N-30D/A 1 0001.txt IMPACT MANAGEMENT INVESTMENT TRUST - ANNUAL IMPACT MANAGEMENT INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO ANNUAL REPORT TO SHAREHOLDERS SEPTEMBER 30, 2000 TABLE OF CONTENTS SECTION PAGE -------------------------------------------------------------------------------- A Message From Your Chairman 1 Fund Performance 2-4 Financial Highlights 5-6 Statement of Assets and Liabilities 7 Schedule of Investments in Securities 8-9 Statement of Operations 10 Statements of Changes in Net Assets 11 Notes to Financial Statements 12-15 Independent Auditors' Report 16 Dear Shareholders, The IMPACT Total Return Portfolio had its most successful year in providing investment results for its investors in fiscal 2000, though the U.S. stock market has had significantly greater volatility over the past 12 months. As opined in our semi-annual report dated March 31, 2000, "The time appears to be right for a well-timed, valued-oriented portfolio of securities to be part of an investor's core holdings.", and indeed that has played itself out in the second half of fiscal year 2000. The fund's investment advisor, Equity Assets Management, focused on the more reliable cyclical patterns of the stock market as delineated in their proprietary analysis and kept the fund heavily invested in equity securities throughout the past year. That combined with Schneider Capital Management's capable handling of and focus on identifying value stocks in which change is foreseeable but not yet reflected in the company's stock has achieved an important facet of the fund's objective, namely, providing capital appreciation. At the time of this writing, we still do not know who our president will be in the United States. Uncertainty and surprises are the two factors that the stock market dislikes more than any other. To summarize - the uncertainties that have been in place in the U.S. stock market over the past 18 months have included: Y2K fears, Federal Reserve interest rate policy and Federal Open Market Committee activity and the outcome of the U.S. presidential election. Only the third item in this list however, the outcome of the presidential election, can be said to have negatively jolted the stock market with both surprise and uncertainty. The other influences worked only in the arena of uncertainty, not surprise. It is safe to say that the U.S. will eventually get a president and that point will likely come when the court of public opinion turns on the candidates for protracting the election process. As for the economy, it has shown signs of slowing down in the second half of 2000. At times during that period there has been talk of the economy experiencing a soft landing. The question that now appears most pertinent is this, will the Federal Reserve give the green light to the stock market by saying one of the two following things, and if so, when? First, and less positive for the market, would be if the Fed were to simply say nothing more about their inflation concerns following a Federal Open Market Committee meeting. Or, secondly, they could be more aggressive and state that they are essentially no longer concerned about inflation thus communicating to the stock market that they are through raising rates, even leaving the door open to lowering rates later. Equity Assets Management's expectations are that the market cycle and business cycle will complete their normal duration and that the market likely has more upside left in it. After the cycles run their course the second facet of the fund's objective, income, through positioning the fund's assets in interest bearing cash equivalent securities will likely then come into play as the focus shifts from capital appreciation to protection of the investment capital. In the meantime, stockpicking by the fund's sub-advisor, Arnie Schneider of Schneider Capital Management, who has been described in a Barron's Magazine article as an "artist," will continue and we will eagerly watch as results progress. Sincerely, Charles R. Clark Chairman - Impact Management Investment Trust GROWTH OF A $10,000 INVESTMENT RETAIL CLASS SHARES [GRAPHIC OMITTED] 9/30/97 9/30/98 9/30/99 9/30/00 ------- ------- ------- ------- Impact Total Return $10,000 $ 8,407 $ 9,374 $12,319 Russell 1000 Value Index $10,000 $10,359 $12,298 $13,394 Russell 2000 Index $10,000 $ 8,100 $ 9,645 $11,901 S&P 500 Index $10,000 $10,900 $13,925 $15,774 The graph above compares the initial and subsequent account values at the fiscal years ended September 30, 1998, 1999 and 2000 of