P R O V I D E N T I N V E S T M E N T C O U N S E L
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S M A L L C A P
G R O W T H F U N D
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Semi-Annual Report
April 30, 1998
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Provident Investment Counsel
Small Cap Growth Fund Message to Shareholders
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================================================================================
Dear Shareholder,
The following are interviews with the members of the investment team at
Provident Investment Counsel. We hope this will provide you additional
information and insight to the investment management process and performance of
the Provident Investment Counsel Small Cap Growth Fund. In addition to the
information in this Semi-Annual Report, we will be sending the regular quarterly
update along with your statement.
Thank you for your continued confidence in Provident Investment Counsel.
Provident Investment Counsel Small Cap Growth Fund
Question: How did the Provident Investment Counsel Small Growth Fund perform
relative to the overall market during the six months ended April 30, 1998?
Answer: The Lipper Small Company Fund Index rose 10.21% for the six months ended
April 30, 1998 and 11.17% from January 1, 1998 through April 30, while the
Fund's total returns were 10.28% and 16.18% in the same periods.
Question: What sectors of the market are driving the Fund's positive performance
year-to-date?
Answer: The sectors with the most positive performance in the latest period
include electronic technology, commercial services and health services. The
Fund's holdings in electronic technology have made the largest impact. We have
also focused our holdings in technology on those companies with the smallest
amount of exposure, if any, to the Asian economies. Our total technology
exposure, which includes electronic technology and technology services, relative
to the broad market remains at a moderate level of roughly 30% of the Fund's
assets.
Question: Why have shares of larger companies posted returns superior to those
of smaller companies in general over the last couple of years? Will this
continue to be the case?
Answer: At the beginning of 1998 we felt that the valuations of smaller
companies, especially growth-oriented small companies, were significantly more
attractive than their larger counterparts. That is based on their expected
earnings and revenue growth over the next year relative to their current stock
price. After the first four months of 1998, we have yet to see a performance
differential materialize. In general we believe those companies, large or small,
with the greatest visibility of both sales and earnings will be rewarded going
forward.
1
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Provident Investment Counsel Statement of Assets and Liabilities
Small Cap Growth Fund as of April 30, 1998
- ----------------------------
================================================================================
ASSETS
- --------------------------------------------------------------------------------
Investment in PIC
Small Cap Portfolio, at value $158,712,358
Receivable from Provident Investment
Counsel, Inc. (Note 3) 4,573
- --------------------------------------------------------------------------------
Total assets 158,716,931
================================================================================
LIABILITIES
- --------------------------------------------------------------------------------
Deferred Trustees' compensation (Note 3) 13,321
Accrued expenses 2,451
- --------------------------------------------------------------------------------
Total liabilities 15,772
================================================================================
NET ASSETS
- --------------------------------------------------------------------------------
Applicable to 6,520,933 shares of beneficial
interest outstanding (unlimited number of
shares authorized, $0.01 par value) $158,701,159
================================================================================
NET ASSET VALUE PER SHARE $ 24.34
- --------------------------------------------------------------------------------
================================================================================
SOURCE OF NET ASSETS
- --------------------------------------------------------------------------------
Paid-in capital $140,334,369
Accumulated net investment loss (1,309,424)
Accumulated net realized loss on investments (3,703,424)
Net unrealized appreciation on investments 23,379,638
- --------------------------------------------------------------------------------
Net Assets $158,701,159
- --------------------------------------------------------------------------------
Unaudited. See Notes to Financial Statements.
2
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Provident Investment Counsel Statement of Operations
Small Cap Growth Fund Six Months ended April 30, 1998
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================================================================================
INVESTMENT INCOME
- --------------------------------------------------------------------------------
Net investment loss from Portfolio $ (488,283)
================================================================================
Expenses
- --------------------------------------------------------------------------------
Administration fees (Note 3) 143,403
Transfer agent's fee 5,207
Audit fee 5,108
Reports to shareholders 4,959
Trustees' fees 3,968
Miscellaneous 3,928
Custody and accounting services fee 2,976
Legal fee 992
Registration fee 496
- --------------------------------------------------------------------------------
Total expenses 171,037
Less, reimbursement/waiver by Provident
Investment Counsel, Inc. (Note 3) (171,037)
- --------------------------------------------------------------------------------
Net expenses 0
================================================================================
Net investment loss (488,283)
================================================================================
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
- --------------------------------------------------------------------------------
Net realized loss on investments (3,643,428)
Change in net unrealized appreciation
on investments 19,332,236
- --------------------------------------------------------------------------------
Net gain on investments 15,688,808
================================================================================
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $15,200,525
- --------------------------------------------------------------------------------
Unaudited. See Notes to Financial Statements.
