PROVIDENT INVESTMENT COUNSEL
---------
MUTUAL
FUNDS
---------
SMALL CAP
GROWTH FUND I
Semi-Annual Report April 30, 1999
Provident Investment Counsel
Investing in growth since 1951
<PAGE>
CONTENTS
3 President's Letter
4 Our Philosophy
5 Inverview with Provident Managers
THE FUND
9 Statement of Assets and Liabilities
10 Statement of Operations
11 Statements of Changes in Net Assets
12 Financial Highlights
13 Notes to Financial Statements
THE PORTFOLIO'S
16 Statement of Net Assets
27 Statement of Operations
28 Statements of Changes in Net Assets
29 Notes to Financial Statements
ITEMS OF INTEREST
THE GROWTH STYLE OF INVESTMENT MANAGEMENT ENJOYS A LEADERSHIP ROLE. Our
strong stock selection and sector allocation were rewarded by positive
performance.
ELECTRONIC TECHNOLOGY, TECHNOLOGY SERVICES AND UTILITIES contributed the
most to the Fund's performance during the past few months.
OUR WEBSITE ADDRESS IS:
www.provnet.com
2
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DEAR SHAREHOLDER,
We are pleased that the Fund had positive results for the six months ending
April 30, 1999 (more detailed information is available on the following pages).
As previously noted, the volatility in the equity markets has continued during
the most recent period. The Fund made a strong recovery from the lows last
September and October only to lose ground again during the early part of this
year.
The fundamentals of our small company holdings remained very compelling and
we were pleased to see some positive performance in May and June. We have
witnessed a general broadening of performance in the equity markets which has
benefited the Fund.
After a difficult April, there was some media discussion about a rotation
by investors out of high quality growth shares into "cheaper" cyclical company
shares. We believe this move is only temporary, precipitated by several factors,
including surprising economic growth and better than expected profit growth by
many cyclical issues.
It is our view that the consumer-driven U.S. economy is enjoying robust
growth with pleasantly strong first quarter earnings. However, on closer review,
we find that many of the earnings growth expectations had been downgraded by
savvy corporate management teams of cyclical issues and that overly optimistic
future earnings may not be attainable. While cyclical stocks might fare well for
several months, it is ill-conceived to believe that a sea change has taken place
with value/cyclical stocks outperforming for a protracted period of time.
During May and in early June, we have been pleased to see growth shares
holding their own once again and Small Company shares in particular, performing
quite well. We fully expect to see growth stocks once again outperform as Y2K
worries and continued slower growth in most overseas markets impact investors'
perceptions of the sustainability of cyclical company earnings. As the year 2000
approaches, smart investors will focus on the new economy--defined as an era
when communications technology creates global competition
3
<PAGE>
SHAREHOLDER LETTER, CONTINUED
and people work with their brains instead of with their hands. The Fund, which
always has a significant commitment to technology, should be in a good position
to reap the rewards.
We appreciate your continued confidence in Provident Investment Counsel.
Sincerely,
/s/ Douglass B. Allen
Douglass B. Allen
President, PIC Investment Trust
June 17, 1999
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.
4
<PAGE>
INTERVIEW WITH PROVIDENT MANAGERS
WHAT INDUSTRY SECTORS PERFORMED POSITIVELY FOR THE FUND'S EQUITY HOLDINGS?
Small Cap
+ Electronic Technology
+ Technology Services
+ Utilities
Q During the difficult month of April, one of the bright spots was the
apparent shift in leadership as Small Company stocks outperformed those of
larger issues. What factors caused this change?
A This performance leadership actually continued in May--the second month in
a row where small cap stocks outperformed large cap equities. We are also
pleased to report it was a month where your Fund also did well. One has to
go back several years to find a similar time when small stocks have
outperformed large cap stocks in successive months. While mindful that "one
Robin doesn't make it Spring," it certainly is encouraging. We have made
several adjustments to the portfolio since the February/March period and
have now seen the beneficial impact on the returns.
The shift favoring small cap stocks is in keeping with our expectations. As
investors become more confident about a more rapid growth scenario for the
economy, they are willing to take on added risk. As the Year 2000
approaches, savvy investors focus on the new economy--defined as an era
when communications technology creates global competition and people work
with their brains instead of their hands. This trend towards technology
instead of industrial stocks is clearly showing up in the flow of funds
data, where mutual fund investors are starting to put new money into small
cap funds, which favor technology stocks.
Q To what do you attribute the recent good performance by the Small Cap Fund?
A We believe there are several factors that caused this positive performance.
In the month of May, for example, the Fund's performance can be attributed
to both strong stock selection and sector allocation in the health services
area, electronic technology, and consumer services. Performance clearly
broadened out to include quality small companies that demonstrated positive
5
<PAGE>
INTERVIEW WITH PROVIDENT MANAGERS, continued
earnings, as opposed to the narrow "Internet only" performance in the first
quarter.
Q Would you like to comment on the general market conditions in April when
investors made a seemingly irrational rush to buy "cheaper" cyclical
stocks. To what do you attribute this shift?
A As stated in our letter to shareholders there are a few themes that have
driven what we believe is a temporary shift toward cyclical issues such as:
1) A strong consumer-driven economy with better than expected growth
domestically, coupled with surprising growth internationally. However, we
continue to see evidence of recession in many countries outside the U.S.,
including Japan and possibly Germany in the near future.
2) Better than expected profit growth domestically by many cyclical issues
driven by savvy management teams that successfully lowered Wall Street
expectations for their earnings. Many of these cyclical issues were coming
off a very disappointing 1998 that made year over year comparisons very
easy to beat.
3) During the fall of 1998, the "flight to quality" may have caused the
valuations of Provident Growth and Balanced Fund equity holdings to be
momentarily over-extended. In light of this, it is understandably a needed
step for our stocks to pause and catch their breath, acclimating to the
strong move they have made.
Q During the latter part of May, the markets in general have been rather
choppy, without clear direction. What caused this recent volatility?
A If one is looking for a reason for the recent market weakness, one needs to
look at the Federal Reserve's action on May 18,
6
<PAGE>
INTERVIEW WITH PROVIDENT MANAGERS, continued
signaling to investors their bias towards a tighter monetary policy in the
future. This followed the release of a higher than expected CPI number for
the month of April. Long-term interest rates, which had risen to close to
6% prior to the Fed's announcement, quickly rallied to the 5.75% area, only
to weaken again last week to a 5.86% level. This upward bias has caused
investor concern about valuations of the general stock market, should
interest rates continue to rise and cross the psychologically important 6%
level. Another exacerbating factor has been that, for the first time this
year, investors are starting to question the high valuations afforded to
Internet stocks. Many of these high-flying stocks are off over 50% from
their April highs. This uncertainty has spilled over into the general
technology sector. As in April, Pharmaceutical stocks continued to be weak,
although rallying sharply on the last day of the trading month.
