PROVIDENT INVESTMENT COUNSEL
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MUTUAL
FUNDS
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GROWTH FUND * SMALL COMPANY GROWTH FUND
Prospectus
March 2, 1998
As Supplemented
September 30, 1998
Provident Investment Counsel
300 North Lake Avenue
Pasadena, CA 91101
Please read this prospectus before investing, and keep it on file for future
reference. It contains important information, including how the Funds invest and
the services available to shareholders.
To learn more about each Fund and its investments, you can obtain a copy of the
Funds' most recent financial reports, including performance information and
portfolio listing, or a copy of the statement of Additional Information (SAI).
The SAI is dated March 2, 1998, as supplemented September 30, 1998, may be
supplemented from time to time, 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.
The SEC maintains an internet site (http://www.sec.gov) that contains the SAI,
other material incorporated by reference and other information about companies
that file electronically with the SEC.
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.
The Funds, unlike many other mutual funds which directly acquire and manage
their own portfolios of securities, seek to achieve their investment objectives
by investing all of their assets in a PIC Portfolio. Investors should carefully
consider this investment approach.
Like all mutual funds, these securities have not been approved or disapproved by
the SEC or any state securities commission nor has the SEC or any state
securities commission passed upon the accuracy or adequacy of this prospectus.
Any representation to the contrary is a criminal offense.
<PAGE>
Contents
Key Facts 3 The Funds at a Glance
3 Who May Want to Invest
3 Expenses
5 Structure of the Funds and
the Portfolios
6 Financial Highlights
The Funds in Detail 8 Charter How the Fund is organized
9 Information About the Funds'
Investments The Funds' overall approach
to investing.
10 Securities and Investment
Practices More information about how the
Funds invest.
11 Breakdown of Expenses How
operating costs are calculated and what
they include.
12 Performance
Your Account 13 Ways to Set Up Your Account
14 How to Buy Shares
15 How to Sell Shares
17 Investor Services Services to help you
manage your account.
Shareholder 18 Dividends, Capital Gains
Account Policies and Taxes
19 Transaction Details Share price
calculations and the timing of purchases
and redemptions.
21 Exchange Restrictions
General Information 22
Prospectus 2
<PAGE>
Key Facts
The Funds at a Glance
Management: Provident Investment Counsel (PIC), located in Pasadena, California
since 1951, is the Funds' Advisor. At December 31, 1997, total assets under
PIC's management were over $20 billion.
Growth Fund
Goal: Long term growth of capital.
Strategy: Invests, through the PIC Growth Portfolio, in high quality growth
stocks.
Small Company Growth Fund
Goal: Long term growth of capital.
Strategy: Invests, through the PIC Small Cap Portfolio, mainly in equity
securities of small companies.
Who May Want to Invest
Shares of the Funds are offered at net asset value only to certain qualified
retirement plans, financial and other institutions (including investment
advisers purchasing on behalf of clients) and "wrap accounts."
The Growth Fund may be appropriate for investors who seek potentially high long
term returns, but are willing to accept the risk of investing in growth stocks.
The Fund is designed for those seeking capital appreciation through a
diversified portfolio of equity securities of issuers of all sizes.
The Small Company Growth Fund may be appropriate for investors who are willing
to ride out stock market fluctuations in pursuit of potentially above average
long-term returns. The Small Company Growth Fund is designed for those who want
to focus on stocks of small capitalization companies in search of above average
returns. A company's market capitalization is the total market value of its
outstanding common stock. A small company is one with market capitalization or
annual revenues at the time of purchase of $250 million or less. The securities
of smaller, less well-known companies may be more volatile than those of larger
companies. Over time, however, small capitalization stocks have shown greater
growth potential than those of larger capitalization companies.
The value of each 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, no Fund constitutes a balanced
investment plan. There is no assurance that either Fund will meet its objective.
Expenses
Shareholder Transaction 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 None
Redemption fee None
Exchange fee $5
Annual Operating Expenses are paid out of each Fund's and each Portfolio's
assets. The Funds each indirectly pay an investment advisory fee equal to 0.80%
of the Fund's average net assets. Each Fund also incurs other expenses for
services such as administrative services, maintaining
3 Prospectus
<PAGE>
Key Facts - continued
shareholder records and furnishing shareholder statements and financial reports.
