File No. 33-44579
811-6498
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 18 x
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940
Amendment No. 21 x
PIC INVESTMENT TRUST
(Exact name of registrant as specified in charter)
300 North Lake Avenue
Pasadena, CA 91101-4106
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number (including area code): (626) 449-8500
THAD M. BROWN
Provident Investment Counsel
300 North Lake Avenue
Pasadena, CA 91101-4106
(Name and address of agent for service of process)
Approximate Date of Proposed Public Offering: As soon as practicable after
the effective date of the registration statement.
It is proposed that this filing will become effective (check appropriate box)
|_| Immediately upon filing pursuant to paragraph (b)
|X| On December 31, 1997 pursuant to paragraph (b)
|_| 60 days after filing pursuant to paragraph (a)(1)
|_| On pursuant to paragraph (a)(1)
|_| 75 days after filing pursuant to paragraph (a)(2)
|_| On pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
|X| this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant
has previously elected to register an indefinite number of shares of beneficial
interest, $.001.
The Registrant filed its 24f-2 Notice on December 27, 1996.
<TABLE>
<CAPTION>
PIC INVESTMENT TRUST
FORM N-1A
CROSS REFERENCE SHEET
(For the Provident Tax Managed Growth Fund)
Part A
Form
N-1A
Item
No. Item Location in Prospectus
<S> <C> <C>
1. Cover Page Cover page
2. Synopsis "Fee Table"
3. Condensed Financial Information "Selected Financial Information"
4. General Description of Registrant "General Information"; "Investment
Objective and Policies";
"Investment Restrictions"
5. Management of the Fund "Management"; "How to Invest in
the Funds"; "General Information"
5B. Management's Discussion of Fund
Performance Not applicable
6. Capital Stock and Other
Securities "General Information"; "Dividends
and Tax Status"
7. Purchase of Securities Being
Offered "How to Invest in the Funds"
8. Redemption or Repurchase "How to Redeem an Investment in
the Funds"
9. Pending Legal Proceedings Not applicable
Part B Location in SAI
10. Cover Page Cover Page
11. Table of Contents "Table of Contents"
12. General Information and History Not applicable
13. Investment Objective and Policies "Investment Objectives and
Policies"
14. Management of the Fund "Management"
15. Control Persons and Principal
Holders of Securities "General Information"
16. Investment Advisory and Other
Services "Management"
17. Brokerage Allocation "Portfolio Transactions and
Brokerage"
18. Capital Stock and Other
Securities "General Information"
19. Purchase, Redemption and Pricing
of Securities Being Offered "Net Asset Value"
20. Tax Status "Taxation"
21. Underwriters Not applicable
22. Calculation of Performance Data "Performance Information"
23. Financial Statements Not applicable
</TABLE>
<PAGE>
Provident Tax Managed Growth Fund
300 North Lake Avenue
Pasadena, CA 91101
(800) 000-0000
The Fund seeks long term growth of capital. While trying to achieve this goal,
the Fund will also try to minimize tax liability for investors. Dividend income
is incidental. The Fund invests primarily in equity securities of companies with
medium and large market capitalizations.
Please read this prospectus before investing, and keep it on file for future
reference. It contains important information, including how the Fund invests and
the services available to shareholders. To learn more about the Fund and its
investments, you can obtain a copy of the Fund's most recent financial reports
and portfolio listing, or a copy of the Statement of Additional Information
(SAI) dated , 1997. The SAI has been filed with the Securities and Exchange
Commission (SEC) and is incorporated herein by reference (legally forms a part
of this prospectus). For a free copy of either document, call (800) 618-7643.
Mutual fund shares are not deposits or obligations of, or guaranteed by, any
depository institution. Shares are not insured by the U.S. Government, the FDIC,
the Federal Reserve Board, or any other U.S. Government agency, and are subject
to investment risk, including the possible loss of principal.
Like all mutual funds, these securities have not been approved or disapproved by
the Securities and Exchange commission nor has the Securities and Exchange
Commission passed upon the accuracy or adequacy of this prospectus. Any
representation to the contrary is a criminal offense.
Prospectus
, 1997
Prospectus
1
<PAGE>
Key Facts 3 The Fund at a Glance
3 Who May Want to Invest
4 Expenses
The Fund in Detail 5 Charter How the Fund is organized
5 Information About the Fund's Investments The
Fund's overall approach to investing.
6 Securities and Investment Practices More
information about how the Fund invests.
8 Breakdown of Expenses How operating costs and
calculated and what they include.
Your Account 9 How to Buy Shares
10 How to Sell Shares
10 Investor Services
11 Dividends, Capital Gains and Taxes
12 Transaction Details Share price calculations
and the timing of purchases and redemptions.
General Information 13 Key Facts
Prospectus
2
<PAGE>
The Fund at a Glance
Management: Provident Investment Counsel (PIC), located in Pasadena, California
since 1951, is the Fund's Advisor. At June 30, 1997, total assets under PIC's
management were $20.4 billion.
Goal: Long term growth of capital (increase in the value of the Fund's shares).
The Fund will try to minimize tax liability for investors. As with any mutual
fund, there is no assurance that the Fund will achieve its goal.
Strategy: Invests in equity securities of companies with medium and large market
capitalizations (market capitalizations of at least $1 billion).
Who May Want to Invest The Fund is designed for investors who are willing to
endure stock market fluctuations and who want to focus on medium and large
capitalization stocks in search of above average after tax returns.
The value of the Fund's investments will vary from day to day, and generally
reflects market conditions, interest rates, and other company, political or
economic news. In the short term, stock prices can fluctuate dramatically in
response to these factors. When you sell your shares, they may be worth more or
less than what you paid for them. By itself, the Fund does not constitute a
balanced investment plan.
Prospectus
3
<PAGE>
Expenses
Shareholder transactions expenses are charges you pay when you buy, sell or hold
shares in a fund.
Maximum sales charge None
Maximum sales charge on reinvested dividends None
Deferred sales charge on redemptions None
Annual Fund operating expenses are paid out of the Fund's assets. The Fund pays
an investment advisory fee equal to 0.80% of the Fund's average net assets. It
also incurs other expenses for services such as administrative services,
maintaining shareholder records and furnishing shareholder statements and
financial reports. The Fund's expenses are factored into its share price or
dividends and are not charged directly to shareholder accounts.
The following are projections based on estimated expenses, and are calculated as
a percentage of average net assets. PIC reimburses the Fund for any expenses in
excess of 1.10% of average net assets.
Management fee 0.80%
12b-1 fee None
Other expenses 0.30%
-----
Total Fund operating
expenses 1.10%
Example: Let's say, hypothetically, that the Fund's annual return is 5% and that
its operating expenses are exactly as just described. For every $1,000 you
invest, here's how much you would pay in total expenses if you close your
account after the number of years indicated:
After 1 year $11 After 3 years $35
This example illustrates the effect of expenses, but it is not meant to suggest
actual or expected costs or returns, all of which may vary.
Prospectus
4
<PAGE>
Charter
The Provident Tax Managed Growth Fund is a mutual fund: an investment that pools
shareholders' money and invests it toward a specified goal. In technical terms,
the Fund is a diversified series of PIC Investment Trust, which is an open-end
management investment company, organized as a Delaware business trust on
December 11, 1991. The Fund is governed by a Board of Trustees, which is
responsible for protecting the interests of shareholders. The Trustees are
experienced executives who meet periodically during the year to oversee the
Fund's activities, review contractual arrangements with companies that provide
services to the Fund, and review performance. The majority of Trustees are not
otherwise affiliated with PIC. The Fund may hold special meetings and mail proxy
materials. These meetings may be called to elect or remove Trustees, change
fundamental policies, approve an investment advisory contract, or for other
purposes. Shareholders not attending these meetings are encouraged to vote by
proxy. The Fund will mail proxy materials in advance, including a voting card
and information about the proposals to be voted on. The number of votes you are
entitled to is based on the number of shares you own. PIC is the adviser to the
Fund. An investment committee of PIC formulates and implements an investment
program for the Fund, including determining which securities should be bought
and sold. PIC may select broker-dealers that sell shares of the Fund to carry
out transactions for the Fund, provided that the Fund receives brokerage
services and commission rates comparable to those of other broker-dealers. PIC
traces its origins to an investment partnership formed in 1951. It is now an
indirect, wholly owned subsidiary of United Asset Management Corporation (UAM),
a publicly owned corporation with headquarters located at One International
Place, Boston, MA 02110. UAM is principally engaged, through affiliated firms,
in providing institutional investment management services.
Information About the Fund's Investments
The Fund seeks long term growth of capital while trying to minimize tax
liability for investors by investing primarily in equity securities of companies
with medium and large market capitalizations.
PIC will invest at least 65%, and normally at least 95%, of the Fund's total
assets in equity securities of companies with medium and large market
capitalizations (that is, at least $1 billion). PIC research professionals
conduct intense fundamental research to determine a company's prospects for
growth. PIC analyses the ability of a company's management to generate
above-average revenue, earnings and cash flow in the future. PIC research
professionals employ a "bottom-up" approach to equity investing, preferring to
identify and invest in individual companies that meet their quality
characteristics rather than using macro-economic analysis. The Fund invests
across a broad cross section of industries, and will minimize extreme
overweighting or underweighting of its portfolio relative to sector weightings
of the Standard & Poor's 500 Stock Index. In selecting securities for the Fund,
PIC will focus its efforts on finding companies with steady sales and above
average earnings growth. In addition, PIC will attempt to find companies where
changes in corporate operations and competitive markets will allow for future
significant growth of sales and earnings. Finally, the Fund will attemp to
invest in companies where there are other opportunities for future earnings
growth. It will endeavor to invest in securities valued at attractive levels,
particularly relative to their growth rates with historical multiples of
earnings and comparable peer candidates. The Fund plans to employ tax efficient
strategies designed to reduce but not eliminate the impact of capital gains
taxes on shareholders' after tax returns. As part of this strategy, when selling
investments the managers will select the highest cost basis shares held, to
reduce realized capital gains. In addition, the managers will attempt to offset
capital gains by realizing capital losses when possible. These procedures will
not necessarily prevent the Fund from selling securities as necessary to meet
shareholder redemptions or economic, market or issuer specific investment
considerations.