More recently, in the middle of June as we write this commentary, we have
seen positive news with regard to inflationary pressures. As an example,
recently released Consumer Price Index numbers were at lower than expected
levels, easing investors' worst fears of a larger increase in interest
rates by the Federal Reserve.
Q What is your outlook for the markets in general and the Small Cap Fund in
particular for the remainder of the year?
A The shift favoring cyclical stocks has slowed in recent weeks. Our analysis
of reported earnings shows that the rates of change in revenue and earnings
growth of some now high-flying cyclical stocks are still quite weak over
several quarters. These factors question the sustainability of their recent
price appreciation. This was evident during the last week of May when
numerous cyclical stocks were quite weak. To illustrate, Alcoa was down
8.3%; Caterpillar was off 8.0%; International Paper was down 9.0%.
In the face of this concern for large cap stocks, both mid cap and small
cap stocks have on balance performed better during
7
<PAGE>
INTERVIEW WITH PROVIDENT MANAGERS, continued
downdrafts. While neither would be immune to a steep stock market decline,
we feel given the relative under-performance of both areas in 1998 relative
to large cap stocks, that both may well do better than large caps in a
moderate market decline. So far in June, we continue to have much improved
performance and as the market broadens, both the mid and small portfolios
we manage are doing very well from a relative performance perspective.
While we cannot predict future results, if the first part of June is any
indicator, we may expect a continued improvement in performance and as the
market broadens out, the Funds with their well balanced portfolios may do
very well from a relative performance perspective.
8
<PAGE>
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Provident Investment Counsel STATEMENT OF ASSETS AND LIABILITIES
Small Cap Growth Fund I as of April 30, 1999
- ----------------------------
- --------------------------------------------------------------------------------
ASSETS
Investment in Portfolio, at value $ 194,762,089
Receivables:
Fund shares sold 452
From Provident Investment Counsel, Inc. (Note 3) 9,338
Prepaid expenses 23,449
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Total Assets 194,795,328
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LIABILITIES
Payables:
Investments in Portfolio purchased 452
Accrued expenses 2,864
Deferred trustees' compensation (Note 3) 13,066
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Total Liabilities 16,382
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NET ASSETS
Applicable to 9,170,914 shares of beneficial
interest outstanding $ 194,778,946
=============
NET ASSET VALUE PER SHARE $ 21.24
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SOURCE OF NET ASSETS
Paid-in capital $ 190,600,531
Accumulated net investment loss (705,285)
Accumulated net realized loss on investments (31,642,688)
Net unrealized appreciation of investments 36,526,388
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Net Assets $ 194,778,946
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Unaudited. See Notes to Financial Statements.
9
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Provident Investment Counsel STATEMENT OF OPERATIONS
Small Cap Growth Fund I Six Months ended April 30, 1999
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- --------------------------------------------------------------------------------
INVESTMENT INCOME
NET INVESTMENT LOSS FROM PORTFOLIO $ (675,606)
============
Expenses
Administration fees (Note 3) 178,995
Reports to shareholders 4,961
Trustees' fees 3,455
Audit fee 5,109
Legal fees 2,335
Transfer agent's fee 8,118
Custody and accounting services fees 2,977
Registration fees 10,399
Miscellaneous 4,863
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Total expenses 221,212
Less reimbursement/waiver by Provident
Investment Counsel, Inc. (Note 3) (221,212)
------------
Net expenses --
============
NET INVESTMENT LOSS (675,606)
============
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on investments from Portfolio (3,622,608)
Net unrealized appreciation of
investments from Portfolio 28,758,359
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NET GAIN ON INVESTMENTS 25,135,751
============
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 24,460,145
============
Unaudited. See Notes to Financial Statements.
10
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Provident Investment Counsel STATEMENT OF CHANGES IN NET ASSETS
Small Cap Growth Fund I
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- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
Six Months Year
ended ended
FROM OPERATIONS: April 30, 1999* Oct. 31, 1998
--------------- -------------
Net investment loss $ (675,606) $ (938,236)
Net realized loss on investments
from Portfolio (3,622,608) (27,961,289)
Net unrealized appreciation of
investments from Portfolio 28,758,359 3,720,627
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Net increase (decrease) in net assets
resulting from operations 24,460,145 (25,178,898)
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DISTRIBUTIONS TO SHAREHOLDERS:
From net realized gains -- (11,840,606)
============= =============
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST:
Purchases of 2,120,111 and 4,210,252
shares, respectively 44,544,418 89,693,654
Reinvestment of 0 and 560,104
shares, respectively -- 11,840,607
Redemptions of 737,701 and 1,364,413
shares, respectively (15,406,891) (28,852,682)
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Net increase in net assets resulting
from share transactions 29,137,527 72,681,579
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TOTAL INCREASE IN NET ASSETS 53,597,672 35,662,075
============= =============
NET ASSETS
Beginning of period 141,181,274 105,519,199
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End of period $ 194,778,946 $ 141,181,274
============= =============
*Unaudited.
See Notes to Financial Statements.
11
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Provident Investment Counsel FINANCIAL HIGHLIGHTS
Small Cap Growth Fund I
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FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
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<TABLE>
<CAPTION>
Six Months Year ended October 31,
ended -----------------------------------------------
Apr. 30, 1999* 1998 1997 1996 1995 1994
-------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $18.13 $24.08 $23.19 $18.69 $12.90 $13.05
------ ------ ------ ------ ------ ------
Income from investment
operations:
Net investment loss (0.07) (0.03) (0.40) (0.10) (0.07) (0.06)
Net realized and
unrealized gain
(loss) on
investments 3.18 (3.99) 1.58 4.60 5.86 (0.09)
------ ------ ------ ------ ------ ------
Total from investment
operations 3.11 (4.02) 1.18 4.50 5.79 (0.15)
------ ------ ------ ------ ------ ------
Less distributions:
From net realized gains -- (1.93) (0.29) -- -- --
------ ------ ------ ------ ------ ------
Net asset value,
end of period $21.24 $18.13 $24.08 $23.19 $18.69 $12.90
====== ====== ====== ====== ====== ======
Total return 17.15%++ (17.85%) 5.15% 24.08% 44.88% (1.15%)
====== ====== ====== ====== ====== ======
Ratios/supplemental data:
Net assets, end of
period (millions) $194.8 $141.2 $105.6 $196.1 $130.3 $ 84.3
------ ------ ------ ------ ------ ------
Ratios to average net
assets:+
Expenses 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Net investment loss (0.78%) (0.67%) (0.48%) (0.60%) (0.51%) (0.49%)
------ ------ ------ ------ ------ ------
</TABLE>
* Unaudited.
