This Amendment to the Registration Statement has been signed
by the Boards of Trustees of the Registrant and the Portfolios
File No. 33-44579
811-6498
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 27 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 [ ]
Amendment No. 30 [X]
PIC INVESTMENT TRUST
(Exact name of registrant as specified in charter)
300 North Lake Avenue
Pasadena, CA 91101-4106
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number (including area code): (626) 449-8500
THAD M. BROWN
Provident Investment Counsel
300 North Lake Avenue
Pasadena, CA 91101-4106
(Name and address of agent for service of process)
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of the registration statement.
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on (date) pursuant to paragraph (a)(i)
[X] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on (date) pursuant to paragraph (a)(ii) of Rule 485
If appropriate, check the following box
[ ] this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
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PROVIDENT INVESTMENT COUNSEL
PINNACLE FUNDS
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Growth Fund B * Balanced Fund B * Mid Cap Fund B
* Small Company Growth Fund B
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Prospectus
March , 1999
The Securities and Exchange Commission does not judge whether any mutual
fund is a good investment or whether any prospectus is accurate
or complete. It is illegal to make such claims.
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.
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CONTENTS
Key Facts ............................................ 3
The Funds at a Glance ................................ 3
Who May Want to Invest ............................... 3
Expenses ............................................. 5
Structure of the Funds and the Portfolios ............ 6
The Funds in Detail .................................. 6
Management ........................................... 6
PIC's Historical Performance Data .................... 7
More Information About the Funds' Investments
and Strategies ..................................... 8
Your Account ......................................... 10
Ways to Set Up Your Account .......................... 10
How to Buy Shares .................................... 12
How to Sell Shares ................................... 13
Important Redemption Information ..................... 15
Investor Services .................................... 16
Shareholder Account Policies ......................... 16
Dividends, Capital Gains and Taxes ................... 16
Distribution Options ................................. 17
Understanding Distributions .......................... 17
Transaction Details .................................. 17
Year 2000 Risk ....................................... 20
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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 1998, total assets under PIC's
management were over $ 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. Investors should carefully consider this investment approach.
PINNACLE BALANCED FUND B
Goal: Total return -- that is, a combination of income and capital growth, while
preserving capital.
Strategy: Invests, through the PIC Balanced Portfolio, in a combination of high
quality growth stocks and bonds.
PINNACLE GROWTH FUND B
Goal: Long term growth of capital.
Strategy: Invests, through the PIC Growth Portfolio, in high quality growth
stocks.
PINNACLE MID CAP FUND B
Goal: Long term growth of capital.
Strategy: Invests through the PIC Mid Cap Portfolio, mainly in equity securities
of medium-sized companies.
PINNACLE SMALL COMPANY GROWTH FUND B
Goal: Long term growth of capital.
Strategy: Invests, through the PIC Small Cap Portfolio, mainly in equity
securities of small companies.
WHO MAY WANT TO INVEST
The Balanced Fund may be appropriate for investors who seek potentially high
long-term returns, but hope to see less fluctuation in the value of their
investment.
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The Growth Fund may be appropriate for investors who seek potentially high
long-term returns, but are willing to accept the risk of investing in growth
stocks. The Fund is designed for those seeking capital appreciation through a
diversified portfolio of securities of companies of all sizes.
The Mid Cap 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-sized
companies.
The Small Company Growth Fund may be appropriate for investors who are willing
to ride out stock market fluctuations in pursuit of potentially above-average
long-term returns. The Small Company Growth Fund is designed for those who want
to focus on small companies.
A company is considered small or medium-sized based on its market
capitalization. A company's market capitalization is the total market value of
its outstanding common stock. Generally, a small company is one with market
capitalization or annual revenues at the time of purchase of $250 million or
less. A medium-sized company is one with $500 million to $5 billion in market
capitalization. The securities of smaller, less well-known companies (including
medium-sized companies) may be more volatile than those of larger companies.
Over time, however, small capitalization and medium capitalization stocks have
shown greater growth potential than those of large capitalization stocks. Medium
capitalization stocks tend to involve less risk than small capitalization
stocks.
The value of each Fund's investments will vary from day to day. Value generally
reflects market conditions, interest rates, and other company, political and
economic news. In the short term, stock prices can rise and fall dramatically in
response to these factors. And stock prices may decline for extended periods.
The value of the Balanced Fund's bond investments will likely fall when interest
rates rise.
By itself, no Fund is a complete, balanced investment plan. And no Fund can
guarantee that it will reach its goal. When you sell your shares, you may lose
money.
Investments in the Funds are not bank deposits and are not insured or guaranteed
by the FDIC or any other government agency.
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EXPENSES
Shareholder fees are paid directly from your investment.
Maximum sales charge on purchases
(as a percentage of offering price) None
Maximum deferred sales charge
(As a percentage of purchase or sale
price whichever is less) 5.00%
Exchange fee $ 5
Annual operating expenses are paid out of each Fund's and each Portfolio's
assets. Each Fund indirectly will pay an investment advisory fee, and each Fund
also will incur other expenses for services such as administrative services,
maintaining shareholder records and furnishing shareholder statements and
financial reports. A Fund's expenses are factored into its share price or
dividends and will not be charged directly to shareholder accounts.
Pinnacle Pinnacle Pinnacle Pinnacle
Balanced Growth Mid Cap Small Company
Fund B Fund B Fund B Growth Fund B
------ ------ ------ -------------
Management fee (paid by
the Portfolio) 0.60% 0.80% 0.70% 0.80%
12b-1 fee (paid by the Fund) 0.75% 0.75% 0.75% 0.75%
Other expenses (paid by both) 0.74% 3.19% 2.31% 3.45%
----- ----- ----- -----
Total operating expenses 2.09% 4.74% 3.76% 5.00%
Expense reimbursements* (0.19%) (2.64%) (1.62%) (2.70%)
----- ----- ----- -----
Actual operating expenses 1.90% 2.10% 2.14% 2.30%
===== ===== ===== =====
* PIC has agreed to reimburse each Fund and Portfolio for investment advisory
fees and other expenses. PIC may end or change these agreements at any time.
Examples: These examples will help you compare the cost of investing in the
Funds with the cost of investing in other mutual funds. 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:
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Pinnacle Pinnacle Pinnacle Pinnacle
Balanced Growth Mid Cap Small Company
Fund B Fund B Fund B Growth Fund B
------ ------ ------ -------------
1 year - with redemption $708 $728 $731 $ 747
without redemption 193 213 217 233
3 years - with redemption 926 985 996 1,043
without redemption 597 658 670 718
These examples are only illustrations, and your actual costs may be higher or
lower. The tables above reflect the expenses of the Funds and the Portfolios in
which they invest.
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
Pinnacle 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 Pinnacle Fund's 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.
The Funds' Board of Trustees may decide that it is in the best interests of a
Fund to stop investing in a PIC Portfolio. The Board would then decide what
further action to take, such as permitting the Fund to invest in some other
mutual fund or permitting the Fund to invest in securities directly.
THE FUNDS IN DETAIL
MANAGEMENT
PIC is the advisor to the PIC Portfolios, in which the respective Funds invest.
An investment committee of PIC formulates and implements an investment program
for each of the Portfolios, including determining which securities should be
bought and sold. PIC 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.
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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%.
PIC's investment professionals focus on individual companies rather than trying
to identify the best market sectors going forward. They seek out companies with
significant management ownership of stock, strong management goals, plans and
controls; leading proprietary positions in given market niches; and, finally,
companies that may currently be under-researched by Wall Street analysts.
The value of a Portfolio's domestic and foreign investments varies in response
to many factors. Stock values fluctuate in response to the activities of
individual companies and general market and economic conditions. Investments in
foreign securities may involve risks in addition to those of U.S. investments.
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. Each Portfolio also reserves the
right to invest without limitation in short-term instruments for temporary,
defensive purposes. At those times, a Fund would not be seeking capital growth.
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.
PIC'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 similar investment
objectives and strategies to the Funds.
These composites are unaudited and are not intended to predict or suggest the
returns that might be expected for the Funds. Figures reflect annualized
returns, except that second quarter and year-to-date figures represent actual
total returns over the period. Annualized total returns show that cumulative
total returns for a stated time period (i.e., 1, 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 accounts included in the composites are not mutual funds and are not subject
to the same rules and regulations (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
affected the performance figures shown below.
The figures shown below represent the performance of the accounts included in
the composites. The figures are net of actual fees and expenses paid by the
accounts included in the composites.
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However, these fees and expenses are generally lower than the fees and expenses
expected to be paid by the Funds. Higher fees and expenses would have resulted
in lower composite performance figures. The Indices are not managed and do not
pay any fees or expenses.
PERFORMANCE ENDED DECEMBER 31, 1998
Fourth
Quarter 1 3 7 10
1998 Year Years Years Years
---- ---- ----- ----- -----
PIC Balanced Composite 16.48% 33.36% 24.13% 14.92% 19.16%
Lipper Balanced Fund Index(1) ____% ____% ____% ____% ____%
PIC Large Cap Growth Composite 23.41 40.95 30.32 17.64 23.38
Russell Growth Fund Index (2) ____ ____ ____ ____ ____
Russell 1000 Growth Index (3) 26.74 38.71 30.62 19.06 20.56
PIC Mid Cap Growth Composite ____ ____ ____ ____ ____
Russell Midcap Index (4) ____ ____ ____ ____ ____
PIC Small Cap Growth Composite 25.49 7.16 8.35 15.02 21.85
Russell 2000 Growth Index (5) 23.64 1.23 8.35 10.31 11.54
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(1) 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 to bond ratio ranging from 60/40%.
(2) The Russell Growth Fund Index [TO BE SUPPLIED]
(3) The Russell 1000 Growth Index measures the performance of those companies
in the Russell 1000 Index with higher price-to-book ratios and higher
forecasted growth values.
(4) 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
(5) 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.
MORE INFORMATION ABOUT THE FUNDS' INVESTMENTS AND STRATEGIES
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.
PROVIDENT INVESTMENT COUNSEL PINNACLE BALANCED FUND B
The Balanced Fund seeks total return while preserving capital by investing in
the PIC Balanced Portfolio. In PIC's opinion, over time, stocks outperform bonds
and investments that are equivalent to cash. Consequently the Balanced Portfolio
will attempt to achieve total return through investments in equity securities.
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In selecting investments for the Balanced Portfolio, PIC will include equity
securities of companies of various sizes which are currently experiencing an
above-average rate of earnings growth. In addition, PIC seeks companies which
have a five-year average performance record of sales, earnings, pretax margins,
return on equity and reinvestment rate, all of which, in the aggregate, are 1.5
times the average performance of the Standard & Poor's 500 Composite Stock Price
Index for the same period. 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 $250 million, and the average market
capitalization is currently approximately $15 billion. 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 no less than 25% of its 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. In general, prices of
fixed-income securities rise when interest rates fall, and vice versa.
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.
The Balanced Portfolio may invest up to 70% of its total assets in fixed-income
securities, but it may not invest in those securities unless they have been
rated investment grade (BBB/Baa or better) or
are the unrated equivalent. Lower-rated securities have higher credit risks.
