N-30D 1 n30d-501.txt IMPACT MANAGEMENT INVESTMENT TRUST IMPACT MANAGEMENT INVESTMENT TRUST TABLE OF CONTENTS SECTION PAGE ------- ---- A Message From Your President ............................................. 1 A Message From Your Investment Management Team An Update on the Market ................................................ 2 A Message From Your Portfolio Manager .................................. 3 Impact Total Return Portfolio Financial Highlights - Retail Class .................................... 4 Financial Highlights - Traditional Class ............................... 5 Financial Highlights - Wholesale Class ................................. 6 Statement of Assets and Liabilities .................................... 7 Schedule of Investments In Securities .................................. 8 Statement of Operations ................................................ 10 Statement of Changes in Net Assets ..................................... 11 Jordan 25 Fund Financial Highlights ................................................... 12 Statement of Assets and Liabilities .................................... 13 Statement of Operations ................................................ 14 Statement of Changes in Net Assets ..................................... 15 Notes to Financial Statements ............................................. 16 ...A MESSAGE FROM YOUR PRESIDENT Dear Shareholders: In a market where stock prices were generally depressed during this period, our first mutual fund product, the IMPACT Total Return Portfolio produced exceptional results for its investors. Those results positioned the Portfolio to become one of the top performing mid-cap value funds in the country as noted by the Wall Street Journal, Barron's, and others throughout the first quarter of this calendar year. IMPACT Management Investment Trust reached an important milestone in its development with the launch of a second portfolio, the Jordan 25 Fund. The Fund's registration became effective in January of this year. IMPACT's Jordan 25 Fund represents an important step toward building our family of funds. Plans are underway for the launching of two additional IMPACT funds developed this year as well, the Jordan 25 Variable Fund and the Schneider Large Cap Variable Fund, both insurance series, designed for use in variable life and annuity contracts. During the past six months, IMPACT Financial Network, Inc., the Trust's primary distributor of the IMPACT Funds has been busy expanding its distribution network and creating a distribution team to wholesale the IMPACT Funds to the retail broker dealer community. Three additional selling agreements with regional and national broker dealers were secured and a new agreement with Pershing and an expanded agreement with National Financial, both leaders in the clearing brokerage industry worldwide, expands our reach into the retail broker dealer world and the general investing public. In addition, the primary distributor expanded its relationship with a retail broker dealer by entering into an alliance agreement that will permit us to showcase our products in a more efficient manner. On behalf of the Board of Trustees, I extend my gratitude to those shareholders that have been with us from the beginning. Over three years ago, we endeavored to start a mutual fund family in the face of extreme competition. Along the way, we certainly have experienced growing pains but most importantly we have learned from those pains. We are now, in my opinion, positioned to say the future looks bright for IMPACT. The Trust will continue building a family of funds and expanding its financial network based on three foundational principles: competence, trust and value. By bringing together competent money managers, as proven by their past investment performance, we can build the foundation for mutual trust. It is this combination of competence and trust through which we will achieve the desired investment results that will ultimately bring you value. Assembling the right team of money managers on the platform of a two-dimensional investing style, with our principles as a guide, is that which will set the IMPACT Management Investment Trust apart from the crowd. Sincerely, A.J. Elko President PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. 