PROFIT FUNDS INVESTMENT TRUST
PROFIT LOMAX VALUE FUND
SEMI-ANNUAL REPORT TO SHAREHOLDERS
For The Period Ending March 31, 1997
<PAGE>
STATEMENT OF NET ASSETS PROFIT LOMAX VALUE FUND
March 31, 1997 Unaudited
PROFIT LOMAX Market
VALUE FUND Shares Value
- -------------------------------------------------------
COMMON STOCK (95.8%)
AEROSPACE & DEFENSE (3.4%)
Raytheon 610 $ 27,526
---------
AUTOMOTIVE (4.7%)
General Motors 695 38,486
---------
BANKS (6.2%)
First Chicago 525 28,416
J.P. Morgan 225 22,106
---------
50,522
---------
CHEMICALS (2.9%)
E.I. du Pont de Nemours 225 23,850
---------
COMPUTERS & SERVICES (4.0%)
Harris 415 31,903
NCR* 32 1,128
---------
33,031
---------
ELECTRICAL UTILITIES (6.8%)
American Electric Power 700 28,875
Southern 1,260 26,618
---------
55,493
---------
FOOD, BEVERAGE AND TOBACCO (2.9%)
Philip Morris 210 23,966
---------
INSURANCE (7.1%)
American General 675 27,506
Cigna 210 30,686
---------
58,192
---------
PAPER & PAPER PRODUCTS (12.5%)
International Paper 960 37,320
Minnesota Mining & Manufacturing 450 38,025
Weyerhaeuser 605 26,998
---------
102,343
---------
PETROLEUM & FUEL PRODUCTS (3.7%)
Atlantic Richfield 220 29,700
---------
PETROLEUM REFINING (16.9%)
Amoco 355 30,752
Chevron 605 42,123
Exxon 380 40,945
Texaco 225 24,638
---------
138,458
---------
RAILROADS (3.3%)
Norfolk Southern 315 26,854
---------
RETAIL (11.0%)
May Department Stores 595 27,072
The Limited 1,515 27,838
Wal-Mart Stores 1,260 35,123
---------
90,033
---------
Market
Shares Value
- -------------------------------------------------------
RUBBER & PLASTIC (3.6%)
Dow Chemical 370 $ 29,600
---------
SEMI-CONDUCTORS/INSTRUMENTS (3.1%)
AMP 740 25,437
---------
TELEPHONES & TELECOMMUNICATION (3.7%)
AT&T 875 30,406
---------
TOTAL COMMON STOCK
(Cost $776,591) 783,897
---------
CASH EQUIVALENTS (7.3%)
Corestates Liquidity $23,066 23,066
Vanguard Money
Market (Prime) 37,000 37,000
---------
TOTAL CASH EQUIVALENTS
(Cost $60,066) 60,066
---------
TOTAL INVESTMENTS (103.1%)
(Cost $836,656) 843,963
---------
OTHER ASSETS AND LIABILITIES, NET (-3.1%) (25,224)
---------
NET ASSETS:
Portfolio Shares (unlimited
authorization -- no par value)
based on 78,524 outstanding
shares of beneficial interest 806,952
Undistributed net investment income 2,993
Accumulated net realized gain
on investments 1,487
Net unrealized appreciation
on investments 7,307
---------
TOTAL NET ASSETS (100.0%) $818,739
=========
Net Asset Value Per Share $10.43
=========
* NON-INCOME PRODUCING SECURITY
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENT OF OPERATIONS PROFIT LOMAX VALUE FUND
For the period November 15, 1996 to March 31, 1997 Unaudited
INVESTMENT INCOME:
Interest Income............................................ $ 775
Dividend Income............................................ 6,103
------
Total Investment Income.................................. 6,878
------
EXPENSES:
Investment Advisory Fees .................................. 2,484
Less: Waiver of Investment Advisory Fees................... (2,484)
Administrator Fees ........................................ 24,094
Less: Waiver of Administrator Fees ........................ (18,405)
Professional Fees ......................................... 9,346
Transfer Agent Fees ....................................... 10,883
Pricing Fees .............................................. 751
Printing Expenses.......................................... 7,506
Custodian Fees............................................. 414
Registration Fees ......................................... 4,698
Amortization of Deferred Organization ..................... 4,880
Trustee Fees .............................................. 4,505
Insurance Expense ......................................... 1,061
------
Total Expenses before Reimbursement ....................... 49,733
Reimbursement of Expenses by Adviser ...................... (45,848)
------
Total Expenses .......................................... 3,885
------
NET INVESTMENT INCOME ........................................ 2,993
------
Net Realized Gain from Investments Sold ................... 1,487
Net Change in Unrealized Appreciation on Investments ...... 7,307
------
NET GAIN ON INVESTMENTS ...................................... 8,794
------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............. 11,787
======
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS PROFIT LOMAX VALUE FUND
For the period November 15, 1996 to March 31, 1997 Unaudited
Operations:
Net Investment Income............................................ $ 2,993
Net Realized Gain from Investments Sold.......................... 1,487
Net Change in Unrealized Appreciation on Investments............. 7,307
--------
Net Increase in Net Assets Resulting from Operations........... 11,787
--------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net Investment Income ........................................... --
