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P-I-C
GROWTH FUND
SMALL COMPANY GROWTH FUND
ANNUAL REPORT
OCTOBER 31, 1997
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P-I-C
GROWTH FUND
SMALL COMPANY GROWTH FUND MESSAGE TO SHAREHOLDERS
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 for
your P-I-C Mutual 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 GROWTH FUND
QUESTION: How did the P-I-C Growth Fund perform relative to the overall markets
during the fiscal year ended October 31, 1997?
ANSWER: The Lipper Growth Fund Index rose 28.03% for the fiscal year and 21.46%
from January 1, through October 31, 1997, while the Fund's total returns were
26.44% and 24.27% in the same periods.
QUESTION: What are some of the sectors and holdings that have helped the Fund's
performance significantly during the year?
ANSWER: Once again the technology and communications sectors have been strong
throughout 1997 with market leaders such as Microsoft, Ericsson, Lucent
Technologies and Compaq Computer leading the way. Pharmaceutical company
holdings such as Pfizer, Warner Lambert and Eli Lilly have also posted
significant gains along with medical device companies Medtronic and recent
purchase Guidant. The financial services sector posted another strong year of
performance with the help of moderate inflation and a relatively stable interest
rate environment.
QUESTION: What is the outlook for the Fund and broad market in the months ahead?
ANSWER: Going forward, we expect market volatility to continue to be an issue as
investors calm their fears and return their focus back on the strong underlying
fundamentals of the U.S. economy. We look for the leadership in the equity
markets to come from a broad market as the ability of the "nifty-fifty"
multi-national corporations to meet investor expectations may be
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P-I-C
GROWTH FUND
SMALL COMPANY GROWTH FUND MESSAGE TO SHAREHOLDERS
somewhat restrained by their large exposure to overseas economies and,
specifically, the Asia-Pacific region. Therefore, looking to 1998, we expect
investors to selectively shift towards those companies with the ability to
sustain superior sales and earnings growth despite international concerns.
QUESTION: What is your outlook for the bond market and the impact the Federal
Reserve may have on the equity markets going forward?
ANSWER: Given the continued strong domestic economic growth, we would expect to
see the Federal Reserve raise interest rates. However, monetary policy has been
placed on "temporary hold" until the impact of recent events in Southeast Asian
economies can be evaluated. Generally domestic interest rates have benefited due
to a flight to quality. There is little doubt that the Federal reserve will
raise rates if there are any signs of a buildup in inflationary pressure. The
effect on the equity markets may depend upon the level of the increases and if
the Federal Reserve can continue to control inflation with additional preemptive
tightening of monetary policy.
P-I-C SMALL COMPANY GROWTH FUND
QUESTION: How did the P-I-C Small Company 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 4.54% and 3.99% 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
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P-I-C
GROWTH FUND
SMALL COMPANY GROWTH FUND MESSAGE TO SHAREHOLDERS
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 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.
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P-I-C
GROWTH FUND
SMALL COMPANY GROWTH FUND MESSAGE TO SHAREHOLDERS
P-I-C GROWTH EQUITY PORTFOLIO vs. S&P 500 INDEX*
<TABLE>
<CAPTION>
3 Year Earnings
3 Year Sales Per Share 3 Year Dividend Pretax Return on
Growth Growth Per Share Growth Margin Equity Reinvest. Rate
<S> <C> <C> <C> <C> <C> <C>
Superiority 4.1X 1.7X 2.8X 1.6X 1.4X 1.9X
Factor
PIC 24.8% 27.0% 16.2% 17.2% 25.0% 21.0%
S&P 500 Index 6.0% 15.5% 5.7% 10.7% 17.5% 10.8%
</TABLE>
* As of 10/31/97
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
P-I-C GROWTH FUND AND THE S & P 500 INDEX
<TABLE>
<CAPTION>
PIC Growth Fund S & P 500
<S> <C> <C>
07/31/92 10,000 10,000
10/31/92 10,810 10,300
04/30/93 10,349 11,000
10/31/93 11,610 11,900
04/30/94 10,950 11,600
10/31/94 11,710 12,400
04/30/95 11,710 13,600
10/31/95 14,263 15,600
04/30/96 14,883 17,800
10/31/96 16,265 19,400
04/30/97 17,524 22,216
10/31/97 20,565 26,687
</TABLE>
Average Annual Total Return
One Year Since Inception
26.44% 14.31%
Past performance is not predictive of future performance.
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P-I-C
GROWTH FUND
SMALL COMPANY GROWTH FUND MESSAGE TO SHAREHOLDERS
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 1.5X 1.4X 1.1X 1.1X 1.2X
Factor
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 COMPANY 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 10,164 10,300
04/30/94 9,454 9,900
10/31/94 10,008 10,200
04/30/95 10,437 10,700
10/31/95 14,435 12,300
04/30/96 18,609 14,900
10/31/96 17,804 13,900
04/30/97 14,686 12,916
10/31/97 18,611 16,879
</TABLE>
Average Annual Total Return
One Year Since Inception
4.54% 16.40%
Past performance is not predictive of future performance.