the Fund, in relation to the S&P 500 Index, the Russell 2000 Index and the Russell 1000 Value Index. The graph assumes a $10,000 initial investment at October 1, 1997. Past performance is not indicative of future results. GROWTH OF A $10,000 INVESTMENT RETAIL CLASS SHARES [GRAPHIC OMITTED] 5/03/99 9/30/99 9/30/00 ------- ------- ------- Impact Total Return $10,000 $ 9,400 $12.353 Russell 1000 Value Index $10,000 $ 8,994 $ 9,795 S&P 500 Index $10,000 $ 9,657 $10,939 Effective May 3, 1999, the Fund seeks to achieve it's objective by investing in companies with either characteristics similar to or listed in the Russell 1000 Value Index. The graph above compares the initial and subsequent account values at the fiscal years ended September 30, 1999 and 2000 in relation to the S&P 500 Index, and the Russell 1000 Value Index. The graph assumes a $10,000 initial investment at May 3, 1999. Past performance is not indicative of future results. GROWTH OF A $10,000 INVESTMENT TRADITIONAL CLASS SHARES [GRAPHIC OMITTED] 2/03/00 9/30/00 ------- ------- Impact Total Return $10,000 $12,780 Russell 1000 Value Index $10,000 $10,698 S&P 500 Index $10,000 $10,155 The Traditional Class commenced operations on February 3, 2000. The graph above compares the initial and subsequent account values at the fiscal year ended September 30, 2000 in relation to the S&P 500 Index and the Russell 1000 Value Index. The graph assumes a $10,000 initial investment on February 3, 2000. Past performance is not indicative of future results. GROWTH OF A $10,000 INVESTMENT WHOLESALE CLASS SHARES [GRAPHIC OMITTED] 10/5/99 9/30/00 ------- ------- Impact Total Return $10,000 $13,220 Russell 1000 Value Index $10,000 $10,854 S&P 500 Index $10,000 $11,165 The Wholesale Class commenced operations on October 5, 1999. The graph above compares the initial and subsequent account values at the fiscal year ended September 30, 2000 in relation to the S&P 500 Index and the Russell 1000 Value Index. The graph assumes a $10,000 initial investment on October 5, 1999. Past performance is not indicative of future results. --------------------------------------------------------------- Total Return as of 9/30/00 --------------------------------------------------------------- Total Return --------------------------------------------------------------- Since Category 1 Year Inception --------------------------------------------------------------- Impact Total Return - Retail Class 31.3% 5.5%* Impact Total Return - Traditional Class N/A 27.8%+ Impact Total Return - Wholesale Class N/A 32.2%^ --------------------------------------------------------------- Russell 1000 Value Index 8.9% 13.9%* --------------------------------------------------------------- Russell 2000 Index 23.4% 11.6%* --------------------------------------------------------------- S&P 500 Index 13.3% 20.71%* --------------------------------------------------------------- The table above provides the average annual total return for the fiscal year of the Fund and since inception in relation the S&P 500 Index, the Russell 2000 Index and the Russell 1000 Value Index. * Inception - July 1, 1997 (Annualized) + Inception - February 3, 2000 (Not Annualized) ^ Inception - October 5, 1999 (Not Annualized) Past performance does not predict future results. Investment return and principal value will fluctuate so that a investor's shares may be worth more or less than the original cost. All returns assume reinvestment of dividends. IMPACT MANAGEMENT INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO FINANCIAL HIGHLIGHTS --------------------
OCTOBER 5, 1999~ FEBRUARY 3, 2000{ YEAR ENDED YEAR ENDED YEAR ENDED JUNE 17,1997+ TO TO SEPTEMBER 30, TO SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, 2000 2000 2000 1999 1998 1997 WHOLESALE CLASS TRADITIONAL CLASS RETAIL CLASS RETAIL CLASS RETAIL CLASS RETAIL CLASS --------------- ----------------- ------------ ------------ ------------ ------------ PER SHARE DATA * Investment income $ .52 $ 1.55 $ .20 $ .26 $ .29 $ .01 Expenses (.30) (.84) (.19) (.22) (.21) (.01) ---------- ---------- ---------- ---------- ---------- ---------- Net investment income .22 .71 .01 .04 .08 .00 Distributions from net investment income .00 .00 .00 (.08) (.01) .00 Net realized and unrealized gain (loss) on investments 2.50 2.07 2.55 .86 (1.66) (.08) Distributions from realized gains on investments .00 .00 (.48) (.69) .00 . 