<PAGE>   1

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
===============================================================================

                                    FORM 10-K

[X]  Annual Report Pursuant to Section 13 or 15(d) of the Securities 
     Exchange Act of 1934 
              For the period January 1, 1998 to December 31, 1998.

[ ]  Transition Report Pursuant to Section 13 or 15(d) of the Securities 
     Exchange Act of 1934 
              For the transition period               from to             .
                                        --------------       -------------

                         Commission File Number 33-89506
                                                --------

                         BERTHEL GROWTH & INCOME TRUST I
                         -------------------------------
             (Exact name of Registrant as specified in its charter)

           Delaware                                     52-1915821
-------------------------------            ------------------------------------
(State or other jurisdiction of            (I.R.S. Employer Identification No.)
incorporation or organization)

                100 Second Street S.E., Cedar Rapids, Iowa 52401
               --------------------------------------------------
               (Address of principal executive offices) (Zip Code)

       Registrant's telephone number, including area code: (319) 365-2506
                                                           --------------

        Securities registered pursuant to Section 12(b) of the Act: NONE

           Securities registered pursuant to Section 12(g) of the Act:

                          Shares of Beneficial Interest
                          -----------------------------
                                 Title of Class

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filings
requirements for the past 90 days. Yes  X   No
                                      -----   -----

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

As of February 28, 1999, 10,541 Shares of Beneficial Interest were issued and
outstanding. Such shares were issued at $1,000 per share.


                            EXHIBIT INDEX AT PAGE 34



<PAGE>   2


                         BERTHEL GROWTH & INCOME TRUST I

                          1998 FORM 10-K ANNUAL REPORT

                                TABLE OF CONTENTS

                                                                          PAGE
                                     PART I

Item 1.       Business...................................................    3
Item 2.       Properties.................................................    4
Item 3.       Legal Proceedings..........................................    4
Item 4.       Submission of Matters to a Vote of Shareholders............    4


                                     PART II

Item 5.       Market for the Registrant's Common Equity
              and Related Shareholder Matters............................    5
Item 6.       Selected Financial Data....................................    5
Item 7.       Management's Discussion and Analysis
              of Financial Condition and Results of Operations...........    6
Item 7A.      Quantitative and Qualitative Disclosure About Market Risk..   13
Item 8.       Financial Statements and Supplementary Data................   14
Item 9.       Changes in and Disagreements with Accountants
              on Accounting and Financial Disclosure.....................   27


                                    PART III

Item 10.      Directors and Executive Officers of the Registrant.........   27
Item 11.      Executive Compensation.....................................   31
Item 12.      Security Ownership of Certain
              Beneficial Owners and Management...........................   32
Item 13.      Certain Relationships and Related Transactions.............   32

                                     PART IV

Item 14.      Exhibits, Financial Statement Schedules and Reports 
              on Form 8-K................................................   32


SIGNATURES...............................................................   33

EXHIBIT INDEX............................................................   34


<PAGE>   3






                                     PART I

ITEM 1.  BUSINESS

       Berthel Growth & Income Trust I (the "Trust"), a Delaware business trust
that has elected to be treated as a business development company under the
Investment Company Act of 1940, was organized on February 10, 1995. The Trust's
Registration Statement was declared effective, and the Trust began offering
Shares of Beneficial Interest ("shares") effective June 21, 1995. The Trust's
underwriting period was completed on June 21, 1997. A total of $10,541,000 was
raised. The Trust's principal office is located at 100 Second Street S.E., Cedar
Rapids, Iowa 52401. The Trust is a closed-end investment company designed
primarily as a long-term investment and not as a trading vehicle.

       On May 4, 1998, Berthel SBIC, LLC (the "SBIC"), a wholly owned subsidiary
of the Trust within the meaning of Section 2(a)(43) of the Investment Company
Act of 1940, received a license to operate as a Small Business Investment
Company from the Small Business Administration ("SBA"). The SBIC was formed in
1997. The Trust funded the SBIC with a capital contribution of $5,000,000, the
minimum amount eligible to be contributed in order to receive leverage under the
SBA Small Business Investment Company program. The Trust Advisor and Independent
Trustees also serve as the Independent Managers of the SBIC. As used
hereinafter, with respect to investment activities, the term "Trust" includes
investment activities of the SBIC.

       Berthel Fisher & Company Planning, Inc. (the "Trust Advisor") is a
corporation organized under the laws of the State of Iowa on March 20, 1989. The
principal office of the Trust Advisor is located at 100 Second Street S.E.,
Cedar Rapids, Iowa 52401. The Trust Advisor is an SEC Registered Investment
Advisor organized as a subsidiary of Berthel Fisher & Company ("Berthel Fisher")
to serve as a registered investment advisor. All of the voting stock of the
Trust Advisor is owned by Berthel Fisher. Berthel Fisher, a financial services
holding company, was formed in 1985 as an Iowa corporation to hold the stock of
Berthel Fisher & Company Financial Services, Inc. a broker-dealer registered
with the National Association of Securities Dealers, Inc. Berthel Fisher &
Company Financial Services, Inc. was the ("Dealer Manager") for the Trust's
offering of its Shares of Beneficial Interest.

       The Trust will terminate upon the liquidation of all of its investments,
but no later than June 21, 2007. However, the Independent Trustees have the
right to extend the term of the Trust for up to two (2) additional one-year
periods if they determine that such extensions are in the best interest of the
Trust and in the best interest of the shareholders, after which the Trust will
liquidate any remaining investments as soon as practicable but in any event
within three years.

       The investment objective of the Trust is to provide capital appreciation
potential and current income by investing primarily in subordinated debt,
preferred stock and related equity securities issued by small and medium sized
companies that are in need of capital and that the Trust Advisor believes offer
the opportunity for growth or appreciation of equity value while being able, if
required to do so, to service current yield bearing securities. The Trust,
through its Trust Advisor, directs its investment efforts to small and medium
sized companies which, in the view of the Trust Advisor, provides opportunities
for significant capital appreciation and prudent diversification of risk. The



<PAGE>   4


Trust seeks investments in a variety of companies and industries. The securities
of portfolio companies purchased by the Trust typically will be rated below
investment grade, and more frequently, not rated at all. The securities of such
portfolio companies will often have significant speculative characteristics.

ITEM 2.  PROPERTIES

       The Trust does not own or lease any real estate.

ITEM 3.  LEGAL PROCEEDINGS

       In 1996 Soil Recovery Services, Inc. ("SRS"), an investee of the Trust,
was forced into involuntary Chapter 7 bankruptcy by another creditor. During
1997, there was a foreclosure sale of all real estate and certain personal
property in which the SBA had a first security interest. The Trust's claim in
the bankruptcy proceeding was discharged in September 1998. In the fourth
quarter of 1996, the Trust filed a lawsuit against SRS, the President of SRS,
Southwest Merchants group, the investment banking firm which brought SRS to the
Trust and the principles of that investment banking firm in the Northern
District of Iowa. This matter is scheduled for trial in April 1999.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS

       No matters were submitted to a vote of shareholders, through the
solicitation of proxies or otherwise during the period covered by this report.




<PAGE>   5

                                     PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED 
         SHAREHOLDER MATTERS:

       The Registrant's shares are not publicly traded. There is no established
public trading market for the Shares of Beneficial Interest of the Trust and it
is unlikely that any will develop. The Trust Advisor will resist the development
of a public market for the shares.

                             Number of Shareholders      Number of Shares of
                                     at                 Beneficial Interest at
         Title of Class        February 28, 1999           February 28, 1999  
-------------------------------------------------------------------------------

         Shares of 
           Beneficial Interest      872                         10,541

       The Trust accrued an underwriting return based on 10% simple annual
interest computed on a daily basis from the initial closing (August 30, 1995)
until June 21, 1997, the final closing. Shareholders were paid $250,000 in July
1996 and $493,897 in July 1997, leaving $522,791 of the underwriting return
remaining to be paid. There remains to be paid $3,610, which represents interest
earned by the Trust on the investor's funds held in escrow through the initial
closing. Since the final closing, a priority return at 8% simple interest has
been accrued. The earned priority return amounted to $445,899 in 1997 and
$843,280 in 1998. Priority return distributions were $153,611 in 1997 and
$569,029 in 1998, leaving $292,288 to be distributed as of December 31, 1997 and
$566,539 to be distributed as of December 31, 1998.

       The Trust intends to make quarterly distributions of all cash revenues to
the extent that the Trust has cash available for such distributions. These
distributions must be approved by a majority of the Independent Trustees and
made within sixty days of the end of each quarter.


ITEM 6.  SELECTED FINANCIAL DATA

                          Year Ended December 31             February 10, 1995
                   -------------------------------------    (date of inception)
                       1998         1997         1996      to December 31, 1995
--------------------------------------------------------------------------------
Total assets       $12,381,442  $ 7,461,953  $ 6,543,075        $ 4,396,815
Net increase 
  (decrease) in 
  net assets
  resulting from
  operations         5,444,032      167,229     (879,654)           (14,683)
Interest income        584,555      529,792      411,551             54,566
Management and 
  administrative 
  fees                 233,836      191,438      195,495             55,155
Unrealized gain 
  (loss) on 
  investments        5,255,928          -0-   (1,000,000)               -0-
Net income (loss) 
  per beneficial
  share                 516.46        16.70      (122.07)            (4.64)

       The above selected data should be read in conjunction with the
consolidated financial statements and related notes appearing elsewhere in this
report.



