-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KTNm+O+s706/mR7URga0e10Dzw1bosy21J8hKcvLchhSAn6G/NtxLH5oG38WBcxG 7mFLKO1lsN/sIuFGqqRufQ== 0001012709-02-000842.txt : 20020607 0001012709-02-000842.hdr.sgml : 20020607 20020605104733 ACCESSION NUMBER: 0001012709-02-000842 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020331 FILED AS OF DATE: 20020605 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IMPACT MANAGEMENT INVESTMENT TRUST CENTRAL INDEX KEY: 0001030805 IRS NUMBER: 232873254 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-08065 FILM NUMBER: 02670497 BUSINESS ADDRESS: STREET 1: 1875 SKI TIME SQUARE DR STREET 2: STE ONE CITY: STEAMBOAT SPRINGS STATE: CO ZIP: 80487 BUSINESS PHONE: 9708791189 MAIL ADDRESS: STREET 1: ARROTT BUILDING STREET 2: 401 WOOD ST 3RD FL CITY: PITTSBURGH STATE: PA ZIP: 15222 N-30D 1 n30d-502.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 A Message From Your Portfolio Manager ............................... 2 Impact Total Return Portfolio Financial Highlights - Class R ...................................... 4 Financial Highlights - Class A ...................................... 5 Financial Highlights - Class F ...................................... 6 Financial Highlights - Institutional Class .......................... 7 Statement of Assets and Liabilities ................................. 8 Schedule of Investments In Securities ............................... 9 Statement of Operations ............................................. 11 Statement of Changes in Net Assets .................................. 12 Notes to Financial Statements ............................................ 13 .....A MESSAGE FROM YOUR PRESIDENT Dear Shareholders, As you know, following the events of September 11, 2001, there was much uncertainty for the financial services industry. Most investors generally appeared to be immobilized during the past six months, unwilling to make major changes, waiting out the crisis. Despite these difficult times within the industry, our initial mutual fund product, IMPACT Total Return Portfolio ("Portfolio") increased in size by approximately 105% or $4,485,462 during the six-month period ended March 31, 2002, ending the period with approximately $8.8 million in net assets. Most of the increase in size of the Portfolio during the period came from an increase in net assets from share transactions (shares sold, plus shares reinvested, less shares redeemed) of $3,242,862. This increase in net assets from share transactions was due primarily to relatively strong sales attributable to the efforts of the Portfolio's distributor. Sales for the six-month period ended March 31, 2002 of $3,218,216 exceeded sales for the entire last fiscal year of $3,079,982. The Portfolio's primary distributor continues 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 have positioned the Portfolio as one of the top performing mid-cap value funds in the country as noted by the Wall Street Journal, Business Week, and others throughout the period. IMPACT Management Investment Trust experienced further delays in launching its second portfolio, the IMPACT 25 Fund ("Fund") but at the time of this letter the Fund is now operational and accepting assets under management. The Fund's sub-advisor, Denali Advisors LLC is responsible for managing the Fund's portfolio. The Fund's objective is long-term capital growth, employing a non-diversified investment strategy investing in up to 25 equity stocks of U.S. companies with an advisory fee adjusted monthly for investment performance. This unique style and fee structure for the Fund, coupled with the growing "IMPACT" brand name recognition achieved nationally through the Portfolio's performance, should provide a strong platform for marketing and distribution efforts. The business climate in the financial industry remains extremely competitive. Despite the exceptional investment performance by the Portfolio's investment management team and the outstanding efforts made by the Portfolio's underwriter this past year, the asset level achieved to date in the Portfolio is inadequate to allow the investment adviser, Equity Assets Management, Inc. ("EAM"), to achieve profitability. This is an issue both the adviser and your Board of Trustees are currently working on with the goal of maintaining competence, trust and value in the investment management team and the products we offer. Sincerely, A.J. Elko President PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. 