-----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, MiQemtzGSMOVHVuSZ8UrbH5PtGhGucjSp01AaJxQ004e6p8PfsNPqGNd7jh5JjTe 6HBW+rTI0ubuBfWc2hlauw== 0001275125-04-000289.txt : 20040830 0001275125-04-000289.hdr.sgml : 20040830 20040830155104 ACCESSION NUMBER: 0001275125-04-000289 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20040630 FILED AS OF DATE: 20040830 DATE AS OF CHANGE: 20040830 EFFECTIVENESS DATE: 20040830 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ICM SERIES TRUST CENTRAL INDEX KEY: 0001049629 IRS NUMBER: 043386084 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-08507 FILM NUMBER: 041005474 BUSINESS ADDRESS: STREET 1: 2 PORTLAND SQUARE CITY: PORTLAND STATE: ME ZIP: 04101-4049 BUSINESS PHONE: (800472-6114 MAIL ADDRESS: STREET 1: C/O CITIGROUP GLOBAL TRANSACTION SVCS STREET 2: 2 PORTLAND SQUARE CITY: PORTLAND STATE: ME ZIP: 04101-4049 N-CSRS 1 it04-126.txt N-CSR As filed with the Securities and Exchange Commission on August 30, 2004 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-08507 ICM SERIES TRUST Two Portland Square Portland, Maine 04101 207-879-1900 Warren J. Isabelle, President Suite 240 21 Custom House Street Boston, MA 02109 (800) 472-6114 Date of fiscal year end: DECEMBER 31, 2004 Date of reporting period: JUNE 30, 2004 Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles. A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss. 3507. ITEM 1. REPORT TO STOCKHOLDERS. ICM FUNDS [LOGO] ICM SERIES TRUST --------------------------------- ICM/ISABELLE SMALL CAP VALUE FUND Semi-Annual Report June 30, 2004 ICM/ISABELLE SMALL CAP VALUE FUND TABLE OF CONTENTS SHAREHOLDER LETTER .................................... 2 PORTFOLIO OF INVESTMENTS .............................. 9 STATEMENT OF ASSETS AND LIABILITIES ................... 13 STATEMENT OF OPERATIONS ............................... 14 STATEMENTS OF CHANGES IN NET ASSETS ................... 15 FINANCIAL HIGHLIGHTS .................................. 16 NOTES TO FINANCIAL STATEMENTS ......................... 20 SHAREHOLDER LETTER July 2004 "SEEING THE FOREST THROUGH THE TREES" FIRST HALF 2004 OVERVIEW Corporate America, the central bank, the government and the consumer all took actions to drive the stock market higher. Companies showed strong profit growth and began hiring again. The Federal Reserve kept money essentially "free" with interest rates at historic lows. So, too, the government obliged with highly stimulative deficits, which were in part the work of 2003 tax cuts. Individual investors poured money back into the market. So how did the market react? At first with good follow through from 2003's rebound, but soon it just shrugged its shoulders, often selling off on the release of good news. As the second quarter progressed, there were several periods of up weeks only to be followed by periods of down weeks, with the indices remaining relatively close to where they started the beginning of the year. All in all, a lot of effort and expense went toward moving stocks just a little. It was apparent from the blase reaction that investors were looking past decidedly favorable current news and saw less than exciting trends ahead. Gross Domestic Product (GDP) and corporate earnings would continue to grow, but they would not likely match the large gains of 2003. Moreover, earnings comparisons going into the second half of the year and 2005 would be increasingly difficult. Indeed, the Fed signaled investors that this new economic environment would include higher interest rates sooner than investors had expected. Commodity prices continued to rise. Geopolitical fears, too, could not be put out of mind, what with the train bombings in Madrid, the assassination of the head of the Iraqi governing body, fear of another terrorist attack on US soil, and mounting U.S. casualties in Iraq. That combination of events sent oil prices to twenty-year highs. Finally, with a presidential election victory no longer a sure thing for the incumbent, uncertainty regarding potential new fiscal policies weighed on the market. 2 Overall, the Russell 2000 Index advanced 6.76% during the first half of 2004 continuing to outpace (as it did all of last year) the larger cap, S&P 500 Index that gained 3.58%. In the first half of 2004, Energy and Consumer Discretionary sectors led the way with Biotechnology and Healthcare names also performing very strongly. In addition, it appears that a pronounced style shift began. Higher quality stocks, which had been lagging the more volatile, lower quality names, reversed course and moved relatively higher. The ICM/Isabelle Small Cap Value Fund Investment Class Shares outperformed the Russell 2000 Index by returning 7.97% during the first half of 2004, and, over the past year, has returned 37.33% versus 33.36% for the Russell 2000 Index. For a longer term perspective, the Fund's 5-year and Since Inception (3/9/98) average annual returns as of June 30, 2004 were 12.70% and 6.92%, respectively. PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF FUTURE RESULTS. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN ORIGINAL COST. FOR THE MOST RECENT MONTH END PERFORMANCE, PLEASE CALL (800) 472-6114. PORTFOLIO ACTION - ---------------- During the first half of 2004, we were actively taking profits in several stocks that had performed exceptionally well. Companies such as Graphic Packaging, Chattem, and Tesoro Petroleum exhibited strong earnings gains but not enough to justify the sharp rise in share prices. Our investment philosophy dictates that when the stock price reaches or exceeds the inherent economic value of the underlying businesses as we understand them, then the target has been reached and our mission has been accomplished. The top performers for the first half of 2004 were Hypercom (+78%) followed by two new holdings, PMA Capital (+76%) and Prime Medical Services (+69%). EnPro Industries (+65%) and AM Castle (+47%), two industrials, also contributed to the portfolio's solid performance. Our overweight Energy position provided gains from Denbury Resources (+51%) and Harvest Natural Resources (+50%). Other solid performers included Paxar (+46%) and Intercept (+45%). On the down side were biotech companies NeoPharm (-43%) and Praecis Pharmaceutical (-41%), and retailer Tweeter Home Entertainment (-43%). 