<PAGE> 1
[P-I-C LOGO]
SMALL CAP.
GROWTH FUND
Annual Report
October 31, 1997
<PAGE> 2
[P-I-C LOGO] Message to Shareholders
SMALL CAP.
GROWTH FUND
Dear Shareholder,
The following are interviews with the members of the investment team at
Provident Investment Counsel. We hope this will provide you additional
information and insight to the investment management process and performance of
the P-I-C Small Cap Growth Fund. In addition to the information in this Annual
Report, we will be sending the regular quarterly update along with your
statement.
Thank you for your continued confidence in Provident Investment Counsel.
P-I-C SMALL CAP GROWTH FUND
QUESTION: How did the P-I-C Small Cap Growth Fund perform relative to the broad
market during the fiscal year ended October 31, 1997?
ANSWER: The Lipper Small Company Fund Index rose 17.75% for the fiscal year and
15.14% from January 1, 1997 through October 31, while the Fund's total returns
were 5.15% and 4.56% in the same periods.
QUESTION: The past year has been the most volatile period to date for small
company growth stocks. What has caused this volatility?
ANSWER: As we have discussed in prior reports, the calendar year 1997 began with
investor concerns surrounding interest rates, a strong dollar and the
predictability of corporate earnings going forward. These concerns led investors
away from smaller capitalization stocks to larger, more liquid issues. After the
end of the first quarter, investors were reassured by positive earnings reports
along with the realization that valuation levels of smaller issues relative to
large cap stocks were at or near the troughs of 1990. These compelling
valuations and "reassuring" earnings reports caused an investor rotation back to
smaller issues. Looking forward, these positive fundamentals combined with
excellent valuations of small and mid-sized companies relative to large
companies bodes well for the Fund.
QUESTION: Why have we seen such a significant performance differential between
small cap value and small cap growth stocks over the last year?
ANSWER: Small company growth issues bore the brunt of the investor sentiment
during the first quarter of 1997. Many issues saw more than double digit
percentage declines without any change in company fundamentals. Small
2
<PAGE> 3
[P-I-C LOGO] Message to Shareholders
SMALL CAP.
GROWTH FUND
company value issues were less affected in the first quarter and have also
benefited by a strong economy with relatively low interest rates. In general the
high-growth, high-multiple issues have not been rewarded this year. For example,
the Fund has been over-weighted in software vs. hardware technology companies.
Investors have favored the more highly-leveraged hardware companies as opposed
to higher-quality, high-growth software companies. In addition, with the
concerns and uncertainties that surround the Asian situation, investors have
favored low P/E, less-aggressive companies that have more of a value tilt.
QUESTION: What is the outlook for the Small Cap Growth Issues in the months
ahead?
ANSWER: As of the writing of this report, the month of November 1997 proved that
currently the small cap growth segment of the market remains out of favor with
investors. During November this was the only equity segment, broken out by
investment style and size, that reported negative performance. This mainly
reflected investors' desire for safety and quality and less on specific
fundamental news in the sector. In fact, the relative valuations for small cap
growth companies are at their historical lows. If the earnings of the large
multi-national corporations do slow in the near future, as many market experts
are predicting, the small cap sector of the market may be poised for a period of
strong relative performance.
Given the global currency and economic issues that have arisen recently,
particularly those in the Southeast Asian region, our expectations are U.S.
economic growth to moderate in 1998. Furthermore, if there is a slowdown, we
expect growth issues, as they have in the past, to provide performance
leadership over their cyclical counterparts.
3
<PAGE> 4
[P-I-C LOGO] Message to Shareholders
SMALL CAP.
GROWTH FUND
PIC SMALL CAP PORTFOLIO vs. RUSSELL 2000 GROWTH*
<TABLE>
<CAPTION>
3 Year Earnings
3 Year Sales Per Share Pretax Return On
Growth Growth Margin Equity Reinvest. Rate
------------ --------------- ------ --------- --------------
<S> <C> <C> <C> <C> <C>
Superiority Factor 1.5X 1.4X 1.1X 1.1X 1.2X
PIC 41.1% 41.3% 16.8% 19.1% 19.3%
Russell 2000 Growth 28.2% 29.6% 15.0% 18.0% 16.7%
</TABLE>
- ----------------
* As of 10/31/97
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
P-I-C SMALL CAP GROWTH FUND AND THE RUSSELL 2000 GROWTH INDEX.
<TABLE>
<CAPTION>
PIC Small C Russell 2000
------------ -------------
<S> <C> <C>
10/01/93 10,000 10,000
10/31/93 10,172 10,300
04/30/94 9,478 9,900
10/31/94 10,055 10,200
04/30/95 10,514 10,700
10/31/95 14,567 12,300
04/30/96 18,823 14,900
10/31/96 18,067 13,900
04/30/97 14,948 12,916
10/31/97 19,005 16,879
</TABLE>
Average Annual Total Return
One Year Since Inception
5.15% 17.00%
Past performance is not predictive of future performance.
