ANNUAL REPORT
FOR THE YEAR ENDED OCTOBER 31, 2000
[LOGO]
GROWTH FUND I
PROVIDENT INVESTMENT COUNSEL
---------------------------------------
GROWTH STOCK LEADERS FOR HALF A CENTURY
<PAGE>
CONTENTS
2 President's Letter
4 Performance Update/Portfolio Review
THE FUND 6 Statement of Assets and Liabilities
7 Statement of Operations
8 Statements of Changes in Net Assets
9 Financial Highlights
10 Notes to Financial Statements
THE PORTFOLIO 14 Statement of Net Assets
16 Statement of Operations
17 Statements of Changes in Net Assets
18 Selected Ratio Data
19 Notes to Financial Statements
1
<PAGE>
FELLOW SHAREHOLDERS,
We are very pleased to report positive results for the twelve months ended
October 31, 2000.
Our Growth fund performed well on both an absolute and relative basis for this
period. The PIC Growth Fund's return of 11.21% bested the Russell 1000 Growth
Index return of 9.33%.
We are satisfied with the performance of our Fund, especially considering the
uncertain and volatile nature of the current market environment. The year 2000
has been, and continues to be, a challenging year for the U.S. equity markets.
The year began with Y2K fears and valuation concerns. Although Y2K fears
dissipated almost immediately, concerns over relative valuations proved
legitimate. We saw this play out in the spring as many investors exited New
Economy stocks in the technology sectors for stocks in Old Economy sectors
including food, oil, defense and manufacturing. As the year continued, investors
oscillated between fear of rising interest rates and hope that the Fed had
tightened enough. However, as summer approached, technology growth stocks became
leaders once again.
The third quarter of 2000 saw the markets experience additional pressure from
rising energy prices and continued concerns over inflation and interest rates.
The aforementioned technology growth stock leadership proved short-lived as
numerous bellwether stocks in this sector pre-announced weaker than expected
earnings. October saw the usual efforts to reduce capital gains by large mutual
fund companies -- contributing to negative returns for most equity indexes. With
all of this as a backdrop, the market also had to deal with uncertainties
surrounding the presidential election.
Looking ahead, we see economic activity slowing, but not stagnating. We think
investors need to put into perspective that the GDP and earnings growth rates of
the last 18 months have been super-charged and unsustainable. We see a real GDP
growth rate in the area of +3.0-3.5% for 2001 over 2000. If we are close to the
mark, such a rate of change should be sufficient for selected growth companies
--large, mid and small -- to continue to deliver high and sustainable
double-digit revenue and earnings growth.
Our outlook for growth company shares is positive. We feel that the primary
driver of the recent bull market in the U.S. has been extraordinary increases in
productivity. These productivity advances continue. While the Fed has instituted
numerous interest rate increases over the past 2 years, high quality growth
companies continue to record strong revenue and earnings growth translating into
higher equity values.
2
<PAGE>
FELLOW SHAREHOLDERS, (Continued)
For these reasons, Provident Investment Counsel is confident that our
time-tested philosophy of building portfolios of high growth companies --
companies with outstanding revenue and earnings growth -- will continue to
reward our mutual fund shareholders in the long run. Volatility and huge market
swings have become commonplace in today's equity markets. However, it is still
our unwavering belief that, over time, a company's earnings-per-share growth is
the most significant determinant of long-term stock price appreciation.
Thank you for your continued confidence in Provident Investment Counsel.
/s/ Thomas M. Mitchell
Thomas M. Mitchell
President
PIC Investment Trust
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.