3 During the first half of the year we added several new investments, consistent with our long-term investment philosophy, which we believe represented real economic values. These included: Sunterra Corp., Advanced Marketing Services, and Genitope. We also invested in TeleTech Holdings and United Stationers, two names which produced significant gains for us in the past, and appear to have become undervalued situations once again. WHAT DOES THE FUTURE HOLD? - -------------------------- It was a busy first half of the year with a lot of emotional as well as fundamental issues dominating the headlines. Bulls argued that the market had absorbed substantial bad news in terms of a sharp rise in oil prices, increased terrorist activity overseas, and a sharp rise in commodity prices, all without breaking. Looking at the same facts, Bears argued that investors, in not retreating from stocks more aggressively, had become terribly complacent. Bulls responded that investors were overly negative, having ignored very strong economic growth and three quarters of 20%+ earnings growth. Bears said that while this may have been true, the rate of growth in earnings would be slowing in the second half and beyond, especially in 2005. Bears also added that higher inflation and interest rates would slow economic growth as well, while bulls argued that the upward pace of inflation and interest rates simply tended to confirm that the economy was strong. Who was (is) right? At this writing, the Bears can make an early claim. The Russell 2000 has retreated, now standing at a loss for the year-to-date. The issues the Bulls thought the market had successfully coped with seem to have finally taken their toll. The Bear case, near term then, looks to be the more accurate. Positive news from the leading market players in 2003 and early 2004 is waning. Corporate America, after a year of strong earnings growth will likely see profit growth decelerate in late 2004 and 2005. The Fed has begun to raise rates. The winning presidential candidate will have a huge budget and trade deficit to address in 2005. It is easy to understand, in the face of all this, why investors have recently become big net sellers of stocks. Nonetheless, we believe that while all of these negative factors may not disappear and significant risks remain, they will ease in intensity, sufficient to improve investor sentiment and allow better stock prices and a greater 4 appreciation of the positive fundamentals. Ultimately, the environment will turn positive for equities but will be a far cry from that of 2003. This is not a bad scenario. More moderate economic growth should be more sustainable. The `forward mental compression' of perceived expectations which led to the sharp run-up in the market well in advance of actual results will, over a period of time, result in the formation of a new `base' from which future results can be measured. Provided that the fundamentals remain positive, the market is positioned to move in a more positive direction as well. For the near term, we believe that the market will favor those companies with strong cash flows, solid balance sheets and which will benefit from continued economic growth (albeit a slower pace). To sum it up, quality will rule the day. In light of this, we are revisiting the fundamentals of each and every one of our holdings. As we have in the past, during more challenging periods, we will pare weaker holdings in favor of the remaining stronger ones. Very simply, this action results in a `leaner and meaner' portfolio that should be more responsive to improving conditions. Having said that, we must remind all of our shareholders that our investment horizon is longer term, measured in years, not quarters. There will always be obstacles, risks, emotions and fundamentals to encounter and overcome in selecting the best investments for our shareholders. Whatever the economic and market environment is or will be, our job will remain the same - to find unrecognized economic value in businesses built for the long-term - to find the forest through the trees. We will continue to work diligently in an effort to build those long-term returns for our shareholders. We thank you for your continued trust and greatly appreciate your support. Sincerely, /S/WARREN J. ISABELLE /S/ RICK L. DROSTER - --------------------- -------------------- Warren J. Isabelle Rick L. Droster 5 BEFORE INVESTING YOU SHOULD CAREFULLY CONSIDER THE FUND'S INVESTMENT OBJECTIVES, RISKS, CHARGES AND EXPENSES. THIS AND OTHER INFORMATION IS IN THE PROSPECTUS, A COPY OF WHICH MAY BE OBTAINED BY CALLING (800) 472-6114 OR VISITING THE FUND'S WEBSITE AT WWW.ICMFUNDS.COM. PLEASE READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST. INVESTMENTS IN SMALLER COMPANIES CARRY GREATER RISK THAN IS CUSTOMARILY ASSOCIATED WITH LARGER COMPANIES FOR VARIOUS REASONS SUCH AS NARROWER PRODUCT LINES, LIMITED FINANCIAL RESOURCES AND LESS DEPTH IN MANAGEMENT. THE VIEWS IN THIS REPORT WERE THOSE OF THE FUND'S MANAGEMENT AS OF JUNE 30, 2004 AND MAY NOT REFLECT THEIR VIEWS ON THE DATE THIS REPORT IS FIRST PUBLISHED OR ANYTIME THEREAFTER. THESE VIEWS ARE INTENDED TO ASSIST SHAREHOLDERS OF THE FUND IN UNDERSTANDING THEIR INVESTMENTS IN THE FUND AND DO NOT CONSTITUTE INVESTMENT ADVICE. FORUM FUND SERVICES, LLC, DISTRIBUTOR. (08/04). 