Annual Report October 31, 1999
[PROVIDENT INVESTMENT COUNSEL LOGO]
Small Cap Growth Fund I
Provident Investment Counsel
Investing in growth since 1951
<PAGE>
CONTENTS
3 President's Letter
4 Our Philosophy
4 Performance Update/Portfolio Review
5 Interview with Provident Managers
6 Performance Comparison
THE FUND
7 Statement of Assets and Liabilities
8 Statement of Operations
9 Statements of Changes in Net Assets
10 Financial Highlights
11 Notes to Financial Statements
14 Report of Independent Accountants
THE PORTFOLIO
15 Statement of Net Assets
26 Statement of Operations
27 Statements of Changes in Net Assets
28 Selected Ratio Data
29 Notes to Financial Statements
32 Report of Independent Accountants
33 Change in Independent Accountant
Items of Interest
- - THE GROWTH STYLE OF INVESTMENT CONTINUES TO ENJOY A LEADERSHIP ROLE. Our
strong stock selection and sector allocation in the Fund's were rewarded by
positive absolute and relative performance the past year.
- - TECHNOLOGY AND TECHNOLOGY RELATED ISSUES continue to provide the highest
growth rates and as a result have been larger components in the Fund's
portfolio of holdings.
- - OUR WEBSITE ADDRESS IS:
WWW.PROVNET.COM
2
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Fellow Shareholder,
We are pleased to report very positive results for the fiscal year ending
October 31, 1999 (more detailed information is available on the following
pages). The Small Cap Growth Fund I continues to lead the way -- more than
doubling the return of the Russell 2000 Growth Index, a broad measure of the
market's overall performance.
The underlying fundamentals of our holdings have remained very compelling,
and our patience through some volatility this year has been rewarded. Much of
the performance of the broad market and the Fund has been driven by the
technology and telecommunications sectors. Accordingly, we have increased both
the size and number of holdings in these areas.
The narrowness of the overall stock market, with a very limited number of
technology and telecommunications stocks dominating returns, causes some to
worry. Historically, such developments have sometimes ushered in unpleasant
declines. However, those declines have most often been accompanied by
unfavorable economic conditions, when either inflation has surged, or the
Federal Reserve has embarked upon a series of extreme tightening measures to
slow an overheated economy. This process usually results in either very slow
economic growth, or in the extreme, a recession. We do not assign a high
probability to either of these scenarios in the near-term. The one area of
concern to us at the beginning of the year, is high stock market valuations,
which makes the market vulnerable, particularly to rising interest rates.
We remain positive in our outlook for growth company shares well into next
year. The very positive tone and continued domestic economic expansion give us
reason to believe the market will broaden some in the months ahead. As with the
stronger-than-expected corporate profits picture for 1999, we see a solid growth
picture moving well into next year. As to Fund strategy, we intend to remain
extremely flexible, and are prepared to take profits in technology and
telecommunications issues in favor of other sectors if we see equal
opportunities present themselves.
Finally, while Y2K and valuation concerns abound, we do not, at this time,
expect any meaningful Y2K disruptions.
We appreciate your continued confidence in Provident Investment Counsel.
Sincerely,
/s/ Douglass B. Allen
Douglass B. Allen
President, PIC Investment Trust
December 7, 1999
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.
[GRAPHIC] EMERGING COMPANY ESTABLISHED GROWTH MATURE COMPANIES
GROWTH GROWTH CURVE
- - Investment style consistency is critical to superior long-term investment
results.
Performance Update/Portfolio Review
Small Cap Growth Fund I
SECTOR WEIGHTINGS
Technology 57.4%
Consumer Non-Durables 13.5%
Industrials 9.4%
Healthcare/Medical 7.5%
Retail 4.9%
Energy 2.2%
Financial 2.0%
Consumer Durables 1.3%
Transportation 1.0%
Public Utilities 0.8%
Average annualized total returns for the period ending 10/31/99:
Since
Inception
1 Year 3 Year 5 Year 9/30/93
------ ------ ------ -------
58.85% 11.14% 19.79% 16.08%
TOP 10 STOCK HOLDINGS:
Peregrine Systems, Inc. 2.38%
Vignette Corporation 2.13
Business Objects S.A. ADS 2.11
The Profit Recovery Group International, Inc. 2.11
NCO Group, Inc. 2.00
Dollar Tree Stores, Inc. 1.94
Emulex Corporation 1.81
Mercury Interactive Corporation 1.80
Check Point Software Technologies, Ltd. 1.68
UnitedGlobalCom, Inc. 1.65
4
<PAGE>
Interview with Provident Managers
WHAT INDUSTRY SECTORS PERFORMED POSITIVELY FOR THE FUND'S EQUITY HOLDINGS?
- Electronic Technology
- Technology Services
- Commercial Services
Q TO WHAT DO YOU ATTRIBUTE THE STRONG RETURNS OF SMALL CAP STOCKS OVER THE
LAST YEAR?
A For several years now, small cap stocks have generally lagged larger growth
equities. However, the portfolio's performance this year is testament to
the market's narrowing of the extreme valuation gap between large cap and
small cap stocks in the 1996-1998 period. These valuations became more and
more compelling as many of the growth issues continued to deliver strong
fundamental results.