4
<PAGE> 5
[P-I-C LOGO] Statement of Assets and Liabilities
SMALL CAP. as of October 31, 1997
GROWTH FUND
<TABLE>
<S> <C>
============================================================================
ASSETS
- ----------------------------------------------------------------------------
Investment in P-I-C Small Cap. Portfolio, at value $ 105,538,102
Receivables:
Fund shares sold 59,956
From Provident Investment Counsel, Inc. (Note 3) 13,272
- ----------------------------------------------------------------------------
Total assets 105,611,330
============================================================================
LIABILITIES
- ----------------------------------------------------------------------------
Payables:
For Investments purchased in P-I-C Small Cap. Portfolio 59,956
Deferred Trustees' compensation (Note 3) 11,338
Accrued expenses 20,837
- ----------------------------------------------------------------------------
Total liabilities 92,131
============================================================================
NET ASSETS
- ----------------------------------------------------------------------------
Applicable to 4,382,561 shares of beneficial
interest outstanding $ 105,519,199
============================================================================
NET ASSET VALUE PER SHARE $ 24.08
- ----------------------------------------------------------------------------
============================================================================
SOURCE OF NET ASSETS
- ----------------------------------------------------------------------------
Paid-in capital $ 90,512,328
Accumulated net investment loss (821,141)
Undistributed net realized gain on investments 11,780,610
Net unrealized appreciation on investments 4,047,402
- ----------------------------------------------------------------------------
NET ASSETS $ 105,519,199
- ----------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
5
<PAGE> 6
[P-I-C LOGO] STATEMENT OF OPERATIONS
SMALL CAP. Year ended October 31, 1997
GROWTH FUND
<TABLE>
<S> <C>
============================================================
INVESTMENT INCOME
- ------------------------------------------------------------
Net investment loss from Portfolio $ (808,092)
============================================================
Expenses
- ------------------------------------------------------------
Administration fees (Note 3) 344,603
Transfer agent's fee 19,199
Trustees' fees 11,707
Legal fee 11,223
Audit fee 10,300
Reports to shareholders 9,500
Custody and accounting services fee 6,000
Registration fee 5,001
Miscellaneous 11,273
- ------------------------------------------------------------
Total expenses 428,806
Less, reimbursement/waiver by Provident
Investment Counsel, Inc. (Note 3) (428,806)
- ------------------------------------------------------------
Net expenses 0
============================================================
Net investment loss (808,092)
============================================================
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
- ------------------------------------------------------------
Net realized gain on investments 74,102,539
Change in net unrealized depreciation
on investments (68,286,326)
- ------------------------------------------------------------
Net gain on investments 5,816,213
============================================================
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 5,008,121
- ------------------------------------------------------------
</TABLE>
6
<PAGE> 7
[P-I-C LOGO] STATEMENT OF CHANGES IN NET ASSETS
SMALL CAP.
GROWTH FUND
<TABLE>
<S> <C> <C>
===================================================================================
INCREASE (DECREASE) IN NET ASSETS
- -----------------------------------------------------------------------------------
Year Year
ended ended
From operations: Oct. 31, 1997 Oct. 31, 1996
- -----------------------------------------------------------------------------------
Net investment loss $ (808,092) $ (1,029,669)
Net realized gain on investments 74,102,539 15,463,565
Change in net unrealized (depreciation)
appreciation on investments (68,286,326) 18,564,877
- -----------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 5,008,121 32,998,773
===================================================================================
Distributions to shareholders:
From net realized capital gains (2,548,960) -0-
===================================================================================
Transactions in shares of beneficial interest:
Purchases of 5,598,735 and 1,863,518
shares, respectively 131,997,374 41,179,324
Value of 110,728 and 0 shares
issued in payment of
dividends, respectively 2,548,960 -0-
Redemptions of 9,783,763 and 378,540
shares, respectively (227,575,148) (8,396,584)
- -----------------------------------------------------------------------------------
Net (decrease) increase in net assets
resulting from share transactions (93,028,814) 32,782,740
===================================================================================
Total (decrease) increase in net assets (90,569,653) 65,781,513
===================================================================================
NET ASSETS
- -----------------------------------------------------------------------------------
Beginning of year 196,088,852 130,307,339
- -----------------------------------------------------------------------------------
End of year $ 105,519,199 $ 196,088,852
- -----------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
7
<PAGE> 8
[P-I-C LOGO] FINANCIAL HIGHLIGHTS
SMALL CAP.
