PROVIDENT INVESTMENT COUNSEL
MUTUAL FUNDS
PROVIDENT
INVESTMENT COUNSEL
FUNDS A AND B
BALANCED FUND
GROWTH FUND
MID CAP FUND
SMALL COMPANY GROWTH FUND
The Securities and Exchange Commission has not
approved or disapproved these securities or passed
upon the adequacy of this prospectus. Any
representation to the contrary is a criminal
offense.
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.
PROSPECTUS
MARCH 31, 1999
AS REVISED
MAY 17, 1999
<PAGE>
CONTENTS
Key Facts 3 The Funds at a Glance
3 The Principal Goals and
Strategies of the Funds
4 The Principal Risks of
Investing in the Funds
5 Who May Want to Invest
5 Performance
9 Fees and Expenses
11 Structure of the Funds and
the Portfolios
12 More Information About the Funds'
Investments, Strategies and Risks
15 Management
15 The Advisor's Historical
Performance Data
18 Your Account
18 Ways to Set Up Your Account
19 Calculation of Net Asset Value
22 How to Buy Shares
22 How to Sell Shares
24 Important Redemption Information
25 Investor Services
Shareholder Account Policies 26 Dividends, Capital Gains and Taxes
26 Distribution Options
26 Understanding Distributions
26 Transaction Details
29 Year 2000 Risk
29 Financial Highlights
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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, 1998, total assets under
PIC's management were over $20 billion.
STRUCTURE: Unlike most mutual funds, each Fund's investment in portfolio
securities is indirect. A Fund first invests all of its assets in a PIC
Portfolio. The PIC Portfolio, in turn, acquires and manages individual
securities. Each Fund has the same investment objective as the PIC Portfolio in
which it invests. Investors should carefully consider this investment approach.
The Balanced Fund A and the Balanced Fund B (the "Balanced Funds") have the same
investment objective and invest in the PIC Balanced Portfolio. The Growth Fund A
and the Growth Fund B (the "Growth Funds") have the same investment objective
and invest in the PIC Growth Portfolio. The Mid Cap Fund A and the Mid Cap Fund
B (the "Mid Cap Funds") have the same investment objective and invest in the PIC
Mid Cap Portfolio. The Small Company Growth Fund A and the Small Company Growth
Fund B (the "Small Company Growth Funds") have the same investment objective and
invest in the PIC Small Cap Portfolio.
For reasons relating to costs or a change in investment goal, among others, each
Fund could switch to another pooled investment company or decide to manage its
assets itself. None of the Funds in the Prospectus is currently contemplating
such a move.
THE PRINCIPAL GOALS AND STRATEGIES OF THE FUNDS
BALANCED FUNDS
GOAL: Total return -- that is, a combination of income and capital growth,
while preserving capital.
STRATEGY: Invest, through the PIC Balanced Portfolio, in a combination of high
quality growth stocks and bonds. PIC considers companies with high rates of
growth in sales and earnings, strong financial characteristics, a propriety
product, industry leadership, significant management ownership and well thought
out management goals, plans and controls to be high quality. In selecting equity
investments, PIC does an analysis of individual companies and invests in
companies of any size which are currently experiencing a growth of earnings and
revenue which is above the average relative to its industry peers and the equity
market in general. The Balanced Portfolio will invest only in fixed-income
securities that have been rated investment grade by a nationally recognized
statistical rating agency, or are the unrated equivalent. In selecting
fixed-income securities, PIC examines the relationship between long-term and
short-term interest rates, taking into account historical relationships and the
current economic environment.
GROWTH FUNDS
GOAL: Long term growth of capital.
STRATEGY: Invest, through the PIC Growth Portfolio, in high quality growth
stocks. PIC considers companies with high rates of
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KEY FACTS - CONTINUED
growth in sales and earnings, strong financial characteristics, a propriety
product, industry leadership, significant management ownership and well thought
out management goals, plans and controls to be high quality. In selecting equity
investments, PIC does an analysis of individual companies and invests in
companies of any size which are currently experiencing a growth of earnings and
revenue which is above the average relative to its industry peers and the equity
market in general.
MID CAP FUNDS
GOAL: Long term growth of capital.
STRATEGY: Invest, through the PIC Mid Cap Portfolio, mainly in equity securities
of medium-sized companies. In selecting investments, PIC does an analysis of
individual companies and invests in those medium-capitalization companies which
it believes have the best prospects for future growth of earnings and revenue.
SMALL COMPANY GROWTH FUNDS
GOAL: Long term growth of capital.
STRATEGY: Invest, through the PIC Small Cap Portfolio, mainly in equity
securities of small-capitalization companies. In selecting investments, PIC does
an analysis of individual companies and invests in those small-capitalization
companies which it believes have the best prospects for future growth of
earnings and revenue.
THE PRINCIPAL RISKS OF INVESTING IN THE FUNDS
MARKET RISK: The value of each Fund's investments will vary from day to day. The
value of the Fund's investments generally reflect market conditions, interest
rates and other company, political and economic news. Stock prices can rise and
fall in response to these factors for short or extended period of time.
Therefore, when you sell your shares, you may receive more or less money than
you originally invested.
SMALL AND MEDIUM COMPANY RISK: Each Fund may invest in the securities of small
and medium-sized companies. However, the Mid Cap Funds primarily invest in the
securities of medium-sized companies and the Small Company Growth Funds
primarily invest in the securities of small-sized companies. The securities of
medium and small, less well-known companies may be more volatile than those of
larger companies. Such companies may have limited product lines, markets or
financial resources and their securities may have limited market liquidity.