1 .....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 (the "Portfolio") for the six months ended March 31, 2002. U.S. STOCK MARKET OVERVIEW The stock market rebounded strongly to post double-digit returns during the six months ended March 31, 2002. The Standard & Poor's 500 Index gained 11.0% for the period. Investors were treated to an exhilarating rally during the fourth quarter of 2001 as calm was restored and investors began to turn their attention toward the eventual economic recovery. By the end of the period, a consistent flow of economic data confirmed that the U.S. recession probably ended months ago, it was one of the mildest on record, and the global economy was picking up steam. INVESTMENT REVIEW The Portfolio delivered strong results during the six months ended March 31, 2002, returning 33.01% (Class R Shares) versus 11.77% for the Russell 1000 Value Index. The favorable performance was generated from varied sources in the Portfolio's holdings. Favorable security selection in the technology (semiconductors and semiconductor equipment), financial services (commercial insurance and consumer finance) and energy (natural gas) sectors provided a major positive contribution to returns for the period. In the semiconductor industry, positive news on orders, inventories and capacity utilization caused investors to look past one of the worst industry downturns in history and turn their focus toward the next growth cycle. Our property/casualty insurance holdings rebounded strongly during the fourth quarter after investors realized that they had unduly punished these stocks in the aftermath of the September 11 attacks. Natural gas stocks rallied late in the period in anticipation that gas prices would eventually rise from recently depressed levels and lead to an acceleration in earnings growth. STRATEGY AND OUTLOOK Most investors were surprised by the relatively mild depth and brief duration of the recession. The U.S economy proved to be more resilient than expected in the face of strong headwinds: falling equity markets, shrinking corporate profits, rising joblessness, global weakness and the September attacks. The monetary and fiscal injections administered last year, which were supported by lower energy costs, rising home prices and healthy increases in corporate productivity during 2001, have successfully revived the economy. 2 Some are worried that the nascent recovery might be derailed this year by one or more of the following culprits: rising interest rates, anemic corporate spending, surging energy costs or global instability. These factors might mute the strength of the rebound, but we believe that they are not likely to send us tumbling into a new slump. Your portfolio continues to be positioned to benefit from the global economic recovery. Many cyclical companies during the recession were squeezed in the grip of a downturn of severe proportions. The economic boom during the previous decade resulted in additions to capacity just as demand was peaking. Companies were subsequently trapped in a downward spiral of weak demand, a capacity glut and shrinking profit margins. However, while news headlines fueled intense concern as their stock prices fell to earth, bargain hunters like us saw opportunity just at the point that the companies were feeling the maximum pressure. During the period we trimmed the exposure to the financial sector. Selected insurance and savings & loan issues had met our return expectations and price targets. Your portfolio is now measurably underweighted in financials versus the benchmark. The most significant increase in exposure has been in the energy sector, where our research uncovered promising opportunities in domestic natural gas stocks. We established a significant position in the November-February timeframe. Arnold C. Schneider III, CFA Portfolio Manager Schneider Capital Management 3 INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO FINANCIAL HIGHLIGHTS CLASS R SHARES