1 ... REGARDING THE MARKET Dear Shareholders: "How quickly things change," is certainly befitting of the stock market of the past six months. Things went from a condition of the Federal Reserve raising interest rates and fighting inflation to the Fed aggressively lowering rates and fighting recession. Anyone who has a genuine interest in such things has likely already heard more than enough economic data and the accompanying opinions on how we got to where we are in the market now. Suffice it to say, the capital spending cycle screeched to a near halt and the business climate in America slowed, in some cases, dramatically. We would also likely do well not to forget the importance of the Federal Reserve's activity especially with respect to interest rates and their determinant effect on the long-term trend of the U.S. stock market. The Fed has now identified itself as a strong ally of the U.S. economy with its rate cuts and those will, in time, spill their way over into the stock market. In fact, the stock market leads the way as it discounts future conditions, sometimes very far in advance. That may very well explain the powerful movement off the bottom that to date was set on March 22, 2001. Stock market movements cycle from over-optimism through reality to over-pessimism back up to reality and so forth. It may turn out that the sell-off that reached its low point, to date, on March 22, 2001 was the over-pessimistic level at which all of the negative possibilities that investors could imagine were plugged into the pricing structure of the markets. In many ways, the activity of the stock market during the March sell-off reflected the exact opposite extreme of one-year prior. At that time, it looked as though there was no stopping the stock market while it was shrugging off the interest rate hikes by the Federal Reserve. During the March 2001 sell-off, the market was once again shrugging off the positive interest rate activities of the Federal Reserve. It remains to be seen how effective the Federal Reserve's stimulative activity will be, but history tells us that when the Fed does what it has done here, probabilities strongly favor the market's being up from that point one year later. Sincerely, Charles R. Clark Chief Market Analyst IMPACT Financial Network, Inc. 2 ...A MESSAGE FROM YOUR PORTFOLIO MANAGER Dear Fellow Shareholder: We are pleased to provide you with the semi-annual report for the Impact Total Return Portfolio for the six months ended March 31, 2001. INVESTMENT REVIEW The Fund performed significantly better than the benchmark Russell 1000 Value Index over the six-month period ending March 31, 2001, returning 13.76% (Retail Class Shares) versus -2.47% for its benchmark. On the whole, differences between our sector allocations versus the value benchmark did not measurably impact returns for the period. Most helpful to performance were the strong relative returns produced by the Fund's holdings in the financial and consumer discretionary sectors. In financial services, the favorable relative performance was achieved primarily by our avoidance of the bank and brokerage industries. Our investments in the consumer discretionary sector benefited from the strong performance of several turnaround situations. Financial services represented the largest sector weighting in the Fund at the end of the period, with the focus primarily in the savings & loan and commercial lines insurance industries. STRATEGY AND OUTLOOK The Fund invests primarily in companies experiencing temporarily depressed profitability, with improvement expected in the medium-term through internally or externally-driven positive change. We continue to overweight the savings & loan industry. This group still sells at a discount to its underlying business value, and earnings are expected to rebound strongly in response to the shift in recent months from an inverted to steeply sloped yield curve. We are, at the margin, patiently increasing the exposure to cyclical, economically sensitive industrial stocks. Selected niches in the aluminum, steel and truck manufacturing industries have caught our attention and met our stringent investment criteria. In our view, the current economic slowdown will be prolonged as the economy