[GRAPHIC] EMERGING GROWTH SMALL CAP MID CAP LARGE CAP MATURE COMPANIES
ESTABLISHED GROWTH
PERFORMANCE UPDATE/PORTFOLIO REVIEW
GROWTH FUND I
EQUITY SECTOR WEIGHTINGS
Average annual total returns for the period ended 10/31/00*:
Electronic Technology 42.23%
Health Technology 20.39
Technology Services 15.00
Finance 7.37
Retail Trade 5.91
Producer Manufacturing 5.00
Consumer Services 2.32
Consumer Durables 1.22
Communications 0.56
SINCE
INCEPTION
1 YEAR 3 YEAR 5 YEAR 6/11/92
------ ------ ------ -------
11.21% 20.35% 20.24% 16.43%
% OF NET
TOP 10 EQUITY HOLDINGS: ASSETS
--------
Cisco Systems, Inc. 7.08%
Sun Microsystems, Inc. 6.05%
EMC Corp. 5.57%
Morgan Stanley Dean
Witter & Co. 4.84%
General Electric Co. 4.67%
Corning, Inc. 4.64%
Pfizer, Inc. 3.76%
America Online, Inc. 3.54%
CIENA Corp. 2.96%
Analog Devices, Inc. 2.68%
* The total returns stated above were achieved during favorable market
conditions. Investors should not expect that such favorable return can be
consistently achieved.
4
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PERFORMANCE COMPARISON
PROVIDENT INVESTMENT COUNSEL GROWTH FUND I
Value of $10,000 Investment vs Russell 1000 Growth Index
and S&P 500 Index
Provident Investment
Counsel
Growth Fund I Russell 1000 Growth S&P 500 Index
------------- ------------------- -------------
11-Jun-92 $10,000 $10,000 $10,000
31-Jul-92 $10,390 $10,494 $10,397
31-Jan-93 $11,440 $11,089 $10,913
31-Jul-93 $10,950 $10,755 $11,305
31-Jan-94 $11,821 $11,808 $12,319
31-Jul-94 $10,990 $11,296 $11,888
31-Jan-95 $11,150 $12,102 $12,384
31-Jul-95 $13,752 $14,847 $14,992
31-Jan-96 $14,113 $16,801 $17,172
31-Jul-96 $14,303 $17,153 $17,476
31-Jan-97 $17,955 $21,419 $21,696
31-Jul-97 $21,722 $26,043 $26,587
31-Jan-98 $21,422 $26,897 $27,534
31-Jul-98 $26,383 $31,228 $31,715
31-Jan-99 $30,874 $38,350 $36,480
31-Jul-99 $30,830 $38,737 $38,123
31-Jan-00 $36,633 $45,972 $40,253
31-Jul-00 $36,893 $48,179 $41,543
31-Oct-00 $35,853 $45,319 $41,617
Since One
Year Five Year Inception
------ --------- ---------
Provident Investment Counsel Growth Fund I 11.21% 20.24% 16.43%
Past perfomance is not predictive of future performance.
5
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PROVIDENT INVESTMENT COUNSEL GROWTH FUND I
STATEMENT OF ASSETS AND LIABILITIES at October 31, 2000
--------------------------------------------------------------------------------
ASSETS
Investment in Portfolio, at cost ........................... $ 148,385,298
=============
Investment in Portfolio, at value .......................... $ 181,392,956
Receivables:
Investment in Portfolio sold ............................. 2,648
Fund shares sold ......................................... 11,953
From Provident Investment Counsel, Inc. (Note 3) ......... 6,891
Prepaid expenses ........................................... 9,333
-------------
Total assets ........................................... 181,423,781
-------------
LIABILITIES
Payables:
Investment in Portfolio purchased ........................ 11,953
Fund shares redeemed ..................................... 2,648
Deferred trustees' compensation (Note 3) ................... 31,195
Accrued expenses ........................................... 83,998
-------------
Total liabilities ...................................... 129,794
-------------
NET ASSETS
Applicable to shares of beneficial interest outstanding .... $ 181,293,987
=============
Shares of beneficial interest outstanding .................. 8,762,467
-------------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE ..... $ 20.69
=============
COMPONENTS OF NET ASSETS
Paid-in capital ............................................ $ 112,501,662
Accumulated net investment loss ............................ (95,577)
Accumulated net realized gain on investments ............... 35,880,244
Net unrealized appreciation on investments ................. 33,007,658
-------------
Net assets ............................................. $ 181,293,987
=============
See accompanying Notes to Financial Statements.