<PAGE>   6

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
         RESULTS OF OPERATIONS

RESULTS OF OPERATIONS:
<TABLE>
<CAPTION>

                                                            Year Ended                            February 10, 1995
                                    ----------------------------------------------------------- (date of inception) to
                                    December 31, 1998    December 31, 1997    December 31, 1996    December 31, 1995 
----------------------------------------------------------------------------------------------------------------------
<S>                                   <C>                  <C>                 <C>                   <C>
     Interest income                  $   584,555          $  529,792          $  411,551            $   54,566
     Management fees                      194,820             151,422             155,847                30,435
     Administrative services               39,016              40,016              39,648                24,720
     Trustee fees                          36,000              30,000              44,000                 8,000
     Legal fees                            71,144              96,692              65,292                   -0-
     Unrealized gain (loss)
               on investments           5,255,928                 -0-          (1,000,000)                  -0-
</TABLE>


INTEREST INCOME: Below is a summary of the interest income earned by the Trust 
on its investments:
<TABLE>
<CAPTION>
                                                           PERIODS ENDING DECEMBER 31 
                         INVESTMENT   INVESTMENT   -------------------------------------------
                           AMOUNT        DATE         1998        1997         1996      1995   
----------------------------------------------------------------------------------------------
<S>                      <C>            <C>        <C>         <C>         <C>        <C>
       Money Market                                $ 196,712   $ 251,450   $ 185,108  $ 54,566
       SRS               1,000,000      May-96           -0-         -0-      25,000       -0-
       VisionComm        2,180,000      Apr-96           -0-     103,655     201,443       -0-
       VisionComm          500,000      Dec-97        70,000       5,833         -0-       -0-
       Kinseth           2,000,000      May-97       280,000     168,854         -0-       -0-
       VisionComm          200,000      May-98        17,733         -0-         -0-       -0-
       Hicklin             400,000      Jun-98        20,110         -0-         -0-       -0-
                                                   ---------   ---------   ---------  --------
                                                   $ 584,555   $ 529,792   $ 411,551  $ 54,566
                                                   =========   =========   =========  ========
</TABLE>


Pending investments in enhanced yield investments, the Trust invests idle cash
in money market funds or in bank money market accounts. As such, the interest
earned on these investments will vary based on the amount and duration of idle
cash invested. The interest rate on these investments will vary, depending upon
the level of interest rates achieved by the underlying money market accounts.

MANAGEMENT FEES: The Trust accrues an annual management fee equal to 2.5% of the
total assets of the Trust paid quarterly. Changes in management fees from year
to year are directly related to changes in the value of assets in the Trust.
Prior to September 1997, the Trust invested a significant portion of its idle
funds in the Fidelity Daily Money Market Money Fund ("Fidelity Fund"). The Staff
of the Division of Investment Management of the Securities and Exchange
Commission has indicated to the Trust and the Trust Advisor its view that
investment by the Trust in the Fidelity Fund, to the extent it exceeded 5% of
the Trust's assets, was in violation of Section 12(d)(1) of the Investment
Company Act, because, unlike a certificate of deposit, bank money market
account, or similar investment, the Fidelity Fund is a registered investment
company that charges a management fee. In 1997, the Trust received a $31,491
credit from the Trust Advisor for management fees charged on those assets.




<PAGE>   7


TRUSTEE FEES: As compensation for services rendered to the Trust, each
Independent Trustee is paid $1,000 per month plus $1,000 per Board meeting
attended up to a maximum of $24,000 in meeting fees per year. Each Trustee was
paid $7,000 in the second quarter of 1996 for prior unpaid fees.

LEGAL EXPENSE: Legal expenses incurred are associated with the structuring and
monitoring of Trust activities and investments. Additional legal charges were
incurred in connection with the SRS bankruptcy and formation of the SBIC.

UNREALIZED GAIN (LOSS) ON INVESTMENTS: As of December 31, 1998, the Trust
assigned a value of $3.1586 per VisionComm warrant held by the Trust. Warrants
to purchase 889,153 shares of VisionComm common stock were acquired in
connection with preferred stock and promissory note financings in 1996, 1997 and
1998. This valuation reflects the Trust's valuation of VisionComm stock at $4.00
as of December 31, 1998 less the exercise price of $.8414 per common share. The
valuation resulted in an unrealized gain of $2,808,478 during 1998.

A value of $2,750,000 was assigned to warrants issued by Kinseth Hospitality
Company ("Kinseth"), which provide for purchase of 25% of Kinseth's common stock
for $11.80. The warrants were acquired in connection with a 1997 note financing.
The valuation resulted in an unrealized gain equal to the valuation.

An unrealized loss of $297,750 was recorded as of December 31, 1998, to reflect
the valuation of LiveWare5 common stock as of December 31, 1998.

As previously reported, the Trust served a Notice of Default and a Notice of
Rescission on SRS and commenced litigation against key parties during 1996. The
last interest payment received by the Trust was in July 1996. SRS filed for
Chapter 11 bankruptcy and the Trust's claim has been discharged. The Trust is
continuing its avenues of recovery through litigation. Accordingly, in 1996, the
Trust recognized an unrealized loss of $1,000,000, the cost of the investment.

SECURITIES AND EXCHANGE COMMISSION FILINGS: On June 14, 1996, the Trust filed,
with the Securities and Exchange Commission, a Cumulative Supplement No. 2
("Sup. 2") to the prospectus dated June 21, 1995. Sup. 2 provides for the
renewal of registration and extension of the offering period to June 21, 1997.

In addition to the extension of the offering period, the purpose of Sup. 2 was
to: a) report the status of the offering; b) provide information on the status
of investments in portfolio companies through May 31, 1996; c) provide a
description of additional information regarding the Trust and the Offering; and
d) report the financial statements of the Trust and Berthel Fisher & Company
Planning, Inc.

FORMATION OF AN SBIC: On May 4, 1998, Berthel SBIC, LLC (the "SBIC"), a wholly
owned subsidiary of the Trust within the meaning of Section 2(a)(43) of the
Investment Company Act of 1940, received a license to operate as a Small
Business Investment Company from the Small Business Administration ("SBA"). The
SBIC was formed in 1997. The Trust funded the SBIC with a capital contribution
of $5,000,000, the minimum amount eligible to be contributed in order to 



<PAGE>   8

receive leverage under the SBA Small Business Investment Company program.

INVESTMENTS: The Trust has invested in six portfolio companies through December
31, 1998. The investments have been made in companies engaged in
telecommunications, private cable television business, soil remediation, hotel
and restaurant operations and distance based corporate education, vehicular
drive system testing, and internet related technology services.

VISIONCOMM, INC.
<TABLE>
<CAPTION>
                                        December 31, 1998            December 31, 1997
                                    Original Cost   Valuation    Original Cost  Valuation
                                    -------------   ---------    -------------  ---------
<S>                                  <C>           <C>            <C>          <C>

     Notes receivable                $  700,000    $  700,000     $  500,000   $  500,000
     Warrants for 742,813 shares
          at $.8414 per share                --     2,346,249              --          --
     Warrants for 104,529 shares
          at $.8414 per share                --       330,165              --          --
     Warrants for 41,811 shares
          at $84.14 per share                --       132,064              --          --
                                     ----------    ----------     -----------  ----------
                                     $  700,000    $3,508,478     $   500,000  $  500,000
                                     ==========    ==========     ===========  ==========
</TABLE>


VisionComm, Inc. ("VisionComm") is primarily engaged in the telecommunications
and private cable television business. The shares of VisionComm common stock
referred to in the table have been restated to reflect a 5.9425 to 1 stock split
which was effective July 17, 1998. On April 30, 1996, the Trust received a
warrant for 742,813 shares of VisionComm common stock exercisable until April
20, 2007, at an exercise price of $.8414 per share. The warrants were received
in conjunction with a $2,180,000 note that was repaid in 1996 ($775,000) and
1997 ($1,405,000).

On December 1, 1997 and May 14, 1998, the Trust provided $500,000 and $200,000,
respectively, in financing to VisionComm in the form of a 14% 12-month secured
note with warrants. Effective December 1, 1998, the terms of the $500,000 note
receivable were extended due to VisionComm's negotiations for long-term
financing arrangements. This note will become due on May 1, 1999. These notes
are secured by substantially all the private cable assets of VisionComm. The
warrants entitle the Trust to purchase 104,529 and 41,811 shares of common
stock, respectively, at an exercise price of $.8414 per share, exercisable until
April 30, 2003 and September 30, 2003, respectively. The warrants received have
terms equivalent to those received in conjunction with the Trust's previous
investment in VisionComm with the exception that all warrants now owned by the
Trust provide for the option of a cashless exercise. The Trust now has the right
through this latter warrant and the other warrants it previously owned to
purchase approximately 19% of the equity ownership of VisionComm. The Trust,
upon the occurrence of certain conditions, may "put" the warrant shares to
VisionComm, beginning after May 15, 2003. The valuation of VisionComm warrants
at December 31, 1998 is based on a recent preferred stock market transaction as
adjusted to reflect the differences between preferred and common stock.

<PAGE>   9


KINSETH HOSPITALITY COMPANY, INC.

<TABLE>
<CAPTION>
                                        December 31, 1998            December 31, 1997
                                    Original Cost   Valuation    Original Cost  Valuation
                                    -------------   ---------    -------------  ---------
<S>                                  <C>           <C>            <C>          <C>
     Note receivable                 $2,000,000    $2,000,000     $2,000,000   $2,000,000
       Warrants for 25% of the
         outstanding common stock
         of Kinseth at $.01 
           per share                        -0-     2,750,000            -0-          -0-
                                     ----------    ----------     ----------   ----------
                                     $2,000,000    $4,750,000     $2,000,000   $2,000,000
                                     ==========    ==========     ==========   ==========
</TABLE>


       On April 16, 1997, the Trust invested in a senior secured note issued by
Kinseth Hospitality Company, Inc. ("Kinseth"), which is primarily engaged in the
hospitality industry. The six year note carries a 14% interest rate with
interest only payments with a balloon payment due May 16, 2003. The Trust
received a warrant to purchase 25% of Kinseth's common stock for $11.80. The
warrant expires during 2002. Beginning in 2004, the common shares may be called
by Kinseth at a designated multiple or based on independent valuations. The
Trust can "put" the common shares to Kinseth beginning May 1, 2003 if the common
stock is not listed on a national exchange or NASDAQ, or prior to May 1, 2003,
if other certain conditions are met, at a price based on fair market value less
certain specified provisions. The valuation of Kinseth warrants at December 31,
1998 reflects improved operating results and expanded operations.