PIC expects the Fund to have a low portfolio turnover rate, estimated to be less
than 40% per year. The value of the Fund's investments varies in response to
many factors. Stock values fluctuate in response to the activities of individual
companies and general market and economic conditions. As a mutual fund, the Fund
seeks to spread investment risk by diversifying its holdings among many
companies and industries. Of course, when you sell your shares of the Fund, they
may be worth more or less than what you paid for them. PIC normally invests the
Fund's assets according to its investment strategy, but the Fund reserves the
right to invest without limitation in short and intermediate term instruments
for temporary, defensive purposes.
Securities and Investment Practices.
The following pages contain more detailed information about the types of
instruments in which the Fund may invest, and strategies PIC may employ in
pursuit of the Fund's investment objective. A summary of risks and restrictions
associated with these instrument types and investment practices is included as
well. A complete listing of the Fund's policies and limitations and more
detailed information about the Fund's investments is contained in the SAI.
Policies and limitations are considered at the time of purchase; the sale of
instruments is not required in the event of a subsequent change in
circumstances. PIC may not buy all of these instruments or use all of these
techniques to the full extent permitted unless it believes that doing so will
help the Fund achieve its goals. Current holdings and recent investment
strategies are described in the Fund's financial reports which are sent to
shareholders twice a year.
Equity Securities are common stocks and other kinds of securities that have the
characteristics of common stocks. These other securities include bonds,
debentures and preferred stocks which can be converted into common stocks. They
also include warrants and options to purchase common stocks.
Restriction: With respect to 75% of total assets, the Fund may not own more than
10% of the outstanding voting securities of a single issuer.
Short Term Investments are debt securities that mature within a year of the date
they are purchased by the Fund. Some specific examples of short term investments
are commercial paper, bankers' acceptances, certificates of deposit and
repurchase agreements.
Intermediate Term Investments are debt securities that mature within ten years
of the date they are purchased by the Fund. Intermediate term debt securities
include notes and bonds issued by the U.S. Government or a corporation.
Restriction: The Fund will only purchase short and intermediate term investments
which are "high quality." High quality means the investments have been rated A-1
by S&P or Prime-1 by Moody's, or have an issue of debt securities outstanding
rated at least A by S&P or Moody's. The term also applies to short term
investments that PIC believes are comparable in quality to those with an A-1 or
Prime-1 rating. U.S. Government securities are always considered to be high
quality.
Repurchase Agreements. In a repurchase agreement, the Fund buys a security at
one price and simultaneously agrees to sell it back at a higher price. Delays or
losses could result if the other party to the agreement defaults or becomes
insolvent.
Exposure to Foreign Markets. Foreign securities (which are issued by companies
based outside the U.S.) and securities issued by U.S. entities with substantial
foreign operations may involve additional risks and considerations. These
include risks relating to political or economic conditions in foreign countries,
fluctuations in foreign currencies, withholding or other taxes, operational
risks, increased regulatory burdens and the potentially less stringent investor
protection and disclosure standards of foreign markets. All of these factors can
make foreign investments, especially those in developing countries, more
volatile.
Restriction: The Fund may invest no more than 20% of its total assets in foreign
securities, and it will only purchase foreign securities or Depositary Receipts
which are listed on a national securities exchange or included in the NASDAQ
National Market System.
Options and Futures. The Fund has the right to use options and futures to hedge
its investments in securities, but PIC does not expect to use these instruments
during this fiscal year. The Fund will advise you before any investment will be
made in options or futures. See the SAI for details.
Fundamental Investment Policies and Restrictions
Some of the policies and restrictions discussed on this and the preceding pages
are fundamental; that is, subject to change only by shareholder approval. The
Fund's investment objective, as well as those policies described in the
following paragraph are fundamental. All policies stated throughout the
prospectus, other than those identified in the following paragraph, can be
changed without shareholder approval. The Fund, with respect to 75% of total
assets, may not invest more than 5% of its total assets in any one issuer and
may not own more than 10% of the outstanding voting securities of a single
issuer. The Fund may not invest more than 25% of its total assets in any one
industry.
Breakdown of Expenses Like all mutual funds, the Fund pays fees related to its
daily operations. Expenses paid out of the Fund's assets are reflected in its
share price or dividends; they are neither billed directly to shareholders nor
deducted from shareholder accounts. The Fund pays an investment advisory fee to
PIC each month for managing its investments, at the annual rate of 0.80% of the
Fund's average net assets. While the investment advisory fee is a significant
component of the Fund's annual operating costs, the Fund also pays other
expenses. The Fund pays a monthly administration fee to Investment Company
Administration Corporation for managing some of their business affairs, at the
annual rate of 0.10 % of its average net assets. The Fund also pays other
expenses, such as legal, audit and transfer agency fees, as well as the
compensation of Trustees who are not affiliated with PIC. PIC has agreed to
reimburse the Fund for investment advisory fees and other expenses above 1.10%
of the Fund's average net assets. PIC retains the ability to be repaid by the
Fund if expenses subsequently fall below the specified limit within the next
three years. This reimbursement arrangement, which may be terminated at any time
without notice, will decrease the Fund's expenses and boost its performance.
Prospectus
5
<PAGE>
Your Account
How to Buy Shares Once each business day, the Fund calculates its share price:
The share price is the Fund's net asset value (NAV). Shares are purchased at the
next share price calculated after your investment is received and accepted.
Share price is normally calculated at 4 p.m. Eastern time. If you buy shares by
check and then sell those shares within two weeks, the payment may be delayed
for up to seven business days to ensure that your purchase check has cleared.
Rodney Square Management Corporation (RSMC) is the Fund's Transfer Agent; its
address is 1105 N. Market Street, 3rd floor, Wilmington, Delaware 19890, and its
mailing address is P.O. Box 8987, Wilmington, DE 19899. First Fund Distributors,
Inc., 4455 E. Camelback Road, Suite 261E, Phoenix AZ 85018, is the Trust's
principal underwriter.
Minimum Investments
To Open an Account* $500,000
To Add to an Account $250
*The minimum may be waived for advisors or financial institutions offering
investors a program of services, or any other person or organization deemed
appropriate by the Fund.
For Information: (626) 449-8500
To Invest
By Mail:
PIC Funds P.O. Box 8981 Wilmington, DE 19899
By Wire:
Call: (800) 618-7643 to set up an account and arrange a wire transfer
Prospectus
6
<PAGE>
Your Account - continued
How to Sell Shares You can arrange to take money out of your account at any time
by selling (redeeming) some or all of your shares. Your shares will be sold at
the next share price calculated after your order is received and accepted. Share
price is normally calculated at 4 p.m.
Eastern time. Certain requests must include a signature guarantee. It is
designed to protect you and the Fund from fraud. Your request must be made in
writing and include a signature guarantee if any of the following situations
apply:
You wish to redeem more than $100,000 worth of shares, Your account
registration has changed within the last 30 days, The check is being mailed
to a different address from the one on your account (record address), or The
check is being made payable to someone other than the account owner.
You should be able to obtain a signature guarantee from a bank, broker-dealer,
credit union (if authorized under state law), securities exchange or
association, clearing agency or savings association. A notary public cannot
provide a signature guarantee. How to notify us Write a "letter of instruction"
with:
Your name,
Your Fund account number,
The dollar amount or number of shares to be redeemed, and Any other
applicable requirements listed in the table at right.
Unless otherwise instructed, PIC will send a check to the record address.
Mail your letter to:
PIC Total Return Fund
P.O. Box 8987
Wilmington, DE 19899
Investor Services PIC's telephone representatives can be reached at (626)
449-8500. Statements and reports that PIC sends to you include the following:
Confirmation statements (after every transaction that affects your account
balance or your account registration) Financial reports (every six months)
Prospectus
7
<PAGE>
Dividends, Capital Gains, and
Taxes
The Fund distributes substantially
all of its net income and capital
gains, if any, to shareholders each
year. Normally, dividends and
capital gains are distributed in
December.
Distribution Options
When you open an account, specify
on your application how you want
to receive your distributions. If the
option you prefer is not listed on
the application, call (800) 618-7643
for instructions. The Fund offers
three options:
1. Reinvestment Option. Your
dividend and capital gain
distributions will be automatically
reinvested in additional shares of
the Fund. If you do not indicate a
choice on your application, you will
be assigned this option.
2. Income-Earned Option. Your capital
gain distributions will be
automatically reinvested, but you
will be sent a check for each
dividend distribution.
3. Cash Option. You will be sent a
check for your dividend and capital
gain distributions.
For retirement accounts, all
distributions are automatically
reinvested. When you are over 59
1/2 years old, you can receive
distributions in cash.
Understanding Distributions As a Fund shareholder, you are entitled to your
share of the Fund's net income and gains on its investments. The Fund passes its
earnings along to its investors as distributions. The Fund earns dividends from
stocks and interest from short term investments. These are passed along as
dividend distributions. The Fund realizes capital gains whenever it sells
securities for a higher price than it paid for them. These are passed along as
capital gain distributions.
