The Profit Fund
Notes to Schedule of Investments
June 30, 2013 (Unaudited)
The portfolio securities of The Profit Fund (the “Fund”) are valued as of the close of business of the regular session of trading on the New York Stock Exchange (normally 4:00 p.m., Eastern time). Securities which are traded on stock exchanges are valued at the closing price on the day the securities are being valued, or, if not traded on a particular day, at the closing bid price. Securities quoted by NASDAQ are valued at the NASDAQ Official Closing Price. Securities traded in the over-the-counter market are valued at the last sale price, if available, otherwise, at the last quoted bid price. Securities which are traded both in the over-the-counter market and on a stock exchange are valued according to the broadest and most representative market. Securities and other assets for which market quotations are not readily available or are considered to be unreliable due to significant market or other events are valued at their fair value as determined in good faith in accordance with consistently applied procedures established by and under the general supervision of the Board of Trustees, and will be classified as Level 2 or 3 within the fair value hierarchy (see below), depending on the inputs used. Factors in determining portfolio investments subject to fair value determination include, but are not limited to, the following: only a bid price or an asked price is available; the spread between bid and asked prices is substantial; infrequency of sales; thinness of the market; the size of reported trades; a temporary lapse in the provision of prices by any reliable pricing source; and actions of the securities or future markets, such as the suspension or limitation of trading. Short-term instruments (those with remaining maturities of 60 days or less) may be valued at amortized cost, which approximates market value.
Accounting principles generally accepted in the United States establish a single authoritative definition of fair value, set out a framework for measuring fair value and require additional disclosures about fair value measurements.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
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·
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Level 1 – quoted prices in active markets for identical securities
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·
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Level 2 – other significant observable inputs
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·
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Level 3 – significant unobservable inputs
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The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement.
The following is a summary of the inputs used to value the Fund’s investments by security type, as of June 30, 2013:
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Level 1
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Level 2
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Level 3
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Total
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Common Stocks
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$
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13,923,313
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$
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-
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$
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-
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$
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13,923,313
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Money Market Funds
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253,623
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-
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-
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253,623
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Total
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$
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14,176,936
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$
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-
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$
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-
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$
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14,176,936
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The Profit Fund
Notes to Schedule of Investments (Continued)
Refer to the Fund’s Schedule of Investments for a listing of common stocks valued by industry type. As of June 30, 2013, the Fund did not have any transfers in and out of any Level. The Fund did not hold any derivative instruments or assets or liabilities that were measured at fair value on a recurring basis using significant unobservable inputs (Level 3) as of June 30, 2013. It is the Fund’s policy to recognize transfers into and out of any Level at the end of the reporting period.
Security transactions are accounted for on trade date. Gains and losses on securities sold are determined on a specific identification basis.
The following information is computed on a tax basis for each item as of June 30, 2013:
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Cost of portfolio investments
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$
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10,457,233
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Gross unrealized appreciation
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$
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3,812,108
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Gross unrealized depreciation
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(92,405
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)
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Net unrealized appreciation
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$
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3,719,703
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The difference between the federal income tax cost of portfolio investments and the Schedule of Investments cost of the Fund is due to certain timing differences in the recognition of capital gains and losses under income tax regulations and GAAP. These “book/tax” differences are temporary in nature and are primarily due to the tax deferral of losses on wash sales.
If the Fund has significant investments in the securities of issuers in industries within a particular sector, any development affecting that sector will have a greater impact on the value of the net assets of the Fund than would be the case if the Fund did not have significant investments in that sector. In addition, this may increase the risk of loss of an investment in the Fund and increase the volatility of the Fund’s net asset value per share. From time to time, a particular set of circumstances may affect one of these sectors or other companies with the sectors. For instance, economic or market factors, regulation or deregulation, and technological or other developments may negatively impact all companies in a particular sector and therefore the value of the Fund’s portfolio will be adversely affected. As of June 30, 2013 the Fund had 32.1% of the value of its net assets invested in stocks within the Information Technology sector.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant)
Profit Funds Investment Trust
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By (Signature and Title)*
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/s/ Eugene A. Profit
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Eugene A. Profit, President
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Date
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August 13, 2013
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
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By (Signature and Title)*
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/s/ Eugene A. Profit
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Eugene A. Profit, President
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Date
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August 13, 2013
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By (Signature and Title)*
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/s/ Mark J. Seger
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Mark J. Seger, Treasurer
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Date
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August 13, 2013
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*
Print the name and title of each signing officer under his or her signature.