As filed with the Securities and Exchange Commission on September 7, 2006
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
IRONWOOD 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
Date of reporting period: JANUARY 1, 2006 - JUNE 30, 2006
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.
{LOGO} IRONWOOD FUNDS
IRONWOOD SERIES TRUST
-------------------------
IRONWOOD ISABELLE SMALL COMPANY
STOCK FUND
Semi-Annual Report
June 30, 2006
IRONWOOD ISABELLE SMALL COMPANY STOCK FUND
TABLE OF CONTENTS
SHAREHOLDER LETTER ........................................................ 2
PORTFOLIO OF INVESTMENTS .................................................. 7
STATEMENT OF ASSETS AND LIABILITIES ....................................... 10
STATEMENT OF OPERATIONS ................................................... 11
STATEMENTS OF CHANGES IN NET ASSETS ....................................... 12
FINANCIAL HIGHLIGHTS ...................................................... 14
NOTES TO FINANCIAL STATEMENTS ............................................. 18
IRONWOOD ISABELLE SMALL COMPANY STOCK FUND
SHAREHOLDER LETTER
To our Valued Shareholders:
My letter to you this period will be relatively short and hopefully to the
point. After what, in our view, was a stellar first quarter, the small cap
markets almost immediately faced a blizzard of conflicting macro factors, the
uncertainty of which caused a near full about face in performance. After gaining
some 13.93% through the end of March, the Russell 2000 Index, which is the
Ironwood Isabelle Small Company Stock Fund's (the "Fund") benchmark, declined
5.02% through the end of June and at this writing in mid-August, has given back
nearly all of its gains for the year to date. Despite our emphatic assertions
that the research process is indeed working and that your portfolio remains
well-constructed for the future, these difficult times have had an adverse
effect on Fund performance, as well. The Fund's Investment Shares declined by
9.09% for the quarter, lagging the benchmark, though still out performing it for
the six month period ended June 30 at 8.70%, versus 8.21% for the benchmark.
We have written extensively over the past two years about our efforts at
intensifying the research effort and focusing the portfolio. I will not harp on
that subject again, as we believe the process is working as it should, and will
continue to benefit the Fund over the long term.
That said, some discussion as to why the Fund underperformed during the last
quarter is in order. What we want here is to help you understand what we believe
occurs during periods of market instability and how we react, or do not react,
in those situations. We can analyze and rationally address a change in
fundamentals for a given company. For example, if we can determine that a
company's fortunes are about to turn down, we would expect its economic
fundamentals to decline as well, which would most likely not bode well for the
stock price of the company, prompting us to sell out of the position ahead of
the turmoil. What we cannot well address, especially in the short run, is the
excess downward price movement created in small cap stocks resulting from fear
or uncertainty which destroys investor confidence. Once again the threat of war,
terrorism, runaway energy prices, and inflation, appeared to have all
contributed to just such a change in sentiment in the 2nd quarter. During these
periods, when relative safety is sought, entire sectors of the market can be
2
abandoned without regard to company fundamentals. Moreover, in our experience,
small cap stocks tend to suffer disproportionately to their size and relative
liquidity in such circumstances.
During the second quarter, as these uncertainties became increasingly visible,
your Fund's portfolio, from a market sense, reacted accordingly. Small caps were
hit the hardest of all stock groups, and the fact that the portfolio includes a
number of smaller, less liquid names, and is involved in some economic sectors
such as biotechnology and basic industries that for a period of time have been
abandoned by investors, are in our judgment why the Fund underperformed the far
more broad Russell 2000 Index for the period.
What to do? As we have said in the past, with proper research and investment
thesis intact, for a given stock, we believe the thing to do is sit tight. We
are long-term investors. We are always looking for new ideas and if because of
those same difficult market conditions, we can find a company that is a victim
of an overreaction such that the long term value proposition appears to us
better than for one of our existing holdings, we will make a change, but only if
our analysis and valuation warrant it.
Despite the turbulence, during the quarter, there was activity in the Fund's
portfolio. We exited five positions, while making four new investments. Two of
the five sales, corporate travel consultant Navigant International (NASDAQ:
FLYR) and apparel manufacturer Russell Corp (NYSE: RUS), were precipitated by
merger activity, and though the buy out prices in both cases were less than we
would have liked, a respectable return was made in each. Sterling Construction
(NASDAQ: STRL went from what, in our judgment, was a quite undervalued to a
clearly overvalued stock within six months, producing a nice gain (50%+) in the
process. Neopharm (NASDAQ: NEOL) was one biotechnology instance where we decided
to take advantage of the adverse market conditions, at least from a tax-loss
perspective, recognizing that significant clinical trials news on the company's
promising treatment for brain cancer would not be forthcoming for several months
at best. Finally, Hudson Highland Group (NASDAQ: HHGP), a provider of temporary
and permanent professional staffing, was both a new purchase and a sale in the
quarter. While the potential for this company might have been tremendous, it
quickly became apparent to us that the change in environment we were expecting
was not developing, but actually becoming worse.
