<PAGE> 1
[PIC LOGO]
ANNUAL REPORT
OCTOBER 31, 1996
<PAGE> 2
[PIC LOGO]
MESSAGE TO SHAREHOLDERS
THE FOLLOWING IS AN INTERVIEW WITH THE MEMBERS OF THE INVESTMENT TEAM AT
PROVIDENT INVESTMENT COUNSEL REGARDING THE P-I-C SMALL CAP. GROWTH FUND
QUESTION: How did the P-I-C Small Cap. Growth Fund perform relative to the
overall market and comparable indices for the fiscal year ended October 31,
1996?
ANSWER: The Standard and Poor's 500 Index, a broad measure of the market's
overall performance rose 24.09%, while the Fund rose 24.08%. The Russell 2000
Growth Index, a broad measure of smaller capitalization growth stocks rose
13.33% for the period.
QUESTION: What has fueled the broad market and the Fund's positive performance
over the last 12 months?
ANSWER: The primary forces behind the broad market and the Fund's continued
strong performance have been a positive economic environment with a lack of any
significant inflationary pressure and record inflows of cash into equity mutual
funds, especially those with a small stock orientation.
QUESTION: What sectors have helped the Fund's performance during the last 12
months?
ANSWER: The Technology, Healthcare/Medical, Financial and Financial sectors have
been the best performing for the Fund during the last year. The research process
at PIC is a bottom-up approach, and we do not have any predetermined investment
guideline for industry or sector weightings in the Fund. The percentage
allocation to these areas is simply the result of this stock selection approach.
QUESTION: Have there been any significant changes in the Fund's exposure to
certain sectors?
ANSWER: Again, as a result effect of our stock selection approach we have seen
some changes over the year including a reduction in the Fund's exposure to the
technology area and a modestly increased exposure to the consumer non-durable
and industrial areas.
QUESTION: What is the outlook for the Fund in 1997?
ANSWER: We are generally optimistic for the year 1997, given that we see very
little sign of inflation or growth in the overall economy that may have a
2
<PAGE> 3
[PIC LOGO]
MESSAGE TO SHAREHOLDERS
negative impact on the equity markets. In past environments of relatively slow
economic growth, companies that have the ability to sustain high rates of growth
have been rewarded. As always, our focus will be on selecting those companies
that we believe will deliver consistent high rates of growth in any economic
environment.
P-I-C SMALL CAP. PORTFOLIO VS. RUSSELL 2000 GROWTH*
<TABLE>
<CAPTION>
3-YEAR SALES 3-YEAR EARNINGS PRETAX RETURN ON REINVEST.
GROWTH PER SHARE MARGIN EQUITY RATE
<S> <C> <C> <C> <C> <C>
P-I-C 38.7% 39.1% 16.4% 23.0% 22.6%
RUSSELL 2000 GROWTH 27.9% 30.7% 13.9% 18.5% 16.9%
</TABLE>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN P-I-C
SMALL CAP. GROWTH FUND AND THE RUSSELL GROWTH INDEX.
<TABLE>
<CAPTION>
P-I-C SMALL CAP. RUSSELL 2000
GROWTH FUND GROWTH
<S> <C> <C>
10/01/93 $10,000 $10,000
04/94 $ 9,478 $ 9,900
10/94 $10,055 $10,200
04/95 $10,514 $10,700
10/95 $14,567 $12,300
04/96 $18,823 $14,900
10/96 $18,700 $13,900
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<S> <C>
One Year 24.08%
Since Inception 21.09%
</TABLE>
<PAGE> 4
[PIC LOGO]
STATEMENT OF ASSETS AND LIABILITIES
as of October 31, 1996
<TABLE>
<CAPTION>
ASSETS
- ----------------------------------------------------------------------------
<S> <C>
Investment in P-I-C Small Cap. Portfolio, at value $196,108,091
Investments sold in P-I-C Small Cap. Portfolio 16,780
Receivable from Provident Investment Counsel 10,545
Prepaid insurance 3,393
- ----------------------------------------------------------------------------
Total Assets 196,138,809
- ----------------------------------------------------------------------------
LIABILITIES
- ----------------------------------------------------------------------------
Payable for Fund shares redeemed 16,780
Deferred Trustees' compensation (Note 3) 5,405
Accrued expenses 27,772
- ----------------------------------------------------------------------------
Total Liabilities 49,957
- ----------------------------------------------------------------------------
NET ASSETS
- ----------------------------------------------------------------------------
Applicable to 8,456,861 shares of beneficial
interest outstanding $196,088,852
- ----------------------------------------------------------------------------
NET ASSET VALUE PER SHARE $ 23.19
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
SOURCE OF NET ASSETS
- ----------------------------------------------------------------------------
Paid-in capital $123,943,139
Accumulated net investment loss (1,968,943)
Accumulated net realized gain on investments 1,780,928
Net unrealized appreciation on investments 72,333,728
- ----------------------------------------------------------------------------
Net Assets $196,088,852
- ----------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
4
<PAGE> 5
[PIC LOGO]
STATEMENT OF OPERATIONS
Year ended October 31, 1996
<TABLE>
<CAPTION>
INVESTMENT INCOME
- --------------------------------------------------------------------------------
<S> <C>
Net investment loss from Portfolio $ (1,029,669)
- --------------------------------------------------------------------------------
Expenses
- --------------------------------------------------------------------------------
Administration fees (Note 3) 355,807
Trustees' fees 14,359
Auditing fee 11,000
Legal fee 9,226
Transfer agent's fee 13,200
Custody and accounting services fee 6,000
Registration fee 10,999
Miscellaneous 4,852
- --------------------------------------------------------------------------------
Total expenses 425,443
Less, reimbursement/waiver by Provident
Investment Counsel, Inc. (Note 3) (425,443)
- --------------------------------------------------------------------------------
Net expenses -0-
- --------------------------------------------------------------------------------
Net investment loss (1,029,669)
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
- --------------------------------------------------------------------------------
Net realized gain on investments 15,463,565
Change in net unrealized appreciation on investments 18,564,877
- --------------------------------------------------------------------------------
Net gain on investments 34,028,442
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 32,998,773
- --------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
5
<PAGE> 6
[PIC LOGO]
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INCREASE IN NET ASSETS
- --------------------------------------------------------------------------------
<S> <C> <C>
Year Year
ended ended
From operations: October 31, 1996 October 31, 1995
- --------------------------------------------------------------------------------
Net investment loss $ (1,029,669) $ (488,787)