GROWTH FUND
<TABLE>
<CAPTION>
====================================================================================================================================
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- ------------------------------------------------------------------------------------------------------------------------------------
Year Year Year Year Sept. 30, 1993*
ended ended ended ended through
Oct. 31, 1997 Oct. 31, 1996 Oct. 31, 1995 Oct. 31, 1994 Oct. 31, 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of year $ 23.19 $ 18.69 $ 12.90 $ 13.05 $ 12.83
Income from investment
operations:
Net investment loss (.40) (.10) (.07) (.06) (.01)
Net realized and unrealized
gain (loss) on investments 1.58 4.60 5.86 (.09) .23
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.18 4.50 5.79 (.15) .22
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions to shareholders:
From net realized gains (.29) -0- -0- -0- -0-
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $ 24.08 $ 23.19 $ 18.69 $ 12.90 $ 13.05
====================================================================================================================================
Total return 5.15% 24.08% 44.88% (1.15%) 19.50%++
====================================================================================================================================
Ratios/supplemental data:
Net assets, end of period
(millions) $ 105.5 $ 196.1 $ 130.3 $ 84.3 $ 82.6
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: +**
Expenses 1.00% 1.00% 1.00% 1.00% 1.00%++
Net investment loss (0.48%) (.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%, 1.25%, 1.34%, 1.47% and 1.22%, respectively.
++Annualized.
See Notes to Financial Statements.
8
<PAGE> 9
[P-I-C LOGO] NOTES TO FINANCIAL STATEMENTS
SMALL CAP. October 31, 1997
GROWTH FUND
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, 1997,
the Fund owned 76.00% 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
9
<PAGE> 10
[P-I-C LOGO] NOTES TO FINANCIAL STATEMENTS,
SMALL CAP. CONTINUED
GROWTH FUND
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 $334,603 for the year ended October 31, 1997.
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 year ended October 31, 1997 was $94,203. ICAC 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 the Administrator.
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.
10
<PAGE> 11
[P-I-C LOGO] NOTES TO FINANCIAL STATEMENTS,
SMALL CAP. CONTINUED
GROWTH FUND
4 - INVESTMENT TRANSACTIONS
Additions and reductions in the Fund's investment in the Portfolio
aggregated $132,057,728 and $227,635,837, respectively. Included in reductions
in investment is $193,487,607 representing the value of securities disposed of
in payment of a redemption in kind resulting in a realized gain of $61,553,896.
Since this realized gain will not be distributed to shareholders, it has been
reclassified to paid-in-capital.
5 - DIVIDEND DECLARATION
On December 1, 1997, the Board of Trustees declared a dividend from
long-term capital gain of $1.925 per share payable on December 3, 1997 to
shareholders of record December 1, 1997 and ex-dividend as of December 2, 1997.
11
<PAGE> 12
[P-I-C LOGO] INDEPENDENT AUDITOR'S REPORT
SMALL CAP.
GROWTH FUND
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,
1997, the related statement of operations, the statements of changes in net
assets and the financial highlights for each of the periods indicated. 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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, 1997, 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.
McGladrey & Pullen, LLP
New York, New York
December 5, 1997
12
<PAGE> 13
[P-I-C LOGO] STATEMENT OF NET ASSETS
SMALL CAP. as of October 31, 1997
PORTFOLIO
<TABLE>
<CAPTION>
===============================================================================================
Percentage of
EQUITY SECURITIES - 98.5% Shares Value Net Assets
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AIR FREIGHT .. 0.8%
- -----------------------------------------------------------------------------------------------
Eagle USA Airfreight, Inc.* 34,900 $1,055,725 0.8%
===============================================================================================
AIRLINES .. 0.3%
- -----------------------------------------------------------------------------------------------
Ryanair Holdings PLC* 18,800 470,000 0.3%
===============================================================================================
APPAREL AND SHOES .. 1.7%
- -----------------------------------------------------------------------------------------------
Abercrombie & Fitch Co.* 32,400 842,400 0.6%
Coldwater Creek, Inc.* 24,500 710,500 0.5%
Pacific Sunwear of California* 30,850 852,231 0.6%
- -----------------------------------------------------------------------------------------------
Total Apparel and Shoes 2,405,131 1.7%
===============================================================================================
AUTO PARTS .. 1.2%
- -----------------------------------------------------------------------------------------------
Gentex Corp.* 48,900 1,198,050 0.9%
Keystone Automotive Industries, Inc.* 22,000 486,750 0.3%