3
The new additions to the portfolio are faring better, as we would expect. The
largest of these, Bausch and Lomb (NYSE: BOL) is well known as a provider of eye
care products. The news that its ReNu with MoistureLoc contact lens cleaner
poses a higher risk for a potentially blinding fungal infection caused shares to
fall by more than 40%, and is precisely why we are invested in the company, as
we believe that those fears were largely overdone and the company has acted
responsibly by removing it from distribution. NovaGold (NYSE:NG) is a precious
metals mining company that to us represents a bargain. Its gold reserves are
valued at just $40 per ounce, by far the lowest of any significant developer in
North America, and a mere fraction of the $600+ per ounce for gold sold on the
spot market. Finally, we have reinitiated a position in smart-card developer and
security software provider Actividentity (NASDAQ: ACTI), formerly called
Activcard. This firm struggled to execute on its strategy, but the new CEO,
Jason Hart, seems to have put his house in order, underscoring his conviction
with repeated large purchases of stock.
With second half of the year upon us, we reiterate that despite added near-term
volatility, which we appreciated in the first quarter but loathed in the second,
we are comfortable with the construction of the Fund's portfolio and the process
responsible for building it. With those thoughts in mind but cognizant of the
near-term uncertainties that could pose continued problems ahead, we remain
confident in the capability of your Fund to deliver satisfactory results.
Respectfully submitted,
/S/ WARREN J. ISABELLE
- ----------------------
Warren J. Isabelle
Portfolio Manager
- ------------------
INVESTMENTS IN SMALLER COMPANIES CARRY A 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. RETURNS SHOWN
ARE FOR THE FUND'S INVESTMENT SHARES; OTHER SHARE CLASS RETURNS WILL VARY.
THE VIEWS IN THIS REPORT WERE THOSE OF THE FUND MANAGER AS OF JUNE 30, 2006
UNLESS OTHERWISE NOTED, AND MAY NOT REFLECT HIS 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.
4
IRONWOOD ISABELLE SMALL COMPANY STOCK FUND
INVESTMENT CLASS
ILLUSTRATION OF $10,000 INVESTMENT
The graph below reflects the change in value of a hypothetical $10,000
investment in the Ironwood Isabelle Small Company Stock 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.
CHART OMITTED
Average Annual Return for the
period ended 06/30/06
One year ................... 17.53%
Five year .................. 6.21%
Inception (3/9/1998) ....... 8.04%
Ironwood Isabelle
Small Company Russell 2000
Date Stock Fund Index
-----------------------------------------------------
3/9/1998 10,000 10,000
3/31/1998 10,000 10,431
6/30/1998 9,040 9,944
9/30/1998 6,110 7,941
12/31/1998 6,910 9,236
3/31/1999 6,690 8,735
6/30/1999 8,390 10,094
9/30/1999 8,250 9,455
12/31/1999 10,330 11,199
3/31/2000 11,880 11,993
6/30/2000 11,690 11,540
9/30/2000 12,050 11,667
12/31/2000 11,129 10,861
3/31/2001 11,794 10,155
6/30/2001 14,067 11,605
9/30/2001 9,972 9,193
12/31/2001 12,101 11,131
3/31/2002 13,699 11,575
6/30/2002 13,658 10,608
9/30/2002 9,829 8,338
12/31/2002 9,992 8,851
3/31/2003 8,426 8,454
6/30/2003 11,108 10,434
9/30/2003 11,999 11,381
12/31/2003 14,129 13,034
3/31/2004 14,866 13,850
6/30/2004 15,255 13,915
9/30/2004 14,303 13,517
12/31/2004 16,688 15,423
3/31/2005 15,767 14,599
6/30/2005 16,176 15,229
9/30/2005 17,251 15,944
12/31/2005 17,491 16,125
3/31/2006 20,913 18,373
6/30/2006 19,012 17,449
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.
5
IRONWOOD ISABELLE SMALL COMPANY STOCK FUND
INSTITUTIONAL CLASS
ILLUSTRATION OF $10,000 INVESTMENT
The graph below reflects the change in value of a hypothetical $10,000
investment in the Ironwood Isabelle Small Company Stock 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.
CHART OMITTED
Average Annual Return for the
period ended 06/30/06
One year ................... 17.83%
Five year .................. 6.65%
Inception (3/27/1998) ...... 8.43%
Ironwood Isabelle
Small Company Russell 2000
Date Stock Fund Index
-----------------------------------------------------
3/27/1998 10,000 10,000
3/31/1998 9,970 10,074
6/30/1998 9,040 9,605
9/30/1998 6,120 7,670
12/31/1998 6,920 8,920
3/31/1999 6,690 8,437
6/30/1999 8,400 9,749
9/30/1999 8,270 9,132
12/31/1999 10,360 10,817
3/31/2000 11,920 11,583
6/30/2000 11,740 11,145
9/30/2000 12,100 11,268
12/31/2000 11,179 10,490
3/31/2001 11,854 9,807
6/30/2001 14,147 11,209
9/30/2001 10,042 8,879
12/31/2001 12,233 10,751
3/31/2002 13,850 11,179
6/30/2002 13,820 10,245
9/30/2002 9,950 8,053
12/31/2002 10,124 8,549
3/31/2003 8,548 8,165
6/30/2003 11,281 10,077
9/30/2003 12,182 10,992
12/31/2003 14,362 12,588
3/31/2004 15,130 13,376
6/30/2004 15,539 13,439
9/30/2004 14,577 13,055
12/31/2004 17,013 14,895
3/31/2005 16,092 14,100
6/30/2005 16,563 14,709
9/30/2005 17,679 15,399
12/31/2005 17,918 15,574
3/31/2006 21,457 17,744
6/30/2006 19,516 16,853
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.
