ANNUAL REPORT
FOR THE YEAR ENDED OCTOBER 31, 2000
[LOGO]
SMALL CAP GROWTH FUND I
PROVIDENT INVESTMENT COUNSEL
---------------------------------------
GROWTH STOCK LEADERS FOR HALF A CENTURY
<PAGE>
CONTENTS
2 President's Letter
4 Performance Update/Portfolio Review
THE FUND 6 Statement of Assets and Liabilities
7 Statement of Operations
8 Statements of Changes in Net Assets
9 Financial Highlights
10 Notes to Financial Statements
THE PORTFOLIO 14 Statement of Net Assets
18 Statement of Operations
19 Statements of Changes in Net Assets
20 Selected Ratio Data
21 Notes to Financial Statements
1
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FELLOW SHAREHOLDERS:
We are very pleased to report positive results for the twelve months ended
October 31, 2000. Our Small Company Growth funds led the way by significantly
outperforming their benchmark, the Russell 2000 Growth Index. We are satisfied
with the performance of our Fund, especially considering the uncertain and
volatile nature of the current market environment. The year 2000 has been, and
continues to be, a challenging year for the U.S. equity markets. The year began
with Y2K fears and valuation concerns. Although Y2K fears dissipated almost
immediately, concerns over relative valuations proved legitimate. We saw this
play out in the spring as many investors exited New Economy stocks in the
technology sectors for stocks in Old Economy sectors including food, oil,
defense and manufacturing. As the year continued, investors oscillated between
fear of rising interest rates and hope that the Fed had tightened enough.
However, as summer approached, technology growth stocks became leaders once
again.
The third quarter of 2000 saw the markets experience additional pressure from
rising energy prices and continued concerns over inflation and interest rates.
The aforementioned technology growth stock leadership proved short-lived as
numerous bellwether stocks in this sector pre-announced weaker than expected
earnings. Oc-tober saw the usual efforts to reduce capital gains by large mutual
fund companies --contributing to negative returns for most equity indexes. With
all of this as a backdrop, the market also had to deal with uncertainties
surrounding the presidential election.
Looking ahead, we see economic activity slowing, but not stagnating. We think
investors need to put into perspective that the GDP and earnings growth rates of
the last 18 months have been super-charged and unsustainable. We see a real GDP
growth rate in the area of +3.0-3.5% for 2001 over 2000. If we are close to the
mark, such a rate of change should be sufficient for selected growth companies
--large, mid and small -- to continue to deliver high and sustainable
double-digit revenue and earnings growth.
Our outlook for growth company shares is positive. We feel that the primary
driver of the recent bull market in the U.S. has been extraordinary increases in
productivity. These productivity advances continue. While the Fed has instituted
numerous interest rate increases over the past 2 years, high quality growth
companies continue to record strong revenue and earnings growth translating into
higher equity values.
2
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For these reasons, Provident Investment Counsel is confident that our
time-tested philosophy of building portfolios of high growth companies --
companies with outstanding revenue and earnings growth -- will continue to
reward our mutual fund shareholders in the long run. Volatility and huge market
swings have become commonplace in today's equity markets. However, it is still
our unwavering belief that, over time, a company's earnings-per-share growth is
the most significant determinant of long-term stock price appreciation.
Thank you for your continued confidence in Provident Investment Counsel.
/s/ Thomas M. Mitchell
Thomas M. Mitchell
President
PIC Investment Trust
3
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OUR PHILOSOPHY
* Focused, fundamental research, properly controlled, adds value.
* Sustainable earnings growth is the most important contributor to long-term
stock appreciation.
* Emphasis on strong financial characteristics ensures focus on growth and
quality.
* Investment style consistency is critical to superior long-term investment
results.
[GRAPHIC] EMERGING SMALL CAP MID CAP LARGE CAP MATURE COMPANIES
ESTABLISHED GROWTH
PERFORMANCE UPDATE/PORTFOLIO REVIEW
SMALL CAP GROWTH FUND I
EQUITY SECTOR WEIGHTINGS
Average annual total returns for the period ended 10/31/00*:
Electronic Technology 25.44%
Health Technology 21.04
Technology Services 18.44
Industrial Services 6.76
Commercial Services 4.62
Finance 3.83
Transportation 3.50
Retail Trade 3.47
Consumer Services 3.42
Health Services 2.90
Process Industries 2.12
Producer Manufacturing 1.61
Communications 1.53
Distribution Services 0.63
Consumer Durables 0.46
Energy Minerals 0.23
* The total return stated above was achieved during favorable market
conditions. Investors should not expect that such a favorable return can be
consistently achieved.