PROVIDENT INVESTMENT COUNSEL PINNACLE GROWTH FUND B
The Growth Fund seeks long term growth of capital by investing in the PIC Growth
Portfolio, which in turn invests primarily in equity securities. Under normal
circumstances, the Growth Portfolio will invest at least 80% of its assets in
equity securities. In selecting investments for the Growth Portfolio, PIC will
include equity securities of companies of various sizes which are currently
experiencing an above-average rate of earnings growth. PIC uses "bottom-up"
fundamental research to identify companies which have a five-year average
performance record of sales, earnings, pretax margins, return on equity and
reinvestment rate, all of which, in the aggregate, are 1.5 times the average
performance of the Standard & Poor's Index of 500 Common Stocks for the same
period. The minimum market capitalization of a portfolio security is expected to
be $250 million, and the average market capitalization is currently
approximately $15 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.
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PROVIDENT INVESTMENT COUNSEL PINNACLE MID CAP FUND B
The Mid Cap Fund seeks 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 $500 million to $5 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.
PROVIDENT INVESTMENT COUNSEL PINNACLE SMALL COMPANY GROWTH FUND B
The Small Company Growth Fund seeks long term growth of capital by investing in
the PIC Small Cap Portfolio, which in turn invests primarily in equity
securities of small companies.
PIC will invest at least 65%, and normally at least 95%, of the Portfolio's
total assets in these securities. The Small Cap Portfolio has flexibility,
however, to invest the balance in other market capitalizations and security
types. Small 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.
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.
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* 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
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.
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HOW TO BUY SHARES
Once each business day, each Fund calculates its share price: The share price is
the Fund's net asset value (NAV). Shares are purchased at the next share price
calculated after your investment is received and accepted. Share price is
normally calculated at 4 p.m. Eastern time.
If you are investing through a tax-sheltered retirement plan, such as an IRA,
for the first time, you will need a special application. Retirement investing
also involves its own investment procedures. Call (800) 618-7643 for more
information and a retirement application.
If you buy shares by check and then sell those shares within two weeks, the
payment may be delayed for up to seven business days to ensure that your
purchase check has cleared.
If you are investing by wire, please be sure to call (800) 618-7643 before
sending each wire.
Minimum Investments
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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
P.O. Box 8943
Wilmington, DE 19899
By Wire: Call: (800) 618-7643 to set up an account and arrange a wire transfer
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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.
You may be charged a contingent deferred sales charge if you sell your 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 Purchase Deferred 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.
Your Fund shares automatically will convert to shares of the corresponding
Pinnacle Fund A after seven years. For example, if you own shares of Pinnacle
Balanced Fund B, they will be converted to shares of Pinnacle Balanced Fund A.
This will mean that your Fund account will be subject to lower overall charges.
The conversion will be a taxable event for you.
Deferred sales charges may be reduced or waived under certain circumstances and
for certain groups. Call ____________________ for details.
The Trust has adopted a plan pursuant to Rule 12b-1 that allows a Fund to pay
distribution fees for the sale and distribution of its shares. 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. The plan provides for annual payments of 0.75% of each Fund's average
daily net assets.
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).
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Certain requests must include a signature guarantee. It is designed to protect
you and the Funds from fraud. Your request must be made in writing and include a
signature guarantee if any of the following situations apply:
* You wish to redeem more than $100,000 worth of shares,
* Your account registration has changed within the last 30 days,
* The check is being mailed to a different address from the one on your account
(record address), or
* The check is being made payable to someone other than the account owner.
You should be able to obtain a signature guarantee from a bank, broker-dealer,
credit union (if authorized under state law), securities exchange or
association, clearing agency or savings association. A notary public cannot
provide a signature guarantee.
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
* Your name,
* Your Fund account number,
* The dollar amount or number of shares to be redeemed, and
* Any other applicable requirements listed in the table at right.
* Unless otherwise instructed, PIC will send a check to the record address.
Mail your letter to: Provident Investment Counsel Funds
P.O. Box 8943
Wilmington, DE 19899
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IMPORTANT REDEMPTION INFORMATION
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 (maximum check request
$100,000).
Mail or in Individual, Joint * The letter of instructions must be
Person Tenant, Sole Propri- signed by all persons required to
etorship, UGMA, sign for transactions, exactly as
UTMA their names appear on the account.
Retirement Account * The account owner should complete a
retirement distribution form. Call
(800) 618-7643 to request one.
Trust * The trustee must sign the letter
indicating capacity as trustee. If
the trustee's name is not in the
account registration, provide a copy
of the trust document certified
within the last 60 days.
Business or * At least one person authorized by
Organization corporate resolutions to act on the
account must sign the letter.
* Include a corporate resolution with
corporate seal or a signature
guarantee.
Executor, * Call (800) 618-7643 for instructions.
Administrator,
Conservator,
Guardian
Wire All account types * You must sign up for the wire feature
except retirement before using it. To verify that it is
in place, call (800) 618-7643.
Minimum wire: $5,000.
* Your wire redemption request must be
received by the Fund before 4 p.m.
Eastern time for money to be wired
the next business day.
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INVESTOR SERVICES
PIC provides a variety of services to help you manage your account.
INFORMATION SERVICES
PIC'S telephone representatives can be reached at (800) 618-7643.
Statements and reports that PIC sends to you include the following:
* Confirmation statements (after every transaction that affects your account
balance or your account registration)
* Financial reports (every six months)
TRANSACTION SERVICES
Exchange Privilege. You may sell your Fund shares and buy shares of other
Pinnacle 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. The Funds' Transfer Agent, Provident Financial Processing Corp.,
charges a $5 fee for each exchange, which is automatically deducted when the
exchange is made. Also see "Exchange Restrictions."
Systematic withdrawal plans let you set up periodic redemptions from your
account. These redemptions take place on the 25th day of each month or, if that
day is a weekend or holiday, on the prior business day.
REGULAR INVESTMENT PLANS
One easy way to pursue your financial goals is to invest money regularly. PIC
offers convenient services that let you transfer money into your Fund account
automatically. Automatic investments are made on the 20th day of each month or,
if that day is a weekend or holiday, on the prior business day. While regular
investment plans do not guarantee a profit and will not protect you against loss
in a declining market, they can be an excellent way to invest for retirement, a
home, educational expenses, and other long term financial goals. Certain
restrictions apply for retirement accounts. Call (800) 618-7643 for more
information.
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:
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1. Reinvestment Option. Your dividend and capital gain distributions will be
automatically reinvested in additional shares of the Fund. If you do not
indicate a choice on your application, you will be assigned this option.
2. Income-Earned Option. Your capital gain distributions will be automatically
reinvested, but you will be sent a check for each dividend distribution.
3. Cash Option. You will be sent a check for your dividend and capital gain
distributions.
For retirement accounts, all distributions are automatically reinvested. When
you are over 59 1/2 years old, you can receive distributions in cash.
When a Fund deducts a distribution from its NAV, the reinvestment price is the
Fund's NAV at the close of business that day. Cash distribution checks will be
mailed within seven days.
UNDERSTANDING DISTRIBUTIONS
As a Fund shareholder, you are entitled to your share of the Fund's net income
and gains on its investments. The Fund passes its net income along to investors
as distributions which are taxed as dividends; long term capital gain
distributions are taxed as long term capital gains. Every January, PIC will send
you and the IRS a statement showing the taxable distributions.
Taxes on Transactions. Your redemptions--including exchanges to other Pinnacle
Funds B--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
Each Fund is open for business each day the New York Stock Exchange (NYSE) is
open.
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.
17
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When you sign your account application, you will be asked to certify that your
Social Security or taxpayer identification number is correct and that you are
not subject to 31% withholding for failing to report income to the IRS. If you
violate IRS regulations, the IRS can require a Fund to withhold
31% of your taxable distributions and redemptions.
You may initiate many transactions by telephone. PIC may only be liable for
losses resulting from unauthorized transactions if it does not follow reasonable
procedures designed to verify the identity of the caller. PIC will request
personalized security codes or other information, and may also record calls. You
should verify the accuracy of your confirmation statements immediately after you
receive them. If you do not want the liability to redeem or exchange by
telephone, call PIC for instructions.
Each Fund reserves the right to suspend the offering of shares for a period of
time. Each Fund also reserves the right to reject any specific purchase order,
including certain purchases by exchange. See "Exchange Restrictions." 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.
18
<PAGE>
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 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.
* 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.
Please note this about exchanges
As a shareholder, you have the privilege of exchanging shares of a Fund for
shares of other Provident Investment Counsel Pinnacle 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 may have tax consequences for you.
* Because excessive trading can hurt fund performance and shareholders, each
Fund reserves the right to temporarily or permanently terminate the exchange
privilege of any investor who makes more than four exchanges out of a Fund
per calendar year. Accounts under common ownership or control, including
accounts with the same taxpayer identification number, will be counted
together for the purposes of the four exchange limit.
* 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.
19
<PAGE>
YEAR 2000 RISK.
Like other business organizations around the world, the Funds could be adversely
affected if the computer systems used by their investment advisor and other
service providers do not properly process and calculate information related to
dates beginning January 1, 2000. This is commonly known as the "Year 2000
Issue." The Funds' 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.
20
<PAGE>
PIC INVESTMENT TRUST
Statement of Additional Information
Dated ___________, 1999
This Statement of Additional Information ("SAI") is not a prospectus, and it
should be read in conjunction with the applicable prospectus of the Provident
Investment Counsel Pinnacle Balanced Fund B, Provident Investment Counsel
Pinnacle Growth Fund B, Provident Investment Counsel Pinnacle Mid Cap Fund B and
Provident Investment Counsel Pinnacle Small Company Growth Fund, series of PIC
Investment Trust (the "Trust"), which share a common prospectus. There are eight
other series of the Trust: Provident Investment Counsel Pinnacle Balanced Fund
A, Provident Investment Counsel Pinnacle Growth Fund A, Provident Investment
Counsel Pinnacle Mid Cap Fund A and Provident Investment Counsel Pinnacle Small
Company Growth Fund A, Provident Investment Counsel Growth Fund I, Provident
Investment Counsel Mid Cap Fund I, Provident Investment Counsel Small Company
Growth Fund I and Provident Investment Counsel Small Cap Growth Fund I. The
Provident Investment Counsel Pinnacle Balanced Fund B(the "Balanced Fund")
invests in the PIC Balanced Portfolio; the Provident Investment Counsel Pinnacle
Growth Fund B (the "Growth Fund") invests in the PIC Growth Portfolio; the
Provident Investment Counsel Pinnacle Mid Cap Fund B (the "Mid Cap Fund")
invests in the PIC Mid Cap Portfolio; the Provident Investment Counsel Pinnacle
Small Company Growth Fund B (the "Small Company Growth Fund") invests in the PIC
Small Cap Portfolio. (In this SAI, the Balanced Fund, the Growth Fund, the Mid
Cap Fund and the Small Company Growth Fund may be referred to as the "Funds",
and the PIC Balanced Portfolio, PIC Growth Portfolio, PIC Mid Cap Portfolio and
PIC Small Cap Portfolio may be referred to as the "Portfolios.") Provident
Investment Counsel (the "Advisor") is the Advisor to the Portfolios. A copy of
the applicable prospectus may be obtained from the Trust at 300 North Lake
Avenue, Pasadena, CA 91101-4106, telephone (818) 449-8500.