6
IRONWOOD ISABELLE SMALL COMPANY STOCK FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 2006 - (Unaudited)
MARKET
SHARES SECURITY VALUE
- ------ -------- -----
COMMON STOCK - 94.13%
CONSUMER CYCLICALS - 16.12%
138,200 4Kids Entertainment, Inc.+ $ 2,240,222
1,970,800 Danka Business Systems plc, ADR+ 2,148,172
59,000 Gevity HR, Inc. 1,566,450
123,400 Hooker Furniture Corp. 2,069,418
62,500 Jarden Corp.+ 1,903,125
306,100 Sunterra Corp.+ 3,134,464
127,200 Tempur-Pedic International, Inc.+ 1,718,472
-----------
14,780,323
-----------
CONSUMER STAPLES - 5.04%
17,900 Bausch & Lomb, Inc. 877,816
103,200 Chiquita Brands International, Inc. 1,422,096
47,100 United Stationers, Inc.+ 2,322,972
-----------
4,622,884
-----------
ENERGY - 4.06%
168,400 Newpark Resources+ 1,035,660
213,500 Petrohawk Energy Corp.+ 2,690,100
-----------
3,725,760
-----------
FINANCIALS - 11.92%
29,900 Arch Capital Group, Ltd.+ 1,777,854
71,400 Assured Guaranty, Ltd. 1,811,418
74,300 Eastern Insurance Holdings, Inc.+ 951,040
44,600 Hanover Insurance Group, Inc. 2,116,716
196,500 PMA Capital Corp. - Class A+ 2,023,950
168,200 USI Holdings Corp.+ 2,255,562
-----------
10,936,540
-----------
HEALTH CARE - 10.71%
529,100 ARIAD Pharmaceuticals, Inc.+ 2,386,241
545,600 Durect Corp.+ 2,111,472
472,300 Novavax, Inc.+ 2,380,392
516,300 Sirna Therapeutics, Inc.+ 2,942,910
-----------
9,821,015
-----------
INDUSTRIALS - 1.83%
363,300 Proliance International, Inc.+ 1,678,446
-----------
The accompanying notes are an integral part of the financial statements.
7
IRONWOOD ISABELLE SMALL COMPANY STOCK FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 2006 - (Unaudited), (Continued)
MARKET
SHARES SECURITY VALUE
- ------ -------- -----
INFORMATION TECHNOLOGY - 9.69%
38,400 Analogic Corp. $1,789,824
1,120,600 MagneTek, Inc.+ 3,025,620
1,309,444 SoftBrands, Inc.+ 2,422,471
71,400 Technitrol, Inc. 1,652,910
-----------
8,890,825
-----------
MATERIALS - 23.87%
52,308 Aleris International, Inc.+ 2,398,322
49,400 AM Castle & Co. 1,593,150
241,400 Chemtura Corp. 2,254,676
518,500 ICO, Inc.+ 2,551,020
156,900 Lesco, Inc.+ 2,438,226
253,100 Material Sciences Corp.+ 2,285,493
117,200 Novagold Resources, Inc. + 1,502,504
127,800 Olin Corp. 2,291,454
237,400 Omnova Solutions, Inc.+ 1,348,432
367,400 PolyOne Corp.+ 3,225,772
-----------
21,889,049
-----------
OTHER - 2.77%
600,100 Westaff, Inc.+ 2,544,424
-----------
TECHNOLOGY - 0.70%
140,500 Actividentity Corp.+ 640,680
-----------
TELECOMMUNICATION SERVICES - 1.37%
121,200 Broadwing Corp.+ 1,254,420
-----------
UTILITIES - 6.05%
642,200 Aquila, Inc.+ 2,703,662
519,400 Dynegy, Inc. - Class A+ 2,841,118
-----------
5,544,780
-----------
TOTAL COMMON STOCK (COST $76,768,136) 86,329,146
-----------
The accompanying notes are an integral part of the financial statements.
8
IRONWOOD ISABELLE SMALL COMPANY STOCK FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 2006 - (Unaudited), (Continued)
MARKET
SHARES SECURITY VALUE
- ------ -------- -----
SHORT-TERM INVESTMENT - 5.26%
4,820,373 Fifth Third Institutional
Money Market Fund (Cost $4,820,373) $ 4,820,373
------------
TOTAL INVESTMENTS (COST $81,588,509)* - 99.39% 91,149,519
------------
OTHER ASSETS NET OF LIABILITIES - 0.61% 560,125
------------
NET ASSETS - 100.00% $ 91,709,644
============
- -----------
+ Non-income producing security.