3
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Provident Investment Counsel Statement of Changes in Net Assets
Small Cap Growth Fund
- ----------------------------
================================================================================
INCREASE (DECREASE) IN NET ASSETS
- --------------------------------------------------------------------------------
Six Months Year
ended ended
From operations: April 30, 1998 Oct. 31, 1997
- --------------------------------------------------------------------------------
Net investment loss $ (488,283) $ (808,092)
Net realized (loss) gain on investments (3,643,428) 74,102,539
Change in net unrealized appreciation
on investments 19,332,236 (68,286,326)
- --------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 15,200,525 5,008,121
================================================================================
Distributions to shareholders:
From net realized capital gains (11,840,606) (2,548,960)
================================================================================
Transactions in shares of beneficial interest:
Purchases of 2,392,596 and 5,598,735
shares, respectively 55,644,831 131,997,374
Value of 560,104 and 110,728 shares
issued in payment of
dividends, respectively 11,840,606 2,548,960
Redemptions of 814,328 and 9,783,763
shares, respectively (17,663,396) (227,575,148)
- --------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from share transactions 49,822,041 (93,028,814)
================================================================================
Total increase (decrease) in net assets 53,181,960 (90,569,653)
================================================================================
NET ASSETS
- --------------------------------------------------------------------------------
Beginning of period 105,519,199 196,088,852
- --------------------------------------------------------------------------------
End of period (including accumulated net
investment loss of $1,309,424 and
$821,141, respectively) $158,701,159 $105,519,199
- --------------------------------------------------------------------------------
Unaudited. See Notes to Financial Statements.
4
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Provident Investment Counsel Financial Highlights
Small Cap Growth Fund
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<TABLE>
<CAPTION>
==================================================================================================================================
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- ----------------------------------------------------------------------------------------------------------------------------------
Six Months Year Year Year Year Sept. 30, 1993*
ended ended ended ended ended through
April 30, 1998 Oct. 31, 1997 Oct. 31, 1996 Oct. 31, 1995 Oct. 31, 1994 Oct. 31, 1993
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 24.08 $ 23.19 $ 18.69 $ 12.90 $ 13.05 $ 12.83
- ----------------------------------------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment loss (.01) (.40) (.10) (.07) (.06) (.01)
Net realized and
unrealized gain
(loss) on
investments 2.20 1.58 4.60 5.86 (.09) .23
- ----------------------------------------------------------------------------------------------------------------------------------
Total from investment
operations 2.19 1.18 4.50 5.79 (.15) .22
- ---------------------------------------------------------------------------------------------------------------------------------
Less distributions
to shareholders:
From net realized gains (1.93) (.29) -0- -0- -0- -0-
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $ 24.34 $ 24.08 $ 23.19 $ 18.69 $ 12.90 $ 13.05
==================================================================================================================================
Total return 10.28% 5.15% 24.08% 44.88% (1.15%) 19.50%++
==================================================================================================================================
Ratios/supplemental data:
Net assets, end of period
(millions) $ 158.7 $ 105.5 $ 196.1 $ 130.3 $ 84.3 $ 82.6
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: +**
Expenses 1.00%++ 1.00% 1.00% 1.00% 1.00% 1.00%++
Net investment loss (0.63%)++ (0.48%) (.60%) (.51%) (.49%) (.79%)++
</TABLE>
*Commencement of operations.
+Net of expense reimbursements.
**Includes the Fund's shares of expenses, net of expense reimbursements and
waivers, allocated from PIC Small Cap Portfolio. If the expense reimbursements
and waivers, with respect to the Fund and PIC Small Cap Portfolio, had not been
made, the ratio of expenses to average net assets would have been 1.25%, 1.25%,
1.25%, 1.34%, 1.47% and 1.22%, respectively.
++Annualized.
Unaudited. See Notes to Financial Statements.
5
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Provident Investment Counsel Notes to Financial Statements
Small Cap Growth Fund April 30, 1998
- ----------------------------
1 - ORGANIZATION
- --------------------------------------------------------------------------------
Provident Investment Counsel Small Cap Growth Fund (the "Fund") is one of
several 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 Small Cap
Portfolio (the "Portfolio"), a separate, registered management investment
company having the same investment objective as the Fund. At April 30, 1998, the
Fund owned 78.00% 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.
D. Accounting Estimates. In preparing financial statements in conformity with
generally accepted accounting principles, management makes
6
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Provident Investment Counsel Notes to Financial Statements,
Small Cap Growth Fund continued
- ----------------------------
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements, as well as the
reported amounts of revenues and expenses during the period. Actual
results could differ from those estimates.
3 - TRANSACTIONS WITH AFFILIATES
- --------------------------------------------------------------------------------
The Trust has entered into administration agreements with Provident
Investment Counsel, Inc. ("PIC") and Investment Company Administration
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 $138,444 for the six months ended April 30,
1998. 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 1.00% of the Fund's average net assets. The amount of
reimbursement for the six months ended April 30, 1998 was $32,593. ICAC receives
an annual fee for its services at the rate of $10,000.
