UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                  -------------

                                    FORM 10-K

                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                            FOR THE FISCAL YEAR ENDED
                                 MARCH 31, 2005

                           COMMISSION FILE NO. 1-16349

                        INVESTORS CAPITAL HOLDINGS, LTD.
                    (Exact name of registrant in its charter)

       MASSACHUSETTS                                              04-3284631
(State or other jurisdiction of                                (I.R.S.Employer
incorporation or organization)                               Identification No.)

                                230 Broadway East
                         Lynnfield, Massachusetts 01940
                                 (781) 593-8565
   (Address, including zip code, and telephone number, including area code, of
                   Registrant's principal executive offices)

           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

     Title of Each Class               Name of Each Exchange on Which Registered
     -------------------               -----------------------------------------
Common Stock, $0.01 par value                  The American Stock Exchange

           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                                      None
                                (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
filing 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. [ ]

<PAGE>

   Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes[ ] No [X]

   The aggregate market value of the shares of the registrant's common equity
held by non-affiliates, computed by reference to the price at which the common
equity was last sold, as of the last business day of the registrant's most
recently completed second fiscal quarter, was $9,222,536.

   As of June 23, 2005, there were outstanding 5,758,978 shares of the $0.01 par
value per share Common Stock of the registrant.

                       Documents Incorporated by Reference

   Certain portions of the registrant's definitive proxy statement for the
Annual Meeting of Stockholders to be held on September 21, 2005 are incorporated
by reference in Items 10 through 13 of Part III, and Item 15 of Part IV, of this
Annual Report on Form 10-K.

                            www.investorscapital.com

                   Investor Relations Contact: Darren Horwitz


                                     Page 2

<PAGE>


<TABLE>
                                            Contents

<S>                                                                                            <C>
The Company                                                                                    4
Forward-Looking Statements                                                                     4
PART I                                                                                         5
ITEM 1. Business                                                                               5
ITEM 2. Properties                                                                            14
ITEM 3. Legal Proceedings                                                                     15
ITEM 4. Submission of Matters to a Vote of Security Holders                                   15
PART II                                                                                       15
ITEM 5. Market for Registrant's Common Equity and Related Stockholder Matters                 15
ITEM 6. Selected Financial Data                                                               16
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of
        Operations                                                                            16
ITEM 7A.Quantitative and Qualitative Disclosures About Market Risk                            25
ITEM 8. Financial Statements and Supplementary Data                                           26
ITEM 9. Changes In and Disagreements With Accountants on Accounting and Financial
        Disclosure                                                                            53
ITEM 9A.  Controls and Procedures                                                             53
ITEM 9B.  Other Information                                                                   54
PART III                                                                                      54
ITEM 10. Directors and Executive Officers of the Registrant                                   54
ITEM 11. Executive Compensation                                                               54
ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related
         Stockholder Matters                                                                  54
ITEM 13. Certain Relationships and Related Transactions                                       54
ITEM 14. Principal Accountant Fees and Services                                               54
PART IV                                                                                       55
ITEM 15. Exhibits and Financial Statement Schedules                                           55
</TABLE>

                                     Page 3

<PAGE>

                                   The Company

   Investors Capital Holdings, Ltd. and its wholly-owned subsidiaries, Investors
Capital Corporation ("ICC"), Eastern Point Advisors, Inc. ("EPA"), ICC Insurance
Agency, Inc. and Investors Capital Holdings Securities Corporation ("ICH
Securities") are often referred to in this report, both individually and
collectively, as the "Company" or with terms such as "we", "us", "our" and the
like. When being referred to individually without reference to the other
components of the Company, Investors Capital Holdings, Ltd., Investors Capital
Corporation and Eastern Point Advisors, Inc. are often referred to in this
report as "ICH", "ICC" and "EPA", respectively.

                           Forward-Looking Statements

   The statements, analyses, and other information contained herein relating to
trends in our operations and financial results, the markets for our products,
the future development of our business, and the contingencies and uncertainties
to which we may be subject, as well as other statements including words such as
"anticipate," "believe," "plan," "estimate," "expect," "intend," "will,"
"should," "may," and other similar expressions, are "forward-looking statements"
under the Private Securities Litigation Reform Act of 1995. Such statements are
made based upon management's current expectations and beliefs concerning future
events and their effects on the Company. Our actual results may differ
materially from the results anticipated in these forward-looking statements.

   These forward-looking statements are subject to risks and uncertainties
including, but not limited to, the risks that (1) losses may be incurred if our
investment professionals fail to comply with regulatory requirements; (2) the
loss of either Theodore E. Charles or Timothy B. Murphy may adversely affect our
business and financial condition through the loss of significant business
contacts, which may be difficult to replace; (3) customer fraud could harm our
earnings and profits by requiring us to expend time, money and incur actual
loss, exposing us to the potential for arbitration; (4) investment professional
and employee fraud and misconduct could harm our profits and earnings by causing
us to expend time and money, to incur actual loss, and to be exposed to the
potential for litigation; (5) any failure to implement and maintain adequate
internal controls could severely restrict our profitability through the
imposition of regulatory sanctions and fines; (6) involvement in material legal
proceedings could have a significant impact on our earnings and profits to the
extent that we are found liable in such proceedings; (7) a change in our
clearing firm could result in the inability of our customers to transact
business in a timely manner due to delays and errors in the transfer of their
accounts, which, on a temporary basis, could affect our earnings and profits.

   Readers are also directed to other descriptions and discussions of risks and
uncertainties that may be found in this report and other documents filed by the
Company with the United States Securities and Exchange Commission. We
specifically disclaims any obligation to update or revise any forward-looking
information, whether as a result of new information, future developments, or
otherwise.

                                     Page 4

<PAGE>

                                     PART I

ITEM 1.  BUSINESS

Overview

   Incorporated in July of 1995, ICH is a financial services holding company
that operates primarily through its subsidiaries, ICC and EPA, in two segments
of the financial services industry. These two segments provide for the offering
of (1) broker-dealer services in support of trading and investment in corporate
equity and debt securities, U.S. Government securities, municipal securities,
mutual funds, variable annuities and variable life insurance, including
provision of market information, internet trading and portfolio tracking
facilities and records management, and (2) investment advisory and asset
management services, including management of two retail mutual funds. Financial
information pertaining to the Company for each of the three fiscal years ended
March 31, 2005, 2004 and 2003 is included in the selected financial data in Item
6 of this document.

Broker-Dealer Services

   Investors Capital Corporation

   Investors Capital Corporation ("ICC") is a securities broker-dealer that is
registered with the National Association of Securities Dealers ("NASD"), the
Securities and Exchange Commission ("SEC"), the Municipal Securities Rule Making
Board ("MSRB") and the Securities Investor Protection Corporation ("SIPC").
Headquartered in Lynnfield, Massachusetts, the wholly-owned subsidiary of ICH
also is duly registered and doing business as a broker-dealer in all 50 states,
the Commonwealth of Puerto Rico and the District of Columbia. ICC makes
available multiple investment products and provides support, technology and
back-office service to a network of approximately 790 independent registered
representatives ("representatives"). Commissions derived from the provision of
services and products to ICC's registered representatives represented
approximately 95.7% of the Company's total revenues for the fiscal year ended
March 31, 2005.

   Broker-Dealer Representatives

   Our representatives sell investment products that are securities under
federal and state law. Accordingly, they are required to qualify and register as
representatives with our broker-dealer subsidiary under federal and state law.
Depending upon their activities, they also may be required to qualify and
register as investment adviser representatives. Our in-house training programs
for representatives emphasize the long-range aspects of financial planning and
investment products. We believe that the continuing education and support we
provide to our registered representatives enables them to better inform and
serve their clients.

   Continuing to add productive registered representatives is an integral part
of our growth strategy. We seek to recruit primarily experienced registered
representatives who focus on assisting their clients in attaining their
long-range financial goals. Once recruited, we focus on enhancing our
representatives' professional knowledge, skills and value to their clients.
During the fiscal year ended March 31, 2005, our average revenue per registered
representative increased more than 23% to $67,788 compared to the previous
fiscal year, more than offsetting a 9.2% decrease in the number of
representatives in our national network.

   In addition to a variety of valuable products and services, we offer
prospective representatives an attractive commission payout and the independence
of owning and operating their own offices. Generally, our representatives pay
substantially all of the costs associated with their offices and operations,
while we concentrate on providing technical, regulatory, supervisory, compliance
and other support services to our independent investment professionals. This
allows expansion of our operations with relatively minimal capital outlay.

                                     Page 5

<PAGE>

   Compensation to Representatives

   Commission payouts to our registered representatives are negotiable and
currently average approximately 82.2% of the gross dealer concession generated
from the sale of securities. Pursuant to the terms of our agreements with our
registered representatives, and as permitted by current NASD rules, we provide
our representatives, or their named beneficiaries, with continuing commissions
on pre-existing business in the event of their retirement from the securities
industry or death. Representatives grant to us the right to offset against
commissions any losses we sustain as a result of their actions, omissions and
errors. Our agreements with our representatives are terminable by either party
with 15 days prior written notice, and do not contain either a confidentiality
or non-compete provision.

   Support to Representatives

   We provide a variety of services and products to our representatives to
enhance their professionalism and productivity.

   Technology Resources. Advanced technology, including client and corporate
websites, enable our representatives and their clients to perform many tasks
on-line, including:

     o    Opening of new accounts
     o    Monitoring of existing accounts
     o    Updating of client accounts
     o    Initiating and executing trading activities
     o    Viewing and downloading commission data
     o    Locating and exploring financial products
     o    Downloading client data
     o    Researching reports or inquiries on companies, securities and other
          pertinent financial topics

   Approved Investment Products. We allow our representatives to offer a wide
variety of approved investment products to their clients that are sponsored by
well-respected and financially sound companies. We believe that this is critical
to the success of our registered representatives and the Company. We follow a
selective process in determining approved products to be offered to clients by
our representatives, and we continuously monitor the product list for continued
approved status.

   Marketing. We provide advertising and public relations assistance to our
representatives that enhance their competence and professional stature in the
public's eye, including NASD-approved marketing materials, corporate and product
brochures and client letters.

     Supervision/Compliance. We maintain a robust broker-dealer compliance
program. In addition to a thirteen-member home office staff that includes two
dedicated compliance attorneys, we retain experienced field supervisors in
NASD-recognized Offices of Supervisory Jurisdiction across the country that are
charged with compliance responsibilities for defined groups of registered
representatives including, in particular, newly-affiliated representatives. By
positioning these compliance individuals in the field, we are able to more
closely supervise and monitor the activities of our representatives, thereby
ensuring their commitment to compliance with requisite rules and regulations.
Our compliance efforts are further enhanced by in-house computer systems and
programs, including routine internal audits to ensure our compliance with
anti-money laundering standards and other regulations under the USA Patriot Act.

                                     Page 6

<PAGE>

   Our representatives seek and value assistance in the area of compliance and,
in keeping step with the latest industry regulations, our compliance department
provides to our representatives, among other things:

     o    Advertising and sales literature review
     o    Field inspections, followed up with written findings and
          recommendations
     o    Weekly faxes and monthly conference calls on selected compliance
          topics
     o    Assistance with customer complaints and regulatory inquiries
     o    Workshops, seminars and in-house publications on various compliance
          matters
     o    Regional and national meetings
     o    Interpretation of Rules and Regulations and General Compliance
          Training

   Clearing.

   We utilize the services of a clearing firm to clear our transactions on a
fee-for-service basis. Our clearing firm processes most of the securities
transactions for our account and the accounts of our clients. Services of our
clearing firm include billing and credit extension, and control, receipt,
custody and delivery of securities. We pay a transaction charge for these
services, relying on the operational capacity and the ability of our clearing
firm for the orderly processing of security transactions. In addition, by
engaging the processing services of a clearing firm, certain capital reserve
requirements and other complex regulatory requirements imposed by federal and
state securities laws are not applicable.

   Insurance Operations

   In certain states, a separately licensed insurance entity is required in
order for ICC broker-dealer representative to sell life insurance and
annuity products to their clients. Accordingly, the Company established
ICC Insurance Agency, Inc., a wholly-owned subsidiary of ICH that is duly
licensed for such purposes in all states in which such licensing is required.
One hundred percent of all revenue realized by this entity flow through as
revenue to ICC.

   ICH Securities

   On March 05, 2005 Investors Capital Holdings Securities, Inc., ("ICH
Securities"), a wholly-owned subsidiary of ICH, was formed to hold cash for tax
benefit purposes at the state level.

   Broker-Dealer Revenue

   Commission revenue generated by ICC during the last three fiscal years was
derived from the following activities:
                                                     Fiscal Year Ended March 31,
Source of Commission Revenue                              2005    2004    2003
----------------------------                              ----    ----    ----
Sale of mutual funds and unit investment trusts:            19%     20%     25%
Sale of variable annuities and variable life insurance:     39%     38%     49%
Sale of individual stocks and bonds:                        23%     25%     13%
Sale of direct participation programs:                      11%      8%      5%
Other activities:                                            8%      9%      8%
Total                                                      100%    100%    100%

                                     Page 7

<PAGE>

   The sale of direct participation programs predominantly includes limited
partnerships and real estate investment trusts ("REITS"). The increase in sales
of this product type was directly correlated to the performance of the real
estate market since REITS make up 74% of this revenue category. As with other
broker dealer products, sales commissions on REITS are comprised of a gross
dealer concession on the invested amount.

Investment Advisory & Asset Management Services

   Managed Assets Programs

   Eastern Point Advisors, Inc. ("EPA"), our dedicated investment adviser
subsidiary, provides investment advisory and asset management services directly
to the investing public through its managed asset programs. These programs
involve EPA-managed portfolios of load and no-load mutual funds, variable and
fixed annuities and/or individual securities. They are provided to the public
through approximately 110 investment adviser representatives. As of March 31,
2005, we had a total of $172.7 million under management. The maximum annual fee
charged for these services is 3.0%, which is paid by the customer in quarterly
installments. EPA contributes approximately 4.0% of total Company revenues.

   In November 2003 ICC, our dedicated broker-dealer subsidiary, also commenced
operations as a registered investment advisor, doing business as Investors
Capital Advisor ("ICA"). $65.9 million in managed assets were transferred from
EPA to ICC management in March of 2004. ICA-managed assets totaled $127.8
million at March 31, 2005.  At March 31, 2005 we had 287 registered investment
advisers with ICA.

   The following table records the market values of assets under management by
the Company as of the end of the last three fiscal years.

<TABLE>
                                                  Market Value at March 31,
EPA-Managed Assets:                         2005           2004            2003
-------------------                     ------------- --------------- ---------------
<S>                                       <C>            <C>              <C>
Aetna Life Insurance and Annuity Co.              --              --      $1,626,725
American Skandia Annuity Company          $3,983,786     $21,827,151      10,960,062
ING Variable Annuity                       4,579,636       8,793,648       8,384,420
Jackson National Life Insurance Co.        1,706,925       3,424,376       4,025,347
Jefferson National Life (Conseco)          5,834,712       9,662,111      10,699,511
Lincoln Benefit Life Insurance Co.           408,449         956,001         831,385
Manulife                                          --         215,892         314,799
Mass Mutual Life Insurance Co.               749,332       1,478,951       1,366,879
Midland National                                  --         446,066         756,675
Nationwide Life Insurance Co.                 28,024       1,088,182         418,709
Pershing Securities Managed Asset Plan    22,971,682      15,108,585      64,868,636
Resources Trust                                   --       1,232,708       1,601,508
Security Benefit Life                             --              --          57,006
SEI Trust Company                          2,011,744       4,961,547       9,440,688
US Allianz Annuity Company                   861,906       1,551,813         783,885
Western Reserve Life                       1,766,236              --              --
                                        ------------- --------------- ---------------
      EPA Subtotal:                      $44,902,432     $70,747,031    $116,136,235

ICC-Managed Assets:
------------------
Pershing Securities Managed Asset Plan  $127,823,128     $65,938,586              --
                                        ------------- --------------- ---------------

Total Assets Under Company Management   $172,725,560    $136,685,617    $116,136,235
</TABLE>

                                     Page 8

<PAGE>

   Retail Mutual Funds

   In addition, EPA is the investment adviser to our retail mutual funds, the
Eastern Point Advisors Capital Appreciation Fund (previously named the Twenty
Fund) and the Eastern Point Advisors Rising Dividend Growth Fund. As of March
31, 2005, EPA was charging an annual fee, payable in monthly installments, of
1.5% and 0.75%, respectively, of the approximately $5.6 and $27.7 million of
assets under management in the Capital Appreciation and Rising Dividend Growth
Funds, respectively.

   Capital Appreciation Fund. The Eastern Point Advisors Capital Appreciation
Fund (the "Capital Appreciation Fund") is our growth-oriented mutual fund, which
became available to the public on October 19, 1999. We created this mutual fund
to compliment our existing product lines with the rationale that our mutual fund
would provide investors with a convenient way to meet their financial goals and,
at the same time, provide new sales opportunities for ICC representatives.

   The Capital Appreciation Fund invests in a portfolio of common stocks
believed to offer capital appreciation potential. As such, the Fund may be more
suitable for those investors who seek capital appreciation and are willing to
accept a significant degree of volatility and risk. The Capital Appreciation
Fund utilizes a non-diversified portfolio typically consisting of 20 to 30
common stocks of companies of varying size, regardless of industry or sector,
that may include smaller emerging companies. As of March 31, 2005, The Capital
Appreciation Fund had assets of $5,565,952.

