N-30D 1 n30d-1201.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- IMPACT Total Return Portfolio 3 A Message From Your Portfolio Manager- Jordan 25 Fund ............... 4 IMPACT TOTAL RETURN PORTFOLIO Fund Performance ..................................................... 5 Financial Highlights- Retail Class .................................. 9 Financial Highlights- Wholesale Class ............................... 10 Financial Highlights- Traditional Class ............................. 11 Statement of Assets and Liabilities ................................. 12 Statement of Investments in Securities .............................. 13 Statement of Operations ............................................. 15 Statements of Changes in Net Assets ................................. 16 JORDAN 25 FUND Fund Performance .................................................... 17 Financial Highlights ................................................ 19 Statement of Assets and Liabilities ................................. 20 Statement of Operations ............................................. 21 Statements of Changes in Net Assets ................................. 22 Notes to Financial Statements ............................................ 23 Independent Auditors Report .............................................. 27 ...A MESSAGE FROM YOUR PRESIDENT Dear Shareholders: The negative trend in the stock market fueled by the current slowdown in the nation's economy and the events of September 11 has created uncertainty for the financial services industry. Nonetheless, we are encouraged during these difficult times by our ability to generate sales in excess of redemptions of our initial mutual fund product, The IMPACT Total Return Portfolio ("Portfolio"), over the past twelve months. The Portfolio grew at an impressive rate this past year with net assets in the Portfolio up 27% from the previous fiscal year end. This increase can be primarily attributed to an increase in sales occurring mostly within the past six months. Sales of Portfolio shares increased for the fiscal year ended September 30, 2001 to $3,079,982 compared to $1,276,472 for the same period in 2000, an increase of 141%. This increase was due primarily to the efforts made by the Portfolio's primary distributor in building upon existing relationships within the retail broker dealer community and forging a strategic alliance with a national broker dealer. For the twelve months ended September 30, 2001, redemption of Portfolio shares totaled $2,387,415. A significant portion of these redemptions can be attributed to the activity of one former broker who was, but no longer remains, affiliated with the Portfolio's primary distributor. The Portfolio's primary distributor was able to leverage its sales efforts based on the strong investment performance achieved through the stock selection efforts of the Portfolio's sub-advisor, Schneider Capital Management, Inc. These investment 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 last three quarters of this fiscal year. IMPACT Management Investment Trust experienced a delay in launching the marketing of its second portfolio, the Jordan 25 Fund, (soon to be renamed the IMPACT 25 Fund), as a result of a change in the management team of its investment advisor shortly after the fund became ready for distribution. This fund is expected to be launched under the IMPACT 25 Fund name with a new management team by the end of this calendar year. We believe the new management team's level of competence and trust will enable us to bring investors in our new fund value by achieving their desired investment results. As you know, competition in the mutual fund industry remains fierce. As a result, management will continue to look for ways to build on the recognition of the "IMPACT" brand name, which we have achieved nationally through the Portfolio's performance. In addition, management will be focused on efforts to reduce the Portfolio's overall expense ratio over the next fiscal year in order to penetrate additional markets sensitive to price. A lower expense ratio coupled with consistent investment performance should provide additional opportunities for the Portfolio and the upcoming IMPACT 25 Fund. As we face the tragedy of September 11, the uncertainty associated with the accompanying war on terrorism and the current economic conditions, we ask you to join us in prayer for our country. We believe God has blessed our country and we pray for His continued blessing. On behalf of the Board of Trustees, I want to thank you for the opportunity to serve you. Sincerely, A.J. Elko President 1 ...AN UPDATE OF THE MARKET Dear Shareholders, Prior to the attack of September 11th there were some technical indications of an improving stock market, as least as reflected by some of the indices. Of course, the stock market sell-off after that was significant. However, once the trauma of the attacks was fully discounted in the price structure a sharp snap back in several stock market indexes took place. That was