When the Fund deducts a distribution from its NAV, the reinvestment price is the
Fund's NAV at the close of business that day. Cash distribution checks will be
mailed within seven days. Taxes As with any investment, you should consider how
your investment in the Fund will be taxed. If your account is not a tax-deferred
retirement account, you should be aware of these tax implications. Taxes on
distributions. Distributions are subject to federal income tax, and may also be
subject to state or local taxes. If you live outside the United States, your
distributions could also be taxed by the country in which you reside. Your
distributions are taxable when they are paid, whether you take them in cash or
reinvest them. However, distributions declared in December and paid in January
are taxable as if they were paid on December 31. For federal tax purposes, the
Fund's income and short term capital gain distributions are taxed as dividends;
long term capital gain distributions are taxed as long term capital gains. Every
January, PIC will send you and the IRS a statement showing the taxable
distributions. Taxes on transactions. Your redemptions are subject to capital
gains tax. A capital gain or loss is the difference between the cost of your
shares and the price you receive when you sell them. Whenever you sell shares of
the Fund, PIC will send you a confirmation statement showing how many shares you
sold and at what price. You will also receive a consolidated transaction
statement every January. However, it is up to you or your tax preparer to
determine whether the sales resulted in a capital gain and, if so, the amount of
the tax to be paid. Be sure to keep your regular account statements; the
information they contain will be essential in calculating the amount of your
capital gains. "Buying a dividend." If you buy shares just before the Fund
deducts a distribution from its NAV, you will pay the full price for the shares
and then receive a portion of the price back in the form of a taxable
distribution. There are tax requirements that all funds must follow in order to
avoid federal taxation. In its effort to adhere to these requirements, the Fund
may have to limit its investment activity in some types of instruments.
Transaction Details The Fund is open for business each day the New York Stock
Exchange (NYSE) is open. PIC calculates the Fund's NAV as of the close of
business of the NYSE, normally 4 p.m. Eastern time. The Fund's NAV is the value
of a single share. The NAV is computed by adding the value of the Fund's
investments, cash, and other assets, subtracting its liabilities and then
dividing the result by the number of shares outstanding. The NAV is redemption
price (price to sell one share). The Fund's assets are valued primarily on the
basis of market quotations. If quotations are not readily available, assets are
valued by a method that the Board of Trustees believes accurately reflects fair
value. When you sign your account application, you will be asked to certify that
your Social Security or taxpayer identification number is correct and that you
are not subject to 31 % withholding for failing to report income to the IRS. If
you violate IRS regulations, the IRS can require a fund to withhold 31% of your
taxable distributions and redemptions. The Fund reserves the right to suspend
the offering of shares for a period of time. The Fund also reserves the right to
reject any specific purchase order. Purchase orders may be refused if, in PIC's
opinion, they would disrupt management of the Fund. When you buy shares, your
order will be processed at the next NAV calculated after your order is received
and accepted. Note the following:
All of your purchases must be made in U.S. dollars, and checks must be drawn
on U.S. banks. PIC does not accept cash. When making a purchase with more
than one check, each check must have a value of at least $50. The Fund
reserves the right to limit the number of checks processed at one time. If
your check does not clear, your purchase will be canceled and you could be
liable for any losses or fees the Fund or its transfer agent has incurred.
To avoid the collection period associated with check purchases, consider buying
shares by bank wire, U.S. Postal money order, U.S. Treasury check, Federal
Reserve check, or direct deposit instead. When you place an order to sell
shares, your shares will be sold at the next NAV calculated after your request
is received and accepted. Note the following:
Normally, redemption proceeds will be mailed to you on the next business
day, but if making immediate payment could adversely affect the Fund,
it may take up to seven days to pay you. Redemptions may be suspended
or payment dates postponed when the NYSE is closed (other than weekends
or holidays), when trading on the NYSE is restricted, or as permitted
by the SEC.
General Information The Fund is one of a series of shares, each having separate
assets and liabilities, of the Trust. The Board of Trustees may, at its own
discretion, create additional series of shares. The Declaration of Trust
contains an express disclaimer of shareholder liability for its acts or
obligations and provides for indemnification and reimbursement of expenses out
of the Trust's property for any shareholder held personally liable for its
obligations. The Declaration of Trust further provides the Trustees will not be
liable for errors of judgment or mistakes of fact or law, but nothing in the
Declaration of Trust protects a Trustee against any liability to which he 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
office. Shareholders are entitled to one vote for each full share held (and
fractional votes for fractional shares) and may vote in the election of Trustees
and on other matters submitted to meetings of shareholders. It is not
contemplated that regular annual meetings of shareholders will be held. Rule
18f-2 under the Act provides that matters submitted to shareholders be approved
by a majority of the outstanding securities of each series, unless it is clear
that the interests of each series in the matter are identical or the matter does
not affect a series. However, the rule exempts the selection of accountants and
the election of Trustees from the separate voting requirements. Income, direct
liabilities and direct operating expenses of each series will be allocated
directly to each series, and general liabilities and expenses of the Trust will
be allocated among the series in proportion to the total net assets of each
series by the Board of Trustees. The Declaration of Trust provides that the
shareholders have the right, upon the declaration in writing or vote of more
than two-thirds of its outstanding shares, to remove a Trustee. The Trustees
will call a meeting of shareholders to vote on the removal of a Trustee upon the
written request of the record holders of ten per cent of its shares. In
addition, ten shareholders holding the lesser of $25,000 worth or one per cent
of the shares may advise the Trustees in writing that they wish to communicate
with other shareholders for the purpose of requesting a meeting to remove a
Trustee. The Trustees will then, if requested by the applicants, mail at the
applicants' expense the applicants' communication to all other shareholders.
Except for a change in the name of the Trust, no amendment may be made to the
Declaration of Trust without the affirmative vote of the holders of more than
50% of its outstanding shares. The holders of shares have no pre-emptive or
conversion rights. Shares when issued are fully paid and non-assessable, except
as set forth above. The Trust may be terminated upon the sale of its assets to
another issuer, if such sale is approved by the vote of the holders of more than
50% of its outstanding shares, or upon liquidation and distribution of its
assets, if approved by the vote of the holders of more than 50% of its
outstanding shares. If not so terminated, the Trust will continue indefinitely.
PIC INVESTMENT TRUST
Statement of Additional Information
Dated December , 1997
This Statement of Additional Information is not a prospectus, and it should be
read in conjunction with the prospectus of the Provident Tax Management Growth
Fund series (the "Fund") of PIC Investment Trust (the "Trust"). There are six
other series of the Trust: the PIC Balanced Fund, PIC Growth Fund, PIC Pinnacle
Growth Fund, PIC Small Company Growth Fund, PIC Pinnacle Small Company Growth
Fund and PIC Small Cap. Growth Fund, which have separate Statements of
Additional Information. Provident Investment Counsel (the "Advisor") is the
Advisor to the Fund. A copy of the applicable prospectus may be obtained from
the Trust at 300 North Lake Avenue, Pasadena, CA 91101-4106, telephone (626)
449-8500.
TABLE OF CONTENTS
Cross-reference to page
in the prospectus of
the PIC Funds
Investment Objective and Policies................B-2 5
Investment Restrictions............... B-2 7
Repurchase Agreements................. B-3 7
Options Activities.................... B-3 7
Futures Contracts..................... B-3 7
Foreign Securities.................... B-4 7
Forward Foreign Currency
Exchange Contracts............... B-4
Segregated Accounts.............. B-5
Debt Securities and
Ratings.......................... B-5 7
Management.................................. B-5 5, 8
Portfolio Transactions and
Brokerage............................. B-7 5
Net Asset Value............................. B-8 12
Taxation.................................... B-8 11
Dividends and Distributions................. B-8 11
Performance Information..................... B-8
General Information......................... B-9 13
Appendix.................................... B-10
Prospectus
8
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The investment objective of the Fund is to provide long-term growth of
capital. There is no assurance that the Fund will achieve its objective. In
seeking its objective, the Fund will try to minimize tax liability for
investors. The discussion below supplements information contained in the
prospectus as to investment policies of the Fund.
The Trust (on behalf of the Fund) has adopted the following restrictions
as fundamental policies, which may not be changed without the favorable vote of
the holders of a "majority," as defined in the Investment Company Act of 1940
(the "1940 Act"), of the outstanding voting securities of the Fund. Under the
1940 Act, the "vote of the holders of a majority of the outstanding voting
securities" means the vote of the holders of the lesser of (i) 67% of the shares
of the Fund represented at a meeting at which the holders of more than 50% of
its outstanding shares are represented or (ii) more than 50% of the outstanding
shares of the Fund.
As a matter of fundamental policy, the Fund is diversified; i.e., as to
75% of the value of the Fund's total assets, no more than 5% of the value of its
total assets may be invested in the securities of any one issuer (other than
U.S. Government securities). The Fund's investment objective is fundamental.
In addition, the Fund may not:
1. Issue senior securities, borrow money or pledge its assets, except that
the Fund may borrow on an unsecured basis from banks for temporary or emergency
purposes or for the clearance of transactions in amounts not exceeding 10% of
its total assets (not including the amount borrowed), provided that it will not
make investments while borrowings in excess of 5% of the value of its total
assets are outstanding;
2. Make short sales of securities or maintain a short position;
3. Purchase securities on margin, except such short-term credits as may be
necessary for the clearance of transactions;
4. Write put or call options, except that the Fund may write covered call
and cash secured put options and purchase call and put options on stocks and
stock indices;
5. Act as underwriter (except to the extent the Fund may be deemed to be
an underwriter in connection with the sale of securities in its investment
portfolio);
6. Invest 25% or more of its total assets, calculated at the time of
purchase and taken at market value, in any one industry (other than U.S.
Government securities);
7. Purchase or sell real estate or interests in real estate or real estate
limited partnerships (although the Fund may purchase and sell securities which
are secured by real estate and securities of companies which invest or deal in
real estate);
8. Purchase or sell commodities or commodity futures contracts, except
that the Fund may purchase and sell stock index futures contracts;
9. Invest in oil and gas limited partnerships or oil, gas or mineral
leases;
10. Make loans (except for purchases of debt securities consistent with
the investment policies of the Fund and except for repurchase agreements); or
11. Make investments for the purpose of exercising control or management.
The Fund observes the following restrictions as a matter of operating but
not fundamental policy, pursuant to positions taken by federal and state
regulatory authorities:
The Fund may not:
1. Invest more than 10% of its assets in the securities of other
investment companies or purchase more than 3% of any other investment company's
voting securities or make any other investment in other investment companies
except as permitted by federal law.
