- --------------------------------------------------------------------------------
PROFIT FUNDS INVESTMENT TRUST
-----------------------------
PROFIT VALUE FUND
-----------------
ANNUAL REPORT
September 30, 1998
INVESTMENT ADVISER ADMINISTRATOR
------------------ -------------
INVESTOR RESOURCES GROUP, LLC COUNTRYWIDE FUND SERVICES, INC.
8720 Georgia Avenue, Suite 808 P.O. Box 5354
Silver Spring, Maryland 20910 Cincinnati, Ohio 45201-5354
1.888.744.2337
- --------------------------------------------------------------------------------
<PAGE>
Profit Funds
[LOGO]
Investment Trust
LETTER TO SHAREHOLDERS PROFIT VALUE FUND
September 30, 1998
Dear Profit Value Fund Shareholder:
At Profit Funds, we are committed to helping you pursue your financial
goals, whether it's saving for retirement, paying for college tuition, buying a
home, or building your own business. Our investment philosophy is that, over the
long term, the most promising investment opportunities can be found among large
financially sound companies, which at the time of investment, show an attractive
valuation discount relative to their peers.
Profit Value Fund is a growth mutual fund that seeks long-term total return
by investment primarily in established, larger capitalization companies (i.e.
companies having a market capitalization exceeding $1 billion) that are
attractive relative to their peers. During the fiscal year covered by this
report, the performance of traditional "value" stocks lagged significantly
behind the S&P 500 Index.
In its second year of operations, the Profit Value Fund performed
competitively and gained many new investors. The Fund and its portfolio manager
continue to receive positive media coverage, being featured in numerous national
publications. The Fund's transition to Countrywide Fund Services proceeded
smoothly and during the year they took over the administration and fund
accounting functions previously delegated to SEI Fund Resources, and the
transfer agent functions from Boston Financial Data Services. We are excited
about these changes and how they are enhancing our level of service to the Fund.
The improvements have already begun to increase our operational efficiency as
well as decrease the overall operational expenses of the Fund. The Fund's core
operational costs of transfer agency, administration and fund accounting
functions have decreased to a minimum of $48,000 annually from $91,000.
Shareholders are also benefiting from improved statements and 24-hour automated
shareholder and NAV information.
For the fiscal year ended September 30, 1998, the Profit Value Fund closed
at a net asset value of $12.66 per share for a total return of (0.57%) as
compared to an S&P 500 total return of 9.05% and a Lipper Growth and Income
average of (1.08%). The Fund's performance reflects its outperformance compared
to its value oriented growth & income competitors during the fiscal year,
although it fell below the return of the S&P 500. During the period, advances in
the equity market were very narrow, led by a sector by sector rotation of the
top large momentum stocks, pushing the S&P 500 Index to historically high
valuations. In this type of market environment, traditional "value" stocks get
beaten up and fail to keep pace; however, management expects this severe
disparity to dissipate and that value stocks will outperform the market averages
as the
- --------------------------------------------------------------------------------
8720 Georgia Avenue, Suite 808 . Silver spring, MD 20910
301-650-0059 . FAX 302-650-0608
http://www.profitfunds.com
<PAGE>
advance broadens out. When the market declined sharply during the 3rd quarter
from its peaks, the Profit Value Fund lost 8.1%, compared to a S&P 500 Index
loss of 10.0% and a Lipper Growth & Income average loss of 12.5%. We believe one
of the catalysts for the market improvement over the next fiscal year will be
the result of a change in Federal Reserve policy to increasing liquidity in the
financial markets through a reduction in the discount rate. We remain convinced
that the global uncertainty caused by the slowdown in Asia does not represent a
major threat over the near term to the positive investment environment of low
inflation, expanding corporate profitability, and increased efficiencies, in the
domestic market, but we will remain vigilant for any unexpected shocks to the
current economy.
