Annual Report October 31, 1999
[PROVIDENT INVESTMENT COUNSEL LOGO]
Growth Fund I
Small Company Growth Fund I
Provident Investment Counsel
Investing in growth since 1951
<PAGE>
CONTENTS
3 President's Letter
4 Our Philosophy
5 Performance Update/
Portfolio Review
6 Interview with
Provident Managers
8 Performance Comparison
THE FUNDS
9 Statements of Assets and Liabilities
11 Statements of Operations
12 Statements of Changes in Net Assets
14 Financial Highlights
16 Notes to Financial Statements
19 Report of Independent Accountants
THE PORTFOLIOS
21 Statements of Net Assets
37 Statements of Operations
38 Statements of Changes in Net Assets
40 Selected Ratio Data
42 Notes to Financial Statements
45 Report of Independent Accountants
46 Change in Independent Accountant
Items of Interest
- - The Growth Fund was recently named as a top performing growth mutual fund
for the last three and five year periods by Investors Daily, a leading
business publication.
- - The Growth style of investment continues to enjoy a leadership role. Our
strong stock selection and sector allocation in the Funds were rewarded by
positive absolute and relative performance the past year.
- - Technology and technology related issues continue to provide the highest
growth rates and as a result have become larger components of the Funds'
portfolios of holdings.
- - Our website address is: WWW.PROVNET.COM
2
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Fellow Shareholder,
We are pleased to report very positive results for the fiscal year ending
October 31, 1999 (more detailed information is available on the following
pages). The Small Company Growth Fund continues to lead the way -- more than
doubling the return of the Standard and Poors 500 Index, a broad measure of the
market's overall performance. The Growth Fund also outperformed the unmanaged
index for the fiscal year.
The underlying fundamentals of our holdings in all of the PIC Funds have
remained very compelling, and our patience through some volatility this year has
been rewarded. Much of the performance of the broad market and the Funds has
been driven by the technology and telecommunications sectors. Accordingly, we
have increased both the size and number of holdings in these areas.
The narrowness of the overall stock market, with a very limited number of
technology and telecommunications stocks dominating returns, causes some to
worry. Historically, such developments have sometimes ushered in unpleasant
declines. However, those declines have most often been accompanied by
unfavorable economic conditions, when either inflation has surged, or the
Federal Reserve has embarked upon a series of extreme tightening measures to
slow an overheated economy. This process usually results in either very slow
economic growth, or in the extreme, a recession. We do not assign a high
probability to either of these scenarios in the near-term. The one area of
concern to us at the beginning of the year, is high stock market valuations,
which makes the market vulnerable, particularly to rising interest rates.
We remain positive in our outlook for growth company shares well into next
year. The very positive tone and continued domestic economic expansion give us
reason to believe the market will broaden some in the months ahead. As with the
stronger-than-expected corporate profits picture for 1999, we see a solid growth
picture moving well into next year. As to Fund strategy, we intend to remain
extremely flexible, and we are prepared to take profits in technology and
telecommunications issues in favor of other sectors if we see equal
opportunities present themselves.
Finally, while Y2K and valuation concerns abound, we do not, at this time,
expect any meaningful Y2K disruptions.
We appreciate your continued confidence in Provident Investment Counsel.
Sincerely,
/s/ Douglass B. Allen
Douglass B. Allen
President, PIC Investment Trust
December 7, 1999
3
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Our Philosophy
- - Focused, fundamental research, properly controlled, adds value.
- - Sustainable earnings growth is the most important contributor to long-term
stock appreciation.
- - Emphasis on strong financial characteristics ensures focus on growth and
quality.
- - Investment style consistency is critical to superior long-term investment
results.
[GRAPHIC] EMERGING COMPANY ESTABLISHED GROWTH MATURE COMPANIES
GROWTH GROWTH CURVE
4
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Performance Update/Portfolio Review
Growth Fund
SECTOR WEIGHTINGS
Technology 52.2%
Retail 11.8%
Healthcare/Medical 9.5%
Public Utilities 7.7%
Financial 6.6%
Consumer Durables 4.8%
Energy 4.2%
Consumer Non-Durables 3.2%
Average annualized total returns for the period ending 10/31/99:
1 Year 3 Year 5 Year Since Inception 6/11/92
------ ------ ------ -----------------------
31.08% 25.62% 22.45% 17.16%
Top 10 Stock Holdings
1. Microsoft Corporation 7.23%
2. MCI Worldcom Incorporated 4.88%
3. Lucent Technologies, Inc. 4.44%
4. Sun Microsystems, Inc. 4.36%
5. Tyco International Ltd. 4.28%
6. EMC Corporation 3.15%
7. Motorola, Inc. 3.08%
8. Cisco Systems, Inc. 3.07%
9. Kohl's Corporation 2.81%
10. Vitesse Semiconductor Corporation 2.69%
Small Company Growth Fund
SECTOR WEIGHTINGS
Technology 57.4%
Consumer Non-Durables 13.5%
Industrials 9.4%
Healthcare/Medical 7.5%
Retail 4.9%
Energy 2.2%
Financial 2.0%
Consumer Durables 1.3%
Transportation 1.0%
Public Utilities 0.8%
Average annualized total returns for the period ending 10/31/99:
1 Year 3 Year 5 Year Since Inception 9/30/93
------ ------ ------ -----------------------
58.20% 10.61% 19.22% 15.55%
Top 10 Stock Holdings
1. Peregrine Systems, Inc. 2.38%
2. Vignette Corporation 2.13%
3. Business Objects S.A. ADS 2.11%
4. The Profit Recovery Group International, Inc. 2.11%
5. NCO Group, Inc. 2.00%
6. Dollar Tree Stores, Inc. 1.94%
7. Emulex Corporation 1.81%
8. Mercury Interactive Corporation 1.80%
9. Check Point Software Technologies, Ltd. 1.68%
10. UnitedGlobalCom, Inc. 1.65%
Performance results of the Fund for the period prior to the effective date of
its registration statement reflect the total returns of another fund managed by
Provident Investment Counsel. The performance results for this period have been
restated to reflect all applicable fees and expenses of the Fund. For more
information, please refer to the "Performance Comparison" section of this
report.
5
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Interview with Provident Managers
What industry sectors performed positively for the Funds' equity holdings?
Growth
- Telecommunications
- Technology Services
Small Company
- Electronic Technology
- Technology Services
- Commercial Services
Q To what do you attribute the strong returns of small cap stocks over the
last year?
A For several years now, small cap stocks have generally lagged larger growth
equities. However, the portfolio's performance this year is testament to
the market's narrowing of the extreme valuation gap between large cap and
small cap stocks in the 1996-1998 period. These valuations became more and
more compelling as many of the growth issues continued to deliver strong
fundamental results.
Q What were the major factors contributing to the Small Company Growth Fund
significantly outperforming the comparable unmanaged index over the last
year?
A The Small Company Growth Fund has significantly outperformed the unmanaged
indices through positive stock selection and weightings in the technology
services and electronic technology sectors. We focused our stock selection
in strong product sectors such as broadband, communications chips, fiber
optics equipment, and web enabling software. Additionally, almost all
segments of the Fund provided a positive contribution. The exceptions were
the health technology and retail trade sectors, which modestly penalized
overall results.
Q What is the outlook for small cap stocks in general?
A As we move into the final month of the year and into early 2000, we are
confident that the Small Company Growth Fund will continue to experience
both strong absolute and relative performance. For several years now, small
cap stocks have generally lagged larger growth equities. The performance of
the Fund this year gives us evidence that this extreme valuation gap is
narrowing and will continue to do so.
6
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Interview with Provident Managers, continued
Q The Growth Fund outperformed the broad market, as measured by the Standard
and Poors 500 Index, by more than 5% for the year ended October 31, 1999.
What were the major contributors and detractors to performance during the
year?
A The two most positive sectors for the Fund were telecommunications and
technology services. The Fund also benefited from holdings in hardware
technology concerns. Some of the names in telecommunications included
Worldcom, Alltell and Vodaphone. In technology services and hardware, the
Fund's holdings included America Online, Microsoft, Cisco and Lucent. The
Fund's returns were reduced, relative to the broad market, by our holdings
in Healthcare and Health Technology such as Pfizer, Warner Lambert, and
Elan.
Q What is the outlook for the Growth Fund during the remainder of 1999 and
2000?
A We remain very optimistic about the fundamentals of the Fund's holdings. We
think a broadening out of the market to other sectors within both the large
and small capitalization spectrum is likely. So far this year, we have seen
investors move back to growth-oriented small cap stocks where valuations
were historically cheap. We look for investors to broaden their horizons
within the large cap segment of the market, and for the current narrowness
of the market to self-correct. We will continue to make every effort to
check and re-check the fundamentals of the Fund's holdings, and to seek new
opportunities for growth in all areas of the economy.
