Semi-Annual Report
For the Six Months Ended April 30, 2000
PROVIDENT INVESTMENT COUNSEL
MUTUAL FUNDS
Growth Fund I
PROVIDENT INVESTMENT COUNSEL
--------------------------------------------------------------------------------
Investing in Growth Since 1951
<PAGE>
Contents
2 Items of Interest
3 President's Letter
4 Our Philosophy
4 Performance Update/
Portfolio Review
5 Interview with Provident Managers
The Fund 8 Statement of Assets and Liabilities
9 Statement of Operations
10 Statement of Changes
in Net Assets
11 Financial Highlights
12 Notes to Financial Statements
The Portfolio 15 Statement of Net Assets
17 Statement of Operations
18 Statement of Changes
in Net Assets
19 Selected Ratio Data
20 Notes to Financial Statements
1
<PAGE>
ITEMS OF INTEREST
* The Growth style of investment continues to enjoy a leadership role. Our
strong stock selection and sector allocation in the Fund was rewarded by
positive performance.
* The Electronic technology and health technology sectors have been the
significant contributors to the Fund's performance over the last few
months.
* Our web site address is:
WWW.PROVNET.COM
2
<PAGE>
DEAR FELLOW SHAREHOLDERS,
We are once again pleased to report very positive results for the Growth Fund
during the six-months ended April 30, 2000 (more detailed information is
available on the following pages). The market volatility we discussed in earlier
reports has continued in the last several months. After starting out the year
with a repeat of the positive performance in 1999, investors became concerned
about the threat of rising interest rates. Since the middle of March, the
psychology of the marketplace has been oscillating between fears of rising
interest rates and hope that the Fed has tightened enough.
As with most difficult periods we have seen over the last few years, this period
also proved to be temporary. Pundits most recently have been calling this a bear
market. Certainly for the NASDAQ Index, off 37% from its high in March through
its worst level on Friday May 26th, and 21% for the year through the same May
26th date, this has been a severe correction. However, putting the decline in
perspective, it is worth noting that through June 7, the NASDAQ Index has
recovered 19.8% off its May low. In our view, what we have witnessed recently
may then be more appropriately seen as a long-overdue correction to allow
earnings to catch up with valuations. While inflation has been rising, the rate
is moderate and our outlook for GDP growth and corporate profitability in 2000
is for strong growth in 2000 with growth for 2001 only moderately slower than
this year. Thus this current decline, we believe, will prove to be a correction
in an otherwise bull market. Certainly our strategy in the Fund has reflected
and continues to reflect this view.
Looking ahead one thing seems clear, and that is investors for the foreseeable
future will be paying greater heed to valuation levels. This should translate
into a continued broadening out of the market and a more realistic appraisal of
"appropriate" valuations on a near- to intermediate-term basis. We look for a
more balanced market with value stocks and growth stocks, both small and large,
experiencing positive returns.
We appreciate your continued confidence in Provident Investment Counsel.
Sincerely,
/s/ Douglass B. Allen
Douglass B. Allen
President, PIC Investment Trust
June 26, 2000
3
<PAGE>
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.
PERFORMANCE UPDATE/PORTFOLIO REVIEW
GROWTH FUND I
Equity Sector Weightings Average annual total returns for the period
ended 4/30/00:
Electronic Technology 42.54% SINCE
Health Technology 15.29 INCEPTION
Retail Trade 9.92 1 YEAR 3 YEAR 5 YEAR 6/11/92
Technology Service 8.57 ------ ------ ------ -------
Consumer Services 8.43 26.59% 30.04% 26.90% 18.70%
Utilities 4.57
Process Industries 3.41 % OF NET
Finance 3.20 TOP 10 EQUITY HOLDINGS: ASSETS
Consumer Non-Durables 1.74 ----------------------- ------
Transportation 1.54 Cisco Systems, Inc. 7.16%
Consumer Durables 0.79 Sun Microsystems, Inc. 4.12%
Time Warner, Inc. 3.92%
Texas Instruments, Inc. 3.91%
Corning Glass, Inc. 3.59%
Warner-Lambert Co. 3.41%
General Electric Co. 3.27%
Nokia Corp. ADR 3.09%
Microsoft Corp. 2.94%
EMC Corp. 2.93%
4
<PAGE>
INTERVIEW WITH PROVIDENT MANAGERS
Q DURING THE PAST SIX-MONTH PERIOD CAN YOU EXPLAIN THE MARKET CONDITIONS, HOW
THE FUND PERFORMED AND YOUR OVERALL INVESTMENT APPROACH?