Investor Resources Group ("IRG") continues to manage the portfolio as
conditions warrant. The turnover ratio of the portfolio was higher than normal
due to repositioning the portfolio to reflect IRG's style of management.
Specifically, the addition of EMC, Compaq, Intel, Computer Associates,
Microsoft, America Online, and Sun Microsystems should place the Fund in a good
position to benefit from the next run in technology, which management believes
has already begun to occur. Additionally IRG has added four healthcare related
companies (Merck, Pfizer, Amgen, and Medtronics) and four financial services
companies (Countrywide Credit, Legg Mason, Marsh & McClennan, and T. Rowe
Price). We also initiated positions in Nike, Univision, Eastman Kodak, Sunrise
Assisted Living, and Geotel Communications and we accepted the tender offer of
the Limited Corporation for shares of Abercrombie & Fitch.
Regardless of the direction the markets take in the coming years, we
believe that The Profit Value Fund will continue to offer an attractive
investment opportunity for individual and institutional investors. We continue
to evaluate companies in a prudent and cautious manner, seeking companies that
represent good valuations relative to their industry and competitors that are
not dependent upon an excessive upward market trend.
We urge shareholders to take a similar approach. That is, invest for the
long run, avoid the temptation to "time" your investment based on market
predictions, and diversify among stocks, bonds, and mutual funds based on your
individual needs and time horizons. Finally, invest on a consistent basis,
regardless of whether the markets are up or down.
We would like to take this opportunity to express our sincere appreciation
to our valued and growing family of shareholders, for your continued support of
and confidence in the Profit Value Fund. We look forward to serving your
investment needs for many years to come.
Sincerely,
/s/ Eugene A. Profit
Eugene A. Profit
President
<PAGE>
PROFIT VALUE FUND
Comparison of the Change in Value of a $10,000 Investment in the
Profit Value Fund and the Standard & Poor's (S&P) 500 Index
S&P 500 INDEX: PROFIT VALUE FUND:
-------------- ------------------
DATE BALANCE DATE BALANCE
---- ------- ---- -------
11/15/96 10,000 11/15/96 10,000
12/31/96 10,092 12/31/96 10,240
03/31/97 10,363 03/31/97 10,430
06/30/97 12,172 06/30/97 11,650
09/30/97 13,084 09/30/97 12,880
12/31/97 13,459 12/31/97 12,655
03/31/98 15,337 03/31/98 13,778
06/30/98 15,843 06/30/98 13,929
09/30/98 14,267 09/30/98 12,806
-----------------------------
Profit Value Fund
Average Annual Total Return
1 Year Since Inception*
------ ----------------
(0.57)% 14.10%
-----------------------------
* Initial public offering of shares commenced on November 15, 1996.
<PAGE>
PROFIT VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1998
================================================================================
ASSETS
Investment securities:
At acquisition cost $ 1,488,933
===========
At market value (Note 1) $ 1,756,705
Dividends receivable 2,148
Receivable for capital shares sold 4,800
Receivable for securities sold 155,012
Receivable from Adviser 111,589
Organization costs, net (Note 1) 73,114
Other assets 11,131
-----------
TOTAL ASSETS 2,114,499
-----------
LIABILITIES
Bank overdraft 82,115
Payable to affiliates (Note 3) 4,000
Other accrued expenses and liabilities 12,252
-----------
TOTAL LIABILITIES 98,367
-----------
NET ASSETS $ 2,016,132
===========
Net assets consist of:
Paid-in capital $ 1,744,953
Accumulated net realized gains from security transactions 3,407
Net unrealized appreciation on investments 267,772
-----------
Net assets $ 2,016,132
===========
Shares of beneficial interest outstanding (unlimited
number of shares authorized, no par value) 159,211
===========
Net asset value, offering price and
redemption price per share (Note 1) $ 12.66
===========
See accompanying notes to financial statements.