ADR American Depositary Receipt.
* Cost for Federal income tax purposes is substantially the same as for
financial statement purposes and net unrealized appreciation
(depreciation) consists of:
Gross Unrealized Appreciation $ 12,167,203
Gross Unrealized Depreciation (2,606,193)
------------
Net Unrealized Appreciation (Depreciation) $ 9,561,010
============
PORTFOLIO HOLDINGS
% OF TOTAL INVESTMENTS
PIE CHART OMITTED
Materials 24.0%
Consumer Cyclicals 16.2%
Financials 12.0%
Health Care 10.8%
Information Technology 9.7%
Utilities 6.1%
Money Market Fund 5.3%
Consumer Staples 5.1%
Energy 4.1%
Other 2.8%
Industrials 1.8%
Telecommunication Services 1.4%
Technology 0.7%
The accompanying notes are an integral part of the financial statements.
9
IRONWOOD ISABELLE SMALL COMPANY STOCK FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2006 - (Unaudited)
ASSETS:
Investments in securities at market value
(cost $81,588,509) $ 91,149,519
Receivable for securities sold 1,237,876
Receivable for Fund shares sold 59,893
Interest and dividends receivable 19,915
Prepaid expenses 25,415
------------
TOTAL ASSETS 92,492,618
------------
LIABILITIES:
Payable for securities purchased 183,065
Due to custodian 309,662
Payable for Fund shares redeemed 58,412
Payable to adviser 75,481
Payable for trustees' fees and expenses 4,545
Other accrued expenses 151,809
------------
TOTAL LIABILITIES 782,974
------------
NET ASSETS $ 91,709,644
============
NET ASSETS CONSIST OF:
Paid-in capital 71,678,166
Accumulated net investment income (loss) (506,153)
Accumulated net realized gain (loss) on investments 10,976,621
Net unrealized appreciation (depreciation) of investments 9,561,010
------------
NET ASSETS $ 91,709,644
============
INVESTMENT CLASS SHARES:
Net Assets (unlimited shares of $0.001 par beneficial
interest authorized; 5,677,567 shares outstanding) $ 88,014,326
------------
Net asset value, offering and redemption price
per Investment Class Share $ 15.50
------------
INSTITUTIONAL CLASS SHARES:
Net Assets (unlimited shares of $0.001 par beneficial
interest authorized; 231,037 shares outstanding) $ 3,695,318
------------
Net asset value, offering and redemption price
per Institutional Class Share $ 15.99
------------
The accompanying notes are an integral part of the financial statements.
10
IRONWOOD ISABELLE SMALL COMPANY STOCK FUND
STATEMENT OF OPERATIONS
SIX MONTHS
ENDED
JUNE 30, 2006
(UNAUDITED)
-----------
INVESTMENT INCOME
Dividends $ 250,782
Interest 4,001
-----------
TOTAL INCOME 254,783
-----------
EXPENSES
Investment advisory fees 408,683
Administration fees 36,782
Transfer agent fees
Investment Class Shares 49,815
Institutional Class Shares 5,827
Distribution fees
Investment Class Shares 94,078
Accounting fees 33,488
Custodian fees 6,799
Professional fees 93,667
Registration fees 17,139
Trustees' fees and expenses 13,559
Compliance services fees 20,298
Miscellaneous fees 24,267
-----------
TOTAL EXPENSES 804,402
Fees waived and expenses reimbursed (43,466)
-----------
NET EXPENSES 760,936
-----------
NET INVESTMENT INCOME (LOSS) (506,153)
-----------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain (loss) on investments 8,976,057
Net change in unrealized appreciation
(depreciation) of investments (6,369,518)
-----------
Net realized and unrealized gain
(loss) on investments 2,606,539
-----------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 2,100,386
===========
The accompanying notes are an integral part of the financial statements.
11
IRONWOOD ISABELLE SMALL COMPANY STOCK FUND
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED
JUNE 30, 2006 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2005
----------- -----------------
OPERATIONS
Net investment income (loss) $ (506,153) $ (967,078)
Net realized gain (loss) on investments 8,976,057 10,819,514
Net increase from payment by affiliate and
other service provider -- 1,516
Net change in unrealized appreciation
(depreciation) of investments (6,369,518) (7,959,925)
------------ ------------
Increase (decrease) in net assets
resulting from operations 2,100,386 1,894,027
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net realized gains:
Investment Class -- (8,672,721)
Institutional Class -- (1,868,751)
------------ ------------
Total distributions to shareholders -- (10,541,472)
------------ ------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares subscribed:
Investment Class 66,396,697 8,629,573
Institutional Class 1,148,240 904,948
Reinvestment of distributions
Investment Class -- 8,463,918
Institutional Class -- 1,796,885
Redemption of shares
Investment Class (29,480,132) (30,621,231)
Institutional Class (10,202,051) (4,798,274)
------------ ------------
Increase (Decrease) in net assets
from capital share transactions (a) 27,862,754 (15,624,181)
------------ ------------
TOTAL INCREASE (DECREASE)
IN NET ASSETS 29,963,140 (24,271,626)
------------ ------------
NET ASSETS
Beginning of period 61,746,504 86,018,130
------------ ------------
End of period (including accumulated
net investment loss of $506,153 and
$967,078, respectively) $ 91,709,644 $ 61,746,504
============ ============
The accompanying notes are an integral part of the financial statements.