Net realized gain (loss) on investments 15,463,565 (792,768)
Change in net unrealized appreciation
on investments 18,564,877 39,983,063
- --------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 32,998,773 38,701,508
================================================================================
Transactions in shares of beneficial interest:
Purchases of 1,863,518 and 791,568
shares, respectively 41,179,324 12,507,087
Redemptions of 378,540 and 357,853
shares, respectively (8,396,584) (5,217,154)
- --------------------------------------------------------------------------------
Net increase in net assets resulting
from share transactions 32,782,740 7,289,933
================================================================================
Total increase in net assets 65,781,513 45,991,441
================================================================================
NET ASSETS
- --------------------------------------------------------------------------------
Beginning of year 130,307,339 84,315,898
- --------------------------------------------------------------------------------
End of year $196,088,852 $130,307,339
- --------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
6
<PAGE> 7
[PIC LOGO]
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- -------------------------------------------------------------------------------------
Year Year Year Sept. 30, 1993*
ended ended ended through
Oct. 31, Oct. 31, Oct. 31, Oct. 31,
1996 1995 1994 1993
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period $18.69 $12.90 $13.05 $12.83
Income from investment
operations:
Net investment loss (.10) (.07) (.06) (.01)
Net realized and unrealized
gain (loss) on investments 4.60 5.86 (.09) .23
- -------------------------------------------------------------------------------------
Total from investment operations 4.50 5.79 (.15) .22
- -------------------------------------------------------------------------------------
Net asset value, end of period $23.19 $18.69 $12.90 $13.05
=====================================================================================
Total return 24.08% 44.88% (1.15%)+ 19.50%++
=====================================================================================
Ratios/supplemental data:
Net assets, end of period (millions) $196.1 $130.3 $ 84.3 $ 82.6
- -------------------------------------------------------------------------------------
Ratios to average net assets: **
Expenses 1.00% 1.00% 1.00% 1.00%++
Net investment loss (.60%) (.51%) (.49%) (.79%)++
</TABLE>
*Commencement of operations.
+Net of expense reimbursements.
**Includes the Fund's shares of expenses, net of expense reimbursements and
waivers, allocated from P-I-C Small Cap. Portfolio. If the expense
reimbursements and waivers, with respect to the Fund and P-I-C Small Cap.
Portfolio, had not been made, the ratio of expenses to average net assets would
have been 1.25%, 1.34%, 1.47% and 1.22%, respectively.
++Annualized.
See Notes to Financial Statements.
7
<PAGE> 8
[PIC LOGO]
NOTES TO FINANCIAL STATEMENTS
October 31, 1996
================================================================================
1 - ORGANIZATION
- --------------------------------------------------------------------------------
P-I-C Small Cap. Growth Fund (the "Fund") is one of several series of
P-I-C 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 P-I-C Small Cap.
Portfolio (the "Portfolio"), a separate registered management investment company
having the same investment objective as the Fund. At October 31, 1996, the Fund
owned 97.41% of the total net assets of the Portfolio. The financial statements
of the Portfolio are included elsewhere in this report and should be read in
conjunction with the Fund's financial statements.
2 - SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
The following is a summary of significant accounting policies
consistently followed by the Fund. These policies are in conformity with
generally accepted accounting principles.
A. Investment Valuation. The Fund reflects its investment in the Portfolio
at its proportionate interest in the value of the Portfolio's net
assets. Valuation of securities by the Portfolio is discussed at Note
2A of the Portfolio's Notes to Financial Statements.
B. Investment Income and Dividends to Shareholders. The Fund earns income,
net of the expenses of the Portfolio, daily on its investment in the
Portfolio. All net investment income and realized and unrealized gains
or losses on investments of the Portfolio are allocated pro rata among
the Fund and the other Holders of Interests in the Portfolio.
Dividends, if any, are paid annually to shareholders of the Fund and
recorded on the ex-dividend date.
C. Federal Income Taxes. The Fund intends to comply with the requirements
of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its
shareholders. Therefore, no federal income tax provision is required.
D. Accounting Estimates. In preparing financial statements in conformity
with generally accepted accounting principles, management makes
estimates and assumptions that affect the reported amounts of assets
8
<PAGE> 9
[PIC LOGO]
NOTES TO FINANCIAL STATEMENTS, CONTINUED
================================================================================
and liabilities at the date of the financial statements, as well as the
reported amounts of revenues and expenses during the period. Actual
results could differ from those estimates.
3 - TRANSACTIONS WITH AFFILIATES
- --------------------------------------------------------------------------------
The Trust has entered into administration agreements with Provident
Investment Counsel, Inc. ("PIC") and Investment Company Administration
Corporation ("ICAC"), pursuant to which agreements certain employees of these
entities serve as officers and/or trustees of the Trust and the Portfolio. PIC
and ICAC also provide management services necessary for the operations of the
Trust and the Portfolio and furnish office facilities. PIC receives a fee for
its services to the Fund at the rate of 0.20% of the average daily net assets of
the Fund, but waived its fee of $345,808 for the year ended October 31, 1996.
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 period ended October 31, 1996 was $79,635. ICAC receives
an annual fee for its services at the rate of $10,000.
First Fund Distributors, Inc. (an affiliate of ICAC), 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.
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 amongst the Funds. Trustees can
elect to receive payment in cash or defer payments provided for in the plan.
4 - INVESTMENT TRANSACTIONS
- --------------------------------------------------------------------------------
Additions and reductions in the Fund's investment in the Portfolio
aggregated $41,251,127 and $8,473,681, respectively.