<PAGE>
PROFIT VALUE FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1998
================================================================================
INVESTMENT INCOME
Dividend income $ 37,526
Interest income 1,006
----------
TOTAL INVESTMENT INCOME 38,532
----------
EXPENSES
Administration and accounting fees (Note 3) 44,959
Professional fees 27,622
Investment advisory fees (Note 3) 27,115
Transfer agent fees (Note 3) 25,474
Organization expense (Note 1) 23,660
Trustees' fees and expenses 8,847
Insurance expense 8,438
Registration fees 7,908
Postage and supplies 6,885
Reports to shareholders 5,478
Custodian fees 1,940
Distribution expense (Note 3) 1,236
Other expenses 1,092
----------
TOTAL EXPENSES 190,654
Fees waived and expenses reimbursed by the Adviser (Note 3) (148,220)
----------
NET EXPENSES 42,434
----------
NET INVESTMENT LOSS (3,902)
----------
REALIZED AND UNREALIZED GAINS (LOSSES)
ON INVESTMENTS
Net realized gains from security transactions 3,421
Net change in unrealized appreciation/depreciation
on investments (34,188)
----------
NET REALIZED AND UNREALIZED
LOSS ON INVESTMENTS (30,767)
----------
NET DECREASE IN NET ASSETS FROM
OPERATIONS $ (34,669)
==========
See accompanying notes to financial statements.
<PAGE>
PROFIT VALUE FUND
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIODS ENDED SEPTEMBER 30, 1998 AND 1997
================================================================================
<TABLE>
<CAPTION>
Year Period
Ended Ended
September 30, September 30,
1998 1997 (a)
- -------------------------------------------------------------------------------------------------
FROM OPERATIONS:
<S> <C> <C>
Net investment income (loss) $ (3,902) $ 11,364
Net realized gains from security transactions 3,421 8,333
Net change in unrealized appreciation/depreciation
on investments (34,188) 301,960
----------- -----------
Net increase (decrease) in net assets from operations (34,669) 321,657
----------- -----------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income (13,477) --
Distributions from net realized gains (8,347) --
----------- -----------
Decrease in net assets from distributions to shareholders (21,824) --
----------- -----------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 979,553 1,674,905
Net asset value of shares issued in
reinvestment of distributions to shareholders 21,756 --
Payments for shares redeemed (938,460) (86,786)
----------- -----------
Net increase in net assets from capital share transactions 62,849 1,588,119
----------- -----------
TOTAL INCREASE IN NET ASSETS 6,356 1,909,776
NET ASSETS:
Beginning of period 2,009,776 100,000
----------- -----------
End of period $ 2,016,132 $ 2,009,776
=========== ===========
UNDISTRIBUTED NET INVESTMENT INCOME $ -- $ 11,364
=========== ===========
CAPITAL SHARE ACTIVITY:
Shares sold 73,832 153,642
Shares issued in reinvestment of distributions to shareholders 1,766 --
Shares redeemed (72,439) (7,590)
----------- -----------
Net increase in shares outstanding 3,159 146,052
Shares outstanding, beginning of period 156,052 10,000
----------- -----------
Shares outstanding, end of period 159,211 156,052
=========== ===========
</TABLE>
(a) Represents the period from the initial public offering of shares (November
15, 1996) through September 30, 1997.
See accompanying notes to financial statements.
