IMPACT MANAGEMENT INVESTMENT TRUST
IMPACT MANAGEMENT GROWTH PORTFOLIO
ANNUAL REPORT TO SHAREHOLDERS
September 30, 1997
TABLE OF CONTENTS
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PAGES
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A Message From Your Chairman 1
A Letter From the Portfolio Manager 2
Financial Highlights 3
Statement of Assets and Liabilities 4
Schedule of Investments in Securities 5
Statement of Operations 6
Statement of Changes in Net Assets 7
Notes to Financial Statements 8
Independent Auditor's Report 10
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<PAGE> 01
A Message From Your Chairman
Dear Shareholders,
I am pleased to present the first Annual Report of IMPACT Management
Investment Trust and the IMPACT Management Growth Portfolio. The investment
objective of the Portfolio is to provide capital appreciation through
investing primarily in equity securities of companies believed to have
prospects for above-average growth in earnings.
It is our intent to provide you, the investor, with money management
services by a seasoned stock market professional. Our Investment Advisor's
philosophy and experience regarding money management and stock market
investing is unique. By attempting to allocate assets more fully to stocks
during positive market trends and by reducing the investment in stocks during
declining market periods, the Advisor strives to reduce market risk. The
Senior Portfolio Manager of the Advisor, W. Neal Jordan, has been investing
this way, professionally, for over thirty years.
The U.S. stock market has been embraced by many unseasoned and amateur
investors in recent years. This typically occurs near major points of change
for the stock market. It is our Investment Advisor's opinion that, although
experience has not necessarily been a prerequisite for investment success in
recent years, experience may likely be the most valuable tool a money
manager can have in the years ahead.
I wish to thank you for becoming IMPACT Management Growth Portfolio's
charter shareholders. We appreciate your confidence.
Sincerely,
Charles R. Clark
Chairman
IMPACT Management Investment Trust
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<PAGE> 02
A Letter From the Portfolio Manager
Dear IMPACT Management Investment Trust Shareholders,
When I entered the stock market business in February of 1966, I did so
with a purpose. My objective was to learn whatever it was that successful
investors had come to understand which allowed them to rise above their
colleagues, and actually make stock market fortunes. It is one thing to
"play the stock market," as a "sophisticated investor," while it is another
to go into a competitive marketplace and actually multiply investment
capital. In the world of Wall Street, everybody "talks a good game," but
actual results may tell another story.
My objective in managing the IMPACT Management Growth Portfolio is to
try to achieve a very different result from what might come from traditional
Wall Street brokerage firm relationships or from other mutual funds that may
be consistently victimized by market declines. I'm perfectly willing to hold
a temporary defensive cash investment position of up to 100% if our analysis
indicates that an authentic bear market trend is beginning or is in existence
at a time when cash deposits are coming into the portfolio. The purpose of a
conservative approach in which large reserves are sometimes maintained is,
paradoxically, to achieve maximum growth of the portfolio's assets. If the
best opportunities for lower-risk commitments to the stock market come at the
infrequent bear market bottoms, which have been approximately four years
apart according to our analysis, or more frequently at bull market
pullbacks/"corrections" followed by rapid reversals back to the upside, then
we obviously want to be in a position to invest aggressively at those most
opportune times.
Many mutual funds may be somewhat at the mercy of their shareholders, as
to their timing in being fully invested in the fund or making withdrawals.
With a less than exemplary record of shareholder timing, these decisions
often work to the fund managers' disadvantage as more capital is invested
near market tops than near market bottoms. If our timing decisions can prove
superior to those of others, and as the stock market with its fluctuations
creates opportunities for profit, my expectation is that a consistently
positive money flow into the Portfolio may result, which could favorably
benefit the Funds' shareholders.
I have as my long-term objective, a Warren Buffett kind of result.