- -----------------------------------------------------------------------------------------------
Total Auto Parts 1,684,800 1.2%
===============================================================================================
BANKS .. 0.9%
- -----------------------------------------------------------------------------------------------
Hamilton Bancorp., Inc.* 39,900 1,216,950 0.9%
===============================================================================================
BEVERAGE/FOOD .. 0.3%
- -----------------------------------------------------------------------------------------------
Fine Host Corp.* 14,500 406,000 0.3%
===============================================================================================
BIOTECHNOLOGY .. 0.6%
- -----------------------------------------------------------------------------------------------
Incyte Pharmaceuticals, Inc.* 9,600 772,800 0.6%
===============================================================================================
BUILDER .. 0.5%
- -----------------------------------------------------------------------------------------------
Palm Harbor Homes, Inc.* 25,443 680,600 0.5%
</TABLE>
13
<PAGE> 14
[P-I-C LOGO] STATEMENT OF NET ASSETS
SMALL CAP. as of October 31, 1997
PORTFOLIO
<TABLE>
<CAPTION>
===================================================================================================
Percentage of
EQUITY SECURITIES, CONTINUED Shares Value Net Assets
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BUSINESS INFORMATION SERVICES .. 1.0%
- ---------------------------------------------------------------------------------------------------
Gartner Group, Inc.* 39,200 $1,107,400 0.8%
Intelliquest Information Group, Inc.* 15,900 270,300 0.2%
- ---------------------------------------------------------------------------------------------------
Total Business Information Services 1,377,700 1.0%
===================================================================================================
BUSINESS SERVICES .. 8.3%
- ---------------------------------------------------------------------------------------------------
ABR Information Services, Inc.* 10,000 235,000 0.2%
Accustaff Inc.* 91,268 2,606,842 1.9%
Casella Waste Systems, Inc. - Class A* 15,100 334,087 0.2%
Corrections Corp.* 32,600 994,300 0.7%
Elbit Vision Systems, Inc.* 26,600 329,175 0.2%
Forrester Research, Inc.* 19,400 500,762 0.4%
Lason Holdings, Inc.* 25,400 655,637 0.5%
MedQuist, Inc.* 23,300 567,937 0.4%
NCO Grupo, Inc.* 20,100 723,600 0.5%
Personnel Group of America, Inc.* 39,800 1,380,562 1.0%
Romac International, Inc.* 61,700 1,234,000 0.9%
Staffmark, Inc.* 27,800 861,800 0.6%
Superior Consultant Holdings Corp.* 7,500 232,500 0.2%
TMP Worldwide, Inc.* 45,900 975,375 0.6%
- ---------------------------------------------------------------------------------------------------
Total Business Services 11,631,577 8.3%
===================================================================================================
COMPUTER SERVICES .. 8.4%
- ---------------------------------------------------------------------------------------------------
Cambridge Technology Partners, Inc.* 26,900 981,850 0.7%
Cerner Corp.* 45,900 1,113,075 0.8%
CSG Systems International, Inc.* 31,700 1,242,244 0.9%
Daou Systems, Inc.* 42,900 1,131,487 0.8%
Envoy Corp.* 26,800 750,400 0.5%
Fiserv, Inc.* 54,300 2,429,925 1.7%
Intelligroup, Inc.* 27,100 501,350 0.4%
Lycos, Inc.* 25,800 674,025 0.5%
Premiere Technologies, Inc.* 46,400 1,577,600 1.1%
</TABLE>
14
<PAGE> 15
[P-I-C LOGO] STATEMENT OF NET ASSETS
SMALL CAP. as of October 31, 1997
PORTFOLIO
<TABLE>
<CAPTION>
================================================================================================
Percentage of
EQUITY SECURITIES, CONTINUED Shares Value Net Assets
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMPUTER SERVICES, CONTINUED
- ------------------------------------------------------------------------------------------------
RWD Technologies, Inc.* 19,800 $ 445,500 0.3%
Security Dynamics Technologies, Inc.* 12,100 409,887 0.3%
Technology Solutions, Inc.* 12,600 396,900 0.4%
- ------------------------------------------------------------------------------------------------
Total Computer Services 11,654,243 8.4%
================================================================================================
COMPUTER SOFTWARE .. 11.0%
- ------------------------------------------------------------------------------------------------
Access Health Market* 46,200 1,605,450 1.1%
Axent Technologies, Inc.* 46,100 1,077,587 0.8%
CBT Group, PLC-ADR* 9,200 706,100 0.5%
Electronics For Imaging, Inc.* 68,100 3,183,675 2.2%
HNC Software, Inc.* 36,800 1,361,600 1.0%
JDA Software Group, Inc.* 52,600 1,643,750 1.2%
Pegasystems, Inc.* 38,100 695,325 0.5%
Siebel Systems, Inc.* 26,000 1,049,750 0.8%
Simulated Sciences, Inc.* 22,900 417,925 0.3%
Transaction Systems Architects, Inc.,
Class A* 59,700 2,335,762 1.6%
Wind River Systems, Inc.* 21,550 826,981 0.6%
Xionics Document Technologies, Inc.* 32,300 492,575 0.4%
- ------------------------------------------------------------------------------------------------
Total Computer Software 15,396,480 11.0%
================================================================================================