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, but receives no compensation for its services.
The Distributor is an affiliate of the Administrator.
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 a 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.
7
<PAGE>
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Provident Investment Counsel Notes to Financial Statements,
Small Cap Growth Fund continued
- ----------------------------
4 - INVESTMENT TRANSACTIONS
- --------------------------------------------------------------------------------
Additions and reductions in the Fund's investment in the Portfolio
aggregated $55,686,144 and $17,712,413, respectively.
8
<PAGE>
P*I*C
- ---------
SMALL CAP Statement of Net Assets
- --------- as of April 30, 1998
PORTFOLIO
- ---------
================================================================================
Percentage of
EQUITY SECURITIES - 98.5% Shares Value Net Assets
- --------------------------------------------------------------------------------
Air Freight .. 0.6%
- --------------------------------------------------------------------------------
Eagle USA Airfreight, Inc. 36,370 $1,195,664 0.6%
================================================================================
Airlines .. 0.5%
- --------------------------------------------------------------------------------
Ryanair Holdings PLC 25,470 977,411 0.5%
================================================================================
Apparel and Shoes .. 2.2%
- --------------------------------------------------------------------------------
Abercrombie & Fitch Co. - Class A 12,940 575,830 0.3%
Ashworth, Inc. 51,000 854,250 0.4%
Coldwater Creek, Inc. 24,400 481,900 0.3%
Gadzooks, Inc. 50,000 1,312,500 0.6%
Pacific Sunwear of California 28,750 1,268,594 0.6%
- --------------------------------------------------------------------------------
Total Apparel and Shoes 4,493,074 2.2%
================================================================================
Auto Parts .. 1.2%
- --------------------------------------------------------------------------------
Gentex Corp. 50,500 1,704,375 0.8%
Keystone Automotive Industries, Inc. 28,170 727,138 0.4%
- --------------------------------------------------------------------------------
Total Auto Parts 2,431,513 1.2%
================================================================================
Banks .. 0.9%
- --------------------------------------------------------------------------------
Hamilton Bancorp., Inc. 54,730 1,833,455 0.9%
================================================================================
Beverage/Food .. 0.3%
- --------------------------------------------------------------------------------
American Italian Pasta Co. 21,920 679,520 0.3%
================================================================================
Biotechnology .. 0.7%
- --------------------------------------------------------------------------------
Incyte Pharmaceuticals, Inc. 32,800 1,476,000 0.7%
================================================================================
Builder .. 0.8%
- --------------------------------------------------------------------------------
Palm Harbor Homes, Inc. 36,838 1,634,686 0.8%
Unaudited. See Notes to Financial Statements.
9
<PAGE>
P*I*C
- ---------
SMALL CAP Statement of Net Assets
- --------- as of April 30, 1998
PORTFOLIO
- ---------
================================================================================
Percentage of
EQUITY SECURITIES, continued Shares Value Net Assets
- --------------------------------------------------------------------------------
Business Information Services .. 0.9%
- --------------------------------------------------------------------------------
Gartner Group, Inc. 55,480 $1,837,775 0.9%
================================================================================
Business Services .. 11.4%
- --------------------------------------------------------------------------------
Abacus Direct Corp. 7,700 437,937 0.2%
ABR Information Services, Inc. 27,110 784,496 0.4%
Accustaff, Inc. 99,538 3,570,926 1.8%
Casella Waste Systems, Inc. 34,970 1,088,441 0.5%
Forrester Research, Inc. 25,320 949,500 0.5%
Iron Mountain, Inc. 16,900 709,800 0.3%
Lason Holdings, Inc. 33,980 1,325,220 0.6%
Metzler Group, Inc. 14,700 508,987 0.2%
NCO Grupo, Inc. 44,535 1,110,592 0.5%
Pentacon, Inc. 17,200 227,900 0.1%
Personnel Group of America, Inc. 108,680 2,160,015 1.1%
Romac International, Inc. 94,490 2,503,985 1.2%
Staffmark, Inc. 54,310 2,308,175 1.2%
Superior Consultant Holdings Corp. 23,540 907,761 0.4%
The Profit Recovery Group
International, Inc. 39,600 1,029,600 0.5%
TMP Worldwide, Inc. 65,620 1,738,930 0.9%
United Rentals, Inc. 35,700 1,229,419 0.6%
Wackenhut Corrections Corp. 28,200 736,725 0.4%
- --------------------------------------------------------------------------------
Total Business Services 23,328,409 11.4%
================================================================================
Computer Services .. 9.5%
- --------------------------------------------------------------------------------
Cambridge Technology Partners, Inc. 22,330 1,166,742 0.6%
Cerner Corp. 88,390 2,635,127 1.3%
CSG Systems International, Inc. 61,038 2,777,229 1.3%
Daou Systems, Inc. 75,770 1,363,860 0.7%
Envoy Corp. 39,610 1,668,571 0.8%
Fiserv, Inc. 42,900 2,804,587 1.4%
Harbinger Corp. 17,400 632,925 0.3%
Unaudited. See Notes to Financial Statements.