2. Invest more than 15% of its net assets in securities which are
restricted as to disposition or otherwise are illiquid or have no readily
available market (except for securities issued under Rule 144A which are
determined by the Board of Trustees to be liquid).
Repurchase Agreements
Repurchase agreements are transactions in which the Fund purchases a
security from a bank or recognized securities dealer and simultaneously commits
to resell that security to the bank or dealer at an agreed-upon date and price
reflecting a market rate of interest unrelated to the coupon rate or maturity of
the purchased security. The purchaser maintains custody of the underlying
securities prior to their repurchase; thus the obligation of the bank or dealer
to pay the repurchase price on the date agreed to is, in effect, secured by such
underlying securities. If the value of such securities is less than the
repurchase price, the other party to the agreement will provide additional
collateral so that at all times the collateral is at least equal to the
repurchase price.
Although repurchase agreements carry certain risks not associated with
direct investments in securities, the Fund intends to enter into repurchase
agreements only with banks and dealers believed by the Advisor to present
minimum credit risks in accordance with guidelines established by the Board of
Trustees. The Advisor will review and monitor the creditworthiness of such
institutions under the Board's general supervision. To the extent that the
proceeds from any sale of collateral upon a default in the obligation to
repurchase were less than the repurchase price, the purchaser would suffer a
loss. If the other party to the repurchase agreement petitions for bankruptcy or
otherwise becomes subject to bankruptcy or other liquidation proceedings, there
might be restrictions on the purchaser's ability to sell the collateral and the
purchaser could suffer a loss. However, with respect to financial institutions
whose bankruptcy or liquidation proceedings are subject to the U.S. Bankruptcy
Code, the Fund intends to comply with provisions under that Code that would
allow them immediately to resell the collateral. Options Activities
The Fund may write call options on stocks and stock indices, if the calls
are "covered" throughout the life of the option. A call is "covered" if the Fund
owns the optioned securities. When the Fund writes a call, it receives a premium
and gives the purchaser the right to buy the underlying security at any time
during the call period at a fixed exercise price regardless of market price
changes during the call period. If the call is exercised, the Fund will forgo
any gain from an increase in the market price of the underlying security over
the exercise price.
The Fund may purchase a call on securities to effect a "closing purchase
transaction," which is the purchase of a call covering the same underlying
security and having the same exercise price and expiration date as a call
previously written by the Fund on which it wishes to terminate its obligation.
If the Fund is unable to effect a closing purchase transaction, it will not be
able to sell the underlying security until the call previously written by the
Fund expires (or until the call is exercised and the Fund delivers the
underlying security).
The Fund also may write and purchase put options ("puts"). When the Fund
writes a put, it receives a premium and gives the purchaser of the put the right
to sell the underlying security to the Fund at the exercise price at any time
during the option period. When the Fund purchases a put, it pays a premium in
return for the right to sell the underlying security at the exercise price at
any time during the option period. If any put is not exercised or sold, it will
become worthless on its expiration date.
The Fund's option positions may be closed out only on an exchange which
provides a secondary market for options of the same series, but there can be no
assurance that a liquid secondary market will exist at a given time for any
particular option.
In the event of a shortage of the underlying securities deliverable on
exercise of an option, the Options Clearing Corporation has the authority to
permit other, generally comparable securities to be delivered in fulfillment of
option exercise obligations. If the Options Clearing Corporation exercises its
discretionary authority to allow such other securities to be delivered, it may
also adjust the exercise prices of the affected options by setting different
prices at which otherwise ineligible securities may be delivered. As an
alternative to permitting such substitute deliveries, the Options Clearing
Corporation may impose special exercise settlement procedures. Futures Contracts
The Fund may buy and sell stock index futures contracts. A futures
contract is an agreement between two parties to buy and sell a security or an
index for a set price on a future date. Futures contracts are traded on
designated "contract markets" which, through their clearing corporations,
guarantee performance of the contracts.
Entering into a futures contract for the sale of securities has an effect
similar to the actual sale of securities, although sale of the futures contract
might be accomplished more easily and quickly. Entering into futures contracts
for the purchase of securities has an effect similar to the actual purchase of
the underlying securities, but permits the continued holding of securities other
than the underlying securities.
A stock index futures contract may be used as a hedge by the Fund with
regard to market risk as distinguished from risk relating to a specific
security. A stock index futures contract does not require the physical delivery
of securities, but merely provides for profits and losses resulting from changes
in the market value of the contract to be credited or debited at the close of
each trading day to the respective accounts of the parties to the contract. On
the contract's expiration date, a final cash settlement occurs. Changes in the
market value of a particular stock index futures contract reflects changes in
the specified index of equity securities on which the future is based.
There are several risks in connection with the use of futures contracts.
In the event of an imperfect correlation between the futures contract and the
portfolio position which is intended to be protected, the desired protection may
not be obtained, and the Fund may be exposed to risk of loss. Further,
unanticipated changes in interest rates or stock price movements may result in a
poorer overall performance for the Fund than if it had not entered into any
futures on stock indexes.
In addition, the market prices of futures contracts may be affected by
certain factors. First, all participants in the futures market are subject to
margin deposit and maintenance requirements. Rather than meeting additional
margin deposit requirements, investors may close futures contracts through
offsetting transactions which could distort the normal relationship between the
securities and futures markets. Second, from the point of view of speculators,
the deposit requirements in the futures market are less onerous than margin
requirements in the securities market. Therefore, increased participation by
speculators in the futures market may also cause temporary price distortions.
Finally, positions in futures contracts may be closed out only on an
exchange or board of trade which provides a secondary market for such futures.
There is no assurance that a liquid secondary market on an exchange or board of
trade will exist for any particular contract or at any particular time.
Foreign Securities
The Fund may invest in securities of foreign issuers in foreign markets.
In addition, the Fund may invest in American Depositary Receipts ("ADRs"),
European Depositary Receipts ("EDRs") or other securities convertible into
securities of issuers based in foreign countries. These securities may not
necessarily be denominated in the same currency as the securities into which
they may be converted. ADRs are receipts, usually issued by a U.S. bank or trust
company, evidencing ownership of the underlying securities; EDRs are European
receipts evidencing a similar arrangement. Generally, ADRs are issued in
registered form, denominated in U.S. dollars, and are designed for use in the
U.S. securities markets; EDRs are issued in bearer form, denominated in other
currencies, and are designed for use in European securities markets. A
depositary may issue unsponsored ADRs without the consent of the foreign issuer
of securities, in which case the holder of the ADR may incur higher costs and
receive less information about the foreign issuer than the holder of a sponsored
ADR. Forward Foreign Currency Exchange Contracts
The Fund may enter into forward contracts with respect to specific
transactions. For example, when the Fund enters into a contract for the purchase
or sale of a security denominated in a foreign currency, or when it anticipates
the receipt in a foreign currency of dividend or interest payments on a security
that it holds, the Fund may desire to "lock in" the U.S. dollar price of the
security or the U.S. dollar equivalent of the payment, by entering into a
forward contract for the purchase or sale, for a fixed amount of U.S. dollars or
foreign currency, of the amount of foreign currency involved in the underlying
transaction. The Fund will thereby be able to protect itself against a possible
loss resulting from an adverse change in the relationship between the currency
exchange rates during the period between the date on which the security is
purchased or sold, or on which the payment is declared, and the date on which
such payments are made or received.
The precise matching of the forward contract amounts and the value of the
securities involved will not generally be possible because the future value of
such securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date the forward contract
is entered into and the date it matures. Accordingly, it may be necessary for
the Fund to purchase additional foreign currency on the spot (i.e., cash) market
(and bear the expense of such purchase) if the market value of the security is
less than the amount of foreign currency the Fund is obligated to deliver and if
a decision is made to sell the security and make delivery of the foreign
currency. Conversely, it may be necessary to sell on the spot market some of the
foreign currency received upon the sale of the portfolio security if its market
value exceeds the amount of foreign currency the Fund is obligated to deliver.
The projection of short-term currency market movements is extremely difficult,
and the successful execution of a short-term hedging strategy is highly
uncertain. Forward contracts involve the risk that anticipated currency
movements will not be accurately predicted, causing the Fund to sustain losses
on these contracts and transaction costs. The Fund may enter into forward
contracts or maintain a net exposure to such contracts only if (1) the
consummation of the contracts would not obligate the Fund to deliver an amount
of foreign currency in excess of the value of the Fund's securities or other
assets denominated in that currency or (2) the Fund maintains a segregated
account as described below. Under normal circumstances, consideration of the
prospect for currency parities will be incorporated into the longer term
investment decisions made with regard to overall diversification strategies.
However, the Advisor believes it is important to have the flexibility to enter
into such forward contracts when it determines that the best interests of the
Fund will be served.
At or before the maturity date of a forward contract that requires the
Fund to sell a currency, the Fund may either sell a security and use the sale
proceeds to make delivery of the currency or retain the security and offset its
contractual obligation to deliver the currency by purchasing a second contract
pursuant to which the Fund will obtain, on the same maturity date, the same
amount of the currency that it is obligated to deliver. Similarly, the Fund may
close out a forward contract requiring it to purchase a specified currency by
entering into a second contract entitling it to sell the same amount of the same
currency on the maturity date of the first contract. The Fund would realize a
gain or loss as a result of entering into such an offsetting forward contract
under either circumstance to the extent the exchange rate between the currencies
involved moved between the execution dates of the first and second contracts.
The cost to the Fund of engaging in forward contracts varies with factors
such as the currencies involved, the length of the contract period and the
market conditions then prevailing. Because forward contracts are usually entered
into on a principal basis, no fees or commissions are involved. The use of
forward contracts does not eliminate fluctuations in the prices of the
underlying securities the Fund owns or intends to acquire, but it does fix a
rate of exchange in advance. In addition, although forward contracts limit the
risk of loss due to a decline in the value of the hedged currencies, at the same
time they limit any potential gain that might result should the value of the
currencies increase. Segregated Accounts
When the Fund writes an option, sells a futures contract or enters into a
forward foreign currency exchange contract, it will establish a segregated
account with its custodian bank, or a securities depository acting for it, to
hold assets of the Fund in order to insure that the Fund will be able to meet
its obligations. In the case of a call that has been written, the securities
covering the option will be maintained in the segregated account and cannot be
sold by the Fund until released. In the case of a put that has been written or a
forward foreign currency contract that has been entered into, cash, U.S.