A The Fund's performance was very strong in the latter half of the year 1999.
Y2K YAWN, some might say, as the world moved through the milestone 1/1/2000
date with few computer glitches or other infrastructure disruptions. But
YAWN is hardly descriptive of the U.S. equity markets during this six-month
period. At the end of 1999, our stock selection in the Fund proved to be
"ON THE MARK." Our emphasis in technology issues, including medical
technology, electronic technology, and the Internet were very successful
moves. During October and November we increased our technology holdings,
but toward the latter part of 1999, we reduced some of the emphasis based
on significant price appreciation that was achieved over a very short
period of time.
As we moved into the New Year, we, like so many other investors, strongly
believed the technology revolution was a very significant development that
would transform the way in which business is conducted, not just here in
the United States but around the globe. Since year-end 1999, the stock
market has experienced historic volatility. Coming on the heels of what can
only be described as a spectacular 4th quarter 1999, we anticipated the
markets would be choppy. Investors grappled with interest rate hikes,
valuations, and implications of an "old economy" versus "new economy"
paradigm. Performance for the months of January and March was weak while
February was a very strong month. Companies focused on cellular phone
infrastructure and handsets did well as demand for the products, leading
technology, and market share gains drove stock prices higher.
While volatility of returns may remain high, we believe that the
fundamental outlook is bright. The recent earnings reports for the
companies in the Fund have rarely looked better; most have reported better
than expected earnings, or met expectations, and only a few holdings have
had earnings lower than expected. We believe these positive earnings trends
should continue and are the fundamental underpinning to strong returns
going forward. We will continue to be aggressive and flexible in trimming
or eliminating holdings where our confidence level for continued strong
revenue and/or earnings growth is in question.
5
<PAGE>
INTERVIEW WITH PROVIDENT MANAGERS (CONTINUED)
Q THERE WAS EXTRAORDINARY STOCK MARKET VOLATILITY DURING THE MONTH OF APRIL.
WHAT CAUSED THIS RECENT VOLATILITY? DID THE VOLATILITY IMPACT GROWTH
EQUITIES?
A The catalyst for the stock market volatility in April was a combination of
higher than expected March PPI and CPI inflation numbers and a strong Cost
Employment Index report showing that inflation remained a potential problem
for the stock and bond markets. These reports were coupled with the 1st
quarter earnings reports of IBM and Microsoft, where in both cases, while
EPS growth was in line with analysts' expectations, the slowing of top line
growth for both companies surprised investors. The volatility did impact
growth equities, where valuations were the highest, more so than value
equities. Overnight, investors started to reevaluate the valuation levels
of the market as a whole, but more particularly, the valuations of
technology-related growth stocks.
The volatility affected all types of investment strategies, from small and
mid cap to large cap, and from growth to value strategies. From our point
of view there were several elements or conditions that drove this
extraordinary volatility. The first is that the supply/demand equation for
equities is very positive. So far in 2000, through March, there has been a
reduction of equity supply of $58 billion, accomplished through cash
buybacks. For the same time period, the new supply of equity offerings has
been $76 billion. So the flood of mutual fund inflows estimated at $100
billion has easily swallowed up the net equity supply of only $18 billion.
Not withstanding the potential supply of recent IPOs coming out of lockup,
we think this strong demand for equities is very likely to continue.