TABLE OF CONTENTS
Investment Objectives and Policies ...................... B-2
The Balanced Fund .................................... B-2
The Growth Fund ...................................... B-3
The Mid Cap Fund ..................................... B-3
The Small Company Growth Fund ........................ B-3
Investment Restrictions .............................. B-4
Repurchase Agreements ................................ B-6
Options Activities ................................... B-6
Futures Contracts .................................... B-7
Foreign Securities ................................... B-8
Forward Foreign Currency Exchange Contracts .......... B-9
Segregated Accounts .................................. B-11
Debt Securities and Ratings .......................... B-11
Management .............................................. B-11
Custodian and Auditors .................................. B-15
Portfolio Transactions and Brokerage .................... B-15
Portfolio Turnover ...................................... B-17
Additional Purchase and Redemption Information .......... B-17
Net Asset Value ......................................... B-18
Taxation ................................................ B-18
Dividends and Distributions ............................. B-19
Performance Information ................................. B-20
General Information ..................................... B-21
Appendix ................................................ B-23
B-1
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INVESTMENT OBJECTIVES AND POLICIES
Introduction
Each Fund seeks to achieve its investment objective by investing all of its
assets in a PIC Portfolio. Each Portfolio is a separate registered investment
company with the same investment objective as the Fund. Since a Fund will not
invest in any securities other than shares of a Portfolio, investors in the Fund
will acquire only an indirect interest in the Portfolio. Each Fund's and
Portfolio's investment objective cannot be changed without shareholder approval.
In addition to selling its shares to a Fund, a Portfolio may sell its
shares to other mutual funds or institutional investors. All investors in a
Portfolio invest on the same terms and conditions and pay a proportionate share
of the Portfolio's expenses. However, other investors in a Portfolio may sell
their shares to the public at prices different from those of a Fund as a result
of the imposition of sales charges or different operating expenses. You should
be aware that these differences may result in different returns from those of
investors in other entities investing in a Portfolio. Information concerning
other holders of interests in a Portfolio is available by calling (800)618-7643.
The Trustees of the Trust believe that this structure may enable a Fund to
benefit from certain economies of scale, based on the premise that certain of
the expenses of managing an investment portfolio are relatively fixed and that a
larger investment portfolio may therefore achieve a lower ratio of operating
expenses to net assets. Investing a Fund's assets in a Portfolio may produce
other benefits resulting from increased asset size, such as the ability to
participate in transactions in securities which may be offered in larger
denominations than could be purchased by the Fund alone. A Fund's investment in
a Portfolio may be withdrawn by the Trustees at any time if the Board determines
that it is in the best interests of a Fund to do so. If any such withdrawal were
made, the Trustees would consider what action might be taken, including the
investment of all of the assets of a Fund in another pooled investment company
or the retaining of an investment advisor to manage the Fund's assets directly.
Whenever a Fund is requested to vote on matters pertaining to a Portfolio,
the Fund will hold a meeting of its shareholders, and the Fund's votes with
respect to the Portfolio will be cast in the same proportion as the shares of
the Fund for which voting instructions are received.
The Balanced Fund
The investment objective of the Balanced Fund is to provide high total
return while reducing risk. The Balanced Fund may also attempt to earn current
income and reduce the variability of the net asset value of its shares by
investing a portion of its assets in short-term investments. Normally, these
investments will range from 0 to 20% of its assets. There is no assurance that
the Balanced Fund will achieve its objective. The Balanced Fund will attempt to
achieve its objective by investing all of its assets in shares of the PIC
Balanced Portfolio (the "Balanced Portfolio"). The Balanced Portfolio is a
diversified open-end management investment company having the same investment
B-2
<PAGE>
objective as the Balanced Fund. The discussion below supplements information
contained in the prospectus as to investment policies of the Balanced Fund and
the Balanced Portfolio. Because the investment characteristics of the Balanced
Fund will correspond directly to those of the Balanced Portfolio, the discussion
refers to those investments and techniques employed by the Balanced Portfolio.
The Growth Fund
The investment objective of the Growth Fund is to provide long-term growth
of capital. There is no assurance that the Growth Fund will achieve its
objective. The Growth Fund will attempt to achieve its objective by investing
all of its assets in shares of the PIC Growth Portfolio (the "Growth
Portfolio"). The Growth Portfolio is a diversified open-end management
investment company having the same investment objective as the Growth Fund. The
discussion below supplements information contained in the prospectus as to
investment policies of the Growth Fund and the Growth Portfolio. Because the
investment characteristics of the Growth Fund will correspond directly to those
of the Growth Portfolio, the discussion refers to those investments and
techniques employed by the Growth Portfolio.
The Mid Cap Fund
The investment objective of the Mid Cap Fund is to provide long-term growth
of capital. There is no assurance that the Mid Cap Fund will achieve its
objective. The Mid Cap Fund will attempt to achieve its objective by investing
all of its assets in shares of the PIC Mid Cap Portfolio (the "Mid Cap
Portfolio"). The Mid Cap Portfolio is a diversified open-end management
investment company having the same investment objective as the Mid Cap Fund. The
discussion below supplements information contained in the prospectus as to
investment policies of the Mid Cap Fund and the Mid Cap Portfolio. Because the
investment characteristics of the Mid Cap Fund will correspond directly to those
of the Mid Cap Portfolio, the discussion refers to those investments and
techniques employed by the Mid Cap Portfolio.
The Small Company Growth Fund
The investment objective of the Small Company Growth Fund is to provide
capital appreciation. There is no assurance that Small Company Growth Fund will
achieve its objective. The Small Company Growth Fund will attempt to achieve its
objective by investing all of its assets in shares of the PIC Small Cap
Portfolio (the "Small Cap Portfolio"). The Small Cap Portfolio is a diversified
open-end management investment company having the same investment objective as
the Small Company Growth Fund. The discussion below supplements information
contained in the prospectus as to investment policies of the Small Company
Growth Fund and the Small Cap Portfolio. Because the investment characteristics
of the Small Company Growth Fund will correspond directly to those of the Small
Cap Portfolio, the discussion refers to those investments and techniques
employed by the Small Cap Portfolio.
B-3
<PAGE>
Investment Restrictions
The Trust (on behalf of the Funds) and the Portfolios have adopted the
following restrictions as fundamental policies, which may not be changed without
the favorable vote of the holders of a "majority," as defined in the Investment
Company Act of 1940 (the "1940 Act"), of the outstanding voting securities of a
Fund or a Portfolio. Under the 1940 Act, the "vote of the holders of a majority
of the outstanding voting securities" means the vote of the holders of the
lesser of (i) 67% of the shares of a Fund or a Portfolio represented at a
meeting at which the holders of more than 50% of its outstanding shares are
represented or (ii) more than 50% of the outstanding shares of a Fund or a
Portfolio. Except with respect to borrowing, changes in values of assets of a
particular Fund or Portfolio will not cause a violation of the investment
restrictions so long as percentage restrictions are observed by such Fund or
Portfolio at the time it purchases any security.
As a matter of fundamental policy, the Portfolios are diversified; i.e., as
to 75% of the value of a Portfolio's total assets, no more than 5% of the value
of its total assets may be invested in the securities of any one issuer (other
than U.S. Government securities). The Funds invest all of their assets in shares
of the Portfolios. Each Fund's and each Portfolio's investment objective is
fundamental.
In addition, no Fund or Portfolio may:
1. Issue senior securities, borrow money or pledge its assets, except that
a Fund or a Portfolio may borrow on an unsecured basis from banks for temporary
or emergency purposes or for the clearance of transactions in amounts not
exceeding 10% of its total assets (not including the amount borrowed), provided
that it will not make investments while borrowings in excess of 5% of the value
of its total assets are outstanding;
2. Make short sales of securities or maintain a short position;
3. Purchase securities on margin, except such short-term credits as may be
necessary for the clearance of transactions;
4. Write put or call options, except that the Balanced Portfolio may write
covered call and cash secured put options on debt securities, and the Small Cap
Portfolio may write covered call and cash secured put options and purchase call
and put options on stocks and stock indices;
5. Act as underwriter (except to the extent a Fund or Portfolio may be
deemed to be an underwriter in connection with the sale of securities in its
investment portfolio);
6. Invest 25% or more of its total assets, calculated at the time of
purchase and taken at market value, in any one industry (other than U.S.
Government securities), except that any of the Funds may invest more than 25% of
their assets in shares of a Portfolio;
B-4
<PAGE>
7. Purchase or sell real estate or interests in real estate or real estate
limited partnerships (although any Portfolio may purchase and sell securities
which are secured by real estate and securities of companies which invest or
deal in real estate);
8. Purchase or sell commodities or commodity futures contracts, except that
any Portfolio may purchase and sell stock index futures contracts and the
Balanced Portfolio may purchase and sell interest rate futures contracts;
9. Invest in oil and gas limited partnerships or oil, gas or mineral
leases;
10. Make loans (except for purchases of debt securities consistent with the
investment policies of the Funds and the Portfolios and except for repurchase
agreements); or
11. Make investments for the purpose of exercising control or management.
The Portfolios observe the following restrictions as a matter of operating
but not fundamental policy.
No Portfolio may:
1. Invest more than 10% of its assets in the securities of other investment
companies or purchase more than 3% of any other investment company's voting
securities or make any other investment in other investment companies except as
permitted by federal and state law; or
2. Invest more than 15% of its net assets in securities which are
restricted as to disposition or otherwise are illiquid or have no readily
available market (except for securities issued under Rule 144A which are
determined by the Board of Trustees to be liquid).
Securities and Investment Practices
The discussion below supplements information contained in the prospectus as
to investment policies of the Portfolios. PIC may not buy all of these
instruments or use all of these techniques to the full extent permitted unless
it believes that doing so will help a Portfolio achieve its goals.
Equity Securities
Equity securities are common stocks and other kinds of securities that have
the characteristics of common stocks. These other securities include bonds,
debentures and preferred stocks which can be converted into common stocks. They
also include warrants and options to purchase common stocks.
B-5
<PAGE>
Short-Term Investments
Short-term investments are debt securities that mature within a year of the
date they are purchased by a Portfolio. Some specific examples of short-term
investments are commercial paper, bankers' acceptances, certificates of deposit
and repurchase agreements. A Portfolio will only purchase short-term investments
which are "high quality," meaning the investments have been rated A-1 by
Standard & Poor's Ratings Group ("S&P") or Prime-1 by Moody's Investors Service,
Inc. ("Moody's"), or have an issue of debt securities outstanding rated at least
A by S&P or Moody's. The term also applies to short-term investments that PIC
believes are comparable in quality to those with an A-1 or Prime-1 rating. U.S.
Government securities are always considered to be high quality.
Repurchase Agreements
Repurchase agreements are transactions in which a Fund or a Portfolio
purchases a security from a bank or recognized securities dealer and
simultaneously commits to resell that security to the bank or dealer at an
agreed-upon date and price reflecting a market rate of interest unrelated to the
coupon rate or maturity of the purchased security. The purchaser maintains
custody of the underlying securities prior to their repurchase; thus the
obligation of the bank or dealer to pay the repurchase price on the date agreed
to is, in effect, secured by such underlying securities. If the value of such
securities is less than the repurchase price, the other party to the agreement
will provide additional collateral so that at all times the collateral is at
least equal to the repurchase price.
Although repurchase agreements carry certain risks not associated with
direct investments in securities, the Funds and the Portfolios intend to enter
into repurchase agreements only with banks and dealers believed by the Advisor
to present minimum credit risks in accordance with guidelines established by the
Boards of Trustees. The Advisor will review and monitor the creditworthiness of
such institutions under the Boards' general supervision. To the extent that the
proceeds from any sale of collateral upon a default in the obligation to
repurchase were less than the repurchase price, the purchaser would suffer a
loss. If the other party to the repurchase agreement petitions for bankruptcy or
otherwise becomes subject to bankruptcy or other liquidation proceedings, there
might be restrictions on the purchaser's ability to sell the collateral and the
purchaser could suffer a loss. However, with respect to financial institutions
whose bankruptcy or liquidation proceedings are subject to the U.S. Bankruptcy
Code, the Funds and the Portfolios intend to comply with provisions under such
Code that would allow them immediately to resell the collateral.
