PROVIDENT INVESTMENT COUNSEL
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PINNACLE
MID CAP
FUND
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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 Provident
Investment Counsel Pinnacle Mid Cap Fund (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, including 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 Fund, unlike many other mutual funds which directly acquire and manage their
own portfolio of securities, seeks to achieve its investment objective by
investing all of its assets in the PIC Mid Cap Portfolio (the "Portfolio").
Investors should carefully consider this investment approach. For additional
information, see "Structure of the Fund and the Portfolio" in this prospectus
and "Investment Objective and Policies" in the SAI.
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 Fund at a Glance
3 Who May Want to Invest
3 Expenses
6 Structure of the Fund and
the Portfolio
7 Financial Highlights
The Fund in Detail 8 Charter How the Fund is organized.
9 Information About the Fund's
Investments The Fund's overall
approach to investing.
9 Securities and Investment Practices
More information about how the
Fund invests.
11 Breakdown of Expenses How
operating costs are calculated and what they
include.
12 Performance How Sales Charges are
Calculated
12 Sales Charge Waivers
13 Sales Charge Reductions
Your Account 14 Ways to Set Up Your Account
15 How to Buy Shares
16 How to Sell Shares
18 Investor Services Services to help you
manage your account.
18 Transaction Services
18 Exchange Privilege
Shareholder Account 19 Dividends, Capital Gains and
Policies Taxes
20 Transaction Details Share price
calculations and the timing of
purchases and redemptions.
General Information 22
Prospectus 2
<PAGE>
Key Facts
The Fund at a Glance
Management: Provident Investment Counsel ("PIC"), located in Pasadena,
California since 1951, is the Fund's Advisor. At December 31, 1997, total assets
under PIC's management were over $20 billion.
Pinnacle Mid Cap Fund
Goal: Long term growth of capital.
Strategy: Invests, through the Portfolio, mainly in equity securities of
companies with medium market capitalization.
Who May Want to Invest
The 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 Fund is designed for those who want to focus on medium capitalization stocks
in search of above average returns.
A company's market capitalization is the total market value of its outstanding
common stock. A medium capitalization company is one with $500 million to $5
billion in market capitalization. The securities of medium capitalization
companies may be more volatile than those of larger companies. Over time,
however, medium capitalization stocks have shown greater growth potential than
those of larger capitalization companies.
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. There is no assurance that the Fund will meet its
objective.
Expenses
Shareholder transaction expenses
are charges you pay when you buy, sell or hold shares in the Fund:
Maximum sales charge 5.75%
Maximum sales charge on reinvested dividends None
Deferred sales charge None
Redemption fee None(1)
Exchange fee $5.00
Annual operating expenses are paid out of the Fund's and Portfolio's assets. The
Fund indirectly pay an investment advisory fee, and 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.
3 Prospectus
<PAGE>
Key Facts - continued
On September 3, 1998, the Board of Trustees of PIC Investment Trust (the
"Trust") approved the addition of a front-end sales charge to the Fund. The
Board of Trustees also approved the implementation of a Shareholder Services
Plan (the "Services Plan") under which PIC will provide, or arrange for others
to provide, certain specified shareholder services. As compensation for the
provision of shareholder services, the Fund will pay PIC a monthly fee at an
annual rate of up to 0.15% of the Fund's average net assets. PIC will pay
certain banks, trust companies, broker-dealers, and other financial
intermediaries (each a "Participating Organization") out of the fees PIC
receives from the Fund under the Services Plan to the extent that the
Participating Organization performs shareholder servicing functions for Fund
shares owned by its customers. On September 30, 1998, shareholders of the Fund
approved the adoption of a distribution plan (the "Plan") under Rule 12b-1 of
the Investment Company Act of 1940 ("1940 Act"). Under the Plan, the Fund may
pay an amount up to 0.25% of its annual average net assets in shareholder
servicing fees to financial services firms that sell shares of the Fund. For
additional information, see "Distribution Plan" in the SAI.
The Fund's new fee structure, including the Services Plan fee, is made up of
the following components, each based on average annual net assets.
The following are expenses expected to be incurred by the Fund and are
calculated as a percentage of average net assets.
Management fee (paid by the Portfolio) 0.70%
Other expenses of the Portfolio,
after reimbursement by PIC 0.20%
----
Total operating expenses of the Portfolio 0.90%
Administrative fee paid by the Fund to PIC(2) 0.00%
Shareholder Services Plan fee(2) 0.15%
12b-1 fee 0.25%
Other expenses of the Fund, after
reimbursement by PIC 0.09%
----
Total Fund operating expenses 1.39%
(1) Shareholders who buy $1 million in shares without paying a sales charge
will be charged a 1% fee on redemptions made within one year of purchase.