Capital Gains.................................................... --
--------
Total Distributions to Shareholders............................ --
--------
CAPITAL SHARE TRANSACTIONS:
Proceeds from Shares Issued...................................... 807,253
Reinvestment of Cash Distributions............................... --
Cost of Shares Repurchased....................................... (301)
--------
Increase in Net Assets Derived from Capital Share Transactions. 806,952
--------
Total Increase in Net Assets................................... 818,739
NET ASSETS:
Beginning of Period ............................................. --
--------
End of Period.................................................... $818,739
========
CAPITAL SHARE TRANSACTIONS:
Shares Issued.................................................... 78,552
Shares Issued in Lieu of Cash Distributions...................... --
Shares Repurchased............................................... (28)
--------
Net Capital Share Activity..................................... 78,524
========
Amounts designated as "--" are $0.
The accompanying notes are an integral part of the financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS PROFIT LOMAX VALUE FUND
For the period ended March 31, 1997 Unaudited
<TABLE>
<CAPTION>
For a Share Outstanding Throughout the Period
Net
Net Realized and Net
Asset Unrealized Distributions Distributions Asset Net Ratio
Value Net Gains or from Net from Value Assets of Expenses
Beginning Investment (Losses) on Investment Capital End Total End to Average
of Period Income Investments Income Gains of Period Return of Period Net Assets
---------- ------------ -------------- ------------ ------------ --------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997(1) $10.00 $0.04 $0.39 $-- $-- $10.43 4.30% $818,739 1.95%
Ratio
of Net
Ratio Investment
Ratio of Expenses Income (Loss)
of Net to Average to Average
Investment Net Assets Net Assets
Income (Excluding (Excluding Portfolio Average
to Average Waivers and Waivers and Turnover Commission
Net Assets Reimbursements) Reimbursements) Rate Rate(2)
----------- --------------- -------------- -------- ---------
<S> <C> <C> <C> <C> <C>
1997(1) 1.50% 35.43% (31.98)% 9.89% $0.06
<FN>
(1) The Fund commenced operations on November 15, 1996.
(2) Average commission rate paid per share for security
purchases and sales during the period.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS PROFIT LOMAX VALUE FUND
March 31, 1997 Unaudited
1. ORGANIZATION:
The Profit Funds Investment Trust (the "Trust") was organized as a Massachusetts
business trust under a Declaration of Trust dated June 14, 1996. The Trust is
registered under the Investment Company Act of 1940, as amended, as an open-end
management investment company with two funds: the Profit Lomax Value Fund (the
"Fund") and the Profit Lomax Institutional Equity Fund. As of March 31, 1997,
the Profit Lomax Institutional Equity Fund has not commenced operations. The
Fund's prospectus provides a description of the Fund's investment objectives,
policies and strategies. The assets of the Fund are segregated, and a
shareholder's interest is limited to the Fund in which shares are held.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of the significant accounting policies followed by
the Fund. These policies are in conformity with generally accepted accounting
principles.
SECURITY VALUATION -- Investments in equity securities that are traded on a
national securities exchange (or reported on the NASDAQ national market
system) are stated at the last quoted sales price if readily available for
such equity securities on each business day. If there is no such reported
sale, these securities, and unlisted securities for which market quotations
are readily available, are valued at the most recently quoted bid price.
Debt obligations exceeding sixty days to maturity for which market
quotations are readily available are valued at the most recently quoted bid
price. Debt obligations with sixty days or less until maturity may be
valued either at the most recently quoted bid price or at their amortized
cost.
SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Security transactions are
accounted for on the trade date of the security purchase or sale. Dividend
income is recognized on ex-dividend date, and interest income is recognized
on an accrual basis and includes, where applicable, the pro rata
amortization of premium or accretion of discount. The cost used in
determining net realized capital gains and losses on the sale of securities
are those of the specific securities sold, adjusted for the accretion and
amortization of purchase discounts and premiums during the applicable
holding period. Purchase discounts and premiums on securities held by the
Fund are accreted and amortized to maturity using the scientific interest
method, which approximates the effective interest method.