Six months F o r t h e Y e a r E n d e d June 17, 1997^ ended -------------------------------------------------- to March 31, September September September September September 2002 30, 2001 30, 2000 30, 1999 30, 1998 30, 1997 Unaudited ---------- ---------- ---------- ---------- ---------- ---------- Per Share Data* Investment Income $ 0.07 $ 0.17 $ 0.20 $ 0.26 $ 0.29 0.01 Expenses (0.15) (0.25) (0.19) (0.22) (0.21) (0.01) ---------- ---------- ---------- ---------- ---------- ---------- Net investment income (0.08) (0.08) 0.01 0.04 0.08 0.00 Distribution from net Investment Income 0.00 (0.02) 0.00 (0.08) (0.01) 0.00 Net realized and unrealized gain (loss) on investments 3.33 0.99 2.55 0.86 (1.66) (0.08) Distribution from realized gain (loss) on investments (2.17) (0.82) (0.48) (0.69) 0.00 0.00 ---------- ---------- ---------- ---------- ---------- ---------- Net increase (decrease) in net asset value 1.08 0.07 2.08 0.13 (1.59) (0.08) Net asset value: Beginning of Period 10.61 10.54 8.46 8.33 9.92 10.00 ---------- ---------- ---------- ---------- ---------- ---------- End of period 11.69 10.61 $ 10.54 $ 8.46 $ 8.33 $ 9.92 ========== ========== ========== ========== ========== ========== Ratios and Supplemental Data Total Return 33.01%~ 8.24% 31.42% 11.50% (15.93)% (0.80)%> Ratio of expenses to average net assets 1.32%+ 2.20% 2.22% 2.47%# 2.25%# 2.25%># Ratio of net investment income to average net assets (0.71)%+ (0.68)% .10% 0.42%# 0.88%# 0.00%# Portfolio turnover rate 40.42% 162.78% 206.32% 254.79% 221.45% 0.00% Average commission rate paid .0016 .0016 .0023 .0612 .1296 .1437 Net assets, end of period $2,101,567 $1,551,950 $1,969,144 $6,270,819 $3,925,928 $ 501,758 Shares of beneficial interest outstanding, end of period 179,769 146,248 186,760 741,369 471,512 50,567 Number of shareholder accounts, end of period 92 79 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. > Based on operations for the period shown and, accordingly, not representative of a full year. See accompanying notes to financial statements. 4 IMPACT MANAGEMENT INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO FINANCIAL HIGHLIGHTS CLASS A SHARES
Six months ended February 3, 2000^ March 31, 2002 For the Year Ended to Unaudited September 30, 2001 September 30, 2000 ------------------ ------------------ ------------------ Per Share Data* Investment Income $ 0.08 $ 0.91 $ 1.55 Expenses (0.13) (0.76) (0.84) ------------ ------------ ------------ Net investment income (0.05) 0.15 0.71 Distribution from net investment income (0.02) (0.11) 0.00 Net realized and unrealized gain (loss) on investments 4.69 1.02 2.07 Distribution from realized gain (loss) on investments (0.21) (0.04) 0.00 ------------ ------------ ------------ Net increase (decrease) in net asset value 4.41 1.02 2.78 Net asset value: Beginning of period 13.80 12.78 10.00ss. ------------ ------------ ------------ End of period $ 18.21 $ 13.80 $ 12.78 ============ ============ ============ Ratios and Supplemental Data Total Return 26.02%~< 2.86%< 20.45%>< Ratio of expenses to average net assets 0.76%+ 5.13% 7.07%># Ratio of net investment income to average net assets (0.29)%+ 1.03% 6.08%># Average commission rate paid .0016 .0016 .0023 Portfolio turnover rate 40.42% 162.78% 93.35% Net assets, end of period $ 2,447,215 $ 696,545 $ 9,348 Shares of beneficial interest outstanding, end of period 134,359 50,481 782 Number of shareholder accounts, end of period 157 70 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. Class A Shares began trading February 3, 2000 at $10.00 per share. # Excludes administrative fee and account closing fee charged directly to shareholder accounts. See accompanying notes to financial statements. 5 IMPACT MANAGEMENT INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO FINANCIAL HIGHLIGHTS CLASS F SHARES
Six months ended October 5, 1999^ March 31, 2002 For the Year Ended to Unaudited September 30, 2001 September 30, 2000 ------------------ ------------------ ------------------ Per Share Data* Investment Income $ 0.07 $ 0.27 $ 0.52 Expenses (0.11) (0.25) (0.30) ------------ ------------ ------------ Net investment income (0.04) 0.02 0.22 Distribution from net investment income (0.02) (0.18) 0.00 Net realized and unrealized gain (loss) on investments 3.83 1.01 2.50 Distribution from realized gain (loss) on investments (1.37) (0.30) 0.00 ------------ ------------ ------------ Net increase (decrease) in net asset value 2.40 0.55 2.72 Net asset value: Beginning of period 11.72 11.17 8.45ss. ------------ ------------ ------------ End of period $ 14.12 $ 11.72 $ 11.17 ============ ============ ============ Ratios and Supplemental Data Total Return 33.72%~ 9.20% 32.19%> Ratio of expenses to average net assets 0.84%+ 1.98% 3.13%># Ratio of net investment income to average net assets (0.31)%+ 0.20% 2.36%># Average commission rate paid .0016 .0016 0.0023 Portfolio turnover rate 40.42% 162.78% 202.02% Net assets, end of period $ 3,219,627 $ 2,084,822 $ 1,441,027 Shares of beneficial interest outstanding, end of period 228,078 177,856 129,052 Number of shareholder accounts, end of period 115 92 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. Class F shares began trading October 5, 1999 at $8.45 per share. # Excludes administrative fee and account closing fee charged directly to shareholder accounts. See accompanying notes to financial statements. 