6
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PROVIDENT INVESTMENT COUNSEL GROWTH FUND I
STATEMENT OF OPERATIONS For the Year Ended October 31, 2000
--------------------------------------------------------------------------------
INVESTMENT INCOME
Net investment loss from Portfolio .......................... $ (1,059,915)
------------
Expenses
Administration fees (Note 3) .............................. 411,086
Transfer agent fees ....................................... 194,199
Registration expense ...................................... 27,000
Audit fees ................................................ 15,000
Reports to shareholders ................................... 13,000
Trustee fees .............................................. 9,031
Legal fees ................................................ 8,000
Custody and accounting services fees ...................... 6,000
Miscellaneous ............................................. 10,000
------------
Total expenses .......................................... 693,316
Less: fees waived (Note 3) .............................. (198,209)
------------
Net expenses ............................................ 495,107
------------
NET INVESTMENT LOSS ................................... (1,555,022)
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments ............................ 37,543,459
Net unrealized depreciation on investments .................. (16,978,051)
------------
Net realized and unrealized gain on investments ........... 20,565,408
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .... $ 19,010,386
============
See accompanying Notes to Financial Statements.
7
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PROVIDENT INVESTMENT COUNSEL GROWTH FUND I
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 2000 OCTOBER 31, 1999
---------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS
Net investment loss .......................... $ (1,555,022) $ (1,184,689)
Net realized gain on investments ............. 37,543,459 27,417,856
Net unrealized appreciation (depreciation)
on investments ............................. (16,978,051) 14,672,037
------------- -------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS .......................... 19,010,386 40,905,204
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS
From net realized gain ....................... (27,539,449) (9,515,184)
------------- -------------
BENEFICIAL INTEREST SHARE TRANSACTIONS
Proceeds from shares sold .................... 22,945,210 24,616,335
Proceeds from reinvestment of distributions .. 26,503,083 9,201,984
Cost of shares redeemed ...................... (34,024,313) (23,216,938)
------------- -------------
Net increase in net assets resulting
from share transactions .................... 15,423,980 10,601,381
------------- -------------
TOTAL INCREASE IN NET ASSETS ............. 6,894,917 41,991,401
NET ASSETS
Beginning of year ............................ 174,399,070 132,407,669
------------- -------------
END OF YEAR .................................. $ 181,293,987 $ 174,399,070
============= =============
ACCUMULATED NET INVESTMENT LOSS .............. (95,577) (63,034)
============= =============
CHANGE IN SHARES
Shares sold .................................. 1,013,799 1,205,821
Shares issued on reinvestment of distributions 1,264,460 512,075
Shares redeemed .............................. (1,546,128) (1,147,070)
------------- -------------
NET INCREASE ................................. 732,131 570,826
============= =============
</TABLE>
See accompanying Notes to Financial Statements.
8
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PROVIDENT INVESTMENT COUNSEL GROWTH FUND I
FINANCIAL HIGHLIGHTS For a share outstanding throughout each year
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
---------------------------------------------------
2000 1999 1998 1997 1996
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year....... $ 21.72 $ 17.75 $ 18.14 $ 16.25 $ 14.25
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss .................. (0.18) (0.15) (0.06) (0.15) (0.06)
Net realized and unrealized gain
on investments ..................... 2.66 5.40 3.04 3.98 2.06
------- ------- ------- ------- -------
Total from investment operations........ 2.48 5.25 2.98 3.83 2.00
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
From net realized gains .............. (3.51) (1.28) (3.37) (1.94) --
------- ------- ------- ------- -------
Net asset value, end of year ......... $ 20.69 $ 21.72 $ 17.75 $ 18.14 $ 16.25
======= ======= ======= ======= =======
Total return............................ 11.21% 31.08% 19.60% 26.44% 14.04%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (millions).... $ 181.3 $ 174.4 $ 132.4 $ 80.0 $ 116.1
RATIOS TO AVERAGE NET ASSETS:#++
Expenses ............................. 1.25% 1.25% 1.25% 1.25% 1.25%
Net investment loss .................. (0.79%) (0.73%) (0.57%) (0.38%) (0.28%)
</TABLE>
# Includes the Fund's share of expenses, net of fees waived and expenses
absorbed, allocated from the Portfolio.