7
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Provident Investment Counsel
Mutual Funds
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PERFORMANCE COMPARISON
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN PROVIDENT
INVESTMENT COUNSEL GROWTH FUND I, THE RUSSELL 1000 GROWTH INDEX,
AND THE S&P/BARRA GROWTH INDEX.
AVERAGE ANNUAL TOTAL RETURN
One Year Five Years Since Inception
-------- ---------- ---------------
31.08% 22.45% 17.16%
<TABLE>
<CAPTION>
06/11/92 10/31/92 04/30/93 10/31/93 04/30/94 10/31/94 04/30/95 10/31/95
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Growth Fund I $10,390 $10,810 $10,349 $11,610 $10,950 $11,710 $11,710 $14,263
Russell 1000 Growth Index $10,494 $10,643 $10,679 $11,421 $11,087 $12,039 $13,261 $16,700
S&P/Barra Growth Index $10,307 $10,463 $10,408 $11,080 $10,716 $11,686 $12,956 $15,161
04/30/96 10/31/96 04/30/97 10/31/97 04/30/98 10/31/98 04/30/99 10/31/99
-------- -------- -------- -------- -------- -------- -------- --------
Growth Fund I $14,883 $16,265 $17,524 $20,565 $24,401 $24,595 $30,444 $32,240
Russell 1000 Growth Index $17,581 $18,989 $21,458 $24,774 $30,488 $30,877 $38,576 $41,451
S&P/Barra Growth Index $16,891 $18,754 $22,188 $25,189 $31,517 $33,262 $40,771 $43,770
</TABLE>
Past performance is not predictive of future performance.
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
PROVIDENT INVESTMENT COUNSEL SMALL COMPANY GROWTH FUND I AND
THE RUSSELL 2000 GROWTH INDEX.
AVERAGE ANNUAL TOTAL RETURN
One Year Five Years Since Inception
-------- ---------- ---------------
58.20% 19.22% 15.55%
<TABLE>
<CAPTION>
09/30/93 10/31/93 04/30/94 10/31/94 04/30/95 10/31/95 04/30/96 10/31/96
-------- -------- ----------------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Small Company Growth Fund I $10,000 $10,175 $9,460 $10,013 $10,448 $14,444 $18,624 $17,818
Russell 2000 Growth Index $10,000 $10,289 $9,860 $10,196 $10,721 $12,293 $14,940 $13,932
04/30/97 10/31/97 04/30/98 10/31/98 04/30/99 10/31/99
-------- -------- -------- -------- -------- --------
Small Company Growth Fund I $14,698 $18,626 $20,505 $15,243 $17,818 $24,114
Russell 2000 Growth Index $12,915 $16,879 $18,560 $14,204 $17,860 $18,365
</TABLE>
Past performance is not predictive of future performance.
Performance results of the Small Company Growth Fund I reflect the total returns
of the Small Cap Growth Fund I (included in another report) managed by Provident
Investment Counsel prior to the effective date of the Fund's registration
statement which was 6/28/96. Small Cap Growth Fund I returns are restated to
reflect all fees and expenses applicable to the Small Company Growth Fund I.
See Notes to Financial Statements.
8
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Provident Investment Counsel
Mutual Funds
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STATEMENTS OF ASSETS AND LIABILITIES
as of October 31, 1999
Growth Small Company
Fund I Growth Fund I
------ -------------
ASSETS
Investments in Portfolios, at value $174,435,589 $35,693,853
Receivables:
Investments in Portfolios sold 46,532 18,602
Fund shares sold 10,105 3,167
From Provident Investment
Counsel, Inc. (Note 3) 30,384 --
Prepaid expenses 9,085 4,235
------------ -----------
Total assets 174,531,695 35,719,857
============ ===========
LIABILITIES
Payables:
Investments in Portfolios purchased 10,105 3,167
Fund shares repurchased 46,532 18,602
To Provident Investment
Counsel, Inc. (Note 3) -- 13,570
Accrued expenses 53,642 22,542
Deferred trustees' compensation (Note 3) 22,346 16,934
------------ -----------
Total liabilities 132,625 74,815
============ ===========
NET ASSETS
Applicable to 8,030,336 and 2,778,004
shares of beneficial interest
outstanding, respectively $174,399,070 $35,645,042
------------ -----------
NET ASSET VALUE PER SHARE $ 21.72 $ 12.83
------------ -----------
See Notes to Financial Statements.
9
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Provident Investment Counsel
Mutual Funds
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STATEMENTS OF ASSETS AND LIABILITIES
continued, as of October 31, 1999
Growth Small Company
Fund I Growth Fund I
------ -------------
SOURCE OF NET ASSETS
Paid-in capital $ 97,074,897 $ 23,931,903
Accumulated net investment loss (63,034) (22,504)
Accumulated net realized gain on
investments 27,401,498 2,584,334
Net unrealized appreciation on
investments 49,985,709 9,151,309
------------- ------------
Net Assets $174,399,070 $ 35,645,042
------------- ------------
See Notes to Financial Statements.
10
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Provident Investment Counsel
Mutual Funds
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STATEMENTS OF OPERATIONS
Year ended October 31, 1999
Growth Small Company
Fund I Growth Fund I
------ -------------
INVESTMENT INCOME
Net investment loss from Portfolios $ (781,557) $ (233,470)
============ ============
Expenses:
Administration fees (Note 3) 337,505 74,237
Trustees' fees 15,626 12,687
Audit fee 12,300 10,300
Legal fees 18,800 3,599
Transfer agent's fees 136,000 29,600
Custody and accounting services fees 6,000 6,001
Reports to shareholders 10,200 2,000
Registration fees 49,000 4,356
Miscellaneous 2,317 10,245
------------ ------------
Total expenses 587,748 153,025
Less waiver by Provident
Investment Counsel, Inc. (Note 3) (184,616) (19,741)
------------ ------------
Net expenses 403,132 133,284
============ ============
Net investment loss (1,184,689) (366,754)
============ ============
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments 27,417,856 7,584,239
Unrealized appreciation on
investments 14,672,037 7,240,179
------------ ------------
Net gain on investments 42,089,893 14,824,418
============ ============
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 40,905,204 $ 14,457,664
============ ============
See Notes to Financial Statements.
11
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Provident Investment Counsel
Mutual Funds
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STATEMENTS OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS
- --------------------------------------------------------------------------------
FROM OPERATIONS:
- --------------------------------------------------------------------------------
Net investment loss
Net realized gain (loss) on investments
Net unrealized appreciation (depreciation) on investments
- --------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations
================================================================================
DISTRIBUTIONS TO SHAREHOLDERS:
From net realized gains
================================================================================
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST:
Purchases of 1,205,821; 4,057,730; 642,745 and 3,336,041 shares,
respectively
Reinvestment of 512,075; 916,270; 0 and 0 shares, respectively
Redemptions of 1,147,070; 1,924,166; 1,533,416 and 2,795,508 shares,
respectively
- --------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from share transactions
================================================================================
TOTAL INCREASE (DECREASE) IN NET ASSETS
================================================================================
NET ASSETS
- --------------------------------------------------------------------------------
Beginning of year
- --------------------------------------------------------------------------------
End of year
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
12
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Growth Small Company
Fund I Growth Fund I
- ---------------------------------- -------------------------------------
Year Year Year Year
ended ended ended ended
October 31, 1999 October 31, 1998 October 31, 1999 October 31, 1998
- ---------------- ---------------- ---------------- ----------------
$ (1,184,689) $ (725,961) $ (366,754) $ (396,341)
27,417,856 9,563,770 7,584,239 (2,219,078)
14,672,037 14,964,547 7,240,179 (4,097,915)
- --------------- ------------- ------------- -------------
40,905,204 23,802,356 14,457,664 (6,713,334)
- --------------- ------------- ------------- -------------
(9,515,184) (14,604,225) -- --
- --------------- ------------- ------------- -------------
24,616,335 63,028,132 6,314,862 31,788,999
9,201,984 13,890,657 -- --
(23,216,938) (33,710,059) (14,865,034) (26,351,862)
- --------------- ------------- ------------- -------------
10,601,381 43,208,730 (8,550,172) 5,437,137
- --------------- ------------- ------------- -------------
41,991,401 52,406,861 5,907,492 (1,276,197)
- --------------- ------------- ------------- -------------
132,407,669 80,000,808 29,737,550 31,013,747
- --------------- ------------- ------------- -------------
$ 174,399,070 $ 132,407,669 $ 35,645,042 $ 29,737,550
- --------------- ------------- ------------- -------------
13
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Provident Investment Counsel
Mutual Funds
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FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
================================================================================
<TABLE>
<CAPTION>
Growth Fund I
-----------------------------------------------------------------
Year Year Year Year Year
ended ended ended ended ended
October 31, October 31, October 31, October 31, October 31,
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $ 17.75 $ 18.14 $16.25 $14.25 $11.70
------- ------- ------ ------ ------
Income from investment
operations:
Net investment loss (0.15) (0.06) (0.15) (0.06) (0.02)
Net realized and unrealized
gain on investments 5.40 3.04 3.98 2.06 2.57
------- ------- ------ ------ ------
Total from investment
operations 5.25 2.98 3.83 2.00 2.55
------- ------- ------ ------ ------
Less distributions to
shareholders:
From net realized gains (1.28) (3.37) (1.94) -- --
------- ------- ------ ------ ------
Net asset value, end of year $ 21.72 $ 17.75 $18.14 $16.25 $14.25
======= ======= ====== ====== ======
Total return 31.08% 19.60% 26.44% 14.04% 21.79%
======= ======= ====== ====== ======
Ratios/supplemental data:
Net assets, end of year
(millions) $ 174.4 $ 132.4 $ 80.0 $116.1 $131.1
------- ------- ------ ------ ------
Ratios to average net assets:+*
Expenses 1.25% 1.25% 1.25% 1.25% 1.25%
Net investment income (0.73%) (0.57%) (0.38%) (0.28%) (0.17%)
------- ------- ------ ------ ------
</TABLE>
+ Includes the Fund's share of expenses, net of fee waivers and expense
reimbursements, allocated from the Portfolio.