6 IMPACT MANAGEMENT INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO FINANCIAL HIGHLIGHTS INSTITUTIONAL CLASS SHARES December 6, 2001^ to March 31, 2002 ------------ Per Share Data* Investment Income $ 0.08 Expenses (0.11) ------------ Net investment income (0.03) Distribution from net investment income 0.00 Net realized and unrealized gain (loss) on investments 1.12 Distribution from realized gain (loss) on investments 0.00 ------------ Net increase (decrease) in net asset value 1.09 Net asset value: Beginning of period 10.00ss. ------------ End of period $ 11.09 ============ Ratios and Supplemental Data Total Return 10.90%~> Ratio of expenses to average net assets 1.59%+> Ratio of net investment income to average net assets (0.40)%+> Average commission rate paid 0.0023 Portfolio turnover rate 40.42% Net assets, end of period $ 1,050,369 Shares of beneficial interest outstanding, end of period 94,733 Number of shareholder accounts, end of period 3 ^ 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. Institutional Class began trading December 6, 2001 at $10.00 per share. See accompanying notes to financial statements. 7 IMPACT MANAGEMENT INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO STATEMENT OF ASSETS AND LIABILITIES March 31, 2002 Unaudited ASSETS Investments in securities, at value - identified cost $ 8,504,230 Cash 307,559 Interest and dividends receivable 5,805 Receivable from securities sold 21,840 Receivable for Fund shares sold 2,921 ------------ Total assets 8,842,355 ------------ LIABILITIES Payable for investment securities purchased 9,143 Investment advisory fee payable 9,008 Distribution expenses payable 2,903 Administrative Fee Payable 2,522 ------------ Total liabilities 23,576 ------------ NET ASSETS $ 8,818,779 ============ NET ASSETS CONSIST OF: Accumulated net investment income - net of distributions $ (27,795) Accumulated net realized gain 173,731 Net unrealized appreciation 1,397,454 Paid-in capital applicable to 636,939 no par value shares of beneficial interest outstanding; unlimited number of shares Authorized 7,275,389 ------------ NET ASSETS $ 8,818,779 ============ NET ASSET SHARES VALUE NET ASSETS OUTSTANDING PER SHARE ------------ ------------ ------------ CLASS R $ 2,101,567 179,769 $ 11.69 CLASS A 2,447,215 134,359 $ 18.21 CLASS F 3,219,628 228,078 $ 14.12 INSTITUTIONAL CLASS 1,050,369 94,733 $ 11.09 ------------ ------------ $ 8,818,779 636,939 ============ ============ See accompanying notes to financial statements. 8 IMPACT MANAGEMENT INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO SCHEDULE OF INVESTMENTS IN SECURITIES March 31, 2002 Unaudited Shares Value ---------- ------------ Common Stock - 95.8% Consumer Products = 7.2% Archer-Daniels-Midland Co. 14,568 $ 202,932 Tate & Lyle PLC 20,400 404,079 Transportation - 7.8% AMR Corporation * 5,800 153,178 CSX Corporation 8,000 304,880 Swift Transportation * 5,500 120,560 Tidewater, Inc. 2,000 84,700 Computers and Technology - 7.2% Advanced Micro Devices * 4,000 58,840 Avnet, Inc. 3,100 83,886 Computer Associates International 800 17,512 Ingram Micro, Inc.* 1,600 26,480 Micron Technology, Inc.* 4,500 148,050 Sanmina-SCI Corporation * 2,600 30,550 Teradyne, Inc. * 6,300 248,409 Utilities - 4.7% DTE Energy Co. 1,300 59,150 Edison International 200 3,350 P G & E Corporation 14,100 332,196 Capital Goods - 4.3% The Boeing Company 1,200 57,900 Clayton Homes Inc 13,500 226,125 York International Corp 2200 78,980 Basic Materials - 12.4% IMC Global Inc. 16,800 247,800 Alcan Inc. 10,900 431,967 Freeport-McMoRan Copper & Gold, Inc. 4,500 79,290 NuCor Corp. 4,600 295,504 Communications - 1.4% MCI Worldcom, Inc.* 17,800 119,972 Services - 13.9% Liberty Media Corp. * 5,600 70,784 Nabors Industries, Inc. * 8,200 346,450 J.C. Penney Co., Inc. 18,800 389,348 Starwood Hotel & Resorts Worldwide 6,500 244,465 Toys R Us, Inc.