File No. 811-8060
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 / /
Amendment No. 3 /x/
PIC Small Cap. Portfolio
(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): (818) 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)
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PIC SMALL CAP. PORTFOLIO
PART A.
Item 4. General Description of Registrant
PIC Small Cap. Portfolio (the "Small Cap. Portfolio" or the
"Portfolio") is a diversified, management open-end investment company which was
organized as a trust under the laws of the State of New York on March 22, 1993.
The investment objective of the Small Cap. Portfolio is to provide
capital appreciation. There is no assurance that the Small Cap. Fund will
achieve its objective.
The Small Cap. Portfolio will invest in equity securities, consisting
of common stocks and securities having the characteristics of common stocks,
such as convertible preferred stocks, convertible debt securities and warrants.
The Small Cap. Portfolio will invest at least 60% and under normal circumstances
expects to invest at least 95% of its assets in such equity securities of small
companies. In general, a "small company" is one which has a market
capitalization of $250 million or less at the time of investment. In selecting
investments for the Small Cap. Portfolio, Provident Investment Counsel, the
Advisor to the Small Cap. Portfolio, will select equity securities of small
companies which are currently experiencing an above-average rate of earnings
growth. In addition, the Advisor seeks companies that have annual revenues of
less than $250 million. To the extent that the Small Cap. Portfolio does invest
in small issuers, there is the risk that such securities will be less marketable
or may be subject to greater fluctuations in price than the securities of larger
issuers. Small companies often pay no dividends, and income is not a primary
goal of the Small Cap. Portfolio.
The Advisor supports its selection of individual securities through
intensive research and uses qualitative and quantitative disciplines to
determine when securities should be sold. In unusual circumstances, economic,
monetary, technical and other factors may cause the Advisor to assume a
temporary, defensive position during which all or a substantial portion of the
Portfolio's assets may be invested in short-term instruments. For more
information about short-term investments, see "Short-Term Investments" below.
The Small Cap. Portfolio also may invest part of its assets temporarily in
short-term investments pending the investment of the proceeds of the sale of its
Interests or of its portfolio securities.
The Small Cap. Portfolio may also invest up to 20% of its assets in
foreign equity securities, although there is no requirement that it do so. See
"Foreign Securities" below.
Short-Term Investments. The short-term investments that may be
purchased by the Small Cap. Portfolio consist of high quality debt obligations
maturing in one year or less from the date of purchase, such as U.S. Government
securities, certificates of deposit, bankers' acceptances and commercial paper.
High quality means the obligations have been rated at least A-1 by S&P or
Prime-1 by Moody's, or have an outstanding issue of debt securities rated at
least A by S&P or Moody's, or are of comparable quality in the opinion of the
Advisor. See the Appendix for a description of S&P and Moody's ratings.
Short-term investments also include repurchase agreements. A repurchase
agreement is a transaction in which the Portfolio purchases a security, and at
the same time, the seller (normally a commercial bank or broker-dealer) agrees
to repurchase the same security (and/or a security substituted for it under the
repurchase agreement) at an agreed-upon price and date in the future. The resale
price is in excess of the purchase price in that it reflects an agreed-upon
market interest rate effective for the period of time during which the Portfolio
holds the securities. The majority of these transactions run from day to day and
not more than seven days from the original purchase. The Portfolio's risk is
limited to the ability of the seller to pay the agreed-upon sum upon the
delivery date; in the event of bankruptcy or other default by the seller, there
may be possible delays and expenses in liquidating the instrument purchased,
decline in its value and loss of interest. However, the securities will be
marked to market every business day so that the value is at least equal to the
amount due from the seller, including accrued interest. The Advisor will also
consider the creditworthiness of any bank or broker-dealer involved in
repurchase agreements.
U.S. Government Securities. U.S. Government securities include direct
obligations issued by the United States Treasury, such as Treasury bills,
certificates of indebtedness, notes and bonds. U.S. Government agencies and
instrumentalities that issue or guarantee securities include, but are not
limited to, the Federal Home Loan Banks, the Federal National Mortgage
Association and the Student Loan Marketing Association.
Except for U.S. Treasury securities, obligations of U.S. Government
agencies and instrumentalities may or may not be supported by the full faith and
credit of the United States. Some, such as those of the Federal Home Loan Banks,
are backed by the right of the issuer to borrow from the Treasury; others by
discretionary authority of the U.S. Government to purchase the agencies'
obligations; while still others, such as the Student Loan Marketing Association,
are supported only by the credit of the instrumentality. In the case of
securities not backed by the full faith and credit of the United States, the
investor must look principally to the agency or instrumentality issuing or
guaranteeing the obligation for ultimate repayment and may not be able to assert
a claim against the United States itself in the event the agency or
instrumentality does not meet its commitment.
Foreign Securities. The Small Cap. Portfolio has the right to invest up
to 20% of its total assets in foreign securities. The Portfolio will only
purchase foreign securities which are listed on a "national securities
exchange," as defined in the Investment Company Act of 1940 (the "1940 Act"), or
included in the NASDAQ National Market System or which are represented by
American Depositary Receipts listed on a national securities exchange or
included in the NASDAQ National Market System.
Interest or dividend payments on foreign securities may be subject to
foreign withholding taxes. There are also risks in investing in foreign
securities. The value of an investment may be affected indirectly by changes in
currency rates and in exchange control regulations. Foreign companies are
frequently not subject to the accounting and financial reporting standards
applicable to domestic companies, and there may be less information about
foreign issuers. In addition, investments in foreign countries are subject to
the possibility of expropriation or confiscatory taxation, political or social
instability or diplomatic developments that could adversely affect the value of
those investments.
Options Transactions. The Small Cap. Portfolio may write (sell) covered
cash and cash secured put options, and it may purchase call and put options on
stocks and stock indices. The Small Cap. Portfolio will write options on its
portfolio securities for the purpose of increasing its return or to protect the
value of its portfolio. If the price of the underlying security moves adversely
to the Portfolio's position, the option may be exercised, and the Portfolio will
be required to purchase or sell the underlying security at a disadvantageous
price, which may only be partially offset by the amount of the premium, if at
all. The Small Cap. Portfolio also may write straddles, which are combinations
of put and call options on the same security, and which may generate additional
income, but may also present increased risk. The premium paid for a put or call
option plus any transaction costs will reduce the benefit, if any, realized by
the Fund upon exercise or liquidation of the option, and unless the price of the
underlying security changes sufficiently, the option may expire without value to
the Portfolio. The Portfolio's custodian or a securities depository holds
securities in escrow for the Portfolio in connection with options transactions.
See the Statement of Additional Information.
Futures. The Portfolio may buy and sell stock index futures contracts.
The Portfolio will enter into these transactions in order to hedge against
changes in prices of the Portfolio's securities. No more than 25% of the
Portfolio will be hedged.
A stock index futures contract is an agreement pursuant to which one
party agrees to deliver to the other an amount of cash equal to a specific
dollar amount times the difference between the value of a specific stock index
at the close of the last trading day of the contract and the price at which the
agreement is made. No physical delivery of securities is made. If the Advisor
expected general stock market prices to rise, it might purchase a stock index
futures contract as a hedge against an increase in prices of particular equity
securities it wanted ultimately to buy. If in fact the stock index did rise, the
price of the equity securities intended to be purchased might also increase, but
that increase would be offset in part by the increase in the value of the
Portfolio's futures contract resulting from the increase in the index. On the
other hand, if the Advisor expected general stock market prices to decline, it
might sell a futures contract on the index. If that index did in fact decline,
the value of some or all of the equity securities held by the Portfolio might
also be expected to decline, but that decrease would be offset in part by the
increase in the value of the futures contract.
There is no assurance that it will be possible at any particular time
to close a futures position. In the event that the Portfolio could not close a
futures position and the value of the position declined, the Portfolio would be
required to continue to make daily cash payments of maintenance margin. There
can be no assurance that hedging transactions will be successful, as there may
be an imperfect correlation between movements in the prices of the futures
contracts and of the securities being hedged, or price distortions due to market
conditions in the futures markets. Successful use of futures contracts is
subject to the Advisor's ability to predict correctly movements in the direction
of interest rates, market prices and other factors affecting the value of
securities.
Portfolio Turnover. The annual rate of portfolio turnover of the Small
Cap. Portfolio was 53.11% for the fiscal year ended October 31, 1996 and is
expected to be less than 100% in the future. However, under certain market
conditions, the Portfolio may experience a higher rate of portfolio turnover. In
general, the Advisor will not consider the rate of portfolio turnover to be a
limiting factor in determining when or whether to purchase or sell securities in
order to achieve the Portfolio's objective. High portfolio turnover involves
correspondingly greater brokerage commissions and other transaction costs, which
are borne directly by the Portfolio, and may increase realized capital gains
which are taxable to Holders when distributed.
INVESTMENT RESTRICTIONS
The Portfolio has adopted certain investment restrictions, which are
described fully in the Statement of Additional Information. One of these
restrictions states that the Portfolio may borrow money only from banks for
temporary or emergency purposes in amounts not to exceed 10% of the Portfolio's
assets, and that additional investments may not be made while any such
borrowings are in excess of 5% of the Portfolio's assets. Like the investment
objective, these restrictions are fundamental and may be changed only by a
majority vote of the outstanding Interests of the Portfolio.
The Portfolio may, as a fundamental policy and within limits, engage in
short sales, but only those which are "against the box." Such short sales are a
method of locking in unrealized capital gains without current recognition of
such gains.
It is a position of the Securities and Exchange Commission (and an
operating although not a fundamental policy of the Portfolio) that open-end
investment companies such as the Portfolio should not make certain illiquid
investments if thereafter more than 15% of the value of its net assets would be
so invested. The investments included in this 15% limit are (i) those which are
restricted; i.e., those which cannot freely be sold for legal reasons (other
than those which meet the requirements of Securities Act Rule 144A); (ii) fixed
time deposits subject to withdrawal penalties (other than deposits with a term
of less than seven days); (iii) repurchase agreements having a maturity of more
than seven days; and (iv) investments for which market quotations are not
readily available. The 15% limitation does not include obligations which are
payable at principal amount plus accrued interest within seven days after
purchase. Item 5. Management of the Fund.
The Portfolio's Board of Trustees decides on matters of general policy
and reviews the activities of the Advisor and the Administrator. The Portfolio's
officers conduct and supervise the daily business operations of the Portfolio.
The Advisor
The Advisor to the Small Cap. Portfolio is Provident Investment
Counsel, Inc., 300 North Lake Avenue, Pasadena, California 91101-4106. Subject
to the direction and control of the Trustees of the Small Cap. Portfolio, the
Advisor formulates and implements an investment program for the Portfolio,
including determining which securities should be bought and sold. The Advisor
also provides certain of the officers of the Portfolio. For its services, The
Advisor receives a fee from the Portfolio, accrued daily and paid monthly, at
the annual rate of 0.80% of the average daily net assets of the Portfolio.
The Advisor traces its origins to an investment partnership formed in
1951. On February 15, 1995, it became an indirect, wholly owned subsidiary of
United Asset Management ("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. At December 31, 1996, total assets under the Advisor's
management were in excess of $19 billion.
The Administrator
Pursuant to an Administration Agreement, Investment Company
Administration Corporation (the "Administrator") supervises the overall
administration of the Portfolio, including, among other responsibilities, the
preparation and filing of all documents required for compliance by the Portfolio
with applicable laws and regulations, arranging for the maintenance of books and
records and the Portfolio, and supervision of other organizations that provides
services to the Portfolio. Certain officers of the Portfolio are also provided
by the Administrator. The Portfolio is responsible for paying legal and auditing
fees, the fees and expenses of its custodian, accounting services and transfer
agents, trustees' fees and registration fees, as well as its other operating
expenses. For the services it provides, the Administrator receives a fee from
the Portfolio at an annual rate of .10% of the average daily net assets of the
Portfolio; the fee is accrued daily and paid monthly. Transfer and Dividend
Paying Agent
The Portfolio does not have a transfer or dividend paying agent for the
Portfolio.
Item 6. Capital Stock and Other Securities
Holders of Interests in the Portfolio are entitled to one vote for each
full Interest held (and fractional votes for fractions of Interests) and may
vote in the election of Trustees and on other matters submitted to meetings of
Holders. It is not contemplated that regular annual meetings of Holders will be
held.