++ Not annualized.
+ Annualized for periods of less than one year. Includes the Fund's share of
expenses, net of expense reimbursements and waivers, allocated from the
Portfolio. If the expense reimbursements and waivers, with respect to the Fund
and the Portfolio, had not been made, the ratios of expenses to average net
assets would have been 1.25%, 1.26%, 1.25%, 1.25%, 1.34% and 1.47%,
respectively.
See Notes to Financial Statements.
12
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Provident Investment Counsel NOTES TO FINANCIAL STATEMENTS
Small Cap Growth Fund I
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1 - ORGANIZATION
- --------------------------------------------------------------------------------
Provident Investment Counsel Small Cap Growth Fund I (the "Fund") (formerly
PIC Small Cap Growth Fund) is one of several series of PIC Investment Trust (the
"Trust"). The Trust was organized on December 11, 1991 as a Delaware business
trust, with an unlimited number of shares of beneficial interest of $.01 par
value, and is registered under the Investment Company Act of 1940 as an
open-end, diversified management investment company. The Fund invests
substantially all of its assets in the PIC Small Cap Portfolio (the
"Portfolio"), a separate, registered management investment company having the
same investment objective as the Fund. At April 30, 1999, the Fund owned 87.39%
of the total net assets of the Portfolio. The financial statements of the
Portfolio are included elsewhere in this report and should be read in
conjunction with the Fund's financial statements.
- --------------------------------------------------------------------------------
2 - SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
The following is a summary of significant accounting policies consistently
followed by the Fund. These policies are in conformity with generally accepted
accounting principles.
A. Investment Valuation. The Fund reflects its investment in the
Portfolio at its proportionate interest in the value of the
Portfolio's net assets. Valuation of securities by the Portfolio is
discussed at Note 2A of the Portfolio's Notes to Financial Statements.
B. Investment Income and Dividends to Shareholders. The Fund earns
income, net of the expenses of the Portfolio, daily on its investment
in the Portfolio. All net investment income and realized and
unrealized gains or losses on investments of the Portfolio are
allocated pro-rata among the Fund and the other Holders of Interests
in the Portfolio. Dividends, if any, are paid annually to shareholders
of the Fund and recorded on the ex-dividend date.
C. Federal Income Taxes. The Fund intends to comply with the requirements
of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its
shareholders. Therefore, no federal income tax provision is required.
13
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Provident Investment Counsel NOTES TO FINANCIAL STATEMENTS
Small Cap Growth Fund I 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 period.
Actual results could differ from those estimates.
- --------------------------------------------------------------------------------
3 - TRANSACTIONS WITH AFFILIATES
- --------------------------------------------------------------------------------
The Trust has entered into administration agreements with Provident
Investment Counsel, Inc. ("PIC") and Investment Company Administration LLC
("ICA"), pursuant to which agreements 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, but
waived its fee of $174,034 for the six months ended April 30, 1999. PIC has
voluntarily agreed to reimburse the Fund to the extent necessary so that the
expenses of the Fund, including those expenses allocated from the Portfolio, do
not exceed 1.00% of the Fund's average net assets. The amount of reimbursement
for the six months ended April 30, 1999 was $47,178. ICA receives an annual fee
for its services at the rate of $10,000.
First Fund Distributors, Inc. (the "Distributor"), a registered
broker-dealer, acts as the principal underwriter for the Trust in connection
with the offering of its shares, but receives no compensation for its services.
The Distributor is an affiliate of ICA.
On December 19, 1995, the Trust approved a Deferred Compensation Plan for
Trustees (the "Plan"). Trustees are entitled to receive $2,500 per quarter and
$500 per meeting attended, which is allocated among the Funds. Trustees can
elect to receive payment in cash or defer payments provided for in the Plan. If
a trustee elects to defer payment, the Plan provides for the creation of a
deferred payment account (phantom share account). This account accumulates the
deferred fees earned and the value of the account is adjusted at the end of each
quarter to reflect a value which would have been earned if the account had been
invested in designated investments. The Fund recognizes as trustee expense
amounts accrued as meetings are attended plus the change in the value of the
phantom share account determined on a quarterly basis.
14
<PAGE>
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Provident Investment Counsel NOTES TO FINANCIAL STATEMENTS
Small Cap Growth Fund I continued
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4 - INVESTMENT TRANSACTIONS
- --------------------------------------------------------------------------------
Additions and reductions in the Fund's investment in the Portfolio
aggregated $44,597,847 and $15,481,926, respectively.
15
<PAGE>
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SMALL CAP STATEMENT OF NET ASSETS
PORTFOLIO as of April 30, 1999
- ---------
- --------------------------------------------------------------------------------
Percentage of
EQUITY SECURITIES - 96.50% Shares Value Net Assets
- --------------------------------------------------------------------------------
AIRLINES - 0.54%
- --------------------------------------------------------------------------------
RYANAIR HOLDINGS PLC ADS* 26,970 $1,206,908 0.54%
================================================================================
APPAREL AND SHOE - 0.29%
- --------------------------------------------------------------------------------
THE BUCKLE, INC.* 27,600 645,150 0.29
================================================================================
AUTO PARTS - 2.07%
- --------------------------------------------------------------------------------
GENTEX CORPORATION* 118,800 3,571,425 1.60
O'REILLY AUTOMOTIVE, INC.* 22,900 1,047,675 0.47
- --------------------------------------------------------------------------------
TOTAL AUTO PARTS 4,619,100 2.07
================================================================================
BANKS - 1.07%
- --------------------------------------------------------------------------------
HAMILTON BANCORP INC.* 92,630 2,385,222 1.07
================================================================================
BEVERAGE/FOOD - 0.50%
- --------------------------------------------------------------------------------
BERINGER WINE ESTATES HOLDINGS, INC.* 28,200 1,110,375 0.50
================================================================================
BIOTECHNOLOGY - 0.62%
- --------------------------------------------------------------------------------
ALBANY MOLECULAR RESEARCH, INC.* 27,100 677,500 0.30
INVITROGEN CORPORATION* 40,000 717,500 0.32
- --------------------------------------------------------------------------------
TOTAL BIOTECHNOLOGY 1,395,000 0.62
================================================================================
BUILDER - 0.37%
- --------------------------------------------------------------------------------
PALM HARBOR HOMES, INC.* 41,348 832,128 0.37
================================================================================
BUILDING PRODUCTS - 0.24%
- --------------------------------------------------------------------------------
TREX COMPANY, INC.* 33,600 537,600 0.24
Unaudited. See Notes to Financial Statements.