Q WHAT LED TO THE SMALL CAP GROWTH FUND SIGNIFICANTLY OUTPERFORMING THE
COMPARABLE UNMANAGED INDICES OVER THE LAST YEAR?
A The Small Cap Growth Fund has significantly outperformed the unmanaged
indices through positive stock selection and weightings in the technology
services and electronic technology sectors. We focused our stock selection
in strong product sectors such as broadband, communications chips,
fiberoptics equipment, and web-enabling software. Additionally, almost all
segments of the Fund provided a positive contribution. The exceptions were
the health technology and retail trade sectors, which modestly penalized
overall results.
Q WHAT IS THE OUTLOOK FOR SMALL CAP STOCKS?
A As we move into early 2000, we are confident in our belief that the Small
Cap Growth Fund will continue to experience both strong absolute and
relative performance. For several years now, small and mid cap stocks have
generally lagged larger growth equities. The performance of the Fund this
year gives us evidence that this extreme valuation gap is narrowing and
will continue to do so. When coupled with the still attractive valuation
levels of small cap equities relative to large cap equities, the outlook is
indeed bright.
5
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- ----------------------------
Provident Investment Counsel
Small Cap Growth Fund I
- ----------------------------
PERFORMANCE COMPARISON
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
PROVIDENT INVESTMENT COUNSEL SMALL CAP GROWTH FUND I AND
THE RUSSELL 2000 GROWTH INDEX.
Average Annual Total Return
One Year Five Years Since Inception
-------- ---------- ---------------
58.85% 19.79% 16.08%
<TABLE>
<CAPTION>
09/30/93 10/31/93 04/30/94 10/31/94 04/30/95 10/31/95 04/30/96
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Provident Investment Counsel Small Cap Growth Fund I $10,000 $10,172 $9,478 $10,055 $10,514 $14,567 $18,823
Russell 2000 Growth $10,000 $10,289 $9,860 $10,196 $10,721 $12,293 $14,940
<CAPTION>
10/31/96 04/30/97 10/31/97 04/30/98 10/31/98 04/30/99 10/31/99
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Provident Investment Counsel Small Cap Growth Fund I $18,067 $14,948 $19,005 $20,959 $15,612 $18,290 $24,800
Russell 2000 Growth $13,932 $12,915 $16,879 $18,560 $14,204 $17,860 $18,365
</TABLE>
Past performance is not predictive of future performance.
6
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- ----------------------------
Provident Investment Counsel
Small Cap Growth Fund I
- ----------------------------
Statement of Assets and Liabilities
as of October 31, 1999
ASSETS
Investment in Portfolio, at value $ 218,011,604
Receivables:
Investments in Portfolio sold 74,823
Fund shares sold 105,669
From Provident Investment Counsel, Inc. (Note 3) 53,594
Prepaid expenses 20,123
-------------
Total Assets 218,265,813
=============
LIABILITIES
Payables:
Investments in Portfolio purchased 105,669
Fund shares repurchased 74,823
Accrued expenses 27,724
Deferred trustees' compensation (Note 3) 22,346
-------------
Total Liabilities 230,562
=============
NET ASSETS
Applicable to 7,569,965 shares of beneficial interest
outstanding $ 218,035,251
-------------
NET ASSET VALUE PER SHARE $ 28.80
=============
SOURCE OF NET ASSETS
Paid-in capital $ 148,819,365
Accumulated net investment loss (58,748)
Accumulated net realized gain on investments 12,461,129
Net unrealized appreciation on investments 56,813,505
-------------
Net Assets $ 218,035,251
-------------
See Notes to Financial Statements.
7
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- ----------------------------
Provident Investment Counsel
Small Cap Growth Fund I
- ----------------------------
Statement of Operations
Year ended October 31, 1999
INVESTMENT INCOME
Net investment loss from Portfolio $ (1,528,501)
------------
Expenses:
Administration fees (Note 3) 396,716
Trustees' fees 14,435
Audit fee 10,300
Legal fees 29,000
Transfer agent's fees 24,000
Reports to shareholders 10,000
Custody and accounting services fees 6,000
Registration fees 33,223
Miscellaneous 5,321
------------
Total expenses 528,995
Less reimbursement/waiver by Provident
Investment Counsel, Inc. (Note 3) (528,995)
------------
Net expenses --
============
Net investment loss (1,528,501)
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS
Net realized gain on investments 40,481,209
Net unrealized appreciation of investments 49,045,476
------------
Net gain on investments 89,526,685
============
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 87,998,184
------------
See Notes to Financial Statements.
8
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- ----------------------------
Provident Investment Counsel
Small Cap Growth Fund I
- ----------------------------
Statements of Changes in Net Assets
INCREASE (DECREASE) IN NET ASSETS
Year ended Year ended
October 31, 1999 October 31, 1998
------------- -------------
From operations:
Net investment loss $ (1,528,501) $ (938,236)
Net realized gain (loss) on
investments 40,481,209 (27,961,289)
Net unrealized appreciation of
investments 49,045,476 3,720,627
------------- -------------
Net increase (decrease) in net assets
resulting from operations 87,998,184 (25,178,898)
============= =============
Distributions to shareholders:
From net realized gains -- (11,840,606)
============= =============
Transactions in shares of beneficial
interest:
Purchases of 2,806,320 and
4,210,252 shares, respectively 61,000,731 89,693,654
Reinvestment of 0 and 560,104
shares, respectively -- 11,840,607
Redemptions of 3,024,859 and
1,364,413 shares, respectively (72,144,938) (28,852,682)
------------- -------------
Net increase (decrease) in net
assets resulting from share
transactions (11,144,207) 72,681,579
============= =============
Total increase in net assets 76,853,977 35,662,075
============= =============
NET ASSETS
Beginning of year 141,181,274 105,519,199
------------- -------------
End of year $ 218,035,251 $ 141,181,274
------------- -------------
See Notes to Financial Statements.