Performance results reflect the total returns of the P-I-C Small Cap Growth Fund
(included in another report) managed by Provident Investment Counsel prior to
the effective date of the Fund's registration statements, which was 6/28/96.
P-I-C Small Cap Growth Fund returns are restated to reflect all fees and
expenses applicable to the P-I-C Small Company Growth Fund.
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P-I-C
GROWTH FUND
SMALL COMPANY GROWTH FUND STATEMENTS OF ASSETS AND LIABILITIES
AS OF OCTOBER 31, 1997
<TABLE>
<CAPTION>
GROWTH SMALL COMPANY
FUND GROWTH FUND
=================================================================================
ASSETS
- ---------------------------------------------------------------------------------
<S> <C> <C>
Investment in Portfolios, at value $79,991,390 $31,033,620
Receivables:
Fund shares sold 52,821 7,317
From Provident Investment
Counsel, Inc. (Note 3) 16,788 1,191
For investment securities sold in
Portfolios 553 -
Prepaid expenses 34,162 10,028
- ---------------------------------------------------------------------------------
Total assets 80,095,714 31,052,156
=================================================================================
LIABILITIES
- ---------------------------------------------------------------------------------
Payables:
Fund shares redeemed 553 -
For investments purchased in Portfolios 52,821 7,317
Deferred Trustees' compensation (Note 3) 11,148 6,674
Accrued expenses 30,384 24,418
- ---------------------------------------------------------------------------------
Total liabilities 94,906 38,409
=================================================================================
NET ASSETS
- ---------------------------------------------------------------------------------
Applicable to 4,409,676 and 3,128,142
shares of beneficial interest
outstanding, respectively $80,000,808 $31,013,747
=================================================================================
NET ASSET VALUE PER SHARE $ 18.14 $ 9.91
- ---------------------------------------------------------------------------------
=================================================================================
SOURCE OF NET ASSETS
- ---------------------------------------------------------------------------------
Paid-in capital $45,528,365 $27,682,863
Accumulated net investment loss (404,243) (217,893)
Undistributed net realized gain
(loss) on investments 14,527,561 (2,460,268)
Net unrealized appreciation on investments 20,349,125 6,009,045
- ---------------------------------------------------------------------------------
NET ASSETS $80,000,808 $31,013,747
- ---------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
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P-I-C
GROWTH FUND
SMALL COMPANY GROWTH FUND STATEMENTS OF OPERATIONS
Year ended October 31, 1997
<TABLE>
<CAPTION>
GROWTH SMALL COMPANY
FUND GROWTH FUND
=================================================================================
INVESTMENT INCOME
- ---------------------------------------------------------------------------------
<S> <C> <C>
Net investment loss from Portfolios $ (131,399) $ (122,395)
=================================================================================
Expenses:
- ---------------------------------------------------------------------------------
Administration fees (Note 3) 222,782 60,245
Trustees' fees 12,207 12,108
Audit fee 12,301 10,300
Legal fee 10,048 6,223
Transfer agent's fee 58,191 19,199
Custody and accounting services fee 6,000 6,000
Reports to shareholders 13,701 5,501
Registration fees 23,000 5,000
Amortization of organization costs 4,538 -
Miscellaneous 7,101 5,001
- ---------------------------------------------------------------------------------
Total expenses 369,869 129,577
Less, reimbursement/waiver by Provident
Investment Counsel, Inc. (Note 3) (110,144) (35,623)
- ---------------------------------------------------------------------------------
Net expenses 259,725 93,954
=================================================================================
Net investment loss (391,124) (216,349)
=================================================================================
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
- ---------------------------------------------------------------------------------
Net realized gain (loss) on investments 32,173,750 (1,960,254)
Change in net unrealized appreciation
on investments (7,723,822) 5,591,606
- ---------------------------------------------------------------------------------
Net gain on investments 24,449,928 3,631,352
=================================================================================
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $24,058,804 $3,415,003
- ---------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
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P-I-C
GROWTH FUND
SMALL COMPANY GROWTH FUND STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
GROWTH SMALL COMPANY
FUND GROWTH FUND
==========================================================================================================================
INCREASE (DECREASE) IN NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------------
Year Year Year June 28, 1996*
ended ended ended through
From operations: Oct. 31, 1997 Oct. 31, 1996 Oct. 31, 1997 Oct. 31, 1996
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net investment loss $ (391,124) $ (330,789) $ (216,349) $ (14,484)
Net realized gain (loss)
on investments 32,173,750 17,650,636 (1,960,254) (500,014)
Change in net unrealized
appreciation
on investments (7,723,822) (1,600,474) 5,591,606 417,439
- --------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in
net assets resulting from
operations 24,058,804 15,719,373 3,415,003 (97,059)
Distributions to shareholders:
- --------------------------------------------------------------------------------------------------------------------------
From net realized capital gains (13,410,970) - - -
==========================================================================================================================
Transactions in shares of beneficial interest:
Purchases of 939,090, 1,170,731,
3,218,198 and 1,600,082
shares, respectively 15,132,320 17,592,972 28,742,445 15,762,982
Reinvestment of 912,467, 0, 0
and 0 shares, respectively 13,369,645 - - -
Redemptions of 4,585,554,
3,232,079, 636,830 and
1,053,308 shares,
respectively (75,233,871) (48,366,887) (6,327,278) (10,482,346)
- --------------------------------------------------------------------------------------------------------------------------
Net (decrease) increase in net
assets resulting from
share transactions (46,731,906) (30,773,915) 22,415,167 5,280,636
==========================================================================================================================
Total (decrease) increase in net assets (36,084,072) (15,054,542) 25,830,170 5,183,577
==========================================================================================================================
NET ASSETS:
- --------------------------------------------------------------------------------------------------------------------------
Beginning of year 116,084,880 131,139,422 5,183,577 0
- --------------------------------------------------------------------------------------------------------------------------
End of year $ 80,000,808 $116,084,880 $31,013,747 $ 5,183,577
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Commencement of operations.