These risks are greater for small-sized companies.
BOND RISK: The Balanced Funds invest in bonds. A bond's market value is affected
significantly by changes in interest rates. Generally, when interest rates rise,
the bond's market value declines and when interest rates decline, its market
value rises. Generally, the longer a bond's maturity, the greater the risk and
the higher its yield. Conversely, the shorter a bond's maturity, the lower the
risk and the lower its yield. A bond's value can also be affected by changes in
the bond's credit quality rating or its issuer's financial condition.
By itself, no Fund is a complete, balanced investment plan. And no Fund can
guarantee that it will reach its goal.
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WHO MAY WANT TO INVEST
The Balanced Funds may be appropriate for investors who seek potentially high
long-term returns, but hope to see less fluctuation in the value of their
investment.
The Growth Funds may be appropriate for investors who seek potentially high
long-term returns, but are willing to accept the greater risk of investing in
growth stocks. The Funds are designed for those investors seeking capital
appreciation through a diversified portfolio of securities of companies of all
sizes.
The Mid Cap Funds may be appropriate for investors who seek potentially high
long-term returns, but are willing to accept the greater risk of investing in
medium-capitalization companies. The Funds are designed for those investors who
want to focus on medium-capitalization companies.
The Small Company Growth Funds may be appropriate for investors who are willing
to accept higher short-term risk in pursuit of potentially above-average
long-term returns. The Funds are designed for those investors who want to focus
on small-capitalization companies.
Investments in the Funds are not bank deposits and are not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government agency.
PERFORMANCE
The following performance information indicates some of the risks of investing
in the Funds A. The bar charts show how the Funds' total returns have varied
from year to year. The tables show the Funds' average returns over time compared
with broad-based market indexes. The bar charts do not reflect sales charges,
which would lower the returns shown. This past performance will not necessarily
continue in the future.
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KEY FACTS - CONTINUED
[BAR CHART]
Balanced Fund A
Calendar Year Total Returns (%)
-------------------------------
93 2.69
94 -3.13
95 22.31
96 15.56
97 22.32
98 31.12
Best quarter: up 10.32%, 4th quarter 1998
Worst quarter: down 10.54%, 3rd quarter 1998
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 1998
Since Inception
1 Year 5 Years June 11, 1992
--------- --------- -------------
Balanced Fund A+ 23.58% 15.66% 14.12%
S&P 500 Index* 28.76 24.15 20.77
Lehman Brothers Government/
Corporate Bond Index** 9.47 7.30 8.22
S&P 500 Index and Lehman Brothers
Government/ Corporate Bond Index*** 21.45 17.38 15.80
Lipper Balanced Fund Index**** 15.09 13.87 13.54
- --------
* The S&P 500 Index is an unmanaged index generally representative of the
market for stocks of large-sized companies.
** The Lehman Brothers Government/Corporate Bond Index is an unmanaged
market-weighted index which is generally regarded as representative of
the market for domestic bonds.
*** These figures represent a blend of the performance of both the S&P 500
Index (60%) and the Lehman Brothers Government/Corporate Bond Index
(40%). This combined index reflects the asset allocation between equity
and fixed- income securities that PIC intends to maintain.
**** The Lipper Balanced Fund Index measures the performance of those mutual
funds that Lipper Analytical Services, Inc. has classified as "balanced."
Balanced funds maintain a portfolio of both stocks and bonds, typically
with a stock ratio of approximately 60% of assets and a bond ratio of of
approximately 40% of assets. The funds in this index have a similar
investment objective as the Balanced Funds.
+ Includes maximum sales charge.
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[BAR CHART]
Growth Fund A
Calendar Year Total Returns (%)
-------------------------------
98 39.16
Best quarter: up 16.54%, 4th quarter 1998
Worst quarter: down 14.03%, 3rd quarter 1998
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 1998
Since Inception
1 Year February 3, 1997
--------- ----------------
Growth Fund A+ 31.16% 25.29%
S&P 500 Index* 28.76 28.48
- --------
* The S&P 500 Index is an unmanaged index generally representative of the
market for the stocks of large-sized U.S. companies.
+ Includes maximum sales charge.
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KEY FACTS - CONTINUED
[BAR CHART]
Mid Cap Fund A
Calendar Year Total Returns (%)
-------------------------------
98 26.30
Best quarter: up 15.01%, 4th quarter 1998
Worst quarter: down 20.56%, 3rd quarter 1998
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 1998
Since Inception
1 Year December 31, 1997
--------- ----------------
Mid Cap Fund A+ 19.04% 19.04%
Russell Midcap Index* 10.09 10.09
- --------
* The Russell Midcap Index measures the performance of the 800 smallest
companies in the Russell 1000 Index. As of May 31, 1998, the average market
capitalization of companies in the Russell 1000 Index was approximately
$3.7 billion.
+ Includes maximum sales charge.
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KEY FACTS - CONTINUED
[BAR CHART]
Small Company Growth Fund A
Calendar Year Total Returns (%)
-------------------------------
98 5.26
Best quarter: up 17.81%, 4th quarter 1998
Worst quarter: down 26.19%, 3rd quarter 1998
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 1998
Since Inception
1 Year February 3, 1997
--------- ---------------
Small Company Growth Fund A+ (0.79)% (1.04)%
Russell 2000 Growth Index* 1.23 (11.38)
- ----------
* The Russell 2000 Growth Index measures the performance of those companies
in the Russell 2000 Index with higher price-to-book ratios and lower
forecasted growth values. The Russell 2000 Index is a recognized index of
small-capitalization companies.