6 ICM/ISABELLE SMALL CAP VALUE FUND Investment Class ILLUSTRATION OF $10,000 INVESTMENT The graph below reflects the change in value of a hypothetical $10,000 investment in the ICM/Isabelle Small Cap Value Fund (the "Fund") Investment Class compared with a broad-based securities market index since the Investment Class' inception. The Russell 2000 Index is composed of the 2,000 smallest stocks in the Russell 3000 Index, a market weighted index of the 3,000 largest U.S. publicly traded companies. The Fund is professionally managed while the Index is unmanaged and not available for investment. Average Annual Return for the period ending 6/30/04 One year .................... 37.33% Five year ................... 12.70% Inception (3/9/1998) ........ 6.92% [EDGAR representation of line graph ICM/Isabelle Russell 2000 Date Small Cap Value Fund Index ------- ------------------------ ------------- 3/9/1998 10,000 10,000 3/31/1998 10,000 10,431 4/30/1998 9,900 10,488 5/31/1998 9,460 9,924 6/30/1998 9,040 9,944 7/31/1998 7,770 9,139 8/31/1998 5,910 7,365 9/30/1998 6,110 7,941 10/31/1998 6,480 8,265 11/30/1998 6,730 8,698 12/31/1998 6,910 9,236 1/31/1999 7,250 9,359 2/28/1999 6,920 8,601 3/31/1999 6,690 8,735 4/30/1999 7,550 9,518 5/31/1999 8,260 9,657 6/30/1999 8,390 10,094 7/31/1999 8,390 9,817 8/31/1999 8,390 9,453 9/30/1999 8,250 9,455 10/31/1999 8,370 9,563 11/30/1999 9,280 10,061 12/31/1999 10,330 11,199 1/31/2000 10,860 11,020 2/29/2000 11,690 12,839 3/31/2000 11,880 11,993 4/30/2000 11,740 11,271 5/31/2000 11,260 10,614 6/30/2000 11,690 11,540 7/31/2000 11,530 11,168 8/31/2000 11,710 12,020 9/30/2000 12,050 11,667 10/31/2000 11,300 11,146 11/30/2000 10,840 10,002 12/31/2000 11,129 10,861 1/31/2001 12,009 11,427 2/28/2001 11,835 10,677 3/31/2001 11,794 10,155 4/30/2001 12,347 10,949 5/31/2001 13,043 11,218 6/30/2001 14,067 11,605 7/31/2001 12,808 10,977 8/31/2001 12,224 10,623 9/30/2001 9,972 9,193 10/31/2001 10,545 9,731 11/30/2001 11,067 10,484 12/31/2001 12,101 11,131 1/31/2002 12,071 11,015 2/28/2002 11,886 10,713 3/31/2002 13,699 11,575 4/30/2002 13,955 11,680 5/31/2002 13,473 11,162 6/30/2002 13,658 10,608 7/31/2002 11,549 9,006 8/31/2002 10,965 8,983 9/30/2002 9,829 8,338 10/31/2002 9,798 8,605 11/30/2002 10,811 9,373 12/31/2002 9,992 8,851 1/31/2003 9,409 8,606 2/28/2003 8,559 8,346 3/31/2003 8,426 8,454 4/30/2003 9,378 9,255 5/31/2003 10,494 10,248 6/30/2003 11,108 10,434 7/31/2003 11,293 11,087 8/31/2003 12,081 11,595 9/30/2003 11,999 11,381 10/31/2003 12,736 12,337 11/30/2003 13,310 12,774 12/31/2003 14,129 13,034 1/31/2004 14,722 13,600 2/29/2004 15,040 13,722 3/31/2004 14,866 13,850 4/30/2004 14,907 13,143 5/31/2004 14,630 13,353 6/30/2004 15,255 13,915] PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF FUTURE RESULTS. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN ORIGINAL COST. FOR THE MOST RECENT MONTH END PERFORMANCE, PLEASE CALL (800) 472-6114. THE PERFORMANCE TABLE AND GRAPH DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. TOTAL RETURN FIGURES INCLUDE THE REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS. SOME OF THE FUND'S FEES HAVE BEEN WAIVED OR EXPENSES REIMBURSED; OTHERWISE TOTAL RETURN WOULD HAVE BEEN LOWER. 7 ICM/ISABELLE SMALL CAP VALUE FUND Institutional Class ILLUSTRATION OF $10,000 INVESTMENT The graph below reflects the change in value of a hypothetical $10,000 investment in the ICM/Isabelle Small Cap Value Fund (the "Fund") Institutional Class compared with a broad-based securities market index since the Institutional Class' inception. The Russell 2000 Index is composed of the 2,000 smallest stocks in the Russell 3000 Index, a market weighted index of the 3,000 largest U.S. publicly traded companies. The Fund is professionally managed while the Index is unmanaged and not available for investment. Average Annual Return for the period ending 6/30/04 One year .................... 37.75% Five year ................... 13.09% Inception (3/27/1998) ....... 7.29% [EDGAR representation of line graph ICM/Isabelle Russell 2000 Date Small Cap Value Fund Index ------- ------------------------ ------------- 3/27/1998 10,000 10,000 3/31/1998 9,970 10,074 4/30/1998 9,870 10,130 5/31/1998 9,460 9,584 6/30/1998 9,040 9,605 7/31/1998 7,780 8,827 8/31/1998 5,920 7,113 9/30/1998 6,120 7,670 10/31/1998 6,480 7,982 11/30/1998 6,740 8,401 12/31/1998 6,920 8,920 1/31/1999 7,260 9,039 2/28/1999 6,940 8,307 3/31/1999 6,690 8,437 4/30/1999 7,560 9,193 5/31/1999 8,270 9,327 6/30/1999 8,400 9,749 7/31/1999 8,400 9,481 8/31/1999 8,400 9,130 9/30/1999 8,270 9,132 10/31/1999 8,390 9,236 11/30/1999 9,300 9,717 12/31/1999 10,360 10,817 1/31/2000 10,890 10,643 2/29/2000 11,720 12,400 3/31/2000 11,920 11,583 4/30/2000 11,780 10,886 5/31/2000 11,300 10,251 6/30/2000 11,740 11,145 7/31/2000 11,580 10,787 8/31/2000 11,760 11,610 9/30/2000 12,100 11,268 10/31/2000 11,350 10,765 11/30/2000 10,900 9,660 12/31/2000 11,179 10,490 1/31/2001 12,079 11,036 2/28/2001 11,905 10,312 3/31/2001 11,854 9,807 4/30/2001 12,417 10,575 5/31/2001 13,113 10,835 6/30/2001 14,147 11,209 7/31/2001 12,888 10,602 8/31/2001 12,315 10,260 9/30/2001 10,042 8,879 10/31/2001 10,636 9,398 11/30/2001 11,158 10,126 12/31/2001 12,233 10,751 1/31/2002 12,202 10,639 2/28/2002 12,018 10,347 3/31/2002 13,850 11,179 4/30/2002 14,116 11,281 5/31/2002 13,625 10,780 6/30/2002 13,820 10,245 7/31/2002 11,690 8,698 8/31/2002 11,107 8,676 9/30/2002 9,950 8,053 10/31/2002 9,930 8,311 11/30/2002 10,953 9,053 12/31/2002 10,124 8,549 1/31/2003 9,541 8,312 2/28/2003 8,681 8,061 3/31/2003 8,548 8,165 4/30/2003 9,510 8,939 5/31/2003 10,646 9,898 6/30/2003 11,281 10,077 7/31/2003 11,465 10,708 8/31/2003 12,264 11,199 9/30/2003 12,182 10,992 10/31/2003 12,939 11,915 11/30/2003 13,523 12,338 12/31/2003 14,362 12,588 1/31/2004 14,976 13,135 2/29/2004 15,294 13,253 3/31/2004 15,130 13,376 4/30/2004 15,171 12,694 5/31/2004 14,894 12,896 6/30/2004 15,539 13,439] PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF FUTURE RESULTS. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN ORIGINAL COST. FOR THE MOST RECENT MONTH END PERFORMANCE, PLEASE CALL (800) 472-6114. THE PERFORMANCE TABLE AND GRAPH DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. TOTAL RETURN FIGURES INCLUDE THE REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS. SOME OF THE FUND'S FEES HAVE BEEN WAIVED OR EXPENSES REIMBURSED; OTHERWISE TOTAL RETURN WOULD HAVE BEEN LOWER. 8
ICM/ISABELLE SMALL CAP VALUE FUND PORTFOLIO OF INVESTMENTS JUNE 30, 2004 (UNAUDITED) MARKET SHARES SECURITY VALUE - ------ -------- ----- COMMON STOCK - 96.02% CAPITAL GOODS - 2.15% 85,600 Lamson & Sessions Co.+ $ 688,224 139,700 Shaw Group, Inc.+ 1,415,161 ----------- 2,103,385 ----------- CONSUMER DISCRETIONARY - 11.54% 57,900 4Kids Entertainment, Inc.+ 1,384,968 43,300 Advanced Marketing Services 559,003 173,200 First Consulting Group, Inc.+ 956,064 66,500 Navigant International, Inc.+ 1,183,035 69,900 Russell Corp. 1,255,404 60,400 Steven Madden Ltd.+ 1,206,188 134,800 Sunterra Corp. 1,698,480 205,100 Tweeter Home Entertainment Group+ 1,107,540 106,600 Visteon Corp. 1,244,022 130,500 Wet Seal, Inc. - Class A+ 682,515 ----------- 11,277,219 ----------- CONSUMER STAPLES - 3.52% 83,400 Chiquita Brands International, Inc.+ 1,744,728 65,200 Interstate Bakeries 707,420 24,800 United Stationers, Inc.+ 985,056 ----------- 3,437,204 ----------- ENERGY - 10.13% 98,800 Denbury Resources, Inc.+ 2,069,860 54,900 Harvest Natural Resources, Inc.+ 818,559 179,600 Magnum Hunter Resources, Inc.+ 1,864,248 259,000 Newpark Resources+ 1,605,800 48,800 Whiting Petroleum Corp.+ 1,227,320 153,500 Willbros Group, Inc.+ 2,313,245 ----------- 9,899,032 ----------- FINANCIALS - 10.35% 51,200 Allmerica Financial Corp.+ 1,730,560 33,700 Brookline Bancorp, Inc. 494,379 27,800 Chittenden Corp. 977,170 20,200 First Community Bancorp, Inc. 776,488 33,800 Hilb Rogal & Hamilton Co. 1,205,984 The accompanying notes are an integral part of the financial statements. 9 ICM/ISABELLE SMALL CAP VALUE FUND PORTFOLIO OF INVESTMENTS JUNE 30, 2004 (Unaudited) (Continued) MARKET SHARES SECURITY VALUE - ------ -------- ----- FINANCIALS (CONTINUED) 55,500 Investment Technology Group, Inc. $ 709,845 206,600 PMA Capital Corp. - Class A 1,859,400 33,500 Provident Bankshares Corp. 966,140 155,300 Rewards Network, Inc.+ 1,397,700 ----------- 10,117,666 ----------- HEALTH CARE - 15.81% 409,700 ARIAD Pharmaceuticals, Inc.+ 3,068,653 426,600 Durect Corp.+ 1,488,834 19,700 EPIX Medical, Inc.+ 415,670 109,900 Gene Logic, Inc.+ 445,095 77,900 Genitope Corp.+ 768,951 64,100 Hanger Orthopedic Group, Inc.+ 751,252 82,100 Maxim Pharmaceuticals, Inc.+ 792,265 120,500 Maxygen, Inc.+ 1,273,685 77,800 Neopharm, Inc.+ 803,674 97,900 Neose Technologies, Inc.+ 815,507 400,100 PRAECIS Pharmaceuticals, Inc.+ 1,520,380 160,200 Prime Medical Services, Inc.+ 1,271,988 107,100 Theragenics Corp.+ 494,802 112,100 U.S. Physical Therapy, Inc.+ 1,536,891 ----------- 15,447,647 ----------- INDUSTRIALS - 6.80% 102,300 GenCorp, Inc. 1,369,797 147,200 Global Power Equipment Group, Inc.+ 1,180,544 9,000 NACCO Industries, Inc. - Class A 855,000 216,800 Quanta Services, Inc.+ 1,348,496 26,004 Sypris Solutions, Inc. 499,017 186,100 Transpro, Inc.+ 1,071,936 20,769 Woodhead Industries, Inc. 321,089 ----------- 6,645,879 ----------- INFORMATION TECHNOLOGY - 16.16% 195,100 ActivCard Corp.+ 1,416,426 132,300 Agilsys, Inc. 1,824,417 46,400 Analogic Corp. 1,968,752 292,700 Danka Business Systems plc, ADR+ 1,323,004 147,100 Hypercom Corp.+ 1,242,995 33,000 Imation Corp. 1,406,130 The accompanying notes are an integral part of the financial statements. 10 ICM/ISABELLE SMALL CAP VALUE FUND PORTFOLIO OF INVESTMENTS JUNE 30, 2004 (Unaudited) (Continued) MARKET SHARES SECURITY VALUE - ------ -------- ----- INFORMATION TECHNOLOGY (CONTINUED) 95,500 infoUSA, Inc.+ $ 968,370 62,100 Intercept, Inc.+ 1,017,198 88,800 MagneTek, Inc.+ 740,592 62,000 Mentor Graphics Corp.+ 959,140 358,544 SoftBrands, Inc.+ 439,216 303,400 Sycamore Networks, Inc.+ 1,283,382 137,200 TeleTech Holdings, Inc.+ 1,203,244 ----------- 15,792,866 ----------- MATERIALS - 17.55% 164,800 Castle (AM) & Co.+ 1,771,600 188,400 Commonwealth Industries, Inc.+ 1,948,056 477,100 Crompton Corp. 3,005,730 24,800 EnPro Industries, Inc.+ 569,904 150,800 Material Sciences Corp.+ 1,606,020 63,500 Olin Corp. 1,118,870 51,000 Paxar Corp.+ 995,520 459,700 PolyOne Corp.+ 3,420,168 112,500 Strategic Diagnostics, Inc.+ 472,500 87,700 Wausau-Mosinee Paper Corp. 1,517,210 105,800 Western Silver Corp.+ 714,150 ----------- 17,139,728 ----------- OTHER - 0.78% 270,000 Westaff, Inc.+ 764,100 ----------- TELECOMMUNICATION SERVICES - 1.23% 215,300 Lightbridge, Inc.+ 1,205,680 ----------- TOTAL COMMON STOCK (COST $76,653,941) $93,830,406 =========== The accompanying notes are an integral part of the financial statements. 11 ICM/ISABELLE SMALL CAP VALUE FUND PORTFOLIO OF INVESTMENTS JUNE 30, 2004 (Unaudited) (Continued) PRINCIPAL REPURCHASE AGREEMENT - 3.47% $3,393,270 Fifth Third Bancorp, 0.60%, 7/1/04, to be repurchased at $3,393,388, collateralized by US Government Obligations (Cost $3,393,270) $ 3,393,270 ----------- TOTAL INVESTMENTS (COST $80,047,211)* - 99.49% 97,223,676 OTHER ASSETS NET OF LIABILITIES - 0.51% 495,938 ----------- NET ASSETS - 100.00% $97,719,614 =========== - ------------- ADR American Depositary Receipt. + Non-income producing security. * Cost for federal income tax purposes is the same as for financial statement purposes and net unrealized appreciation consists of: Gross Unrealized Appreciation . . . . . . . . . $ 19,343,049 Gross Unrealized Depreciation . . . . . . . . . (2,166,584) ------------- Net Unrealized Appreciation . . . . . . . . . . $ 17,176,465 ============= The accompanying notes are an integral part of the financial statements. 12