Government securities or other liquid assets will be maintained in the
segregated account in an amount sufficient to meet the Fund's obligations
pursuant to the put or forward contract. In the case of a futures contract,
cash, U.S. Government securities or other liquid assets will be maintained in
the segregated account equal in value to the current value of the underlying
contract, less the margin deposits. The margin deposits are also held, in cash
or U.S. Government securities, in the segregated account.
Debt Securities and Ratings
Ratings of debt securities represent the rating agencies' opinions
regarding their quality, are not a guarantee of quality and may be reduced after
the Fund has acquired the security. The Advisor will consider whether the Fund
should continue to hold the security but is not required to dispose of it.
Credit ratings attempt to evaluate the safety of principal and interest payments
and do not evaluate the risks of fluctuations in market value. Also, rating
agencies may fail to make timely changes in credit ratings in response to
subsequent events, so that an issuer's current financial conditions may be
better or worse than the rating indicates.
MANAGEMENT
The overall management of the business and affairs of the Trust is vested
with its Board of Trustees. The Board approves all significant agreements
between the Trust and persons or companies furnishing services to it, including
the agreements with the Advisor, Administrator, Custodian and Transfer Agent.
The day to day operations of the Trust are delegated to their officers, subject
to their investment objectives and policies and to general supervision by its
Boards of Trustees.
The Trustees and officers of the Trust, their business addresses and
principal occupations during the past five years are:
<TABLE>
<S> <C>
Jettie M. Edwards (age 50), Trustee Consulting principal of
76 Seaview Drive Syrus Associates
Santa Barbara, CA 93108 (consulting firm)
Bernard J. Johnson (age 72), Trustee Retired; formerly Chairman
Emeritus of the Advisor
300 North Lake Avenue
Pasadena, CA 91101
Jeffrey D. Lovell (age 44), Trustee Managing Director,
11150 Santa Monica Blvd., Ste 1650 President and co-founder
Los Angeles, CA 90025 of Putnam, Lovell &
Thornton, Inc.
(investment bankers)
Jeffrey J. Miller (age 46), President Managing Director and Secretary of
and Trustee* the Advisor.
300 North Lake Avenue
Pasadena, CA 91101
Wayne H. Smith (age 55), Trustee Vice President and Treasurer of Avery Dennison
150 N. Orange Grove Blvd. Corporation (pressure sensitive material and office products
Pasadena, CA 91103 manufacturer)
Thad M. Brown (age 46), Vice Senior Vice President and Chief Financial Officer
President, Secretary and of the Advisor
Treasurer of the Trust
300 North Lake Avenue
Pasadena, CA 91101
- ---------------------------------
</TABLE>
* denotes Trustees who are "interested persons" of the Trust under the 1940 Act.
The following compensation was paid to each of the following Trustees.
No other compensation or retirement benefits were received by any Trustee or
officer from the Registrant or other registered investment company in the "Fund
Complex."
Deferred
Compensation
Name of Trustee Total Compensation Accrued
- --------------- ------------------ -------
Jettie M. Edwards $12,0001 -0-
Bernard J. Johnson 12,0001 -0-
Jeffrey D. Lovell 12,0001 8,845
Wayne H. Smith 12,0001 8,845
1 Compensation was paid by the Registrant
The Advisor
The following information is provided about the Advisor. Subject to
the supervision of the Board of Trustees, investment management and services are
provided to the Fund by the Advisor, pursuant to an Investment Advisory
Agreement (the "Advisory Agreement"). Under the Advisory Agreement, the Advisor
provides a continuous investment program for the Fund and makes decisions and
places orders to buy, sell or hold particular securities. In addition to the
fees payable to the Advisor and the Administrator, the Trust and the Fund are
responsible for their operating expenses, including: (i) interest and taxes;
(ii) brokerage commissions; (iii) insurance premiums; (iv) compensation and
expenses of Trustees other than those affiliated with the Advisor or the
Administrator; (v) legal and audit expenses; (vi) fees and expenses of the
custodian, shareholder service and transfer agents; (vii) fees and expenses for
registration or qualification of the Trust and its shares under federal or state
securities laws; (viii) expenses of preparing, printing and mailing reports and
notices and proxy material to shareholders; (ix) other expenses incidental to
holding any shareholder meetings; (x) dues or assessments of or contributions to
the Investment Company Institute or any successor; (xi) such non-recurring
expenses as may arise, including litigation affecting the Trust and the legal
obligations with respect to which the Trust may have to indemnify their officers
and Trustees; and (xii) amortization of organization costs.
The Advisor is an indirect, wholly owned subsidiary of United Asset
Management Corporation ("UAM"), a New York Stock Exchange listed holding company
principally engaged, through affiliated firms, in providing institutional
investment management services. On February 15, 1995, UAM acquired the assets of
the Advisor's predecessor, which had the same name as the Advisor. The term
"Advisor" also refers to the Advisor's predecessor.
Under the Advisory Agreement, the Advisor will not be liable to the
Fund for any error of judgment by the Advisor or any loss sustained by the Fund
except in the case of a breach of fiduciary duty with respect to the receipt of
compensation for services (in which case any award of damages will be limited as
provided in the 1940 Act) or of willful misfeasance, bad faith, gross negligence
or reckless disregard of duty.
The Advisory Agreement will remain in effect for two years from their
execution. Thereafter, if not terminated, the Advisory Agreement will continue
automatically for successive annual periods, provided that such continuance is
specifically approved at least annually (i) by a majority vote of the
Independent Trustees cast in person at a meeting called for the purpose of
voting on such approval, and (ii) by the Board of Trustees or by vote of a
majority of the outstanding voting securities of the Fund.
The Advisory Agreement is terminable by vote of the Board of Trustees
or by the holders of a majority of the outstanding voting securities of the Fund
at any time without penalty, on 60 days written notice to the Advisor. The
Advisory Agreement also may be terminated by the Advisor on 60 days written
notice to the Fund. The Advisory Agreement terminates automatically upon its
assignment (as defined in the 1940 Act).
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Advisory Agreement states that in connection with its duties to
arrange for the purchase and the sale of securities held by the Fund by placing
purchase and sale orders for the Fund, the Advisor shall select such
broker-dealers ("brokers") as shall, in its judgment, achieve the policy of
"best execution," i.e., prompt and efficient execution at the most favorable
securities price. In making such selection, the Advisor is authorized in the
Advisory Agreement to consider the reliability, integrity and financial
condition of the broker. The Advisor also is authorized by the Advisory
Agreement to consider whether the broker provides research or statistical
information to the Fund and/or other accounts of the Advisor. Subject to the
requirement of achieving best execution, the Advisor expects to allocate a
substantial portion of the Fund's brokerage commissions to Montgomery
Securities, which will be acting as custodian for the Fund's securities.
The Advisory Agreement states that the commissions paid to brokers may
be higher than another broker would have charged if a good faith determination
is made by the Advisor that the commission is reasonable in relation to the
services provided, viewed in terms of either that particular transaction or the
Advisor's overall responsibilities as to the accounts as to which it exercises
investment discretion and that the Advisor shall use its judgment in determining
that the amount of commissions paid are reasonable in relation to the value of
brokerage and research services provided and need not place or attempt to place
a
specific dollar value on such services or on the portion of commission rates
reflecting such services. The Advisory Agreement provides that to demonstrate
that such determinations were in good faith, and to show the overall
reasonableness of commissions paid, the Advisor shall be prepared to show that
commissions paid (i) were for purposes contemplated by the Advisory Agreement;
(ii) were for products or services which provide lawful and appropriate
assistance to its decision-making process; and (iii) were within a reasonable
range as compared to the rates charged by brokers to other institutional
investors as such rates may become known from available information.
The research services discussed above may be in written form or
through direct contact with individuals and may include information as to
particular companies and securities as well as market, economic or institutional
areas and information assisting the Fund in the valuation of the Fund's
investments. The research which the Advisor receives for the Fund's brokerage
commissions, whether or not useful to the Fund, may be useful to it in managing
the accounts of its other advisory clients. Similarly, the research received for
the commissions of such accounts may be useful to the Fund.
NET ASSET VALUE
The net asset value of the Fund's shares will fluctuate and is
determined as of the close of trading on the New York Stock Exchange (currently
4:00 p.m. Eastern time) each business day. The Exchange annually announces the
days on which it will not be open for trading. The most recent announcement
indicates that it will not be open on the following days: New Year's Day, Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day. However, the Exchange may
close on days not included in that announcement.
The net asset value per share is computed by dividing the value of the
securities held by the Fund plus any cash or other assets (including interest
and dividends accrued but not yet received) minus all liabilities (including
accrued expenses) by the total number of shares of the Fund outstanding at such
time.
TAXATION
The Fund will be taxed as a separate entity under the Internal Revenue
Code and intends to elect to qualify for treatment as a regulated investment
company ("RIC") under Subchapter M of the Code. In each taxable year that the
Fund qualifies, the Fund (but not its shareholders) will be relieved of federal
income tax on that part of its investment company taxable income (consisting
generally of interest and dividend income, net short term capital gain and net
realized gains from currency transactions) and net capital gain that is
distributed to shareholders.