   Class A Shares of the Capital Appreciation Fund carry a maximum one-time,
up-front 5.75% sales charge that decreases as the dollar amount of the
investor's investment increases. Class C Shares have no such up-front sales
charge but, in addition to annual management fees, carry a 1.00% per year annual
fee.

    Rising Dividend Growth Fund. The Eastern Point Advisors Rising Dividend
Growth Fund (the "Rising Dividend Growth Fund", is our second growth-oriented
mutual fund, which became available on March 5, 2004. EPA created this mutual
fund to extend our existing product offering and to enhance our mutual fund
offerings while providing investors with another vehicle to effectively manage
their assets.

   The Rising Dividend Growth Fund invests in companies that appear to maintain
the financial stability to prosper in all kinds of economic climates. The fund's
objective is long-term growth of capital and current income, investing in common
stocks of domestic and foreign companies that have increased their dividend
payments to shareholders at least each year for the past ten years.

   Expansion of Marketing Network

   Until recently, the Company's managed assets programs and mutual funds were
marketed to the public solely by registered representatives of ICC. EPA has
begun making its investment portfolios available for marketing by investment
professionals affiliated with select broker-dealers other than ICC.

                                     Page 9

<PAGE>

   Investment Advisor Representatives

   As of March 31, 2005 we had approximately 397 investment adviser
representatives registered with the various state securities departments. These
investment adviser representatives typically are registered representatives of
EPA and ICA. Licensing requirements for these investment adviser representatives
are dictated by the state in which they conduct business. As such, prior to
their clients utilizing our investment advisory services, each investment
adviser representative must satisfy the requisite state licensing requirements.

   Asset Allocation Strategy

   The Company's asset allocation strategy utilized by approximately 2,345
investors as of March 31, 2005, is based on the principle that, by investing in
a combination of asset classes, risk may be reduced while seeking enhanced
returns. By combining asset classes that typically do not fluctuate in tandem,
the volatility of the customer's investment portfolio may be lowered while, at
the same time, providing the opportunity for possible increased long-term
returns. The Company utilizes the following steps in implementing this asset
allocation strategy for each individual customer:

o    We determine the customer's risk tolerance, investment goals, age, time
     horizon, investment experience and financial and personal circumstances
     using detailed questionnaires that are completed during personal
     interviews. Based upon these facts, we recommend an overall investment
     allocation consisting of a suggested percentage of stocks, bonds, cash,
     and other investment products.

o    Should the customer agree with the recommended overall investment
     allocation, we then select what we believe to be appropriate investment
     vehicles for the particular customer from a universe of mutual funds,
     variable annuities and individual securities, and other investment
     products.

o    Following implementation of the recommended portfolio, we monitor portfolio
     performance, communicate the model's performance to the client
     quarterly, and make portfolio changes based upon performance, the
     customer's financial situation, goals and risk tolerance and other relevant
     factors.

   Fee-Based Compensation Structure

   As required by the Investment Advisers Act of 1940, compensation is based on
an annual fee calculated as a percentage of total assets under management rather
than a transaction-based commission or performance fee.

Our Strategy

   Key elements to achieve our corporate objectives include:

   Increase brand awareness. We plan to increase our brand recognition to
attract new clients and representatives. We are implementing a comprehensive
marketing plan to attract more clients and experienced representatives, build
market awareness, educate the investing public and maintain customer loyalty. We
intend to accomplish this strategy through direct marketing, advertising through
our marketing department, use of our web site, various public relations
programs, web and live seminars, print advertising, radio, and television air
time. In addition, we have committed to opening Company-operated offices in
selected strategic locations across the country, including a recently
opened investment center in Topsfield, Massachusetts and recruiting centers in
New York City, Long Island, New York, Florida and California.

                                    Page 10

<PAGE>

   Provide value-added services to our clients. We will continue to provide our
clients with access to a pool of well-trained representatives, access to
up-to-date market and other financial information, and direct access to our
trade desk that is online with various stock exchanges and institutional buyers
and sellers. We will also continue to provide trading before and after
traditional market hours to our clients.

   Create technologically innovative solutions to satisfy client needs. We
continue our active efforts in pursuing additional technologies to
service the rapidly evolving financial services industry. Specifically, we are
developing our web site to enable our clients to trade equity securities more
efficiently via the Internet, monitor on-line the history and current status of
their accounts at any time and access all types of financial and other
information to enhance their situations. Also, we have developed personalized
Internet web sites for our representatives. These personalized sites provide the
clients of our representatives, through the use of passwords and firewalls, a
secure and private interface directly to our proprietary web site. This allows
these clients to perform market research, buy and sell securities on-line,
monitor their accounts and utilize financial calculators.

   Build and expand our corporate presence. We intend to expand our branch
office locations to strategically situated metropolitan locations throughout the
United States. We have expanded in Massachusetts, New York and Pennsylvania, and
have recently expanded in California and Florida. We also continue to explore
strategic alliances, acquisitions and other opportunities to provide our clients
with the best possible services and products.

   Expand our product and service offering through strategic relationships. We
will continue to actively pursue alliances with various companies to increase
trading volume, capitalize on cross-selling opportunities, create additional
markets for our asset management programs and mutual fund sales, take advantage
of emerging market trends and create operational efficiencies and further
enhance our name recognition. We have no present agreements, plans, arrangements
or understandings regarding any acquisitions and have not identified any
specific criteria that such acquisitions must meet.

Competition

   Our competitors vary in size, scope and breadth of services offered. We
encounter direct competition from numerous other brokerage firms that have
electronic brokerage services and full research capabilities. We also encounter
competition from established, full-commission brokerage firms, as well as
insurance companies with securities brokerage subsidiaries, financial
institutions, mutual fund sponsors and others who utilize financial planning
representatives paying their own office costs and expenses.

                                    Page 11

<PAGE>

   Some competitors of our broker-dealer services business have greater
financial, technical, marketing and other resources, and certain of our
competitors also offer a wider range of services and financial products and have
greater name recognition and more extensive client bases.

   We believe that our ability to compete in the broker-dealer segment of our
business depends upon many factors both within and outside our control,
including:

     o    Our ability to attract and retain a network of experienced investment
          professionals
     o    The effectiveness, ease of use, performance and features of our
          technology and services and overall client satisfaction
     o    The price and quality of our services
     o    The volatility of financial markets and the world economy
     o    Our ability to service our clients effectively and efficiently
     o    Our reputation in the financial services industry

    Respecting our mutual funds, new funds are continuously being introduced to
the investing public by new and existing mutual fund companies. Many of our
mutual fund competitors have greater financial, technical, marketing and
distribution resources. We believe that we can become competitive through our
sales force and through selling agreements with other broker-dealers.

How We Are Regulated

   Broker-Dealer Regulation

   The securities industry is subject to extensive regulation under both federal
and state law. The SEC is the federal agency responsible for administering the
federal securities laws. ICC is a broker-dealer registered with the SEC. Under
the Securities Exchange Act of 1934, every registered broker-dealer that
conducts business with the public is required to be a member of and subject to
the rules of NASD.

   NASD has established conduct rules for all securities transactions among
broker-dealers and private investors, trading rules for the over-the-counter
markets and operational rules for its member firms. NASD conducts examinations
of member firms, investigates possible violations of the federal securities laws
and its own rules and conducts disciplinary proceedings involving member firms
and associated individuals. NASD administers qualification testing for all
securities principals and registered representatives for its own account and on
behalf of the state securities authorities. We are also subject to regulation
under state law. We are currently registered as a broker-dealer in all 50
states, Puerto Rico and the District of Columbia.

   The SEC and other regulatory bodies in the United States have rules with
respect to net capital requirements that affect our broker-dealer subsidiary.
These rules are designed to ensure that broker-dealers maintain adequate
regulatory capital in relation to their liabilities, types of securities
business conducted and the size of their customer business. These rules have the
effect of requiring that a substantial portion of a broker-dealer's assets be
kept in cash or highly liquid investments. Failure to maintain the required net
capital may subject a firm to suspension or revocation of its registration with
the SEC and suspension and expulsion by the NASD and other regulatory bodies,
and ultimately may require its liquidation. The rules could restrict
underwriting, trading activities, our ability to withdraw capital, pay
dividends, pay interest on and repay the principal of any debt, among other
matters.

                                    Page 12

<PAGE>

   Registered Investment Adviser Regulation

   The Investment Advisors Act of 1940 (the "Advisors Act") regulates the
registration and compensation of investment advisers. Investment advisers are
subject to a similar level of oversight by the SEC and the various states as are
broker-dealers. Investment advisers are required to register with the SEC and/or
appropriate state regulatory agencies, are required to periodically file
reports, and are subject to periodic or special examinations. Rules promulgated
under the Advisers Act govern advertisements by investment advisers and the
custody or possession of funds or securities of a client. Most states require
registration by investment advisers unless an exemption is available and impose
annual registration fees. Some states also impose minimum capital requirements.
There can be no assurance that compliance with existing and future requirements
and legislation will not be costly and time consuming or otherwise adversely
impact our business in this area.

   As a registered investment adviser under the Investment Advisors Act of 1940,
EPA and ICA are subject to regulations which cover various aspects of their
business, including compensation arrangements. Under the Advisers Act, every
investment advisory agreement with clients must expressly provide that such
contract may not be assigned by the adviser without the consent of the client.
Under the Investment Company Act of 1940, every investment adviser's agreement
with a registered investment company must provide for the agreement's automatic
termination in the event it is assigned. Under both the Advisers Act and the
Investment Company Act, an investment advisory agreement is deemed to have been
assigned when there is a direct or indirect transfer of the Agreement, including
a direct assignment or a transfer of a "controlling block" of the adviser's
voting securities or, under certain circumstances, upon the transfer of a
"controlling block" of the voting securities of its parent corporation. A
transaction is not, however, an assignment under the Advisers Act or the
Investment Company Act if it does not result in a change of actual control or
management of the investment adviser. Any assignment of the Company's investment
advisory agreements would require, as to any registered investment company
client, the approval of a majority of its shareholders, and as to other advisory
clients, the consent of such clients to such assignments.

   Regulations Applicable to the Use of the Internet

   Due to the established popularity and use of the internet and other online
services, various regulatory authorities are considering laws and/or regulations
with respect to the internet or other online services covering issues such as
user privacy, pricing, content copyrights and quality of services. In addition,
the growth and development of the market for online commerce may prompt more
stringent consumer protection laws that may impose additional burdens on those
companies conducting business online.

   Also, the recent increase in the number of complaints by online traders could
lead to more stringent regulations of online trading firms and their practices
by the SEC, NASD and other regulatory agencies. The applicability to the
Internet and other online services of existing laws in various jurisdictions
governing issues such as property ownership, sales and other taxes and personal
privacy is also uncertain and may take years to resolve. Finally, as our
services are available over the Internet in multiple states, and as we have
numerous clients residing in these states, these jurisdictions may claim that we
are required to qualify to conduct business as a foreign corporation in each
such state. While ICC currently is registered as a broker-dealer in all 50
states, Puerto Rico and the District of Columbia, we are qualified to conduct
business as a foreign corporation in only a few states. Failure by our company
to qualify as a broker-dealer in other jurisdictions or as an out-of-state or
"foreign" corporation in a jurisdiction where it is required to do so could
subject us to taxes and penalties for the failure to qualify. Our business could
be harmed by any new legislation or regulation, the application of laws and
regulations from jurisdictions whose laws do not currently apply to our business
or the applications of existing laws and regulations to the internet and other
online services.

                                    Page 13

<PAGE>

Employees

   As of March 31, 2005, we had 65 full-time employees, the majority of which
are located at our principal office in Lynnfield, Massachusetts. No employee is
covered by a collective bargaining agreement or is represented by a labor union.
We consider our employee relations to be excellent. We also enter into
independent contractor arrangements with other individuals on an as-needed basis
to assist with programming and developing proprietary technologies.

Available information

   We file our annual report on Form 10-K, quarterly reports on Form 10-Q,
periodic information on Form 8-K, our proxy statement, and other required
information with the SEC. Shareholders may read and copy any materials on file
with the SEC at the SEC's Public Reference Room at 450 Fifth Street, NW,
Washington, DC 20549. Shareholders may obtain information on the operation of
the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the
SEC maintains an Internet web-site, http://www.sec.gov, that contains reports,
proxy and information statements and other information with respect to our
filings.

   Our website address is http://www.investorscapital.com. We make available
free of charge on or through our website, our annual report on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to
those reports filed or furnished pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as soon as reasonably practicable after we
electronically file such material with, or furnish it to, the SEC. All documents
are also available in print at no charge to any shareholder who requests them in
writing to Darren Horwitz, Manager Corporate Communications, Investor Relations,
230 Broadway East, Lynnfield, MA 01940.

ITEM 2.  PROPERTIES.

    Our principal executive offices are located in a 9,068 square foot facility
at 230 Broadway East, Lynnfield, Massachusetts 01940. This facility is comprised
of several office condominiums owned by different entities, which lease the
office space to the Company. A portion of the space which is leased to the
Company, including ICC and EPA, is owned by Arlsburg Trust, the trustee of which
is the principal stockholder of ICH, and Investors Realty, LLC, the principal
member of which is the principal stockholder of ICH. The remainder is leased
from an unrelated entity. The combined current annual rent was $235,128 and is
comparable to current market rates for similar space in our geographic area. The
leases expired in March 2005 and were subsequently renewed. In addition, the
Company leases office space from the Arlsburg Trust for its investment center
located in Topsfield, Massachusetts. Rent expense for the investment center was
$36,000 for the year ended March 31, 2005. ICC leases an additional 1,832 square
feet of office space from Investors Realty, LLC at fair market value. On
September 1, 2004, ICC leased rental space from an unrelated party for its new
investment center located in Portsmouth, New Hampshire. The rent expense for the
year ended March 31, 2005 was $10,500.

                                    Page 14

<PAGE>

ITEM 3.  LEGAL PROCEEDINGS.

   The Company operates in a highly litigious and regulated business and, as
such, is a defendant or codefendant in various lawsuits and arbitrations
incidental to its securities business. The Company is vigorously contesting the
allegations of the complaints in these cases and believes that there are
meritorious defenses in each. Counsel is unable to respond concerning the
likelihood of an outcome, whether favorable or unfavorable, because of inherent
uncertainty routine in these matters. For the majority of pending claims, the
Company's errors and omissions (E&O) policy limits the maximum exposure in any
one case to between $75,000 and $100,000 and, in certain of these cases, the
Company has the contractual right to seek indemnity from related parties.
Management, in consultation with counsel, believes that resolution of pending
litigation will not have a material adverse effect on the consolidated financial
results of the Company.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

   No matter was submitted to a vote of security holders of ICH during the
fourth quarter of the fiscal year covered by this report.

                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

   ICH's common stock has been trading on The American Stock Exchange (AMEX)
under the symbol "ICH" since February 8, 2001. Prior to such date, there was no
established public trading market for the common stock. As of June 23, 2005,
there were 5,758,978 shares outstanding.

   The following table presents the high and low closing prices for the common
stock of ICH on the AMEX for the periods indicated.

                                                     High              Low
Fiscal 2005                                          ----              ---
January 1, 2005 through March 31, 2005              $5.51            $3.91
October 1, 2004 through December 31, 2004           $4.79            $3.40
July 1, 2004 through September 30, 2004             $5.06            $4.27
April 1, 2004 through June 30, 2004                 $5.65            $4.10

Fiscal 2004
January 1, 2004 through March 31, 2004              $6.14            $5.00
October 1, 2003 through December 31, 2003           $5.70            $3.15
July 1, 2003 through September 30, 2003             $3.58            $2.78
April 1, 2003 through June 30, 2003                 $3.01            $1.80

   Investors Capital Holdings, Ltd. did not pay dividends for the year ended
March 31, 2005. Subsequent to the balance sheet date a $0.02/share dividend was
declared on April 18, 2005. This became payable on May 16, 2005 for shareholders
of record as of May 2, 2005. Future dividend decisions will be based on, and
affected by, a number of factors, including the operating results and financial
requirements of the Company and the impact of regulatory restrictions. See
Regulation and Management's Discussion and Analysis--Liquidity and Capital
Resources, included elsewhere in this Form 10-K.

                                    Page 15

<PAGE>

ITEM 6. SELECTED FINANCIAL DATA.

   The following table sets forth certain selected historical consolidated
financial data. The selected income statement data for each of the three years
ended March 31, 2005, 2004 and 2003 and balance sheet data as of March 31, 2005
and 2004 have been derived from our audited consolidated financial statements
and related notes included elsewhere in this Form 10-K and should be read in
conjunction with those financial statements and Management's Discussion and
Analysis of Financial Condition and Results of Operations, also included
elsewhere in this Form 10-K. The following selected income statement data for
the years ended March 31, 2002 and 2001 and balance sheet data as of March 31,
2003, 2002 and 2001 are derived from our audited consolidated financial
statements not included herein. The following selected consolidated financial
data has been prepared in accordance with generally accepted accounting
principals generally accepted in the United States. Due to certain
reclassificiations, commission and advisory fee income has changed from the
amounts reported in previous SEC filings; however, these reclassifications did
not change the information presented for the comparative years mentioned above.