Options Activities
The Balanced Portfolio may write (i.e., sell) call options ("calls") on
debt securities, and the Small Cap Portfolio may write call options on stocks
and stock indices, if the calls are "covered" throughout the life of the option.
call is "covered" if the Portfolio owns the optioned securities. When the
Balanced or Small Cap Portfolio writes a call, it receives a premium and gives
the purchaser the right to buy the underlying security at any time during the
call period at a fixed exercise price regardless of market price changes during
the call period. If the call is exercised, the Portfolio will forgo any gain
from an increase in the market price of the underlying security over the
exercise price.
B-6
<PAGE>
The Balanced and Small Cap Portfolios may purchase a call on securities to
effect a "closing purchase transaction," which is the purchase of a call
covering the same underlying security and having the same exercise price and
expiration date as a call previously written by the Portfolio on which it wishes
to terminate its obligation. If the Portfolio is unable to effect a closing
purchase transaction, it will not be able to sell the underlying security until
the call previously written by the Portfolio expires (or until the call is
exercised and the Portfolio delivers the underlying security).
The Balanced and Small Cap Portfolios also may write and purchase put
options ("puts"). When the Portfolio writes a put, it receives a premium and
gives the purchaser of the put the right to sell the underlying security to the
Portfolio at the exercise price at any time during the option period. When the
Portfolio purchases a put, it pays a premium in return for the right to sell the
underlying security at the exercise price at any time during the option period.
If any put is not exercised or sold, it will become worthless on its expiration
date.
A Portfolio's option positions may be closed out only on an exchange which
provides a secondary market for options of the same series, but there can be no
assurance that a liquid secondary market will exist at a given time for any
particular option.
In the event of a shortage of the underlying securities deliverable on
exercise of an option, the Options Clearing Corporation has the authority to
permit other, generally comparable securities to be delivered in fulfillment of
option exercise obligations. If the Options Clearing Corporation exercises its
discretionary authority to allow such other securities to be delivered, it may
also adjust the exercise prices of the affected options by setting different
prices at which otherwise ineligible securities may be delivered. As an
alternative to permitting such substitute deliveries, the Options Clearing
Corporation may impose special exercise settlement procedures.
Futures Contracts
The Balanced Portfolio may buy and sell interest rate futures contracts,
and all the Portfolios may buy and sell stock index futures contracts. A futures
contract is an agreement between two parties to buy and sell a security or an
index for a set price on a future date. Futures contracts are traded on
designated "contract markets" which, through their clearing corporations,
guarantee performance of the contracts.
Entering into a futures contract for the sale of securities has an effect
similar to the actual sale of securities, although sale of the futures contract
might be accomplished more easily and quickly. Entering into futures contracts
for the purchase of securities has an effect similar to the actual purchase of
the underlying securities, but permits the continued holding of securities other
than the underlying securities.
A stock index futures contract may be used as a hedge by any of the
Portfolios with regard to market risk as distinguished from risk relating to a
specific security. A stock index futures contract does not require the physical
delivery of securities, but merely provides for profits and losses resulting
B-7
<PAGE>
from changes in the market value of the contract to be credited or debited at
the close of each trading day to the respective accounts of the parties to the
contract. On the contract's expiration date, a final cash settlement occurs.
Changes in the market value of a particular stock index futures contract
reflects changes in the specified index of equity securities on which the future
is based.
There are several risks in connection with the use of futures contracts. In
the event of an imperfect correlation between the futures contract and the
portfolio position which is intended to be protected, the desired protection may
not be obtained and a Portfolio may be exposed to risk of loss. Further,
unanticipated changes in interest rates or stock price movements may result in a
poorer overall performance for a Portfolio than if it had not entered into any
futures on stock indices.
In addition, the market prices of futures contracts may be affected by
certain factors. First, all participants in the futures market are subject to
margin deposit and maintenance requirements. Rather than meeting additional
margin deposit requirements, investors may close futures contracts through
offsetting transactions which could distort the normal relationship between the
securities and futures markets. Second, from the point of view of speculators,
the deposit requirements in the futures market are less onerous than margin
requirements in the securities market. Therefore, increased participation by
speculators in the futures market may also cause temporary price distortions.
Finally, positions in futures contracts may be closed out only on an
exchange or board of trade which provides a secondary market for such futures.
There is no assurance that a liquid secondary market on an exchange or board of
trade will exist for any particular contract or at any particular time.
Foreign Securities
The Portfolios may invest in securities of foreign issuers in foreign
markets. In addition, the Portfolios may invest in American Depositary Receipts
("ADRs"), which are receipts, usually issued by a U.S. bank or trust company,
evidencing ownership of the underlying securities. Generally, ADRs are issued in
registered form, denominated in U.S. dollars, and are designed for use in the
U.S. securities markets. A depositary may issue unsponsored ADRs without the
consent of the foreign issuer of securities, in which case the holder of the ADR
may incur higher costs and receive less information about the foreign issuer
than the holder of a sponsored ADR. A Portfolio may invest no more than 20% of
its total assets in foreign securities, and it will only purchase foreign
securities or ADRs which are listed on a national securities exchange or
included in the NASDAQ system.
Foreign securities and securities issued by U.S. entities with substantial
foreign operations may involve additional risks and considerations. These
include risks relating to political or economic conditions in foreign countries,
fluctuations in foreign currencies, withholding or other taxes, operational
risks, increased regulatory burdens and the potentially less stringent investor
protection and disclosure standards of foreign markets. All of these factors can
make foreign investments, especially those in developing countries, more
volatile.
B-8
<PAGE>
Forward Foreign Currency Exchange Contracts
The Portfolios may enter into forward contracts with respect to specific
transactions. For example, when a Portfolio enters into a contract for the
purchase or sale of a security denominated in a foreign currency, or when it
anticipates the receipt in a foreign currency of dividend or interest payments
on a security that it holds, the Portfolio may desire to "lock in" the U.S.
dollar price of the security or the U.S. dollar equivalent of the payment, by
entering into a forward contract for the purchase or sale, for a fixed amount of
U.S. dollars or foreign currency, of the amount of foreign currency involved in
the underlying transaction. The Portfolio will thereby be able to protect itself
against a possible loss resulting from an adverse change in the relationship
between the currency exchange rates during the period between the date on which
the security is purchased or sold, or on which the payment is declared, and the
date on which such payments are made or received.
The precise matching of the forward contract amounts and the value of the
securities involved will not generally be possible because the future value of
such securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date the forward contract
is entered into and the date it matures. Accordingly, it may be necessary for a
Portfolio to purchase additional foreign currency on the spot (i.e., cash)
market (and bear the expense of such purchase) if the market value of the
security is less than the amount of foreign currency the Portfolio is obligated
to deliver and if a decision is made to sell the security and make delivery of
the foreign currency. Conversely, it may be necessary to sell on the spot market
some of the foreign currency received upon the sale of the portfolio security if
its market value exceeds the amount of foreign currency a Portfolio is obligated
to deliver. The projection of short-term currency market movements is extremely
difficult, and the successful execution of a short-term hedging strategy is
highly uncertain. Forward contracts involve the risk that anticipated currency
movements will not be accurately predicted, causing a Portfolio to sustain
losses on these contracts and transaction costs. The Portfolios may enter into
forward contracts or maintain a net exposure to such contracts only if (1) the
consummation of the contracts would not obligate the Portfolio to deliver an
amount of foreign currency in excess of the value of the Portfolio's securities
or other assets denominated in that currency or (2) the Portfolio maintains a
segregated account as described below. Under normal circumstances, consideration
of the prospect for currency parities will be incorporated into the longer term
investment decisions made with regard to overall diversification strategies.
However, the Advisor believes it is important to have the flexibility to enter
into such forward contracts when it determines that the best interests of a
Portfolio will be served.
At or before the maturity date of a forward contract that requires a
Portfolio to sell a currency, the Portfolio may either sell a security and use
the sale proceeds to make delivery of the currency or retain the security and
offset its contractual obligation to deliver the currency by purchasing a second
contract pursuant to which the Portfolio will obtain, on the same maturity date,
the same amount of the currency that it is obligated to deliver. Similarly, a
Portfolio may close out a forward contract requiring it to purchase a specified
currency by entering into a second contract entitling it to sell the same amount
of the same currency on the maturity date of the first contract. The Portfolio
would realize a gain or loss as a result of entering into such an offsetting
forward contract under
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either circumstance to the extent the exchange rate between the currencies
involved moved between the execution dates of the first and second contracts.
The cost to a Portfolio of engaging in forward contracts varies with
factors such as the currencies involved, the length of the contract period and
the market conditions then prevailing. Because forward contracts are usually
entered into on a principal basis, no fees or commissions are involved. The use
of forward contracts does not eliminate fluctuations in the prices of the
underlying securities a Portfolio owns or intends to acquire, but it does fix a
rate of exchange in advance. In addition, although forward contracts limit the
risk of loss due to a decline in the value of the hedged currencies, at the same
time they limit any potential gain that might result should the value of the
currencies increase.
Segregated Accounts
When a Portfolio writes an option, sells a futures contract or enters into
a forward foreign currency exchange contract, it will establish a segregated
account with its custodian bank, or a securities depository acting for it, to
hold assets of the Portfolio in order to insure that the Portfolio will be able
to meet its obligations. In the case of a call that has been written, the
securities covering the option will be maintained in the segregated account and
cannot be sold by a Portfolio until released. In the case of a put that has been
written or a forward foreign currency contract that has been entered into,
liquid securities will be maintained in the segregated account in an amount
sufficient to meet a Portfolio's obligations pursuant to the put or forward
contract. In the case of a futures contract, liquid securities will be
maintained in the segregated account equal in value to the current value of the
underlying contract, less the margin deposits. The margin deposits are also
held, in cash or U.S. Government securities, in the segregated account.
Debt Securities and Ratings
Ratings of debt securities represent the rating agencies' opinions
regarding their quality, are not a guarantee of quality and may be reduced after
a Portfolio has acquired the security. The Advisor will consider whether the
Portfolio should continue to hold the security but is not required to dispose of
it. Credit ratings attempt to evaluate the safety of principal and interest
payments and do not evaluate the risks of fluctuations in market value. Also,
rating agencies may fail to make timely changes in credit ratings in response to
subsequent events, so that an issuer's current financial conditions may be
better or worse than the rating indicates.
MANAGEMENT
The overall management of the business and affairs of the Trust is vested
with its Board of Trustees. The Board approves all significant agreements
between the Trust and persons or companies furnishing services to it, including
the agreements with the Advisor, Administrator, Custodian and Transfer Agent.
Likewise, the Portfolios each have a Board of Trustees which have comparable
responsibilities, including approving agreements with the Advisor. The day to
day operations of the Trust and the Portfolios are delegated to their officers,
subject to their investment objectives and policies and to general supervision
by their Boards of Trustees.
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The Trustees and officers of the Trust, their business addresses and
principal occupations during the past five years are:
Jettie M. Edwards (age 52), Consulting principal of
Trustee Syrus Associates (consulting firm)
76 Seaview Drive
Santa Barbara, CA 93108
Jeffrey D. Lovell (age 46), Managing Director, President and co-founder
Trustee of Putnam, Lovell & Thornton, Inc.
