Semi-Annual Report
For the Six Months Ended April 30, 2000
PROVIDENT INVESTMENT COUNSEL
MUTUAL FUNDS
Small Cap Growth Fund I
PROVIDENT INVESTMENT COUNSEL
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Investing in Growth Since 1951
<PAGE>
Contents
2 Items of Interest
3 President's Letter
4 Our Philosophy
4 Performance Update/
Portfolio Review
5 Interview with Provident Managers
The Fund 8 Statement of Assets and Liabilities
9 Statement of Operations
10 Statement of Changes
in Net Assets
11 Financial Highlights
12 Notes to Financial Statements
The Portfolio 15 Statement of Net Assets
20 Statement of Operations
21 Statement of Changes
in Net Assets
22 Selected Ratio Data
23 Notes to Financial Statements
<PAGE>
ITEMS OF INTEREST
* The Growth style of investment continues to enjoy a leadership role. Our
strong stock selection and sector allocation in the Fund was rewarded by
positive performance.
* The Electronic technology and health technology sectors have been the
significant contributors to the Fund's performance over the last few
months.
* Our web site address is:
WWW.PROVNET.COM
2
<PAGE>
DEAR FELLOW SHAREHOLDERS,
We are once again pleased to report very positive results for the six-months end
April 30, 2000 (more detailed information is available on the following pages).
The Small Cap Fund enjoyed very positive performance, further closing the
performance gap somewhat between the large and smaller capitalization portfolios
seen over the last few years.
The market volatility we discussed in earlier reports has continued in the last
several months. After starting out the year with a repeat of the positive
performance in 1999, investors became concerned about the threat of rising
interest rates. Since the middle of March, the psychology of the marketplace has
been oscillating between fears of rising interest rates and hope that the Fed
has tightened enough.
As with most difficult periods we have seen over the last few years, this period
also proved to be temporary. Pundits most recently have been calling this a bear
market. Certainly for the NASDAQ Index, off 37% from its high in March through
its worst level on Friday May 26th, and 21% for the year through the same May
26th date, this has been a severe correction. However, putting the decline in
perspective, it is worth noting that through June 7, the NASDAQ Index has
recovered 19.8% off its May low. In our view, what we have witnessed recently
may then be more appropriately seen as a long-overdue correction to allow
earnings to catch up with valuations. While inflation has been rising, the rate
is moderate and our outlook for GDP growth and corporate profitability in 2000
is for strong growth in 2000 with growth for 2001 only moderately slower than
this year. Thus this current decline, we believe, will prove to be a correction
in an otherwise bull market. Certainly our strategy in the Fund has reflected
and continues to reflect this view.
Looking ahead one thing seems clear, and that is investors for the foreseeable
future will be paying greater heed to valuation levels. This should translate
into a continued broadening out of the market and a more realistic appraisal of
"appropriate" valuations on a near- to intermediate-term basis. We look for a
more balanced market with value stocks and growth stocks, both small and large,
experiencing positive returns.
We appreciate your continued confidence in Provident Investment Counsel.
Sincerely,
/s/ Douglas B. Allen
Douglass B. Allen
President, PIC Investment Trust
June 26, 2000
3
<PAGE>
OUR PHILOSOPHY
* Focused, fundamental research, properly controlled, adds value.
* Sustainable earnings growth is the most important contributor to long-term
stock appreciation.
* Emphasis on strong financial characteristics ensures focus on growth and
quality.
* Investment style consistency is critical to superior long-term investment
results.
PERFORMANCE UPDATE/PORTFOLIO REVIEW
SMALL CAP GROWTH FUND I
EQUITY SECTOR WEIGHTINGS Average annual total returns for the period
ended 4/30/00:
Electronic Technology 42.34% SINCE
Technology Services 13.13 INCEPTION
Health Technology 12.75 1 YEAR* 3 YEAR 5 YEAR 9/30/93
Commercial Services 5.89 ------- ------ ------ -------
Retail Trade 5.57 104.49% 35.76% 28.89% 22.23%
Industrial Services 4.69
Consumer Services 3.83 % OF NET
Utilities 2.74 TOP 10 STOCK HOLDINGS: ASSETS
Finance 2.58 ------
Transportation 2.08 Credence Systems Corp. 2.23%
Health Services 1.61 Brooks Automation, Inc. 1.98
Producer Manufacturing 1.27 BISYS Group, Inc. 1.83
Consumer Non-Durables 0.78 ASM International, N.V. 1.83
Consumer Durables 0.62 Dollar Tree Stores, Inc. 1.72
Process Industries 0.12 Cree, Inc. 1.39
TranSwitch Corp. 1.38
Varian Semiconductor Equipment
Associates, Inc. 1.36
Burr-Brown Corp. 1.24
Powerwave Technologies, Inc. 1.22
* The total return stated above was acieved during favorable market
conditions. Investors should not expect that such a favorable return can be
consistently achieved.
4
<PAGE>
INTERVIEW WITH PROVIDENT MANAGERS
Q DURING THE PAST SIX-MONTH PERIOD CAN YOU EXPLAIN THE MARKET CONDITIONS, HOW
THE FUND PERFORMED AND YOUR OVERALL INVESTMENT APPROACH?
A The Fund's performance was very strong in the latter half of the year 1999.
Y2K YAWN, some might say, as the world moved through the milestone 1/1/2000
date with few computer glitches or other infrastructure disruptions. But
YAWN is hardly descriptive of the U.S. equity markets during this six-month
period. At the end of 1999, our stock selection in the Fund proved to be
"ON THE MARK." Our emphasis in technology issues, including medical
technology, electronic technology, and the Internet were very successful
moves. During October and November we increased our technology holdings,
but toward the latter part of 1999, we reduced some of the emphasis based
on significant price appreciation that was achieved over a very short
period of time.