The Declaration of Trust provides that the Holders have the right, upon
the declaration in writing or vote of the Holders of a majority of Interests, to
remove a Trustee. The Trustees will call a meeting of Holders to vote on the
removal of a Trustee upon the written request of the Holders of ten per cent of
its Interests. In addition, ten Holders holding the lesser of $25,000 worth or
one per cent of the Interests may advise the Trustees in writing that they wish
to communicate with other Holders 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 Holders.
Holders of Interests have no preemptive or other right to subscribe for
additional securities. Interests are non-transferable.
Holders may be liable for obligations of the Portfolio, but the risk of
a Holder incurring financial loss on account of such liability is limited to
circumstances in which the Portfolio was unable to meet its obligations.
The Book Capital Account balances of Holders are determined at such
time or times, at such frequency and pursuant to such method as the Trustees may
from time to time determine. The power and duty to make such calculations may be
delegated by the Trustees to such person as the Trustees may determine. Such
calculations are made on such days as necessary to comply with Rule 22c-1 under
the 1940 Act.
The Trustees shall, in compliance with applicable provisions of the
Internal Revenue Code (the "Code") or regulations thereunder, agree to (a) the
daily allocation of income or loss to each Holder, (b) the payment of
distributions to Holders and (c) upon liquidation of the Portfolio, the final
distribution of items of taxable income and expense. Any such agreement may be
amended from time to time to comply with the Code or regulations thereunder. The
Trustees may retain from net profits such amount as they may deem necessary to
pay the debts or expenses of the Portfolio or to meet obligations of the
Portfolio, or as they may deem desirable to use in the conduct of the affairs of
the Portfolio or to retain for future requirements or extension of the business
of the Portfolio.
As of January 31, 1997, the Registrant was controlled by the PIC Small
Company Growth Fund, 300 North Lake Avenue, Pasadena, CA 91101, which owned
94.17% of its outstanding Interests.
Item 7. Purchase of Securities Being Offered
Interests in the Portfolio are issued solely to institutional
investors, including regulated investment companies, group trusts governed by
Section 501(a) of the Code, common trust funds governed by Section 584 of the
Code and similar collective investment arrangements in transactions which do not
involve any "public offering" within the meaning of the Securities Act of 1933
(the "1933 Act"). This Registration Statement does not constitute an offer to
sell, or the solicitation of an offer to buy, any "security" within the meaning
of the 1933 Act.
There is no sales charge on Interests in the Portfolio, and the
Portfolio does not use its assets for distribution pursuant to Rule 12b-1 under
the 1940 Act. There is no minimum investment in the Portfolio. The Portfolio
reserves the right to reject any investment.
The net asset value of the Portfolio is determined as of the close of
regular trading (currently 4:00 p.m., New York time) on each day that the New
York Stock Exchange is open for trading. The net asset value per Interest of the
Portfolio is the value of the Portfolio's assets, less its liabilities, divided
by the number of Interests outstanding.
The Portfolio values its investments on the basis of the market value
of the securities. Securities and other assets for which market prices are not
readily available are valued at fair value as determined in good faith by the
Board of Trustees of the Portfolio. The fair value of debt securities with
remaining maturities of 60 days or less is normally their amortized cost value,
unless conditions indicate otherwise. Cash and receivables are valued at their
face amounts. Interest will be recorded as accrued and dividends will be
recorded on their ex-dividend date. Item 8. Redemption or Repurchase
A Holder wishing to redeem Interests may do so at any time by writing
to the Fund in care of its Custodian at P.O. Box 8950, Wilmington DE 19899, or
by delivering instructions to the Custodian at 103 Bellevue Parkway, Wilmington,
Delaware 19809. The redemption request should identify the Portfolio, specify
the number of Interests to be redeemed and be signed by an authorized person of
the Holder. If the request is not properly executed, the Interests specified
will be redeemed at the net asset value next determined after receipt of the
request. Payment for Interests tendered will be made within seven days after
receipt by the Portfolio of instructions properly executed. However, payment may
be delayed under unusual circumstances, as specified in the Investment Company
Act of 1940 or as determined by the Securities and Exchange Commission. Payment
will be sent only to Holders at the address of record. Redemption of Small
Accounts
In order to reduce the Portfolio's expenses, the Board of Trustees is
authorized to cause the redemption of all of the Interests of any Holder whose
account has declined to a net asset value of less than $500, as a result of a
transfer or redemption, at the net asset value determined as of the close of
business on the business day preceding the sending of proceeds of such
redemption. The Portfolio would give Holders whose Interests were being redeemed
60 days' prior written notice in which to purchase sufficient Interests to avoid
such redemption. Item 9. Pending Legal Proceedings
Not applicable.
The date of this Part A is March 4, 1997.
PART B.
PIC SMALL CAP. PORTFOLIO
STATEMENT OF ADDITIONAL INFORMATION
Item 10. Cover Page
This Statement of Additional Information of the PIC Small Cap.
Portfolio (the "Small Cap. Portfolio" or the "Portfolio") is not a prospectus,
and it should be read only in conjunction with Part A of this Registration
Statement. The date of this Statement of Additional Information is March 4,
1997.
Item 11. Table of Contents
Item 12. General Information and History B-1
Item 13. Investment Objective and Policies B-1
Item 14. Management of the Fund B-5
Item 15. Control Persons and Principal Holders of Securities B-6
Item 16. Investment Advisory and Other Services B-6
Item 17. Brokerage Allocation B-7
Item 18. Capital Stock and Other Securities B-8
Item 19. Purchase, Redemption and Pricing of Securities Being Offered B-8
Item 20. Tax Status B-8
Item 21. Underwriters B-9
Item 22. Calculation of Performance Data B-9
Appendix B-9
Item 23. Financial Statements B-10
Item 12. General Information and History
Not applicable.
Item 13. Investment Objective and Policies
The investment objective of the Small Cap. Portfolio is to provide
capital appreciation. There is no assurance that the Portfolio will achieve its
objective. The discussion below supplements information contained in Part A as
to investment policies of the Small Cap. Portfolio.
Investment Restrictions
The Portfolio has adopted the following restrictions as fundamental
policies, which may not be changed without the favorable vote of the holders of
a "majority," as defined in the Investment Company Act of 1940 (the "1940 Act"),
of the outstanding voting securities of the 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 Interests of the
Portfolio represented at a meeting at which the holders of more than 50% of its
outstanding Interests are represented or (ii) more than 50% of the outstanding
Interests of the Portfolio.
The Portfolio may not:
1. Issue senior securities, borrow money or pledge its assets, except
that the 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 the
its total assets are outstanding;
2. Make short sales of securities or maintain a short position, except
for short sales against the box;
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 it may write covered cash and
cash secured put options and purchase call and put options on stocks and stock
indices;
5. Act as underwriter (except to the extent the 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);
7. Purchase or sell real estate or interests in real estate or real
estate limited partnerships (although the 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 the Portfolio may purchase and sell stock index futures contracts;
9. Buy 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 Portfolio and except for repurchase agreements);
or
11. Make investments for the purpose of exercising control or
management.
The Portfolio observes the following restrictions as a matter of
operating but not fundamental policy, pursuant to positions taken by federal and
state regulatory authorities:
The Portfolio may not:
1. Purchase any security if as a result the Portfolio would then hold
more than 10% of any class of securities of an issuer (taking all common stock
issues as a single class, all preferred stock issues as a single class, and all
debt issues as a single class);
2. Invest in securities of any issuer if, to the knowledge of the
Portfolio, any officer or Trustee of the Portfolio or any officer or Director of
the Advisor owns more than 1/2 of 1% of the outstanding securities of such
issuer, and such officers, Trustees and Directors who own more than 1/2 of 1%
own in the aggregate more than 5% of the outstanding securities of such issuer;
3. Invest more than 5% of the value of its net assets in warrants
(included in that amount, but not to exceed 2% of the value of the Portfolio's
net assets, may be warrants which are not listed on the New York or American
Stock Exchange).
4. Invest in any security if as a result the Portfolio would have more
than 5% of its total assets invested in securities of companies which together
with any predecessor have been in continuous operation for fewer than three
years.
5. 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.
Repurchase Agreements
Repurchase agreements are transactions in which 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 Portfolio intends to enter into repurchase
agreements only with banks and dealers believed by the Advisor to present
minimum credit risks in accordance with guidelines established by the Boards of
Trustees. The Advisor will review and monitor the creditworthiness of such
institutions under the Board's general supervision. To the extent that the
proceeds from any sale of collateral upon a default in the obligation to
repurchase were less than the repurchase price, the purchaser would suffer a
loss. If the other party to the repurchase agreement petitions for bankruptcy or
otherwise becomes subject to bankruptcy or other liquidation proceedings, there
might be restrictions on the purchaser's ability to sell the collateral and the
purchaser could suffer a loss. However, with respect to financial institutions
whose bankruptcy or liquidation proceedings are subject to the U.S. Bankruptcy
Code, the Portfolio intends to comply with provisions under that Code that would
allow them immediately to resell the collateral. Options Activities
The Small Cap. Portfolio may write call options on stocks and stock
indices, if the calls are "covered" throughout the life of the option. A call is
"covered" if the Portfolio owns the optioned securities. When the 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.
The Small Cap. Portfolio 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 Small Cap. Portfolio 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. When the Portfolio writes a put, it will maintain at all times during the
option period, in a segregated account, cash or U.S. Government securities equal
in value to the exercise price of the put.
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.
The Portfolio's custodian, or a securities depository acting for it,
generally acts as escrow agent as to the securities on which the Portfolio has
written puts or calls, or as to other securities acceptable for such escrow so
that no margin deposit is required of the Portfolio. Until the underlying
securities are released from escrow, they cannot be sold by the Portfolio.
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 Portfolio 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.
A stock index futures contract may be used as a hedge by the Small Cap.
Portfolio with regard to market risk as distinguished from risk relating to a
specific security. A stock index futures contract does not require the physical
delivery of securities, but merely provides for profits and losses resulting
from changes in the market value of the contract to be credited or debited at
the close of each trading day to the respective accounts of the parties to the
contract. On the contract's expiration date, a final cash settlement occurs.
Changes in the market value of a particular stock index futures contract
reflects changes in the specified index of equity securities on which the future
is based.
There are several risks in connection with the use of futures
contracts. In the event of an imperfect correlation between the futures contract
and the portfolio position which is intended to be protected, the desired
protection may not be obtained and the fund may be exposed to risk of loss.
Further, unanticipated changes in interest rates or stock price movements may
result in a poorer overall performance for the Portfolio than if it had not
entered into any futures on debt securities or stock indexes.
In addition, the market prices of futures contracts may be affected by
certain factors. First, all participants in the futures market are subject to
margin deposit and maintenance requirements. Rather than meeting additional
margin deposit requirements, investors may close futures contracts through
offsetting transactions which could distort the normal relationship between the
securities and futures markets. Second, from the point of view of speculators,
the deposit requirements in the futures market are less onerous than margin
requirements in the securities market. Therefore, increased participation by
speculators in the futures market may also cause temporary price distortions.
Item 14. Management of the Fund
The Trustees and officers of the Portfolio, their business addresses
and principal occupations during the past five years are:
Richard N. Frank (age 73), Trustee Chief Executive Officer, Lawry's
234 E. Colorado Blvd. Restaurants, Inc.; formerly Chairman
Pasadena, CA 91101 of Lawry's Foods, Inc.
Bernard J. Johnson (age 72), Trustee Emeritus Retired;
300 North Lake Avenue formerly Chairman Emeritus
Pasadena, CA 91101 of the Advisor
James Clayburn LaForce (age 68), Trustee Dean Emeritus,
P.O. Box 1585 John E. Anderson Graduate School of
Pauma Valley, CA 92061 Management, University of California,
Los Angeles.
Director of The BlackRock Funds.
Trustee of Payden &
Rygel Investment Trust.
Director of the Timken Co.,
Rockwell International, Eli Lilly,
Jacobs Engineering Group and Imperial
Credit Industries.
Jeffrey J. Miller (age 46), President Managing Director and Secretary
and Trustee* of the Advisor
300 North Lake Avenue
Pasadena, CA 91101
Angelo R. Mozilo (age 58), Trustee Vice Chairman and Executive Vice President
155 N. Lake Avenue of Countrywide Credit Industries (mortgage
Pasadena, CA 91101 banking)
Thad M. Brown (age 46), Vice Senior Vice President and Chief Financial Officer
President, Secretary and of the Advisor
Treasurer of the Trust
300 North Lake Avenue
Pasadena, CA 91101
- ---------------------------------
* denotes Trustees who are "interested persons" of Portfolio 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."
