brokerage commissions by a shareholder.
Shares are issued in book entry form. No paper certificates are issued. The
Fund reserves the right to reject any purchase order.
Tax-Sheltered Plans
For those persons who are employees of tax exempt charitable, religious and
educational organizations [technically, organizations described in Internal
Revenue Code Sections 501(c)(3) and 170(b)(1)(A)(ii)], there is available
through the distributor, Wheat First Securities, 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
C-29
<PAGE>
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 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 the Fund at P.O.
Box 13156, Pittsburgh, PA 15243; telephone (412) 396-4431.
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
C-30
<PAGE>
when there is a complete account liquidation, either to the account owner or for
transfer to another Custodian. The Periodic Distribution Fee covers the
situation where an individual is in the payout phase of a Tax-Sheltered Account
and is receiving monthly or quarterly checks on a regular periodic basis. The
fees are charged per plan. The total charge per account will be at least $13 per
year. What additional charges will be assessed against a particular account is
dependent on when and if lump sum or periodic distributions are made.
Directors and Officers
The Directors and Officers of Triumph Funds, Inc., their addresses, principal
occupations during the past five years and their affiliations, if any, with the
Fund's adviser, Executive Investment Advisors, Inc., its distributor, Wheat
First Securities, Inc., and its administrators, Gabriel Capital Management, Inc.
and American Data Services, Inc., are as follows:
<TABLE>
<CAPTION>
Offices Principal
Name and Address With Fund Occupation
- ---------------- --------- ----------
<S> <C> <C>
Angelo M. Gabriel*, President, Consultant
PhD Secretary,
Treasurer, and
Director
Marlee B. Smith* Director Consultant
Peter Rostosky Director Business owner
Saul Weitz Director President, Harold B.
Weitz, Inc.
</TABLE>
* Dr. Gabriel is deemed to be an "interested person" of the Fund in that he is
an officer of the Fund, and a shareholder of the Fund's administrative services
provider, Gabriel Capital Management, Inc. Ms. Smith is deemed to be an
"interested person" in that she is an affiliate of Gabriel Capital Management,
Inc.
For over five years, Dr. Gabriel has served as a business consultant and fund-
raiser for various community and educational institutions. From December, 1994,
he served as CEO of Summit Investment Group, Inc., a registered broker dealer.
Dr. Gabriel is the father of 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
C-31
<PAGE>
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, 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
C-32
<PAGE>
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 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.
C-33
<PAGE>
Custodian
Star Bank, N.A. ("Star"), Star Bank Center, 425 Walnut
C-34
<PAGE>
Street, Cincinnati, Ohio 45202, as custodian, has custody of all securities and
cash of the Fund. It attends to the collection of principal and income, and
payment for and collection of proceeds of securities bought and sold by the
Fund. Star is not affiliated with the Fund or any of its affiliates. Star is
paid a minimum fee of $400 per month plus various transaction fees to act as
custodian for the Fund.
Transfer and Dividend Agent
American Data Services, Inc. serves as the Fund's Transfer and Dividend
Disbursing Agent.
Independent Certified Public Accountants
McCurdy & Associates CPA's, Inc., with principal offices at 27955 Clemens
Road, Westlake, Ohio 44145, act as the independent certified public accountants
for the Fund. As such they audit and report on the Fund's annual financial
statements, review certain regulatory reports, and perform other professional
accounting, auditing, and advisory services when engaged to do so by the Fund.
Shareholders will receive annual audited financial statements and semi-annual
unaudited financial statements. The selection of independent accountants is
subject to annual ratification by the Fund's shareholders.
Portfolio Brokerage
Decisions to buy and sell securities for the Fund are made by the Adviser
subject to review by the Fund's Board of Directors. The Adviser intends to
direct brokerage on the basis of best execution of orders at the most favorable
price in light of the overall quality of brokerage and research services
provided, as described in this and the following paragraph. In selecting
brokers to effect portfolio transactions, the determination of what is expected
to result in best execution at the most favorable price involves a number of
largely judgmental considerations. Among them are the Advisers evaluation of
the broker's efficiency in executing and clearing transactions, block trading
capability (including the broker's willingness to position securities) and the
broker's financial strength and stability. The most favorable price to the Fund
means the best net price without regard to the mix between purchase or sale
price and commission, if any. Over-the-counter securities may be purchased and
sold directly with principal market makers who retain the difference in their
cost in the security and its selling price or from non-principal market makers
who are paid commissions directly. The Adviser may allocate portfolio brokerage
on the basis of recommendations to purchase shares of the Fund made by brokers,
but only if the Adviser reasonably believes the commissions and transaction
quality are comparable to that available from other brokers. Under the
Investment Company Act of 1940, the Adviser is prohibited from dealing with the
Fund as a principal in the purchase and sale of securities.