SINCE
INCEPTION
1 YEAR 3 YEAR 5 YEAR 9/30/93
------ ------ ------ -------
42.29% 22.91% 19.36% 19.45%
% OF NET
TOP 10 STOCK HOLDINGS: ASSETS
--------
Informatica Corp. 2.21%
Oak Technology, Inc. 2.18
Elantec Semiconductor, Inc. 2.07
Plexus Corp. 2.00
Interwoven, Inc. 1.89
Henry (Jack) & Associates, Inc. 1.85
Bisys Group, Inc. 1 79
Myriad Genetics, Inc. 1.76
Cephalon, Inc. 1.76
Catalina Marketing Corp. 1.64
4
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PERFORMANCE COMPARISON
PROVIDENT INVESTMENT COUNSEL SMALL CAP GROWTH FUND I
Value of $10,000 Investment vs Russell 2000 Growth
Provident Investment Counsel
Small Cap Growth Fund I Russell 2000 Growth Index
----------------------- -------------------------
30-Sep-93 $10,000 $10,000
31-Jan-94 $10,055 $10,536
31-Jul-94 $ 8,963 $ 9,359
31-Jan-95 $ 9,501 $ 9,809
31-Jul-95 $13,281 $12,515
31-Jan-96 $15,331 $13,012
31-Jul-96 $17,077 $12,893
31-Jan-97 $18,626 $14,964
31-Jul-97 $19,076 $16,146
31-Jan-98 $18,066 $16,268
31-Jul-98 $18,376 $15,937
31-Jan-99 $19,444 $17,443
31-Jul-99 $21,536 $18,249
31-Jan-00 $35,368 $23,662
31-Jul-00 $36,289 $22,105
31-Oct-00 $35,287 $21,331
ONE FIVE SINCE
YEAR YEAR INCEPTION
---- ---- ---------
Provident Investment Counsel Small Cap Growth Fund I 42.29% 19.36% 19.45%
Past perfomance is not predictive of future performance.
5
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PROVIDENT INVESTMENT COUNSEL SMALL CAP GROWTH FUND I
STATEMENT OF ASSETS AND LIABILITIES at October 31, 2000
ASSETS
Investment in Portfolio, at cost ........................... $ 184,950,325
=============
Investment in Portfolio, at value .......................... $ 239,612,854
Receivables:
Investment in Portfolio sold ............................. 48,249
Fund shares sold ......................................... 27,978
Prepaid expenses ........................................... 12,391
-------------
Total assets ........................................... 239,701,472
-------------
LIABILITIES
Payables:
Investment in Portfolio purchased ........................ 27,978
Fund shares redeemed ..................................... 48,249
To Provident Investment Counsel, Inc. (Note 3) ........... 11,463
Deferred trustees' compensation (Note 3) ................... 42,053
Accrued expenses ........................................... 34,590
-------------
Total liabilities ...................................... 164,333
-------------
NET ASSETS
Applicable to shares of beneficial interest outstanding .... $ 239,537,139
=============
Shares of beneficial interest outstanding .................. 6,132,564
-------------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE ... $ 39.06
=============
COMPONENTS OF NET ASSETS
Paid-in capital ............................................ $ 88,899,066
Accumulated net investment loss ............................ (95,462)
Accumulated net realized gain on investments ............... 96,071,006
Net unrealized appreciation on investments ................. 54,662,529
-------------
Net assets ............................................. $ 239,537,139
=============
See accompanying Notes to Financial Statements.
6
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PROVIDENT INVESTMENT COUNSEL SMALL CAP GROWTH FUND I
STATEMENT OF OPERATIONS For the Year Ended October 31, 2000
INVESTMENT INCOME
Net investment loss from Portfolio ......................... $ (1,820,572)
------------
Expenses
Administration fees (Note 3) ............................. 578,904
Registration expense ..................................... 36,433
Transfer agent fees ...................................... 26,943
Trustee fees ............................................. 20,791
Legal fees ............................................... 13,417
Reports to shareholders .................................. 15,000
Audit fees ............................................... 17,500
Custody and accounting services fees ..................... 6,000
Miscellaneous ............................................ 3,982
------------
Total expenses ......................................... 718,970
Less: fees waived and expenses absorbed (Note 3) ....... (718,970)
------------
Net expenses ........................................... --
------------
NET INVESTMENT LOSS .................................. (1,820,572)
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments ........................... 98,033,118
Net unrealized depreciation on investments ................... (2,150,976)
------------
Net realized and unrealized gain on investments .............. 95,882,142
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ......... $ 94,061,570
============
See accompanying Notes to Financial Statements.