COSMETICS AND SOAPS .. 1.1%
- ------------------------------------------------------------------------------------------------
Rexall Sundown* 68,400 1,496,250 1.1%
================================================================================================
CREDIT AND FINANCE .. 1.4%
- ------------------------------------------------------------------------------------------------
Sirrom Capital Corp. 39,500 1,989,812 1.4%
================================================================================================
DISCOUNT CHAINS .. 3.8%
- ------------------------------------------------------------------------------------------------
Dollar Tree Stores, Inc.* 132,200 5,354,100 3.8%
</TABLE>
15
<PAGE> 16
[P-I-C LOGO]
SMALL CAP. STATEMENT OF NET ASSETS
PORTFOLIO as of October 31, 1997
<TABLE>
<CAPTION>
===================================================================================
Percentage of
EQUITY SECURITIES, CONTINUED Shares Value Net Assets
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
DRUGS .. 5.0%
- -----------------------------------------------------------------------------------
Arqule, Inc.* 26,500 $ 569,750 0.4%
Atrix Laboratories, Inc.* 28,100 530,387 0.4%
Dura Pharmaceuticals, Inc.* 45,400 2,196,225 1.6%
Jones Medical Industries, Inc. 38,875 1,171,109 0.8%
Kos Pharmaceuticals, Inc.* 32,000 1,144,000 0.8%
Medicis Pharmaceutical Corp., Class A* 27,600 1,328,250 1.0%
- -----------------------------------------------------------------------------------
Total Drugs 6,939,721 5.0%
===================================================================================
EDUCATIONAL PROGRAMS .. 4.4%
- -----------------------------------------------------------------------------------
Apollo Group, Inc., Class A* 53,394 2,255,896 1.6%
Edutrek International, Inc., Class A* 5,000 122,500 0.1%
Learning Tree International, Inc.* 26,300 913,925 0.7%
Sylvan Learning Systems, Inc.* 66,100 2,784,462 2.0%
- -----------------------------------------------------------------------------------
Total Educational Programs 6,076,783 4.4%
===================================================================================
ELECTRONICS .. 1.6%
- -----------------------------------------------------------------------------------
Anicom, Inc.* 34,300 531,650 0.4%
DBT Online, Inc.* 21,800 600,863 0.4%
Littlefuse, Inc.* 23,900 731,938 0.5%
Power-One, Inc.* 22,800 424,650 0.3%
- -----------------------------------------------------------------------------------
Total Electronics 2,289,101 1.6%
===================================================================================
ELECTRICAL COMPONENTS/SEMICONDUCTOR .. 4.2%
- -----------------------------------------------------------------------------------
Anadigics, Inc.* 35,100 1,298,700 0.9%
Etec Systems, Inc.* 11,900 531,038 0.4%
Helix Technology Corp. 6,500 292,500 0.2%
Sawtek, Inc.* 30,200 1,026,800 0.7%
Unitrode Corp.* 16,300 437,044 0.3%
Vitesse Semiconductor Corp.* 56,350 2,444,181 1.7%
- -----------------------------------------------------------------------------------
Total Electrical Components/
Semiconductor 6,030,263 4.2%
</TABLE>
16
<PAGE> 17
[P-I-C LOGO]
SMALL CAP. STATEMENT OF NET ASSETS
PORTFOLIO as of October 31, 1997
<TABLE>
<CAPTION>
===================================================================================
Percentage of
EQUITY SECURITIES, CONTINUED Shares Value Net Assets
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
ELECTRICAL EQUIPMENT/PERIPHERY .. 1.5%
- -----------------------------------------------------------------------------------
Computer Products, Inc.* 19,700 $ 536,825 0.4%
Level One Communications, Inc.* 13,250 596,250 0.4%
PMC-Sierra, Inc.* 22,700 598,713 0.4%
Semtech Corp.* 8,600 400,438 0.3%
- -----------------------------------------------------------------------------------
Total Electrical Equipment/Periphery 2,132,226 1.5%
===================================================================================
ELECTRICAL PRODUCTS .. 0.4%
- -----------------------------------------------------------------------------------
Advanced Lighting Technologies, Inc.* 24,500 493,063 0.4%
===================================================================================
ENTERTAINMENT AND LEISURE ..2.8%
- -----------------------------------------------------------------------------------
Fairfield Communities, Inc.* 62,400 2,741,700 2.0%
Suburban Lodges of America* 45,800 1,133,550 0.8%
- -----------------------------------------------------------------------------------
Total Entertainment and Leisure 3,875,250 2.8%
===================================================================================
FINANCIAL SERVICES .. 3.2%
- -----------------------------------------------------------------------------------
BA Merchant Services, Inc.* 30,400 454,100 0.3%
Concord EFS, Inc.* 33,200 985,625 0.7%
PMT Services, Inc.* 129,000 2,080,125 1.5%
Pre-Paid Legal Services, Inc.* 34,400 1,040,600 0.7%
- -----------------------------------------------------------------------------------
Total Financial Services 4,560,450 3.2%
===================================================================================
FOOD AND RESTAURANTS .. 0.4%