10
<PAGE>
P*I*C
- ---------
SMALL CAP Statement of Net Assets
- --------- as of April 30, 1998
PORTFOLIO
- ---------
================================================================================
Percentage of
EQUITY SECURITIES, continued Shares Value Net Assets
- --------------------------------------------------------------------------------
Computer Services, continued
- --------------------------------------------------------------------------------
Intelligroup, Inc. 23,850 $ 488,925 0.2%
International Network Services 20,500 689,312 0.3%
Lycos, Inc. 15,100 933,369 0.5%
Pegasus Systems, Inc. 17,800 476,150 0.2%
Premiere Technologies, Inc. 89,800 2,862,375 1.4%
QuadraMed Corp. 11,000 313,500 0.2%
RWD Technologies, Inc. 26,460 668,115 0.3%
- --------------------------------------------------------------------------------
Total Computer Services 19,480,787 9.5%
================================================================================
Computer Software .. 11.5%
- --------------------------------------------------------------------------------
Access Health Market 67,840 2,289,600 1.1%
AXENT Technologies, Inc. 70,930 1,861,912 0.9%
Business Objects S.A 27,500 519,062 0.3%
CBT Group, PLC 21,280 1,082,620 0.5%
Filenet Corp. 22,600 1,231,700 0.6%
HNC Software, Inc. 40,160 1,566,240 0.8%
I2 Technologies, Inc. 12,500 834,375 0.4%
JDA Software Group, Inc. 53,620 2,711,161 1.3%
Medical Manager Corp. 10,000 295,625 0.1%
Mercury Interactive 26,400 1,069,200 0.5%
National Instruments Corp. 20,700 734,850 0.4%
PC Connection, Inc. 19,900 431,581 0.2%
Peregrine Systems, Inc. 35,200 849,200 0.4%
Platinum Software Corp. 37,300 834,587 0.4%
Siebel Systems, Inc. 50,740 1,312,897 0.6%
Software AG Systems, Inc. 56,370 1,395,157 0.7%
Transaction Systems Architects, Inc. 65,510 2,751,420 1.3%
VERITAS Software Corp. 10,700 585,825 0.3%
Walker Interactive Systems, Inc. 29,900 547,544 0.3%
Wind River Systems, Inc. 23,370 809,186 0.4%
- --------------------------------------------------------------------------------
Total Computer Software 23,713,742 11.5%
Unaudited. See Notes to Financial Statements
11
<PAGE>
P*I*C
- ---------
SMALL CAP Statement of Net Assets
- --------- as of April 30, 1998
PORTFOLIO
- ---------
================================================================================
Percentage of
EQUITY SECURITIES, continued Shares Value Net Assets
- --------------------------------------------------------------------------------
Cosmetics and Soaps .. 1.5%
- --------------------------------------------------------------------------------
Rexall Sundown, Inc. 69,720 $2,226,682 1.1%
Twinlab Corp. 19,600 769,300 0.4%
- --------------------------------------------------------------------------------
Total Cosmetics and Soap 2,995,982 1.5%
================================================================================
Credit and Finance .. 2.0%
- --------------------------------------------------------------------------------
Healthcare Financial Partners, Inc. 7,900 397,962 0.2%
Sirrom Capital Corp. 93,320 2,787,935 1.4%
United Panam Financial Corp. 23,300 308,725 0.2%
Waddell & Reed Financial, Inc. 20,500 507,375 0.2%
- --------------------------------------------------------------------------------
Total Credit and Finance 4,001,997 2.0%
================================================================================
Discount Chains .. 3.3%
- --------------------------------------------------------------------------------
Dollar Tree Stores, Inc. 113,920 6,180,160 3.0%
Fred's, Inc. - Class A 21,500 537,500 0.3%
- --------------------------------------------------------------------------------
Total Discount Chains 6,717,660 3.3%
================================================================================
Drugs .. 3.1%
- --------------------------------------------------------------------------------
Arqule, Inc. 35,990 623,077 0.3%
Atrix Laboratories, Inc. 49,440 902,280 0.4%
Jones Medical Industries, Inc. 50,825 1,499,337 0.7%
Medicis Pharmaceutical Corp. 47,400 2,026,350 1.1%
Pharmacyclics, Inc. 25,000 678,125 0.3%
Shire Pharmaceuticals Group 28,300 636,750 0.3%
- --------------------------------------------------------------------------------
Total Drugs 6,365,919 3.1%
================================================================================
Educational Programs .. 3.8%
- --------------------------------------------------------------------------------
Apollo Group, Inc. 125,061 4,283,339 2.1%
Sylvan Learning Systems, Inc. 70,700 3,490,812 1.7%
- --------------------------------------------------------------------------------
Total Educational Programs 7,774,151 3.8%
Unaudited. See Notes to Financial Statements.