(2) PIC has agreed to reimburse the Fund and the Portfolio for investment
advisory fees and other expenses so that the Fund's ratio of total
operating expenses to average net assets will not exceed 1.39%. Without
this reimbursement, total fund operating expenses are estimated to be 1.75%
of 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.
Prospectus 4
<PAGE>
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 $71
After 3 years $99
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. For a more complete
description of the various costs and expenses, see "Breakdown of Expenses." The
table above summarizes the expenses of both the Portfolio and the Fund. The
Trustees expect that the combined per share expenses of the Fund and the
Portfolio will be equal to, or may be less than, the expenses that would be
incurred by the Fund if it retained an investment manager and invested directly
in the types of securities held by the Portfolio.
5 Prospectus
<PAGE>
Structure of the Fund and the Portfolio
Unlike many other mutual funds which directly acquire and manage their own
portfolio securities, the Fund seeks to achieve its investment objective by
investing all of its assets in the Portfolio. The Portfolio is a separate
registered investment company with the same investment objective as the Fund.
Since the Fund will not invest in any securities other than shares of the
Portfolio, investors in the Fund will acquire only an indirect interest in the
Portfolio. The Fund's and Portfolio's investment objective cannot be changed
without shareholder approval.
In addition to selling its shares to the Fund, the Portfolio may sell its shares
to other mutual funds or institutional investors. All investors in the Portfolio
invest on the same terms and conditions and pay a proportionate share of the
Portfolio's expenses. However, other investors in the Portfolio may sell their
shares to the public at prices different from those of the 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 the Portfolio. Information concerning
other holders of interests in the Portfolio is available by calling (800)
618-7643.
The Trustees of the Trust believe that this structure may enable the 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 the Fund's assets in the 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. The Fund's investment
in the Portfolio may be withdrawn by the Trustees at any time if the Board
determines that it is in the best interests of the 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 the Fund is requested to vote on matters pertaining to the 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 Fund in Detail," "Information about the Fund's Investments" and
"Securities and Investment Practices."
Prospectus 6
<PAGE>
Financial Highlights
The table that follows is included in the Fund's Semi-Annual Report, which has
not been audited. The financial statements and financial highlights are
incorporated by reference into (are legally a part of) the Fund's SAI.
Dec. 31, 1997*
through
April 30, 1998
Net asset value, beginning of period $ 10.00
Income from investment operations:
Net investment loss (0.01)
Net realized and unrealized gain on investments 1.96
Total from investment operations 1.95
Net asset value, end of period $ 11.95
Total return 19.50+++
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Ratios/supplemental data:
Net assets, end of period (millions) $ 4.6
Ratios to average net assets:+**
Expenses after exp. reimbursements 0.99%
Expenses before exp. reimbursements 6.32%
Net investment loss after exp. reimbursements -0.38%
Portfolio turnover rate++ 55.12%
Average commission rate paid by Portfolio $ 0.0327*
* Commencement of operations
+ Annualized.
** Includes the Fund's share of expenses allocated from PIC Mid Cap Portfolio.
++ Portfolio turnover rate of PIC Mid Cap Portfolio, in which all of the Fund's
assets are invested.
+++ Not annualized
7 Prospectus
<PAGE>
The Fund in Detail
Charter
The 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 the Trust, which is an open-end management investment
company, organized as a Delaware business trust on December 11, 1991.
The Fund and the Portfolio 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 Fund
and the Portfolio, review contractual arrangements with companies that provide
services to the Fund and the Portfolio, 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 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 advisor to the Portfolio. Its address is 300 North Lake Avenue,
Pasadena, CA 91101. An investment committee of PIC formulates and implements an
investment program for the Portfolio, 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 Portfolio 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 the 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.
The Portfolio 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 Portfolio's assets according to its investment strategy. The Portfolio also
reserves
Prospectus 8
<PAGE>
the right to invest without limitation in short term instruments for temporary,
defensive purposes.
PIC may use broker-dealers that sell shares of the Fund to carry out
transactions for the Portfolio, provided that the Portfolio 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
Because the investment characteristics of the Fund will correspond directly to
those of the Portfolio, the following is a discussion of the various investments
of, and techniques employed by, the Portfolio.
The Fund seeks long term growth of capital by investing in the Portfolio, which
in turn invests primarily in equity securities of companies with medium market
capitalizations.
PIC will invest at least 65%, and normally at least 95%, of the Portfolio's
total assets in these securities. The Portfolio has flexibility, however, to
invest the balance in other market capitalizations and security types.