As we moved into the New Year, we, like so many other investors, strongly
believed the technology revolution was a very significant development that
would transform the way in which business is conducted, not just here in
the United States but around the globe. Since year-end 1999, the stock
market has experienced historic volatility. Coming on the heels of what can
only be described as a spectacular 4th quarter 1999, we anticipated the
markets would be choppy. Investors grappled with interest rate hikes,
valuations, and implications of an "old economy" versus "new economy"
paradigm. Performance for the months of January and March was weak while
February was a very strong month. Companies focused on cellular phone
infrastructure and handsets did well as demand for the products, leading
technology, and market share gains drove stock prices higher.
While volatility of returns may remain high, we believe that the
fundamental outlook is bright. The recent earnings reports for the
companies in the Fund have rarely looked better; most have reported better
than expected earnings, or met expectations, and only a few holdings have
had earnings lower than expected. We believe these positive earnings trends
should continue and are the fundamental underpinning to strong returns
going forward. We will continue to be aggressive and flexible in trimming
or eliminating holdings where our confidence level for continued strong
revenue and/or earnings growth is in question.
5
<PAGE>
INTERVIEW WITH PROVIDENT MANAGERS (Continued)
Q THERE WAS EXTRAORDINARY STOCK MARKET VOLATILITY DURING THE MONTH OF APRIL.
WHAT CAUSED THIS RECENT VOLATILITY? DID THE VOLATILITY IMPACT GROWTH
EQUITIES?
A The catalyst for the stock market volatility in April was a combination of
higher than expected March PPI and CPI inflation numbers and a strong Cost
Employment Index report showing that inflation remained a potential problem
for the stock and bond markets. These reports were coupled with the 1st
quarter earnings reports of IBM and Microsoft, where in both cases, while
EPS growth was in line with analysts' expectations, the slowing of top line
growth for both companies surprised investors. The volatility did impact
growth equities, where valuations were the highest, more so than value
equities. Overnight, investors started to reevaluate the valuation levels
of the market as a whole, but more particularly, the valuations of
technology-related growth stocks.
The volatility affected all types of investment strategies, from small and
mid cap to large cap, and from growth to value strategies. From our point
of view there were several elements or conditions that drove this
extraordinary volatility. The first is that the supply/demand equation for
equities is very positive. So far in 2000, through March, there has been a
reduction of equity supply of $58 billion, accomplished through cash
buybacks. For the same time period, the new supply of equity offerings has
been $76 billion. So the flood of mutual fund inflows estimated at $100
billion has easily swallowed up the net equity supply of only $18 billion.
Not withstanding the potential supply of recent IPOs coming out of lockup,
we think this strong demand for equities is very likely to continue.
However, investors are increasingly focusing their investments in a narrow
group of technology sectors, where valuations are high, and where the
slightest problem, either economic or fundamental, real or imagined, causes
investors to become increasingly short-term oriented, causing an almost
"day trading mentality." This, hopefully temporary, paradigm shift has
dramatically increased the market's overall volatility.
We believe that maintaining a longer-term perspective based on very strong
growth in revenues and earnings of the companies in the Fund is essential.
Q WITH THE MARKET VALUATIONS AT RECORD LEVELS, WHAT SECTORS OF THE U.S.
ECONOMY LOOK PARTICULARLY ATTRACTIVE NOW? WHAT IS YOUR OUTLOOK FOR THE
FUTURE?
A We believe we are still in a bull market that will bolster equities in
general but will continue to favor small and large growth companies with
strong unit growth, such as technology and drug stocks. The stocks in the
Fund that have been under such severe pressure and dragged down absolute
6
<PAGE>
INTERVIEW WITH PROVIDENT MANAGERS (Continued)
and relative performance during April and May are the very stocks that are
making the strongest recoveries in June. We continue to believe the
positive economic backdrop, coupled with the strong and sustainable
earnings growth of the companies in the portfolio, will prevail for the
balance of this economic cycle. Further, we believe that the secular
opportunities in broadband infrastructure, web-enabling software, and rapid
shifts in global telecommunications, along with exciting opportunities in
the healthcare area, are the correct areas of concentration. We are
currently reducing some exposure to Electronic Technology. However, we
continue to feel the semi-conductor and capital equipment companies will
continue to show solid advances. Likewise, we have reduced our software
exposure where valuations look less attractive. As in April, we continue to
selectively add healthcare holdings.
In our view, we are experiencing protracted strong product cycles such as
broadband communications chips, fiberoptics equipment, health technology,
and web enabling software that promise to be the strong economic and stock
market drivers for the foreseeable future. In the United States alone the
penetration of usage of the personal computer, cell phone, and Internet has
only scratched the surface. We expect that over the next several years
dramatic increases in usage will be experienced. This coupled, with the
advances in Health Technology, to include drug delivery systems, genomics,
and the biotechnology area argue that advances in technology -- only a few
years ago thought to be impossible -- are going to be realized.
In the months ahead, we will remain disciplined about cutting back or
selling stocks which have exceeded our price targets while re-circulating
capital into better risk/reward opportunities. While recent returns were
volatile, the Fund continues to make very solid progress. For many
investors, the recent stock market volatility is a good lesson that risk is
inherent in investing. Long-term investors must be willing to accept
fluctuations in their portfolio. While short periods of volatility are to
be expected, we believe maintaining a longer-term perspective is essential.