See Notes to Financial Statements.
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P-I-C
GROWTH FUND
SMALL COMPANY GROWTH FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
==========================================================================================================================
GROWTH FUND
- ---------------------------------------------------------------------------------------------------------------------------
Year Year Year Year Year
ended ended ended ended ended
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 $16.25 $14.25 $11.70 $11.60 $10.81
- ---------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment loss (.15) (.06) (.02) .00 .00
Net realized and unrealized
gain on investments 3.98 2.06 2.57 .10 .80
- ---------------------------------------------------------------------------------------------------------------------------
Total from investment operations 3.83 2.00 2.55 .10 .80
- ---------------------------------------------------------------------------------------------------------------------------
Less distributions to shareholders:
From net realized capital gains (1.94) .00 .00 .00 .00
Return of capital .00 .00 .00 .00 (.01)
- ---------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders (1.94) .00 .00 .00 (.01)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $18.14 $16.25 $14.25 $11.70 $11.60
===========================================================================================================================
Total return 26.44% 14.04% 21.79% 0.86% 7.40%
===========================================================================================================================
Ratios/supplemental data:
Net assets, end
of year (millions) $ 80.0 $116.1 $131.1 $102.3 $ 88.9
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:*+
Expenses 1.25% 1.25% 1.25% 1.25% 1.25%
Net investment loss (0.38%) (.28%) (.17%) N/A N/A
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Includes the Fund's share of expenses, net of expense reimbursements, allocated
from P-I-C Growth Portfolio. If the fee waivers and expense reimbursements, with
respect to the Fund and P-I-C Growth Portfolio, had not been made, the ratio of
expenses to average net assets would have been 1.35%, 1.30%, 1.30%, 1.53%, and
1.54%, respectively.
+Net of expense reimbursements.
See Notes to Financial Statements.
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P-I-C
GROWTH FUND
SMALL COMPANY GROWTH FUND FINANCIAL HIGHLIGHTS, CONTINUED
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
===================================================================================
SMALL COMPANY GROWTH FUND
Year June 28, 1996*
ended through
Oct. 31, 1997 October 31, 1996
- -----------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of year $ 9.48 $10.00
- -----------------------------------------------------------------------------------
Income from investment operations:
Net investment loss (.05) (.03)
Net realized and unrealized
gain (loss) on investments .48 (.49)
- -----------------------------------------------------------------------------------
Total from investment operations .43 (.52)
- -----------------------------------------------------------------------------------
Net asset value, end of year $ 9.91 $ 9.48
===================================================================================
Total return 4.54% (5.20%)++
===================================================================================
Ratios/supplemental data:
Net assets, end of year (millions) $ 31.0 $ 5.2
- -----------------------------------------------------------------------------------
Ratios to average net assets:#+
Expenses 1.45% 1.43%+++
Net investment loss (0.96%) (0.91)%+++
</TABLE>
*Commencement of operations.
#Includes the Fund's share of expenses, allocated from P-I-C Small Cap
Portfolio. If the fee waivers and expense reimbursements, 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 1.61% and 4.03%, respectively.
+ Net of expense reimbursements.
++ Not annualized.
+++ Annualized.
See Notes to Financial Statements.