12
<PAGE>
P*I*C
- ---------
SMALL CAP Statement of Net Assets
- --------- as of April 30, 1998
PORTFOLIO
- ---------
================================================================================
Percentage of
EQUITY SECURITIES, continued Shares Value Net Assets
- --------------------------------------------------------------------------------
Electronics .. 0.8%
- --------------------------------------------------------------------------------
Anicom, Inc. 37,890 $ 592,031 0.3%
DBT Online, Inc. 22,950 608,175 0.3%
Power-One, Inc. 39,180 492,199 0.2%
- --------------------------------------------------------------------------------
Total Electronics 1,692,405 0.8%
================================================================================
Electrical Components/Semiconductor .. 3.7%
- --------------------------------------------------------------------------------
Etec Systems, Inc. 26,020 1,476,635 0.7%
Micrel, Inc. 11,100 435,675 0.2%
Photronics Labs, Inc. 48,400 1,784,750 0.9%
PRI Automation, Inc. 23,400 625,950 0.3%
Uniphase Corp. 14,000 759,500 0.4%
Vitesse Semiconductor Corp. 43,240 2,494,407 1.2%
- --------------------------------------------------------------------------------
Total Electrical Components/
Semiconductor 7,576,917 3.7%
================================================================================
Electrical Equipment/Periphery .. 1.2%
- --------------------------------------------------------------------------------
ATMI, Inc. 6,300 175,613 0.1%
Level One Communications, Inc. 33,265 1,035,373 0.5%
PMC-Sierra, Inc. 14,930 679,315 0.3%
Semtech Corp. 21,820 520,953 0.3%
- --------------------------------------------------------------------------------
Total Electrical Equipment/Periphery 2,411,254 1.2%
================================================================================
Electrical Products .. 0.4%
- --------------------------------------------------------------------------------
Advanced Lighting Technologies, Inc. 31,200 865,800 0.4%
================================================================================
Entertainment and Leisure ..2.3%
- --------------------------------------------------------------------------------
Fairfield Communities, Inc. 170,520 3,985,905 2.0%
Suburban Lodges of America 41,200 762,200 0.3%
- --------------------------------------------------------------------------------
Total Entertainment and Leisure 4,748,105 2.3%
Unaudited. See Notes to Financial Statements.
13
<PAGE>
P*I*C
- ---------
SMALL CAP Statement of Net Assets
- --------- as of April 30, 1998
PORTFOLIO
- ---------
================================================================================
Percentage of
EQUITY SECURITIES, continued Shares Value Net Assets
- --------------------------------------------------------------------------------
Financial Services .. 3.2%
- --------------------------------------------------------------------------------
Financial Federal Corp. 18,500 $ 427,813 0.2%
First Sierra Financial, Inc. 40,000 1,010,000 0.5%
PMT Services, Inc. 173,810 3,389,295 1.7%
Pre-Paid Legal Services, Inc. 45,730 1,729,166 0.8%
- --------------------------------------------------------------------------------
Total Financial Services 6,556,274 3.2%
================================================================================
Food and Restaurants .. 1.0%
- --------------------------------------------------------------------------------
Dave & Buster's, Inc. 41,280 1,078,440 0.5%
Landry's Seafood Restaurants, Inc. 32,900 937,650 0.5%
- --------------------------------------------------------------------------------
Total Food and Restaurants 2,016,090 1.0%
================================================================================
Hospitals .. 1.8%
- --------------------------------------------------------------------------------
Alternative Living Services, Inc. 31,400 1,099,000 0.6%
Assisted Living Concepts, Inc. 47,690 876,304 0.4%
CareMatrix Corp. 25,800 699,825 0.3%
Province Healthcare Co. 14,700 406,088 0.2%
Sunrise Assisted Living 12,900 578,081 0.3%
- --------------------------------------------------------------------------------
Total Hospitals 3,659,298 1.8%
================================================================================
Insurance .. 1.2%
- --------------------------------------------------------------------------------
Annuity and Life Re, Ltd. 27,800 663,725 0.4%
Enhance Financial Services Group, Inc. 24,580 1,686,803 0.8%
- --------------------------------------------------------------------------------
Total Insurance 2,350,528 1.2%
================================================================================
Medical/Dental Products ..1.2%
- --------------------------------------------------------------------------------
Henry Schein, Inc. 26,970 1,051,830 0.6%
Heska Corp. 37,500 487,500 0.2%
Unaudited. See Notes to Financial Statements.