9
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- ----------------------------
Provident Investment Counsel
Small Cap Growth Fund I
- ----------------------------
Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
Year Year Year Year Year
ended ended ended ended ended
October October October October October
31, 1999 31, 1998 31, 1997 31, 1996 31, 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
year $ 18.13 $ 24.08 $ 23.19 $ 18.69 $ 12.90
------- ------- ------- ------- -------
Income from investment
operations:
Net investment loss (0.20) (0.03) (0.40) (0.10) (0.07)
Net realized and
unrealized gain (loss)
on investments 10.87 (3.99) 1.58 4.60 5.86
------- ------- ------- ------- -------
Total from investment
operations 10.67 (4.02) 1.18 4.50 5.79
------- ------- ------- ------- -------
Less distributions to
shareholders:
From net realized gains -- (1.93) (0.29) -- --
------- ------- ------- ------- -------
Net asset value, end of
year $ 28.80 $ 18.13 $ 24.08 $ 23.19 $ 18.69
======= ======= ======= ======= =======
Total return 58.85% (17.85%) 5.15% 24.08% 44.88%
======= ======= ======= ======= =======
Ratios/supplemental data:
Net assets, end of year
(millions) $ 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%
Net investment loss (0.79%) (0.67%) (0.48%) (0.60%) (0.51%)
</TABLE>
+ Includes the Fund's share of expenses, net of fee waivers and expense
reimbursements, allocated from the Portfolio.
** Net of expense reimbursements and fee waivers. The expense reimbursements
and fee waivers of the Fund were 0.27%, 0.26%, 0.25%, 0.34% and 0.47%,
respectively.
See Notes to Financial Statements.
10
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- ----------------------------
Provident Investment Counsel
Small Cap Growth Fund I
- ----------------------------
Notes to Financial Statements
1 -- ORGANIZATION
Provident Investment Counsel Small Cap Growth Fund I (the "Fund") (formerly
Provident Investment Counsel Small Cap Growth Fund) is one of eleven 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.
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 DISTRIBUTIONS TO SHAREHOLDERS. The Fund earns
income, net of the expenses of the Portfolio, daily on its investment
in the Portfolio. All net investment income or loss 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. Distributions to shareholders, if any, are paid
annually 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.
11
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- ----------------------------
Provident Investment Counsel
Small Cap Growth Fund I
- ----------------------------
Notes to Financial Statements
continued
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, as well as
the reported amounts of revenues and expenses during the periods
presented. 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, L.L.C.
("ICA") pursuant to which certain employees of these entities serve as officers
and/or trustees of the Trust and the Portfolio. PIC and ICA also provide
management services necessary for the operations of the Trust and the Portfolio
and furnish office facilities. PIC receives a fee for its services to the Fund
at the rate of 0.20% of the average daily net assets of the Fund. ICA receives
an annual fee for its services of $10,000.
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
fees waived and expenses reimbursed for the year ended October 31, 1999 were
$386,716 and $142,279, respectively.
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 year ended October 31, 1999.
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
12
<PAGE>
- ----------------------------
Provident Investment Counsel
Small Cap Growth Fund I
- ----------------------------
Notes to Financial Statements
continued
quarter to reflect the value which would have been earned if the account had
been invested in designated investments. The Fund recognizes as trustee expense
amounts accrued as meetings are held plus the change in the value of the phantom
share account determined on a quarterly basis.
4 -- INVESTMENT TRANSACTIONS
Additions and reductions in the investment in the Portfolio aggregated
$61,104,984 and $72,277,587, respectively.
At October 31, 1999, the Fund owned 85.57% of the total net assets of the
Portfolio.
13
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- ----------------------------
Provident Investment Counsel
Small Cap Growth Fund I
- ----------------------------
Report of Independent Accountants
To the Board of Trustees of
PIC Investment Trust
and the Shareholders of
Provident Investment Counsel Small Cap Growth Fund I
In our opinion, the accompanying statement of assets and liabilities, the
related statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
Provident Investment Counsel Small Cap Growth Fund I Series of PIC Investment
Trust (the "Trust") at October 31, 1999, and the results of its operations, the
changes in its net assets and the financial highlights for the year then ended,
in conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these financial statements in accordance
with generally accepted auditing standards, which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for the opinion expressed
above. The financial statements of the Trust as of October 31, 1998, including
the financial highlights for each of the four years in the period then ended,
were audited by other independent accountants whose report dated December 3,
1998 expressed an unqualified opinion on those financial statements.