16
<PAGE>
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SMALL CAP STATEMENT OF NET ASSETS
PORTFOLIO as of April 30, 1999
- ---------
- --------------------------------------------------------------------------------
Percentage of
EQUITY SECURITIES, continued Shares Value Net Assets
- --------------------------------------------------------------------------------
BUSINESS SERVICES - 10.43%
- -------------------------------------------------------------------------------
THE CORPORATE EXECUTIVE BOARD COMPANY* 9,500 $ 267,188 0.12%
DENDRITE INTERNATIONAL, INC.* 39,700 1,027,238 0.46
FORRESTER RESEARCH, INC.* 13,020 442,680 0.20
IRON MOUNTAIN INCORPORATED* 36,450 1,013,766 0.45
LABOR READY, INC.* 38,200 1,499,350 0.67
LASON, INC.* 52,855 2,091,076 0.94
MEDQUIST INC.* 41,800 1,431,650 0.64
METRO NETWORKS, INC.* 22,575 1,015,875 0.46
NCO GROUP, INC.* 80,635 2,630,717 1.18
THE PROFIT RECOVERY GROUP
INTERNATIONAL, INC.* 100,300 3,660,950 1.64
TMP WORLDWIDE INC.* 87,420 5,878,995 2.64
UNITED RENTALS, INC.* 77,000 2,295,562 1.03
- --------------------------------------------------------------------------------
TOTAL BUSINESS SERVICES 23,255,047 10.43
================================================================================
COMPUTER SERVICES - 9.92%
- --------------------------------------------------------------------------------
THE BISYS GROUP, INC.* 23,800 1,207,850 0.54
CHECK POINT SOFTWARE TECHNOLOGIES, LTD.* 71,700 2,527,425 1.13
CHECKFREE HOLDINGS CORPORATION* 19,900 955,200 0.43
CLARIFY INC.* 21,900 514,650 0.23
CONCENTRIC NETWORK CORPORATION* 21,100 1,761,850 0.79
CSG SYSTEMS INTERNATIONAL, INC.* 60,776 2,347,473 1.05
ENTRUST TECHNOLOGIES INC* 13,100 322,588 0.14
GLOBIX CORPORATION* 15,600 731,250 0.33
HI/FN, INC.* 33,300 1,798,200 0.81
INTERNATIONAL NETWORK SERVICES* 23,025 874,950 0.39
ISS GROUP, INC.* 17,100 907,369 0.41
MENTOR GRAPHICS CORPORATION* 65,900 799,038 0.36
MIPS TECHNOLOGIES, INC.* 33,800 1,343,550 0.60
MODEM MEDIA . POPPE TYSON, INC., CLASS A* 19,300 680,325 0.31
NICE SYSTEMS LTD. ADR* 94,650 2,721,188 1.22
Unaudited. See Notes to Financial Statements.
17
<PAGE>
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SMALL CAP STATEMENT OF NET ASSETS
PORTFOLIO as of April 30, 1999
- ---------
- --------------------------------------------------------------------------------
Percentage of
EQUITY SECURITIES, continued Shares Value Net Assets
- --------------------------------------------------------------------------------
COMPUTER SERVICES, CONTINUED
- --------------------------------------------------------------------------------
PEGASUS SYSTEMS, INC.* 43,225 $ 2,020,769 0.91%
RWD TECHNOLOGIES, INC.* 35,160 606,510 0.27
- --------------------------------------------------------------------------------
TOTAL COMPUTER SERVICES 22,120,185 9.92
================================================================================
COMPUTER SOFTWARE - 11.91%
- --------------------------------------------------------------------------------
AVANT! CORPORATION* 55,100 743,850 0.33
AVT CORPORATION* 43,600 1,185,375 0.53
BUSINESS OBJECTS S.A. ADS* 87,000 2,039,062 0.92
ELECTRONICS FOR IMAGING, INC.* 93,700 4,433,181 1.99
EXCHANGE APPLICATIONS, INC.* 27,800 820,100 0.37
GEMSTAR INTERNATIONAL GROUP LIMITED* 21,400 2,255,025 1.01
LEGATO SYSTEMS, INC.* 5,200 210,275 0.09
MACROMEDIA, INC.* 41,500 1,719,656 0.77
MEDICAL MANAGER CORPORATION* 75,800 2,160,300 0.97
MERCURY INTERACTIVE CORPORATION* 71,900 2,026,681 0.91
NATIONAL INSTRUMENTS CORPORATION* 11,200 380,800 0.17
NEON SYSTEMS, INC.* 15,800 663,600 0.30
PEREGRINE SYSTEMS, INC.* 67,100 1,509,750 0.68
PINNACLE SYSTEMS, INC.* 42,925 2,334,047 1.05
PLX TECHNOLOGY, INC.* 25,000 484,375 0.22
SIEBEL SYSTEMS, INC.* 27,340 1,050,881 0.47
SOFTWARE AG SYSTEMS, INC.* 12,970 107,002 0.05
TRANSACTION SYSTEMS ARCHITECTS,
INC., CLASS A* 22,710 736,656 0.33
VERISIGN, INC.* 4,900 563,500 0.25
VERITAS SOFTWARE CORPORATION* 15,750 1,118,250 0.50
- --------------------------------------------------------------------------------
TOTAL COMPUTER SOFTWARE 26,542,366 11.91
================================================================================
CONSTRUCTION - 0.48%
- --------------------------------------------------------------------------------
DYCOM INDUSTRIES, INC.* 23,475 1,072,514 0.48
Unaudited. See Notes to Financial Statements.