corrects the serious imbalances that exist (the persistent trade deficit, negative personal savings rate, and high debt levels) and purges bubble-related excesses (inflated stock prices and overcapacity in manufacturing and retail). In the midst of this turbulent environment, we are taking particular care to avoid stocks that appear to be "cheap", but are in reality no bargain due to the likelihood of future earnings erosion. We also continue to find an ample supply of attractive stocks that meet our stringent investment criteria. Thank you for the confidence you have shown in us by investing in the Fund. Arnold C. Schneider III, CFA Portfolio Manager Schneider Capital Management PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. 3 INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO FINANCIAL HIGHLIGHTS RETAIL CLASS
Six months For the Year Ended June 17, 1997^ ended ------------------------------------------- to March 31, September 30, September 30, September 30, September 30, 2001 2000 1999 1998 1997 Unaudited ----------- ----------- ----------- ----------- ----------- Per Share Data* Investment Income $ 0.14 $ 0.20 $ 0.26 $ 0.29 0.01 Expenses (0.16) (0.19) (0.22) (0.21) (0.01) ----------- ----------- ----------- ----------- ----------- Net investment income (0.02) 0.01 0.04 0.08 0.00 Distribution from net investment income (0.02) 0.00 (0.08) (0.01) 0.00 Net realized and unrealized gain (loss) on investments 1.42 2.55 0.86 (1.66) (0.08) Distribution from realized gain (loss) on investments (0.82) (0.48) (0.69) 0.00 0.00 ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net asset value 0.56 2.08 0.13 (1.59) (0.08) Net asset value: Beginning of period 10.54 8.46 8.33 9.92 10.00 ----------- ----------- ----------- ----------- ----------- End of period $ 11.10 $ 10.54 $ 8.46 $ 8.33 $ 9.92 =========== =========== =========== =========== =========== Ratios and Supplemental Data Total Return 13.76%~ 31.42% 11.50% (15.93)% (0.80)% Ratio of expenses to average net assets 2.87%+ 2.22% 2.47%# 2.25%# 2.25%# Ratio of net investment income to average net assets (0.37)%+ .10% 0.42% 0.88% 0.00% Portfolio turnover rate 100.55% 206.32% 254.79% 221.45% 0.00% Average commission rate paid .0016 .0023 .0612% .1296 .1437 Net assets, end of period $ 1,695,050 $ 1,969,144 $ 6,270,819 $ 3,925,928 $ 501,758 Shares of beneficial interest outstanding, end of period 152,666 186,760 741,369 471,512 50,567 Number of shareholder accounts, end of period 69 81 156 136 17
^ Commencement of operations. * Selected data for a share of beneficial interest outstanding throughout each period. ~ Not annualized. + Annualized. # Excludes administrative fee and account closing fee charged directly to shareholder accounts. See accompanying notes to financial statements. 4 IMPACT MANAGEMENT INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO FINANCIAL HIGHLIGHTS TRADITIONAL CLASS Six months ended February 3, 2000^ March 31, 2001 to Unaudited September 30, 2000 ---------------- ------------------ Per Share Data* Investment Income $ 0.20 $ 1.55 Expenses (0.17) (0.84) ------------ ------------ Net investment income 0.03 0.71 Distribution from net investment income (0.11) 0.00 Net realized and unrealized gain (loss) on investments 1.71 2.07 Distribution from realized gain (loss) on investments (0.04) 0.00 ------------ ------------ Net increase (decrease) in net asset value 1.59 2.78 Net asset value: Beginning of period 12.78 10.00ss. ------------ ------------ End of period $ 14.37 $ 12.78 ============ ============ Ratios and Supplemental Data Total Return 7.14%~< 27.80%> Ratio of expenses to average net assets 2.43%+ 7.07%> Ratio of net investment income to average net assets 0.48%+ 6.08%> Average commission rate paid .0016 .0023 Portfolio turnover rate 100.55% 93.35% Net assets, end of period $ 22,906 $ 9,348 Shares of beneficial interest outstanding, end of period 1,593 782 Number of shareholder accounts, end of period 7 4 ^ Commencement of operations. * Selected data for a share of beneficial interest outstanding throughout each period. ~ Not annualized. + Annualized. < Return reflects the maximum sales charge of 5.75% imposed as a percentage of the offering price. > Based on operations for the period shown and, accordingly, not representative of a full year. ss. Traditional class began trading February 3, 2000 at $10.00 per share. See accompanying notes to financial statements. 