PricewaterhouseCoopers LLP
December 3, 1999
14
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P-I-C
- ---------
SMALL CAP
PORTFOLIO
- ---------
Statement of Net Assets
as of October 31, 1999
Percntage of
EQUITY SECURITIES -- 95.76% Shares Value Net Assets
------- ---------- ------
AIRLINES -- 0.47%
Ryanair Holdings plc ADS* 28,870 $1,190,887 0.47%
======= ========== ======
APPAREL AND SHOES -- 0.25%
The Children's Place
Retail Stores, Inc.* 1,900 49,519 0.02
Too, Inc.* 37,350 597,600 0.23
------- ---------- ------
Total Apparel and Shoes 647,119 0.25
========== ======
AUTO PARTS -- 0.90%
Gentex Corporation * 133,600 2,296,250 0.90
======= ========== ======
BANKS -- 0.08%
Hamilton Bancorp Inc.* 13,230 210,026 0.08
======= ========== ======
BEVERAGE/FOOD -- 0.46%
Beringer Wine Estates
Holdings, Inc.* 29,600 1,176,600 0.46
======= ========== ======
BIOTECHNOLOGY -- 2.44%
Abgenix, Inc.* 12,900 572,437 0.23
Albany Molecular Research, Inc.* 34,400 855,700 0.34
Alkermes, Inc.* 27,000 953,438 0.37
Invitrogen Corporation * 42,800 1,070,000 0.42
QLT Phototherapeutics Inc.* 65,200 2,762,850 1.08
------- ---------- ------
Total Biotechnology 6,214,425 2.44
See Notes to Financial Statements.
15
<PAGE>
P-I-C
- ---------
SMALL CAP
PORTFOLIO
- ---------
Statement of Net Assets
as of October 31, 1999
Percentage of
EQUITY SECURITIES, continued Shares Value Net Assets
------- ----------- ------
BUSINESS SERVICES -- 8.04%
CoStar Group, Inc.* 26,900 $ 662,412 0.26%
The Corporate Executive Board
Company * 9,500 358,625 0.14
Dendrite International, Inc.* 83,900 2,632,362 1.03
Iron Mountain Incorporated* 16,750 506,688 0.20
NCO Group, Inc.* 120,435 5,103,433 2.00
The Profit Recovery Group
International, Inc.* 130,200 5,362,613 2.11
TeleTech Holdings Inc.* 65,700 932,119 0.37
TMP Worldwide Inc.* 37,120 2,317,680 0.91
United Rentals, Inc.* 38,400 715,200 0.28
Westwood One, Inc.* 40,763 1,880,170 0.74
------- ----------- ------
Total Business Services 20,471,302 8.04
----------- ------
COMPUTER SERVICES -- 6.44%
The BISYS Group, Inc.* 7,100 362,100 0.14
Computer Network Technology
Corporation* 9,700 155,806 0.06
DSP Group, Inc.* 44,700 2,134,425 0.84
Electro Scientific Industries, Inc.* 14,500 783,000 0.31
Globix Corporation* 16,700 601,200 0.24
Jack Henry & Associates, Inc. 25,300 920,287 0.36
MicroStrategy Incorporated* 31,800 3,072,675 1.21
MIPS Technologies, Inc.* 23,000 664,125 0.26
Modem Media . Poppe Tyson, Inc.* 31,700 2,187,300 0.86
National Computer Systems, Inc. 45,900 1,735,594 0.68
NICE Systems Ltd. ADR* 77,550 2,248,950 0.88
Pegasus Systems, Inc.* 33,325 1,424,644 0.56
ShowCase Corporation* 27,800 107,725 0.04
------- ----------- ------
Total Computer Services 16,397,831 6.44
See Notes to Financial Statements.
16
<PAGE>
P-I-C
- ---------
SMALL CAP
PORTFOLIO
- ---------
Statement of Net Assets
as of October 31, 1999
Percentage of
EQUITY SECURITIES, continued Shares Value Net Assets
------ ----- -------------
COMPUTER SOFTWARE -- 15.23%
Bluestone Software, Inc.* 27,700 $ 1,021,437 0.40%
Brio Technology, Inc.* 31,400 761,450 0.30
Business Objects S.A. ADS* 74,700 5,378,400 2.11
Check Point Software
Technologies, Ltd.* 36,900 4,268,869 1.68
Electronics for Imaging, Inc.* 60,900 2,455,031 0.96
Exchange Applications, Inc.* 31,200 850,200 0.33
F5 Networks, Inc.* 10,000 1,387,500 0.54
HNC Software Inc.* 52,600 2,100,712 0.83
Macromedia, Inc.* 44,100 2,841,694 1.12
Mercury Interactive Corporation* 56,400 4,575,450 1.80
Micromuse Inc.* 13,300 1,421,438 0.56
Mission Critical Software, Inc.* 12,700 747,713 0.29
National Instruments Corporation* 39,600 1,190,475 0.47
Peregrine Systems, Inc.* 138,450 6,074,494 2.38
PLX Technology, Inc.* 10,000 160,000 0.06
TriZetto Group, Inc.* 45,000 450,000 0.18
Unigraphics Solutions Inc.* 17,600 379,500 0.15
Verity, Inc.* 39,600 2,727,450 1.07
------- ----------- ------
Total Computer Software 38,791,813 15.23
=========== ======
CONSTRUCTION -- 0.12%
Dycom Industries, Inc.* 9,225 300,389 0.12
======= =========== ======
CREDIT AND FINANCE -- 0.51%
AmeriCredit Corp.* 74,300 1,290,962 0.51
See Notes to Financial Statements.