<TABLE>

                                                                       For the Year Ended March 31,
                                                  2005            2004          2003            2002            2001
                                                  ----            ----          ----            ----            ----

Income Statement Data:

<S>                                           <C>            <C>            <C>            <C>             <C>
Total Revenues                                $53,552,345    $48,964,074    $34,797,047    $29,519,260     $30,086,799

Operating Income (loss)                          $959,654     $1,439,657       $311,799       $160,368        $(68,730)

Operating Income (loss) per share, basic             $.17           $.25           $.06           $.03           $(.01)

Operating Income (loss) per share, diluted           $.17           $.25           $.05           $.03           $(.01)

Net income (loss)                                $619,109       $790,413       $115,891         $4,137       $(104,306)

Net income (loss) per share, basic                   $.11           $.14           $.02          $0.00          $(0.02)

Net income (loss) per share, diluted                 $.10           $.14           $.02          $0.00          $(0.02)

Weighted average common shares
   outstanding, basic                           5,735,287      5,720,843      5,717,380      5,717,931       4,789,007

Weighted average common shares
   outstanding, diluted                         5,922,204      5,877,075      5,790,060      5,818,695       4,789,007

Cash dividends declared per share                       -              -              -              -               -


                                                                             As of March 31,
                                                  2005            2004          2003            2002            2001
                                                  ----            ----          ----            ----            ----
Balance Sheet Data:

Total assets                                  $14,109,638    $13,388,879    $10,642,940    $10,114,532     $10,612,301

Shareholders' equity                          $10,182,783     $9,404,939     $8,248,640     $8,057,066      $8,122,573

Shares outstanding                              5,753,463      5,727,713      5,717,380      5,717,380       5,708,311

Equity per share at end of period                   $1.77          $1.64          $1.44          $1.41           $1.42
</TABLE>


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

   Management's discussion and analysis reviews our consolidated financial
condition as of March 31, 2005 and 2004, the consolidated results of operations
for the years ended March 31, 2005, 2004 and 2003 and, where appropriate,
factors that may affect future financial performance. The discussion should be
read in conjunction with the consolidated financial statements and related
notes, included elsewhere in the Form 10-K.

                                    Page 16

<PAGE>

Forward-Looking Statements

   The reader is urged to read the information contained in the "Forward-Looking
Statements" section at the beginning of this report for a discussion of the use
of forward-looking statements in this report as well as risks and uncertainties
in attempting to predict our future performance based upon such statements.

Overview

   We are a financial services holding company that, primarily through our
subsidiaries, provides broker-dealer, investment advisory, asset management,
financial planning, insurance and related services. We operate in a highly
regulated and competitive industry that is influenced by numerous external
factors such as economic conditions, marketplace liquidity and volatility,
monetary policy, global and national political events, regulatory developments,
competition and investor preferences. Our revenues and net earnings may be
either enhanced or diminished from period to period by any one of or by a
multiple of these external factors.

Critical Accounting Policies

   Our consolidated financial statements are prepared in accordance with
accounting principles generally accepted in the United States of America. The
Company believes that of its significant accounting policies, those described
below involve a high degree of judgment and complexity. These critical
accounting policies require estimates and assumptions that affect the amounts of
assets, liabilities, revenues and expenses reported in the consolidated
financial statements. Due to their nature, estimates involve judgment based upon
available information. Actual results or amounts could differ from estimates and
the difference could have a material effect on the consolidated financial
statements. Therefore, understanding these policies is important to
understanding the reported results of operations and the financial position of
the Company.

Valuation of Securities and Other Assets

   Substantially all financial instruments are reflected in the consolidated
financial statements at fair value or amounts that approximate fair value. These
include cash; cash equivalents; securities purchased under agreements to resell;
deposits with clearing organizations; securities owned; and securities sold but
not yet purchased. In accordance with FAS 115, certain financial instruments are
classified as trading and available for sale. The realized gains and losses are
recorded in the income statement in the period in which the transactions
occurred. The unrealized gains and losses related are reflected in other
comprehensive income depending on the underlying purpose of the instrument.
Where available, the Company uses prices from independent sources such as listed
market prices, or broker or dealer price quotations. Fair values for certain
derivative contracts are derived from pricing models that consider current
market and contractual prices for the underlying financial instruments or
commodities, as well as time value and yield curve or volatility factors
underlying the positions. In addition, even where the value of a security is
derived from an independent market price or broker or dealer quote, certain
assumptions may be required to determine the fair value. For instance, the
Company generally assumes that the size of positions in securities that the
Company holds would not be large enough to affect the quoted price of the
securities if the Company were to sell them, and that any such sale would happen
in an orderly manner. However, these assumptions may be incorrect and the actual
value realized upon disposition could be different from the current carrying
value.

REVENUE RECOGNITION:

   The Company has established revenue recognition policies for each of the
following income item areas: Mutual Funds/Variable Annuities, Marketing Revenue
on production and for regional and national events, Administration fees on
Errors and Omissions ("E&O") and Renewals, Advisory Fees and Trading Revenue. A
description of the revenue recognition process related to each category is
presented below. The revenue recognition policy the Company maintains is in
compliance with SEC Staff Accounting Bulletin ("SAB") 104 "Revenue Recognition
in Financial Statements".

                                     Page 17

<PAGE>

   Mutual Funds/Variable Annuities

   The Mutual Funds/Variable Annuity revenue is recognized upon receipt of
commissions related to the sale. The earnings process is substantially
complete at the point that the respective fund company distributes payment to
the Company.

   The Company records a receivable for Mutual Funds/Variable Annuity revenue to
properly capture the commission amounts that are due the brokerage firm but not
yet received. Additionally, a receivable for Mutual Funds/Variable Annuity
revenue is recorded to properly account for and capture amounts related to
commissions due the brokerage firm at the end of each period.

   Trading

   Revenue from trading activities is recognized in accordance with the
agreement between the clearing firm and the Company. The Company earns
commissions through stock purchase and sale transactions, mutual fund purchases,
government and corporate bonds transactions, fee based managed accounts, and
through ticket charges. The Company also earns revenue in the form of 12b1 fees
and interest on account balances. The earnings process is complete at the time
the transactions are settled in accordance with the rules of the NASD and the
Securities and Exchange Commissions ("SEC").

   The Company also receives credit adjustments for clearing charge adjustments
that are netted against any clearing charges the Company may incur for the
period. These adjustments are recognized as income in the period received unless
otherwise noted by the clearing firm.

   Unrealized gains and losses are recorded at the time that the Company
reconciles its trading positions with the market value. The unrealized gains or
losses are adjusted to market until the position is settled or the trade is
cancelled.

   Advisory Fees

   Advisory fee income is recorded quarterly based on the amount of
money-managed during the period. The amounts billed are based on the agreement
between the advisor and the client. Any uncollected advisory fees billed on
these managed accounts are charges against earnings in the subsequent quarter.

                                    Page 18

<PAGE>

                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                    Years Ended March 31, 2005, 2004 and 2003

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

   Revenue is earned based on fees billed for assets managed during the period.
The revenue related to accounts billed in arrears is recognized at the end of
the period in which the account was active.

   Other Advisory fees are recorded based on the average daily net assets of our
mutual funds as disclosed under the Advisory Agreement in the prospectuses.
These fees are recognized monthly based on the fund's administrative fee report
which reports the amounts that are earned for the period. The Company can elect
and has elected to waive certain fees to allow for the fund to maintain its
ceiling on administrative expenses. Based on the agreement, the waived fees have
a three-year recovery period. At the end of the recovery period, these fees are
charged against earnings if uncollected.

Administration Fees

   Administration fees on renewals and E&O insurance are recognized as revenue
upon registration of the representative with National Association of Security
Dealers (NASD) and listing of the registered representative with the E&O
insurance carrier. The funds received from the registered representative are
initially recorded as unearned revenue. The amounts, if any, collected in excess
of the E & O insurance premium and/or fees due NASD are recognized as
revenue.

Marketing Revenue

   Revenue from marketing associated with product sales is recognized quarterly
based on production levels. Marketing event revenues are recognized at the
commencement of the event offset by its costs.

CASH AND CASH EQUIVALENTS:

   For purposes of reporting cash flow, cash and cash equivalents includes cash
in checking and savings accounts, cash at a clearing broker-dealer and
short-term investments with original maturities of 90 days or less.

CUSTOMER ACCOUNTS:

   The Company's customer accounts are reported by the various custodians on a
fully disclosed basis.

FINANCIAL INSTRUMENTS:

   The financial instruments of the Company are reported in the consolidated
balance sheets at market or fair value, or at carrying amounts that approximate
fair value because of the short maturity of the instruments, except loans
receivable. The fair value for loans receivable are estimated using discounted
cash flow analyses, using interest rates currently being offered for loans with
similar terms to borrowers of similar credit quality.

CAPITALIZED SOFTWARE

   We capitalize certain software development costs that meet established
criteria, in accordance with statement of position 98.1. Accounting for costs of
computer systems developed or obtained for internal use.

                                    Page 19

<PAGE>

Off Balance Sheet Risk

   The Company is engaged in various trading and brokerage activities whose
counterparties primarily include the general public. In the event that
counterparties do not fulfill their obligations, the Company may be exposed to
risk. Securities sold, but not yet purchased, represent obligations of the
Company to purchase the security in the market at the prevailing prices to the
extent that the Company does not already have the securities in its possession.
Accordingly, these transactions result in off-balance sheet risk when the
Company's satisfaction of the obligations exceeds the amount recognized in the
balance sheet. The risk of default depends on the creditworthiness of the
counterparty or issuer of the instrument. It is the Company's policy to review,
as necessary, the credit standings of each counterparty with which it conducts
business. Commission receivables from one source were 20% and 49% of total
receivables for the years ended March 31, 2005 and 2004, respectively.

Receivable from and Payable to Brokers and Clearing Organizations

   The balances shown as receivable from and payable to brokers and clearing
organizations represent amounts due in connection with the Company's normal
transactions involving trading of securities. Management considers all such
receivables to be collectible, therefore no allowance for doubtful accounts has
been provided.

Receivable from our Mutual Funds

   Per SFAS 5, management assesses the ability to collect mutual fund
receivables. If Management determines that it is probable that a receivable will
not be collected and the dollar amount can be determined, management will create
a provision for that amount. See "Note 8 -Transactions with Related Parties" to
review the dollar amounts that were written-off for the comparative periods
ended March 31, 2005, 2004 and 2003. There was no material impact on the
financials for the comparative years as a result of these write-offs.

Reserves

   The Company records reserves related to legal proceedings in "accrued
expenses" in the consolidated balance sheet. The determination of these reserve
amounts requires significant judgment on the part of management. Management
considers many factors including, but not limited to: the amount of the claim;
the amount of the loss in the client's account; the basis and validity of the
claim; the possibility of wrongdoing on the part of an employee or
representative of the Company; previous results in similar cases; and legal
precedents and case law. Each legal proceeding is reviewed with counsel in each
accounting period and the reserve is adjusted as deemed appropriate by
management. Any change in the reserve amount is recorded in the consolidated
financial statements and is recognized as a charge/credit to earnings in that
period. The assumptions of management in determining the estimates of reserves
may be incorrect and the actual disposition of a legal proceeding could be
greater or less than the reserve amount.

                                    Page 20

<PAGE>

<TABLE>
Results of Operations:

Comparative Consolidated Statements of Income

                                                                                           Percent of Revenue
                                                                                               Year Ended
                                                           Year Ended March 31,                 March 31        Percent Change
                                                  -------------------------------------- ---------------------------------------
                                                                                                                2005     2004
                                                     2005         2004         2003      2005   2004    2003   vs. 2004 vs. 2003
                                                  ------------ ------------ ------------ ------ ------ ------- -------- --------
<S>                                               <C>          <C>          <C>           <C>    <C>     <C>       <C>     <C>
Revenues:

Commission                                        $48,660,052  $44,831,827  $31,118,558   88.2%  91.6%   89.4%     8.5%    44.1%
Advisory                                            3,702,556    2,288,658    2,101,933    6.7%   4.7%    6.0%    61.8%     8.9%
Other fee income                                    1,189,737      673,418      843,547    2.2%   1.4%    2.4%    76.7%   -20.2%
Marketing revenue                                   1,140,098      836,428      483,188    2.1%   1.7%    1.4%    36.3%    73.1%
Other income                                          473,091      333,743      249,821    0.9%   0.7%    0.7%    41.8%    33.6%
                                                  ------------ ------------ ------------

Total Revenue                                      55,165,534   48,964,074   34,797,047  100.0% 100.0%  100.0%    12.7%    40.7%
                                                  ============ ============ ============

Commission and advisory fees                       44,025,005   39,295,954   28,040,831   79.8%  80.3%   80.6%    12.0%    40.1%

    Gross Profit                                   11,140,530    9,668,120    6,756,216   20.2%  19.7%   19.4%    15.2%    43.1%

Operating Expenses:

    Advertising                                       763,192      611,435      479,622    1.4%   1.2%    1.4%    24.8%    27.5%
    Communications                                    536,386      419,749      448,830    1.0%   0.9%    1.3%    27.8%    -6.5%
                                                  ------------ ------------ ------------

Selling Expenses                                    1,299,578    1,031,184      928,452    2.4%   2.1%    2.7%    26.0%    11.1%

    Compensation and benefits                       5,713,028    4,569,398    3,528,986   10.4%   9.3%   10.1%    25.0%    29.5%
    Regulatory, legal and professional              1,527,256    1,028,901      831,613    2.8%   2.1%    2.4%    48.4%    23.7%
    Occupancy                                         585,646      474,998      446,078    1.1%   1.0%    1.3%    23.3%     6.5%
    Other administrative expenses                   1,055,368    1,123,982      709,288    1.9%   2.3%    2.0%    -6.1%    58.5%
                                                  ------------ ------------ ------------

Administrative Expenses                             8,881,298    7,197,279    5,515,965   16.1%  14.7%   15.9%    23.4%    30.5%

    Total Operating Expenses                       10,180,876    8,228,463    6,444,417   18.5%  16.8%   18.5%    23.7%    27.7%
                                                  ============ ============ ============

    Operating Income                                  959,654    1,439,657      311,799    1.7%   2.9%    0.9%   -33.3%   361.7%

Other Expense:
    Interest expense                                   40,440       39,326       14,117    0.1%   0.1%    0.0%     2.8%   178.6%
    Loss on disposal of equipment                      31,072            -            -    0.1%   0.0%    0.0%     N/A      N/A

    Total other expense                                71,512       39,326       14,117    0.1%   0.1%    0.0%    81.8%   178.6%
                                                  ------------ ------------ ------------

Income before taxes                                   888,142    1,400,331      297,682    1.6%   2.9%    0.9%   -36.6%   370.4%
Provision for income taxes                            269,033      609,918      181,791    0.5%   1.2%    0.5%   -55.9%   235.5%
                                                  ------------ ------------ ------------

    Net Income                                     $  619,109   $  790,413   $  115,891    1.1%   1.6%    0.3%   -21.7%   582.0%
                                                  ============ ============ ============
</TABLE>

                                    Page 21

<PAGE>

<TABLE>
Revenues
                                                                                            Percent of Revenue
                                                                   Revenue                      Year Ended           Revenue
                                                             Year Ended March 31,                March 31        Percent Change
                                                    -------------------------------------- -------------------- -----------------
                                                                                                                 2005     2004
                                                       2005         2004         2003      2005   2004   2003   vs. 2004 vs. 2003
                                                    ------------ ------------ ------------ ------ ------ ------ -------- --------
<S>                                                 <C>          <C>          <C>           <C>    <C>    <C>       <C>     <C>
Revenues:

   Commission - Mutual Funds and Variable Annuity   $33,967,125  $33,076,432  $24,189,238   61.6%  67.6%  69.5%     2.7%    36.7%

   Commission - Trading                              14,245,778   11,384,745    6,172,347   25.8%  23.3%  17.7%    25.1%    84.4%

   Commission - Insurance Products                      348,787      240,649       79,390    0.6%   0.5%   0.2%    44.9%   203.1%

   Commission - Underwriting                            116,338      131,540      677,583    0.2%   0.3%   1.9%   -11.6%   -80.6%

   Advisory Services and Administration Fees          3,863,090    2,519,554    2,377,576    7.0%   5.1%   6.8%    53.3%     6.0%

   Licensing                                          1,004,307      340,283      565,579    1.8%   0.7%   1.6%   195.1%   -39.8%

   Marketing                                          1,140,098      836,428      483,188    2.1%   1.7%   1.4%    36.3%    73.1%

   Other income                                         480,011      434,443      252,146    0.9%   0.9%   0.7%    10.5%    72.3%
                                                    ------------ ------------ ------------

   Total Revenue                                    $55,165,534  $48,964,074  $34,797,047  100.0% 100.0% 100.0%    12.7%    40.7%
                                                    ============ ============ ============
</TABLE>

<TABLE>
Gross Margin
                                                            Gross Margin Retention   Percent of Total Gross Margin
                                   Gross Margin                   Year Ended                  Year Ended            Gross Margin
                               Year Ended March 31,                March 31                    March 31            Percent Change
                        ----------------------------------- -----------------------  ---------------------------- -----------------
                                                                                                                     2005     2004
                           2005        2004        2003        2005    2004   2003           2005   2004    2003  vs. 2004 vs. 2003
                        ----------- ----------- ----------- -------- ------- ------  ------------- ------ ------- -------- --------
<S>                     <C>         <C>         <C>            <C>     <C>    <C>            <C>    <C>     <C>       <C>     <C>
Gross Margin:

   Commission -
    Mutual Funds and
     Variable Annuities $4,467,234  $4,299,936  $3,144,601     13.2%   13.0%  13.0%          40.1%  44.5%   46.5%     3.9%    36.7%

   Commission -
    Trading              2,050,085   2,484,005   1,067,919     14.4%   21.8%  17.3%          18.4%  25.7%   15.8%   -17.5%   132.6%

   Commission -
    Insurance Products     342,978     173,347      35,757     98.3%   72.0%  45.0%           3.1%   1.8%    0.5%    97.9%   384.8%

   Commission -
    Underwriting            17,766      31,861     138,258     15.3%   24.2%  20.4%           0.2%   0.3%    2.0%   -44.2%   -77.0%

   Advisory Services
    and Administration
    Fees                 1,647,048   1,147,176   1,068,769     42.6%   45.5%  45.0%          14.8%  11.9%   15.8%    43.6%     7.3%

   Licensing             1,004,307     340,283     565,579    100.0%  100.0% 100.0%           9.0%   3.5%    8.4%   195.1%   -39.8%

   Marketing             1,140,098     836,428     483,188     74.8%   53.3%  58.5%          10.2%   8.7%    7.2%    36.3%    73.1%

   Other income            471,012     355,084     252,146     98.1%   81.7% 100.0%           4.2%   3.7%    3.7%    32.6%    40.8%
                        ----------- ----------- -----------

   Total Gross Margin  $11,140,530  $9,668,120  $6,756,216     20.2%   19.7%  19.4%         100.0% 100.0%  100.0%    15.2%    43.1%
                       ============ =========== ===========
</TABLE>

Revenues

   Revenues increased 12.7% for fiscal year 2005 versus 40.7% in 2004. The
Company still managed growth during the year although overall market conditions
negatively affected the industry. The presidential election, the war in Iraq,
rising energy costs, and a potential increase in interest rates created
skepticism within the financial service sector; however, the Company, through
it's recruiting process, continued to attract sophisticated representatives who
offered a broad and diversified product base to clients. As a result, the
Company was able to obtain an increase in overall sales even during difficult
market conditions.