In order to qualify for treatment as a RIC, the Fund must distribute
annually to shareholders at least 90% of its investment company taxable income
and must meet several additional requirements. Among these requirements are the
following: (1) at least 90% of the Fund's gross income each taxable year must be
derived from dividends, interest, payments with respect to securities loans and
gains from the sale or other disposition of securities or foreign currencies, or
other income derived with respect to its business of investing in securities or
currencies; (2) at the close of each quarter of the Fund's taxable year, at
least 50% of the value of its total assets must be represented by cash and cash
items, U.S. Government securities, securities of other RICs and other
securities, limited in respect of any one issuer, to an amount that does not
exceed 5% of the value of the Fund and that does not represent more than 10% of
the outstanding voting securities of such issuer; and (3) at the close of each
quarter of the Fund's taxable year, not more than 25% of the value of its assets
may be invested in securities (other than U.S. Government securities or the
securities of other RICs) of any one issuer.
The Fund will be subject to a nondeductible 4% excise tax to the
extent it fails to distribute by the end of any calendar year substantially all
of its ordinary income for that year and capital gain net income for the
one-year period ending on October 31 of that year, plus certain other amounts.
DIVIDENDS AND DISTRIBUTIONS
Dividends from the Fund's investment company taxable income (whether
paid in cash or invested in additional shares) will be taxable to shareholders
as ordinary income to the extent of the Fund's earnings and profits.
Distributions of the Fund's net capital gain (whether paid in cash or invested
in additional shares) will be taxable to shareholders as long-term capital gain,
regardless of how long they have held their Fund shares.
Dividends declared by the Fund in October, November or December of any
year and payable to shareholders of record on a date in one of such months will
be deemed to have been paid by the Fund and
received by the shareholders on the record date if the dividends are paid by the
Fund during the following January. Accordingly, such dividends will be taxed to
shareholders for the year in which the record date falls.
The Fund is required to withhold 31% of all dividends, capital gain
distributions and repurchase proceeds payable to any individuals and certain
other noncorporate shareholders who do not provide the Fund with a correct
taxpayer identification number. The Fund also is required to withhold 31% of all
dividends and capital gain distributions paid to such shareholders who otherwise
are subject to backup withholding.
PERFORMANCE INFORMATION
Total Return
Average annual total return quotations used in the Fund's advertising
and promotional materials are calculated according to the following formula:
P(1 + T)n = ERV
where P equals a hypothetical initial payment of $1000; T equals average annual
total return; n equals the number of years; and ERV equals the ending redeemable
value at the end of the period of a hypothetical $1000 payment made at the
beginning of the period.
Under the foregoing formula, the time periods used in advertising will
be based on rolling calendar quarters, updated to the last day of the most
recent quarter prior to submission of the advertising for publication. Average
annual total return, or "T" in the above formula, is computed by finding the
average annual compounded rates of return over the period that would equate the
initial amount invested to the ending redeemable value. Average annual total
return assumes the reinvestment of all dividends and distributions. Yield
Annualized yield quotations used in the Fund's advertising and
promotional materials are calculated by dividing the Fund's interest income for
a specified thirty-day period, net of expenses, by the average number of shares
outstanding during the period, and expressing the result as an annualized
percentage (assuming semi-annual compounding) of the net asset value per share
at the end of the period. Yield quotations are calculated according to the
following formula:
YIELD = 2 [(a-b + 1)6 - 1]
cd
where a equals dividends and interest earned during the period; b equals
expenses accrued for the period, net of reimbursements; c equals the average
daily number of shares outstanding during the period that are entitled to
receive dividends and d equals the maximum offering price per share on the last
day of the period.
Except as noted below, in determining net investment income earned
during the period ("a" in the above formula), the Fund calculates interest
earned on each debt obligation held by it during the period by (1) computing the
obligation's yield to maturity, based on the market value of the obligation
(including actual accrued interest) on the last business day of the period or,
if the obligation was purchased during the period, the purchase price plus
accrued interest; (2) dividing the yield to maturity by 360 and multiplying the
resulting quotient by the market value of the obligation (including actual
accrued interest). Once interest earned is calculated in this fashion for each
debt obligation held by the Fund, net investment income is then determined by
totalling all such interest earned.
Shareholder Account Policies
For purposes of these calculations, the maturity of an obligation with
one or more call provisions is assumed to be the next date on which the
obligation reasonably can be expected to be called or, if none, the maturity
date. Other information
Performance data of the Fund quoted in advertising and other
promotional materials represents past performance and is not intended to predict
or indicate future results. The return and principal value of an investment in
the Fund will fluctuate, and an investor's redemption proceeds may be more or
less than the
original investment amount. In advertising and promotional materials the Fund
may compare its performance with data published by Lipper Analytical Services,
Inc. ("Lipper") or CDA Investment Technologies, Inc. ("CDA"). The Fund also may
refer in such materials to mutual fund performance rankings and other data, such
as comparative asset, expense and fee levels, published by Lipper or CDA.
Advertising and promotional materials also may refer to discussions of the Fund
and comparative mutual fund data and ratings reported in independent periodicals
including, but not limited to, The Wall Street Journal, Money Magazine, Forbes,
Business Week, Financial World and Barron's.
GENERAL INFORMATION
The Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest and to divide or
combine the shares into a greater or lesser number of shares without thereby
changing the proportionate beneficial interest in the Fund. Each share
represents an interest in the Fund proportionately equal to the interest of each
other share. Upon the Trust's liquidation, all shareholders would share pro rata
in the net assets of the Fund in question available for distribution to
shareholders. If they deem it advisable and in the best interest of
shareholders, the Board of Trustees may create additional series of shares which
differ from each other only as to dividends. The Board of Trustees has created
seven series of shares, and may create additional series in the future, which
have separate assets and liabilities. Income and operating expenses not
specifically attributable to a particular Fund are allocated fairly among the
series by the Trustees, generally on the basis of the relative net assets of the
Fund.
Rule 18f-2 under the 1940 Act provides that as to any investment
company which has two or more series outstanding and as to any matter required
to be submitted to shareholder vote, such matter is not deemed to have been
effectively acted upon unless approved by the holders of a "majority" (as
defined in the Rule) of the voting securities of each series affected by the
matter. Such separate voting requirements do not apply to the election of
Trustees or the ratification of the selection of accountants. The Rule contains
special provisions for cases in which an advisory contract is approved by one or
more, but not all, series. A change in investment policy may go into effect as
to one or more series whose holders so approve the change even though the
required vote is not obtained as to the holders of other affected series.
The Fund's custodian, Montgomery Securities, 600 Montgomery Street,
San Francisco, CA 94111 is responsible for holding the Fund's assets, and
American Data Services acts as the Trust's accounting services agent. The
Trust's independent accountants, McGladrey & Pullen, LLP, 555 Fifth Avenue, New
York, NY 10017, assist in the preparation of certain reports to the Securities
and Exchange Commission and the Fund's tax returns.
Shares of Fund owned by the Trustees and officers as a group were less
than 1%.
APPENDIX
Description of Ratings
Moody's Investors Service, Inc.: Corporate Bond Ratings
Aaa--Bonds which are rated Aaa are judged to be of the best quality
and carry the smallest degree of investment risk. Interest payments are
protected by a large or by an exceptionally stable margin, and principal is
secure. While the various protective elements are likely to change, such changes
as can be visualized are most unlikely to impair the fundamentally strong
position of such issues.
Aa---Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long term risks appear somewhat larger than in Aaa securities.
Moody's applies numerical modifiers "1", "2" and "3" to both the Aaa
and Aa rating classifications. The modifier "1" indicates that the security
ranks in the higher end of its generic rating category; the
modifier "2" indicates a mid-range ranking; and the modifier "3" indicates that
the issue ranks in the lower end of its generic rating category.
A--Bonds which are rated A possess many favorable investment
attributes and are to be considered
as upper medium grade obligations. Factors giving security to principal and
interest are considered adequate but elements may be present which suggest a
susceptibility to impairment sometime in the future.
Baa--Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great period of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Standard & Poor's Corporation: Corporate Bond Ratings
AAA--This is the highest rating assigned by Standard & Poor's to a
debt obligation and indicates an extremely strong capacity to pay principal and
interest.
AA--Bonds rated AA also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority of
instances they differ from AAA issues only in small degree.
A--Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.
BBB--Bonds rated BBB are regarded as having an adequate capacity to
pay principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in the A category.
Commercial Paper Ratings
Moody's commercial paper ratings are assessments of the issuer's
ability to repay punctually promissory obligations. Moody's employs the
following three designations, all judged to be investment grade, to indicate the
relative repayment capacity of rated issuers: Prime 1--highest quality; Prime
2--higher quality; Prime 3--high quality.
A Standard & Poor's commercial paper rating is a current assessment of
the likelihood of timely payment. Ratings are graded into four categories,
ranging from "A" for the highest quality obligations to "D" for the lowest.
Issues assigned the highest rating, A, are regarded as having the
greatest capacity for timely payment. Issues in this category are delineated
with the numbers "1", "2" and "3" to indicate the relative degree of safety. The
designation A-1 indicates that the degree of safety regarding timely payment is
either overwhelming or very strong. A "+" designation is applied to those issues
rated "A-1" which possess extremely strong safety characteristics. Capacity for
timely payment on issues with the designation "A-2" is strong. However, the
relative degree of safety is not as high as for issues designated A-1. Issues
carrying the designation "A-3" have a satisfactory capacity for timely payment.
They are, however, somewhat more vulnerable to the adverse effect of changes in
circumstances than obligations carrying the higher designations.
Prospectus
9
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements:
Not applicable
<TABLE>
(b) Exhibits:
<CAPTION>
<S> <C>
(1) Declaration of Trust3
(2) By-Laws3
(3) Not applicable
(4) Specimen stock certificate3
(5) Management Agreement
(6) Distribution Agreement3
(7) Not applicable
(8) Custodian Agreement1
(9) (i) Administration Agreement with Investment Company
Administration Corporation3
(ii) Administration Agreement with Provident Investment
Counsel3
(iii) Administration Agreement with Investment Company
Administration Agreement relating to the Growth Equity with
Income Fund
(10) Opinion and consent of counsel3
(11) Not applicable
(12) Not applicable
(13) Investment letter3
(14) Individual Retirement Account forms2
(15) Distribution Plan pursuant to Rule 12b-14
(16) Not applicable
(17) Financial Data Schedules
</TABLE>
1 Previously filed with Pre-effective Amendment No. 1 to the
Registration Statement on Form N-1A of PIC Investment Trust, File No 33-44579,
on April 16, 1992 and incorporated herein by reference.