9
<PAGE> 10
[PIC LOGO]
INDEPENDENT AUDITOR'S REPORT
================================================================================
To the Board of Trustees of
P-I-C Investment Trust
and the Shareholders of
P-I-C Small Cap. Growth Fund
We have audited the accompanying statement of assets and liabilities of
P-I-C Small Cap. Growth Fund (a series of P-I-C Investment Trust) as of October
31, 1996, the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period then
ended and the financial highlights for each of the three years in the period
then ended and for the period September 30, 1993 (commencement of operations) to
October 31, 1993. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of P-I-C Small Cap. Growth Fund as of October 31, 1996, the results of
its operations, the changes in its net assets and the financial highlights for
the periods indicated, in conformity with generally accepted accounting
principles.
/s/ McGladrey & Pullen, LLP
New York, New York
November 27, 1996
10
<PAGE> 11
[PIC LOGO]
STATEMENT OF NET ASSETS
as of October 31, 1996
================================================================================
<TABLE>
<CAPTION>
Percentage of
EQUITY SECURITIES - 91.2% Shares Value Net Assets
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
AIR FREIGHT .. 0.9%
- ---------------------------------------------------------------------------------------
Atlas Air, Inc.* 22,700 $ 837,062 0.4%
Eagle USA Airfreight, Inc.* 34,900 951,025 0.5%
- ---------------------------------------------------------------------------------------
Total Air Freight 1,788,087
=======================================================================================
APPAREL AND SHOE .. 1.5%
- ---------------------------------------------------------------------------------------
Amercrombie & Fitch Co.* 27,400 602,800 0.3%
Hibbett Sporting Goods, Inc.* 11,600 237,800 0.1%
Just For Feet, Inc.* 37,450 969,019 0.5%
Kenneth Cole Productions* 68,000 1,122,000 0.6%
- ---------------------------------------------------------------------------------------
Total Apparel and Shoe 2,931,619
=======================================================================================
AUDIO/VIDEO .. 0.8%
- ---------------------------------------------------------------------------------------
Harman International Industries, Inc. 32,195 1,654,018 0.8%
=======================================================================================
AUTO PARTS .. 0.3%
- ---------------------------------------------------------------------------------------
Gentex Corp.* 27,200 646,000 0.3%
=======================================================================================
BIOTECHNOLOGY .. 0.4%
- ---------------------------------------------------------------------------------------
Martek Biosciences Corp.* 13,300 285,950 0.1%
Neopath, Inc.* 26,700 435,544 0.2%
Neuromedical Systems, Inc.* 5,200 88,400 0.1%
- ---------------------------------------------------------------------------------------
Total Biotechnology 809,894
=======================================================================================
BUILDERS .. 0.9%
- ---------------------------------------------------------------------------------------
Oakwood Homes Corp. 35,500 940,750 0.5%
Palm Harbor Homes, Inc.* 28,475 800,859 0.4%
- ---------------------------------------------------------------------------------------
Total Builders 1,741,609
</TABLE>
11
<PAGE> 12
[PIC LOGO]
STATEMENT OF NET ASSETS
as of October 31, 1996
================================================================================
<TABLE>
<CAPTION>
Percentage of
EQUITY SECURITIES, CONTINUED Shares Value Net Assets
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
BUILDING PRODUCTS .. 2.5%
- ---------------------------------------------------------------------------------------
Diamond Home Services* 23,400 $ 538,200 0.3%
Fastenal Co.* 96,400 4,458,500 2.2%
- ---------------------------------------------------------------------------------------
Total Building Products 4,996,700
=======================================================================================
BUSINESS INFORMATION SERVICES .. 0.5%
- ---------------------------------------------------------------------------------------
Intelliquest Information Group, Inc.* 16,500 363,000 0.2%
M.A.I.D. PLC ADR* 31,100 553,969 0.3%
- ---------------------------------------------------------------------------------------
Total Business Information Services 916,969
=======================================================================================
BUSINESS SERVICES .. 4.8%
- ---------------------------------------------------------------------------------------
Accustaff Inc.* 95,000 2,541,250 1.3%
Apac Teleservices, Inc.* 32,400 1,494,450 0.7%
Career Horizons* 22,600 918,125 0.4%
Claremont Technology Group, Inc.* 15,000 457,500 0.2%
Dendrite International, Inc.* 6,100 162,412 0.1%
Health Management Systems, Inc.* 32,125 754,937 0.4%
Labor Ready, Inc.* 9,900 142,313 0.1%
Personnel Group of America* 26,800 740,350 0.4%
Protection One, Inc.* 23,500 264,375 0.1%
Romac International, Inc.* 23,200 667,000 0.3%
Rural Metro Corp.* 20,200 737,300 0.4%
Teletech Holdings, Inc.* 6,700 214,400 0.1%
U.S. Office Products Co.* 20,600 597,400 0.3%
- ---------------------------------------------------------------------------------------
Total Business Services 9,691,812
=======================================================================================
COMPUTER HARDWARE .. 1.1%
- ---------------------------------------------------------------------------------------
Brooktrout Technology, Inc.* 33,600 1,083,600 0.5%
International Network Services* 4,400 157,300 0.1%
National Techteam, Inc.* 36,300 980,100 0.5%
- ---------------------------------------------------------------------------------------
Total Computer Hardware 2,221,000
</TABLE>
12
<PAGE> 13
[PIC LOGO]
STATEMENT OF NET ASSETS
as of October 31, 1996
================================================================================
<TABLE>
<CAPTION>
Percentage of
EQUITY SECURITIES, CONTINUED Shares Value Net Assets
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMPUTER SERVICES .. 4.4%
- ---------------------------------------------------------------------------------------
Cambridge Technology Partners, Inc.* 66,100 $ 2,181,300 1.1%
Datastream Systems, Inc.* 17,600 321,200 0.2%
Enterprise Systems, Inc.* 29,200 470,850 0.2%
Envoy Corp.* 23,300 856,275 0.4%
Fiserv, Inc.* 52,000 1,995,500 1.0%
Gartner Group, Inc., Class A* 36,000 1,107,000 0.6%
HBO & Co. 18,000 1,082,250 0.5%