A Fund's expenses are factored into its share price or dividends and are not
charged directly to shareholder accounts.
The following are based on expenses incurred during the most recent fiscal year,
and are calculated as a percentage of average net assets.
Growth Fund
Management fee (paid by the Portfolio) 0.80%
Other expenses of the Portfolio, after
reimbursement by PIC 0.20%
-----
Total Operating Expenses of the Portfolio 1.00%
Administrative fee paid by the Fund to
PIC 0.20%
12b-1 fee None
Other expenses of the Fund, after
reimbursement by PIC 0.05%
-----
Total Fund Operating Expenses 1.25%
=====
PIC reimburses the Growth Fund for any expenses in excess of 1.25% of average
net assets. Without this reimbursement, Total Fund Operating Expenses would have
been 1.35% of average net assets for the fiscal year ended October 31, 1997.
Small Company Growth Fund
Management fee (paid by the Portfolio) .80%
Other expenses of the Portfolio .20%
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Total Operating Expenses of the Portfolio 1.00%
Administrative fee paid by the Fund to
PIC .20%
12b-1 fee None
Other expenses of the Fund, after
reimbursement by PIC .25%
-----
Total Fund Operating Expenses 1.45%
=====
PIC reimburses the Small Company Growth Fund for any expenses in excess of 1.45%
of average net assets. Without this reimbursement, Total Fund Operating Expenses
would have been 1.61% for the fiscal year ended October 31, 1997.
PIC retains the ability to be repaid by either Fund if expenses subsequently
fall below the specified limit within the next three years.
Examples: Let's say, hypothetically, that each 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:
Growth Fund
After 1 year $ 13
After 3 years $ 40
After 5 years $ 69
After 10 years $151
Small Company Growth Fund
After 1 year $ 15
After 3 years $ 46
After 5 years $ 79
After 10 years $174
These examples illustrate the effect of expenses, but they are not meant to
suggest actual or expected costs or returns, all of which may vary. For a more
complete description of the various costs and expenses, see "Breakdown of
Expenses." The tables above summarize the expenses of both the Portfolios and
the Funds. The Trustees expect that the combined per share expenses of the Funds
and the Portfolios will be equal to, or may be less than, the expenses that
would be incurred by a Fund if it retained an investment manager and invested
directly in the types of securities held by a Portfolio.
Prospectus 4
<PAGE>
Structure of the Funds and the Portfolios
Unlike many other mutual funds which directly acquire and manage their own
portfolio securities, each Fund seeks to achieve its investment objective by
investing all of its assets in a PIC Portfolio. Each Portfolio is a separate
registered investment company with the same investment objective as the Fund.
Since a Fund will not invest in any securities other than shares of a Portfolio,
investors in the Fund will acquire only an indirect interest in the Portfolio.
Each Fund's and Portfolio's investment objective cannot be changed without
shareholder approval.
In addition to selling its shares to a Fund, a Portfolio may sell its shares to
other mutual funds or institutional investors. All investors in a Portfolio
invest on the same terms and conditions and pay a proportionate share of the
Portfolio's expenses. However, other investors in a Portfolio may sell their
shares to the public at prices different from those of a Fund as a result of the
imposition of sales charges or different operating expenses. You should be aware
that these differences may result in different returns from those of investors
in other entities investing in a Portfolio. Information concerning other holders
of interests in a Portfolio is available by calling (800) 618-7643.
The Trustees of PIC Investment Trust (the "Trust") believe that this structure
may enable a Fund to benefit from certain economies of scale, based on the
premise that certain of the expenses of managing an investment portfolio are
relatively fixed and that a larger investment portfolio may therefore achieve a
lower ratio of operating expenses to net assets. Investing a Fund's assets in a
Portfolio may produce other benefits resulting from increased asset size, such
as the ability to participate in transactions in securities which may be offered
in larger denominations than could be purchased by the Fund alone. A Fund's
investment in a Portfolio may be withdrawn by the Trustees at any time if the
Board determines that it is in the best interests of a Fund to do so. If any
such withdrawal were made, the Trustees would consider what action might be
taken, including the investment of all of the assets of the Fund in another
pooled investment company or the retaining of an investment advisor to manage
the Fund's assets directly.