2 Previously filed with Post-effective Amendment No. 1 to the
Registration Statement on Form N-1A of PIC Investment Trust, File No 33-44579,
on April 7, 1993 and incorporated herein by reference.
3 Previously filed with Post-effective Amendment No. 10 to the
Registration Statement on Form N-1A of PIC Investment Trust, File No 33-44579,
on April 4, 1996 and incorporated herein by reference.
4 Previously filed with Post-effective Amendment No. 13 to the
Registration Statement on Form N-1A of PIC Investment Trust, File No 33-44579,
on January 27, 1996 and incorporated herein by reference.
Item 25. Persons Controlled by or under Common Control with Registrant.
As of August 31, 1997, Registrant owned 99.9% of the outstanding
Interests in PIC Growth Portfolio, PIC Balanced Portfolio and PIC Small Cap.
Portfolio, all of which are trusts organized under the laws of the State of New
York and registered management investment companies.
Item 26. Number of Holders of Securities.
As of August 31, 1997, the PIC Growth Fund had 318 shareholders; the
PIC Balanced Fund had 78 shareholders; the PIC Small Company Growth Fund had 81
shareholders; and the PIC Small Cap. Growth Fund had three shareholders.
Item 27. Indemnification.
Article VI of Registrant's By-Laws states as follows:
Section 1. AGENTS, PROCEEDINGS AND EXPENSES. For the purpose of this
Article, "agent" means any person who is or was a Trustee, officer, employee or
other agent of this Trust or is or was serving at the request of this Trust as a
Trustee, director, officer, employee or agent of another foreign or domestic
corporation, partnership, joint venture, trust or other enterprise or was a
Trustee, director, officer, employee or agent of a foreign or domestic
corporation which was a predecessor of another enterprise at the request of such
predecessor entity; "proceeding" means any threatened, pending or completed
action or proceeding, whether civil, criminal, administrative or investigative;
and "expenses" includes without limitation attorney's fees and any expenses of
establishing a right to indemnification under this Article.
Section 2. ACTIONS OTHER THAN BY TRUST. This Trust shall indemnify any
person who was or is a party or is threatened to be made a party to any
proceeding (other than an action by or in the right of this Trust) by reason of
the fact that such person is or was an agent of this Trust, against expenses,
judgments, fines, settlements and other amounts actually and reasonably incurred
in connection with such proceeding, if it is determined that person acted in
good faith and reasonably believed:
(a) in the case of conduct in his official capacity as a Trustee of
the Trust, that his conduct was in the Trust's best interests,
and
(b) in all other cases, that his conduct was at least not opposed to
the Trust's best interests, and
(c) in the case of a criminal proceeding, that he had no reasonable
cause to believe the conduct of that person was unlawful.
The termination of any proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent shall not of
itself create a presumption that the person did not act in good faith and in a
manner which the person reasonably believed to be in the best interests of this
Trust or that the person had reasonable cause to believe that the person's
conduct was unlawful.
Section 3. ACTIONS BY THE TRUST. This Trust shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action by or in the right of this Trust to procure a
judgment in its favor by reason of the fact that that person is or was an agent
of this Trust, against expenses actually and reasonably incurred by that person
in connection with the defense or settlement of that action if that person acted
in good faith, in a manner that person believed to be in the best interests of
this Trust and with such care, including reasonable inquiry, as an ordinarily
prudent person in a like position would use under similar circumstances.
Section 4. EXCLUSION OF INDEMNIFICATION. Notwithstanding any provision
to the contrary contained herein, there shall be no right to indemnification for
any liability arising by reason of willful misfeasance, bad faith, gross
negligence, or the reckless disregard of the duties involved in the conduct of
the agent's office with this Trust.
No indemnification shall be made under Sections 2 or 3 of this
Article:
(a) In respect of any claim, issue, or matter as to which that
person shall have been adjudged to be liable on the basis
that personal benefit was improperly received by him, whether
or not the benefit resulted from an action taken in the
person's official capacity; or
(b) In respect of any claim, issue or matter as to which that
person shall have been adjudged to be liable in the
performance of that person's duty to this Trust, unless and
only to the extent that the court in which that action was
brought shall determine upon application that in view of all
the circumstances of the case, that person was not liable by
reason of the disabling conduct set forth in the preceding
paragraph and is fairly and reasonably entitled to indemnity
for the expenses which the court shall determine; or
(c) of amounts paid in settling or otherwise disposing of a
threatened or pending action, with or without court approval,
or of expenses incurred in defending a threatened or pending
action which is settled or otherwise disposed of without
court approval, unless the required approval set forth in
Section 6 of this Article is obtained.
Section 5. SUCCESSFUL DEFENSE BY AGENT. To the extent that an agent of
this Trust has been successful on the merits in defense of any proceeding
referred to in Sections 2 or 3 of this Article or in defense of any claim, issue
or matter therein, before the court or other body before whom the proceeding was
brought, the agent shall be indemnified against expenses actually and reasonably
incurred by the agent in connection therewith, provided that the Board of
Trustees, including a majority who are disinterested, non-party Trustees, also
determines that based upon a review of the facts, the agent was not liable by
reason of the disabling conduct referred to in Section 4 of this Article.
Section 6. REQUIRED APPROVAL. Except as provided in Section 5 of this
Article, any indemnification under this Article shall be made by this Trust only
if authorized in the specific case on a determination that indemnification of
the agent is proper in the circumstances because the agent has met the
applicable standard of conduct set forth in Sections 2 or 3 of this Article and
is not prohibited from indemnification because of the disabling conduct set
forth in Section 4 of this Article, by:
(a) A majority vote of a quorum consisting of Trustees who are not
parties to the proceeding and are not interested persons of the
Trust (as defined in the Investment Company Act of 1940); or
(b) A written opinion by an independent legal counsel.
Section 7. ADVANCE OF EXPENSES. Expenses incurred in defending any
proceeding may be advanced by this Trust before the final disposition of the
proceeding upon a written undertaking by or on behalf of the agent, to repay the
amount of the advance if it is ultimately determined that he or she is not
entitled to indemnification, together with at least one of the following as a
condition to the advance: (i) security for the undertaking; or (ii) the
existence of insurance protecting the Trust against losses arising by reason of
any lawful advances; or (iii) a determination by a majority of a quorum of
Trustees who are not parties to the proceeding and are not interested persons of
the Trust, or by an independent legal counsel in a written opinion, based on a
review of readily available facts that there is reason to believe that the agent
ultimately will be found entitled to indemnification. Determinations and
authorizations of payments under this Section must be made in the manner
specified in Section 6 of this Article for determining that the indemnification
is permissible.
Section 8. OTHER CONTRACTUAL RIGHTS. Nothing contained in this Article
shall affect any right to indemnification to which persons other than Trustees
and officers of this Trust or any subsidiary hereof may be entitled by contract
or otherwise.
Section 9. LIMITATIONS. No indemnification or advance shall be made
under this Article, except as provided in Sections 5 or 6 in any
circumstances where it appears:
(a) that it would be inconsistent with a provision of the
Agreement and Declaration of Trust of the Trust, a resolution
of the shareholders, or an agreement in effect at the time of
accrual of the alleged cause of action asserted in the
proceeding in which the expenses were incurred or other
amounts were paid which prohibits or otherwise limits
indemnification; or Shareholder Account Policies
(b) that it would be inconsistent with any condition expressly
imposed by a court in approving a settlement.
Section 10. INSURANCE. Upon and in the event of a determination by
the Board of Trustees of this Trust to purchase such insurance, this Trust
shall purchase and maintain insurance on behalf of any agent of this Trust
against any liability asserted against or incurred by the agent in such capacity
or arising out of the agent's status as such, but only to the extent that this
Trust would have the power to indemnify the agent against that liability under
the provisions of this Article and the Agreement and Declaration of Trust of the
Trust.
Item 28. Business and Other Connections of Investment Adviser.
Not applicable.
Item 29. Principal Underwriters.
(a) The Registrant's principal underwriter also acts as principal
underwriter for the following investment companies:
Guinness Flight Investment Funds, Inc. Jurika & Voyles Mutual
Funds Hotchkis and Wiley Funds Kayne Anderson Mutual Funds
Masters' Select Investment Fund PIC Investment Trust
Professionally Managed Portfolios Rainier Investment
Management Mutual Funds RNC Liquid Assets Fund, Inc.
O'Shaughnessy Funds, Inc.
(b) The following information is furnished with respect to the
officers and directors of First Fund Distributors, Inc.:
Position and Offices Position and
Name and Principal with Principal Offices with
Business Address Underwriter Registrant
Robert H. Wadsworth President Assistant
4455 E. Camelback Road and Treasurer Secretary
Suite 261E
Phoenix, AZ 85018
Eric M. Banhazl Vice President Assistant
2025 E. Financial Way Treasurer
Glendora, CA 91741
Steven J. Paggioli Vice President & Assistant
479 West 22nd Street Secretary Secretary
New York, New York 10011
(c) Not applicable.
Item 30. Location of Accounts and Records.
The accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940 and
the rules promulgated thereunder are in the possession of Registrant and
Registrant's custodian, as follows: the documents required to be maintained by
paragraphs (4), (5), (6), (7), (10) and (11) of Rule 31a-1(b) will be maintained
by the Registrant, and all other records will be maintained by the Custodian.
Item 31. Management Services.
Not applicable.
Item 32. Undertakings.
The Registrant undertakes to file a Post-Effective Amendment containing
financial statements, which may be unaudited of the Provident Tax Managed Growth
Fund, within four to six months of the effective date of this Amendment.
