PIC Institutional Balanced Fund
Annual Report
October 31, 1995
<PAGE>
PIC Institutional Balanced Fund
President's Message
The following is an interview with the members of the investment team at
Provident Investment Counsel regarding the PIC Balanced Portfolio (the
"portfolio").
Question: How did the PIC Institutional Balanced Fund perform relative to
overall markets for the fiscal year ended October 31, 1995?
Answer: The PIC Institutional Balanced Fund rose 19.35%. By comparison the
Standard and Poors 500 Index and the Lehman Government/Corporate, broad measures
of the stock and bond market's overall performance, rose 23.11% and 16.16%,
respectively. The Lipper Analytical Balanced Fund index, a widely recognized
mutual fund index, rose 17.37% for the fiscal year.
Question: The broad market reached record levels early in 1995 and has
continued to advance for most of the year. What were some of
the factors attributable to this rise?
Answer: The year 1994 ended with uncertainty and weak financial markets due to
an economic transition that had taken place during the year which included the
Federal Reserve Board of Governors raising interest rates six times. During the
first quarter of 1995 investors gained confidence that the economy was beginning
to slow in reaction to the rate increases. The market's advance began despite a
weak dollar and an economic crisis in Mexico with the hopes of a domestic soft
landing for the economy.
Question: Will these sectors continue to lead the market going forward?
Answer: We believe selected stocks in these sectors that have sustainable
revenue and earnings growth rates will be rewarded going forward. We have begun
to see a greater disparity in performance of individual issues in strong
segments of the market such as technology. As always at PIC we are focusing on
those issues that continue to show revenue and earnings along with visibility
for future sustainable earnings growth.
Question: What is the outlook for the near future for the market and the Fund?
Answer: During the third quarter we saw some sluggish earnings reports form a
number of economically sensitive companies that would seem to reflect a slow but
a steady domestic outlook for the economy. We are seeing a rotation in the
market toward companies with consistently growing revenues and earnings rather
than a reliance on upside earnings surprises. The reasonable level of inflation
currently along with the potential for near term reductions in interest rates
appears positive for the Fund's holdings.
On the whole the bond market returns for the year were very positive on
a historical basis and given this strong advance we now have moved to a neutral
positions with the bond segment of the portfolio and remain more optimistic for
the equity segment of the portfolio going forward. Our research process will
remain focused on companies with strong financial characteristics to maintain
emphasis on growth and quality. The financial characteristics of the portfolio
as of October 31, 1995 are displayed on the following page:
<PAGE>
PIC Institutional Balanced Fund
President's Message, continued
(Graphical Material Omitted)
<PAGE>
<TABLE>
<CAPTION>
PIC Institutional Balanced Fund
Statement of Assets and Liabilities as of October 31, 1995
ASSETS
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<S> <C>
Investment in PIC Balanced Portfolio, at value $12,540,457
Receivable from Provident Investment Counsel, Inc. (Note 3) 4,463
Prepaid insurance 269
Deferred organization costs 14,537
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Total assets 12,559,726
====================================================================================================================================
LIABILITIES
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Accrued expenses 14,683
====================================================================================================================================
NET ASSETS
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Applicable to 947,532 shares of beneficial interest outstanding $12,545,043
====================================================================================================================================
NET ASSET VALUE PER SHARE $ 13.24
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====================================================================================================================================
SOURCE OF NET ASSETS
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Paid-in capital $ 9,818,558
Accumulated net realized gain on investments 582,893
Undistributed net investment income 10,652
Net unrealized appreciation of investments 2,132,940
====================================================================================================================================
Net Assets $12,545,043
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See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PIC Institutional Balanced Fund
Statement of Operations Year ended October 31, 1995
INVESTMENT INCOME
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<S> <C>
Net investment income from Portfolio $ 202,080
====================================================================================================================================
Expenses:
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Administration fees (Note 3) 40,723
Trustees' fees 11,259
Auditing fee 8,401
Legal fee 675
Transfer agent's fee 10,001
Custody and accounting services fee 6,000
Report to shareholders 3,000
Registration fees 4,000
Amortization of organization costs 10,001
Miscellaneous 1,818
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Total expenses 95,878
Less, reimbursement/waiver by Provident Investment Counsel, Inc. (Note 3) (63,727)
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Net expenses 32,151
====================================================================================================================================
Net investment income 169,929