Whenever a Fund is requested to vote on matters pertaining to a Portfolio, the
Fund will hold a meeting of its shareholders, and the Fund's votes with respect
to the Portfolio will be cast in the same proportion as the shares of the Fund
for which voting instructions are received. For further information, see "The
Funds in Detail," "Information about the Funds' Investments" and "Securities and
Investment Practices."
5 Prospectus
<PAGE>
Financial Highlights
The tables that follow are included in each Fund's Annual Report and have been
audited by McGladrey & Pullen, LLP, Independent Certified Public Accountants.
Their reports on the financial statements and financial highlights are included
in the Annual Reports. The financial statements and financial highlights are
incorporated by reference into (are legally a part of) the Funds' SAI.
Provident Investment Counsel Growth Fund
<TABLE>
<CAPTION>
Selected Per-Share Data and Ratios
Years ended October 31 1997 1996 1995 1994 1993 1992*
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.25 $ 14.25 $ 11.70 $ 11.60 $ 10.81 $ 10.00
Income from Investment Operations:
Net investment income (.15) (.06) (.02) .00 .00 .01
Net realized and unrealized gain on
investments 3.98 2.06 2.57 .10 .80 .80
Total from investment operations 3.83 2.00 2.55 .10 .80 .81
Less: capital gain distributions (1.94) .00 .00 .00 .00 .00
Return of capital dividend .00 .00 .00 .00 (.01) .00
Net asset value, end of period $ 18.14 $ 16.25 $ 14.25 $ 11.70 $ 11.60 $ 10.81
Total return 26.44% 14.04% 21.79% .86% 7.40% 20.88%+
- -------------------------------------------------------------------------------------------------------------------
Ratios and Supplemental Data
Net assets, end of period (000) omitted $ 80.0 $ 116.1 $ 131.1 $ 102.3 $ 88.9 $ 5.7
Ratio of expenses to average net assets 1.35% 1.30% 1.30% 1.53% 1.54% 4.12%+
Ratio of expenses to average net assets
after expense reductions** 1.25% 1.25% 1.25% 1.25% 1.25% 1.25%+
Ratio of net investment income (loss)
to average net assets (.38%) (.28%) (.17%) (.15%) (.11%) .25%+
Portfolio turnover rate++ 67.54% 64.09% 54.89% 68.26% 43.20% 7.42%
Average commission rate paid by Portfolio $ 0.0416 $ 0.0440 -- -- -- --
</TABLE>
* June 11, 1992 (commencement of operations) to October 31, 1992.
+ Annualized.
** Includes the Fund's share of expenses allocated from PIC Growth Portfolio.
++ Portfolio turnover rate of PIC Growth Portfolio, in which all of the Fund's
assets are invested. ++
Prospectus 6
<PAGE>
Financial Highlights - continued
Provident Investment Counsel Small Company Growth Fund
<TABLE>
<CAPTION>
Selected Per-Share Data and Ratios
Year ended October 31 1997 1996
<S> <C> <C>
Net asset value, beginning of period $ 9.48 $ 10.00
Income from Investment Operations:
Net investment loss (.05) (.03)
Net realized and unrealized gain (loss) on
investments .48 (.49)
Total from investment operations .43 (.52)
Net asset value, end of period $ 9.91 $ 9.48
Total return 4.54% (5.20%)
- -----------------------------------------------------------------------------
Ratios and Supplemental Data
Net assets, end of period (000) omitted $ 31.0 $ 5.2
Ratio of expenses to average net assets 1.61% 4.03%+
Ratio of expenses to average net assets after
expense reductions** 1.45% 1.43%+
Ratio of net investment income to average net assets (0.96%) (0.91%)+
Portfolio turnover rate++ 151.52% 53.11%
Average commission rate paid by Portfolio $ 0.0326 $ 0.0307
</TABLE>
* June 28, 1996 (commencement of operations) to October 31, 1996.
+ Annualized.
** Includes the Fund's share of expenses allocated from PIC Small Cap Portfolio.
++ Portfolio turnover rate of PIC Small Cap Portfolio, in which all of the
Fund's assets are invested.
7 Prospectus
<PAGE>
The Funds in Detail
Charter
Each Fund is a Mutual Fund: an investment that pools shareholders' money and
invests it toward a specified goal. In technical terms, each Fund is a
diversified series of the Trust, which is an open-end management investment
company, organized as a Delaware business trust on December 11, 1991.