++ Net of fees waived. The combined fees waived were 0.10%, 0.11%, 0.16%,
0.15%, and 0.09%, respectively.
See accompanying Notes to Financial Statements.
9
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PROVIDENT INVESTMENT COUNSEL GROWTH FUND I
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
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
Decem-ber 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.
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 investment 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 its
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.
10
<PAGE>
PROVIDENT INVESTMENT COUNSEL GROWTH FUND I
NOTES TO FINANCIAL STATEMENTS (Continued)
--------------------------------------------------------------------------------
E. RECLASSIFICATION OF CAPITAL ACCOUNTS. The Fund accounts and reports
for distributions to shareholders in accordance with the American
Institute of Certified Public Accountants' Statement of Position 93-2:
DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF
INCOME, CAPITAL AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT
COMPANIES. For the year ended October 31, 2000, the Fund decreased
accumulated net realized gain by $1,525,264 and increased paid-in
capital by $2,785 primarily due to the Fund experiencing a net
investment loss during the year. Net assets were not affected by this
change.
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. ICA receives
an annual fee of $15,000 for its services from the Fund.
Pursuant to a contract with the Fund, PIC has agreed to reimburse the Fund
and Portfolio for investment advisory fees and other expenses for ten years
ending March 1, 2010, 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 net assets. PIC reserves the right to be reimbursed for any
waiver of its fees or expenses paid on behalf of the Fund and Portfolio if,
within three subsequent years, the Fund's or Portfolio's expenses are less than
the limit agreed to by PIC. The amount of fees waived for the year ended October
31, 2000 were $198,209.
At October 31, 2000, the amount available for reimbursement that has been
paid and/or waived by PIC on behalf of the Fund is $561,598.
At October 31, 2000, PIC may recapture a portion of the above amounts no
later than the dates as stated below:
OCTOBER 31,
--------------------------------------
2001 2002 2003
-------- -------- --------
Growth Fund I ........... $178,773 $184,616 $198,209
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 Fund shares
during the year ended Octo-ber 31, 2000.
11
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PROVIDENT INVESTMENT COUNSEL GROWTH FUND I
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 Fund recognizes as trustee expense
amounts accrued as meetings are attended plus the change in the value of the
phantom share account determined on a quarterly basis. For the year ended
October 31, 2000, the change in the value of the phantom account was unrealized
appreciation of $5,384.
4 - INVESTMENT TRANSACTIONS
Additions and reductions in the investments in the Portfolio aggregated
$22,979,524 and $35,527,650, respectively.
At October 31, 2000, the Fund owned 95.0% of the total net assets of the
Portfolio.
5 - SPECIAL MEETING OF SHAREHOLDERS (UNAUDITED)
On September 26, 2000, Old Mutual plc acquired UAM, PIC's indirect parent.
A special meeting of shareholders of the Fund was held at the offices of
Provident Investment Counsel, Inc. on October 27, 2000. The shareholders of the
Funds approved a new investment advisory agreement for the PIC Growth Portfolio
as a result of the acquisition of PIC's parent company, UAM, by Old Mutual plc
with 4,490,667 shares voted "For", 3,971 shares voted "Against" and 135,791
shares abstained.
12
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PROVIDENT INVESTMENT COUNSEL GROWTH FUND I
REPORT OF INDEPENDENT ACCOUNTANTS
--------------------------------------------------------------------------------
To the Board of Trustees of PIC Investment Trust and the Shareholders of
Provident Investment Counsel Growth Fund I
In our opinion, the accompanying statement 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
Provident Investment Counsel Growth Fund I series of PIC Investment Trust (the
"Trust") at Octo-ber 31, 2000, the results of its operations for the year then
ended, the changes in its net assets and the financial highlights for each of
the two years in the period then ended, in conformity with accounting principles
generally accepted in the United States of America. 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 audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States of America, 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 audits provide a reasonable basis for our opinion. The
financial highlights for each of the three years in the period ended October 31,
1998 were audited by other independent accountants whose report dated December
3, 1998 expressed an unqualified opinion on those statements.