ICM/ISABELLE SMALL CAP VALUE FUND STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2004 (Unaudited) ASSETS: Investments in securities at market value (cost $76,653,941) $ 93,830,406 Investments in repurchase agreements (cost $3,393,270) 3,393,270 Receivable for securities sold 331,097 Receivable for Fund shares sold 520,537 Interest and dividends receivable 10,912 Prepaid expenses 28,206 ------------ TOTAL ASSETS 98,114,428 ------------ LIABILITIES: Payable for securities purchased 175,917 Due to custodian 32,007 Payable to adviser 76,962 Other accrued expenses 109,928 ------------ TOTAL LIABILITIES 394,814 ------------ NET ASSETS $ 97,719,614 ============ NET ASSETS CONSIST OF: Paid-in-Capital 78,568,121 Accumulated net investment income (loss) (587,235) Accumulated net realized gain (loss) on investments 2,562,263 Net unrealized appreciation (depreciation) of investments 17,176,465 ------------ NET ASSETS $ 97,719,614 ============ INVESTMENT CLASS SHARES: Net Assets (unlimited shares of $0.001 par beneficial interest authorized; 5,512,495 shares outstanding) $ 82,154,489 ============ Net asset value, offering and redemption price per Investment Class Share $ 14.90 ============ INSTITUTIONAL CLASS SHARES: Net Assets (unlimited shares of $0.001 par beneficial interest authorized; 1,025,504 shares outstanding) $ 15,565,125 ============ Net asset value, offering and redemption price per Institutional Class Share $ 15.18 ============ The accompanying notes are an integral part of the financial statements. 13
ICM/ISABELLE SMALL CAP VALUE FUND STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2004 (UNAUDITED) ---------------- INVESTMENT INCOME Dividends $ 177,625 Interest 23,136 ----------- TOTAL INCOME 200,761 ----------- EXPENSES Investment advisory fees 444,718 Administration fees 44,471 Transfer agent fees Investment Class Shares 49,825 Institutional Class Shares 6,961 Distribution fees Investment Class Shares 90,426 Accounting fees 31,179 Custodian fees 17,675 Professional fees 59,272 Registration fees 16,701 Trustees' fees and expenses 6,847 Miscellaneous fees 34,139 ----------- TOTAL EXPENSES 802,214 Expenses reimbursed (14,218) ----------- NET EXPENSES 787,996 ----------- NET INVESTMENT INCOME (LOSS) (587,235) ----------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS Net realized gain (loss) on investments 6,086,307 Net increase from payment by affiliate 21,855 Net change in unrealized appreciation (depreciation) of investments 1,576,154 ----------- Net realized and unrealized gain (loss) on investments 7,684,316 ----------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 7,097,081 =========== The accompanying notes are an integral part of the financial statements. 14
ICM/ISABELLE SMALL CAP VALUE FUND STATEMENTS OF CHANGES IN NET ASSETS SIX MONTHS ENDED JUNE 30, 2004 YEAR ENDED (UNAUDITED) DECEMBER 31, 2003 ----------- ----------------- OPERATIONS Net investment income (loss) $ (587,235) $ (931,264) Net realized gain (loss) on investments 6,086,307 1,415,100 Net increase from payment by affiliate 21,855 Net change in unrealized appreciation (depreciation) of investments 1,576,154 27,090,438 ------------ ------------ Increase (decrease) in net assets resulting from operations 7,097,081 27,574,274 ------------ ------------ CAPITAL SHARE TRANSACTIONS Proceeds from shares subscribed: Investment Class 32,221,874 45,238,558 Institutional Class 1,001,308 74,529,769 Redemption of shares Investment Class (23,829,818) (63,195,562) Institutional Class (5,006,525) (83,383,754) ------------ ------------ Increase (Decrease) in net assets from capital share transactions (a) 4,386,839 (26,810,989) ------------ ------------ TOTAL INCREASE (DECREASE) IN NET ASSETS 11,483,920 763,285 NET ASSETS Beginning of period 86,235,694 85,472,409 ------------ ------------ End of period (including accumulated net investment loss of $587,235 and $-, respectively) $ 97,719,614 $ 86,235,694 ============ ============ (a) Transactions in capital stock were: Investment Class Shares sold 2,240,261 4,213,982 Shares redeemed (1,653,859) (5,902,574) ------------ ------------ Increase (Decrease) in shares outstanding 586,402 (1,688,592) ============ ============ Institutional Class Shares sold 69,456 7,762,501 Shares redeemed (344,585) (8,576,722) ------------ ------------ Increase (Decrease) in shares outstanding (275,129) (814,221) ============ ============ The accompanying notes are an integral part of the financial statements. 15