7
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PROVIDENT INVESTMENT COUNSEL SMALL CAP GROWTH FUND I
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 2000 OCTOBER 31, 1999
---------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS
Net investment loss .................................... $ (1,820,572) $ (1,528,501)
Net realized gain on investments ....................... 98,033,118 40,481,209
Net unrealized appreciation (depreciation)
on investments ....................................... (2,150,976) 49,045,476
------------- -------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS .................................. 94,061,570 87,998,184
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS
From net realized gain ................................. (12,639,383) --
------------- -------------
BENEFICIAL INTEREST SHARE TRANSACTIONS
Proceeds from shares sold .............................. 72,529,471 61,000,731
Proceeds from reinvestment of distributions ............ 12,623,251 --
Cost of shares redeemed ................................ (145,073,021) (72,144,938)
Net decrease in net assets resulting from
share transactions ................................... (59,920,299) (11,144,207)
------------- -------------
TOTAL INCREASE IN NET ASSETS ....................... 21,501,888 76,853,977
NET ASSETS
Beginning of year ...................................... 218,035,251 141,181,274
------------- -------------
END OF YEAR ............................................ $ 239,537,139 $ 218,035,251
============= =============
ACCUMULATED NET INVESTMENT LOSS .......................... (95,462) (58,748)
============= =============
CHANGE IN SHARES
Shares sold ............................................ 1,718,093 2,806,320
Shares issued on reinvestment of distributions ......... 368,132 --
Shares redeemed ........................................ (3,523,626) (3,024,859)
------------- -------------
NET DECREASE ........................................... (1,437,401) (218,539)
============= =============
</TABLE>
See accompanying Notes to Financial Statements.
8
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PROVIDENT INVESTMENT COUNSEL SMALL CAP GROWTH FUND I
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
----------------------------------------------------
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ..... $ 28.80 $ 18.13 $ 24.08 $ 23.19 $ 18.69
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss .................. (0.30) (0.20) (0.03) (0.40) (0.10)
Net realized and unrealized gain
(loss) on investments ............... 12.24 10.87 (3.99) 1.58 4.60
------- ------- ------- ------- -------
Total from investment operations ....... 11.94 10.67 (4.02) 1.18 4.50
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
From net realized gains .............. (1.68) 0.00 (1.93) (0.29) 0.00
------- ------- ------- ------- -------
Net asset value, end of year ........... $ 39.06 $ 28.80 $ 18.13 $ 24.08 $ 23.19
======= ======= ======= ======= =======
Total return ........................... 42.29% 58.85% (17.85%) 5.15% 24.08%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (millions).... $ 239.5 $ 218.0 $ 141.2 $ 105.5 $ 196.1
RATIOS TO AVERAGE NET ASSETS:#++
Expenses ............................. 1.00% 1.00% 1.00% 1.00% 1.00%
Net investment loss .................. (0.64%) (0.79%) (0.67%) (0.48%) (0.60%)
</TABLE>
# Includes the Fund's share of expenses, net of fees waived and expenses
absorbed, allocated from the Portfolio.
++ Net of fees waived and expenses combined fees and expenses absorbed. The
waived absorbed were 0.25%, 0.27%, 0.27%, 0.26% and 0.35%, respectively.
See accompanying Notes to Financial Statements.
9
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PROVIDENT INVESTMENT COUNSEL SMALL CAP GROWTH FUND I
1 - ORGANIZATION
Provident Investment Counsel Small Cap Growth Fund I (the "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.
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.
E. RECLASSIFICATION OF CAPITAL ACCOUNTS. The Fund accounts and reports
for distributions to shareholders in accordance with the American
Institute of Certfied Public Accountants' Statement of Position 93-2:
DETERMINATION,
10
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PROVIDENT INVESTMENT COUNSEL SMALL CAP GROWTH FUND I
NOTES TO FINANCIAL STATEMENTS
DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF INCOME, CAPITAL
AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES. For the
year ended October 31, 2000, the Funds decreased accumulated net
realized gain by $1,783,858 due to the Fund experiencing a net
investment loss during the year. Net assets were not affected by this
change.
3 - TRANSACTIONS WITH AFFILIATES
The Trust has entered into administration agreements with Provident
Investment Counsel, Inc. ("PIC") and Investment Company Administration, L.L.C.
("ICA") pursuant to which certain employees of these entities serve as officers
and/or trustees of the Trust and the Portfolio. PIC and ICA also provide
management services necessary for the operations of the Trust and the Portfolio
and furnish office facilities. PIC receives a fee for its services to the Fund,
at the rate of 0.20% of the average daily net assets of the Fund. ICA receives
an annual fee for its services of $10,000.
Pursuant to a contract with the Fund, PIC has agreed to reimburse the Fund
and Portfolio for investment advisory fees and other expenses for ten years
ending March 1, 2010, to the extent necessary so that the expenses of the Fund,
including those expenses allocated from the Portfolio, do not exceed 1.00% of
the Fund's average net assets. PIC reserves the right to be reimbursed for any
waiver of its fees or expenses paid on behalf of the Fund and Portfolio if,
within three subsequent years, the Fund's or Portfolio's expenses are less than
the limit agreed to by PIC. The amount of fees waived and expenses absorbed for
the year ended October 31, 2000 were $568,904 and $150,066, respectively.
At October 31, 2000, the amount available for reimbursement that has been
paid and/or waived by PIC on behalf of the Fund is $1,602,018.
At October 31, 2000, PIC may recapture a portion of the above amounts no
later than the dates as stated below:
OCTOBER 31,
------------------------------
2001 2002 2003
---- ---- ----
Small Cap Growth Fund I ................ $354,053 $528,995 $718,970
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, 2000.