00 ---------- ---------- ---------- ---------- ---------- ---------- Net increase (decrease) in net asset value 2.72 2.78 2.08 .13 (1.59) (.08) Net asset value: Beginning of period 8.45 10.00 8.46 8.33 9.92 10.00 ---------- ---------- ---------- ---------- ---------- ---------- End of period $ 11.17 $ 12.78 $ 10.54 $ 8.46 $ 8.33 $ 9.92 ========== ========== ========== ========== ========== ========== RATIOS AND SUPPLEMENTAL DATA Total return # 32.19%^ 27.80%^ 31.42% 11.50% (15.93)% (.80)%^ Ratio of expenses to average net assets 3.13%^ 7.07%^ 2.22% 2.47%# 2.25%# 2.25%^# Ratio of net investment income to average net assets 2.36%^ 6.08%^ .10% .42%# 0.88%# 0.00%^ Portfolio turnover rate 202.02% 93.35% 206.32% 254.79% 221.45% 0.00% Average commission rate paid .0023 .0023 .0023 $ .0612 $ .1296 $ .1437 Net assets, end of period $1,441,027 $ 9,348 $1,969,144 $6,270,819 $3,925,928 $ 501,758 Shares of beneficial interest outstanding, end of period 129 052 732 186 760 741 369 471 512 50 567 Number of shareholder accounts, end of period 75 4 81 156 136 17
+ Commencement of operations. * Selected data for a share of beneficial interest outstanding throughout each period. ^ Based on operations for the period shown and, accordingly, not representative of a full year # Excludes administrative fee and account closing fee charged directly to shareholder accounts (see Note 3 to financial statements). ~ Wholesale class began trading October 5, 1999 at $8.45 per share { Traditional class began trading February 3, 2000 at $10.00 per share The accompanying notes are an integral part of these statements. -3- IMPACT MANAGEMENT INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 2000 ==================
ASSETS Investments in securities, at value - identified cost $2,898,457 $ 2,977,017 Cash 416,520 Dividends and interest receivable 4,297 Receivable from securities sold 39,269 ------------ TOTAL ASSETS 3,437,103 ------------ LIABILITIES Payable for securities purchased 11,428 Investment advisory fee payable 3,373 Distribution expenses payable 1,839 Administrative fee payable 944 ------------ TOTAL LIABILITIES 17,584 ------------ NET ASSETS $ 3,419,519 ============ NET ASSETS CONSIST OF: Accumulated net investment income net of distributions $ 21,047 Accumulated net realized gain 205,321 Net unrealized appreciation 78,560 Paid-in capital applicable to 316,544 no par value shares of beneficial interest outstanding; unlimited number of shares authorized 3,114,591 ------------ NET ASSETS $ 3,419,519 ============
NET ASSET NET SHARES VALUE ASSETS OUTSTANDING PER SHARE ------------ ------------ ------------ RETAIL CLASS $ 1,969,144 186,760 $ 10.54 WHOLESALE CLASS 1,441,027 129,052 $ 11.17 TRADITIONAL CLASS 9,348 732 $ 12.78 ------------ ------------ $ 3,419,519 316,544 ============ ============ The accompanying notes are an integral part of this statement. -4- IMPACT MANAGEMENT INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO SCHEDULE OF INVESTMENTS IN SECURITIES SEPTEMBER 30, 2000 ================== SHARES VALUES ------ ------ CONVERTIBLE BONDS-2.7% OF NET ASSETS Consumer Products Asia Pulp & Paper Company Conv. (cost $131,143) $ 94,437 ---------- COMMON STOCKS-83.4% Consumer Products-11.5% Archer-Daniels-Midland Co. 14,175 $ 122,259 Litton Industries, Inc.* 1,000 44,688 Visteon Corp. 1,800 27,225 Tate & Lyle PLC 8,000 111,420 Tyson Foods, Inc. 8,700 87,000 Computers & Technology-3.8% Arrow Electronics, Inc.* 200 6,813 Compuware Corporation* 1,700 14,238 Ingram Micro, Inc.* 2,900 39,875 Technip* 500 69,711 Energy and Utilities-10.4% CMS Energy Corporation 1,600 43,100 PG & E Corporation 500 12,094 Niagara Mohawk Holdings, Inc.* 10,500 165,375 R&B Falcon Corp.* 3,400 94,775 Diamond Offshore Drilling, Inc. 1,000 41,000 Insurance-18.4% Washington Mutual, Inc. 4,000 159,250 Aetna Inc. 2,400 139,350 AON Corporation 2,800 109,900 Progressive Corporation 800 65,500 Humana, Inc. 6,700 72,025 Partner Re, Ltd. 1,000 47,437 UNUM Provident Corp. 1,300 35,425 Basic Materials-5.6% IMC Global, Inc. 6,700 97,150 Eastman Chemical Company 1,500 55,406 International Paper 1,400 40,162 Services-2.8% Circuit City Stores 1,100 25,300 JC Penney Company 3,400 40,162 Toys R Us, Inc.* 2,000 32,500 Capital Goods-8.5% CNH Global NV 9,100 91,000 The Boeing Company 1,000 63,000 Raytheon Class A 2,100 57,488 Mesto Corporation 3,200 32,400 Fluor Corporation 1,500 45,000 Financial-13.6% Dime Bancorp, Inc. 4,500 97,031 Loews Corporation 900 75,038 Cincinnati Financial Corporation 1,000 35,500 Golden State Bancorp 6,000 141,750 Ace Limited 3,000 117,750 Communications-2.6% Loral Space & Communications Ltd.