ICM/ISABELLE SMALL CAP VALUE FUND FINANCIAL HIGHLIGHTS The table below sets forth financial data for one share of capital stock outstanding throughout each year or period indicated. SIX MONTHS ENDED YEAR ENDED JUNE 30, 2004 DECEMBER 31, INVESTMENT CLASS (UNAUDITED) 2003 - ---------------- ---------------- ------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 13.80 $ 9.76 ---------- ----------- Increase (decrease) from investment operations: Net investment loss (0.10)* (0.13)* Net realized and unrealized gains (losses) on investments 1.20* 4.17* ---------- ----------- NET INCREASE (DECREASE) FROM INVESTMENT OPERATIONS 1.10 4.04 ---------- ----------- Less distributions from net realized gains -- -- ---------- ----------- NET ASSET VALUE, END OF PERIOD $ 14.90 $ 13.80 ========== =========== TOTAL RETURN ** 7.97% 41.39% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in 000s) $ 82,155 $ 67,983 Ratio of expenses to average net assets: Before waivers and/or 1.83%*** 1.94% reimbursements After waivers and/or 1.80%*** 1.88% reimbursements Ratio of net investment income (loss) to average net assets: Before waivers and/or (1.38)%*** (1.32)% reimbursements After waivers and/or (1.35)%*** (1.26)% reimbursements Portfolio turnover rate 42.60% 51.70% - ----------------- * Based on average shares outstanding. ** Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at the end of the period. Total return reflects performance based on net operating expenses. During any period in which fees were waived or expenses reimbursed, total return would have been lower if expenses had not been reduced. *** Annualized. The accompanying notes are an integral part of the financial statements. 16
ICM/ISABELLE SMALL CAP VALUE FUND FINANCIAL HIGHLIGHTS (Continued) YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, 2002 2001 2000 1999 ---- ---- ---- ---- $ 11.82 $ 10.87 $ 10.33 $ 6.91 - --------- --------- ------------ -------- (0.14) (0.08) (0.05) (0.12)* (1.92) 1.03 0.84 3.54* - --------- --------- ------------ -------- (2.06) 0.95 0.79 3.42 - --------- --------- ------------ -------- -- -- (0.25) -- - --------- --------- ------------ -------- $ 9.76 $ 11.82 $ 10.87 $ 10.33 ========= ========= ============ ======== (17.43)% 8.74% 7.73% 49.49% $ 64,552 $ 85,386 $ 75,327 $ 9,993 1.80% 1.74% 1.82% 4.79% 1.71% 1.74% 1.81% 1.95% (1.17)% (0.61)% (0.44)% (4.23)% (1.08)% (0.61)% (0.43)% (1.39)% 50.41% 43.16% 53.91% 84.30% The accompanying notes are an integral part of the financial statements. 17
ICM/ISABELLE SMALL CAP VALUE FUND FINANCIAL HIGHLIGHTS The table below sets forth financial data for one share of capital stock outstanding throughout each year or period indicated. SIX MONTHS ENDED YEAR ENDED JUNE 30, 2004 DECEMBER 31, INSTITUTIONAL CLASS (UNAUDITED) 2003 - ------------------- ---------------- ------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 14.03 $ 9.89 ---------- -------- Increase (decrease) from investment operations: Net investment loss (0.08)* (0.10)* Net realized and unrealized gains (losses) on investments 1.23* 4.24* ---------- -------- NET INCREASE (DECREASE) FROM INVESTMENT OPERATIONS 1.15 4.14 ---------- -------- Less distributions from net realized gains -- -- ---------- -------- NET ASSET VALUE, END OF PERIOD $ 15.18 $ 14.03 ========== ======== Total Return ** 8.20% 41.86% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in 000s) $ 15,565 $ 18,253 Ratio of expenses to average net assets: Before waivers and/or 1.60%*** 1.61% reimbursements After waivers and/or 1.56%*** 1.55% reimbursements Ratio of net investment income (loss) to average net assets: Before waivers and/or (1.14)%*** (0.98)% reimbursements After waivers and/or (1.10)%*** (0.93)% reimbursements Portfolio turnover rate 42.60% 51.70% - ----------------- * Based on average shares outstanding. ** Assumes initial investment at net asset value at the beginning of each period, rein- vestment of all distributions and the complete redemption of the investment at the end of the period. Total return reflects performance based on net operating expenses. During any period in which fees were waived or expenses reimbursed, total return would have been lower if expenses had not been reduced. *** Annualized. The accompanying notes are an integral part of the financial statements. 18
ICM/ISABELLE SMALL CAP VALUE FUND FINANCIAL HIGHLIGHTS (Continued) YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, 2002 2001 2000 1999 ---- ---- ---- ---- $ 11.95 $ 10.92 $ 10.36 $ 6.92 - --------- --------- -------- -------- (0.11) (0.05) (0.02) (0.10)* (1.95) 1.08 0.83 3.54* - --------- --------- -------- -------- (2.06) 1.03 0.81 3.44 - --------- --------- -------- -------- -- -- (0.25) -- - --------- --------- -------- -------- $ 9.89 $ 11.95 $ 10.92 $ 10.36 ======== ========= ======== ======== (17.24)% 9.43% 7.90% 49.71% $ 20,920 $ 29,502 $ 26,225 $ 7,448 1.49% 1.49% 1.57% 4.54% 1.44% 1.49% 1.56% 1.70% (0.86)% (0.36)% (0.18)% (4.14)% (0.82)% (0.36)% (0.17)% (1.30)% 50.41% 43.16% 53.91% 84.30% The accompanying notes are an integral part of the financial statements. 19
ICM/ISABELLE SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS JUNE 30, 2004 - (Unaudited) NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES ICM/Isabelle Small Cap Value Fund (the "Fund") is a series of the ICM Series Trust (the "Trust"), which was organized as a Massachusetts business trust pursuant to a Declaration of Trust 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 (collectively, the "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 under the 1940 Act ("12b-1 Plan") and is subject to 12b-1 Plan expenses. The Fund commenced operations on March 9, 1998 (March 27, 1998 for the Institutional Class). The investment objective of the Fund is to seek capital appreciation by investing primarily in relatively undervalued common stocks of domestic small market capitalization companies. 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. Exchange traded securities for which market quotations are readily available are valued using the last reported sales price provided by independent pricing services as of the close of trading on the New York Stock Exchange (normally 4:00 p.m. Eastern time), on each Fund business day. In the absence of a sale, such securities are valued at the mean of the last bid and asked price. Non-exchange traded securities for which over-the-counter quotations are available are generally valued at the mean between the closing bid and asked prices. Money market instruments that mature in sixty days or less may be valued at amortized cost unless the Fund's investment adviser believes another valuation is more appropriate. Investments in other open-ended regulated investment companies are valued at net asset value. 