18
<PAGE>
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SMALL CAP STATEMENT OF NET ASSETS
PORTFOLIO as of April 30, 1999
- ---------
- --------------------------------------------------------------------------------
Percentage of
EQUITY SECURITIES - 96.50% Shares Value Net Assets
- --------------------------------------------------------------------------------
CREDIT AND FINANCE - 0.40%
- --------------------------------------------------------------------------------
AMERICREDIT CORP.* 53,900 $ 892,719 0.40%
================================================================================
DISCOUNT STORES - 3.99%
- --------------------------------------------------------------------------------
DOLLAR TREE STORES, INC.* 147,880 5,397,620 2.42
99 CENTS ONLY STORES* 73,950 3,484,894 1.57
- --------------------------------------------------------------------------------
TOTAL DISCOUNT STORES 8,882,514 3.99
================================================================================
DRUGS - 1.05%
- --------------------------------------------------------------------------------
ALPHARMA INC., CLASS A 29,000 855,500 0.38
K-V PHARMACEUTICAL COMPANY, CLASS A* 15,500 240,250 0.11
SHIRE PHARMACEUTICALS GROUP PLC* 57,550 1,244,519 0.56
- --------------------------------------------------------------------------------
TOTAL DRUGS 2,340,269 1.05
================================================================================
EDUCATIONAL PROGRAMS - 1.81%
- --------------------------------------------------------------------------------
CAREER EDUCATION CORPORATION* 12,700 425,450 0.19
CORINTHIAN COLLEGES, INC.* 41,400 677,925 0.30
EDUCATION MANAGEMENT CORPORATION* 58,200 1,160,362 0.52
SCHOOL SPECIALTY, INC.* 41,275 779,066 0.35
SYLVAN LEARNING SYSTEMS, INC.* 39,650 996,206 0.45
- --------------------------------------------------------------------------------
TOTAL EDUCATIONAL PROGRAMS 4,039,009 1.81
================================================================================
ELECTRIC POWER - 0.31%
- --------------------------------------------------------------------------------
CALPINE CORPORATION* 16,400 699,050 0.31
================================================================================
ELECTRICAL EQUIPMENT/PERIPHERALS - 2.52%
- --------------------------------------------------------------------------------
DIONEX CORPORATION* 12,000 492,000 0.22
PMC-SIERRA, INC.* 34,330 3,291,389 1.48
SANDISK CORPORATION* 20,000 405,000 0.18
TRANSWITCH CORPORATION* 32,300 1,421,200 0.64
- --------------------------------------------------------------------------------
TOTAL ELECTRICAL EQUIPMENT/PERIPHERALS 5,609,589 2.52
Unaudited. See Notes to Financial Statements.
19
<PAGE>
- ---------
SMALL CAP STATEMENT OF NET ASSETS
PORTFOLIO as of April 30, 1999
- ---------
- --------------------------------------------------------------------------------
Percentage of
EQUITY SECURITIES - 96.50% Shares Value Net Assets
- --------------------------------------------------------------------------------
ELECTRONIC COMPONENTS/SEMICONDUCTORS - 10.49%
- --------------------------------------------------------------------------------
ALPHA INDUSTRIES, INC.* 25,200 $ 888,300 0.40%
BROOKS AUTOMATION, INC.* 30,000 645,000 0.29
CREE RESEARCH, INC.* 22,900 961,800 0.43
DUPONT PHOTOMASKS, INC.* 15,600 682,500 0.31
FLEXTRONICS INTERNATIONAL LTD.* 36,900 1,722,769 0.77
GENESIS MICROCHIP INCORPORATED* 42,900 890,175 0.40
LAM RESEARCH CORPORATION* 45,400 1,430,100 0.64
LATTICE SEMICONDUCTOR CORPORATION* 28,600 1,169,025 0.53
MICREL, INCORPORATED* 16,000 942,000 0.42
ORBOTECH LTD. 24,200 1,161,600 0.52
PLEXUS CORP.* 27,200 907,800 0.41
PRI AUTOMATION, INC.* 10,200 253,088 0.11
QLOGIC CORPORATION* 14,000 979,125 0.44
SANMINA CORPORATION* 48,900 3,245,738 1.46
SDL, INC.* 12,700 1,387,475 0.62
THE DII GROUP, INC.* 53,100 1,646,100 0.74
UNIPHASE CORPORATION* 10,900 1,322,988 0.59
VITESSE SEMICONDUCTOR CORPORATION* 67,880 3,143,692 1.41
- --------------------------------------------------------------------------------
TOTAL ELECTRONIC COMPONENTS/SEMICONDUCTORS 23,379,275 10.49
================================================================================
ELECTRONICS - 1.03%
- --------------------------------------------------------------------------------
ANTEC CORPORATION* 26,700 724,238 0.33
POWER INTEGRATIONS, INC.* 26,100 1,024,425 0.46
ZORAN CORPORATION* 50,000 540,625 0.24
- --------------------------------------------------------------------------------
TOTAL ELECTRONICS 2,289,288 1.03
================================================================================
ENTERTAINMENT AND LEISURE - 5.96%
- --------------------------------------------------------------------------------
AMERICAN CLASSIC VOYAGES CO. 40,900 731,088 0.33
CINAR CORPORATION* 29,000 605,375 0.27
CITADEL COMMUNICATIONS CORPORATION* 33,000 924,000 0.41
COX RADIO, INC., CLASS A* 21,800 1,062,750 0.48
Unaudited. See Notes to Financial Statements.
20
<PAGE>
- ---------
SMALL CAP STATEMENT OF NET ASSETS
PORTFOLIO as of April 30, 1999
- ---------
- --------------------------------------------------------------------------------
Percentage of
EQUITY SECURITIES - 96.50% Shares Value Net Assets
- --------------------------------------------------------------------------------
ENTERTAINMENT AND LEISURE, CONTINUED
- --------------------------------------------------------------------------------
ENTERCOM COMMUNICATIONS CORP., CLASS A* 8,200 $ 304,425 0.14%
FAIRFIELD COMMUNITIES, INC. 109,170 1,405,564 0.63
HEFTEL BROADCASTING CORPORATION, CLASS A* 31,800 1,729,125 0.77
INTERNATIONAL SPEEDWAY CORPORATION,
CLASS A 27,200 1,400,800 0.63
JONES INTERCABLE, INC., CLASS A* 52,375 2,428,891 1.09
STEINER LEISURE LIMITED* 32,500 1,031,875 0.46
UNITED INTERNATIONAL HOLDINGS, INC., CLASS A* 27,900 1,667,025 0.75
- --------------------------------------------------------------------------------
TOTAL ENTERTAINMENT AND LEISURE 13,290,918 5.96
================================================================================
FINANCIAL SERVICES - 1.11%
- --------------------------------------------------------------------------------
FINANCIAL FEDERAL CORPORATION* 19,500 407,062 0.18
METRIS COMPANIES INC. 6,200 378,975 0.17
NOVA CORPORATION* 39,936 1,038,336 0.47
SEI INVESTMENTS COMPANY 6,900 655,500 0.29
- --------------------------------------------------------------------------------
TOTAL FINANCIAL SERVICES 2,479,873 1.11
================================================================================
FOOD AND RESTAURANTS - 0.29%
- --------------------------------------------------------------------------------
BUCA, INC.* 2,800 50,750 0.02
PERFORMANCE FOOD GROUP COMPANY* 23,000 609,500 0.27
- --------------------------------------------------------------------------------
TOTAL FOOD AND RESTAURANTS 660,250 0.29
================================================================================
HOSPITALS - 0.10%
- --------------------------------------------------------------------------------
CAREMATRIX CORPORATION* 12,850 220,056 0.10
================================================================================
INSURANCE - 1.62%
- --------------------------------------------------------------------------------
ANNUITY AND LIFE RE (HOLDINGS), LTD. 6,500 128,375 0.06
CLARK/BARDES HOLDINGS, INC.* 51,500 669,500 0.30
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD. 17,100 976,838 0.44
MUTUAL RISK MANAGEMENT LTD. 47,100 1,831,012 0.82
- --------------------------------------------------------------------------------
TOTAL INSURANCE 3,605,725 1.62
Unaudited. See Notes to Financial Statements.