11
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PROVIDENT INVESTMENT COUNSEL SMALL CAP GROWTH FUND I
NOTES TO FINANCIAL STATEMENTS (Continued)
On December 19, 1995, the Trust approved a Deferred Compensation Plan for
Trustees (the "Plan"). Trustees are entitled to receive $2,500 per quarter and
$500 per meeting attended, which is allocated among the Funds. Trustees can
elect to receive payment in cash or defer payments provided for in the Plan. If
a trustee elects to defer payment, the Plan provides for the creation of a
deferred payment account (phantom share account). This account accumulates the
deferred fees earned and the value of the account is adjusted at the end of each
quarter to reflect the value which would have been earned if the account had
been invested in designated investments. The Fund recognizes as trustee expense
amounts accrued as meetings are held plus the change in the value of the phantom
share account determined on a quarterly basis. For the year ended October 31,
2000, the change in the value of the phantom share account included unrealized
appreciation of $9,287.
4 - INVESTMENT TRANSACTIONS
Additions and reductions in the investment in the Portfolio aggregated
$72,746,330 and $145,206,650, respectively.
At October 31, 2000, the Fund owned 79.6% of the total net assets of the
Porfolio.
5 - SPECIAL MEETING OF SHAREHOLDERS (UNAUDITED)
On September 26, 2000, Old Mutual plc acquired UAM, PIC's indirect parent.
A special meeting of shareholders of the Fund was held at the offices of
Provident Investment Counsel, Inc. on October 27, 2000. The shareholders of the
Fund approved a new investment advisory agreement to the PIC Small Cap Portfolio
as a result of the acquisition of PIC's parent company, UAM, by Old Mutual plc
with 6,252,236 shares voted "For", 951 shares voted "Against" and 3,514 shares
abstained.
12
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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 and
the related statements of operations and of changes in net assets and the
financial highlights present fairly, in all material respects, the financial
position of Provident Investment Counsel Small Cap Growth Fund I series of PIC
Investment Trust (the "Trust") at October 31, 2000, the results of its
operations for the year then ended, the changes in its net assets and the
financial highlights for each of the two years in the period then ended, in
conformity with accounting principles generally accepted in the United States of
America. These financial statements and financial highlights (hereafter referred
to as "financial statements") are the responsibility of the Trust's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with auditing standards generally accepted in the United States of
America, which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion. The financial highlights for
each of the three years in the period ended October 31, 1998 were audited by
other independent accountants whose report dated December 3, 1998 expressed an
unqualified opinion on those statements.
PricewaterhouseCoopers LLP
December 15, 2000
13
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PIC SMALL CAP PORTFOLIO
STATEMENT OF NET ASSETS as of October 31, 2000
--------------------------------------------------------------------------------
SHARES VALUE
--------------------------------------------------------------------------------
EQUITY SECURITIES -- 96.3%
AIRLINES -- 2.1%
64,440 Ryanair Holdings plc ADS* $ 2,597,737
73,400 Skywest, Inc. 3,706,700
-----------
6,304,437
-----------
APPAREL & SHOES -- 0.9%
82,700 Hot Topic, Inc.* 2,832,475
-----------
AUTO PARTS -- 0.8%
92,900 Gentex Corp.* 2,299,275
-----------
BANKS -- 0.8%
42,100 Commerce Bancorp, Inc. 2,549,681
-----------
BIOTECHNOLOGY -- 12.1%
48,300 Alkermes, Inc.* 1,790,119
46,300 Aurora Biosciences Corp.* 2,821,406
21,900 Bruker Daltonics, Inc.* 750,075
48,300 Cell Therapeutics, Inc.* 3,230,817
35,600 Charles River Laboratories International, Inc.* 934,500
31,300 CuraGen Corp.* 2,022,762
60,050 Digene Corp.* 1,948,810
48,200 Eden Bioscience Corp.* 1,825,575
17,900 Genencor International, Inc.* 492,250
23,000 Illumina, Inc.* 747,500
