<PAGE>
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[GRAPHIC OMITTED]
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ICM SERIES TRUST
------------------
ISABELLE SMALL CAP
VALUE FUND
Annual Report
December 31, 1998
<PAGE>
ICM/ISABELLE
SMALL CAP VALUE FUND
TABLE OF CONTENTS
Shareholder Letter .................................... 1
Portfolio of Investments .............................. 6
Statement of Assets and Liabilities ................... 8
Statement of Operations ............................... 9
Statement of Changes in Net Assets .................... 10
Financial Highlights .................................. 11
Notes to Financial Statements ......................... 13
<PAGE>
Shareholder Letter
Dear Shareholder:
First and foremost let me thank you for your continued vote of confidence in the
ICM/Isabelle Small Cap Value Fund. While many established funds can offer such
comments gratuitously, we are especially grateful to our shareholders who helped
make this new fund an investment reality in its first year of existence.
Despite our best intentions and most diligent effort, the early going was rough.
Generally, 1998 was not a good year: it was not for value oriented investors; it
was not for small capitalization stocks; and it was certainly not for your fund.
In my nearly 18 years as analyst, portfolio manager and administrator, I have
never experienced a more difficult or exasperating year. It was like being in
Wonderland where everything you thought should act one way behaved the opposite.
Large capitalization stocks with already high valuations simply got richer while
small capitalization stocks, which appeared to be extraordinarily cheap on a
business value basis, let alone relative to larger stocks, simply got cheaper.
One need only to look at the disparity in returns of the S&P 500* and the Dow
Jones Industrial Average, up 26.67% and 16.10%, respectively, as compared to the
Russell 2000 Index,* down 3.45%, to verify this.
- -------------
Past performance is no guarantee of future results. For more complete
information about the fund, including fees and expenses, please call
1-800-472-6114 for a prospectus. Please read the prospectus carefully before
investing or sending money. There are risks associated with investing in funds
that invest in stocks of small companies. These stocks tend to be more volatile
and less liquid than stocks of larger companies. Share prices and performance
calculations are based upon investment class shares. Investment return and
principal value of mutual funds will vary with market conditions, so that
shares, when redeemed, may be worth more or less than their original cost.
Without fee waivers and expense reimbursement in effect during the period, total
return for the Fund would have been lower. The Russell 2000 Index, the most
relevant benchmark for the Fund, is an unmanaged index of stocks considered
representative of the small cap market. An individual cannot invest in the
index. Distributors: First Data Distributors, Inc.
In the meantime, we began to build the ICM/Isabelle Small Cap Value Fund. Having
been at the business of managing mutual funds for more than 10 years, I set
about constructing the portfolio as I always have: finding businesses that were
undervalued, with individual characteristics that made them particularly
attractive as investments over the long-term. What I did not, could not, have
known was the effect that the uncertainty introduced into the market later in
the year would have on it. In fact, liquidity for small capitalization issues
literally dried up. Worse yet, investors had no patience for situations like
ours, which, although carefully identified, were not yet responding with sales
and/or earnings growth. In addition, there was, perhaps driven by the need to
offset gains taken in larger capitalization issues, an inordinate amount of
tax-loss selling both in October for mutual funds, and again in December for
individuals.
All kinds of reasons can be offered as to why performance was poor, but the
bottom line is that it was and it must improve. We believe that our investment
philosophy, which focuses on determining the economic value of a business,
coupled with our ability for finding individual small capitalization stocks,
continues to be a rewarding one. In our opinion this discipline of investment
selection, which we have practiced for more than a decade, offers investors the
greatest potential for appreciation while maintaining a truly diversified
portfolio.
Just as last year's results were disappointing, I am more convinced than ever
that the outlook for 1999 is positive and our efforts will pay off. The
portfolio has largely taken shape. Our ideas are beginning to work and
performance is improving. As of this writing, from its 1998 low, your fund has
rebounded some 38%. In addition, in recognition of our fundamental strategy, the
ICM/Isabelle Small Cap Value Fund continued to receive accolades from the
financial press in 1998 as Forbes named the Fund to its top ten "up-and-comers"
list in late August. Further, when Kiplinger's Personal Finance Magazine hit the
newsstand in December, the Fund was named as one of the "Best of the New Funds"
for investors in 1999.
In summary, while the performance of the Fund during most of 1998 was truly
frustrating, we are optimistic for 1999 as the continued under-valuation of
small company stocks offers opportunities for the Fund to respond to a change in
market sentiment toward these stocks. We encourage investors to maintain a
"long-term" perspective recognizing that over time wealth is built through
steady effort and patience - not speculation. Again, we thank you for your
support and continued confidence.
Sincerely,
/s/ Warren J. Isabelle
Warren J. Isabelle
President and Chairman of the Board
February 1999
- ----------
* Unmanaged indices, not available for investment.
The views expressed in this report reflect those of the portfolio manager, only
through the period of this report as stated on the cover. The manager's views
are subject to change at any time based on the market and other conditions.
<PAGE>
ICM/ISABELLE SMALL CAP VALUE FUND
Investment Class
ILLUSTRATION OF $10,000 INVESTMENT
The graph below compares the increase in the value of a $10,000 investment in
the ICM/Isabelle Small Cap Value Fund with the performance of the Russell 2000
Index. The values and returns for the ICM Isabelle Small Cap Value Fund include
reinvested dividends.
INVESTMENT CLASS
- -------------------------------------------
Total return for the period ending 12/31/98
Inception (3/9/1998) ............. (30.90)%
- -------------------------------------------
ICM/Isabelle
Small Cap Russell 2000
Value Fund Index
---------- -----
9-Mar $10,000.00 $10,000.00
31-Mar 10,000.00 10,430.71
30-Apr 9,900.00 10,488.44
31-May 9,460.00 9,923.57
30-Jun 9,040.00 9,944.44
31-Jul 7,770.00 9,139.39
31-Aug 5,910.00 7,364.73
30-Sep 6,110.00 7,941.07
31-Oct 6,480.00 8,264.96
30-Nov 6,730.00 8,697.96
31-Dec 6,910.00 9,236.17
* Past performance is not indicative of future results.
ICM/ISABELLE SMALL CAP VALUE FUND
Institutional Class
ILLUSTRATION OF $10,000 INVESTMENT
The graph below compares the increase in the value of a $10,000 investment in
the ICM/Isabelle Small Cap Value Fund with the performance of the Russell 2000
Index. The values and returns for the ICM Isabelle Small Cap Value Fund include
reinvested dividends.
INSTITUTIONAL CLASS
- -------------------------------------------
Total return for the period ending 12/31/98
Inception (3/29/1998) ............ (30.80)%
- -------------------------------------------
ICM/Isabelle
Small Cap Russell 2000
Value Fund Index
---------- -----
30-Mar $10,000.00 $10,000.00
31-Mar 9,970.00 10,091.86
30-Apr 9,870.00 10,147.73
31-May 9,460.00 9,601.20
30-Jun 9,040.00 9,621.39
31-Jul 7,780.00 8,842.49
31-Aug 5,920.00 7,125.49
30-Sep 6,120.00 7,683.10
31-Oct 6,480.00 7,996.47
30-Nov 6,740.00 8,415.41
31-Dec 6,920.00 8,936.13
* Past performance is not indicative of future results.
<PAGE>
ICM/ISABELLE SMALL CAP VALUE FUND
PORTFOLIO OF INVESTMENTS
December 31, 1998
MARKET
SHARES VALUE
------ -----
COMMON STOCKS - 97.80%
BASIC MATERIALS - 7.69%
30,000 Crown Vantage, Inc.* $ 67,500
28,100 Landec Corp.* 168,600
21,000 Material Sciences Corp.* 178,500
-----------
414,600
-----------
CAPITAL GOODS - 16.85%
47,700 Acme Electric Corp.* 226,575
9,300 Kollmorgen Corp. 141,825
75,400 Measurement Specialties, Inc.* 329,875
8,800 Nashua Corp. 117,150
7,000 Sparton Corp. * 41,563
4,000 Woodhead Industries, Inc. 52,000
-----------
908,988
-----------
CONSUMER CYCLICALS - 8.96%
60,000 Morgan Products, Ltd.* 210,000
42,700 Transmedia Network, Inc. 90,737
50,400 Worldtex, Inc.* 182,700
-----------
483,437
-----------
CONSUMER STAPLES - 4.34%
26,000 WLR Foods, Inc. 234,000
-----------
234,000
-----------
ENERGY - 1.64%
7,000 Power-One, Inc. * 49,000
5,000 Triton Energy Limited * 39,688
-----------
88,688
-----------
HEALTH CARE - 19.88%
112,400 Anergen, Inc.* 45,662
50,200 Apria Healthcare Group, Inc.* 448,663
5,000 EPIX Medical, Inc. * 46,562
97,500 Medical Resources, Inc.* 219,375
29,000 Neurocrine Biosciences, Inc.* 199,375
25,000 Vencor, Inc. * 112,500
-----------
1,072,137
-----------
The accompanying notes are an integral part of the Financial Statements.
<PAGE>
TECHNOLOGY - 22.85%
11,800 Anacomp, Inc.* 219,775
47,000 Broadway & Seymour, Inc.* 105,750
23,650 CSP, Inc. * 187,722
2,000 DT Industries, Inc. 31,500
5,000 General Scanning, Inc. * 30,312
17,000 Integrated Circuit Systems, Inc.* 299,625
50,000 OpenROUTE Networks, Inc. * 85,937
22,700 Pioneer-Standard Electronics, Inc. 212,813
10,000 Signal Technology, Corp. * 26,250
3,000 VLSI Technology, Inc. * 32,813
-----------
1,232,497
-----------
TRANSPORTATION - 8.51%
24,000 Yellow Corp. 459,000
-----------
459,000
-----------
OTHER - 7.08%
5,000 Harnischfeger Industries, Inc. 50,938
19,000 Maverick Tube Corp. * 105,687
2,000 Roy F. Weston, Inc. * 5,500
11,000 Vallen Corporation * 220,000
-----------
382,125
-----------
TOTAL COMMON STOCKS (COST $6,274,651) 5,275,472
TOTAL INVESTMENTS (COST $6,274,651)** - 97.80% 5,275,472
LIABILITIES NET OF CASH AND OTHER ASSETS - 2.20% 119,488
-----------
NET ASSETS - 100.00% $ 5,394,960
===========
- ------------
* Non-income producing security.
** Cost for federal income tax purposes is $6,274,651 and net unrealized
depreciation consists of:
Gross unrealized appreciation..................... $ 399,331
Gross unrealized depreciation..................... 1,398,510
------------
Net unrealized depreciation....................... ($999,179)
============
The accompanying notes are an integral part of the Financial Statements.
<PAGE>
ICM/ISABELLE SMALL CAP VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
ASSETS:
Investments in securities at market value
(identified cost $6,274,651) (Note 1) $ 5,275,472
Receivable for investments sold 104,574
Receivable for fund shares sold 42,073
Due from adviser (Note 3) 26,018
Deferred organization costs (Note 1) 50,464
Other assets 4,294
-----------
TOTAL ASSETS 5,502,895
-----------
LIABILITIES:
Accrued expenses 46,924
Accrued distribution expense 1,204
Due to Bank 59,807
-----------
TOTAL LIABILITIES 107,935
-----------
NET ASSETS $ 5,394,960
===========
INVESTMENT CLASS SHARES (NOTE 1):
Net assets (Unlimited shares of $0.001 par beneficial
interest authorized; 240,298 shares outstanding) $ 1,660,463
===========
Net asset value, offering and redemption price per
Investment Class Share ($1,660,463 / 240,298 shares) $ 6.91
===========
INSTITUTIONAL CLASS SHARES (NOTE 1):
Net assets (Unlimited shares of $0.001 par beneficial
interest authorized; 539,374 shares outstanding) $ 3,734,497
===========
Net asset value, offering and redemption price per
Institutional Class Share ($3,734,497 / 539,374 shares) $ 6.92
===========
NET ASSETS CONSIST OF:
Paid-in capital ................................... 7,206,712
Accumulated net investment loss 0
Accumulated net realized loss on investments (812,573)
Net unrealized depreciation on investments (999,179)
-----------
NET ASSETS $ 5,394,960
===========
The accompanying notes are an integral part of the Financial Statements.
<PAGE>
ICM/ISABELLE SMALL CAP VALUE FUND
STATEMENT OF OPERATIONS
December 31, 1998
FOR THE PERIOD
MARCH 9, 1998*
THROUGH
DECEMBER 31, 1998
-----------------
INVESTMENT INCOME:
Dividends $ 4,307
Interest 22,576
------------
TOTAL INCOME 26,883
------------
EXPENSES:
Investment advisory fees (Note 3) 32,936
Professional fees 40,426
Accounting fees 32,591
Administration fees 45,017
Registration fees 36,291
Transfer agent fees 57,942
Custodian fees (Note 3) 10,062
Printing fees 3,589
Amortization of organization costs (Note 1) 9,804
Insurance fees 8,759
Trustees fees 4,000
Distribution fees - Investment Class (Note 4) 2,153
------------
TOTAL EXPENSES 283,570
Fees waived and expenses reimbursed by Adviser
(Note 3) (224,508)
Credits allowed by custodian (Note 3) (922)
------------
NET EXPENSES 58,140
------------
NET INVESTMENT LOSS (31,257)
------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss on investments (812,573)
Net change in unrealized depreciation of investments (999,179)
------------
Net realized and unrealized loss on investments (1,811,752)
------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(1,843,009)
===========
*Commencement of investment operations.
The accompanying notes are an integral part of the Financial Statements.
<PAGE>
ICM/ISABELLE SMALL CAP VALUE FUND
STATEMENT OF CHANGES IN NET ASSETS
December 31, 1998
FOR THE PERIOD
MARCH 9, 1998*
THROUGH
DECEMBER 31, 1998
-----------------
OPERATIONS:
Net investment loss $ (31,257)
Net realized loss on investments (812,573)
Net change in unrealized depreciation of investments. (999,179)
------------
Net decrease in net assets resulting from operations. (1,843,009)
------------
CAPITAL SHARE TRANSACTIONS
Shares sold:
Investment Class 2,144,314
Institutional Class 5,500,000
Shares redeemed:
Investment Class (206,284)
Institutional Class (300,061)
------------
Increase in net assets derived from capital share
transactions (a) 7,137,969
------------
TOTAL INCREASE IN NET ASSETS 5,294,960
------------
NET ASSETS:
Beginning of period 100,000
------------
End of period (including accumulated net investment
loss of ($31,257)) $ 5,394,960
===========
(a) Transactions in capital stock were: Shares sold:
Investment Class 270,372
Institutional Class. 589,374
Shares redeemed:
Investment Class (30,074)
Institutional Class (50,000)
------------
Increase in shares outstanding. 779,672
===========
- ----------
* Commencement of investment operations.
The accompanying notes are an integral part of the Financial Statements.
<PAGE>
ICM/ISABELLE SMALL CAP VALUE FUND
FINANCIAL HIGHLIGHTS
December 31, 1998
The table below sets forth financial data for one share of capital stock
outstanding throughout the period presented.
INVESTMENT
CLASS
--------------
FOR THE PERIOD
MARCH 9, 1998*
THROUGH
DECEMBER 31, 1998
-----------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
--------
Income From Investment Operations:
Net investment loss (0.04)
Net losses on securities
(both realized and unrealized) (3.05)
--------
TOTAL FROM INVESTMENT OPERATIONS (3.09)
--------
NET ASSET VALUE, END OF PERIOD $ 6.91
=======
TOTAL RETURN (NOT ANNUALIZED) (30.90%)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000s) $ 1,660
Ratio of expenses to average net assets:
Before expense reimbursement(2) 8.81%(1)
After expense reimbursement(2) 1.95%(1)
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement(2) (7.99%)(1)
After expense reimbursement(2) (1.13%)(1)
Portfolio turnover rate 26.04%
- ---------
* Commencement of investment operations.
(1) Annualized.
(2) Includes custody earnings credits.
The accompanying notes are an integral part of the Financial Statements.
<PAGE>
ICM/ISABELLE SMALL CAP VALUE FUND
FINANCIAL HIGHLIGHTS
December 31, 1998
The table below sets forth financial data for one share of capital stock
outstanding throughout the period presented.
INSTITUTIONAL
CLASS
--------------
FOR THE PERIOD
MARCH 9, 1998*
THROUGH
DECEMBER 31, 1998
-----------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
--------
Income From Investment Operations:
Net investment loss (0.04)
Net losses on securities
(both realized and unrealized) (3.04)
--------
TOTAL FROM INVESTMENT OPERATIONS (3.08)
--------
NET ASSET VALUE, END OF PERIOD $ 6.92
=======
TOTAL RETURN (NOT ANNUALIZED) (30.80%)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000s) $ 3,734
Ratio of expenses to average net assets:
Before expense reimbursement(2) 8.56%(1)
After expense reimbursement(2) 1.70%(1)
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement(2) (7.74%)(1)
After expense reimbursement(2) (0.88)(1)
Portfolio turnover rate 26.04%
- ----------
* Commencement of investment operations.
(1) Annualized
(2) Includes custody earnings credits.
The accompanying notes are an integral part of the Financial Statements.