* 14,500 88,812 The accompanying notes are an integral part of this statement. -5- IMPACT MANAGEMENT INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO SCHEDULE OF INVESTMENTS IN SECURITIES SEPTEMBER 30, 2000 ================== (continued) SHARES VALUES ------ ------ Transportation -4.0% CSX Corporation 4,200 91,613 Tidewater, Inc. 1,000 45,500 Healthcare -2.2% Tenet Healthcare Corporation* 1,600 58,200 Healthsouth Corporation* 1,900 15,438 ---------- TOTAL COMMON STOCKS (cost $2,739,394) 2,854,660 ---------- SHORT-TERM INVESTMENTS-1.0% Rydex Series Trust-U.S. Government Money Market Fund (5.63% seven day yield, cost $27,920) 27,920 ---------- TOTAL INVESTMENTS IN SECURITIES-87.1% OF NET ASSETS (cost $2,898,457) $2,977,017 ========== --------------------------------------- *Non-income producing security The accompanying notes are an integral part of this statement. -6- IMPACT MANAGEMENT INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO STATEMENT OF OPERATIONS FOR THE YEAR ENDED SEPTEMBER 30, 2000 ===================================== INVESTMENT INCOME Interest income $ 61,635 Dividend income 76,085 -------- TOTAL INCOME 137,720 -------- EXPENSES Investment advisory fee 56,650 Distribution expenses 37,633 Administrative expenses 15,861 -------- TOTAL EXPENSES 110,144 -------- NET INVESTMENT INCOME 27,576 -------- REALIZED AND UNREALIZED GAIN Net realized gain on securities 198,792 Change in net unrealized appreciation or depreciation on securities 725,257 -------- NET REALIZED AND UNREALIZED GAIN 924,049 -------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $951,625 ======== NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS BY CLASS: RETAIL CLASS $621,039 WHOLESALE CLASS 329,887 TRADITIONAL CLASS 699 -------- $951,625 ======== The accompanying notes are an integral part of this statement. -7- IMPACT MANAGEMENT INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED SEPTEMBER 30, 2000 AND 1999 ===============================================
YEAR ENDED YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, 2000 1999 ------------ ------------ INCREASE (DECREASE) IN NET ASSETS Operations Net investment income $ 27,576 $ 30,248 Net realized gain on securities 198,792 1,082,431 Change in net unrealized appreciation or depreciation on securities 725,257 (331,051) ------------ ------------ Increase in net assets resulting from operations 951,625 781,628 ------------ ------------ Distributions to shareholders from net investment income -- (61,540) from net realized gains on investments (302,987) (552,154) ------------ ------------ Total distributions to shareholders 302,987 613,694 ------------ ------------ Beneficial interest share transactions* Shares sold 1,276,472 5,244,694 Shares redeemed (5,079,397) (3,681,431) Shares issued for reinvestment of distributions (302,987) (613,694) ------------ ------------ Increase (decrease) in net assets from share transactions (3,499,938) 2,176,957 ------------ ------------ Total increase (decrease) in net assets (2,851,300) 2,344,891 Net assets Beginning of period 6,270,819 3,925,928 ------------ ------------ End of period (including undistributed net investment income (loss) of $27,576 and $(6,529), respectively) $ 3,419,519 $ 6,270,819 ============ ============ *Share information Shares sold 138,039 606,390 Shares redeemed (577,864) (400,831) Change in shares resulting from transfers between classes (17,932) -- Shares issued for reinvestment of distributions 32,933 64,298 ------------ ------------ Increase in shares outstanding 424,824 269,857 ============ ============
The accompanying notes are an integral part of these statements. -8- IMPACT MANAGEMENT INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO NOTES TO FINANCIAL STATEMENTS ============================= NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES GENERAL DESCRIPTION ------------------- IMPACT Management Investment Trust (the "Trust") was organized as a Massachusetts business trust on December 18, 1996. The Trust is registered under the Investment Company Act of 1940 (the "1940 Act") as a diversified, open-end management investment company. IMPACT Total Return Portfolio (formerly IMPACT Management Growth Portfolio)(the "Fund") is the initial Series of the Trust. The Trust commenced operations on June 17,1997, with the sale of 10,000 shares of beneficial interest of the Fund to Jordan American Holdings, Inc., d/b/a/ Equity Assets Management (the "Investment Advisor"), for cash in the amount of $100,000. The Trust commenced investing in securities on September 16, 1997. Effective