Medium market capitalization companies are those whose market capitalization
falls within the range of $500 million to $5 billion at the time of the
Portfolio's investment. Companies whose capitalization falls outside this range
after purchase continue to be considered medium capitalization for the purposes
of the Portfolio's investment policy. Investing in medium capitalization stocks
may involve greater risk than investing in large capitalization stocks, since
they can be subject to more abrupt or erratic movements in value.
The value of the 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.
Securities and Investment Practices The following pages contain more detailed
information about the types of instruments in which the Portfolio may invest,
and strategies PIC may employ in pursuit of the Portfolio'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
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.
9 Prospectus
<PAGE>
The Fund in Detail - continued
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 Portfolio
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. 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 warrants and
bonds, debentures and preferred stocks which can be converted into common
stocks.
Restriction: With respect to 75% of total assets, the 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 the Portfolio. Some specific examples of short term
investments are commercial paper, bankers' acceptances, certificates of deposit
and repurchase agreements.
Restriction: The Portfolio will only purchase short term investments which are
"high 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 Agreement. In a repurchase agreement, the 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. The Portfolio may invest in foreign securities.
Restriction: The Portfolio may invest no more than 20% of its total assets in
foreign securities, and it will only purchase foreign securities or American
Depository Receipts which are listed on a national securities exchange or
included in the NASDAQ system.
Futures. The Portfolio has the right to use futures to hedge its investments in
securities, but PIC does not expect to use these instruments during this fiscal
year. The Fund will advise shareholders before any investment in 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
Prospectus 10
<PAGE>
of these factors can make foreign investments, especially those in developing
countries, more volatile.
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.
The Fund's investment objective is a fundamental investment policy. The
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. The Portfolio 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 Portfolio pays an investment advisory fee to PIC each month for managing its
investments at the annual rate of 0.70% of its average net assets.
While the investment advisory fee is a significant component of the Portfolio's
(and thus the Fund's) annual operating costs, the Fund also pays other expenses.
The Fund pays shareholder servicing fees to financial services firms that sell
shares of the Fund, and these firms typically pass along a portion of these fees
to your financial representative for helping you with your investment in the
Fund. The maximum amount that the Fund may pay is 0.25% of its annual average
net assets (12b-1 fees). For additional information, see "Distribution Plan" in
the SAI. The Fund pays PIC a monthly fee at an annual rate of 0.15% of its
average net assets for providing, or arranging for others to provide, certain
specified shareholder services (shareholder services fees). For additional
information, see "Shareholder Services Plan" in the SAI. The Fund and the
Portfolio each pay a monthly administration fee to Investment Company
Administration Corporation (the "Administrator") for managing some of their
business affairs. The Portfolio pays an administration fee at the annual rate of
0.10% of its average net assets subject to an annual minimum of $45,000, and the
Fund pays an annual administration fee of $15,000. The Fund and the Portfolio
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 the Fund and Portfolio for investment advisory fees
and other expenses if they exceed 1.39% of the Fund's average net assets. This
reimbursement arrangement, which may be terminated at any time without notice,
will
11 Prospectus
<PAGE>
The Fund in Detail - continued
decrease the Fund's expenses and boost its performance. PIC retains the ability
to be repaid by the Fund if expenses subsequently fall below the specified limit
within the next three years.
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 the 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. The Fund may sometimes show its performance compared
to certain performance rankings, averages or stock indices (described more fully
in the SAI).
How Sales Charges are Calculated
Sales charges are as follows:
As a As a Dealer
% of % of Commission
offering your as a % of
Your investment price investment offering price
Up to $49,999 5.75% 6.10% 5.00%
$50,000-$99,999 4.50% 4.71% 3.75%
$100,000-$249,999 3.50% 3.63% 2.75%
$250,000-$499,999 2.50% 2.56% 2.00%
$500,000-$999,999 2.00% 2.04% 1.60%
$1,000,000 and over None None 1.00%
Investments of $1 million or more have no sales charge. The Distributor pays a
commission of 1% to financial institutions that initiate purchases of $1 million
or more.