20 ICM/ISABELLE SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS JUNE 30, 2004 - (Unaudited) (Continued) The Fund values securities at fair value pursuant to procedures adopted by the Board if (1) market quotations are insufficient or not readily available or (2) the Adviser believes that the prices or values available are unreliable due to, among other things, the occurrence of events after the close of the securities markets on which the Fund's securities primarily trade but before the time as of which the Fund calculates its net asset value. B. INVESTMENT INCOME AND SECURITIES TRANSACTIONS. Securities 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 the total 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. FEDERAL INCOME TAXES. The Trust intends to continue 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. The characterization of distributions to shareholders for financial reporting purposes is determined in accordance with federal income tax rules E. 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 21 ICM/ISABELLE SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS JUNE 30, 2004 - (Unaudited) (Continued) 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. F. REPURCHASE AGREEMENTS. The Fund may invest in repurchase agreements. The Fund will also require the financial institution to maintain collateral at all times with a value equal to the amount the Fund paid for the securities. In the event of default, the Fund may have difficulties disposing of such securities. G. DISTRIBUTIONS TO SHAREHOLDERS. The Fund will distribute substantially all of its net investment income and capital gains, if any, at least 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 principles. H. 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 $44,464,298 and $34,961,455, respectively, for the six months ended June 30, 2004. NOTE 3 - ADVISORY FEES, SERVICING FEES, AND OTHER TRANSACTIONS WITH RELATED PARTIES INVESTMENT ADVISER - Ironwood Capital Management, LLC ("ICM") serves as the investment adviser for the Fund pursuant to an investment advisory agreement (the "Agreement"). Under the terms of the Agreement, 22 ICM/ISABELLE SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS JUNE 30, 2004 - (Unaudited) (Continued) 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. Pursuant of the terms of the Agreement, ICM is obligated for as long as the Agreement remains in effect, to limit total Fund expenses, including its investment advisory fee, to 1.95% of the average daily net assets annually for the Investment Class and 1.70% of the average daily net assets annually for the Institutional Class, and to waive such fees and reimburse expenses to the extent that they exceed these amounts. For the six months ended June 30, 2004, no advisory fees were waived nor other expenses reimbursed by ICM. ADMINISTRATION AND OTHER SERVICES - Citigroup Global Transaction Services, through its various affiliates (collectively "Citigroup"), provides administration, portfolio accounting and transfer agency services to the Fund. In addition, the Fund has entered into separate transfer agency and operating agreements with Charles Schwab & Co., Inc. ("Schwab") and Fidelity Capital Markets ("FCM"), whereby Schwab and FCM make shares of the Fund available to their clients in exchange for a servicing fee. These fees are included as part of the Transfer Agency fees on the statement of operations. For the six months ended June 30, 2004, the Fund was reimbursed expenses of $13,233 by FCM. The custodian, Fifth Third Bank (the "Custodian"), has agreed to compensate the Fund and decrease custody fees for interest on any cash balances left uninvested. For the six months ended June 30, 2004, the Fund's custodian expenses were reduced by $985, which are disclosed as expenses reimbursed on the accompanying statement of operations. DISTRIBUTOR - Forum Fund Services, LLC is the Fund's distributor (the "Distributor). The Distributor is not affiliated with ICM or with Citigroup or its affiliated companies. The Distributor receives no compensation from the Fund for its distribution services. 23 ICM/ISABELLE SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS JUNE 30, 2004 - (Unaudited) (Continued) No Trustee, officer or employee of ICM, or Citigroup, or any affiliate thereof, receives any compensation from the Trust for serving as a Trustee or officer of the Trust. NOTE 4 - LINE OF CREDIT The Fund has entered into a line of credit agreement with the Custodian to be used for temporary purposes, primarily for financing redemptions. The agreement provides that the Fund may borrow up to $5,000,000. The aggregate outstanding principal amount of all loans may not exceed $5,000,000. Interest is charged to the Fund, based on its borrowings, at a rate equal to the rate of interest on overnight facilities which the Custodian is offering to other borrowers and potential borrowers of comparable financial condition on the business day that a loan is made pursuant to the agreement. During the six months ended June 30, 2004, the Fund was charged $203 from borrowings under the line of credit. As of June 30, 2004, the Fund had no loans outstanding under the line of credit. NOTE 5 - 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 annual net assets attributable to the Investment Class shares for distribution expenses borne, or paid to others, by the Distributor. For the six months ended June 30, 2004, the Fund incurred $90,426 in distribution costs for Investment Class shares. 