12
IRONWOOD ISABELLE SMALL COMPANY STOCK FUND
STATEMENTS OF CHANGES IN NET ASSETS - (Continued)
SIX MONTHS ENDED
JUNE 30, 2006 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2005
----------- -----------------
NET ASSETS (CONTINUED)
(a) Transactions in capital stock were:
Investment Class
Shares sold 4,016,770 547,778
Reinvestment of distributions -- 614,663
Shares redeemed (1,858,333) (1,986,988)
----------- ----------
Increase (Decrease) in shares outstanding 2,158,437 (824,547)
=========== ==========
Institutional Class
Shares sold 68,628 58,268
Reinvestment of distributions -- 126,720
Shares redeemed (625,838) (310,541)
----------- ----------
Increase (Decrease) in shares outstanding (557,210) (125,553)
=========== ==========
The accompanying notes are an integral part of the financial statements.
13
IRONWOOD ISABELLE SMALL COMPANY STOCK 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
JUNE 30, 2006 YEAR ENDED
INVESTMENT CLASS (UNAUDITED) DECEMBER 31, 2005
- ---------------- ----------- -----------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.26 $ 16.31
--------- ---------
Increase (decrease) from
investment operations:
Net investment loss (0.10)(b) (0.23)(b)
Net realized and unrealized gains
(losses) on investments 1.34(b) 0.91(b)
--------- ---------
NET INCREASE (DECREASE)
FROM INVESTMENT OPERATIONS 1.24 0.68
--------- ---------
Less distributions from net
realized gains -- (2.73)
--------- ---------
NET ASSET VALUE, END OF PERIOD $ 15.50 $ 14.26
========= =========
TOTAL RETURN(c) 8.70% 4.81%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000s) $ 88,015 $ 50,171
Ratio of expenses to average net assets:
Before waivers and/or reimbursements 1.97% 2.04%
After waivers and/or reimbursements 1.88% 1.95%
Ratio of net investment income
(loss) to average net assets:
Before waivers and/or reimbursements (1.34)% (1.56)%
After waivers and/or reimbursements (1.25)% (1.47)%
Portfolio turnover rate 54.33% 65.68%
<FN>
- ----------
(a) Audited by another Independent Registered Public Accounting Firm.
(b) Calculated based on average shares outstanding during the period.
(c) 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.
The accompanying notes are an integral part of the financial statements.
</FN>
14
IRONWOOD ISABELLE SMALL COMPANY STOCK FUND
FINANCIAL HIGHLIGHTS - (Continued)
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2004(a) 2003(a) 2002(a) 2001(a)
- ------------ ------------ ------------ ------------
$ 13.80 $ 9.76 $ 11.82 $ 10.87
- -------- -------- -------- --------
(0.19)(b) (0.13)(b) (0.14) (0.08)
2.70(b) 4.17(b) (1.92) 1.03
- -------- -------- -------- --------
2.51 4.04 (2.06) 0.95
- -------- -------- -------- --------
-- -- -- --
- -------- -------- -------- --------
$ 16.31 $ 13.80 $ 9.76 $ 11.82
======== ======== ======== ========
18.12% 41.39% (17.43)% 8.74%
$ 70,825 $ 67,983 $ 64,552 $ 85,386
1.89% 1.94% 1.80% 1.74%
1.86% 1.88% 1.71% 1.74%
(1.38)% (1.32)% (1.17)% (0.61)%
(1.35)% (1.26)% (1.08)% (0.61)%
90.58% 51.70% 50.41% 43.16%
The accompanying notes are an integral part of the financial statements.
15
IRONWOOD ISABELLE SMALL COMPANY STOCK 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
JUNE 30, 2006 YEAR ENDED
INSTITUTIONAL CLASS (UNAUDITED) DECEMBER 31, 2005
- ------------------- ----------- -----------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.68 $ 16.63
------- ---------
Increase (decrease) from
investment operations:
Net investment loss (0.09)(b) (0.20)(b)
Net realized and unrealized gains
(losses) on investments 1.40(b) 0.98(b)
------- ---------
NET INCREASE (DECREASE)
FROM INVESTMENT OPERATIONS 1.31 0.78
------- ---------
Less distributions from net
realized gains -- (2.73)
------- ---------
NET ASSET VALUE, END OF PERIOD $ 15.99 $ 14.68
======= =========
TOTAL RETURN(c) 8.92% 5.31%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000s) $ 3,695 $ 11,576
Ratio of expenses to average net assets:
Before waivers and/or reimbursements 1.95% 1.81%
After waivers and/or reimbursements 1.69% 1.70%
Ratio of net investment income
(loss) to average net assets:
Before waivers and/or reimbursements (1.35)% (1.35)%
After waivers and/or reimbursements (1.09)% (1.24)%
Portfolio turnover rate 54.33% 65.68%
<FN>
- ------------
(a) Audited by another Independent Registered Public Accounting Firm.