The Funds and the Portfolios are each governed by a Board of Trustees,
responsible for protecting the interests of shareholders. The Trustees are
experienced executives who meet throughout the year to oversee the activities of
the Funds and the Portfolios, review contractual arrangements with companies
that provide services to the Funds and the Portfolios, and review performance.
The majority of Trustees are not otherwise affiliated with PIC. Information
about the Trustees and officers is contained in the SAI.
The Funds 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 Funds 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 advisor to the PIC Portfolios, in which the respective Funds invest.
An investment committee of PIC formulates and implements an investment program
for each of the Portfolios, including determining which securities should be
bought and sold. PIC's research professionals meet personally with the majority
of the senior officers of the companies in the Portfolios to discuss their
abilities to generate strong revenue and earnings growth in the future.
PIC's investment professionals focus on individual companies rather than trying
to identify the best market sectors going forward. They seek out companies with
significant management ownership of stock, strong management goals, plans and
controls; leading proprietary positions in given market niches; and finally
companies that may currently be under-researched by Wall Street analysts.
The value of a Portfolio's domestic and foreign investments varies in response
to many factors. Stock values fluctuate in response to the activities of
individual companies and general market and economic conditions. Investments in
foreign securities may involve risks in addition to those of U.S. investments,
including increased political and economic risk, as well as exposure to currency
fluctuations.
Each Portfolio seeks to spread investment risk by diversifying its holdings
among many companies and industries. Of course, when you sell your shares of a
Fund, they may be worth more or less than what you paid for them. PIC normally
invests each Portfolio's assets according to its investment strategy. Each
Portfolio also reserves the right to invest without limitation in short term
instruments for temporary, defensive purposes.
Prospectus 8
<PAGE>
PIC may use broker-dealers that sell shares of the Funds to carry out
transactions for the Portfolios, provided that the Portfolios receive 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 Funds' Investments
Because the investment characteristics of each Fund will correspond directly to
those of the Portfolio in which it invests, the following is a discussion of the
various investments of, and techniques employed by, the Portfolios.
Provident Investment Counsel
Growth Fund
The Provident Investment Counsel Growth Fund seeks long term growth of capital
by investing in the PIC Growth Portfolio, which in turn invests primarily in
equity securities. Under normal circumstances, the Growth Portfolio will invest
at least 80% of its assets in such equity securities. In selecting investments
for the Growth Portfolio, PIC will include equity securities of companies of
various sizes which are currently experiencing an above-average rate of earnings
growth. PIC uses "bottom-up" fundamental research to identify companies which
have a five-year average performance record of sales, earnings, pretax margins,
return on equity and reinvestment rate, all of which, in the aggregate, are 1.5
times the average performance of the Standard & Poor's Index of 500 Common
Stocks for the same period. The Growth Portfolio will invest in a range of
medium to large companies; the minimum market capitalization of a portfolio
security is expected to be $1 billion, and the average market capitalization is
currently approximately $35 billion. Equity securities in which the Growth
Portfolio invests typically average less than a 1% dividend. Currently,
approximately 70% of the equity securities in which the Growth Portfolio invests
are listed on the New York or American Stock Exchanges, and the remainder are
traded on the NASDAQ system or are otherwise traded over-the-counter. PIC
supports its selection of individual securities through intensive research and
uses qualitative and quantitative disciplines to determine when securities
should be sold.
In unusual circumstances, economic, monetary, technical and other factors may
cause PIC to assume a temporary, defensive position during which all or a
substantial portion of the Growth Portfolio's assets may be invested in
short-term instruments. Under normal market conditions, it is expected that
investments in such short-term instruments may range from zero (fully invested)
to 30% of the Portfolio's assets.
The Growth Portfolio may also invest up to 20% of its assets in foreign
securities.
9 Prospectus
<PAGE>
The Funds in Detail - continued
Provident Investment Counsel Small Company Growth Fund
The Provident Investment Counsel Small Company Growth Fund seeks long term
growth of capital by investing in the PIC Small Cap Portfolio, which in turn
invests primarily in equity securities of small companies.