11150 Santa Monica Blvd., Ste 1650 (investment bankers)
Los Angeles, CA 90025
Jeffrey J. Miller (age 48), Managing Director and Secretary of the
President and Trustee* Advisor; President and Trustee of each of
300 North Lake Avenue the Portfolios
Pasadena, CA 91101
Wayne H. Smith (age 57), Vice President and Treasurer of Avery
Trustee Dennison Corporation (pressure sensitive
150 N. Orange Grove Blvd. material and office products manufacturer)
Pasadena, CA 91103
Thad M. Brown (age 48), Senior Vice President and Chief Financial
Vice President, Secretary Officer of the Advisor
and Treasurer of the Trust
300 North Lake Avenue
Pasadena, CA 91101
The Trustees and officers of each of the Portfolios, their business address
and their occupations during the past five years are:
Richard N. Frank (age 75), Chief Executive Officer, Lawry's
Trustee Restaurants, Inc.; formerly Chairman
234 E. Colorado Blvd. of Lawry's Foods, Inc.
Pasadena, CA 91101
James Clayburn LaForce (age70), Dean Emeritus, John E. Anderson Graduate
Trustee School of Management, University of
P.O. Box 1585 California, Los Angeles. Director of The
Pauma Valley, CA 92061 BlackRock Funds. Trustee of Payden & Rygel
Investment Trust. Director of the Timken
Co., Rockwell International, Eli Lilly,
Jacobs Engineering Group and Imperial
Credit Industries.
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Jeffrey J. Miller (age 48), Managing Director and Secretary of the
President and Trustee* Advisor
300 North Lake Avenue
Pasadena, CA 91101
Angelo R. Mozilo (age 59), Vice Chairman and Executive Vice President
Trustee of Countrywide Credit Industries (mortgage
155 N. Lake Avenue banking)
Pasadena, CA 91101
Thad M. Brown (age 48), Senior Vice President and Chief Financial
Vice President, Secretary Officer of the Advisor
and Treasurer of the Trust
300 North Lake Avenue
Pasadena, CA 91101
- ----------
* denotes Trustees who are "interested persons" of the Trust or Portfolios
under the 1940 Act.
The following compensation was paid to each of the following Trustees. No
other compensation or retirement benefits were received by any Trustee or
officer from the Registrant or other registered investment company in the "Fund
Complex."
Deferred
Total Compensation
Name of Trustee Compensation Accrued
--------------- ------------ -------
Jettie M. Edwards $12,000(1) $ -0-
Bernard J. Johnson 11,500(1) -0-
Jeffrey D. Lovell 11,500(1) 22,093
Wayne H. Smith 12,000(1) 23,719
Richard N. Frank 12,000(2) 23,604
James Clayburn LaForce 12,000(2) -0-
Angelo R. Mozilo 12,000(2) 24,153
- ----------
(1) Compensation was paid by the Registrant
(2) Compensation was paid by three other registered investment companies in the
"Fund Complex."
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The Advisor
The Trust does not have an investment advisor, although the Advisor
performs certain administrative services for it, including providing certain
officers and office space.
The following information is provided about the Advisor and the Portfolios.
Subject to the supervision of the Boards of Trustees of the Portfolios,
investment management and services will be provided to the Portfolios by the
Advisor, pursuant to separate Investment Advisory Agreements (the "Advisory
Agreements"). Under the Advisory Agreements, the Advisor will provide a
continuous investment program for the Portfolios and make decisions and place
orders to buy, sell or hold particular securities. In addition to the fees
payable to the Advisor and the Administrator, the Portfolios and the Trust are
responsible for their operating expenses, including: (i) interest and taxes;
(ii) brokerage commissions; (iii) insurance premiums; (iv) compensation and
expenses of Trustees other than those affiliated with the Advisor or the
Administrator; (v) legal and audit expenses; (vi) fees and expenses of the
custodian, shareholder service and transfer agents; (vii) fees and expenses for
registration or qualification of the Trust and its shares under federal or state
securities laws; (viii) expenses of preparing, printing and mailing reports and
notices and proxy material to shareholders; (ix) other expenses incidental to
holding any shareholder meetings; (x) dues or assessments of or contributions to
the Investment Company Institute or any successor; (xi) such non-recurring
expenses as may arise, including litigation affecting the Trust or the
Portfolios and the legal obligations with respect to which the Trust or the
Portfolios may have to indemnify their officers and Trustees; and (xii)
amortization of organization costs.
The Advisor is an indirect, wholly owned subsidiary of United Asset
Management Corporation ("UAM"), a New York Stock Exchange listed holding company
principally engaged, through affiliated firms, in providing institutional
investment management services. On February 15, 1995, UAM acquired the assets of
the Advisor's predecessor, which had the same name as the Advisor; on that date
the Advisor entered into new Advisory Agreements having the same terms as the
previous Advisory Agreements with the Portfolios. The term "Advisor" also refers
to the Advisor's predecessor.
For its services, the Advisor receives a fee from the Balanced Portfolio at
an annual rate of 0.60% of its average net assets, 0.80% of the Growth
Portfolio's average net assets, 0.80% of the Small Cap Portfolio's average net
assets and 0.70% of the Mid Cap Portfolio's average net assets. During the
fiscal years ended October 31, 1998, 1997 and 1996, the Advisor earned fees
pursuant to the Advisory Agreements as follows: from the Balanced Portfolio,
$236,672, $153,518 and $74,462, respectively; from the Growth Portfolio,
$1,045,893, $838,058 and $949,431, respectively; and from the Small Cap
Portfolio, $1,418,731, $1,525,768 and $1,395,748, respectively. The Mid Cap
Portfolio earned fees of $29,031 during the period December 31, 1997 through
October 31, 1998. However, the Advisor has agreed to limit the aggregate
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expenses of the Balanced Portfolio to 0.80% of average net assets, and the
aggregate expenses of the Growth and Small Cap Portfolios to 1.00% of average
net assets. As a result, the Advisor paid expenses of the Balanced Portfolio
that exceeded these expense limits in the amounts of $71,076, $91,689 and
$111,580 during the fiscal years ended October 31, 1998, 1997 and 1996,
respectively. The Advisor paid expenses of the Growth Portfolio that exceeded
these expense limits in the amounts of $22,176, $48,003 and $64,401 during the
fiscal years ended October 31, 1998, 1997 and 1996, respectively. The Advisor
paid expenses of the Small Cap Portfolio that exceeded these expense limits in
the amounts of $24,020, $24,879 and $64,401 during the fiscal years ended
October 31, 1998, 1997 and 1996, respectively. The Mid Cap Portfolio was not in
existence prior to 1998; during the period December 31, 1997 through October 31,
1998, it paid the Advisor a net fee of $29,031, after waiving $85,951.
Under the Advisory Agreements, the Advisor will not be liable to the
Portfolios for any error of judgment by the Advisor or any loss sustained by the
Portfolios except in the case of a breach of fiduciary duty with respect to the
receipt of compensation for services (in which case any award of damages will be
limited as provided in the 1940 Act) or of willful misfeasance, bad faith, gross
negligence or reckless disregard of duty.
The Advisory Agreements will remain in effect for two years from their
execution. Thereafter, if not terminated, each Advisory Agreement will continue
automatically for successive annual periods, provided that such continuance is
specifically approved at least annually (i) by a majority vote of the
Independent Trustees cast in person at a meeting called for the purpose of
voting on such approval, and (ii) by the Board of Trustees or by vote of a
majority of the outstanding voting securities of the Portfolio.
The Advisory Agreements are terminable by vote of the Board of Trustees or
by the holders of a majority of the outstanding voting securities of the
Portfolios at any time without penalty, on 60 days written notice to the
Advisor. The Advisory Agreements also may be terminated by the Advisor on 60
days written notice to the Portfolios. The Advisory Agreements terminate
automatically upon their assignment (as defined in the 1940 Act).
The Advisor also provides certain administrative services to the Trust
pursuant to Administration Agreements, including assisting shareholders of the
Trust, furnishing office space and permitting certain employees to serve as
officers and Trustees of the Trust. For its services, it earns a fee at the rate
of 0.20% of the average net assets of each series of the Trust.
The Advisor 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 the Advisor.
The Administrator
The Funds and the Portfolios each pay a monthly administration fee to
Investment Company Administration, L.L.C. for managing some of their business
affairs. Each Portfolio pays an annual administration fee of 0.10% of its
average net assets, subject to an annual minimum of $45,000. Each Fund pays an
annual fee of $15,000.
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<PAGE>
The Distributor
First Fund Distributors, Inc., 4455 E. Camelback Road, Suite 261E, Phoenix
AZ 85018, is the Trust's principal underwriter.
Distribution Plan
The Trustees and/or shareholders of the Trust have adopted, on behalf of
each Fund, a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the
1940 Act. The Plan provides that each Fund will pay a 12b-1 fee to the
Distributor at an annual rate of 0.75% of its average daily net assets for
expenses incurred in marketing its shares, including advertising, printing and
compensation to securities dealers or other industry professionals.
Shareholder Services Plan
On ____________, 1999, the Board of Trustees approved the implementation of
a Shareholder Services Plan (the "Services Plan") under which the Advisor will
provide, or arrange for others to provide, certain specified shareholder
services. As compensation for the provision of shareholder services, each Fund
will pay the Advisor a monthly fee at an annual rate of up to 0.25% of the
Fund's average daily net assets. The Advisor will pay certain banks, trust
companies, broker-dealers and other financial intermediaries (each, a
"Participating Organization") out of the fees the Advisor receives from the
Funds under the Services Plan to the extent that the Participating Organization
performs shareholder servicing functions for Fund shares owned by its customers.
CUSTODIAN AND AUDITORS
The Trust's custodian, Provident National Bank, 200 Stevens Drive, Lester,
PA 19113 is responsible for holding the Funds' assets. Provident Financial
Processing Corporation, 400 Bellevue Parkway, Wilmington, DE 19809, acts as each
Fund's transfer agent; its mailing address is P.O. Box 8943, Wilmington, DE
19899. The Trust's independent accountants, ______________________, assist in
the preparation of certain reports to the Securities and Exchange Commission and
the Funds' tax returns.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Advisory Agreements state that in connection with its duties to arrange
for the purchase and the sale of securities held by the Portfolios by placing
purchase and sale orders for the Portfolios, the Advisor shall select such
broker-dealers ("brokers") as shall, in its judgment, achieve the policy of
"best execution," i.e., prompt and efficient execution at the most favorable
securities price. In making such selection, the Advisor is authorized in the
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<PAGE>
Advisory Agreements to consider the reliability, integrity and financial
condition of the broker. The Advisor also is authorized by the Advisory
Agreements to consider whether the broker provides research or statistical
information to the Portfolios and/or other accounts of the Advisor. The Advisor
may select brokers who sell shares of the Portfolios or the Funds which invest
in the Portfolios.