14
<PAGE>
P*I*C
- ---------
SMALL CAP Statement of Net Assets
- --------- as of April 30, 1998
PORTFOLIO
- ---------
================================================================================
Percentage of
EQUITY SECURITIES, continued Shares Value Net Assets
- --------------------------------------------------------------------------------
Medical/Dental Products, continued
- --------------------------------------------------------------------------------
Ocular Sciences, Inc. 24,780 $ 693,840 0.3%
Perclose, Inc. 5,500 167,063 0.1%
- --------------------------------------------------------------------------------
Total Medical/Dental Products 2,400,233 1.2%
================================================================================
Medical/Dental Services .. 10.0%
- --------------------------------------------------------------------------------
Boron Lepore & Associates 24,610 922,875 0.5%
Centennial Healthcare Corp. 51,490 1,222,888 0.6%
Coast Dental Services, Inc. 30,910 718,658 0.4%
Concentra Managed Care, Inc. 111,620 3,474,173 1.6%
Minimed, Inc. 9,540 477,000 0.2%
Omnicare, Inc. 44,170 1,512,823 0.7%
Orthodontic Centers of America, Inc. 103,640 2,215,305 1.1%
Paraxel International Corp. 76,610 2,566,435 1.3%
Quintiles Transnational Corp. 61,540 3,046,230 1.5%
Renal Care Group, Inc. 56,630 2,166,098 1.1%
Total Renal Care Holdings, Inc. 61,263 2,029,337 1.0%
- --------------------------------------------------------------------------------
Total Medical/Dental Services 20,351,822 10.0%
================================================================================
Medical Instruments .. 1.2%
- --------------------------------------------------------------------------------
ESC Medical Systems, Ltd. 22,600 734,500 0.4%
IDEXX Corp. 31,200 690,300 0.3%
Laser Vision Centers, Inc. 34,300 460,906 0.2%
VISX, Inc. 13,200 582,450 0.3%
- --------------------------------------------------------------------------------
Total Medical Instruments 2,468,156 1.2%
================================================================================
Mortgage and Related Services .. 0.4%
- --------------------------------------------------------------------------------
Franchise Mortgage Acceptance Co. 30,360 728,640 0.4%
================================================================================
Networking .. 0.2%
- --------------------------------------------------------------------------------
Objective Systems Integrators, Inc. 29,000 322,625 0.2%
Unaudited. See Notes to Financial Statements.
15
<PAGE>
P*I*C
- ---------
SMALL CAP Statement of Net Assets
- --------- as of April 30, 1998
PORTFOLIO
- ---------
================================================================================
Percentage of
EQUITY SECURITIES, continued Shares Value Net Assets
- --------------------------------------------------------------------------------
Oil Field Services .. 3.0%
- --------------------------------------------------------------------------------
Atwood Oceanics, Inc. 24,440 $1,336,563 0.7%
Bayard Drilling Technologies, Inc. 61,430 852,341 0.4%
Global Industries, Ltd. 87,220 1,978,804 1.0%
Marine Drilling Co., Inc. 20,500 498,406 0.2%
Parker Drilling Co. 137,170 1,405,993 0.7%
- --------------------------------------------------------------------------------
Total Oil Field Services 6,072,107 3.0%
================================================================================
Pollution Control .. 2.2%
- --------------------------------------------------------------------------------
American Disposal Services, Inc. 26,060 1,044,843 0.6%
Newpark Resources, Inc. 139,410 3,354,553 1.6%
- --------------------------------------------------------------------------------
Total Pollution Control 4,399,396 2.2%
================================================================================
Publishing/Advertising .. 0.5%
- --------------------------------------------------------------------------------
Consolidated Graphics, Inc. 17,400 1,003,763 0.5%
================================================================================
Real Estate Investment Trust .. 0.4%
- --------------------------------------------------------------------------------
Lasalle Partners, Inc. 23,480 807,125 0.4%
================================================================================
Specialty Chains .. 2.8%
- --------------------------------------------------------------------------------
Black Box Corp. 15,900 528,675 0.3%
Central Garden & Pet Co. 18,020 617,185 0.3%
Guitar Center, Inc. 66,780 1,903,230 0.8%
Hibbett Sporting Goods, Inc. 45,980 1,540,330 0.8%
Starbucks Corp. 25,180 1,211,788 0.6%
- --------------------------------------------------------------------------------
Total Specialty Chains 5,801,208 2.8%
================================================================================
Telecommunications .. 5.6%
- --------------------------------------------------------------------------------
Advanced Fibre Communications 63,290 2,681,914 1.3%
Applied Micro Circuits Corp. 15,200 419,900 0.2%
Unaudited. See Notes to Financial Statements.