May 1, 1999, the Trust changed the name of the Portfolio to the IMPACT Total Return Portfolio consistent with the changes made to the investment objective and policies. Effective May 1, 1999, the Trust began offering four classes of shares of beneficial interest (See Note 3). SECURITIES VALUATION -------------------- Investments in securities listed or traded on a securities exchange are valued at the last quoted sales price on the securities' principal exchange on that day. Listed securities not traded on an exchange that day, and other securities which are traded in the over-the-counter market are valued at the mean between the last closing bid and asked prices in the market on that day. METHOD OF REPORTING ------------------- The financial statements are presented in accordance with generally accepted accounting principles, which require the use of certain estimates made by the Fund's management. The Fund follows industry practice and records securities transactions on the trade date. Realized gains and losses are reported on the identified cost basis. Dividend income is recognized on the ex-dividend date, and interest income is recorded on the accrual basis. FEDERAL INCOME TAXES -------------------- No provision for federal income taxes is required since the Fund intends to continue to qualify as a regulated investment company and distribute all of its taxable income to its shareholders. -9- IMPACT MANAGEMENT INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO NOTES TO FINANCIAL STATEMENTS ============================= (continued) NOTE 2. INVESTMENT TRANSACTIONS Purchases and sales of investment securities, other than short-term investments, during the year ended September 30, 2000 were $18,568,672 and $12,346,872, respectively. At September 30, 2000, the aggregate cost of investments for federal income tax and financial reporting purposes was $2,898,457 and net unrealized appreciation aggregated $78,560, of which $485,175 related to appreciated investments and $406,615 to depreciated investments. NOTE 3. FEES, EXPENSES AND OTHER TRANSACTIONS WITH AFFILIATES The Trust has entered into an investment advisory agreement with the Investment Advisor. The Investment Advisor makes investment decisions with respect to the assets of the Fund and reviews, supervises and administers the investment program of the Fund. As compensation for services rendered, the Investment Advisor receives an annual investment advisory fee based on the Fund's average daily net assets. The investment advisory fee is calculated daily and paid monthly. Effective May 1, 1999 the Trust entered into a sub-advisory agreement with Schneider Capital Management, Inc. ("Schneider"). Pursuant to the sub-advisory agreement, the Investment Advisor pays Schneider monthly at the rate of 60 basis points annually, out of its advisory fee. The Trust has a Distribution Plan pursuant to Rule 12b-1 of the 1940 Act. Under the provisions of the Distribution Plan, the Fund pays or reimburses the Investment Advisor, affiliates or other third parties for expenses incurred in connection with the promotion and distribution of the Fund's shares based on the average daily net assets of the Fund. The Trust entered into an administrative service agreement with Impact Administrative Services, Inc. ("IASI"), a wholly-owned subsidiary of the Investment Advisor. Under the agreement, IASI provides administrative personnel and services necessary to operate the Fund including transfer agent and dividend disbursing agent services. IASI bears substantially all operating expenses of the Fund, excluding brokerage fees, interest charges and taxes. For these services, IASI was paid a fee of $165.00 per account through April 30, 1999. The annual fee paid to IASI was charged to shareholder accounts at each month end as a redemption of shares of beneficial interest. Subsequent to April 30, 1999, the Trust began charging an administrative service fee based on the daily net assets of the Fund. The administrative service fee is calculated daily and paid monthly to IASI. In addition, when a shareholder closes an account, IASI is paid a fee of $2.00 which is charged to the shareholder as a redemption of shares of beneficial interest. -10- IMPACT MANAGEMENT INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO NOTES TO FINANCIAL STATEMENTS ============================= (continued) NOTE 3. FEES, EXPENSES AND OTHER TRANSACTIONS WITH AFFILIATES (continued) The following table describes the fees and expenses applicable to each class of shares.