Given the narrowness of the market in the technology-related stocks, we
have added some non-technology companies for additional diversification. We
will continue to focus on finding attractive opportunities that we believe
will provide superior returns and add value to the Fund in the new economy.
7
<PAGE>
PROVIDENT INVESTMENT COUNSEL SMALL CAP GROWTH FUND I
STATEMENT OF ASSETS AND LIABILITIES at April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
ASSETS
Investments in Portfolio, at cost $ 198,817,433
=============
Investments in Portfolio, at value $ 273,115,238
Receivables:
Investments in Portfolio sold 1,035,901
Fund shares sold 9,178
Due from advisor (Note 3) 34,240
Prepaid expenses 13,286
-------------
Total assets 274,207,843
-------------
LIABILITIES
Payables:
Investments in Portfolio purchased 9,178
Fund shares redeemed 1,035,901
Accrued expenses 34,535
Deferred trustees' compensation (Note 3) 43,788
-------------
Total liabilities 1,123,402
-------------
NET ASSETS
Applicable to shares of beneficial interest outstanding $ 273,084,441
=============
Shares of beneficial interest outstanding 6,595,506
-------------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE $ 41.40
=============
COMPONENTS OF NET ASSETS
Paid-in capital $ 105,461,779
Accumulated net investment loss (1,217,432)
Accumulated net realized gain on investments 94,542,289
Net unrealized appreciation on investments 74,297,805
-------------
Net assets $ 273,084,441
=============
See accompanying Notes to Financial Statements.
8
<PAGE>
PROVIDENT INVESTMENT COUNSEL SMALL CAP GROWTH FUND I
STATEMENT OF OPERATIONS For the Six Months Ended April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME
Net investment loss from Portfolio $ (1,158,684)
-------------
Expenses
Administration fees (Note 3) 296,171
Registration expense 25,139
Trustee fees 24,411
Transfer agent fees 13,487
Legal fees 11,073
Audit fees 5,022
Reports to shareholders 5,005
Custody and accounting services fees 3,004
Miscellaneous 3,637
-------------
Total expenses 386,949
Less: fees waived and expenses absorbed (Note 3) (386,949)
-------------
Net expenses --
-------------
NET INVESTMENT LOSS (1,158,684)
-------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments 94,720,543
Net unrealized appreciation on investments 17,484,300
-------------
Net realized and unrealized gain on investments 112,204,843
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 111,046,159
=============
See accompanying Notes to Financial Statements.
9
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PROVIDENT INVESTMENT COUNSEL SMALL CAP GROWTH FUND I
STATEMENT OF CHANGES IN NET ASSTS
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<TABLE>
<CAPTION>
Six Months Ended Year Ended
April 30, 2000+ October 31, 1999
--------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS
Net investment loss $ (1,158,684) $ (1,528,501)
Net realized gain on investments 94,720,543 40,481,209
Net unrealized appreciation on investments 17,484,300 49,045,476
------------- -------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 111,046,159 87,998,184
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS
From net realized gain (12,639,383) --
------------- -------------
BENEFICIAL INTEREST SHARE TRANSACTIONS
Proceeds from shares sold 35,206,845 61,000,731
Proceeds from reinvestment of distributions 12,623,251 --
Cost of shares redeemed (91,187,682) (72,144,938)
------------- -------------
Net decrease in net assets resulting from
share transactions (43,357,586) (11,144,207)
------------- -------------
TOTAL INCREASE IN NET ASSETS 55,049,190 76,853,977
NET ASSETS
Beginning of period 218,035,251 141,181,274
------------- -------------
END OF PERIOD $ 273,084,441 $ 218,035,251
============= =============
CHANGE IN SHARES
Shares sold 822,874 2,806,320
Shares issued on reinvestment of distributions 368,132 --
Shares redeemed (2,165,465) (3,024,859)
------------- -------------
NET DECREASE (974,459) (218,539)
============= =============
</TABLE>
----------
+ Unaudited.
See accompanying Notes to Financial Statements.
10
<PAGE>
PROVIDENT INVESTMENT COUNSEL SMALL CAP GROWTH FUND I
FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended October 31,
Six Months Ended --------------------------------------------
April 30, 2000+ 1999 1998 1997 1996 1995
--------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 28.80 $ 18.13 $ 24.08 $ 23.19 $ 18.69 $ 12.90
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss (0.18) (0.20) (0.03) (0.40) (0.10) (0.07)
Net realized and unrealized
gain (loss) on investments 14.46 10.87 (3.99) 1.58 4.60 5.86
------- ------- ------- ------- ------- -------
Total from investment operations 14.28 10.67 (4.02) 1.18 4.50 5.79
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
From net realized gain (1.68) -- (1.93) (0.29) -- --
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 41.40 $ 28.80 $ 18.13 $ 24.08 $ 23.19 $ 18.69
======= ======= ======= ======= ======= =======
Total return 50.81%^ 58.85 (17.85%) 5.15% 24.08% 44.88%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(millions) $ 273.1 $ 218.0 $ 141.2 $ 105.5 $ 196.1 $ 130.3
RATIOS TO AVERAGE NET ASSETS:#++
Expenses 1.00%+ 1.00% 1.00% 1.00% 1.00% 1.00%
Net investment loss (0.80%)+ (0.79%) (0.67%) (0.48%) (0.60%) (0.51%)
</TABLE>
+ Unaudited.
# Includes the Fund's share of expenses, net of fees waived and expenses
absorbed, allocated from the Portfolio.
+ Annualized.
++ Net of fees waived and expenses absorbed. The combined fees waived and
expenses absorbed were 0.23%, 0.27%, 0.26%, 0.25%, 0.34% and 0.47%,
respectively.