5 IMPACT MANAGEMENT INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO FINANCIAL HIGHLIGHTS WHOLESALE CLASS Six months ended October 5, 1999^ March 31, 2001 to Unaudited September 30, 2000 ----------------- ------------------ Per Share Data* Investment Income $ 0.11 0.52 Expenses (0.09) (0.30) ------------- ------------- Net investment income 0.02 0.22 Distribution from net investment income (0.18) 0.00 Net realized and unrealized gain (loss) on investments 1.50 2.50 Distribution from realized gain (loss) on investments (0.30) 0.00 ------------- ------------- Net increase (decrease) in net asset value 1.04 2.72 Net asset value: Beginning of period 11.17 8.45ss. ------------- ------------- End of period $ 12.21 $ 11.17 ============= ============= Ratios and Supplemental Data Total Return 13.23%~ 32.19%> Ratio of expenses to average net assets 1.46%+ 3.13%> Ratio of net investment income to average net assets 0.16%+ 2.36%> Average commission rate paid .0016 0.0023 Portfolio turnover rate 100.55% 202.02% Net assets, end of period $ 865,788 $ 1,441,027 Shares of beneficial interest outstanding, end of period 70,932 129,052 Number of shareholder accounts, end of period 41 75 ^ Commencement of operations. * Selected data for a share of beneficial interest outstanding throughout each period. ~ Not annualized. + Annualized. > Based on operations for the period shown and, accordingly, not representative of a full year. ss. Wholesale Class began trading October 5, 1999 at $8.45 per share. See accompanying notes to financial statements. 6 IMPACT MANAGEMENT INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO STATEMENT OF ASSETS AND LIABILITIES March 31, 2001 Unaudited ASSETS Investments in securities, at value - identified cost $2,313,892 $ 2,534,195 Cash 74,177 Interest and dividends receivable 2,409 Receivable from securities sold 25,023 Receivable for Fund shares sold 2,000 ----------- Total assets 2,637,804 ----------- LIABILITIES Payable for investment securities purchased 48,565 Investment advisory fee payable 2,915 Distribution expenses payable 1,764 Administrative Fee Payable 816 ----------- Total liabilities 54,060 ----------- NET ASSETS $ 2,583,744 =========== NET ASSETS CONSIST OF: Accumulated net investment income - net of distributions $ (2,615) Accumulated net realized gain 373,649 Net unrealized appreciation 220,303 Paid-in capital applicable to 225,191 no par value shares of beneficial interest outstanding; unlimited number of shares Authorized 1,992,407 ----------- NET ASSETS $ 2,583,744 =========== NET ASSET SHARES VALUE NET ASSETS OUTSTANDING PER SHARE ---------- ---------- ---------- RETAIL CLASS $1,695,050 152,666 $ 11.10 TRADITIONAL CLASS 22,906 1,593 $ 14.37 WHOLESALE CLASS 865,788 70,932 $ 12.21 ---------- ---------- $2,583,744 225,191 ========== ========== See accompanying notes to financial statements. 7 IMPACT MANAGEMENT INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO SCHEDULE OF INVESTMENTS IN SECURITIES March 31, 2001 Unaudited Shares Value ---------- ---------- Common Stock - 98.9% Consumer Products = 12.1% Archer-Daniels-Midland Co. 9,075 $ 119,336 Tate & Lyle PLC 9,200 122,426 Tyson Foods, Inc 4,600 61,962 Transportation - 4.4% CSX Corporation 2,200 74,140 Tidewater 800 36,160 Computers and Technology - 7.2% Ingram Micro, Inc.* 3,700 49,950 Micron Technology, Inc.* 1,100 45,683 Technip 600 84,231 Utilities - 6.2% DTE Energy Co. 1,500 59,700 Niagra Mohawk Holdings, Inc.* 1,300 21,970 P G & E Corporation 5,800 72,210 Capital Goods - 5.1% The Boeing Company 1,200 66,852 Raytheon Co. Class A 1,900 55,480 CNH Global N.V 900 5,913 Basic Materials - 10.9% IMC Global Inc. 5,200 63,960 Alcan Inc. 4,500 162,000 NuCor Corp. 1,200 48,084 Communications - 0.6% MCI Worldcom, Inc.* 800 14,950 Services - 6.3% A T & T Corp. 800 17,040 J.C. Penney Co., Inc. 6,600 105,534 Toys R Us, Inc.* 1,400 35,140 See accompanying notes to financial statements. 