However, investors are increasingly focusing their investments in a narrow
group of technology sectors, where valuations are high, and where the
slightest problem, either economic or fundamental, real or imagined, causes
investors to become increasingly short-term oriented, causing an almost
"day trading mentality." This, hopefully temporary, paradigm shift has
dramatically increased the market's overall volatility.
We believe that maintaining a longer-term perspective based on very strong
growth in revenues and earnings of the companies in the Fund is essential.
Q WITH THE MARKET VALUATIONS AT RECORD LEVELS, WHAT SECTORS OF THE U.S.
ECONOMY LOOK PARTICULARLY ATTRACTIVE NOW? WHAT IS YOUR OUTLOOK FOR THE
FUTURE?
A We believe we are still in a bull market that will bolster equities in
general but will continue to favor small and large growth companies with
strong unit growth, such as technology and drug stocks. The stocks in the
Fund that have been under such severe pressure and dragged down absolute
6
<PAGE>
INTERVIEW WITH PROVIDENT MANAGERS (CONTINUED)
and relative performance during April and May are the very stocks that are
making the strongest recoveries in June. We continue to believe the
positive economic backdrop, coupled with the strong and sustainable
earnings growth of the companies in the portfolio, will prevail for the
balance of this economic cycle. Further, we believe that the secular
opportunities in broadband infrastructure, web-enabling software, and rapid
shifts in global telecommunications, along with exciting opportunities in
the healthcare area, are the correct areas of concentration. We are
currently reducing some exposure to Electronic Technology. However, we
continue to feel the semi-conductor and capital equipment companies will
continue to show solid advances. Likewise, we have reduced our software
exposure where valuations look less attractive. As in April, we continue to
selectively add healthcare holdings.
In our view, we are experiencing protracted strong product cycles such as
broadband communications chips, fiberoptics equipment, health technology,
and web enabling software that promise to be the strong economic and stock
market drivers for the foreseeable future. In the United States alone the
penetration of usage of the personal computer, cell phone, and Internet has
only scratched the surface. We expect that over the next several years
dramatic increases in usage will be experienced. This coupled, with the
advances in Health Technology, to include drug delivery systems, genomics,
and the biotechnology area argue that advances in technology -- only a few
years ago thought to be impossible -- are going to be realized.
In the months ahead, we will remain disciplined about cutting back or
selling stocks which have exceeded our price targets while re-circulating
capital into better risk/reward opportunities. While recent returns were
volatile, the Fund continues to make very solid progress. For many
investors, the recent stock market volatility is a good lesson that risk is
inherent in investing. Long-term investors must be willing to accept
fluctuations in their portfolio. While short periods of volatility are to
be expected, we believe maintaining a longer-term perspective is essential.
Given the narrowness of the market in the technology-related stocks, we
have added some non-technology companies for additional diversification. We
will continue to focus on finding attractive opportunities that we believe
will provide superior returns and add value to the Fund in the new economy.
7
<PAGE>
PROVIDENT INVESTMENT COUNSEL GROWTH FUND I
STATEMENT OF ASSETS AND LIABILITIES At April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
ASSETS
Investments in Portfolio, at cost $ 154,990,345
=============
Investments in Portfolio, at value $ 201,303,804
Receivables:
Investments in Portfolio sold 935
Fund shares sold 33,628
Prepaid expenses 14,325
-------------
Total assets 201,352,692
-------------
LIABILITIES
Payables:
Investments in Portfolio purchased 33,628
Fund shares redeemed 935
Due to advisor (Notes 3) 8,819
Accrued expenses 68,092
Deferred trustees' compensation (Note 3) 31,703
-------------
Total liabilities 143,177
-------------
NET ASSETS
Applicable to shares of beneficial interest outstanding $ 201,209,515
=============
Shares of beneficial interest outstanding 9,049,077
-------------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE $ 22.24
=============
COMPONENTS OF NET ASSETS
Paid-in capital $ 118,275,158
Accumulated net investment loss (792,767)
Accumulated net realized gain on investments 37,413,665
Net unrealized appreciation on investments 46,313,459
-------------
Net assets $ 201,209,515
=============
See accompanying Notes to Financial Statements.