<PAGE>
ICM/ISABELLE SMALL CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
ICM/Isabelle Small Cap Value Fund (the "Fund"), a series of ICM Series Trust
(the "Trust") was organized as a Massachusetts business trust pursuant to a
trust agreement dated November 18, 1997. The Trust is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"). The Fund offers two
classes of shares (Investment Class shares and Institutional Class shares) each
of which has equal rights as to class and voting privileges. The Investment
Class has exclusive voting rights with respect to its distribution plan pursuant
to Rule 12b-1 ("12b-1 Plan") and is subject to 12b-1 Plan expenses. The Fund
commenced operations on March 9, 1998. The investment objective of the Fund is
to seek capital appreciation by investing in a diversified portfolio of
securities consisting primarily of common stocks. The following is a summary of
significant accounting policies consistently followed by the Fund in the
preparation of its financial statements. The policies are in conformity with
generally accepted accounting principles for investment companies.
A. SECURITY VALUATION. Investments in securities are valued at the last
reported sales price on the national securities exchange or national
securities market on which such securities are primarily traded on the last
business day of the period. Unlisted securities, or listed securities in
which there were no sales, are valued at the mean of the closing bid and ask
prices. Short-term obligations with remaining maturities of 60 days or less
are valued at amortized cost plus accrued interest, which approximates market
value. Any securities or other assets for which recent market quotations are
not readily available are valued at fair value as determined in good faith
under the direction of the Board of Trustees.
B. INVESTMENT INCOME AND SECURITIES TRANSACTIONS. Security transactions are
accounted for on the date the securities are purchased or sold (trade date).
Cost is determined and gains and losses are based on the identified cost
basis for both financial statement and federal income tax purposes. Dividend
income is reported on the ex-dividend date. Interest income and expenses are
accrued daily.
C. NET ASSET VALUE PER SHARE. Net asset value per share of each class of
shares of the Fund is determined daily as of the close of trading on the New
York Stock Exchange by dividing the value of its net assets, less liabilities
attributable to that class, by the number of outstanding shares of that
class. The net asset value of the classes may differ because of different
fees and expenses charged to each class.
D. ORGANIZATION COSTS. Organization costs are being amortized on a straight
line basis over five years from commencement of operations. If any of the
original shares are redeemed by any holder thereof prior to the end of the
amortization period, the redemption proceeds will be decreased by the pro
rata share of the unamortized organizational costs as of the date of
redemption. The pro rata shares will be derived by dividing the number of
original shares redeemed by the total number of original shares outstanding
at the time of redemption.
E. FEDERAL INCOME TAXES. The Trust intends to qualify each year as a
regulated investment company by complying with all requirements of the
Internal Revenue Code of 1986, as amended, applicable to regulated investment
companies including, among other things, distributing substantially all of
its earnings to its shareholders. Therefore, no federal income tax provision
is required. At December 31, 1998, the Fund has a capital loss carryforward
of $296,646, which will expire December 31, 2006.
F. INCOME AND EXPENSES. Expenses directly attributable to a particular class
are charged directly to such class. In calculating net asset value per share
of each class, investment income, realized and unrealized gains and losses
and expenses, other than class specific expenses, are allocated daily to each
class of shares based on the proportion of net assets of each class at the
beginning of that day.
G. DISTRIBUTIONS TO SHAREHOLDERS. The Fund will distribute substantially all
if its net investment income and capital gains, if any, annually.
Distributions to shareholders are recorded on the ex-dividend date. Income
and capital gain distributions are determined in accordance with income tax
regulations, which may differ from generally accepted accounting principals.
F. USE OF ESTIMATES. In preparing financial statements in conformity with
generally accepted accounting principles, management makes estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements, as well as the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates.
NOTE 2 - PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, other than short-term investments, aggregated
$8,069,443 and $982,219 respectively, for the period from March 9, 1998
(commencement of operations) through December 31, 1998.
NOTE 3 - INVESTMENT MANAGEMENT FEE, ADMINISTRATION FEE AND OTHER TRANSACTIONS
Ironwood Capital Management, LLC ("ICM") serves as the investment advisor for
the Fund pursuant to an investment advisory agreement (the "Agreement") dated
March 2, 1998. Under the terms of the Agreement, ICM receives a fee from the
Fund, accrued daily and paid monthly, at an annual rate of 1.00% of the average
daily net assets of the Fund.
ICM has voluntarily agreed to waive its fees and reimburse the Fund to the
extent total annualized expenses, inclusive of distribution expenses, exceed
1.95%, with respect to the Investment Class, and 1.70%, with respect to the
Institutional Class, of the average daily net assets. For the period from
commencement of operations through December 31, 1998, advisory fees of $32,936
were waived by ICM and ICM has agreed to reimburse the Fund $191,572.