In allocating brokerage business for the Fund, the Adviser may also take into
consideration the research, analytical,
C-35
<PAGE>
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
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
Wheat First Securities, Inc. ("Wheat") serves as the Fund's distributor in a
continuous
C-36
<PAGE>
offering of the Fund's shares pursuant to a Distribution Agreement dated August
1, 1998. 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. Wheat received no commissions from the Fund
during the preceding three fiscal years. Wheat 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.
C-37
<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, and Semi-Annual Report for the Period Ended March 31,
1998, both of which are 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. Distribution Agreement dated August 1,1998
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. Inapplicable
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
C-38
<PAGE>
No. 7 to the Registration Statement of Registrant on Form N-1A filed on or
about March 6, 1996.
## Incorporated herein by reference to Post-Effective Amendment No. 8 to the
Registration Statement of Registrant on Form N-1A filed on or about December 30,
1997.
Item 25. Persons Controlled by or Under Common Control with Registrant
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.
C-39
<PAGE>
Item 29. Principal Underwriters
(a) Inapplicable
(b) The following is certain information with respect
to the officers and directors of Wheat First Securities, Inc., the principal
distributor for the Fund:
No officer or director of Wheat First Securities, Inc. has any relationship
with the Fund, the Advisor or the administrator of the Fund.
Their principal business address is Riverfront Plaza, 901 East Byrd Street,
Richmond, VA 23219.
(c) Inapplicable.
Item 30. Location of Accounts and Records
All such accounts, books and other documents are maintained at the offices the
Registrant, P.O. Box 13156, Pittsburgh, Pennsylvania 15243, 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 Triumph Funds, Inc. satisfies the standards
contained in Section 17(d)-1(d)(7)(i) and (ii) of the Investment Company
Act of 1940, as amended.
C-40
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this registration statement pursuant to Rule
485(b) under the Securities Act of 1933 and 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 day of September, 1998.
Triumph Funds, Inc.
By: /s/ Angelo M. Gabriel
-----------------------
President
Pursuant to the requirements of the Securities Act of 1933, this amendment to
the Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
Signature Title: Date:
--------- ----- ----
/s/ Angelo M. Gabriel President (Principal Sept. 23, 1998
---------------------- Executive Officer), Treasurer
Angelo M. Gabriel (Principal Accounting Officer),
Secretary and Director
/s/ Marlee B. Smith Director Sept. 23,1998
- --------------------
Marlee B. Smith
/s/ Peter Rostosky Director Sept. 23,1998
- -------------------
Peter Rostosky
/s/ Saul Weitz Director Sept. 23,1998
- ---------------
Saul Weitz
C-41
<PAGE>
C-42
<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. Distribution Agreement dated August 1, 1998
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.
## Incorporated herein by reference to Post-Effective Amendment No. 8 to the
Registration Statement of Registrant on Form N-1A filed on or about December 30,
1997.
C-43
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE SIX
MONTH PERIOD ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> $28,001
<INVESTMENTS-AT-VALUE> 28,001
<RECEIVABLES> 118
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 28,119
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 24,225
<TOTAL-LIABILITIES> 24,225
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> $164,480
<SHARES-COMMON-STOCK> 22,191
<SHARES-COMMON-PRIOR> 22,191
<ACCUMULATED-NII-CURRENT> (20,907)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (140,477)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 3,894
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 798
<OTHER-INCOME> 0
<EXPENSES-NET> 20,907
<NET-INVESTMENT-INCOME> (20,109)
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> (20,109)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (20,109)
<ACCUMULATED-NII-PRIOR> (140,477)
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 20,907
<AVERAGE-NET-ASSETS> 13,949
<PER-SHARE-NAV-BEGIN> 1.09
<PER-SHARE-NII> (0.91)
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0.18
<EXPENSE-RATIO> 556.68
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
Exhibit 6
DISTRIBUTION AGREEMENT
We have an agreement (the "Distribution Agreement") with the Triumph Fund, an
incorporated business organized under the laws of the Commonwealth of
Pennsylvania (the "Fund") pursuant to which we act as the distributor of shares
of beneficial interest of the Fund, par value $.00l per share ("Shares") and as
such have the right to distribute Shares for resale. The Fund is a diversified,
open-end, management investment company registered under the Investment Company
Act of 1940, as amended, and the Shares are registered under the Securities Act
of 1933, as amended (the "Act"). The terms "Prospectus" and "Statement" as used
herein refer respectively to the then current prospectus and statement of
additional information forming parts of the Registration Statement on Form N-lA
of the Fund under the Act. As principal we offer to sell to you Shares on the
following terms and conditions:
1. In all of Shares to the public you shall act as dealer for your own account
and in no transaction shall you have any authority to act as agent for us or
the Fund.