* Net of fee waivers and expense reimbursements which were 0.11%, 0.14%, 0.10%,
0.05% and 0.05%, respectively.
See Notes to Financial Statements.
14
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Provident Investment Counsel
Mutual Funds
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FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
================================================================================
<TABLE>
<CAPTION>
Small Company Growth Fund I
--------------------------------------------------
Year Year Year Year
ended ended ended ended
October 31, October 31, October 31, October 31,
1999 1998 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period $ 8.11 $ 9.91 $ 9.48 $10.00
------ ------- ------ ------
Income from investment
operations:
Net investment loss (0.13) (0.10) (0.05) (0.03)
Net realized and unrealized
gain (loss) on investments 4.85 (1.70) 0.48 (0.49)
------ ------- ------ ------
Total from investment
operations 4.72 (1.80) 0.43 (0.52)
------ ------- ------ ------
Net asset value, end of period $12.83 $ 8.11 $ 9.91 $ 9.48
====== ======= ====== ======
Total return 58.20% (18.16%) 4.54% (5.20%)-
====== ======= ====== ======
Ratios/supplemental data:
Net assets, end of period
(millions) $ 35.6 $ 29.7 $ 31.0 $ 5.2
------ ------- ------ ------
Ratios to average net assets:#*
Expenses 1.45% 1.45% 1.45% 1.43% +
Net investment loss (1.24%) (1.13%) (0.96%) (0.91%)+
------ ------- ------ ------
</TABLE>
** Commencement of operations.
+ Annualized.
# Includes the Fund's share of expenses, net of fee waivers and expense
reimbursements, allocated from the Portfolio.
* Net of fee waivers and expense reimbursements which were 0.07%, 0.04%, 0.16%
and 2.60%, respectively.
- - Not annualized.
See Notes to Financial Statements.
15
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Provident Investment Counsel
Mutual Funds
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NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1 -- ORGANIZATION
Provident Investment Counsel Growth Fund I (formerly Provident Investment
Counsel Growth Fund) and Small Company Growth Fund I (formerly Provident
Investment Counsel Small Company Growth Fund) (each a "Fund" and collectively
the "Funds") are each one of eleven series of PIC Investment Trust (the
"Trust"). The Trust was organized on December 11, 1991 as a Delaware business
trust, with an unlimited number of shares of beneficial interest of $.01 par
value, and is registered under the Investment Company Act of 1940 as an
open-end, diversified management investment company. The Funds invest
substantially all of their assets in the PIC Growth Portfolio and the PIC Small
Cap Portfolio (the "Portfolios"), separate registered management investment
companies having the same investment objective as the respective Fund. The
financial statements of the Portfolios are included elsewhere in this report and
should be read in conjunction with the Funds' financial statements.
2 -- SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds. These policies are in conformity with generally accepted
accounting principles.
A. INVESTMENT VALUATION. The Funds reflect their investments in the
respective Portfolios at their proportionate interest in the value of
the Portfolios' net assets. Valuation of securities by the Portfolios
is discussed at Note 2A of the Portfolios' Notes to Financial
Statements.
B. INVESTMENT INCOME AND DISTRIBUTIONS TO SHAREHOLDERS. The Funds earn
income, net of the expenses of the Portfolios, daily on their
investment in the Portfolios. All net investment income and realized
and unrealized gains or losses on investments of the Portfolios are
allocated pro rata among the Funds and the other Holders of Interests
in the Portfolio. Distributions to shareholders, if any, are paid
annually to shareholders of the Funds and recorded on the ex-dividend
date.
C. FEDERAL INCOME TAXES. The Funds intend to comply with the requirements
of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of their taxable income to
16
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Provident Investment Counsel
Mutual Funds
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NOTES TO FINANCIAL STATEMENTS,
CONTINUED
- --------------------------------------------------------------------------------
their shareholders. Therefore, no federal income tax provisions are
required.
D. ACCOUNTING ESTIMATES. In preparing financial statements in conformity
with generally accepted accounting principles, management makes
estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements, as well as
the reported amounts of revenues and expenses during the periods
presented. Actual results could differ from those estimates.
3 -- TRANSACTIONS WITH AFFILIATES
The Trust has entered into administration agreements with Provident
Investment Counsel, Inc. ("PIC") and Investment Company Administration, L.L.C.
("ICA") pursuant to which certain employees of these entities serve as officers
and/or trustees of the Trust and the Portfolios. PIC and ICA also provide
management services necessary for the operations of the Trust and the Portfolios
and furnish office facilities. PIC receives a fee for its services to the Funds
at the rate of 0.20% of the average daily net assets of the Funds.
PIC has voluntarily taken to limit the Funds' expenses, including those
expenses allocated from the Portfolios, to the following levels:
Growth Fund I -- 1.25%
Small Company Growth Fund I -- 1.45%
The percentages are based on the Funds' average daily net assets.
Fees waived by PIC for the year ended October 31, 1999 were as follows:
Growth Fund I -- $184,616 Small Company Growth Fund I -- $19,741
ICA receives an annual fee of $15,000 for its services from each of the
Funds.
First Fund Distributors, Inc. (the "Distributor"), a registered
broker-dealer, acts as the principal underwriter for the Trust in connection
with the offering of its shares. The Distributor is an affiliate of ICA. The
Distributor received no commissions from the sales or redemptions of the Funds'
shares during the year ended October 31, 1999.
17
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Provident Investment Counsel
Mutual Funds
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NOTES TO FINANCIAL STATEMENTS,
CONTINUED
- --------------------------------------------------------------------------------
On December 19, 1995, the Trust approved a Deferred Compensation Plan for
Trustees (the "Plan"). Trustees are entitled to receive $2,500 per quarter and
$500 per meeting attended, which is allocated among the Funds. Trustees can
elect to receive payment in cash or defer payments provided for in the Plan. If
a trustee elects to defer payment, the Plan provides for the creation of a
deferred payment account (phantom share account). This account accumulates the
deferred fees earned and the value of the account is adjusted at the end of each
quarter to reflect the value which would have been earned if the account had
been invested in designated investments. The Funds recognize as trustee expense
amounts accrued as meetings are held plus the change in the value of the phantom
share account determined on a quarterly basis.
4 -- INVESTMENT TRANSACTIONS
Additions and reductions in the investments in the respective Portfolios
for the year ended October 31, 1999 were as follows:
Additions Reductions
--------- ----------
Growth Fund I $ 24,683,600 $23,916,845
Small Company Growth Fund I 6,319,862 14,976,520
As of October 31, 1999 the Funds owned the following percentages of the
Portfolios:
Growth Fund I -- 95.7% of PIC Growth Portfolio
Small Company Growth Fund I -- 14.0% of PIC Small Cap Portfolio
18
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Provident Investment Counsel
Mutual Funds
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
PIC Investment Trust
and the Shareholders of:
Provident Investment Counsel Growth Fund I
Provident Investment Counsel Small Company Growth Fund I
In our opinion, the accompanying statements of assets and liabilities and the
related statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
each of the above named funds of PIC Investment Trust (the "Trust") at October
31, 1999, and the results of each of their operations, the changes in each of
their net assets and the financial highlights for the year then ended, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these financial statements in accordance
with generally accepted auditing standards, which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for the opinion expressed
above. The financial statements of the Trust as of October 31, 1998, including
the financial highlights for each of the periods prior to October 31, 1999, were
audited by other independent accountants whose report dated December 3, 1998
expressed an unqualified opinion on those financial statements.