The Advisory Agreements state that the commissions paid to brokers may be
higher than another broker would have charged if a good faith determination is
made by the Advisor that the commission is reasonable in relation to the
services provided, viewed in terms of either that particular transaction or the
Advisor's overall responsibilities as to the accounts as to which it exercises
investment discretion and that the Advisor shall use its judgment in determining
that the amount of commissions paid are reasonable in relation to the value of
brokerage and research services provided and need not place or attempt to place
a specific dollar value on such services or on the portion of commission rates
reflecting such services. The Advisory Agreements provide that to demonstrate
that such determinations were in good faith, and to show the overall
reasonableness of commissions paid, the Advisor shall be prepared to show that
commissions paid (i) were for purposes contemplated by the Advisory Agreements;
(ii) were for products or services which provide lawful and appropriate
assistance to its decision-making process; and (iii) were within a reasonable
range as compared to the rates charged by brokers to other institutional
investors as such rates may become known from available information. During the
fiscal years ended October 31, 1997 and 1996, the amount of brokerage
commissions paid by the Balanced Portfolio were $24,471 and $8,805,
respectively. During the fiscal year ended October 31, 1998, the Balanced
Portfolio paid $34,286 in brokerage commissions, of which $319 was paid to
brokers who furnished research services. During the fiscal years ended October
31, 1997 and 1996, the amount of brokerage commissions paid by the Growth
Portfolio were $110,376 and $148,938, respectively. During the fiscal year ended
October 31, 1998, the Growth Portfolio paid $165,841 in brokerage commissions,
of which $2,255 was paid to brokers who furnished research services. During the
fiscal years ended October 31, 1997 and 1996, the amount of brokerage
commissions paid by the Small Cap Portfolio were $218,087 and $115,709,
respectively. During the fiscal year ended December 31, 1998, the Small Cap
Portfolio paid $208,083 in brokerage commissions, of which $10,766 was paid to
brokers who furnished research services. During the period December 31, 1997
through October 31, 1998, the Mid Cap Portfolio paid $15,377 in brokerage
commissions, of which $921 was paid to brokers who furnished research services.
The research services discussed above may be in written form or through
direct contact with individuals and may include information as to particular
companies and securities as well as market, economic or institutional areas and
information assisting the Portfolios in the valuation of the Portfolios'
investments. The research which the Advisor receives for the Portfolios'
brokerage commissions, whether or not useful to the Portfolios, may be useful to
it in managing the accounts of its other advisory clients. Similarly, the
research received for the commissions of such accounts may be useful to the
Portfolios.
The debt securities which will be a major component of the Balanced
Portfolio's portfolio are generally traded on a "net" basis with dealers acting
as principal for their own accounts without a stated commission although the
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<PAGE>
price of the security usually includes a profit to the dealer. Money market
instruments usually trade on a "net" basis as well. On occasion, certain money
market instruments may be purchased by the Portfolios directly from an issuer in
which case no commissions or discounts are paid. In underwritten offerings,
securities are purchased at a fixed price which includes an amount of
compensation to the underwriter, generally referred to as the underwriter's
concession or discount.
PORTFOLIO TURNOVER
Although the Funds generally will not invest for short-term trading
purposes, portfolio securities may be sold without regard to the length of them
they have been held when, in the opinion of the Advisor, investment
considerations warrant such action. Portfolio turnover rate is calculated by
dividing (1) the lesser of purchases or sales of portfolio securities for the
fiscal year by (2) the monthly average of the value of portfolio securities
owned during the fiscal year. A 100% turnover rate would occur if all the
securities in a Portfolio's portfolio, with the exception of securities whose
maturities at the time of acquisition were one year or less, were sold and
either repurchased or replaced within one year. A high rate of portfolio
turnover (100% or more) generally leads to transaction costs and may result in a
greater number of taxable transactions. See "Portfolio Transactions and
Brokerage." Growth Portfolio's portfolio turnover rate for the fiscal years
ended October 31, 1998 and 1997 was 81.06% and 67.45%, respectively. Balanced
Portfolio's portfolio turnover rate for the fiscal years ended October 31, 1998
and 1997 was 111.47% and 104.50%, respectively. Small Cap Portfolio's portfolio
turnover rate for the fiscal years ended October 31, 1998 and 1997 was 81.75%
and 151.51%, respectively. Mid Cap Portfolio's portfolio turnover rate for the
period December 31, 1997 through October 31, 1998 was 166.89%.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Reference is made to "Ways to Set Up Your Account - How to Buy Shares - How
To Sell Shares" in the prospectus for additional information about purchase and
redemption of shares. You may purchase and redeem shares of each Fund on each
day on which the New York Stock Exchange ("Exchange") is open for trading. The
Exchange annually announces the days on which it will not be open for trading.
The most recent announcement indicates that it will not be open on the following
days: New Year's Day, Martin Luther King Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
However, the Exchange may close on days not included in that announcement.
The contingent deferred sales charge imposed on Fund shares does not
apply to (a) any redemption pursuant to a tax-free return of an excess
contribution to an individual retirement account or other qualified retirement
plan if the Fund is notified at the time of such request; (b) any redemption of
a lump-sum or other distribution from qualified retirement plans or accounts
provided the shareholder has attained the minimum age of 70 1/2 years and has
held the Fund shares for a minimum period of three years; (c) any redemption by
advisory accounts managed by the Advisor or its affiliates; (d) any redemption
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<PAGE>
made by employees, officers or directors of the Advisor or its affiliates; (e)
any redemption by a tax-exempt employee benefit plan if continuation of the
investment would be improper under applicable laws or regulations; and (f) any
redemption or transfer of ownership of shares following the death or disability,
as defined in Section 72(m)(7) of the Internal Revenue Code (the "Code"), of a
shareholder if the Fund is provided with proof of death or disability and with
all documents required by the Transfer Agent within one year after the death or
disability.
NET ASSET VALUE
The net asset value of the Portfolios' shares will fluctuate and is
determined as of the close of trading on the Exchange (normally 4:00 p.m.
Eastern time) each business day. Each Portfolio's net asset value is calculated
separately.
The net asset value per share is computed by dividing the value of the
securities held by each Portfolio plus any cash or other assets (including
interest and dividends accrued but not yet received) minus all liabilities
(including accrued expenses) by the total number of interests in the Portfolio
outstanding at such time.
Equity securities listed on a national securities exchange or traded on the
NASDAQ system are valued on their last sale price. Other equity securities and
debt securities for which market quotations are readily available are valued at
the mean between their bid and asked price, except that debt securities maturing
within 60 days are valued on an amortized cost basis. Securities for which
market quotations are not readily available are valued at fair value as
determined in good faith by the Board of Trustees.
TAXATION
The Funds will each be taxed as separate entities under the Code and each
intends to elect to qualify for treatment as a regulated investment company
("RIC") under Subchapter M of the Code. In each taxable year that the Funds
qualify, the Funds (but not their shareholders) will be relieved of federal
income tax on that part of their investment company taxable income (consisting
generally of interest and dividend income, net short-term capital gain and net
realized gains from currency transactions) and net capital gain that is
distributed to shareholders.
In order to qualify for treatment as a RIC, the Funds must distribute
annually to shareholders at least 90% of their investment company taxable income
and must meet several additional requirements. Among these requirements are the
following: (1) at least 90% of each Fund's gross income each taxable year must
be derived from dividends, interest, payments with respect to securities loans
and gains from the sale or other disposition of securities or foreign
currencies, or other income derived with respect to its business of investing in
securities or currencies; (2) at the close of each quarter of each Fund's
taxable year, at least 50% of the value of its total assets must be represented
by cash and cash items, U.S. Government securities, securities of other RICs and
other securities, limited in respect of any one issuer, to an amount that does
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<PAGE>
not exceed 5% of the value of the Fund and that does not represent more than 10%
of the outstanding voting securities of such issuer; and (3) at the close of
each quarter of each Fund's taxable year, not more than 25% of the value of its
assets may be invested in securities (other than U.S. Government securities or
the securities of other RICs) of any one issuer.
Each Fund will be subject to a nondeductible 4% excise tax to the extent it
fails to distribute by the end of any calendar year substantially all of its
ordinary income for that year and capital gain net income for the one-year
period ending on October 31 of that year, plus certain other amounts.
DIVIDENDS AND DISTRIBUTIONS
Dividends from a Fund's investment company taxable income (whether paid in
cash or invested in additional shares) will be taxable to shareholders as
ordinary income to the extent of the Fund's earnings and profits. Distributions
of a Fund's net capital gain (whether paid in cash or invested in additional
shares) will be taxable to shareholders as long-term capital gain, regardless of
how long they have held their Fund shares.
Dividends declared by a Fund in October, November or December of any year
and payable to shareholders of record on a date in one of such months will be
deemed to have been paid by the Fund and received by the shareholders on the
record date if the dividends are paid by a Fund during the following January.
Accordingly, such dividends will be taxed to shareholders for the year in which
the record date falls.
Under the Taypayer Relief Act of 1997, different maximum tax rates apply to
an individual's net capital gain depending on the individual's holding period
and marginal rate of federal income tax - generally, 28% for gain recognized on
capital assets held for more than one year but not more than 18 months and 20%
(10% for taxpayers in the 15% marginal tax bracket) for gain recognized on
capital assets held for more than 18 months. Pursuant to an Internal Revenue
Service notice, each Fund may divide each net capital gain distribution into a
28% rate gain distribution and a 20% rate gain distribution (in accordance with
the Fund's holding periods for the securities it sold that generated the
distributed gain) and its shareholders must treat those portions accordingly.
Each Fund is required to withhold 31% of all dividends, capital gain
distributions and repurchase proceeds payable to any individuals and certain
other noncorporate shareholders who do not provide the Fund with a correct
taxpayer identification number. Each Fund also is required to withhold 31% of
all dividends and capital gain distributions paid to such shareholders who
otherwise are subject to backup withholding.
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PERFORMANCE INFORMATION
Total Return
Average annual total return quotations used in a Fund's advertising and
promotional materials are calculated according to the following formula:
P(1 + T)n = ERV
where P equals a hypothetical initial payment of $1000; T equals average annual
total return; n equals the number of years; and ERV equals the ending redeemable
value at the end of the period of a hypothetical $1000 payment made at the
beginning of the period.
Under the foregoing formula, the time periods used in advertising will be
based on rolling calendar quarters, updated to the last day of the most recent
quarter prior to submission of the advertising for publication. Average annual
total return, or "T" in the above formula, is computed by finding the average
annual compounded rates of return over the period that would equate the initial
amount invested to the ending redeemable value. Average annual total return
assumes the reinvestment of all dividends and distributions.
Yield
Annualized yield quotations used in a Fund's advertising and promotional
materials are calculated by dividing the Fund's interest income for a specified
thirty-day period, net of expenses, by the average number of shares outstanding
during the period, and expressing the result as an annualized percentage
(assuming semi-annual compounding) of the net asset value per share at the end
of the period. Yield quotations are calculated according to the following
formula:
YIELD = 2 [(a-b + 1){6}-1]
--
cd
where a equals dividends and interest earned during the period; b equals
expenses accrued for the period, net of reimbursements; c equals the average
daily number of shares outstanding during the period that are entitled to
receive dividends and d equals the maximum offering price per share on the last
day of the period.
Except as noted below, in determining net investment income earned during
the period ("a" in the above formula), a Fund calculates interest earned on each
debt obligation held by it during the period by (1) computing the obligation's
yield to maturity, based on the market value of the obligation (including actual
accrued interest) on the last business day of the period or, if the obligation
was purchased during the period, the purchase price plus accrued interest; (2)
dividing the yield to maturity by 360 and multiplying the resulting quotient by
the market value of the obligation (including actual accrued interest). Once
interest earned is calculated in this fashion for each debt obligation held by a
Fund, net investment income is then determined by totaling all such interest
earned.
For purposes of these calculations, the maturity of an obligation with one
or more call provisions is assumed to be the next date on which the obligation
reasonably can be expected to be called or, if none, the maturity date.