48,800 Invitrogen Corp.* 3,711,850
43,600 Large Scale Biology Corp.* 809,325
29,600 Medarex, Inc.* 1,809,300
44,200 Myriad Genetics, Inc.* 5,304,000
18,300 OSI Pharmaceuticals, Inc.* 1,317,600
55,250 Paradigm Genetics, Inc.* 877,094
41,100 Sangamo Biosciences, Inc.* 1,071,169
62,600 Titan Pharmaceuticals, Inc.* 2,634,208
26,000 Vertex Pharmaceuticals, Inc.* 2,420,844
-----------
36,519,204
-----------
BUSINESS SERVICES -- 2.4%
20,800 Corporate Executive Board Co.* 959,400
39,300 CoStar Group, Inc.* 1,228,125
70,500 Iron Mountain, Inc.* 2,383,781
99,400 Teletech Holdings, Inc.* $ 2,758,350
-----------
7,329,656
-----------
COMPUTER SERVICES-- 8.5%
114,600 Bisys Group, Inc.* 5,400,525
35,400 Cerner Corp.* 2,192,587
46,000 Digital Lightwave, Inc.* 2,331,625
44,900 Globix Corp.* 454,612
101,200 Henry Jack & Associates, Inc. 5,566,000
25,700 Manhattan Associates, Inc.* 1,645,202
60,100 Network Engines, Inc.* 1,878,125
53,850 Nice Systems, Ltd. ADR* 2,517,487
44,200 Optimal Robotics Corp.* 1,486,225
47,700 Vastera, Inc.* 846,675
58,300 Versata, Inc.* 961,950
-----------
25,281,013
-----------
COMPUTER SOFTWARE-- 8.7%
105,500 Actuate Corp.* 2,973,781
83,350 Aspen Technology, Inc.* 3,443,397
10,700 Business Objects S.A. ADS* 843,127
42,800 Docent, Inc.* 1,102,100
70,500 Informatica Corp.* 6,662,250
27,600 Manugistics Group, Inc.* 3,144,675
54,700 National Instruments Corp.* 2,553,806
29,663 NetIQ, Corp.* 2,554,726
30,800 OTG Software, Inc.* 970,200
27,800 Software Technologies Corp.* 472,600
11,541 WebMethods, Inc.* 1,025,706
-----------
25,746,368
-----------
CREDIT & FINANCE-- 0.8%
85,700 AmeriCredit Corp.* 2,303,187
-----------
DISCOUNT STORES-- 0.9%
115,033 99 Cents Only Stores, Inc.* 2,581,053
-----------
DRUGS & PHARMACEUTICALS-- 6.1%
38,500 Alpharma, Inc.-Class A 1,494,281
98,800 Cephalon, Inc.* 5,298,150
7,600 Durect Corp.* 113,525
-----------
14
<PAGE>
PIC SMALL CAP PORTFOLIO
STATEMENT OF NET ASSETS as of October 31, 2000 - (continued)
--------------------------------------------------------------------------------
SHARES VALUE
--------------------------------------------------------------------------------
99,000 Dusa Pharmaceuticals, Inc.* $ 2,586,375
93,700 K-V Pharmaceutical Co.-Class A* 3,648,444
6,150 K-V Pharmaceutical Co.-Class B* 239,850
51,500 Medicis Pharmaceutical Corp.-Class A* 3,791,687
49,300 Praecis Pharmaceuticals, Inc.* 1,250,987
-----------
18,423,299
-----------
EDUCATIONAL PROGRAMS-- 0.7%
31,450 DeVry, Inc.* 1,161,684
41,450 University of Phoenix Online* 1,088,062
-----------
2,249,746
-----------
ELECTRONIC COMPONENTS/SEMICONDUCTOR-- 16.5%
84,500 ASM International, N.V.* 1,357,281
67,500 Benchmark Electronics, Inc.* 2,716,875
23,275 Brooks Automation, Inc.* 616,787
30,000 DuPont Photomasks, Inc.* 1,683,750
55,900 Elantec Semiconductor, Inc.* 6,218,875
58,200 Exar Corp.* 2,600,812
36,600 Galileo Technology, Ltd.* 992,775
80,200 Lattice Semiconductor Corp.* 2,340,837
44,600 LightPath Technologies, Inc.-Class A* 1,215,350
42,800 MatrixOne, Inc.* 1,270,625
233,600 Oak Technology, Inc.* 6,555,400
79,000 Orbotech, Ltd.* 4,182,062
18,600 Pixelworks, Inc.* 619,613
95,200 Plexus Corp.* 6,003,550
31,000 Sawtek, Inc.* 1,577,125
54,200 Semtech Corp.* 1,747,950
51,600 Sipex Corp.* 2,031,750
65,700 Symyx Technologies, Inc.* 3,100,219
36,650 Tripath Technology, Inc.* 1,072,013
51,500 Tvia, Inc.* 843,313
15,200 Veeco Instruments, Inc.* 1,006,288
-----------
49,753,250
-----------
ELECTRICAL EQUIPMENT/PERIPHERALS-- 2.4%
25,350 Anaren Microwave, Inc.*$ 2,636,400
29,100 Shaw Group, Inc.* 2,371,650
37,350 TranSwitch Corp.* 2,156,963
-----------
7,165,013
-----------
ELECTRONICS -- 0.8%
36,500 InFocus Corp.* 1,612,844
15,100 Keithley Instruments, Inc. 807,850
-----------
2,420,694
-----------
ENTERTAINMENT & LEISURE-- 0.4%
105,470 Fairfield Communities, Inc.* 1,338,151
-----------
FINANCIAL SERVICES-- 2.0%
105,000 Metris Companies, Inc. 3,399,375
38,400 PMI Group, Inc. 2,836,800
-----------
6,236,175
-----------
FOOD & RESTAURANTS -- 1.7%
13,000 California Pizza Kitchen, Inc.* 455,000
45,350 Performance Food Group, Co.* 1,836,675
120,925 Rare Hospitality International, Inc.* 2,811,506
-----------
5,103,181
-----------
HOME FURNISHINGS-- 0.6%