PIC will invest at least 65%, and normally at least 95%, of the Portfolio's
total assets in these securities. The Small Cap Portfolio has flexibility,
however, to invest the balance in other market capitalizations and security
types. Small capitalization companies are those whose market capitalization or
annual revenues are $250 million or less at the time of the Portfolio's
investment. Companies whose capitalization or revenues increase beyond this
range after purchase continue to be considered small capitalization for the
purposes of the Portfolio's investment policy. Investing in small capitalization
stocks may involve greater risk than investing in large or medium capitalization
stocks, since they can be subject to more abrupt or erratic movements in value.
The Small Cap Portfolio may also invest up to 20% of its assets in foreign
securities.
Securities and Investment Practices
The following pages contain more detailed information about the types of
instruments in which the Portfolios may invest, and strategies PIC may employ in
pursuit of the Portfolios' investment objectives. A summary of risks and
restrictions associated with these instrument types and investment practices is
included as well. A complete listing of each Fund's policies and limitations and
more detailed information about each Portfolio'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 a Portfolio
achieve its goals. Current holdings and recent investment strategies are
described in the Funds' financial reports which are sent to shareholders twice a
year. For a free SAI or financial report, call (800) 618-7643.
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, a Portfolio 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 a Portfolio. Some specific examples of short-term
investments are commercial paper, bankers' acceptances, certificates of deposit
and repurchase agreements.
Restriction: A Portfolio will only purchase short-term investments which are
"high
Prospectus 10
<PAGE>
quality." High quality means the investments have been rated A-1 by Standard &
Poor's Ratings Group (S&P) or Prime-1 by Moody's Investors Service, Inc.
(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, a Portfolio 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. A Portfolio may invest in foreign securities.
Restriction: A Portfolio may invest no more than 20% of its total assets in
foreign securities, and it will only purchase foreign securities or American
Depositary Receipts which are listed on a national securities exchange or
included in the NASDAQ system.
Options and Futures. A Portfolio 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. A Fund will advise shareholders before any
investment in options or futures commences. See the SAI for details.
Risk Factors. Foreign securities 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.
Options and futures, which are sometimes called derivative securities, also
entail certain risks, which are described in detail in the SAI.
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
following paragraph states all those that are fundamental. All policies stated
throughout the prospectus, other than those identified in the following
paragraph, can be changed without shareholder approval.
Each Fund seeks long term growth of capital. Each Portfolio, 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. Each Portfolio may not invest more than 25% of its total assets
in any one industry.
Breakdown of Expenses
Like all mutual funds, each Fund pays fees related to its daily operations.
Expenses paid out of a Fund's assets are reflected in its share price or
dividends; they are
11 Prospectus
<PAGE>
The Funds in Detail - continued
neither billed directly to shareholders nor deducted from shareholder accounts.
The Portfolios pay an investment advisory fee to PIC each month for managing its
investments at the annual rate of 0.80% of the Portfolio's average net assets.
While the investment advisory fee is a significant component of a Portfolio's
(and thus a Fund's) annual operating costs, each Fund also pays other expenses.
The Funds pay a fee to PIC for certain administrative services PIC provides. The
Funds and the Portfolios each pay a monthly administration fee to Investment
Company Administration Corporation (the "Administrator") for managing some of
their business affairs. Each Portfolio pays an administration fee at the annual
rate of 0.10% of average net assets, subject to an annual minimum of $45,000,
and each Fund pays an annual administration fee of $15,000. The Funds and the
Portfolios also pay other expenses, such as legal, auditing, custodian and
transfer agency fees, as well as the compensation of Trustees who are not
affiliated with PIC.
PIC has agreed to reimburse each Fund for investment advisory fees and other
expenses if they exceed a certain percentage of the Fund's average net assets.
In the case of the Growth Fund, the limit is 1.25% and in the case of the Small
Company Growth Fund the limit is 1.45%. PIC retains the ability to be repaid by
a 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 a Fund's expenses and boost its performance.
Performance
Mutual fund performance is commonly measured as total return. Total return is
the change in value of an investment over a given period, assuming reinvestment
of any dividends and capital gains. Total return reflects a Fund's performance
over a stated period of time. An average annual total return is a hypothetical
rate of return that, if achieved annually, would have produced the same total
return if performance had been constant over the entire period. Average annual
total return smooths out variations in performance; it is not the same as actual
year-by-year results.