17
<PAGE>
P-I-C
- ---------
SMALL CAP
PORTFOLIO
- ---------
Statement of Net Assets
as of October 31, 1999
Percentage of
EQUITY SECURITIES, continued Shares Value Net Assets
------- ---------- -------------
DISCOUNT -- 2.91%
Dollar Tree Stores, Inc.* 113,380 $4,939,116 1.94%
99 CENTS Only Stores* 82,750 2,472,156 0.97
------- ---------- ------
Total Discount 7,411,272 2.91
========== ======
DRUGS -- 1.86%
K-V Pharmaceutical Company,
Class A* 47,300 821,837 0.32
Medicis Pharmaceutical Corporation,
Class A* 35,500 1,082,750 0.43
Roberts Pharmaceutical Corporation* 9,300 299,925 0.12
Shire Pharmaceuticals Group plc* 79,450 2,522,538 0.99
------- ---------- ------
Total Drugs 4,727,050 1.86
========== ======
EDUCATIONAL PROGRAMS -- 0.65%
Corinthian Colleges, Inc.* 57,100 1,113,450 0.44
Education Management Corporation* 58,200 552,900 0.21
------- ---------- ------
Total Educational Programs 1,666,350 0.65
========== ======
ELECTRIC POWER -- 0.77%
Calpine Corporation* 33,900 1,953,488 0.77
======= ========== ======
ELECTRICAL EQUIPMENT/PERIPHERALS -- 1.72%
Creo Products Inc.* 8,700 221,850 0.09
Dionex Corporation* 19,900 884,306 0.35
SanDisk Corporation* 31,200 1,891,500 0.74
TranSwitch Corporation* 29,400 1,383,637 0.54
- ------------------------------------ ------- ---------- ------
Total Electrical
Equipment/Peripherals 4,381,293 1.72
See Notes to Financial Statements.
18
<PAGE>
P-I-C
- ---------
SMALL CAP
PORTFOLIO
- ---------
Statement of Net Assets
as of October 31, 1999
Percentage of
EQUITY SECURITIES, continued Shares Value Net Assets
------- ----------- -------------
ELECTRONIC COMPONENTS/SEMICONDUCTORS -- 12.73%
Alpha Industries, Inc.* 25,200 $ 1,392,300 0.55%
Brooks Automation, Inc.* 32,800 623,200 0.25
Burr-Brown Corporation* 32,000 1,258,000 0.49
Credence Systems Corporation* 58,400 2,664,500 1.05
Cree Research, Inc.* 76,300 3,257,056 1.28
Cymer, Inc.* 47,000 1,736,062 0.68
Cypress Semiconductor Corporation* 36,800 940,700 0.37
The DII Group, Inc.* 63,100 2,271,600 0.89
Flextronics International Ltd.* 31,300 2,222,300 0.87
GlobeSpan, Inc.* 12,300 894,825 0.35
Integrated Device Technology, Inc.* 38,200 785,488 0.31
Lam Research Corporation* 37,800 3,191,738 1.25
Lattice Semiconductor Corporation* 71,800 2,539,925 1.00
Micrel, Incorporated* 49,200 2,675,250 1.05
Orbotech Ltd.* 25,200 1,968,750 0.77
Plexus Corp.* 21,200 561,800 0.22
QLogic Corporation* 8,300 864,237 0.34
Semtech Corporation* 34,800 1,333,275 0.52
Varian Semiconductor Equipment
Associates, Inc.* 55,400 1,253,425 0.49
------ ----------- ------
Total Electronic
Components/Semiconductors 32,434,431 12.73
----------- ------
ELECTRONICS -- 1.30%
Ancor Communications,
Incorporated* 34,900 1,105,894 0.43
ANTEC Corporation* 26,700 1,294,950 0.51
Power Integrations, Inc.* 8,900 907,244 0.36
- ------------------------------------ ------ ----------- ------
Total Electronics 3,308,088 1.30
See Notes to Financial Statements.
19
<PAGE>
P-I-C
- ---------
SMALL CAP
PORTFOLIO
- ---------
Statement of Net Assets
as of October 31, 1999
Percentage of
EQUITY SECURITIES, continued Shares Value Net Assets
--------- ------------- --------------
ENTERTAINMENT AND LEISURE -- 7.09%
American Classic Voyages Co.* 42,900 $ 1,072,500 0.42%
CINAR Corporation* 19,100 331,862 0.13
Citadel Communications
Corporation* 71,200 3,439,850 1.35
Cox Radio, Inc., Class A* 22,900 1,603,000 0.63
Emmis Communications Corporation,
Class A* 23,300 1,680,512 0.66
Entercom Communications Corp.,
Class A* 31,200 1,554,150 0.61
Fairfield Communities, Inc.* 116,770 1,430,433 0.56
International Speedway Corporation,
Class A 15,300 789,863 0.31
Jones Intercable, Inc., Class A* 22,375 1,222,234 0.48
Spanish Broadcasting System, Inc.,
Class A* 27,900 742,838 0.29
UnitedGlobalCom, Inc.* 48,300 4,202,100 1.65
------- ----------- ------
Total Entertainment and Leisure 18,069,342 7.09
=========== ======
FINANCIAL SERVICES -- 0.59%
Metris Companies Inc. 43,900 1,511,806 0.59
======= =========== ======
FOOD AND RESTAURANTS -- 0.50%
Performance Food Group Company* 46,600 1,264,025 0.50
======= =========== ======
INSURANCE -- 0.76%
Clark/Bardes Holdings, Inc.* 36,700 504,625 0.20
Financial Security Assurance
Holdings Ltd. 25,300 1,426,288 0.56
------- ----------- ------
Total Insurance 1,930,913 0.76
See Notes to Financial Statements.