^ Not annualized.
See accompanying Notes to Financial Statements.
11
<PAGE>
PROVIDENT INVESTMENT COUNSEL SMALL CAP GROWTH FUND I
NOTES TO FINANCIAL STATEMENTS (Unaudited)
--------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
Provident Investment Counsel Small Cap Growth Fund I (the "Fund") (formerly
Provident Investment Counsel Small Cap Growth Fund) is one of twelve series of
PIC Investment Trust (the "Trust"). The Trust was organized on December 11, 1991
as a Delaware business trust, with an unlimited number of shares of beneficial
interest of $.01 par value, and is registered under the Investment Company Act
of 1940 as an open-end, diversified management investment company. The Fund
invests substantially all of its assets in the PIC Small Cap Portfolio (the
"Portfolio"), a separate registered management investment company having the
same investment objective as the Fund. The financial statements of the Portfolio
are included elsewhere in this report and should be read in conjunction with the
Fund's financial statements.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund. These policies are in conformity with generally accepted
accounting principles.
A. INVESTMENT VALUATION. The Fund reflects its 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
estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements. Actual
results could differ from those estimates.
12
<PAGE>
PROVIDENT INVESTMENT COUNSEL SMALL CAP GROWTH FUND I
NOTES TO FINANCIAL STATEMENTS (Unaudited) - (Continued)
--------------------------------------------------------------------------------
NOTE 3 - TRANSACTIONS WITH AFFILIATES
The Trust has entered into administration agreements with Provident
Investment Counsel, Inc. ("PIC") and Investment Company Administration, L.L.C.
("ICA") pursuant to which certain employees of these entities serve as officers
and/or trustees of the Trust and the Portfolio. PIC and ICA also provide
management services necessary for the operations of the Trust and the Portfolio
and furnish office facilities. PIC receives a fee for its services to the Fund,
at the rate of 0.20% of the average daily net assets of the Fund.
PIC has voluntarily 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 daily net assets. The
amount of fees waived and expenses absorbed for the six months ended April 30,
2000 were $288,928 and $98,021, respectively.
Pursuant to a contract with the Funds, PIC has agreed to reimburse each
Fund and Portfolio for investment advisory fees and other expenses for ten years
ending March 1, 2010. PIC reserves the right to be reimbursed for any waiver of
its fees or expenses paid on behalf of the Funds and Portfolios if, within three
subsequent years, a Fund's or Portfolio's expenses are less than the limit
agreed to by PIC. Any reimbursements to PIC are subject to approval by the Board
of Trustees.
ICA receives an annual fee for its services 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. The Distributor is an affiliate of ICA. The
Distributor received no commissions from sales or redemptions of Fund shares
during the six months ended April 30, 2000.
On December 19, 1995, the Trust approved a Deferred Compensation Plan for
Trustees (the "Plan"). Trustees are entitled to receive $2,500 per quarter and
$500 per meeting attended, which is allocated among the Funds. Trustees can
elect to receive payment in cash or defer payments provided for in the Plan. If
a trustee elects to defer payment, the Plan provides for the creation of a
deferred payment account (phantom share account). This account accumulates the
deferred fees earned and the value of the account is adjusted at the end of each
quarter to reflect the value which would have been earned if the account had
13
<PAGE>
PROVIDENT INVESTMENT COUNSEL SMALL CAP GROWTH FUND I
NOTES TO FINANCIAL STATEMENTS (Unaudited) - (Continued)
--------------------------------------------------------------------------------
been invested in designated investments. The Fund recognizes as trustee expense
amounts accrued as meetings are held plus the change in the value of the phantom
share account determined on a quarterly basis. For the six months ended April
30, 2000, the change in the value of the phantom share account was unrealized
appreciation of $19,855.
NOTE 4 - INVESTMENT TRANSACTIONS
Additions and reductions in the investment in the Portfolio aggregated
$35,324,948 and $91,267,473, respectively.
At April 30, 2000, the Fund owned 80.8% of the total net assets of the
Portfolio.
14
<PAGE>
PIC SMALL CAP PORTFOLIO
STATEMENT OF NET ASSETS at April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
Shares EQUITY SECURITIES-- 91.80% Value
--------------------------------------------------------------------------------
Airlines -- 1.17%
55,440 Ryanair Holdings plc ADS* $ 2,259,180
40,000 Skywest, Inc. 1,685,000
------------
Total Airlines 3,944,180
------------
Apparel and Shoes -- 1.55%
47,700 Hot Topic, Inc.* 1,466,775
30,300 Pacific Sunwear Of California, Inc.* 1,032,094
91,150 Too, Inc.* 2,728,803
------------
Total Apparel and Shoes 5,227,672
------------
Auto Parts -- 1.16%
121,600 Gentex Corp.* 3,921,600
------------
Banks -- 0.18%
15,200 Commerce Bancorp, Inc. 603,250
------------
Biotechnology -- 6.44%
21,800 Abgenix, Inc.* 1,952,462
28,600 Alkermes, Inc.* 1,522,950
21,000 Aurora Biosciences Corp.* 761,250
59,100 Celgene Corp.* 2,781,394
32,700 Digene Corp.* 1,393,837
22,500 Emisphere Technologies, Inc.* 923,555
8,200 Human Genome Sciences, Inc.* 627,812
23,100 Ilex Oncology, Inc.* 554,400
29,800 Invitrogen Corp.* 1,858,775
85,700 Isis Pharmaceuticals, Inc.* 953,412
11,600 Millennium Pharmaceuticals, Inc.* 920,750
38,300 Neose Technology, Inc.* 1,196,875
33,700 Pharmacopeia, Inc.* 1,385,912
55,400 QLT PhotoTherapeutics, Inc.* 3,078,162
33,600 Sangamo Biosciences, Inc.* 331,800
28,900 Vertex Pharmaceuticals, Inc.* 1,510,025
------------
Total Biotechnology 21,753,371
------------
Business Services -- 2.86%
6,900 Corporate Executive Board Co.* 405,375
25,100 CoStar Group, Inc.* 602,008
12,800 Iron Mountain, Inc.* 448,000
196,700 Profit Recovery Group International, Inc. (The)* 3,454,544
85,900 Teletech Holdings, Inc.* 2,802,487
29,940 TMP Worldwide, Inc.* 1,957,327
------------
Total Business Services 9,669,741
------------
Computer Services -- 7.70%
98,900 BISYS Group, Inc.* 6,187,431
25,100 Digital Lightwave, Inc.* 1,719,350
55,400 DSP Group, Inc.* 3,940,325
32,300 Electro Scientific Industries, Inc.* 2,036,919
38,400 Globix Corp.* 864,000
62,400 Henry Jack & Associates, Inc. 2,464,800
8,700 MIPS Technologies, Inc.* 251,212
60,400 Modem Media Poppe Tyson, Inc.* 883,350
43,700 National Computer Systems, Inc. 2,247,819
56,450 NICE Systems, Ltd. ADR* 3,693,947
34,700 Optimal Robotics Corp.* 1,474,750
8,300 Versata, Inc.* 252,112
------------
Total Computer Services 26,016,015
------------
Computer Software -- 8.53%
34,800 Business Objects S.A. ADS* 3,406,050
24,600 Clarus Corp.* 988,612
56,100 Electronics For Imaging, Inc.* 2,931,225
133,700 Emachines, Inc.* 1,144,806
46,600 Exchange Applications, Inc.* 567,937
50,000 Informatica Corp.* 2,096,875
40,000 Macromedia, Inc.* 3,480,000
43,900 Manugistics Group, Inc.* 1,879,469
43,200 Mercator Software, Inc.* 1,590,300
29,700 Mercury Interactive Corp.* 2,673,000
15
<PAGE>
PIC SMALL CAP PORTFOLIO
STATEMENT OF NET ASSETS at April 30, 2000 (Unaudited) - (Continued)
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
31,100 Metasolv Software, Inc.* 1,061,287
5,800 Micromuse, Inc.* 569,125
36,900 Mission Critical Software, Inc.* 1,328,400
45,300 National Instruments Corp.* 2,208,375
17,000 OTG Software, Inc.* 374,000
52,400 Peregrine Systems, Inc.* 1,260,875
39,500 Verity, Inc.* 1,281,281
------------
Total Computer Software 28,841,617
------------
Credit & Finance -- 0.53%
96,600 Americredit Corp.* 1,805,212
------------
Discount -- 2.82%
99,133 99 CENTS Only Stores, Inc.* 3,729,879
100,680 Dollar Tree Stores, Inc.* 5,826,855
------------
Total Discount 9,556,734
------------
Drugs -- 3.41%
55,400 Cephalon, Inc.* 3,116,250
67,600 Dusa Pharmaceuticals, Inc.* 1,115,400
35,950 Jones Pharmaceuticals, Inc. 1,035,809
36,300 K-V Pharmaceutical Co.-Class A* 916,575
61,000 Medicis Pharmaceutical Corp.-Class A* 2,668,750
25,971 Shire Pharmaceuticals Group, plc* 1,045,333
49,400 Supergen, Inc.* 1,636,375
------------
Total Drugs 11,534,492
------------
Electronics Components/Semiconductors -- 22.89%
42,200 Advanced Energy Industries, Inc.* 2,911,800
34,200 Alpha Industries, Inc. 1,778,400
179,300 ASM International, N.V.* 6,185,850
74,375 Brooks Automation, Inc.* 6,670,508
61,700 Burr-Brown Corp.* 4,203,312
52,700 Credence Systems Corp.* 7,522,925
32,400 Cree, Inc.* 4,714,200
13,500 Digitas, Inc.* 208,406
10,000 Elantec Semiconductor, Inc.* 405,000
29,800 Electroglas, Inc.* 1,154,750
38,300 Exar Corp.* 3,070,583
55,800 Gasonics International Corp.* 1,841,400
40,200 GlobeSpan, Inc.* 3,819,000
82,200 Integrated Device Technology, Inc.* 3,950,737
44,100 Lattice Semiconductor Corp.* 2,971,237
39,300 LTX Corp.* 1,797,975
23,800 Mattson Technology, Inc.* 1,169,175
34,100 Micrel, Inc.* 2,949,650
41,400 Nanometrics, Inc.* 1,588,725
63,700 Oak Technology, Inc.* 895,781
40,100 Orbotech, Ltd.* 3,418,525
40,900 Plexus Corp.* 3,133,962
41,400 Quicklogic Corp.* 1,216,125
28,900 Semtech Corp.* 1,970,619
10,500 Symyx Technologies, Inc.* 348,469
68,400 Varian Semiconductor Equipment Associates, Inc.* 4,599,900
45,875 Veeco Instruments, Inc.* 2,849,984
------------
Total Electronics Components/ Semiconductors 77,346,998
------------
Electrical Equipment/Peripherals -- 3.31%
35,400 Asyst Technologies, Inc.* 1,893,900
19,900 Dionex Corp.* 723,863
42,500 SanDisk Corp.* 3,894,063
53,050 TranSwitch Corp.* 4,671,716
------------
Total Electrical Equipment/ Peripherals 11,183,542
------------
Electronics -- 1.74%
23,500 Kemet Corp.* 1,750,750
19,925 Powerwave Technologies, Inc.* 4,145,645
------------
Total Electronics 5,896,395
------------
Entertainment & Leisure -- 1.99%
48,700 American Classic Voyages Co. 977,044
41,500 Citadel Communications Corp.* 1,621,094
16
<PAGE>
PIC SMALL CAP PORTFOLIO
STATEMENT OF NET ASSETS at April 30, 2000 (Unaudited) - (Continued)
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
26,100 Cox Radio, Inc.-Class A* 1,892,250
105,470 Fairfield Communities, Inc.* 955,822
67,900 Spanish Broadcasting Systems, Inc.-Class A* 1,268,881
------------
Total Entertainment & Leisure 6,715,091
------------
Financial Services -- 0.69%
61,900 Metris Companies, Inc. 2,321,250
------------
Food & Restaurants -- 0.46%
31,500 Performance Food Group, Co.* 830,813
23,900 RARE Hospital International, Inc.* 739,406
------------
Total Food & Restaurants 1,570,219
------------
Insurance -- 0.12%
28,200 Clark/Bardes Holdings, Inc.* 398,325
------------
Internet Services -- 3.34%
25,600 Agile Software Corp.* 948,800
20,800 Art Technology Group, Inc.* 1,263,600
8,000 C-Bridge Internet Solutions, Inc.* 212,000
17,300 CyberSource Corp.* 261,663
9,800 Cysive, Inc.* 533,487
29,500 Exactis.Com, Inc.* 339,250
11,600 Herme, Inc.* 84,644
14,000 Keynote Systems, Inc.* 628,250
21,400 Media Metrix, Inc.* 687,475
48,900 Primus Knowledge Solutions, Inc.* 1,818,469
10,900 S1 Corp.* 592,006
5,700 Selectica, Inc.* 216,600
38,200 Ticketmaster Online-City Search, Inc.* 764,000
16,000 Watchguard Technologies, Inc.* 771,000
27,300 WebTrends Corp.* 895,781
118,600 Wit Capital Group, Inc.* 1,252,713
------------
Total Internet Services 11,269,738
------------
Medical & Dental Products -- 1.35%
80,900 Cytyc Corp.* 3,620,275
21,500 Zoll Medical Corp.* 950,031
------------
Total Medical &
Dental Products 4,570,306
------------
Medical Instruments -- 0.80%
9,625 Affymetrix, Inc.* 1,299,977
34,500 Novoste Corp.* 1,414,500
------------
Total Medical Instruments 2,714,477
------------
Medical/Dental Services -- 1.06%
30,100 Accredo Health, Inc.* 846,562
76,400 Amsurg Corp. - Class A * 446,463
102,745 Renal Care Group, Inc.* 2,292,498
------------
Total Medical / Dental Services 3,585,523
------------
Mortage & Related Services -- 0.40%
27,700 PMI Group, Inc. 1,341,719
------------
Networking -- 1.96%
60,400 C-Cor Electronics, Inc.* 2,363,150
15,600 Osicom Technologies, Inc.* 811,200
19,900 Performance Technologies, Inc.* 695,256
33,400 Visual Networks, Inc.* 1,302,600
36,800 Xircom, Inc.* 1,451,300
------------
Total Networking 6,623,506
------------
Oil & Gas Production -- 0.96%
243,600 Grey Wolf, Inc.* 989,625
57,500 Precision Drilling Corp.* 1,840,000
12,000 UTI Energy Corp.* 417,000
------------
Total Oil & Gas Production 3,246,625
------------
Offshore Drilling -- 1.33%
12,700 Dril-Quip, Inc.* 515,938
88,800 Pride International, Inc.* 2,009,100
70,300 Rowan Companies, Inc. 1,964,006
------------
Total Offshore Drilling 4,489,044
------------
Oil Field Services/Equipment -- 1.75%
20,100 Atwood Oceanics, Inc.* 1,218,563
90,500 Marine Drilling Companies, Inc.* 2,353,000
69,300 Patterson Energy, Inc.* 1,957,725
17
<PAGE>
PIC SMALL CAP PORTFOLIO
STATEMENT OF NET ASSETS at April 30, 2000 (Unaudited) - (Continued)
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
51,000 Trico Marine Services, Inc.* 385,688
------------
Total Oil Field Services/Equipment 5,914,976
------------
Pollution Control -- 0.26%
88,900 Newpark Resources, Inc.* 733,425
11,525 Waste Connections, Inc.* 144,063
------------
Total Pollution Control 877,488
------------
Publishing/Advertising -- 2.33%
34,700 Catalina Marketing Corp.* 3,513,375
42,000 Getty Images, Inc.* 1,275,750
34,100 Lamar Advertising Co.* 1,502,531
98,400 Playboy Enterprises, Inc.-Class B* 1,586,700
------------
Total Publishing/ Advertising 7,878,356
------------
Specialty Retail -- 0.73%
54,250 Cost Plus, Inc.* 1,658,016
48,800 Electronics Boutique Holdings Corp.* 793,000
------------
Total Specialty Retail 2,451,016
------------
Technology -- 0.09%
31,600 Centra Software, Inc.* 292,300
------------
Telecommunications -- 6.29%
51,500 Adaptive Broadband Corp.* 1,673,750
13,800 AirGate PCS, Inc.* 1,183,350
19,800 Audiocodes, Ltd.* 1,485,000
43,700 Caprock Communications Corp.* 1,463,950
22,900 Celeritek, Inc.* 1,362,550
29,500 Eloquent, Inc.* 261,812
13,500 Gilat Satellite Networks, Ltd.* 1,159,313
7,400 Ibasis, Inc.* 167,425
57,800 InterVoice-Brite, Inc.* 921,188
28,000 Netro Corp.* 1,207,500
22,400 Orckit Communications, Ltd.* 991,200
60,100 Pinnacle Holdings, Inc.* 3,376,869
23,700 SBA Communications Corp.* 962,813