Indus Group, Inc.* 15,500 313,875 0.2%
Renaissance Solutions, Inc.* 11,400 458,850 0.2%
- ---------------------------------------------------------------------------------------
Total Computer Services 8,787,100
=======================================================================================
COMPUTER SOFTWARE .. 14.3%
- ---------------------------------------------------------------------------------------
Aspen Technology, Inc.* 27,000 1,815,750 0.9%
Baan Company, N.V.* 15,800 584,600 0.3%
BDM International, Inc.* 23,900 1,200,975 0.6%
CCC Information Services Group* 15,000 281,250 0.1%
Casino Data System* 20,700 297,562 0.1%
Citrix Systems, Inc.* 14,600 806,650 0.4%
Cognos, Inc.* 18,800 589,850 0.3%
Electronics For Imaging, Inc.* 42,000 3,024,000 1.5%
Epic Design Technology, Inc.* 26,300 644,350 0.3%
Gemstar International Group Limited* 21,100 466,837 0.2%
HNC Software, Inc.* 16,700 526,050 0.3%
Integrated Systems, Inc.* 18,700 504,900 0.3%
Intelligroup, Inc.* 8,300 130,725 0.1%
Network General Corp.* 89,700 2,164,013 1.1%
Parametric Technology Corp.* 150,700 7,365,463 3.7%
Peoplesoft, Inc.* 23,700 2,127,075 1.1%
Pure Atria Corp.* 5,000 136,250 0.1%
Rational Software Corp.* 12,700 487,363 0.2%
Synopsys, Inc.* 55,500 2,497,500 1.2%
Transactions Systems Architects, Inc.* 55,700 2,311,550 1.1%
USCS International, Inc.* 22,300 401,400 0.2%
</TABLE>
13
<PAGE> 14
[PIC LOGO]
STATEMENT OF NET ASSETS
as of October 31, 1996
================================================================================
<TABLE>
<CAPTION>
Percentage of
EQUITY SECURITIES, CONTINUED Shares Value Net Assets
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMPUTER SOFTWARE, CONTINUED
- ---------------------------------------------------------------------------------------
White Pine Software, Inc.* 9,100 $ 81,900 0.0%
Wind River Systems, Inc.* 8,800 374,000 0.2%
- ---------------------------------------------------------------------------------------
Total Computer Software 28,820,013
=======================================================================================
CONSUMER ELECTRICAL .. 0.2%
- ---------------------------------------------------------------------------------------
Watsco, Inc. 17,300 335,188 0.2%
=======================================================================================
COSMETICS .. 2.1%
- ---------------------------------------------------------------------------------------
Blyth Industries, Inc.* 36,900 1,434,487 0.7%
Luxottica Group SPA Sponsored ADR 34,800 2,209,800 1.1%
USA Detergents, Inc.* 16,300 537,900 0.3%
- ---------------------------------------------------------------------------------------
Total Cosmetics 4,182,187
=======================================================================================
CREDIT & FINANCE .. 1.8%
- ---------------------------------------------------------------------------------------
First USA Paymentech, Inc.* 29,100 1,076,700 0.6%
First USA, Inc. 43,000 2,472,500 1.2%
- ---------------------------------------------------------------------------------------
Total Credit & Finance 3,549,200
=======================================================================================
DISCOUNT STORES .. 1.3%
- ---------------------------------------------------------------------------------------
Dollar Tree Stores, Inc.* 71,800 2,710,450 1.3%
=======================================================================================
DRUGS .. 1.2%
- ---------------------------------------------------------------------------------------
Biovail Corp. International* 29,200 854,100 0.4%
Jones Medical Industries, Inc. 16,675 725,363 0.4%
Medicis Pharmaceutical, Class A* 10,400 522,600 0.3%
NCS Healthcare, Inc., Class A* 8,800 267,300 0.1%
- ---------------------------------------------------------------------------------------
Total Drugs 2,369,363
</TABLE>
14
<PAGE> 15
[PIC LOGO] STATEMENT OF NET ASSETS
as of October 31, 1996
<TABLE>
<CAPTION>
================================================================================
EQUITY SECURITIES, CONTINUED Shares Value Percentage of
Net Assets
- --------------------------------------------------------------------------------
EDUCATIONAL PROGRAMS .. 1.5%
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Apollo Group, Inc., Class A(*) 77,722 $ 2,137,355 1.1%
Sylvan Learning Systems, Inc.(*) 18,500 781,625 0.4%
- --------------------------------------------------------------------------------
Total Educational Programs 2,918,980
================================================================================
ELECTRIC COMPONENTS/SEMICONDUCTORS .. 0.2%
- --------------------------------------------------------------------------------
SDL, Inc.(*) 29,600 503,200 0.2%
================================================================================
ELECTRICAL PRODUCTS .. 0.5%
- --------------------------------------------------------------------------------
Chicago Miniature Lamp, Inc.(*) 36,600 1,088,850 0.5%
================================================================================
ELECTRONICS .. 1.0%
- --------------------------------------------------------------------------------
Anicom, Inc.(*) 29,400 264,600 0.1%
Computer Products, Inc.(*) 12,000 237,000 0.1%
Gargoyles, Inc.(*) 16,200 214,650 0.1%
Sawtek, Inc.(*) 17,100 517,275 0.3%
Vitesse Semiconductor, Inc.(*) 20,300 647,063 0.3%
Xionics Document Technologies, Inc.(*) 8,400 107,100 0.1%
- --------------------------------------------------------------------------------
Total Electronics 1,987,688
================================================================================
ENTERTAINMENT & LEISURE ..5.8%
- --------------------------------------------------------------------------------
Ascent Entertainment Group, Inc.(*) 17,100 316,350 0.2%
Clear Channel Communications, Inc.(*) 26,600 1,941,800 1.0%
Dover Downs Entertainment(*) 22,900 460,862 0.2%
Extended Stay America(*) 49,000 992,250 0.5%
HFS, Inc.(*) 75,700 5,545,025 2.7%
Interstate Hotels Company(*) 17,100 461,700 0.2%
LodgeNet Entertainment Corp.(*) 35,200 554,400 0.3%
North Face, Inc.(*) 10,800 218,700 0.1%
StudioPLUS Hotels, Inc.(*) 40,950 721,744 0.4%
Suburban Lodges of America(*) 20,900 436,288 0.2%
- --------------------------------------------------------------------------------
Total Entertainment & Leisure 11,649,119
</TABLE>
15
<PAGE> 16
[PIC LOGO] STATEMENT OF NET ASSETS
as of October 31, 1996
<TABLE>
<CAPTION>
================================================================================
EQUITY SECURITIES, CONTINUED Shares Value Percentage of
Net Assets
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