8
<PAGE>
PROVIDENT INVESTMENT COUNSEL GROWTH FUND I
STATEMENT OF OPERATIONS For the Six Months Ended April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME
Net investment loss from Portfolio $ (481,990)
------------
Expenses
Administration fees (Note 3) 205,654
Transfer agent fees 79,997
Registration expense 18,457
Trustee fees 14,574
Legal fees 7,662
Reports to shareholders 6,325
Miscellaneous 5,331
Audit fees 5,087
Custody and accounting services fees 2,984
------------
Total expenses 346,071
Less: fees waived and expenses absorbed (Note 3) (98,328)
------------
Net expenses 247,743
------------
NET INVESTMENT LOSS (729,733)
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments 37,551,617
Net unrealized depreciation on investments (3,672,250)
------------
Net realized and unrealized gain on investments 33,879,367
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 33,149,634
============
See accompanying Notes to Financial Statements.
9
<PAGE>
PROVIDENT INVESTMENT COUNSEL GROWTH FUND I
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
April 30, 2000+ October 31, 1999
--------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
Operations
Net investment loss $ (729,733) $ (1,184,689)
Net realized gain on investments 37,551,617 27,417,856
Net unrealized appreciation (depreciation)
on investments (3,672,250) 14,672,037
------------- -------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 33,149,634 40,905,204
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS
From net realized gain (27,539,450) (9,515,184)
------------- -------------
Beneficial Interest Share Transactions
Proceeds from shares sold 14,807,699 24,616,335
Proceeds from reinvestment of distribution 26,503,083 9,201,984
Cost of shares redeemed (20,110,521) (23,216,938)
------------- -------------
Net increase in net assets resulting
from share transactions 21,200,261 10,601,381
------------- -------------
TOTAL INCREASE IN NET ASSETS 26,810,445 41,991,401
NET ASSETS
Beginning of period 174,399,070 132,407,669
------------- -------------
END OF PERIOD $ 201,209,515 $ 174,399,070
============= =============
CHANGE IN SHARES
Shares sold 647,018 1,205,821
Shares issued on reinvestment of distributions 1,264,460 512,075
Shares redeemed (892,737) (1,147,070)
------------- -------------
NET INCREASE 1,018,741 570,826
============= =============
</TABLE>
+ Unaudited.
See accompanying Notes to Financial Statements.
10
<PAGE>
PROVIDENT INVESTMENT COUNSEL GROWTH FUND I
FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended October 31,
Six Months Ended -----------------------------------------------
April 30, 2000+ 1999 1998 1997 1996 1995
--------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period ....................... $ 21.72 $ 17.75 $ 18.14 $ 16.25 $ 14.25 $ 11.70
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss ............. (0.08) (0.15) (0.06) (0.15) (0.06) (0.02)
Net realized and unrealized
gain on investments ........... 4.11 5.40 3.04 3.98 2.06 2.57
------- ------- ------- ------- ------- -------
Total from investment operations .. 4.03 5.25 2.98 3.83 2.00 2.55
------- ------- ------- ------- ------- -------
Less distributions:
From net realized gain .......... (3.51) (1.28) (3.37) (1.94) -- --
------- ------- ------- ------- ------- -------
Net asset value, end of period .... $ 22.24 $ 21.72 $ 17.75 $ 18.14 $ 16.25 $ 14.25
======= ======= ======= ======= ======= =======
Total return ...................... 19.54%^ 31.08 19.60% 26.44% 14.04% 21.79%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(millions) .................... $ 201.2 $ 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% 1.25%
Net investment loss ............. (0.49%)+ (0.73%) (0.57%) (0.38%) (0.28%) (0.17%)
</TABLE>
+ Unaudited.