The Registrant undertakes, if requested to do so by the holders of at
least 10% of the Trust's outstanding shares, to call a meeting of shareholders
for the purposes of voting upon the question of removal of a director and will
assist in communications with other shareholders.
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 the Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this Amendment
to the Registration Statement on Form N-1A of PIC Investment Trust to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of
Pasadena and State of California on the 12th day of December, 1997.
PIC INVESTMENT TRUST
Jeffrey J. Miller*
By Jeffrey J. Miller
President
This Amendment to the Registration Statement on Form N-1A of PIC Investment
Trust has been signed below by the following persons in the capacities indicated
on December 12, 1997.
Jeffrey J. Miller* President and Trustee
Jeffrey J. Miller
Jettie M. Edwards* Trustee
Jettie M. Edwards
Bernard J. Johnson* Trustee
Bernard J. Johnson
Jeffrey D. Lovell* Trustee
Jeffrey D. Lovell
Wayne H. Smith* Trustee
Wayne H. Smith
Thad M. Brown* Treasurer and Principal
Thad M. Brown Financial and Accounting
Officer
* Robert H. Wadsworth
By: Robert H. Wadsworth
Attorney-in-fact
PIC INVESTMENT TRUST
MANAGEMENT AGREEMENT
AGREEMENT made this day of , 1997, by and between PIC INVESTMENT TRUST (the
"Trust"), a business trust organized under the laws of the State of Delaware, on
behalf of the PROVIDENT TAX MANAGED GROWTH FUND (the "Fund"), a series of the
Trust, and PROVIDENT INVESTMENT COUNSEL, INC. (the "Advisor"), a California
corporation.
WITNESSETH:
In consideration of the mutual promises and agreements
herein contained and other good and valuable consideration, the
receipt of which is hereby acknowledged, it is hereby agreed by
and between the parties hereto as follows:
l. In General
The Trust hereby appoints the Advisor to act as investment
adviser to the Fund. The Advisor agrees, all as more fully set
forth herein, to provide professional investment management with
respect to the investment of the assets of the Fund and to
supervise and arrange the purchase and sale of securities held in
the portfolio of the Fund.
2. Duties and Obligations of the Advisor
with respect to Management of the Fund
(a) Subject to the succeeding provisions of this
section and subject to the direction and control of the
Board of Trustees of the Trust, the Advisor shall:
(i) Decide what securities shall be purchased or
sold by the Fund and when; and
(ii) Arrange for the purchase and the sale of
securities held in the portfolio of the Fund by placing
purchase and sale orders for the Fund.
(b) Any investment purchases or sales made by the
Advisor shall at all times conform to, and be in accordance
with, any requirements imposed by: (l) the provisions of
the Investment Company Act of 1940 (the "Act") and of any
rules or regulations in force thereunder; (2) any other
applicable provisions of law; (3) the provisions of the
Declaration of Trust and By-Laws of the Trust as amended
from time to time; (4) any policies and determinations of
the Board of Trustees of the Trust; and (5) the fundamental
policies of the Fund, as reflected in its registration
statement under the Act, or as amended by the shareholders
of the Fund.
(c) The Advisor shall give the Fund the benefit of its
best judgment and effort in rendering services hereunder.
In the absence of willful misfeasance, bad faith, gross
negligence or reckless disregard of obligations or duties
("disabling conduct") hereunder on the part of the Advisor
(and its officers, directors, agents, employees, controlling
persons, shareholders and any other person or entity
affiliated with the Advisor) the Advisor shall not be
subject to liability to the Fund or to any shareholder of
the Fund for any act or omission in the course of, or
connected with rendering services hereunder, including
without limitation, any error of judgment or mistake of law
or for any loss suffered by any of them in connection with
the matters to which this Agreement related, except to the
extent specified in Section 36(b) of the Act concerning loss
resulting from a breach of fiduciary duty with respect to
the receipt of compensation for services. Except for such
disabling conduct, the Fund shall indemnify the Advisor (and
its officers, directors, agents, employees, controlling
persons, shareholders and any other person or entity
affiliated with the Advisor) from any liability arising from
the Advisor's conduct under this Agreement to the extent
permitted by the Declaration of Trust and applicable law.
(d) Nothing in this Agreement shall prevent the
Advisor or any affiliated person (as defined in the Act) of
the Advisor from acting as investment adviser or manager
and/or principal underwriter for any other person, firm or
corporation and shall not in any way limit or restrict the
Advisor or any such affiliated person from buying, selling
or trading any securities for its or their own accounts or
the accounts of others for whom it or they may be acting,
provided, however, that the Advisor expressly represents
that it will undertake no activities which, in its judgment,
will adversely affect the performance of its obligations to
the Fund under this Agreement.
(e) It is agreed that the Advisor shall have no
responsibility or liability for the accuracy or completeness
of the Trust's Registration Statement under the Act except
for information supplied by the Advisor for inclusion
therein.
3. Broker-Dealer Relationships
In connection with its duties set forth in Section 2(a)(ii)
of this Agreement to arrange for the purchase and the sale of
securities held by the Fund by placing purchase and sale orders
for the Fund, the Advisor shall select such broker-dealers
("brokers") as shall, in the Advisor's judgment, implement the
policy of the Trust to achieve "best execution", i.e., prompt and
efficient execution at the most favorable securities price. In
making such selection, the Advisor is authorized to consider the
reliability, integrity and financial condition of the broker.
The Advisor is also authorized to consider whether the broker
provides brokerage and/or research and other services to the Fund
and/or other accounts of the Advisor. The commissions paid to
such brokers may be higher than another broker would have charged
if a good faith determination is made by the Advisor that the
commission is reasonable in relation to the services provided,
viewed in terms of either that particular transaction or the
Advisor's overall responsibilities as to the accounts as to which
it exercises investment discretion. The Advisor shall use its
judgment in determining that the amount of commissions paid are
reasonable in relation to the value of brokerage and research
services provided and need not place or attempt to place a
specific dollar value on such services or on the portion of
commission rates reflecting such services. To demonstrate that
such determinations were in good faith, and to show the overall
reasonableness of commissions paid, the Advisor shall be prepared
to show that commissions paid (i) were for purposes contemplated
by this Agreement; (ii) provide lawful and appropriate assistance
to the Advisor in the performance of its decision-making
responsibilities; and (iii) were within a reasonable range as
compared to the rates charged by qualified brokers to other
institutional investors as such rates may become known from
available information. The Trust recognizes that, on any
particular transaction, a higher than usual commission may be
paid due to the difficulty of the transaction in question. The
Advisor also is authorized to consider sales of shares, and any
other factors that the Trustees shall direct, in the selection of
brokers to execute brokerage and principal transactions, subject
to the requirements of "best execution", as defined above.
4. Allocation of Expenses
The Advisor agrees that it will furnish the Fund, at the
Advisor's expense, with all office space and facilities, and
equipment and clerical personnel necessary for carrying out its
duties under this Agreement. The Advisor will also pay all
compensation of all Trustees, officers and employees of the Trust
who are affiliated persons of the Advisor. All costs and
expenses not expressly assumed by the Advisor under this
Agreement shall be paid by the Fund, including, but not limited
to (i) interest and taxes; (ii) brokerage commissions; (iii)
insurance premiums; (iv) compensation and expenses of its
Trustees other than those affiliated with the Advisor or its
Administrator; (v) legal and audit expenses; (vi) fees and
expenses of the Fund's custodian, transfer agent and accounting
services agent; (vii) expenses incident to the issuance of its
shares, including stock certificates and issuance of shares on
the payment of, or reinvestment of, dividends; (viii) fees and
expenses incident to the registration under Federal or state
securities laws of the Fund or its shares; (ix) expenses of
preparing, printing and mailing reports, notices, proxy material
and prospectuses to shareholders of the Fund; (x) all other
expenses incidental to holding meetings of the Fund's
shareholders; (xi) dues or assessments of or contributions to the
Investment Company Institute or any successor or other industry
association; (xii) such non-recurring expenses as may arise,
including litigation affecting the Trust and the legal
obligations which the Trust may have to indemnify its officers
and Trustees with respect thereto; (xiii) fees of the Fund's
Administrator and (xiii) the organization costs of the Fund.
5. Compensation of the Advisor
The Fund agrees to pay the Advisor and the Advisor agrees to
accept as full compensation for all services rendered by the
Advisor as such, an annual management fee, payable monthly and
computed on the value of the net assets of the Fund as of the
close of business each business day at the annual rate of 0.80 of
1% of such net assets of the Fund.
6. Duration and Termination
(a) This Agreement shall go into effect on the date set
forth above and shall, unless terminated as hereinafter provided,
continue in effect until September 30, 1999, and thereafter from
year to year, but only so long as such continuance is
specifically approved at least annually by the Trust's Board of
Trustees, including the vote of a majority of the Trustees who
are not parties to this Agreement or "interested persons" (as
defined in the Act) of any such party cast in person at a meeting
called for the purpose of voting on such approval, or by the vote
of the holders of a "majority" (as so defined) of the outstanding
voting securities of the Fund.
(b) This Agreement may be terminated by the Advisor at any
time without penalty upon giving the Trust sixty (60) days'
written notice (which notice may be waived by the Trust) and may
be terminated by the Trust at any time without penalty upon
giving the Advisor sixty (60) days' written notice (which notice
may be waived by the Advisor), provided that such termination by
the Trust shall be directed or approved by the vote of a majority
of all of its Trustees in office at the time or by the vote of
the holders of a majority (as defined in the Act) of the voting
securities of the Fund. This Agreement shall automatically
terminate in the event of its assignment (as so defined).
IN WITNESS WHEREOF, the parties hereto have caused the
foregoing instrument to be executed by duly authorized persons
and their seals to be hereunto affixed, all as of the day and
year first above written.
PIC INVESTMENT TRUST
By
ATTEST:
PROVIDENT INVESTMENT COUNSEL, INC.
By
ATTEST:
