IMPACT MANAGEMENT INVESTMENT TRUST
TABLE OF CONTENTS
SECTION PAGE
------- ----
A Message From Your Chairman 1
Financial Highlights 2
Statement of Assets and Liabilities 4
Schedule of Investments in Securities 5
Statement of Operations 7
Statements of Changes in Net Assets 8
Notes to Financial Statements 9
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IMPACT MANAGEMENT INVESTMENT TRUST
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2155 RESORT DRIVE, SUITE 108
STEAMBOAT SPRINGS, CO 80487
1.800.556.5856
A MESSAGE FROM YOUR CHAIRMAN....
Dear Shareholders,
The IMPACT Total Return Portfolio achieved solid results for the first half
of its fiscal year, October 1, 1999 through March 31, 2000. Volatility and
uncertainty were the primary characteristics associated with the U.S. stock
market during that same period of time. In 1999, the uncertainties centered
around concerns over Y2K and then beginning in 2000, the focus shifted to
Federal Reserve Board policy regarding interest rates. Though Fed policy has
many investors wondering how far the Federal Open Market Committee will go with
rates and the resulting restriction on the U.S. economy, the fund's investment
advisor has a different perspective on their activity. Rather than having an
objective of restriction on the U.S. economy, the Fed may very well be simply
supplying the necessary uncertainty to keep the rising market trend intact. In
other words, rather than the market getting so far ahead of itself that a
reactionary debacle ensues, uncertainty is having the effect of keeping the
party under control.
The volatility that the market has seen has also been difficult, at times,
for investors. Much commotion was raised early in the first part of 2000
regarding margin debt reaching excessive levels. Shortly thereafter, the market
in general and NASDAQ in particular set about adjusting out much of that excess.
The significant sell-off in NASDAQ served to bring an increased awareness of the
need for revenues and earnings, not just great ideas and hopeful business plans.
The resulting rise in the price structure of the "old economy" stocks following
the sell-off indicates that value and companies with proven track records are
not entirely a thing of the past. However, selectivity still dominates the
market condition overall, so careful stock selection is crucial.
The time appears to be right for a well-timed, value-oriented portfolio of
securities to be part of an investor's core holdings. The IMPACT Total Return
Portfolio has just such a focus. We look forward to strength in the second half
of the year 2000 as the presidential election unfolds.
Sincerely,
Charles R. Clark
Chairman
Impact Management Investment Trust
1
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IMPACT MANAGEMENT INVESTMENT TRUST
IMPACT TOTAL RETURN PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Six Months Ended, March 31, 2000
Unaudited
--------------------------------------------------
Retail Wholesale Traditional
--------------------------------------------------
Per Share Data*
<S> <C> <C> <C>
Investment Income ....................................... $ 0.11 $ 0.26 $ 0.22
Expenses ................................................ (0.11) (0.15) (0.12)
------------ ------------ ------------
Net investment income ................................... 0.00 0.11 0.10
Distributions from net investment income ................ 0.00 0.00 0.00
Net realized and unrealized gain on investments ......... 0.71 0.60 0.39
Distributions from realized gain on investments ......... (0.48) 0.00 0.00
------------ ------------ ------------
Net increase (decrease) in net asset value ............ 0.23 0.71 0.49
Net asset value:
Beginning of period .............................. 8.46 8.45ss 10.00<<
------------ ------------ ------------
End of period .................................... $ 8.69 $ 9.16 $ 10.49
============ ============ ============
Ratios and Supplemental Data
Total return ........................................... 8.10%~ 8.40%~ 4.90%~
Ratio of expenses to average net assets ................ 2.52%+ 2.57%+ 2.12%+
Ratio of net investment income to average net assets ... 0.14%+ 2.56%+ 1.92%+
Portfolio turnover rate ................................ 205.69% 205.69% 205.69%
Net assets, end of period .............................. $ 2,486,938 $ 1,081,556 $ 989
Shares of beneficial interest outstanding, end of period 286,256 118,040 94
Number of shareholder accounts, end of period .......... 96 37 1
</TABLE>
* Selected data for a share of beneficial interest outstanding throughout
each period.
~ Not annualized.
+ Annualized
ss Wholesale Class began trading October 5, 1999 at $ 8.45 per share
<< Traditional Class began trading February 3, 2000 at $ 10.00 per share.
See accompanying notes to financial statements.
2
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IMPACT MANAGEMENT INVESTMENT TRUST
IMPACT TOTAL RETURN PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
For the Year Ended
------------------------------ June 17, 1997++ to
September 30, September 30, September 30,
1999 1998 1997
Retail Retail Retail
------------ ------------ ------------
Per Share Data*
<S> <C> <C> <C>
Investment Income $ 0.26 $ 0.29 $ 0.01
Expenses (0.22) (0.21) (0.01)
------------ ------------ ------------
Net investment income 0.04 0.08 0.00
Distributions from net investment income (0.08) (0.01) 0.00
Net realized and unrealized gain (loss) on investments 0.86 (1.66) (0.08)
Distributions from realized gain (loss) on investments (0.69) 0.00 0.00
------------ ------------ ------------
Net increase (decrease) in net asset value 0.13 (1.59) (0.08)
Net asset value:
Beginning of period 8.33 9.92 10.00
------------ ------------ ------------
End of period $ 8.46 $ 8.33 $ 9.92
============ ============ ============
Ratios and Supplemental Data
Total return 11.50% (15.93)% (0.80)%
Ratio of expenses to average net assets 2.47% 2.25% 2.25%
Ratio of net investment income to average net assets 0.42% 0.88% 0.00%
Portfolio turnover rate 254.79% 221.45% 0.00%
Net assets, end of period $ 6,270,819 $ 3,925,928 $ 501,758
Shares of beneficial interest outstanding, end of period 741,369 471,512 50,567
Number of shareholder accounts, end of period 156 136 17
</TABLE>
++ Commencement of operations.
* Selected data for a share of beneficial interest outstanding throughout
each period.
See accompanying notes to financial statements.
3
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IMPACT MANAGEMENT INVESTMENT TRUST
IMPACT TOTAL RETURN PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2000
Unaudited
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investments in securities, at value - identified cost $3,491,542 $ 3,111,215
Cash 477,713
Interest and dividends receivable 11,806
Receivable from securities sold 69,798
------------
Total assets 3,670,532
------------
LIABILITIES
Payable for investment securities purchased 92,185
Investment advisory fee payable 4,704
Distribution expenses payable 2,843
Administrative Fee Payable 1,317
------------
Total liabilities 101,049
------------
NET ASSETS $ 3,569,483
============
NET ASSETS CONSIST OF:
Accumulated net investment income - net of distributions $ 7,647
Accumulated net realized gain 75,651
Net unrealized (depreciation) (380,327)
Paid-in capital applicable to 404,390 no par value shares of
beneficial interest outstanding; unlimited number of shares
Authorized 3,866,512
------------
NET ASSETS $ 3,569,483
============
NET ASSET VALUE PER SHARE:
RETAIL CLASS $ 8.69
TRADITIONAL CLASS 10.49
WHOLESALE CLASS 9.16
</TABLE>
See accompanying notes to financial statements.
4
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IMPACT MANAGEMENT INVESTMENT TRUST
IMPACT TOTAL RETURN PORTFOLIO
SCHEDULE OF INVESTMENTS IN SECURITIES
March 31, 2000
Unaudited
Shares Value
Convertible Bonds - 4.4%
Consumer Products
Asia Pulp & Paper Company Conv. (cost $136,627) $ 156,244
------------
Total convertible bonds 156,244
------------
Common Stock - 82.0%
Consumer Products - 11.5%
Archer-Daniels-Midland Co. 6,200 64,325
Homestake Mining Co.* 5,400 32,400
Tate & Lyle PLC 12,000 168,655
Tupperware Corporation 6,000 94,875
Tyson Foods, Inc. 4,500 50,063
Communications - 1.9%
Loral Space & Communications LTD * 6,500 66,219
Computers and Technology - 2.4%
Arrow Electronics, Inc.* 2,400 84,600
Utilities - 10.1%
CMS Energy Corporation 2,600 47,125
Edision International 2,000 33,125
Niagra Mohawk Holdings, Inc.* 11,500 155,250
P G & E Corporation 6,000 126,000
Insurance - 10.6%
Aetna, Inc. 3,500 194,906
Foundation Health Systems, Inc.* 17,400 139,200
UNUMProvident Corp 2,500 42,500
Capital Goods - 3.7%
The Boeing Company 1,000 37,938
Fluor Corporation 1,700 52,700
Metso Corporation 3,100 41,850
Basic Materials - 9.4%
IMC Global Inc 12,300 180,656
International Paper Co. 1,800 76,950
Smurfit-Stone Container Corporation* 4,700 79,606
5
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IMPACT MANAGEMENT INVESTMENT TRUST
IMPACT TOTAL RETURN PORTFOLIO
SCHEDULE OF INVESTMENTS IN SECURITIES
March 31, 2000
Unaudited
(continued)
Services - 1.1%
Nabors Industries, Inc* 1,000 38,813
Energy - 6.7%
Petroleo Brasileiro SA* 2,000 54,441
R & B Falcon Corp* 6,000 118,125
Utlramar Diamond Shamrock 2,600 65,975
Financial - 23.0%
Aon Corp 2,800 90,300
Golden State Bancorp, Inc.* 3,200 47,800
Loews Corporation 1,300 65,000
The St. Paul Companies 2,000 68,250
Sovereign Bancorp Inc. 12,500 94,531
Washington Mutual Inc. 2,000 53,000
Ace Limited 8,500 194,437
CHN Global N V 21,100 208,362
Healthcare -1.7%
Tenet Healthcare Corporation 2,600 59,800
------------
Total common stocks (cost $3,327,722) 2,927,777
------------
Short-Term Investments - .8%
Rydex Series Trust - U.S. Government Money
Market Fund (4.90% seven day yield, cost $27,194) 27,194 27,194
------------
Total investments in securities - 87.2% of net
assets (cost $3,491,543) $ 3,111,215
============
* Non-income producing security
See accompanying notes to financial statements.
6
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IMPACT MAMAGEMENT INVESTMENT TRUST
IMPACT TOTAL RETURN PORTFOLIO
STATEMENT OF OPERATIONS
For the Six Months Ended March 31, 2000
Unaudited
INVESTMENT INCOME
Interest income $ 40,068
Dividend income 48,258
----------
Total income 88,326
----------
EXPENSES
Investment advisory fee 37,163
Distribution expenses 26,581
Administrative fee 10,406
----------
Total expenses 74,150
----------
Net investment income 14,176
----------
REALIZED AND UNREALIZED GAIN
Net realized gain on securities 69,122
Change in net unrealized appreciation on securities 266,370
----------
Net realized and unrealized gain 335,492
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 349,668
==========
See accompanying notes to financial statements.
7
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IMPACT MANAGEMENT INVESTMENT TRUST
IMPACT TOTAL RETURN PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended March 31, 2000 Unaudited
<TABLE>
<CAPTION>
Six Months Ended Year Ended
March 31, 2000 September 30,
(Unaudited) 1999
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
Operations
<S> <C> <C>
Net investment income gain $ 14,176 $ 30,248
Net realized gain on securities 69,122 1,082,431
Change in net unrealized appreciation
(depreciation) on securities 266,370 (331,051)
------------ ------------
Increase (decrease) in net assets resulting
from operations 349,668 781,628
------------ ------------
Distributions to shareholders
From net investment income -- (61,540)
From net realized gains on investments (302,987) (552,154)
------------ ------------
Total distributions to shareholders (302,987) (613,694)
------------ ------------
Beneficial interest share transactions*
Shares sold 710,933 5,244,694
Shares redeemed (3,761,937) (3,681,431)
Shares issued for reinvestment of distributions 302,987 613,694
------------ ------------
(Decrease) Increase in net assets from share transactions (2,748,017) 2,176,957
------------ ------------
Total (decrease) increase in net assets (2,701,336) 2,344,891
Net assets
Beginning of period 6,270,819 3,925,928
------------ ------------
End of period (including undistributed net investment
income of $14,176 and $6,529, respectively) $ 3,569,483 $ 6,270,819
============ ============
Share information
Shares sold 81,869 606,390
Shares redeemed (435,392) (400,831)
Change in shares resulting from transfers between classes (16,388) --
Shares issued for reinvestment of distributions 32,933 64,298
------------ ------------
Increase (decrease) in shares outstanding (336,978) 269,857
============ ============
</TABLE>
See accompanying notes to financial statements.
8
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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
"Fund") is the initial Series of the Trust. The Trust commenced
operations on June 17, 1997, with the sale of 10,000 shares of
beneficial interest of the Fund to Jordan American Holdings, Inc.,
d/b/a Equity Assets Management (the "Investment Advisor"), for cash in
the amount of $100,000. The Trust commenced investing in securities on
September 16, 1997.
Effective May 1, 1999, the Trust changed the name of the Portfolio to
the Impact Total Return Portfolio consistent with the changes made to
the investment objective and policies. Effective May 1, 1999, the
Trust offers four classes of shares of beneficial interest.
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 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. Federal Income Taxes
No provision for federal income taxes is required since the Fund
intends to continue to qualify as a regulated investment company and
distribute all its taxable income to its shareholders
Note 2. INVESTMENT TRANSACTIONS
-----------------------
Purchases and sales of investment securities, other than short-term
investments, during the period were $6,343,571 and $9,439,100,
respectively. At March 31, 2000, the aggregate cost of investments for
federal income tax and financial reporting purposes was $3,491,542 and
net unrealized depreciation aggregated $(380,327).
9
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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 Fund and reviews, supervises and
administers the investment program of the Fund. As compensation for
services rendered, the Investment Advisor receives an annual
investment advisory fee equal to 1.25% of the Fund'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 Fund'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 Fund pays or reimburses the Investment Advisor
affiliates or other third parties for expenses incurred in connection
with the promotion and distribution of the Fund's shares in an amount
up to 1% per annum for Retail Class shares of the average daily net
assets of each Class. Effective May 1, 1999, this plan was amended to
change the name of the Portfolio to Impact Total Return Portfolio,
Retail Class.
Also, effective May 1, 1999, a Distribution Plan was adopted by the
Trust for the Traditional Class and Wholesale Class pursuant to Rule
12b-1 of the 1940 Act. Under the provisions of the Distribution Plan,
the Fund pays or reimburses the Investment Advisor affiliates or other
third parties for expenses incurred in connection with the promotion
and distribution of the Fund's shares in an amount up to .25% per
annum of the average daily net assets of each class.
A wholly-owned subsidiary of the Investment Advisor, IMPACT Financial
Network, Inc., a broker and dealer in securities registered with the
Securities and Exchange Commission and a member of the National
Association of Securities Dealers, Inc., earned brokerage fees on the
Fund's purchases and sales of investment securities aggregating
approximately $0 and was reimbursed $26,581 pursuant to the provisions
of the Distribution Plan for the six months ended March 31, 2000.
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"),
a wholly owned subsidiary of the Investment Advisor. Under the
agreement, IASI provides administrative personnel and services
necessary to operate the Fund including transfer agent and dividend
disbursing agent services. IASI bears substantially all operating
expenses of the Fund, excluding brokerage fees, interest charges and
taxes
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 Fund's average daily net
assets. Total fees incurred by the Trust for the six-months ended,
March 31, 2000 amounted to $10,406..
10
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IMPACT MANAGEMENT INVESTMENT TRUST
IMPACT TOTAL RETURN PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
Unaudited
In addition, when a shareholder closes an account, IASI is paid a fee
of $2.00 which is charged to the shareholder as redemption of shares
of beneficial interest.
Note 5. CHANGES IN NET ASSETS
---------------------
The net assets of the fund have dropped from $6,270,819 at September
30, 1999 to $3,569,483 at March 31, 2000. This is predominantly due to
redemptions that were made by investors who, at the direction of their
advisers, repositioned their assets into various other investment
vehicles over the period. It is anticipated that this type of
repositioning, as a percentage of the overall fund assets, will be
less significant in the future as the fund has been recharacterized to
be consistent with its investment objective as a more conservative,
core holding by those who are presently marketing the fund to
prospective investors.