PricewaterhouseCoopers LLP
December 15, 2000
13
<PAGE>
PIC GROWTH PORTFOLIO
STATEMENT OF NET ASSETS as of October 31, 2000
--------------------------------------------------------------------------------
SHARES VALUE
--------------------------------------------------------------------------------
EQUITY SECURITIES: 93.3%
AUTOMOBILES: 1.1%
45,200 Harley-Davidson, Inc. $ 2,178,075
------------
BIOTECHNOLOGY: 2.8%
18,700 IDEC Pharmaceuticals Corp.* 3,667,538
40,400 Immunex Corp.* 1,719,525
------------
5,387,063
------------
BUILDING PRODUCTS: 1.4%
57,800 Lowe's Companies, Inc. 2,640,738
------------
COMPUTER SERVICES: 8.4%
12,600 Amdocs Ltd.* 816,638
18,600 Juniper Networks, Inc.* 3,627,000
104,200 Sun Microsystems, Inc.* 11,553,175
------------
15,996,813
------------
COMPUTER SOFTWARE: 6.9%
57,200 Adobe Systems, Inc. 4,350,775
54,100 BEA Systems, Inc.* 3,881,675
12,500 i2 Technologies, Inc.* 2,125,000
85,800 Oracle Corp.* 2,831,400
------------
13,188,850
------------
DISCOUNT RETAILERS: 0.5%
25,600 Dollar Tree Stores, Inc.* 1,001,600
------------
DIVERSIFIED FINANCIAL SERVICES: 4.8%
115,100 Morgan Stanley Dean Witter & Co. 9,243,969
------------
DRUGS & PHARMACEUTICALS: 14.3%
54,100 Alza Corp.* 4,378,719
73,900 American Home Products Corp. 4,692,650
81,900 Elan Corp plc, ADR* 4,253,681
166,250 Pfizer, Inc. 7,179,922
83,900 Pharmacia Corp. 4,614,500
36,700 Watson Pharmaceuticals, Inc.* 2,296,044
------------
27,415,516
------------
ELECTRIC COMPONENTS/SEMICONDUCTORS: 7.8%
78,600 Analog Devices, Inc.* 5,109,000
38,400 Applied Micro Circuits Corp.* 2,932,800
43,700 QLogic Corp.* 4,227,975
9,800 SDL, Inc.* 2,540,650
------------
14,810,425
------------
ELECTRICAL EQUIPMENT/PERIPHERALS: 5.6%
119,400 EMC Corp.* 10,634,062
------------
ELECTRICAL PRODUCTS: 4.7%
162,600 General Electric Co. 8,912,512
------------
ENTERTAINMENT & LEISURE: 2.2%
72,550 Viacom, Inc. - Class B* 4,126,281
------------
FINANCIAL SERVICES: 2.0%
87,000 Stilwell Financial, Inc. 3,898,687
------------
INTERNET SERVICES: 6.7%
134,100 America Online, Inc.* 6,762,663
34,300 Ariba, Inc.* 4,334,662
12,300 VeriSign, Inc.* 1,623,600
------------
12,720,925
------------
MEDICAL & DENTAL PRODUCTS: 1.8%
42,000 Allergan, Inc. 3,530,625
------------
NETWORKING: 9.9%
12,600 Broadcom Corp. - Class A* 2,801,925
251,100 Cisco Systems, Inc.* 13,528,012
21,000 Network Appliance, Inc.* 2,499,000
------------
18,828,937
------------
SPECIALTY RETAIL: 1.1%
40,516 Kohl's Corp.* 2,195,461
------------
SUPERMARKETS: 2.5%
86,000 Safeway, Inc.* 4,703,125
------------
TELECOMMUNICATIONS: 8.3%
53,800 CIENA Corp.* 5,655,725
115,800 Corning, Inc. 8,858,700
30,400 Nokia Corp., ADR 1,299,600
1 Nortel Networks Corp. 46
------------
15,814,071
------------
TELEPHONE: 0.5%
50,800 McLeodUSA, Inc.- Class A* 977,900
------------
TOTAL EQUITY SECURITIES
(cost $143,901,361) 178,205,635
------------
14
<PAGE>
PIC GROWTH PORTFOLIO
STATEMENT OF NET ASSETS October 31, 2000 - (Continued)
--------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
--------------------------------------------------------------------------------
MONEY MARKET INVESTMENTS: 5.8%
$5,499,597 Temporary Investment Fund Inc.- Temp Cash $ 5,499,597
5,499,597 Temporary Investment Fund Inc.- Temp Fund 5,499,597
------------
TOTAL MONEY MARKET INVESTMENTS
(cost $10,999,194) 10,999,194
------------
TOTAL INVESTMENTS: 99.1%
(cost $154,900,555) 189,204,829
------------
OTHER ASSETS: 1.0%
Receivables:
Securities sold 1,917,399
Dividends and interest 40,143