consistent with the select improvement the stock market was showing prior to the attacks. Along with the rebound in the price structure there are several factors in place that tend to accompany a strengthening stock market condition. In particular, as cited in our last report to shareholders, the Federal Reserve's stimulative policies are noteworthy. Additionally, by the time a recession is official and the headlines contain it, the majority of market weakness is typically over. Of course, we would expect consumer confidence to be low during a recession and the events of September 11th only aggravated the situation. The technical indications, at the time of this report, indicate an improving economic situation in the U.S. that is being reflected in advance, by a strengthening stock market. The stock market tends to discount future events several months in advance, sometimes longer than that. In the meantime, the capable stock picking competence of Schneider Capital Management has allowed the Portfolio to be positioned as a top quality equity mutual fund. Sincerely, Charles R. Clark Chief Market Analyst Equity Assets Management, Inc. 2 ...A MESSAGE FROM YOUR PORTFOLIO MANAGER - IMPACT TOTAL RETURN PORTFOLIO Dear Fellow Shareholder: We are pleased to provide you with the annual report for the IMPACT Total Return Portfolio (the "Portfolio") for the fiscal year ended September 30, 2001. U.S. STOCK MARKET OVERVIEW The sharp retreat on Wall Street after the Sept. 11 terrorist attacks capped a miserable period for U.S. equity markets during the year ended September 30, 2001. Economic data revealed severe weakness in the manufacturing segment and an increasingly fragile consumer sector. After Sept. 11, investors had to grapple with the collateral damage to the economy and consumer confidence in the aftermath of the attack. The S&P 500 Index fell 26.6% for the twelve-month period. The Russell 2000 Index of small cap stocks declined 21.1%. The tech-laden Nasdaq Composite Index dropped 59.1% and found itself an astounding 71% below its March 2000 peak. INVESTMENT REVIEW The Portfolio performed significantly better than the benchmark Russell 1000 Value Index during the year ended September 30, 2001, returning 8.24% (Retail Class Shares) versus -8.91% for the benchmark. The favorable results were generated from varied sources in the Portfolio's holdings. Holdings in the financial services sector made a strong contribution to returns. Our savings & loans issues fared well as lower interest rates encouraged healthy mortgage refinancing activity. Our insurance stocks performed capably in the midst of a weak market. The Portfolio also benefited from our avoidance of large money center banks and brokerage firms. Our investments in the consumer discretionary sector benefited from the strong performance of several turnaround situations in the retail industry. STRATEGY AND OUTLOOK The horrific attacks in New York City and Washington on Sept. 11 dashed the market's hopes that the U.S. would avoid a recession and enjoy the beginning of a moderate recovery later this year. Economic activity had already visibly weakened, and consumer confidence and spending were showing strains prior to the tragedy. Investors have now digested the fact that the current slowdown will be deeper and more prolonged than they had previously expected. On the positive side of the equation, the full force of fiscal and monetary stimulus are being engaged in an effort to make sure that the downturn is as short and shallow as possible. The full force of these measures should set the stage for a global rebound beginning in 2002. Periods of excessive investor pessimism and high price volatility offer us the opportunity to add tremendous value to your portfolio. Therefore, we continue to employ our time-tested investment approach to uncover stocks that 1) are cheap in relation to their future earnings power and 2) possess agents for "positive quantum change" that will reinvigorate the company's profit growth. The Portfolio's holdings continue to be most overweighted (in percentage terms) in the economically-sensitive materials & processing and autos & transportation sectors. The major change in sector weightings during the fiscal year was to increase our exposure to the autos & transportation sector, specifically the trucking, auto parts manufacturing and airline industries. We believe that the portfolio is well positioned to benefit from the eventual economic recovery. We appreciate your support as we work energetically every day to invest in companies that we believe have temporarily fallen from favor but are near a turning point in their fortunes. The rewards can be handsome when these stocks eventually earn back the respect they once had among investors. Arnold C. Schneider III, CFA Portfolio Manager Schneider Capital Management 3 ...A MESSAGE FROM YOUR PORTFOLIO MANAGER - JORDAN 25 FUND Dear Fellow Shareholders: The Fund began operations on January 24, 2001 and performed significantly better than the benchmark Lipper Growth