SOIL RECOVERY SERVICES, INC.
<TABLE>
<CAPTION>
                                        December 31, 1998            December 31, 1997
                                    Original Cost   Valuation   Original Cost  Valuation
                                    -------------   ---------   -------------  ---------
<S>                                  <C>           <C>            <C>          <C>

       Convertible subordinated
         debenture                   $1,000,000    $      -0-     $1,000,000   $      -0-
                                     ==========    ==========     ==========   ==========
</TABLE>


         In 1996, the Trust invested $1,000,000 in a convertible subordinated
debenture issued by Soil Recovery Services, Inc. ("SRS"). During 1996, SRS was
forced into involuntary Chapter 7 bankruptcy by another creditor. During 1997,
there was a foreclosure sale of all real estate and certain personal property in
which the SBA has a first security interest. The Trust's claim in the bankruptcy
proceeding was discharged in September 1998. In the fourth quarter of 1996, the
Trust filed a lawsuit against SRS, the President of SRS, Southwest Merchants
group, the investment banking firm which brought SRS to the Trust and the
principles of that investment banking firm in the Northern District of Iowa.
This matter is scheduled for trial in April 1999.

LIVEWARE5, INC. 

<TABLE>
<CAPTION>
                                        December 31, 1998            December 31, 1997
                                    Original Cost   Valuation   Original Cost  Valuation
                                    -------------   ---------   -------------  ---------
<S>                                  <C>           <C>            <C>          <C>
       300,000 shares of common 
         stock and warrants for 
         up to 600,000 shares of
         common stock of LIVEware5
         at $.01 per share           $  300,000    $    2,250     $  300,000   $  300,000
                                     ==========    ==========     ==========   ==========
</TABLE>




<PAGE>   10


       LIVEware5, Inc. ("LIVEware") is a provider of distance based corporate
education via advanced teleconferencing technologies. On December 11, 1997, the
Trust invested $300,000 in LIVEware in exchange for 300,000 shares of no par
value common stock, representing approximately 12% of outstanding LIVEware
common stock and warrants to purchase 600,000 shares of common stock at $.01 per
share. The warrants will cancel upon LIVEware achieving certain levels of
revenues and pretax profit beginning in fiscal year 2000. If the warrants do not
cancel, the Trust may own up to 900,000 shares of LIVEware, which would
represent approximately 18% and 17% of LIVEware as of December 31, 1998 and
1997, respectively. Subject to certain restrictions, the Trust can "put" the
common stock and warrants to LIVEware beginning December 11, 2003 at the greater
of a designated multiple or fair market value. The valuation of warrants at
December 31, 1998 is based on recent market transactions.

HICKLIN ENGINEERING, L.C.
<TABLE>
<CAPTION>
                                        December 31, 1998            December 31, 1997
                                    Original Cost   Valuation   Original Cost  Valuation
                                    -------------   ---------   -------------  ---------
<S>                                  <C>           <C>            <C>          <C>
       Subordinated note             $  400,000    $  400,000     $      -0-   $      -0-
                                     ==========    ==========     ==========   ==========
</TABLE>


       Hicklin Engineering, L.C. ("Hicklin") specializes in manufacturing drive
train component test equipment and dynometer systems. Hicklin designs equipment
and integrated test systems used to test vehicular drive train components. On
June 30, 1998, the Trust invested $400,000 in a Hicklin secured 10% subordinated
note due June 30, 2003, and a warrant to purchase 6,857 units of membership
interest at an exercise price of $.01. The note is collateralized by
substantially all the assets of Hicklin. The warrant expires on May 1, 2006. The
exercise of these warrants would give the Trust a 6.86% membership interest in
Hicklin. The Trust can "put" the warrant shares to Hicklin beginning June 30,
2003 at a designated multiple or based on independent valuations. As of December
31, 1998 the Trust had a verbal commitment to invest an additional $150,000 in
Hicklin, but Hicklin withdrew its request after December 31, 1998.

OBJECTSPACE, INC.

<TABLE>
<CAPTION>
                                        December 31, 1998            December 31, 1997
                                    Original Cost   Valuation   Original Cost  Valuation
                                    -------------   ---------   -------------  ---------
<S>                                  <C>           <C>            <C>          <C>
       108,108 shares of Series B
         Convertible preferred stock $  404,800    $  400,000     $      -0-   $      -0-
                                     ==========    ==========     ==========   ==========
</TABLE>


       ObjectSpace, Inc. provides information technology services to Fortune 500
companies, assisting its clients in realizing the full potential of Java for
enterprise-level systems. On December 30, 1998, the Trust invested $404,800 in
108,108 shares of ObjectSpace Series B Convertible Preferred Stock ("Preferred
Stock"). The Preferred Stock is subordinated to the claims of other secured
creditors and may be converted into common shares at any time at a price equal
to $3.70 divided by the conversion rate in effect on the date of conversion. The
initial conversion rate was $3.70 per share. Subject to other investor rights,
the Trust can "put" the Preferred Stock to ObjectSpace beginning January 1, 2003
at a price equal to the greater of fair market value or the per share sales
price, payable over three years earning interest at prime interest rate.

INVESTMENTS SUBSEQUENT TO DECEMBER 31, 1998: On February 5, 1999, the Trust
invested $100,000 in LIVEware in exchange for 13,333,333 shares of common stock.
In addition, 
<PAGE>   11

certain terms of the original investment agreement dated December 11, 1997, were
amended. As a result, the Trust owns approximately 32% of the outstanding shares
of common stock of LIVEware.

During February, 1999, the Trust invested $700,000 in 11% subordinated
debentures due March 1, 2004, of Easy Systems, Inc. ("Easy Systems"). Interest
payments are not scheduled to begin until March 2000. In addition, the Trust
received a warrant to purchase 290,060 shares of Easy Systems' common stock at
an exercise price of $2.95 per share. The warrant expires on the earlier of
February, 2009, or upon the occurrence of a certain specified event. The Trust
also received the right to "put" the shares to Easy Systems upon the occurrence
of certain conditions, at fair market value.

YEAR 2000 ISSUE: The Trust recognizes that the arrival of the Year 2000 poses a
unique challenge to the ability of all systems to recognize the date change from
December 31, 1999 to January 1, 2000. The Trust has determined that the software
it uses in its operations is compatible with the Year 2000. The cost of making
software compatible with the Year 2000 has been included in the costs of
software billed to the Trust Advisor and is not believed to be material. There
are no non-information technology processes that the Trust has identified which
would affect the Trust's operations. An assessment of the readiness of external
entities which it interfaces with, such as vendors, counterparties, customers,
and others, is ongoing. At the present the Trust Advisor does not contemplate
any specific charges will be incurred for this assessment, but if separate
charges are identified they will be billed to the Trust as incurred. The amount
of such expenditures is not expected to be significant. The Trust does not
expect the Year 2000 impact of external relationships will have a material
adverse impact on the Trust. But, in a worst case scenario, the Trust expects a
Year 2000 related event might delay the processing of cash flows by up to 90
days, but that recovery from the event would not be beyond the Trust's normal
capabilities.

The Trust is assessing the impact of the Year 2000 issue on information
technology and non-information technology systems used by investee companies. No
investee company is contractually obligated to become Year 2000 compliant or to
disclose their capabilities to the Trust. However, all investee companies have
been contacted and the Trust plans to complete an assessment of their Year 2000
readiness by April 30, 1999. As of the date of this report, the Trust has been
informed that VisionComm expects to be fully compliant by June 1999, and has
implemented an assessment and remedial process to encompass external
relationships.

At this time the Trust is unable to determine if the Year 2000 issue now
jeopardizes any of its investments. In a worst case scenario any investee
company could experience significant disruptions to cash flows and business
processes that would lead to a decrease in the valuation of securities issued.

IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS: In June 1998, the Financial Accounting
Standards Board ("FASB") issued Statement of Financial Accounting Standards
("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging
Activities". SFAS No. 133 establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities. SFAS No. 133 is effective for
fiscal years beginning after June 15, 1999. Reclassification of financial
statements for earlier periods provided for comparative purposes is not
required. The Trust has not completed its 


<PAGE>   12


assessment of the impact of the adoption of SFAS No. 133 on the financial
statements.

The American Institute of Certified Public Accountants issued Statement of
Position ("SOP") 98-5, "Reporting on the Costs of Start-up Activities". SOP 98-5
requires the expensing of start-up activities and organization costs as
incurred. The SOP is effective for fiscal years beginning after December 15,
1998. The Trust will adopt the SOP in 1999 which will require SBIC organization
costs of $33,818 to be written off and reported as a cumulative effect of a
change in accounting principle.


LIQUIDITY AND CAPITAL RESOURCES:            Years Ending December 31
--------------------------------    ---------------------------------------
                                        1998          1997           1996     
----------------------------------------------------------------------------
Major Cash Source:
     Proceeds from issuance of 
      beneficial shares              $      -0-    $1,655,000     $3,763,000
     Repayment of note receivable           -0-     1,405,000        775,000
Major Cash Use:
     Payments for syndication costs         -0-       233,033        530,488
     Distributions                      569,029       647,508        250,000
     Investing activities             1,004,800     2,831,954      3,184,523

Pending investment in enhanced yield investments, the Trust had invested
$3,187,453 and $4,587,598 in bank money market accounts at December 31, 1998 and
December 31, 1997, respectively.

Distributions of $1,092,940 and $818,689 were accrued as of December 31, 1998
and December 31, 1997, respectively. The Trust will continue to accrue
distributions based on 8% simple annual interest computed on a daily basis until
the cumulative distributions to each investor from the Trust equals 100% of
their original investment plus the priority and underwriting return.