20
<PAGE>
P-I-C
- ---------
SMALL CAP
PORTFOLIO
- ---------
Statement of Net Assets
as of October 31, 1999
Percentage of
EQUITY SECURITIES, continued Shares Value Net Assets
-------- ----------- -------------
INTERNET SERVICES -- 8.16%
About.com, Inc.* 29,500 $ 1,393,875 0.55%
AdForce, Inc.* 12,450 343,931 0.14
Agile Software Corporation* 11,000 1,078,000 0.42
Art Technology Group, Inc.* 24,200 1,306,800 0.51
Ask Jeeves, Inc.* 16,200 1,251,450 0.49
Critical Path, Inc.* 46,000 2,104,500 0.83
CyberSource Corporation* 12,200 774,700 0.30
Insweb Corporation* 9,950 179,100 0.07
JFAX.COM, Inc.* 54,300 235,866 0.09
Marimba, Inc.* 9,400 267,900 0.11
Media Metrix, Inc.* 22,000 1,031,250 0.40
Paradyne Networks, Inc.* 16,700 507,262 0.20
Primus Knowledge Solutions, Inc.* 33,500 1,009,187 0.40
PSINet Inc.* 7,000 252,000 0.10
Security First Corp.* 26,000 1,044,875 0.41
Vignette Corporation* 34,400 5,435,200 2.13
WebTrends Corporation* 31,400 1,938,950 0.76
Wink Communications, Inc.* 18,300 642,788 0.25
------ ----------- ------
Total Internet Services 20,797,634 8.16
============ ======
MEDICAL AND DENTAL PRODUCTS -- 0.18%
Cytyc Corporation* 11,600 461,100 0.18
====== ============ ======
MEDICAL INSTRUMENTS -- 0.95%
Affymetrix, Inc.* 27,500 2,423,437 0.95
See Notes to Financial Statements.
21
<PAGE>
P-I-C
- ---------
SMALL CAP
PORTFOLIO
- ---------
Statement of Net Assets
as of October 31, 1999
Percentage of
EQUITY SECURITIES, continued Shares Value Net Assets
------- ---------- -------------
MEDICAL/DENTAL SERVICES -- 1.75%
AmSurg Corp., Class A* 93,200 $ 570,850 0.22%
Professional Detailing, Inc.* 34,800 870,000 0.34
Renal Care Group, Inc.* 162,245 3,021,813 1.19
------- ---------- ------
Total Medical/Dental Services 4,462,663 1.75
========== ======
NETWORKING -- 3.12%
Emulex Corporation* 29,500 4,600,156 1.81
Extreme Networks, Inc.* 4,000 321,250 0.13
MMC Networks, Inc.* 10,700 341,063 0.13
Visual Networks, Inc.* 33,900 1,411,088 0.55
Xircom, Inc.* 25,500 1,286,156 0.50
------- ---------- ------
Total Networking 7,959,713 3.12
========== ======
OFFSHORE DRILLING -- 0.61%
Dril-Quip, Inc.* 11,700 273,487 0.11
Rowan Companies, Inc.* 81,600 1,269,900 0.50
------- ---------- ------
Total Offshore Drilling 1,543,387 0.61
========== ======
OIL FIELD SERVICES -- 1.52%
Atwood Oceanics, Inc.* 17,000 494,063 0.19
Global Industries, Ltd.* 90,000 720,000 0.28
Marine Drilling Companies, Inc.* 70,600 1,142,838 0.45
Patterson Energy, Inc.* 66,900 857,156 0.34
Trico Marine Services, Inc.* 96,300 668,081 0.26
------- ---------- ------
Total Oil Field Services 3,882,138 1.52
========== ======
POLLUTION CONTROL -- 0.85%
Newpark Resources, Inc.* 150,500 968,844 0.38
Waste Connections, Inc.* 78,125 1,206,055 0.47
------- ---------- ------
Total Pollution Control 2,174,899 0.85
See Notes to Financial Statements.