                                    Page 22

<PAGE>

   The effect of recruiting suitable representatives is demonstrated in the
preceding Revenue table. Sales of mutual funds and variable annuities, as a
percentage of revenue, decreased to 61.6% in Fiscal Year 2005 compared to 67.6%
for the previous year. On the other hand, sales from trading, as a percentage of
revenue, increased from 23.3% to 25.8% compared to the prior year, and advisory
services sales, as a percentage of revenue, increased from 5.1% to 7.0%.

   By recruiting representatives who are licensed to sell a variety of
investments that meet the needs of their clients, we achieved a significant
shift of sales towards higher margin products. This contributed to an increase
in the overall profit margin. The gross margin table illustrates that sales in
mutual funds and variable annuities generated on average a 13% margin retention
during the last three full fiscal years, whereas sales from trading produced
profit margin retentions of 14.4%, 21.8% and 17.3% for fiscal years 2005, 2004
and 2003, respectively. Even more tellingly, Advisory Services sales for those
three years yielded an average margin retention of 44%.

Gross Margins

   We experienced an increase in advisory services revenues of 43.6% compared to
only a $7.3% increase for years 2004 versus 2003. Gross margin contribution in
advisory services went from $1.1 million in 2004 to $1.6 million in 2005. We
have enhanced our advisory services model by implementing ICA's advisory service
program, an advisor directed asset managed program that accounted for most of
the greatest increase in advisory sales.

   Gross margins from trading experienced a 17.5% decrease compared to an
increase of 132.6% for the years 2004 versus 2003. After growing from $1.1
million to $2.5 million for the years 2003 versus 2004, the margin contribution
from trading declined to $2.1 million in 2005 as the result of several factors.
In Fiscal Year 2005 we had a net trade error of approximately $215,000. In
addition, a number of our representatives increased sales through our online
trading platform. These representatives tend to execute fewer, but higher
volume, trades than our other representatives, resulting in less ticket revenue
for the Company. Also, these representatives generally command a higher payout.
In light of the increases in trading sales volume and assets under management,
we will continue to focus our attention on recruiting high-level and experienced
representatives to improve our overall profit margin and at the same time meet
the financial needs of our clients.

Payouts to Representatives

   Payouts to representatives in commissions, advisory, and other fees have held
steadily at approximately 82.2% of sales for the comparative years 2005, 2004
and 2003. Management continually monitors and adjusts its payout structure
accordingly.

Operating Expenses

   Advertising. Advertising expenses increased by approximately 25% over the
previous year due to added marketing efforts that are necessary to promote the
Company and enhance its brand name recognition. The national presence of the
Corporation has demanded a wider scope of advertising. Additionally, travel and
its associated costs have been required in order to support our marketing
efforts.

                                    Page 23

<PAGE>

   Communications. Communications expenses increased by approximately 28% over
the past year due to costs in the areas of printing, investor/public relations,
website infrastructure, conferences, and telephone. These expenses are heavily
correlated with growth in the Company and its overall business activity.

   Compensation and Benefits. Compensation and benefits expenses increased by
25% over the past year due to our commitment to place individuals with strong
industry expertise into positions of leadership where essential decisions can be
formed. On an overall basis, additional compensation benefits allow the Company
to grow and provide better service.

   Regulatory, Legal and Professional. Regulatory, legal and professional
expenses increased by approximately 48% over Fiscal 2004. With the growth in our
broker-dealer, advisory, and asset management business, and the associated
regulatory scrutiny commonplace in the industry, the Company had increased its
utilization of professional services. The Company remitted full payment during
2005 on a sizeable liability related to regulatory matters, thus fully
satisfying its related obligations. The overall current market risk of the
industry is a factor that remains uncertain. Management believes that costs
related to regulatory, legal and professional activities can be stabilized in
the future under an improved overall investment environment and increasingly
effective risk management.

   Occupancy. Occupancy expenses increased by approximately 23% over the past
year due to increases in rent and depreciation of fixed assets. As the Company
continues to expand, additional fixed asset expenditures may be required.

   Other Administrative. Other administrative expenses decreased by
approximately 6% over the past year, demonstrating that the Company is
controlling operating expenses related to company wide items. The other
administrative expense categories include various insurance items, postage,
office expenses, and computer maintenance

Operating Income

   Operating income declined from $1.4 million, or 2.9% of revenues, to $1.0
million, or 1.7% of revenues, compared to 2004. Operating income had increased
in 2004 as compared to 2003 because the Company benefited from implementing
fixed operating overhead initiatives, including technology and web-based
reporting that enhanced the automation of commission statements and autonomous
trade processing through our online trading platform. In contrast, this year we
made a substantial financial commitment to acquire seasoned personnel, including
senior management with extensive and responsible industry expertise, in an
effort to increase sales, particularly by restructuring the Company's product
mix to emphasize the advisory services sector. Management will continue to
refine our business model, particular regarding recruitment of key personnel and
growing the advisory services sector, with a view to improve operating income
and earnings per share.

Net Income

   In comparative years 2005 and 2004, net income decreased by approximately
$170 thousand, or $0.03 per basic share and $0.04 per diluted share. In an ever
changing and increasingly competitive environment, our long-term plan is to
increase net income and earnings per share on a sustainable basis. Key to this
effort will be to continue attracting and servicing high quality, professional
representatives who will enable us to efficiently exploit our market niche, grow
assets under management, and increase our overall profitability.

                                    Page 24

<PAGE>

Liquidity and Capital Resources

   We believe that achieving our return on equity goals requires the efficient
use of capital. Historically, we have financed our operations primarily with
private equity and internally generated cash flow.

   As of March 31, 2005, cash and cash equivalents totaled approximately $8.6
million compared to $8.1 million as of March 31, 2004. Working capital as of
March 31, 2005 was $9.1 million compared to $8.5 million as of March 31, 2004.
Our ratio of current assets to current liabilities was 3.31 to 1 as of March 31,
2005 compared to 3.20 to 1 as of March 31, 2004.

   As of March 31, 2005, the net capital ratio for ICC, the broker-dealer
subsidiary, was 2.43 to 1 compared to 2.38 to 1 for our fiscal year ended March
31, 2004. The SEC Uniform Net Capital Rule (Rule 15c3-1) requires that the
Company maintain a net capital of $100,000 and a ratio of aggregate indebtedness
to net capital not to exceed 15 to 1. This SEC requirement is also referred to
as the "net capital ratio" or the "net capital rule." Indebtedness generally
includes all money owed by a company, and net capital includes cash and assets
that are easily converted into cash. SEC rules also prohibit "equity capital"
(which, under the net capital rule, includes subordinated loans) from being
withdrawn, cash dividends from being paid and other specified actions of similar
effect from being taken, if, among other specified contingencies, our net
capital ratio would exceed 10 to 1 or if we would have less than 120% of our
minimum required net capital. As of March 31, 2005, the Company had net capital
of approximately $1.7 million compared to net capital of $1.8 million as of
March 31, 2004. This resulted in excess net capital of $1.4 million and $1.5
million, respectively.

   The company continues to generate a positive cash flow from operating
activities. The Company generated cash flow from operations of $0.9 million,
$1.1 million, and $0.5 million for 2005, 2004 and 2003, respectively. Cash
inflows as a result of the Company's profitability of $0.6 million, $0.8 million
and $0.1 million, respectively, have continued to provide the Company's largest
source of cash during said comparative years.

   Cash outflows for the year came most notably from payment of income taxes in
the amount of $1.02 million. We also paid out $142 thousand in corporate
insurance policies, $240 thousand for equipment and technology and $182 thousand
in loans to registered representatives to foster sales growth. Finally, we paid
off a note to NASD in the amount of $149 thousand.

 ICC made a business decision in fiscal year 2005 to conclude an NASD
investigation into supervisory procedures relating to the period of January 2000
through July of 2002. While we considered disputing the allegations in a formal
proceeding, we estimated the cost of doing so to be prohibitive. Furthermore, we
sought to avoid disruption of our home office and other operations. Accordingly,
while neither admitting nor denying the allegations, we consented to a number of
findings in order to resolve the matter in its initial stages.

   Repayment of the settlement note to NASD did not have a material effect
on cash flow at any time during the comparative years of 2005, 2004 and 2003.
The Company has implemented and maintains an adequate system of supervisory and
regulatory procedures and does not foresee any material deficiencies in the
future in this regard.

                                    Page 25

<PAGE>

Contractual Obligations

<TABLE>
                                                                       Payments Due by Period
                                                                     ---------------------------
Contractual Obligations

                                                                     Less than 1 year 1-3 years   4-5 years     After 5 years
                                                            Total         2005        2006-2008   2008-2009  2010 and Thereafter
-------------------------------------------------------------------- ---------------------------  ---------- -------------------
<S>                                                      <C>                <C>        <C>               <C>                 <C>
Short- term loans and notes payable:1
        Lines of credit and other short-term borrowings      $9,433           $9,433          -           -                   -


Operating Leases:2                                        1,056,364          316,796    739,568           -                   -





-------------------------------------------------------------------- ---------------------------  ---------- -------------------
Total Contractual obligations                            $1,065,797         $326,229   $739,568          $-                  $-
-------------------------------------------------------------------- ---------------------------  ---------- -------------------

1 Refer to Note 10 of the Notes to Consolidated Financial Statements for information regarding short- term loans and notes
 payable.

2 Refer to Note 14 of the Notes to Consolidated Financial Statements for information regarding operating leases.
</TABLE>


Risk Management

   Risk is an inherent part of the Company's business and activities. Risk
management is critical to the Company's financial strength and profitability and
requires robust auditing, constant communications, judgment and knowledge of
financial trends and the economy as a whole.

   Senior management takes an active role in the risk management process. The
principal risks involved in the Company's business activities are market,
operational, regulatory and legal.

Market Risk

   Market risk is the risk attributable to common macroeconomic factors such as
gross domestic product, employment, inflation, interest rates, budget deficits
and consumer sentiment. Consumer and producer sentiment is critical to our
business. The level of consumer confidence determines their willingness to
spend, especially in the financial markets. It is this willingness to spend in
the financial markets that is key to our business. A shift in spending in this
area could negatively impact us. However, senior management is constantly
monitoring these economic trends in order to enhance our product line to offset
any potential negative impact. See, also, "ITEM 7A. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK", below.

Operational Risk

   Operational risk refers to the risk of loss resulting from the Company's
operations, including, but not limited to, improper or unauthorized execution
processing of transactions, deficiencies in the Company's technology or
financial or financial operating systems and inadequacies or breaches in the
Company's control processes. Managing these risks is critical, especially in a
rapidly changing environment with increasing transaction volume. Failure to
manage these risks could result in material financial loss to the Company. To
mitigate these risks, the Company had developed specific policies and procedures
designed to identify and manage operational risk. These policies and procedures
are reviewed and updated on a continuing basis to ensure that this risk is
minimized.

                                    Page 26

<PAGE>

Regulatory and Legal Risk

   Regulatory and legal risk includes non-compliance with applicable legal and
regulatory requirements and the risk of a large number of customer claims that
could result in adverse judgments against the Company. The Company is subject to
extensive regulation in all jurisdictions in which it operates. In this regard,
the Company has instituted comprehensive procedures to address issues such as
regulatory capital requirements, sales and trading practices, use of and
safekeeping of customer funds, credit granting, collection activities,
money-laundering and record keeping.

Effect of Recently Issued Accounting Pronouncements

   Please refer to Note 2 "Accounting Policies" of the notes to the consolidated
financial statements contained herein.

Effects of Inflation

   The Company's assets primarily are liquid in nature and not significantly
affected by inflation. Management believes that the replacement cost of property
and equipment will not materially affect operating results. However, the rate of
inflation affects our expenses, including employee compensation and benefits,
communications and occupancy, which may not be readily recoverable through
charges for services provided.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

   Market risk is present in our business due to price changes in equities,
changes in interest rates, and credit ratings in debt instruments. We are also
exposed to market risk as a result of asset management of a client's portfolio.
Market risk is present in our normal business activity as a result of our
involvement as principal in the execution of trading activity and delivery of
fixed and variable investment products. We conduct our business as a brokerage
and advisory firm clearing through another broker dealer on a fully disclosed
basis to minimize our market risk. Additional information pertaining to market
risk is contained in "Managements' Discussion and Analysis of Financial
Condition and Results of Operations" under the caption " Risk Management" of
this Form 10-K.

                                    Page 27

<PAGE>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

         To the Board of Directors and Stockholders of Investors Capital
         Holdings, Ltd. and Subsidiaries Lynnfield, Massachusetts

                          INDEPENDENT AUDITORS' REPORT

We have audited the accompanying consolidated balance sheet of Investors Capital
Holdings, Ltd. and Subsidiaries (the "Company") as of March 31, 2005 and 2004,
and the related consolidated statements of income, changes in stockholders'
equity, and cash flows for the years then ended. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. We were not engaged to perform an
audit of the Company's internal control over financial reporting. Our audits
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
Company's internal control over financial reporting. Accordingly, we express no
such opinion. 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 consolidated financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Company as of
March 31, 2005 and 2004 and the results of its operations and its cash flows for
the years then ended in conformity with accounting principles generally accepted
in the United States of America.


/s/ Brown & Brown, LLP
Boston, Massachusetts
May 11, 2005




                                    Page 28

<PAGE>

         To the Board of Directors and Stockholders of Investors Capital
         Holdings, Ltd. and Subsidiaries Lynnfield, Massachusetts

                          INDEPENDENT AUDITORS' REPORT

   We have audited the accompanying consolidated balance sheet of Investors
Capital Holdings, Ltd. and Subsidiaries as of March 31, 2003 and the related
consolidated statements of income, changes in stockholders' equity and cash
flows for the year then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

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

   In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Investors Capital Holdings, Ltd. and Subsidiaries as of March 31, 2003 and the
consolidated results of their operations and their cash flows for the year then
ended in conformity with accounting principles generally accepted in the United
States of America.