+ Includes maximum sales charge.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Funds.
Provident Provident
Investment Investment
Counsel Counsel
Funds A Funds B
---------- ----------
Shareholder Fees
(fees paid directly from your investment)
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price) 5.75% None
Maximum deferred sales (load) charge
(as a percentage of purchase or sale price
whichever is less) None 5.00%
Redemption fee None* None
Exchange fee None None
- --------
* Shareholders who buy $1 million of Fund A shares without paying a sales
charge will be charged a 1% fee on redemptions made within one year of
purchase.
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KEY FACTS - CONTINUED
ANNUAL FUND OPERATING EXPENSES*
(expenses that are deducted from Fund assets)
<TABLE>
<CAPTION>
Small
Company
Balanced Growth Mid Cap Growth
Fund A Fund A Fund A Fund A
------ ------ ------ ------
<S> <C> <C> <C> <C>
Management Fee (paid by the Portfolio) 0.60% 0.80% 0.70% 0.80%
Distribution and Service (12b-1) Fees
(paid by the Fund) 0.25% 0.25% 0.25% 0.25%
Other Expenses** (paid by the Fund
and the Portfolio) 0.55% 2.80% 4.11% 3.03%
Administration Fee to PIC
(paid by the Fund) 0.20% 0.20% 0.20% 0.20%
Shareholder Services Fee
(paid by the Fund) 0.15% 0.15% 0.15% 0.15%
----- ----- ----- -----
Total Annual Fund Operating Expenses 1.75% 4.20% 5.41% 4.43%
Expense Reimbursements *** (0.70%) (2.85%) (4.02%) (2.88%)
----- ----- ----- -----
Net Expenses 1.05% 1.35% 1.39% 1.55%
===== ===== ===== =====
Small
Company
Balanced Growth Mid Cap Growth
Fund B Fund B Fund B Fund B
------ ------ ------ ------
Management Fee (paid by the Portfolio) 0.60% 0.80% 0.70% 0.80%
Distribution and Service (12b-1) Fees
(paid by the Fund) 1.00% 1.00% 1.00% 1.00%
Other Expenses** (paid by the Fund
and the Portfolio) 0.29% 2.74% 1.86% 3.00%
Administration Fee to PIC
(paid by the Fund) 0.20% 0.20% 0.20% 0.20%
----- ----- ----- -----
Total Annual Fund Operating Expenses 2.09% 4.74% 3.76% 5.00%
Expense Reimbursements *** (0.19%) (2.64%) (1.62%) (2.70%)
----- ----- ----- -----
Net Expenses 1.90% 2.10% 2.14% 2.30%
===== ===== ===== =====
</TABLE>
- --------
* The tables above and the Example below reflect the expenses of the Funds
and the Portfolios.
** Other Expenses are based on estimated amounts for the current fiscal year.
*** Pursuant to a contract with the Funds, PIC has agreed to reimburse each
Fund and Portfolio for investment advisory fees and other expenses for ten
years ending March 1, 2009. PIC reserves the right to be reimbursed for any
waiver of its fees or expenses paid on behalf of the Funds if, within three
subsequent years, a Fund's expenses are less than the limit agreed to by
PIC.
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Examples: These examples will help you compare the cost of investing in the
Funds with the cost of investing in other mutual funds. These examples are only
illustrations, and your actual costs may be higher or lower. Let's say,
hypothetically, that each Fund's annual return is 5% and that its operating
expenses remain the same. For every $10,000 you invest, here's how much you
would pay in total expenses for the time periods shown if you redeemed your
shares at the end of the period:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Balanced Fund A $676 $ 890 $1,121 $1,784
Balanced Fund B $708 $ 926 N/A N/A
Growth Fund A $705 $ 978 $1,272 $2,105
Growth Fund B $728 $ 985 N/A N/A
Mid Cap Fund A $708 $ 990 $1,292 $2,148
Mid Cap Fund B $731 $ 996 N/A N/A
Small Company Growth Fund A $724 $1,036 $1,371 $2,314
Small Company Growth Fund B $747 $1,043 N/A N/A
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Balanced Fund A $676 $ 890 $1,121 $1,784
Balanced Fund B $193 $ 597 N/A N/A
Growth Fund A $705 $ 978 $1,272 $2,105
Growth Fund B $213 $ 658 N/A N/A
Mid Cap Fund A $708 $ 990 $1,292 $2,148
Mid Cap Fund B $217 $ 670 N/A N/A
Small Company Growth Fund A $724 $1,036 $1,371 $2,314
Small Company Growth Fund B $233 $ 718 N/A N/A
STRUCTURE OF THE FUNDS AND THE PORTFOLIOS
Each Fund seeks its goal by investing all of its assets in a PIC Portfolio. The
PIC Portfolio then invests directly in securities. Each PIC Portfolio is a
mutual fund with the same investment goal as the Fund investing in it.
A Portfolio may sell its shares to other funds and institutions as well as to a
Fund. All who invest in a Portfolio do so on the same terms and conditions and
pay a proportionate share of the Portfolio's expenses. However, these other
funds may sell their shares to the public at prices different from the Funds'
prices. This would be due to different sales charges or operating expenses, and
it might result in different investment returns to these other funds'
shareholders.
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<PAGE>
MORE INFORMATION ABOUT THE FUNDS' INVESTMENTS, STRATEGIES AND RISKS
As described earlier, each Fund invests all of its assets in a PIC Portfolio.
This section gives more information about how the PIC Portfolios invest.