# Includes the Fund's share of expenses, net of fees waived and expenses
absorbed, allocated from the Portfolio.
+ Annualized.
++ Net of fees waived and expenses absorbed. The combined fees waived and
expenses absorbed were 0.08%, 0.11%, 0.14%, 0.10%, 0.05% and 0.05%,
respectively.
^ Not annualized.
See accompanying Notes to Financial Statements.
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1 - ORGANIZATION
Provident Investment Counsel Growth Fund I (the "Fund") is one of twelve
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 Fund invests substantially all of its assets in the PIC Growth
Portfolio (the "Portfolio"), a separate registered management investment company
having the same investment objective as the Fund. The financial statements of
the Portfolio are included elsewhere in this report and should be read in
conjunction with the Fund's financial statements.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund. These policies are in conformity with generally accepted
accounting principles.
A. INVESTMENT VALUATION. The Fund reflects its investments in the
Portfolio at its proportionate interest in the value of the
Portfolio's net assets. Valuation of securities by the Portfolio is
discussed at Note 2A of the Portfolio's Notes to Financial Statements.
B. INVESTMENT INCOME AND DIVIDENDS TO SHAREHOLDERS. The Fund earns
income, net of the expenses of the Portfolio, daily on its investment
in the Portfolio. All net investment income and realized and
unrealized gains or losses on investments of the Portfolio are
allocated pro rata among the Fund and the other Holders of Interests
in the Portfolio. Dividends, if any, are paid annually to shareholders
of the Fund and recorded on the ex-dividend date.
C. FEDERAL INCOME TAXES. The Fund intends to comply with the requirements
of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to 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. Actual
results could differ from those estimates.
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) - (Continued)
NOTE 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 Portfolio. PIC and ICA also provide
management services necessary for the operations of the Trust and the Portfolio
and furnish office facilities. PIC receives a fee for its services to the Fund,
at the rate of 0.20% of the average daily net assets of the Fund.
PIC has voluntarily undertaken to reimburse the Fund to the extent
necessary so that the expenses of the Fund, including those expenses allocated
from the Portfolio, do not exceed 1.25% of the Fund's average daily net assets.
The amount of fees waived and expenses absorbed for the six months ended April
30, 2000 were $94,316 and $4,012, respectively.
Pursuant to a contract with the Funds, PIC has agreed to reimburse each
Fund and Portfolio for investment advisory fees and other expenses for ten years
ending March 1, 2010. PIC reserves the right to be reimbursed for any waiver of
its fees or expenses paid on behalf of the Funds and Portfolios if, within three
subsequent years, a Fund's or Portfolio's expenses are less than the limit
agreed to by PIC. Any reimbursements to PIC are subject to approval by the Board
of Trustees.
ICA receives an annual fee of $15,000 for its services from the Fund.
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 Fund's
shares during the six months ended April 30, 2000.
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 Fund recognizes as trustee expense
amounts accrued as meetings are attended plus the change in the value of the
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) - (Continued)
phantom share account determined on a quarterly basis. For the six months ended
April 30, 2000, the change in the value of the phantom account was unrealized
appreciation of $7,770.
NOTE 4 - INVESTMENT TRANSACTIONS
Additions and reductions in the investments in the Portfolio aggregated
$14,842,013 and $21,371,175, respectively.
At April 30, 2000, the Fund owned 94.8% of the total net assets of the
Portfolio.