ENVIRONMENTAL SERVICES .. 0.1%
- --------------------------------------------------------------------------------
Tetra Technologies(*) 4,300 $ 89,763 0.1%
================================================================================
EQUIPMENT & LEASING .. 0.5%
- --------------------------------------------------------------------------------
Oxford Resources Corp., Class A(*) 32,400 826,200 0.4%
Prime Service, Inc.(*) 11,600 272,600 0.1%
- --------------------------------------------------------------------------------
Total Equipment & Leasing 1,098,800
================================================================================
FINANCE COMPANIES .. 0.1%
- --------------------------------------------------------------------------------
Leasing Solution(*) 7,500 236,250 0.1%
================================================================================
FINANCIAL SERVICES .. 2.7%
- --------------------------------------------------------------------------------
Bisys Group, Inc.(*) 31,100 1,158,475 0.6%
Concord EFS, Inc.(*) 33,800 980,200 0.5%
NOVA Corp.(*) 1,700 36,975 0.0%
PMT Services, Inc.(*) 104,500 2,090,000 1.0%
Sirrom Capital Corp. 33,300 1,215,450 0.6%
- --------------------------------------------------------------------------------
Total Financial Services 5,481,100
================================================================================
FOOD AND RESTAURANTS .. 1.2%
- --------------------------------------------------------------------------------
Cooker Restaurant Corp. 21,000 231,000 0.1%
Landry's Seafood Restaurant(*) 41,400 848,700 0.4%
Outback Steakhouse, Inc.(*) 13,100 303,756 0.2%
Rainforest Cafe, Inc.(*) 29,700 965,250 0.5%
- --------------------------------------------------------------------------------
Total Food and Restaurants 2,348,706
================================================================================
GAMING .. 0.1%
- --------------------------------------------------------------------------------
Trump Hotels & Casino Resorts, Inc.(*) 18,600 295,275 0.1%
================================================================================
HEALTH MAINTENANCE ORGANIZATIONS .. 4.1%
- --------------------------------------------------------------------------------
Oxford Health Plans, Inc.(*) 183,400 8,344,700 4.1%
</TABLE>
16
<PAGE> 17
[PIC LOGO] STATEMENT OF NET ASSETS
as of October 31, 1996
<TABLE>
<CAPTION>
================================================================================
EQUITY SECURITIES, CONTINUED Shares Value Percentage of
Net Assets
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
HEALTH SERVICES .. 0.6%
- --------------------------------------------------------------------------------
Clintrials(*) 14,100 $ 523,462 0.3%
National Surgery Centers, Inc.(*) 17,400 469,800 0.2%
Superior Consultant Holdings Corp.(*) 11,000 269,500 0.1%
- --------------------------------------------------------------------------------
Total Health Services 1,262,762
================================================================================
INDUSTRIAL MACHINERY/COMPONENTS .. 0.2%
- --------------------------------------------------------------------------------
Rental Service Corp.(*) 20,900 480,700 0.2%
================================================================================
INSURANCE .. 1.9%
- --------------------------------------------------------------------------------
Amerin Corp.(*) 6,900 136,275 0.1%
Capmac Holdings, Inc. 21,000 700,875 0.3%
Enhance Financial Services Group, Inc. 10,800 360,450 0.2%
HCC Insurance Holdings, Inc. 89,100 2,272,050 1.1%
Meadowbrook Insurance Group, Inc. 13,300 339,150 0.2%
- --------------------------------------------------------------------------------
Total Insurance 3,808,800
================================================================================
MAJOR CHEMICALS .. 0.1%
- --------------------------------------------------------------------------------
Nuco2, Inc.(*) 20,100 266,325 0.1%
================================================================================
MEDICAL INSTRUMENTS .. 3.4%
- --------------------------------------------------------------------------------
IDEXX Laboratories, Inc.(*) 126,600 4,969,050 2.5%
Target Therapeutics, Inc.(*) 50,600 1,872,200 0.9%
- --------------------------------------------------------------------------------
Total Medical Instruments 6,841,250
================================================================================
MEDICAL/DENTAL PRODUCTS ..0.8%
- --------------------------------------------------------------------------------
Cohr, Inc.(*) 7,800 191,100 0.1%
Henry Schein, Inc.(*) 35,500 1,411,125 0.7%
- --------------------------------------------------------------------------------
Total Medical/Dental Products 1,602,225
</TABLE>
17
<PAGE> 18
[PIC LOGO] STATEMENT OF NET ASSETS
as of October 31, 1996
<TABLE>
<CAPTION>
================================================================================
EQUITY SECURITIES, CONTINUED Shares Value Percentage of
Net Assets
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
MEDICAL/DENTAL SERVICES .. 5.0%
- --------------------------------------------------------------------------------
Compdent Corp.(*) 34,100 $ 1,172,187 0.6%
Mecon, Inc.(*) 12,700 244,475 0.1%
Occusystems, Inc.(*) 30,800 843,150 0.4%
Omnicare, Inc. 29,500 803,875 0.4%
Orthodontic Centers of America, Inc.(*) 74,000 1,063,750 0.5%
Pediatrix Medical Group, Inc.(*) 21,300 838,688 0.4%
Phymatrix Corp.(*) 27,900 463,838 0.2%
Physicians Resource Group, Inc.(*) 20,300 548,100 0.3%
Quintiles Transnational Corp.(*) 28,100 1,847,575 0.9%
Renal Care Group, Inc.(*) 20,600 762,200 0.4%
Total Renal Care Holdings, Inc.(*) 34,600 1,349,400 0.7%
UroCor, Inc.(*) 19,000 223,250 0.1%
- --------------------------------------------------------------------------------
Total Medical/Dental Services 10,160,488
================================================================================
MID-SIZED BANKS .. 0.2%
- --------------------------------------------------------------------------------
Mentor Corp. / Minnesota 17,400 384,975 0.2%
================================================================================
MORTGAGE & RELATED SERVICES .. 2.6%
- --------------------------------------------------------------------------------
Cityscape Financial Corp.(*) 72,500 1,866,875 0.9%
ContiFinancial Corp.(*) 21,800 708,500 0.4%
IMC Mortgage Company(*) 9,500 356,250 0.2%
Insignia Financial Group, Inc., Class A(*) 107,000 2,313,875 1.1%
- --------------------------------------------------------------------------------