Index through the year ended September 30, 2001, returning since inception .8% (Retail Class Shares) versus -29.70% for the benchmark, The favorable results were generated from the Fund maintaining a 100% cash position since inception. The Fund is expected to have a sub-advisor added to management team before the end of calendar year 2001 and is expected to be actively trading by the beginning of the year 2002. Charles R. Clark Portfolio Manager Equity Assets Management, Inc. 4 IMPACT MANAGEMENT INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO -------------------------------------------------------------------------------- FUND PERFORMANCE -------------------------------------------------------------------------------- FOR THE FISCAL YEAR FROM OCTOBER 1, 2000 THROUGH SEPTEMBER 30, 2001 [GRAPHIC OMITTED] Growth of a $10,000 Investment Retail Class Shares
9/30/1997 9/30/1998 9/30/1999 9/30/2000 9/30/2001 --------- --------- --------- --------- --------- Impact Total Return - Retail $10,000 $8,407 $9,374 $12,319 $13,334 Russell 1000 Value Index $10,000 $10,359 $12,298 $13,394 $12,201 S&P 500 Index $10,000 $10,900 $13,925 $15,774 $11,570
The graph above compares the initial and subsequent account values at the fiscal years ended September 30, 1998, 1999, 2000 and 2001 of the Fund, in relation to the S&P 500 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. 5 IMPACT MANAGEMENT INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO -------------------------------------------------------------------------------- FUND PERFORMANCE -------------------------------------------------------------------------------- FOR THE FISCAL YEAR FROM OCTOBER 1, 2000 THROUGH SEPTEMBER 30, 2001 Growth of a $10,000 Investment Traditional Class Shares [GRAPHIC OMITTED] 2/3/2000 9/30/2000 9/30/2001 -------- --------- --------- Impact Total Return - Traditional $10,000 $12,780 $13,951 Russell 1000 Value Index $10,000 $10,698 $9,744 S&P 500 Index $10,000 $10,155 $7,449 The Traditional Class commenced operations on February 3, 2000. The graph above compares the initial and subsequent account values at the fiscal years ended September 30, 2000 and 2001 of the Fund, in relation to the S&P 500 Index and the Russell 1000 Value Index. The graph assumes a $ 10,000 initial investment at February 3, 2000. Past performance is not indicative of future results. 6 IMPACT MANAGEMENT INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO -------------------------------------------------------------------------------- FUND PERFORMANCE -------------------------------------------------------------------------------- FOR THE FISCAL YEAR FROM OCTOBER 1, 2000 THROUGH SEPTEMBER 30, 2001 Growth of a $10,000 Investment Wholesale Class Shares [GRAPHIC OMITTED] 10/5/1999 9/30/2000 9/30/2001 --------- --------- --------- Impact Total Return - Wholesale $10,000 $13,220 $14,436 Russell 1000 Value Index $10,000 $10,854 $9,886 S&P 500 Index $10,000 $11,165 $8,190 The Wholesale Class commenced operations on October 5, 1999. The graph above compares the initial and subsequent account values at the fiscal years ended September 30, 2000 and 2001 of the Fund, in relation to the S&P 500 Index and the Russell 1000 Value Index. The graph assumes a $ 10,000 initial investment at October 5, 2000. Past performance is not indicative of future results. 7 IMPACT MANAGEMENT INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO -------------------------------------------------------------------------------- FUND PERFORMANCE -------------------------------------------------------------------------------- FOR THE FISCAL YEAR FROM OCTOBER 1, 2000 THROUGH SEPTEMBER 30, 2001 -------------------------------------------------------------------------------- Total Return as of 9/30/01 -------------------------------------------------------------------------------- Total Return --------------------------------- Category 1 Year Since Inception -------------------------------------------------------------------------------- Impact Total Return - Retail Class 8.2% 6.1% * --------------------------------- Impact Total Return - Traditional Class 9.2% 22.2% + --------------------------------- Impact Total Return - Wholesale Class 9.2% 20.3% ^ -------------------------------------------------------------------------------- Russell 1000 Value Index -8.9% 5.4% * -------------------------------------------------------------------------------- S&P 500 Index -26.6% 7.6% * -------------------------------------------------------------------------------- The table above provides the average annual total return for the fiscal year of the Fund since inception in relation to the S&P 500 Index and the Russell 1000 Value Index. * Inception - June 17, 1997 (Annualized) + Inception - February 3, 2000 (Annualized) ^ Inception - October 5, 1999 (Annualized) Past performance does not predict future results. Investment return and principal value will fluctuate so that an investor's shares may be worth more or less than the original cost. All returns assume reinvestment of dividends. 8 IMPACT MANAGEMENT INVESTMENT TRUST FINANCIAL HIGHLIGHTS RETAIL CLASS