22
<PAGE>
P-I-C
- ---------
SMALL CAP
PORTFOLIO
- ---------
Statement of Net Assets
as of October 31, 1999
Percentage of
EQUITY SECURITIES, continued Shares Value Net Assets
-------- ----------- -------------
PUBLISHING/ADVERTISING -- 4.11%
Catalina Marketing Corporation* 38,200 $ 3,576,475 1.40%
Lamar Advertising Company,
Class A* 60,700 3,277,800 1.29
Playboy Enterprises, Inc., Class B* 141,400 3,623,375 1.42
------- ----------- ------
Total Publishing/Advertising 10,477,650 4.11
=========== ======
SPECIALTY RETAIL -- 1.05%
Cost Plus, Inc.* 54,150 1,976,475 0.78
The Yankee Candle Company, Inc.* 46,000 701,500 0.27
------- ----------- ------
Total Specialty Retail 2,677,975 1.05
=========== ======
TELECOMMUNICATIONS -- 6.29%
AirGate PCS, Inc.* 23,900 1,195,000 0.47
American Mobile Satellite
Corporation* 46,000 511,750 0.20
Applied Micro Circuits Corporation* 27,600 2,147,625 0.84
AudioCodes Ltd.* 25,300 1,530,650 0.60
CD Radio Inc.* 83,200 2,121,600 0.83
E-TEK Dynamics, Inc.* 15,200 1,012,700 0.40
Gilat Satellite Networks, Ltd.* 38,800 2,022,450 0.80
Insight Communications
Company, Inc.* 33,300 786,713 0.31
Orckit Communications Ltd.* 26,900 741,431 0.29
Pinnacle Holdings Inc.* 50,300 1,207,200 0.47
Research in Motion Limited* 55,400 1,703,550 0.67
Time Warner Telecom Inc.* 21,000 528,938 0.21
WinStar Communications, Inc.* 13,200 512,325 0.20
------- ----------- ------
Total Telecommunications 16,021,932 6.29
See Notes to Financial Statements.
23
<PAGE>
P-I-C
- ---------
SMALL CAP
PORTFOLIO
- ---------
Statement of Net Assets
as of October 31, 1999
Percentage of
EQUITY SECURITIES, continued Shares Value Net Assets
---------- ------------ -------------
TEXTILES AND SHOES -- 0.35%
Cutter & Buck Inc.* 53,700 $ 882,694 0.35%
--------- ------------ -------
TOYS -- 0.53%
JAKKS Pacific, Inc.* 32,800 1,344,800 0.53
========= ============ =======
TRUCKING -- 0.47%
Forward Air Corporation* 41,000 1,206,938 0.47
--------- ------------ -------
Total Equity Securities
(Cost $177,616,708) 243,962,622 95.76
============ =======
MONEY MARKET FUNDS -- 5.42%
Temporary Investment Fund Inc. --
Temp Fund 6,902,048 6,902,048 2.71
Temporary Investment Fund Inc. --
Temp Cash 6,902,048 6,902,048 2.71
--------- ------------ -------
Total Money Market Funds
(Cost $13,804,096) 13,804,096 5.42
------------ -------
Total Investments
(Cost $191,420,804) 257,766,718 101.18
============ =======
See Notes to Financial Statements.
24
<PAGE>
P-I-C
- ---------
SMALL CAP
PORTFOLIO
- ---------
Statement of Net Assets
as of October 31, 1999
Percentage of
OTHER ASSETS -- 0.91% Value Net Assets
------------ -------------
Receivables:
Investment securities sold $ 2,128,359
Interest 72,743
Shares of beneficial interest sold 111,831
Other assets 18,417
------------
Total other assets 2,331,350 0.91%
============ =======
TOTAL ASSETS 260,098,068 102.09
------------ -------
LIABILITIES -- (2.09%)
Payables:
Investment securities purchased 4,979,923
Shares of beneficial interest redeemed 93,425
To Advisor (Note 3) 153,623
Accrued expenses 66,002
Deferred trustees' compensation (Note 3) 42,194
------------
Total liabilities 5,335,167 (2.09)
============ =======
TOTAL NET ASSETS -- 100.00% $254,762,901 100.00%
------------ -------
* Non-income producing security.
See Notes to Financial Statements.
25
<PAGE>
P-I-C
- ---------
SMALL CAP
PORTFOLIO
- ---------
Statement of Operations
Year ended October 31, 1999
INVESTMENT INCOME
Income:
Dividends $ 30,354
Interest 440,273
-------------
Total income 470,627
=============
EXPENSES:
Investment advisory fees (Note 3) 1,793,492
Administration fees (Note 3) 224,187
Accounting services fees 88,822
Custodian fees 66,810
Audit fee 22,997
Trustees' fees 23,835
Insurance 6,001
Legal fees 10,598
Miscellaneous 9,001
-------------
Total expenses 2,245,743
Less waiver by Provident Investment Counsel,
Inc. (Note 3) (3,878)
-------------
Net expenses 2,241,865
=============
Net investment loss (1,771,238)
-------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments 48,594,775
Net unrealized appreciation of investments 56,517,702
-------------
Net gain on investments 105,112,477
=============
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 103,341,239
-------------
See Notes to Financial Statements.