<PAGE>
PROFIT VALUE FUND
FINANCIAL HIGHLIGHTS
================================================================================
<TABLE>
<CAPTION>
Year Period
Ended Ended
September 30, September 30,
1998 1997 (a)
- ---------------------------------------------------------------------------------------------
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
<S> <C> <C>
Net asset value at beginning of period $ 12.88 $ 10.00
--------- ---------
Income (loss) from investment operations:
Net investment income (loss) (0.02) 0.07
Net realized and unrealized gains (losses) on investments (0.06) 2.81
--------- ---------
Total from investment operations (0.08) 2.88
--------- ---------
Less distributions:
Dividends from net investment income (0.09) --
Distributions from net realized gains (0.05) --
--------- ---------
Total distributions (0.14) --
--------- ---------
Net asset value at end of period $ 12.66 $ 12.88
========= =========
RATIOS AND SUPPLEMENTAL DATA:
Total return (0.57%) 28.80%(c)
========= =========
Net assets at end of period (000's) $ 2,016 $ 2,010
========= =========
Ratio of expenses to average net assets (b) 1.95% 1.95%(d)
Ratio of net investment income (loss) to average net assets (0.18%) 1.19%(d)
Portfolio turnover rate 101% 10%(d)
- ---------------------------------------------------------------------------------------------
</TABLE>
(a) Represents the period from the initial public offering of shares (November
15, 1996) through September 30, 1997.
(b) Absent fee waivers and expense reimbursements by the Adviser, the ratios of
expenses to average net assets would have been 8.79% and 18.57% (d) for the
periods ended September 30, 1998 and 1997, respectively (Note 3).
(c) Not annualized.
(d) Annualized.
See accompanying notes to financial statements.
<PAGE>
PROFIT VALUE FUND
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1998
- --------------------------------------------------------------------------------
MARKET
COMMON STOCKS - 87.1% SHARES VALUE
- --------------------------------------------------------------------------------
BASIC & SPECIALTY CHEMICALS - 3.0%
Dow Chemical Co. 720 $ 61,515
------------
CONSUMER STAPLES - 3.8%
Eastman Kodak Co. 1,000 77,312
------------
ELECTRIC UTILITIES - 3.6%
Southern Co. 2,460 72,416
------------
ENERGY & RESOURCES - 4.7%
Exxon Corp. 800 56,150
Mobil Corp. 500 37,969
------------
94,119
------------
FINANCIAL & INSURANCE - 13.8%
American General Corp. 1,375 87,828
Countrywide Credit Industries, Inc. 1,000 41,625
Legg Mason, Inc. 2,000 52,625
Marsh & McLennan Co., Inc. 750 37,313
T. Rowe Price Associates, Inc. 2,000 58,750
------------
278,141
------------
HEALTHCARE - 9.7%
Amgen, Inc.* 700 52,894
Merck & Co., Inc. 700 90,694
Pfizer, Inc. 500 52,969
------------
196,557
------------
MEDICAL INSTRUMENTS - 2.9%
Medtronic, Inc. 1,000 57,875
------------
PAPER PRODUCTS - 2.3%
International Paper Co. 1,000 46,625
------------
RETAILING - 9.7%
Abercrombie & Fitch Co.* 1,775 78,100
Nike, Inc. 1,000 36,813
Wal-Mart Stores, Inc. 1,500 81,937
------------
196,850
------------
RETIREMENT/AGED CARE - 1.7%
Sunrise Assisted Living, Inc.* 1,000 34,312
------------
<PAGE>
PROFIT VALUE FUND
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1998
- --------------------------------------------------------------------------------
MARKET
COMMON STOCKS - 87.1% SHARES VALUE
- --------------------------------------------------------------------------------
TECHNOLOGY - 24.0%
America Online, Inc.* 600 $ 66,750
Compaq Computer Corp. 2,000 63,250
Computer Associates International, Inc. 1,000 37,000
EMC Corp.* 2,000 114,375
Intel Corp. 1,000 85,750
Microsoft Corp.* 600 66,037
Sun Microsystems, Inc.* 1,000 49,813
------------
482,975
------------
TELECOMMUNICATIONS - 6.4%
AT&T Corp. 1,275 74,508
GeoTel Communications Corp.* 2,000 53,750
------------
128,258
------------
TELEVISION - 1.5%
Univision Communications, Inc. - Class A* 1,000 29,750
------------
TOTAL COMMON STOCKS $ 1,756,705
(Cost $1,488,933)
OTHER ASSETS IN EXCESS OF LIABILITIES - 12.9% 259,427
------------
NET ASSETS - 100.0% $ 2,016,132
============
* Non-income producing security.