Unreimbursed balance due from the Advisor as of December 31, 1998 was $26,018.
Certain officers and Trustees of the Trust are affiliated persons of ICM.
First Data Investor Services Group, Inc. ("Investor Services Group"), a
subsidiary of First Data Corporation, serves as the Fund's Administrator
pursuant to an Administration Agreement with the Trust on behalf of the Fund.
Under the terms of the agreement, Investor Services Group is entitled to receive
fees based on the aggregate average daily net assets of the Fund, computed daily
and payable monthly at a rate of 0.12% of the first $150 million of net assets
and 0.15% of net assets between $150 million and $500 million of net assets,
subject to a minimum annual charge of $55,000. A separate fee of $35,000 per
annum and $5,000 for any additional class per annum, will be charged for fund
accounting services.
Fifth Third Bank serves as the Fund's custodian. Investor Services Group serves
as the Fund's transfer agent.
Fifth Third Bank has agreed to compensate the Fund and decrease custody fees for
uninvested fund cash balances left uninvested by it. For the period ended
December 31, 1998, the Fund's expenses were reduced by $922.
No officer, trustee or employee of ICM, Investor Services Group or First Data
Distributors (the "Distributor"), or any affiliate thereof, receives any
compensation from the Trust for serving as a Trustee or officer of the Trust.
The Trust pays each unaffiliated Trustee an annual fee of $2,000 for their
services, including their attendance at board and committee meetings. The Trust
also reimburses each unaffiliated Trustee for travel and out-of-pocket expenses
related to the attendance at such meetings.
NOTE 4 - DISTRIBUTION PLAN
The Trustees of the Fund have adopted a 12b-1 Plan with respect to the
Investment Class shares pursuant to Section 12(b) of the 1940 Act and Rule 12b-1
thereunder, which permits the Fund to pay certain expenses associated with the
distribution of its Investment Class shares. Under the 12b-1 Plan, the Fund
compensates the Distributor, at a fee calculated at an annual rate of up to
0.25% of the value of the average daily net assets attributable to the
Investment Class shares for distribution expenses borne, or paid to others, by
the Distributor. For the period from commencement of operations through December
31, 1998, the Fund incurred $2,153 in distribution costs for Investment Class
Shares.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD
OF TRUSTEES OF THE
ICM/ISABELLE SMALL CAP VALUE FUND
We have audited the accompanying statement of assets and liabilities of the
ICM/Isabelle Small Cap Value Fund, including the schedule of investments, as of
December 31, 1998, and the related statements of operations, the statement of
changes in net assets, and the financial highlights for the period presented.
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.
These 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 and
the financial highlights. Our procedures included confirmation of securities
owned as of December 31, 1998, by correspondence with the custodian and brokers.
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 the
ICM/Isabelle Small Cap Value Fund as of December 31, 1998, the results of its
operations, the changes in its net assets, and the financial highlights for the
period presented, in conformity with generally accepted accounting principles.
Arthur Andersen, LLP
Boston, Massachusetts
February 16, 1999
<PAGE>
IRONWOOD CAPITAL MANAGEMENT, LLC
AND ICM FUNDS
The Ironwood Tree
is a small, hardy tree, which yields a very useful and solid wood. Patiently,
these trees remain under the forest canopy until taller neighbors fall.
Once given the opportunity, the Ironwood grows quickly
to reach its full potential. We believe this imagery is appropriate
for our firm as well as our investment style.
Ironwood Capital Management, LLC,
the investment manager of the ICM/Isabelle Small Cap Value Fund,
is an independent investment management firm specializing
in investing in small company stocks.
ICM Funds
C/O First Data Investor Services Group
P.O. Box 60529
King of Prussia, PA 19406-0529
1-800-472-6114
- -------------------------------------------------------------------------------
There are risks associated with investing in funds of this type that invest in
stocks of small-sized companies, which tend to be more volatile and less liquid
than stocks of larger companies. Past Fund performance is not indicative of
future results.
This information is not authorized for distribution unless accompanied or
preceded by a current prospectus.
DISTRIBUTOR: FIRST DATA DISTRIBUTORS, INC.
FOR ACCOUNT INFORMATION AND PRICES, CALL 1-800-472-6114 BETWEEN THE HOURS OF
9:00 A.M. AND 5:00 P.M. (EASTERN TIME), MONDAY THROUGH FRIDAY.
DFU 12/98