- -----------------------------------------------------------------------------------
Dave & Buster's, Inc.* 22,000 577,500 0.4%
===================================================================================
HOSPITALS .. 0.3%
- -----------------------------------------------------------------------------------
Assisted Living Concepts, Inc.* 21,100 432,550 0.3%
</TABLE>
17
<PAGE> 18
[P-I-C LOGO]
SMALL CAP. STATEMENT OF NET ASSETS
PORTFOLIO as of October 31, 1997
<TABLE>
<CAPTION>
===================================================================================
Percentage of
EQUITY SECURITIES, CONTINUED Shares Value Net Assets
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
INSURANCE .. 1.3%
- -----------------------------------------------------------------------------------
Enhance Financial Services Group, Inc. 13,600 $ 718,250 0.5%
HCC Insurance Holdings, Inc. 47,650 1,113,819 0.8%
- -----------------------------------------------------------------------------------
Total Insurance 1,832,069 1.3%
===================================================================================
MEDICAL/DENTAL PRODUCTS ..2.1%
- -----------------------------------------------------------------------------------
Henry Schein, Inc.* 20,800 683,800 0.5%
Medimmune, Inc.* 4,100 163,488 0.1%
Ocular Sciences, Inc.* 21,000 462,000 0.3%
Safeskin Corp.* 37,700 1,710,638 1.2%
- -----------------------------------------------------------------------------------
Total Medical/Dental Products 3,019,926 2.1%
===================================================================================
MEDICAL/DENTAL SERVICES .. 9.8%
- -----------------------------------------------------------------------------------
Boron Lepore & Associates* 21,400 521,625 0.4%
Centennial Healthcare Corp.* 24,800 514,600 0.4%
Coast Dental Services, Inc.* 14,500 382,438 0.3%
Concentra Managed Care, Inc.* 62,300 2,032,538 1.5%
Minimed, Inc.* 12,900 503,100 0.4%
National Research Corp.* 8,400 170,100 0.1%
Omnicare, Inc. 42,500 1,182,031 0.6%
Orthodontic Centers of America, Inc.* 77,000 1,333,063 1.0%
Paraxel International Corp.* 44,800 1,618,400 1.2%
Quintiles Transnational Corp.* 38,000 2,755,000 2.0%
Renal Care Group, Inc.* 42,450 1,422,075 1.0%
Total Renal Care Holdings, Inc.* 39,333 1,211,948 0.9%
- -----------------------------------------------------------------------------------
Total Medical/Dental Services 13,646,918 9.8%
===================================================================================
MORTGAGE AND RELATED SERVICES .. 0.4%
- -----------------------------------------------------------------------------------
ContiFinancial Corp.* 18,500 526,094 0.4%
</TABLE>
18
<PAGE> 19
[P-I-C LOGO]
SMALL CAP. STATEMENT OF NET ASSETS
PORTFOLIO as of October 31, 1997
<TABLE>
<CAPTION>
===========================================================================================
Percentage of
EQUITY SECURITIES, CONTINUED Shares Value Net Assets
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OIL FIELD SERVICES .. 4.0%
- -------------------------------------------------------------------------------------------
Atwood Oceanics, Inc.* 6,000 $ 664,500 0.5%
Global Industries, Ltd.* 68,200 1,372,525 1.0%
Parker Drilling Co.* 141,900 2,101,894 1.5%
Patterson Energy, Inc.* 25,800 1,444,800 1.0%
- -------------------------------------------------------------------------------------------
Total Oil Field Services 5,583,719 4.0%
===========================================================================================
OIL AND GAS, U.S. EXPLORATION/PRODUCTION .. 0.5%
- -------------------------------------------------------------------------------------------
UTI Energy Corp.* 15,700 700,613 0.5%
===========================================================================================
POLLUTION CONTROL .. 2.0%
- -------------------------------------------------------------------------------------------
American Disposal Services, Inc.* 20,300 715,575 0.5%
Newpark Resources, Inc.* 51,100 2,120,650 1.5%
- -------------------------------------------------------------------------------------------
Total Pollution Control 2,836,225 2.0%
===========================================================================================
REAL ESTATE INVESTMENT TRUST .. 0.8%
- -------------------------------------------------------------------------------------------
Imperial Credit Commercial Mortgage
Investment Corp.* 25,100 414,150 0.3%
Lasalle Partners, Inc.* 17,900 654,469 0.5%
- -------------------------------------------------------------------------------------------
Total Real Estate Investment Trust 1,068,619 0.8%
===========================================================================================
SPECIALTY CHAINS .. 3.9%
- -------------------------------------------------------------------------------------------
CDW Computers Centers, Inc.* 12,100 750,200 0.5%
Fastenal Co. 39,200 1,920,800 1.4%
Guitar Center, Inc.* 44,500 967,875 0.7%
Hibbett Sporting Goods, Inc.* 39,900 1,107,225 0.8%
Starbucks Corp.* 22,800 752,400 0.5%
- -------------------------------------------------------------------------------------------
Total Specialty Chains 5,498,500 3.9%
</TABLE>
19
<PAGE> 20
[P-I-C LOGO]
SMALL CAP.