PricewaterhouseCoopers LLP
December 3, 1999
19
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THIS PAGE INTENTIONALLY LEFT BLANK
20
<PAGE>
P-I-C
- ----------
GROWTH STATEMENT OF NET ASSETS
- ---------- as of October 31, 1999
PORTFOLIO
- ----------
================================================================================
Percentage of
EQUITY SECURITIES -- 89.16% Shares Value Net Assets
- --------------------------------------------------------------------------------
BANKS -- 2.00%
Providian Financial Corporation 33,500 $ 3,651,500 2.00%
------- ----------- -----
BIOTECHNOLOGY -- 2.58%
Amgen Inc.* 31,000 2,472,250 1.36
Genentech, Inc.* 15,300 2,229,975 1.22
------- ----------- -----
Total Biotechnology 4,702,225 2.58
------- ----------- -----
BUILDING PRODUCTS -- 4.31%
The Home Depot, Inc. 39,700 2,997,350 1.65
Lowe's Companies, Inc. 88,300 4,856,500 2.66
------- ----------- -----
Total Building Products 7,853,850 4.31
------- ----------- -----
COMPUTER SERVICES -- 4.36%
Sun Microsystems, Inc.* 75,100 7,946,519 4.36
------- ----------- -----
COMPUTER SOFTWARE -- 10.59%
BMC Software, Inc.* 53,200 3,414,775 1.87
Microsoft Corporation * 142,324 13,173,865 7.23
VERITAS Software Corporation * 25,200 2,718,450 1.49
------- ----------- -----
Total Computer Software 19,307,090 10.59
------- ----------- -----
CREDIT AND FINANCE -- 1.80%
MBNA Corporation 118,816 3,282,292 1.80
------- ----------- -----
DISCOUNT -- 1.92%
Costco Companies, Inc.* 43,600 3,501,625 1.92
See Notes to Financial Statements.
21
<PAGE>
P-I-C
- ----------
GROWTH STATEMENT OF NET ASSETS
- ---------- as of October 31, 1999
PORTFOLIO
- ----------
================================================================================
Percentage of
EQUITY SECURITIES, continued Shares Value Net Assets
- --------------------------------------------------------------------------------
DIVERSIFIED -- 4.28%
Tyco International Ltd. 195,560 $ 7,810,177 4.28%
--------- --------- ----
DRUGS -- 3.70%
Pfizer, Inc. 62,452 2,466,854 1.35
Warner-Lambert Company 53,600 4,277,950 2.35
--------- --------- ----
Total Drugs 6,744,804 3.70
--------- --------- ----
ELECTRICAL EQUIPMENT/PERIPHERALS -- 7.34%
Dell Computer Corporation* 52,500 2,106,562 1.16
EMC Corporation* 78,700 5,745,100 3.15
Lexmark International Group, Inc.* 58,700 4,582,269 2.51
PMC-Sierra, Inc.* 10,000 942,500 0.52
--------- --------- ----
Total Electrical
Equipment/Peripherals 13,376,431 7.34
--------- --------- ----
ELECTRONIC COMPONENTS/SEMICONDUCTORS -- 8.60%
Linear Technology Corporation 54,800 3,832,575 2.10
Solectron Corporation* 55,200 4,153,800 2.28
Texas Instruments, Incorporated 31,000 2,782,250 1.53
Vitesse Semiconductor Corporation* 106,900 4,904,038 2.69
--------- --------- ----
Total Electronic
Components/Semiconductors 15,672,663 8.60
--------- --------- ----
ELECTRONICS -- 3.08%
Motorola, Inc. 57,700 5,622,144 3.08
See Notes to Financial Statements.
22
<PAGE>
P-I-C
- ----------
GROWTH STATEMENT OF NET ASSETS
- ---------- as of October 31, 1999
PORTFOLIO
- ----------
================================================================================
Percentage of
EQUITY SECURITIES, continued Shares Value Net Assets
- --------------------------------------------------------------------------------
ENTERTAINMENT AND LEISURE -- 2.82%
AT&T Corp./Liberty Media
Corporation* 50,000 $1,984,375 1.09%
Clear Channel Communications, Inc.* 22,600 1,816,475 1.00
Viacom Inc., Class B* 30,000 1,342,500 0.73
--------- --------- ----
Total Entertainment and
Leisure 5,143,350 2.82
--------- --------- ----
INSURANCE -- 2.12%
American International Group, Inc. 37,590 3,869,421 2.12
--------- --------- ----
MEDICAL AND DENTAL PRODUCTS -- 1.07%
MedImmune, Inc.* 17,400 1,948,800 1.07
--------- --------- ----
MEDICAL INSTRUMENTS -- 1.09%
Medtronic, Inc. 57,608 1,994,677 1.09
--------- --------- ----
NATURAL GAS PRODUCTS AND PIPELINES -- 1 .62%
Enron Corp. 74,000 2,955,375 1.62
--------- --------- ----
NETWORKING -- 3.07%
Cisco Systems, Inc.* 75,700 5,601,800 3.07
--------- --------- ----
OIL FIELD SERVICES -- 2.16%
Baker Hughes Incorporated 51,900 1,449,956 0.79
Schlumberger Limited 41,100 2,489,119 1.37
--------- --------- ----
Total Oil Field Services 3,939,075 2.16
--------- --------- ----
See Notes to Financial Statements.
23
<PAGE>
P-I-C
- ----------
GROWTH STATEMENT OF NET ASSETS
- ---------- as of October 31, 1999
PORTFOLIO
- ----------
================================================================================
Percentage of
EQUITY SECURITIES, continued Shares Value Net Assets
- --------------------------------------------------------------------------------
SPECIALTY RETAIL -- 4.24%
Bed Bath & Beyond Inc.* 78,500 $ 2,615,031 1.43%
Kohl's Corporation* 68,358 5,114,033 2.81
--------- --------- ----
Total Specialty Retail 7,729,064 4.24
--------- --------- ----
TELECOMMUNICATIONS -- 7.72%
Lucent Technologies Inc. 125,900 8,089,075 4.44
Nextel Communications, Inc.* 2,900 249,944 0.14
Nokia Corporation ADR 25,700 2,969,956 1.63
Tellabs, Inc.* 43,400 2,745,050 1.51
--------- --------- ----
Total Telecommunications 14,054,025 7.72
TELEPHONE -- 6.84%
ALLTEL Corporation 43,000 3,579,750 1.96
MCI WorldCom Incorporated * 103,650 8,894,466 4.88
--------- --------- ----
Total Telephone 12,474,216 6.84
--------- --------- ----
WIRELESS SERVICES -- 1.85%
Vodafone Airtouch Plc ADR 70,250 3,367,609 1.85
--------- --------- ----
Total Equity Securities
(Cost $111,127,729) 162,548,732 89.16
--------- --------- ----
Money Market Funds -- 4.64%
Temporary Investment Fund Inc. --
Temp Fund 4,230,318 4,230,318 2.32
--------- --------- ----
Temporary Investment Fund Inc. --
Temp Cash 4,230,318 4,230,318 2.32
--------- --------- ----
Total Money Market Funds
(Cost $8,460,636) 8,460,636 4.64
--------- --------- ----
Total Investments
(Cost $119,588,365) 171,009,368 93.80
--------- --------- ----
See Notes to Financial Statements.
24
<PAGE>
P-I-C
- ----------
GROWTH STATEMENT OF NET ASSETS
- ---------- as of October 31, 1999
PORTFOLIO
- ----------
================================================================================
Percentage of
OTHER ASSETS -- 8.18% Value Net Assets
- --------------------------------------------------------------------------------
Receivables:
Investment securities sold $ 14,780,237
Shares of beneficial interest sold 52,471
Dividends and Interest 53,055
Other assets 23,317
------------ ------
Total other assets 14,909,080 8.18%
============ ======
TOTAL ASSETS 185,918,448 101.98
------------ ------
LIABILITIES -- (1.98%)
Payables:
Investment securities purchased 3,326,953
Shares of beneficial interest redeemed 76,010
To Advisor (Note 3) 113,970
Accrued expenses 54,062
Deferred Trustees' compensation (Note 3) 42,194
------------ ------
Total Liabilities 3,613,189 (1.98)
============ ======
TOTAL NET ASSETS -- 100.00% $182,305,259 100.00%
------------ ------
* Non-income producing security.