For the Year Ended June 17, 1997+ ---------------------------------------------------------- to September 30, September 30, September 30, September 30, September 30, 2001 2000 1999 1998 1997 ---------- ---------- ---------- ---------- ---------- Per Share Data* Investment Income $ 0.17 $ 0.20 $ 0.26 $ 0.29 $ 0.01 Expenses (0.25) (0.19) (0.22) (0.21) (0.01) ---------- ---------- ---------- ---------- ---------- Net investment income (0.08) 0.01 0.04 0.08 -- Distribution from net investment income (0.02) -- (0.08) (0.01) -- Net realized and unrealized gain (loss) on investments 0.99 2.55 0.86 (1.66) (0.08) Distribution from realized gain (loss) on investments (0.82) (0.48) (0.69) -- -- ---------- ---------- ---------- ---------- ---------- Net increase (decrease) in net asset value 0.07 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 $ 10.61 $ 10.54 $ 8.46 $ 8.33 $ 9.92 ========== ========== ========== ========== ========== Ratios and Supplemental Data Total Return# 8.24% 31.42% 11.50% (15.93)% (0.80)% ^ Ratio of expenses to average net assets 2.20% 2.22% 2.47% # 2.25% # 2.25% ^# Ratio of net investment income to average net assets (0.68)% .10% 0.42% # 0.88% # 0.00% ^ Portfolio turnover rate 162.78% 206.32% 254.79% 221.45% 0.00% Average commission rate paid .0016 .0023 .0612 .1296 .1437 Net assets, end of period $1,551,950 $6,270,819 $1,969,144 $3,925,928 $ 501,758 Shares of beneficial interest outstanding, end of period 146,248 186,760 741,369 471,512 50,567 Number of shareholder accounts, end of period 79 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) The accompanying notes are an integral part of these statements. 9 IMPACT MANAGEMENT INVESTMENT TRUST FINANCIAL HIGHLIGHTS WHOLESALE CLASS
October 5, 1999~ For the Year Ended to September 30, September 30, 2001 2000 ------------------ ---------- Per Share Data* Investment Income $ 0.27 $ 0.52 Expenses (0.25) (0.30) ---------- ---------- Net investment income 0.02 0.22 Distribution from net investment income (0.18) -- Net realized and unrealized gain on investments 1.01 2.50 Distribution from realized gain on investments (0.30) -- ---------- ---------- Net increase in net asset value 0.55 2.72 Net asset value: Beginning of period 11.17 8.45 ---------- ---------- End of period $ 11.72 $ 11.17 ========== ========== Ratios and Supplemental Data Total Return 9.20% 32.19% Ratio of expenses to average net assets 1.98% 3.13% Ratio of net investment income to average net assets 0.20% 2.36% Average commission rate paid .0016 .0023 Portfolio turnover rate 162.78% 202.02% Net assets, end of period 2,084,822 1,441,027 Shares of beneficial interest outstanding, end of period 177,856 129,052 Number of shareholder accounts, end of period 92 75
------------------------- * 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 The accompanying notes are an integral part of these statements 10 IMPACT MANAGEMENT INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO FINANCIAL HIGHLIGHTS TRADITIONAL CLASS
February 3, 2000~ For the Year Ended to September 30, September 30, 2001 2000 ------------------ ---------- Per Share Data* Investment Income $ 0.91 $ 1.55 Expenses (0.76) (0.84) ---------- ---------- Net investment income 0.15 0.71 Distribution from net investment income (0.11) -- Net realized and unrealized gain on investments 1.02 2.07 Distribution from realized gain on investments (0.04) -- ---------- ---------- Net increase in net asset value 1.02 2.78 Net asset value: Beginning of period 12.78 10.00 ---------- ---------- End of period $ 13.80 $ 12.78 ========== ========== Ratios and Supplemental Data Total Return 9.16% 27.80% ^ Ratio of expenses to average net assets 5.13% 7.07% ^# Ratio of net investment income to average net assets 1.03% 6.08% ^# Average commission rate paid .0016 .0023 Portfolio turnover rate 162.78% 93.35% Net assets, end of period $ 696,545 $ 9,348 Shares of beneficial interest outstanding, end of period 50,481 782 Number of shareholder accounts, end of period 70 4
------------------------- * 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) ~ Traditional class began trading February 3, 2000 at $10.00 per share The accompanying notes are an integral part of these statements. 11 IMPACT MANAGEMENT INVESTMENT TRUST STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 2001 ASSETS Investments in securities, at value - identified cost $4,217,716 $ 3,921,042 Cash 382,927 Interest and dividends receivable 3,554 Receivable from securities sold 77,621 ------------ TOTAL ASSETS 4,385,144 ------------ LIABILITIES Payable for investment securities purchased 44,265 Investment advisory fee payable 4,452 Distribution expenses payable 1,864 Administrative fee payable 1,246 ------------ TOTAL LIABILITIES 51,827 ------------ NET ASSETS $ 4,333,317 ============ NET ASSETS CONSIST OF: Accumulated net investment loss - net of distributions $ (7,966) Accumulated net realized gain 605,429 Net unrealized depreciation (296,674) Paid-in capital applicable to 374,585 no par value shares of beneficial interest outstanding; unlimited number of shares authorized 4,032,528 ------------ NET ASSETS $ 4,333,317 ============ NET ASSET SHARES VALUE NET ASSETS OUTSTANDING PER SHARE ---------- ---------- ---------- RETAIL CLASS $1,551,950 146,248 $ 10.61 WHOLESALE CLASS 2,084,822 177,856 $ 11.72 TRADITIONAL CLASS 696,545 50,481 $ 13.80 ---------- ---------- ---------- $4,333,317 374,585 ========== ========== The accompanying notes are an integral part of these statements. 