2. Orders received from you will be accepted by us, through Shareholder
Services, as the Fund's agent, only at the public offering price applicable
to each order, as set forth in the Prospectus and Statement. The procedure
relating to the handling of orders shall be in accordance with oral or
written instructions or instructions received through the National Securities
Clearing Corporation's mutual fund order clearing program ("FundServ") by us
or the Fund in the sole discretion of either.
3. (a) Class A Shares "A Shares". You shall receive compensation in the form of
dealer concessions computed in the manner set forth in the Fund's current
Prospectus with respect to the aggregate purchase price of A Shares purchased
by you during a particular calendar month (the "Purchase Month"). Such
compensation shall be payable as follows: (I) on the settlement date for
those orders received through National Securities Clearing Corporation's
mutual fund order clearing program ("FundServ"); (II) semi-monthly for all
other orders. No compensation shall be payable in respect of A Shares
purchased through reinvestment of dividends or distributions, or in respect
of A Shares purchased in exchange for Shares that, either originally or
through one or more exchange transactions, had been the subject of payments
under this Paragraph 3. In addition, no compensation shall be payable in
respect of A Shares the purchase of which is subject to a waiver of the sales
charge as set forth in the Fund's current Prospectus.
4. You agree to purchase Shares only in transactions contemplating the
simultaneous resale of such Shares to investors and in no event shall you
place orders for Shares unless you have already received corresponding
purchase orders for Shares at the applicable public offering prices and
subject to the terms hereof. You agree that you will not offer or sell any
Shares except under circumstances that will result in compliance with the
applicable federal and state securities laws and that in connection with
sales and offers to sell Shares you will furnish to each person to whom any
such sale or offer is made, a copy of the Prospectus and if requested, the
<PAGE>
Statement (as then amended or supplemented) and will not furnish to any
person any information relating to the Fund that is inconsistent in any
respect with the information contained in the Prospectus and Statement (as
then amended or supplemented) or cause any written materials to be used in
connection with sales of Shares or any advertisement to be published in any
newspaper, broadcast by television, radio or other means or posted in any
public place without our prior written consent.
5. No person is authorized to make any representations concerning the Shares
except those contained in the Prospectus and Statement and in such printed
information subsequently issued by us or the Fund as information supplemental
to the Prospectus and Statement. In purchasing Shares through us you shall
rely solely on the representations contained in the Prospectus and Statement
and supplemental information above mentioned. Any printed information that we
furnish to you other than the Prospectus, Statement, information supplemental
to the Prospectus and Statement issued by the Fund, periodic reports and
proxy solicitation materials is our sole responsibility and not the
responsibility of the Fund, and agree that the Fund shall have no liability
or responsibility to you in these respects. If you should make an
unauthorized representation concerning the Shares, you agree to indemnify the
Fund and us from and against any and all claims, liability, expense or loss
in any way arising out of or in any way connected with such representation.
6. You shall not withhold placing orders for the Shares received from your
customers so as to profit yourself as a result of such withholding: e.g., by
a change in the net asset value from that used in determining the offering
price to your customers.
7. We reserve the right in our discretion and without notice to suspend sales or
withdraw the offering of Shares or, upon notice to you, to amend this
Agreement. You agree that any order to purchase Shares placed by you after
notice of any amendment to this Agreement has been sent to you shall
constitute your agreement to such amendment. The provisions of the
Distribution Agreement and the related Plans of Distribution (the "Plans")
are incorporated herein by reference and the Agreement shall continue in
effect only so long as the continuation of the Distribution Agreement and the
Plans are approved at least annually by the Board of Trustees of the Fund in
the manner contemplated by the Distribution Agreement and the Plan and by
applicable law. This Agreement shall also be terminable by either party
without penalty upon 30 days' written notice to the other party; provided,
however, that any termination of his Agreement by operation of this Paragraph
7 shall not affect your and our several obligations under Paragraphs 3 (c)
and 9 hereof in respect of Shares purchased prior to such termination for so
long as the Distribution Agreement and the Plans shall remain in effect.