During March 1999, the SBIC received approval for SBA leverage ("Leverage")
reserved in the form of debentures equal to $5,000,000 to be issued on or prior
to September 30, 2003. In exchange for the approved Leverage, the SBIC paid
the SBA a nonrefundable fee of $50,000 during March, 1999 and the remaining
portion of the Leverage fee in the amount of $100,000 will be deducted pro rata
as commitment proceeds are drawn. Each issuance of Leverage is conditional upon
the SBIC's credit worthiness and compliance with specified regulations, as
determined by the SBA. The SBA may also limit the amounts that may be drawn each
year.

The Trust Advisor is not aware of any regulatory issues that may have a
substantial negative impact on the portfolio companies it is currently
researching for possible investment of Trust funds.

The effect of interest rate fluctuations and inflation on the current Trust
investments is negligible.



<PAGE>   13


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The Trust's investment objective is to achieve capital appreciation in the value
of its net assets and to achieve current income principally by making
investments through private placements in securities of small and medium sized
privately and publicly owned companies. Securities consist of subordinated debt,
preferred stock, or common stock combined with equity participation in common
stock or rights to acquire common stock. Securities held for investment at
December 31, 1998 are not held for trading purposes.

         The primary risk of the portfolio is derived from the underlying
ability of investee companies to satisfy debt obligations and their ability to
maintain or improve common equity values. Levels of interest rates are not
expected to impact the Trust's valuations, but could impact the capability of
investee companies to repay debt or create and maintain shareholder value.

         As of December 31, 1998, the portfolio is valued at fair value, as
determined by the Independent Trustees ("Trustees"). In determining fair value
for securities and warrants, investments are initially stated at cost until
significant subsequent events and operating trends require a change in
valuation. Among the factors considered by the Trustees in determining fair
value of investments are the cost of the investment, terms and liquidity of
warrants, developments since the acquisition of the investment, the sales price
of recently issued securities, the financial condition and operating results of
the issuer, earnings trends and consistency of operating cash flows, the
long-term business potential of the issuer, the quoted market price of
securities with similar quality and yield that are publicly traded and other
factors generally pertinent to the valuation of investments. The Trustees relied
on financial data of the portfolio companies provided by the management of the
portfolio companies.

         The Trust Advisor maintains ongoing contact with management of the
portfolio companies including participation on their Boards of Directors and
review of financial information.

         There is no assurance that any investment made by the Trust will be
repaid or re-marketed. Accordingly, at December 31, 1998, the entire portfolio
value is at risk in light of the underlying operations and financial health of
investee companies. At December 31, 1998, the amount at risk was $9,060,728; at
December 31, 1997, the amount at risk was $2,800,000. The change is a result of
unrealized net appreciation and new investments during 1998.

         At December 31, 1998, the portfolio consisted of the following:
                                                      Cost        Valuation
                                                   ----------     ----------
         Notes and debentures                      $3,100,000     $3,100,000
         Warrant to purchase common stock 
              as a result of note and 
              debenture financings                        -0-      5,558,478
         Preferred stock convertible into
              common stock                            404,800        400,000
         Common stock                                 300,000          2,250
         Debenture - subject to litigation
              for recovery of investment            1,000,000            -0-
                                                   ----------     ----------
                                                   $4,804,800     $9,060,728
                                                   ==========     ==========



<PAGE>   14


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The following financial statements and related information as of the 
         years ended December 31, 1998, 1997 and 1996 are included in Item 8:
         Independent Auditors' Report
         Consolidated Statements of Assets and Liabilities
         Consolidated Statements of Operations
         Consolidated Statements of Changes in Net Assets
         Consolidated Statements of Cash Flows
         Notes to Consolidated Financial Statements


<PAGE>   15


INDEPENDENT AUDITORS' REPORT


To the Independent Trustees and Shareholders of
Berthel Growth & Income Trust I

We have audited the accompanying consolidated statements of assets and
liabilities of Berthel Growth & Income Trust I and subsidiary (the "Trust") as
of December 31, 1998 and 1997, and the related consolidated statements of
operations, changes in net assets, and cash flows for each of the three years in
the period ended December 31, 1998. These financial statements are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Trust at December 31, 1998 and
1997, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1998 in conformity with generally
accepted accounting principles.

As discussed in Note 1 to the consolidated financial statements, investments in
securities and warrants not readily marketable amounting to $9,060,728 as of
December 31, 1998 have been valued at fair value, as determined by the
Independent Trustees ("Trustees"). We have reviewed the procedures applied by
the Trustees in valuing such securities and have inspected underlying
documentation and, in the circumstances, we believe that the procedures are
reasonable and the documentation appropriate. However, because of the inherent
uncertainty of valuation, the Trustees' estimate of fair values may differ
significantly from the values that would have been used had a ready market
existed for the securities, and the differences could be material.


DELOITTE & TOUCHE LLP

Cedar Rapids, Iowa
March 12, 1999



<PAGE>   16


BERTHEL GROWTH & INCOME TRUST I

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1998 AND 1997
-------------------------------------------------------------------------------

                                                       1998             1997
ASSETS:

  Investments in securities (81% and 
    42.5% of net assets as of 
    December 31, 1998 and 1997, 
    respectively) (Note 2):
      VisionComm, Inc.                             $ 3,508,478       $  500,000
      Soil Recovery Services, Inc.                           -                -
      LIVEware5, Inc. (Note 7)                           2,250          300,000
      Kinseth Hospitality Company, Inc.              4,750,000        2,000,000
      Hicklin Engineering, LC                          400,000                -
      ObjectSpace, Inc.                                400,000                -
                                                   -----------       ----------
           Total investments in securities           9,060,728        2,800,000

  Cash                                                  31,663           15,047
  Temporary investment in money market securities    3,187,453        4,587,598
  Interest receivable                                   35,382            5,833
  Other assets                                          66,216           53,475
                                                   -----------       ----------
           Total assets                             12,381,442        7,461,953
                                                   -----------       ----------

LIABILITIES:

  Accounts payable and other accrued expenses           25,232           36,509
  Distributions payable to shareholders (Note 5)     1,092,940          818,689
  Due to affiliate (Note 3)                             71,560           15,797
                                                   -----------       ----------
           Total liabilities                         1,189,732          870,995
                                                   -----------       ----------

COMMITMENTS AND CONTINGENCIES

NET ASSETS (equivalent to $1,061.73 per 
  share in 1998, and $625.27 per 
  share in 1997)                                   $11,191,710       $6,590,958
                                                   ===========       ==========
Net assets consist of:
  Shares of beneficial interest, 
    25,000 shares authorized -
    10,541 shares issued and 
    outstanding in 1998 and 1997                   $ 6,474,786       $7,318,066
  Undistributed net investment gain (loss)           4,716,924         (727,108)
                                                   -----------       ----------
                                                   $11,191,710       $6,590,958
                                                   ===========       ==========

See notes to consolidated financial statements.






<PAGE>   17

BERTHEL GROWTH & INCOME TRUST I

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
--------------------------------------------------------------------------------

                                               1998        1997         1996
REVENUES:
  Interest income                          $  584,555   $ 529,792   $   411,551
  Closing fees                                      -      20,000             -
  Commitment fees                              15,502         833        63,600
  Other income                                      -         100             -
                                           ----------   ---------   -----------
           Total revenues                     600,057     550,725       475,151
                                           ----------   ---------   -----------

EXPENSES:
  Management fees (Note 3)                    194,820     151,422       155,847
  Administrative services                      39,016      40,016        39,648
  Trustee fees                                 36,000      30,000        44,000
  Legal expense                                71,144      96,692        65,292
  Other general and administrative expenses    70,973      65,366        50,018
                                           ----------   ---------   -----------
           Total expenses                     411,953     383,496       354,805
                                           ----------   ---------   -----------

NET INVESTMENT INCOME                         188,104     167,229       120,346

UNREALIZED GAIN (LOSS) ON INVESTMENTS       5,255,928           -    (1,000,000)
                                           ----------   ---------   -----------

NET INCREASE (DECREASE) IN NET ASSETS
  RESULTING FROM OPERATIONS                $5,444,032   $ 167,229   $  (879,654)
                                           ==========   =========   ===========

INVESTMENT INCOME PER BENEFICIAL SHARE     $    56.92   $   54.99   $     65.94

EXPENSES PER BENEFICIAL SHARE                  (39.08)     (38.29)       (49.24)
                                           ----------   ---------   -----------

NET INVESTMENT INCOME
  PER BENEFICIAL SHARE                          17.84       16.70         16.70

UNREALIZED GAIN (LOSS) ON INVESTMENTS
  PER BENEFICIAL SHARE                         498.62           -       (138.77)
                                           ----------   ---------   -----------

NET OPERATIONAL INCREASE (DECREASE)
  IN NET ASSETS PER BENEFICIAL SHARE       $   516.46   $   16.70   $   (122.07)
                                           ==========   =========   ===========

WEIGHTED AVERAGE SHARES                        10,541      10,013         7,206
                                           ==========   =========   ===========


See notes to consolidated financial statements.



                                      -3-
<PAGE>   18


BERTHED GROWTH & INCOME TRUST I

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
-------------------------------------------------------------------------------

                                                     SHARES OF
                                                    BENEFICIAL
                                                     INTEREST          AMOUNT

NET ASSETS AT JANUARY 1, 1996                          5,128       $ 4,242,814

  Net investment income                                    -           120,346

  Unrealized loss on investments                           -        (1,000,000)
                                                      ------      ------------

  Net decrease in assets resulting 
    from operations                                        -          (879,654)

  Proceeds from sales of shares of 
    beneficial interest                                3,763         3,763,000

  Syndication costs incurred                               -          (530,488)

  Distributions to shareholders                            -          (250,000)

  Distributions payable to shareholders                    -          (457,693)
                                                      ------      ------------

NET ASSETS AT DECEMBER 31, 1996                        8,891         5,887,979

  Net investment income                                    -           167,229

  Proceeds from sales of shares of 
    beneficial interest                                1,655         1,655,000

  Shares of beneficial interest redeemed                  (5)           (4,500)

  Syndication costs incurred                               -          (233,033)

  Distributions to shareholders                            -          (647,508)

  Distributions payable to shareholders                    -          (234,209)
                                                      ------      ------------

NET ASSETS AT DECEMBER 31, 1997                       10,541         6,590,958

  Net investment income                                    -           188,104

  Unrealized gain on investments                           -         5,255,928

  Distributions to shareholders                            -          (569,029)

  Distributions payable to shareholders                    -          (274,251)
                                                      ------      ------------
NET ASSETS AT DECEMBER 31, 1998                       10,541      $ 11,191,710
                                                      ======      ============

See notes to consolidated financial statements.