16
<PAGE>
P*I*C
- ---------
SMALL CAP Statement of Net Assets
- --------- as of April 30, 1998
PORTFOLIO
- ---------
================================================================================
Percentage of
EQUITY SECURITIES, continued Shares Value Net Assets
- --------------------------------------------------------------------------------
Telecommunications, continued
- --------------------------------------------------------------------------------
Clearnet Communications 33,900 $ 472,481 0.2%
Davox Corp. 31,050 694,744 0.3%
Metromedia Fiber Network, Inc. 20,600 636,025 0.3%
MRV Communications, Inc. 110,200 2,961,625 1.5%
P-Com, Inc. 99,350 1,955,953 1.0%
REMEC, Inc. 47,070 1,170,866 0.6%
Tel-Save Holdings, Inc. 15,190 346,522 0.2%
- --------------------------------------------------------------------------------
Total Telecommunications 11,340,030 5.6%
================================================================================
Telephone .. 0.5%
- --------------------------------------------------------------------------------
McLeod USA, Inc. 24,400 1,122,400 0.5%
================================================================================
Textiles and Shoes .. 0.7%
- --------------------------------------------------------------------------------
Novel Denim Holdings, Ltd. 55,240 1,394,810 0.7%
- --------------------------------------------------------------------------------
Total Equity Securities(Cost $168,752,660) 201,026,731 98.5%
================================================================================
SHORT-TERM INVESTMENTS - 0.8%
- --------------------------------------------------------------------------------
Repurchase Agreement .. 0.8% Principal Amount
- --------------------------------------------------------------------------------
Lehman Brothers On-Line Repurchase
Agreement, 5.13%, dated 4/30/1998,
due 5/1/1998 (collateralized by $1,717,002
U.S. Treasury Note, 6.38%, due 8/15/2027)
(Cost $1,677,252) $1,677,252 1,677,252 0.8%
- --------------------------------------------------------------------------------
Total Investments
(Cost $170,429,912) 202,703,983 99.3%
Unaudited. See Notes to Financial Statements.
17
<PAGE>
P*I*C
- ---------
SMALL CAP Statement of Net Assets
- --------- as of April 30, 1998
PORTFOLIO
- ---------
================================================================================
Percentage of
OTHER ASSETS - 0.9% Value Net Assets
================================================================================
Receivables:
Investment securities sold $ 1,664,414
Shares of beneficial interest sold 180,577
Dividends and interest 2,954
Prepaid insurance 7,212
Deferred organization costs, net 5,041
Other assets 13,254
- --------------------------------------------------------------------------------
Total other assets 1,873,452 0.9%
================================================================================
LIABILITIES - (0.2%)
- --------------------------------------------------------------------------------
Payables:
Investment securities purchased 224,725
To Advisor (Note 3) 132,154
Deferred Trustees' compensation (Note 3) 25,821
Accrued expenses 70,750
- --------------------------------------------------------------------------------
Total liabilities 453,450 (0.2%)
================================================================================
TOTAL NET ASSETS - 100.0% $204,123,985 100.0%
- --------------------------------------------------------------------------------
Unaudited. See Notes to Financial Statements.
18
<PAGE>
P*I*C
- ---------
SMALL CAP Statement of Operations
- --------- Six Months ended April 30, 1998
PORTFOLIO
- ---------
================================================================================
INVESTMENT INCOME
- --------------------------------------------------------------------------------
Income:
- --------------------------------------------------------------------------------
Dividends $ 60,911
Interest 197,020
Other 3,877
- --------------------------------------------------------------------------------
Total income 261,808
================================================================================
Expenses:
- --------------------------------------------------------------------------------
Investment advisory fee (Note 3) 704,407
Administration fees 88,051
Accounting services fee 40,092
Custodian fee 37,175
Audit fee 9,076
Trustees' fees 8,480
Amortization of organization costs 4,959
Legal fee 3,514
Miscellaneous 4,604
- --------------------------------------------------------------------------------
Total expenses 900,358
Less, reimbursement/waiver by Advisor (Note 3) (19,849)
- --------------------------------------------------------------------------------
Net expenses 880,509
================================================================================
Net investment loss (618,701)
================================================================================
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
- --------------------------------------------------------------------------------
Net realized loss on investments (1,685,774)
Change in net unrealized appreciation
of investments 22,162,824
- --------------------------------------------------------------------------------
Net gain on investments 20,477,050
================================================================================
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 19,858,349
- --------------------------------------------------------------------------------
Unaudited. See Notes to Financial Statements.
19
<PAGE>
P*I*C
- ---------
SMALL CAP Statement of Changes in Net Assets
- ---------
PORTFOLIO
- ---------
================================================================================
INCREASE (DECREASE) IN NET ASSETS
- --------------------------------------------------------------------------------
Six Months Year
ended ended
From operations: April 30, 1998 October 31, 1997
- --------------------------------------------------------------------------------
Net investment loss $ (618,701) $ (934,925)
Net realized (loss) gain
on investments (1,685,774) 72,084,822
Change in net unrealized
appreciation on investments 22,162,824 (62,640,291)
- --------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 19,858,349 8,509,606
================================================================================
Transactions in interests:
Contributions by Holders 73,223,086 164,160,467
Withdrawals by Holders (28,613,247) (234,314,952)
- --------------------------------------------------------------------------------
Net increase (decrease) in net assets
from transactions in interests 44,609,839 (70,154,485)
================================================================================
Total increase (decrease) in net assets 64,468,188 (61,644,879)
- --------------------------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------------------------
Beginning of period 139,655,797 201,300,676
- --------------------------------------------------------------------------------
End of period $ 204,123,985 $ 139,655,797
- --------------------------------------------------------------------------------
Unaudited. See Notes to Financial Statements.