Sincerely,
W. Neal Jordan
Senior Portfolio Manager
Jordan American Holdings, Inc.
d/b/a Equity Assets Management
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<PAGE> 03
IMPACT MANAGEMENT INVESTMENT TRUST
IMPACT MANAGEMENT GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
For the Period June 17, 1997 (commencement of operations)
to September 30, 1997
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Per Share Data*
Investment income $ .01
Expenses (.01)
Net investment income (loss) .00
Distributions from net investment income .00
Net realized and unrealized (loss) on investments (.08)
Distributions from realized gains on investments .00
Net decrease in net asset value (.08)
Net asset value:
Beginning of period 10.00
End of period $ 9.92
Ratios and Supplemental Data
Total return (not annualized)# (0.80)%
Ratio of expenses to average net assets+# 2.25%
Ratio of net investment income to average net assets+# 0.00%
Portfolio turnover rate 0.00%
Average commission rate paid $ .1437
Net assets, end of period $501,758
Shares of beneficial interest outstanding, end of period 50,567
Number of shareholder accounts, end of period 17
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* Selected data for a share of beneficial interest outstanding throughout
the period.
+ Annualized.
# Excludes administrative fee charged directly to shareholder accounts
(see Note 4 to financial statements).
See accompanying notes to financial statements.
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<PAGE> 04
IMPACT MANAGEMENT INVESTMENT TRUST
IMPACT MANAGEMENT GROWTH PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1997
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ASSETS
Investments in securities, at value - identified cost $165,424 $162,753
Cash 294,829
Receivable for shares of beneficial interest sold 44,793
Total assets 502,375
LIABILITIES
Investment advisory fee payable 503
Administrative fee payable 114
Total liabilities 617
NET ASSETS $501,758
NET ASSETS CONSIST OF:
Accumulated net investment income (loss) $ (17)
Accumulated net realized gain (loss) 0
Unrealized depreciation of investments (2,671)
Paid-in capital applicable to 50,567 no par value shares of
beneficial interest outstanding; unlimited number of
shares authorized 504,446
NET ASSETS $501,758
NET ASSET VALUE PER SHARE $ 9.92
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See accompanying notes to financial statements.
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<PAGE> 05
IMPACT MANAGEMENT INVESTMENT TRUST
IMPACT MANAGEMENT GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS IN SECURITIES
September 30, 1997
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Shares Value
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Common Stocks - 32.4%
Computers and Technology - 11.3%
Compaq Computer Corp.* 90 $ 6,728
Dell Computer Corp.* 70 6,781
Intergraph Corp.* 2,000 21,750
Summit Technology Inc.* 2,000 14,750
Sun Microsystems Inc.* 140 6,554
Communications - 7.0%
Associated Group Inc. - Class A* 180 12,690
Scientific Atlanta Inc. 1,000 22,625
Medical - 7.0%
Interneuron Pharmaceuticals* 1,600 19,200
Vivus Inc.* 420 15,750
Restaurants - 4.8%
Nathans Famous Inc.* 6,000 24,375
Other - 2.3%
Harris & Harris Group Inc.* 3,300 11,550
Total investments in securities - 32.4% of net
assets (cost $165,424) $162,753
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* Non-income producing security
See accompanying notes to financial statements.
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<PAGE> 06
IMPACT MANAGEMENT INVESTMENT TRUST
IMPACT MANAGEMENT GROWTH PORTFOLIO
STATEMENT OF OPERATIONS
For the Period June 17, 1997 (commencement of operations)
to September 30, 1997
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Investment income
Interest $ 486
Expenses
Investment advisory fee 503
Net investment income (loss) (17)
Unrealized depreciation of investments (2,671)
Net (decrease) in net assets resulting from operations $(2,688)
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See accompanying notes to financial statements.
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<PAGE> 07
IMPACT MANAGEMENT INVESTMENT TRUST
IMPACT MANAGEMENT GROWTH PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
For the Period June 17, 1997 (commencement of operations)
to September 30, 1997
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Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ (17)
Unrealized depreciation of investments (2,671)
(Decrease) in net assets resulting from operations (2,688)
Beneficial interest share transactions
Shares sold (50,579 shares) 504,560
Shares redeemed (12 shares) (114)
Increase in net assets from share transactions 504,446
Total increase in net assets 501,758
Net assets
Beginning of period 0
End of period $501,758
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See accompanying notes to financial statements.