14
<PAGE>
PIC GROWTH PORTFOLIO
STATEMENT OF NET ASSETS at April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
Shares Equity Securities -- 95.23% Value
--------------------------------------------------------------------------------
Apparel and Shoe -- 0.98%
56,700 Gap,Inc. $ 2,083,725
------------
Automobiles -- 0.76%
40,400 Harley-Davidson, Inc. 1,608,425
------------
Biotechnology -- 0.73%
13,200 Genentech, Inc.* 1,544,400
------------
Building Products -- 3.05%
59,550 Home Depot, Inc. 3,338,522
63,300 Lowe's Companies, Inc. 3,133,350
------------
Total Building Products 6,471,872
------------
Chemicals -- 1.39%
59,200 Pharmacia Corp. 2,956,300
------------
Computer Services -- 4.12%
95,200 Sun Microsystems, Inc.* 8,752,450
------------
Computer Software -- 7.87%
27,700 Adobe Systems, Inc. 3,349,969
37,600 Gemstar International Group, Ltd.* 1,739,000
89,924 Microsoft Corp.* 6,272,199
39,600 Oracle Corp.* 3,165,525
44,400 SAP AG-Sponsored ADR 2,181,150
------------
Total Computer Software 16,707,843
------------
Cosmetics & Soaps -- 1.67%
60,200 Estee Lauder Co.-Class A 2,656,325
14,800 Procter & Gamble Co. 882,450
------------
Total Cosmetics & Soaps 3,538,775
------------
Discount -- 1.84%
72,200 Costco Companies, Inc.* 3,903,312
------------
Drugs -- 8.66%
97,500 Bristol-Myers Squibb Co. 5,112,656
60,500 Merck & Co., Inc. 4,204,750
45,200 Schering-Plough Corp. 1,822,125
63,600 Warner-Lambert Co. 7,238,475
------------
Total Drugs 18,378,006
------------
Electronics -- 0.88%
8,600 Agilent Technologies, Inc.* 762,175
10,000 International Business Machines Corp. 1,116,250
------------
Total Electronics 1,878,425
------------
Electrical Equipment/Peripherals -- 8.91%
21,200 Apple Computer, Inc. 2,630,125
43,600 Applied Materials, Inc.* 4,439,025
44,900 EMC Corp.* 6,238,294
13,300 PMC-Sierra, Inc.* 2,551,937
33,400 SanDisk Corp.* 3,060,275
------------
Total Electrical Equipment/Peripherals 18,919,656
------------
Electric Components/Semiconductors -- 7.52%
64,900 Analog Devices, Inc.* 4,985,131
51,000 Texas Instruments, Inc. 8,306,625
39,100 Vitesse Semiconductor Corp.* 2,661,244
------------
Total Electric Components/ Semiconductors 15,953,000
------------
Electrical Products-- 3.27%
44,100 General Electric Co. 6,934,725
------------
Entertainment & Leisure -- 8.07%
63,400 AT&T Corp./Liberty Media Corp.-Class A* 3,166,037
30,000 CBS Corp. 1,762,500
35,200 EchoStar Communications Corp.* 2,241,800
92,500 Time Warner, Inc. 8,319,219
30,000 Viacom, Inc.-Class B* 1,631,250
------------
Total Entertainment & Leisure 17,120,806
------------
Financial Services -- 3.07%
20,000 American Express Co. 3,001,250
45,800 Morgan Stanley Dean Witter & Co. 3,515,150
------------
Total Financial Services 6,516,400
------------
Internet Services -- 1.10%
8,700 Exodus Communications, Inc.* 769,406
6,300 VeriSign, Inc.* 878,062
14,100 Vignette Corp.* 679,444
------------
Total Internet Services 2,326,912
------------
15
<PAGE>
PIC GROWTH PORTFOLIO
STATEMENT OF NET ASSETS at April 30, 2000 (Unaudited) - (Continued)
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
Medical & Dental Products -- 3.05%
41,500 Allergan, Inc. $ 2,443,312
29,100 Johnson & Johnson 2,400,750
10,200 MedImmune, Inc.* 1,631,363
------------
Total Medical & Dental Products 6,475,425
------------
Medical Instruments -- 0.77%
31,500 Medtronic, Inc. 1,636,031
------------
Networking -- 7.90%
6,800 Brocade Communications Systems, Inc.* 843,200
219,100 Cisco Systems, Inc.* 15,189,792
9,800 Network Appliance, Inc.* 724,588
------------
Total Networking 16,757,580
------------
Specialty Retail -- 1.82%