                                          /s/ SHATSWELL, MacLEOD & COMPANY, P.C.
                                          --------------------------------------
West Peabody, Massachusetts                   SHATSWELL, MacLEOD & COMPANY, P.C.
May 15, 2003


                                    Page 29

<PAGE>


<TABLE>
                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
                ------------------------------------------------
                           CONSOLIDATED BALANCE SHEETS
                           ---------------------------


                                                                       March 31,         March 31,
                                                                          2005              2004
                                                                      ------------     ------------
Assets

Current Assets

<S>                                                                     <C>             <C>
     Cash and cash equivalents ....................................     $ 8,618,261     $ 8,112,567
     Deposit with clearing organization, restricted ...............         175,000         175,000
     Accounts receivable ..........................................       3,361,509       3,785,423
     Loans receivable from registered representatives(current).....         173,875              --
     Investments in available-for-sale securities .................              --          56,339
     Investments...................................................         142,816          85,820
     Prepaid income taxes .........................................         100,889              --
     Marketable securities, at market value .......................         330,380          17,422
     Prepaid expenses .............................................         247,421         310,270
                                                                       ------------    ------------
                                                                         13,150,151      12,457,021
Long-term Assets

Property and equipment, net .......................................         571,198         503,316

Loans receivable from registered representatives...................          77,270          69,306
Equity investments, at cost .......................................          40,000          40,000
                                                                       ------------    ------------
                                                                            260,086         195,126
Other Assets
     Other assets .................................................         121,548          99,295
     Deferred tax asset, net ......................................         149,471          69,721
     Receivables from officers ....................................              --          64,400
                                                                       ------------    ------------
                                                                            271,019         233,416

          TOTAL ASSETS ............................................    $ 14,109,638    $ 13,388,879
                                                                       ============    ============

Liabilities and Stockholders' Equity

Current Liabilities
     Accounts payable .............................................    $  1,045,314     $   570,236
     Accrued expenses .............................................         552,088         435,067
     Notes payable ................................................           9,433          78,999
     Unearned revenues.............................................         106,775              --
     NASD settlement payable (current portion) ....................              --          54,375
     Commissions payable ..........................................       1,885,340       2,078,196
     Income taxes payable .........................................              --         582,721
     Securities sold, not yet purchased, at market value ..........         327,905          90,042
                                                                       ------------    ------------
                                                                          3,926,855       3,889,636
 Long-Term Liabilities

     NASD settlement payable, net of current portion...............              --          94,304
                                                                       ------------    ------------
                                                                                             94,304


          Total liabilities .......................................       3,926,855       3,983,940
                                                                       ------------    ------------
Commitments and contingencies (Note 14)

Stockholders' Equity:

     Common stock, $.01 par value, 10,000,000
      shares authorized; 5,757,348 issued and 5,753,463 outstanding
      in 2005; 5,731,598 issued and 5,727,713 outstanding in 2004 .         57,573           57,316
     Additional paid-in capital ...................................      8,691,566        8,520,931
     Retained earnings ............................................      1,463,779          844,670
       less: Treasury stock, 3,885 shares at cost .................        (30,135)         (30,135)
     Accumulated other comprehensive income .......................             --           12,157
                                                                      ------------     ------------

            Total stockholders' equity ............................     10,182,783        9,404,939
                                                                      ------------     ------------

           TOTAL LIABILITIES AND STOCKHOLDERS'
                EQUITY ............................................   $ 14,109,638     $ 13,388,879
                                                                      ============     ============

             See Notes to Condensed Consolidated Financial Statements.
</TABLE>

                                    Page 30

<PAGE>


<TABLE>


                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
                -------------------------------------------------
                        CONSOLIDATED STATEMENTS OF INCOME
                        ---------------------------------
                                   YEARS ENDED
                                   -----------

                                                                                  March 31,
                                                                      2005           2004         2003
                                                                  ------------   -----------   -----------
<S>                                                               <C>            <C>           <C>
Revenues:
Commission                                                        $ 48,660,052   $44,831,827   $31,118,558
Advisory fees                                                        3,702,556     2,288,658     2,101,933
Other fee income                                                     1,189,737       673,418       843,547
Marketing revenue                                                    1,140,098       836,428       483,188
Other income                                                           473,091       333,743       249,821
                                                                   -----------   -----------   -----------
Total revenue                                                       55,165,534    48,964,074    34,797,047


Commission and advisory fees                                        44,025,004    39,295,954    28,040,831
                                                                   -----------   -----------   -----------
           Gross profit                                             11,140,530     9,668,120     6,756,216
                                                                   -----------   -----------   -----------
Operating expenses:

   Advertising                                                         763,192       611,435       479,622
   Communications                                                      536,386       419,749       448,830
                                                                   -----------   -----------   -----------
Selling                                                              1,299,578     1,031,184       928,452
                                                                   -----------   -----------   -----------

   Compensation and benefits                                         5,713,028     4,569,398     3,528,986
   Regulatory, legal and professional                                1,527,256     1,028,901       831,613
   Occupancy                                                           585,646       474,998       446,078
   Other administrative expenses                                     1,055,368     1,123,982       709,288
                                                                   -----------   -----------   -----------
Administrative                                                       8,881,298     7,197,279     5,515,965
                                                                   -----------   -----------   -----------
         Total operating expenses                                   10,180,876     8,228,463     6,444,417
                                                                   -----------   -----------   -----------
           Operating income                                            959,654     1,439,657       311,799
                                                                   -----------   -----------   -----------
Other expense:

            Interest expense                                            40,440        39,326        14,117
            Loss on disposal of equipment                               31,072            --            --
                                                                   -----------   -----------   -----------
           Total other expense                                          71,512        39,326        14,117
                                                                   -----------   -----------   -----------
Income before taxes                                                    888,142     1,400,331       297,682
Provision for income taxes                                             269,033       609,918       181,791
                                                                   -----------   -----------   -----------
           Net income                                              $   619,109   $   790,413   $   115,891
                                                                   ===========   ===========   ===========

Earnings per common share

   Basic earnings per common share:                                $      0.11   $      0.14   $      0.02
                                                                   ===========   ===========   ===========
   Diluted earnings per common share:
                                                                   $      0.10   $      0.14   $      0.02
                                                                   ===========   ===========   ===========

Share data:

   Weighted average shares used in basic earnings per
     common share calculations                                      5,735,287      5,720,843     5,717,380
Plus:  Incremental shares from assumed exercise of stock options      186,917        156,232        72,680
                                                                   -----------   -----------   -----------
   Weighted average shares used in diluted earnings per
     common share calculations                                      5,922,204      5,877,075     5,790,060
                                                                   ===========   ===========   ===========

            The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>

                                    Page 31

<PAGE>


<TABLE>
                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
                -------------------------------------------------
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
           ----------------------------------------------------------
                    Years Ended March 31, 2005, 2004 and 2003
                    -----------------------------------------

                                                                 Retained                    Accumulated
                                 Common Stock      Additional    Earnings                       Other
                              ------------------    Paid-in    (Accumulated    Treasury     Comprehensive
                                Shares    Amount     Capital      Deficit)       Stock      Income (Loss)      Total
                              ------------------   ----------   ------------   ----------   ---------------   -----------

<S>                           <C>           <C>       <C>            <C>           <C>            <C>           <C>
Balance, March 31, 2002       5,721,265     57,213    8,135,347      (61,634)      (30,135)       (43,725)      8,057,066
Stock-based compensation                                 33,945                                                    33,945
Comprehensive income:
   Net income                                                        115,891
   Net unrealized gains                                                                            41,738
     Comprehensive income                                                                                         157,629
                              ---------  ---------   ----------    ---------      --------     ----------      ----------
Balance, March 31, 2003       5,721,265    $57,213   $8,169,292    $  54,257      $(30,135)    $   (1,987)     $8,248,640
Stock-based compensation                                319,606                                                   319,606
Stock issued employees           10,000        100       31,400                                                    31,500
Exercised stock options             333          3          633                                                       636
Comprehensive income:
         Net Income                                                  790,413
         Net Unrealized gains                                                                      14,144
           Comprehensive income                                                                                   804,557
                              ---------  ---------   ----------   ----------      --------     -----------    -----------
Balance, March 31, 2004       5,731,598    $57,316   $8,520,931    $ 844,670      $(30,135)    $   12,157      $9,404,939
Stock-based compensation                                 97,841                                                    97,841
Stock issued employees           12,000        120       45,520                                                    45,640
Exercised stock options          13,750        137       27,274                                                    27,411
Comprehensive income:
         Net Income                                                  619,109
         Net Unrealized (loss)                                                                    (12,157)
           Comprehensive income                                                                                   606,952

                              ---------  ---------   ----------    ---------      --------     ----------      ----------
Balance, March 31, 2005       5,757,348    $57,573   $8,691,566   $1,463,779      $(30,135)            --     $10,182,783
                              =========  =========   ==========   ==========      ========     ==========      ==========
</TABLE>

Reclassification disclosure:

   Net unrealized losses on available-for-sale securities for the year ended
March 31, 2005 were $385. Such amount has been adjusted to $12,157 to reflect a
reclassification of the gain of $11,772 on the sale of a security, with no tax
effect. Net unrealized gains on available-for-sale securities for the year ended
March 31, 2003 were $14,906. Such amount has been adjusted to $41,738 to reflect
a reclassification of the loss of $55,834 on the sale of a security, with no tax
effect.

   Accumulated other comprehensive loss as of March 31, 2005, 2004 and
2003consists of net unrealized holding losses on available-for-sale securities,
net of taxes.

The accompanying notes are an integral part of these consolidated financial
statements.

                                    Page 32

<PAGE>


<TABLE>
                  INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
                  -------------------------------------------------
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                        -------------------------------------
                      Years Ended March 31, 2005, 2004 and 2003
                      -----------------------------------------


                                                                         2005            2004           2003
                                                                     -----------     ----------     ----------
<S>                                                                     <C>            <C>            <C>
Cash flows from operating activities:

       Net income.............................................          $619,109       $790,413       $115,891
     Adjustments to reconcile net income to net cash
      provided by (used in) operating activities:
           Depreciation and amortization......................           172,153        138,093        140,954
           Realized(gain)loss on securities...................           (11,772)            --         55,834
           Change in deferred taxes...........................           (79,750)       (97,753)        59,962
           Stock option compensation..........................            97,841        319,606         33,945
           Change in marketable securities....................           (75,095)        97,818         30,737
           Unrealized gain on investments.....................                 -          7,500              -
           Loss on disposal of equipment  ....................            31,072             --             --
           Income (loss) on investment .......................              (990)       (21,325)        25,202

     Change in operating assets and liabilities
           Decrease (increase) in accounts receivable.........           423,914     (1,844,973)       160,750
           Increase(decrease)prepaid expenses and other assets            40,596        (44,143)       (22,789)
          (Increase)decrease income taxes receivable..........          (100,889)        60,113        (60,113)
           Decrease in loans receivable from officers.........            64,400         39,688         31,990
          (Decrease)Increase in taxes payable.................          (582,721)       582,721       (149,108)
           Increase (decrease) in accounts payable ...........           475,078        166,792        (75,876)
           Increase in accrued expenses.......................           117,021         57,284        173,969
          (Decrease)Increase  in commissions payable..........          (192,856)       947,657         (6,137)
           Increase in unearned revenues......................           106,775             --             --
          (Payments) Increases on NASD settlement.............          (148,679)      (101,321)       250,000

               Net cash provided by operating activities......           955,207      1,098,170        765,211


Cash flows from investing activities:

     Purchases of property and equipment......................          (271,107)      (116,235)     (134,832)
     Purchase of Investment in unconsolidated affiliate.......           (56,006)            --            --
     Sale of Investment available for sale....................            55,954             --            --
     Loans receivable from registered representatives.........          (181,839)        26,083       104,606
                                                                      -----------     ----------    ---------

              Net cash used in investing activities...........          (452,998)       (90,152)      (30,226)
                                                                      -----------     ----------    ----------


                               See Notes to Consolidated Financial Statements.
</TABLE>

                                    Page 33

<PAGE>

<TABLE>

                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
                ------------------------------------------------
              CONSOLIDATED STATEMENTS OF CASH FLOWS -- (CONTINUED)
              ----------------------------------------------------

                                                                                 2005        2004       2003
Cash flows from financing activities:                                         ----------  ----------  ---------
<S>                                                                              <C>         <C>         <C>

        Note Payable:

           (Payments on) proceeds from Note Payable......................        (69,566)    (18,230)    18,213

        Additional paid in capital:
           Issuance of employee stock ...................................         45,520      31,400
                  Exercise of stock options .............................         27,274         633
           Additional public offering cost

        Common stock:

           Issuance of employee stock ...................................            120         100
           Exercise of stock options ....................................            137           3
                                                                              ----------  ----------  ---------
              Net cash provided by in financing activities...............          3,485      13,906     18,213
                                                                              ----------  ----------  ---------
Net increase in cash and cash equivalents................................        505,694   1,021,924    753,198

Cash and cash equivalents, beginning of year...........  ................      8,112,567   7,090,643  6,337,445
                                                                              ----------  ----------  ---------

Cash and cash equivalents, end of year.................  ................     $8,618,261  $8,112,567 $7,090,643
                                                                              ==========  ==========  =========

Supplemental disclosures of cash flow information:

     Interest paid.......................................................        $40,440     $39,326    $14,117
                                                                             ===========  ==========  =========

     Income taxes paid ..................................................     $1,020,000    $124,000   $331,050
                                                                             ===========  ==========  =========

     Transfer of security to securities not readily marketable from
           receivable from officers......................................    $        --    $     --    $30,000
                                                                             ===========  ==========  =========



                          See Notes to Condensed Consolidated Financial Statements.
</TABLE>

                                    Page 34

<PAGE>

                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    Years Ended March 31, 2005, 2004 and 2003

 NOTE 1 - NATURE OF OPERATIONS

   Investors Capital Holdings, Ltd., (the Company or "ICH") and its wholly-owned
subsidiaries, Investors Capital Corporation ("ICC"), Eastern Point Advisors,
Inc. ("EPA"), ICC Insurance Agency, Inc. and Investors Capital Holdings
Securities Corporation ("ICH Securities") are engaged throughout the United
States in the financial services industry as general securities brokers and
asset managers. ICC is a duly registered broker-dealer under the Securities
Exchange Act of 1934 and a Registered Investment Advisor with a national network
of independent financial representatives. These representatives are licensed to
sell securities through ICC, with the National Association of Securities Dealers
(the "NASD") and the Securities and Exchange Commission (the "SEC") acting as
the requisite federal and local regulatory agencies. The Company clears its
public customer accounts on a fully disclosed basis through a clearing broker.
EPA is a federally regulated Investment Advisor subject to the Securities and
Exchange Commission under the Investment Adviser's Act of 1940. The primary
activity of EPA is to provide portfolio and mutual fund management services to
both individual investors and institutional clients, such as banking
institutions, pension funds, endowments, and trusts on a fee basis. ICC
Insurance Agency, Inc. facilitates the sale of insurance and annuities by our
registered representatives. ICH Securities is a Massachusetts securities
corporation and was established in March 2005. ICH Securities primary activity
consists of acting as a holding company for the cash and cash equivalents and
interest and dividend income for ICH.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   The significant accounting policies of the Company are summarized below to
assist the reader to better understand the consolidated financial statements and
other data contained herein.

BASIS OF PRESENTATION:

   The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries, ICC, EPA, ICC Insurance Agency, Inc., and ICH
Securities. All significant inter-company items and transactions have been
eliminated in the consolidation.

USE OF ESTIMATES AND ASSUMPTIONS:

   The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, and disclosure of contingent assets and liabilities, if
any, at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

RECLASSIFICATIONS:

   Certain amounts in 2003 and 2004 were reclassified to provide comparison with
2005 classifications. Included in these reclassifications, were amounts of
marketing and interest and dividend income all of which, either individually or
in the aggregate, had no impact on previously reported net income and retained
earnings.

                                    Page 35

<PAGE>

                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                    Years Ended March 31, 2005, 2004 and 2003

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

REVENUE RECOGNITION:

   The Company has established revenue recognition policies for each of the
following income item areas: Mutual Funds/Variable Annuities, Marketing Revenue
on production and for regional and national events, Administration fees on
Errors and Omissions ("E&O") and Renewals, Advisory Fees and Trading Revenue. A
description of the revenue recognition process related to each category is
presented below. The revenue recognition policy the Company maintains is in
compliance with SEC Staff Accounting Bulletin ("SAB") 104 "Revenue Recognition
in Financial Statements".

   Mutual Funds/Variable Annuities

   The Mutual Funds/Variable Annuity revenue is recognized upon receipt of
commissions related to the sale. The earnings process is substantially
complete at the point that the respective fund company distributes payment to
the Company.

   The Company records a receivable for Mutual Funds/Variable Annuity revenue to
properly capture the commission amounts that are due the brokerage firm but not
yet received. Additionally, a receivable for Mutual Funds/Variable Annuity
revenue is recorded to properly account for and capture amounts related to
commissions due the brokerage firm at the end of each period.

   Trading

   Revenue from trading activities is recognized in accordance with the
agreement between the clearing firm and the Company. The Company earns
commissions through stock purchase and sale transactions, mutual fund purchases,
government and corporate bonds transactions, fee based managed accounts, and
through ticket charges. The Company also earns revenue in the form of 12b1 fees
and interest on account balances. The earnings process is complete at the time
the transactions are settled in accordance with the rules of the NASD and the
Securities and Exchange Commissions ("SEC").

   The Company also receives credit adjustments for clearing charge adjustments
that are netted against any clearing charges the Company may incur for the
period. These adjustments are recognized as income in the period received unless
otherwise noted by the clearing firm.

   Unrealized gains and losses are recorded at the time that the Company
reconciles its trading positions with the market value. The unrealized gains or
losses are adjusted to market until the position is settled or the trade is
cancelled.

   Advisory Fees

   Advisory fee income is recorded quarterly based on the amount of
money-managed during the period. The amounts billed are based on the agreement
between the advisor and the client. Any uncollected advisory fees billed on
these managed accounts are charges against earnings in the subsequent quarter.

                                    Page 36

<PAGE>

                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                    Years Ended March 31, 2005, 2004 and 2003

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

   Revenue is earned based on fees billed for assets managed during the period.
The revenue related to accounts billed in arrears is recognized at the end of
the period in which the account was active.

   Other Advisory fees are recorded based on the average daily net assets of our
mutual funds as disclosed under the Advisory Agreement in the prospectuses.
These fees are recognized monthly based on the fund's administrative fee report
which reports the amounts that are earned for the period. The Company can elect
and has elected to waive certain fees to allow for the fund to maintain its
ceiling on administrative expenses. Based on the agreement, the waived fees have
a three-year recovery period. At the end of the recovery period, these fees are
charged against earnings if uncollected.