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Other information
Performance data of a Fund quoted in advertising and other promotional
materials represents past performance and is not intended to predict or indicate
future results. The return and principal value of an investment in a Fund will
fluctuate, and an investor's redemption proceeds may be more or less than the
original investment amount. In advertising and promotional materials a Fund may
compare its performance with data published by Lipper Analytical Services, Inc.
("Lipper") or CDA Investment Technologies, Inc. ("CDA"). A Fund also may refer
in such materials to mutual fund performance rankings and other data, such as
comparative asset, expense and fee levels, published by Lipper or CDA.
Advertising and promotional materials also may refer to discussions of a Fund
and comparative mutual fund data and ratings reported in independent periodicals
including, but not limited to, The Wall Street Journal, Money Magazine, Forbes,
Business Week, Financial World and Barron's.
GENERAL INFORMATION
Each Fund is a diversifed series of the Trust, which is an open-end
investment management company, organized as a Delaware business trust on
December 11, 1991. The Declaration of Trust permits the Trustees to issue an
unlimited number of full and fractional shares of beneficial interest and to
divide or combine the shares into a greater or lesser number of shares without
thereby changing the proportionate beneficial interest in a Fund. Each share
represents an interest in a Fund proportionately equal to the interest of each
other share. Upon the Trust's liquidation, all shareholders would share pro rata
in the net assets of the Fund in question available for distribution to
shareholders. If they deem it advisable and in the best interest of
shareholders, the Board of Trustees may create additional series of shares which
differ from each other only as to dividends. The Board of Trustees has created
twelve series of shares, and may create additional series in the future, which
have separate assets and liabilities. Income and operating expenses not
specifically attributable to a particular Fund are allocated fairly among the
Funds by the Trustees, generally on the basis of the relative net assets of each
Fund.
Each Fund is one of a series of shares, each having separate assets and
liabilities, of the Trust. The Board of Trustees may at its own discretion,
create additional series of shares. The Declaration of Trust contains an express
disclaimer of shareholder liability for its acts or obligations and provides for
indemnification and reimbursement of expenses out of the Trust's property for
any shareholder held personally liable for its obligations.
The Declaration of Trust further provides the Trustees will not be liable
for errors of judgment or mistakes of fact or law, but nothing in the
Declaration of Trust protects a Trustee against any liability to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of his
office.
Shareholders are entitled to one vote for each full share held (and
fractional votes for fractional shares) and may vote in the election of Trustees
and on other matters submitted to meetings of shareholders. It is not
B-21
<PAGE>
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 no pre-emptive or conversion rights. Shares when issued
are fully paid and non-assessable, except as set forth above. The Trust may be
terminated upon the sale of its assets to another issuer, if such sale is
approved by the vote of the holders of more than 50% of its outstanding shares,
or upon liquidation and distribution of its assets, if approved by the vote of
the holders of more than 50% of its outstanding shares. If not so terminated,
the Trust will continue indefinitely.
Rule 18f-2 under the 1940 Act provides that as to any investment company
which has two or more series outstanding and as to any matter required to be
submitted to shareholder vote, such matter is not deemed to have been
effectively acted upon unless approved by the holders of a "majority" (as
defined in the Rule) of the voting securities of each series affected by the
matter. Such separate voting requirements do not apply to the election of
Trustees or the ratification of the selection of accountants. The Rule contains
special provisions for cases in which an advisory contract is approved by one or
more, but not all, series. A change in investment policy may go into effect as
to one or more series whose holders so approve the change even though the
required vote is not obtained as to the holders of other affected series.
B-22
<PAGE>
APPENDIX
Description of Ratings
Moody's Investors Service, Inc.: Corporate Bond Ratings
Aaa--Bonds which are rated Aaa are judged to be of the best quality and
carry the smallest degree of investment risk. Interest payments are protected by
a large or by an exceptionally stable margin, and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of such
issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
Moody's applies numerical modifiers "1", "2" and "3" to both the Aaa and Aa
rating classifications. The modifier "1" indicates that the security ranks in
the higher end of its generic rating category; the modifier "2" indicates a
mid-range ranking; and the modifier "3" indicates that the issue ranks in the
lower end of its generic rating category.
A--Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa--Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
period of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Standard & Poor's Ratings Group: Corporate Bond Ratings
AAA--This is the highest rating assigned by S&P to a debt obligation and
indicates an extremely strong capacity to pay principal and interest.
AA--Bonds rated AA also qualify as high-quality debt obligations. Capacity
to pay principal and interest is very strong, and in the majority of instances
they differ from AAA issues only in small degree.
A--Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in the A category.
B-23
<PAGE>
Commercial Paper Ratings
Moody's commercial paper ratings are assessments of the issuer's ability to
repay punctually promissory obligations. Moody's employs the following three
designations, all judged to be investment grade, to indicate the relative
repayment capacity of rated issuers: Prime 1--highest quality; Prime 2--higher
quality; Prime 3--high quality.
An S&P commercial paper rating is a current assessment of the likelihood of
timely payment. Ratings are graded into four categories, ranging from "A" for
the highest quality obligations to "D" for the lowest.
Issues assigned the highest rating, A, are regarded as having the greatest
capacity for timely payment. Issues in this category are delineated with the
numbers "1", "2" and "3" to indicate the relative degree of safety. The
designation A-1 indicates that the degree of safety regarding timely payment is
either overwhelming or very strong. A "+" designation is applied to those issues
rated "A-1" which possess extremely strong safety characteristics. Capacity for
timely payment on issues with the designation "A-2" is strong. However, the
relative degree of safety is not as high as for issues designated A-1. Issues
carrying the designation "A-3" have a satisfactory capacity for timely payment.
They are, however, somewhat more vulnerable to the adverse effect of changes in
circumstances than obligations carrying the higher designations.
B-24
<PAGE>
PART C
OTHER INFORMATION
ITEM 23. EXHIBITS.
(1) Declaration of Trust(1)
(2) By-Laws(1)
(3) Not applicable
(4) Management Agreement(3)
(5) Distribution Agreement(1)
(6) Not applicable
(7) Custodian Agreement(4)
(8) (i) Administration Agreement with Investment
Company Administration Corporation(1)
(ii) Administration Agreement with Provident
Investment Counsel(1)
(9) Opinion and consent of counsel(1)
(10) Not applicable
(11) Not applicable
(12) Investment letter(1)
(13) Distribution Plan pursuant to Rule 12b-1 (5)
(14) Financial Data Schedules (filed as Exhibit 27 for
electronic filing purposes)
(15) Not applicable
(1) Previously filed with Post-effective Amendment No. 10 to the
Registration Statement on Form N-1A of PIC Investment Trust, File No 33-44579,
on April 4, 1996 and incorporated herein by reference.
(2) Previously filed with Post-effective Amendment No. 13 to the
Registration Statement on Form N-1A of PIC Investment Trust, File No 33-44579,
on January 27, 1997 and incorporated herein by reference.
(3) Previously filed with Post-effective Amendment No. 18 to the
Registration Statement on Form N-1A of PIC Investment Trust, File No 33-44579,
on December 12, 1997 and incorporated herein by reference.
(4) Previously filed with Post-effective Amendment No. 21 to the
Registration Statement on Form N-1A of PIC Investment Trust, File No. 33-44579,
on September 29, 1998 and incorporated herein by reference.
(5) To be filed by amendment.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
As of January 14, 1999, Registrant owned 99.9% of the outstanding Interests
in PIC Growth Portfolio, PIC Balanced Portfolio, PIC Mid Cap Portfolio and PIC
Small Cap Portfolio, all of which are trusts organized under the laws of the
State of New York and registered management investment companies.
ITEM 25. INDEMNIFICATION.
Article VI of Registrant's By-Laws states as follows:
Section 1. AGENTS, PROCEEDINGS AND EXPENSES. For the purpose of this
Article, "agent" means any person who is or was a Trustee, officer, employee or
other agent of this Trust or is or was serving at the request of this Trust as a
Trustee, director, officer, employee or agent of another foreign or domestic
corporation, partnership, joint venture, trust or other enterprise or was a
<PAGE>
Trustee, director, officer, employee or agent of a foreign or domestic
corporation which was a predecessor of another enterprise at the request of such
predecessor entity; "proceeding" means any threatened, pending or completed
action or proceeding, whether civil, criminal, administrative or investigative;
and "expenses" includes without limitation attorney's fees and any expenses of
establishing a right to indemnification under this Article.
Section 2. ACTIONS OTHER THAN BY TRUST. This Trust shall indemnify any
person who was or is a party or is threatened to be made a party to any
proceeding (other than an action by or in the right of this Trust) by reason of
the fact that such person is or was an agent of this Trust, against expenses,
judgments, fines, settlements and other amounts actually and reasonably incurred
in connection with such proceeding, if it is determined that person acted in
good faith and reasonably believed:
(a) in the case of conduct in his official capacity as a Trustee of
the Trust, that his conduct was in the Trust's best interests,
and
(b) in all other cases, that his conduct was at least not opposed to
the Trust's best interests, and
(c) in the case of a criminal proceeding, that he had no reasonable
cause to believe the conduct of that person was unlawful.
The termination of any proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent shall not of
itself create a presumption that the person did not act in good faith and in a
manner which the person reasonably believed to be in the best interests of this
Trust or that the person had reasonable cause to believe that the person's
conduct was unlawful.
Section 3. ACTIONS BY THE TRUST. This Trust shall indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action by or in the right of this Trust to procure a judgment in
its favor by reason of the fact that that person is or was an agent of this
Trust, against expenses actually and reasonably incurred by that person in
connection with the defense or settlement of that action if that person acted in
good faith, in a manner that person believed to be in the best interests of this
Trust and with such care, including reasonable inquiry, as an ordinarily prudent
person in a like position would use under similar circumstances.
Section 4. EXCLUSION OF INDEMNIFICATION. Notwithstanding any provision to
the contrary contained herein, there shall be no right to indemnification for
any liability arising by reason of willful misfeasance, bad faith, gross
negligence, or the reckless disregard of the duties involved in the conduct of
the agent's office with this Trust.
No indemnification shall be made under Sections 2 or 3 of this Article:
(a) In respect of any claim, issue, or matter as to which that person
shall have bee liable on the basis that personal benefit was
improperly received by him, whether or not the benefit resulted
from an action taken in the person's official capacity; or
(b) In respect of any claim, issue or matter as to which that person
shall have been adjudged to be liable in the performance of that
person's duty to this Trust, unless and only to the extent that
the court in which that action was brought shall determine upon
application that in view of all the circumstances of the case,
that person was not liable by reason of the disabling conduct set
forth in the preceding paragraph and is fairly and reasonably
entitled to indemnity for the expenses which the court shall
determine; or
<PAGE>
(c) of amounts paid in settling or otherwise disposing of a
threatened or pending action, with or without court approval, or
of expenses incurred in defending a threatened or pending action
which is settled or otherwise disposed of without court approval,
unless the required approval set forth in Section 6 of this
Article is obtained.
Section 5. SUCCESSFUL DEFENSE BY AGENT. To the extent that an agent of this
Trust has been successful on the merits in defense of any proceeding referred to
in Sections 2 or 3 of this Article or in defense of any claim, issue or matter
therein, before the court or other body before whom the proceeding was brought,
the agent shall be indemnified against expenses actually and reasonably incurred
by the agent in connection therewith, provided that the Board of Trustees,
including a majority who are disinterested, non-party Trustees, also determines
that based upon a review of the facts, the agent was not of the disabling
conduct referred to in Section 4 of this Article.