(b) Calculated based on average shares outstanding during the period.
(c) 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.
The accompanying notes are an integral part of the financial statements.
</FN>
16
IRONWOOD ISABELLE SMALL COMPANY STOCK FUND
FINANCIAL HIGHLIGHTS - (Continued)
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2004(a) 2003(a) 2002(a) 2001(a)
------- ------- ------- -------
$ 14.03 $ 9.89 $ 11.95 $ 10.92
(0.16)(b) (0.10)(b) (0.11) (0.05)
2.76(b) 4.24(b) (1.95) 1.08
2.60 4.14 (2.06) 1.03
-- -- -- --
$ 16.63 $ 14.03 $ 9.89 $ 11.95
18.46% 41.86% (17.24)% 9.43%
$ 15,193 $ 18,253 $ 20,920 $ 29,502
1.63% 1.61% 1.49% 1.49%
1.61% 1.55% 1.44% 1.49%
(1.12)% (0.98)% (0.86)% (0.36)%
(1.10)% (0.93)% (0.82)% (0.36)%
90.58% 51.70% 50.41% 43.16%
The accompanying notes are an integral part of the financial statements.
17
IRONWOOD ISABELLE SMALL COMPANY STOCK FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2006 - (Unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
Ironwood Isabelle Small Company Stock Fund (formerly known as ICM/Isabelle Small
Cap Value Fund) (the "Fund") is a series of the Ironwood Series Trust (formerly
known as 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 Shares and
Institutional Shares (collectively, the "Shares"), each of which has equal
rights as to class and voting privileges. The Investment Shares have exclusive
voting rights with respect to its distribution plan pursuant to Rule 12b-1 under
the 1940 Act ("12b-1 Plan") and are subject to 12b-1 Plan expenses. The Fund
commenced operations on March 9, 1998 (March 27, 1998 for the Institutional
Shares). The investment objective of the Fund is to seek capital appreciation by
investing primarily in relatively undervalued common stocks of domestic small
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 accounting principles generally
accepted in the United States of America for investment companies.
A. SECURITY VALUATION. Exchange traded securities and over-the-counter
securities listed on the NASDAQ National Market System for which market
quotations are readily available are valued using the last reported sales
price or the NASDAQ Official Closing Price ("NOCP"), 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 or NOCP, such securities are valued at the
mean of the last bid and asked price. Non-exchange traded securities for
which quotations are available are generally valued at the mean between the
current bid and asked prices. Debt securities may be valued at prices
supplied by the Fund's pricing agent based on broker or dealer supplied
valuations or matrix pricing, a method of valuing securities by reference
to the
18
IRONWOOD ISABELLE SMALL COMPANY STOCK FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2006 - (Unaudited), (Continued)
value of other securities with similar characteristics, such as rating,
interest rate and maturity. Money market instruments that mature in sixty
days or less may be valued at amortized cost.
The Fund values securities at fair value pursuant to procedures adopted by
the Trust's Board of Trustees (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. Fair valuation is based on
subjective factors and as a result, the fair value price of an asset may
differ from the asset's market price and may not be the price at which the
asset may be sold. Fair valuation could result in a different net asset
value ("NAV") than a NAV determined by using market quotes.
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.
19
IRONWOOD ISABELLE SMALL COMPANY STOCK FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2006 - (Unaudited), (Continued)
For the year ended December 31, 2005, the Fund reclassified $967,078 to
decrease accumulated net realized gain and $967,078 to increase accumulated
net investment loss. The reclassification has no impact on the net asset
value of the Fund and is primarily due to net operating losses.
As of December 31, 2005, distributable earnings on a tax basis were as
follows:
Undistributed Ordinary Income $ 396,919
Undistributed Long-Term Gain 1,790,685
Unrealized Appreciation (Depreciation) 15,743,489
-------------
Total $ 17,931,093
=============
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
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 require the financial institution with which the Fund enters into
a repurchase agreement 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 accounting principles
generally accepted in the United States of America.
20
IRONWOOD ISABELLE SMALL COMPANY STOCK FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2006 - (Unaudited), (Continued)
H. NEW ACCOUNTING PRONOUNCEMENTS. In June 2006, the Financial Accounting
Standards Board issued Financial Interpretation No. 48, "Accounting for
Uncertainty in Income Taxes" (the "Interpretation"), which is effective for
fiscal years beginning after December 15, 2006 and is to be applied to all
open tax years as of the effective date. This Interpretation prescribes a
minimum threshold for financial statement recognition of the benefit of a tax
position taken or expected to be taken in a tax return, and requires certain
expanded disclosures. Management has recently begun to evaluate the
application of the Interpretation to the Fund, and has not at this time
determined the impact, if any, resulting from the adoption of this
Interpretation on the Fund's financial statements.