21
<PAGE>
- ---------
SMALL CAP STATEMENT OF NET ASSETS
PORTFOLIO as of April 30, 1999
- ---------
- --------------------------------------------------------------------------------
Percentage of
EQUITY SECURITIES - 96.50% Shares Value Net Assets
- --------------------------------------------------------------------------------
INTERNET SERVICES - 6.01%
- --------------------------------------------------------------------------------
DOUBLECLICK INC.* 14,000 $ 1,957,375 0.88%
EXODUS COMMUNICATIONS, INC.* 9,300 838,162 0.38
EXTREME NETWORKS, INC.* 10,600 587,638 0.26
INFOSEEK CORPORATION* 16,200 827,212 0.37
INTERVU INC.* 9,900 534,600 0.24
MINDSPRING ENTERPRISES, INC.* 8,200 794,888 0.36
NETOPIA, INC.* 20,200 453,238 0.20
PSINET INC.* 32,900 1,661,450 0.75
REALNETWORKS, INC.* 6,700 1,484,050 0.67
SOFTNET SYSTEMS, INC.* 23,125 754,453 0.34
TELEBANC FINANCIAL CORPORATION* 10,200 1,056,975 0.47
USINTERNETWORKING, INC.* 8,500 434,562 0.19
VERIO INC.* 28,200 2,002,200 0.90
- --------------------------------------------------------------------------------
TOTAL INTERNET SERVICES 13,386,803 6.01
================================================================================
INVESTMENT SERVICES - 0.18%
- --------------------------------------------------------------------------------
NATIONAL DISCOUNT BROKERS GROUP, INC.* 7,000 399,437 0.18
================================================================================
MEDICAL AND DENTAL PRODUCTS - 1.88%
- --------------------------------------------------------------------------------
MEDIMMUNE, INC.* 66,100 3,643,762 1.63
PATTERSON DENTAL COMPANY* 15,400 555,362 0.25
- --------------------------------------------------------------------------------
TOTAL MEDICAL AND DENTAL PRODUCTS 4,199,124 1.88
================================================================================
MEDICAL INSTRUMENTS - 2.18%
- --------------------------------------------------------------------------------
LASER VISION CENTERS, INC.* 46,100 1,941,962 0.87
NOVOSTE CORPORATION* 23,900 531,775 0.24
VISX, INCORPORATED* 11,200 1,442,000 0.65
XOMED SURGICAL PRODUCTS, INC.* 22,550 938,644 0.42
- --------------------------------------------------------------------------------
TOTAL MEDICAL INSTRUMENTS 4,854,381 2.18
Unaudited. See Notes to Financial Statements.
22
<PAGE>
- ---------
SMALL CAP STATEMENT OF NET ASSETS
PORTFOLIO as of April 30, 1999
- ---------
- --------------------------------------------------------------------------------
Percentage of
EQUITY SECURITIES - 96.50% Shares Value Net Assets
- --------------------------------------------------------------------------------
MEDICAL/DENTAL SERVICES - 1.52%
- --------------------------------------------------------------------------------
AMSURG CORP., CLASS A* 93,200 $ 640,750 0.29%
PHARMACEUTICAL PRODUCT DEVELOPMENT, INC.* 23,200 675,700 0.30
PROFESSIONAL DETAILING, INC.* 23,100 664,125 0.30
RENAL CARE GROUP, INC.* 67,245 1,403,739 0.63
- --------------------------------------------------------------------------------
TOTAL MEDICAL/DENTAL SERVICES 3,384,314 1.52
================================================================================
NETWORKING - 0.30%
- --------------------------------------------------------------------------------
RHYTHMS NETCONNECTIONS INC.* 8,100 668,250 0.30
================================================================================
OFFSHORE DRILLING - 0.63%
- --------------------------------------------------------------------------------
DRIL-QUIP, INC.* 5,200 126,750 0.05
ROWAN COMPANIES, INC.* 80,500 1,288,000 0.58
- --------------------------------------------------------------------------------
TOTAL OFFSHORE DRILLING 1,414,750 0.63
================================================================================
OIL FIELD SERVICES - 1.52%
- --------------------------------------------------------------------------------
ATWOOD OCEANICS, INC.* 14,100 491,737 0.22
GLOBAL INDUSTRIES, LTD.* 89,700 1,104,431 0.50
MARINE DRILLING COMPANIES, INC.* 26,000 446,875 0.20
PATTERSON ENERGY, INC.* 135,900 1,095,694 0.49
TRICO MARINE SERVICES, INC.* 30,100 238,919 0.11
- --------------------------------------------------------------------------------
TOTAL OIL FIELD SERVICES 3,377,656 1.52
================================================================================
POLLUTION CONTROL - 1.95%
- --------------------------------------------------------------------------------
NEWPARK RESOURCES, INC.* 143,300 1,316,569 0.59
U S LIQUIDS INC.* 76,400 1,547,100 0.69
WASTE CONNECTIONS, INC.* 56,600 1,492,825 0.67
- --------------------------------------------------------------------------------
TOTAL POLLUTION CONTROL 4,356,494 1.95
Unaudited. See Notes to Financial Statements.