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====================================================================================================================================
NET REALIZED & UNREALIZED GAIN ON INVESTMENTS
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Net realized gain on investments 1,041,048
Change in net unrealized appreciation of investments 1,491,368
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Net gain on investments 2,532,416
====================================================================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $2,702,345
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See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PIC Institutional Balanced Fund
Statement of Changes in Net Assets
INCREASE IN NET ASSETS
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Year Year
ended ended
From operations: October 31, 1995 October 31, 1994
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<S> <C> <C>
Net investment income $ 169,929 $ 113,640
Net realized gain (loss) on investments 1,041,048 (414,373)
Change in unrealized appreciation of investments 1,491,368 284,032
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Net increase (decrease) in net assets resulting from operations 2,702,345 (16,701)
====================================================================================================================================
Dividends:
From net investment income (168,227) (110,555)
====================================================================================================================================
Transactions in shares of beneficial interest:
Purchases of 674,528 and 325,227 shares, respectively 7,543,312 3,640,420
Value of 13,617 and 8,432 shares issued in payment of dividends, respectively 160,830 91,739
Redemptions of 554,383 and 106,875 shares, respectively (6,843,102) (1,192,136)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from share transactions 861,040 2,540,023
====================================================================================================================================
Total increase in net assets 3,395,158 2,412,767
</TABLE>
================================================================================
<TABLE>
<CAPTION>
NET ASSETS:
- --------------------------------------------------------------------------------
<S> <C> <C>
Beginning of year 9,149,885 6,737,118
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End of year $12,545,043 $ 9,149,885
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</TABLE>
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
PIC Institutional Balanced Fund
Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
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Year Year Year June 11, 1992*
ended ended ended through
October 31, 1995 October 31, 1994 October 31, 1993 October 31, 1992
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<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.24 $ 11.48 $ 10.82 $ 10.00
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Income from investment operations:
Net investment income .15 .15 .18 .04
Net realized and unrealized gain (loss)
of investments 2.00 (.24) .69 .78
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Total from investment operations 2.15 (.09) .87 .82
Less dividends from net investment income (.15) (.15) (.21) .00
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Change in net asset value 2.00 (.24) .66 .82
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Net asset value, end of period $ 13.24 $ 11.24 $ 11.48 $ 10.82
====================================================================================================================================
Total return 19.35% (.78%) 8.10% 21.14%++
====================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (millions) $ 12.5 $ 9.1 $ 6.7 $ 1.2
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Ratios to average net assets:+**
Expenses 1.05% 1.05% 1.05% 1.05%++
Net investment income 1.32% 1.37% 1.79% 2.60%++
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<FN>
*Commencement of operations.
+Net of expense reimbursements.
**Includes the Fund's shares of expenses, net of fee waivers and expense
reimbursements, allocated from PIC Balanced Portfolio. If the fee waivers and
expense reimbursements, with respect to the Fund and PIC Balanced Portfolio,
had not been made, the ratio of expenses to average net assets would have been
2.32%, 2.87%, 7.44% and 43.11%, respectively.
++Annualized.
</FN>
</TABLE>
See Notes to Financial Statements.
<PAGE>
PIC Institutional Balanced Fund
Notes to Financial Statements
1 - ORGANIZATION
- --------------------------------------------------------------------------------
PIC Institutional Balanced Fund (the "Fund") is one of six 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 Balanced Portfolio
(the "Portfolio"), a separate registered management investment company having
the same investment objective as the Fund. At October 31, 1995, the Fund owned
99.99% of the total net assets of the Portfolio. 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 provision is required.
3 - TRANSACTIONS WITH AFFILIATES
- --------------------------------------------------------------------------------
The Trust has entered into administration agreements with Provident
Investment Counsel, Inc. ("PIC") and Investment Company Administration
Corporation ("ICAC"), pursuant to which agreements certain employees of these
entities serve as officers and/or trustees of the Trust and the Portfolio. PIC
and ICAC 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, but waived its fee of $25,721 for the year ended October 31, 1995. PIC
has voluntarily agreed 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 1.05% of the Fund's average net assets. For the year ended October
31, 1995, PIC reimbursed expenses of the Fund amounting to $38,006. ICAC
receives an annual fee for its services at the rate of $15,000.