PIC supports its selection of individual securities through intensive research
and uses qualitative and quantitative disciplines to determine when securities
should be 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. This is often referred to as
a "bottom-up" approach to investing. PIC seeks companies that have displayed
exceptional profitability, market share, return on equity, reinvestment rates
and sales and dividend growth. Companies with significant management ownership
of stock, strong management goals, plans and controls; and leading proprietary
positions in given market niches are especially attractive. Finally, the
valuation of each company is assessed relative to its industry, earnings growth
and the market in general.
Each Portfolio invests to a limited degree in foreign securities. Foreign
investments involve additional risks including currency fluctuations, political
and economic instability, differences in financial reporting standards, and less
stringent regulation of securities markets.
In determining whether to sell a security, PIC considers the following: (a) a
fundamental change in the future outlook of the company; (b) the company's
performance compared to other companies in its peer group; and (c) whether the
security has reached its target price.
Each Portfolio seeks to spread investment risk by diversifying its holdings
among many companies and industries. PIC normally invests each Portfolio's
assets according to its investment strategy. However, each Portfolio may depart
from its principal investment strategies by making short-term investments in
high-quality cash equivalents for temporary, defensive purposes. At those times,
a Fund would not be seeking its investment objective.
It is not anticipated that the annual portfolio turnover rate of the Portfolios
will exceed 100%. However, the Advisor will not consider the rate of portfolio
turnover to be a limiting factor in determining whether or purchase or sell
securities in order to achieve a Fund's investment objective. A high portfolio
turnover rate (100% or more) has the potential to result in the realization and
distribution to shareholders of higher capital gains. This may mean that you
would be likely to have a higher tax liability. A high portfolio turnover rate
also leads to higher transactions costs, which could negatively affect a Fund's
performance.
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<PAGE>
PROVIDENT INVESTMENT COUNSEL
BALANCED FUNDS
The Balanced Funds seek total return while preserving capital by investing in
the PIC Balanced Portfolio. The Balanced Portfolio will attempt to achieve total
return through investments in equity and fixed-income securities.
In selecting investments for the Balanced Portfolio, PIC will include equity
securities of companies of various sizes which are currently experiencing a
growth of earnings and revenue which is above the average relative to its
industry peers and the equity market general. The Balanced Portfolio will invest
in a range of small, medium and large companies. The minimum market
capitalization of a portfolio security is expected to be $1 billion, and the
average market capitalization is currently approximately $30 billion. A
company's market capitalization is the total market value of its outstanding
common stock. Equity securities in which the Balanced Portfolio invests
typically average less than a 1% dividend. Currently, approximately 70% of the
equity securities in which the Balanced 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.
The Balanced Portfolio will also invest at least 25%, and may invest up to 70%,
of its total assets in fixed-income securities, both to earn current income and
to achieve gains from an increase in the value of the fixed-income securities.
The types of fixed-income securities in which the Balanced Portfolio will invest
include U.S. dollar denominated corporate debt securities and U.S. Government
securities. The Balanced Portfolio will invest only in fixed-income securities
that are rated investment grade by a nationally recognized statistical rating
agency, or are the unrated equivalent. Lower-rated securities have higher credit
risks.
Fixed-income securities have varying degrees of quality and varying levels of
sensitivity to changes in interest rates. Longer-term fixed-income securities
are generally more sensitive to interest rate changes than short-term
fixed-income securities. In general, prices of fixed-income securities rise when
interest rates fall, and vice versa.
In selecting fixed-income securities, PIC does not base its investment decisions
on forecasts of future interest rates or economic events. Rather, in selecting
fixed-income securities for the Balanced Portfolio, PIC examines the
relationship between long-term and short-term interest rates, taking into
account historical relationships and the current economic environment. PIC seeks
to identify sectors and individual securities within certain sectors, which it
has determined are undervalued. PIC's analysis takes into account historical
data and current market conditions.
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PROVIDENT INVESTMENT COUNSEL
GROWTH FUNDS
The Growth Funds seek 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
equity securities. In selecting investments for the Growth Portfolio, PIC will
include equity securities of companies of various sizes which are currently
experiencing a growth of earnings and revenue which is above the average
relative to its industry peers and the equity market in general. The minimum
market capitalization of a portfolio security is expected to be $1 billion, and
the average market capitalization is currently approximately $30 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.
PROVIDENT INVESTMENT COUNSEL
MID CAP FUNDS
The Mid Cap Funds seek long term growth of capital by investing in the PIC Mid
Cap Portfolio, which in turn invests primarily in equity securities of
medium-sized companies.
PIC will invest at least 65%, and normally at least 95%, of the Mid Cap
Portfolio's total assets in these securities. The Mid Cap Portfolio has
flexibility, however, to invest the balance in other market capitalizations and
security types.
Medium-sized companies are those whose market capitalizations fall within the
range of $1 billion to $12 billion. 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. However, they
tend to involve less risk than stocks of small companies. Over the course of a
business cycle, medium capitalization stocks have shown greater growth potential
than those of large capitalization stocks.
PROVIDENT INVESTMENT COUNSEL
SMALL COMPANY GROWTH FUNDS
The Small Company Growth Funds seek 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 companies are those whose market capitalization or annual revenues
are $250 million or less. 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. Small companies may
have limited product lines, markets or financial resources and their management
may be dependent on a limited number of key individuals. Securities of these
companies may have limited market liquidity and
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their prices tend to be more volatile. Over the course of a business cycle,
however, small capitalization stocks have shown greater growth potential than
those of larger capitalization stocks.