See Notes to Financial Statements.
25
<PAGE>
P-I-C
- ----------
SMALL CAP Statement of Net Assets
- ---------- as of October 31, 1999
PORTFOLIO
- ----------
================================================================================
Percentage of
EQUITY SECURITIES -- 95.76% Shares Value Net Assets
- --------------------------------------------------------------------------------
AIRLINES -- 0.47%
Ryanair Holdings plc ADS* 28,870 $ 1,190,887 0.47%
--------- ------------ ------
APPAREL AND SHOES -- 0.25%
The Children's Place
Retail Stores, Inc.* 1,900 49,519 0.02
Too, Inc.* 37,350 597,600 0.23
--------- ------------ ------
Total Apparel and Shoes 647,119 0.25
--------- ------------ ------
AUTO PARTS -- 0.90%
Gentex Corporation * 133,600 2,296,250 0.90
--------- ------------ ------
BANKS -- 0.08%
Hamilton Bancorp Inc.* 13,230 210,026 0.08
--------- ------------ ------
BEVERAGE/FOOD -- 0.46%
Beringer Wine Estates
Holdings, Inc.* 29,600 1,176,600 0.46
--------- ------------ ------
BIOTECHNOLOGY -- 2.44%
Abgenix, Inc.* 12,900 572,437 0.23
Albany Molecular Research, Inc.* 34,400 855,700 0.34
Alkermes, Inc.* 27,000 953,438 0.37
Invitrogen Corporation * 42,800 1,070,000 0.42
QLT Phototherapeutics Inc.* 65,200 2,762,850 1.08
--------- ------------ ------
Total Biotechnology 6,214,425 2.44
See Notes to Financial Statements.
26
<PAGE>
P-I-C
- ----------
SMALL CAP Statement of Net Assets
- ---------- as of October 31, 1999
PORTFOLIO
- ----------
================================================================================
Percentage of
EQUITY SECURITIES, continued Shares Value Net Assets
- --------------------------------------------------------------------------------
BUSINESS SERVICES -- 8.04%
CoStar Group, Inc.* 26,900 $ 662,412 0.26%
The Corporate Executive Board
Company * 9,500 358,625 0.14
Dendrite International, Inc.* 83,900 2,632,362 1.03
Iron Mountain Incorporated* 16,750 506,688 0.20
NCO Group, Inc.* 120,435 5,103,433 2.00
The Profit Recovery Group
International, Inc.* 130,200 5,362,613 2.11
TeleTech Holdings Inc.* 65,700 932,119 0.37
TMP Worldwide Inc.* 37,120 2,317,680 0.91
United Rentals, Inc.* 38,400 715,200 0.28
Westwood One, Inc.* 40,763 1,880,170 0.74
------- ---------- -----
Total Business Services 20,471,302 8.04
------- ---------- -----
COMPUTER SERVICES -- 6.44%
The BISYS Group, Inc.* 7,100 362,100 0.14
Computer Network Technology
Corporation* 9,700 155,806 0.06
DSP Group, Inc.* 44,700 2,134,425 0.84
Electro Scientific Industries, Inc.* 14,500 783,000 0.31
Globix Corporation* 16,700 601,200 0.24
Jack Henry & Associates, Inc. 25,300 920,287 0.36
MicroStrategy Incorporated* 31,800 3,072,675 1.21
MIPS Technologies, Inc.* 23,000 664,125 0.26
Modem Media . Poppe Tyson, Inc.* 31,700 2,187,300 0.86
National Computer Systems, Inc. 45,900 1,735,594 0.68
NICE Systems Ltd. ADR* 77,550 2,248,950 0.88
Pegasus Systems, Inc.* 33,325 1,424,644 0.56
ShowCase Corporation* 27,800 107,725 0.04
------- ---------- -----
Total Computer Services 16,397,831 6.44
------- ---------- -----
See Notes to Financial Statements.
27
<PAGE>
P-I-C
- ----------
SMALL CAP STATEMENT OF NET ASSETS
- ---------- as of October 31, 1999
PORTFOLIO
- ----------
================================================================================
Percentage of
EQUITY SECURITIES, continued Shares Value Net Assets
- --------------------------------------------------------------------------------
COMPUTER SOFTWARE -- 15.23%
Bluestone Software, Inc.* 27,700 $ 1,021,437 0.40%
Brio Technology, Inc.* 31,400 761,450 0.30
Business Objects S.A. ADS* 74,700 5,378,400 2.11
Check Point Software
Technologies, Ltd.* 36,900 4,268,869 1.68
Electronics for Imaging, Inc.* 60,900 2,455,031 0.96
Exchange Applications, Inc.* 31,200 850,200 0.33
F5 Networks, Inc.* 10,000 1,387,500 0.54
HNC Software Inc.* 52,600 2,100,712 0.83
Macromedia, Inc.* 44,100 2,841,694 1.12
Mercury Interactive Corporation* 56,400 4,575,450 1.80
Micromuse Inc.* 13,300 1,421,438 0.56
Mission Critical Software, Inc.* 12,700 747,713 0.29
National Instruments Corporation* 39,600 1,190,475 0.47
Peregrine Systems, Inc.* 138,450 6,074,494 2.38
PLX Technology, Inc.* 10,000 160,000 0.06
TriZetto Group, Inc.* 45,000 450,000 0.18
Unigraphics Solutions Inc.* 17,600 379,500 0.15
Verity, Inc.* 39,600 2,727,450 1.07
------- ---------- -----
Total Computer Software 38,791,813 15.23
------- ---------- -----
CONSTRUCTION -- 0.12%
Dycom Industries, Inc.* 9,225 300,389 0.12
------- ---------- -----
CREDIT AND FINANCE -- 0.51%
AmeriCredit Corp.* 74,300 1,290,962 0.51
See Notes to Financial Statements.
28
<PAGE>
P-I-C
- ----------
SMALL CAP STATEMENT OF NET ASSETS
- ---------- as of October 31, 1999
PORTFOLIO
- ----------
================================================================================
Percentage of
EQUITY SECURITIES, continued Shares Value Net Assets
- --------------------------------------------------------------------------------
DISCOUNT -- 2.91%
Dollar Tree Stores, Inc.* 113,380 $4,939,116 1.94%
99 CENTS Only Stores* 82,750 2,472,156 0.97
------- ---------- -----
Total Discount 7,411,272 2.91
------- ---------- -----
DRUGS -- 1.86%
K-V Pharmaceutical Company,
Class A* 47,300 821,837 0.32
Medicis Pharmaceutical Corporation,
Class A* 35,500 1,082,750 0.43
Roberts Pharmaceutical Corporation* 9,300 299,925 0.12
Shire Pharmaceuticals Group plc* 79,450 2,522,538 0.99
------- ---------- -----
Total Drugs 4,727,050 1.86
------- ---------- -----
EDUCATIONAL PROGRAMS -- 0.65%
Corinthian Colleges, Inc.* 57,100 1,113,450 0.44
Education Management Corporation* 58,200 552,900 0.21
------- ---------- -----
Total Educational Programs 1,666,350 0.65
------- ---------- -----
ELECTRIC POWER -- 0.77%
Calpine Corporation* 33,900 1,953,488 0.77
------- ---------- -----
Electrical Equipment/Peripherals -- 1.72%
Creo Products Inc.* 8,700 221,850 0.09
Dionex Corporation* 19,900 884,306 0.35
SanDisk Corporation* 31,200 1,891,500 0.74
TranSwitch Corporation* 29,400 1,383,637 0.54
------- ---------- -----
Total Electrical
Equipment/Peripherals 4,381,293 1.72
------- ---------- -----
See Notes to Financial Statements.