80,716 Kohl's Corp.* 3,874,368
------------
Supermarkets -- 1.79%
86,000 Safeway, Inc.* 3,794,750
------------
Telecommunications -- 13.76%
107,800 AT & T Wireless Group* 3,429,388
24,800 CIENA Corp.* 3,065,900
38,600 Corning Glass, Inc. 7,623,500
37,000 Ericsson, (L.M.) Telephone Co. ADR 3,272,188
18,600 JDS Uniphase Corp.* 1,929,750
30,400 Nextel Communications, Inc.-Class A* 3,326,900
115,200 Nokia Corp. ADR 6,552,000
------------
Total Telecommunications 29,199,626
------------
Telephone -- 1.18%
100,800 McLeodUSA, Inc.* 2,520,000
------------
Transportation-Rail -- 1.07%
31,600 Kansas City Southern Industries, Inc. 2,271,250
------------
Total Equity Securities (cost $154,135,026) 202,124,062
------------
Money Market Investments -- 7.04%
$7,477,354 Temporary Investment Fund Inc. -
Temp Fund $ 7,477,354
7,477,354 Temporary Investment Fund Inc. -
Temp Cash 7,477,354
------------
TOTAL MONEY MARKET INVESTMENTS (cost $14,954,708) 14,954,708
------------
TOTAL INVESTMENTS (cost $169,089,734) 217,078,770
------------
Other Assets -- 1.01%
Receivables:
Securities sold 1,950,530
Interest sold 34,900
Dividends and interest 124,759
Prepaid Insurance 4,243
Other assets 23,317
------------
Total Other Assets 2,137,749
------------
Total Assets 219,216,519
------------
LIABILITIES -- (3.28%) Payables:
Securities purchased 6,731,516
Interest redeemed 17,270
Due to advisor (Note 3) 121,143
Accrued expenses 29,649
Deferred trustees' compensation (Note 3) 64,398
------------
Total Liabilities 6,963,976
------------
Net Assets - 100.00% $212,252,543
============
* Non-income producing security.
See accompanying Notes to Financial Statements.
16
<PAGE>
PIC GROWTH PORTFOLIO
STATEMENT OF OPERATIONS For the Six Months Ended April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME
Income
Dividends $ 290,808
Interest 245,057
------------
Total income 535,865
------------
Expenses
Investment advisory fees (Note 3) 833,451
Administration fees (Note 3) 104,181
Accounting services fees 43,291
Trustee fees 27,470
Custodian fees 20,634
Audit fee 11,563
Insurance expense 1,507
Legal fees 5,382
Miscellaneous 3,209
------------
Total expenses 1,050,688
Less: fee waived and expenses absorbed (Note 3) (8,874)
------------
Net expenses 1,041,814
------------
NET INVESTMENT LOSS (505,949)
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments 38,832,600
Net unrealized depreciation on investments (3,431,968)
------------
Net realized and unrealized gain on investments 35,400,632
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 34,894,683
============
See accompanying Notes to Financial Statements.
17
<PAGE>
PIC GROWTH PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
Six Months Ended Year Ended
April 30, 2000+ October 31, 1999
--------------- ----------------
Increase (Decrease) In Net Assets From:
OPERATIONS
Net investment loss $ (505,949) $ (811,454)
Net realized gain on investments 38,832,600 27,950,275
Net unrealized appreciation (depreciation)
on investments (3,431,968) 15,478,042
------------- -------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 34,894,683 42,616,863
------------- -------------
TRANSACTIONS IN INTERESTS
Contributions by Holders 17,571,768 28,654,776
Withdrawals by Holders (22,519,167) (25,048,703)
------------- -------------
Net increase (decrease) in net assets from
transactions in Interests (4,947,399) 3,606,073
------------- -------------
TOTAL INCREASE IN NET ASSETS 29,947,284 46,222,936
NET ASSETS
Beginning of period 182,305,259 136,082,323
------------- -------------
END OF PERIOD $ 212,252,543 $ 182,305,259
============= =============
+ Unaudited.