<TABLE>
<CAPTION>
Cash Compensation Deferred Compensation Total Compensation
Name of Trustee From Registrant From Registrant From Fund Complex
<S> <C> <C> <C>
Richard N. Frank $1,000 $3,000 $4,000
James Clayburn La Force 4,000 -0- 4,000
Angelo R. Mozilo 1,000 3,000 4,000
</TABLE>
Item 15. Control Persons and Principal Holders of Securities
The Portfolio is controlled by PIC Small Cap. Growth Fund, 300 North
Lake Avenue, Pasadena, CA 91101, which owns 94.17% of its outstanding interests.
Item 16. Investment Advisory and Other Services
Subject to the supervision of the Board of Trustees of the Portfolio,
investment management and services are provided to the Portfolio by the Advisor,
pursuant to an Investment Advisory Agreement (the "Advisory Agreement").
Under the Advisory Agreement, the Advisor provides a continuous
investment program for the Portfolio and makes decisions and places orders to
buy, sell or hold particular securities. In conjunction with Investment Company
Administration Corporation (the "Administrator"), the Advisor also supervises
all matters relating to the operation of the Portfolio and obtains for it
officers, clerical staff, office space, equipment and services. As compensation
for its services, the Advisor receives a monthly fee at an annual rate of 0.60
of 1% of the Portfolio's average net assets. In addition to the fees payable to
the Advisor and the Administrator, the Portfolio is responsible for its
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 and transfer
agent; (vii) fees and expenses for registration or qualification of the
Portfolio and its Interests under federal or state securities laws; (viii)
expenses of preparing, printing and mailing reports and notices and proxy
material to Holders; (ix) other expenses incidental to holding any meetings of
Holders; (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 Portfolio and the legal obligations with
respect to which the Portfolio may have to indemnify its officers and Trustees;
and (xii) amortization of organization costs.
Under the Advisory Agreement, the Advisor will not be liable to the
Portfolio for any error of judgment by the Advisor or any loss sustained by the
Portfolio except in the case of a breach of fiduciary duty with respect to the
receipt of compensation for services (in which case any award of damages will be
limited as provided in the 1940 Act) or of willful misfeasance, bad faith, gross
negligence or reckless disregard of duty.
The Advisory Agreement was approved by the Board of Trustees and by a
majority of the Trustees who neither are interested persons of the Portfolio nor
have any direct or indirect financial interest in the Advisory Agreement or any
agreement related thereto ("Independent Trustees") on December 19, 1996. If not
terminated, the Advisory Agreement continues 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 Agreement is terminable by vote of the Board of Trustees
or by the holders of a majority of the outstanding voting securities of the
Portfolio at any time without penalty, on 60 days' written notice to the
Advisor. The Advisory Agreement also may be terminated by the Advisor on 60 days
written notice to the Portfolio. The Advisory Agreement terminates automatically
upon its assignment (as defined in the 1940 Act).
During the fiscal years ended October 31, 1996, 1995 and 1994, the
Registrant paid investment advisory fees to the Advisor in the amounts of
$1,395,748, $771,499 and $640,123, respectively. In order to limit the aggregate
expenses of the Registrant to 1% of average net assets, the Advisor paid
expenses of the Registrant that exceed the limit in the amount of $26,098,
$66,713 and $83,418. The Registrant paid fees to its Administrator in the
amounts of $174,469, $96,687 and $80,015, respectively.
The Registrant's custodian is PNC Bank, 17th and Market Streets,
Philadelphia, PA 19101, which holds its assets. The Registrant's auditors are
McGladrey & Pullen, LLP, 555 Fifh Avenue, New York, NY 10017-2416, which audits
the Registrant's financial statements and prepares its tax returns.
Item 17. Brokerage Allocation
The Advisory Agreement states that in connection with its duties to
arrange for the purchase and the sale of securities held in the portfolio of the
Portfolio by placing purchase and sale orders for the Portfolio, the Advisor
shall select such broker-dealers ("brokers") as shall, in its judgment, achieve
the policy of "best execution,"i.e., prompt and efficient execution at the most
favorable securities price. In making such selection, the Advisor is authorized
in the Advisory Agreement to consider the reliability, integrity and financial
condition of the broker. The Advisor also is authorized by the Advisory
Agreement to consider whether the broker provides research or statistical
information to the Portfolio and/or other accounts of the Advisor.
The Advisory Agreement states that the commissions paid to brokers may
be higher than another broker would have charged if a good faith determination
is made by the Advisor that the commission is reasonable in relation to the
services provided, viewed in terms of either that particular transaction or the
Advisor's overall responsibilities as to the accounts as to which it exercises
investment discretion and that the Advisor shall use its judgment in determining
that the amount of commissions paid are reasonable in relation to the value of
brokerage and research services provided and need not place or attempt to place
a specific dollar value on such services or on the portion of commission rates
reflecting such services. The Advisory Agreement provides that to demonstrate
that such determinations were in good faith, and to show the overall
reasonableness of commissions paid, the Advisor shall be prepared to show that
commissions paid (i) were for purposes contemplated by the Advisory Agreement;
(ii) were for products or services which provide lawful and appropriate
assistance to its decision-making process; and (iii) were within a reasonable
range as compared to the rates charged by brokers to other institutional
investors as such rates may become known from available information. During the
fiscal years ended October 31, 1996, 1995 and 1994, brokerage commissions paid
by the Registrant aggregated $115,709, $59,282 and $75,749. respectively.
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 Portfolio in the valuation of the Portfolio's
investments. The research which the Advisor receives for the Portfolio's
brokerage commissions, whether or not useful to the Portfolio, 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
Portfolio.
Money market instruments usually trade on a "net" basis as well. On
occasion, certain money market instruments may be purchased by the Portfolio
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. Item 18. Capital Stock and Other
Securities
See Part A.
Item 19. Purchase, Redemption and Pricing of Securities Being Offered
The net asset value of the Portfolio's Interests will fluctuate and is
determined as of the close of regular trading on the New York Stock Exchange
(currently 4:00 p.m. Eastern time) each business day. The Exchange annually
announces the days on which it will not be open for trading. The most recent
announcement indicates that it will not be open on the following days: New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day. However, the Exchange may close on days
not included in that announcement.
The net asset value per Interest is computed by dividing the value of
the securities held by the 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.
Item 20. Tax Status
The Portfolio does not expect to be subject to any income taxes.
However, each investor in the Portfolio will be taxable on its share of the
Portfolio's ordinary income and capital gain.
Item 21. Underwriters
Not applicable.
Item 22. Calculation of Performance Data
Not applicable.
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.
Standard & Poor's Corporation: Corporate Bond Ratings
AAA--This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA--Bonds rated AA also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority of
instances they differ from AAA issues only in small degree.
A--Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.
Commercial Paper Ratings
Moody's commercial paper ratings are assessments of the issuer's
ability to repay punctually promissory obligations. Moody's employs the
following three designations, all judged to be investment grade, to indicate the
relative repayment capacity of rated issuers: Prime 1--highest quality; Prime
2--higher quality; Prime 3--high quality.
A Standard & Poor's commercial paper rating is a current assessment of
the likelihood of timely payment. Ratings are graded into four categories,
ranging from "A" for the highest quality obligations to "D" for the lowest.
Issues assigned the highest rating, A, are regarded as having the
greatest capacity for timely payment. Issues in this category are delineated
with the numbers "1", "2" and "3" to indicate the relative degree of safety. The
designation A-1 indicates that the degree of safety regarding timely payment is
either overwhelming or very strong. A "+" designation is applied to those issues
rated "A-1" which possess extremely strong safety characteristics. Capacity for
timely payment on issues with the designation "A-2" is strong. However, the
relative degree of safety is not as high as for issues designated A-1. Issues
carrying the designation "A-3" have a satisfactory capacity for timely payment.
They are, however, somewhat more vulnerable to the adverse effect of changes in
circumstances than obligations carrying the higher designations.
Item 23. Financial Statements
The Financial Statements of Registrant are included in the Annual
Report to Shareholders of PIC Small Company Growth Fund for the fiscal year
ended October 31, 1996 and incorporated by reference herein.
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements:
The following financial statements are included the Annual
Report to Shareholders of PIC Small Company Growth Fund and incorporated herein
by reference:
Statement of Net Assets as of October 31, 1996
Statement of Operations, Year ended October 31, 1996
Statement of Changes in Net Assets, Year ended
October 31, 1996 and Period
ended October 31, 1995
Notes to Financial Statements, October 31, 1996
Independent Auditor's Report
(b) Exhibits:
(1) Declaration of Trust
(2) Not applicable
(3) Not applicable
(4) Not applicable
(5) Management Agreement
(6) Not applicable
(7) Not applicable
(8) Custodian Agreement1
(9) Administration Agreement
(10) Not applicable
(11) Consent of McGladrey & Pullen
(12) Not applicable
(13) Investment letter
(14) Not applicable
(15) Not applicable
(16) Not applicable
1 To be filed by Amendment.
Item 25. Persons Controlled by or under Common Control with Registrant.
None.
Item 26. Number of Holders of Securities.
As of February 28, 1997, there were three record Holders of Interests
in the Registrant.
Item 27. Indemnification.
Article V of Registrant's Declaration of Trust, states as follows:
1. Definitions. As used in this Article, the following terms shall have
the meanings set forth below:
(a) the term "indemnitee" shall mean any present or
former Trustee, officer or employee of the Trust, any present or former
Trustee or officer of another trust or corporation whose securities are
or were owned by the Trust or of which the Trust is or was a creditor
and who served or serves in such capacity at the request of the Trust,
any present or former investment adviser, sub-adviser or principal
underwriter of the Trust and the heirs, executors, administrators,
successors and assigns of any of the foregoing; however, whenever
conduct by an indemnitee is referred to, the conduct shall be that of
the original indemnitee rather than that of the heir, executor,
administrator, successor or assignee;
(b) the term "covered proceeding" shall mean any
threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, to which an
indemnitee is or was a party or is threatened to be made a party by
reason of the fact or facts under which he or it is an indemnitee as
defined above;
(c) the term "disabling conduct" shall mean willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office in question;
(d) the term "covered expenses" shall mean expenses
(including attorney's fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by an indemnitee in
connection with a covered proceeding; and
(e) the term "adjudication of liability" shall mean,
as to any covered proceeding and as to any indemnitee, an adverse
determination as to the indemnitee whether by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its
equivalent.
2. Indemnification. The Trust shall indemnify any indemnitee
for covered expenses in any covered proceeding, whether or not there is an
adjudication of liability as to such indemnitee, to the maximum extent permitted
by law. However, the Trust shall not indemnify any indemnitee for any covered
expenses in any covered proceeding if there has been an adjudication of
liability against such indemnitee expressly based on a finding of disabling
conduct. Nothing in this Declaration of Trust shall protect a Trustee against
any liability to which such Trustee would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office of Trustee hereunder.
3. Advance of Expenses. Covered expenses incurred by an
indemnitee in connection with a covered proceeding shall be advanced by the
Trust to an indemnitee prior to the final disposition of a covered proceeding
upon the request of the indemnitee for such advance and the undertaking by or on
behalf of the indemnitee to repay the advance unless it is ultimately determined
that the indemnitee is entitled to indemnification thereunder, but only if one
or more of the following is the case: (i) the indemnitee shall provide a
security for such undertaking; (ii) the Trust shall be insured against losses
arising out of any lawful advances; or (iii) there shall have been a
determination, based on a review of the readily available facts (as opposed to a
full trial-type inquiry) that there is a reason to believe that the indemnitee
ultimately will be found entitled to indemnification by either independent legal
counsel in a written opinion or by the vote of a majority of a quorum of
trustees who are neither "interested persons" as defined in the 1940 Act nor
parties to the covered proceeding. Nothing herein shall be deemed to affect the
right of the Trust and/or any indemnitee to acquire and pay for any insurance
covering any or all indemnitees to the extent permitted by the 1940 Act or to
affect any other indemnification rights to which any indemnitee may be entitled
to the extent permitted by the 1940 Act.