See accompanying notes to financial statements.
<PAGE>
PROFIT VALUE FUND
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
1. SIGNIFICANT ACCOUNTING POLICIES
The Profit Value Fund (the Fund) is a diversified series of Profit Funds
Investment Trust (the Trust), an open-end management investment company
registered under the Investment Company Act of 1940. The Trust was organized as
a Massachusetts business trust on June 14, 1996. The public offering of shares
of the Fund commenced on November 15, 1996. The Fund had no operations prior to
the public offering of shares except for the initial issuance of shares.
The Fund seeks long-term total return, consistent with the preservation of
capital and maintenance of liquidity, by investing primarily in the common stock
of established, larger capitalization companies (i.e. companies having a market
capitalization exceeding $1 billion). Dividend income is only an incidental
consideration to the Fund's investment objective.
The following is a summary of the Fund's significant accounting policies:
Securities valuation -- The Fund's portfolio securities are valued as of the
close of business of the regular session of trading on the New York Stock
Exchange (currently 4:00 p.m., Eastern time). Securities which are traded on
stock exchanges or are quoted by NASDAQ are valued at the closing sales price
or, if not traded on a particular day, at the closing bid price. Securities
traded in the over-the-counter market, and which are not quoted by NASDAQ, are
valued at the last sales price, if available, otherwise, at the last quoted bid
price. Securities for which market quotations are not readily available are
valued at fair value as determined in good faith in accordance with procedures
established by and under the general supervision of the Board of Trustees.
Repurchase agreements -- Repurchase agreements, which are collateralized by U.S.
Government obligations, are valued at cost, which, together with accrued
interest, approximates market. At the time the Fund enters into a repurchase
agreement, the seller agrees that the value of the underlying securities,
including accrued interest, will at all times be equal to or exceed the face
amount of the repurchase agreement.
Share valuation -- The net asset value per share of the Fund is calculated daily
by dividing the total value of the Fund's assets, less liabilities, by the
number of shares outstanding, rounded to the nearest cent. The offering and
redemption price per share of the Fund is equal to the net asset value per
share.
Investment income -- Dividend income is recorded on the ex-dividend date.
Interest income is accrued as earned.
Distributions to shareholders -- Distributions to shareholders arising from net
investment income and net realized capital gains, if any, are distributed at
least once each year. Dividends from net investment income and capital gain
distributions are determined in accordance with income tax regulations, which
may differ from generally accepted accounting principles.
Security transactions -- Security transactions are accounted for on the trade
date. Securities sold are valued on a specific identification basis.
<PAGE>
PROFIT VALUE FUND
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
Organization costs -- Costs incurred by the Fund in connection with its
organization and registration of shares, net of certain expenses, have been
capitalized and are being amortized on a straight-line basis over a five year
period beginning with the commencement of operations. In the event any of the
initial shares of the Fund are redeemed during the amortization period, the
redemption proceeds will be reduced by a pro rata portion of any unamortized
organization costs in the same proportion as the number of initial shares being
redeemed bears to the number of initial shares of the Fund outstanding at the
time of redemption. As of September 30, 1998, unamortized organaization costs of
$73,114 were scheduled to be amortized over a remaining 37 months.
Estimates -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could differ from those
estimates.
Federal income tax -- It is the Fund's policy to comply with the special
provisions of the Internal Revenue Code (the Code) available to regulated
investment companies. As provided therein, in any fiscal year in which the Fund
so qualifies and distributes at least 90% of its taxable net income, the Fund
(but not the shareholders) will be relieved of federal income tax on the income
distributed. Accordingly, no provision for income taxes has been made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also the Fund's intention to declare as dividends in
each calendar year at least 98% of its net investment income (earned during the
calendar year) and 98% of its net realized capital gains (earned during the
twelve months ended October 31) plus undistributed amounts from prior years.