24 ICM/ISABELLE SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS JUNE 30, 2004 - (Unaudited) (Continued) NOTE 6 - INVESTMENT RESTRICTION VIOLATIONS For the six months ended June 30, 2004, the Adviser made a contribution to the Fund to offset a trading investment restriction violation. As a result of the trading investment restriction, the Fund sold the violating securities at a loss. The Adviser made a contribution to the Fund to offset this loss. This amount is reflected as payment by affiliate on the Statement of Operations and Statements of Changes in Net Assets. This payment had no effect on the total return of the Fund. NOTE 7 - PROXY VOTING INFORMATION A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to securities held in the Fund's portfolio and the Fund's proxy voting record for the twelve-month period ended June 30, 2004 are available, without charge and upon request, by calling (800) 472-6114. This information is also available from the EDGAR database on the SEC's Web site at http://www.sec.gov. NOTE 8 - LITIGATION On April 9, 2004 Ironwood Capital, Ltd. (the "Plaintiff") filed a complaint in U.S. District Court, District of Massachusetts Eastern Division against the Adviser, the Fund and Ironwood Partners, LLC (collectively, the "Defendants") alleging trademark infringement resulting from the use of the "Ironwood" mark. The Plaintiff seeks to refrain the Defendants from using the "Ironwood" mark and to pay damages to be determined. The Adviser has committed to absorbing any costs associated with legal fees and settlement that may result from this matter. As a result, it is not anticipated that this litigation will have any financial impact on the Fund or its shareholders. 25 This page intentionally left blank. This page intentionally left blank. This page intentionally left blank. 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 Series Trust Two Portland Square Portland, ME 04101 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. FOR ACCOUNT INFORMATION, CURRENT PERFORMANCE 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. ITEM 2. CODE OF ETHICS. Not applicable. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS. Not applicable. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. ITEM 10. CONTROLS AND PROCEDURES (a) The Registrant's President and Treasurer have concluded that the Registrant's disclosure controls and procedures (as defined in rule 30a-3(c) under the Act) are effective, based on their evaluation of these disclosure controls and procedures required by Rule 30a-3(b) as of a date within 90 days of the filing date of this report. (b) There were no changes in the Registrant's internal control over financial reporting (as defined in rule 30a-3(d) under the Act) that occurred during the Registrant's last fiscal half year that have materially affected, or are reasonably likely to materially affect, the Registrant's internal control over financial reporting. ITEM 11. EXHIBITS. (a)(1) Code of Ethics (Not applicable). (a)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Exhibit filed herewith). (a)(3) Not applicable. (b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Exhibit filed herewith). SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Registrant ICM SERIES TRUST By /s/ Warren J. Isabelle ----------------------------- Warren J. Isabelle, President Date 8/27/04 ------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By /s/ Warren J. Isabelle ----------------------------- Warren J. Isabelle, President Date 8/27/04 ------- By /s/ Gary S. Saks ----------------------- Gary S. Saks, Treasurer Date 8/27/04 ------- EX-31 2 cert302.txt 302 CERT CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT I, Warren J. Isabelle, certify that: 1. I have reviewed this report on Form N-CSR of the ICM Series Trust (the "registrant"); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) NA c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal controls over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: 8/27/04 ------- /s/ Warren J. Isabelle - ---------------------- TITLE: PRESIDENT CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT I, Gary S. Saks, certify that: 1. I have reviewed this report on Form N-CSR of the ICM Series Trust (the "registrant"); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) NA c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal controls over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: 8/27/04 ------- /s/ Gary S. Saks - ----------------- TITLE: TREASURER EX-32 3 cert906.txt 906CERT CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (SUBSECTIONS (A) AND (B) OF SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE) In connection with the attached Report of the ICM Series Trust (the "Trust") on Form N-CSR to be filed with the Securities and Exchange Commission (the "Report"), each of the undersigned officers of the Trust does hereby certify that, to the best of such officer's knowledge: 1. The Report fully complies with the requirements of 13(a) or 15(d) of the Securities and Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Trust as of, and for, the periods presented in the Report. Dated: 8/27/04 ------- /s/ Warren J. Isabelle - ---------------------- Warren J. Isabelle President Dated: 8/27/04 ------- /s/ Gary S. Saks - ---------------- Gary S. Saks Treasurer A signed original of this written statement required by Section 906 has been provided to the Trust and will be retained by the Trust and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----