* 7,000 125,720 See accompanying notes to financial statements. 9 IMPACT MANAGEMENT INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO SCHEDULE OF INVESTMENTS IN SECURITIES March 31, 2002 Unaudited (continued) Shares Value ---------- ------------ Energy - 10.9% Burlington Resources, Inc. 11,100 444,999 Patterson-UTI Energy, Inc. * 2,500 74,350 Rowan Companies Inc 8,700 200,448 Valero Energy Corp 3,700 183,224 Williams Companies, Inc. 700 17,941 Financial - Insurance - 16.5% Aetna, Inc. 14,200 551,244 Allstate Corp. 8,800 332,376 American Financial Group 4,700 134,984 Fairfax Financial Holdings 500 51,632 Loews Corporation 1,400 82,012 Travelers Property Casualty Corp. 3,400 68,000 Ace Limited 3,300 137,610 Partnere Ltd. 800 43,680 Financial -Consumer Finance - 4.8% Amercredit Corp 10,700 406,493 Consumer, Cyclical - 7.5% Brunswick Corporation 1,400 38,248 Goodyear Tire & Rubber 200 5,114 Paccar, Inc. 4,100 300,161 Visteon Corp. 17,900 296,245 Conglomerates - 1.3% Tyco International Ltd. 3,500 113,120 ------------ Total common stocks (cost $7,077,484) 8,474,938 ------------ Short-Term Investments - 1.0% Rydex Series Trust - U.S. Government Money Market Fund (0.94% seven day yield, cost $29,292) 29,292 29,292 ------------ Total investment in securities - 96.4% of net assets (cost $ 7,106,776) $ 8,504,230 ============ * Non-income producing security See accompanying notes to financial statements. 10 IMPACT MANAGEMENT INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO STATEMENT OF OPERATIONS For the Six Months Ended March 31, 2002 Unaudited INVESTMENT INCOME Interest income $ 35,445 Dividend income 3,542 ------------ Total income 38,987 ------------ EXPENSES Investment advisory fee 40,918 Distribution expenses 14,496 Administrative fee 11,368 ------------ Total expenses 66,782 ------------ Net investment income (27,795) ------------ REALIZED AND UNREALIZED GAIN Net realized gain on securities 173,731 Change in net unrealized appreciation on securities 1,694,127 ------------ Net realized and unrealized gain 1,867,858 ------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 1,840,063 ============ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS BY CLASS: CLASS R $ 509,501 CLASS A 485,401 CLASS F 749,792 INSTITUTIONAL CLASS 95,369 ------------ $ 1,840,063 ============ See accompanying notes to financial statements. 11 IMPACT MANAGEMENT INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS For the Six Months Ended March 31, 2002 Unaudited
Six Months Ended March 31, 2002 Year Ended (Unaudited) September 30, 2001 ------------ ------------ INCREASE IN NET ASSETS Operations Net investment loss $ (27,795) $ (7,966) Net realized gain on securities 173,731 605,429 Change in net unrealized appreciation (depreciation) on securities 1,694,128 (375,234) ------------ ------------ Increase in net assets resulting from operations 1,840,063 222,229 ------------ ------------ Distributions to shareholders ------------ ------------ From net investment income (597,463) (27,576) ------------ ------------ From net realized gains on investments 0 (198,792) ------------ ------------ Total distributions to shareholders (597,463) (226,368) ------------ ------------ Beneficial interest share transactions* Shares sold 3,218,216 3,079,982 Shares redeemed (550,677) (2,387,415) Shares issued for reinvestment of distributions 575,323 225,370 ------------ ------------ Increase in net assets from share transactions 3,242,862 917,937 ------------ ------------ Total increase in net assets 4,485,462 913,798 Net assets Beginning of period 4,333,317 3,419,519 ------------ ------------ End of period (including undistributed net investment income (loss) of $(27,795) and $(7,966), respectively $ 8,818,779 $ 4,333,317 ============ ============ *Share information Shares sold 254,175 238,631 Shares redeemed (42,135) (199,154) Change in shares resulting from transfers between classes 0 (1,341) Shares issued for reinvestment of distributions 50,314 19,905 ------------ ------------ Increase in shares outstanding 262,354 58,041 ============ ============