First Fund Distributors, Inc. (an affiliate of ICAC), a registered
broker-dealer, acts as the principal underwriter for the Trust in connection
with the offering of its shares, but receives no compensation for its services.
4 - INVESTMENT TRANSACTIONS
- --------------------------------------------------------------------------------
Additions and reductions in the Fund's investment in the Portfolio
aggregated $7,579,804 and $6,913,353, respectively.
<PAGE>
PIC Institutional Balanced Fund
Independent Auditor's Report
To the Board of Trustees of
PIC Investment Trust
and the Shareholders of
PIC Institutional Balanced Fund
We have audited the accompanying statement of assets and liabilities of
PIC Institutional Balanced Fund (a series of PIC Investment Trust) as of
October 31, 1995, the related statement of operations for the year then ended,
the statement of changes in net assets for each of the two years in the period
then ended, and the financial highlights for each of the three years then ended
and for the period June 11, 1992 (commencement of operations) to October 31,
1992. These financial statements and financial highlights are the responsibility
of the Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
PIC Institutional Balanced Fund as of October 31, 1995, the results of its
operations, the changes in its net assets and the financial highlights for the
periods indicated, in conformity with generally accepted accounting principles.
McGladrey & Pullen, LLP
New York, New York
November 22, 1995
<PAGE>
<TABLE>
<CAPTION>
PIC BALANCED PORTFOLIO
Statement of Net Assets as of October 31, 1995 Percentage of
EQUITY SECURITIES - 73.4% Shares Value Net Assets
Aerospace - 0.4%
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<S> <C> <C> <C>
Boeing Company 700 $ 45,938 0.4%
Boeing Company manufactures commercial and military aircraft.
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Auto Parts - 0.7%
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Autozone, Inc.* 3,800 94,050 0.7%
Autozone is a leading specialty retailer of automotive parts and
accessories, focusing on Do-It-Yourself consumers.
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Business and Financial Services - 5.6%
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Danka Business System PLC, Sponsored ADR 2,500 83,750 0.7%
Danka Business System
is a leading independent retail and wholesale distributor of photocopiers, fax
equipment and related service and parts, with 193 retail branches in the United
States and 9 branches in Canada and the United Kingdom.
First Data Corporation 9,366 619,337 4.9%
First Data Corporation provides high quality, high volume
information processing and related services.
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Total Business and Financial Services 703,087
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Computer Services - 3.3%
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Automatic Data Processing, Inc. 850 60,775 0.5%
Automatic Data Processing provides computerized transaction processing, data
communications, information recordkeeping and payroll
services.
Ceridian Corporation 1,400 60,900 0.5%
Ceridian Corporation is an information services company providing payroll and
human resource services to large corporations. Their
Arbitron division is the dominant provider of radio rating services and CDI
provides electronic solutions to defense markets.
Computer Sciences Corporation* 1,900 127,063 1.0%
Computer Sciences Corporation is a large independent provider of information
technology consulting.
3Com Corporation 3,400 159,800 1.3%
3Com Corporation is a leading networking products vendor with 50% of sales in
systems (hubs, routers and switches) and 50% in network
adapter cards.
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Total Computer Services 408,538
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Computer Software - 8.2%
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Computer Associates International, Inc. 3,850 211,750 1.7%
Computer Associates manufactures software that enables computers to run more
efficiently. The company develops, markets and services
over 300 products for a wide range of mainframes, mini-computers and
micro-computers.
Informix Corporation 5,100 148,538 1.2%
Informix is a leading provider of relational database management software,
including application development tools and graphical- and
character-based productivity software, for use on most significant desktop
platforms.
Microsoft Corporation* 4,534 453,400 3.6%
Microsoft developes and markets systems and applications software for business,
and home use.
Oracle Systems Corporation* 5,000 218,125 1.7%
Oracle Systems is the world's largest maker of database management systems
(DBMS), software that allows users to create, retrieve,
and manipulate data in computer-based files. Main products support ORACLE, a
relational DBMS, which allows people to manipulate data by using an industry
standard language SQL.