FEDERAL INCOME TAXES -- It is the Fund's intention to qualify as a
regulated investment company by complying with the appropriate provisions
of the Internal Revenue Code of 1986, as amended. Accordingly, no
provisions for Federal income taxes is required.
REPURCHASE AGREEMENTS -- Securities pledged as collateral for repurchase
agreements are held by the custodian bank until the repurchase agreements
mature. Provisions of the repurchase agreements ensure that the market
value of the collateral, including accrued interest thereon, is sufficient
in the event of default of the counterparty. If the counterparty defaults
and the value of the collateral declines or if the counterparty enters an
insolvency proceeding, realization of the collateral by the Fund may be
delayed or limited.
NET ASSET VALUE PER SHARE -- The net asset value per share of the Fund is
calculated each business day. In general, it is completed by dividing the
assets of each Fund, less its liabilities, by the number of shares
outstanding shares of the Fund.
OTHER -- Distributions from net investment income for the Fund are declared
and paid annually to shareholders. Any net realized capital gains are
distributed to shareholders at least annually.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS -- The
preparation of financial statements, in conformity with generally accepted
accounting principles, requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the finan-
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONCLUDED) PROFIT LOMAX VALUE FUND
March 31, 1997 Unaudited
cial statements and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates.
3. INVESTMENT ADVISORY AGREEMENT:
The Fund has an agreement with Investor Resources Group, Inc. (the "Manager"),
to provide general investment supervisory services to the Fund and to manage the
Fund's business affairs. The agreement requires the Fund to pay the Manager a
monthly fee at the annual rate of 1.25% of the Fund's average daily net assets.
The Manager currently intends to waive its fee and reimburse the Fund for
expenses incurred to the extent necessary to enable the Fund to maintain total
operating expenses at a maximum level of 1.95% per annum of the Fund's average
daily net assets. The waiver and reimbursement are voluntary and may be
discontinued at any time.
The Manager has retained the Edgar Lomax Company ("Edgar Lomax"), to serve as
subadviser to the Fund. For its services, the Manager pays Edgar Lomax a fee at
the annual rate of 0.50% of the Fund's average daily net assets.
CoreStates Bank, N.A., acts as Custodian for the Fund. The Custodian plays no
role in determining the investment policies of the Fund or which securities are
to be purchased or sold in the Fund.
4. ADMINISTRATION AGREEMENTS:
The Fund has entered into an Administration Agreement with SEI Fund Resources.
For its services, the Fund pays SEI a fee equal on an annual basis to the
greater of (i) 0.15% of the average daily net assets on the first $50 million of
the Fund, 0.125% of the average daily net assets on the next $50 million, and
0.10% of the average daily net assets on all assets over $100 million, or (ii)
$65,000.
The Fund has retained State Street Bank and Trust Company as its Transfer Agent.
Boston Financial Data Services, Inc., serves as the Fund's dividend disbursing
agent and shareholder service agent. BFDS is a subsidiary of State Street Bank
and Trust Company.
5. ORGANIZATION COSTS AND TRANSACTIONS WITH AFFILIATES:
Organizational costs have been capitalized by the Fund and are being amortized
on a straight line basis over a maximum of sixty months following commencement
of operations. In the event any of the initial shares of the Fund are redeemed
by any holder thereof during the period that the Fund is amortizing its
organizational costs, the redemption proceeds payable to the holder thereof by
the Fund will be reduced by the unamortized organizational cost in the same
ratio as the number of initial shares being redeemed bears to the number of
initial shares outstanding at the time of redemption.
Certain officers of the Fund are also officers of the Manager or the
Administrator. Such officers are paid no fees by the Fund for serving as
officers of the Fund.
6. INVESTMENT TRANSACTIONS:
The cost of security purchases and the proceeds from security sales, excluding
short-term investments, for the period ended March 31, 1997 were as follows:
PURCHASES SALES
--------- --------
Profit Lomax
Value Fund $828,382 $(53,278)
The aggregate gross unrealized appreciation and depreciation for securities held
by the Fund at March 31, 1997 was as follows:
NET UNREALIZED
APPRECIATION
APPRECIATION DEPRECIATION (DEPRECIATION)
---------- ---------- ------------
Profit Lomax
Value Fund $27,981 $(20,674) $7,307