Administration Fees

   Administration fees on renewals and E&O insurance are recognized as revenue
upon registration of the representative with National Association of Security
Dealers (NASD) and listing of the registered representative with the E&O
insurance carrier. The funds received from the registered representative are
initially recorded as unearned revenue. The amounts, if any, collected in excess
of the E & O insurance premium and/or fees due NASD are recognized as
revenue.

Marketing Revenue

   Revenue from marketing associated with product sales is recognized quarterly
based on production levels. Marketing event revenues are recognized at the
commencement of the event offset by its costs.

CASH AND CASH EQUIVALENTS:

   For purposes of reporting cash flow, cash and cash equivalents includes cash
in checking and savings accounts, cash at a clearing broker-dealer and
short-term investments with original maturities of 90 days or less.

CUSTOMER ACCOUNTS:

   The Company's customer accounts are reported by the various custodians on a
fully disclosed basis.

FINANCIAL INSTRUMENTS:

   The financial instruments of the Company are reported in the consolidated
balance sheets at market or fair value, or at carrying amounts that approximate
fair value because of the short maturity of the instruments, except loans
receivable. The fair value for loans receivable are estimated using discounted
cash flow analyses, using interest rates currently being offered for loans with
similar terms to borrowers of similar credit quality.

                                    Page 37

<PAGE>

                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                    Years Ended March 31, 2005, 2004 and 2003

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

MARKETABLE SECURITIES:

   The Company accounts for its investments in accordance with Statement of
Financial Accounting Standards (SFAS) No. 115, "Accounting for certain
investments in debt and equity securities". SFAS No. 115 requires companies to
classify their short-term investments as trading, available-for-sale, or
held-to-maturity. The Company's marketable securities consist of fixed income
instruments and mutual funds and have been classified by management as trading.
Accordingly, realized and unrealized gains and losses at year-end are included
in the earnings of the Company. The fair market value of these securities was
determined based on quoted market prices.

   The Company conducts its principal trading through two designated trading
accounts. One of these accounts is used to facilitate fixed income trading on a
same day buy-sell basis. The second account is used to facilitate fixed income
trading for representatives and may carry positions overnight. These securities
are normally held in the account for no longer than 30 days and are recorded at
fair market value.

PROPERTY AND EQUIPMENT:

   Furniture, equipment and leasehold improvements are stated at cost.
Maintenance and repairs are charged to operations as incurred. Depreciation is
provided utilizing the straight-line method over the shorter of either their
estimated useful lives or lease term, if applicable. For software and equipment
we use a 5-year straight-line method and for furniture and fixtures we use a
7-year straight-line method.

ADVERTISING:

   The Company expenses all promotional costs as incurred.

INCOME TAXES:

   The Company accounts for income taxes under provisions of Statement of
Financial Accounting Standards ("SFAS") SFAS No. 109, "accounting for income
taxes", which uses the asset and liability method. Deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of the existing
assets and liabilities and their respective tax bases and operating loss
carryforwards. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which the
temporary differences are expected to be realized or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date. Valuation allowances are
established when necessary to reduce deferred tax assets to the amount expected
to be realized. The Company management has not recorded a valuation allowance
against the deferred tax assets as management believes it is more likely than
not that they will be realized.

EARNINGS PER SHARE:

   The Company reports net income per share in accordance with the SFAS No. 128,
"earnings per share". Diluted earnings per share do not include the effect of
stock options as it has an antidilutive

                                    Page 38

<PAGE>


                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                    Years Ended March 31, 2005, 2004 and 2003

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

effect on EPS (See Note 16). In accordance with SFAS No. 128, basic and diluted
net income per common share was determined by dividing net income by the
weighted average number of common shares outstanding during the period.

STOCK BASED COMPENSATION:

   The Company applies Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees" and related interpretations in accounting for its
stock option plans. The following table illustrates the effect on net income
(loss) had the Company adopted the fair value based model of accounting for
stock-based employee compensation for all periods presented:

<TABLE>

                                                   2005            2004            2003
                                               --------------  -------------- ---------------

<S>                                                 <C>             <C>             <C>
          Net income (loss), as reported            $619,109        $790,413        $115,891
                                               --------------  -------------- ---------------
          Deduct:  Total stock-based
            employee compensation
            expense determined under
            fair value based method for
            all awards, net of related
            tax effects                                   --          (9,903)        (13,458)
                                               --------------  -------------- ---------------

                                               --------------  -------------- ---------------
          Pro forma net income                      $619,109        $780,510        $102,433
                                               --------------  -------------- ---------------

                                               --------------  -------------- ---------------
          Earnings per share:
                                               --------------  -------------- ---------------
            Basic - as reported                         $.11           $0.14           $0.02
                                               --------------  -------------- ---------------
            Basic - pro forma                           $.11           $0.14           $0.02
                                               --------------  -------------- ---------------
            Diluted - as reported                       $.10           $0.14           $0.02
                                               --------------  -------------- ---------------
            Diluted - pro forma                         $.10           $0.14           $0.02
                                               --------------  -------------- ---------------
</TABLE>

   There was no expense that would have been reported for stock- based employee
compensation for the year ended March 31, 2005 had we adopted SFAS 123. This
calculation was based on the Black Scholes method for valuing options under a
graded vested period of five years.

SEGMENT REPORTING:

   The Company makes disclosures about products and services, geographic areas,
and major customers in accordance with SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information."

RECENTLY ISSUED ACCOUNTING STANDARDS:


   In December 2004, the Financial Accounting Standards Board issued SFAS No.
123R, "Share-Based Payment" (SFAS 123R). This Statement is a revision of SFAS
123 and supersedes APB 25 and its related implementation guidance. SFAS 123R
requires a company to measure the grant-date fair value of equity awards given
to employees in exchange for services and recognize that cost over the period
that such services are performed. SFAS 123R is effective for the first interim
or annual reporting period that begins after December 15, 2005.

                                    Page 39

<PAGE>

                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                    Years Ended March 31, 2005, 2004 and 2003

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

   The Company is currently evaluating the two methods of adoption allowed by
SFAS 123R: the modified-prospective transition method and the
modified-retrospective transition method. Adoption of SFAS 123R may materially
increase stock compensation expense and decrease net income. In addition, SFAS
123R requires that the excess tax benefits related to stock compensation be
reported as a cash inflow from financing activities rather than as a reduction
of taxes paid in cash from operations. The Company is currently evaluating
whether the impact of SFAS 123R will have a material effect on net income.

   In January 2003, the FASB issued FASB Interpretation No. 46, "Consolidation
of Variable Interest Entities" ("FIN 46"), an interpretation of Accounting
Research Bulletin No. 51, "Consolidated Financial Statements", which requires
the consolidation by a business enterprise of variable interest entities if the
business enterprise is the primary beneficiary. FIN 46 was effective January 31,
2003, for the Company with respect to interests in variable interest entities
obtained after that date. With respect to interests in variable interest
entities existing prior to February 1, 2003, the FASB issued FASB Interpretation
No. 46 (revised December 2003) ("FIN 46R"), which extended the effective date to
the period ended May 31, 2004. Management has determined that the Company does
not have any interests that qualify as a variable interest entity.

ACCOUNT RECEIVABLE-ALLOWANCE FOR DOUBTFUL ACCOUNTS:

   Our policy for determining whether a receivable is considered uncollectible
are as follows.

   Loans to representatives: In accordance with SFAS No. 5, we perform periodic
credit evaluations and provide allowance based on our assessment of specifically
identified unsecured receivables and other factors, including the
representative's payment history. Once it is determined that it is both probable
that the loan has been impaired and the amount of loss can reasonably be
estimated, then the loan balance is classified an uncollectible and written off.

   Advisory Fees from our Mutual Funds: As disclosed in the respective mutual
funds' prospectuses, the Company attempts to recoup all waived advisory service
fees within a three year period. If management believes that the likelihood of
collecting that receivable within the three year period is doubtful, then the
Company provides for an allowance in accordance with SFAS No. 5. Determinations
whether to write off such fees are made annually.

   On Trade receivables: As prescribed by the SEC, trade receivables usually
settle within three days. If a trade error results, then the Company will
pursue remedies to collect on that trade error. We do not record a receivable
resulting from a trade error that is in litigation or whose outcome is otherwise
not reasonably determinable. In such a case, we apply any proceeds from
settlements or insurance against any trade losses incurred.

NOTE 3 - NET CAPITAL

   The Company's wholly owned subsidiary, ICC, is subject to the SEC's
regulations and operating guidelines, which require ICC to maintain a specified
amount of net capital, as defined, and a ratio of aggregate indebtedness to net
capital, as defined, not exceeding 15 to 1.

                                    Page 40

<PAGE>

                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                    Years Ended March 31, 2005, 2004 and 2003

NOTE 3 - NET CAPITAL (Continued)

   ICC's net capital as computed under SEC Uniform Net Capital Rule (Rule
15c3-1) was $1,692,787 at March 31, 2005, which resulted in excess net capital
of $1,418,238 over the required net capital of $274,549. The ratio of aggregate
indebtedness to capital at March 31, 2005 was 2.43 to 1. ICC's net capital as
computed under 15c3-1 was $1,778,941 at March 31, 2004, which resulted in excess
net capital of $1,497,286 over the required net capital of $281,655. The ratio
of aggregate indebtedness to capital at March 31, 2004 was 2.38 to 1.

NOTE 4 - SECURITIES OWNED AND SOLD, NOT YET PURCHASED

   Securities owned and sold, not yet purchased, consist of available-for-sale
securities and investment securities at market values.

   The carrying amount of investment securities at market values are as follows:

                                            March 31, 2005
                                            --------------
                                                       Sold, Not Yet
                                        Owned            Purchased
                                        -----          -------------
   Corporate equity                    $132,964           $291,124
   Unit investment trust                  7,287             36,781
   Municipal bonds                      107,317
   Mortgage backed securities            54,143
   Mutual funds                          28,669
                                       --------           --------

                                       $330,380           $327,905
                                       ========           ========


                                               March 31, 2004
                                               --------------

                                                       Sold, Not Yet
                                        Owned            Purchased
                                        -----          -------------

    Corporate equity                   $ 17,422           $ 90,042
                                       ========           ========


NOTE 5 - OTHER INVESTMENTS

    Securities not readily marketable include investment securities (a) for
which there is no market on a securities exchange or no independent publicly
quoted market, (b) that cannot be publicly offered or sold unless registration
has been effected under the Securities Act of 1933, or (c) that cannot be
offered or sold because of other arrangements, restrictions, or conditions
applicable to the securities or to the Company. At March 31, 2005 and 2004, the
Company recorded its private equity holdings at cost of $40,000 for the

                                    Page 41

<PAGE>

                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                    Years Ended March 31, 2005, 2004 and 2003

NOTE 5 - OTHER INVESTMENTS (Continued)

respective periods, in accordance with Accounting Principles Board No. 18 "The
Equity Method of Accounting for Investments in Common Stock" (APB 18) as the
Company does not exercise significant influence over this equity investment.

NOTE 6 - INVESTMENT

   As of March 31, 2005, the Company owned 2.4% ownership of The Eastern Point
Advisors Capital Appreciation Fund, which had a fair market value of $84,403.
Company ownership of the Capital Appreciation Fund at March 31, 2004 was 1.4%
with a fair market value of $85,820. During October 2004, the Company purchased
approximately 5,484 shares of the Eastern Point Advisors Rising Dividend Fund.
As of March 31, 2005, the Company held 0.2% ownership in this mutual fund, which
had a fair market value of $58,413.

NOTE 7 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND CONCENTRATIONS OF
         CREDIT RISK

   The Company is engaged in various trading and brokerage activities whose
counterparties primarily include the general public. In the event counterparties
do not fulfill their obligations, the Company may be exposed to risk. Securities
sold, but not yet purchased, represent obligations of the Company to purchase
the security in the market at the prevailing prices to the extent that the
Company does not already have the securities in possession. Accordingly, these
transactions result in off-balance sheet risk when the Company's satisfaction of
the obligations exceeds the amount recognized in the balance sheet. The risk of
default depends on the creditworthiness of the counterparty of issuer of the
instrument. It is the Company's policy to review, as necessary, the credit
standings of each counterparty with which it conducts business. Commissions
receivables from one source were 27% and 49% of total receivables for the years
ended March 31, 2005 and 2004, respectively.

   At March 31, 2005, the carrying amount of the Company's cash and cash
equivalents was $8,618,261. Of the bank statement balance, $100,000 was covered
by federal depository insurance and $6,610,915 was covered by the Depositors
Insurance Fund of Massachusetts. The Company's cash and cash equivalents as of
March 31, 2005 also include $2,314,545 at its clearing broker-dealer of which
$500,000 is fully insured by the Securities Investor Protection Corporation
(SIPC). At March 31, 2004, the carrying amount of the Company's cash and cash
equivalents, including a time deposit, was $8,112,567 and the bank statement
balance was $7,909,854. Of the bank statement balance, $100,000 was covered by
federal depository insurance and $7,809,854 was covered by the Depositors
Insurance Fund of Massachusetts. The Company's deposits at March 31, 2004 also
included $1,578,480 at its clearing broker-dealer of which $500,000 was fully
insured by the SIPC.

NOTE 8 - TRANSACTIONS WITH RELATED PARTIES

   ICH has arrangements with several related parties pertaining to a variety of
transactions. These transactions are incurred in the normal course of business
and are fully arms-length in nature.

                                    Page 42

<PAGE>


                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                    Years Ended March 31, 2005, 2004 and 2003

NOTE 8 - TRANSACTIONS WITH RELATED PARTIES (Continued)

   ICH was paid management fees of $1,324,733 and $1,315,306 for the years ended
March 31, 2005 and 2004, respectively, from its subsidiaries ICC and EPA. During
fiscal year 2004, the management fees were allocated from ICH to ICC based on a
70% allocation of direct operating expenses and a 30% allocation to EPA. During
fiscal year 2005, an updated time study was prepared which, based on information
provided, resulted in an allocation of 90% of direct operating expenses for ICC
and a 10% allocation for EPA. At March 31, 2005, ICH was owed $99,098 and
$351,770, respectively, from ICC and EPA. At March 31, 2004, ICH was owed
$423,268 and $17,156, respectively, from ICC and EPA.

   The Company leases office space from the Arlsburg Trust, the trustee of whom
is the principal stockholder of the Company, and Investors Realty, LLC, the
principal member of whom is the principal stockholder of the Company. Rent
expense for these leases amounted to $225,671, $192,423 and $175,799, for the
years ending March 31, 2005, 2004 and 2003, respectively.

   Two former members of the Board of Directors were also registered
representatives and received compensation related to commissions or consulting
fees in the years ending March 31, 2005, 2004 and 2003 of $117,292, $176,652 and
$186,418, respectively.

   Loans Receivable From Registered Representatives consist of promissory notes
which bear interest at the rate of 3.94% per annum and are payable within 18 or
24 months of the date of the note in weekly installments. The notes are secured
by various pledges of brokerage accounts and/or personal assets of the
registered representatives. As of March 31, 2003 these loans amounted to
$95,389, of which $18,141 of these loans was to a registered representative who
is also a director of the Company. As of March 31, 2005 and 2004 these loans
amounted to $251,145 and $69,306, respectively.

   The Company had previously recorded a receivable for funds it was owed from
senior executives. As of March 31, 2004 and 2003 the balances owed amounted to
$48,393 and $64,400, respectively. As of March 31, 2005, the loans had been paid
in full.

   Investors Marketing Services, Inc. is jointly owned by the Company's
principal stockholder and his spouse. This entity performs a fulfillment
function for subsidiaries of the Company by preparing, collating and mailing
registration kits to registered representatives, and creates graphics and other
art work for various marketing materials produced for these subsidiaries. It
also prepares the assembly, shipping and postage of literature pertaining to the
subsidiaries. For the years ended March 31, 2005, 2004 and 2003, the cost paid
for these services was $33,723, $60,038, and $60,130, respectively.

   Accounts receivable at March 31, 2005 and 2004 include amounts due to EPA
from the Eastern Point Advisors Capital Appreciation Fund (the "Fund") of
$102,483 and $75,938, respectively. As compensation for services that EPA
performs on behalf of the Fund, EPA receives a monthly investment advisory fee
calculated at the annual rate of 1.5% of the Fund's exercised daily net assets.
EPA has voluntarily agreed to waive its advisory fees or reimburse other Fund
expenses so that the Fund's annual operating expenses will not exceed 5.00% for
Class A shares and 5.75% for Class C shares, of the average daily net assets of
the respective class. The waiver may be terminated by EPA at any time. EPA has
three years to recoup any expenses it pays for on behalf of the Fund; otherwise
the receivable relating to the current fiscal year in which it is deemed
unrecoverable is charged against earnings by EPA. On

                                    Page 43

<PAGE>

                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                    Years Ended March 31, 2005, 2004 and 2003

NOTE 8 - TRANSACTIONS WITH RELATED PARTIES (Continued)

November 1, 2004, the Fund had modified the ceiling on its annual operating
expenses from 5.00% to 2.5% on Class A shares and to 3.25% from 5.75% on its
class C shares.

    In addition, The Eastern Point Advisors Rising Dividend Growth Fund
("ICRDX") owed EPA $158,029 as of March 31, 2005 for reimbursement of expenses
(not to exceed 1.65% for Class A shares and 2.75% for class C shares).
Additionally, both funds owe EPA for legal fees incurred on each of their behalf
throughout the current fiscal year in the amount of $97,538.