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Total Computer Software 1,031,813
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PIC BALANCED PORTFOLIO
Statement of Net Assets as of October 31, 1995
Percentage of
EQUITY SECURITIES, continued Shares Value Net Assets
Cosmetics and Soap - 1.2%
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The Gillette Company 3,100 $ 149,962 1.2% Gillette produces and manufactures
razors and razor blades, cosmetics, stationery products, small appliances and
oral care products.
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Credit and Finance - 4.0%
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<S> <C> <C> <C>
First USA, Inc. 3,800 174,800 1.4%
First USA is one of the largest issuers of credit cards and processors of
credit card transactions for merchants with a total of
nearly $13 billion in loans outstanding.
MBNA Corporation 8,840 325,975 2.6%
MBNA is the fourth largest credit card issuer and processor in the United States.
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Total Credit and Finance 500,775
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Diversified - 1.6%
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American Standard Company, Inc.* 3,000 80,250 0.6%
American Standard Company is a global manufacturer of brand name products such
as air conditioning, plumbing and braking and control
systems.
Tyco International Ltd. 2,000 121,500 1.0%
Tyco International is a diversified manufacturing company. Tyco produces
fire protection systems, pipes, fittings, and other flow
control equipment.
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Total Diversified 201,750
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Electric Components/Semiconductors - 6.8%
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Analog Devices, Inc. 3,100 111,987 0.9%
Analog Devices designs, manufactures and sells high performance linear and
mixed signal integrated circuits used in analog and
digital signal processing applications.
Applied Materials, Inc. 3,380 169,423 1.4%
Applied Materials develops, manufactures, sells and services semiconductor
wafer fabrication equipment to the semiconductor wafer
industry.
Intel Corporation 5,900 412,263 3.3%
Intel is the world's leading manufacturer of microprocessors, memory chips,
controllers and peripherals.
LSI Logic Corporation 1,900 89,538 0.7%
LSI Logic Corporation manufactures application-specified integrated circuits and
provides related design and technology services.
SGS-Thomson Microelectronics N.V.* 1,500 67,875 0.5%
SGS Thomson Microelect designs, develops, manufactures and markets a broad range
of semiconductor integrated circuits and discrete devices used in a wide variety
of microelectronic applications.
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Total Electric Components/Semiconductors 851,086
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PIC BALANCED PORTFOLIO
Statement of Net Assets as of October 31, 1995
Percentage of
EQUITY SECURITIES, continued Shares Value Net Assets
Electronics - 4.9%
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cirrus Logic Corporation 1,300 $ 54,762 0.4%
Cirrus Logic is a semiconductor company focused primarily on the markets for
graphics chips, wireless communications and mass storage.
Motorola, Inc. 3,200 210,000 1.7%
Motorola manufactures cellular telephone, paging and specialized mobile
radio equipment. Motorola is also a major supplier of
semiconductors, circuits, controls and related data communications equipment.
Texas Instruments, Inc. 4,100 279,825 2.2%
Texas Instruments manufactures semiconductor integrated circuits and
sub-assemblies, defense electronics and digital products.
Xilinx, Inc. 1,600 73,600 0.6%
Xilinx is the world's largest supplier of programmable logic divices.
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Total Electronics 618,187
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Entertainment - 3.1%
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British Sky Broadcasting Group PLC, Sponsored ADR 3,500 125,125 1.0%
British Sky Broadcasting is the leading pay television broadcasting service in
the United Kingdom with over 4.2 million subscribers.
Capital Cities/ABC, Inc. 1,100 130,487 1.0%
Capital Cities conducts business through five operating groups: ABC
HFS, Inc. 2,200 134,750 1.1%
HFS is the world's largest hotel franchiser with four nationally recognized
brand names, including Days Inn, Ramada, Howard Johnson and Super 8.
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Total Entertainment 390,362
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Food and Restaurants - 0.6%
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McDonalds Corp. 1,700 69,700 0.6%
McDonalds Corporation operates 3,856 fast-food restaurants and franchises 9,237
restaurants in 65 countries.
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Funeral Services - 1.2%
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Loewen Group, Inc. 3,700 148,173 1.2%
Loewen Group is the second largest funeral service corporation in North America.
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Health Industry Services - 1.2%
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Healthsouth Corporation 2,400 62,700 0.5%
Healthsouth is the nation's largest provider of outpatient and
rehabilitative health care services. Healthsouth provides these
services through outpatient and inpatient rehabilitation facilities, outpatient
surgery centers and medical centers.