23
<PAGE>
- ---------
SMALL CAP STATEMENT OF NET ASSETS
PORTFOLIO as of April 30, 1999
- ---------
- --------------------------------------------------------------------------------
Percentage of
EQUITY SECURITIES - 96.50% Shares Value Net Assets
- --------------------------------------------------------------------------------
PUBLISHING/ADVERTISING - 2.56%
- --------------------------------------------------------------------------------
CATALINA MARKETING CORPORATION* 28,600 $ 2,443,512 1.10%
CONSOLIDATED GRAPHICS, INC.* 25,800 1,099,725 0.49
LAMAR ADVERTISING COMPANY, CLASS A* 61,700 2,074,662 0.93
PLAYBOY ENTERPRISES, INC., CLASS B* 2,500 80,469 0.04
- --------------------------------------------------------------------------------
TOTAL PUBLISHING/ADVERTISING 5,698,368 2.56
================================================================================
SPECIALTY RETAIL - 0.39%
- --------------------------------------------------------------------------------
COST PLUS, INC.* 23,000 810,750 0.36
GUITAR CENTER, INC.* 3,855 60,234 0.03
- --------------------------------------------------------------------------------
TOTAL SPECIALTY RETAIL 870,984 0.39
================================================================================
TELECOMMUNICATIONS - 6.12%
- --------------------------------------------------------------------------------
APPLIED MICRO CIRCUITS CORPORATION* 39,700 2,116,506 0.95
CATAPULT COMMUNICATIONS CORPORATION* 15,425 240,052 0.11
DSP COMMUNICATIONS, INC.* 82,500 2,248,125 1.01
E-TEK DYNAMICS, INC.* 20,500 881,500 0.40
GILAT SATELLITE NETWORKS, LTD.* 28,500 1,482,000 0.66
INTERMEDIA COMMUNICATIONS INC.* 40,300 1,297,156 0.58
MGC COMMUNICATIONS, INC.* 13,000 442,000 0.20
QUANTA SERVICES, INC.* 37,500 1,080,469 0.49
RCN CORPORATION* 18,100 880,112 0.39
RESEARCH IN MOTION LIMITED* 118,600 1,445,437 0.65
VIATEL, INC.* 32,800 1,508,800 0.68
- --------------------------------------------------------------------------------
TOTAL TELECOMMUNICATIONS 13,622,157 6.12
================================================================================
TELEPHONE - 1.22%
- --------------------------------------------------------------------------------
MCLEODUSA INCORPORATED, CLASS A* 48,300 2,707,819 1.22
================================================================================
TEXTILES AND SHOES - 0.24%
- --------------------------------------------------------------------------------
NOVEL DENIM HOLDINGS LIMITED* 68,940 534,285 0.24
Unaudited. See Notes to Financial Statements.
24
<PAGE>
- ---------
SMALL CAP STATEMENT OF NET ASSETS
PORTFOLIO as of April 30, 1999
- ---------
- --------------------------------------------------------------------------------
Percentage of
EQUITY SECURITIES - 96.50% Shares Value Net Assets
- --------------------------------------------------------------------------------
TOYS - 0.29%
- --------------------------------------------------------------------------------
JAKKS PACIFIC, INC.* 30,000 $ 641,250 0.29%
================================================================================
TRUCKING - 0.39%
- --------------------------------------------------------------------------------
FORWARD AIR CORPORATION* 39,000 867,750 0.39
- --------------------------------------------------------------------------------
TOTAL EQUITY SECURITIES (COST $170,878,501) 215,093,952 96.50
================================================================================
MONEY MARKET FUNDS - 4.08%
- --------------------------------------------------------------------------------
TEMPORARY INVESTMENT FUND, INC. -
TEMPCASH 4,540,560 4,540,560 2.04
TEMPORARY INVESTMENT FUND, INC. -
TEMPFUND 4,540,560 4,540,560 2.04
- --------------------------------------------------------------------------------
TOTAL MONEY MARKET FUNDS (COST $9,081,120) 9,081,120 4.08
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS (COST $179,959,621) 224,175,072 100.58
- --------------------------------------------------------------------------------
Unaudited. See Notes to Financial Statements.
25
<PAGE>
- ---------
SMALL CAP STATEMENT OF NET ASSETS
PORTFOLIO as of April 30, 1999
- ---------
- --------------------------------------------------------------------------------
Percentage of
Value Net Assets
OTHER ASSETS - 1.28%
- --------------------------------------------------------------------------------
RECEIVABLES:
INTEREST $ 42,866
INVESTMENT SECURITIES SOLD 2,788,118
SHARES OF BENEFICIAL INTEREST SOLD 452
OTHER ASSETS 21,253
- --------------------------------------------------------------------------------
TOTAL OTHER ASSETS 2,852,689 1.28%
================================================================================
TOTAL ASSETS 227,027,761 101.86
- --------------------------------------------------------------------------------
================================================================================
LIABILITIES - (1.86%)
- --------------------------------------------------------------------------------
PAYABLE FOR INVESTMENT SECURITIES PURCHASED 3,912,158
ACCRUED EXPENSES 228,393
- --------------------------------------------------------------------------------
TOTAL LIABILITIES 4,140,551 (1.86)
================================================================================
NET ASSETS - 100.00% $222,887,210 100.00%
================================================================================
*NON-INCOME PRODUCING SECURITY.
Unaudited. See Notes to Financial Statements.
26
<PAGE>
- ---------
SMALL CAP STATEMENT OF OPERATIONS
PORTFOLIO Six Months ended April 30, 1999
- ---------
- --------------------------------------------------------------------------------
INVESTMENT INCOME
INCOME:
Dividends $ 15,485
Interest 191,181
Other 22,530
------------
Total income 229,196
============
EXPENSES:
Investment advisory fee (Note 3) 815,316
Administration fees (Note 3) 101,915
Accounting services fee 42,865
Custodian fee 34,639
Audit fee 9,819
Trustees' fees 6,248
Insurance 2,976
Legal fee 3,968
Miscellaneous 4,463
------------
Total expenses 1,022,209
Less, reimbursement/waiver by Advisor (Note 3) (3,064)
------------
Net expenses 1,019,145
============
NET INVESTMENT LOSS (789,949)
============
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized loss on investments (3,500,072)
Unrealized appreciation of investments 34,387,239
------------
NET GAIN ON INVESTMENTS 30,887,167
============
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 30,097,218
============
Unaudited. See Notes to Financial Statements.
27
<PAGE>
- ---------
SMALL CAP STATEMENT OF CHANGES IN NET ASSETS
PORTFOLIO
- ---------
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
Six Months Year
ended ended
FROM OPERATIONS: April 30, 1999* October 31, 1998
- ---------------- --------------- ----------------
Net investment loss $ (789,949) $ (1,197,741)
Net realized loss on investments (3,500,072) (30,872,647)
Unrealized appreciation
(depreciation) on investments 34,387,239 (283,036)
------------- -------------
Net increase (decrease) in net assets
resulting from operations 30,097,218 (32,353,424)
============= =============
TRANSACTIONS IN INTEREST:
Contributions by Holders 49,308,168 123,809,971
Withdrawals by Holders (30,171,815) (57,458,705)
------------- -------------
Net increase in net assets
from transactions in interests 19,136,353 66,351,266
------------- -------------
TOTAL INCREASE IN NET ASSETS 49,233,571 33,997,842
============= =============
NET ASSETS:
Beginning of period 173,653,639 139,655,797
------------- -------------
End of period $ 222,887,210 $ 173,653,639
============= =============
*Unaudited.