                                      -4-









<PAGE>   19

BERTHEL GROWTH & INCOME TRUST I

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
-------------------------------------------------------------------------------

                                              1998           1997        1996
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net increase (decrease) in net assets   $ 5,444,032   $  167,229   $ (879,654)
  Adjustments to reconcile net increase 
     (decrease) in net assets to net cash 
     flows from operating activities:
    Amortization of organizational costs        3,660        1,000        1,000
    Unrealized (gain) loss on investments  (5,255,928)           -    1,000,000
    Changes in operating assets and 
      liabilities:
      Temporary investment in money 
        market securities                   1,400,145      405,576     (720,625)
      Interest receivable                     (29,549)      34,353      (22,356)
      Other assets                            (16,401)     (14,831)           -
      Accounts payable and other 
        accrued expenses                      (11,277)      12,915       23,594
      Due to affiliate                         55,763      (31,225)      19,808
                                          -----------   ----------    ---------
           Net cash flows from 
             operating activities           1,590,445      575,017     (578,233)
                                          -----------   ----------    ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Issuance of Kinseth note receivable               -   (2,000,000)           -
  Issuance of Hicklin Engineering, L.C. 
    note receivable                          (400,000)           -
  Issuance of VisionComm, Inc. 
    note receivable                          (200,000)    (500,000)  (2,180,000)
  Repayment of VisionComm, Inc. 
    note receivable                                 -    1,405,000      775,000
  Investment in LIVEware5, Inc.                     -     (300,000)           -
  Investment in Soil Recovery 
    Services, Inc.                                  -            -   (1,000,000)
  Investment in ObjectSpace, Inc.            (404,800)           -            -
  Payment of organizational costs                   -      (31,954)      (4,523)
                                          -----------   ----------    ---------
           Net cash flows from 
             investing activities          (1,004,800)  (1,426,954)  (2,409,523)
                                          -----------   ----------    ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from sales of shares of 
    beneficial interest                             -    1,655,000    3,763,000
  Redemption of shares of beneficial 
    interest                                        -       (4,500)           -
  Distribution payments to shareholders      (569,029)    (647,508)    (250,000)
  Syndication costs incurred                        -     (233,033)    (530,488)
                                          -----------   ----------    ---------
           Net cash flows from 
             financing activities            (569,029)     769,959    2,982,512
                                          -----------   ----------    ---------

NET INCREASE (DECREASE) IN CASH                16,616      (81,978)      (5,244)

CASH AT BEGINNING OF PERIOD                    15,047       97,025      102,269
                                          -----------   ----------    ---------
CASH AT END OF PERIOD                     $    31,663   $   15,047    $  97,025
                                          ===========   ==========    =========
SUPPLEMENTAL DISCLOSURE OF
  CASH FLOW INFORMATION:
  Noncash financing activities - 
    Distributions payable
    to shareholders                       $   274,251   $  234,209    $ 457,693
                                          ===========   ==========    =========

See notes to consolidated financial statements.


                                      -5-




<PAGE>   20


BERTHEL GROWTH & INCOME TRUST I

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
-------------------------------------------------------------------------------


1.   ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

     BUSINESS- Berthel Growth & Income Trust I (the "Trust") is registered under
     the Investment Company Act of 1940, as amended, as a nondiversified,
     closed-end management investment company electing status as a business
     development company. The Trust was formed on February 10, 1995 under the
     laws of the State of Delaware and received approval from the Securities and
     Exchange Commission to begin offering shares of beneficial interest (the
     "Shares") effective June 21, 1995. The Trust's investment objective is to
     achieve capital appreciation in the value of its net assets and to achieve
     current income principally by making investments through private placements
     in securities of small and medium sized privately and publicly owned
     companies. Securities to be purchased will consist primarily of
     subordinated debt, common stock or preferred stock, combined with equity
     participation in common stock or rights to acquire common stock. The Trust
     offered a minimum of 1,500 Shares and a maximum of 50,000 Shares at an
     offering price of $1,000 per Share. The minimum offering of 1,500 Shares
     sold was reached on August 30, 1995. The offering period expired June 21,
     1997.

     The Trust will terminate upon the liquidation of all of its investments,
     but no later than June 21, 2007. However, the Independent Trustees (the
     "Trustees") have the right to extend the term of the Trust for up to two
     additional one-year periods if they determine that such extensions are in
     the best interest of the Trust and in the best interest of the
     shareholders, after which the Trust will liquidate any remaining
     investments as soon as practicable but in any event within three years.

     Berthel SBIC, LLC (the "SBIC"), a wholly owned subsidiary of the Trust
     within the meaning of Section 2(a)(43) of the Investment Company Act of
     1940, was formed during 1997 and received a license to operate as a Small
     Business Investment Company from the Small Business Administration ("SBA")
     on May 4, 1998. The Trust funded the SBIC with a capital contribution of
     $5,000,000, the minimum amount eligible to be contributed in order to
     receive leverage under the SBA Small Business Investment Company program.
     The Trustees also serve as the Independent Managers of the SBIC.

     Berthel Fisher & Company Planning, Inc. (the "Trust Advisor") is the
     Trust's investment advisor and manager. TJB Capital Management, Inc. (the
     "Corporate Trustee") provides certain management services necessary for the
     conduct of the Trust's business. Shares were offered by Berthel Fisher &
     Company Financial Services, Inc. (the "Dealer Manager"). Each of these
     three entities is a wholly or majority owned subsidiary of Berthel Fisher &
     Company.

     CONSOLIDATION - The consolidated financial statements include the accounts
     of the Trust and its wholly owned subsidiary. All significant intercompany
     balances and transactions have been eliminated in consolidation.



                                      -6-


<PAGE>   21

     USE OF ESTIMATES - The preparation of the Trust's consolidated financial
     statements in conformity with generally accepted accounting principles
     requires management to make estimates and assumptions that affect the
     reported amounts of assets and liabilities and disclosure of contingent
     assets and liabilities at the date of the financial statements and the
     reported amounts of revenues and expenses during the reporting period.
     Actual results could differ significantly from those estimates. Material
     estimates that are particularly susceptible to significant change in the
     near-term relate to the valuation of not readily marketable securities by
     the Trustees.

     TEMPORARY INVESTMENT IN MONEY MARKET SECURITIES - Pending investment in
     enhanced yield investments, the Trust has invested in money market
     securities with WFS Clearing Services, which are reported at market value,
     which approximates cost.

     OTHER ASSETS - Included within other assets are costs of organizing the
     SBIC, which are being amortized over the life of the SBIC, eight years,
     beginning upon receipt of its license to operate as a Small Business
     Investment Company. SBIC organizational costs total $33,818, net of
     accumulated amortization of $2,660, as of December 31, 1998.

     INVESTMENTS IN SECURITIES - In accordance with accounting practices,
     investments that are not readily marketable are valued at fair value, as
     determined by the Trustees. The resulting difference between cost and
     market is included in the Statements of Operations.

     In determining fair value for securities and warrants not readily
     marketable, investments are initially stated at cost until significant
     subsequent events and operating trends require a change in valuation. Among
     the factors considered by the Trustees in determining fair value of
     investments are the cost of the investment, terms and liquidity of
     warrants, developments since the acquisition of the investment, the sales
     price of recently issued securities, the financial condition and operating
     results of the issuer, earnings trends and consistency of operating cash
     flows, the long-term business potential of the issuer, the quoted market
     price of securities with similar quality and yield that are publicly traded
     and other factors generally pertinent to the valuation of investments. The
     Trustees, in making their evaluation, have relied on financial data of the
     portfolio companies provided by the management of the portfolio companies.

     NET INCOME (LOSS) PER BENEFICIAL SHARE - Net income (loss) per beneficial
     share is based on the weighted average of shares outstanding.

     IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS - In June 1998, the Financial
     Accounting Standards Board ("FASB") issued Statement of Financial
     Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
     Instruments and Hedging Activities". SFAS No. 133 establishes accounting
     and reporting standards for derivative instruments, including certain
     derivative instruments embedded in other contracts, and for hedging
     activities. SFAS No. 133 is effective for fiscal years beginning after June
     15, 1999. Reclassification of financial statements for earlier periods
     provided for comparative purposes is not required. The Trust has not
     completed its assessment of the impact of the adoption of SFAS No. 133 on
     the financial statements.

     In April 1998, the American Institute of Certified Public Accountants
     issued Statement of Position ("SOP") 98-5, "Reporting on the Costs of
     Start-Up Activities. SOP 98-5 provides guidance on the financial reporting
     of start-up costs and organization costs. SOP 98-5 requires the costs of
     start-up activities and organization costs to be expensed as incurred. This
     SOP is effective for financial statements for fiscal years beginning after
     December 15, 1998. Except for entities meeting certain specified criteria,
     entities should report the initial application of this SOP as a cumulative
     effect of a change in accounting principle. Entities meeting this specified
     criteria should adopt this SOP prospectively. The adoption of this SOP will
     require the SBIC organization costs of $33,818, as of December 31, 1998, to
     be written off and reported as a cumulative effect of a change in
     accounting principle during the year ended December 31, 1999.