12 IMPACT MANAGEMENT INVESTMENT TRUST SCHEDULE OF INVESTMENTS IN SECURITIES SEPTEMBER 30, 2001 Shares Value ------ ------------ Common Stock - 98.1% Consumer Products = 8.3% Archer-Daniels-Midland Co. 12,469 $ 156,985 Tate & Lyle PLC 11,000 164,901 Tyson Foods, Inc 200 2,004 Transportation - 9.3% AMR Corporation* 1,700 32,538 CSX Corporation 5,000 157,500 Swift Transportation Co.* 5,800 102,660 Tidewater, Inc. 2600 69,394 Computers and Technology - 5.2% Micron Technology, Inc.* 6,500 122,395 Technip 400 50,417 Teradyne, Inc.* 1400 27,300 Utilities - 7.2% DTE Energy Co. 1,500 64,575 Niagra Mohawk Holdings, Inc.* 5,000 84,850 P G & E Corporation 8,600 130,720 Capital Goods - 3.4% The Boeing Company* 1,100 36,850 Clayton Homes, Inc. 7800 95,160 Basic Materials - 9.6% IMC Global Inc. 8,600 77,400 Alcan Inc. 6,500 195,000 NuCor Corp. 2,500 99,250 Communications - 4.5% Allegiance Telecom, Inc.* 4,800 14,448 MCI Worldcom, Inc.* 10,700 160,928 Services - 8.2% Circuit City Group 800 9,600 J.C. Penney Co., Inc. 9,000 197,100 Starwood Hotel & Resorts Worldwide 2,200 48,400 Royal Caribbean Cruises 3,700 63,751 Toys R Us, Inc.* 100 1,073 13 SCHEDULE OF INVESTMENTS IN SECURITIES SEPTEMBER 30, 2001 (Concluded) Shares Value ------ ------------ Energy - 1.8% Diamond Offshore Drilling, Inc. 1,200 $ 30,264 Transocean Sedco Forex, Inc. 1,500 39,600 Financial - Insurance - 28.2% Aetna, Inc. 8,500 245,565 Allstate Corp. 3,500 130,725 American Financial Group 2,200 48,840 Aon Corp. 1,900 79,800 Fairfax Financial Holdings* 700 89,647 HCC Insurance Holdings 2,900 76,270 Loews Corporation 1,700 78,676 Ace Limited 6,100 176,107 Partnere Ltd. 3,600 169,560 Financial -Banking - 4.9% Washington Federal, Inc. 2,200 55,110 Washington Mutual, Inc. 3,550 136,604 Consumer - Cyclical - 7.2% Paccar, Inc. 2,800 137,396 Visteon Corp. 11,300 144,075 Consumer - Non Cyclical - 2.0% Office Depot, Inc.* 5,800 78,880 Financial - Consumer Financing - 0.2% Americredit Corp.* 300 9,486 ------------ Total common stocks (cost $4,188,478) 3,891,804 ------------ Short-Term Investments - 0.7% Rydex Series Trust - U.S. Government Money Market Fund (2.22% seven day yield, cost $29,238) 29,238 29,238 ------------ Total investments in securities - 90.5% of net assets (cost $ 4,217,716) $ 3,921,042 ============ -------------------------------- * Non-income producing security The accompanying notes are an integral part of these statements. 14 IMPACT MANAGEMENT INVESTMENT TRUST STATEMENT OF OPERATIONS FOR THE YEAR ENDED SEPTEMBER 30, 2001 INVESTMENT INCOME Interest income $ 19,230 Dividend income 54,286 ---------- TOTAL INCOME 73,516 ---------- EXPENSES Investment advisory fee 45,476 Distribution expenses 23,273 Administrative fee 12,733 ---------- TOTAL EXPENSES 81,482 ---------- NET INVESTMENT LOSS (7,966) ---------- REALIZED AND UNREALIZED GAIN Net realized gain on securities 605,429 Change in net unrealized depreciation on securities (375,234) ---------- NET REALIZED AND UNREALIZED GAIN 230,195 ---------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 222,229 ========== NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS BY CLASS: RETAIL CLASS $ 112,574 TRADITIONAL CLASS 99,875 WHOLESALE CLASS 9,780 ---------- $ 222,229 ========== The accompanying notes are an integral part of these statements. 15 IMPACT MANAGEMENT INVESTMENT TRUST STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND 2000 ===============================================
Year Ended Year Ended September 30, September 30, 2001 2000 ------------ ------------ INCREASE (DECREASE) IN NET ASSETS Operations Net investment income (loss) $ (7,966) $ 27,576 Net realized gain on securities 605,429 198,792 Change in net unrealized appreciation (depreciation) on securities (375,234) 725,257 ------------ ------------ Increase in net assets resulting from operations 222,229 951,625 ------------ ------------ Distributions to shareholders From net investment income (27,576) -- From net realized gain on securities (198,792) (302,987) ------------ ------------ Total distributions to shareholders (226,368) (302,987) ------------ ------------ Beneficial interest share transactions* Shares sold 3,079,982 1,276,472 Shares redeemed (2,387,415) (5,079,397) Shares issued for reinvestment of distributions 225,370 302,987 ------------ ------------ Increase (decrease) in net assets from share transactions 917,937 (3,499,938) ------------ ------------ Total increase (decrease) in net assets 913,798 (2,851,300) Net assets Beginning of period 3,419,519 6,270,819 ------------ ------------ End of period (including undistributed net investment income (loss) of $(7,966) and $27,576, respectively) $ 4,333,317 $ 3,419,519 ============ ============ *Share information Shares sold 238,631 138,039 Shares redeemed (199,154) (577,864) Change in shares resulting from transfers between classes (1,341) (17,932) Shares issued for reinvestment of distributions 19,905 32,933 ------------ ------------ Increase (decrease) in shares outstanding 58,041 (424,824) ============ ============