Total return and average annual total return are based on past results and are
not a prediction of future performance. They do not include the effect of income
taxes paid by shareholders. A Fund may sometimes show its performance compared
to certain performance rankings, averages or stock indices (described more fully
in the SAI).
Prospectus 12
<PAGE>
Your Account
Ways to Set Up Your Account
Individual or Joint Tenant
For your general investment needs
Individual accounts are owned by one person. Joint accounts can have two or more
owners (tenants).
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Retirement
To shelter your retirement savings from taxes
Retirement plans allow individuals to shelter investment income and capital
gains from current taxes. In addition, contributions to these accounts may be
tax deductible. Retirement accounts require special applications.
* Individual Retirement Accounts (IRAs) allow anyone of legal age and under
70 1/2 with earned income to invest up to $2000 per tax year. Individuals can
also invest in a spouse's IRA if the spouse has earned income of less than
$250.
* Rollover IRAs retain special tax advantages for certain distributions from
employer-sponsored retirement plans.
* Keogh or Corporate Profit Sharing and Money Purchase Pension Plans allow
self-employed individuals or small business owners (and their employees) to
make tax-deductible contributions for themselves and any eligible employees up
to $30,000 per year.
* Simplified Employee Pension Plans (SEP-IRAs) provide small business owners or
those with self-employed income (and their eligible employees) with many of
the same advantages as a Keogh, but with fewer administrative requirements.
* 403(b) Custodial Accounts are available to employees of most tax-exempt
institutions, including schools, hospitals and other charitable organizations.
* 401(k) Programs allow employees of corporations of all sizes to contribute a
percentage of their wages on a tax-deferred basis. These accounts need to be
established by the trustee of the plan.
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Gifts or Transfers to Minor (UGMA, UTMA)
To invest for a child's education or other future needs
These custodial accounts provide a way to give money to a child and obtain tax
benefits. An individual can give up to $10,000 a year per child without paying
a federal gift tax. Depending on state laws, you can set up a custodial account
under the Uniform Gifts to Minors Act (UGMA) or the Uniform Transfers to Minors
Act (UTMA).
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Trust
For money being invested by a trust
The trust must be established before an account can be opened.
- --------------------------------------------------------------------------------
Business or Organization
For investment needs of corporations, associations, partnerships or other
groups
Does not require a special application.
13 Prospectus
<PAGE>
Your Account - continued
How to Buy Shares
Once each business day, each 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 are investing through a tax-sheltered retirement plan, such as an IRA,
for the first time, you will need a special application. Retirement investing
also involves its own investment procedures. Call (800) 618-7643 for more
information and a retirement application.
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.
If you are investing by wire, please be sure to call (800) 618-7643 before
sending each wire.
Provident Financial Processing Corp. (PFPC) is each Fund's Transfer Agent; its
address is 400 Bellevue Parkway, Wilmington, Delaware 19809, and its mailing
address is P.O. Box 8943, Wilmington, DE 19899.
First Fund Distributors, Inc., 4455 E. Camelback Road, Suite 261E, Phoenix, AZ
85018, an affiliate of the Administrator, is the Trust's principal underwriter.
Minimum Investments
To Open an Account $1 million
The Funds may, at their discretion, waive the minimum investment for employees
and affiliates of PIC or any other person or organization deemed appropriate.
To Add to an Account $250
For retirement plans $250
Through automatic investment plans $100
Minimum Balance $1,000
For retirement accounts $500
For Information: (800) 618-7643
To Invest
By Mail: Provident Investment Counsel Funds
c/o PFPC Inc.
P.O. Box 8943
Wilmington, DE 19899
By Overnight Delivery:
Provident Investment Counsel Funds
c/o PFPC Inc.
400 Bellevue Parkway
Wilmington, DE 19809
By Telephone:
Call (800) 618-7643 and then wire
federal funds to:
PNC Bank
Philadelphia, PA
ABA# 031-0000-53
DDA# 86-0172-6604
For Credit to Provident Investment
Counsel (Fund Name)
Shareholder Name
Shareholder Account Name
Prospectus 14
<PAGE>
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.
To sell shares in a non-retirement account, you may use any of the methods
described on these two pages.