                                      -7-


<PAGE>   22


2.    INVESTMENTS

<TABLE>
<CAPTION>

                                                    1998                      1997
                                          ------------------------  -------------------------
                                             Cost       Valuation       Cost        Valuation
<S>                                      <C>          <C>           <C>           <C>
VisionComm, Inc.:
  Notes receivable                       $  700,000    $   700,000  $   500,000   $   500,000
  Warrants for 742,813 shares
    at $.8414 per share                           -      2,346,249            -             -
  Warrants for 104,529 shares
    at $.8414 per share                           -        330,165            -             -
  Warrants for 41,811 shares
    at $.8414 per share                           -        132,064            -             -

Soil Recovery Services, Inc. -
   Convertible subordinated 
     debenture                            1,000,000              -    1,000,000             -

Kinseth Hospitality Company, Inc.:
  Note receivable                         2,000,000      2,000,000    2,000,000     2,000,000
  Warrants for 25% of the outstanding
    common stock at $0.01 per share               -      2,750,000            -             -

LIVEware5, Inc.:
  300,000 shares of common stock,
    no par value and warrants for
    600,000 shares at $0.01 per share       300,000          2,250      300,000       300,000

Hicklin Engineering , L.C. -
  10% subordinated note                     400,000        400,000            -             -

Object Space, Inc. -
  108,108 shares of Series B
    Convertible Preferred Stock             404,800        400,000            -             -
                                         ----------     ----------   ----------    ----------

                                         $4,804,800     $9,060,728   $3,800,000    $2,800,000
                                         ==========     ==========   ==========    ==========
</TABLE>

      VISIONCOMM, INC.

      VisionComm, Inc. ("VisionComm") is primarily engaged in the
      telecommunications and private cable television business. The shares of
      VisionComm common stock mentioned in the following paragraphs have been
      restated to reflect a 5.9425 to 1 stock split which was effective July 17,
      1998. On April 30, 1996, the Trust received a warrant for 742,813 shares
      of VisionComm common stock exercisable until April 20, 2007, at an
      exercise price of $.8414 per share.



                                      -8-


<PAGE>   23



     On December 1, 1997 and May 14, 1998, the Trust provided $500,000 and
     $200,000, respectively, in financing to VisionComm in the form of a 14%
     12-month secured note with warrants. Effective December 1, 1998, the terms
     of the $500,000 note receivable were extended to May 1, 1999 due to
     VisionComm's negotiations for long-term financing arrangements. These notes
     are secured by substantially all the private cable assets of VisionComm.
     The warrants entitle the Trust to purchase 104,529 and 41,811 shares of
     common stock, respectively, at an exercise price of $.8414 per share,
     exercisable until April 30, 2003 and September 30, 2003, respectively. The
     warrants received have terms equivalent to those received in conjunction
     with the Trust's previous investment in VisionComm with the exception that
     all warrants now owned by the Trust provide for the option of a cashless
     exercise. The Trust, upon the occurrence of certain conditions, may "put"
     the warrant shares to VisionComm, beginning after May 15, 2003. The Trust
     now has the right through these warrants to purchase approximately 19% of
     the equity ownership of VisionComm. As of December 31, 1998, the warrants
     are valued at $3.1586 per share based on recent market transactions, and an
     unrealized gain of $2,808,478 was recognized for the year ended December
     31, 1998.

     SOIL RECOVERY SERVICES, INC.

     The Trust invested $1,000,000 in a convertible subordinated debenture
     issued by Soil Recovery Services, Inc. ("SRS"). The debenture is for a
     seven year term with an annual interest rate of 15% with no prepayment
     penalty. Interest only is due the first two years with equal principal
     payments due at the end of years three through seven.

     The Trust served a Notice of Default and a Notice of Recession on SRS and
     commenced litigation against key parties. The last interest payment
     received by the Trust was in July 1996. During 1996, SRS was forced into
     involuntary Chapter 7 bankruptcy by another creditor and during 1998, the
     Trust's claim in the bankruptcy proceeding was discharged. The Trust is
     continuing its avenues of recovery through litigation but for the year
     ended December 31, 1996, the Trust recognized an unrealized loss of
     $1,000,000.

     KINSETH HOSPITALITY COMPANY, INC.

     The Trust has invested in a senior secured note issued by Kinseth
     Hospitality Company, Inc. ("Kinseth"), which is primarily engaged in the
     hospitality industry. The six year note carries a 14% interest rate with
     interest only payments with a balloon payment due May 16, 2003. The Trust
     received a warrant to purchase 25% of Kinseth's common stock for $11.80.
     The warrant expires during 2002. Beginning in 2004, the common shares may
     be called by Kinseth at a designated multiple or based on independent
     valuations. The Trust can "put" the common shares to Kinseth beginning May
     1, 2003 if the common stock is not listed on a national exchange or NASDAQ,
     or prior to May 1, 2003, if other certain conditions are met, at a price
     based on Kinseth's fair market value less certain specified provisions. As
     of December 31, 1998, the warrant to purchase 25% of Kinseth's common stock
     is valued at $2,750,000, based on improved operating performance and
     expanded operations, and an unrealized gain of $2,750,000 was recognized
     during the year ended December 31, 1998.



                                      -9-


<PAGE>   24



     LIVEWARE5, INC.

     LIVEware5, Inc. ("LIVEware") is a provider of distance based corporate
     education via advanced teleconferencing technologies. The Trust has
     invested $300,000 in LIVEware in exchange for 300,000 shares of no par
     value common stock, representing approximately 12% of outstanding LIVEware
     common stock and warrants to purchase 600,000 shares of common stock at
     $.01 per share. The warrants will cancel upon LIVEware achieving certain
     levels of revenues and pretax profit beginning in fiscal year 2000. If the
     warrants do not cancel, the Trust may own up to 900,000 shares of LIVEware,
     which would represent approximately 18% and 17% of LIVEware as of December
     31, 1998 and 1997, respectively. Subject to certain restrictions, the Trust
     can "put" the common stock and warrants to LIVEware beginning December 11,
     2003 at the greater of a designated multiple or fair market value. As of
     December 31, 1998, the common stock is valued at $.0075 per share, based on
     recent market transactions, and an unrealized loss of $297,750 was
     recognized for the year ended December 31, 1998.

     HICKLIN ENGINEERING, L.C.

     Hicklin Engineering, L.C. ("Hicklin") specializes in manufacturing drive
     train component test equipment and dynometer systems. Hicklin designs
     equipment and integrated test systems used to test vehicular drive train
     components. On June 30, 1998, the Trust invested $400,000 in a Hicklin
     secured 10% subordinated note due June 30, 2003, and a warrant to purchase
     6,857 units of membership interest at an exercise price of $.01. The note
     is collateralized by substantially all the assets of Hicklin. The warrant
     expires on May 1, 2006. The exercise of these warrants would give the Trust
     a 6.86% membership interest in Hicklin. The Trust can "put" the warrant
     shares to Hicklin beginning June 30, 2003 at a designated multiple or based
     on independent valuations.

     OBJECTSPACE, INC.

     ObjectSpace, Inc. ("ObjectSpace") provides information technology services
     to Fortune 500 companies, assisting its clients in realizing the full
     potential of Java for enterprise-level systems. On December 30, 1998, the
     Trust invested $404,800 in 108,108 shares of ObjectSpace Series B
     Convertible Preferred Stock ("Preferred Stock"). The Preferred Stock is
     subordinated to the claims of other secured creditors and may be converted
     into common shares at any time at a price equal to $3.70 divided by the
     conversion rate in effect on the date of conversion. The initial conversion
     rate was $3.70 per share. Subject to other investor rights, the Trust can
     "put" the Preferred Stock to ObjectSpace beginning January 1, 2003 at a
     price equal to the greater of fair market value or the per share sales
     price, payable over three years earning interest at prime interest rate.

3.   RELATED PARTY TRANSACTIONS

     The Trust has entered into a management agreement with the Trust Advisor
     that provides for incentive compensation to the Trust Advisor based on the
     capital appreciation of the Trust's investments. The Trust pays the Trust
     Advisor an annual management fee equal to 2.5% of the value of the assets
     of the Trust. The management fee is paid quarterly, in arrears, and is
     determined by reference to the value of the assets of the Trust as of the
     first day of that quarter. Management fees incurred during the years ended
     December 31, 1998, 1997 and 1996 relating to this agreement aggregated
     $194,820, $151,422 and $155,847, respectively.

     In addition, the Trust paid the Dealer Manager $39,016, $40,016 and $39,648
     during the periods ended December 31, 1998, 1997 and 1996, respectively,
     for administration of shareholder accounts and other administrative
     services.

4.   SYNDICATION COSTS

     As part of the issuance of Shares, the Trust paid certain fees described
     below to the Dealer Manager, Trust Advisor and Corporate Trustee. These
     syndication costs have been treated as a direct reduction of net assets.



                                      -10-

<PAGE>   25



     The Trust compensated the Dealer Manager through selling commissions and a
     wholesale marketing fee in conjunction with the offering of Shares, and
     reimbursement of due diligence expenses. Selling commissions varied between
     7% and 2% of the aggregate purchase price of all Shares sold, depending on
     the number of Shares purchased by the investor. Selling commissions paid
     during the periods ended December 31, 1997 and 1996, aggregated $115,850
     and $263,410, respectively. The wholesale marketing fee of $41,375 and
     $94,075 is equal to 2.5% of the public offering price of all Shares sold
     during the periods ended December 31, 1997 and 1996, respectively. Due
     diligence expenses totaled $1,333, and $3,668 during the periods ended
     December 31, 1997, and 1996, respectively.

     The Trust paid organizational and offering expenses paid or incurred by the
     Trust Advisor in connection with organizing the Trust and offering the
     Shares. The amount of reimbursement may not exceed 4% of the aggregate
     purchase price of all Shares sold. During the periods ended December 31
     1997 and 1996, respectively, these reimbursement costs aggregated $66,200
     and $150,520. Any organizational and offering expenses (excluding the
     expenses mentioned above) of the Trust in excess of this amount are paid by
     the Trust Advisor.

     The Trust paid the Corporate Trustee a fee equal to .5% of the aggregate
     purchase price of all Shares sold aggregating $8,275 and $18,815 during the
     periods ended December 31, 1997 and 1996, respectively.