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P-I-C
GROWTH FUND
SMALL COMPANY GROWTH FUND NOTES TO FINANCIAL STATEMENTS
1 - ORGANIZATION
- -------------------------------------------------------------------------------
P-I-C Investment 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 Trust
currently offers six separate series: P-I-C Pinnacle Balanced Fund (formerly
P-I-C Institutional Balanced Fund), P-I-C Growth Fund (formerly P-I-C
Institutional Growth Fund), P-I-C Pinnacle Growth Fund, P-I-C Small Company
Growth Fund (formerly P-I-C Institutional Small Cap. Fund), P-I-C Pinnacle Small
Company Growth Fund, and P-I-C Small Cap. Growth Fund (each a "Fund" and
collectively the "Funds"). The Funds invest substantially all of their assets in
the respective Portfolios, a separate registered management investment company
having the same investment objective as the Funds. The financial statements of
the Portfolios are included elsewhere in this report and should be read in
conjunction with the Funds' financial statements. The financial statements of
the P-I-C Pinnacle Balanced Fund, P-I-C Pinnacle Growth Fund, P-I-C Pinnacle
Small Company Growth Fund and P-I-C Small Cap. Growth Fund are in separate
reports.
- -------------------------------------------------------------------------------
2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds. These policies are in conformity with generally accepted
accounting principles.
A. Investment Valuation. The Funds reflect their investments in the Portfolio
at their 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 Funds earn income,
net of the expenses of the Portfolio, daily on their 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
Funds and the other Holders of Interests in the Portfolio. Dividends, if
any, are paid annually to shareholders of the Funds and recorded on the
ex-dividend date.
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P-I-C
GROWTH FUND
SMALL COMPANY GROWTH FUND NOTES TO FINANCIAL STATEMENTS, CONTINUED
C. Federal Income Taxes. The Funds intend to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and
to distribute all of their taxable income to their shareholders.
Therefore, no federal income tax provision is required.
D. Accounting Estimates. In preparing financial statements in conformity with
generally accepted accounting principles, management makes estimates and
assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements, 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 Funds at the rate of 0.20% of the average daily net assets
of the Funds.
PIC has voluntarily taken to limit the Funds' expenses, including those
expenses allocated from the Portfolios, to the following levels:
<TABLE>
<CAPTION>
<S> <C>
Growth Fund 1.25%
Small Company Growth Fund 1.45%
</TABLE>
The percentages are based on the Funds' average net assets. Fees waived
and expenses reimbursed by PIC for the year ended October 31, 1997, were as
follows:
<TABLE>
<CAPTION>
Waived Reimbursed
Fees Expenses
---- --------
<S> <C> <C>
Growth Fund $110,144 $ 0
Small Company Growth Fund 35,623 0
</TABLE>
ICAC receives an annual fee for its services of $15,000 from each of the
Funds.
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P-I-C
GROWTH FUND
SMALL COMPANY GROWTH FUND NOTES TO FINANCIAL STATEMENTS, CONTINUED
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 Funds recognize 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
- -------------------------------------------------------------------------------
Additions and reductions in the investments in the respective Portfolios
for the year ended October 31, 1997, were as follows:
<TABLE>
<CAPTION>
Additions Reductions
--------- ----------
<S> <C> <C>
Growth Fund $15,137,581 $75,564,089
Small Company Growth Fund 28,771,472 6,438,924
</TABLE>
Included in P-I-C Growth Fund's reductions in investments is $47,288,344
representing the value of securities disposed of in payment of a redemption in
kind resulting in a realized gain of $17,613,905. Since this realized gain will
not be distributed to shareholders, it has been reclassified to paid-in-capital.
For Federal income tax purposes, the P-I-C Small Company Growth Fund has capital
loss carryforwards of $2,442,982 as of October 31, 1997 available to offset
future realized capital gains. To the extent that such carryforwards are used,
no capital gain distributions will be made. The carryforwards expire as follows:
October 31, 2004 - $500,014 and October 31, 2005 - $1,942,968.
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P-I-C
GROWTH FUND
SMALL COMPANY GROWTH FUND NOTES TO FINANCIAL STATEMENTS, CONTINUED
5 - DIVIDEND DECLARATION
- -------------------------------------------------------------------------------
On December 1, 1997, the Board of Trustees of P-I-C Growth Fund declared a
dividend from long-term capital gain of $3.369 per share payable on December 3,
1997 to shareholders of record December 1, 1997 and ex-dividend as of December
2, 1997.
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P-I-C
GROWTH FUND
SMALL COMPANY GROWTH FUND INDEPENDENT AUDITOR'S REPORT
To the Board of Trustees of
P-I-C Investment Trust
and the Shareholders of:
P-I-C Growth Fund
P-I-C Small Company Growth Fund
We have audited the accompanying statements of assets and liabilities as of
October 31, 1997, and the related statements of operations, the statements of
changes in net assets and the financial highlights for each of the periods
indicated of P-I-C Growth Fund (formerly P-I-C Institutional Growth Fund) and
P-I-C Small Company Growth Fund (formerly P-I-C Institutional Small Cap. Fund).