As of September 30, 1998, net unrealized appreciation on investments was
$267,772 for federal income tax purposes, of which $322,895 related to
appreciated securities and $55,123 related to depreciated securities based on a
federal income tax cost basis of $1,488,933.
Reclassification of capital accounts -- As of September 30, 1998, the Fund had
an accumulated net investment loss of $6,015 which was reclassified to paid-in
capital on the Statement of Assets and Liabilities. The reclassification, a
result of permanent differences between financial statement and income tax
reporting requirements, had no effect on the Fund's net assets or net asset
value per share.
2. INVESTMENT TRANSACTIONS
During the year ended September 30, 1998, cost of purchases and proceeds from
sales of portfolio securities, other than short-term investments, amounted to
$1,996,695 and $2,118,554, respectively.
3. TRANSACTIONS WITH AFFILIATES
The President of the Trust is also the President of Investor Resources Group,
LLC (the Adviser). Certain other trustees and officers of the Trust are also
officers of the Adviser, or of Countrywide Fund Services, Inc. (CFS), the
administrative services agent, shareholder servicing and transfer agent, and
accounting services agent for the Trust, or of CW Fund Distributors, Inc., the
principal underwriter for the Fund and exclusive agent for the distribution of
shares of the Fund.
<PAGE>
PROFIT VALUE FUND
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
INVESTMENT ADVISORY AGREEMENT
The Fund's investments are managed by the Adviser pursuant to the terms of an
Investment Advisory Agreement. The Fund pays the Adviser an investment advisory
fee, computed and accrued daily and paid monthly, at an annual rate of 1.25% of
average daily net assets of the Fund.
The Adviser currently intends to voluntarily waive its investment advisory fees
and reimburse the Fund for expenses incurred to the extent necessary to limit
total operating expenses of the Fund to 1.95% of the Fund's average daily net
assets. Accordingly, the Adviser waived its investment advisory fees of $27,115
and reimbursed the Fund for $121,105 of other operating expenses during the year
ended September 30, 1998. Subsequent to September 30, 1998, the Adviser paid all
such expense reimbursements due to the Fund.
ADMINISTRATION AND ACCOUNTING SERVICES AGREEMENTS
Under the terms of an Administration Agreement effective January 12, 1998, CFS
supplies non-investment related statistical and research data, internal
regulatory compliance services and executive and administrative services for the
Fund. CFS supervises the preparation of tax returns, reports to shareholders of
the Fund, reports to and filings with the Securities and Exchange Commission and
state securities commissions and materials for meetings of the Board of
Trustees. For these services, CFS receives a monthly fee at an annual rate of
0.15% of the Fund's average daily net assets up to $25 million; 0.125% of such
net assets between $25 million and $50 million; and 0.10% of such net assets in
excess of $50 million, subject to a minimum monthly fee of $1,000. During the
year ended September 30, 1998, CFS earned $9,000 of administration fees under
the Administration Agreement.
Under the terms of an Accounting Services Agreement effective January 12, 1998,
CFS calculates the daily net asset value per share and maintains the financial
books and records of the Fund. For these services, CFS receives a fee, based on
current asset levels, of $2,000 per month from the Fund. During the year ended
September 30, 1998, CFS earned $18,000 of accounting fees under the Accounting
Services Agreement. In addition, the Fund reimburses CFS for out-of-pocket
expenses related to the pricing of the Fund's portfolio securities.
Prior to January 12, 1998, the Fund was party to a Fund Accounting and
Administration Agreement with SEI Fund Resources (SEI) under which these
services were performed by SEI at a fee, equal on an annual basis, to the
greater of (i) 0.15% of the Fund's average daily net assets up to $50 million;
0.125% on the next $50 million of such net assets; and 0.10% of such net assets
over $100 million, or (ii) $65,000.