75,700 Sirius Satellite Radio, Inc.* 3,004,344
35,925 Telaxis Communications Corp.* 940,786
39,000 Westell Technologies, Inc.* 1,109,063
------------
Total Telecommunications 21,270,913
------------
Textiles and Shoes -- 0.21%
58,100 Cutter & Buck, Inc.* 708,094
------------
Toys -- 0.28%
52,100 JAKKS Pacific, Inc.* 957,338
------------
Trucking -- 0.73%
72,250 Forward Air Corp.* 2,483,594
------------
Utilities -- 0.38%
33,300 Independent Energy Holding plc, ADR 1,298,701
------------
Total Equity Securities (cost $223,918,638) 310,279,418
------------
Principal
Amount
--------------------------------------------------------------------------------
Money Market Investments-- 8.74%
$14,758,985 Temporary Investment Fund Inc. - Temp Fund 14,758,985
14,758,985 Temporary Investment Fund Inc. - Temp Cash 14,758,985
------------
Total Money Market Investments (cost $29,517,970) 29,517,970
------------
Total Investments (cost $253,436,608) 339,797,388
------------
18
<PAGE>
PIC SMALL CAP PORTFOLIO
STATEMENT OF NET ASSETS at April 30, 2000 (Unaudited) - (Continued)
--------------------------------------------------------------------------------
Value
--------------------------------------------------------------------------------
OTHER ASSETS -- 0.30% Receivables:
Securities sold 814,254
Interest sold 25,816
Interest 116,761
Prepaid Insurance 3,310
Other assets 16,332
------------
Total Other Assets 976,473
------------
TOTAL ASSETS 340,773,861
------------
LIABILITIES -- (0.84%) Payables:
Securities purchased 1,459,203
Interest redeemed 1,036,951
Due to advisor (Note 3) 213,659
Accrued expenses 26,597
Deferred Trustees'
compensation (Note 3) 61,609
------------
Total Liabilities 2,798,019
------------
NET ASSETS - 100.00% $337,975,842
============
* Non-income producing security.
See accompanying Notes to Financial Statements.
19
<PAGE>
PIC SMALL CAP PORTFOLIO
STATEMENT OF OPERATIONS For the Six Months Ended April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME
Income
Dividends $ 17,449
Interest 328,483
-------------
Total income 345,932
-------------
Expenses
Investment advisory fees (Note 3) 1,389,180
Administration fees (Note 3) 173,647
Accounting services fees 54,800
Custodian fees 44,303
Trustee fees 18,350
Audit fee 9,928
Insurance expense 3,964
Legal fees 8,961
Miscellaneous 4,890
-------------
Total expenses 1,708,023
Add: expenses recouped by advisor (Note 3) 28,452
-------------
Net expenses 1,736,475
-------------
NET INVESTMENT LOSS (1,390,543)
-------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments 110,788,121
Net unrealized appreciation on investments 20,014,866
-------------
Net realized and unrealized gain on investments 130,802,987
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 129,412,444
=============
See accompanying Notes to Financial Statements.
20
<PAGE>
PIC SMALL CAP PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
Six Months Ended Year Ended
April 30, 2000+ October 31, 1999
------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS
Net investment loss $ (1,390,543) $ (1,771,238)
Net realized gain on investments 110,788,121 48,594,775
Net unrealized appreciation on investments 20,014,866 56,517,702
------------- -------------
Net increase in net assets resulting
from operations 129,412,444 103,341,239
------------- -------------
TRANSACTIONS IN INTEREST
Contributions by Holders 115,086,242 68,296,971
Withdrawals by Holders (161,285,745) (90,528,948)
------------- -------------
Net decrease in net assets from
transactions in Interests (46,199,503) (22,231,977)
------------- -------------
TOTAL INCREASE IN NET ASSETS 83,212,941 81,109,262
NET ASSETS
Beginning of period 254,762,901 173,653,639
------------- -------------
END OF PERIOD $ 337,975,842 $ 254,762,901
============= =============
+ Unaudited.
21
<PAGE>
PIC SMALL CAP PORTFOLIO
SELECTED RATIO DATA
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended October 31,
Six Months Ended ----------------------------------------
April 30, 2000+ 1999 1998 1997 1996 1995
--------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Operating expenses ......... 1.00%+ 1.00% 1.00% 1.00% 1.00% 1.00%
Net investment loss ........ (0.80%)#+ (0.79%)* (0.68%)* (0.49%)* (0.59%)* (0.51%)*
Portfolio turnover rate .... 63.10%^ 133.24% 81.75% 151.52% 53.11% 45.45%
</TABLE>
+ Unaudited.
* Net of fees waived and expenses absorbed of 0.00%, 0.01%, 0.01%, 0.01% and
0.07% of average net assets, respectively.
# Includes expenses recouped of 0.02%.
+ Annualized.
^ Not annualized.
See accompanying Notes to Financial Statements.
22
<PAGE>
PIC SMALL CAP PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited)
--------------------------------------------------------------------------------
NOTE 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.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Portfolio. These policies are in conformity with generally
accepted accounting principles.