54,200 Linens `n Things, Inc.* 1,666,650
-----------
HOSPITALS -- 0.8%
41,600 Community Health Systems* 1,172,600
34,000 LifePoint Hospitals, Inc.* 1,317,500
-----------
2,490,100
-----------
INTERNET SERVICES-- 4.1%
57,100 Agile Software Corp.* 4,303,913
23,000 Equinix, Inc.* 224,250
56,500 Interwoven, Inc.* 5,692,375
34,200 Radware, Ltd.* 773,775
43,250 WebTrends Corp.* 1,390,082
-----------
12,384,395
-----------
MANUFACTURING - ELECTRONIC OFFICE AND COMPUTING -- 0.5%
60,600 Mentor Graphics Corp.* 1,420,313
-----------
15
<PAGE>
PIC SMALL CAP PORTFOLIO
STATEMENT OF NET ASSETS as of October 31, 2000 - (continued)
--------------------------------------------------------------------------------
SHARES VALUE
--------------------------------------------------------------------------------
MEDICAL & DENTAL PRODUCTS-- 0.5%
32,050 Zoll Medical Corp.* $ 1,588,478
-----------
MEDICAL INSTRUMENTS-- 2.1%
227,300 ESC Medical Systems, Ltd.* 3,537,356
22,900 Molecular Devices Corp.* 1,565,788
45,700 Novoste Corp.* 1,153,925
-----------
6,257,069
-----------
MEDICAL/DENTAL SERVICES-- 1.2%
50,750 Accredo Health, Inc.* 2,194,938
103,300 Amsurg Corp.-Class A* 1,510,763
-----------
3,705,701
-----------
NETWORKING -- 1.3%
39,150 JNI Corp.* 3,486,797
20,900 Stanford Microdevices, Inc.* 523,806
-----------
4,010,603
-----------
OIL & GAS PRODUCTION -- 1.9%
67,100 National-Oilwell, Inc.* 1,962,675
86,000 Precision Drilling Corp.* 2,461,750
21,100 Triton Energy Corp.* 648,825
33,200 UTI Energy Corp.* 666,075
-----------
5,739,325
-----------
OFFSHORE DRILLING -- 1.7%
48,800 Dril-Quip, Inc.* 1,610,400
134,100 Pride International, Inc.* 3,394,406
-----------
5,004,806
-----------
OIL FIELD SERVICES/EQUIPMENT -- 2.5%
5,900 Atwood Oceanics, Inc.* 198,019
50,600 Core Laboratories N.V.* 1,091,063
78,700 Hanover Compressor Co.* 2,567,588
112,800 Marine Drilling Companies, Inc.* 2,693,100
34,700 Patterson Energy, Inc.* 975,938
-----------
7,525,708
-----------
POLLUTION CONTROL-- 0.6%
124,900 Newpark Resources, Inc.* 1,124,100
32,525 Waste Connections, Inc.* 831,420
-----------
1,955,520
-----------
PUBLISHING/ADVERTISING -- 2.1%
126,000 Catalina Marketing Corp.* $ 4,945,500
8,600 Getty Images, Inc.* 273,050
83,550 Playboy Enterprises, Inc.-Class B* 1,080,928
-----------
6,299,478
-----------
SPECIALTY RETAIL-- 1.0%
54,850 Cost Plus, Inc.* 1,535,800
92,600 Electronics Boutique Holdings Corp.* 1,446,875
-----------
2,982,675
-----------
TELECOMMUNICATIONS-- 5.5%
18,300 AirGate Pcs, Inc.* 711,413
84,200 AudioCodes, Ltd.* 3,331,163
87,600 Floware Wireless Systems Ltd.* 1,199,025
64,400 MCK Communications, Inc.* 1,006,250
74,300 SBA Communications, Corp.* 3,724,288
65,900 Sirius Satellite Radio, Inc.* 3,311,475
84,900 Tekelec* 3,125,381
-----------
16,408,995
-----------
TRUCKING -- 1.3%
93,050 Forward Air Corp* 3,826,681
-----------
TOTAL EQUITY SECURITIES
(cost $224,754,437) 289,702,355
-----------
PRINCIPAL
AMOUNT
--------------------------------------------------------------------------------
MONEY MARKET INVESTMENTS -- 5.9%
$8,850,013 Temporary Investment Fund Inc. - Temp Cash 8,850,013
8,850,013 Temporary Investment Fund Inc. - Temp Fund 8,850,013
-----------
TOTAL MONEY MARKET INVESTMENTS
(cost $17,700,026) 17,700,026
-----------
TOTAL INVESTMENTS: 102.2%
(cost $242,454,463) 307,402,381
-----------
16
<PAGE>
PIC SMALL CAP PORTFOLIO
STATEMENT OF NET ASSETS as of October 31, 2000 - (continued)
--------------------------------------------------------------------------------
VALUE
--------------------------------------------------------------------------------
OTHER ASSETS -- 0.1%
Receivables:
Securities sold $ 196,573
Interest 100,009
Shares of beneficial interests sold 30,837
Prepaid insurance 1,099
Other assets 16,332
------------
Total Other Assets 344,850
------------
TOTAL ASSETS $307,747,231
------------
LIABILITIES -- (2.3%)
Payables:
Securities purchased 6,342,045
Shares of beneficial interests redeemed 116,286
Due to advisor (Note 3) 215,413
Deferred Trustees' compensation (Note 3) 65,062
Accrued expenses 81,957
------------
Total Liabilities 6,820,763
------------
NET ASSETS -- 100.0% $300,926,468
============
* Non-income producing security.