MANAGEMENT
PIC is the advisor to the PIC Portfolios, in which the respective Funds invest.
PIC's address is 300 North Lake Avenue, Pasadena, CA 91101. 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. 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.
Each Portfolio pays an investment advisory fee to PIC for managing the
Portfolio's investments. Last year, as a percentage of net assets, the Balanced
Portfolio paid PIC 0.60%; the Growth Portfolio paid 0.80%; the Mid Cap Portfolio
paid 0.70%; and the Small Cap Portfolio paid 0.80%.
THE ADVISOR'S HISTORICAL
PERFORMANCE DATA
The investment results presented below are not the results of the Funds. They
are for composites of all accounts managed by PIC with substantially similar
investment objectives and strategies to the Funds.
The composite performance data was calculated in accordance with recommended
standards for the Association of Investment Management and Research (AIMR)
retroactively applied for all time periods. AIMR is a non-profit membership and
education organization with more than 60,000 members worldwide that, among other
things, has formulated a set for performance presentation standards for
investment advisers. These AIMR performance presentation standards are intended
to (i) promote full and fair presentations by investment advisers of their
performance results, and (ii) ensure uniformity in reporting so that performance
results of investments advisers are directly comparable.
All returns presented were calculated on a total return basis and include all
dividends and interest, accrued income and realized and unrealized gains and
losses. All returns do not reflect investment management fees and other
operating expenses paid by the accounts in the composite. Securities
transactions are accounted for on the trade date and accrual accounting is
utilized. Cash and equivalents are included in performance returns. The
composites' returns are calculated on a time-weighted basis.
These composites are unaudited and are not intended to predict or suggest the
returns that might be expected for the Funds. Figures reflect average annual
returns. Average annual total returns show that cumulative total returns for a
stated
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time period (i.e., 3, 7 or 10 years) have been averaged over the period. You
should note that the Funds will compute and disclose average annual return using
the standard formula set forth in SEC rules, which differs in certain respects
from the methodology used below to calculate PIC's performance. The SEC total
return calculation method calls for computation and disclosure of an average
annual compounded rate of return for one, five and ten year periods or shorter
periods, from inception. The calculation provides a rate of return that equates
a hypothetical initial investment of $1,000 to an ending redeemable value. The
formula requires that returns to be shown for the Funds will be net of advisory
fees as well as any maximum applicable sales charges and all other Fund
operating expenses.
The accounts included in the composites are not mutual funds and are not subject
to the same rules and regulations imposed by the 1940 Act and the Internal
Revenue Code (for example, diversification and liquidity requirements and
restrictions on transactions with affiliates) as the Funds or to the same types
of expenses that the Funds pay. These differences might have adversely affected
the performance figures shown below. The Indices are not managed and do not pay
any fees or expenses.
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PERFORMANCE ENDED DECEMBER 31, 1998
1 3 7 10
Year Years Years Years
---- ----- ----- -----
PIC Balanced Composite 33.36% 24.13% 14.92% 19.16%
S&P 500 Index(1) 28.76 28.39 19.56 19.22
Lehman Brothers Government/Corporate
Bond Index(2) 9.47 7.33 7.87 9.33
S&P 500 Index/Lehman Brothers
Government/Corporate Bond Index(3) 21.45 19.92 14.94 15.38
Lipper Balanced Fund Index(4) 15.09 16.11 12.66 13.32
PIC Large Cap Growth Composite 40.95% 30.32% 17.64% 23.38%
S&P 500 Index(1) 28.76 28.39 19.56 19.22
Lipper Growth Fund Index(5) 25.69 23.67 16.86 17.21
PIC Small Cap Growth Commingled Fund 7.16% 8.35% 15.23% 21.85%
Russell 2000 Growth Index(6) 1.23 8.35 10.31 11.54
Lipper Small Cap Fund Index(7) (0.85) 9.26 12.07 13.16
- ----------
(1) The S&P 500 Index is an unmanaged index generally representative of the
market for stocks of large-sized companies.
(2) The Lehman Brothers Government/Corporate Bond Index is an unmanaged
market-weighted index which is generally regarded as representative of the
market for domestic bonds.
(3) These figures represent a blend of the performance of both the S&P 500 Index
(60%) and the Lehman Brothers Government/Corporate Bond Index (40%). This
combined index mirrors the composition of the PIC Balanced Composite.
(4) The Lipper Balanced Fund Index measures the performance of those mutual
funds that Lipper Analytical Services, Inc. has classified as "balanced."
Balanced funds maintain a portfolio of both stocks and bonds, typically with
a stock ratio of approximately 60% of assets and a bond ratio of
approximately 40% of assets. The funds in this index have a similar
investment objective as the Balanced Funds.
(5) The Lipper Growth Fund Index is composed of the 30 largest funds that
normally invest in companies with long-term earnings expected to grow
significantly faster than the earnings of the stocks represented in the
major unmanaged indices. The funds in this index have a similar investment
objective as the Growth Funds.
(6) The Russell 2000 Growth Index measures the performance of those companies in
the Russell 2000 Index with higher price-to-book ratios and lower forecasted
growth values. The Russell 2000 Index is a recognized index of
small-capitalization companies.
(7) The Lipper Small Cap Fund Index is composed of the 30 largest funds that by
prospectus or portfolio practice invest primarily in companies with market
capitalizations of less than $1 billion at the time of purchase. The funds
in this index have a similar investment objective as the Small Company
Growth Funds.
17
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
701|M/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
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.