Shares of beneficial interests sold 26,953
Prepaid insurance 1,008
Other assets 23,317
------------
Total Other Assets 2,008,820
------------
TOTAL ASSETS 191,213,649
------------
LIABILITIES: (0.1%)
Payables:
Shares of beneficial interests redeemed 3,568
Due to advisor (Note 3) 144,412
Deferred trustees' compensation (Note 3) 67,694
Accrued expenses 56,177
------------
Total Liabilities 271,851
------------
NET ASSETS: 100.0% $190,941,798
============
* Non-income producing security.
ADR - American Depository Receipt
See accompanying Notes to Financial Statements.
15
<PAGE>
PIC GROWTH PORTFOLIO
STATEMENT OF OPERATIONS For the Year Ended October 31, 2000
--------------------------------------------------------------------------------
INVESTMENT INCOME
Income
Dividends (Net of foreign taxes of 8,963) ................. $ 548,706
Interest .................................................. 420,975
------------
Total income ............................................ 969,681
------------
Expenses
Investment advisory fees (Note 3) ......................... 1,667,220
Accounting services fees .................................. 86,480
Administration fees (Note 3) .............................. 208,403
Trustees' fees ............................................ 33,100
Custodian fees ............................................ 44,041
Audit fees ................................................ 23,378
Legal fees ................................................ 13,276
Insurance expense ......................................... 2,964
Miscellaneous ............................................. 7,032
------------
Total expenses .......................................... 2,085,894
Less: fees waived (Note 3) .............................. (1,869)
------------
Net expenses ............................................ 2,084,025
------------
NET INVESTMENT LOSS ................................... (1,114,344)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments ............................ 38,535,191
Net unrealized depreciation on investments .................. (17,116,729)
------------
Net realized and unrealized gain on investments ........... 21,418,462
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS... $ 20,304,118
============
See accompanying Notes to Financial Statements.
16
<PAGE>
PIC GROWTH PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, 2000 OCTOBER 31, 1999
---------------- ----------------
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS
Net investment loss ....................... $ (1,114,344) $ (811,454)
Net realized gain on investments .......... 38,535,191 27,950,275
Net unrealized appreciation (depreciation)
on investments .......................... (17,116,729) 15,478,042
------------- -------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ....................... 20,304,118 42,616,863
------------- -------------
TRANSACTIONS IN INTERESTS:
Contributions by Holders .................. 26,934,456 28,654,776
Withdrawals by Holders .................... (38,602,035) (25,048,703)
Net increase (decrease) in net assets from
transactions in interests ............... (11,667,579) 3,606,073
------------- -------------
TOTAL INCREASE IN NET ASSETS ............ 8,636,539 46,222,936
NET ASSETS
Beginning of year ......................... 182,305,259 136,082,323
------------- -------------
END OF YEAR ............................... $ 190,941,798 $ 182,305,259
============= =============
See accompanying Notes to Financial Statements.