Item 28. Business and Other Connections of Investment Adviser.
Provident Investment Counsel, Inc. is the investment advisor of the
Registrant. For information as to the business, profession, vocation or
employment of a substantial nature of Provident Investment Counsel, Inc.,
reference is made to the Form ADV filed under the Investment Advisers Act of
1940 by Provident Investment Counsel, Inc.
Item 29. Principal Underwriters.
Not applicable.
Item 30. Location of Accounts and Records.
The accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940 and
the rules promulgated thereunder are in the possession of Registrant and
Registrant's custodian, as follows: the documents required to be maintained by
paragraphs (4), (5), (6), (7), (10) and (11) of Rule 31a-1(b) will be maintained
by the Registrant's Administrator, and all other records will be maintained by
the Custodian.
Item 31. Management Services.
Not applicable.
Item 32. Undertakings.
Not applicable.
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940 the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorized, in the City of Pasadena and
State of California on the 3rd day of March, 1997.
PIC SMALL CAP. PORTFOLIO
By /s/ Robert H. Wadsworth
Robert H. Wadsworth
Assistant Secretary
<PAGE>
PIC SMALL CAP. PORTFOLIO
DECLARATION OF TRUST
PIC SMALL CAP. PORTFOLIO
DECLARATION OF TRUST
TABLE OF CONTENTS
Page
ARTICLE I Name.................................................... 1
ARTICLE II Definitions............................................ 1
ARTICLE III Trustees and Officers
1. Increase or Decrease in Number of Trustees............ 2
2. Term.................................................. 2
3. Resignation, Removal and Retirement................... 2
4. Vacancies............................................. 3
5. Meetings.............................................. 3
6. Committees............................................ 4
7. Actions without Meeting; Telephone Meetings........... 5
8. Compensation.......................................... 5
9. Officers.............................................. 5
ARTICLE IV Powers of Trustees
1. General............................................... 5
2. Investments........................................... 6
3. Legal Title........................................... 6
4. Sale of Interests..................................... 6
5. Miscellaneous Powers.................................. 6
6. Further Powers........................................ 8
ARTICLE V Limitations of Liability; Indemnification
1. Definitions........................................... 8
2. No Personal Liability of Trustees and Others.......... 9
3. Indemnification....................................... 9
4. Advance of Expenses................................... 10
5. Liability of Holders ................................. 10
6. Reliance of Experts................................... 11
7. No Duty of Investigation.............................. 11
ARTICLE VI Interests
1. Interests............................................. 11
2. Limitations on Holders of Beneficial Interest......... 11
3. Rights of Holders..................................... 11
4. Record of Interests................................... 11
ARTICLE VII Holders
1. Meetings of Holders................................... 12
2. Notice of Meetings.................................... 12
3. Record Dates.......................................... 12
4. Quorum................................................ 12
5. Voting................................................ 12
Page
6. Proxies and Inspectors................................ 13
7. Conduct of Holders' Meetings.......................... 13
8. Concerning Validity of Proxies, Ballots, etc.......... 14
9. Action by Written Consent............................. 14
10. Inspection of Records................................ 14
11. Other Rights of Holders.............................. 14
ARTICLE VIII Management and Other Contracts
1. Parties to Contracts.................................. 14
2. Management and Underwriting Contracts................. 15
ARTICLE IX Redemptions
1. Right of Redemptions.................................. 15
ARTICLE X Determination of Book Capital Accounts
1. Book Capital Account Balances......................... 16
2. Distributions and Allocations to Holders.............. 16
3. Power to Modify Foregoing............................. 16
ARTICLE XI Duration and Termination
1. Duration.............................................. 16
2. Termination........................................... 16
3. Dissolution........................................... 17
ARTICLE XII Miscellaneous
1. Requirement for Action................................ 17
2. Implied Powers........................................ 17
3. Organization Costs.................................... 18
4. Proper Action......................................... 18
5. Determination of Value................................ 18
6. Amendment............................................. 18
7. Certificate of Designation; Agent for Service of
Process............................................... 18
8. Governing Law......................................... 19
9. Counterparts.......................................... 19
10. Reliance by Third Parties............................ 19
11. Provisions in Conflict with Law or Regulations....... 19
PIC SMALL CAP. PORTFOLIO
DECLARATION OF TRUST
This DECLARATION OF TRUST is made on March 22, 1993, by and
among the individuals executing this Declaration of Trust as the initial
Trustees:
WITNESSETH THAT:
WHEREAS, the Trustees desire to establish a trust fund under
the laws of the State of New York for the investment and reinvestment of funds
contributed thereto;
NOW THEREFORE, the Trustees declare that all money and
property contributed to the trust fund hereunder shall be held and managed under
this Declaration of Trust in trust as herein set forth below.
ARTICLE I
Name
This Trust shall be known as "PIC Small Cap. Portfolio".
ARTICLE II
Definitions
Whenever used herein, unless otherwise required by the context
or specifically provided, all terms used in this Declaration of Trust which are
defined in the 1940 Act shall have the meanings given to them in the 1940 Act,
and the following terms shall have the meanings set forth below. In this
Declaration of Trust, the masculine embraces the feminine.
"Board" or "Board of Trustees" means the Board of Trustees of the
Trust.
"Book Capital Account" means, for any Holder at any time, the
Book Capital Account of the Holder for such day, determined in accordance with
generally accepted accounting principles and the provisions of the 1940 Act.
"Code" refers to the Internal Revenue Code of 1986, as amended
from time to time.
"Commission" means the Securities and Exchange Commission.
"Holder" means a record owner of an Interest of the Trust.
"Interest" means the interest of a Holder in the Trust,
including all rights, powers and privileges accorded to Holders in the
Declaration of Trust, which interest may be expressed as a percentage,
determined by calculating, at such times and on such basis as the Trustees shall
from time to time determine, the ratio of each Holder's Book Capital Account
balance to the total of all Holders' Book Capital Account balances. Reference
herein to a specified percentage in, or fraction of, Interests of the Holders
means Holders whose combined Book Capital Accounts represent such specified
percentage or fraction of the Book Capital Accounts of all Holders.
"Trust" refers to PIC Small Cap. Portfolio, the trust created by this
Declaration of Trust.
"Trustees" refer to the individual trustees in their capacity
as trustees hereunder of the Trust and their successor or successors for the
time being in office as such trustees.
"1940 Act" refers to the Investment Company Act of 1940, as
amended from time to time.
ARTICLE III
Trustees and Officers
1. Increase or Decrease in Number of Trustees. The Trustees
may, by written instrument signed by a majority of the Trustees then holding
office, increase the number of Trustees to a number not exceeding fifteen, and
may fill the vacancies created by any such increase in the number of Trustees by
appointment of an individual made by written instrument signed by a majority of
the Trustees then holding office. The Trustees may likewise decrease the number
of Trustees to a number not less than three, provided that no reduction in the
number of Trustees shall have the effect of removing any Trustee from office. No
appointment of a Trustee shall become effective unless the individual named is
at least 21 years of age and not under legal disability and until the individual
shall have accepted in writing such appointment and agreed in writing to be
bound by the terms of this Declaration of Trust.
2. Term. Subject to any provisions of the 1940 Act and except
as provided in this Article III, each Trustee shall hold office during the
lifetime of this Trust and until its termination as hereinafter provided.
3. Resignation, Removal and Retirement. A Trustee may resign
his trust, without need for prior or subsequent accounting, by an instrument
signed in writing and delivered or mailed to the Chairman, if any, the President
or the Secretary of the Trust, and such resignation shall be effective upon its
receipt unless a later date is specified in the instrument. Any Trustee at any
time may be removed either with or without cause by resolution duly adopted by
the affirmative votes of the holders of the majority of the Interests of the
Trust present in person or by proxy at any meeting of Holders at which such vote
may be taken, provided that a quorum is present. Any Trustee at any time may be
removed for cause by the action of at least two thirds of the Trustees whose
removal is not proposed. Removal with cause includes, but is not limited to, the
removal of the Trustee due to physical or mental incapacity or failure to comply
with such written policies as from time to time may be adopted by at least two
thirds of the Trustees with respect to the conduct of Trustees and attendance at
meetings. Any Trustee who has attained a mandatory retirement age established
pursuant to any written policy adopted by at least two thirds of the Trustees
shall, automatically and without action of such Trustee or the remaining
Trustees, be deemed to have retired in accordance with such policy, effective as
of the date determined in accordance with such policy. Any Trustee who has
become incapacitated by illness or injury as determined by a majority of the
other Trustees may be retired by written instrument signed by a majority of the
other Trustees, specifying the date of his retirement. Upon the resignation,
removal or retirement of a Trustee, or his otherwise ceasing to be a Trustee, he
shall execute and deliver such documents as the remaining Trustees shall require
for the purpose of conveying to the Trust or the remaining Trustees any property
of the Trust held in the name of the resigning, retiring or removed Trustee.
Upon the death of any Trustee or upon removal or resignation due to any
Trustee's incapacity to serve, his legal representative shall execute and
deliver such documents as the remaining Trustees shall require as provided in
the preceding sentence. The death, declination, resignation, retirement,
removal, or incapacity of the Trustees, or any one of them, shall not operate to
annul the Trust or to revoke any existing agency created pursuant to the terms
of this Declaration of Trust.
4. Vacancies. The term of office of a Trustee shall terminate,
and a vacancy shall occur, in the event of the death, resignation, retirement,
removal, adjudicated incompetence or other incapacity to perform the duties of
the office of a Trustee. No such vacancy shall operate to annul this Declaration
of Trust or to revoke any existing agency created pursuant to the terms of this
Declaration of Trust. A vacancy may be filled by the vote of the Holders of a
majority of the Interests entitled to vote, at a meeting held in accordance with
Section 1 of Article VII hereof, or, to the extent provided by the 1940 Act, by
written instrument signed by a majority of the Trustees then holding office.
5. Meetings. Regular meetings of the Board of Trustees shall
be held at such time and on such notice, if any, as the Trustees may from time
to time determine. Special meetings of the Trustees may be held from time to
time upon call of the Chairman of the Board, if any, the President, the
Secretary or two or more of the Trustees, by oral or telegraphic or written
notice duly served on or sent or mailed to each Trustee not less than one day
before such meeting. No notice need be given to any Trustee who attends in
person or to any Trustee who, in writing executed and filed with the records of
the meeting either before or after the holding thereof, waives such notice. Such
notice or waiver of notice need not state the purpose or purposes of such
meeting. A majority of the Trustees then in office shall constitute a quorum for
the transaction of business, provided that a quorum shall in no case be less
than two Trustees. If at any meeting of the Trustees there shall be less than a
quorum present (in person or by open telephone line, to the extent permitted by
the 1940 Act), a majority of those present may adjourn the meeting from time to
time until a quorum shall have been obtained. The act of the majority of the
Trustees present at any meeting at which there is a quorum shall be the act of
the Board, except as may be otherwise specifically provided by statute or by
this Declaration of Trust.
6. Committees. The Trustees may, by the affirmative vote of a
majority of all Trustees, elect from the Trustees an Executive Committee to
consist of such number of Trustees as the Trustees may from time to time
determine. The Trustees by such affirmative vote shall have power at any time to
change the members of such Committee and may fill vacancies in the Committee by
election from the Trustees. When a meeting of Trustees is not in session, the
Executive Committee shall have and may exercise any or all of the powers of the
Trustees in the management of the business and affairs of the Trust (including
the power to authorize the seal of the Trust to be affixed to all papers which
may require it) except as provided by law and except the power to increase or
decrease the size of, or fill vacancies among the Trustees. The Executive
Committee may fix its own rules of procedure, and may meet, when and as provided
by such rules or by resolution of the Trustees, but in every case the presence
of a majority shall be necessary to constitute a quorum. In the absence of any
member of the Executive Committee the members thereof present at any meeting,
whether or not they constitute a quorum, may appoint a Trustee to act in the
place of such absent member.
The Trustees, by the affirmative vote of a majority of all the
Trustees, may appoint other committees which shall in each case consist of such
number of Trustees (not less than two) and shall have and may exercise such
powers as the Trustees may determine in the resolution appointing them. A
majority of all members of any such committee may determine its action, and fix
the time and place of its meetings, unless the Trustees shall otherwise provide.
The Trustees shall have power at any time to change the members and powers of
any such committee, to fill vacancies, and to discharge any such committee.