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
Growth Fund and P-I-C Small Company Growth Fund as of October 31, 1997, the
results of their operations, the changes in their 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
16
<PAGE> 17
P-I-C Statement of Net Assets
GROWTH as of October 31, 1997
PORTFOLIO
<TABLE>
<CAPTION>
====================================================================================
Percentage of
EQUITY SECURITIES - 94.4% Shares Value Net Assets
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Banks - 2.4%
- ------------------------------------------------------------------------------------
State Street Corp. 33,900 $ 1,889,925 2.3%
Synovus Financial Corp. 2,784 60,552 0.1%
- ------------------------------------------------------------------------------------
Total Banks 1,950,477 2.4%
====================================================================================
Beverage/Food - 0.7%
- ------------------------------------------------------------------------------------
PepsiCo., Inc. 13,500 496,969 0.6%
Tricon Global Restaurants, Inc.* 1,350 40,922 0.1%
- ------------------------------------------------------------------------------------
Total Beverage/Food 537,891 0.7%
====================================================================================
Business Information Services - 1.2%
- ------------------------------------------------------------------------------------
Paychex, Inc. 26,089 994,643 1.2%
====================================================================================
Business Services - 0.7%
- ------------------------------------------------------------------------------------
Danka Business Systems PLC, ADR 15,679 580,123 0.7%
====================================================================================
Computer Services - 0.7%
- ------------------------------------------------------------------------------------
Sungard Data Systems, Inc.* 23,300 550,462 0.7%
====================================================================================
Computer Software - 6.8%
- ------------------------------------------------------------------------------------
Microsoft Corp.* 43,156 5,610,280 6.8%
====================================================================================
Cosmetics and Soaps - 2.1%
- ------------------------------------------------------------------------------------
The Gillette Company 19,259 1,715,255 2.1%
====================================================================================
Credit and Finance - 7.1%
- ------------------------------------------------------------------------------------
Associates First Capital Corp. 20,030 1,274,409 1.6%
Household International, Inc. 13,700 1,551,525 1.9%
MBNA Corporation 111,382 2,930,739 3.6%
- ------------------------------------------------------------------------------------
Total Credit and Finance 5,756,673 7.1%
</TABLE>
17
<PAGE> 18
P-I-C STATEMENT OF NET ASSETS
GROWTH as of October 31, 1997
PORTFOLIO
<TABLE>
<CAPTION>
======================================================================================
Percentage of
EQUITY SECURITIES, CONTINUED Shares Value Net Assets
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Discount - 3.9%
- --------------------------------------------------------------------------------------
Costco Companies, Inc.* 37,100 $ 1,428,350 1.8%
Dollar General Corp. 52,750 1,744,047 2.1%
- --------------------------------------------------------------------------------------
Total Discount 3,172,397 3.9%
======================================================================================
Diversified - 2.6%
- --------------------------------------------------------------------------------------
Tyco International Ltd. 55,760 2,104,940 2.6%
======================================================================================
Drugs - 16.8%
- --------------------------------------------------------------------------------------
Elan Corp., PLC ADR* 29,657 1,479,143 1.8%
Lilly (Eli) & Co. 74,870 5,006,931 6.1%
Pfizer, Inc. 38,684 2,736,893 3.3%
Warner-Lambert Co. 32,300 4,624,956 5.6%
- --------------------------------------------------------------------------------------
Total Drugs 13,847,923 16.8%
======================================================================================
Electrical Components/Semiconductors - 2.6%
- --------------------------------------------------------------------------------------
Texas Instruments, Inc. 20,400 2,176,425 2.6%
======================================================================================
Electrical Equipment/Periphery - 5.5%
- --------------------------------------------------------------------------------------
Compaq Computer, Inc. 47,000 2,996,250 3.6%
Dell Computer Corp.* 19,400 1,554,425 1.9%
- --------------------------------------------------------------------------------------
Total Electrical Equipment/Periphery 4,550,675 5.5%
======================================================================================
Health Maintenance Organizations - 0.8%
- --------------------------------------------------------------------------------------
Oxford Health Plans, Inc.* 23,942 618,003 0.8%
======================================================================================
Insurance - 4.0%
- --------------------------------------------------------------------------------------
American International Group, Inc. 20,018 2,043,087 2.5%
MGIC Investment Corp. 20,938 1,262,823 1.5%
- --------------------------------------------------------------------------------------
Total Insurance 3,305,910 4.0%
</TABLE>
18
<PAGE> 19
P-I-C Statement of Net Assets
GROWTH as of October 31, 1997
PORTFOLIO
<TABLE>
<CAPTION>
=====================================================================================
Percentage of
EQUITY SECURITIES, CONTINUED Shares Value Net Assets
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Medical Instruments - 3.3%
- -------------------------------------------------------------------------------------
Medtronic, Inc. 61,704 $ 2,684,125 3.3%
=====================================================================================
Miscellaneous - 1.4%
- -------------------------------------------------------------------------------------