28
<PAGE>
- ---------
SMALL CAP NOTES TO FINANCIAL STATEMENTS
PORTFOLIO
- ---------
- --------------------------------------------------------------------------------
1 - ORGANIZATION
- --------------------------------------------------------------------------------
PIC Small Cap Portfolio (the "Portfolio") was organized on March 22, 1993
as a trust under the laws of the State of New York. The beneficial interests in
the Portfolio are divided into an unlimited number of non-transferable
Interests, par value $.01 each. The Portfolio is registered under the Investment
Company Act of 1940 as an open-end, diversified management investment company.
- --------------------------------------------------------------------------------
2 - SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
The following is a summary of significant accounting policies consistently
followed by the Portfolio. These policies are in conformity with generally
accepted accounting principles.
A. Valuation of Securities. Equity securities listed on a national
securities exchange or traded on the NASDAQ system are valued at their
last sale price. Other equity securities and debt securities for which
market quotations are readily available are valued at the mean between
their bid and asked price, except that debt securities maturing within
60 days are valued on an amortized cost basis. Securities for which
market quotations are not readily available are valued at fair value
as determined in good faith by the Board of Trustees.
B. Federal Income Taxes. The Portfolio intends to comply with the
requirements of the Internal Revenue Code applicable to it. Therefore,
no federal income tax provision is required.
C. 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
29
<PAGE>
- ---------
SMALL CAP NOTES TO FINANCIAL STATEMENTS
PORTFOLIO
- ---------
- --------------------------------------------------------------------------------
reported amounts of revenues and expenses during the period. Actual
results could differ from those estimates.
- --------------------------------------------------------------------------------
3 - TRANSACTIONS WITH AFFILIATES
- --------------------------------------------------------------------------------
The Portfolio has entered into an investment advisory agreement with
Provident Investment Counsel, Inc. ("PIC") and an administration agreement with
Investment Company Administration LLC ("ICA"), pursuant to which agreements
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 a fee for its services to the Portfolio at the rate of 0.80%
of the average daily net assets of the Portfolio. PIC has voluntarily agreed to
limit the total expenses of the Portfolio to an annual rate of 1.00% of the
Portfolio's average daily net assets. During the six months ended April 30,
1999, PIC received $815,316 in fees from the Portfolio after deducting fees
waived of $3,064. ICA receives an annual fee for its services at the rate of
0.10% of average daily net assets of the Portfolio. Fees paid to ICA pursuant to
the agreement totaled $101,915 for the six months ended April 30, 1999.
On December 19, 1995, the Portfolio approved a Deferred Compensation Plan
for Trustees (the "Plan"). Trustees are entitled to receive $2,500 per quarter
and $500 per meeting attended, which is allocated among the Portfolios. Trustees
can elect to receive payment in cash or defer payments provided for in the Plan.
If a Trustee elects to defer payment, the Plan provides for the creation of a
deferred payment account (phantom share account). This account accumulates the
deferred fees earned and the value of the account is adjusted at the end of each
quarter to reflect a value which would have been earned if the account had been
invested in designated investments. The Portfolio recognizes as trustee expense
amounts accrued as meetings are attended plus the change in the value of the
phantom share account determined on a quarterly basis.
30
<PAGE>
- ---------
SMALL CAP NOTES TO FINANCIAL STATEMENTS
PORTFOLIO
- ---------
- --------------------------------------------------------------------------------
4 - INVESTMENT TRANSACTIONS
- --------------------------------------------------------------------------------
During the six months ended April 30, 1999, the cost of purchases and the
proceeds from sales of investment securities, other than short-term obligations,
were $143,029,395 and $123,371,562, respectively. The cost of securities for
federal income tax purposes was $179,959,621. The aggregate gross unrealized
appreciation and depreciation of portfolio securities, based on cost for federal
income tax purposes, were as follows:
Unrealized appreciation $50,897,014
Unrealized depreciation (6,681,563)
----------
Net unrealized appreciation $44,215,451
===========
- --------------------------------------------------------------------------------
5 - SELECTED RATIO DATA
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Year Year Year Year Year
ended ended ended ended ended ended
Apr. 30, 1999 Oct. 31, 1998 Oct. 31, 1997 Oct. 31, 1996 Oct. 31, 1995 Oct. 31, 1994
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ratios to average
net assets*
Operating expenses 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Net investment loss (0.78%) (0.68%) (0.49%) (0.59%) (0.51%) (0.49%)
Portfolio turnover rate 61.75% 81.75% 151.52% 53.11% 45.45% 63.89%
</TABLE>
+Unaudited
*Net of expense reimbursements equivalent to 0.00%, 0.01%, 0.01%, 0.01%, 0.07%,
and 0.10% of average net assets, respectively.
31
<PAGE>
- ----------------------------
Provident Investment Counsel TRUSTEES AND OFFICERS
Small Cap Growth Fund I
- ----------------------------
- --------------------------------------------------------------------------------
TRUSTEES AND OFFICERS - PIC INVESTMENT TRUST
- --------------------------------------------------------------------------------
JEFFREY J. MILLER, Trustee
JETTIE M. EDWARDS, Trustee
BERNARD J. JOHNSON, Trustee Emeritus
JEFFREY D. LOVELL, Trustee
WAYNE H. SMITH, Trustee
DOUGLASS B. ALLEN, President
THAD M. BROWN, Vice President, Secretary and Treasurer
TRUSTEES AND OFFICERS - P*I*C SMALL CAP PORTFOLIO
- --------------------------------------------------------------------------------
JEFFREY J. MILLER, Trustee
RICHARD N. FRANK, Trustee
JAMES CLAYBURN LAFORCE, Trustee
ANGELO R. MOZILO, Trustee
BERNARD J. JOHNSON, Trustee Emeritus
DOUGLASS B. ALLEN, President
THAD M. BROWN, Vice President, Secretary and Treasurer
LEGAL COUNSEL - PIC INVESTMENT TRUST
- --------------------------------------------------------------------------------
SWIDLER, BERLIN, SHEREFF, FRIEDMAN, LLP
LEGAL COUNSEL - P*I*C SMALL CAP PORTFOLIO
- --------------------------------------------------------------------------------
PAUL, HASTINGS, JANOFSKY & WALKER, LLP
INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
MCGLADREY & PULLEN, LLP
TRUSTEES AND OFFICERS
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.