20
<PAGE>
P*I*C
- ---------
SMALL CAP Notes to Financial Statements
- --------- April 30, 1998
PORTFOLIO
- ---------
================================================================================
1 - ORGANIZATION
- --------------------------------------------------------------------------------
PIC Small Cap Portfolio (the "Portfolio") was organized on March 22, 1993
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 Costs. 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
21
<PAGE>
P*I*C
- ---------
SMALL CAP Notes to Financial Statements
- --------- continued
PORTFOLIO
- ---------
================================================================================
on an identified cost basis. Interest is recorded as accrued, and
dividend income is recorded on the ex-dividend date.
E. Accounting Estimates. In preparing financial statements in
conformity with generally accepted accounting principles, management
makes estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements, as
well as the reported amounts of revenues and expenses during the
period. 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 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 0.80%
of the average daily net assets of the Portfolio. PIC has voluntarily agreed to
limit the total expenses of the Portfolio to an annual rate of 1.00% of the
Portfolio's average net assets. During the six months ended April 30, 1998, PIC
received $684,558 in fees from the Portfolio after deducting fees waived and
expenses reimbursed of $19,849. 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 totaled $88,051 for the six months ended April 30,
1998.
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 a value which would have been earned if
22
<PAGE>
P*I*C
- ---------
SMALL CAP Notes to Financial Statements
- --------- continued
PORTFOLIO
- ---------
================================================================================
the account had been invested in designated investments. The Portfolio
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.
4 - INVESTMENT TRANSACTIONS
- --------------------------------------------------------------------------------
During the six months ended April 30, 1998, the cost of purchases and the
proceeds from sales of investment securities, other than short-term obligations,
were $103,982,901 and $61,029,023, respectively. The cost of securities for
federal income tax purposes was $170,429,912. The aggregate gross unrealized
appreciation and depreciation of portfolio securities, based on cost for federal
income tax purposes, were as follows:
Unrealized appreciation $36,081,515
Unrealized depreciation (3,807,444)
-----------
Net unrealized appreciation $32,274,071
===========
5 - SELECTED RATIO DATA
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Six Months Year Year Year Year Sept. 30, 1993*
ended ended ended ended ended through
April 30, 1998 Oct. 31, 1997 Oct. 31, 1996 Oct. 31, 1995 Oct. 31, 1994 Oct. 31, 1993
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ratios to average net assets#
Operating expenses 1.00%+ 1.00% 1.00% 1.00% 1.00% 1.00%+
Net investment loss (.62%)+ (.49%) (.59%) (.51%) (.49%) (.79%)+
Portfolio turnover rate 35.44% 151.52% 53.11% 45.45% 63.89% 6.06%
Average commission rate
paid per share** $0.0270 $0.0326 $0.0307 -- -- --
</TABLE>
*Commencement of operations.
#Net of expense reimbursements equivalent to 0.02%, 0.01%, 0.01%, 0.07%, 0.10%
and 0.11% of average net assets, respectively.
+Annualized.
**For fiscal years beginning on or after September 1, 1995, a fund is required
to disclose its average commission rate paid per share for security trades on
which commissions are charged.
23
<PAGE>
- ----------------------------
Provident Investment Counsel Trustees and Officers
Small Cap Growth Fund
- ----------------------------
================================================================================
TRUSTEES AND OFFICERS - P*I*C INVESTMENT TRUST
- --------------------------------------------------------------------------------
Jeffrey J. Miller, Trustee and President
Jettie M. Edwards, Trustee
Bernard J. Johnson, Trustee Emeritus
Jeffrey D. Lovell, Trustee
Wayne H. Smith, Trustee
Thad M. Brown, Vice President, Secretary and Treasurer
TRUSTEES AND OFFICERS - P*I*C SMALL CAP 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 - P*I*C INVESTMENT TRUST
- --------------------------------------------------------------------------------
Shereff, Friedman, Hoffman & Goodman
LEGAL COUNSEL - P*I*C SMALL CAP PORTFOLIO
- --------------------------------------------------------------------------------
Paul, Hastings, Janofsky & Walker, LLP
INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
McGladrey & Pullen, LLP
This report is intended for the information of shareholders of Provident
Investment Counsel Small Cap Growth Fund and should not be used as sales
literature unless preceded or accompanied by a current prospectus.