Total Mortgage & Related Services 5,245,500
================================================================================
NETWORKING .. 1.5%
- --------------------------------------------------------------------------------
Ascend Communications, Inc.(*) 28,100 1,837,037 0.9%
Fore Systems, Inc.(*) 30,700 1,220,325 0.6%
- --------------------------------------------------------------------------------
Total Networking 3,057,362
================================================================================
OFFICE AUTOMATION .. 0.1%
- --------------------------------------------------------------------------------
Lason Holdings, Inc.(*) 8,500 150,875 0.1%
</TABLE>
18
<PAGE> 19
[PIC LOGO] STATEMENT OF NET ASSETS
as of October 31, 1996
<TABLE>
<CAPTION>
================================================================================
EQUITY SECURITIES, CONTINUED Shares Value Percentage of
Net Assets
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
OFFICE EQUIPMENT/SUPPLIES .. 2.0%
- --------------------------------------------------------------------------------
Elbit Vision Systems(*) 35,600 $ 213,600 0.1%
Viking Office Products, Inc.(*) 130,200 3,792,075 1.9%
- --------------------------------------------------------------------------------
Total Office Equipment /Supplies 4,005,675
================================================================================
OIL & GAS PRODUCTION .. 0.5%
- --------------------------------------------------------------------------------
Swift Energy Co.(*) 41,700 1,021,650 0.5%
================================================================================
OIL FIELD SERVICES .. 0.9%
- --------------------------------------------------------------------------------
Chesapeake Energy Corp.(*) 31,950 1,861,087 0.9%
================================================================================
PHARMACEUTICALS .. 0.5%
- --------------------------------------------------------------------------------
Applied Analytical Industries, Inc.(*) 1,700 36,975 0.0%
Capstone Pharmacy Services(*) 23,600 275,825 0.1%
Dura Pharmaceuticals(*) 21,200 731,400 0.4%
- --------------------------------------------------------------------------------
Total Pharmaceuticals 1,044,200
================================================================================
POLLUTION CONTROL .. 3.3%
- --------------------------------------------------------------------------------
Continental Waste Industries, Inc.(*) 20,066 499,142 0.2%
Memtec Ltd. ADR 51,000 1,740,375 0.9%
Republic Industries, Inc.(*) 63,000 1,960,875 1.0%
United Waste Systems, Inc.(*) 41,100 1,412,813 0.7%
USA Waste Services, Inc.(*) 33,800 1,081,600 0.5%
- --------------------------------------------------------------------------------
Total Pollution Control 6,694,805
================================================================================
RECREATIONAL PRODUCTS .. 0.2%
- --------------------------------------------------------------------------------
Rockshox, Inc.(*) 13,600 173,400 0.1%
West Marine(*) 6,500 229,125 0.1%
- --------------------------------------------------------------------------------
Total Recreational Products 402,525
</TABLE>
19
<PAGE> 20
[PIC LOGO] STATEMENT OF NET ASSETS
as of October 31, 1996
<TABLE>
<CAPTION>
================================================================================
EQUITY SECURITIES, CONTINUED Shares Value Percentage of
Net Assets
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
SPECIALTY CHAINS .. 1.5%
- --------------------------------------------------------------------------------
Barnett, Inc.(*) 15,500 $ 366,187 0.2%
CDW Computers Centers, Inc.(*) 16,800 1,057,350 0.5%
Loehmann's Holdings, Inc.(*) 17,800 478,375 0.2%
Marks Brothers Jewelers, Inc.(*) 15,900 369,675 0.2%
Starbucks Corp.(*) 12,800 416,000 0.2%
Veterinary Centers of America(*) 19,300 354,638 0.2%
- --------------------------------------------------------------------------------
Total Specialty Chains 3,042,225
================================================================================
TELECOMMUNICATIONS .. 6.0%
- --------------------------------------------------------------------------------
Advanced Fibre Communication(*) 8,700 496,987 0.3%
Aspect Telecommunications Corp.(*) 19,300 1,148,350 0.6%
Cascade Communications Corp.(*) 44,400 3,224,550 1.6%
Coherent Communications System
Corp.(*) 35,500 687,812 0.3%
Davox Corp.(*) 8,300 298,800 0.2%
DSP Communications, Inc.(*) 42,400 1,611,200 0.8%
Getty Communications PLC,
Sponsored ADR(*) 32,800 451,000 0.2%
Inter-Tel, Inc., Class A(*) 26,800 405,350 0.2%
McLeod, Inc.(*) 16,700 542,750 0.3%
MRV Communications, Inc.(*) 44,500 967,875 0.5%
P-Com, Inc.(*) 44,500 979,000 0.5%
Tel-Save Holdings, Inc.(*) 40,250 1,006,250 0.5%
- --------------------------------------------------------------------------------
Total Telecommunications 11,819,924
================================================================================
TEXTILES & SHOES .. 2.8%
- --------------------------------------------------------------------------------
Tommy Hilfiger Corp.(*) 108,500 5,642,000 2.8%
================================================================================
TOBACCO .. 0.3%
- --------------------------------------------------------------------------------
Consolidated Cigar Holdings, Inc.(*) 25,000 681,250 0.3%
- --------------------------------------------------------------------------------
Total Common Stock (Cost $110,918,705) 183,670,243
</TABLE>
20
<PAGE> 21
[PIC LOGO] STATEMENT OF NET ASSETS
as of October 31, 1996
<TABLE>
<CAPTION>
================================================================================
SHORT-TERM INVESTMENTS - 8.6% Value Percentage of
Net Assets
- --------------------------------------------------------------------------------
COMMERCIAL PAPER .. 7.5% Principal
Amount
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
American Express Credit Corp.,
5.26%, 11/14/96 $6,000,000 $ 6,000,000 3.0%
Ford Motor Credit Co., 5.26%,
11/14/96 6,000,000 6,000,000 3.0%
Prudential Funding Corp., 5.30%,
11/12/96 3,000,000 3,000,000 1.5%
- --------------------------------------------------------------------------------
Total Commercial Paper
(Cost $15,000,000) 15,000,000 7.5%
REPURCHASE AGREEMENT .. 1.1%
- --------------------------------------------------------------------------------
Lehman Brothers On-Line Repurchase
Agreement, 5.04%, dated 12/13/93,
due 11/1/96 (Collateralized by
$2,193,996 U.S. Treasury Bill, 5.09%,
due 4/3/97) (Cost $2,130,300) 2,130,300 2,130,300 1.1%
- --------------------------------------------------------------------------------