ADR - American Depository Receipt
See accompanying Notes to Financial Statements.
17
<PAGE>
PIC SMALL CAP PORTFOLIO
STATEMENT OF OPERATIONS For the Year Ended October 31, 2000
--------------------------------------------------------------------------------
INVESTMENT INCOME
Income
Dividends ................................................ $ 58,911
Interest ................................................. 1,197,675
-------------
Total income ........................................... 1,256,586
-------------
Expenses
Investment advisory fees (Note 3) ........................ 2,771,902
Accounting services fees ................................. 109,009
Administration fees (Note 3) ............................. 346,488
Trustees' fees ........................................... 31,869
Custodian fees ........................................... 108,546
Audit fees ............................................... 24,982
Legal fees ............................................... 19,015
Insurance expense ........................................ 10,778
Miscellaneous ............................................ 9,917
-------------
Total expenses ......................................... 3,432,506
Add: expenses recouped by advisor (Note 3) ............. 32,371
-------------
Net expenses ........................................... 3,464,877
-------------
NET INVESTMENT LOSS .................................. (2,208,291)
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments ........................... 112,241,729
Net unrealized depreciation on investments ................. (1,397,996)
-------------
Net realized and unrealized gain on investments .......... 110,843,733
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ... $ 108,635,442
=============
See Accompanying Notes to Financial Statements.
18
<PAGE>
PIC SMALL CAP PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
2000 1999
------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS
Net investment loss ........................ $ (2,208,291) $ (1,771,238)
Net realized gain on investments ........... 112,241,729 48,594,775
Net unrealized appreciation (depreciation)
on investments ............................ (1,397,996) 56,517,702
------------- -------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ....................... 108,635,442 103,341,239
------------- -------------
TRANSACTIONS IN INTERESTS
Contributions by Holders ................... 157,460,067 68,296,971
Withdrawals by Holders ..................... (219,931,942) (90,528,948)
------------- -------------
Net decrease in net assets from
transactions in interests ................. (62,471,875) (22,231,977)
------------- -------------
TOTAL INCREASE IN NET ASSETS ........... 46,163,567 81,109,262
NET ASSETS
Beginning of year .......................... 254,762,901 173,653,639
------------- -------------
END OF YEAR ................................ $ 300,926,468 $ 254,762,901
============= =============
See accompanying Notes to Financial Statements.
19
<PAGE>
PIC SMALL CAP PORTFOLIO
SELECTED RATIO DATA
--------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
----------------------------------------
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
RATIOS TO AVERAGE NET ASSETS:
Operating expenses .............. 1.00%* 1.00%* 1.00%* 1.00%* 1.00%*
Net investment loss ............. (0.64%)* (0.79%)* (0.68%)* (0.49%)* (0.59%)*
Portfolio turnover rate 143.39% 133.24% 81.75% 151.52% 53.11%
* Net of fees waived of 0.00%, 0.00%, 0.01%, 0.01%, and 0.01% of average net
assets, respectively.
See Accompanying Notes to Financial Statements.
20
<PAGE>
PROVIDENT INVESTMENT COUNSEL SMALL CAP PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
1 - ORGANIZATION
PIC Small Cap Portfolio (the "Portfolio") was organized on March 22, 1993
as a separate trust under the laws of the State of New York. The beneficial
interests in the Portfolio are divided into an unlimited number of
non-transferable interests, par value $.01 each. The Portfolio is registered
under the Investment Company Act of 1940 as an open-end, diversified management
investment company.
2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Portfolio. These policies are in conformity with generally
accepted accounting principles.
A. VALUATION OF SECURITIES. Equity securities traded on a national
securities exchange or Nasdaq are valued at the last reported sales
price at the close of regular trading on each day that the exchanges
are open for trading. Other equity securities and debt securities for
which market quotations are readily available are valued at the mean
between their bid and asked price, except that debt securities
maturing within 60 days are valued on an amortized cost basis.
Securities for which market quotations are not readily available are
valued at fair value as determined in good faith by the Board of
Trustees.
B. FEDERAL INCOME TAXES. The Portfolio intends to comply with the
requirements of the Internal Revenue Code applicable to it. Therefore,
no federal income tax provision is required.
C. OTHER. Securities transactions are recorded on the trade date basis.
Realized gains and losses from securities transactions are reported on
an identified cost basis. Interest is recorded as accrued and dividend
income is recorded on the ex-dividend date.