8 IMPACT MANAGEMENT INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO SCHEDULE OF INVESTMENTS IN SECURITIES March 31, 2001 Unaudited (continued) Shares Value ---------- ---------- Energy - 3.9% Diamond Offshore Drilling, Inc. 1,100 $ 43,285 Transocean Sedco Forex, Inc. 1,300 56,355 Financial - Insurance - 30.3% Aetna, Inc. 3,900 140,088 Aon Corp. 4,200 149,100 Cincinnati Financial 1,500 56,906 Loews Corporation 1,200 71,292 Humana, Inc.* 2,200 23,056 Progressive Corp. 1,300 126,165 Ace Limited 3,000 103,470 Partnere Ltd. 1,800 88,686 Financial -Banking - 8.2% Golden State Bancorp 1,100 30,668 U. S. Bancorp 1,600 37,120 Washington Mutual, Inc. 2,500 136,875 Consumer, Cyclical - 3.2% Paccar, Inc. 800 35,850 Visteon Corp. 2,900 43,616 Consumer - Non Cyclical - 1.6% Office Depot, Inc.* 4,600 40,250 ---------- Total common stocks (cost $2,285,200) 2,505,503 ---------- Short-Term Investments - 1.1% Rydex Series Trust - U.S. Government Money Market Fund (4.63% seven day yield, cost $28,692) 28,692 28,692 ---------- Total investment in securities - 98.1% of net assets (cost $ 2,313,892) $2,534,195 ========== * Non-income producing security See accompanying notes to financial statements. 9 IMPACT MANAGEMENT INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO STATEMENT OF OPERATIONS For the Six Months Ended March 31, 2001 Unaudited INVESTMENT INCOME Interest income $ 25,720 Dividend income 12,829 --------- Total income 38,549 --------- EXPENSES Investment advisory fee 22,534 Distribution expenses 12,321 Administrative fee 6,309 --------- Total expenses 41,164 --------- Net investment income (2,615) --------- REALIZED AND UNREALIZED GAIN Net realized gain on securities 373,649 Change in net unrealized appreciation on securities 141,743 --------- Net realized and unrealized gain 515,392 --------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 512,777 ========= NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS BY CLASS: RETAIL CLASS $ 323,460 TRADITIONAL CLASS 5,045 WHOLESALE CLASS 184,272 --------- $ 512,777 ========= See accompanying notes to financial statements. 10 IMPACT MANAGEMENT INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS For the Six Months Ended March 31, 2001 Unaudited
Six Months Ended March 31, 2001 Year Ended (Unaudited) September 30, 2000 ---------------- ------------------ INCREASE (DECREASE) IN NET ASSETS Operations Net investment income loss $ (2,615) $ 27,576 Net realized gain on securities 373,649 198,792 Change in net unrealized appreciation (depreciation) on securities 141,743 725,257 ----------- ----------- Increase (decrease) in net assets resulting from operations 512,777 951,625 ----------- ----------- Distributions to shareholders From net investment income (27,576) -- From net realized gains on investments (198,792) (302,987) ----------- ----------- Total distributions to shareholders (226,368) (302,987) ----------- ----------- Beneficial interest share transactions* Shares sold 713,500 1,276,472 Shares redeemed (2,061,053) (5,079,397) Shares issued for reinvestment of distributions 225,369 302,987 ----------- ----------- (Decrease) Increase in net assets from share transactions (1,122,184) (3,499,938) ----------- ----------- Total (decrease) increase in net assets (835,775) (2,851,300) Net assets Beginning of period 3,419,519 6,270,819 ----------- ----------- End of period (including undistributed net investment income (loss) of $(2,615) and $27,576, respectively) $ 2,583,744 $ 3,419,519 =========== =========== *Share information Shares sold 61,092 138,039 Shares redeemed (171,512) (577,864) Change in shares resulting from transfers between classes (837) (17,932) Shares issued for reinvestment of distributions 19,905 32,933 ----------- ----------- (Decrease) in shares outstanding (91,352) (424,824) =========== ===========
See accompanying notes to financial statements. 