See accompanying Notes to Financial Statements.
18
<PAGE>
PIC GROWTH PORTFOLIO
SELECTED RATIO DATA
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended October 31,
Six Months Ended ---------------------------------------
April 30, 2000+ 1999 1998 1997 1996 1995
--------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratios to average net assets:*
Operating expenses ........... 1.00%+ 1.00% 1.00% 1.00% 1.00% 1.00%
Net investment
income (loss) .............. (0.48%)+ (0.49%) (0.32%) (0.13%) (0.04%) 0.08%
Portfolio turnover rate .... 84.78%^ 80.34% 81.06% 67.54% 64.09% 54.89%
</TABLE>
+ Unaudited.
* Net of fees waived and expenses absorbed of 0.01%, 0.00%, 0.02%, 0.05%
0.04% and 0.01% of average net assets, respectively.
+ Annualized.
^ Not annualized.
See accompanying Notes to Financial Statements.
19
<PAGE>
PIC GROWTH PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1 - ORGANIZATION
PIC Growth Portfolio was organized on December 11, 1991 as a separate trust
under the laws of the State of New York (the "Portfolio"). The beneficial
interests in the Portfolio are divided into an unlimited number of
non-transferable Interests, par value $.01 each. The Portfolio is registered
under the Investment Company Act of 1940 as an open-end, diversified management
investment company.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Portfolio. These policies are in conformity with generally
accepted accounting principles.
A. VALUATION OF SECURITIES. Equity securities traded on a national securities
exchange or Nasdaq are valued at the last reported sales price at the close
of regular trading on each day that the exchanges are open for trading.
Other equity securities and debt securities for which market quotations are
readily available are valued at the mean between their bid and asked
prices, 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 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. Actual results could differ from
those estimates.
NOTE 3 - TRANSACTIONS WITH AFFILIATES
The 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 Portfolio.
20
<PAGE>
PIC GROWTH PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited) - (Continued)
PIC and ICA also provide management services necessary for the operations of the
Portfolio and furnish office facilities.
PIC receives an investment advisory fee for its services to the Portfolio,
at the annual rate of 0.80% of its average daily net assets. PIC has voluntarily
undertaken to limit the expenses of the Portfolio to 1.00% of its average daily
net assets. During the six months ended April 30, 2000, PIC waived fees of
$8,874.
Pursuant to a contract with the Funds, PIC has agreed to reimburse each
Fund and Portfolio for investment advisory fees and other expenses for ten years
ending March 1, 2010. PIC reserves the right to be reimbursed for any waiver of
its fees or expenses paid on behalf of the Funds and Portfolios if, within three
subsequent years, a Fund's or Portfolio's expenses are less than the limit
agreed to by PIC. Any reimbursements to PIC are subject to approval by the Board
of Trustees.
ICA receives for its services a fee at the annual rate of 0.10% of the
average daily net assets of the 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 Portfolio recognizes 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. For the six months ended
April 30, 2000, the change in the value of the phantom account was unrealized
appreciation of $18,880.
NOTE 4 - INVESTMENT TRANSACTIONS
The aggregate cost of purchases and the proceeds from sales of investment
securities, other than short-term obligations, for the six months ended April
30, 2000 were $172,767,016 and $168,592,319, respectively.
The cost of securities for federal income tax purposes was $169,089,734.
The aggregate gross unrealized appreciation and depreciation of investment
securities, based on their cost for federal income tax purposes, were as
follows:
Gross unrealized appreciation $55,909,654
Gross unrealized depreciation (7,920,618)
-----------
Net unrealized appreciation $47,989,036
===========
21
<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.