Retail Traditional Wholesale Institutional Class Class Class Class (2) ------------ ------------ ------------ ------------ Sales Charge (1) -- 5.75 % -- -- Investment Advisory Fee 1.25 % 1.25 % 1.25 % 1.25 % Distribution (12b-1) Fees 1.00 % 0.25 % 0.25 % none Administrative Expenses 0.35 % 0.35 % 0.35 % 0.35 %
(1) Reduced for purchases of $50,000 or more, decreasing to zero for purchases over $1 million. (2) As of September 30, 2000 no shares of beneficial interest have been sold. A wholly-owned subsidiary of the Investment Advisor, IMPACT Financial Network, Inc., a broker and dealer in securities registered with the Securities and Exchange Commission and a member of the National Association of Securities Dealers, Inc., earned brokerage fees on the Fund's purchases and sales of investment securities aggregating approximately $0 and $7,695 and was reimbursed $37,633 and $74,430 pursuant to the provisions of the Distribution Plan for the years ended September 30, 2000 and 1999. Certain officers of the Trust and members of the Board of Trustees are also officers and directors of the Investment Advisor. -11- IMPACT MANAGEMENT INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO NOTES TO FINANCIAL STATEMENTS ============================= (continued) NOTE 4. CAPITAL SHARE TRANSACTIONS
YEAR ENDED YEAR ENDED SEPTEMBER 30, 2000 SEPTEMBER 30, 1999 AMOUNT SHARES AMOUNT SHARES ------------ ------------ ------------ ------------ RETAIL CLASS: ------------- Sold $ 220,940 23,374 $ 5,244,694 606,390 Reinvestment 302,987 32,933 613,694 64,298 Repurchased (2,107,310) (242,281) (3,681,431) (400,831) Transfers between classes (3,036,344) (368,634) -- -- ------------ ------------ ------------ ------------ NET INCREASE (DECREASE) IN RETAIL CLASS (4,619,727) (554,608) 2,176,957 269,857 ------------ ------------ ------------ ------------ WHOLESALE CLASS: ---------------- Sold 1,046,883 113,933 -- -- Reinvestment -- -- -- -- Repurchased (2,972,087) (335,583) -- -- Transfers between classes 3,036,344 350,702 -- -- ------------ ------------ ------------ ------------ NET INCREASE IN WHOLESALE CLASS 1,111,140 129,052 -- -- ------------ ------------ ------------ ------------ TRADITIONAL CLASS: ------------------ Sold 8,649 732 -- -- Reinvestment -- -- -- -- Repurchased -- -- -- -- ------------ ------------ ------------ ------------ NET INCREASE IN TRADITIONAL CLASS 8,649 732 -- -- ------------ ------------ ------------ ------------ TOTAL NET INCREASE (DECREASE) IN FUND $ (3,499,938) (424,824) $ 2,176,957 269,857 ============ ============ ============ ============
-12- INDEPENDENT AUDITORS' REPORT To the Shareholders and Board of Trustees IMPACT Management Investment Trust IMPACT Total Return Portfolio We have audited the accompanying statement of assets and liabilities of IMPACT Total Return Portfolio (the "Fund"), a Series of IMPACT Management Investment Trust, including the schedule of investments in securities, as of September 30, 2000, and the related statement of operations for the year ended September 30, 2000 and changes in net assets and financial highlights for the years ended September 30, 2000 and 1999. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for the year ended September 30, 1998 and the period from inception (June 17, 1997) to September 30, 1997 were audited by other auditors whose report dated October 22, 1998 expressed an unqualified opinion on those statements. 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 and financial highlights. Our procedures included confirmation of securities owned as of September 30, 2000, by correspondence with the custodian. 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 IMPACT Total Return Portfolio, a Series of IMPACT Management Investment Trust, as of September 30, 2000 and 1999, and the results of its operations, changes in its net assets and the financial highlights for the years ended September 30, 2000 and 1999 in conformity with generally accepted accounting principles. SPICER, JEFFRIES & CO. Denver, Colorado October 27, 2000 11