AES Corp.* 29,250 1,159,031 1.4%
=====================================================================================
Mortgage and Related Services - 3.2%
- -------------------------------------------------------------------------------------
Federal National Mortgage
Association 54,819 2,655,295 3.2%
=====================================================================================
Networking - 1.1%
- -------------------------------------------------------------------------------------
Cisco Systems, Inc.* 11,000 902,344 1.1%
=====================================================================================
Offshore Drilling - 1.3%
- -------------------------------------------------------------------------------------
Global Marine, Inc.* 34,200 1,064,475 1.3%
=====================================================================================
Oil Field Services - 5.1%
- -------------------------------------------------------------------------------------
Schlumberger Ltd. 47,900 4,191,250 5.1%
=====================================================================================
Oil Refining - 0.9%
- -------------------------------------------------------------------------------------
Tosco Corp. 23,575 777,975 0.9%
=====================================================================================
Outpatient - Home Care - 1.7%
- -------------------------------------------------------------------------------------
Healthsouth Corp.* 55,730 1,424,598 1.7%
=====================================================================================
Specialty - 4.4%
- -------------------------------------------------------------------------------------
CVS Corp. 23,000 1,410,188 1.7%
Kohls Corp.* 27,479 1,844,528 2.2%
Walgreen Co. 13,600 382,500 0.5%
- -------------------------------------------------------------------------------------
Total Specialty 3,637,216 4.4%
</TABLE>
19
<PAGE> 20
P-I-C Statement of Net Assets
GROWTH as of October 31, 1997
PORTFOLIO
<TABLE>
<CAPTION>
===============================================================================
Percentage of
EQUITY SECURITIES, CONTINUED Shares Value Net Assets
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Supermarkets - 1.8%
- -------------------------------------------------------------------------------
Safeway, Inc.* 25,975 $ 1,509,797 1.8%
===============================================================================
Telecommunications - 9.2%
- -------------------------------------------------------------------------------
ADC Telecommunications, Inc.* 18,982 628,779 0.7%
Ericsson,(L.M.) Telephone Co., ADR 66,040 2,922,270 3.6%
Lucent Technologies, Inc. 41,950 3,458,253 4.2%
Tellabs, Inc.* 10,400 561,600 0.7%
- -------------------------------------------------------------------------------
Total Telecommunications 7,570,902 9.2%
===============================================================================
Telephone - 3.1%
- -------------------------------------------------------------------------------
Worldcom, Inc.* 74,850 2,516,830 3.1%
- -------------------------------------------------------------------------------
Total Equity Securities 77,565,915 99.4%
(Cost $57,140,416)
===============================================================================
SHORT-TERM INVESTMENTS - 4.7%
- -------------------------------------------------------------------------------
Repurchase Agreement - 4.7% Principal Amount
- -------------------------------------------------------------------------------
Lehman Brothers On-Line Repurchase
Agreement, 5.29%, dated 10/31/1997,
due 11/3/1997 (collateralized by
$3,953,818 U.S. Treasury Note, 3.63%,
due 7/15/2002) (Cost $3,831,800) $3,831,800 3,831,800 4.7%
- -------------------------------------------------------------------------------
Total Investments 81,397,715 99.1%
(Cost $60,972,216)
</TABLE>
20
<PAGE> 21
P-I-C STATEMENT OF NET ASSETS
GROWTH as of October 31, 1997
PORTFOLIO
<TABLE>
<CAPTION>
===================================================================================
Percentage of
OTHER ASSETS - 1.1% Value Net Assets
- -----------------------------------------------------------------------------------
<S> <C> <C>
Cash $ 15,337
Receivables:
Investment securities sold 742,997
Shares of beneficial interest sold 61,591
Dividends and interest 27,637
Other assets 23,317
- -----------------------------------------------------------------------------------
Total other assets 870,879 1.1%
===================================================================================
LIABILITIES - (0.2%)
- -----------------------------------------------------------------------------------
Payables:
Shares of beneficial interest redeemed 553
To Advisor (Note 3) 54,526
Deferred Trustees' compensation (Note 3) 21,512
Accrued expenses 47,323
- -----------------------------------------------------------------------------------
Total liabilities 123,914 (0.2%)
===================================================================================
TOTAL NET ASSETS - 100.0% $82,144,680 100.0%
- -----------------------------------------------------------------------------------
</TABLE>
*Non-income producing security.
See Notes to Financial Statements.
21
<PAGE> 22
P-I-C 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>
22
<PAGE> 23
P-I-C 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>
23
<PAGE> 24
P-I-C 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>
24
<PAGE> 25
P-I-C 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>
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>
25
<PAGE> 26
P-I-C 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>
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>
26
<PAGE> 27
P-I-C 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>
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>
27
<PAGE> 28
P-I-C 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>
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>
28
<PAGE> 29
P-I-C 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>
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%
</TABLE>
29
<PAGE> 30
P-I-C 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.
30
<PAGE> 31
P-I-C STATEMENTS OF OPERATIONS
GROWTH as of October 31, 1997
SMALL CAP.