Total Investments
(Cost $128,049,005) 99.8% $200,800,543 99.8%
</TABLE>
21
<PAGE> 22
[PIC LOGO] STATEMENT OF NET ASSETS
as of October 31, 1996
<TABLE>
<CAPTION>
================================================================================
OTHER ASSETS - 1.1% Value Percentage of
Net Assets
- --------------------------------------------------------------------------------
<S> <C> <C>
Cash $ 69
Receivables:
Investment securities sold 2,198,028
Dividends and interest 68,439
Shares of beneficial interest sold 7,218
Deferred organization costs 20,001
Other assets 13,254
- --------------------------------------------------------------------------------
Total other assets 2,307,009 1.1%
================================================================================
LIABILITIES - (0.9%)
- --------------------------------------------------------------------------------
Payable for investment securities purchased 1,534,102
Shares of beneficial interest redeemed 70,416
Deferred Trustees' compensation (Note 3) 7,713
Accrued expenses 194,645
- --------------------------------------------------------------------------------
Total liabilities 1,806,876 (0.9)%
================================================================================
TOTAL NET ASSETS - 100.0% $201,300,676 100.0%
- --------------------------------------------------------------------------------
</TABLE>
*Non-incoming producing security.
See Notes to Financial Statements.
22
<PAGE> 23
[PIC LOGO] STATEMENT OF OPERATIONS
Year ended October 31, 1996
<TABLE>
<CAPTION>
================================================================================
INVESTMENT INCOME
- --------------------------------------------------------------------------------
<S> <C>
Income:
- --------------------------------------------------------------------------------
Dividends $ 108,873
Interest 593,787
Other 4,857
- --------------------------------------------------------------------------------
Total income 707,517
================================================================================
Expenses:
- --------------------------------------------------------------------------------
Investment advisory fee (Note 3) 1,395,748
Administration fees 174,469
Accounting services fee 79,887
Custodian fee 55,572
Auditing fee 20,499
Trustees' fees 17,134
Legal fee 4,000
Amortization of organization costs 9,999
Miscellaneous 13,476
- --------------------------------------------------------------------------------
Total expenses 1,770,784
Less, reimbursement/waiver from Advisor (Note 3) (26,098)
- --------------------------------------------------------------------------------
Net expenses 1,744,686
================================================================================
Net investment loss (1,037,169)
================================================================================
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
- --------------------------------------------------------------------------------
Net realized gain from security transactions 14,963,528
Change in net unrealized appreciation of
investments for the period 18,982,622
- --------------------------------------------------------------------------------
Net gain on investments 33,946,150
================================================================================
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $32,908,981
- --------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
23
<PAGE> 24
[PIC LOGO] STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
================================================================================
INCREASE IN NET ASSETS
- --------------------------------------------------------------------------------
Year Year
ended ended
From operations: October 31, 1996 October 31, 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Net investment loss $ (1,037,169) $ (488,788)
Net realized gain (loss) on
investments 14,963,528 (792,768)
Change in unrealized appreciation
of investments 18,982,622 39,983,109
- --------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 32,908,981 38,701,553
================================================================================
Transactions in interests:
Contributions by Holders 57,035,094 12,662,902
Withdrawals by Holders (18,975,416) (5,287,514)
- --------------------------------------------------------------------------------
Net increase in net assets from
transactions in interests 38,059,678 7,375,388
================================================================================
Total increase in net assets 70,968,659 46,076,941
================================================================================
NET ASSETS:
- --------------------------------------------------------------------------------
Beginning of year 130,332,017 84,255,076
- --------------------------------------------------------------------------------
End of year $201,300,676 $130,332,017
- --------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
24
<PAGE> 25
[PIC LOGO] NOTES TO FINANCIAL STATEMENTS
October 31, 1996
================================================================================
1 - ORGANIZATION
- --------------------------------------------------------------------------------
P-I-C Small Cap. Portfolio (the "Portfolio") was organized on March 22, 1993 as
a trust under the laws of the State of New York. The beneficial interests in the
Portfolio are divided into an unlimited number of non-transferable Interests,
par value $.01 each. The Portfolio is registered under the Investment Company
Act of 1940 as an open-end, diversified management investment company.
2 - SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
The following is a summary of significant accounting policies consistently
followed by the Portfolio. These policies are in conformity with generally
accepted accounting principles.
A. Valuation of Securities. Equity securities listed on a national
securities exchange or traded on the NASDAQ system are valued at
their last sale price. Other equity securities and debt securities
for which market quotations are readily available are valued at the
mean between their bid and asked price, except that debt securities
maturing within 60 days are valued on an amortized cost basis.
Securities for which market quotations are not readily available are
valued at fair value as determined in good faith by the Board of
Trustees.
B. Federal Income Taxes. The Portfolio intends to comply with the
requirements of the Internal Revenue Code applicable to it.
Therefore, no federal income tax provision is required.