7. Actions without Meeting; Telephone Meetings. Any action
required or permitted to be taken at any meeting of the Trustees or any
committee thereof may be taken without a meeting, if a written consent to such
action is signed by all members of the Board, or of such committee, as the case
may be. Trustees or members of a committee of the Trustees may participate in a
meeting by means of a conference telephone or similar communications equipment;
such participation shall, except as otherwise required by the 1940 Act, have the
same effect as presence in person.
8. Compensation. Trustees shall be entitled to receive such
compensation from the Trust for their services as may from time to time be voted
by the Trustees.
9. Officers. The executive officers of the Trust shall be
chosen by the Trustees. These may include a Chairman of the Board, and shall
include a President, one or more Vice-Presidents (the number thereof to be
determined by the Trustees), a Secretary and a Treasurer. The Chairman of the
Board, if any, shall be selected from among the Trustees. The Trustees may also,
in their discretion, appoint Assistant Secretaries, Assistant Treasurers, and
other officers, agents and employees. The Trustees may fill any vacancy which
may occur in any office. Any two offices, except those of President and
Vice-President, may be held by the same person, but no officer shall execute,
acknowledge or verify any instrument in more than one capacity, if such
instrument is required by law to be executed, acknowledged or verified by two or
more officers. The term of office of all officers shall be as fixed by the
Trustees; however, any officer may be removed from office at any time with or
without cause by the vote of a majority of the Trustees. The officers, agents
and employees of the Trust shall have such powers and duties as generally
pertain to their respective offices, as well as such powers and duties as may
from time to time be conferred by the Trustees or the Executive Committee.
ARTICLE IV
Powers of Trustees
1. General. The Trustees in all instances shall act as
principals, and are and shall be free from the control of the Holders. The
Trustees shall have full power and authority to do any and all acts and to make
and execute any and all contracts and instruments that they may consider
necessary or appropriate in connection with the management of the Trust. The
Trustees shall not in any way be bound or limited by present or future laws or
customs in regard to Trust investments, but shall have full authority and power
to make any and all investments which they, in their uncontrolled discretion,
shall deem proper to accomplish the purposes of this Trust.
2. Investments. The Trustees shall have power and authority to
hold, invest and reinvest the funds of the Trust, and in connection therewith to
hold part or all of such funds in cash, and to purchase or otherwise acquire,
hold for investment or otherwise, sell, sell short, assign, negotiate, transfer,
exchange or otherwise dispose of or turn to account or realize upon, securities
(which term "securities" shall for the purposes of this Declaration of Trust,
without limitation of the generality thereof, be deemed to include any stocks,
shares, bonds, debentures, notes, mortgages or other obligations, and any
certificates, receipts, warrants or other instruments representing rights to
receive, purchase or subscribe for the same, or evidencing or representing any
other rights or interests therein, or in any property or assets) created or
issued by any issuer (which term "issuer" shall for the purposes of this
Declaration of Trust, without limitation of the generality thereof be deemed to
include any persons, firms, associations, corporations, syndicates,
combinations, organizations, governments, or subdivisions thereof) or in any
other financial instruments whether or not considered as securities or
commodities; and to exercise, as owner or holder of any securities or other
financial instruments, all rights, powers and privileges in respect thereof; and
to do any and all acts and things for the preservation, protection, improvement
and enhancement in value of any or all such securities. The Trustees shall not
be limited to investing in obligations maturing before the possible termination
of the Trust, nor shall the Trustees be limited by any law limiting the
investments that may be made by fiduciaries.
3. Legal Title. As soon as any person shall become a Trustee,
the Trust estate shall vest in the new Trustee together with the continuing
Trustees without any further act or conveyance. All of the assets of the Trust
shall at all times be considered as vested in the Trustees and shall be held
separate and apart from any assets now or hereafter held in any capacity other
than as Trustee hereunder by the Trustees or any successor Trustees. The
Trustees shall have the power to cause legal title to any property of the Trust
to be held by or in the name of one or more of the Trustees or of any other
person on behalf of the Trust, on such terms as the Trustees may determine.
4. Sale of Interests. Subject to any more detailed provisions
contained herein, the Trustees shall have the power to permit the purchase of
Interests and to permit Holders to add to or reduce their Interest in the Trust.
5. Miscellaneous Powers. Subject to any applicable limitation
in this Declaration of Trust, the Trustees shall have power and authority:
(a) to adopt By-Laws not inconsistent with this
Declaration of Trust providing for the conduct of the business of the
Trust and to amend and repeal them to the extent that they do not
reserve that right to the Holders;
(b) to employ a bank or trust company as custodian of
any assets of the Trust subject to any conditions set forth in this
Declaration of Trust or in the By-Laws;
(c) to retain a transfer agent and Holder
servicing agent, or both;
(d) to provide for the distribution of Interests
either through a principal underwriter or the Trust itself or both;
(e) to set record dates in the manner provided
for in the By-Laws of the Trust.
(f) to delegate such authority as they consider
desirable to any officers of the Trust and to any agent,
custodian or underwriter;
(g) to vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities or property held
in Trust hereunder; and to execute and deliver powers of attorney to
such person or persons as the Trustees shall deem proper, granting to
such person or persons such power and discretion with relation to
securities or property as the Trustees shall deem proper;
(h) to exercise powers and rights of subscription or
otherwise which in any manner arise out of ownership
of securities held in trust hereunder;
(i) to consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or concern,
any security of which is held in the Trust; to consent to any contract,
lease, mortgage, purchase or sale of property by such corporation or
concern, and to pay calls or subscriptions with respect to any security
held in the Trust;
(j) to compromise, arbitrate, or otherwise adjust
claims in favor of or against the Trust or any matter in controversy
including, but not limited to, claims for taxes;
(k) to make, in the manner provided in the By-Laws,
distributions of income and of capital gains to Holders;
(l) to borrow money and to pledge assets to the
extent and in the manner permitted by the 1940 Act and the Trust's
fundamental policy thereunder as to borrowing; and
(m) to enter into investment advisory or management
contracts, subject to the 1940 Act, with any one or more corporations,
partnerships, trusts, associations or other persons; if the other party
or parties to any such contract are authorized to enter into securities
transactions on behalf of the Trust, such transactions shall be deemed
to have been authorized by all of the Trustees.
6. Further Powers. The Trustees shall have power to conduct
the business of the Trust in all its branches and maintain one or more offices,
whether within or without the State of New York or elsewhere in any part of the
world, without restriction or limit as to extent. The Trustees shall have power
to carry out all or any of the foregoing objects and purposes as principal or
agent, and alone or with associates or, to the extent now or hereafter permitted
by the laws of the State of New York, as a member of, or as the owner or holder
of any stock of, or share of interest in, any issuer, and in connection
therewith to make or enter into such deeds or contracts with any issuers and to
do such acts and things and to exercise such powers, as a natural person could
lawfully make, enter into, do or exercise. The Trustees shall have power to do
any and all such further acts and things and to exercise any and all such
further powers as may be necessary, incidental, relative, conducive, appropriate
or desirable for the accomplishment, carrying out or attainment of all or any of
the purposes or objects for which the Trust was established, and such power,
objects and purposes shall, except as otherwise expressly provided, be in no way
limited or restricted by reference to, or inference from, the terms of any other
clause of this or any other Articles of this Declaration of Trust, and shall
each be regarded as independent and construed as powers as well as objects and
purposes, and the enumeration of specific powers, objects and purposes shall not
be construed to limit or restrict in any manner the meaning of general terms or
the general powers of the Trust now or hereafter conferred by the laws of the
State of New York nor shall the expression of one thing be deemed to exclude
another, though it be of like nature, not expressed; provided, however, that the
Trust shall not carry on any business, or exercise any powers, in any state,
territory, district or country except to the extent that the same may lawfully
be carried on or exercised under the laws thereof.
ARTICLE V
Limitations of Liability; Indemnification
1. Definitions. As used in this Article, the following terms
shall have the meanings set forth below:
(a) the term "indemnitee" shall mean any present or
former Trustee, officer or employee of the Trust, any present or former
Trustee or officer of another trust or corporation whose securities are
or were owned by the Trust or of which the Trust is or was a creditor
and who served or serves in such capacity at the request of the Trust,
any present or former investment adviser, sub-adviser or principal
underwriter of the Trust and the heirs, executors, administrators,
successors and assigns of any of the foregoing; however, whenever
conduct by an indemnitee is referred to, the conduct shall be that of
the original indemnitee rather than that of the heir, executor,
administrator, successor or assignee;
(b) the term "covered proceeding" shall mean any
threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, to which an
indemnitee is or was a party or is threatened to be made a party by
reason of the fact or facts under which he or it is an indemnitee as
defined above;
(c) the term "disabling conduct" shall mean willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office in question;
(d) the term "covered expenses" shall mean expenses
(including attorney's fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by an indemnitee in
connection with a covered proceeding; and
(e) the term "adjudication of liability" shall mean,
as to any covered proceeding and as to any indemnitee, an adverse
determination as to the indemnitee whether by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its
equivalent.
2. No Personal Liability of Trustees and Others. No indemnitee
shall be subject to any personal liability to any Person other than the Trust or
its Holders in connection with the property or affairs of the Trust, unless
arising from his bad faith, wilful misfeasance, gross negligence or reckless
disregard of his duty to such Person, and all such Persons shall look solely to
the property of the Trust for satisfaction of claims of any nature against an
indemnitee arising in connection with the affairs of the Trust.
3. Indemnification. The Trust shall indemnify any indemnitee
for covered expenses in any covered proceeding, whether or not there is an
adjudication of liability as to such indemnitee, to the maximum extent permitted
by law. However, the Trust shall not indemnify any indemnitee for any covered
expenses in any covered proceeding if there has been an adjudication of
liability against such indemnitee expressly based on a finding of disabling
conduct. Nothing in this Declaration of Trust shall protect a Trustee against
any liability to which such Trustee would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office of Trustee hereunder.
4. Advance of Expenses. Covered expenses incurred by an
indemnitee in connection with a covered proceeding shall be advanced by the
Trust to an indemnitee prior to the final disposition of a covered proceeding
upon the request of the indemnitee for such advance and the undertaking by or on
behalf of the indemnitee to repay the advance unless it is ultimately determined
that the indemnitee is entitled to indemnification thereunder, but only if one
or more of the following is the case: (i) the indemnitee shall provide a
security for such undertaking; (ii) the Trust shall be insured against losses
arising out of any lawful advances; or (iii) there shall have been a
determination, based on a review of the readily available facts (as opposed to a
full trial-type inquiry) that there is a reason to believe that the indemnitee
ultimately will be found entitled to indemnification by either independent legal
counsel in a written opinion or by the vote of a majority of a quorum of
trustees who are neither "interested persons" as defined in the 1940 Act nor
parties to the covered proceeding. Nothing herein shall be deemed to affect the
right of the Trust and/or any indemnitee to acquire and pay for any insurance
covering any or all indemnitees to the extent permitted by the 1940 Act or to
affect any other indemnification rights to which any indemnitee may be entitled
to the extent permitted by the 1940 Act.
5. Liability of Holders. Each Holder shall be jointly and
severally liable (with rights of contribution inter sese in proportion to their
respective Interests in the Trust) for the liabilities and obligations of the
Trust in the event that the Trust fails to satisfy such liabilities and
obligation; provided, however, that to the extent assets are available in the
Trust the Trust shall indemnify and hold each Holder harmless from and against
any claim or liability to which such Holder may become subject by reason of his
being or having been a Holder to the extent that such claim or liability imposes
on the Holder an obligation or liability which, when compared to the obligations
and liabilities imposed on other Holders, is greater than its Interest, and
shall reimburse such Holder for all legal and other expenses reasonably incurred
by it in connection with any such claim or liability. The rights accruing to a
Holder under this section shall not exclude any other right to which such Holder
may be lawfully entitled, nor shall anything herein contained restrict the right
of the Trust to indemnify or reimburse a Holder in any appropriate situation
even though not specifically provided herein. Notwithstanding the
indemnification procedure described above, it is intended that each Holder shall
remain jointly and severally liable to the Trust's creditors as a legal matter.
6. Reliance on Experts. The Trustees may take advice of
counsel or other experts with respect to the meaning and operations of this
Declaration of Trust and shall be under no liability for any act or omission in
accordance with such advice or for failing to follow such advice. The Trustees
shall not be required to give any bond as such, nor any surety if a bond is
required.