Section 6. REQUIRED APPROVAL. Except as provided in Section 5 of this
Article, any indemnification under this Article shall be made by this Trust only
if authorized in the specific case on a determination that indemnification of
the agent is proper in the circumstances because the agent has met the
applicable standard of conduct set forth in Sections 2 or 3 of this Article and
is not prohibited from indemnification because of the disabling conduct set
forth in Section 4 of this Article, by:
(a) A majority vote of a quorum consisting of Trustees who are not
parties to the proceeding and are not interested persons of the
Trust (as defined in the Investment Company Act of 1940); or
(b) A written opinion by an independent legal counsel.
Section 7. ADVANCE OF EXPENSES. Expenses incurred in defending any
proceeding may be advanced by this Trust before the final disposition of the
proceeding upon a written undertaking by or on behalf of the agent, to repay the
amount of the advance if it is ultimately determined that he or she is not
entitled to indemnification, together with at least one of the following as a
condition to the advance: (i) security for the undertaking; or (ii) the
existence of insurance protecting the Trust against losses arising by reason of
any lawful advances; or (iii) a determination by a majority of a quorum of
Trustees who are not parties to the proceeding and are not interested persons of
the Trust, or by an independent legal counsel in a written opinion, based on a
review of readily available facts that there is reason to believe that the agent
ultimately will be found entitled to indemnification. Determinations and
authorizations of payments under this Section must be made in the manner
specified in Section 6 of this Article for determining that the indemnification
is permissible.
Section 8. OTHER CONTRACTUAL RIGHTS. Nothing contained in this Article
shall affect any right to indemnification to which persons other than Trustees
and officers of this Trust or any subsidiary hereof may be entitled by contract
or otherwise.
Section 9. LIMITATIONS. No indemnification or advance shall be made under
this Article, except as provided in Sections 5 or 6 in any circumstances where
it appears:
(a) that it would be inconsistent with a provision of the Agreement
and Declaration of Trust of the Trust, a resolution of the
shareholders, or an agreement in effect at the time of accrual of
the alleged cause of action asserted in the proceeding in which
the expenses were incurred or other amounts were paid which
prohibits or otherwise limits indemnification; or
(b) that it would be inconsistent with any condition expressly
imposed by a court in approving a settlement.
<PAGE>
Section 10. INSURANCE. Upon and in the event of a determination by the
Board of Trustees of this Trust to purchase such insurance, this Trust shall
purchase and maintain insurance on behalf of any agent of this Trust against any
liability asserted against or incurred by the agent in such capacity or arising
out of the agent's status as such, but only to the extent that this Trust would
have the power to indemnify the agent against that liability under the
provisions of this Article and the Agreement and Declaration of Trust of the
Trust.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
Not applicable.
ITEM 27. PRINCIPAL UNDERWRITERS.
(a) The Registrant's principal underwriter also acts as principal
underwriter for the following investment companies:
Advisors Series Trust
Guinness Flight Investment Funds, Inc.
Fremont Mutual Funds, Inc.
Fleming Capital Mutual Fund Group, Inc.
The Purissima Fund
Professionally Managed Portfolios
Jurika & Voyles Fund Group
Kayne Anderson Mutual Funds
Masters' Select Investment Trust
O'Shaughnessy Funds, Inc.
Rainier Investment Management Mutual Funds
RNC Mutual Fund Group, Inc.
UBS Private Investor Funds
(b) The following information is furnished with respect to the officers and
directors of First Fund Distributors, Inc.:
Name and Principal Position and Offices with Position and Offices
Business Address Principal Underwriter with Registrant
- ------------------ ------------------------- --------------------
Robert H. Wadsworth President and Treasurer Assistant Secretary
4455 E. Camelback Road
Suite 261
Phoenix, AZ 85018
Eric M. Banhazl Vice President Assistant Secretary
2025 E. Financial Way
Glendora, CA 91741
Steven J. Paggioli Vice President and Assistant Secretary
915 Broadway Secretary
New York, NY 10010
(c) Not applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.
The accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940 and
the rules promulgated thereunder are in the possession of Registrant and
Registrant's custodian, as follows: the documents required to be maintained by
paragraphs (4), (5), (6), (7), (10) and (11) of Rule 31a-1(b) will be maintained
by the Registrant, and all other records will be maintained by the Custodian.
ITEM 29. MANAGEMENT SERVICES.
Not applicable.
ITEM 30. UNDERTAKINGS.
The Registrant undertakes, if requested to do so by the holders of at least
10% of the Trust's outstanding shares, to call a meeting of shareholders for the
purposes of voting upon the question of removal of a director and will assist in
communications with other shareholders.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment to
the Registration Statement on Form N-1A of PIC Investment Trust to be signed on
its behalf by the undersigned, thereunto duly authorized in the City of Pasadena
and State of California on the 12th day of January, 1999.
PIC INVESTMENT TRUST
By Jeffrey J. Miller*
---------------------------
Jeffrey J. Miller
President
This Amendment to the Registration Statement on Form N-1A of PIC Investment
Trust has been signed below by the following persons in the capacities indicated
on January 12, 1999.
Jeffrey J. Miller* President and
- ---------------------------- Trustee
Jeffrey J. Miller
Jettie M. Edwards* Trustee
- ----------------------------
Jettie M. Edwards
Bernard J. Johnson* Trustee
- ----------------------------
Bernard J. Johnson
Jeffrey D. Lovell* Trustee
- ----------------------------
Jeffrey D. Lovell
Wayne H. Smith* Trustee
- ----------------------------
Wayne H. Smith
Thad M. Brown* Treasurer and Principal
- ---------------------------- Financial and Accounting
Thad M. Brown Officer
* Robert H. Wadsworth
--------------------------
By: Robert H. Wadsworth
Attorney-in-fact
<PAGE>
SIGNATURES
PIC Mid Cap Portfolio has duly caused this Amendment to the Registration
Statement on Form N-1A of PIC Investment Trust to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Pasadena and State of
California on the 12th day of January, 1999.
PIC MID CAP PORTFOLIO
By Jeffrey J. Miller*
------------------------
Jeffrey J. Miller
President
This Amendment to the Registration Statement on Form N-1A of PIC Investment
Trust has been signed below by the following persons in the capacities indicated
on January 12, 1999.
Jeffrey J. Miller* President and Trustee
- ---------------------------- Of PIC Mid Cap Portfolio
Jeffrey J. Miller
Richard N. Frank* Trustee of PIC Mid Cap Portfolio
- ----------------------------
Richard N. Frank
James Clayburn LaForce* Trustee of PIC Mid Cap Portfolio
- ----------------------------
James Clayburn LaForce
Angelo R. Mozilo* Trustee of Pic Mid Cap Portfolio
- ----------------------------
Angelo R. Mozilo
Thad M. Brown* Treasurer and Principal Financial and
- ---------------------------- Accounting Officer of PIC Mid Cap
Thad M. Brown Portfolio
* Robert H. Wadsworth
--------------------------
By: Robert H. Wadsworth
Attorney-in-fact
<PAGE>
SIGNATURES
PIC Balanced Portfolio has duly caused this Amendment to the Registration
Statement on Form N-1A of PIC Investment Trust to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Pasadena and State of
California on the 12th day of January, 1999.
PIC BALANCED PORTFOLIO
By Jeffrey J. Miller*
------------------------
Jeffrey J. Miller
President
This Amendment to the Registration Statement on Form N-1A of PIC Investment
Trust has been signed below by the following persons in the capacities indicated
on January 12, 1999.
Jeffrey J. Miller* President and Trustee
- ---------------------------- Of PIC Balanced Portfolio
Jeffrey J. Miller
Richard N. Frank* Trustee of PIC Balanced Portfolio
- ----------------------------
Richard N. Frank
James Clayburn LaForce* Trustee of PIC Balanced Portfolio
- ----------------------------
James Clayburn LaForce
Angelo R. Mozilo* Trustee of Pic Balanced Portfolio
- ----------------------------
Angelo R. Mozilo
Thad M. Brown* Treasurer and Principal Financial and
- ------------ Accounting Officer of PIC Balanced
Thad M. Brown Portfolio
* Robert H. Wadsworth
--------------------------
By: Robert H. Wadsworth
Attorney-in-fact
<PAGE>
SIGNATURES
PIC Small Cap Portfolio has duly caused this Amendment to the Registration
Statement on Form N-1A of PIC Investment Trust to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Pasadena and State of
California on the 12th day of January, 1999.
PIC SMALL CAP PORTFOLIO
By Jeffrey J. Miller*
------------------------
Jeffrey J. Miller
President
This Amendment to the Registration Statement on Form N-1A of PIC Investment
Trust has been signed below by the following persons in the capacities indicated
on January 12, 1999.
Jeffrey J. Miller* President and Trustee
- ---------------------------- Of PIC Small Cap Portfolio
Jeffrey J. Miller
Richard N. Frank* Trustee of PIC Small Cap Portfolio
- ----------------------------
Richard N. Frank
James Clayburn LaForce* Trustee of PIC Small Cap Portfolio
- ----------------------------
James Clayburn LaForce
Angelo R. Mozilo* Trustee of PIC Small Cap Portfolio
- ----------------------------
Angelo R. Mozilo
Thad M. Brown* Treasurer and Principal Financial and
- ---------------------------- Accounting Officer of PIC Small Cap
Thad M. Brown Portfolio
* Robert H. Wadsworth
--------------------------
By: Robert H. Wadsworth
Attorney-in-fact
<PAGE>
SIGNATURES
PIC Growth Portfolio has duly caused this Amendment to the Registration
Statement on Form N-1A of PIC Investment Trust to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Pasadena and State of
California on the 12th day of January, 1999.
PIC GROWTH PORTFOLIO
By Jeffrey J. Miller*
------------------------
Jeffrey J. Miller
President
This Amendment to the Registration Statement on Form N-1A of PIC
Investment Trust has been signed below by the following persons in the
capacities indicated on January 12, 1999.
Jeffrey J. Miller* President and Trustee
- ---------------------------- Of PIC Growth Portfolio
Jeffrey J. Miller
Richard N. Frank* Trustee of PIC Growth Portfolio
- ----------------------------
Richard N. Frank
James Clayburn LaForce* Trustee of PIC Growth Portfolio
- ----------------------------
James Clayburn LaForce
Angelo R. Mozilo* Trustee of PIC Growth Portfolio
- ----------------------------
Angelo R. Mozilo
Thad M. Brown* Treasurer and Principal Financial and
- ---------------------------- Accounting Officer of PIC Growth
Thad M. Brown Portfolio
* Robert H. Wadsworth
--------------------------
By: Robert H. Wadsworth
Attorney-in-fact
<PAGE>
EXHIBITS
--------
Number Description
------ -----------
27.1 FDS-Balanced Portfolio
27.2 FDS-Growth Portfolio
27.4 FDS-Small Cap Portfolio
27.7 FDS-Mid Cap Portfolio
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<GROSS-EXPENSE> 386638
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<PER-SHARE-NAV-BEGIN> 19.13
<PER-SHARE-NII> 0
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<INVESTMENTS-AT-COST> 103127941
<INVESTMENTS-AT-VALUE> 139070902
<RECEIVABLES> 100769
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<TOTAL-ASSETS> 139194988
<PAYABLE-FOR-SECURITIES> 2895730
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 216935
<TOTAL-LIABILITIES> 3112665
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 42848379
<SHARES-COMMON-STOCK> 5557856
<SHARES-COMMON-PRIOR> 4017425
<ACCUMULATED-NII-CURRENT> (286059)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 35942962
<ACCUM-APPREC-OR-DEPREC> 0
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