PORTFOLIOS
<TABLE>
<CAPTION>
GROWTH SMALL CAP.
PORTFOLIO PORTFOLIO
=================================================================================
<S> <C> <C>
INVESTMENT INCOME
- ---------------------------------------------------------------------------------
Income:
- ---------------------------------------------------------------------------------
Dividends $ 644,385 $ 115,763
Interest 269,728 856,522
- ---------------------------------------------------------------------------------
Total income 914,113 972,285
=================================================================================
Expenses:
- ---------------------------------------------------------------------------------
Investment advisory fee (Note 3) 838,058 1,525,768
Administration fee (Note 3) 103,757 190,721
Accounting services fee 66,987 88,237
Custodian fee 32,876 65,049
Audit fee 24,302 16,301
Trustees' fees 17,502 17,810
Legal fees 5,001 7,500
Amortization of organization costs 5,010 10,001
Miscellaneous 2,083 10,702
- ---------------------------------------------------------------------------------
Total expenses 1,095,576 1,932,089
Less, waiver by Advisor (Note 3) (48,003) (24,879)
- ---------------------------------------------------------------------------------
Net expenses 1,047,573 1,907,210
=================================================================================
Net investment loss (133,460) (934,925)
=================================================================================
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
- ---------------------------------------------------------------------------------
Net realized gain on investments 32,161,956 72,084,822
Change in net unrealized depreciation
on investments (7,683,870) (62,640,291)
- ---------------------------------------------------------------------------------
Net gain on investments 24,478,086 9,444,531
=================================================================================
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $24,344,626 $ 8,509,606
- ---------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
31
<PAGE> 32
P-I-C STATEMENTS OF CHANGES IN NET ASSETS
GROWTH
SMALL CAP.
PORTFOLIOS
<TABLE>
<CAPTION>
SMALL CAP.
GROWTH PORTFOLIO PORTFOLIO
===========================================================================================================================
INCREASE (DECREASE) IN NET ASSETS:
- ---------------------------------------------------------------------------------------------------------------------------
Year Year Year Year
ended ended ended ended
From operations: Oct. 31, 1997 Oct. 31, 1996 Oct. 31, 1997 Oct. 31, 1996
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net investment loss $ (133,460) $ (34,806) $ (934,925) $ (1,037,169)
Net realized gain
on investments 32,161,956 17,614,277 72,084,822 14,963,528
Change in net unrealized
(depreciation) appreciation
on investments (7,683,870) (28,383,014) (62,640,291) 18,982,622
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in
net assets resulting from
operations 24,344,626 (10,803,543) 8,509,606 32,908,981
===========================================================================================================================
Transactions in Interests:
Contributions by Holders 17,478,857 19,462,190 164,160,467 57,035,094
Withdrawals by Holders (75,778,332) (122,401,366) (234,314,952) (18,975,416)
- ---------------------------------------------------------------------------------------------------------------------------
Net (decrease) increase
in net assets from
transactions in interests (58,299,475) (102,939,176) (70,154,485) 38,059,678
===========================================================================================================================
Total (decrease) increase in net assets (33,954,849) (113,742,719) (61,644,879) 70,968,659
===========================================================================================================================
NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------------
Beginning of year 116,099,529 229,842,248 201,300,676 130,332,017
- ---------------------------------------------------------------------------------------------------------------------------
End of year $ 82,144,680 $ 116,099,529 $ 139,655,797 $ 201,300,676
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
32
<PAGE> 33
P-I-C SELECTED RATIO DATA
GROWTH
SMALL CAP.
PORTFOLIOS
<TABLE>
<CAPTION>
GROWTH PORTFOLIO
==============================================================================================================
Year ended October 31,
--------------------------------------------------------------------
1997 1996 1995 1994 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) income (0.13%) (0.04%) 0.08% 0.10% 0.17%
Portfolio turnover rate 67.54% 64.09% 54.89% 68.26% 43.20%
Average commission rate
paid per share** $ 0.0416 $ 0.0440 -- -- --
</TABLE>
#Net of expense reimbursements equivalent to 0.05%, 0.04%, 0.01%, 0.01% and
0.09% of average net assets, respectively.
**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.
See Notes to Financial Statements.
33
<PAGE> 34
P-I-C SELECTED RATIO DATA
GROWTH
SMALL CAP.
PORTFOLIOS
<TABLE>
<CAPTION>
SMALL CAP. PORTFOLIO
==================================================================================================================
Year Ended October 31, Sept. 30, 1993*
-------------------------------------------------------- through
1997 1996 1995 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) income (0.49%) (.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 expenses 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 per share for security trades on which
commissions are charged.
34
<PAGE> 35
P-I-C NOTES TO FINANCIAL STATEMENTS
GROWTH
SMALL CAP.