If you are selling some but not all of your shares, leave at least $1,000 worth
of shares in the account to keep it open ($500 for retirement accounts).
Certain requests must include a signature guarantee. It is designed to protect
you and the Funds 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.
Selling Shares in Writing
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:
Provident Investment Counsel Funds
c/o PFPC Inc.
P.O. Box 8943
Wilmington, DE 19899
15 Prospectus
<PAGE>
Your Account - continued
Account Type Special Requirements
Phone All account types * Your telephone call must be received
(800) 618-7643 except retirement by 4 p.m. Eastern time to be redeemed
on that day.
- --------------------------------------------------------------------------------
Mail or in Individual, Joint * The letter of instructions must be
Person Tenant, Sole Propri- signed by all persons required to
etorship, UGMA, UTMA sign for transactions, exactly as
their names appear on the account.
Retirement Account * The account owner should complete a
retirement distribution form. Call
(800) 618-7643 to request one.
Trust * The trustee must sign the letter
indicating capacity as trustee. If
the trustee's name is not in the
account registration, provide a copy
of the trust document certified
within the last 60 days.
Business or * At least one person authorized by
Organization corporate resolutions to act on the
account must sign the letter.
* Include a corporate resolution with
corporate seal or a signature
guarantee.
Executor, * Call (800) 618-7643 for instructions.
Administrator,
Conservator, Guardian
- --------------------------------------------------------------------------------
Wire All account types * You must sign up for the wire feature
except retirement before using it. To verify that it is
in place, call (800) 618-7643.
Minimum wire: $5,000.
* Your wire redemption request must be
received by the Fund before 4 p.m.
Eastern time for money to be wired
the next business day.
Prospectus 16
<PAGE>
Investor Services
PIC provides a variety of services to help you manage your account.
Information Services
PIC'S telephone representatives can be reached at (800) 618-7643.
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)
Transaction Services
Exchange Privilege. You may sell your Fund shares and buy shares of the other
Provident Investment Counsel Fund by telephone or in writing. Note that
exchanges into each Fund are limited to four per calendar year, and that they
may have tax consequences for you. PFPC charges a $5 fee for each exchange,
which is automatically deducted when the exchange is made. Also see "Exchange
Restrictions" on page 21.
Systematic withdrawal plans let you set up periodic redemptions from your
account. These redemptions take place on the 25th day of each month or, if that
day is a weekend or holiday, on the prior business day.
Regular Investment Plans
One easy way to pursue your financial goals is to invest money regularly. PIC
offers convenient services that let you transfer money into your Fund account
automatically. Automatic investments are made on the 20th day of each month or,
if that day is a weekend or holiday, on the prior business day. While regular
investment plans do not guarantee a profit and will not protect you against loss
in a declining market, they can be an excellent way to invest for retirement, a
home, educational expenses, and other long term financial goals. Certain
restrictions apply for retirement accounts. Call (800) 618-7643 for more
information.
17 Prospectus
<PAGE>
Shareholder Account Policies
Dividends, Capital Gains, and Taxes
The Funds distribute substantially all of their net income and capital gains,
if any, to shareholders each year 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 Funds offer 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.
When a 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.
* 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.
A Fund earns dividends from stocks and interest from short term
investments held by a Portfolio. These are passed along as dividend
distributions. A Fund realizes capital gains whenever a Portfolio sells
securities for a higher price than it paid for them. These are passed
along as capital gain distributions.
Taxes
As with any investment, you should consider how your investment in a 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, each 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
Prospectus 18
<PAGE>
send you and the IRS a statement showing the taxable distributions.
Taxes on Transactions. Your redemptions--including exchanges to the other
Provident Investment Counsel Fund--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 a 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 a 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, a Fund may have to
limit its investment activity in some types of instruments.
Transaction Details
Each Fund is open for business each day the New York Stock Exchange (NYSE) is
open. PIC calculates each Fund's NAV as of the close of business of the NYSE,
normally 4 p.m. Eastern time.
Each Fund's NAV is the value of a single share. The NAV is computed by adding
the value of a Fund's share of investments held by the Portfolio in which it
invests, cash, and other assets, subtracting its liabilities and then dividing
the result by the number of shares outstanding. The NAV is also the redemption
price (price to sell one share).
Each 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.