See accompanying notes to financial statements. 12 IMPACT MANAGEMENT INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO 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. The Total Return renamed it's share classes, effective with the most recent Prospectus dated January 28, 2002, to Class A Shares, Class F Shares and Class R Shares from the Traditional Class, Wholesale Class and Retail Class, respectively. 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. By October 1, 2001, the Jordan 25 Fund had redeemed all shares within each Class. The Jordan 25 Fund did not have any sales or redemption activity during the reporting period. The Jordan 25 Fund was later renamed the IMPACT 25 Fund through a Post Effective Amendment filed with the Securities & Exchange Commission and became operational April 12, 2002. 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 $5,204,539 and $2,489,137, respectively. At March 31, 2002, the aggregate cost of investments for federal income tax and financial reporting purposes was $7,106,776 and net unrealized appreciation aggregated $1,397,454. 13 IMPACT MANAGEMENT INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO 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. 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 $14,491, pursuant to the provisions of the Distribution Plan for the six months ended March 31, 2002. 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. The total fees incurred by the Trust for the six-months ended March 31, 2002 amounted to $11,368. 14 IMPACT MANAGEMENT INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO NOTES TO FINANCIAL STATEMENTS Unaudited Effective January 28, 2002, the Trust amended the administrative service agreement with IASI that changes the fee structure. The fee paid to IASI for services is as follows: For the transfer agency and dividend disbursing services rendered by the Administrator pursuant to this Agreement, IMIT shall pay the Administrator at the beginning of each month, a monthly pro rata amount of the following annual fees: Shareholder account fee $ 8.25 Minimum annual fee per initial portfolio $15,000 Additional annual fee for each additional class $ 5,000 For the administration and accounting services rendered by the Administrator pursuant to this Agreement, IMIT shall pay the Administrator at the beginning of each month, a fee, calculated as follows: Fee for first $50 million in total fund assets 0.06%1 Fee for over $50 million up to $100 million in total fund assets 0.05%1 Fee for over $100 million in total fund assets 0.04%1 Minimum annual fee $48,000 Additional annual fee for each additional class $12,000 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 increased from $4,333,317 at September 30, 2001 to $8,818,779 at March 31, 2002. This was predominantly due to purchases that were made by investors and unrealized appreciation on securities. - -------- 1 Calculated annually of the average daily net assets of each portfolio for the previous month. 15 IMPACT MANAGEMENT INVESTMENT TRUST IMPACT TOTAL RETURN PORTFOLIO NOTES TO FINANCIAL STATEMENTS Unaudited NOTE 6. CAPITAL SHARE TRANSACTIONS : ----------------------------
For the Six Months Ended For the Year Ended March 31, 2002 September 30, 2001 Amount Shares Amount Shares ------------ ------------ ------------ ------------ CLASS R Sold $ 150,235 13,434 $ 402,322 35,517 Reinvested 313,843 29,975 159,237 14,307 Repurchased (106,852) (9,890) (853,472) (75,407) Transfer between classes 0 0 (167,883) (14,929) ------------ ------------ ------------ ------------ Net increase (decrease) in retail class 357,226 33,520 (459,796) (40,512) ------------ ------------ ------------ ------------ CLASS A Sold 1,394,154 90,313 749,969 49,780 Reinvested 21,400 1,314 201 15 Repurchased (127,269) (7,749) (677) (46) ------------ ------------ ------------ ------------ Net increase in traditional class 1,288,285 83,878 749,493 49,749 ------------ ------------ ------------ ------------ CLASS F Sold 718,827 55,695 1,927,691 153,334 Reinvested 240,080 19,024 65,932 5,583 Repurchased (316,556) (24,497) (1,533,266) (123,701) Transfer between classes 0 0 167,883 13,588 ------------ ------------ ------------ ------------ Net increase in wholesale class 642,350 50,222 628,240 48,804 ------------ ------------ ------------ ------------ INSTITUTIONAL CLASS Sold 955,000 94,733 0 0 Reinvested 0 0 0 0 Repurchased 0 0 0 0 Transfer between classes 0 0 0 0 ------------ ------------ ------------ ------------ Net increase in wholesale class 955,000 94,733 0 0 ------------ ------------ ------------ ------------ Total net increase (decrease) in Fund $ 3,242,862 262,354 $ 917,937 58,041 ============ ============ ============ ============
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