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<PAGE> 08
IMPACT MANAGEMENT INVESTMENT TRUST
IMPACT MANAGEMENT GROWTH PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
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 as a diversified, open-end
management investment company. Impact Management Growth Portfolio (the
"Fund") is the initial Series of the Trust. The Trust commenced operations
on June 17, 1997 with the sale of 10,000 shares of beneficial interest of the
Fund to Jordan American Holdings, Inc., d/b/a Equity Assets Management, (the
"Investment Advisor") for cash in the amount of $100,000. The Trust
commenced investing in securities on September 16, 1997.
The Trust's fiscal year end is September 30th of each year.
B. Security Valuation
Investments in securities traded on a national securities exchange (or
reported on the NASDAQ national market) are stated at the last reported sales
price on the day of valuation.
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 Fund's management. The Fund follows industry practice and
records 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. Income Taxes
The Fund's policy is to comply with the requirements of the Internal
Revenue Code that are applicable to regulated investment companies and to
distribute all its taxable income to its shareholders. Therefore, no federal
or state income tax provision is required.
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<PAGE> 09
Note 2. INVESTMENT TRANSACTIONS
Purchases of investment securities during the period were $165,424 with
no sales of investment securities occurring. At September 30, 1997, the
aggregate cost of investments for federal income tax and financial reporting
purposes was $165,424 and net unrealized depreciation aggregated $2,671, of
which $3,041 related to appreciated investments and $5,712 to depreciated
investments.
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 Fund and continuously reviews, supervises and
administers the investment program of the Fund. As compensation for services
rendered, the Investment Advisor receives an annual investment advisory fee
equal to 2.25% of the Fund's average daily net assets. The investment
advisory fee, which may be voluntarily waived in whole or in part by the
Investment Advisor, is paid on a monthly basis. Certain officers of the
Trust and members of the Board of Trustees are also officers and directors of
the Investment Advisor.
A wholly-owned subsidiary of the Investment Advisor, Impact Financial
Network, Inc., a broker and dealer in securities registered with the
Securities and Exchange Commission, earned brokerage fees on the Fund's
purchases of investment securities aggregating approximately $1,500 for the
period June 17, 1997 (commencement of operations) to September 30, 1997.
Note 4. ADMINISTRATIVE SERVICES
The Trust has entered into an administrative services agreement with
Impact Management Services, Inc. (the "Administrator"). Under the agreement,
the Administrator provides administrative personnel and services necessary to
operate the Fund and provides transfer agent and dividend disbursing agent
services. The Administrator bears substantially all operating expenses of
the Fund, excluding brokerage fees, interest charges and taxes. For these
services, the Administrator is paid a fee of $165.00 per account, per year.
One twelfth of the annual fee paid to the Administrator is charged to
shareholder accounts at each month end as a redemption of shares of
beneficial interest. Total fees charged to shareholder accounts amounted to
$114 for the period June 17, 1997 (commencement of operations) to
September 30, 1997.
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<PAGE> 10
INDEPENDENT AUDITOR'S REPORT
To the Shareholders and Board of Trustees
Impact Management Investment Trust
Impact Management Growth Portfolio
We have audited the accompanying statement of assets and liabilities of
Impact Management Growth Portfolio (the "Fund"), a Series of Impact
Management Investment Trust, including the schedule of investments in
securities, as of September 30, 1997, and the related statements of
operations, changes in net assets, and the financial highlights for the
period June 17, 1997 (commencement of operations) to September 30, 1997.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit 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. Our procedures included confirmation of
securities owned as of September 30, 1997, 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 audit provides
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 Management Growth Portfolio, a Series of Impact Management Investment
Trust, as of September 30, 1997, and the results of its operations, the
changes in its net assets and the financial highlights for the period
June 17, 1997 (commencement of operations) to September 30, 1997, in
conformity with generally accepted accounting principles.
/s/ Arthur F. Bell, Jr. & Associates, L.L.C.
ARTHUR F. BELL, JR. & ASSOCIATES, L.L.C.
CERTIFIED PUBLIC ACCOUNTANTS
Lutherville, Maryland
November 20, 1997
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