29
<PAGE>
P-I-C
- ----------
SMALL CAP STATEMENT OF NET ASSETS
- ---------- as of October 31, 1999
PORTFOLIO
- ----------
================================================================================
Percentage of
EQUITY SECURITIES, continued Shares Value Net Assets
- --------------------------------------------------------------------------------
ELECTRONIC COMPONENTS/SEMICONDUCTORS -- 12.73%
Alpha Industries, Inc.* 25,200 $ 1,392,300 0.55%
Brooks Automation, Inc.* 32,800 623,200 0.25
Burr-Brown Corporation* 32,000 1,258,000 0.49
Credence Systems Corporation* 58,400 2,664,500 1.05
Cree Research, Inc.* 76,300 3,257,056 1.28
Cymer, Inc.* 47,000 1,736,062 0.68
Cypress Semiconductor Corporation* 36,800 940,700 0.37
The DII Group, Inc.* 63,100 2,271,600 0.89
Flextronics International Ltd.* 31,300 2,222,300 0.87
GlobeSpan, Inc.* 12,300 894,825 0.35
Integrated Device Technology, Inc.* 38,200 785,488 0.31
Lam Research Corporation* 37,800 3,191,738 1.25
Lattice Semiconductor Corporation* 71,800 2,539,925 1.00
Micrel, Incorporated* 49,200 2,675,250 1.05
Orbotech Ltd.* 25,200 1,968,750 0.77
Plexus Corp.* 21,200 561,800 0.22
QLogic Corporation* 8,300 864,237 0.34
Semtech Corporation* 34,800 1,333,275 0.52
Varian Semiconductor Equipment
Associates, Inc.* 55,400 1,253,425 0.49
------- ---------- -----
Total Electronic
Components/Semiconductors 32,434,431 12.73
------- ---------- -----
ELECTRONICS -- 1.30%
Ancor Communications,
Incorporated* 34,900 1,105,894 0.43
ANTEC Corporation* 26,700 1,294,950 0.51
Power Integrations, Inc.* 8,900 907,244 0.36
------- ---------- -----
Total Electronics 3,308,088 1.30
See Notes to Financial Statements.
30
<PAGE>
P-I-C
- ----------
SMALL CAP STATEMENT OF NET ASSETS
- ---------- as of October 31, 1999
PORTFOLIO
- ----------
================================================================================
Percentage of
EQUITY SECURITIES, continued Shares Value Net Assets
- --------------------------------------------------------------------------------
ENTERTAINMENT AND LEISURE -- 7.09%
American Classic Voyages Co.* 42,900 $ 1,072,500 0.42%
CINAR Corporation* 19,100 331,862 0.13
Citadel Communications
Corporation* 71,200 3,439,850 1.35
Cox Radio, Inc., Class A* 22,900 1,603,000 0.63
Emmis Communications Corporation,
Class A* 23,300 1,680,512 0.66
Entercom Communications Corp.,
Class A* 31,200 1,554,150 0.61
Fairfield Communities, Inc.* 116,770 1,430,433 0.56
International Speedway Corporation,
Class A 15,300 789,863 0.31
Jones Intercable, Inc., Class A* 22,375 1,222,234 0.48
Spanish Broadcasting System, Inc.,
Class A* 27,900 742,838 0.29
UnitedGlobalCom, Inc.* 48,300 4,202,100 1.65
------- ---------- -----
Total Entertainment and Leisure 18,069,342 7.09
------- ---------- -----
FINANCIAL SERVICES -- 0.59%
Metris Companies Inc. 43,900 1,511,806 0.59
------- ---------- -----
FOOD AND RESTAURANTS -- 0.50%
Performance Food Group Company* 46,600 1,264,025 0.50
------- ---------- -----
INSURANCE -- 0.76%
Clark/Bardes Holdings, Inc.* 36,700 504,625 0.20
Financial Security Assurance
Holdings Ltd. 25,300 1,426,288 0.56
------- ---------- -----
Total Insurance 1,930,913 0.76
See Notes to Financial Statements.
31
<PAGE>
P-I-C
- ----------
SMALL CAP STATEMENT OF NET ASSETS
- ---------- as of October 31, 1999
PORTFOLIO
- ----------
================================================================================
Percentage of
EQUITY SECURITIES, continued Shares Value Net Assets
- --------------------------------------------------------------------------------
INTERNET SERVICES -- 8.16%
About.com, Inc.* 29,500 $ 1,393,875 0.55%
AdForce, Inc.* 12,450 343,931 0.14
Agile Software Corporation* 11,000 1,078,000 0.42
Art Technology Group, Inc.* 24,200 1,306,800 0.51
Ask Jeeves, Inc.* 16,200 1,251,450 0.49
Critical Path, Inc.* 46,000 2,104,500 0.83
CyberSource Corporation* 12,200 774,700 0.30
Insweb Corporation* 9,950 179,100 0.07
JFAX.COM, Inc.* 54,300 235,866 0.09
Marimba, Inc.* 9,400 267,900 0.11
Media Metrix, Inc.* 22,000 1,031,250 0.40
Paradyne Networks, Inc.* 16,700 507,262 0.20
Primus Knowledge Solutions, Inc.* 33,500 1,009,187 0.40
PSINet Inc.* 7,000 252,000 0.10
Security First Corp.* 26,000 1,044,875 0.41
Vignette Corporation* 34,400 5,435,200 2.13
WebTrends Corporation* 31,400 1,938,950 0.76
Wink Communications, Inc.* 18,300 642,788 0.25
------- ---------- -----
Total Internet Services 20,797,634 8.16
------- ---------- -----
MEDICAL AND DENTAL PRODUCTS -- 0.18%
Cytyc Corporation* 11,600 461,100 0.18
------- ---------- -----
MEDICAL INSTRUMENTS -- 0.95%
Affymetrix, Inc.* 27,500 2,423,437 0.95
See Notes to Financial Statements.
32
<PAGE>
P-I-C
- ----------
SMALL CAP STATEMENT OF NET ASSETS
- ---------- as of October 31, 1999
PORTFOLIO
- ----------
================================================================================
Percentage of
EQUITY SECURITIES, continued Shares Value Net Assets
- --------------------------------------------------------------------------------
MEDICAL/DENTAL SERVICES -- 1.75%
AmSurg Corp., Class A* 93,200 $ 570,850 0.22%
Professional Detailing, Inc.* 34,800 870,000 0.34
Renal Care Group, Inc.* 162,245 3,021,813 1.19
------- ---------- -----
Total Medical/Dental Services 4,462,663 1.75
------- ---------- -----
NETWORKING -- 3.12%
Emulex Corporation* 29,500 4,600,156 1.81
Extreme Networks, Inc.* 4,000 321,250 0.13
MMC Networks, Inc.* 10,700 341,063 0.13
Visual Networks, Inc.* 33,900 1,411,088 0.55
Xircom, Inc.* 25,500 1,286,156 0.50
------- ---------- -----
Total Networking 7,959,713 3.12
------- ---------- -----
OFFSHORE DRILLING -- 0.61%
Dril-Quip, Inc.* 11,700 273,487 0.11
Rowan Companies, Inc.* 81,600 1,269,900 0.50
------- ---------- -----
Total Offshore Drilling 1,543,387 0.61
------- ---------- -----
OIL FIELD SERVICES -- 1.52%
Atwood Oceanics, Inc.* 17,000 494,063 0.19
Global Industries, Ltd.* 90,000 720,000 0.28
Marine Drilling Companies, Inc.* 70,600 1,142,838 0.45
Patterson Energy, Inc.* 66,900 857,156 0.34
Trico Marine Services, Inc.* 96,300 668,081 0.26
------- ---------- -----
Total Oil Field Services 3,882,138 1.52
------- ---------- -----
Pollution Control -- 0.85%
Newpark Resources, Inc.* 150,500 968,844 0.38
Waste Connections, Inc.* 78,125 1,206,055 0.47
------- ---------- -----
Total Pollution Control 2,174,899 0.85
See Notes to Financial Statements.
33
<PAGE>
P-I-C
- ----------
SMALL CAP STATEMENT OF NET ASSETS
- ---------- as of October 31, 1999
PORTFOLIO
- ----------
================================================================================
Percentage of
EQUITY SECURITIES, continued Shares Value Net Assets
- --------------------------------------------------------------------------------
PUBLISHING/ADVERTISING -- 4.11%
Catalina Marketing Corporation* 38,200 $ 3,576,475 1.40%
Lamar Advertising Company,
Class A* 60,700 3,277,800 1.29
Playboy Enterprises, Inc., Class B* 141,400 3,623,375 1.42
------- ---------- -----
Total Publishing/Advertising 10,477,650 4.11
------- ---------- -----
SPECIALTY RETAIL -- 1.05%
Cost Plus, Inc.* 54,150 1,976,475 0.78
The Yankee Candle Company, Inc.* 46,000 701,500 0.27
------- ---------- -----
Total Specialty Retail 2,677,975 1.05
------- ---------- -----
TELECOMMUNICATIONS -- 6.29%
AirGate PCS, Inc.* 23,900 1,195,000 0.47
American Mobile Satellite
Corporation* 46,000 511,750 0.20
Applied Micro Circuits Corporation* 27,600 2,147,625 0.84
AudioCodes Ltd.* 25,300 1,530,650 0.60
CD Radio Inc.* 83,200 2,121,600 0.83
E-TEK Dynamics, Inc.* 15,200 1,012,700 0.40
Gilat Satellite Networks, Ltd.* 38,800 2,022,450 0.80
Insight Communications
Company, Inc.* 33,300 786,713 0.31
Orckit Communications Ltd.* 26,900 741,431 0.29
Pinnacle Holdings Inc.* 50,300 1,207,200 0.47
Research in Motion Limited* 55,400 1,703,550 0.67
Time Warner Telecom Inc.* 21,000 528,938 0.21
WinStar Communications, Inc.* 13,200 512,325 0.20
------- ---------- -----
Total Telecommunications 16,021,932 6.29
------- ---------- -----
See Notes to Financial Statements.