26
<PAGE>
P-I-C
- ---------
SMALL CAP
PORTFOLIO
- ---------
Statements of Changes in Net Assets
INCREASE (DECREASE) IN NET ASSETS
Year Year
ended ended
October 31, 1999 October 31, 1998
---------------- ----------------
FROM OPERATIONS:
Net investment loss $ (1,771,238) $ (1,197,741)
Net realized gain (loss) on
investments 48,594,775 (30,872,647)
Net unrealized appreciation
(depreciation) of investments 56,517,702 (283,036)
------------- -------------
Net increase (decrease) in net
assets resulting from operations 103,341,239 (32,353,424)
============= =============
TRANSACTIONS IN INTERESTS:
Contributions by Holders 68,296,971 123,809,971
Withdrawals by Holders (90,528,948) (57,458,705)
------------- -------------
Net increase (decrease) in net
assets from transactions in
interests (22,231,977) 66,351,266
============= =============
TOTAL INCREASE IN NET ASSETS 81,109,262 33,997,842
============= =============
NET ASSETS
Beginning of year 173,653,639 139,655,797
------------- -------------
End of year $ 254,762,901 $ 173,653,639
------------- -------------
See Notes to Financial Statements.
27
<PAGE>
P-I-C
- ---------
SMALL CAP
PORTFOLIO
- ---------
Selected Ratio Data
<TABLE>
<CAPTION>
Year Year Year Year Year
ended ended ended ended ended
Oct. 31, Oct. 31, Oct. 31, Oct. 31, Oct. 31,
1999 1998 1997 1996 1995
------- ------ ------- ------- -------
<S> <C> <C> <C> <C> <C>
Ratios to average net assets:+
Expenses 1.00% 1.00% 1.00% 1.00% 1.00%
Net investment loss (0.79%) (0.68%) (0.49%) (0.59%) (0.51%)
------- ------ ------- ------- -------
Portfolio turnover rate 133.24% 81.75% 151.52% 53.11% 45.45%
------- ------ ------- ------- -------
</TABLE>
+ Net of expense reimbursements equivalent to 0.00%, 0.01%, 0.01%, 0.01%, and
0.07% of average net assets, respectively.
See Notes to Financial Statements.
28
<PAGE>
P-I-C
- ---------
SMALL CAP
PORTFOLIO
- ---------
Notes to Financial Statements
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 Nasdaq 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. 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 as well as the
reported amounts of revenues and expenses during the periods
presented. Actual results could differ from those estimates.
29
<PAGE>
P-I-C
- ---------
SMALL CAP
PORTFOLIO
- ---------
Notes to Financial Statements
continued
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.
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 year ended October 31, 1999, PIC waived $3,878 in advisory
fees.
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.
4 -- INVESTMENT TRANSACTIONS
The aggregate cost of purchases and the proceeds from sales of investment
securities, other than short-term obligations, for the year ended October 31,
1999 were $291,632,958 and $317,295,458, respectively.
30
<PAGE>
P-I-C
- ---------
SMALL CAP
PORTFOLIO
- ---------
Notes to Financial Statements
continued
The cost of securities for federal income tax purposes was $191,628,800.
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 $ 74,295,755
Gross unrealized depreciation (8,157,837)
------------
Net unrealized appreciation $ 66,137,918
============
31
<PAGE>
P-I-C
- ---------
SMALL CAP
PORTFOLIO
- ---------
Report of Independent Accountants
To the Board of Trustees of
and the Holders of Interests in
PIC Small Cap Portfolio
In our opinion, the accompanying statement of net assets and the related
statements of operations and of changes in net assets and the selected ratio
data present fairly, in all material respects, the financial position of PIC
Small Cap Portfolio (the "Portfolio") at October 31, 1999, and the results of
its operations, the changes in its net assets and the selected ratio data for
the year then ended, in conformity with generally accepted accounting
principles. These financial statements and selected ratio data (hereafter
referred to as "financial statements") are the responsibility of the Portfolio's
management; our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit of these financial
statements in accordance with generally accepted auditing standards, which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit, which included
confirmation of securities at October 31, 1999, by correspondence with the
custodian and brokers, provides a reasonable basis for the opinion expressed
above. The financial statements of the Portfolio as of October 31, 1998,
including the selected ratio data for each of the four years in the period then
ended, were audited by other independent accountants whose report dated December
3, 1998 expressed an unqualified opinion on those financial statements.
PricewaterhouseCoopers LLP
December 3, 1999
32
<PAGE>
P-I-C
- ---------
SMALL CAP
PORTFOLIO
- ---------
Change in Independent Accountant
On August 27, 1999, McGladrey & Pullen, LLP ("McGladrey") resigned as
independent auditors of PIC Investment Trust and PIC Small Cap Portfolio
pursuant to an agreement by PricewaterhouseCoopers LLP ("PwC") to acquire
McGladrey's investment company practice. The McGladrey partners and
professionals serving the Portfolio at the time of the acquisition joined PwC.
The reports of McGladrey on the financial statements of PIC Investment Trust and
PIC Small Cap Portfolio during the past two fiscal years contained no adverse
opinion or disclaimer of opinion, and were not qualified or modified as to
uncertainty, audit scope or accounting principles.
In connection with its audits for the two most recent fiscal years and through
August 27, 1999, there were no disagreements with McGladrey on any matter of
accounting principle or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements, if not resolved to the satisfaction of
McGladrey would have caused it to make reference to the subject matter of
disagreement in connection with its report.
On September 1, 1999, and October 25, 1999, PIC Portfolios and PIC Investment
Trust, respectively, with the approval of their Boards of Trustees and their
Audit Committees, engaged PwC as their independent auditors.
33
<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.