PORTFOLIO STATEMENT OF NET ASSETS
as of October 31, 1997
================================================================================
Percentage of
EQUITY SECURITIES, CONTINUED Shares Value Net Assets
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS .. 6.7%
- --------------------------------------------------------------------------------
Advanced Fibre Communications* 46,700 $ 1,357,219 1.0%
Davox Corp.* 41,100 1,469,325 1.1%
MRV Communications, Inc.* 62,600 1,831,050 1.3%
P-Com, Inc.* 68,300 1,374,538 1.0%
REMEC, Inc.* 52,650 1,335,994 1.0%
Tel-Save Holdings, Inc.* 83,000 1,784,500 1.3%
- --------------------------------------------------------------------------------
Total Telecommunications 9,152,626 6.7%
================================================================================
TELEPHONE .. 0.5%
- --------------------------------------------------------------------------------
McLeod USA, Inc.* 18,100 671,963 0.5%
================================================================================
TEXTILES AND SHOES .. 1.4%
- --------------------------------------------------------------------------------
Novel Denim Holdings Ltd.* 37,600 761,400 0.5%
St. John Knits, Inc. 32,300 1,298,056 0.9%
- --------------------------------------------------------------------------------
Total Textiles and Shoes 2,059,456 1.4%
- --------------------------------------------------------------------------------
Total Equity Securities (Cost $127,484,556) 137,595,803 98.5%
================================================================================
SHORT-TERM INVESTMENTS - 1.2%
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT .. 1.2% Principal Amount
- --------------------------------------------------------------------------------
Lehman Brothers On-Line Repurchase
Agreement, 5.29%, dated 10/31/1997,
due 11/3/1997 (collateralized by $1,749,490
U.S. Treasury Note, 3.63%, due 7/15/2002)
(Cost $1,695,900) $1,695,900 1,695,900 1.2%
- --------------------------------------------------------------------------------
Total Investments
(Cost $129,180,456) 139,291,703 99.7%
20
<PAGE> 21
[P-I-C LOGO] STATEMENT OF NET ASSETS
SMALL CAP. as of October 31, 1997
PORTFOLIO
<TABLE>
<CAPTION>
================================================================================
Percentage of
OTHER ASSETS - 1.3% Value Net Assets
- --------------------------------------------------------------------------------
<S> <C> <C>
Cash $ 90
Receivables:
Investment securities sold 1,649,007
Shares of beneficial interest sold 70,242
Dividends and interest 21,402
Prepaid insurance 3,261
Deferred organization costs 10,000
Other assets 13,254
- --------------------------------------------------------------------------------
Total other assets 1,767,256 1.3%
================================================================================
LIABILITIES - (1.0%)
- --------------------------------------------------------------------------------
Payables:
Investment securities purchased 1,246,031
To Advisor (Note 3) 81,739
Deferred Trustees' compensation (Note 3) 21,526
Accrued expenses 53,866
- --------------------------------------------------------------------------------
Total liabilities 1,403,162 (1.0%)
================================================================================
TOTAL NET ASSETS - 100.0% $139,655,797 100.0%
- --------------------------------------------------------------------------------
</TABLE>
*Non-income producing security.
See Notes to Financial Statements.