The accompanying notes are an integral part of these statements. 16 IMPACT MANAGEMENT INVESTMENT TRUST JORDAN 25 FUND -------------------------------------------------------------------------------- FUND PERFORMANCE -------------------------------------------------------------------------------- FOR THE FISCAL YEAR FROM OCTOBER 1, 2000 THROUGH SEPTEMBER 30, 2001 [GRAPHIC OMITTED] Growth of a $10,000 Investment Retail Class Shares 1/25/2001 9/30/2001 --------- --------- Jordan 25 - Retail $10,000 $10,080 Lipper Growth Index $10,000 $7,983 The Retail Class commenced operations on January 25, 2001. The graph above compares the initial and subsequent account values at the fiscal years ended September 30, 2001 of the Fund, in relation to the Lipper Growth Index. The graph assumes a $ 10,000 initial investment at January 25, 2001. Past performance is not indicative of future results. [GRAPHIC OMITTED] Growth of a $10,000 Investment Traditional Class Shares 1/25/2001 9/30/2001 --------- --------- Jordan 25 - Traditional $10,000 $10,120 Lipper Growth Index $10,000 $7,983 The Traditional Class commenced operations on January 25, 2001. The graph above compares the initial and subsequent account values at the fiscal years ended September 30, 2001 of the Fund, in relation to the Lipper Growth Index. The graph assumes a $ 10,000 initial investment at January 25, 2001. Past performance is not indicative of future results. The accompanying notes are an integral part of these statements. 17 IMPACT MANAGEMENT INVESTMENT TRUST JORDAN 25 FUND -------------------------------------------------------------------------------- FUND PERFORMANCE -------------------------------------------------------------------------------- FOR THE FISCAL YEAR FROM OCTOBER 1, 2000 THROUGH SEPTEMBER 30, 2001 [GRAPHIC OMITTED] Growth of a $10,000 Investment Wholesale Class Shares 1/24/2001 9/30/2001 --------- --------- Jordan 25 - Wholesale $10,000 $10,130 Lipper Growth Index $10,000 $7,935 The Wholesale Class commenced operations on January 24, 2001. The graph above compares the initial and subsequent account values at the fiscal years ended September 30, 2001 of the Fund, in relation to the Lipper Growth Index. The graph assumes a $ 10,000 initial investment at January 24, 2001. Past performance is not indicative of future results. ------------------------------------------------------------ Total Return as of 9/30/01 ------------------------------------------------------------ Category Since Inception ------------------------------------------------------------ Jordan 25 - Retail Class 0.8% * ----------------- Jordan 25 - Traditional Class 1.2% * ----------------- Jordan 25 - Wholesale Class 1.3% + ------------------------------------------------------------ Lipper Growth Index -29.7% * ------------------------------------------------------------ The table above provides the average annual total return for the fiscal year of the Fund since inception in relation to the Lipper Value Index. * Inception - January 25, 2001 (Not Annualized) + Inception - January 24, 2001 (Not Annualized) Past performance does not predict future results. Investment return and principal value will fluctuate so that an investor's shares may be worth more or less than the original cost. All returns assume reivestment of dividends. 18 IMPACT MANAGEMENT INVESTMENT TRUST JORDAN 25 FUND FINANCIAL HIGHLIGHTS ====================
January 24, 2001~ to September 30, 2001 ------------------------------------------ Retail Traditional Wholesale ---------- ---------- ---------- Per Share Data* Investment Income $ 0.24 $ 0.24 $ 0.24 Expenses (0.16) (0.12) (0.11) ---------- ---------- ---------- Net investment income 0.08 0.12 0.13 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 0.08 0.12 0.13 Net asset value: Beginning of period 10.00 10.00 10.00 ---------- ---------- ---------- End of period $ 10.08 $ 10.12 $ 10.13 ========== ========== ========== Ratios and Supplemental Data Total Return^ 0.80% 1.20% 1.30% Ratio of expenses to average net assets^ 1.76% 1.27% 1.80% Ratio of net investment income to average net assets^ 0.75% 1.23% 3.03% Portfolio turnover rate 0.00% 0.00% 0.00% Net assets, end of period $ 1,008 $ 954 $ 10,135 Shares of beneficial interest outstanding, end of period 100 94 1,000 Number of shareholder accounts, end of period 1 1 1