7. No Duty of Investigation. No one dealing with the Trustees
shall be under any obligation to make any inquiry concerning the authority of
the Trustees, or to see to the application of any payments made or property
transferred by the Trustees or upon their order. The exercise by the Trustees of
their powers and discretion hereunder in good faith and with reasonable care
under the circumstances then prevailing, shall be binding upon everyone
interested. Subject to the provisions of paragraph 2 of this Article, the
Trustees shall not be liable for errors of judgment or mistakes of fact or law.
ARTICLE VI
Interests
1. Interests. The beneficial interests in the Trust shall
consist of non-transferable Interests.
2. Limitations on Holders of Beneficial Interest. Only
institutional investors, including regulated investment companies, group trusts
governed by Section 501(a) of the Code, common trust funds governed by Section
584 of the Code and similar collective investment arrangements may hold
beneficial interests in the Trust. Such Holders may increase or decrease their
interests in the Trust, however, such interests are not transferable. New
holders of beneficial interest, from the institutional investor groups as
previously described, may be admitted as investors.
3. Rights of Holders. All of the assets of the Trust shall at
all times be considered as vested in the Trustees. Except as provided in this
Declaration of Trust, no Holder shall have, as such holder of beneficial
interest in the Trust, any authority, power or right whatsoever to transact
business for or on behalf of the Trust, or on behalf of the Trustees, in
connection with the property or assets of the Trust, or in any part thereof,
except the rights to receive the income and distributable amounts arising
therefrom as set forth herein.
4. Record of Interests. The ownership of Interests shall be
recorded in the books of the Trust or an agent. The record books of the Trust or
any agent, as the case may be, shall be conclusive as to who are the Holders of
Interests and as to the Book Capital Account balance of each.
ARTICLE VII
Holders
1. Meetings of Holders. Meetings of the Holders for any
purpose or purposes (including the election of Trustees) may be called by the
Chairman of the Board of Trustees, if any, or by the President or by the Board
of Trustees and shall be called by the Secretary upon receipt of the request in
writing signed by Holders holding not less than ten per cent (10%) of the
Interests of the Trust. Such request shall state the purpose or purposes of the
proposed meeting. All meetings of the Holders shall be held at the principal
office of the Trust or at such other place as may from time to time be
designated by the Board of Trustees and stated in the notice of meeting.
2. Notice of Meetings. Not less than ten days' and not more
than ninety days' written or printed notice of every meeting of Holders, stating
the time and place thereof (and the general nature of the business proposed to
be transacted at any special or extraordinary meeting), shall be given to each
Holder entitled to vote thereat by leaving the same with him or at his residence
or usual place of business or by mailing it, postage prepaid and addressed to
him at his address as it appears upon the books of the Trust.
No notice of the time, place or purpose of any meeting of
Holders need be given to any Holder who attends in person or by proxy or to any
Holder who, in writing executed and filed with the records of the meeting,
either before or after the holding thereof, waives such notice.
3. Record Dates. The Board of Trustees may fix, in advance, a
date, not exceeding ninety days and not less than ten days preceding the date of
any meeting of Holders, and not exceeding ninety days preceding any dividend
payment date or any date for the allotment of rights, as a record date for the
determination of the Holders entitled to receive such dividends or rights, as
the case may be; and only Holders of record on such date shall be entitled to
notice of and to vote at such meeting or to receive such dividends or rights, as
the case may be.
4. Quorum. The presence in person or by proxy of the Holders
of one-third of the Interests of the Trust shall constitute a quorum at any
meeting of the Holders. If at any meeting of the Holders there shall be less
than a quorum present, the Holders present at such meeting may, without further
notice, adjourn the same from time to time until a quorum shall attend, but no
business shall be transacted at any such adjourned meeting except such as might
have been lawfully transacted had the meeting not been adjourned.
5. Voting. The Holders shall have power to vote (a) for the
election of Trustees, (b) with respect to the amendment of this Declaration of
Trust, (c) to the same extent as the shareholders of a New York business
corporation, as to whether or not a court action, proceeding or claim should be
brought or maintained derivatively or as a class action on behalf of the Trust
or the Holders, and (d) with respect to such additional matters relating to the
Trust as may be required by the 1940 Act or authorized by law, by this
Declaration of Trust, or the By-Laws of the Trust or any registration statement
of the Trust with the Commission or any State, or as the Trustees may consider
desirable. At all meetings of Holders each Holder shall be entitled to a vote in
proportion to his interest in the Trust on the record date, fixed as set forth
above. All elections of Trustees shall be had by a plurality of the votes cast
and all questions shall be decided by a majority of the votes cast, in each case
at a duly constituted meeting, except as otherwise provided in this Declaration
of Trust or by specific statutory provision superseding the restrictions and
limitations contained in this Declaration of Trust.
6. Proxies and Inspectors. At all meetings of Holders every
Holder of record entitled to vote thereat shall be entitled to vote at such
meeting either in person or by proxy appointed by instrument in writing
subscribed by such Holder or his duly authorized attorney-in-fact.
At any election of Trustees, the Board of Trustees prior
thereto may, or, if they have not so acted, the Chairman of the meeting may, and
upon the request of the holders of ten per cent (10%) of the Interests entitled
to vote at such election shall, appoint two inspectors of election who shall
first subscribe an oath of affirmation to execute faithfully the duties of
inspectors at such election with strict impartiality and according to the best
of their ability, and shall after the election make a certificate of the result
of the vote taken. No candidate for the office of Trustee shall be appointed
such inspector.
The Chairman of the meeting may cause a vote by ballot to be
taken upon any election or matter, and such vote shall be taken upon the request
of the holders of ten per cent (10%) of the Interests entitled to vote on such
election or matter.
7. Conduct of Holders' Meetings. The meetings of the Holders
shall be presided over by the Chairman of the Board of Trustees, if any, or if
he shall not be present, by the President, or if he shall not be present, by a
Vice-President, or if neither the Chairman of the Board of Trustees, the
President nor any Vice-President is present, by a chairman to be elected at the
meeting. The Secretary of the Trust, if present, shall act as Secretary of such
meetings, or if he is not present, an Assistant Secretary shall so act; if
neither the Secretary nor an Assistant Secretary is present, then the meeting
shall elect its secretary.
8. Concerning Validity of Proxies, Ballots, etc. At every
meeting of the Holders, all proxies shall be received and taken in charge of and
all ballots shall be received and canvassed by the secretary of the meeting, who
shall decide all questions touching the qualification of voters, the validity of
the proxies, and the acceptance or rejection of votes, unless inspectors of
election shall have been appointed as provided in Section 6, in which event such
inspectors of election shall decide all such questions.
9. Action by Written Consent. Any action which may be taken by
Holders may be taken without a meeting if the Holders holding more than 50% of
the total Interests entitled to vote (or such larger proportion thereof as shall
be required by any express provisions of this Declaration of Trust) shall
consent to the action in writing and the written consents are filed with the
records of the meetings of Holders. Such consent shall be treated for all
purposes as a vote taken at a meeting of Holders.
10. Inspection of Records. The Holders shall have the right to
inspect the records, documents, accounts and books of the Trust, subject to
reasonable regulations of the Trustees, not contrary to New York law, as to
whether and to what extent, and at what times and places, and under what
conditions and regulations, such right shall be exercised.
11. Other Rights of Holders. Notwithstanding anything
elsewhere contained in this Declaration of Trust or in the By-Laws of the Trust,
the Holders shall have such rights, and the Trust, the Board of Trustees, and
the Trustees shall have such obligations as would exist if the Trust were a
common law trust covered by Section 16(c) of the 1940 Act. However, the Trust
may at any time or from time to time apply to the Commission for one or more
exemptions from all or part of said Section 16(c) and, if an exemptive order or
orders are issued by the Commission, such order or orders shall be deemed part
of said Section 16(c) for the purposes of this paragraph.
ARTICLE VIII
Management and Other Contracts
1. Parties to Contracts. Subject to the provisions of the 1940
Act, any Trustee, officer or employee, individually, or any partnership of which
any Trustee, officer or employee may be a member, or any corporation or
association of which any Trustee, officer or employee may be an officer,
director, trustee, employee or stockholder, may be a party to, or may be
pecuniarily or otherwise interested in, any contract or transaction of the
Trust, and in the absence of fraud no contract or other transaction shall be
thereby affected or invalidated; provided that in case a Trustee, or a
partnership, corporation or association of which a Trustee is a member, officer,
director, trustee, employee or stockholder is so interested, such fact shall be
disclosed or shall have been known to the Trustees or a majority thereof; and
any Trustee who is so interested, or who is also a director, officer, trustee,
employee or stockholder of such other corporation or association or a member of
such partnership which is so interested, may be counted in determining the
existence of a quorum at any meeting of the Trustees which shall authorize any
such contract or transaction, and may vote thereat to authorize any such
contract or transaction, with like force and effect as if he were not such
director, officer, trustee, employee or stockholder of such other trust or
corporation or association or a member of a partnership so interested.
2. Management and Underwriting Contracts. Specifically, but
without limitation of the foregoing, the Trust may enter into a management or
investment advisory contract or underwriting contract and other contracts with,
and may otherwise do business with any manager or investment adviser and/or any
sub-adviser for the Trust and/or principal underwriter of the Interests of the
Trust or any subsidiary or affiliate of any such manager or investment adviser
and/or sub-adviser and/or principal underwriter and may permit any such firm or
corporation to enter into any contracts or other arrangements with any other
firm or corporation relating to the Trust notwithstanding that the Board of the
Trust may be composed in part of partners, directors, officers or employees of
any such firm or corporations, and officers of the Trust may have been or may be
or become partners, directors, officers or employees of any such firm or
corporation, and in the absence of fraud the Trust and any such firm or
corporation may deal freely with each other, and no such contract or transaction
between the Trust and any such firm or corporation shall be invalidated or in
any way affected thereby, nor shall any Trustee or officer of the Trust be
liable to the Trust or to any Holder or creditor thereof or to any other person
for any loss incurred by it or him solely because of the existence of any such
contract or transaction; provided that nothing herein shall protect any Trustee
or officer of the Trust against any liability to the Trust or to its security
holders 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.
ARTICLE IX
Redemptions
Each Holder, upon request to the Trust in proper form
determined by the Trust, shall be entitled to redeem its Interest in the Trust,
by decreasing or withdrawing all or part of such Interest. Such redemption shall
be subject to the terms and conditions provided in this Article. The amount of
such redemption shall be determined by a formula adopted by the Board of
Trustees, provided that such amount shall not exceed the reduction in the
Holder's Book Capital Account effected by such redemption. Notwithstanding the
foregoing, the Trustees, when permitted or required to do so by the 1940 Act,
may suspend the right of the Holders to require the Trust to redeem Interests.
ARTICLE X
Determination of Book Capital Accounts
1. Book Capital Account Balances. The Book Capital Account
balances of Holders shall be determined at such time or times, at such frequency
and pursuant to such method as the Trustees may from time to time determine. The
power and duty to make such calculations may be delegated by the Trustees to
such person as the Trustees may determine.
2. Distributions and Allocations to Holders. The Trustees
shall, in compliance with applicable provisions of the Code or regulations
thereunder, agree to (a) the daily allocation of income or loss to each Holder,
(b) the payment of distributions to Holders and (c) upon liquidation of the
Trust, the final distribution of items of taxable income and expense. Any such
agreement may be amended from time to time to comply with the Code or
regulations thereunder. The Trustees may retain from net profits such amount as
they may deem necessary to pay the debts or expenses of the Trust or to meet
obligations of the Trust, or as they may deem desirable to use in the conduct of
the affairs of the Trust or to retain for future requirements or extension of
the business of the Trust.
3. Power to Modify Foregoing. Notwithstanding any of the
foregoing provisions of this Article, the Trustees may, in their absolute
discretion, prescribe such bases and times for determining the net income and
net assets of the Trust, the allocation of income or the payment of
distributions to the Holders of the Trust as they may deem necessary or
desirable to enable the Trust to comply with any provision of the 1940 Act, any
rule or regulation thereunder, or any order of exemption issued by the
Commission, all as in effect now or hereafter amended or modified.