   As disclosed in the Eastern Point Advisors Funds Trust prospectus, we have
three years to recoup any payments that we may advance on behalf of the funds.
During the fiscal years ended March 31, 2005, 2004 and 2003, receivables
resulting from such advances were determined to be uncollectable within the
three year recovery period as follows:

         March 31, 2005            March 31, 2004          March 31, 2003
             $46,336                   $54,929                  --

   The $46,336 was written of at March 31, 2005 as management concluded that
this receivable was not going to be collected at the end of the recovery period
ending September 30, 2005. On September 30, 2003, $54,929 was written off as the
recovery period had expired.

  See "Note 2 - Summary of Significant Accounting Policies - Account Receivable
Allowance for Doubtful Accounts" and "Item 7 -Management's Discussion and
Analysis of Financial Condition and Results of Operations - Receivable From Our
Mutual Funds" for further information regarding our accounting for doubtful
accounts receivable.


                          The Capital Appreciation Fund
                          -----------------------------

         2005            2004       Reimbursable Fund
        Amount          Amount          Year End        Expiration Date
        ------          ------          --------        ----------------


      $     --        $ 60,969            2002          September 30, 2005
        17,786              --            2003          September 30, 2006
            --              --            2004          September 30, 2007
        84,697              --            2005          September 30, 2008
       -------        --------

      $102,483        $ 60,969
      ========        ========

                                    Page 44

<PAGE>


                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                    Years Ended March 31, 2005, 2004 and 2003

NOTE 8 - TRANSACTIONS WITH RELATED PARTIES (Continued)

                         The Rising Dividend Growth Fund
                         -------------------------------

       2005            2004          Reimbursable Fund
      Amount          Amount              Year End         Expiration Date
      ------          ------              --------         ----------------


    $ 38,057               --               2004           September 30, 2007
     119,972               --               2005           September 30, 2008
   ---------        ---------

    $158,029           $   --
   =========        =========

   The 2003 Reimbursable Fund Year End amount outstanding of $17,786 for The
Capital Appreciation Fund consists of waived advisory fees that management
believes are recoverable as of March 31, 2005.

NOTE 9 - PROPERTY AND EQUIPMENT, NET

   Property and equipment consisted of the following at March 31:

                                                     2005              2004
                                                     ----              ----

Equipment                                          $617,816          $636,178
Furniture and fixtures                              283,896           242,420
Leasehold improvements                              253,998           198,868
                                                  ----------        ---------
                                                  1,155,710         1,077,466
 Accumulated depreciation and amortization         (584,512)         (574,150)
                                                  ----------        ---------

         Property and equipment, net               $571,198          $503,316
                                                  ==========        =========

NOTE 10 - NOTES PAYABLE

   At March 31, 2005, 2004 and 2003 notes payable consisted of debt to finance
insurance premiums. The annual rate of interest on the outstanding loan, which
matures on July 15, 2005, was 6% at March 31, 2005, 2004 and 2003.

NOTE 11 - NATIONAL ASSOCIATION OF SECURITIES DEALERS SETTLEMENT

   Subsequent to a National Association of Securities Dealers ("NASD")
examination, the NASD, on April 9, 2003, accepted a Letter of Acceptance, Waiver
and Consent ("AWC") submitted by the Company, in which the Company agreed to be
censured and fined $250,000. Without admitting or denying the alleged
violations, the Company agreed to the findings by NASD that certain supervisory
deficiencies existed between January 2000 and July 2002. The acceptance of the
AWC concludes the matter. As a result, the Company recorded a $250,000 three
year note payable (7% interest rate) and related expense for the

                                    Page 45

<PAGE>

                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                    Years Ended March 31, 2005, 2004 and 2003

NOTE 11 - NATIONAL ASSOCIATION OF SECURITIES DEALERS SETTLEMENT (Continued)

NASD fine in its financial statements for the year ending March 31, 2003. At
March 31, 2004 and 2005, the outstanding balance on this note was $148,679 and
$0, respectively. The note was fully paid on August 19, 2004.

NOTE 12 - INCOME TAXES

   The provision (benefit) for income taxes is as follows for the years ended
March 31:

                                          2005           2004            2003
Current:

   Federal                             $335,333       $ 535,555       $ 71,420
   State                                103,531         165,788         50,409
                                       ---------      ----------      --------

                                        438,864         701,343        121,829
                                       ---------      ----------      --------
Deferred:

   Federal                            $(129,766)      $ (82,740)      $ 45,373
   State                                (40,065)         (8,685)        10,469
   Increase in valuation allowance           --              --          4,120
                                      ----------      ----------      --------

                                       (169,831)        (91,425)        59,962
                                      ----------      ----------      --------

   Total income taxes                 $ 269,033       $ 609,918       $181,791
                                      ==========      ==========      ========

   Deferred income taxes are the result of timing differences between book and
taxable income and consist primarily of net operating loss carryforwards,
unrealized gains, mutual fund start up costs and differences between
depreciation expense for financial statement purposes versus tax return
purposes.

   Net deferred tax assets (liabilities) within each tax jurisdiction consisted
of the following at:

                                            March 31, 2005
                              Asset            Liability            Net
                              -----            ---------            ---

Federal                     $162,197          $ (35,998)         $126,199
State                         29,911             (6,639)           23,272
                             --------------------------------------------

   Total                    $192,108          $ (42,637)         $149,471
                            ========          =========          ========

                                    Page 46

<PAGE>

                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                    Years Ended March 31, 2005, 2004 and 2003

NOTE 12 - INCOME TAXES (Continued)

                                             March 31, 2004
                             Asset            Liability            Net
                             -----            ---------            ---
Federal                     $106,361          $ 43,264          $ 63,097
State                         11,165             4,541             6,624
                            --------          --------          --------

   Total                    $117,526          $ 47,805          $ 69,721
                            ========          ========          ========


   The following is a summary of the significant components of the Company's
deferred tax assets and liabilities:

                                                    Year ended March 31
                                             --------------------------------
                                                  2005             2004
                                             ---------------  ---------------
                                                     (In thousands)
     Deferred tax assets (liabilities):
        Mutual Fund Start Up Costs             $    24,002    $       21,295
        Deferred compensation                      168,106            96,231
        Unrealized gain                           (10,806)                --

        Depreciation and other                    (31,831)           (47,805)
                                               ------------   ---------------
     Total deferred tax assets                 $   149,471    $       69,721
                                               ============   ===============

   The total income tax provision (benefit) differs from the income tax at the
statutory federal income tax rate due to the following:

                                                    Year Ended March 31,
                                           2005           2004           2003
                                           ----           ----           -----

Tax at U.S. statutory rate              $357,770        $471,876      $101,212
State taxes, net of federal benefit           --          95,009        40,179
Unallowable expenses                     (88,737)         16,429        36,280
Change in valuation allowance                             26,604         4,120
                                        ---------       ---------     ---------

   Provision for income taxes            $269,033       $609,918      $181,791
                                        =========       =========     =========

                                    Page 47

<PAGE>


                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                    Years Ended March 31, 2005, 2004 and 2003

NOTE 13 - SEGMENT INFORMATION

   The accounting policies of the segments are described in the summary of
significant accounting policies. The Company evaluates performance based on
profit and loss from operations after income taxes.

   The Company accounts for intersegment services and transfers as if the
services or transfers were to third parties, that is, at current market prices.
The Company's reportable segments are strategic business units that offer
different services. They are managed separately because each business requires
different technology and marketing strategies.

   The Company's reportable segments include investment services offered through
ICC and asset management services offered through EPA. The investment services
segment includes securities, insurance, financial planning and related services.
ICH incurs expenses on behalf of and to support ICC and EPA. ICC earns
commissions as a broker for its customers in the purchase and sale of securities
on major exchanges. Asset management services generate recurring annual revenue
from fees received on the management of customer accounts. EPA provides asset
management and portfolio design services to one mutual fund and a variety of
investors.

   Segment data presented includes the allocation of all corporate overhead to
each segment. Intersegment revenues and expenses, and receivables and payables,
are eliminated between segments. Currently it is impractical to report segment
information using geographical concentration.

   Assets are allocated among ICH and its subsidiaries based upon legal
ownership. Total year-end assets are in this Note 13 on a standalone basis,
i.e., without inter-company eliminations. Corporate items and eliminations
consist are presented for purposes of reconciling the standalone asset amounts
to total consolidated assets.

<TABLE>
                                                             Years Ended
                                              2005             2004            2003
                                        ----------------- --------------- ---------------

<S>                                          <C>              <C>               <C>
Inter-company eliminations -                 $(1,779,540)     (1,370,852)       (766,594)
Classification items (stand alone)                    --              --          (3,752)
Deferred income taxes-                           (31,830)        (47,804)        (26,619)
Income Taxes-                                   (491,664)             --           60112
                                        ----------------- --------------- ---------------

Total Corporate items and eliminations       $(2,303,034)     (1,418,656)       (736,853)
</TABLE>

  During the year ended March 31, 2004, management changed its approach in
identifying reportable segments. Management concluded that its reportable
segments are to be shown on a stand alone basis, in accordance with SFAS No.
131, "Disclosures about Segments of an Enterprise and Related Information",
("SFAS 131"). Specifically, as ICH does not generate operating revenue, other
than interest income, and does not meet the quantitative tests under SFAS 131,
management concludes that ICH does not meet the definition of a reportable
segment. Previously reported segment information has been restated to reflect
the new presentation and to preserve the comparability between years.

                                    Page 48

<PAGE>

                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                    Years Ended March 31, 2005, 2004 and 2003

NOTE 13 - SEGMENT INFORMATION (Continued)

Segment reporting is as follows:

<TABLE>

                                                2005          2004           2003
                                             ------------ ------------- ---------------
<S>                                          <C>           <C>             <C>
Non-interest revenues:


   ICC, investment services                  $52,552,053   $46,093,464     $32,121,316
   EPA, asset management services              2,200,391     2,529,367       2,377,576
   ICH investments gain (loss)                    12,763        21,324         (12,913)
                                             ------------ ------------- ---------------

     Total                                   $54,765,207   $48,644,155     $34,485,979
                                             ============ ============= ===============


Revenues from transactions with other
 operating segments:

   ICC                                        $1,196,277      $920,714        $625,969
   EPA                                           128,456       394,592         268,273
                                             ------------ ------------- ---------------

     Total                                    $1,324,733    $1,315,306        $894,242
                                             ============ ============= ===============


Interest and dividend income, net:

   ICC                                          $237,125      $177,090        $159,787
   ICH                                           151,612       142,829         151,281
   ICH Securities                                 11,590            --              --
                                             ------------ ------------- ---------------

     Total                                      $400,327      $319,919        $311,068
                                             ============ ============= ===============


Depreciation and amortization expense:
   ICC                                          $163,317      $131,055        $134,668
   EPA                                             8,835         7,037           6,286
                                             ------------ ------------- ---------------

     Total                                      $172,152      $138,092        $140,954
                                             ============ ============= ===============


Income tax provision (benefit):
   ICC                                          $517,202      $892,296        $269,812
   EPA                                          (265,959)     (292,864)       (150,682)
   ICH                                            17,790        10,486          62,661
                                             ------------ ------------- ---------------

     Total                                      $269,033      $609,918        $181,791
                                             ============ ============= ===============

</TABLE>

                                    Page 49

<PAGE>

                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                    Years Ended March 31, 2005, 2004 and 2003


<TABLE>

NOTE 13 - SEGMENT INFORMATION (Continued)

Income (loss):

<S>                                          <C>            <C>                 <C>
   ICC                                       $858,451       $1,293,437          $291,811
   EPA                                       (397,516)        (434,437)         (224,818)
   ICH                                        146,584          (68,587)           48,898
   ICH Securities                              11,590               --                --
                                    ------------------ ---------------- -----------------

     Total                                   $619,109         $790,413          $115,891
                                    ================== ================ =================


Year-end total assets:
   ICC                                     $9,465,238       $8,256,043        $5,219,053
   EPA                                        734,584          493,990           605,913
   ICH                                      1,459,207        6,057,502         5,554,827
   ICH Securities                           4,753,643
   Corporate items and eliminations        (2,303,034)      (1,418,656)         (736,853)
                                    ------------------ ---------------- -----------------

     Total                                $14,109,638      $13,388,879       $10,642,940
                                    ================== ================ =================
</TABLE>

NOTE 14 - COMMITMENTS AND CONTINGENCIES

   The Company is obligated under various lease agreements covering offices and
equipment. These agreements are considered to be operating leases in accordance
with the requirements under FASB 13 "Accounting for Leases". The terms of the
leases expire between fiscal year 2005 and 2008. Options to renew for additional
terms are included under the lease agreements. The total minimum rental due in
future periods under these existing agreements is as follows as of March 31,
2005:

                  Year ending March 31, 2005                       $316,796
                  Year ending March 31, 2006                        320,130
                  Year ending March 31, 2007                        243,639
                  Year ending March 31, 2008                        175,799
                                                                  ---------

                      Total minimum lease payments               $1,056,364
                                                                 ==========

   Certain leases contain provisions for escalation of minimum lease payments
contingent upon increases in real estate taxes. The total lease expense amounted
to $382,809 for fiscal year 2005, $322,846 for fiscal year 2004 and $233,397 for
fiscal year 2003. The related party lease amount to Arlsburg Trust was $225,671
for fiscal year 2005.

                                    Page 50

<PAGE>

                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                    Years Ended March 31, 2005, 2004 and 2003

NOTE 15 - LITIGATION

   The Company is involved with various judicial, regulatory, and arbitration
proceedings concerning matters arising in connection with the conduct of its
business. At March 31, 2005 and 2004, the Company was the co-defendant in
several lawsuits with claims of approximately $3.3 million and $2.5 million,
respectively. Management believes, based on currently available information,
that the results of such proceedings, in the aggregate, will not have a material
adverse effect on the firm's financial condition. The Company has Errors and
Omissions ("E&O") insurance to protect itself from potential damages and/or
legal costs associated with the majority of the aforementioned lawsuits. The
maximum exposure in any one case with coverage is $75,000 and $100,000 per the
Company's E & O policy. In accordance with Financial Accounting Standards Board
("FASB") Statement No. 5, "ACCOUNTING FOR CONTINGENCIES", the Company had
accrued expenses of approximately $247,000 and $215,000 for the year ended March
31, 2005 and 2004, respectively, related to legal fees and estimated probable
settlement costs relating to the Company's defense in various lawsuits.

NOTE 16 - BENEFIT PLANS

   Stock Option Plans: As of September 1, 1994, the Company adopted a stock
option plan (the "1994 Plan") that provided for the granting of options to an
officer of the Company to purchase shares of the common stock of the Company.
Following a three for two stock split in 1997, a maximum of 150,000 shares of
common stock were issuable under the 1994 Plan. The number of options and grant
date were determined at the discretion of the Company's Board of Directors (the
"Board"). Options outstanding under the 1994 Plan are fully exercisable and have
no stated expiration.

   As of October 1, 1997, the Board of Directors adopted the 1996 Incentive
Stock Option Plan (the "1996 Plan"). Key employees, directors and the Company's
registered representatives are eligible to receive options and the aggregate
number of shares to be delivered under the 1996 Plan cannot exceed 300,000. Each
grant of options, the number of options granted and the vesting schedules of
such options subject thereto were determined by the Board. The stock options
outstanding are fully vested after two years from grant date, are exercisable
for an additional three years after vesting and, unless exercised, are forfeited
thirty days after termination.

   As of March 12, 2001, the Board of Directors adopted the 2001 Equity
Incentive Plan (the "2001 Plan"). Key employees, directors and the Company's
registered representatives are eligible to receive options to purchase shares of
the common stock of the Company and the aggregate number of shares to be
delivered under the 2001 Plan shall not exceed 250,000 shares. Each grant of
options, the number of options granted and the vesting schedules of such options
subject thereto shall be determined by the Board. The stock options outstanding
are fully vested after two years from grant date, are exercisable for an
additional three years after vesting and are forfeited ninety days after
termination.