34
<PAGE>
P-I-C
- ----------
SMALL CAP STATEMENT OF NET ASSETS
- ---------- as of October 31, 1999
PORTFOLIO
- ----------
================================================================================
Percentage of
EQUITY SECURITIES, continued Shares Value Net Assets
- --------------------------------------------------------------------------------
TEXTILES AND SHOES -- 0.35%
Cutter & Buck Inc.* 53,700 $ 882,694 0.35%
--------- ------------ ------
TOYS -- 0.53%
JAKKS Pacific, Inc.* 32,800 1,344,800 0.53
--------- ------------ ------
TRUCKING -- 0.47%
Forward Air Corporation* 41,000 1,206,938 0.47
--------- ------------ ------
Total Equity Securities
(Cost $177,616,708) 243,962,622 95.76
--------- ------------ ------
MONEY MARKET FUNDS -- 5.42%
Temporary Investment Fund Inc. --
Temp Fund 6,902,048 6,902,048 2.71
Temporary Investment Fund Inc. --
Temp Cash 6,902,048 6,902,048 2.71
--------- ------------ ------
Total Money Market Funds
(Cost $13,804,096) 13,804,096 5.42
--------- ------------ ------
Total Investments
(Cost $191,420,804) 257,766,718 101.18
--------- ------------ ------
See Notes to Financial Statements.
35
<PAGE>
P-I-C
- ----------
SMALL CAP STATEMENT OF NET ASSETS
- ---------- as of October 31, 1999
PORTFOLIO
- ----------
================================================================================
Percentage of
EQUITY SECURITIES, continued Shares Value Net Assets
- --------------------------------------------------------------------------------
Receivables:
Investment securities sold $ 2,128,359
Interest 72,743
Shares of beneficial interest sold 111,831
Other assets 18,417
------------ ------
Total other assets 2,331,350 0.91%
------------ ------
TOTAL ASSETS 260,098,068 102.09
------------ ------
LIABILITIES -- (2.09%)
Payables:
Investment securities purchased 4,979,923
Shares of beneficial interest redeemed 93,425
To Advisor (Note 3) 153,623
Accrued expenses 66,002
Deferred Trustees' compensation (Note 3) 42,194
------------ ------
Total liabilities 5,335,167 (2.09)
------------ ------
TOTAL NET ASSETS -- 100.00% $254,762,901 100.00%
------------ ------
* Non-income producing security.
See Notes to Financial Statements.
36
<PAGE>
P-I-C
- ----------
GROWTH
- ---------- STATEMENTS OF OPERATIONS
SMALL CAP Year ended October 31, 1999
- ----------
PORTFOLIOS
- ----------
================================================================================
Growth Small Cap
Portfolio Portfolio
--------- ---------
INVESTMENT INCOME
Income:
Dividends $ 569,502 $ 30,354
Interest 290,405 440,273
------------ -------------
Total income 859,907 470,627
============ =============
Expenses:
Investment advisory fees (Note 3) 1,337,089 1,793,492
Administration fees (Note 3) 167,136 224,187
Accounting services fees 78,227 88,822
Custodian fees 36,960 66,810
Audit fee 20,499 22,997
Trustees' fees 23,498 23,835
Insurance 3,701 6,001
Legal fees 7,000 10,598
Miscellaneous 4,398 9,001
------------ -------------
Total expenses 1,678,508 2,245,743
Less waiver by Provident Investment
Counsel, Inc. (Note 3) (7,147) (3,878)
------------ -------------
Net expenses 1,671,361 2,241,865
============ =============
Net investment loss (811,454) (1,771,238)
============ =============
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS
Net realized gain on investments 27,950,275 48,594,775
Net unrealized appreciation of investments 15,478,042 56,517,702
------------ -------------
Net gain on investments 43,428,317 105,112,477
============ =============
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 42,616,863 $ 103,341,239
============ =============
See Notes to Financial Statements.
37
<PAGE>
P-I-C
- ----------
GROWTH
- ----------
SMALL CAP STATEMENTS OF CHANGES IN NET ASSETS
- ----------
PORTFOLIOS
- ----------
================================================================================
INCREASE (DECREASE) IN NET ASSETS
- --------------------------------------------------------------------------------
From operations:
- --------------------------------------------------------------------------------
Net investment loss
Net realized gain (loss) on investments
Net unrealized appreciation (depreciation) of investments
- --------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations
================================================================================
Transactions in interest:
Contribution by Holders
Withdrawals by Holders
- --------------------------------------------------------------------------------
Net increase (decrease) in net assets from transactions in interests
================================================================================
Total increase in net assets
================================================================================
NET ASSETS
- --------------------------------------------------------------------------------
Beginning of year
- --------------------------------------------------------------------------------
End of year
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
38
<PAGE>
P-I-C
- ----------
GROWTH
- ----------
SMALL CAP STATEMENTS OF CHANGES IN NET ASSETS
- ----------
PORTFOLIOS
- ----------
================================================================================
Growth Small Cap
Portfolio Portfolio
- ---------------------------------- -------------------------------------
Year Year Year Year
ended ended ended ended
October 31, 1999 October 31, 1998 October 31, 1999 October 31, 1998
- ---------------- ---------------- ---------------- ----------------
$ (811,454) $ (417,693) $ (1,771,238) $ (1,197,741)
27,950,275 9,511,479 48,594,775 (30,872,647)
15,478,042 15,517,462 56,517,702 (283,036)
------------- ------------- ------------- -------------
42,616,863 24,611,248 103,341,239 (32,353,424)
------------- ------------- ------------- -------------
28,654,776 64,364,321 68,296,971 123,809,971
(25,048,703) (35,037,926) (90,528,948) (57,458,705)
------------- ------------- ------------- -------------
3,606,073 29,326,395 (22,231,977) 66,351,266
------------- ------------- ------------- -------------
46,222,936 53,937,643 81,109,262 33,997,842
------------- ------------- ------------- -------------
136,082,323 82,144,680 173,653,639 139,655,797
------------- ------------- ------------- -------------
$ 182,305,259 $ 136,082,323 $ 254,762,901 $ 173,653,639
------------- ------------- ------------- -------------
39
<PAGE>
P-I-C
- ----------
GROWTH
- ----------
SMALL CAP SELECTED RATIO DATA
- ----------
PORTFOLIOS
- ----------
Growth Portfolio
================================================================================
Year Year Year Year Year
ended ended ended ended ended
Oct. 31, Oct. 31, Oct. 31, Oct. 31, Oct. 31,
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
Ratios to average net assets:+
Expenses 1.00% 1.00% 1.00% 1.00% 1.00%
Net investment income
(loss) (0.49%) (0.32%) (0.13%) (0.04%) 0.08%
Portfolio turnover rate 80.34% 81.06% 67.54% 64.09% 54.89%
+ Net of expense reimbursements equivalent to 0.00%, 0.02%, 0.05%, 0.04% and
0.01% of average daily net assets, respectively.
See Notes to Financial Statements.
40
<PAGE>
P-I-C
- ----------
GROWTH
- ----------
SMALL CAP SELECTED RATIO DATA
- ----------
PORTFOLIOS
- ----------
Growth Portfolio
================================================================================
Year Year Year Year Year
ended ended ended ended ended
Oct. 31, Oct. 31, Oct. 31, Oct. 31, Oct. 31,
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
Ratios to average net assets:+
Expenses 1.00% 1.00% 1.00% 1.00% 1.00%
Net investment loss (0.79%) (0.68%) (0.49%) (0.59%) (0.51%)
Portfolio turnover rate 133.24% 81.75% 151.52% 53.11% 45.45%
+ Net of expense reimbursements equivalent to 0.00%, 0.01%, 0.01%, 0.01% and
0.07% of average daily net assets, respectively.
See Notes to Financial Statements.
41
<PAGE>
P-I-C
- ----------
GROWTH
- ----------
SMALL CAP NOTES TO FINANCIAL STATEMENTS
- ----------
PORTFOLIOS
- ----------
================================================================================
1 -- ORGANIZATION
PIC Growth Portfolio was organized on December 11, 1991 and PIC Small Cap
Portfolio was organized on March 22, 1993 as separate trusts under the laws of
the State of New York (each a "Portfolio" and collectively the "Portfolios").