11 IMPACT MANAGEMENT INVESTMENT TRUST JORDAN 25 FUND FINANCIAL HIGHLIGHTS January 26, January 26, January 24, 2001 2001 2001 to to to March 31, 2001 March 31, 2001 March 31, 2001 Unaudited Unaudited Unaudited Retail Traditional Wholesale ------------------------------------------ Per Share Data* Investment Income $ 0.09 $ 0.09 $ 0.09 Expenses 0.05 0.03 0.04 ---------- ---------- ---------- Net investment income 0.04 0.06 0.05 Distribution from net investment income 0.00 0.00 0.00 Net realized and unrealized gain (loss) on investments 0.00 0.00 0.00 Distribution from realized gain (loss) on investments 0.00 0.00 0.00 ---------- ---------- ---------- Net increase (decrease) in net asset value 0.04 0.06 0.05 Net asset value: Beginning of period 10.00> 10.00ss. 10.00< ---------- ---------- ---------- End of period $ 10.04 $ 10.06 $ 10.05 ========== ========== ========== Ratios and Supplemental Data Total Return 0.04%~ -5.28%~ 0.60%~^ Ratio of expenses to average net assets 2.55%+ 1.88%+ 1.80%+ Ratio of net investment income to average net assets 2.35%+ 3.36%+ 3.03%+ Portfolio turnover rate 0.00% 0.00% 0.00% Net assets, end of period $ 1,004 $ 948 $ 10,056 Shares of beneficial interest outstanding, end of period 100 94 1000 Number of shareholder accounts, end of period 1 1 1 * Selected data for a share of beneficial interest outstanding throughout each period. ~ Not annualized. + Annualized. ss. Wholesale Class began trading January 24, 2001 at $10.00 per share. < Traditional Class began trading January 26, 2001 at $10.00 per share. > Retail Class began trading January 26, 2001 at $10.00 per share. ^ Return reflects the maximum sales charge of 5.75% imposed as a percentage of the offering price. See accompanying notes to financial statements. 12 IMPACT MANAGEMENT INVESTMENT TRUST JORDAN 25 FUND STATEMENT OF ASSETS AND LIABILITIES March 31, 2001 Unaudited ASSETS Cash $ 12,026 ----------- Total assets 12,026 ---------- LIABILITIES Investment advisory fee payable 12 Distribution expenses payable 3 Administrative Fee Payable 3 ----------- Total liabilities 18 ----------- NET ASSETS $ 12,008 =========== NET ASSETS CONSIST OF: Accumulated net investment income - net of distributions $ 65 Paid-in capital applicable to 1,194 no par value shares of beneficial interest outstanding; unlimited number of shares authorized 11,943 ----------- NET ASSETS $ 12,008 =========== NET ASSET SHARES VALUE NET ASSETS OUTSTANDING PER SHARE ---------- ---------- ---------- RETAIL CLASS $ 1,004 100 $ 10.04 TRADITIONAL CLASS 948 94 $ 10.05 WHOLESALE CLASS 10,056 1,000 $ 10.06 ---------- ---------- $ 12,008 1,194 ========== ========== See accompanying notes to financial statements. 13 IMPACT MANAGEMENT INVESTMENT TRUST JORDAN 25 FUND STATEMENT OF OPERATIONS For the Period of January 24, 2001 to March 31, 2001 Unaudited INVESTMENT INCOME Interest income $ 105 ---------- Total income 105 ---------- EXPENSES Investment advisory fee 26 Distribution expenses 7 Administrative fee 7 ---------- Total expenses 40 ---------- Net investment income 65 ---------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 65 ========== See accompanying notes to financial statements. 14 IMPACT MANAGEMENT INVESTMENT TRUST JORDAN 25 FUND STATEMENT OF CHANGES IN NET ASSETS For the Period of January 24, 2001 to March 31, 2001 Unaudited January 24, 2001 to March 31, 2001 (Unaudited) ---------------- INCREASE IN NET ASSETS Operations Net investment income $ 65 ---------- Increase in net assets resulting from operations 65 ---------- Beneficial interest share transactions* Shares sold 11,943 ---------- Increase in net assets from share transactions 11,943 ---------- Total increase in net assets 12,008 Net assets Beginning of period -- ---------- End of period (including undistributed net investment income of $65) $ 12,008 ========== *Share information Shares sold 1,194 ---------- Increase in shares outstanding 1,194 ========== See accompanying notes to financial statements. 15 IMPACT MANAGEMENT INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO AND JORDAN 25 FUND NOTES TO FINANCIAL STATEMENTS Unaudited Note 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ----------------------------------------------------------- A. 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, f/k/a IMPACT Management Growth Portfolio (the "Total Return") is the initial series of the Trust. The Total Return commenced operations on June 17, 1997, with the sale of 10,000 shares of beneficial interest of the Total Return to Jordan American Holdings, Inc., for cash in the amount of $100,000. The Total Return commenced investing in securities on September 16, 1997. On May 1, 1999, the name of the Total Return was changed to the Impact Total Return Portfolio consistent with the changes made to the investment objective and policies. At this time, the Total Return began offering four classes of shares of beneficial