Sales Charge Waivers
Shares of the Fund may be sold at net asset value (free of any sales charge) to:
(1) current shareholders of the Fund as of September 30, 1998; (2) current or
retired directors, trustees, partners, officers and employees of the Trust, the
Distributor, PIC and affiliates, certain family members of the above persons,
and trusts or plans primarily for such persons; (3) current or retired
registered representatives of broker-dealers having sales agreements with the
Distributor or full-time employees and their spouses and minor children and
plans of such persons; (4) investors who exchange their shares from an
unaffiliated investment company which has a sales charge, so long as shares are
purchased within 60 days of the redemption; (5) trustees or other fiduciaries
purchasing shares for certain retirement plans of organizations with 50 or more
eligible employees; (6) investment advisers and financial planners
Prospectus 12
<PAGE>
who place trades for their own accounts or the accounts of their clients either
individually or through a master account and who charge a management, consulting
or other fee for their services; (7) employee-sponsored benefit plans in
connection with purchases of Fund shares made as a result of
participant-directed exchanges between options in such a plan; (8) "wrap
accounts" for the benefit of clients of broker-dealers, financial institutions
or financial planners having sales or service agreements with the Distributor or
another broker-dealer or financial institution with respect to sales of shares
of the Fund; and (9) such other persons as are determined by the Board of
Trustees (or by the Distributor pursuant to guidelines established by the Board)
to have acquired shares under circumstances not involving any sales expense to
the Trust or the Distributor.
Sales Charge Reductions
There are several ways you can combine multiple purchases of shares of the Fund
to take advantage of the breakpoints in sales charge schedule. These can be
combined in any manner.
Accumulation Privilege -- lets you add the value of shares of any of the
Provident Investment Counsel Pinnacle Funds ("Pinnacle Funds") you and your
family already own to the amount of your next investment in the Fund for
purposes of calculating the sales charge.
Letter of Intent -- lets you purchase shares of the Fund and any Pinnacle Funds
over a 13-month period and receive the same sales charge as if all shares had
been purchased at once.
Combination Privilege -- lets you combine shares of multiple Pinnacle Funds for
purposes of reducing the sales charge on the purchase of Fund shares.
For more information, contact your financial representative or the Pinnacle
Funds.
13 Prospectus
<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).
- --------------------------------------------------------------------------------
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 and typically
have lower minimums.
* 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.
- --------------------------------------------------------------------------------
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).
- --------------------------------------------------------------------------------
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.
Prospectus 14
<PAGE>
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) plus the sales charge. 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 the 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, is the Trust's principal underwriter.
Minimum Investments
To Open an Account $2,000
For retirement accounts $500
For automatic investment plans $250
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 Pinnacle Funds
c/o PFPC Inc.
P.O. Box 8943
Wilmington, DE 19899
By Overnight Delivery:
Provident Investment Counsel
Pinnacle 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 Pinnacle Mid Cap Fund
Shareholder Name
Shareholder Account Name
15 Prospectus
<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.
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 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.
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
Pinnacle Funds
c/o PFPC Inc.
P.O. Box 8943
Wilmington, DE 19899
Prospectus 16
<PAGE>
How to Sell Shares:
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.
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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
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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.
17 Prospectus
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Your Account - continued
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
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 and conveniently. 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.
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.
Exchange Privilege. You may sell your Fund shares and buy shares of other
Pinnacle Funds by telephone or in writing.
Exchange Restrictions. 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.
* Exchanges into the Fund and other Pinnacle Funds are limited to five per
calendar year.
The Fund reserves the right to terminate or modify the exchange privilege in
the future.
Prospectus 18
<PAGE>
Shareholder Account Policies
Dividends, Capital Gains, and Taxes
The Fund distributes substantially all of its net income and capital gains, if
any, to shareholders each year. The Fund pays dividends, normally, in December.
Capital gains are also normally 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.
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.
+ 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 held by the Portfolio. These are passed along as dividend
distributions. The Fund realizes capital gains whenever the 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 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.
19 Prospectus
<PAGE>
Shareholder Account Policies - continued
Taxes on transactions. Your redemptions--including exchanges to other Pinnacle
Funds--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 plus the sales charge is the value of a single share. The NAV is
computed by adding the value of the Fund's share of investments held by the
Portfolio, cash, and other assets, subtracting its liabilities and then dividing
the result by the number of shares outstanding. The NAV is the 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 the 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.
Prospectus 20
<PAGE>
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,
including certain purchases by exchange. See "Exchange Restrictions" on page 18.
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 plus the sales charge.
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.
* 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.
You may buy shares of the 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 Fund is 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 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.
* 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.
21 Prospectus
<PAGE>
Shareholder Account Policies - continued
* 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.
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 1940
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
Prospectus 22
<PAGE>
no pre-emptive or conversion rights. Shares when issued are fully paid and
non-assessable, HERE IT ISno 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.
Year 2000 Risk. Like other business organizations around the world, the Fund
could be adversely affected if the computer systems used by its 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 Fund's 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 Fund's 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 Fund.
23 Prospectus