The beneficial interests in each Portfolio are divided into an unlimited number
of non-transferable interests, par value $.01 each. The Portfolios are
registered under the Investment Company Act of 1940 as open-end, diversified
management investment companies.
2 -- SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Portfolios. These policies are in conformity with generally
accepted accounting principles.
A. VALUATION OF SECURITIES. Equity securities listed on a national
securities exchange or traded on Nasdaq are valued at their last sale
price. Other equity securities and debt securities for which market
quotations are readily available are valued at the mean between their
bid and asked price, except that debt securities maturing within 60
days are valued on an amortized cost basis. Securities for which
market quotations are not readily available are valued at fair value
as determined in good faith by the Board of Trustees.
B. FEDERAL INCOME TAXES. Each Portfolio intends to comply with the
requirements of the Internal Revenue Code applicable to it. Therefore,
no federal income tax provision is required.
C. OTHER. Securities transactions are recorded on the trade date basis.
Realized gains and losses from securities transactions are reported on
an identified cost basis. Interest is recorded as accrued and dividend
income is recorded on the ex-dividend date.
D. ACCOUNTING ESTIMATES. In preparing financial statements in con-formity
with generally accepted accounting principles, management makes
estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements, as well as
the reported amounts of revenues and expenses during the periods
presented. Actual results could differ from those estimates.
42
<PAGE>
P-I-C
- ----------
GROWTH
- ----------
SMALL CAP NOTES TO FINANCIAL STATEMENTS
- ---------- CONTINUED
PORTFOLIOS
- ----------
================================================================================
3 -- TRANSACTIONS WITH AFFILIATES
Each Portfolio has entered into an investment advisory agreement with
Provident Investment Counsel, Inc. ("PIC") and an administration agreement with
Investment Company Administration, L.L.C. ("ICA") pursuant to which certain
employees of these entities serve as officers and/or trustees of the Portfolios.
PIC and ICA also provide management services necessary for the operations of the
Portfolios and furnish office facilities.
PIC receives from each Portfolio an investment advisory fee at the annual
rate of 0.80% of its average daily net assets. In addition, PIC has voluntarily
agreed to limit the expenses of each Portfolio to 1.00% of its average net
assets.
Fees waived by PIC for the year ended October 31, 1999 were as follows:
Growth Portfolio -- $7,147
Small Cap Portfolio -- 3,878
ICA receives for its services a fee at the annual rate of 0.10% of the
average daily net assets of each Portfolio subject to an annual minimum of
$45,000.
On December 19, 1995, each Portfolio approved a Deferred Compensation Plan
for Trustees (the "Plan"). Trustees are entitled to receive $2,500 per quarter
and $500 per meeting attended, which is allocated among the Portfolios. Trustees
can elect to receive payment in cash or defer payments provided for in the Plan.
If a trustee elects to defer payment, the Plan provides for the creation of a
deferred payment account (phantom share account). This account accumulates the
deferred fees earned and the value of the account is adjusted at the end of each
quarter to reflect the value which would have been earned if the account had
been invested in designated investments. The Portfolios recognize as trustee
expense amounts accrued as meetings are held plus the change in the value of the
phantom share account determined on a quarterly basis.
43
<PAGE>
P-I-C
- ----------
GROWTH
- ----------
SMALL CAP NOTES TO FINANCIAL STATEMENTS
- ---------- CONTINUED
PORTFOLIOS
- ----------
================================================================================
4 -- INVESTMENT TRANSACTIONS
The aggregate cost of purchases and the proceeds from sales of investment
securities, other than short-term obligations, for the year ended October 31,
1999 were as follows:
Purchases Sales
--------- -----
Growth Portfolio $128,004,046 $135,004,771
Small Cap Portfolio 291,632,958 317,295,454
The aggregate gross unrealized appreciation and depreciation of investment
securities at October 31, 1999, based on their cost for federal income tax
purposes, were as follows:
Tax Gross Gross
Cost of Unrealized Unrealized
Investments Appreciation Depreciation
----------- ------------ ------------
Growth Portfolio $119,734,492 $51,804,877 $ (530,001)
Small Cap Portfolio 191,628,800 74,295,755 (8,157,837)
44
<PAGE>
P-I-C
- ----------
GROWTH
- ---------- REPORT OF INDEPENDENT ACCOUNTANTS
SMALL CAP
- ----------
PORTFOLIOS
- ----------
================================================================================
To the Board of Trustees of
and the holders of Interests in:
PIC Growth Portfolio
PIC Small Cap Portfolio
In our opinion, the accompanying statements of net assets and the related
statements of operations and of changes in net assets and the selected ratio
data present fairly, in all material respects, the financial position of PIC
Growth Portfolio and PIC Small Cap Portfolio (the "Portfolios") at October 31,
1999, and the results of each of their operations, the changes in each of their
net assets and the selected ratio data for the year then ended, in conformity
with generally accepted accounting principles. These financial statements and
selected ratio data (hereafter referred to as "financial statements") are the
responsibility of the Portfolios' management; our responsibility is to express
an opinion on these financial statements based on our audit. We conducted our
audit of these financial statements in accordance with generally accepted
auditing standards, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit, which included confirmation of securities at October 31, 1999, by
correspondence with the custodian and brokers, provides a reasonable basis for
the opinion expressed above. The financial statements of the Portfolios as of
October 31, 1998, including the selected ratio data for each of the periods
prior to October 31, 1998, were audited by other independent accountants whose
report dated December 3, 1998 expressed an unqualified opinion on those
financial statements.
PricewaterhouseCoopers LLP
December 3, 1999
45
<PAGE>
P-I-C
- ----------
GROWTH
- ---------- CHANGE IN INDEPENDENT ACCOUNTANTS
SMALL CAP
- ----------
PORTFOLIOS
- ----------
================================================================================
On August 27, 1999, McGladrey & Pullen, LLP ("McGladrey") resigned as
independent auditors of PIC Investment Trust, PIC Growth Portfolio and PIC Small
Cap Portfolio pursuant to an agreement by PricewaterhouseCoopers LLP ("PwC") to
acquire McGladrey's investment company practice. The McGladrey partners and
professionals serving the Fund at the time of the acquisition joined PwC.
The reports of McGladrey on the financial statements of PIC Investment Trust,
PIC Growth Portfolio and PIC Small Cap Portfolio during the past two fiscal
years contained no adverse opinion or disclaimer of opinion, and were not
qualified or modified as to uncertainty, audit scope or accounting principles.
In connection with its audits for the two most recent fiscal years and through
August 27, 1999, there were no disagreements with McGladrey on any matter of
accounting principle or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements, if not resolved to the satisfaction of
McGladrey would have caused it to make reference to the subject matter of
disagreement in connection with its report.
On September 1, 1999, and October 25, 1999, PIC Portfolios and PIC Investment
Trust, respectively, with the approval of their Boards of Trustees and their
Audit Committees, engaged PwC as their independent auditors.
46
<PAGE>
- ----------------------------
Provident Investment Counsel
Mutual Funds
- ----------------------------
TRUSTEES AND OFFICERS
================================================================================
TRUSTEES AND OFFICERS -- P I C INVESTMENT TRUST
- --------------------------------------------------------------------------------
Thomas J. Condon, Trustee
Jettie M. Edwards, Trustee
Richard N. Frank, Trustee
James Clayburn LaForce, Trustee
Angelo R. Mozilo, Trustee
Wayne H. Smith, Trustee
Douglass B. Allen, President and Trustee
Aaron W.L. Eubanks, Sr., Vice President and Secretary
William T. Warnick, Vice President and Treasurer
TRUSTEES AND OFFICERS -- P*I*C PORTFOLIOS
- --------------------------------------------------------------------------------
Thomas J. Condon, Trustee
Jettie M. Edwards, Trustee
Richard N. Frank, Trustee
James Clayburn LaForce, Trustee
Angelo R. Mozilo, Trustee
Wayne H. Smith, Trustee
Douglass B. Allen, President and Trustee
Aaron W.L. Eubanks, Sr., Vice President and Secretary
William T. Warnick, Vice President and Treasurer
LEGAL COUNSEL
- --------------------------------------------------------------------------------
Paul, Hastings, Janofsky & Walker, LLP
INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
PricewaterhouseCoopers LLP
This report is intended for shareholders of the Fund and may not be used as
sales literature unless preceded or accompanied by a current prospectus.
Past performance results shown in this report should not be considered a
representation of future performance. Share price and returns will fluctuate so
that shares, when redeemed, may be worth more or less than their original cost.
Statements and other information herein are dated and are subject to change.