St. Jude Medical, Inc. 1,700 90,525 0.7%
St. Jude Medical manufactures and market biomedical devices for cardiovascular
and vascular applications.
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Total Health Industry Services 153,225
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PIC BALANCED PORTFOLIO
Statement of Net Assets as of October 31, 1995
Percentage of
EQUITY SECURITIES, continued Shares Value Net Assets
Health Maintenance Organizations - 1.9%
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Oxford Health Plans, Inc. 1,300 $ 101,725 0.8%
Oxford Health Plans provides managed healthcare products to the greater New
York metro area: HMO, Point of Service, and third party
administration of self-funded plans.
United HealthCare Corporation 2,560 136,000 1.1% United Healthcare owns manages
health maintenance organizations in 23 states and offers reinsurance coverage to
HMO's and others.
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Total Health Maintenance Organizations 237,725
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Insurance - 1.6%
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MGIC Investment Corp. 2,600 147,875 1.1%
MGIC provides private mortgage insurance coverage to thrifts, mortgage
bankers and brokers, commercial banks and other lending
institutions.
PMI Group, Inc. 1,200 57,600 0.5%
PMI provides private mortgage insurance coverage to thrifts, mortgage bankers
and brokers, commercial banks, and lending institutions.
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Total Insurance 205,475
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Mainframes - 2.4%
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Hewlett Packard Company 3,200 296,400 2.4%
Hewlett-Packard manufactures computers, calculators, electronic test and
measurement analysis instruments.
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Medical Electronics - 2.1%
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Medtronic, Inc. 4,600 265,650 2.1%
Medtronic manufactures pacemakers, heart valves, neurological stimulation
devices, therapeutic catheters and blood oxygenators. MDT
markets its products through hospitals, doctors, and other medical institutions
throughout the world.
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Medical Services - 0.7%
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Cardinal Health, Inc. 1,800 92,475 0.7%
Cardinal Health Incorporated is a leading wholesale drug distributor in the
United States.
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Mortgage and Related Services - 2.9%
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Federal Home Loan Mortgage Corporation 1,000 69,250 0.6%
Federal Home Loan Mortgage buys and holds mortgages from lenders through the
United States and sells guaranteed mortgage-backed securities. Federal National
Mortgage Association 2,790 292,601 2.3% Federal National Mortgage provides
supplemental assistance to the secondary market in guaranteed and insured home
mortgages.
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Total Mortgage and Related Services 361,851
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PIC BALANCED PORTFOLIO
Statement of Net Assets as of October 31, 1995
Percentage of
EQUITY SECURITIES, continued Shares Value Net Assets
Natural Gas Products and Pipelines - 1.1%
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Enron Corp. 3,840 $ 132,000 1.1%
Enron is an integrated natural gas company engaged in the gathering,
transportation and wholesale marketing of natural gas throughout
the United States and internationally.
- ------------------------------------------------------------------------------------------------------------------------------------
Networking - 3.3%
- ------------------------------------------------------------------------------------------------------------------------------------
Cabletron Systems, Inc.* 2,300 180,838 1.4%
Cabletron manufactures local area network products and provides design and
support services for local area network systems.
Cisco Systems* 3,000 232,500 1.9%
Cisco Systems is the leading supplier of multimedia and multinetworking
products including routers, bridges, terminal servers and
network management products.
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Total Networking 413,338
- ------------------------------------------------------------------------------------------------------------------------------------
Office Equipment/Supplies - 1.2%
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Office Depot, Inc.* 5,147 147,333 1.2% Office Depot operates the largest chain
of office product warehouse stores with locations throughout the United States.
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Pharmaceuticals - 4.0%
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Amgen, Inc. 1,500 72,000 0.6%
Amgen develops, manufactures and markets drugs based on advanced cellular
and molecular biology. The company's two principal drugs
are Epogen, which promotes the production of white blood cells, and Nuepogen,
which stimulates the production of certain white blood
cells.
Merck & Company, Inc. 2,000 115,000 0.9%
Merck is the world's largest pharmaceutical company and the largest U.S.
pharmacy benefits management company.
Pfizer, Inc. 5,600 321,300 2.6%
Pfizer is a major producer of pharmaceuticals, hospital products, animal
health lines, consumer products and specialty chemicals and
minerals.