18
Prospectus
<PAGE>
CALCULATION OF
NET ASSET VALUE
Once each business day, each Fund calculates its net asset value (NAV). NAV is
calculated at the close of regular trading on the New York Stock Exchange
(NYSE), which is normally 4 p.m., Eastern time. NAV will not be calculated on
days that the NYSE is closed for trading.
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. The NAV for Fund A
and Fund B shares will generally differ because they have different expenses.
CHOOSING BETWEEN
FUND A AND B
As mentioned earlier, there are Funds A and Funds B. While both Funds invest in
the same PIC Portfolio (for example, Balanced Fund A and Balanced Fund B invest
in the PIC Balanced Portfolio), each Fund has separate sales charge and expense
structures. Because of the different expense structures, Fund A and Fund B will
have different NAVs and dividends.
The principal advantages of Fund A shares are the lower overall expenses, the
availability of quantity discounts on volume purchases and certain account
privileges that are available only on Fund A shares. The principal advantage of
Fund B shares is that all of your money is put to work from the outset.
FUND A SHARES
Fund A shares are sold at the public offering price, which includes a front-end
sales charge. Shares are purchased at the next NAV calculated after your
investment is received by the Transfer Agent with complete information and
meeting all the requirements discussed in this Prospectus, including the shares
charge. The sales charge declines with the size of your purchase, as shown
below:
As a % of As a % of
offering your
Your investment price investment
--------------- ----- ----------
Up to $49,999 5.75% 6.10%
$50,000 to $99,999 4.50% 4.71%
$100,000 to $249,999 3.50% 3.63%
$250,000 to $499,999 2.50% 2.56%
$500,000 to $999,999 2.00% 2.04%
$1,000,000 and over None* None*
- --------
* Shareholders who buy $1 million of Fund A shares without paying a sales
charge will be charged a 1% fee on redemptions made within one year of
purchase.
FUND A SALES CHARGE WAIVERS
Shares of Fund A may be sold at net asset value (free of any sales charge) to:
(1) shareholders investing $1 million or more; (2) current shareholders of the
Balanced, Growth and Small Company Growth Funds A as of June 30, 1998 and the
Mid Cap Fund A as of September 30, 1998; (3) current or retired directors,
trustees, partners, officers and employees of the Trust, the Distributor, PIC
and its affiliates, certain family members of the above persons, and trusts or
plans primarily for such persons; (4) current or retired registered
representatives of broker-dealers
19
Prospectus
<PAGE>
YOUR ACCOUNT - CONTINUED
having sales agreements with the Distributor or full-time employees and their
spouses and minor children and plans of such persons; (5) investors who redeem
shares from an unaffiliated investment company which has a sales charge and use
the redemption proceeds to purchase Fund A shares within 60 days of the
redemption; (6) trustees or other fiduciaries purchasing shares for certain
retirement plans or organizations with 60 or more eligible employees; (7)
investment advisors and financial planners 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; (8) employee-sponsored benefit plans in connection with purchases of
Fund A shares made as a result of participant-directed exchanges between options
in such a plan; (9) "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 Fund A shares; and (10) 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 Fund A shares under
circumstances not involving any sales expense to the Trust or the Distributor.
FUND A SALES CHARGE REDUCTIONS
There are several ways you can combine multiples purchases of Fund A shares to
take advantage of the breakpoints in the sales charge schedule. These can be
combined in any manner.
ACCUMULATION PRIVILEGE -- This lets you add the value of shares of any of the
Funds A you and your family already own to the amount of your next purchase of
Fund A shares for purposes of calculating the sales charge.
LETTER OF INTENT -- This lets you purchase shares of a Fund A and any other Fund
A over a 13-month period and receive the same sales charge as if all the shares
had been purchased at one time.
COMBINATION PRIVILEGE -- This lets you combine shares of one or more Funds A for
the purpose of reducing the sales charge on the purchase of Fund A shares.
FUND B SHARES
The price you will pay to buy Fund B shares is the Fund's NAV. Shares are
purchased at the next NAV calculated after your investment is received by the
Transfer Agent with complete information and meeting all the requirements
discussed in this Prospectus.
20
Prospectus
<PAGE>
You may be charged a contingent deferred sales charge if you sell your Fund B
shares within a certain time after you purchased them. There is no charge on
shares which you acquire by reinvesting your dividends. The deferred sales
charge is based on the original cost of your shares or the market value of them
when you sell, whichever is less. The deferred sales charges are as follows:
Years after Deferred
Purchase Sales Charge
-------- ------------
1 5.00%
2 4.00%
3 3.00%
4 3.00%
5 2.00%
6 1.00%
Within the 7th Year None
When you place an order to sell your shares, we will first sell any shares in
your account which are not subject to a deferred sales charge. Next we will sell
shares subject to the lowest deferred sales charge.
After seven years, your Fund B shares automatically will convert to a class of
shares with the same investment objective and policies as your Fund. For
example, if you own shares of Balanced Fund B, they will be converted to a new
class of Balanced Fund B shares to be established. The new class of shares will
have lower distribution fees. This will mean that your Fund account will be
subject to lower overall charges. The conversion will be a non-taxable event for
you.
Deferred sales charges for Fund B shares may be reduced or waived under certain
circumstances and for certain groups. Call (800) 618-7643 for details.
DISTRIBUTION PLANS
The Trust has adopted plans pursuant to Rule 12b-1 that allows each Fund to pay
distribution fees for the sale and distribution of its shares. The plan with
respect to Fund A shares provides for the payment of a distribution fee at the
annual rate of 0.25% of each Fund's average daily net assets. The plan with
respect to Fund B shares provides for the payment of a distribution fee at the
annual rate of 0.75% of each Fund's average daily net assets and a service fee
at the annual rate of 0.25% of each Fund's average daily net assets. Because
these fees are paid out of a Fund's assets, over time these fees will increase
the cost of your investment and may cost you more than paying other types of
sales charges.