5.   DISTRIBUTIONS PAYABLE TO SHAREHOLDERS

     Distributions payable represents a 10% accrued underwriting return
     ("Underwriting Return") and an 8% accrued priority return ("Priority
     Return"). The Underwriting Return is based on actual interest earned by the
     Trust on the investors funds held in escrow through the initial closing,
     plus 10% simple annual interest, computed on a daily basis from the initial
     closing (August 31, 1995) until the Final Closing (June 21, 1997). The
     Priority Return is based on 8% simple annual interest computed from Final
     Closing on each shareholder's investment balance in the Trust.

     The Trust intends to make quarterly distributions of all cash revenues to
     the extent that the Trust has cash available for such distributions. These
     distributions must be approved by a majority of the Independent Trustees
     and made within sixty days of the end of each quarter.



                                      -11-



<PAGE>   26


      The distributions payable balance is comprised of the following:


                                      Underwriting    Priority
                                         Return        Return         Total
        
        Balance at January 1, 1997     $ 584,480    $       -      $   584,480
        
          Distributions paid            (493,897)    (153,611)        (647,508)
        
          Distributions earned           435,818      445,899          881,717
                                       ---------     --------      -----------
        Balance at December 31, 1997     526,401      292,288          818,689
        
          Distributions paid                   -     (569,029)        (569,029)
        
          Distributions earned                 -      843,280          843,280
                                       ---------   ----------       ----------
        Balance at December 31, 1998   $ 526,401   $  566,539       $1,092,940
                                       =========   ==========       ==========


6.   FEDERAL INCOME TAXES

     The Trust has received an opinion from counsel that it will be treated as a
     partnership for federal income tax purposes. As such, under present income
     tax laws, no income taxes will be reflected in these financial statements
     as taxable income or loss of the Trust is included in the income tax
     returns of the investors.

7.   SUBSEQUENT EVENT

     During February 1999, the Trust invested $100,000 in LIVEware in exchange
     for 13,333,333 shares of common stock. In addition, certain terms of the
     original investment agreement dated December 11, 1997, were amended. As a
     result, the Trust owns approximately 32% of the outstanding shares of
     common stock of LIVEware.

     During February 1999, the Trust invested $700,000 in 11% subordinated
     debentures due March 1, 2004, of Easy Systems, Inc. ("Easy Systems").
     Interest payments are not scheduled to begin until March 2000. In addition,
     the Trust received a warrant to purchase 290,060 shares of Easy Systems'
     common stock at an exercise price of $2.95 per share. The warrant expires
     on the earlier of February, 2009, or upon the occurrence of a certain
     specified event. The Trust also received the right to "put" the shares to
     Easy Systems upon the occurrence of certain conditions, at fair market
     value.

     During March 1999, the SBIC received approval for SBA leverage ("Leverage")
     reserved in the form of debentures equal to $5,000,000 to be issued on or
     prior to September 30, 2003. In exchange for the approved Leverage, the
     SBIC paid the SBA a nonrefundable fee of $50,000 during March, 1999 and the
     remaining portion of the Leverage fee in the amount of $100,000 will be
     deducted pro rata as proceeds are drawn. Each issuance of Leverage is
     conditional upon the SBIC's credit worthiness and compliance with specified
     regulations, as determined by the SBA. The SBA may also limit the amounts
     that may be drawn each year.

     As of December 31, 1998, the Trust verbally committed to invest $150,000 in
     Hicklin in exchange for a note receivable, the terms of which were to be
     negotiated at a later date; however, subsequent to December 31, 1998,
     Hicklin withdrew its request for financing from the Trust. The Trust
     continues to hold its original investment in Hicklin.

                                    * * * * *


                                      -12-
<PAGE>   27


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         None


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         A management board consisting of the Independent Trustees and the
         Trust Advisor is responsible for the management of the Trust and its
         business.

         Trustees of the Registrant:

               Corporate Trustee - TJB Capital Management, Inc. was organized as
               a Delaware corporation on January 25, 1995 for the purpose of
               organizing the Trust. The principal office of the Corporate
               Trustee is located at 1105 N. Market Street, Suite 1300,
               Wilmington, Delaware, 19801. The Corporate Trustee is an
               affiliate of the Trust Advisor.

               Henry T. Madden (Age 68) - Mr. Madden is an Independent Trustee
               of the Trust. He was awarded a B.S.M.E. from the University of
               Notre Dame in 1951 and an M.B.A. from the University of
               Pittsburgh in 1966. He began his career as an Industrial
               Engineer, then Quality Control Manager in Technical Ceramics for
               3M Company in Chattanooga, Tennessee. He became Manager of
               Production Engineering, then Manager for a 1,500 employee, $50
               million in sales Allis-Chalmers Plant, manufacturing power and
               distribution transformers in Pittsburgh, Pennsylvania. In 1966,
               he became General Plant Manager of the Allis-Chalmers, Cedar
               Rapids, Iowa Plant manufacturing construction machinery. In 1969,
               Mr. Madden became Division Manager for Hydraulic Truck Cranes for
               Harnischfeger Corporation. In 1975 Mr. Madden became President,
               Harnischfeger GMBH in Dortmund, West Germany, a joint venture
               with August Thyssen A.G. of West Germany, manufacturing truck
               cranes, creating a 100 million deutsche mark business. He also
               served as Managing Director for Harnischfeger International
               Corporation for Europe, East Europe, and North and West Africa,
               responsible for all product sales in those areas. In 1981, Mr.
               Madden became a consultant to and assumed the responsibilities of
               General Manager of Oak Hill Engineering Inc. in Cedar Rapids,
               Iowa, manufacturing wire harnesses. In 1983, he started a
               company, Enertrac Inc., designing, manufacturing and marketing
               communications systems. Mr. Madden financed Enertrac Inc. through
               an initial public offering and merged it into another company in
               1986. Mr. Madden organized the Institute for Entrepreneurial
               Management in the University of Iowa College of Business
               Administration in 1986, advising potential and new entrepreneurs
               and teaching courses on entrepreneurship in 


<PAGE>   28



               the MBA program. He also teaches courses in Corporate Strategy in
               the Executive MBA and MBA programs. Mr. Madden has been
               consulting with developmental stage companies since 1981.

               Henry Royer (Age 66) - Mr. Royer served as an Independent Trustee
               of the Trust from its date of inception through February 5, 1999,
               when he resigned as Trustee. He graduated in 1953 from Colorado
               College with a B.A. in Money and Banking. From 1950 until 1962,
               Mr. Royer was employed for four years by Pillsbury Mills and for
               four years by Peavey Company as a grain merchandiser. From 1962
               through 1965 he was employed as Treasurer and served on the Board
               of Lehigh Sewer Pipe and Tile. Mr. Royer joined First National
               Bank of Duluth in 1965, where he served in various capacities,
               including Assistant Cashier, Assistant Vice President, Assistant
               Manager of the Commercial Loan Department and Senior Vice
               President in Charge of Loans. When he left the bank in 1983 he
               was serving as Executive Vice President/Loans. He then joined The
               Merchants National Bank of Cedar Rapids (currently Firstar Bank
               Cedar Rapids, N.A.) where he served as Chairman and President
               until August, 1994. Since September, 1994, Mr. Royer served as
               the President and Chief Executive Officer of River City Bank,
               Sacramento, California from September 1994 through December 31,
               1997.

               Mary Quass (age 49) - Ms. Quass was elected as an Independent
               Trustee, effective February 5, 1999. She received a BA Degree
               from the University of Northern Iowa in 1982. In 1982, she was
               appointed General Sales Manager of KSO and later in 1982 became
               Vice President and General Manager of KHAK AM/FM. In 1988, Ms.
               Quass formed Quass Broadcasting Company, Inc., which merged with
               CapStar Broadcasting Partners to form Central Star
               Communications, Inc. in 1998. She held the position of President
               of Quass Broadcasting until 1998. Quass Broadcasting, Inc. and
               Central Star Communications, Inc. are primarily involved in the
               ownership and management of AM and FM radio stations. Ms. Quass
               has served as President and Chief Executive Officer of Central
               Star Communications since 1998.



<PAGE>   29


         Executive Officers and Directors of the Trust Advisor:

               Thomas J. Berthel (age 46) - Mr. Berthel serves as Chief
               Executive Officer and Chairman of the Board of the Trust Advisor
               and as the Chief Executive Officer of Berthel Fisher & Company,
               the parent company of the Trust Advisor and the Dealer Manager.
               He has held these positions since 1985. Effective March 24, 1999,
               Mr. Berthel was elected President of the Trust Advisor. Until
               June, 1993, Mr. Berthel served as President of the Dealer
               Manager. From 1993 until the present he has served as Chief
               Executive Officer and as a Director of the Dealer Manager. Mr.
               Berthel is also President and a Director of various other
               subsidiaries of Berthel Fisher & Company that act or have acted
               as general partners of separate private leasing programs and two
               publicly sold leasing programs. He serves as the Chairman of the
               Board of Amana Colonies Golf Course, Inc., and, in November 1995,
               he was elected to the Board of Directors of Intellicall, Inc., an
               advanced telecommunications technologies company in Carrollton,
               Texas. Mr. Berthel holds a Financial and Operation Principal
               license issued by the National Association of Securities Dealers,
               Inc. He is also a Certified Life Underwriter. Mr. Berthel holds a
               bachelor's degree from St. Ambrose College in Davenport, Iowa
               (1974). He also holds a Master's degree in Business
               Administration from the University of Iowa in Iowa City, Iowa
               (1993).