I. 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
$67,655,950 and $41,721,909, respectively, for the six months ended June 30,
2006.
NOTE 3 - ADVISORY FEES, SERVICING FEES, AND OTHER TRANSACTIONS WITH RELATED
PARTIES
INVESTMENT ADVISER - Ironwood Investment Management, LLC (formerly known as
Ironwood Capital Management) ("Ironwood") serves as the investment adviser for
the Fund pursuant to an investment advisory agreement (the "Agreement"). Under
the terms of the Agreement, Ironwood receives an investment advisory 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 to the terms of the
21
IRONWOOD ISABELLE SMALL COMPANY STOCK FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2006 - (Unaudited), (Continued)
Agreement, Ironwood is obligated for as long as the Agreement remains in effect,
to limit total annual Fund operating expenses, including its investment advisory
fee, to 1.95% of the average daily net assets annually for the Investment Shares
and 1.70% of the average daily net assets annually for the Institutional Shares,
and to waive such fees and reimburse expenses to the extent that they exceed
these amounts. For the six months ended June 30, 2006, advisory fees of $3,402
were waived by Ironwood.
INVESTMENT ADVISORY CONTRACT APPROVAL - On January 24, 2006, Ironwood
consummated a transaction (the "Transaction") with MB Investment Partners, Inc.
and MB Investment Partners and Associates LLC ("MBIPA"), pursuant to which MBIPA
acquired Ironwood. The Transaction resulted in a change in control of Ironwood
and an assignment and automatic termination of the Investment Advisory Agreement
between Ironwood and the Trust, on behalf of the Fund (the "Agreement"),
pursuant to the terms of the Agreement. On October 17, 2005, the Trust's Board
of Trustees (the "Board") approved an Interim Investment Advisory Agreement
between the Trust, on behalf of the Fund, and Ironwood (the "Interim
Agreement"). The Interim Agreement became effective upon closing of the
Transaction and remained in effect until April 18, 2006, at which time the
Fund's shareholders approved, at a special meeting, a new investment advisory
agreement (the "New Agreement," and, collectively with the Interim Agreement and
the Agreement, the "Advisory Agreements") between Ironwood and the Trust, on
behalf of the Fund, also approved by the Board on October 17, 2005. The terms,
including without limitation the advisory fee, of each of the Advisory
Agreements, are the same in all material respects, except with respect to those
terms related to duration of each Advisory Agreement, and execution and
termination dates. The basis of the Board's approval of both the Interim
Agreement and New Agreement is set forth in the Fund's Annual Report dated
December 31, 2005.
22
IRONWOOD ISABELLE SMALL COMPANY STOCK FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2006 - (Unaudited), (Continued)
ADMINISTRATION AND OTHER SERVICES - Citigroup Fund Services, LLC, through its
various affiliates ("Citigroup"), provides administration, portfolio accounting
and transfer agency services to the Fund.
In addition, the Fund has entered into separate service 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,
2006, the Fund was reimbursed expenses of $39,457 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, 2006, the Fund was reimbursed
expenses of $607 by the Custodian.
DISTRIBUTOR - Foreside Fund Services, LLC is the Fund's distributor (the
"Distributor). The Distributor is not affiliated with the Adviser or Citigroup
or its various affiliates. The Distributor receives no compensation from the
Fund for its distribution services.
Under a Compliance Services Agreement with the Trust, the Distributor provides a
Chief Compliance Officer to the Trust as well as certain additional compliance
support functions.
No trustee, officer or employee of Ironwood, 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
23
IRONWOOD ISABELLE SMALL COMPANY STOCK FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2006 - (Unaudited), (Continued)
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, 2006, the Fund was charged $150 from
borrowings under the line of credit. As of June 30, 2006, 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 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 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 Shares for distribution expenses borne, or paid to others, by the
Distributor. For the six months ended June 30, 2006, the Fund incurred $94,078
in distribution costs for Investment Shares.
NOTE 6 - PAYMENTS BY AFFILIATE & OTHER SERVICE PROVIDER
For the year ended December 31, 2005, Citigroup reimbursed the Fund to offset an
accounting error. As a result, the Fund reimbursed the shareholders who placed
trades during the re-evaluation period. In order to compensate the Fund for the
overstated number of shares issued to subscribing shareholders during the
reevaluation period, Citigroup reimbursed the Fund for the dollar value of these
shares. This amount is reflected as payment by other service provider on the
Statements of Changes in Net Assets. This payment had no effect on the total
return of the Fund.
24
IRONWOOD ISABELLE SMALL COMPANY STOCK FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2006 - (Unaudited), (Continued)
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 is
available, without charge and upon request, by calling (800) 472-6114 and on the
SEC's website at www.sec.gov. The Fund's proxy voting record for the
twelve-month period ended June 30, is available, without charge and upon
request, by calling (800) 472-6114, on the Fund's website www.ironwoodfunds.com
and on the SEC's website at www.sec.gov.