PORTFOLIOS
================================================================================
1 - ORGANIZATION
- --------------------------------------------------------------------------------
P-I-C Growth Portfolio was organized on December 11, 1991 and P-I-C
Small Cap. Portfolio was organized on March 22, 1993 as separate trusts under
the laws of the State of New York (each a "Portfolio" and collectively the
"Portfolios"). The beneficial interests in each Portfolio are divided into an
unlimited number of non-transferable interests, par value $.01 each. The
Portfolios are registered under the Investment Company Act of 1940 as open-end,
diversified management investment companies.
2 - SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
The following is a summary of significant accounting policies consistently
followed by the Portfolios. 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. Each 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 Portfolios 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 a 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 on an
identified cost basis. Interest is recorded as accrued, and dividend
income is recorded on the ex-dividend date.
35
<PAGE> 36
P-I-C NOTES TO FINANCIAL STATEMENTS
GROWTH CONTINUED
SMALL CAP.
PORTFOLIO
================================================================================
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
================================================================================
Each 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 Portfolios. PIC and ICAC also provide management services necessary for
the operations of the Portfolios and furnish office facilities.
PIC receives from Growth and Small Cap. Portfolios an investment advisory
fee at the annual rate of 0.80% of its average net assets from each of the
Portfolios. In addition, PIC has voluntarily taken to limit the expenses of the
Growth and Small Cap. Portfolios to 1.00% of its average net assets for each of
the Portfolios.
During the year ended October 31, 1997, PIC waived its fees to the Growth
and Small Cap. Portfolio in the amount of $48,003 and $24,879, respectively.
ICAC receives for its services a fee at the annual rate of 0.10% of the
average net assets of the Portfolios. Fees paid to ICAC for the year ended
October 31, 1997 are stated on the respective Portfolios' Statement of
Operations.
On December 19, 1995, each Portfolio approved a Deferred Compensation Plan
for Trustees (the "Plan"). Trustees are entitled to receive $2,500 per quarter
and $500 per meeting attended, which is allocated among the Portfolios. Trustees
can elect to receive payment in cash or defer payments provided for in the Plan.
If a trustee elects to defer payment, the Plan provides for the creation of a
deferred payment account (phantom share account). This account accumulates the
deferred fees earned and the value of the account is adjusted at the end of each
quarter to reflect a value which would have been earned if the account had been
invested in designated investments. The
36
<PAGE> 37
P-I-C NOTES TO FINANCIAL STATEMENTS
GROWTH CONTINUED
SMALL CAP.
PORTFOLIO
================================================================================
Portfolios recognize 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
================================================================================
The aggregate cost of purchases and the proceeds from sales of investment
securities, other than short-term obligations, for the year ended October 31,
1997, were as follows:
<TABLE>
<CAPTION>
Purchases Sales
--------- -----
<S> <C> <C>
Growth Portfolio $ 67,938,440 $125,999,278
Small Cap. Portfolio 263,751,802 319,270,773
</TABLE>
The aggregate unrealized appreciation and depreciation of investment
securities at October 31, 1997, based on costs for federal income tax purposes,
were as follows:
<TABLE>
<CAPTION>
Tax Gross Gross
Costs of Unrealized Unrealized
Investments Appreciation Depreciation
----------- ------------ ------------
<S> <C> <C> <C>
Growth Portfolio $ 61,038,401 $21,634,685 $(1,275,371)
Small Cap. Portfolio 129,258,249 13,637,236 (3,603,782)
</TABLE>
37
<PAGE> 38
P-I-C INDEPENDENT AUDITOR'S REPORT
GROWTH
SMALL CAP.
PORTFOLIO
================================================================================
To the Board of Trustees of
and the holders of Interests in,
P-I-C Growth Portfolio
P-I-C Small Cap. Portfolio
We have audited the accompanying statements of net assets of P-I-C Growth
Portfolio and P-I-C Small Cap. Portfolio as of October 31, 1997, the related
statements of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended and selected ratio
data for each of the periods indicated. These financial statements and selected
ratio data are the responsibility of the Portfolio's management. Our
responsibility is to express an opinion on these financial statements and
selected ratio data 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 Growth Portfolio and
P-I-C Small Cap. Portfolio as of October 31, 1997, the results of their
operations, the changes in their net assets and the selected ratio data for the
periods indicated, in conformity with generally accepted accounting principles.
McGladrey & Pullen, LLP
New York, New York
December 5, 1997
38
<PAGE> 39
[P-I-C LOGO]
P-I-C TRUSTEES AND OFFICERS
GROWTH FUND
SMALL COMPANY 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 PORTFOLIOS
- --------------------------------------------------------------------------------
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, Freidman, Hoffman & Goodman
LEGAL COUNSEL - P-I-C PORTFOLIOS
- --------------------------------------------------------------------------------
Paul, Hastings, Janofsky & Walker, LLP
INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
McGladrey & Pullen, LLP
This report is intended for the information of shareholders of P-I-C Funds and
should not be used as sales literature unless preceded or accompanied by a
current prospectus.