interest. An additional series, the Jordan 25 Fund (the "Jordan 25," and together with the "Total Return," the "Funds") became effective on January 16, 2001 offering four classes of shares. The Jordan 25 commenced operation on January 24, 2001 with the sale of 1000 Wholesale Class Shares of beneficial interest to Equity Assets Management, Inc. (the "Investment Advisor") for cash in the amount of $10,000. On January 26, 2001, the Investment Advisor also purchased shares of beneficial interest in the Jordan 25's Retail and Traditional Classes totaling 100 and 94 shares, respectively, for cash in the amount of $1,000 for each. B. Security Valuation Investments in securities listed or traded on a securities exchange are valued at the last quoted sales price on the security's 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. C. 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 Funds' management. The Funds follow industry practice and record security 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. D. Federal Income Taxes No provision for federal income taxes is required since the Funds intend to continue to qualify as regulated investment companies and distribute all their taxable income to their shareholders. Note 2. INVESTMENT TRANSACTIONS ----------------------- Purchases and sales of investment securities of the Total Return, other than short-term investments, during the period were $3,233,127 and $4,221,222, respectively. At March 31, 2001, the aggregate cost of investments for federal income tax and financial reporting purposes was $2,313,892 and net unrealized appreciation aggregated $220,303. The Jordan 25 had no purchases or sales of investment securities other than short-term investments during the period. 16 IMPACT MANAGEMENT INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO AND JORDAN 25 FUND NOTES TO FINANCIAL STATEMENTS Unaudited Note 3. INVESTMENT ADVISORY FEES 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 Funds and reviews, supervises and administers the investment program of the Funds. As compensation for services rendered, the Investment Advisor receives an annual investment advisory fee equal to 1.25% of the Total Return's average daily net assets and 1.2% of the Jordan 25's average daily net assets. The investment advisory fee is calculated daily and paid monthly. Effective May 1, 1999, the Trust and the Investment Advisor entered into a sub-investment advisory agreement with Schneider Capital Management in which the sub-advisor receives from the advisor an annual investment advisory fee equal to .60% of the Total Return's average daily net assets. Effective May 5, 1998, a Distribution Plan was adopted by the Trust pursuant to Rule 12b-1 of the 1940 Act. Under the provisions of the Distribution Plan, the Total Return pays or reimburses the Investment Advisor affiliates or other third parties for expenses incurred in connection with the promotion and distribution of the Total Return's shares in an amount up to 1% per annum for Retail Class shares of the average daily net assets. Effective May 1, 1999, this plan was amended to change the name of the fund to Impact Total Return Portfolio, Retail Class. Also, effective May 1, 1999, a Distribution Plan was adopted by the Trust for the Total Return's Traditional Class and Wholesale Class pursuant to Rule 12b-1 of the 1940 Act. Under the provisions of the Distribution Plan, the Total Return pays or reimburses the Investment Advisor affiliates or other third parties for expenses incurred in connection with the promotion and distribution of the Total Return's shares in an amount up to .25% per annum of the average daily net assets of each class. Effective January 4, 2001, a Distribution Plan was adopted by the Trust for the Jordan 25's Retail, Traditional and Wholesale Classes pursuant to Rule 12b-1 of the 1940 Act. Under the provisions of the Distribution Plan, the Jordan 25 pays or reimburses the Investment Advisor affiliates or other third parties for expenses incurred in connection with the promotion and distribution of the Jordan 25's shares in an amount up to 1% per annum of the average daily net assets of the Retail Class and .25% per annum of the average daily net assets of the Traditional and Wholesale Classes. An