NOTE 8 - AVAILABILITY OF QUARTERLY PORTFOLIO SCHEDULES
The Fund files its complete schedule of portfolio holdings with the SEC for the
first and third quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q
are available, without charge and upon request, on the SEC's website at
www.sec.gov. or may be reviewed and copied at the SEC's Public Reference Room in
Washington, D.C. Information on the operation of the Public Reference Room may
be obtained by calling (800) SEC-0330.
NOTE 9 - SHAREHOLDER EXPENSES
As a shareholder of the Fund, you incur ongoing costs, including management fees
and distribution fees with respect to Investment Shares and other Fund expenses.
This example is intended to help you understand these costs (in dollars) of
investing in the Fund and to compare these costs with the ongoing costs of
investing in other mutual funds.
The following example is based on $1,000 invested at the beginning of the period
and held for the entire period from January 1, 2006 through June 30, 2006.
25
IRONWOOD ISABELLE SMALL COMPANY STOCK FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2006 - (Unaudited), (Continued)
ACTUAL EXPENSES - The first line of the table below provides information about
actual account values and actual expenses. You may use the information in this
line, together with the amount you invested, to estimate the expenses that you
paid over the period. Simply divide your account value by $1,000 (for example,
an $8,600 account value divided by $1,000 = 8.6), then multiply the result by
the number in the first line under the heading "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES - The second line of the table
provides information about hypothetical account values and hypothetical expenses
based on the Fund's actual expense ratio and an assumed rate of return of 5% per
year before expenses, which is not the Fund's actual return. The hypothetical
account values and expenses may not be used to estimate the actual ending
account balance or expenses you paid for the period. You may use this
information to compare the ongoing cost of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight your ongoing
costs only and do not reflect any transactional costs. Therefore, the second
line of the table is useful in comparing ongoing costs only, and will not help
you determine the relative total costs of owning different funds. In addition,
if these transactional costs had been included, your costs would have been
higher.
26
IRONWOOD ISABELLE SMALL COMPANY STOCK FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2006 - (Unaudited), (Continued)
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING
JANUARY 1, 2006 JUNE 30, 2006 PERIOD*
--------------- ------------- -------
INVESTMENT
SHARES
Actual $ 1,000.00 $ 1,086.95 $ 9.73
Return
Hypothetical Return $ 1,000.00 $ 1,015.47 $ 9.39
INSTITUTIONAL
SHARES
Actual $ 1,000.00 $ 1,089.24 $ 8.75
Return
Hypothetical Return $ 1,000.00 $ 1,016.41 $ 8.45
- ----------------
* Expenses are equal to the Fund's annualized expense ratios of 1.88%
and 1.69% for Investment Shares and Institutional Shares,
respectively, multiplied by the average account value over the period,
multiplied by the number of days in most recent fiscal half-year/365
(to reflect the half-year period).
NOTE 10 - PROXY RESULTS
At the Special Meeting of Stockholders, held on April 18, 2006 shares were voted
as summarized below on the following proposal presented to Shareholders:
To approve a new Investment Advisory Agreement between the Fund and Ironwood
Investment Management, LLC:
AFFIRMATIVE AGAINST ABSTAIN
----------- ------- -------
2,166,945 27,926 163,391
NOTE 11 - OTHER INFORMATION
On June 30, 2006, two shareholders held approximately 58% of the outstanding
shares of the Fund's Investment Shares. These shareholders are comprised of
omnibus accounts, which are held on behalf of several individual shareholders.
As of the same date, five shareholders held approximately 79% of the outstanding
shares of the Fund's Institutional Shares. One of these shareholders is an
omnibus account, which is held on behalf of several individual shareholders.
27
This page intentionally left blank.
IRONWOOD INVESTMENT MANAGEMENT, LLC
AND IRONWOOD 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 INVESTMENT MANAGEMENT, LLC,
the investment manager of the Ironwood Isabelle Small Company Stock
Fund, is an independent investment management firm specializing in
investing in small company stocks.
Ironwood Series Trust
Two Portland Square
Portland, ME 04101
1-800-472-6114
DISTRIBUTOR
Foreside Fund Services, LLC
Two Portland Square, 1st Floor
Portland, ME 04101
www.foresides.com
- --------------------------------------------------------------------------------
This report is submitted for the general information of the shareholders of the
Fund. It is not authorized for distribution to prospective investors unless
preceded or accompanied by an effective prospectus, which includes information
regarding the Fund's risks, objectives, fees and expenses, experience of its
management, and other information.
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.
Included as part of report to stockholders under Item 1.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 11. 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 Investment Company Act of 1940 (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 quarter that have
materially affected, or are reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) of the Investment Company Act of
1940 as amended, and Section 302 of the Sarbanes-Oxley Act of 2002 (Exhibit
filed herewith).
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) of the Investment Company Act of
1940, as amended, and 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 Ironwood Series Trust
By /s/ Warren J. Isabelle
---------------------------
Warren J. Isabelle, President
Date 9/6/06
---------------------------
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 9/6/06
-----------------------------------
By /s/ Gary S. Saks
-----------------------------------
Gary S. Saks, Treasurer
Date 9/5/06
-----------------------------------