------------------------- * Selected data for a share of beneficial interest outstanding outstanding throughout each period ^ Based on operations for the period shown and, accordingly not representative of a full year ~ Jordan 25 Fund began trading January 24, 2001 at $10.00 per share The accompanying notes are an integral part of these statements. 19 IMPACT MANAGEMENT INVESTMENT TRUST JORDAN 25 FUND STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 2001 ================== ASSETS - CASH $ 12,116 LIABILITIES - ACCRUED OPERATING EXPENSES 19 ---------- NET ASSETS $ 12,097 ========== NET ASSETS CONSIST OF: Accumulated net investment income - net of distributions $ 227 Paid-in capital applicable to 1,194 no par value shares of beneficial interest outstanding; unlimited number of shares authorized 11,870 ---------- NET ASSETS $ 12,097 ========== NET ASSET SHARES VALUE NET ASSETS OUTSTANDING PER SHARE ---------- ---------- ---------- RETAIL CLASS $ 1,008 100 $ 10.08 WHOLESALE CLASS 10,135 1,000 $ 10.13 TRADITIONAL CLASS 954 94 $ 10.12 ---------- ---------- $ 12,097 1,194 ========== ========== The accompanying notes are an integral part of these statements. 20 IMPACT MANAGEMENT INVESTMENT TRUST JORDAN 25 FUND STATEMENT OF OPERATIONS FOR THE PERIOD FROM INCEPTION (JANUARY 24, 2001) THROUGH SEPTEMBER 30, 2001 ========================== INVESTMENT INCOME - INTEREST $ 479 ---------- EXPENSES Investment advisory fee 164 Distribution expenses 40 Administrative fee 48 ---------- Total expenses 252 ---------- NET INVESTMENT INCOME AND INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 227 ========== The accompanying notes are an integral part of these statements. 21 IMPACT MANAGEMENT INVESTMENT TRUST JORDAN 25 FUND STATEMENT OF CHANGES IN NET ASSETS FOR THE PERIOD FROM INCEPTION (JANUARY 24, 2001) THROUGH SEPTEMBER 30, 2001 ========================== INCREASE IN NET ASSETS Operations Net investment income $ 227 ---------- Beneficial interest share transactions* Shares sold 40,525 Shares redeemed (28,655) ---------- Increase in net assets from share transactions 11,870 ---------- Total increase in net assets 12,097 Net assets Beginning of period -- ---------- End of period (including undistributed net investment income of $227) $ 12,097 ========== *Share information Shares sold 4,023 Shares redeemed (2,829) ---------- Increase in shares outstanding 1,194 ========== The accompanying notes are an integral part of these statements. 22 IMPACT MANAGEMENT INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO & JORDAN 25 FUND NOTES TO FINANCIAL STATEMENTS ============================= NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION ------------ 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-ended management investment company. IMPACT Total Return Portfolio ("IMPACT") was the initial series of the Trust. IMPACT commenced operations on June 17, 1997, with the sale of 10,000 shares of beneficial interest to Jordan American Holdings, Inc., d/b/a Equity Assets Management ("EAM") (the "Investment Advisor"), for cash in the amount of $100,000. On January 16, 2001, the second series of the Trust, the Jordan 25 Fund ("Jordan 25") was formed. On January 24 and 25, the Trust sold 1,194 shares of beneficial interest to EAM for cash in the amount of $12,000. Both series (collectively "Funds") of the Trust offer four classes of shares (See Note 3). 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 ask 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 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. 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. 23 IMPACT MANAGEMENT INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO & JORDAN 25 FUND NOTES TO FINANCIAL STATEMENTS ============================= (Continued) NOTE 2. INVESTMENT TRANSACTIONS Purchases and sales of investment securities of IMPACT, other than short-term investments, during the year ended September 30, 2001 were $6,611,559 and $5,899,662, respectively. At September 30, 2001, the aggregate cost of investments for federal income tax and financial reporting purposes was $4,217,716 and net unrealized depreciation aggregated $296,674, of which $277,247 related to appreciated investments and $573,921 to depreciated investments. The Jordan 25 had no purchases or sales of investment securities other than short-term investments during the period. 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 based on the Funds' average daily assets. The investment advisory fee is calculated daily and paid monthly. IMPACT 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 Funds pay or reimburse the Investment Advisor, affiliates or other third parties for expenses incurred in connection with the promotion and distribution of the Funds' shares based on the average daily net assets of the Funds. The Trust has 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 Fund including transfer agent and dividend disbursing agent services. IASI bears substantially all operating expenses of the Funds, 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 redemption of shares of beneficial interest. Subsequent to April 30, 1999, the Trust began charging an administrative service fee based on daily net assets of the Funds. The administrative service fee is calculated daily and paid monthly to IASI. In addition, prior to January 1, 2001, when a shareholder closed an account, 24 IMPACT MANAGEMENT INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO & JORDAN 25 FUND NOTES TO FINANCIAL STATEMENTS ============================= (Continued) NOTE 3. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES (Continued) IASI was paid a fee of $2.00, which was charged, to the shareholder as redemption of shares of beneficial interest. 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: IMPACT 1.25% 1.25% 1.25% 1.25% Jordan 25 1.20% 1.20% 1.20% 1.20% 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, 2001, no shares of beneficial interest have been sold. A wholly-owned subsidiary 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., was reimbursed 12b-1 fees and sales charges from both series of the Trust for a total of $61,824 and $38,163 pursuant to the provisions of the Distribution Plan for the years ended September 30, 2001 and 2000. IFNI pays out a portion of these fees to additional selling agents. Certain officers of the Trust and members of the Board of Trustees are also officers and directors of the Investment Advisor. NOTE 4. CAPITAL SHARE TRANSACTIONS IMPACT TOTAL RETURN PORTFOLIO:
YEAR ENDED YEAR ENDED SEPTEMBER 30, 2001 SEPTEMBER 30, 2000 AMOUNT SHARES AMOUNT SHARES ----------- ----------- ----------- ----------- RETAIL CLASS: ------------- Sold $ 402,322 35,517 $ 220,940 23,374 Reinvestment 159,238 14,307 302,987 32,933 Repurchased (853,473) (75,407) (2,107,310) (242,281) Transfers between classes (167,883) (14,929) (3,036,344) (368,634) ----------- ----------- ----------- ----------- NET DECREASE IN RETAIL CLASS (459,796) (40,512) (4,619,727) (554,608) ----------- ----------- ----------- -----------
25 IMPACT MANAGEMENT INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO & JORDAN 25 FUND NOTES TO FINANCIAL STATEMENTS ============================= (Continued) NOTE 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) IMPACT TOTAL RETURN PORTFOLIO (Concluded): IMPACT TOTAL RETURN PORTFOLIO:
YEAR ENDED YEAR ENDED SEPTEMBER 30, 2001 SEPTEMBER 30, 2000 AMOUNT SHARES AMOUNT SHARES ----------- ----------- ----------- ----------- TRADITIONAL CLASS: ------------------ Sold 749,969 49,780 8,649 732 Reinvestment 201 15 -- -- Repurchased (677) (46) -- -- Transfers between classes -- -- -- -- ----------- ----------- ----------- ----------- NET INCREASE IN TRADITIONAL CLASS 749,493 49,749 8,649 732 ----------- ----------- ----------- ----------- WHOLESALE CLASS: ---------------- Sold 1,927,691 153,334 1,046,883 113,933 Reinvestment 65,932 5,583 -- -- Repurchased (1,533,266) (123,701) (2,972,087) (335,583) Transfers between classes 167,883 13,588 3,036,344 350,702 ----------- ----------- ----------- ----------- NET INCREASE IN WHOLESALE CLASS 628,240 48,804 1,111,140 129,052 ----------- ----------- ----------- ----------- TOTAL NET INCREASE (DECREASE) IN FUND $ 917,937 58,041 $(3,499,938) (424,824) =========== =========== =========== ===========
JORDAN 25 FUND: PERIOD ENDED SEPTEMBER 30, 2001 AMOUNT SHARES ----------- ----------- RETAIL CLASS: ------------- Sold $ 1,000 100 Reinvestment -- -- Repurchased -- -- ----------- ----------- NET INCREASE IN RETAIL CLASS 1,000 100 ----------- ----------- TRADITIONAL CLASS: ------------------ Sold 943 94 Reinvestment -- -- Repurchased -- -- ----------- ----------- NET INCREASE IN TRADITIONAL CLASS 943 94 ----------- ----------- WHOLESALE CLASS: ---------------- Sold 38,582 3,829 Reinvestment -- -- Repurchased (28,655) (2,829) ----------- ----------- NET INCREASE IN WHOLESALE CLASS 9,927 1,000 ----------- ----------- TOTAL NET INCREASE IN FUND $ 11,870 1,194 =========== =========== 26 INDEPENDENT AUDITORS' REPORT To the Shareholders and Board of Trustees IMPACT Management Investment Trust IMPACT Total Return Portfolio and Jordan 25 Fund We have audited the accompanying statements of assets and liabilities of IMPACT Total Return Portfolio ("IMPACT") and Jordan 25 Fund ("Jordan") (collectively the "Funds"), two Series of IMPACT Management Investment Trust, including the schedule of investments in securities as of September 30, 2001, the related statements of operations for the period ended September 30, 2001 and changes in net assets for the periods ended September 30, 2001 and 2000 and financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with accounting principles generally accepted in the United States of America. 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, 2001, 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 and Jordan 25 Fund, two Series of IMPACT Management Investment Trust, as of September 30, 2001, the results of its operations and changes in net assets for the periods ended September 30, 2001 and 2000 and the financial highlights for each of the five years in the period then ended in conformity with accounting principles generally accepted in the United States of America. SPICER, JEFFRIES & CO. Denver, Colorado November 7, 2001