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Total Pharmaceuticals 508,300
- ------------------------------------------------------------------------------------------------------------------------------------
Specialty Chains - 0.7%
- ------------------------------------------------------------------------------------------------------------------------------------
CUC International, Inc. 2,500 86,563 0.7%
CUC, a consumer services company, provides over 29 million members with access
to discount prices, product comparison information,
and convenient purchasing for home shopping, travel, insurance, auto and dining
services.
- ------------------------------------------------------------------------------------------------------------------------------------
Telephone Communications - 8.2%
- ------------------------------------------------------------------------------------------------------------------------------------
ADC Telecommunications, Inc. 1,300 52,000 0.4%
ADC Telecommunications is a leading telecommunications equipment supplier
which focuses on broadband connectivity, broadband
transmission and wide area networking products.
Andrew Corporation 2,300 97,175 0.8%
Andrew Corporation is an international supplier of communications equipment and
services to commercial and government markets.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PIC BALANCED PORTFOLIO
Statement of Net Assets as of October 31, 1995
Percentage of
EQUITY SECURITIES, continued Shares Value Net Assets
Telephone Communications, continued
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Ericsson, (L.M.) Telephone Co., ADR 14,800 $ 316,119 2.5%
Ericsson is one of the world's leading telecommunications equipment suppliers
and the preeminent supplier in the cellular equipment
market.
Frontier Corporation 2,700 72,900 0.6%
Frontier Corporation is a telecommunications services provider with 70% of
revenues in long distance (mostly small and mid sized
commercial accounts) and 30% in local and cellular in 22 markets including
Rochester. Frontier merged with ALC Communications on
August 16, 1995, creating the fifth largest long distance carrier after AT&T,
MCI Communications, Sprint and WorldCom.
Glenayre Technologies, Inc. 1,800 115,650 0.9%
Glenayre Technologies is a leading worldwide manufacturer of
infrastructure equipment for paging and other wireless
telecommunications markets.
Nokia Corporation Sponsored ADR 4,100 228,575 1.8%
Nokia Corporation supplies advanced telecommunications infrastructure
systems and equipment for use in mixed and mobile phone
networks. Nokia is also a leading supplier of color televisions, computer
monitors and car speakers.
U.S. Robotics, Inc. 1,600 148,000 1.2%
U.S. Robotics is the dominant provider of communications access products
including high speed modems and LAN/WAN hubs for dial up
connectivity.
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Total Telephone Communications 1,030,419
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Transportation - 0.5%
- ------------------------------------------------------------------------------------------------------------------------------------
Fritz Companies, Inc.* 1,800 63,000 0.5%
Fritz Companies provides global integrated logistics information services
and outsourcing to companies involved in the worldwide
movement of goods.
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Total Equity Securities (Cost $7,152,054) 9,207,175 73.4%
- ------------------------------------------------------------------------------------------------------------------------------------
FIXED INCOME SECURITIES - 3.6%
- ------------------------------------------------------------------------------------------------------------------------------------
Corporate Bonds - 3.6%
- ------------------------------------------------------------------------------------------------------------------------------------
American Express Credit Corporation, 8.750%, 6/15/1996 $ 100,000 101,635 0.8%
Ford Motor Credit Corporation, 7.250%, 5/15/1999 175,000 180,906 1.4%
International Lease Finance, 6.125%, 11/1/1999 175,000 174,563 1.4%
- ------------------------------------------------------------------------------------------------------------------------------------
Total Corporate Bonds (Cost $458,085) 457,104 3.6%
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Obligations - 19.3%
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, 10.375%, 11/15/2012 375,000 504,116 4.0%
U.S. Treasury Bonds, 9.875%, 11/15/2015 325,000 451,974 3.6%
U.S. Treasury Notes, 4.375%, 11/15/1996 160,000 158,091 1.3%
U.S. Treasury Notes, 6.750%, 5/31/1997 150,000 152,500 1.2%
U.S. Treasury Notes, 6.875%, 7/31/1999 425,000 440,725 3.5%
U.S. Treasury Notes, 6.250%, 2/15/2003 700,000 712,607 5.7%
- ------------------------------------------------------------------------------------------------------------------------------------
Total U.S. Treasury Obligations (Cost $2,341,183) 2,420,013 19.3%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PIC BALANCED PORTFOLIO
Statement of Net Assets as of October 31, 1995
Principal Percentage of
Repurchase Agreements - 3.8% Amount Value Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Lehman Government Securities, Inc., 5.410%, due 11/1/1995
(Collateralized by $491,413 U.S. Treasury Note, 7.50%,
due 1/31/97) (Cost $477,100) $ 477,100 $ 477,100 3.8%
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments (Cost $10,428,422) 12,561,392 100.1%
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS - 0.8%
- ------------------------------------------------------------------------------------------------------------------------------------
Cash 67
Receivables:
Dividends and interest 71,497
For securities sold 9,934
Prepaid expense 131
Deferred organization costs 14,537
Other assets 1,207
- ------------------------------------------------------------------------------------------------------------------------------------
Total Other Assets 97,373 0.8%
- ------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES - (0.9%)
- ------------------------------------------------------------------------------------------------------------------------------------
Payable for securities purchased 96,955
Accrued expenses 21,215
- ------------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 118,170 (0.9%)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS - 100.0% $12,540,595 100.0%
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
*Non-income producing security.