SHAREHOLDER SERVICES PLAN
In addition, the Trust, on behalf of each Fund A, has entered into a Shareholder
Services Plan with the Advisor. Under the Shareholder Services Plan, the Advisor
will provide, or arrange for others to provide, certain shareholder services to
shareholders of each Fund A. The Shareholder Services Plan provides for the
payment to the Advisor of a service fee at the annual rate of 0.15% of each Fund
A's average daily net assets.
21
Prospectus
<PAGE>
YOUR ACCOUNT - CONTINUED
HOW TO BUY SHARES
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.
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 Funds
P.O. Box 8943
Wilmington, DE 19899
BY WIRE:
Call: (800) 618-7643 to set up
an account and arrange a
wire transfer
BY OVERNIGHT DELIVERY:
Provident Investment Counsel Funds
400 Bellevue Parkway
Wilmington, DE 19809
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 NAV
calculated after your order is received by the Transfer Agent with complete
information and meeting all the requirements discussed in this Prospectus. You
may be charged a contingent deferred sales charge on the sale of your Fund B
shares.
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, you must leave at least $1,000 worth of shares in the account to keep it
open ($500 for retirement accounts).
22
Prospectus
<PAGE>
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.
Shareholders redeeming their shares by mail should submit written instructions
with a guarantee of their signature(s) by an eligible institution acceptable to
the Funds' Transfer Agent, such as a domestic bank or trust company, broker,
dealer, clearing agency or savings association, who are participants in a
medallion program recognized by the Securities Transfer Association. The three
recognized medallion programs are Securities Transfer Agents Medallion Program
(STAMP), Stock Exchanges Medallion Pregram (SEMP) and New York Stock Exchange,
Inc. Medallion Signature Program (MSP). Signature guarantees that are not part
of these programs will not be accepted. 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 under "Important Redemption
Information."
* Unless otherwise instructed, PIC will send a check to the record address.
Mail your letter to:
Provident Investment Counsel Funds
P.O. Box 8943
Wilmington, DE 19899
23
Prospectus
<PAGE>
YOUR ACCOUNT - CONTINUED
IMPORTANT REDEMPTION INFORMATION
<TABLE>
<CAPTION>
ACCOUNT TYPE SPECIAL REQUIREMENTS
------------ --------------------
<S> <C> <C>
Phone All account types * Your telephone call must be received by
(800) 618-7643 except retirement 4 p.m. Eastern time to be redeemed on that
day (maximum check request $100,000).
Mail or in Individual, Joint * The letter of instructions must be signed by all
Person Tenant, Sole Propri- persons required to sign for transactions,
etorship, UGMA, UTMA 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 corporate
Organization 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 before
except retirement using it. To verify that it is in place, call (800)
618-7643. Minimum redemption 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.
</TABLE>
24
Prospectus
<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)
* Annual and semi-annual shareholder reports (every six months)
TRANSACTION SERVICES
EXCHANGE PRIVILEGE. You may sell your Fund A shares and buy shares of other
Funds A or sell your Fund B shares and buy shares of other Funds B 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. Also see
"Shareholder Account Policies."
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. This service is
available to Fund A account holders only.
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.
25
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 591|M/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 net income along to investors
as distributions which are taxed as dividends; long term capital gain
distributions are taxed as long term capital gains regardless of how long you
have held your Fund shares. Every January, PIC will send you and the IRS a
statement showing the taxable distributions.
TAXES ON TRANSACTIONS. Your redemptions -- including exchanges -- 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 or exchange 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 sale 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.
TRANSACTION DETAILS
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
26
Prospectus
<PAGE>
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.
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 Privilege." Purchase
orders may be refused if, in PIC's opinion, they would disrupt management of the
Fund.
Please note this about purchases:
* 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 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 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.
Please note this about redemptions:
* 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 beyond seven days
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
27
Prospectus
<PAGE>
SHAREHOLDER ACCOUNT POLICIES - CONTINUED
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.
* 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. You will not be charged a deferred sales
charge for a low balance redemption from a Fund B.
Please note this about exchanges
As a shareholder, you have the privilege of exchanging shares of a Fund A for
shares of other Funds A and shares of Fund B for shares of other Funds B.
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 are considered a sale and purchase of Fund shares for tax purposes
and may result in a capital gain or loss.
* You may exchange Fund A shares only for other Fund A Shares.
* You may exchange Fund B shares only for other Fund B shares.
* 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.
* 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.
28
Prospectus
<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 situation may negatively affect the companies in which the
Portfolios invest and by extension the value of the Funds' shares. The Funds'
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.
FINANCIAL HIGHLIGHTS
These tables show the financial performance for the Funds A for up to the past
five years. The Funds B are new series of the Trust for which financial
highlights are not available. "Total return" shows how much your investment in a
Fund would have increased or decreased during each period, assuming you had
reinvested all dividends and distributions. This information has been audited by
McGladrey & Pullen, LLP, Independent Certified Public Accountants. Their reports
and the Funds' financial statements are included in the Annual Reports.