affiliate of the Investment Advisor, IMPACT Financial Network, Inc. ("IFNI"), 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 Total Return and the Jordan 25 from purchases and sales of investment securities. IFNI earned brokerage fees on the Total Return of approximately $0 and was reimbursed $12,321, pursuant to the provisions of the Distribution Plan for the six months ended March 31, 2001. IFNI earned brokerage fees on the Jordan 25 of approximately $0 and was reimbursed $7, pursuant to the provisions of the Distribution Plan for the period January 24, 2001 to March 31, 2001. Certain officers of the Trust and members of the Board of Trustees are also officers and directors of the Investment Advisor. Note 4. ADMINISTRATIVE SERVICES ----------------------- Effective May 5, 1998, the Trust entered into an administrative service agreement with Impact Administrative Services, Inc. ("IASI"), an affiliate of the Investment Advisor. Under the agreement, IASI provides administrative personnel and services necessary to operate the Funds including transfer agent and dividend disbursing agent services. IASI bears substantially all operating expenses of the Funds, excluding brokerage fees, interest charges and taxes. Effective May 1, 1999, the Trust amended the administrative service agreement with IASI that changes the fee structure. Effective May 1, 1999, IASI is paid a fee equal to .35% of the Total Return's average daily net assets, and 17 IMPACT MANAGEMENT INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO AND JORDAN 25 FUND NOTES TO FINANCIAL STATEMENTS Unaudited effective January 4, 2001, IASI is paid a fee equal to .35% of the Jordan 25's average daily net assets. Total fees incurred by the Trust for the six-months ended March 31, 2001 amounted to $6,316, of which $6,309 resulted from the Total Return and $7 was from the Jordan 25. In addition, prior to January 22, 2001 when a shareholder closed an account, IASI was paid a fee of $2, which was charged to the shareholder as redemption of shares of beneficial interest. For accounts closed after this date, the fee no longer applies. NOTE 5. CHANGES IN NET ASSETS --------------------- The net assets of the Total Return have dropped from $3,419,519 at September 30, 2000 to $2,583,744 at March 31, 2001. This is predominantly due to redemptions that were made by investors who, at the direction of their advisers, repositioned their assets into various other investment vehicles over the period. It is anticipated that this type of repositioning, as a percentage of the overall fund assets, will be less significant in the future as the Total Return has been recharacterized to be consistent with its investment objective as a more conservative, core holding by those who are presently marketing the fund to prospective investors.
NOTE 6. CAPITAL SHARE TRANSACTIONS Impact Total Return Portfolio -------------------------- Six Months Ended March 31, 2001 Year Ended September 30, 2000 Unaudited Amount Shares Amount Shares ----------- ----------- ----------- ----------- RETAIL CLASS ------------ Sold $ 203,669 18,303 $ 220,940 23,374 Reinvested 159,238 14,307 302,987 32,933 Repurchased (645,522) (57,247) (2,107,310) (242,281) Transfer between classes (103,281) (9,458) (3,036,344) (368,634) ----------- ----------- ----------- ----------- Net increase (decrease) in retail class (385,896) (34,095) (4,619,727) (554,608) ----------- ----------- ----------- ----------- TRADITIONAL CLASS ----------------- Sold 11,307 847 8,649 732 Reinvested 201 15 -- -- Repurchased -- -- -- -- ----------- ----------- ----------- ----------- Net increase in traditional class 11,508 862 8,649 732 ----------- ----------- ----------- ----------- WHOLESALE CLASS --------------- Sold 498,522 41,942 1,046,883 113,933 Reinvested 65,932 5,583 -- -- Repurchased (1,415,531) (114,265) (2,972,087) (335,583) Transfer between classes 103,281 8,621 3,036,344 350,702 ----------- ----------- ----------- ----------- Net increase (decrease) in wholesale class (747,796) (58,119) 1,111,140 129,052 ----------- ----------- ----------- ----------- Total net increase (decrease) in Fund $(1,122,184) (91,352) $(3,499,938) (424,824) =========== =========== =========== ===========
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