</FN>
</TABLE>
The above descriptions of portfolio companies are furnished by management
solely for the general information of investors. See Notes to Financial
Statements.
<PAGE>
<TABLE>
<CAPTION>
PIC BALANCED PORTFOLIO
Statement of Operations Year ended October 31, 1995
INVESTMENT INCOME
- ------------------------------------------------------------------------------------------------------------------------------------
Income:
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Dividends $ 68,280
Interest 236,599
- ------------------------------------------------------------------------------------------------------------------------------------
Total income 304,879
====================================================================================================================================
Expenses:
- ------------------------------------------------------------------------------------------------------------------------------------
Investment advisory fee (Note 3) 77,098
Administration fee 12,850
Accounting services fee 64,800
Custodian fee 20,655
Auditing fee 10,001
Legal fees 1,250
Trustees' fees 3,800
Amortization of organization costs 10,001
Miscellaneous 3,037
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses 203,492
Less, reimbursement/waiver by Advisor (Note 3) (100,695)
- ------------------------------------------------------------------------------------------------------------------------------------
Net expenses 102,797
====================================================================================================================================
Net investment income 202,082
====================================================================================================================================
NET REALIZED & UNREALIZED GAIN ON INVESTMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain from security transactions 1,041,070
Change in net unrealized appreciation of investments 1,491,367
- ------------------------------------------------------------------------------------------------------------------------------------
Net gain on investments 2,532,437
====================================================================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $2,734,519
- ------------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PIC BALANCED PORTFOLIO
Statement of Changes in Net Assets
INCREASE IN NET ASSETS:
- ------------------------------------------------------------------------------------------------------------------------------------
Year Year
ended ended
From operations: October 31, 1995 October 31, 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net investment income $ 202,082 $ 134,310
Net realized gain (loss) on investments 1,041,070 (414,393)
Change in unrealized appreciation of investments 1,491,367 284,049
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 2,734,519 3,966
====================================================================================================================================
Transactions in interests:
Contributions by Holders 7,579,804 3,694,264
Withdrawals by Holders (6,913,353) (1,264,936)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from transactions in interests 666,451 2,429,328
====================================================================================================================================
Total increase in net assets 3,400,970 2,433,294
====================================================================================================================================
NET ASSETS:
- ------------------------------------------------------------------------------------------------------------------------------------
Beginning of year 9,139,625 6,706,331
- ------------------------------------------------------------------------------------------------------------------------------------
End of year $12,540,595 $ 9,139,625
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
<PAGE>
PIC BALANCED PORTFOLIO
Notes to Financial Statements
1 - ORGANIZATION
- --------------------------------------------------------------------------------
PIC Balanced Portfolio (the "Portfolio") was organized on December 11,
1991 as a 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 listed on a national
securities exchange or traded on the NASDAQ system 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. 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. Deferred Organization Expense. Organization costs of the Portfolio are
being amortized on a straight line basis over a period of sixty months. During
the amortization period the proceeds of any redemption of the original Interests
in the Portfolio by any Holder thereof will be reduced by a pro rata portion of
any then unamortized organization costs based on the ratio of Interests redeemed
to the total initial Interests outstanding prior to the redemption.