C. Deferred Organization Expense. Organization costs of the Portfolio
are being amortized on a straight line basis over a period of sixty
months. During the amortization period the proceeds of any
redemption of the original Interests in the Portfolio by any Holder
thereof will be reduced by a pro rata portion of any then
unamortized organization costs based on the ratio of Interests
redeemed to the total initial Interests outstanding prior to the
redemption.
D. Other. Securities transactions are recorded on the trade date basis.
Realized gains and losses from securities transactions are reported
25
<PAGE> 26
[PIC LOGO] NOTES TO FINANCIAL STATEMENTS,
CONTINUED
================================================================================
on an identified cost basis. Interest is recorded as accrued, and
dividend income is recorded on the ex-dividend date.
E. Accounting Estimates. In preparing financial statements in
conformity with generally accepted accounting principles, management
makes estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements, as
well as the reported amounts of revenues and expenses during the
period. Actual results could differ from those estimates.
3 - TRANSACTIONS WITH AFFILIATES
- --------------------------------------------------------------------------------
The Portfolio has entered into an investment advisory agreement with
Provident Investment Counsel, Inc. ("PIC") and an administration agreement with
Investment Company Administration Corporation ("ICAC"), pursuant to which
agreements certain employees of these entities serve as officers and/or trustees
of the Portfolio. PIC and ICAC also provide management services necessary for
the operations of the Portfolio and furnish office facilities.
PIC receives a fee for its services to the Portfolio at the rate of 0.80%
of the average daily net assets of the Portfolio. PIC has voluntarily agreed to
limit the total expenses of the Portfolio to an annual rate of 1.00% of the
Portfolio's average net assets. During the year ended October 31, 1996, PIC
received $1,369,650 in fees from the Portfolio, after deducting fees waived and
expenses reimbursed of $26,098. ICAC receives an annual fee for its services at
the rate of .10% of average daily net assets of the Portfolio. Fees paid to ICAC
pursuant to the agreement totalled $174,469 for the year ended October 31, 1996.
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 amongst the Portfolios.
Trustees can elect to receive payment in cash or defer payments provided for in
the plan.
26
<PAGE> 27
[PIC LOGO] NOTES TO FINANCIAL STATEMENTS,
CONTINUED
================================================================================
4 - INVESTMENT TRANSACTIONS
- --------------------------------------------------------------------------------
During the year ended October 31, 1996, purchases and sales of investment
securities, other than short-term obligations, were $113,056,097 and
$86,753,672, respectively. The cost of securities for federal income tax
purposes was $128,049,005. The aggregate gross unrealized appreciation and
depreciation of portfolio securities, based on cost for federal income tax
purposes, were as follows:
<TABLE>
<S> <C>
Unrealized appreciation $75,710,254
Unrealized depreciation (2,958,716)
-----------
Net unrealized appreciation $72,751,538
===========
</TABLE>
<TABLE>
<CAPTION>
5 - SELECTED RATIO DATA
- ------------------------------------------------------------------------------------------------
Year Year Year Sept. 30, 1993(*)
ended ended ended through
Oct. 31, 1996 Oct. 31, 1995 Oct. 31, 1994 Oct. 31, 1993
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ratios to average net assets:(++)
Operating expenses 1.00% 1.00% 1.00% 1.00%(+)
Net investment loss (.59%) (.51%) (.49%) (.79%)(+)
Portfolio turnover rate 53.11% 45.45% 63.89% 6.06%
Average commission rate paid(**) $0.0307 - - -
</TABLE>
*Commencement of Operations.
++Net of expense reimbursements equivalent to 0.01%, 0.07%, 0.10% and 0.11% of
average net assets, respectively.
+Annualized.
**For fiscal years beginning on or after September 1, 1995, a fund is required
to disclose its average commission rate per share for security trades on which
commissions are charged.
27
<PAGE> 28
[PIC LOGO] INDEPENDENT AUDITOR'S REPORT
================================================================================
To the Board of Trustees of,
and the holders of Interests in,
P-I-C Small Cap. Portfolio
We have audited the accompanying statement of assets of P-I-C Small Cap.
Portfolio as of October 31, 1996, the related statement of operations for the
year then ended and the statement of changes in net assets for each of the two
years in the period then ended. These financial statements are the
responsibility of the Portfolio's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. Our procedures included
confirmation of securities owned as of October 31, 1996 by correspondence with
the custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of P-I-C Small Cap. Portfolio
as of October 31, 1996, the results of its operations and the changes in its net
assets for the periods indicated, in conformity with generally accepted
accounting principles.
McGladrey & Pullen, LLP
New York, New York
November 27, 1996
28
<PAGE> 29
[PIC LOGO] TRUSTEES AND OFFICERS
================================================================================
TRUSTEES AND OFFICERS - P-I-C INVESTMENT TRUST
- --------------------------------------------------------------------------------
Jeffrey J. Miller, Trustee and President
Jettie M. Edwards, Trustee
Bernard J. Johnson, Trustee
Jeffrey D. Lovell, Trustee
Wayne H. Smith, Trustee
Thad M. Brown, Vice President, Secretary and Treasurer
TRUSTEES AND OFFICERS - P-I-C SMALL CAP. PORTFOLIO
- --------------------------------------------------------------------------------
Jeffrey J. Miller, Trustee and President
Richard N. Frank, Trustee
James Clayburn LaForce, Trustee
Angelo R. Mozilo, Trustee
Bernard J. Johnson, Trustee Emeritus
Thad M. Brown, Vice President, Secretary and Treasurer
LEGAL COUNSEL - P-I-C INVESTMENT TRUST
- --------------------------------------------------------------------------------
Shereff, Friedman, Hoffman & Goodman
LEGAL COUNSEL - P-I-C SMALL CAP. PORTFOLIO
- --------------------------------------------------------------------------------
Heller, Ehrman, White & McAuliffe
INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
McGladrey & Pullen, LLP
This report is intended for the information of shareholders of P-I-C Small Cap.
Growth Fund and should not be used as sales literature unless preceded or
accompanied by a current prospectus.
32