21
<PAGE> 22
[P-I-C LOGO] STATEMENT OF OPERATIONS
SMALL CAP. Year Ended October 31, 1997
PORTFOLIO
<TABLE>
<CAPTION>
================================================================================
INVESTMENT INCOME
- --------------------------------------------------------------------------------
<S> <C>
Income:
- --------------------------------------------------------------------------------
Dividends $ 115,763
Interest 856,522
- --------------------------------------------------------------------------------
Total income 972,285
================================================================================
Expenses:
Investment advisory fee (Note 3) 1,525,768
Administration fees 190,721
Accounting services fee 88,237
Custodian fee 65,049
Trustees' fees 17,810
Audit fee 16,301
Amortization of organization costs 10,001
Legal fee 7,500
Miscellaneous 10,702
- --------------------------------------------------------------------------------
Total expenses 1,932,089
Less, waiver by Advisor (Note 3) (24,879)
- --------------------------------------------------------------------------------
Net expenses 1,907,210
================================================================================
Net investment loss (934,925)
================================================================================
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
- --------------------------------------------------------------------------------
Net realized gain on investments 72,084,822
Change in net unrealized depreciation
on investments (62,640,291)
- --------------------------------------------------------------------------------
Net gain on investments 9,444,531
================================================================================
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 8,509,606
- --------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
22
<PAGE> 23
[P-I-C LOGO] STATEMENT OF CHANGES IN NET ASSETS
SMALL CAP.
PORTFOLIO
<TABLE>
<CAPTION>
================================================================================
INCREASE (DECREASE) IN NET ASSETS
- --------------------------------------------------------------------------------
Year Year
ended ended
From operations: October 31, 1997 October 31, 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Net investment loss $ (934,925) $ (1,037,169)
Net realized gain on investments 72,084,822 14,963,528
Change in net unrealized
(depreciation) appreciation
on investments (62,640,291) 18,982,622
- --------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 8,509,606 32,908,981
================================================================================
Transactions in interests:
Contributions by Holders 164,160,467 57,035,094
Withdrawals by Holders (234,314,952) (18,975,416)
- --------------------------------------------------------------------------------
Net (decrease) increase in net assets
from transactions in interests (70,154,485) 38,059,678
================================================================================
Total (decrease) increase in net assets (61,644,879) 70,968,659
================================================================================
NET ASSETS:
- --------------------------------------------------------------------------------
Beginning of year 201,300,676 130,332,017
- --------------------------------------------------------------------------------
End of year $139,655,797 $201,300,676
- --------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
23
<PAGE> 24
[P-I-C LOGO] NOTES TO FINANCIAL STATEMENTS
SMALL CAP. October 31, 1997
PORTFOLIO
================================================================================
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 Costs. 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
24
<PAGE> 25
[P-I-C LOGO] NOTES TO FINANCIAL STATEMENTS,
SMALL CAP. CONTINUED
PORTFOLIO
================================================================================
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, 1997, PIC
received $1,500,889 in fees from the Portfolio after deducting fees waived and
expenses reimbursed of $24,879. 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 $190,721 for the year ended October 31, 1997.
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
25
<PAGE> 26
[P-I-C LOGO] NOTES TO FINANCIAL STATEMENTS,
SMALL CAP. CONTINUED
PORTFOLIO
================================================================================
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.
4 - INVESTMENT TRANSACTIONS
- --------------------------------------------------------------------------------
During the year ended October 31, 1997, the cost of purchases and the
proceeds from sales of investment securities, other than short-term obligations,
were $263,751,802 and $319,270,773, respectively. The cost of securities for
federal income tax purposes was $129,258,249. 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 $13,637,236
Unrealized depreciation (3,603,782)
----------
Net unrealized appreciation $10,033,454
===========
</TABLE>
5 - SELECTED RATIO DATA
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Yar Year Year Year Sept. 30, 1993*
ended ended ended ended through
Oct. 31, 1997 Oct. 31, 1996 Oct. 31, 1995 Oct. 31, 1994 Oct. 31, 1993
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ratios to average net assets#
Operating expenses 1.00% 1.00% 1.00% 1.00% 1.00% +
Net investment loss (.49%) (.59%) (.51%) (.49%) (.79%)+
Portfolio turnover rate 151.52% 53.11% 45.45% 63.89% 6.06%
Average commission rate
paid per share** $0.0326 $0.0307 - - -
</TABLE>
*Commencement of operations.
#Net of expense reimbursements equivalent to 0.01%, 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 paid per share for security trades on
which commissions are charged.
26
<PAGE> 27
[P-I-C LOGO] INDEPENDENT AUDITOR'S REPORT
SMALL CAP.
PORTFOLIO
================================================================================
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 net assets of P-I-C Small Cap.
Portfolio as of October 31, 1997, 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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, 1997 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, 1997, 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
December 5, 1997
27
<PAGE> 28
[P-I-C LOGO] TRUSTEES AND OFFICERS
SMALL CAP.
GROWTH FUND
================================================================================
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
- --------------------------------------------------------------------------------
Paul, Hastings, Janofsky & Walker, LLP
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.
28