D. 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.
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 Corporation ("ICAC"), pursuant to which
agreements certain employees of these entities serve as officers and/or trustees
of the Portfolio. PIC and ICAC also provide management services necessary for
the operations of the Portfolio and furnish office facilities.
PIC receives a fee for its services to the Portfolio at the rate of 0.60%
of the average daily net assets of the Portfolio, but waived its fee of $77,098
for the year ended October 31, 1995. PIC has voluntarily agreed to limit the
total expenses of the Portfolio to an annual rate of 0.80% of the Portfolio's
average net assets. For the year ended October 31, 1995, PIC reimbursed expenses
of the Portfolio amounting to $23,597. ICAC receives an annual fee for its
services at the rate of .10% of average daily net assets of the Portfolio. Fees
paid to ICAC pursuant to the agreement totalled $12,850 for the year ended
October 31, 1995.
<PAGE>
PIC BALANCED PORTFOLIO
Notes to Financial Statements
4 - INVESTMENT TRANSACTIONS
- --------------------------------------------------------------------------------
During the year ended October 31, 1995, purchases and sales of investment
securities, other than short-term obligations, were $13,869,913 and $13,057,536,
respectively. The cost of securities for federal income tax purposes was
$10,437,500. The aggregate gross unrealized appreciation and depreciation of
portfolio securities, based on cost for federal income tax purposes, was as
follows:
<TABLE>
<S> <C>
Unrealized appreciation $2,178,310
Unrealized depreciation (54,418)
-------
Net unrealized appreciation $2,123,892
==========
</TABLE>
<TABLE>
<CAPTION>
5 - SELECTED RATIO DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Year Year Year
ended ended ended
October 31, 1995 October 31, 1994 October 31, 1993
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:++
<S> <C> <C> <C>
Operating expenses 0.80% 0.80% 0.80%
Net investment income 1.57% 1.63% 2.05%
Portfolio turnover rate 106.50% 116.63% 92.65%
<FN>
++Net of expense reimbursements equivalent to 0.78%, 1.16% and 4.68% of average
net assets, respectively.
</FN>
</TABLE>
<PAGE>
PIC BALANCED PORTFOLIO
Independent Auditor's Report
To the Board of Trustees of,
and the holders of Interests in,
PIC Balanced Portfolio
We have audited the accompanying statement of assets of PIC Balanced
Portfolio as of October 31, 1995, the related statement of operations for the
year then ended and the statement of changes in net assets for each of the two
years in the period then ended. These financial statements are the
responsibility of the Portfolio's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. Our procedures included
confirmation of securities owned as of October 31, 1995 by correspondence with
the custodian. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of PIC Balanced Portfolio as
of October 31, 1995, the results of its operations and the changes in its net
assets for the periods indicated, in conformity with generally accepted
accounting principles.
McGladrey & Pullen, LLP
New York, New York
November 22, 1995
<PAGE>
PIC Institutional Balanced Fund
Trustees and Officers
TRUSTEES AND OFFICERS - PIC INVESTMENT TRUST
- --------------------------------------------------------------------------------
Jeffrey J. Miller, Trustee and President
Jettie M. Edwards, Trustee
Bernard J. Johnson, Trustee
Jeffrey D. Lovell, Trustee
Wayne H. Smith, Trustee
Thad M. Brown, Vice President, Secretary and Treasurer
TRUSTEES AND OFFICERS - PIC BALANCED PORTFOLIO
- --------------------------------------------------------------------------------
Jeffrey J. Miller, Trustee and President
Richard N. Frank, Trustee
James Clayburn LaForce, Trustee
Angelo R. Mozilo, Trustee
Bernard J. Johnson, Trustee Emeritus
Thad M. Brown, Vice President, Secretary and Treasurer
LEGAL COUNSEL - PIC INVESTMENT TRUST
- --------------------------------------------------------------------------------
Shereff, Friedman, Hoffman & Goodman
LEGAL COUNSEL - PIC BALANCED PORTFOLIO
- --------------------------------------------------------------------------------
Heller, Ehrman, White & McAuliffe
INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
McGladrey & Pullen, LLP
This report is intended for the information of shareholders of PIC
Institutional Balanced Fund and should not be used as sales literature unless
preceded or accompanied by a current prospectus.