17
<PAGE>
PIC GROWTH PORTFOLIO
SELECTED RATIO DATA
--------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
------------------------------------------
2000 1999 1998 1997 1996
------ ------ ------ ------ ------
RATIOS TO AVERAGE NET ASSETS:*
Operating expenses.............. 1.00% 1.00% 1.00% 1.00% 1.00%
Net investment income (loss).... (0.53%) (0.49%) (0.32%) (0.13%) (0.04%)
Portfolio turnover rate......... 148.85% 80.34% 81.06% 67.54% 64.09%
* Net of fees waived of 0.00%, 0.00%, 0.02%, 0.05%, and 0.04% of average net
assets, respectively.
See accompanying Notes to Financial Statements.
18
<PAGE>
PIC GROWTH PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
1 - ORGANIZATION
PIC Growth Portfolio (the "Portfolio") was organized on December 11, 1991
as a separate trust under the laws of the State of New York. 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.
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 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. The 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.
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
19
<PAGE>
PIC GROWTH PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Continued)
--------------------------------------------------------------------------------
employees of these entities serve as officers and/or trustees of the Portfolio.
PIC and ICA also provide management services necessary for the operations of the
Portfolio and furnish office facilities. 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.
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
agreed to limit the expenses of the Portfolio to 1.00% of its average daily net
assets. The amount of fees waived for the year ended October 31, 2000 were
$1,869.
At October 31, 2000, the amount available for reimbursement that has been
paid and/or waived by the Adviser on behalf of the Portfolio is $31,192. At
October 31, 2000, the Adviser may recapture a portion of the above amounts no
later than the dates as stated below:
OCTOBER 31,
--------------------------------
2001 2002 2003
---- ---- ----
Growth Portfolio ................... $22,176 $7,147 $1,869
On December 19, 1995, the 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 year ended October 31, 2000, the change in the value of the phantom
account included unrealized appreciation of $8,543.
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,
2000 were $296,799,634 and $302,561,196, respectively.
20
<PAGE>
PIC GROWTH PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Continued)
--------------------------------------------------------------------------------
The cost of securities for federal income tax purposes was $154,900,555.
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 .......................... $37,298,841
Gross unrealized depreciation .......................... (2,994,567)
-----------
Net unrealized appreciation ......................... $34,304,274
===========
21
<PAGE>
PIC GROWTH PORTFOLIO
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of and the Holders of Interests in
PIC Growth Portfolio
In our opinion, the accompanying statement 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 (the "Portfolio") at October 31, 2000, the results of its
operations for the year then ended, the changes in its net assets and the
selected ratio data for each of the two years in the period then ended, in
conformity with accounting principles generally accepted in the United States of
America. These financial statements and selected ratio data (hereafter referred
to as "financial statements") are the responsibility of the Portfolio's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with auditing standards generally accepted in the
United States of America, 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
audits, which included confirmation of securities at October 31, 2000, by
correspondence with the custodian, provide a reasonable basis for our opinion.
The selected ratio data for each of the three years in the period ended October
31, 1998 were audited by other independent accountants whose report dated
December 3, 1998 expressed an unqualified opinion on those statements.
PricewaterhouseCoopers LLP
December 15, 2000
22
<PAGE>
PIC GROWTH PORTFOLIO
TAX DESIGNATION
--------------------------------------------------------------------------------
Provident Investment Counsel Growth Fund I hereby designates $27,539,449 as a
capital gain dividend under section 852(b)(3)(c) of the Internal Revenue Code.
23
<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
THOMAS M. MITCHELL, President
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
THOMAS M. MITCHELL, President
AARON W.L. EUBANKS, SR., Vice President and Secretary
WILLIAM T. WARNICK, Vice President and Treasurer
LEGAL COUNSEL
--------------------------------------------------------------------------------
PAUL, HASTINGS, JANOFSKY & WALKER, LLP
INDEPENDENT ACCOUNTANTS
--------------------------------------------------------------------------------
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.