You may initiate many transactions by telephone. PIC may only be liable for
losses resulting from unauthorized transactions if it does not follow reasonable
procedures designed to verify the identity of the caller. PIC will request
personalized security codes or other information, and may also record calls. You
should verify the accuracy of your confirmation statements immediately after you
receive them. If you do not want the liability to redeem or exchange by
telephone, call PIC for instructions.
19 Prospectus
<PAGE>
Shareholder Account Policies - continued
Each Fund reserves the right to suspend the offering of shares for a period of
time. Each Fund also reserves the right to reject any specific purchase order,
including certain purchases by exchange. See "Exchange Restrictions" on page 21.
Purchase orders may be refused if, in PIC's opinion, they would disrupt
management of the Fund.
When you place an order to 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 or third party checks.
* When making a purchase with more than one check, each check must have a value
of at least $50.
* Each 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 a 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.
You may buy shares of a Fund or sell them through a broker, who may charge you a
fee for this service. If you invest through a broker or other institution, read
its program materials for any additional service features or fees that may
apply.
Certain financial institutions that have entered into sales agreements with PIC
may enter confirmed purchase orders on behalf of customers by phone, with
payment to follow no later than the time when the Funds are priced on the
following business day. If payment is not received by that time, the financial
institution could be held liable for resulting fees or losses.
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 a 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.
* PIC reserves the right to deduct an annual maintenance fee of $12.00 from
accounts with a value of less than $1,000. It is expected that accounts will
be valued on the second Friday in November of each year. Accounts opened after
September 30 will not be subject to the fee for that year. The fee, which is
payable to the transfer agent, is designed to offset in part the relatively
higher cost of servicing smaller accounts.
Prospectus 20
<PAGE>
* PIC also reserves the right to redeem the shares and close your account if it
has been reduced to a value of less than $1,000 as a result of a redemption or
transfer. PIC will give you 30 days' prior notice of its intention to close
your account.
Exchange Restrictions
As a shareholder, you have the privilege of exchanging shares of a Fund for
shares of the other Provident Investment Counsel Fund. However, you should note
the
following:
* The Fund you are exchanging into must be registered for sale in your state.
* You may only exchange between accounts that are registered in the same name,
address, and taxpayer identification number.
* Before exchanging into a Fund, read its prospectus.
* Exchanges may have tax consequences for you.
* Because excessive trading can hurt Fund performance and shareholders, each
Fund reserves the right to temporarily or permanently terminate the exchange
privilege of any investor who makes more than four exchanges out of a Fund per
calendar year. Accounts under common ownership or control, including accounts
with the same taxpayer identification number, will be counted together for the
purposes of the four exchange limit.
* The exchange limit may be modified for accounts in certain institutional
retirement plans to conform to plan exchange limits and Department of Labor
regulations. See your plan materials for further information.
* Each Fund reserves the right to refuse exchange purchases by any person or
group if, in PIC's judgment, a Portfolio would be unable to invest the money
effectively in accordance with its investment objective and policies, or would
otherwise potentially be adversely affected.
* Your exchanges may be restricted or refused if a Fund receives or anticipates
simultaneous orders affecting significant portions of a Portfolio's assets. In
particular, a pattern of exchanges that coincides with a "market timing"
strategy may be disruptive to a Portfolio.
Although each Fund will attempt to give you prior notice whenever it is
reasonably able to do so, it may impose these restrictions at any time. The
Funds reserve the right to terminate or modify the exchange privilege in the
future.
21 Prospectus
<PAGE>
General Information
Each 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
Investment Company Act of 1940 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. As of January 31, 1998, the Growth Fund was controlled by the
Vanguard Fiduciary Trust Trustee FBO Memorial Health Services Plan 91582.
Prospectus 22
<PAGE>
Year 2000 Risk. Like other business organizations around the world, the Funds
could be adversely affected if the computer systems used by their investment
advisor and other service providers do not properly process and calculate
information related to dates beginning January 1, 2000. This is commonly known
as the "Year 2000 Issue." The Funds' investment advisor is taking steps that it
believes are reasonably designed to address the Year 2000 Issue with respect to
its own computer systems, and it has obtained assurances from the Funds' other
service providers that they are taking comparable steps. However, there can be
no assurance that these actions will be sufficient to avoid any adverse impact
on the Funds.
23 Prospectus