ARTICLE XI
Duration and Termination
1. Duration. Subject to possible termination or dissolution in
accordance with the terms of this Article, the Trust created hereby shall
continue until the expiration of twenty years after the death of the last
survivor of the initial Trustees named herein and the last survivor of the
descendants of Queen Victoria of England living on the date hereof.
2. Termination. The Trustees, with the favorable vote of the
Holders of not less than two-thirds of the Interests of the Trust, may sell and
convey the assets of the Trust (which sale may be subject to the retention of
assets for the payment of liabilities and expenses) to another issuer for a
consideration which may be or include securities of such issuer. Upon making
provision for the payment of liabilities, by assumption by such issuer or
otherwise, the Trustees shall distribute the remaining proceeds ratably among
the Holders of the Interests of the Trust.
The Trustees, with the favorable vote of the holders of not
less than two-thirds of the Interests of the Trust, may at any time sell and
convert into money all the assets of the Trust. Upon making provision for the
payment of all outstanding obligations, taxes and other liabilities, accrued or
contingent, of the Trust, the Trustees shall distribute the remaining assets of
the Trust ratably among the Holders of the Interests.
Upon completion of the distribution of the remaining proceeds
or the remaining assets as provided above, the Trust shall terminate and the
Trustees shall be discharged of any and all further liabilities and duties
hereunder and the right, title and interest of all parties shall be cancelled
and discharged.
3. Dissolution. Upon the withdrawal, resignation, retirement,
bankruptcy or expulsion of any Holder, the Trust shall be dissolved and
terminated effective 120 days after such event. However, the Holders may, by a
unanimous affirmative vote of Holders of the Interests of the Trust at any
meeting of the Holders or by an instrument in writing without a meeting signed
by a majority of the Trustees and consented to by all of the Holders of such
Interests, agree to continue the business of the Trust even if there has been a
prior dissolution and termination.
ARTICLE XII
Miscellaneous
1. Requirement for Action. Except as otherwise provided in
this Declaration of Trust or the By-Laws, whenever this Declaration of Trust
calls for or permits any action to be taken by the Trustees hereunder, such
action shall mean that taken by the Board of Trustees by vote of the majority of
a quorum of Trustees as set forth herein or as required pursuant to the
provisions of the 1940 Act and the rules and regulations promulgated thereunder.
2. Implied Powers. The Trustees shall possess and exercise any
and all such additional powers as are reasonably implied from the powers herein
contained such as may be necessary or convenient in the conduct of any business
or enterprise of the Trust, to do and perform anything necessary, suitable, or
proper for the accomplishment of any of the purposes, or the attainment of any
one or more of the objects, herein enumerated, or which shall at any time appear
conducive to or expedient for the protection or benefit of the Trust, and to do
and perform all other acts or things necessary or incidental to the purposes
herein before set forth, or that may be deemed necessary by the Trustees.
3. Organization Costs. In the event that any person advances
the organizational expenses of the Trust, such advances shall become an
obligation of the Trust subject to such terms and conditions as may be fixed by,
and on a date fixed by, or determined in accordance with criteria fixed by the
Board of Trustees, to be amortized over a period or periods to be fixed by the
Board.
4. Proper Action. Whenever any action is taken under this
Declaration of Trust under any authorization to take action which is permitted
by the 1940 Act, such action shall be deemed to have been properly taken if such
action is in accordance with the construction of the 1940 Act then in effect as
expressed in "no action" letters of the staff of the Commission or any release,
rule, regulation or order under the 1940 Act or any decision of a court of
competent jurisdiction, notwithstanding that any of the foregoing shall later be
found to be invalid or otherwise reversed or modified by any of the foregoing.
5. Determination of Value. Whenever under this Declaration of
Trust, the Board of Trustees is permitted or required to place a value on assets
of the Trust, such action may be delegated by the Board, and/or determined in
accordance with a formula determined by the Board, to the extent permitted by
the 1940 Act.
6. Amendment. If authorized by vote of the Trustees and the
favorable vote of the Holders of more than 50% of the Interests entitled to
vote, or by any larger vote which may be required by applicable law in any
particular case, the Trustees shall amend or otherwise supplement this
instrument. Notwithstanding the foregoing, the name of the Trust may be changed
if authorized by vote of the Trustees and no vote of, or other action by, the
holders of the outstanding Interests of the Trust is required. A certification
in recordable form signed by a majority of the Trustees setting forth an
amendment and reciting that it was duly adopted by the Holders or the Trustees
as aforesaid or a copy of the Declaration, in recordable form, and executed by a
majority of the Trustees, shall be conclusive evidence of such amendment when
lodged among the records of the Trust. Notwithstanding any other provisions
hereof, until such time as Interests are first sold, this Declaration of Trust
may be terminated or amended in any respect by an instrument signed by a
majority of the Trustees.
7. Certificate of Designation; Agent for Service of Process.
The Trust shall file, in the Department of State of New York, a certificate, in
the Trust name and signed by an officer of the Trust, designating the Secretary
of State of New York as an agent upon whom process in any action or proceeding
against the Trust may be served.
8. Governing Law. The Declaration of Trust is executed by the
Trustees and delivered in the State of New York and with reference to the laws
thereof, and the rights of all parties and the validity and construction of
every provision hereof shall be subject to and construed according to the laws
of the State of New York and reference shall be specifically made to the trust
law of the State of New York as to the construction of matters not specifically
covered herein or as to which an ambiguity exists.
9. Counterparts. This Declaration of Trust may be
simultaneously executed in several counterparts, each of which shall be deemed
to be an original, and such counterparts, together, shall constitute one and the
same instrument, which shall be sufficiently evidenced by any such original
counterpart.
10. Reliance by Third Parties. Any certificate executed by an
individual who, according to the records of the Trust or of any recording office
in which this Declaration of Trust may be recorded, appears to be a Trustee
hereunder, certifying to: (a) the number or identity of Trustees or Holders, (b)
the due authorization of the execution of any instrument or writing, (c) the
form of any vote passed at a meeting of Trustees or Holders (d) the fact that
the number of Trustees or Holders present at any meeting or executing any
written instrument satisfies the requirements of this Declaration of Trust, (e)
the form of any By-Laws adopted by or the identity of any officers elected by
the Trustees, or (f) the existence of any fact or facts which in any manner
related to the affairs of the Trust, shall be conclusive evidence as to the
matters so certified in favor of any person dealing with the Trustees and their
successors.
11. Provisions in Conflict with Law or Regulations.
(a) The provisions of this Declaration of Trust are
severable, and if the Trustees shall determine, with the advice of
counsel, that any of such provisions is in conflict with the 1940 Act,
or with other applicable laws and regulations, the conflicting
provision shall be deemed never to have constituted a part of this
Declaration; provided, however, that such determination shall not
affect any of the remaining provisions of this Declaration or render
invalid or improper any action taken or omitted prior to such
determination.
(b) If any provision of this Declaration of Trust
shall be held invalid or unenforceable in any jurisdiction, such
invalidity or unenforceability shall attach only to such provision in
such jurisdiction and shall not in any manner affect such provision in
any other jurisdiction or any other provision of this Declaration of
Trust in any jurisdiction.
IN WITNESS WHEREOF, the undersigned initial trustees have
executed this instrument this 22nd day of March, 1993.
Lawrence M. Lieberman
as Trustee and not individually
479 West 22nd Street
New York, NY 10011
Steven J. Paggioli
as Trustee and not individually
479 West 22nd Street
New York, NY 10011
Robert H. Wadsworth
as Trustee and not individually
479 West 22nd Street
New York, NY 10011
PIC SMALL CAP. PORTFOLIO
MANAGEMENT AGREEMENT
AGREEMENT made this 15th day of February, 1995, by and between PIC
SMALL CAP. PORTFOLIO (the "Trust"), a trust organized under the laws of the
State of New York, and PROVIDENT INVESTMENT COUNSEL, INC. (the "Advisor"), a
California corporation.
WITNESSETH:
In consideration of the mutual promises and agreements herein contained
and other good and valuable consideration, the receipt of which is hereby
acknowledged, it is hereby agreed by and between the parties hereto as follows:
l. In General
The Trust hereby appoints the Advisor to act as investment adviser to
the Trust. The Advisor agrees, all as more fully set forth herein, to provide
professional investment management with respect to the investment of the assets
of the Trust and to supervise and arrange the purchase and sale of securities
held in the portfolio of the Trust.
2. Duties and Obligations of the Advisor
with respect to Management of the Trust
(a) Subject to the succeeding provisions of this section and
subject to the direction and control of the Board of Trustees of the
Trust, the Advisor shall:
(i) Decide what securities shall be purchased or
sold by the Trust and when; and
(ii) Arrange for the purchase and the sale of
securities held in the portfolio of the Trust by placing
purchase and sale orders for the Trust.
(b) Any investment purchases or sales made by the Advisor
shall at all times conform to, and be in accordance with, any
requirements imposed by: (l) the provisions of the Investment Company
Act of 1940 (the "Act") and of any rules or regulations in force
thereunder; (2) any other applicable provisions of law; (3) the
provisions of the Declaration of Trust and By-Laws of the Trust as
amended from time to time; (4) any policies and determinations of the
Board of Trustees of the Trust; and (5) the fundamental policies of the
Trust, as reflected in its registration statement under the Act, or as
amended by the shareholders of the Trust.
(c) The Advisor shall give the Trust the benefit of its best
judgment and effort in rendering services hereunder. In the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard
of obligations or duties ("disabling conduct") hereunder on the part of
the Advisor (and its officers, directors, agents, employees,
controlling persons, shareholders and any other person or entity
affiliated with the Advisor) the Advisor shall not be subject to
liability to the Trust or to any shareholder of the Trust for any act
or omission in the course of, or connected with rendering services
hereunder, including without limitation, any error of judgment or
mistake of law or for any loss suffered by any of them in connection
with the matters to which this Agreement related, except to the extent
specified in Section 36(b) of the Act concerning loss resulting from a
breach of fiduciary duty with respect to the receipt of compensation
for services. Except for such disabling conduct, the Trust shall
indemnify the Advisor (and its officers, directors, agents, employees,
controlling persons, shareholders and any other person or entity
affiliated with the Advisor) from any liability arising from the
Advisor's conduct under this Agreement to the extent permitted by the
Declaration of Trust and applicable law.
(d) Nothing in this Agreement shall prevent the Advisor or any
affiliated person (as defined in the Act) of the Advisor from acting as
investment adviser or manager and/or principal underwriter for any
other person, firm or corporation and shall not in any way limit or
restrict the Advisor or any such affiliated person from buying, selling
or trading any securities for its or their own accounts or the accounts
of others for whom it or they may be acting, provided, however, that
the Advisor expressly represents that it will undertake no activities
which, in its judgment, will adversely affect the performance of its
obligations to the Trust under this Agreement.
(e) It is agreed that the Advisor shall have no responsibility
or liability for the accuracy or completeness of the Trust's
Registration Statement under the Act except for information supplied by
the Advisor for inclusion therein.
3. Broker-Dealer Relationships
In connection with its duties set forth in Section 2(a)(ii) of this
Agreement to arrange for the purchase and the sale of securities held by the
Trust by placing purchase and sale orders for the Trust, the Advisor shall
select such broker-dealers ("brokers") as shall, in the Advisor's judgment,
implement the policy of the Trust to achieve "best execution", i.e., prompt and
efficient execution at the most favorable securities price. In making such
selection, the Advisor is authorized to consider the reliability, integrity and
financial condition of the broker. The Advisor is also authorized to consider
whether the broker provides brokerage and/or research services to the Trust
and/or other accounts of the Advisor. The commissions paid to such brokers may
be higher than another broker would have charged if a good faith determination
is made by the Advisor that the commission is reasonable in relation to the
services provided, viewed in terms of either that particular transaction or the
Advisor's overall responsibilities as to the accounts as to which it exercises
investment discretion. The Advisor shall use its judgment in determining that
the amount of commissions paid are reasonable in relation to the value of
brokerage and research services provided and need not place or attempt to place
a specific dollar value on such services or on the portion of commission rates
reflecting such services. To demonstrate that such determinations were in good
faith, and to show the overall reasonableness of commissions paid, the Advisor
shall be prepared to show that commissions paid (i) were for purposes
contemplated by this Agreement; (ii) provide lawful and appropriate assistance
to the Advisor in the performance of its decision-making responsibilities; and
(iii) were within a reasonable range as compared to the rates charged by
qualified brokers to other institutional investors as such rates may become
known from available information. The Trust recognizes that, on any particular
transaction, a higher than usual commission may be paid due to the difficulty of
the transaction in question. The Advisor also is authorized to consider sales of
shares as a factor in the selection of brokers to execute brokerage and
principal transactions, subject to the requirements of "best execution", as
defined above.