A. VALUATION OF SECURITIES. Equity securities traded on a national
securities exchange or Nasdaq are valued at the last reported sales
price at the close of regular trading on each day that the exchanges
are open for trading. Other equity securities and debt securities for
which market quotations are readily available are valued at the mean
between their bid and asked prices, except that debt securities
maturing within 60 days are valued on an amortized cost basis.
Securities for which market quotations are not readily available are
valued at fair value as determined in good faith by the Board of
Trustees.
B. FEDERAL INCOME TAXES. The Portfolio intends to comply with the
requirements of the Internal Revenue Code applicable to it. Therefore,
no federal income tax provision is required.
C. OTHER. Securities transactions are recorded on the trade date basis.
Realized gains and losses from securities transactions are reported on
an identified cost basis. Interest is recorded as accrued and dividend
income is recorded on the ex-dividend date.
D. ACCOUNTING ESTIMATES. In preparing financial statements in conformity
with generally accepted accounting principles, management makes
estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements. Actual
results could differ from those estimates.
NOTE 3 - TRANSACTIONS WITH AFFILIATES
The Portfolio has entered into an investment advisory agreement with
Provident Investment Counsel, Inc. ("PIC") and an administration agreement with
Investment Company Administration, L.L.C. ("ICA") pursuant to which certain
employees of these entities serve as officers and/or trustees of the Portfolio.
PIC and ICA also provide management services necessary for the operations of the
Portfolio and furnish office facilities.
23
<PAGE>
PIC SMALL CAP PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited)- (Continued)
--------------------------------------------------------------------------------
PIC receives an investment advisory fee for its services to the Portfolio
at the annual rate of 0.80% of its average daily net assets. PIC has voluntarily
agreed to limit the expenses of the Portfolio to 1.00% of its average daily net
assets. During the six months ended April 30, 2000, PIC recouped $28,452 in
expenses.
Pursuant to a contract with the Funds, PIC has agreed to reimburse each
Fund and Portfolio for investment advisory fees and other expenses for ten years
ending March 1, 2010. PIC reserves the right to be reimbursed for any waiver of
its fees or expenses paid on behalf of the Funds and Portfolios if, within three
subsequent years, a Fund's or Portfolio's expenses are less than the limit
agreed to by PIC. Any reimbursements to PIC are subject to approval by the Board
of Trustees.
ICA receives for its services a fee at the annual rate of 0.10% of average
daily net assets of the Portfolio.
On December 19, 1995, the Portfolio approved a Deferred Compensation Plan
for Trustees (the "Plan"). Trustees are entitled to receive $2,500 per quarter
and $500 per meeting attended, which is allocated among the Portfolios. Trustees
can elect to receive payment in cash or defer payments provided for in the Plan.
If a Trustee elects to defer payment, the Plan provides for the creation of a
deferred payment account (phantom share account). This account accumulates the
deferred fees earned and the value of the account is adjusted at the end of each
quarter to reflect the value, which would have been earned if the account had
been invested in designated investments. The Portfolio recognizes as trustee
expense amounts accrued as meetings are held plus the change in the value of the
phantom share account determined on a quarterly basis. For the six months ended
April 30, 2000, the change in the value of the phantom share account was
unrealized appreciation of $16,090.
NOTE 4 - INVESTMENT TRANSACTIONS
The aggregate cost of purchases and the proceeds from sales of investment
securities, other than short-term obligations, for the six months ended April
30, 2000 were $206,915,721 and $271,401,954, respectively.
The cost of securities for federal income tax purposes was $253,436,608.
The aggregate gross unrealized appreciation and depreciation of investment
securities, based on their cost for federal income tax purposes, were as
follows:
Gross unrealized appreciation ............................. $ 113,775,120
Gross unrealized depreciation ............................. (27,414,340)
-------------
Net unrealized appreciation ............................ $ 86,360,780
=============
24
<PAGE>
Provident Investment Counsel Mutual Funds
Trustees and Officers
TRUSTEES AND OFFICERS-- P*I*C INVESTMENT TRUST
--------------------------------------------------------------------------------
Thomas J. Condon, Trustee
Jettie M. Edwards, Trustee
Richard N. Frank, Trustee
James Clayburn LaForce, Trustee
Angelo R. Mozilo, Trustee
Wayne H. Smith, Trustee
Douglass B. Allen, President and Trustee
Aaron W.L. Eubanks, Sr., Vice President and Secretary
William T. Warnick, Vice President and Treasurer
TRUSTEES AND OFFICERS-- P*I*C Portfolios
--------------------------------------------------------------------------------
Thomas J. Condon, Trustee
Jettie M. Edwards, Trustee
Richard N. Frank, Trustee
James Clayburn LaForce, Trustee
Angelo R. Mozilo, Trustee
Wayne H. Smith, Trustee
Douglass B. Allen, President and Trustee
Aaron W.L. Eubanks, Sr., Vice President and Secretary
William T. Warnick, Vice President and Treasurer
LEGAL COUNSEL
--------------------------------------------------------------------------------
Paul, Hastings, Janofsky & Walker, LLP
INDEPENDENT AUDITORS
--------------------------------------------------------------------------------
PricewaterhouseCoopers LLP
--------------------------------------------------------------------------------
This report is intended for shareholders of the Fund and may not be used as
sales literature unless preceded or accompanied by a current prospectus.
Past performance results shown in this report should not be considered a
representation of future performance. Share price and returns will fluctuate so
that shares, when redeemed, may be worth more or less than their original cost.
Statements and other information herein are dated and are subject to change.