   A summary of the status of the Company's employee and Directors' fixed stock
options as of March 31, 2005, 2004 and 2003 and changes during the years ending
on those dates is presented below:

                                    Page 51

<PAGE>

                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                    Years Ended March 31, 2005, 2004 and 2003

NOTE 16 - BENEFIT PLANS (Continued)

<TABLE>

                                                 2005                       2004                        2003
                                       ------------------------- --------------------------- ---------------------------
                                              Weighted-Average        Weighted-Average            Weighted-Average
                                         Shares   Exercise Price  Shares    Exercise Price     Shares    Exercise Price
                                       ---------------------------------------------------------------------------------
Fixed Options


<S>                                      <C>               <C>    <C>                 <C>      <C>                <C>
Outstanding at beginning of year         199,923           2.45   207,709             $2.65    218,731            $2.82
Granted                                        -                        -                       10,000             1.91
Forfeited                                      -                   (7,453)             8.00    (21,022)            4.01
Exercised                                   (989)          1.91      (333)             1.91          -
                                       ---------- -------------- --------- ----------------- ---------- ----------------

Outstanding at end of year               198,934           2.46   199,923              2.45    207,709             2.65
                                       ========== ============== ========= ================= ========== ================


Options exercisable at year-end          192,934                  192,189                      197,709
Weighted-average fair value of
options granted during the year                               -                           -                       $0.88
</TABLE>

    The fair value of options granted to employees in 2005, 2004 and 2003 is
estimated on the date of grant using the Black-Scholes option-pricing model
based on the following assumptions:

                                      2005            2004           2003
                                      ----            ----           -----

Dividend yield                        0.10%              0%             0%
Volatility                              41%             44%            50%
Risk-free interest rate               3.86%           2.36%          2.78%
Expected life in years                2.75            3.75              5


   The following table summarizes information about employee and Directors'
fixed stock options outstanding as of March 31, 2005:

<TABLE>
                       Options Outstanding                              Options Exercisable
------------------------------------------------------------------ ------------------------------
Range of     Outstanding          Number          Weighted-Average  Exercisable       Number
  Exercise     Prices           Remaining        Weighted-Average                Weighted-Average
                            Contractual Life      Exercise Price                  Exercise Price
----------- ------------- --------------------- ------------------ ------------- ----------------



<S>  <C>         <C>                                        <C>         <C>                <C>
     $1.00       150,000     No Stated Maturity             $1.00       150,000            $1.00
      8.00        40,256                   .38               8.00        40,256             8.00
      1.91         8,678                  2.81               1.91         2,678             1.91
            -------------                                          -------------

                 198,934                .81 (1)              2.46       192,934             2.47
            =============                                          =============
</TABLE>

 (1) Includes only stock options with stated maturity. A summary of the status
of the Company's registered representatives' fixed stock options as of March 31,
2005, 2004 and 2003 and changes during the years ending on those dates is
presented below:

                                    Page 52

<PAGE>

                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                    Years Ended March 31, 2005, 2004 and 2003

NOTE 16 - BENEFIT PLANS (Continued)


<TABLE>
                                                2005                            2004                           2003
                                  -------------------------------- ------------------------------- ------------------------------

                                                  Weighted-Average                Weighted-Average             Weighted-Average
Fixed Options                          Share      Exercise Price       Shares     Exercise Price      Share      Exercise Price
-------------                     --------------- ---------------- -------------- ---------------- ----------- ------------------

<S>                                      <C>                 <C>         <C>                <C>       <C>                  <C>
Outstanding at beginning of year         352,895             5.43        296,022            $6.12     232,196              $7.72
Granted                                   49,509             4.55         93,901             3.50      86,483               2.00
Forfeited                                (17,501)            6.46        (37,028)            6.09     (22,657)              6.80
Exercised                                (12,761)            2.00             --                           --
                                  ---------------                  --------------                  -----------

Outstanding at end of year               372,142             5.42        352,895             5.43     296,022               6.12
                                  ===============                  ==============                  ===========


Options exercisable at year-end          240,125                                          186,595                        200,197
</TABLE>

    Stock-based compensation for grants to registered representatives amounted
to $97,841 for the year ended March 31, 2005, and was calculated using the
Black-Scholes option-pricing model as of March 31, 2005. The fair value per
share was $3.18 per the July 01, 2002 lot, $2.35 per the August 15, 2003 lot,
and $2.14 per the November 01,2004 lot. The fair value per share for grants
during the years ending March 31, 2003 and 2002, were $0.77 and $0.31,
respectively. The following assumptions were applied at March 31, 2005 to grants
for the years ending March 31:

<TABLE>
                                             2005                       2004          2003
                                             ----                       ----          ----
                                July 02    Aug 03   Nov 04      July 02   Aug 03

<S>                               <C>        <C>       <C>          <C>       <C>      <C>
Dividend yield                    .10%       .10%      .10%         0%        0%       0%
Volatility                         41%        41%       41%        44%       44%      53%
Risk-free interest rate          3.73%      3.90%     4.05%      1.94%      2.3%    2.36%
Expected life in years           2.25       3.38      4.58       3.25       4.38    4.25
</TABLE>


   The following table summarizes information about representatives' fixed stock
options outstanding as of March 31, 2005:

<TABLE>
                              Options Outstanding                                              Options Exercisable
------------------------------------------------------------------------     -------------------------------------------------
                                        Number          Weighted-Average                                  Number
     Range of          Outstanding     Remaining        Weighted-Average            Exercisable      Weighted-Average
Exercise Prices                     Contractual Life      Exercise Price                               Exercise Price
---------------                     ----------------      --------------                               --------------
<S>   <C>                <C>                 <C>               <C>                    <C>                  <C>
      $8.00              167,376             .49               $8.00                  167,376              $5.58
       3.90               10,000            1.16                3.90                   10,000                .16
       2.00               62,749            2.25                2.00                   62,749                .52
       3.50               83,583            3.38                3.50
       4.55               48,434            4.58                4.55
                        --------                                                     --------              -----

                         372,142            1.99                5.42                  240,125              $6.26
                        ========                                                     ========              =====
</TABLE>

                                    Page 53

               INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                   Years Ended March 31, 2005, 2004 and 2003

NOTE 16 - BENEFIT PLANS (Continued)

   Retirement Plans: The Company has a 401(k) retirement plan that allows
participation by all employees with at least three months of service.
Individuals employed on the plan's effective date did not have to satisfy the
service requirement. The Company's contribution was based on matching 100% of
the first 3% of the amount of elected salary deferral elected by each eligible
employee. Effective May 29, 2001 the Company's contribution was increased to
matching 100% of the first 6% of the amount of elected salary deferral, with
matching dollars to be in the form of the Company's common stock. The Company's
contribution expense for the years ended March 31, 2005, 2004 and 2003 were
$109,641, $92,373 , and $88,804, respectively.

   Deferred Compensation Plans: On March 20, 2001, at a special meeting of the
Board of Directors, the Board adopted a non-qualified deferred compensation plan
for the principal stockholder, President and Chief Executive Officer, Theodore
E. Charles effective April 1, 2001. Under the terms of this plan, which was
terminated in 2003, Mr. Charles could annually defer $100,000 of his salary in
return for the Company's unsecured promise to pay him a retirement benefit upon
his retirement on or after attaining age 60. The amount of this retirement
benefit was to be determined solely by the investment performance of the amount
deferred by Mr. Charles and invested by the Company, and was to be paid to Mr.
Charles, at his election, either in a lump sum or in installments over a period
of 10 years. Should Mr. Charles die prior to reaching retirement, his designated
beneficiary would receive a pre-retirement death benefit calculated in exactly
the same manner. This non-qualified deferred compensation plan was one in which
Mr. Charles was electing to defer current salary. There were no additional
corporate funds being contributed to the plan. In the year ending March 31, 2003
Mr. Charles elected to receive the entire deferred balance owed to him by the
Company in a lump sum in the amount of $192,105 and the plan was terminated.
There were no deferred compensation plans established for the fiscal year ended
March 31, 2004 or 2005.

NOTE 17 - EMPLOYMENT AGREEMENTS

   The Company entered into separate employment agreements with its President
and Chief Financial Officer. The employment agreements provide for continued
payments of specified compensation and benefits for specified benefits. The
employment agreements also provide for severance benefits if the President or
Chief Financial Officer resign for just cause, as defined in the employment
agreements, just cause including a significant decrease by the Board of
Directors of their duty or authority. Severance benefits include, among other
things, sixty months of base salary for the President and thirty-six months of
base salary for the Chief Financial Officer.

NOTE 18 - EARNINGS PER COMMON SHARE

   Basic earnings per share represents income available to common stockholders
divided by the weighted-average number of common shares outstanding during the
period. Diluted earnings per share reflects additional common shares that would
have been outstanding if dilutive potential common shares had been issued, as
well as any adjustment to income that would result from the assumed issuance.
Potential common shares that may be issued by the Company relate solely to
outstanding stock options, and are determined using the treasury stock method.
Options to purchase common stock totaling 207,632, 226,951, and 353,731 at March
31, 2005, 2004 and 2003, respectively, were not included in the computation of
diluted earnings per share as their effect would have been antidilutive.

                                    Page 54

<PAGE>


                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                    Years Ended March 31, 2005, 2004 and 2003

NOTE 19   UNAUDITED QUARTERLY RESULTS OF OPERATIONS

   The unaudited quarterly amounts may differ due to the reclassifications.
Refer to Note 2 -- Summary of Significant Accounting Policies.

<TABLE>

                                          June 30, 2004  September 30, 2004 December 31, 2004 March 31, 2005
                                          -------------- ------------------ ----------------- --------------

<S>                                         <C>                <C>               <C>            <C>
Revenues                                    $14,315,198        $12,440,188       $13,580,861    $14,829,287
Expenses                                     14,111,182         12,589,685        13,225,638     14,619,920
Net Income (Loss)                               204,016           (149,497)          355,223        209,367
Basic Earnings (Loss) per Share                     .04               (.03)              .06            .04
Dilute Earnings (Loss) per Share                    .03               (.03)              .06            .04


                                          June 30, 2003  September 30, 2003 December 31, 2003 March 31, 2004
                                          -------------- ------------------ ----------------- --------------

Revenues                                     $9,728,483        $11,451,716       $13,519,169    $14,264,706
Expenses                                      9,811,925         11,181,911        13,212,539     13,967,286
Net Income (Loss)                               (83,442)           269,805           306,630        297,420
Basic & Dilute Earnings (Loss) per Share           (.01)               .05               .05            .05
</TABLE>

NOTE 20 - TRADING ERROR

   In the financial statements for the year ended March 31, 2004, the Company
disclosed a trading error as a subsequent event. This error was the result of a
trade initiated by a Registered Representative during the normal course of
business on April 20, 2004. The potential impact disclosed was estimated to be a
$530,000 decrease to the statement of income. The Company pursued all remedies,
including insurance, recourse from the clearing firm and recovery from the
Registered Representative. The outcome of such remedies was $315,010. Therefore,
the net loss realized from the trade error was $214,337 which is included in
cost of sales for the year ended March 31, 2005.

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

   None.

ITEM 9A.  CONTROLS AND PROCEDURES.

   Based on an evaluation by our management in which they or persons performing
similar functions participated, our principal executive and financial officers
have concluded that reasonably effective controls and procedures were in place
as of the end of the period covered by this report to ensure that information
required to be disclosed in our reports filed under the Securities Exchange Act
of 1934 is recorded, processed, summarized and reported within the time periods
specified in the rules and forms of the Securities and Exchange Commission.

                                    Page 55

<PAGE>


ITEM 9B.  OTHER INFORMATION.

   In our Report on Form 8-K filed on June 14, 2005, we reported that Robert
Martin was elected as a director of ICH effective June 10, 2005. Although the
action to elect Mr. Martin as a director was taken effective June 10, 2005, he
will not commence serving as a director of ICH until July 28, 2005.


                                    PART III

Incorporated by Reference

   The information called for by Item 10 -- "Directors and Executive Officers of
the Registrant", Item 11 -- "Executive Compensation", Item 12 -- "Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters" and Item 13 -- "Certain Relationships and Related Transactions" is
incorporated herein by this reference to the Company's definitive proxy
statement for its 2005 annual meeting of stockholders, which definitive proxy
statement is expected to be filed with the Commission not later than 120 days
after the end of the fiscal year to which this report relates.

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Audit Fees

   The aggregate fees billed for fiscal years ended March 31, 2005 and 2004 for
professional services rendered by the Company's principal accountants for the
audit of the Company's annual financial statements for those fiscal years
totaled $79,309 and $40,994, respectively.

Audit-Related Fees

   The aggregate fees billed in fiscal years ended March 31, 2005 and 2004 for
assurance and related services by the Company's principal accountant that are
reasonably related to the performance of the auditor review of the Company's
financial statements totaled $34,998 and $18,269, respectively. Said services
consisted of a review of the Company's 2005 and 2004 quarterly reports filed on
Form 10-Q.

Tax fees

   The aggregate fees billed during fiscals years ended March 31, 2005 and 2004
for professional services rendered by the Company's principal accountant for tax
compliance, tax advice, and tax planning totaled $16,800 and $5,400,
respectively. Said services included preparation and filing of federal and state
returns for the years ended March 31,2004 and projections for the year ended
March 31, 2005.

All Other Fees

   In fiscal year ended March 31, 2005 and 2004 the Company was billed $22,375
and $2,725, respectively to by our principal accountant. Such services consisted
of GAAP related research, business operation advisory services, and various
matters related to SEC compliance.

                                    Page 56

<PAGE>

                                     PART IV

ITEM 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

<TABLE>
Documents Filed as a Part of this Report:
                                                                                    Page
1.       Financial Statements:
         --------------------

<S>                                                                                  <C>
         Independent Auditors' Reports . . . . . . . . . . . . . . . . . . . . .     26

         Consolidated Balance Sheets as of March 31, 2005 and 2004 . . . . . . .     28

         Consolidated Statements of Income for the years ended March 31, 2005,
            2004 and 2003  . . . . . . . . . . . . . . . . . . . . . . . . . . .     29

         Consolidated Statements of Changes in Stockholders' Equity for the years
            ended March 31, 2005, 2004 and 2003  . . . . . . . . . . . . . . . .     30

         Consolidated Statements of Cash Flows for the years ended March 31, 2005,
            2004 and 2003  . . . . . . . . . . . . . . . . . . . . . . . . . . .     31

         Notes to Consolidated Financial Statements . . . . . . . . . . . . . .      33
</TABLE>

2. Financial Statement Schedules:
   -----------------------------

   No financial schedules are listed since they are not applicable or are
   not required, or because the required information is included in the
   consolidated financial statements or notes thereto.


3. Exhibits:

<TABLE>
Exhibit
Number                              Description                                       Location

<C>                                                                                           <C>
3.1      Articles of Organization, as amended . . . . . . . . . . . . . . . . . .   (2)(Exh. 3.1)

3.2      By-Laws . . . . . . . . . . . . . .  . . . . . . . . . . . . . . . . . .   (2)(Exh. 3.2)

4.1      Form of Stock Certificate . . . . . . . . . . . . . . . . . . . . . . . .  (2)(Exh. 4.1)

10.1     Employment Agreement with Theodore E. Charles (3)  . . . . . . . . . .. . (2)(Exh. 10.1)

10.2     Employment Agreement with Timothy B. Murphy (3) . . . . . . . .. .  . . . (2)(Exh. 10.2)

10.3     The 1994 Stock Option Plan . . . . . . . . . . . . . . . . . . . . . . .             (1)

14.1     Code of Ethics     . . . . . . . . . . . . . . . . . . . . . . . . . . .             (1)
</TABLE>

                                    Page 57

<PAGE>


<TABLE>

<C>                                                                   <C> <C>                 <C>
21.1     Subsidiaries of Investors Capital Holdings, Ltd. as of March 31, 2005. .             (1)

31.1     Certification of Theodore E. Charles pursuant to Rule 13a-14(a) . . . . .            (1)

31.2     Certification of Timothy B. Murphy pursuant to Rule 13a-14(a) . . . . . .            (1)

32.1     Certification of Theodore E. Charles pursuant to 18 U.S.C. Section 1350 .            (1)

32.2     Certification of Timothy B. Murphy pursuant to 18 U.S.C. Section 1350 . .            (1)

----------------------------

(1)      Filed herewith.

(2)      Incorporated by reference to the indicated exhibit to the Registrant's
         Registration Statement on Form SB-2 (File No. 333-05327) filed August
         14, 2000.

(3)      A management contract or compensatory plan or arrangement required to
         be filed as an exhibit pursuant to Item 15(b) of this report.
</TABLE>

   Any exhibit not included with this Form 10-K when furnished to any
shareholder of record will be furnished to such shareholder upon written request
and payment of up to $.25 per page plus postage. Such requests should be
directed to Investors Capital Holdings, LTD., 230 Broadway East, Lynnfield, MA
01940-2320.

                                    Page 58

<PAGE>


                                   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.

                                                INVESTORS CAPITAL HOLDINGS, LTD.

                                                By: /s/ Timothy B. Murphy
                                                    ----------------------------
                                                    Chief Financial Officer

                                                Date: June 29, 2005


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

<TABLE>

<S>                                                                                                     <C> <C>
/s/ Theodore E. Charles                     Chairman, President, Chief Executive Officer,          June 29, 2005
----------------------------------------    and Director (Principal Executive Officer)
Theodore E. Charles

/s/ Timothy B. Murphy                       Executive Vice President, Chief Financial              June 29, 2005
----------------------------------------    Officer and Director (Principal Financial and
Timothy B. Murphy                           Accounting Officer)

/s/ C. Troy Shaver, Jr.                     Director                                               June 29, 2005
----------------------------------------
C. Troy Shaver, Jr.

/s/ Arthur E. Stickney                      Director                                               June 29, 2005
----------------------------------------
Arthur E. Stickney

/s/ William Atherton                        Director                                               June 29, 2005
----------------------------------------
William Atherton

/s/ Marshall Acuff, Jr.                     Director                                               June 29, 2005
----------------------------------------
Marshall Acuff, Jr.
</TABLE>

                                    Page 59

<PAGE>

                                  EXHIBIT INDEX
                                  -------------

              (Exhibits being initially filed with this Form 10-K)




10.3    The 1994 Stock Option Plan

14.1    Code of Ethics

21.1    Subsidiaries of Investors Capital Holdings, Ltd. as of March 31, 2005

31.2    Certification of Theodore E. Charles pursuant to Rule 13a-14(a)

31.2    Certification of Timothy B. Murphy pursuant to Rule 13a-14(a)

32.1    Certification of Theodore E. Charles pursuant to 18 U.S.C. Section 1350

32.2    Certification of Timothy B. Murphy pursuant to 18 U.S.C. Section 1350


                                    Page 60