4. Allocation of Expenses
The Advisor agrees that it will furnish the Trust, at the Advisor's
expense, with all office space and facilities, and equipment and clerical
personnel necessary for carrying out its duties under this Agreement. The
Advisor will also pay all compensation of all Trustees, officers and employees
of the Trust who are affiliated persons of the Advisor. All costs and expenses
not expressly assumed by the Advisor under this Agreement shall be paid by the
Trust, including, but not limited to (i) interest and taxes; (ii) brokerage
commissions; (iii) insurance premiums; (iv) compensation and expenses of its
Trustees other than those affiliated with the Advisor or its Administrator; (v)
legal and audit expenses; (vi) fees and expenses of the Trust's custodian,
transfer agent and accounting services agent; (vii) expenses incident to the
issuance of its shares, including stock certificates and issuance of shares on
the payment of, or reinvestment of, dividends; (viii) fees and expenses incident
to the registration under Federal or state securities laws of the Trust or its
shares; (ix) expenses of preparing, printing and mailing reports, notices, proxy
material and prospectuses to shareholders of the Trust; (x) all other expenses
incidental to holding meetings of the Trust's shareholders; (xi) dues or
assessments of or contributions to the Investment Company Institute or any
successor or other industry association; (xii) such non-recurring expenses as
may arise, including litigation affecting the Trust and the legal obligations
which the Trust may have to indemnify its officers and Trustees with respect
thereto; (xiii) fees of the Trust's Administrator and (xiii) the organization
costs of the Trust.
5. Compensation of the Advisor
(a) The Trust agrees to pay the Advisor and the Advisor agrees to accept as
full compensation for all services rendered by the Advisor as such, an annual
management fee, payable monthly and computed on the value of the net assets of
the Trust as of the close of business each business day at the annual rate of
0.80 of 1% of such net assets of the Trust.
(b) In the event the expenses of the Trust (including the fees of the
Advisor and the Administrator and amortization of organization expenses but
excluding interest, taxes, brokerage commissions, extraordinary expenses and
sales charges and distribution fees) for any fiscal year exceed the limits set
by applicable regulations of state securities commissions in states where the
Trust's shares are registered or qualified for sale, the Advisor will reduce its
fee by the amount of such excess. Any such reductions are subject to
readjustment during the year. The payment of the management fee at the end of
any month will be reduced or postponed or, if necessary, a refund will be made
to the Trust so that at no time will there be any accrued but unpaid liability
under this expense limitation.
6. Duration and Termination
(a) This Agreement shall go into effect on the date set forth above and
shall, unless terminated as hereinafter provided, continue in effect until the
earlier of February 15, 1997 or the first meeting of shareholders of the Trust
and, if approved at that meeting, until the next February 15th after that
meeting and thereafter from year to year, but only so long as such continuance
is specifically approved at least annually by the Trust's Board of Trustees,
including the vote of a majority of the Trustees who are not parties to this
Agreement or "interested persons" (as defined in the Act) of any such party cast
in person at a meeting called for the purpose of voting on such approval, or by
the vote of the holders of a "majority" (as so defined) of the outstanding
voting securities of the Trust.
(b) This Agreement may be terminated by the Advisor at any time without
penalty upon giving the Trust sixty (60) days' written notice (which notice may
be waived by the Trust) and may be terminated by the Trust at any time without
penalty upon giving the Advisor sixty (60) days' written notice (which notice
may be waived by the Advisor), provided that such termination by the Trust shall
be directed or approved by the vote of a majority of all of its Trustees in
office at the time or by the vote of the holders of a majority (as defined in
the Act) of the voting securities of the Trust. This Agreement shall
automatically terminate in the event of its assignment (as so defined).
IN WITNESS WHEREOF, the parties hereto have caused the foregoing
instrument to be executed by duly authorized persons and their seals to be
hereunto affixed, all as of the day and year first above written.
PIC SMALL CAP. PORTFOLIO
By
ATTEST:
PROVIDENT INVESTMENT COUNSEL, INC.
By
ATTEST:
PIC SMALL CAP. PORTFOLIO
ADMINISTRATION AGREEMENT
AGREEMENT made this day of September, 1993, by and between PIC SMALL
CAP. PORTFOLIO (the "Trust"), a trust organized under the laws of the State of
New York, and INVESTMENT COMPANY ADMINISTRATION CORPORATION (the
"Administrator"), a Delaware corporation.
WITNESSETH:
In consideration of the mutual promises and agreements herein contained
and other good and valuable consideration, the receipt of which is hereby
acknowledged, it is hereby agreed by and between the parties hereto as follows:
l. In General.
The Trust hereby appoints Investment Company Administration Corporation
as Administrator, subject to the overall supervision of the Board of Trustees of
the Trust for the period and on the terms set forth in this Agreement. The
Administrator hereby accepts such appointment and agrees during such period to
render the services herein described and to assume the obligations set forth
herein, for the compensation herein provided.
2. Duties and Obligations of the Administrator.
(a) Subject to the direction and control of the Board of
Trustees of the Trust, the Administrator shall be responsible for
providing such services as the Trustees may reasonably request,
including but not limited to (i) maintaining the Trust's books and
records (other than financial or accounting books and records
maintained by any custodian, transfer agent or accounting services
agent); (ii) overseeing the Trust's insurance relationships; (iii)
preparing for the Trust (or assisting counsel and/or auditors in the
preparation of) all required tax returns, proxy statements and reports
to the Trust's shareholders and Trustees and reports to and other
filings with the Securities and Exchange Commission and any other
governmental agency (the Trust agreeing to supply or cause to be
supplied to the Administrator all necessary financial and other
information in connection with the foregoing); (iv) preparing such
applications and reports as may be necessary to register or maintain
the Trust's registration and/or the registration of the shares of the
Trust under the securities or "blue sky" laws of the various states
selected by the Trust (the Trust agreeing to pay all filing fees or
other similar fees in connection therewith); (v) responding to all
inquiries or other communications of shareholders, if any, which are
directed to the Administrator, or if any such inquiry or communication
is more properly to be responded to by the Trust's custodian, transfer
agent or accounting services agent, overseeing their response thereto;
(vi) overseeing all relationships between the Trust and any
custodian(s), transfer agent(s) and accounting services agent(s),
including the negotiation of agreements and the supervision of the
performance of such agreements; and (vii) authorizing and directing any
of the Administrator's directors, officers and employees who may be
elected as Trustees or officers of the Trust to serve in the capacities
in which they are elected. All services to be furnished by the
Administrator under this Agreement may be furnished through the medium
of any such directors, officers or employees of the Administrator.
(b) In the absence of willful misfeasance, bad faith, gross
negligence or reckless disregard of obligations or duties ("disabling
conduct") hereunder on the part of the Administrator (and its officers,
directors, agents, employees, controlling persons, shareholders and any
other person or entity affiliated with the Administrator) the
Administrator shall not be subject to liability to the Trust or to any
shareholder of the Trust for any act or omission in the course of, or
connected with, rendering services hereunder, including, without
limitation, any error of judgment or mistake of law or for any loss
suffered by any of them in connection with the matters to which this
Agreement relates, except to the extent specified in Section 36(b) of
the Investment Company Act of 1940 (the "Act") concerning loss
resulting from a breach of fiduciary duty with respect to the receipt
of compensation for services. Except for such disabling conduct, the
Trust shall indemnify the Administrator (and its officers, directors,
agents, employees, controlling persons, shareholders and any other
person or entity affiliated with the Administrator) from any liability
arising from the Administrator's conduct under this Agreement to the
extent permitted by the Trust's Declaration of Trust and applicable
law.
(c) It is agreed that the Administrator shall have no
responsibility or liability for the accuracy or completeness of the
Trust's Registration Statement under the Act except for information
supplied by the Administrator for inclusion therein.
3. Allocation of Expenses
The Administrator agrees that it will furnish the Trust, at the
Administrator's expense, with all office space and facilities, and equipment and
clerical personnel necessary for carrying out its duties under this Agreement.
The Administrator will also pay all compensation of all Trustees, officers and
employees of the Trust who are affiliated persons of the Administrator. All
costs and expenses not expressly assumed by the Administrator under this
Agreement shall be paid by the Trust, including, but not limited to (i) interest
and taxes; (ii) brokerage fees and commissions; (iii) insurance premiums; (iv)
compensation and expenses of the Trust's Trustees other than those affiliated
with the Advisor or the Administrator; (v) legal and auditing fees and expenses;
(vi) fees and expenses of the Trust's custodian, transfer agent and accounting
services agent; (vii) expenses incident to the issuance of the Trust's shares,
including issuance on the payment of, or reinvestment of, dividends; (viii) fees
and expenses incident to the registration under Federal or state securities laws
of the Trust or its shares; (ix) expenses of preparing, printing and mailing
reports and notices and proxy material to shareholders of the Trust; (x) all
other expenses incidental to holding meetings of the Trust's shareholders; (xi)
dues or assessments of or contributions to the Investment Company Institute or
any successor; (xii) such non-recurring expenses as may arise, including
litigation affecting the Trust and the legal obligations which the Trust may
have to indemnify its officers and Trustees with respect thereto; and (xiii)
organization costs of the Trust.
4. Compensation of the Administrator
The Trust agrees to pay the Administrator and the Administrator agrees
to accept as full compensation for all services rendered by the Administrator as
such, an annual fee, payable monthly and computed based on the value of the
total net assets of the Trust at the annual rate of 0.10% of the such net
assets.
5. Duration and Termination
(a) This Agreement shall become effective on the date set
forth above and shall remain in force for two years thereafter unless
terminated pursuant to the provisions of paragraph (b) hereof. This
Agreement shall continue in force from year to year after the initial
two-year term, but only so long as such continuance is specifically
approved annually by the Trust's Board of Trustees or by a vote of a
majority of the Trust's outstanding voting securities.
(b) This Agreement may be terminated by the Administrator at
any time without penalty upon giving the Trust not less than sixty (60)
days' written notice (which notice may be waived by the Trust) and may
be terminated by the Trust at any time without penalty upon giving the
Administrator not less than sixty (60) days' written notice (which
notice may be waived by the Administrator), provided that such
termination by the Trust shall be directed or approved by the vote of a
majority of all of its Trustees in office at the time or by the vote of
the holders of a majority (as defined in the Act) of the voting
securities of the Trust.
IN WITNESS WHEREOF, the parties hereto have caused the
foregoing instrument to be executed by duly authorized persons and their seals
to be hereunto affixed, all as of the day and year first above written.
PIC SMALL CAP.PORTFOLIO
By
INVESTMENT COMPANY ADMINISTRATION CORPORATION
By
McGladrey & Pullen, LLP
Certified Public Acountants and Consultants
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the use of our report dated November 27, 1996 on the
financial statements of PIC Small-Cap Portfolio referred to therein, which is
incorporated by reference in Amendment No. 3 to the Registration Statement on
Form N-1A of PIC Small-Cap Portfolio as filed with the Securities and Exchange
Commission.
/s/ McGladrey & Pullen, LLP
McGladrey & Pullen, LLP
New York, New York
March 4, 1997
SUBSCRIPTION AGREEMENT
PIC SMALL CAP. PORTFOLIO (the "Trust"), an open-end management
investment company, and PIC INVESTMENT TRUST (the "Investor"), intending to be
legally bound, hereby agree as follows:
1. In order to provide the Trust with its initial capital, the
Investor hereby contributes $100,000 to purchase Interests in the Trust.
2. The Investor represents and warrants to the Trust that the Interests
are being acquired for investment and not with a view to distribution thereof
and that the Investor has no present intention to redeem or dispose of any of
the Interests.
3. The Investor agrees that in the event that the Trust liquidates
before the deferred organizational expenses are fully amortized, then the
redemption price of the Interests may be subject to reduction in the amount of a
proportionate share of such unamortized organizational expenses.
IN WITNESS WHEREOF, the parties have executed this agreement this day
of , 1992.
PIC SMALL CAP. PORTFOLIO PIC INVESTMENT TRUST
By By
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