8. We shall have full authority to take such action as we may deem advisable in
respect of all matters pertaining to the continuous offering of Shares. We
and you shall be under no liability to each other except for gross
negligence, lack of good faith and for obligations expressly assumed by you
and us herein. Nothing contained in this Paragraph 8 is intended to operate
as, and the provisions of this Paragraph 8 shall not in any way whatsoever
constitute, a waiver by you or us of
<PAGE>
compliance with any provision of the Act or of the rules and regulations of
the Securities and Exchange Commission issued thereunder.
9. In addition to the dealer concessions outlined in Paragraph 3 of the
Agreement, we agree to pay you a fee (the "Shareholder Servicing Fee")
computed daily at an annual rate equal to .25% of the aggregate net asset
value on that day of all shares in Portfolios, other than the Money Market
Portfolio, purchased by you, including such Shares purchased through
reinvestment of dividends and distributions, which fee shall be payable
quarterly. This fee shall be payable only so long as and to the extent that
the Fund reimburses us for payment of this fee to you. Any overpayment of
compensation and fees pursuant to this Paragraph 9 or Paragraph 3 above shall
reduce amounts payable to you in subsequent months. If such overpayment is
the final payment to you, in such case you agree to pay forthwith to us the
full amount of the overpayment. We reserve the right at any time to impose
minimum fee payment requirements before any monthly payments will be made to
you hereunder.
In return for the Shareholder Servicing Fee you agree to provide services to
Shareholders which services shall include the following:
(a) responding to Shareholder inquiries and providing information on their
investments
(b) providing such other similar services as we may reasonably request to the
extent permitted under applicable statutues, rules and regulations.
10. We both hereby agree to abide by the Rules the National Association of
Securities Dealers, Inc. (the "NASD"). Reference is specifically made to
Section 2000 of such Rules, which Section is incorporated herein by
reference. The signing of this Agreement and the purchase of Shares pursuant
hereto is a representation to us that you are a member in good standing of
the NASD and a properly registered broker-dealer under the Securities and
Exchange Act of 1934 (the "1934 Act"). Nothing in this Agreement shall be
deemed or construed to make you an employee, agent, representative or
partner of the Fund or of us and you are not authorized to act for us, or
for the Fund or to make any representations on our or its behalf. This
Agreement shall be in substitution for any prior agreement between us
regarding Shares of the Fund and shall terminate automatically in the event
of your ceasing to be member in good standing of the NASD or upon the
occurrence of any event affecting your registration as a broker-dealer under
the 1934 Act. This Agreement shall not be assignable to you.
11. Upon application to us, we will inform you as to the states and
jurisdictions in which we believe the Shares have been qualified for sale
under, or are exempt from the requirements of, the respective securities
laws of such states and jurisdictions, but we assume no responsibility or
obligation as to your right to sell Shares in any jurisdiction. You agree to
indemnify us and/or the Fund for any claim, liability expense or loss in any
way arising out of a sale of Shares in any State or Jurisdiction in which
such Shares are not so qualified or exempt.
12. You agree to indemnify us for any loss, including losses resulting from
changes in
<PAGE>
Share prices, in connection with checks that are tendered to us for the
purchase of Shares and that are not paid when presented for payment to the
appropriate bank.
13. Except as otherwise noted, any notice to the other party hereto shall be
duly given if mailed via certified mail or telegraphed to such party at the
address thereof specified herein:
If to Triumph Fund, Inc.
P.O. Box 13165
Pittsburgh, PA 15243
If to you: Wheat First Securities, Inc.
----------------------------
901 E. Byrd Street
----------------------
Richmond, VA 23219
------------------
By: D. Keith Sloane By: Angelo M. 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
is included in Post Effective Amendment Number 11 to the Registration
Statement of the Triumph Asset Allocation Fund.
McCurdy & Associates CPA's, Inc.
September 21, 1998
<PAGE>
Exhibit 16
SPECIMEN PRICE MARK-UP SHEET
(Based on March 31, 1998 Balance Sheet)
Net Assets Excluding Securities $116,370
Securities At Cost 28,001
Unrealized Gain /(Loss) (140,477)
---------
Total Net Assets $3,894
======
Shares Outstanding - 22,191
NET ASSET VALUE AND REDEMPTION PRICE
PER SHARE ($3,894/22,191 SHARES) $0.18
=====