29
Prospectus
<PAGE>
SHAREHOLDER ACCOUNT POLICIES - CONTINUED
PROVIDENT INVESTMENT COUNSEL FUNDS
<TABLE>
<CAPTION>
Balanced Fund A
Year Year Year Year Year
ended ended ended ended ended
10/31/98 10/31/97 10/31/96 10/31/95 10/31/94
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 15.51 $ 13.91 $13.24 $ 11.24 $ 11.48
Income from investment operations:
Net investment income 0.16 0.16 0.14 0.15 0.15
Net realized and unrealized gain
(loss) on investments 2.44 2.64 1.34 2.00 (0.24)
Total from investment operations 2.60 2.80 1.48 2.15 (0.09)
Less distributions:
From net investment income (0.15) (0.16) (0.14) (0.15) (0.15)
From net realized gains (1.01) (1.04) (0.67) 0.00 0.00
Total distributions (1.16) (1.20) (0.81) (0.15) (0.15)
Net asset value, end of period $ 16.95 $ 15.51 $13.91 $ 13.24 $ 11.24
Total return 17.85% 21.76% 11.96% 19.35% (0.78%)
------- ------- ------ ------- -------
Ratios/supplemental data:
Net assets, end of period (millions) $ 42.0 $ 35.3 $ 12.9 $ 12.5 $ 9.1
Ratios to average net assets:*
Expenses after exp. reimbursements 1.05% 1.05% 1.05% 1.05% 1.05%
Expenses before exp. reimbursements 1.41% 1.43% 1.72% 2.32% 2.87%
Net investment income after exp.
reimbursements 0.97% 1.10% 1.05% 1.32% 1.37%
Portfolio turnover rate + 111.47% 104.50% 54.24% 106.50% 116.63%
</TABLE>
* Includes the Fund's share of expenses allocated from PIC Balanced Portfolio.
+ Portfolio turnover rate of PIC Balanced Portfolio, in which all of the Fund's
assets are invested.
Prospectus
30
<PAGE>
Provident Investment Counsel Funds
<TABLE>
<CAPTION>
Mid Cap Small Company
Growth Fund A Fund A Growth Fund A
----------------------- --------- ----------------------
Year 2/3/97* 12/31/97* Year 2/3/97*
ended through through ended through
10/31/98 10/31/97 10/31/98 10/31/98 10/31/97
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $11.44 $10.00 $10.00 $10.42 $10.00
Income from investment operations:
Net investment loss (0.07) (0.03) (0.03) (0.12) (0.03)
Net realized and unrealized gain
(loss) on investments 2.30 1.47 0.56 (1.80) 0.45
Total from investment operations 2.23 1.44 0.53 (1.92) 0.42
Less distributions:
From net investment income 0.00 0.00 0.00 0.00 0.00
From net realized gains 0.00 0.00 0.00 0.00 0.00
Total distributions 0.00 0.00 0.00 0.00 0.00
Net asset value, end of period $13.67 $11.44 $10.53 $ 8.50 $10.42
Total return 19.49% 14.40%++ 5.30%++ (18.43)% 4.20%++
------ ------ ------ ------ ------
Ratios/supplemental data:
Net assets, end of period (millions) $3.7 $2.2 $5.7 $2.7 $3.1
Ratios to average net assets:
Expenses after exp. reimbursements 1.35%o 1.35%o+ 1.04%^+ 1.55%# 1.55%#+
Expenses before exp. reimbursements 4.06%o 9.97%o+ 3.08%^+ 4.32%# 11.55%#+
Net investment loss after exp.
reimbursements (0.68)% (0.62)%+ (0.43)%+ (1.23)% (1.14)%+
Portfolio turnover rate 81.06%! 67.54%! 166.89%/ 81.75%** 151.52%**
</TABLE>
* Commencement of operations
+ Annualized.
++ Not annualized
o Includes the Fund's share of expenses allocated from PIC Growth Portfolio.
^ Includes the Fund's share of expenses allocated from PIC Mid Cap Portfolio.
# Includes the Fund's share of expenses allocated from PIC Small Cap Portfolio.
! Portfolio turnover rate of PIC Growth Portfolio, in which all of the Fund's
assets are invested.
/ Portfolio turnover rate of PIC Mid Cap Portfolio, in which all of the Fund's
assets are invested.
** Portfolio turnover rate of PIC Small Cap Portfolio, in which all of the
Fund's assets are invested.
31
Prospectus
<PAGE>
PROVIDENT INVESTMENT COUNSEL
FUNDS A AND B
BALANCED FUND
GROWTH FUND
MID CAP FUND
SMALL COMPANY GROWTH FUND
For investors who want more information about the Funds, the following documents
are available free upon request:
ANNUAL/SEMI-ANNUAL REPORTS: Additional information about the Funds A investments
is available in the Funds' annual and semi-annual reports to shareholders. In
each Fund's annual report, you will find a discussion of the market conditions
and investment strategies that significantly affected the Fund's performance
during its last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI): The SAI provides more detailed
information about the Funds and is incorporated by reference into this
Prospectus.
You can get free copies of the Funds' reports and SAI, request other information
and discuss your questions about the Funds by contacting the Funds at:
Provident Investment Counsel
P.O. Box 8943
Wilmington, DE 19899
Telephone: 1-800-618-7643
You can review and copy information including the Funds' reports and SAI at the
Public Reference Room of the Securities and Exchange Commission in Washington,
D.C. You can obtain information on the operation of the Public Reference Room by
calling 1-800-SEC-0330. You can get text-only copies:
For a fee, by writing to the Public Reference Room of the Commission,
Washington, DC 20549-6009 or by calling 1-800-SEC-0330.
Free of charge from the Commission's Internet website at http://www.sec.gov
(Investment Company Act
File No. 811-6498)
32
Prospectus