               James D. Thorp (Age 39) - Mr. Thorp served as President of the
               Trust Advisor until March 24, 1999 when he resigned to focus full
               attention on Trust investment matters in his role as Managing
               Director. He is responsible for the day-to-day management of the
               Trust's portfolio. He was elected as a Director of Berthel Fisher
               & Company in April 1994. He serves as Vice President - Investment
               Banking of Berthel Fisher & Company Financial Services, Inc., the
               Dealer Manager, a position he has held since 1993. In this
               position he is responsible for all the investment banking,
               corporate finance and due diligence activities of the Dealer
               Manager. During his tenure in this position he has been
               responsible for, directed and completed nine private financings
               for company clients totaling over $20 million. From 1983 to 1992,
               Mr. Thorp served in various positions and finally as Principal
               for Allsop Venture Partners II and its affiliates, a private
               equities investment management concern managing over $105 million
               in capital invested in over 80 portfolio companies. These
               companies spanned a myriad of industries and involved many
               transaction types that covered the spectrum of private equities
               investing, from seed investments to later stage expansions and
               turnaround financing to leveraged buyouts. During his tenure at
               Allsop Venture Partners III he reviewed and analyzed business
               plans for potential financings of over $1.5 billion, performed
               due diligence on projects representing potential financings of
               over $200 million. The funds under management while Mr. Thorp was
               at Allsop Venture Partners III and its affiliates consistently
               yielded twice the average internal rate of return generated by
               similar private 



<PAGE>   30




               equities investment firms. He has served as a director and on the
               boards of seven portfolio companies and is a past member of the
               National Venture Capital Association, the National Association of
               Small Business Investment Companies and the Midwest Regional
               Association of Small Business Investment Companies. He is a
               graduate of the Ninth Annual Management Institute of the National
               Association of Small Business Investment Companies. Mr. Thorp
               received a Bachelor of Science degree in Business Administration
               in 1981 from Oklahoma State University. In 1983 he was awarded a
               Master of Business Administration - Finance from the Wharton
               School, University of Pennsylvania.

               Ronald O. Brendengen (Age 44) - Mr. Brendengen is the Chief
               Operating Officer, Chief Financial Officer, Treasurer and a
               Director of the Trust Advisor. He has served since 1985 as
               Controller and since 1987 as the Treasurer and a Director of
               Berthel Fisher & Company, the parent company of the Trust
               Advisor. He was elected Secretary and Chief Financial Officer in
               1994, and Chief Operating Officer in January 1998, of Berthel
               Fisher & Company. He also serves as Chief Financial Officer,
               Treasurer and a Director of each subsidiary of Berthel Fisher &
               Company. Mr. Brendengen holds a certified public accounting
               certificate and worked in public accounting during 1984 and 1985.
               From 1979 to 1984, Mr. Brendengen worked in various capacities
               for Morris Plan and MorAmerica Financial Corp., Cedar Rapids,
               Iowa. Mr. Brendengen attended the University of Iowa before
               receiving a bachelor's degree in Accounting and Business
               Administration with a minor in Economics from Mt. Mercy College,
               Cedar Rapids, Iowa in 1978.

               Leslie D. Smith (Age 51) - Mr. Smith is a Director and the
               Secretary of the Trust Advisor. In 1994 Mr. Smith was named
               General Counsel of Berthel Fisher & Company. Mr. Smith was
               awarded his B.A. in Economics in 1976 from Iowa Wesleyan College,
               Mount Pleasant, Iowa, and his J.D. in 1980 from the University of
               Dayton School of Law, Dayton, Ohio. Mr. Smith was employed as
               Associate Attorney and as a Senior Attorney for Life Investors
               Inc., Cedar Rapids, Iowa, from 1981 through 1985 where he was
               responsible for managing mortgage and real estate transactions.
               From 1985 to 1990 Mr. Smith was General Counsel for LeaseAmerica
               Corporation, Cedar Rapids, Iowa. In that capacity, Mr. Smith
               performed all duties generally associated with the position of
               General Counsel. From 1990 to 1992, Mr. Smith was Operations
               Counsel for General Electric Capital Corporation located in Cedar
               Rapids, Iowa. From 1993 to 1994, Mr. Smith was employed as
               Associate General Counsel for Gateway 2000, Inc. in North Sioux
               City, South Dakota.



<PAGE>   31


ITEM 11. EXECUTIVE COMPENSATION

         Set forth is the information relating to all direct remuneration 
         paid or accrued by the Registrant.
<TABLE>
<CAPTION>

(A)                            (B)             (C)           (C1)             (C2)                   (D)

                                                                      Securities of property    Aggregate of
                                         Cash and cash                  insurance benefits      contingent
Name of individual and         Year     equivalent forms                 or reimbursement       or forms
capacities in which served     Ended    of remuneration      Fees       personal benefits       of remuneration
---------------------------------------------------------------------------------------------------------------
<S>                            <C>            <C>           <C>                <C>                   <C>
TJB Capital Management, Inc.   1998           $0            $     0            $0                    $0
Corporate Trustee              1997           $0            $ 8,275            $0                    $0
                               1996           $0            $18,815            $0                    $0


Henry T. Madden                1998           $0            $18,000            $0                    $0
Corporate Trustee              1997           $0            $15,000            $0                    $0
                               1996           $0            $22,000            $0                    $0


Henry Royer                    1998           $0            $18,000            $0                    $0
Corporate Trustee              1997           $0            $15,000            $0                    $0
                               1996           $0            $22,000            $0                    $0

</TABLE>

The Trust paid the Trust Advisor $194,280, $151,422, and $155,847 for management
fees and $-0-, $66,200, and $150,250 for reimbursement of organizational and
offering expenses for the years 1998, 1997, and 1996, respectively.






<PAGE>   32


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         No person owns of record, or is known by the Registrant to own
         beneficially, more than five percent of the shares.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Related party transactions are described in Notes 3 and 4 of Notes to
         Consolidated Financial Statements. See Item 8.

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

         (a)   1. Financial Statements                                Page No.

                  Consolidated Statements of Assets and Liabilities
                  at December 31, 1998 and December 31, 1997             16

                  Consolidated Statements of Operations for the
                  Years Ended December 31, 1998, 1997 and 1996           17

                  Consolidated Statements of Changes in Net Assets for
                  the Years Ended December 31, 1998, 1997 and 1996       18

                  Consolidated Statements of Cash Flows for the
                  Years Ended December 31, 1998, 1997 and 1996           19

                  Notes to Consolidated Financial Statements             20

               2. Financial Statement Schedules - None

         (b)   Reports on Form 8-K

                  None

               3. Exhibits

               3.1   Certificate of Trust
               3.2   Declaration of Trust
               10.1  Management Agreement between the Trust and the Trust 
                     Advisor 
               10.2  Safekeeping Agreement between the Trust and Firstar 
                     Bank Cedar Rapids, N.A. 
               16.0  Letter rechange in certifying accountant


<PAGE>   33

                                   SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                              BERTHEL GROWTH & INCOME TRUST I

                              By: /s/ Thomas J. Berthel
                              ------------------------------------------------
Date: March 25, 1999          THOMAS J. BERTHEL, Chief Executive Officer
                              (principal executive officer) of Berthel 
                              Fisher & Company Planning, Inc., Trust Advisor

                              By: /s/ Ronald O. Brendengen
                              ------------------------------------------------
Date: March 25, 1999          RONALD O. BRENDENGEN, Chief Operating Officer,  
                              Chief Financial Officer and Treasurer (principal
                              financial officer) of Berthel Fisher & Company 
                              Planning, Inc., Trust Advisor


      Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.


                              /s/ Thomas J. Berthel
                              ------------------------------------------------
Date: March 25, 1999          THOMAS J. BERTHEL, Chairman and Director of 
                              Berthel Fisher & Company, Berthel Fisher & 
                              Company Planning, Inc., Trust Advisor

                              /s/Ronald O. Brendengen
                              ------------------------------------------------
Date: March 25, 1999          RONALD O. BRENDENGEN, Director of Berthel Fisher
                              & Company Planning, Inc., Trust Advisor

                              /s/ James D. Thorp
                              ------------------------------------------------
Date: March 25, 1999          JAMES D. THORP, Director of Berthel Fisher & 
                              Company Planning, Inc., Trust Advisor

                              /s/ Leslie D. Smith
                              ------------------------------------------------
Date: March 25, 1999          LESLIE D. SMITH, Director of Berthel Fisher & 
                              Company Planning,  Inc., Trust Advisor

                              
                              /s/ Henry T. Madden
                              ------------------------------------------------
Date: March 25, 1999          HENRY T. MADDEN, Independent Trustee of Berthel 
                              Growth & Income Trust I

                              /s/ Thomas J. Berthel
                              ------------------------------------------------
Date: March 25, 1999          THOMAS J. BERTHEL, Chairman of the Board and 
                              Chief Executive Officer of TJB Capital Management,
                              Inc., Trustee of Berthel Growth & Income Trust I

                              By:/s/ Daniel P. Wegmann
                              ------------------------------------------------
Date: March 25, 1999          DANIEL P. WEGMANN, Controller of Berthel Fisher
                              & Company Planning, Inc., Trust Advisor


<PAGE>   34



                                  EXHIBIT INDEX



        3.1       Certificate of Trust (1)
        3.2       Declaration of Trust (2)
       10.1       Management Agreement between the
                     Trust and the Trust Advisor (3)
       10.2       Safekeeping Agreement between the Trust
                     and Firstar Bank Cedar Rapids, N.A. (4)
       16.0       Letter re change in certifying accountant (5)


         (1)      Incorporated by reference to the Trust's Registration
                  Statement on Form N-2, filed with the Commission on February
                  14, 1995 (File No. 33-89605).

         (2)      Incorporated by reference to Pre-Effective Amendment No. 3 to
                  the Trust's Registration Statement on Form N-2, filed with the
                  Commission on June 21, 1995 (File No. 33-89605).

         (3)      Incorporated by reference to Pre-Effective Amendment No. 1 to
                  the Trust's Registration Statement on Form N-2, filed with the
                  Commission on May 9, 1995 (File No. 33-89605).

         (4)      Incorporated by reference to Pre-Effective Amendment No. 2 to
                  the Trust's Registration Statement on Form N-2, filed with the
                  Commission on June 12, 1995 (File No. 33-89605).

         (5)      Incorporated by reference to Form 8-K filed with the 
                  Commission on October 13, 1995 (File No. 33-89605).