TRANSFER AGENT AGREEMENT
Under the terms of a Transfer, Dividend Disbursing, Shareholder Service and Plan
Agency Agreement effective July 31, 1998, CFS maintains the records of each
shareholder's account, answers shareholders' inquiries concerning their
accounts, processes purchases and redemptions of the Fund's shares, acts as
dividend and distribution disbursing agent and performs other shareholder
service functions. For these services, CFS receives a monthly fee at an annual
rate of $17.00 per shareholder account from the Fund, subject to a $1,000
minimum monthly fee. During the year ended September 30, 1998, CFS earned $2,000
of transfer agent fees under the Transfer Agent Agreement. In addition, the Fund
reimburses CFS for out-of-pocket expenses including, but not limited to, postage
and supplies.
Prior to July 31, 1998, the Fund was party to a Transfer Agent and Shareholder
Service Agreement with State Street Bank and Trust Company under which these
services were performed by Boston Financial Data Services, Inc., a subsidiary of
State Street Bank and Trust Company.
<PAGE>
PROFIT VALUE FUND
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
DISTRIBUTION PLAN
The Fund has adopted a Plan of Distribution (the Plan) under which the Fund may
directly incur or reimburse the Adviser for expenses related to the distribution
and promotion of Fund shares. The annual limitation for payment of such expenses
under the Plan is 0.25% of the Fund's average daily net assets. The Fund
incurred distribution expenses of $1,236 under the Plan during the year ended
September 30, 1998.
<PAGE>
To the Shareholders and Trustees of
the Profit Funds Investment Trust:
In our opinion, the accompanying statement of asset and liabilities, including
the portfolio of investments, and the related statements of operations and
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Profit Value Fund at September
30, 1998, the results of its operations for the year then ended, the changes in
its net assets and the financial highlights for periods presented, in conformity
with generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at September 30, 1998 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
/s/ PricewaterhouseCoopers LLP
Columbus, Ohio
November 24, 1998
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001016887
<NAME> PROFIT FUNDS INVESTMENT TRUST
<SERIES>
<NUMBER> 1
<NAME> PROFIT VALUE FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 1,488,933
<INVESTMENTS-AT-VALUE> 1,756,705
<RECEIVABLES> 273,549
<ASSETS-OTHER> 73,114
<OTHER-ITEMS-ASSETS> 11,131
<TOTAL-ASSETS> 2,114,499
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 98,367
<TOTAL-LIABILITIES> 98,367
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,744,953
<SHARES-COMMON-STOCK> 159,211
<SHARES-COMMON-PRIOR> 156,052
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3,407
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 267,772
<NET-ASSETS> 2,016,132
<DIVIDEND-INCOME> 37,526
<INTEREST-INCOME> 1,006
<OTHER-INCOME> 0
<EXPENSES-NET> 42,434
<NET-INVESTMENT-INCOME> (3,902)
<REALIZED-GAINS-CURRENT> 3,421
<APPREC-INCREASE-CURRENT> (34,188)
<NET-CHANGE-FROM-OPS> (34,669)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 13,477
<DISTRIBUTIONS-OF-GAINS> 8,347
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 73,832
<NUMBER-OF-SHARES-REDEEMED> 72,439
<SHARES-REINVESTED> 1,766
<NET-CHANGE-IN-ASSETS> 6,356
<ACCUMULATED-NII-PRIOR> 11,364
<ACCUMULATED-GAINS-PRIOR> 8,333
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 27,115
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 190,654
<AVERAGE-NET-ASSETS> 2,169,345
<PER-SHARE-NAV-BEGIN> 12.88
<PER-SHARE-NII> (.02)
<PER-SHARE-GAIN-APPREC> (.06)
<PER-SHARE-DIVIDEND> .09
<PER-SHARE-DISTRIBUTIONS> .05
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.66
<EXPENSE-RATIO> 1.95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