D. ACCOUNTING ESTIMATES. In preparing financial statements in conformity
with generally accepted accounting principles, management makes
estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements. Actual
results could differ from those estimates.
3 - TRANSACTIONS WITH AFFILIATES
The Portfolio has entered into an investment advisory agreement with
Provident Investment Counsel, Inc. ("PIC") and an administration agreement with
Investment Company Administration, L.L.C. ("ICA") pursuant to which certain
employees of these entities serve as officers and/or trustees of the Portfolio.
PIC and
21
<PAGE>
PROVIDENT INVESTMENT COUNSEL SMALL CAP PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Continued)
--------------------------------------------------------------------------------
ICA also provide management services necessary for the operations of the
Portfolio and furnish office facilities. ICA receives for its services a fee at
the annual rate of 0.10% of average daily net assets of the Portfolio, subject
to an annual minimum of $45,000.
PIC receives an investment advisory fee for its services to the Portfolio
at the annual rate of 0.80% of its average daily net assets. PIC has voluntarily
agreed to limit the expenses of the Portfolio to 1.00% of its average daily net
assets. During the year ended October 31, 2000, PIC recouped $32,371 in
expenses.
At October 31, 2000, the amount available for reimbursement that has been
paid and/or waived by PIC on behalf of the Portfolio is $20,406. At October 31,
2000, PIC may recapture a portion of the above amounts no later than the dates
as stated below.
OCTOBER 31,
-----------------
2001 2002
---- ----
Small Cap Portfolio....................... $16,528 $3,878
On December 19, 1995, the Portfolio approved a Deferred Compensation Plan
for Trustees (the "Plan"). Trustees are entitled to receive $2,500 per quarter
and $500 per meeting attended, which is allocated among the Portfolios. Trustees
can elect to receive payment in cash or defer payments provided for in the Plan.
If a Trustee elects to defer payment, the Plan provides for the creation of a
deferred payment account (phantom share account). This account accumulates the
deferred fees earned and the value of the account is adjusted at the end of each
quarter to reflect the value, which would have been earned if the account had
been invested in designated investments. The Portfolio recognizes as trustee
expense amounts accrued as meetings are held plus the change in the value of the
phantom share account determined on a quarterly basis. For the year ended
October 31, 2000, the change in the value of the phantom share account included
unrealized appreciation of $7,975.
4 - INVESTMENT TRANSACTIONS
The aggregate cost of purchases and the proceeds from sales of investment
securities, other than short-term obligations, for the year ended October 31,
2000 were $464,248,792 and $529,297,941, respectively.
The cost of securities for federal income tax purposes was $245,956,044.
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.......................... $ 72,192,431
Gross unrealized depreciation.......................... (10,746,094)
------------
Net unrealized appreciation....................... $ 61,446,337
============
22
<PAGE>
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, 2000, the results of its
operations for the year then ended, the changes in its net assets and the
selected ratio data for each of the two years in the period then ended, in
conformity with accounting principles generally accepted in the United States of
America. These financial statements and selected ratio data (hereafter referred
to as "financial statements") are the responsibility of the Portfolio's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at October 31, 2000, by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion. The selected ratio data for each of the three years in the period
ended October 31, 1998 were audited by other independent accountants whose
report dated December 3, 1998 expressed an unqualified opinion on those
statements.
PricewaterhouseCoopers LLP
December 15, 2000
23
<PAGE>
TAX DESIGNATION
--------------------------------------------------------------------------------
Provident Investment Counsel Small Cap Growth Fund I hereby designates
$12,639,383 as a capital gain dividend under section 852(b)(3)(c) of the
Internal Revenue Code.
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
THOMAS M. MITCHELL, President
AARON W.L. EUBANKS, SR., Vice President and Secretary
WILLIAM T. WARNICK, Vice President and Treasurer
TRUSTEES AND OFFICERS-- P*I*C PORTFOLIOS
--------------------------------------------------------------------------------
THOMAS J. CONDON, Trustee
JETTIE M. EDWARDS, Trustee
RICHARD N. FRANK, Trustee
JAMES CLAYBURN LAFORCE, Trustee
ANGELO R. MOZILO, Trustee
WAYNE H. SMITH, Trustee
THOMAS M. MITCHELL, President
AARON W.L. EUBANKS, SR., Vice President and Secretary
WILLIAM T. WARNICK, Vice President and Treasurer
LEGAL COUNSEL
--------------------------------------------------------------------------------
PAUL, HASTINGS, JANOFSKY & WALKER, LLP
INDEPENDENT ACCOUNTANTS
--------------------------------------------------------------------------------
PRICEWATERHOUSECOOPERS LLP
================================================================================
This report is intended for shareholders of the Fund and may not be used as
sales literature unless preceded or accompanied by a current prospectus.
Past performance results shown in this report should not be considered a
representation of future performance. Share price and returns will fluctuate so
that shares, when redeemed, may be worth more or less than their original cost.
Statements and other information herein are dated and are subject to change.
